Morton v Interpro Australia Pty Ltd
[2009] FMCA 423
•14 May 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MORTON v INTERPRO AUSTRALIA PTY LTD & ANOR | [2009] FMCA 423 |
| TRADE PRACTICES – Alleged misrepresentation about employment – alleged breach of contract of employment arising from misrepresentations – s.53B Trade Practices Act considered – minor ancillary claims. |
| Trade Practices Act 1974 Miller’s Trade Practices Act 30th Edition 2009 |
| Gates v The City Mutual life Assurance Society Limited (1985) 160 CLR 1 Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 4 FCR 450 |
| Applicant: | MARK MORTON |
| First Respondent: | INTERPRO AUSTRALIA PTY LTD |
| Second Respondent: | COURTS GLOBAL PTY LTD |
| File Number: | MLG 588 of 2008 |
| Judgment of: | Burchardt FM |
| Hearing dates: | 10, 11, 12 and 13 March 2009 |
| Date of Last Submission: | 13 March 2009 |
| Delivered at: | Melbourne |
| Delivered on: | 14 May 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr G C P McKeown |
| Solicitors for the Applicant: | Armstrong Lawyers Pty Ltd |
| Counsel for the Respondent: | Mr M R Champion |
| Solicitors for the Respondent: | DLA Phillips Fox |
ORDERS
That the First and Second Respondents pay the Applicant damages in the sum of $19,158.76 together with interest in the sum of $2,030.83.
That the First and Second Respondents pay the Applicant’s costs to be taxed in default of agreement pursuant to the Federal Magistrate Court Rules save that the Applicant’s costs of the Respondents’ counterclaim be paid on an indemnity basis.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 588 of 2008
| MARK MORTON |
Applicant
And
| INTERPRO AUSTRALIA PTY LTD |
First Respondent
| COURTS GLOBAL PTY LTD |
Second Respondent
REASONS FOR JUDGMENT
Mark Morton worked for Interpro Australia Pty Ltd (“Interpro”) from 7 March 2007 until 5 April 2008. Although there are a number of subsidiary issues as to outstanding annual leave and wages, the essential basis of Mr Morton's complaint is that he says the First Respondent breached the Trade Practices Act (“TPA”) in respect of representations made by Interpro in order to induce him to take up the employment. He also says Interpro breached his contract by reneging upon the terms of the contract that he says the representations constituted.
Interpro denies the representations and says that in any event the contract was terminated for Mr Morton's misconduct.
For the reasons that follow, I have decided that Interpro did represent to Mr Morton that a 1% commission override on gross profit would be paid to him in the second year of his employment but that there was no express representation that the contract would last for two years as he asserts.
I further find that the purported removal of the 1% override was indeed a breach of the TPA and a breach of contract.
Nonetheless, because Mr Morton obtained new employment shortly after his dismissal and because he was paid from late February 2008 onwards, his losses for both breach of the TPA and breach of contract are small.
I additionally find that Mr Morton did not misconduct himself and that his employment was not terminable for serious misconduct.
I further find that Mr Morton is owed 6.3 days' annual leave, two days' pay, and contractor's commission but not quarterly commission.
The facts
Mr Morton was born on 19 March 1964 in Britain, where he lived most of his life until this recent employment.
In late 2006 he was working in Britain, although there is no evidence as to precisely how much he was earning nor as to what his future prospects were. This latter point is important for reasons to which I shall come in respect of the Trade Practices claim.
Although it is not in evidence before me, I was informed in opening submissions that Mr Morton has two children in England and despite a period of employment in New York, it would be reasonable to infer that all things being equal, he would have intended to remain in the United Kingdom.
Nonetheless he was on the look-out for other opportunities and in October 2006 he was put in touch with Bruce Hara of Interpro through an intermediate in Hong Kong.
In his affidavit material, Mr Hara did not depose to any oral exchanges between him and Mr Morton prior to the commencement of Mr Morton's employment. He maintained that position in his evidence before me.
By way of contrast, Mr Morton said that several conversations took place, during which Mr Hara expressly confirmed to him that the employment was for a guaranteed period of two years and that he would receive a 1% commission override on gross profit of Interpro in his second year of employment.
I do not think that either of these recollections is wholly correct. Mr Hara is plainly wrong in his assertion that there were no conversations between the parties. Document R5 of the Respondents’ discovered documents makes it clear that there was a telephone call between the parties on 11 October 2006. It seems reasonably clear from R5, however, that this conversation was reasonably general in its terms.
