O'Brien v F J Trousers Pty Ltd
[2000] VSCA 107
•14 June 2000
SUPREME COURT OF VICTORIA
COURT OF APPEAL Not Restricted
No. 4179 of 1998
| JOHN O'BRIEN and KEVIN BISHOP |
| v. |
| F.J. TROUSERS PTY.LTD. |
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JUDGES: | CALLAWAY, BATT and BUCHANAN, JJ.A. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 6 June 2000 | |
DATE OF JUDGMENT: | 14 June 2000 | |
MEDIUM NEUTRAL CITATION: | [2000] VSCA 107 | |
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CONTRACT – Employment – Redundancy – Acceptance of redundancy on terms inconsistent with previous rights – Previous rights extinguished.
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APPEARANCES: | Counsel | Solicitors |
For the Appellant | Mr T.P. Tobin | Stringer Clark |
| For the Respondent | Mr M.J. Colbran, Q.C. Mr B.J. Lacy | T.J. Mulvany & Co. |
CALLAWAY, J. A.:
The first appellant, Mr John O'Brien, began his employment with the respondent in 1961 when he was aged 17. After seven years he became a lay planner. He was a member of the Federated Clerks' Union ("the Clerks' Union") until he became a member of staff in 1973. Although he remained a member of staff, he rejoined the union in the mid-1980s. In 1990 he became a shop steward and remained a shop steward until his employment with the respondent ended on 29th March 1993.
The second appellant, Mr Kevin Bishop, began his employment with the respondent in 1976. In the mid-1980s he, too, became a lay planner and worked with Mr O'Brien. They were the only lay planners employed by the respondent. Although he became a member of staff, Mr Bishop was at all times a member of the Clerks' Union during his employment with the respondent, which also ended on 29th March 1993 in circumstances to be described.
On or about 19th November 1984 an agreement regarding termination of employment ("the collective agreement") was signed by the president and the secretary of the combined shop stewards' committee and two managers of the respondent. The agreement did not say who the parties were, but the agreed summary of facts states that they were the committee and the respondent. The agreement purported to set out "the various ways in which an employee may cease employment with the Company" and to state "the obligations of the Company and of the employee in each case". Clause 2.2 dealt with retrenchment through redundancy. Paragraph (viii)(f) provided that such employees would receive "retrenchment compensation" that was in excess of the applicable award.
The collective agreement was negotiated by the unions with the respondent over a period of years prior to November 1984. The terms of the redundancy package it contained ("the F.J. redundancy package") were disseminated among employees of the respondent. A copy was placed on the notice board and the terms of the agreement were reproduced in the respondent's administration manual. Both the appellants were aware of those terms and it was generally assumed that they applied to all employees irrespective of the union, if any, to which they belonged. In particular, in making retrenchment payments, the respondent made no distinction between employees who were members of the Textile Clothing and Footwear Union ("the Clothing Union") and members of other unions and employees who were not union members.
In December 1992 and for some months prior thereto the respondent was in a difficult financial position, so much so that it was faced with the prospect of being unable to pay its employees holiday and other pay for the Christmas period. Negotiations took place with possible buyers with a view to an injection of capital. One such possible buyer was Pelaco Pty. Ltd. ("Pelaco"), but it was not willing to conclude an agreement whilst the respondent's existing liability with respect to the F.J. redundancy package remained.
After a meeting between representatives of the Clothing Union and representatives of the respondent and Pelaco on 16th December 1992, a meeting of all the respondent's employees was held on 21st December 1992 in the canteen of the respondent's factory at Warrnambool. The meeting was called by management in order to obtain approval by employees of a reduction in the respondent's liability for redundancy payments from the level set out in the collective agreement to the level set out in the award. After management representatives had addressed the meeting, the national industrial officer of the Clothing Union asked them and employees other than Clothing Union members to leave the meeting while a vote of the Clothing Union members was taken. The appellants were among those who left the meeting and they waited in the foyer while the vote was taken. The members of the Clothing Union voted in favour of accepting a reduction in redundancy payments to the level set out in the award.
