O'Neill v Medical Benefits Fund
[2001] FMCA 61
•9 November 2001
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| O’NEILL v MEDICAL BENEFITS FUND | [2001] FMCA 61 |
| TRADE PRACTICES – Misleading and deceptive conduct – representation of secure long term employment – insufficient evidence of damages – declaration granted. |
Brown v Jam Factory Pty Ltd (1991) 53 FLR 340
Wheeler Grace and Pierucci Pty Ltd v Wright (1989) ATPR 40,940
Cummings v Lewis (1993) 113 ALR 285
Stack v Coast Securities No 9 Pty Ltd (1983) 5 TPR 130
Clarke Equipment Pty Ltd v Covcat (1987) ATPR 40-678
McCormick v Riverwood International Pty Ltd [1999] FCA 1640 (29 November 1999)
Stoelwinder v Southern Health Care Network [2000] FCA 444 Finklestein J
(7 April 2000) 2000 97 IR 76
Barto v GPR Management Services (1991) 105 ALR 339
Concrete Constructions v Nelson (1990) 169 CLR 594
Sellars v Adelaide Petroleum & others (1992-1994) 179 CLR 332
Equity Access Pty Ltd v Westpac Banking Corporation (1990) ATPR 40-994; (1989) 16 IPR 431
Argy v Blunts (1990) 94 ALR 719
Gould v Vaggelas (1984) 157 CLR 215
Sheldrick v WT Partnership (Aust) Pty Ltd [1988] FCA 1794 (7 September 1998)
WT Partnership (Aust) Pty Ltd v Sheldrick (1999) FCA 843 (25 June 1999)
Ricochet Pty Ltd and anor v Equity Trustees Executor and Agency Co and ors (1993) 113 ALR 30
Byrne v Australian Airlines Ltd (1995) 185 CLR 410
Hawkins v Clayton (1988) 164 CLR 539
Australian National Hotels Pty Ltd v Louis Peter Jager (2000) TASSC 42 (11 May 2000)
Malik and anor v Bank of Credit and Commerce International SA (in liq) (1995) 3 ALL ER 545; 1997 3 WLR 95
Burazin v Blacktown City Guardian Pty Ltd (1996) 142 ALR 144
Gates v City Mutual Life Assurance Society Ltd (1982) 68 FLR 101
Gokora Pty Limited v Montgomery Jordan and Stevenson Pty Limited and anor (1986) 4 ANZ Insurance Cases 60-727
Gates v City Mutual Life Assurance Society Ltd (1986) 63 ALR 600
Wardley Australia Ltd and anor v The State of Western Australia (1992) 175 CLR 514
Marks and ors v GIO Australia Holdings Ltd and ors (1998) 196 CLR 494
Trade Practices Act 1974
| Applicant: | KEVIN O’NEILL |
| Respondent: | MEDICAL BENEFITS FUND OF AUSTRALIA LIMITED |
| File No: | MZ 80 of 2000 |
| Delivered on: | 9 November 2001 |
| Delivered at: | Melbourne |
| Hearing Date: | 28 & 29 November & 1 December 2000 |
| Judgment of: | McInnis FM |
REPRESENTATION
| Counsel for the Applicant: | Ms K Parkinson |
| Solicitors for the Applicant: | Clark & Toop |
| Counsel for the Respondent: | Mr G McKeown |
| Solicitors for the Respondent: | Gadens Lawyers |
ORDERS
I declare that the respondent has engaged in misleading and deceptive conduct in breach of s 52 of the Trade Practices Act 1974 by representing to the applicant that employment with the respondent would be secure and/or for the long term.
The respondent pay the applicant’s costs including reserved costs, if any, to be taxed in default of agreement pursuant to Order 62 of the Federal Court Rules.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MZ 80 of 2000
| KEVIN O’NEILL |
Applicant
And
| MEDICAL BENEFITS FUND OF AUSTRALIA LIMITED |
Respondent
REASONS FOR JUDGMENT
Introduction
KEVIN O’NEILL (“the applicant”) seeks damages arising out of his employment with MEDICAL BENEFITS FUND OF AUSTRALIA LIMITED (“the respondent”) which had commenced on 10 June 1998 and was terminated effective from 3 July 2000.
The claim by the applicant against the respondent arises pursuant to representations allegedly made for and on behalf of the respondent to the applicant in or about May and June 1998 when the applicant was already gainfully employed with a former employer as a Contract Negotiator in the health insurance industry.
In his statement of claim, the applicant alleges that in or about February 1998 and about March 1998, he was approached by a recruitment consultant engaged for and on behalf of the respondent. At that time the applicant claims that he had been in a senior management position with his then employer for a period in excess of 12 years.
The applicant claims that in February 1998 and March 1998 he had been invited to accept employment with the respondent on certain terms and conditions. He claims that the terms and conditions of employment were made known to him by offers in letters dated
26 February 1998 and 12 March 1998 and in telephone conversations between the applicant and a Ms ROBERTA LAUCHLAN and with Ms HELEN LONGLAND. After declining the offers made, the applicant in his statement of claim, asserts that in May of 1998 he was again approached by a recruitment consultant and invited to accept employment with the respondent. Representations are alleged to have been made concerning the terms and conditions of employment with the respondent which are set out in the statement of claim as follows:
“(a)That the applicant will be provided with secure and long-term employment in Melbourne.
(b)That the applicant will be entitled to remain in the employment for the long haul.
(c)That the employment was at a senior management level with the respondent to remain at that level.
(d)That the duties and responsibilities undertaken by the applicant would not be altered without the applicant’s express consent.
(e)That the employment policies and procedures applying to the respondent from time to time would be applied to the applicant in his employment.
(f)That the employment would not be terminated without just cause or in a manner which was contrary to the policies and procedures of the respondent applicable from time to time.
(g)That the applicant would be accorded fair and equitable treatment by the respondent and in accordance with the mutual obligation of fidelity and good faith.”
The applicant relies upon representations both in writing, oral or to be implied and asserts that he is able to rely upon a document entitled “Contract of Employment” dated 8 September 1998, together with the Termination of Employment Policy, Redundancy and Retrenchment Policy and the Good Working Relationships Policy of the respondent. He further relies upon the conversations between himself, Ms Roberta Lauchlan and Ms Helen Longland in February, March, April, May and June 1998 and conversations between himself and the recruitment consultant in February, March, April, May and June 1998.
It is asserted by the applicant that the representations constituted misleading and deceptive conduct and that the respondent had thereby engaged in conduct in breach of s 52 of the Trade Practices Act 1974.
The alleged breach occurred first on 8 July 1999 when the respondent altered the applicant’s employment position without the applicant’s consent, by altering his duties and responsibilities. The applicant undertook duties on 8 July 1999 which had been allocated to him despite the fact that his new position was that of Contract Manager (Day Surgery) and that he was no longer Contract Manager (Acute Care Services) responsible for a budget and contractual negotiations of hundreds of millions of dollars.
In his statement of claim the applicant asserts that the representations were ultimately breached when the applicant’s employment was terminated by the respondent effective from close of business 3 July 2000.
As a result of the termination, the applicant claims damages for misleading and deceptive conduct and in the alternative has asserted a breach of his contract of employment and likewise claims damages arising out of that breach. Damages claimed by the applicant arise out of his alleged failure to obtain alternative permanent employment and include a loss of income, loss of career opportunities, damage to reputation and loss of career seniority.
In his further and better particulars of the statement of claim dated
9 October 2000, the applicant asserts an entitlement to an amount of notice and/or redundancy payment equivalent to two years’ salary together with an amount allocated to out-placement services. He indicates that he was earning $84,181 per annum at the time of termination of his employment. The loss and damage was said to be continuing, although at the hearing it was indicated the applicant had successfully commenced alternative employment, though the details of that employment compared with his former employment prior to engagement with the respondent was somewhat vague.
