FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MCRAE v WATSON WYATT AUSTRALIA PTY LTD | [2008] FMCA 1568 |
| TRADE PRACTICES – Where applicant made redundant from senior position claims representations or contractual terms relating to termination payment made – whether conversations said to constitute arrangements were as alleged by applicant – whether document prepared by applicant was made contemporaneously with conversations – whether document was deliberately interfered with – nature of representations – whether words used constituted supplementary oral term – whether applicant relied upon alleged representations in entering into contract of service – whether later service agreement containing ‘whole agreement’ clause superseded original arrangements – whether breach of s.53B Trade Practices Act – whether applicant mitigated loss – whether damages under s.82 need to be assessed where breach of contract found – method of calculating costs in Federal Magistrates Court. |
| Trade Practices Act 1974, ss.52, 53B, 82 Chitty on Contracts, 29th ed, Beale, Sweet & Maxwell Cheshire & Fifoot’s Law of Contract, 6th ed, Starke, Seddon and Ellinghaus, Butterworths Trade Practices Law, Heydon, Ed Thomson Law Book Co, vol 2 Catanzariti J, (2008) Law Society Journal Civil Procedure Act 2005 (NSW), s.100 Federal Magistrates Court Rules 2001 Federal Court Rules |
| Applicant: | KATHRYN ANN MCRAE |
| Respondent: | WATSON WYATT AUSTRALIA PTY LTD |
| File number: | SYG 3894 of 2007 |
| Judgment of: | Raphael FM |
| Hearing dates: | 18, 19, 20 August, 29 October 2008 |
| Date of last submission: | 29 October 2008 |
| Delivered at: | Sydney |
| Delivered on: | 1 December 2008 |
REPRESENTATION
| Counsel for the Applicant: | Ms L Clegg |
| Solicitors for the Applicant: | Carroll & O’Dea |
| Counsel for the Respondent: | Mr R Crow |
| Solicitors for the Respondent: | Mallesons Stephen Jacques |
ORDERS
Respondent to pay applicant $106,615.38 for breach…
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Details
- Case
- [2008] FMCA 1568
- Decision Date
CaseChat Overview and Summary
The case of McRae v Watson Wyatt Australia Pty Ltd involved the applicant, Ms McRae, who brought an action against the respondent, Watson Wyatt Australia Pty Ltd, seeking damages for breach of contract and misleading or deceptive conduct under the Trade Practices Act. The dispute arose from Ms McRae's resignation from her position at NSP Buck, following representations made by Mr Dillon of Watson Wyatt regarding a redundancy package, which she subsequently found were not honoured when she commenced employment with the respondent.
The primary legal issues before the court were whether Ms McRae's acceptance of the job offer from Mr Dillon was materially influenced by his representations regarding a severance package, and if these representations could be considered misleading or deceptive conduct under the Trade Practices Act. The court also had to determine whether the representations were vague or imprecise enough to negate reliance on them.
The court found that Ms McRae did rely on Mr Dillon’s representations, which were sufficiently clear to materially affect her decision to resign and join Watson Wyatt. Although Ms McRae was aware of the vagueness of the representations, she had a clear understanding of what she believed they entailed, namely a severance package of at least three weeks per year of service. The court held that the respondent's conduct was misleading or deceptive because Ms McRae relied on the representations when deciding to accept the job offer, even though they were not the sole factor in her decision. The court further held that the vagueness of individual parts of the representation did not negate the overall clarity of the message conveyed by Mr Dillon.
The court ordered the respondent to pay Ms McRae $106,615.38 for breach of contract, $13,903.96 in interest, and reserved the issue of costs for further determination.
The primary legal issues before the court were whether Ms McRae's acceptance of the job offer from Mr Dillon was materially influenced by his representations regarding a severance package, and if these representations could be considered misleading or deceptive conduct under the Trade Practices Act. The court also had to determine whether the representations were vague or imprecise enough to negate reliance on them.
The court found that Ms McRae did rely on Mr Dillon’s representations, which were sufficiently clear to materially affect her decision to resign and join Watson Wyatt. Although Ms McRae was aware of the vagueness of the representations, she had a clear understanding of what she believed they entailed, namely a severance package of at least three weeks per year of service. The court held that the respondent's conduct was misleading or deceptive because Ms McRae relied on the representations when deciding to accept the job offer, even though they were not the sole factor in her decision. The court further held that the vagueness of individual parts of the representation did not negate the overall clarity of the message conveyed by Mr Dillon.
The court ordered the respondent to pay Ms McRae $106,615.38 for breach of contract, $13,903.96 in interest, and reserved the issue of costs for further determination.
Orders
Orders of the court
1.
Respondent to pay applicant $106,615.38 for breach of her contract of employment dated 18 July 2000.
2.
Respondent to pay applicant $13,903.96 interest to judgment.
3.
Costs reserved.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
The respondent then argues that the move to Watson Wyatt was because the applicant was getting bored with NSP Buck and was looking for a greater challenge, and that she obtained career advantages by moving to Watson Wyatt. It argues that she might have been out of a job at NSP Buck had the Coca Cola account moved to Watson Wyatt with Mr Burnett. These are all good additional reasons why Ms McRae would accept the job offer from Mr Dillon, but they do not exclude her relying on his representations about a redundancy package when she committed herself to the change. The application of the common law principle to trade practices matters that a representation does not need to be the sole inducement that leads to the formation of a contract; it must be a ‘real’ inducement in the sense that it “materially affected the representee’s decision to contract” (see Heydon, Trade Practices Law, vol 2 at 11-7551) was approved of in Henjo v Collins Marrickville Pty Ltd (1988) 39 FCR 546 where Lockhart J (with whom Burchett J agreed) referring to Gould v Vaggelas (1985) 157 CLR 215 (where this principle was articulated by Wilson J) and Nielsen v Hempston Holdings Pty Ltd(1986) 65 ALR 302 said at 96:“These decisions support the view that recovery under s 52 is founded by the applicant's actual reliance upon the misleading or deceptive conduct of the respondent, although that conduct was not the only factor in the applicant's decision to enter a particular agreement, and although the applicant did not seek to verify the representations or did so inadequately and so failed to discover their falsity.” [emphasis added] The respondent argues that the applicant accepted that Mr Dillon’s representations were vague and imprecise. It concludes that they were only the subjective opinions of Mr Dillon at the time. Ms McRae is quite clear about what she thought those representations added up to; a severance package of at least three weeks per year of service:“[T45] So the generosity which you say he mentioned could have applied to any of those things?--- I had specifically referenced the amount payable on severance however in my question to him.The question that he was responding to, according to your evidence is:Does this also apply to Watson Wyatt and would you consider putting the redundancy terms in my contract.?---Yes.And according to your account of this, he specifically replies to the second half – or second limb of that question by saying:We don’t include redundancy terms in contracts.?---That’s right.Yes. And do you say that he’s responded to this first half of the question:Does this also apply at Watson Wyatt??---Yes, I do. Cause I asked him whether the industry standard ---Where does he say:That we pay three weeks for every year of service.?---His question needs to be read in response to mine.I see.” The individual constituents of the representation may have been imprecise or vague, but the whole was not. Ms McRae had told Mr Dillon what she understood the ‘industry standard’ to be. He responded to that proposition.
Ratio Decidendi
Legal Principle Established
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