Neither of the appellants authorized the Clothing Union to act on his behalf at the meeting and there was no evidence that any other union, such as the Clerks' Union, authorized the Clothing Union to act on its behalf or on behalf of its members at the meeting. Moreover, while they were waiting outside, an official of the Clerks' Union, Ms Lynch, told management representatives that the decision by the Clothing Union was not binding on her union. Management representatives responded by saying that they would have to talk further with the Clerks' Union. They made no claim in that discussion that the Clothing Union had authority to trade away the entitlement of Ms Lynch's members with respect to the F.J. redundancy package.
On 24th December 1992 the Clothing Union entered into a deed of agreement with the respondent, other Fletcher Jones companies and Pelaco, acting through a company which proposed "to purchase the assets and shares of" the respondent and those other companies. The deed terminated the collective agreement, but the Clothing Union was not authorized to execute it on behalf of either of the appellants or on behalf of any other union.
Although the deed was intended to apply only to members of the Clothing Union, the position adopted by the respondent was that no employee remained entitled to the F.J. redundancy package. In taking that stance the respondent adopted what it perceived to be a consistent position. As its personnel manager said, with disarming simplicity, in a letter to the appellants' solicitors dated 13th September 1993:
"During the life of the first agreement between the Company and the Clothing and Allied Trades Union, the enhanced employment terms and conditions were applied equally to all employees, notwithstanding that their representative trade unions had not sought to enter into any similar agreement with the Company.
Following the formal signing of the second agreement between the Company and the Clothing Trades Union on 24th December 1992, the employment terms and conditions for all employees were applied in accordance with their respective Industrial Award."
It will be observed that, in that letter, the collective agreement was itself treated as one between the respondent and the Clothing Union.
On 19th March 1993 shop stewards, including Mr O'Brien, attended a meeting with management representatives of the respondent, who informed them that retrenchments would be made on 23rd March 1993 and called for volunteers. At a meeting of all employees held later that day one of those representatives, Mr Colasante, told the meeting that the proposed retrenchments were to include 40 persons in the manufacturing section and two in the clerical section.[1] (The position of a lay planner is a clerical position.) He asked for volunteers and said that the same redundancy payments would be made both to those who volunteered and to those who were compulsorily made redundant by the respondent. I shall return to the terms of that assurance later.
[1]I take this from the agreed summary of facts. Mr Colasante's evidence, given from memory, was that there were to be 41 in the sewing area, two or three in the clerical area and a couple in the maintenance department. Mr O'Brien said there were going to be something like 46 total redundancies.
The respondent subsequently agreed with the unions to postpone the date for retrenchment to 26th March 1993 in order to give employees more time to consider voluntary redundancy. In various discussions between management and shop stewards it was made clear that all redundancies would be on award conditions. In those discussions Ms Lynch and Mr O'Brien maintained that the Clerks' Union still had the benefit of the F.J. redundancy package and that they had not traded it in the sense that the Clothing Union members had, offering something and gaining something else in return.
A further meeting of shop stewards and management representatives took place on 26th March 1993, at which the shop stewards reported that no one had volunteered for redundancy. Mr O'Brien's name was on the list for retrenchment, but management indicated a willingness to retain him for a trial period of one month with a review at the end of that period.
Over the following weekend the appellants discussed the position. Mr Bishop decided that, if Mr O'Brien took voluntary redundancy, he would do the same. On 29th March 1993 they told management that they would accept voluntary retrenchment and each of them signed a "termination of employment" document. The reason for termination in Mr O'Brien's document was stated as "retrenchment" and the reason for termination in Mr Bishop's document was stated as "voluntary redundancy". They were paid redundancy payments and other payments, including five and four weeks respectively payment in lieu of notice, and their employment ceased on that date.
At the time they took voluntary redundancy both the appellants knew that the respondent would pay only an amount calculated in accordance with the award. When they informed management that they would take voluntary redundancy, they did not state that they were entitled to the additional benefits of the F.J. redundancy package and, although they had in mind to pursue that claim later, they did not tell the respondent. They took the money they were offered. They were not asked for, and did not give, an express release of the additional rights that Ms Lynch and Mr O'Brien had earlier asserted and that the appellants were later to claim, first in correspondence and then in the proceedings in the County Court from which this appeal is brought.