It is also clear that there was a further conversation on 13 November 2006 (document R7) and in all probability, a follow-up call the next day. This was clearly a more detailed set of conversations covering, amongst other things, Mr Morton's salary and OTE expectations and when he was looking to commit to an opportunity and when he would be available to start.
It would appear from document R8 that following the transmission of written information by Mr Morton, there was in all probability a further conversation between the parties on 16 November 2006 when further matters were clarified.
A further email was sent by Mr Hara on a date not ascertained by either party but which gave rise to an important response from Mr Morton on 6 December 2008. That this was the date of its transmission is clear from Respondents’ documents 12 and 13.
The document ultimately produced was a composite. It responded to an offer from Interpro which set out salaries, guarantees and various matters as to bonuses. It includes on the original annexed to Mr Morton's affidavit of evidence‑in‑chief (as MM-1) remarks made by Mr Morton in green and responses by Mr Hara in yellow.
The document clearly posits a different salary scheme for year 2. In the first year, Mr Morton was to be paid $109,000 plus a $50,000 guarantee, together with bonuses. In the second year, he was to receive the same basic salary but a bonus of only $12,000. Mr Morton relevantly complained of the drop and went on to say:
“There doesn't appear to be a mechanism built into the offer to cover the guarantee. It would normally come in the form of % of GP paid monthly which would take the place of the guarantee. So you can see from my totals above, it's a massive drop in income.”
The direct response of Mr Hara to this assertion was:
“1% override on branch revenue - estimated minimum of 450K per month times 1% =$4500 x 12 months = 54K.”
The original, not the subject of this response, also included:
“Additional bonus structures will be agreed with Mark as sales manager to ensure he has the opportunity to exceed first-year earnings based on the performance and growth of the business.”
Mr Morton's response was:
“There could be two reasons for this
(1) They see the job as only taking one year and they want to ensure I move on in that time period;
(2 It's an oversight and they haven't thought about year 2.
I have no problem with either of these, I just want to know which one it is. I don't want to rent a house etc knowing I'm on my way 12 months down the road. And I would want a bit more money for the single year's work!”
The relevant response by Mr Hara was appended to paragraphs 1 and 2 immediately thereafter in these terms:
“In response to paragraph 1 -
(they see the job as taking only one year and want to ensure I move on in that time period)
- Not part of our thinking whatsoever, we see Mark's appointment as strategic and long term for the business. Of course, sales management roles are performance based and incentives for year 2 and beyond may well be tied to the results of the first year.”
In response to paragraph 2 -
“(it's an oversight and they haven't thought about it)
- We have thought about year two and currently have sales management overrides in place that Mark will be eligible for, based on the role he is performing. See attached management override structure. Given it is envisaged Mark will be performing the sales manager role by the time year 2 comes around, his overrides will look a little like this;
Essentially current contract numbers produce about 230K per month rev + another 120K on a perm. This is based on 130 contractors out. I am sure you can do the sums based on growth of the contract base and perm revenue.”
The sales management overrides are not in fact annexed to exhibit MM-1 but Mr Morton's evidence which I accept (it was not seriously challenged by Mr Hara) was that a schedule eventually annexed to a letter of offer was what constituted that document. It should be noted that the various bonuses offered did not include the 1% override previously referred to.
On 13 December 2006 Mr Hara sent Mr Morton a formal letter of offer (exhibit G to Mr Hara's first affidavit).
That letter on its face mentioned only the salary component for the first two years and did not mention the 1% override. The employment was expressly said to be terminable on one week's written notice by either party during the first three months of employment and four weeks thereafter. Mr Morton signed it and returned it on 20 December 2006.
Mr Morton says that there was a telephone discussion on or about 6 December 2006 in which he says there was additional discussion of the Interpro offer consistent with the version set out in his affidavit. The conversations he asserts included not only the express representation as to the 1% override but also express representation of a minimum employment of two years (paragraphs 26-29).
Mr Morton and Mr Hara were very much in the habit of putting their thoughts in writing in emails. It is clear that Mr Hara's recollection that there were virtually no conversations orally between him and Mr Morton before the commencement of Mr Morton's employment is wrong. This does not however mean that Mr Morton's recollection is necessarily correct in every way.
Exhibit MM-1 which was the kernel of his case on the two-year point, does not expressly demand a two-year term. It does however expressly contain the representation that he would be paid a 1% override in the second year.
