Morris v Allianz Australia Services Pty Ltd - [2006] SADC 63

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Interlocutory Application)
MORRIS v ALLIANZ AUSTRALIA SERVICES PTY LTD
[2006] SADC 63
Judgment of His Honour Judge David Smith
16 June 2006
EQUITY - EQUITABLE REMEDIES - INJUNCTIONS
Application by plaintiff for mandatory interlocutory injunction of a contract of employment – principles upon which interlocutory injunction may be granted- held though serious question to be tried, consideration of balance of convenience did not favour grant of injunction – application refused
Trade Practices Act 1974 S52, referred to.
American Cyanamid v Ethicon Ltd [1975] AC 396; Castlemaine Tooheys Ltd v State of South Australia (1986) 161 CLR 148; Businessworld Computers Pty Ltd v Australian Telecommunication Commission (1988) 82 ALR 499; NWL Ltd v Woods [1979] 1 WLR 1294; Cayne v Global Natural Resources (1984) 1 All ER 225; State of Queensland v Australian Telecommunications Commission (1985) 59 ALR 243; Films Rover International Ltd v Cannon Films Sales Ltd [1986] 3 All ER 772; Kingston Estate Wines Pty Ltd v Marangalli Vineyard Trust and Anor [2005] SADC 13; Chappell v Times Newspapers Ltd [1975] 2 All ER 233; Hill v CA Parsons & Co Ltd [1972] Ch 305; Irani v Southampton and South West Hampshire Health Authority [1985] ChD 590; Thorpe v SANFL (1974) 10 SASR 17; CH Giles & Co Ltd v Morris [1972] 1 WLR 307; Carlton and United Breweries (NSW) Pty Ltd v Bond Brewing New South Wales and Ors (1987) 76 ALR 633, considered.

MORRIS v ALLIANZ AUSTRALIA SERVICES PTY LTD
[2006] SADC 63
Introduction

This is an application for an interlocutory injunction. In particular, by a Notice for Specific Directions of the 7^th April 2006, the plaintiff applies for, inter alia, an interlocutory mandatory injunction in the following terms:
... that the defendant reinstate the plaintiff to his former position within the defendant’s company or to a redeployed position within that company.
The Evidence – the Pleadings
I have before me the following:
·the affidavit of the plaintiff sworn on the 7^th April 2006;
·the affidavit of the Human Resources Manager of the defendant, Nina Livorness, sworn on the 9^th May 2006; and
·the affidavit of the plaintiff’s solicitor, Matthew de Gregorio, sworn on the 19^th May 2006.
I also have had limited regard to the pleadings.
The plaintiff began working for the defendant as State Operations Manager on about the 12^th August 2002. The terms and conditions of his employment were contained in a document entitled “Allianz Australia Business Partnership Agreement 2001” and his employment was also governed by the Allianz Australia Human Resources Policies and Procedures Manual. Then, effective from the 1^st July 2003, the plaintiff was appointed to the position of Contracts and Compliance Manager within the Personal Injury Business Unit of the defendant’s operations. The terms and conditions of the new employment remained as before.
On the 7^th March 2005, the plaintiff was notified by the defendant that his position was redundant and so his employment was effectively terminated.
On the 12^th September 2005, the plaintiff instituted this wrongful dismissal action against the defendant. In the originally pleaded action, he claimed that there had been a wrongful breach of the employment contract in the two following respects:
·firstly, that is was agreed that he would be employed for five years from the 1^stJuly 2003 and therefore the termination within that time was a breach of that agreement; and
·secondly, that he had not committed any act or omitted to perform any action which would have constituted “justified reasons” for termination.
In this originally pleaded claim, the plaintiff sought only damages. The Statement of Claim was amended on the 16^th March 2006. The material amendment was to delete the first of the above particulars of breach. Still the plaintiff sought only damages.
Since the termination, the plaintiff has been unable to find alternative employment, due to his depressed psychological state. He has been diagnosed as suffering from an adjustment disorder with depressed and anxious mood. He alleges that this condition was “substantially caused” by his employment with the defendant. He is currently pursuing a Worker’s Compensation Claim against the defendant pursuant to the provisions of the Worker’s Rehabilitation and Compensation Act 1986 (SA) (“WorkCover Claim”).
The psychiatric opinion in the evidence before me is that the plaintiff has, as indicated above, an adjustment disorder with depressed and anxious mood (see report Dr Paul Davis dated the 22^nd September 2005), and/or a major depressive illness (see reports of Dr W Blakemore dated 16^th November 2005 and 4^th January 2006). In his report dated the 22^nd September 2005, Dr Davis said, inter alia:
He is not capable of resuming normal duties at this time. I do not believe that any particular restrictions would enable Mr Morris to return to alternative work at this time.