Those proceedings raised a number of issues of law and fact, in connexion with which the learned trial judge reached the following three conclusions:
1.Immediately prior to the meeting of employees on 21st December 1992 the appellants had enforceable rights to the F.J. redundancy package. That was either because it had become a term of their contracts of employment, the respondent having offered the package by disseminating its terms among its employees and the appellants having accepted that offer by continuing in the respondent's employment, or because it was the subject of a promissory estoppel.
2.Neither the resolution passed at the meeting on 21st December 1992 nor the deed of agreement executed three days later brought the appellants' rights to the F.J. redundancy package to an end. They were excluded from the meeting and neither they nor the Clerks' Union had authorized the Clothing Union to act on their behalf, then or in executing the deed, and management was at all times aware of the position of the Clerks' Union members.
3.By taking voluntary redundancy the appellants lost their rights to the F.J. redundancy package. That was either because there was a variation of their contracts of employment or because they were thereafter precluded from relying on the promissory estoppel or because there was an accord and satisfaction.
Judgment was therefore given for the respondent, but the order for costs took account of the late stage in the proceedings at which it had pleaded accord and satisfaction.
The notice of appeal and a notice of contention filed on behalf of the respondent called in question the first and third conclusions that his Honour reached. (A challenge to his order as to costs, contained in the notice of contention, was not pressed. It would have required a notice of cross-appeal and in any event had little prospect of success.) Counsel on each side prepared careful written submissions, appropriately cross-referenced to the appeal book. As a result, oral argument was responsibly confined to a narrow compass. Counsel were given leave to file memoranda referring to certain further portions of the transcript, the relevance, or possible relevance, of which emerged in the course of that argument. I do not intend to convey any lack of appreciation for the work that was done by both sides in proposing that we dispose of the appeal on a very simple basis, which makes it unnecessary to consider all the questions that were raised.
I shall assume without deciding, in favour of the appellants, that they did have enforceable rights to the F.J. redundancy package arising in one or other of the ways his Honour identified. Their difficulty is that they accepted voluntary redundancy from the respondent knowing that it was offered on award conditions. They were not legally entitled to be made redundant, so the company provided valuable consideration for the agreement that must be taken to have been made on 29th March 1993. One of the terms of that agreement, redundancy on award conditions, was inconsistent with the continued assertion of the appellant's rights to the F.J. redundancy package. It is of no present consequence whether that is regarded as a variation of their contracts of employment, as a contract inconsistent with the continued assertion of those rights, as conduct rendering the continued assertion of those rights, in so far as they derived from promissory estoppel, inequitable or as conduct making it no longer inequitable for the respondent to resile from a promise that it had made. The essential point is that a bargain was made, for valuable consideration, that was inconsistent with, and therefore necessarily excluded, the rights the appellants formerly enjoyed.
Mr Tobin sought to overcome that difficulty in two ways. First, he pointed out that the respondent was bound by law to pay the award entitlements. Accordingly, he submitted, the respondent furnished no valuable consideration. I do not accept that submission, because, although the company was bound to pay the award entitlements if an employee was made redundant, it was not obliged to make an employee redundant. The valuable consideration consisted in bringing about the circumstances in which the obligation to pay the award entitlements arose. It matters not that it suited the respondent to do so. Moreover, as we shall see, if the appellants had not approached management jointly, only one of them would in fact have been made redundant.
Secondly, counsel submitted that management had represented to the appellants that those employees who accepted voluntary redundancy would be in the same position as those who were compulsorily retrenched. I shall refer to the relevant assurance or representation as "the promise of equality". If the appellants had been compulsorily retrenched, so the submission proceeded, they would have been entitled to the F.J. redundancy package and it would have availed the respondent nothing to pay them only part of their entitlements. Counsel for the respondent replied that no such promise had been pleaded, opened or argued below and it could not properly be raised on appeal.