The respondent denied the claim and in its defence, whilst admitting the applicant had been recruited in the manner described, asserts that there was a first agreement with the applicant, made in or about April 1998, where the applicant agreed to provide the respondent with services as a Contract Manager (Acute Services) and following that agreement, a second agreement was entered into in or about September 1998 where the applicant agreed to continue to serve the respondent as its Contract Manager (Acute Services Provider Relations). The respondent, in its defence, further relies upon a third agreement entered into between the parties in or about July 1999 whereby the respondent claims the applicant agreed to serve as Contract Manager (Day Surgery). In all agreements the respondent relies upon its right to terminate the employment of the applicant by giving the applicant one month’s notice.
Both in the pleadings and in the evidence, the respondent denied that a representation was made for and on its behalf as to any long-term employment or that the applicant would be entitled to remain in employment with the respondent for the “long haul”.
Essentially the complaint of the applicant in the present case is that he had been in secure employment with a previous employer for a period in excess of a decade and had not been seeking alternative employment when he was approached by a consultant engaged for and on behalf of the respondent determined to recruit the applicant. During the course of the hearing, the process engaged in by the respondent is one which I had described as “executive head hunting”. It is clear that the task of the recruitment consultant was to effectively persuade potential employees to abandon current employment and in return accept a position which either had a greater challenge or greater remuneration, or both. There is no doubt in the present case that the applicant was enticed by the recruitment consultant away from his current secure employment at a time when he was then in his late forties.
The evidence
Evidence was given for and on behalf of the applicant by GREGOR ALLEN RAMSEY, the consultant engaged by the respondent. The applicant gave evidence and also called his former partner, Ms BARBARA ANN O’LOUGHLIN to give evidence in support of his application. The respondent relied upon evidence from LESLEY ANN McADAM, a business manager with the respondent since May 1988, and Ms HELEN LONGLAND who in 1998 assumed the position of National Manager for Acute Services with the respondent.
Both parties relied upon both oral and written submissions and it should be noted that a significant delay has occurred between the conclusion of the matter and delivery of this judgment. That delay, although unfortunate, has not affected the ability of the Court having regard to its access to transcript, to properly consider the matters before it in this application. The hearing was disrupted to the extent that there was illness suffered by Counsel and to that extent, a lack of continuity meant that it was desirable to obtain a transcript.
Dr Gregor Ramsey
The first witness to be called by the applicant, somewhat surprisingly, was Mr Gregor Allen Ramsey, the recruitment consultant who was engaged to act for and on behalf of the respondent. That employment arose through an agency referred to as TASA International. Mr Ramsey gave detailed evidence concerning his method of operation in the process of `head hunting’ executives who were already gainfully employed. In brief terms, Mr Ramsey said that he approached his task by first establishing the potential people who may have been involved in the health industry in order to determine those persons who may usefully fulfil the task of the respondent of a contractor/negotiator, or to use its formal title, “Contract Manager”. It was clear that a Contract Manager has to have good negotiating skills. Mr Ramsey gave evidence that he would follow leads given to him by people in the industry in order to target those persons who may be interested in the position. I gained a clear impression from Mr Ramsey’s evidence that the task of recruiting a Contract Manager such as the applicant is a very carefully planned and well organised event. After identifying the potential target, the recruitment officer then needs to establish what it might take to persuade the potential target to leave current employment.
There was a great deal of confusion about the sequence of events in terms of job offers to the applicant made by Mr Ramsey on behalf of the respondent. Nevertheless, the essential feature was that at first the applicant was reluctant to even respond to the initial approach by Mr Ramsey. Indeed, as both Mr Ramsey and the applicant indicated, there is an initial feeling upon being approached by a recruitment officer of being flattered, whether or not the approach is taken seriously. In any event the initial approach made to the applicant, according to Mr Ramsey, was to offer a position in Queensland. It is significant to note the evidence of Mr Ramsey in relation to the first approach and rejection by the applicant. In his evidence, Mr Ramsey stated the following:
“Did he give you any particular reasons why he was not interested in the position? --- The reasons were that you know he was happy where he was. He’d been in the position for some time. He had a wife, I think who was – had just established a business or a small – some kind of activity as I recall and it just wasn’t he thought feasible.”
During the course of this process, Mr Ramsey said that he was mainly in contact with Helen Longland and Roberta Lauchlan from the respondent. They had explained to him the purpose and nature of the recruitment and in particular the nature of the reorganisation that was then being undertaken by the respondent.
On the next occasion when Mr Ramsey approached the applicant, he said that he may be able to reconfigure the position so that it was in Melbourne, even though some travel might be involved. Despite the proposition of the applicant being offered a position in Melbourne, Mr Ramsey indicated that there was still not a strong interest expressed by the applicant as he indicated a degree of reluctance. According to Mr Ramsey the applicant had expressed a sentiment of “Why should I move from where I was with National Mutual to this job?” Mr Ramsey then tried to persuade the applicant that there were more opportunities in an organisation such as that of the respondent, and particularly with it developing a more national focus. He explained that it was good for people to change positions, particularly where the applicant had been in the same position for 10 years. A crucial part of the evidence of Mr Ramsey is found in the following exchange:
“Did you discuss with Mr O’Neill any particular concerns he had about leaving his current employment?---Yes, I think he said, “Look, I’m in a secure job now. I want to be assured that this job is a secure one that I’m going to.” And I would’ve said, “Yes, it’s like the other appointments we’ve made. It is secure as any job is these days and I’m quite careful about saying something like that.
Did he or you use any particular expression to describe the nature of the employment?---I can’t remember that I would’ve. The term that I try to avoid in these discussions is permanent because I think that has a connotation that – you know, nothing in this world is permanent in terms of one’s employment, especially these days, but I would’ve used words like ongoing and it’s a position that, you know, you’re appointed to without – it has no contract. I mean, either you’re appointed or you’re not, in my understanding of appointments except if there is a contract for a particular period, and anyway those issues were ones that the client would’ve taken up with Mr O’Neill at the point of appointment. In other words, whilst I can well get the potential person to the client and say, ”He said yes , that he’ll consider it with you.” Or, “Yes, he’s prepared to consider it,” there is still the opportunity, as happens from time to time, that when they meet each other and get down to trying to negotiate what the position is about they’ll withdraw.”
Upon further approaching the applicant, Mr Ramsey stated that on another occasion when discussing the position in Melbourne and asking the applicant to consider that position, the applicant wished to be assured that it was an ongoing position. Mr Ramsey was unable to recall whether the applicant used the expression “permanent”.
Significantly, Mr Ramsey said in his evidence that he informed the representative of the respondent accurately as to what the applicant had said to him during his conversation. In particular, he agreed that he had told them about the applicant’s concerns about security of employment. During the course of cross-examination, Mr Ramsey stated that the discussions at the early stage with the applicant were very much of a preliminary nature and that his task at that time was to represent his client in the best possible light and also present the opportunities that may be available for the person to be recruited. He agreed that he never received instructions that the position, whether in Queensland or in Melbourne, would be for a number of years’ duration, nor did he have instructions as to the notice period that might be applied for the terms of employment. He agreed that what he was essentially inviting the applicant to do was partake in negotiations, not a contract. This had been described to him by Counsel in cross-examination as a “invitation to treat”. Mr Ramsey indicated that the applicant “didn’t at any time ask me details of this contract.”
When he was taken to paragraph 9 of the statement of claim where the applicant refers to the fact that in or about May and June 1998, the respondent by its employees and by its agents, made representations to the applicant as to the terms and conditions of his employment, Mr Ramsey said when asked whether he made representations, “As I said before, I made representations to Mr O’Neill about his job opportunities.” He described his approach as being a very general approach and seemed to resist the suggestion that it was specifically an approach which defined terms and conditions of employment. He tended to promote the respondent as being a stable and well-respected company and to that extent agreed he would have said something like “Employment in it will be ongoing.”