After the hearing of submissions in this application, I accepted into evidence a further report from Dr Davis dated the 16^th May 2006, in which he said as follows:
... you have asked me to express my opinion on whether or not Mr Morris would be able to return to work at Allianz if a position was made available for him.
Mr Morris is making steady progress in recovery from his Adjustment Disorder. I believe if a position was made available for him at Allianz he would be able to undertake the duties of his employment given a gradual re-introduction to the workplace. If you require any further clarification or more information please contact me.
On the 25^th November 2005, in connection with the WorkCover claim, an authorised WorkCover Investigator interviewed Mr Joseph Anthony Di Pinto who was the plaintiff’s supervisor during the time the plaintiff was with the defendant. At the time of the interview, Mr Di Pinto was himself no longer employed by the defendant. The record of interview is in evidence before me. Counsel for the plaintiff, Mr Heywood-Smith QC, submitted that the record of interview discloses that the alleged claim of redundancy was false.
The plaintiff saw the record of interview on the 9^th March 2006 and to use his words was “... unaware of many of the details claimed within it ...”
Plainly it was the discovery of this record of interview, emerging as it did in the WorkCover claim, which has provoked the plaintiff to substantially recast his claim and in particular to seek specific performance of the employment contract by way of both interlocutory and final relief.
As a result, on the 8^th May 2006, the plaintiff filed and served a Further Amended Statement of Claim. In it, the plaintiff maintains the plea of a breach of the employment contract, but, relying on that said by Mr Di Pinto in the record of interview, he alleges that the claim of redundancy was false, and that the representation by the defendant that his contract of employment was terminated because of it, contravened s52 of the Trade Practices Act 1974 (Cth) and also constituted the tort of deceit. Notably, the plaintiff also pleads that, by reason of the deceit and misleading and deceptive conduct, the plaintiff, inter alia, has suffered “... a major depressive illness more particularly described as an adjustment disorder with anxious and depressed mood ...”
In the Prayer for Relief, the plaintiff claims as follows:
1.Specific performance of his contract of employment pursuant to the general law.
2.An order for specific performance pursuant to s.80(1) of the TPA.
3.Damages for breach of contract.
4.Damages for deceit.
5.Damages pursuant to s.82 and/or s.87 of the TPA.
6.Interest.
7.Costs.
In its defence, save for the formal matters, the defendant denies the allegations.
The only evidence adduced by the defendant on this application was, as indicated, the affidavit of Nina Livorness. In summary, she deposes that she is not aware of any suitable position that the plaintiff “... could be employed in within the South Australian operations ...”
So it is against that background that the plaintiff seeks an interlocutory mandatory injunction.
Legal Principles
The principles governing the grant or refusal of an interlocutory injunction are well settled. I set them out as follows.
1.Firstly, the grant of an interlocutory injunction “... is a remedy that is both temporary and discretionary” (see American Cyanamid v Ethicon Ltd [1975] AC 396 per Lord Diplock at 405). In exercising this discretion, the court should consider all the relevant circumstances bearing in mind that the object of this equitable relief is to prevent irremedial prejudice arising pending the final resolution of the issues at trial (see American Cyanamid (supra) per Lord Diplock at 406).
It is perhaps trite to point out that the applicant for an interlocutory injunction bears the onus of satisfying the court that it should be granted.
2.The first matter to be established is whether there is “... a serious question to be tried or that the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is, there is probability that at the trial of the action that the plaintiff will be held entitled to relief; ...” (see Castlemaine Tooheys Ltd v State of South Australia (1986) 161 CLR 148 at 153 per Mason ACJ; see also American Cyanamid (supra) per Lord Diplock at pp.407, 408).
3.To give a plaintiff standing to seek interlocutory injunctive relief the serious question to be tried must involve some legal right which attracts injunctive relief (see Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499 at 506 per Gummow J).