I note that Mr Morton was clear that he would not wish to come to Australia for a period of one year but although I suspect this may well have been mentioned in oral discussions between him and Mr Hara, either in November or in December of 2006, I do not accept that he has established that he was ever guaranteed a two-year term. Mr Morton is a man who impresses me as having a very acute appreciation of his interests. He is not the sort of person who would have demanded a two‑year period and got it without demanding that it be recorded in writing. Even allowing for the fact, as I accept, that he entered into the contract on the basis of his earlier conversations with Mr Morton, the document sent to him in December 2006 was plainly terminable on what was extremely short notice and I think it is entirely improbable that there was a binding antecedent agreement for a two-year minimum term. If there had been, Mr Morton would not have signed the document and returned it without comment.
On the other hand, I accept Mr Morton's evidence that there was plainly discussion of what would happen in the second year. He had a clear unambiguous representation that in the second year, he would get 1% of gross profit. It is clear to me that he would not have left his home in England and come to Australia had that representation not been made.
I have no doubt that it was in both Mr Morton's and Mr Hara’s minds that he would work for a second year but I do not think that Mr Hara went so far as to guarantee him such a term. I note that although
Mr Hara invited Mr Morton to call him “anytime” by email on
6 December 2006(document R12) there is no subsequent email that suggests any such call took place.
Nonetheless, the passage of emails, and most particularly perhaps R13, shows that the letter from which MM-1 eventually sprang was seen by Mr Morton as an offer (and I have no doubt it was intended to be so seen) and also confirms that the override deal was central to Mr Morton's decision to take up a position.
At this stage, it should be observed that Interpro was not doing well at this stage. Interpro had a total of 127 contractors in November 2006. By March 2007 when Mr Morton started work, that figure was down to 115.
On 7 February 2007 Mr Hara sent Mr Morton an email (R32) which said relevantly:
“The contract guys are struggling right across the business (Sydney, Melbourne, Brisbane, ACT). Nationally our base has lost around 50 contractors over the last five months (410 to 360‑odd), we simply do not have enough business coming through the front door.
Melbourne has been a little sheltered from this, however we have still dropped to 115 out as of this week.”
It is clear that Mr Morton was employed on the basis that he would be able radically to raise the number of contractors-out and that he would be rewarded substantially should he be able to do so. I note that a nationwide drop of fifty contractors was regarded as significant.
The business of Interpro is in the placing of contract staff in the IT industry and it is clear from the evidence before me that Mr Morton had considerable skill in his knowledge of the margins, skills in equipment and placement and the like. It is also clear that it is a ferocious “dog-eat-dog” industry. There are creatures known as “R2Rs” in the industry who make a living by doing no more than obtaining the services of the sort of contract staff with whom Interpro deals and getting them to sign up for them or others at placement agencies. There is clearly no great employee loyalty. It is noteworthy that Mr Morton received ongoing offers from competitors throughout his employment with Interpro.
As early as 14 December 2006 Mr Hara told Mr Morton by email of a company called Courts Global Pty Ltd, which is the Second Respondent. This was a payroll company which performed payroll tasks and functions for Interpro.
A matter raised in the course of the proceeding was who was the true employer. There is no possible doubt that Mr Morton's true employer was Interpro. His letter of offer was from Interpro and all the documentation that had anything to do with his engagement was from Interpro.
Nonetheless, on 26 February 2007 Mr Hara forwarded to Mr Morton, amongst other things, a contract. That was a purported consultancy agreement to be made not between Mr Morton and Interpro but between him and Courts Global.
Mr Morton replied on 28 February querying this arrangement and received a response on the same date (R41) from Mr Hara. Relevantly that said:
“Nature of your employment is full‑time, and Interpro is the company you work for, while Courts Global are the payroll employer.
No need to invoice - your[sic] paid as perm a normal employee/employer relationship.”
The consultancy agreement with Courts Global was always in my view something of a sham. Courts Global always was, as counsel for the Respondents conceded, nothing more than a pay conduit. Mr Morton never provided Courts Global with any services whatever and the delineation of him as an independent contractor to Courts Global (which was after all the central kernel of the document) was false.
The one thing one should say about the Courts Global document is that the schedule of bonuses at the end was, as Mr Morton says, clearly annexed to the offer of contract sent to him in December 2006.
Once Mr Morton started work on 7 March 2007, he was rapidly given the consultancy agreement and told to sign it. I accept Mr Morton's evidence that he was told not to worry about it and that it was “strictly for payroll”.
Thereafter, things essentially went well. By July 2007 Mr Morton was promoted and by about August and September, business had increased to a point where it was necessary to separate out a group of better, bigger clients who were thereafter looked after, at least for some months, by Mr Pattinson.
Although Mr Hara was not prepared to concede this, numbers of contractors increased significantly and I accept Mr Morton's evidence that the reason for the division of work to Mr Pattinson was his own success in building things up.