Mr Ramsey could not recall ever using the expression that the applicant would be entitled to remain in employment for the “long haul”. He stated that he would not have used that expression. Mr Ramsey otherwise denied making representations concerning the level at which the respondent would be employed or that he would remain at that level, that the duties would not be altered without the applicant’s express consent, that the employment policies and procedures of the respondent would be applied to the applicant in his employment, that employment would not be terminated without just cause or in a manner contrary to the policies and procedures of the respondent or that the applicant would be accorded fair and equitable treatment by the respondent in accordance with mutual obligations of fidelity and good faith. That is, he othewise denied the representations (d) to (g) in paragraph 9 of the applicant’s statement of claim.
Mr Ramsey was taken to paragraph 4 (a) of the applicant’s further and better particulars which were filed on 6 November 2000 where reference is made on behalf of the applicant to a telephone conversation with Mr Ramsey occurring on or about 1 May 1998. In that particular, the applicant states that Ramsey “advised to the effect that the respondent was keen to recruit him to its employment, that the employment which was being offered was a permanent position and a long-term career position, a position for the ‘long haul’ and that the respondent was now desirous of offering the applicant a senior position based in its Melbourne Office”. Mr Ramsey recalls having a telephone conversation on or about that date, but could not recall the specific terminology referred to in the further and better particulars. Instead he stated, “I would have said to Mr O’Neill that they were keen to recruit him to its employment and the position was an ongoing one and he shouldn’t have any concerns about ongoing employment.” Again, when confronted with the details of the pleadings, Mr Ramsey certainly indicated that he had made representations of a similar nature and specifically stated, “I made representations that it was an ongoing career appointment.”
At the conclusion of his evidence, Mr Ramsey clearly indicated that he had no doubt the issue of ongoing security was an issue raised by the applicant with him during the course of his discussions and that he in turn raised those issues with the respondent through its representatives, Ms Lauchlan and Ms Longland.
The applicant
The Applicant gave evidence that he had been employed in the past in the Victoria Police Force, as a loss assessor/investigator in the insurance industry, a member of the Federal Police Force and then for a period of in excess of ten years involved in the medical health industry and in addition was self employed in a restaurant related business. It was his extensive experience as a Contract Manager in the health industry that led to the approach by Dr Ramsey. The Applicant whilst differing on the circumstances leading up to the discussions with Dr Ramsey gave evidence that he made sure he was not going to be in the new job for a short term and he recalled specifically discussing the matter with regard to the longevity of the job. He gave evidence of specific conversations with Dr Ramsey and also indicated that his then partner at the time had insisted that he should make sure that the new job was secure and for the long term.
The applicant gave evidence of an interview which occurred at the Melbourne office of the respondent with Ms Lauchlan and Ms Longland representing the Respondent. He was questioned on that occasion about his work experience and when asked why he applied for the position told the interviewer that he hadn’t applied but had been approached by Dr Ramsey. He recalled saying to Ms Longland that he wouldn’t be leaving his current employment for anything for a short term. He gave evidence that Ms Longland replied, “This is the for long haul, we’re changing the way we are doing business”. It was in that context that he told the interviewers that he was happy in his current employment and that he would not be leaving it for anything for a short term. The initial meeting related to a position in Sydney which ultimately was rejected by the Applicant. He believed incorrectly in my view that meeting had taken place in late March of 1998.
According to the Applicant after rejecting the Sydney position he then received a telephone call on his car phone from Dr Ramsey offering the same position but located in Melbourne. The Applicant gave evidence that this conversation occurred in the first week of May 1998. The Applicant again indicated that in the conversation with Dr Ramsey he had conveyed the view that he did not want a short term position and was told that the position was “for the long haul”.
The Applicant was taken to a letter dated 29 April 1998 (Document 6 in Exhibit R1) which was confirmation of an offer of employment with the respondent for the position in Melbourne. It should be noted at this point that the applicant’s evidence of a conversation making an offer to him in the first week of May would therefore seem to be incorrect. In any event the letter contained terms and conditions of employment which included a reference to the right of the respondent to dismiss the applicant summarily without notice in the case of serious breach of employment conditions and the right for “either party may terminate the agreement for any reason by the provision of one month’s notice”. The letter further stated, “MBF, at its discretion, may pay you one month’s (or part thereof) salary in lieu of notice.” The letter provided for appointment to the position of “Contract Manager Acute Services Provider Relations”. The position meant that the applicant had the major corporate hospital groups to negotiate with on a national basis for the respondent.
The Applicant gave evidence that he received a letter dated
17 August 1998 from Mr Goldman, National Contract Manager of the respondent adjusting the remuneration package and providing a revised employment contract. That revised contract was not executed. By letter dated 8 September 1998 revised employment conditions were forwarded to the Applicant by Ms Lauchlan and on
22 October 1998 the Applicant signed the document indicating acceptance of revised employment conditions. The remuneration in that revised contract was for the amount of $84,181.00 which included a salary component of $78,674.00 with a superannuation component of $5,507.00. The document signed by the applicant on 22 October 1998 was the first document which he had duly executed and provided for termination clause allowing for one month’s notice, summary dismissal of the applicant by the respondent in the case of serious breach of the employment conditions and a discretion to the respondent to pay one month’s (or part thereof) salary in lieu of notice.
It is appropriate to set out the applicant’s evidence in relation to the document dated 8 September 1998 which he had signed on
22 October 1998 as follows:
“But did you have a view about whether or not that document of 8 September 1998 represented the terms and conditions upon which you’d accepted employment?---Yes.
Yes, you had a view. And what was that view, Mr O’Neill?---That I was accepting the position as outlined and had been offered to me, to take up that senior position in the company as a contract manager, and previously discussed in my earlier dealings with Gregor Ramsey.
Yes. Mr O’Neill, do the terms that are contained in that document of 8 September represent the terms and conditions of employment that you had agreed prior to entering the employment?---Yes.”
The applicant agreed that if there was to be any change in relation to his accountability and grading then it would be done in consultation with him according to the revised terms and conditions of his employment.
According to the applicant in or about June or July of 1999 he had a meeting with Ms McAdam in Sydney. He was then advised that his role was to change and that he would become a Manager of Day Centres instead of being a Contract Manager looking after key strategic corporate hospitals. The applicant regarded that as a significantly lesser role and his previous position was to be divided up amongst other Contract Managers on a state by state basis. Discussions occurred according to the applicant in late April 1999 where reference was allegedly made to his ongoing employment. Ms McAdam allegedly asked whether the applicant had considered leaving his employment and told him that if he did then she would look favourably at his resignation.
The applicant was quite clear in his evidence that he would not have left his secure employment to be engaged by the respondent if the new position was for the short term and was not for what has been described as the “long haul”.
In about July 1999 the applicant had a discussion with a Ms McAdam and Ms Vanest of the respondent wherein the applicant was advised that his position was being redundant and that he would be finishing employment on 3 July 1999.
The applicant did not earn any income from 3 July 1999 until he was employed in his present position on 4 October 2000. The Applicant stated that his current income is $300.00 per day and suggested the difference between that current income and the income previously earned with the respondent is “around $25,000 per year”.
Under cross-examination it was clear that the applicant had extensive experience in negotiating contracts. He recalled rolling over his superannuation entitlement with National Mutual and that the amount rolled over was “around the $117,000 mark”.
He denied that he had no further challenges in his position with National Mutual at the time that he was recruited by the Respondent. He agreed he responded quickly to the offer of employment with the Respondent and conceded that considerable changes were occurring the health industry at the time. He disagreed that he was earning approximately $70,000 with National Mutual and asserted that it was “$84,000 all inclusive”.