4.On the basis that it has been established that there is a serious issue to be tried, the second matter for the Court is to decide is whether the balance of convenience weighs down in favour of granting the injunction or not. Issues such as irreparable injury, detriment and whether damages are an adequate remedy, are subsumed under this general banner of the balance of convenience (see NWL Ltd v Woods [1979] 1 WLR 1294 per Lord Diplock 1306). What is embraced by the balance of convenience is best described by Lord Diplock, in his speech in NWL Ltd v Woods (supra) at 1306, 1307:
Cases of this kind are exceptional, but when they do occur they bring into the balance of convenience an important additional element. In assessing whether what is compendiously called the balance of convenience lies in granting or refusing interlocutory injunctions in actions between parties of undoubted solvency the judge is engaged in weighing the respective risks that injustice may result from his deciding one way rather than the other at a stage when the evidence is incomplete. On the one hand there is the risk that if the interlocutory injunction is refused but the plaintiff succeeds in establishing at the trial his legal right for the protection of which the injunction had been sought he may in the meantime have suffered harm and inconvenience for which an award of money can provide no adequate recompense. On the other hand there is the risk that if the interlocutory injunction is granted but the plaintiff fails at the trial, the defendant may in the meantime have suffered harm and inconvenience which is similarly irrecompensable. The nature and degree of harm and inconvenience that are likely to be sustained in these two events by the defendant and the plaintiff respectively in consequence of the grant or the refusal of the injunction are generally sufficiently disproportionate to bring down, by themselves, the balance on one side or the other; and this is what I understand to be the thrust of the decision of this House in American Cyanamid Co. v. Ethicon Ltd. Where, however, the grant or refusal of the interlocutory injunction will have the practical effect of putting an end to the action because the harm that will have been already caused to the losing party by its grant or its refusal is complete and of a kind for which money cannot constitute any worthwhile recompense, the degree of likelihood that the plaintiff would have succeeded in establishing his right to an injunction if the action had gone to trial, is a factor to be brought into the balance by the judge in weighing the risks that injustice may result from his deciding the application one way rather than the other.
In Cayne v Global Natural Resources (1984) 1 All ER 225 at 237 May LJ said:
... the balance that one is seeking to make is more fundamental, more weighty, than mere ‘convenience’. I think that it is quite clear from both cases that, although the phrase may well be substantially less elegant, the ‘balance of the risk of doing an injustice’ better describes the process involved.
As is made clear in the above comments, the issue of whether damages will be adequate compensation arises in this process of ascertaining where the balance of convenience falls.
5.The defendant contends, on good authority, that there is a higher onus on an applicant for a mandatory injunction than on an applicant for a prohibitory injunction (see State of Queensland v Australian Telecommunications Commission (1985) 59 ALR 243 at 244). In particular, it was submitted that in order to grant a mandatory interlocutory injunction, this Court should feel a high degree of assurance that the applicant would succeed in obtaining such relief at trial. As a bald proposition that is no longer the generally accepted approach. Hoffman J in Films Rover International Ltd v Cannon Films Sales Ltd [1986] 3 All ER 772 at 780-781 set out, what I suggest is now the better approach:
The principal dilemma about the grant of interlocutory injunctions, whether prohibitory or mandatory, is that there is by definition a risk that the court may make the ‘wrong’ decision, in the sense of granting an injunction to a party who fails to establish his right at the trial (or would fail if there was a trial) or alternatively, in failing to grant an injunction to a party who succeeds (or would succeed) at trial. A fundamental principle is therefore that the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been ‘wrong’ in the sense I have described. The guidelines for the grant of both kinds of interlocutory injunctions are derived from this principle.
The passage quoted from Megarry J in Shepherd Homes Ltd v Sandham [1970] 3 All ER 402 at 412, [1971] Ch 340 at 351 qualified as it was by the words ‘in a normal case’ was plainly intended as a guideline rather than an independent principle. It is another way of saying that the features which justify describing an injunction as ‘mandatory’ will usually also have the consequence of creating a greater risk of injustice if it is granted rather than withheld at the interlocutory stage unless the court feels a ‘high degree of assurance’ that the plaintiff would be able to establish his right at a trial. I have taken the liberty of reformulating the proposition in this way in order to bring out two points. The first is to show that semantic arguments over whether the injunction as formulated can properly be classified as mandatory or prohibitory are barren. The question of substance is whether the granting of the injunction would carry that higher risk of injustice which is normally associated with the grant of a mandatory injunction. The second point is that in cases in which there can be no dispute about the use of the term ‘mandatory’ to describe the injunction, the same question of substance will determine whether the case is ‘normal’ and therefore within the guideline or ‘exceptional’ and therefore requiring special treatment. If it appears to the court that, exceptionally the case is one in which withholding mandatory interlocutory injunction would in fact carry a greater risk of injustice than granting it even though the court does not feel a ‘high degree of assurance’ about the plaintiff’s chances of establishing his right, there cannot be any rational basis for withholding the injunction.