That may very well be so but, more fundamentally, the submission is not sustained by the evidence. All that management represented was that those taking voluntary redundancies and those who were compulsorily retrenched would receive the same benefits, namely the entitlements under the award. There is nothing in the evidence to support the suggestion that there was a promise of equality in any other sense. I shall refer briefly to some of the evidence to make that clear.
Speaking of the meeting of employees on 19th March 1993, Mr Colasante said:
"Did you announce when the redundancies were to take place that were contemplated then?---Yes, we announced that the redundancies were to take place the following Tuesday. We encouraged and asked them to please think it over the weekend. If there was anyone who was thinking of leaving the company or anyone who was volunteering they would all be treated in exactly the same fashion, they would all get – whether you were volunteering or being put off you would get the same redundancy payout.
Was that stated, what that would be?---Yes, that was the award conditions."
In cross-examination he said that those who opted for voluntary redundancy "would get the same payment as if they were made redundant" and later that both groups "would get exactly the same entitlement". That cannot be taken to mean the same payment or entitlement as if they had been made redundant and it transpired that they were entitled to the F.J. redundancy package.
Mrs Margaret Martin attended the meeting of employees on 19th March 1993 in her capacity as personnel manager with Pelaco. When she was asked what was said at the meeting, she said it was exactly the same as had been said to the shop stewards in the morning, namely that there would be redundancies the following week and that they were expected to take place on the following Tuesday. She continued:
"That the provisions or the circumstances of the redundancies would be strictly as laid down by the industrial awards, and if anybody had been thinking or was contemplating or had any ideas of leaving the company in the foreseeable future, if they would come forward, give their name to their supervisor and – for voluntary redundancy. But it was also stressed that if they did that that would really be on the basis of saving another workmate's job, that the provisions would be the same."
The true nature of the promise of equality is apparent from that answer.
Quite apart from its not being sustained by the evidence, the version of the promise of equality for which Mr Tobin contended would, if enforceable, have the effect that each of the appellants would be entitled to the F.J. redundancy package despite the fact that only one of them was at risk of being retrenched. As Mr Bishop explained in the course of his evidence, there were only two lay planners and the respondent would not have retrenched them both. Mr Garner, one of the respondent's managers, gave evidence to the same effect.
In the course of his submissions Mr Tobin emphasized the evidence showing that it was the respondent's position that the appellants had ceased to be entitled to the F.J. redundancy package in December 1992. His memorandum filed after the conclusion of argument contained further reference to that point. He contended that, in those circumstances, the offer of voluntary redundancy in March 1993 was not intended as an offer in substitution for the appellants' entitlements to the F.J. redundancy package. For my own part, I am unpersuaded by that argument. The point of substance lies not in the respondent's intention, nor in whether there was an offer from the respondent or only an invitation to treat, but in the fact that the agreement that must be taken to have been made on 29th March 1993 was supported by valuable consideration and was inconsistent with the continued assertion of the appellants' previous rights.
I shall set out one further passage from the evidence. Speaking of the meeting between shop stewards and management on 26th March 1993, Mr O'Brien said:
"When Mr Gowty attended, and those other persons that you refer to were also in attendance, what advice did you receive from Mr Gowty as to the retrenchment agreement that existed between yourself and the defendant?---Mr Gowty's words to us, and they were very simple, he said I am not going to pay anyone onepenny or one cent more than I'm paying to the Clothing and Allied people. So in other words, that's it fellows, no-one is getting any more, the only redundancy package is what we now have in place, which is the award."
Mr Gowty was the managing director of Pelaco. That evidence militates against the contention that the promise of equality went beyond the receipt of the same benefits, being the benefits under the award. It also shows, on an objective analysis, the nature of the bargain the appellants made with the respondent three days later.
For these reasons I would dismiss the appeal.
BATT, J. A.:
I agree that this appeal should be dismissed, substantially for the reasons given by Callaway, J.A.
BUCHANAN, J.A.:
For the reasons stated by Callaway, J.A. I agree that the appeal should be dismissed.
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