The applicant was taken to a letter dated 12 March 1998 addressed to him from the Respondent. In that letter reference was made to a facsimile of 5 March which was not produced to the Court. The letter clearly refers to relocation to Brisbane though the applicant gave evidence that he thought he had rejected Brisbane probably just before the letter. Hence there was a degree of confusion about the chronology from the evidence of the Applicant compared with the documentary material made available to the Court.
The applicant agreed in cross-examination that he had one face to face interview with Ms Lauchlan and Ms Longland and denied that he had reconstructed terms used in that interview including reference to “long haul” and “long term job security”. He insisted those matters were discussed at the interview. He disputed that the interview occurred prior to 26 February 1998 which was the date on a letter addressed to the Applicant from Ms Roberta Lauchlan of the Respondent.
In any event the applicant confirmed that he understood clearly that his contract which he had accepted on 5 May 1998 could be terminated by either party on one month’s notice. The applicant’s salary package was increased effective 1 July 1998 to $84,181.00 and this was the subject of a notice dated 17 August 1998. In revised terms of employment attached to that notice reference is made to three months notice. The applicant could not remember whether he challenged that item in the revised contract though it is clear from the copy signed by the applicant on 22 October 1998 that the period of notice reverted to one month.
During the course of his evidence and indeed throughout the hearing of the application it did not appear to the court that any issue was taken about the applicant’s competence in the performance of his duties.
In the role of Day Surgeries Manager since July 1999 The applicant agreed that he wasn’t as busy as he had been in his former role.
A meeting which took place on 28 March 2000 with Ms McAdam and Ms Vanest whereby the Applicant was told that the position he held is redundant and that the Respondent did not have any other suitable work available in their Victorian office. This was confirmed by letter dated 28 March 2000 which advises the Applicant that his employment would be terminated effective 3 July 2000. It provided one month’s notice period and two months redundancy pay together with annual leave entitlements to the end of the notice period.
A further letter was forwarded to the Applicant on 12 April 2000 confirming that the Applicant’s position was not redundant until 1 July 2000 and that accordingly the Applicant was expected to continue work requirements until that time. Hence the one month’s notice was given to the Applicant well before the termination date. With the second letter details were given of termination payment advice which refers to gross payment “in lieu of notice of $8,469.33” and “redundancy pay” of $20,326.38. In the same document the salary in lieu of notice is referred to as being a gross amount as indicated for a five week period and the redundancy pay is referred to as being the gross amount for a twelve week period. The letter attached to it a Deed of Release. A signed and dated Deed of Release was not produced in evidence. The applicant gave evidence that he in fact never signed any Deed of Release.
It is clear that the Applicant therefore received approximately
17 weeks pay after termination comprising notice and redundancy payments.
The Applicant agreed he commenced his current employment on
4 October 2000.
Therefore it appears that by commencing work on 4 October 2000 the Applicant has effectively gained employment within the 17 week period from the date of termination. The Applicant agreed that his current employment which commenced on 4 October 2000 is with Medibank Private via the agency Morgan & Banks. He continues to be employed as a Contract Manager.
Under cross examination whilst conceding that he did not insist on a longer term contract with the Respondent the Applicant said as follows:-
“ …. But I had no doubt it, that it was a long term position. I didn’t query that because I don’t believe I had cause to query it. I was satisfied in my mind that I had a long term position offered to me; it would see me through to at least 65, my retirement age – not that I have any plans to retire – and I didn’t query it.”
The Applicant accepted that at the time when he signed the letter confirming acceptance of the revised employment condition on
22 October 1998 that he did not rely upon any representations in the period prior to executing that document. He agreed that this was after the initial engagement and that there had been no representations made prior to signing the acceptance of the revised employment conditions.
Barbara Ann O’Loughlin
Ms O’Loughlin gave evidence that she had been the former partner of the Applicant. Her evidence was limited in its scope and it is difficult for the Court to place a great deal of weight upon her evidence save for the fact that it is accepted that she was able to corroborate that the Applicant had secure employment with his former employer prior to joining the Respondent. She was also able to corroborate to some extent that the issue of security and long term employment had been discussed and was certainly a matter which she insisted the Applicant should be aware of prior to abandoning his secure employment with HBA.
To that extent she recalled what the Applicant had told her about the meeting and it is not proposed to rely upon that evidence. Overall however the main thrust of evidence was that in discussing terms of employment she understood that the long term employment had been the subject of verbal reassurance.
Respondent’s evidence
Roberta Louise Lauchlan
Ms Lauchlan gave evidence that she is the General Manager of Provider Relations of the Respondent and has held that position since November 1996.
She was responsible for engaging the services of TASA International and had dealings with Dr Ramsey. TASA acted for and on behalf of the Respondent.
Ms Lauchlan interviewed the applicant on 23 February 1998 and during the course of that interview used a prepared list of possible questions as the basis for questioning of the applicant during the course of the interview.
During the course of those discussions Ms Lauchlan stated that she could not recall the applicant raising an issue in terms of the long-term nature of the employment. Nor could she recall him raising any issue of security involved with the employment. Ms Longland was present during the interview and according to Ms Lauchlan she could not recall whether Ms Longland made any reference to employment being for “long haul”.
Mr Lauchlan confirmed that she was the author of a letter to the applicant dated 26 February 1998 together with a draft offer of employment for a position in Queensland and that she only conducted in fact one interview with the applicant.
Ms Lauchlan when referred to the letter dated 8 September 1999 from the Respondent to the Applicant explained the change from three months to one month in the termination provision as a consequence of the negotiations “initiated by The applicant around the one month as his preference to the three months that was now the standard in the majority of employees contracts”.
Ms Lauchlan gave evidence that her change in position regarding the applicant’s duties occurred as of July 1999 and that although the organisation was not going back to the State structure there was a change to the portfolios of individual contract managers including the applicant. A discussion occurred in March 1999 between Ms Lauchlan and Ms McAdam concerning possible retrenchment. Therefore in less than twelve months after the date of commencing his position with the respondent the applicant’s retrenchment was under consideration.
Ms Lauchlan denied that during the course of the interview with the applicant on 23 February 1998 that any discussion took place concerning secure and long term employment or that employment would be for the “long haul”.
Ms Lauchlan said that the proposed re-structure of the organisation had been discussed at workshops conducted in February of 1998 which was the about the time approaches were made by the respondent via its agent to the applicant.
In cross examination Ms Lauchlan did not remember the applicant saying he had been asked to attend the interview and had been head hunted or approached by Mr Ramsey to attend the interview and confirmed she could not recall reference being made in relation to the long term nature of the employment or job security. At one point when pressed on the matter and asked whether she was able to tell the Court that it definitely did not occur she stated, ”I can’t say categorically it didn’t occur …”. She did not have a note of any questions asked by the applicant during the interview and could not recall the applicant asking questions though at the same time was not prepared to suggest that there were no questions asked by the applicant at the interview.
The second re-organisation which ultimately led to the retrenchment of the applicant appeared to have been the subject of discussions which evolved in very late 1998 according to Ms Lauchlan.
Ms Lauchlan agreed that a Ms Higginbottom had been employed as a Contract Manager after the development of the second business plan. The applicant’s position was not one which was mentioned as being redundant in July 1999 and no discussion took place with him that his position might be under threat according to Ms Lauchlan. The second plan was suggested by Ms Lauchlan was not a change to a state base and that the only change was the Contract Manager’s area as a responsibility. It was agreed that there had been no change with respect to relative market share amongst the states but that there was simply a move back to a state based portfolio for the contract managers.
Ms Lauchlan was taken to Exhibit A7 which is a Respondent’s document entitled “Termination of Employment Policy”. In that document reference was made to “policy overview which provides:
“Termination of employment, whether initiated by an employee or by MBF, will be conducted in accordance with all relevant legislation, Certified Agreements or individual contracts of employment. Terminations will also be carried out in line with MBF’s ethical values as outlined in the Good Working Relationships Policy.”