(The italics are mine)
The authorities indicating that this is the preferred or better approach in Australia are gathered usefully in the judgment of Robertson DCJ in Kingston Estate Wines Pty Ltd v Marangalli Vineyard Trust and Anor [2005] SADC 13 at paras 14 and 15. I particularly refer to that said by Gummow J at 503 in Businessworld Computers v Australian Telecommunications Commission (supra).
In the end, this “change of approach” may be regarded as nothing more than a matter of emphasis or semantics.
6.In this case, the plaintiff is seeking by way of interlocutory order that which he also seeks by way of final relief, namely specific performance of the contract of employment. In this circumstance, the Court, before making any such order, at the interlocutory stage, needs to have a high degree of assurance that the plaintiff would be entitled to such relief at the final hearing.
Again, I refer to and adopt that said by Robertson DCJ in Kingston Estate (supra) at 17 and to the following comments quoted by His Honour from Dr Spry QC in his text “Equitable Remedies” 6^th ed at 571-572.
“.... On all interlocutory applications the hardship or prejudice that may ensue if relief is granted or if conversely it is refused is weighed with other relevant considerations, including the strength of the plaintiff’s case (see generally American Cynamid Co v Ethicon Ltd [1975] AC 396 ....); and although the court acts with caution, a mandatory order is made if the balance of justice so requires. But when the plaintiff is seeking on an interlocutory application an order for the specific performance of part or all of the defendant’s obligations under a contract, being relief that is ordinarily granted only at the final hearing, that relief is, at least in the absence of special circumstances, granted only if its refusal would give rise to disproportionate prejudice or hardship to the plaintiff, as against the prejudice or hardship that its grant will cause the defendant (Films Rover International Ltd v Cannon Films Sales Ltd [1987] 1 WLR 670). Since account is taken of the strength of the plaintiff’s case, the more probable it appears that he will succeed at the final hearing or in other relevant proceedings, the less reluctance to intervene will be shown by the court (Locabail International Finance Ltd v Agroexport [1986] 1 WLR 657).”
7.Generally speaking, equity has declined to enforce contracts for personal services, either by specific performance or by injunction. Rather, the plaintiff is left to his or her remedy in damages. Geoffrey Lane LJ in Chappell v Times Newspapers Ltd [1975] 2 All ER 233 at 244 explained the reasons for the rule in the following terms:
Very rarely indeed will a court enforce, either by specific performance or by injunction, a contract for services, either at the behest of the employers or of the employee. The reason is obvious: if one party has no faith in the honesty or integrity or the loyalty of the other, to force him to serve or to employ that other is a plain recipe for disaster.
Nonetheless, there have been a series of significant decisions which have enforced contracts for personal services (eg Hill v CA Parsons & Co Ltd [1972] Ch 305; Irani v Southampton and South West Hampshire Health Authority [1985] ChD 590). However, the weight of authority and academic opinion is that such cases should be regarded as an exception to the rule. So, save for the exceptional case there remains a reluctance by courts to grant such relief (see Thorpe v SANFL (1974) 10 SASR 17; see also CH Giles & Co Ltd v Morris [1972] 1 WLR 307 per Megarry J at 378-319; see also Law of Employment 5^th ed by Macken, O’Grady and Ors ch8 at pp257, 258; see also The Personal Employment Contract by Mark Freedland at 372, 373).
8.The weighing up of whether there is a serious issue to be tried and whether the balance of convenience favours the granting of an order or not, is upon the affidavit evidence adduced in support of the application (see American Cyanamid (supra) at 406 per Lord Diplock). Further, it is permissible for the Court to refer to any pleadings in order to ascertain what is in issue between the parties.

Such are the principles, which in my view, are applicable to the decision in this case.
Conclusion
I am satisfied that the plaintiff has established that there is a “serious issue to be tried”, namely whether the plaintiff’s termination was in breach of contract, in breach of s52 of Trade Practices Act and procured by the commission of the Tort of Deceit and whether specific performance of the contract of employment or damages is the appropriate remedy. It is clear that these issues have the capacity to attract injunctive relief and so provide the plaintiff with standing to make this application.
So the resolution of this application turns upon whether in all the circumstances the balance of convenience weighs down in favour of the granting of the interlocutory order.
The plaintiff here seeks the interlocutory order not only pursuant to this Court’s equitable jurisdiction, but also pursuant to s80(1) of the Trade Practices Act 1974 (Cth). Counsel for the plaintiff, Mr Heywood-Smith QC, contended that in respect of the injunctive relief claimed under the Trade Practices Act this Court is not confined by equitable principles. However, the authority on which he relied for that submission, namely Town & Country v Partnership Pacific (1988) 20 FCR 540, also makes it clear that the Court can have regard to equitable principles “... to provide ready guidance for what is appropriate ...” (see 545). I propose to be guided by the relevant equitable principles (see also Miller’s Annotated Trade Practices Act, 2^nd ed, at paras 1.80.5-1.80.125).