In this regard I should interpolate and say that despite some incongruities here and there in his evidence, Mr Morton was an extremely credible witness. He answered questions responsively, clearly and in my view, generally extremely credibly.
Mr Hara, the primary contrary witness, while generally responsive, was clearly erroneous in a number of important respects in his evidence and his demeanour was less inclined to promote confidence.
Not only was he inclined not to give Mr Morton proper credit for such successes as he had had, Mr Hara also was plainly instrumental in the Respondents’ failure to comply with Court orders as to discovery. This is a matter to which I shall come in due course.
I do not have the records of contractors-out numbers prior to September 2007. It seems common cause, however, that at some point the First Respondent decided to integrate into its contractors-out a number of contractors-out placed through two other companies within a larger group, known as Pegasus and Radius. Mr Hara says that on 13 July 2007, some 28 Pegasus and seven Radius employees were added. This of course would increase the numbers by 35, which from 115 would take them to 150.
Mr Morton's evidence was that the numbers concerned were much smaller and that in any event, once these new employees were added, they simply became part of his responsibility in any event.
The 1% override on gross profit was never qualified in any way. It simply meant, as I find, that however many contractors Interpro had formed the basis upon which the relevant calculation would be made.
Thus, albeit unintentionally perhaps, Interpro increased the number of contractors itself to a point where Mr Morton arguably became entitled to his contractor-out bonus.
Prior to the provision of the relevant documents, Mr Morton said that there were over 175 contractors, and even suggested a high point of 190. Mr Hara's corresponding evidence was that 168 was the highest number ever reached.
Well into the trial, Interpro was compelled to produce the documents from September 2007 till February 2008. These show a picture markedly different from the more miserly assertions previously advanced by Mr Hara. Mr Hara's evidence was essentially to the effect that Mr Morton had had very little success in raising contractor numbers. It is apparent however that from mid-September 2007 onwards, certainly through until the end of November, the contractor numbers were well in excess of 160 and reached a high point of 175 for the period November 2007. They never thereafter went below 150 and were close to 160 or thereabouts until the end of Mr Morton's employment.
While neither of the two witnesses was exact, the fact is that Mr Morton's initial estimate of 175 was close to the mark, whereas the picture sought to be painted by Mr Hara was niggardly and understated.
The full records of the contractor numbers were not provided as part of the discovery process, notwithstanding that they should have been. Mr Hara gave only a snapshot which, as it happened, was far more favourable to Interpro than the full documentation showed was the case. It was said that the failure to produce these documents was an oversight. I am prepared to give Mr Hara the benefit of the doubt and accept that he simply responded to three particular dates indicated by his legal advisers, all of which happened to be less than wholly true if considered in isolation. Nonetheless, Mr Hara is an intelligent man. He would reasonably be taken to have understood his obligations in the discovery process. While he is obviously no doubt a busy man with many calls upon his time, his failure to produce the documentation, produced quite readily once it was pressed for in cross‑examination, suggests a reluctance to do Mr Morton credit. This attitude in my view springs from the very considerable hostility felt by Interpro to Mr Morton and is more likely I suspect to have operated subconsciously than consciously. Nonetheless, it is an episode that does the Respondents and Mr Hara no credit.
By about October-November 2007, a new management team came in to run Interpro. A Mr Zammet, a forceful off-stage presence, decided that the then extant bonus scheme was too beneficial to employees and not sufficiently so to Interpro. He wanted to move from a bonus structure based on turnover (the 1% override) to a bonus structure based on how much money Interpro made on that turnover. The 1% structure, which I accept had been in place generally for a senior employee such as Mr Hara and Mr Morton, was to go. This decision by Mr Zammet was really the cause of the breakdown in the relationship between Mr Morton and Interpro.
By January 2008 Mr Hara, who seems to have accepted the proposed new changes quite readily, was in the position of telling Mr Morton that his 1% was to disappear and be replaced by a series of payments rather more conditional in their nature.
Mr Morton was not the man to take such changes lying down. He rapidly wrote back to Mr Hara, in effect insisting upon the original deal. Tellingly, his email of 1 February 2008, R65:
“I seek clarity in income, which you have always known and when we originally negotiated the deal from London, % GP was always part of the deal.”
It is also clear from that email that by this stage at the very latest, Mr Morton had come to the conclusion that things were perhaps likely not to work out. He was, as I find, already and not improperly, considering alternatives. He made express reference in the email as follows:
As advised I receive innumerable calls from R2R’s and historically I have not entertained them, as you and I shook hands on a deal and I am a person who values these things much higher than a contract. However as the deal has now been changed then all bets are off.