Ms Lauchlan agreed under cross examination that she made no enquiries of any other Manager, Division Manager, in any other state or in Victoria in relation to opportunities of alternative employment for the applicant.
Lesley Ann McAdam
Mrs McAdam describes herself as a Business Manager in Provider Relations with the Respondent. She joined the Respondent in May 1998. From February 1999 the applicant reported to Mrs McAdam.
Mrs McAdam indicated she had some concern regarding the discharge of the duties as Contract Manager by the applicant. She was concerned about his style and lack of progress at an initial meeting. Mrs McAdam referred to the applicant’s failure to progress negotiations and was unable to deliver matters which had been promised from previous meetings. The specific concerns regarding the applicant’s performance did not appear to have been put directly to the Applicant and objection was taken to as part of the evidence although in general terms an issue was raised with the applicant about a problem finalising contracts.
In any event Mrs McAdam confirmed that in September 1999 she was involved in changing the applicant’s position. She told the applicant that he was not managing the portfolio he had been given and that she was looking to give him a less risk portfolio to pursue. Hence after being appointed as Business Manager in February 1999 Mrs McAdam by September of the same year had decided to change the applicant’s position. After discussing the matter with the applicant Mrs McAdam described his reaction as being `accepting’ of the decision. She stated, “We had some discussion about the why, but he then got on did the work”.
Mrs McAdam confirmed that the applicant was on an individual contract (Grade H) and to that extent the respondent’s “Termination of Employment Policy” did not apply.
It was Mrs McAdam’s decision to make the applicant redundant and this was conveyed to the applicant by letter dated 28 March 2000. Therefore during the period that Mrs McAdam was Business Manager she had changed the applicant’s position and ultimately within a twelve month period recommended his altered position be made redundant.
Mrs McAdam gave evidence that a meeting occurred with the applicant on 8 July 1999 to discuss work assignment time lines. A document produced which purports to be topics for that meeting provided that an explanation of the purpose of the meeting and business imperative should be explained to the applicant. He was then to be shown a list of work assignments which it is noted relate to due dates of completion with the earliest being 22 July 1999 and the latest being 16 August 1999. Other dates were to be set by the applicant though at the meeting he was to be told to set the dates and was given four days in which to respond. The meeting occurred on Thursday 8 July 1999 and the applicant was given until Monday
12 July 1999 to respond.
Mrs McAdam gave evidence that in about the middle of February 2000 she had reached a position where she had decided that the applicant’s position should be made redundant. She did not give as a reason for that decision any criticism of the applicant’s performance. When asked the reason for making the position redundant she stated,
“Changes in business needs, the fact that we had tendered in Queensland and were doing so in New South Wales, change to focus of the way we wished to conduct contracts, and so we would need less facilities to contract within Victoria than we had previously thought”.
Under cross examination in relation to the respondent’s “Termination of Employment Policy” it was clear that Mrs McAdam had not regarded that policy as applying to the applicant. She had agreed that she had not consulted anyone in the company regarding alternative positions for the applicant even though it was clearly stated that redundancy does not result from any factor arising from an employee’s performance or behaviour. She further agreed that she did not make enquiries of any managers or operation offices within the respondent either in Victoria or any other State in relation to the applicant. She indicated a direction was given to her not to approach any potential applicant whose position had been declared redundant but rather to wait for that person to make the approach to the respondent.
The “Termination of Employment Policy” contains the following in relation to redundancy and compares it to other terminations as follows:
“The distinguishing factor is that an employee’s position no longer exists. Redundancy does not result from any factor arising from an employee’s performance or behaviour.
… It is MBF’s objective to secure alternative comparable employment within MBF for as many employees as possible should their positions be declared redundant. Retrenchment may occur when no other suitable placement is found within the organisation and MBF terminates the employees employment contract”.
Despite these references in the policy Mrs McAdam agreed that her understanding was that MBF would be reactive rather than proactive in the implementation of the policy.
Ms McAdam indicated that at the time when she made the recommendation that the applicant’s position was no longer required it was after going “through the process of lining up the company’s objectives with the skills required to do it etc”. She was unable to produce any formal document which related to the process and indeed stated that apart from a company’s business plan and general objectives that none of the documents were ever specific in recommending redundancy of the applicant. She agreed that in fact there was no specific background paper referring to the applicant’s position being declared redundant and reliance was placed upon general background papers used as a basis to declare the applicant’s position redundant. No other positions in the organisation apart from the applicant’s were declared redundant as a consequence of analysis of those papers.
Ms McAdam agreed that in considering whether to declare the applicant’s position redundant no consideration was given to the background circumstances of the applicant’s appointment which included the fact that he had been recruited by a professional agency and that it was known he had left a secure position which he had occupied for a period of approximately a decade.
Helen Longland
Ms Longland joined the respondent in July 1997 and was initially employed as Manager of Dental and Optical Services. In February 1998 she assumed the position of National Manager for Acute Services. She confirmed the history of the respondent as being one organised along state based lines and that a restructure occurred following the appointment of a new CEO where a more national based structure was adopted.
At the interview with the applicant on 23 February 1998 Ms Longland could not remember any questions raised by the applicant concerning the issue of how long the position was to last and specifically denied stating the position was for the `long haul’.
Ms Longland confirmed that the notes taken by her colleague Ms Lauchlan of the interview with the applicant on 23 February 1998 did not contain any reference to issues or questions raised by the applicant. She indicated however that the meeting would have lasted `somewhere around an hour’ and could only recall the applicant raising one question namely a relocation to Brisbane. She agreed that her recall of the interview was very broad and that she was unable to recall the specific detail of the conversations held.
Ms Longland in her evidence agreed that her memory in this particular case was that there was no reference made at all of the position for the applicant being a long term or permanent one.
Applicant’s submissions
It was submitted on behalf of the applicant that the employment arose after an unsolicited approach and that of itself is significant in the application. Reliance was placed upon the evidence of the applicant and the evidence of Dr Ramsey. It was submitted that the court could be satisfied that representations as to longevity of employment were made and they were made by Dr Ramsey for and on behalf of the respondent and by Ms Longland expressly. It was further submitted that I could be satisfied that the representations were made by reference to Ms Lauchlan’s silence. Above all it was submitted the court should rely upon the evidence of the applicant who described in some detail his discussions with Mr Ramsey, Ms Lauchlan and Ms Longland. The making of the representations and concern about longevity arises further from the context of the employment given that the evidence of the applicant is that at the time of being recruited was employed in well remunerated and secure employment and had in fact been so engaged in that employment for a period of approximately ten years.
Further assistance in reaching the conclusion that the representations were made was found in the context of the evidence of the applicant’s then partner who at least confirmed there had been mutual concern between her and the applicant as to the permanency of the position with the respondent. Reliance was placed upon the undated notes produced by the respondent which failed to identify any contribution or enquiry by the applicant to the interview process. It was submitted that the applicant as a cautious experienced businessman would be unlikely to have not enquired as to the longevity of employment and to be satisfied in relation to that issue before leaving his secure position. It was submitted that both Ms Lauchlan and Ms Longland were vague in relation to matters which were discussed with the applicant during the course of his interview.
It was submitted by Counsel for the applicant that the draft contract in this matter and the documents which followed that contract provide evidence of a representation that the respondent’s policies and procedures would be followed and that there would not be alteration to the applicant’s position without consultation.
The applicant relied upon the employment contract dated
8 September 1998 to establish what was submitted to have been an entitlement to have the policies and procedures of redeployment applied to him. It was submitted there was no evidence that such steps had been taken by the respondent and that this had been conceded by the respondent’s witnesses. In relation to the second re-structure in July 1999 no consideration was given to the impact or affect upon the applicant’s position, there was no business plan, no supporting documentation and in the circumstances the court should find the applicant was moved into a position where there had been no analysis of the future need for the position and no consideration of employment interests of the applicant notwithstanding requirements of fairness expressly provided for by the representations and contract of employment.