As previously indicated, because the injunctive relief sought is also the final relief sought, I need to have a high degree of assurance that the plaintiff would finally succeed in obtaining such an order at trial. I feel no such assurance. In order to obtain such an order, whether it be interlocutory or final, the plaintiff is faced with the Court’s reluctance to specifically enforce such contracts. In order to displace that reluctance, the plaintiff needs to point to special or exceptional circumstances which existed in, for example, the cases of Hill v CA Parsons Pty Ltd and Irani v Southampton and South West Hampshire Health Authority (supra). I do not accept that the recently discovered record of interview of the plaintiff’s former supervisor elevates this matter into that exceptional category. Rather, this case is akin to that of Thorpe v SANFL (1974) 10 SASR 17. Thorpe, like the plaintiff here, stood dismissed. It was contended that Thorpe was entitled to reinstatement and reliance was placed on the decision in Hill v CA Parsons Pty Ltd (supra). At page 38 Jacobs J said, in the course of distinguishing Hill and refusing interlocutory reinstatement, as follows:
The majority of the Court, however, thought that it was not an ordinary case, but on the contrary, a very rare and special one, which justified the Court, in the exercise of its discretion, in granting the equitable relief which the plaintiff sought. I need not recount in detail the special facts and circumstances, which sufficiently appear from the report. The employee in that case had completed thirty-five years of service and was due to retire in two years time with substantial superannuation benefits. He was an entirely satisfactory employee, and the employer would not have contemplated his dismissal but for trade union pressure arising from the unwillingness of the employee to join the union. That cause of friction was likely to be removed in the near future by legislation already passed but not proclaimed. The majority of the Court found in these facts sufficient reason to exercise its discretion in favour of re-instatement by means of a declaration and injunction, but I do not understand Sachs L.J. to say that he would have exercised such a discretion merely by calling in aid the trend of modern legislation to shield employees. The facts were of decisive importance, but the facts in the present case are in no way comparable. To grant a declaration and injunction here would be to continue a personal relationship of a confidential nature contrary to the will of one of the parties, in defiance of the long-established principles upon which the Court acts. I can find no ground upon which I can, as a matter of discretion, depart from the ordinary consequences of a breach of contract of personal services by the master, giving rise only to a right to damages.
Further, in both the cases of Hill and Irani the plaintiffs sought injunctions restraining their employers from effectively implementing the termination of their employment. They both acted before the processes of dismissal had concluded. Here, the plaintiff’s employment has been terminated. The relationship for some considerable time has been fractured. What is sought is the re‑establishment, perhaps on an interim basis of “an employer employee” relationship which ended as long ago as the 7^th March 2005.
The delay in seeking the interlocutory relief is undue. The dismissal occurred on the 7^th March 2005 and proceedings were issued on the 12^th September 2005. This application was made on the 7^th April 2006. Such a delay militates against any interlocutory order of reinstatement (see Carlton and United Breweries (NSW) Pty Ltd v Bond Brewing New South Wales and ors (1987) 76 ALR 633 at 638). I do not regard the eleventh hour discovery of the record of interview as ameliorating this delay in part because I do not see its evidentiary value in the conclusive terms put by Mr Heywood-Smith QC.
It is relevant to making any interlocutory order for reinstatement that the plaintiff satisfy the Court that he is ready, willing and able to resume the subject employment (see Australian National Airlines v Robinson [1977] VR 87 per Young CJ at 94-96). Psychiatric evidence at the time of the hearing of this application was, in categorical terms, that the plaintiff was unable to work. The recent modification of that view is highly qualified. So any restoration of the plaintiff to his employment or to some redeployed position may involve the prospect of supervision which of itself is an indicator against such an order.
Finally, counsel for the defendant, Mr Stanley, submitted that the time between the plaintiff’s dismissal and the trial will be “a closed period” in respect of which any potential injustice to the plaintiff can be adequately addressed by an award of damages. I agree. If the outcome at trial is an order for specific performance of the employment contract, then the injustice to the plaintiff of being wrongfully denied his employment from the 7^th March 2005 until the final orders can be addressed by an award of damages for that period.
For the above reasons, I take the view that the balance of convenience does not favour the granting of the application.
Accordingly, the application is refused.
I will hear the parties as to costs and any other consequential orders.