Any suggestion that Mr Morton's performance of his duties had been inadequate must be set against the fact that from 1 January 2008 he received a $10,000 pay increase confirmed by Mr Hara’s letter of 9 January 2008 (annexure M to Mr Hara’s affidavit sworn 9 December 2008).
On 1 February Mr Morton says, and I accept, that he gave a short typewritten notice of resignation to Mr Hara. He and Mr Hara then spoke for some considerable time and it was that which led to the email (document R65). Although R65 is not on its face consistent with the prior letter of resignation, I accept Mr Morton’s evidence that this was a response requested by Mr Hara in the light of their discussions.
That was met by a reply requiring Mr Morton to have a meeting on 5 February 2008.
At this point, the contrast in the parties' accounts of the events becomes more stark.
Mr Hara says that Mr Morton turned up on 5 February 2008 in casual clothing, refused to discuss the various security concerns which Mr Hara wished to raise and said words to the effect that he had a "ball-brushing offer" he had to go and sign and was thereafter escorted from the building.
Mr Morton completely denies using the particular phrase and says he was dressed normally. He says that he attended and was told he was being dismissed. In his evidence, Mr Morton said that he was surprised he was being dismissed because he thought he had already resigned. That evidence was given with conviction and I accept it. I accept, however, that in response to the dismissal he made the remark attributed to him by Mr Hara.
What had happened quite clearly was that each side was getting wary of the other. Interpro’s officers had already moved to start checking Mr Morton's emails. They thought they had found a pattern of dishonest conduct on his part, removing sensitive material with a view to setting up in opposition.
I find however that the documents Mr Morton had taken home were taken home by him for no more than proper reasons. I accept the explanations he has given. His evidence under cross-examination was impressive. If Mr Morton had wished to act dishonestly, it was well within his power to simply print the emails at work or photocopy the documents that he took home. No‑one would ever have been any the wiser. Mr Morton is an intelligent man and he would be well aware that an email trail could be dangerous for him and in my view, he was quite acute enough to realise that Interpro by this stage might be looking more closely at anything he did.
In the ultimate therefore it is clear that the representation made to Mr Morton that he would get a 1% override of gross profit in the second year was:
a)made in the pre-contractual negotiations in 2006;
b)relied upon by Mr Morton in making his decision whether or not to take the job;
c)dishonoured before the occasion for its application could even arise upon the first anniversary of his engagement.
Much was made by Interpro of what was said to be improper conduct by Mr Morton in arranging alternative employment before he ceased with Interpro on 5 March 2008.
It is true that there is evidence that would ground such a suspicion. Mr Morton says he started work with another employer, Peer Industries Pty Ltd, in late March 2008. There is a contract (exhibit R2) purporting to give a 30 January start date and another contract (exhibit R3) ostensibly signed “Feb 08”, although the start date on that document is “dependent on visa transfer”.
Furthermore, a pay slip, which Mr Morton says was his first (exhibit R1), appears to show salary and bonuses in amounts that would necessarily substantially pre-date the date upon which he said he commenced employment.
Mr Morton said he did not start work until he got visa clearance to do so and that occurred on 15 March 2008. He says he may have been paid some form of bonus for signing on but could not recall the details exactly.
This was one area of evidence where I found Mr Morton somewhat less than satisfactory. I think, as a very switched-on individual having a clear idea of where his interests lay, he started looking for work in mid to late January when the writing was on the wall for his contract with Interpro. Nonetheless, that does not mean that I think he behaved improperly in this regard. Employees are entitled to look for other work, especially where a very significant contractual benefit is clearly under threat.
What I think is more probable than otherwise is that Mr Morton entered into discussions with Peer in late January and these came to fruition in early February 2008 but I accept Mr Morton's evidence that he did not work until he had a visa transfer and that he enjoyed his break. The evidence once again was given with conviction and like most of Mr Morton's evidence, I accept it. What seems more probable to me than otherwise is that Mr Morton was paid from an early (albeit not precisely identifiable) point before his visa clearance took place, as a bonus to engage his services. That would of course mean that he started being paid prior to visa clearance and starting work. If one looks carefully at the exhibit detailing his pay from Interpro, it is entirely consistent with these conclusions. Although some of the allowances paid seem to be such as to suggest three months' employment by April 2008, that is self-evidently impossible. Salary was paid according to clause 9(a) of exhibit R2, “on the last business day of every month in arrears”. On any view, Mr Morton could not have accrued three months’ pay in arrears by April.