It was submitted the representations were made in trade and commerce and constituted conduct of a type governed by the provisions of the Trade Practices Act 1974. The representations by the respondent related to employment being for the long term or for the `long haul’ and not merely for a short term proposition and it was on that basis the applicant accepted employment with the respondent. The applicant it was submitted was entitled in the circumstances to rely upon the truth of the representations and to assume that the respondent and its agents had taken reasonable steps to ensure the accuracy of the statement made. The applicant was not moving to a position of substantially greater income than his existing employment and was likely to have remained in that employment had he not been `headhunted’ by the respondent’s agent.
The applicant’s counsel submitted that the representations were untrue and the applicant’s employment was altered to his disadvantage during the course of employment on 8 July 1999. The representations relied upon were untrue and the applicant’s employment was terminated on 3 July 2000.
The entitlement of the court to conclude the representations were untrue at the time they were made is based upon a conclusion that there was no regard by the respondent to the question at the time as to whether the representations were true and indeed no attempt made by the respondent to make any reasonable effort or enquiries to ensure the truth of the statements as a result of the misleading and deceptive statements the applicant suffered loss and damage which it was said continues. The applicant has been unable to obtain secure long term employment or employment at the same level.
The reliance by the applicant upon the representation in altering his position was reasonable in the circumstances (See Brown v Jam Factory Pty Ltd (1991) 53 FLR 340).
Section 52 it was submitted is not confined in its operation to situations where there is proof of intention to mislead or deceive. The assessment of misleading or deceptive conduct is an objective test (Wheeler Grace and Pierucci Pty Ltd v Wright (1989) ATPR 40, 940 at 50,251).
The representations were untrue and this was known and ought to have been known by the respondent at the time the representations were made. In the present case the respondent did not take any reasonable steps or have reasonable grounds for the making of the representation (Cummings v Lewis (1993) 113 ALR 285 at 295).
The representation could not be described as a mere prediction although even if it was then it was a prediction which still contravened s 52 of the Trade Practices Act because the maker did not have an honest or reasonable belief that it would be fulfilled (Stack v Coast Securities No 9 Pty Ltd (1983) 5 TPR 130 at 134).
Counsel for the applicant submitted that misleading and deceptive conduct would usually have occurred prior to the signing of the contract. If as a result of the conduct the contract is entered into then the action in relation to the pre contractual conduct should be permitted (Clarke Equipment Pty Ltd v Covcat (1987) ATPR 40-678). In relation to the notice provisions of the contract it was submitted that they are not inconsistent with the representation of the type relied upon by the applicant and in general terms did not detract from the applicant’s case.
Relying upon the accrued or associated jurisdiction of the court the applicant further claims breach of contract as a result of the failure of the respondent to record benefits arising under the contract including implied terms that employment was for the `long haul’ and that the applicant would be entitled to the benefit of policies and procedures operating from time to time by the respondent. In particular it was asserted the applicant’s entitled to damages for breach of the contract resulting from the failure of the respondent to comply with the implied or express terms of the contract and those damages arising from that contract were continuing.
In endeavouring to assess the total quantum of the damages it was submitted that the court should rely upon the applicant’s evidence and find that he has established a current loss of $25,000 and that if he had continued to work until retirement age then on the assumption of a loss of income of $20,000 per annum over a period of 8 years the damages would be the amount of $160,000. It was conceded that the court is entitled in any assessment of damages to have regard to the matters described as exigencies of life and taking into account other factors which may have an impact upon the amount of damages suffered. When asked to explain the damages Counsel for the applicant advised the court that it could rely upon the evidence of the income of the applicant which he had been earning prior to termination of employment and that this was $84,000 per annum together with the value of the motor vehicle. It was suggested that his current earnings were $300 per day in a consultancy contract. That contract was due to conclude though it was noted the applicant had made formal application for longer employment.
In considering the issue of damages the applicant asserts that he had suffered a reduction of income of $25,000 per annum accounted for by the rate of pay received and the loss of benefits such as fully maintained motor vehicle in the employment with the respondent. The applicant at the age of 57 years would have difficulty obtaining long term employment at this stage. In relation to the law it was submitted that the representations made to the applicant was conduct on the part of the respondent which was misleading or deceptive or likely to mislead and deceive counsel referred to the misleading and deceptive conduct having been made in trade and commerce by the respondent (see McCormick v Riverwood International Pty Ltd [1999] FCA 1640 (29 November 1999); Stoelwinder v Southern Health Care Network [2000] FCA 444 Finklestein J. (7 April 2000) 2000 97 IR 76; Barto v GPR Management Services (1991) 105 ALR 339; Concrete Constructions v Nelson (1990) 169 CLR 594).
Apart from the specific reference to the loss of $25,000 per annum by way of damages it was submitted that an applicant having altered his position as a result of reliance upon the misleading conduct is entitled to damages on account of loss of opportunity which he would have had by remaining in his existing employment, loss of income as a result of the contravention and any likely ongoing loss of income (see Sellars v Adelaide Petroleum & ors (1992-1994) 179 CLR 332 at 355).
It was submitted that the respondent’s policies applied to the applicant as a consequence of a reference being made to those policies in the original draft offer of employment dated 26 February 1998 where the author states,
“MBF has in place policies to ensure a safe fair and health work environment and you are expected to comply with such policies or any other policies or amendments to policies which may be introduced from time to time for your benefit and well being”.
It was submitted that that clause includes known policies about redundancy and retrenchment.
During the course of submissions relating to damages counsel for the applicant referred me to the well known decision of Sellars v Adelaide Petroleum (1994) 179 CLR 332 at p355 where the High Court states,
“Notwithstanding the observations of this Court in Norwest, we consider that acceptance of the principle enunciated in Malec requires that damages for deprivation of a commercial opportunity, whether the deprivation occurred by reason of breach of contract, tort or contravention of s 52(1), should be ascertained by reference to the court's assessment of the prospects of success of that opportunity had it been pursued. The principle recognized in Malec was based on a consideration of the peculiar difficulties associated with the proof and evaluation of future possibilities and past hypothetical fact situations, as contrasted with proof of historical facts. Once that is accepted, there is no secure foundation for confining the principle to cases of any particular kind.
On the other hand, the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities. It is no answer to that way of viewing an applicant's case to say that the commercial opportunity was valueless on the balance of probabilities because to say that is to value the commercial opportunity by reference to a standard of proof which is inapplicable.”
It was agreed by counsel for the applicant that in the event that the court were to find that s 52 of the Trade Practices matters had not been proved then the court was still entitled to consider a claim for damages arising out of the alleged breach of contract assuming that the breach arose from a common substratum of facts.
Respondent’s submissions
In support of his submissions counsel for the respondent urged me to read the transcript and submitted that I should do so in order to determine the obvious areas in which the parties disagree in terms of evidence. It was submitted that for the applicant to succeed he had to prove on the balance of probabilities that Ms Lauchlan, Ms Longland and Dr Ramsey had engaged in misleading and deceptive conduct in breach of s 52 of the Trade Practices Act to induce the applicant to accept the employment with the respondent on 5 May 1998. I was referred to the evidence of Dr Ramsey and it was noted that Dr Ramsey gave evidence that he would not have used such terms as “permanent” or “for the long haul”. Further reference was made to the evidence of Ms Lauchlan and Ms Longland to which I have already referred. It was submitted however that if the court were to find representations as alleged then the applicant did not rely upon those representations when he executed his contract of employment dated 29 April 1998. It was submitted that for the applicant to succeed under s 52 of the Act he needs to prove that the representations were false and misleading and that he relied upon those representations thereby suffering loss and damage. There has to be, it was submitted, a nexus between the conduct complained of in the loss or damage suffered.
In his submissions counsel for the respondent relied upon the evidence that the applicant was an experienced contractor negotiator who had been interviewed on 23 February 1998 by Ms Lauchlan and Ms Longland. I was invited to consider in handwritten endorsements to a letter dated 26 February 1998 queries relating to terms and conditions were raised by the applicant and that there were no notations under the heading “Period of Notice” which stipulated the contract could be terminated by either party on one month’s notice period.
It was submitted that when considering the principles to be applied in relation to s 52 the court should have regard to the judgment of Hill J in Equity Access Pty Ltd v Westpac Banking Corporation (1990) ATPR 40-994 at 50,950; (1989) 16 IPR 431 as follows:-
“1.For conduct to be misleading or deceptive the conduct must convey in all the circumstances of the case a misrepresentation…
2.There will however be no contravention of s 52(1) of the Act unless error or misconception results from the conduct of the corporation and not from other circumstances for which the corporation is not responsible …
3.Conduct will be likely to mislead or deceive if there is a `real or not remote chance or possibility’ of misleading or deception regardless of whether it is more than 50% … The question of whether conduct is misleading or deceptive or likely to mislead or deceive is an objective question which the court must determine for itself. Hence, evidence that persons in relevant class have been misled will, although admissible, not be determinative. In some cases, however, such evidence will be very persuasive …
4.Conduct of a corporation causing mere confusion or uncertainty in the minds of the public … is not necessarily coextensive with misleading or deceptive misconduct … Since actual deception need not be shown the court must consider whether a reasonably significant number of potential purchasers would be likely to be misled or deceived …
5.…
6.Section 52 is not confined to conduct which is intended to mislead or deceive … and a corporation which acts honestly and reasonably may nonetheless engage in conduct that is likely to mislead or deceive …”
Although Counsel for the respondent placed a great deal of emphasis on the period of notice which had been included in the contract, he was unable to indicate whether that period of notice was any different for the applicant to that which had applied to the applicant’s previous employer. The documents before the court indicate a change of heading of the clause from “Period of Notice” to “Termination”. In the context of the period of notice clause it was submitted by the respondent that if the applicant had any concerns about longevity of employment he should have sought a fixed term contract or asked for a longer period of notice.
In relation to loss and damage it was submitted that the applicant had been vague in relation to his past salary and in particular superannuation entitlements. It was suggested that rather than abandoning secure employment for long term employment the applicant was merely seeking a new challenge. I was referred to the decision of Hill J in Argy v Blunts & Lane Cove Real Estate Pty Ltd (1989) 94 ALR 719 where at page 741 the court states:
“For misleading conduct to give rise to the statutory cause of action under either the Trade Practices Act or the Fair Trading Act it is necessary that the loss or damage suffered arise from or out of the misleading or deceptive conduct”.
In the same case Hill J cited with approval a passage which was concerned with the law of deceit but analogous to the Trade Practices Act in the case of Gould v Vaggelas (1984) 157 CLR 215 where Wilson J stated at p 236 the following principles:
“1. Notwithstanding that a representation is both false and fraudulent, if the representee does not rely upon it he has no case.
2. If a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation.
3. The inference may be rebutted, for example, by showing that the representee, before he entered into the contract, either was possessed of actual knowledge of the true facts and knew them to be true or alternatively made it plain that whether he knew the true facts or not he did not rely on the representation.
4. The representation need not be the sole inducement. It is sufficient so long as it plays some part even if only a minor part in contributing to the formation of the contract”.
Counsel for the respondent urged me to place significant reliance upon the matters raised in paragraphs (3) and (4) of the High Court Decision and in particular submitted that the applicant in the present case was a person who was aware of the true fact in relation to his employment. I was referred to a further passage from the decision of Hill J in the Argy case where at page 744 His Honour states,
“A case may perhaps be imagined where an applicant is so negligent in protecting his own interests that there will be a `finding of fact’ that the representation complained of was not in the circumstances a real inducement to his entering into a contract. In such a case the element of causation between misrepresentation and damage will have been severed by the intervention of the negligence of the applicant. However, in my view, the present case cannot be said to be that case”.
It was submitted that the principles annunciated in that passage do apply to the present case.
During the course of the submissions I had also referred counsel to a further passage from the decision of Hill J in the Argy case at page 742 where His Honour states,
“Brennan J in the same case (CLR at 250-1; ALR at 57) described the relevant question for the tribunal of fact as being `whether the misrepresentation alone, or with or notwithstanding other things that accompanied it, was a real inducement, or one of the real inducements to the plaintiff to do whatever caused his loss.”
Counsel for the respondent referred me to the decision of Einfeld J in the Federal Court case of Sheldrick v WT Partnership (Aust) Pty Ltd [1998] FCA 1794 (7 September 1998). In that case a contract of employment involved the relocation of the employee overseas and an issue arose as to whether it was a term of employment that it would be for four years or that there was a long term commitment to the employee by the employer. It was also in issue as to whether a term allowing three months notice of termination reflected the intentions of the parties. I was particularly referred to the following extract of that decision
“The representations made by WTPHK through Lowndes as to its long term commitment to Sheldrick were clearly representations as to a future matter, namely the length of time for which Sheldrick would be employed by the Partnership in Asia. Pursuant to section 51A of the Act, such a representation is assumed to be misleading unless the party making the representation can show that it was made on reasonable grounds. It was common ground that Lowndes had faced significant opposition to Sheldrick relocating but had persevered to ensure that it happened. He invited Sheldrick and his wife to Asia at the company's expense to find a suitable base and invested considerable time and resources in persuading Sheldrick that the relocation would be beneficial to both parties. It would be perverse in the extreme that Lowndes undertook this effort and involved his group in this expense to relocate Sheldrick and his entire family to a place so far away from home and with all the personal disruption involved, including separation from wider family and friends, and interruption to the education of his children, if it was not his intention that they should remain there for the long term.
The evidence also showed that at the time of the representations, it was envisaged that WTPHK would be engaged for a number of years on the KLIAB project, and even if Sheldrick was not to be involved for the duration, there were numerous other Partnership projects throughout Asia on which he could be employed. There was no evidence to doubt the genuine intentions of either Sheldrick or Lowndes when they were negotiating in 1993 and 1994. I have no doubt that Lowndes intended Sheldrick to remain in Asia for the long term when he negotiated for his relocation, and although it is not clear why Sheldrick was summarily dismissed when his position on the KLIAB project became untenable, rather than being relocated to a different part of Asia, it is true to say that the Partnership's intentions concerning Sheldrick’s position had changed. That such a change was possible was evidenced by the inclusion in the written contract of a term enabling termination on three months' notice. Therefore, while the representations as to a long term commitment were made by Lowndes on behalf of WTPHK, they were not misleading and deceptive in breach of the Act because they were based on reasonable grounds when they were made.”
The decision of Einfeld J was that subject of an appeal (see WT Partnership (Aust) Pty Ltd v Sheldrick (1999) FCA 843 (25 June 1999)). The full Court did not consider that the Trial Judge had erred in finding representations in that case did not constitute conduct which contravened the Trade Practices Act or did it challenge the court’s reasoning. Hence counsel for the respondent submitted that the terms of that particular case at the first instance supported the position in the present case where it is said that a contract clause relating to notice was clear and should have been clearly understood by the applicant would have been aware of that clause from February until he signed the document on 5 May 1998.