Exhibit R1 shows a record on 14 April 2008 for the period ending 30 April 2008. The same pattern was repeated in May but in July 2008, the date of payment is 30 July and is for the period ending 31 July 2008.
What I think happened is that Mr Morton did indeed start work on 15 March 2008. He received his first payslip on 14 April 2008.
I think he was, by agreement, paid from some earlier date as a sign-on bonus. Whether he was paid periodically in the time up to 14 April 2008 or in a lump sum I do not know, although I suspect the former. It would be logical for Peer and Mr Morton not to have recorded such payments until after Mr Morton’s visa clearance to avoid him breaching his visa conditions.
I think that Mr Morton was paid the full sums disclosed by exhibit R1 but I accept he did not actually do any work for Peer until 15 March 2008.
No particular analysis of the exhibit is entirely satisfactory. Mr Morton faced the incongruities in it with complete aplomb and was not only not able to explain them, but faced that failure with complete equanimity. I think his failure to explain arises from a guilty conscience of the fact that he was not being truthful about when he first started looking for his employment with Peer and indeed obtained it. Nonetheless, and accepting that he obtained by way of mitigation the sums disclosed in the pay exhibit, I do not think it is fatal to his credit and I think it is explained in the manner I have described.
It follows that I do not accept that Mr Morton misconducted himself.
I note that the Respondents pursued a cross-claim right up to trial, asserting the misconduct that I now find not to have occurred.
Interpro went to great lengths to bring in Mr Morton's records. They conducted a detailed analysis of his email dealings.
It is hard to avoid the impression that Interpro from a very early point was determined to make an object lesson of Mr Morton, whether to deter others or whether because those in authority took such a dim view of his conduct. It is noteworthy that following his departure on 5 February 2008, with lightning speed, Interpro pressed through its solicitors a demand for immediate return of materials allegedly improperly retained. It is clear that Interpro had formed the view that Mr Morton was misconducting himself prior to that date. It beggars belief to assume that instructions could issue and a letter of demand be drawn with that kind of speed without some antecedent thought.
Conclusions arising from these findings of fact
In my view it is clear that Mr Morton was the subject of a binding representation made to him by Mr Hara about the 1% commission override in 2006. He would never have taken the job without it. The effect of the representation was that he would receive this in year two as an alternative to his $50,000 guarantee in year one.
As I find, this representation became a term of his contract of employment. The document sent to Mr Morton in December 2006 did not have an all-terms clause and was no more than a brief encapsulation of some of the more important matters raised. I do not think, looking at the facts as a whole, Interpro can be said not to have intended to enter into a binding contractual term as to that 1% override. The fact that the purported contract with Courts Global was to a different effect is irrelevant. For the reasons already indicated, that document was never intended to have contractual effect. Exhibit
MM-1, and more particularly the representation about the 1%, clearly was intended to have contractual effect. It was an express offer by way of response to a query about a critical issue. Mr Morton accepted it by taking up the job.
The representation was plainly intended to induce Mr Morton to take up employment. He clearly would not have done so without it.
Taking exhibit MM-1 as a whole, it is quite clear that Mr Morton expressly raised the possible drop in his income in year two and was reassured by the express representation that he would have 1% override on branch revenue in year two which was likely, even on minimum revenue, to generate a sum approximating the guarantee he had in year one.
As Mr Hara, who after all made the representation, put it at trial, that was no more than an assertion that at that time employees at the level that both he and Mr Morton were would receive that 1% override. It was implicit in his position that it was open to Interpro to put in place some different arrangement as Interpro in fact ultimately did.
Taking exhibit MM-1 as a whole, Mr Morton would reasonably have assumed, and did assume, that he had a guarantee of the 1% override in year two. That is what was represented to him. Mr Hara did not say anything to suggest that the 1% override was removable at will. Had he done so, it is clear that Mr Morton would not have accepted the job.
I have already determined above that this became a binding term of the contract. It was also, however, a representation as to what would obtain in the second year of Mr Morton’s employment.
It was a representation made in trade and commerce, and was a representation made in relation to employment to be offered by Interpro as to the terms and conditions of his employment (s 53B TPA).
It was, of course, a representation as to a future matter. That brings us to the question of s 51A of the TPA. In my opinion, Mr Hara did not have reasonable grounds for making the representation. The representation that I find that he made was to the effect that Mr Morton had a guarantee that in his second year of employment, he would be paid a 1% override. In fact, as he presented his evidence at trial, and as was emphasised in the written and oral submissions of the Respondents, this was said to be no more than a mere representation and not a promise (see paragraph 67 of the Respondents’ written submissions).
I roundly reject that assertion. In the context in which they were made, and in particular in the context of the objections raised by Mr Morton during the negotiation process, the representation made by Mr Hara was plainly promissory. It was not qualified in any way.
Either Mr Hara knew that what he was promising could not be promised, in which case his conduct was misleading and deceptive, or he did not know, in which case he obviously intended it to be binding, and, to adopt the language of the Respondents’ submissions, promissory rather than mere representation.
Putting the matter shortly, to tell a prospective employee based in another land that a particular pay outcome will obtain in the second year of his employment (albeit if he performs well) and then simply not to provide it because you purport to unilaterally remove that benefit, is conduct that can properly be described as misleading and deceptive. It should be noted and emphasised again that Mr Morton performed well. Not only was he given the pay increase already referred to but as the exhibits show, in October 2007, his Melbourne office was the standout performer.
It follows that the conduct of the Respondents contravened s 53B of the TPA as well as the contract of employment.
Damages for breaches of the Trade Practices Act and of the Contract of Employment
I accept that there is simply no evidence as to what Mr Morton would have earned if he had remained in England. This means that the quasi-tortious approach often appropriate in TPA cases (see Gates v The City Mutual life Assurance Society Limited (1985) 160 CLR 1) to his damages cannot be sustained. His projected income in England simply cannot be contrasted with what he would have made had the contract continued according to its original terms and the representation.
Nonetheless, the TPA is remedial legislation to be given a beneficent approach. The authorities show that the damages are statutory in their nature. In Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 the Court said at 526
“It would not be right to conclude that the measure of damages recoverable under s 82(1) necessarily coincides with the measure of damages applicable in an action for deceit or in an
action for negligent misrepresentation. The measure of damages recoverable under s 82(1) can only be ascertained after a thorough analysis of those provisions in Pts IV & V of the Act for the contravention of which the statutory cause of action may be maintained.”
As is stated in Miller’s Trade Practices Act 30th Edition 2009 (paragraph 1.82.21 at p 823)
“Economic loss may take a variety of forms…central to all of those forms in s 52 cases is that the applicant has sustained prejudice or disadvantage as a result of altering his or her position under the inducement of the misleading conduct.”
Here, Mr Morton would not have come to Australia if he had not been offered the 1% override. I cannot say exactly what his position would have been because of the lack of evidence to which I have referred in paragraph 98. Nonetheless, as the Federal Court said in Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 4 FCR 450 at [68] (not part of the reported decision)
“The principle is clear. If the Court finds that damage has occurred, it must do its best to quantify the loss even if a degree of speculation and guesswork is involved…We emphasise, however, that the principle applies only when the court finds that loss or damage has occurred. It is not enough for a plaintiff merely to show wrongful conduct by the defendant.”
Here, I am satisfied that although the loss cannot be precisely quantified, loss has indeed occurred. I will never know exactly what Mr Morton would have made had he stayed in England, but I am satisfied that his level of expertise was such that he suffered loss by coming to Australia.
That observation must be qualified because Mr Morton has elected to stay in Australia and as I understand it, intends to remain here permanently. He has certainly not returned home in the period in excess of one year since he ceased work with Interpro.
Nonetheless, I am satisfied that Mr Morton, it is more probable than otherwise, would have made more money had he stayed in Britain than coming to Australia on the strength of the misleading representation.
This is a case where the march of events makes it appropriate that the wrongdoing of the Respondents be addressed according to the measure of damages in contract. That is of course also the methodology for the breach of contract action.
The difficulty here, however, is that on any view the contract was terminable. The fact is that Mr Morton signed a contract pursuant to which he could be dismissed on four weeks' notice. It was always open to the First Respondent to dismiss him on that notice.
I think that the only possible outcome of the claim for damages under this heading is his loss of wages from 5 February 2008 when his employment was terminated for four weeks. The difficulty in quantifying that loss is that one has to compare the payments received by Mr Morton as disclosed by exhibit R1 with what he was entitled to and would otherwise have received if he had remained in employment with Interpro for the four week period of notice. Mr Morton’s base salary was $10,900.00 with Peer and his $169,000.00 guaranteed package with Interpro would have paid him $14,083.00.
It is not clear to what extent the LAHFA (living away from home allowance) and other matters disclosed by exhibit R1 are replicated by similar payments made by Interpro.
Doing the best I can, and bearing in mind that I have already indicated that I accept that Mr Morton was paid the amounts set out in R1, it seems to me he has a loss under this heading of $4,083.00.
The claim for damages for breach of the Contractors-Out bonus
It is common cause that Mr Morton had to get contractor numbers up to 150 or 175 for a minimum of four consecutive weeks to qualify for the bonus. The bonus was a one-off which once achieved was not, it would appear, repeated.
The records ultimately tendered show that for the periods 1 October 2007, 8 October 2007, 15 October 2007 and 22 October 2007, a figure in excess of 150 was reached. There was no period of four consecutive weeks where a total of 175 was exceeded. There is an annotation to the contract that:
“Note - the C'out numbers need to be on site for a minimum of four consecutive weeks to qualify for this bonus.”
It suggests more probably than otherwise to me that it was a one-off bonus, not a bonus paid each time there were four consecutive weeks achieved. Accordingly, while the total of 150 was in fact exceeded continuously from 1 October 2007 until the end of Mr Morton's employment in February 2008, he is in my view entitled only to $10,000 under this heading.
Interpro, as I have indicated earlier, sought to denigrate Mr Morton's work and to disaggregate by removing the Pegasus and Radius contractors. This is entirely inconsistent with its own figures which intersperse them in a fashion in which no differentiation is made with these other alleged different employees. The evidence is not wholly clear as to how many Pegasus and Radius employees stayed in that capacity. Mr Hara, who seems to have known more about them than anyone else, said that some transferred over time. On any view, as I have earlier said, the contract did not envisage anything other than that Mr Morton would be paid on the contractor totals as they were recorded by Interpro and that the total as now available produced this result.
To the extent that it is relevant, it seems to me on any view that even if one gave Interpro full credit for the 35 transferred from Radius and Pegasus, producing a total of 150, Mr Morton plainly managed the incorporation of the extra employees and managed to expand the numbers quite substantially for an extended period of time by a total of between 10 to in excess of 15%. Given that things were abject for Interpro at the time he took over, one might feel that he had done well in generally difficult economic circumstances.
The claim for the quarterly bonus
It is sufficient to say here that I accept the evidence of Mr Hara. Although Mr Morton always thought he should be paid on globalised employee results, it was made clear in MM-1 that this would not be the case and I accept that the records show that Mr Morton has been paid everything to which he is entitled.
Unpaid annual leave
This is an area of some difficulty because on any view, none of the records are entirely satisfactory.
It seems reasonably clear from exhibit R13 that Mr Morton took unpaid leave in April 2007. This is consistent with the necessity on his part to return to Britain and organise his affairs over there. All 11 days of that leave is recorded as unpaid leave on exhibit R13 but his pay record shows only the deduction of some eight days. This inconsistency is inexplicable. It does not give rise to confidence that these leave records are wholly accurate.
There is a record of unpaid leave period of some two weeks in July and that is supported to an extent by the absence of email transmissions by Mr Morton's computer on those dates. The trouble I have with that, however, is that Mr Morton roundly denied taking any leave in July 2007. He had only been in employment for some three or four months and had already had in excess of two weeks' leave, albeit unpaid. Mr Hara was not able to recall anything in any detail about Mr Morton's leave. That is surprising, since they worked so closely together and Mr Morton would have required approval to take leave in advance.
Although the company's leave records suggest that Mr Morton took two weeks' leave, I accept that they are wrong. Mr Morton's evidence was once again given with conviction and although he went so far as to concede that it was possible he was wrong (a concession made attractively) in substance he stuck to his evidence and I accept it.
I accept that Mr Morton took 12 days' leave over the Christmas period and although he points to email transmissions on two of those days, I think it is more probable than otherwise that he did indeed take 12 full days of leave. The return trip to Europe is a long one and it is reasonable to suppose that he took more than less leave at that time. The email records were more probably than not automatically generated.
Accordingly, given that Mr Morton's leave accrued on a monthly basis, it is plain that after 11 months, he was entitled to 18.3 days' leave of which he had taken 12 days and therefore he is entitled to payment of 6.3 days.
Unpaid wages
Interpro concedes that its withholding of two days' pay was wholly interrelated with the annual leave point and Mr Morton must therefore succeed on this matter as well.
Conclusion
I have therefore concluded that Mr Morton is entitled to $4,083.00 pay for his breach of contract and Trade Practices action. He is additionally entitled to $10,000 for his contracting-out bonus, together with 6.3 days' annual leave and two days' pay for unpaid pay.
I will hear the parties as to any ancillary matters.
I certify that the preceding one hundred and twenty-four (124) paragraphs are a true copy of the reasons for judgment of Burchardt FM
Deputy Associate:
Date: 14 May 2009
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