During the course of submissions counsel for the respondent referred me to the decision of the Full Court of the Federal Court in Ricochet Pty Ltd and anor v Equity Trustees Executor and Agency Co and ors (1993) 113 ALR 30. In that case the court held that it was not enough for an applicant under s 82 of the Trade Practices Act to show that the impugned representation, being conduct which contravened s 52 might have induced entry into the contract. A finding that a misrepresentation might have induced a decision will not of itself establish as a matter of probability that it did. In particular I was referred to the following passage in the court’s judgment at page 36,
“Ultimately the causative threshold beyond which liability attaches to a misrepresentation which is one of a number of factors inducing a decision that produces loss will be a question of judgment. This is a familiar process adverted to in various related contexts by Mason CJ in March v E & MH Stramare Pty Ltd, supra, and in this court in Elna Australia Pty Ltd v International Computers (Australia) Pty Ltd (No 2) (1987) 16 FCR 410 at 418-19; 75 ALR 271 and Pavich v Bobra Nominees Pty Ltd (1988) ATPR (Digest) 46-039. (See also Munchies Management Pty Ltd v Belperio (1988) 84 ALR 700 at 712). But the mere possibility that a representation might have induced a course of action by the representee can never of itself attach liability under s 82 to the making of it.’
During the course of the submissions I had invited counsel to address me on the meaning of the words “inducing a course of action” and counsel submitted that in the present case even if I were to find that there had been a misrepresentation that induced a cause of action, namely the resignation from employment then the effect of that is extinguished upon the signing of subsequent contracts and indeed had been dissipated when the parties embarked upon more detailed negotiations.
In relation to the contract claim counsel for the respondent submitted that there is no basis upon which the court should regard the representations alleged as constituting terms of the contract of employment between the parties. I was referred to a number of cases supporting well known principles that contractual terms can only be implied, in fact or to give business efficacy to the contract or implied by law referrable to a class of contract which in the present case would be an employment contract.
In particular counsel referred to the High Court decision in Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at page 422 where the court endorsed the approach taken by Dean J in Hawkins v Clayton (1988) 164 CLR 539 at 571 where His Honour stated:
“The most that can be said consistently with the need for some degree of flexibility is that, in a case where it is apparent that the parties have not attempted to spell out the full terms of their contract, a court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case. The general statement of principle is subject to the qualification that a term may only be implied in a contract by established Mercantile usage or professional practice or by a past course of dealing between the parties”.
I was also referred to the Full Court decision of the Tasmanian Supreme Court in the matter of Australian National Hotels Pty Ltd v Louis Peter Jager (2000) TASSC 42 (11 May 2000) where at paragraph 13 the court stated,
“The criteria for determining whether a term is implied to give business efficacy to a contract are detailed in the majority judgment in BP Refinery (Western Port) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283 where their Lordships said,
`…. For a term to be implied, the following conditions (which may overlap) must be satisfied:
(1)it must be reasonable and equitable;
(2)it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;
(3)it must be so obvious that `it goes without saying’;
(4)it must be capable of clear expression;
(5)it must not contradict any express term of the contract.”
Counsel for the respondent submitted that in the present case there is an express term in the contract which relates to the period of notice of termination and that in the circumstances applying the decisions to which he referred it is inappropriate to imply a term based upon the alleged representations.
It was submitted that in the present case the evidence from the applicant is that he completed a three month period of working on 30 June 2000 and received an additional 17 weeks salary giving him full pay until October 2000 and thereafter accepted a contract position with Medibank Private through the agency of Morgan & Banks on and from 4 October 2000. It was noted by counsel for the respondent that the term of trust and confidence as a term to be implied by operation of law into contracts of employment has been recognised by the House of Lords in Malik and anor v Bank of Credit and Commerce International SA (in liq) (1995) 3 All ER 545; 1997 3 WLR 95 and see Burazin v Blacktown City Guardian Pty Ltd (1996) 142 ALR 144. Whilst a term of trust and confidence may be implied into a contract it is understood that the respondent’s submission in the present case is that even if such a term is implied in the present case and is not a term which reflects the representations which had been alleged by the applicant.
On the issue of damages the respondent relied upon the decision of the Full Court in the Federal Court in the matter of Gates v City Mutual Life Assurance Society Ltd (1982) 68 FLR 101 where the court said at page 104,
“However s 87 like s 82 is concerned with loss or damage `by’ the offending conduct and it is sufficient for present purposes to observe that in this case the question is not how much better off Mr Gates would have been if the statements had been true but how much worse off he is by reason of having taken the steps which he did in reliance of the statements”.
I was further referred to the decision of Wilcox J in the Federal Court case of Gokora Pty Ltd v Montgomery Jordan & Stevenson Pty Ltd and Wendy Kay Worboys (1986) 4 ANZ Insurance Cases 60-727 at paragraph 37,
“However I do not think that this sum is recoverable under s 52. That section permits recovery of losses, which are consequential upon misleading conduct, such as expenses incurred in reliance upon a misrepresentation. See Gates v City Mutual Life Assurance Society Ltd (1986) 63 ALR 600 at 603, 607. But as that decision makes clear the section does not permit an award of damages designed to place the claimant in the position in which he would or she would have been had the representation been true”.
I was further referred to the High Court Decision in Wardley Australia Ltd and anor v The State of Western Australia (1992) 175 CLR 514 at 526 where the court stated,
“In determining when a plaintiff first suffers economic loss or damage in an action under s 82(1) based on misleading conduct constituting a contravention of s 52, it is necessary to have regard to the applicable measure of damages. In this respect it would not be right to conclude that the measure of damages recoverable under the sub-section necessarily coincides with the measure of damages applicable in an action for deceit or in an action for negligent misrepresentation …
In a case such as the present it may be safely assumed that the plaintiff is entitled to recover `a sum consequence of his altering his position under inducement’”.
I was also referred to the decision of the High Court in Marks and ors v GIO Australia Holdings Ltd and ors (1998) 196 CLR 494 where at page 495 the court states,
“The bare fact that a contract has been made which confers rights or imposes obligations different from what one party represented to be the case does not demonstrate to the party that was misled has suffered loss or damage. The party who is misled suffers no prejudice or disadvantage unless it is shown, that the party could have acted in some or other way (or refrained from acting in some way) which would have been of greater benefit or less detriment to it then the course in fact adopted.
The respondent submitted that in the present case the applicant cannot be said to have relied upon the representations in circumstances where he was fully aware the contract he had entered into in May 1998 with the respondent and the subsequent contracts entered into in September 1998 were both terminable on one month’s notice. In applying the principles relating to loss and damage and reliance as I understand the submissions of the respondent even if the representation could be established and reliance also likewise established that there was not sufficient evidence from which the court could rely to establish the appropriate damages. It was submitted that there was no documentary evidence produced in relation to damages and that if one accepted the evidence of the applicant that he had received a package of $84,000 that this might not represent an increase in the salary. It was submitted that in the material it is difficult to establish exactly the amount of salary that the applicant received with his former employer. Essentially it was submitted that in the present case in any event there is no loss because upon the expiration of the seventeen weeks of salary with full pay until October 2000 the applicant has been gainfully employed. In addition to resisting the allegation that there had been representations constituting misleading and deceptive conduct it was further submitted that the contract of employment had been properly terminated in accordance with the terms and that no loss would follow from that termination in circumstances where the applicant indeed received seventeen weeks additional salary.
Reasoning
The critical issue in the present case when applying the relevant law is to determine whether in fact a representation was made of a kind that could be considered to be conduct that is misleading and deceptive for the purposes of s 52 of the Trade Practices Act.
There is no doubt in my view that in this matter the applicant had been enticed away from secure employment by an agent of the respondent. I have no doubt that a major concern to the applicant was the issue of security and/or long term employment. In any event he was the target of what appears to be an executive “head hunting” approach by a pro active employment agency. The evidence of Dr Ramsey satisfies me that this would appear to be a normal activity notwithstanding that there is a considerable risk that this behaviour could constitute conduct which may amount to inducing a breach of contract. There is not doubt in my mind that the approach made to the respondent was with the full authority and in accordance with the instructions of the respondent. Equally there is no doubt that at the time the approach was made the applicant had no intention of leaving his then secure employment and entertain the advance made to him partly as a consequence of being flattered by the thought that another company wished to recruit him as a senior executive but also because he was naturally interested in a challenge which may or may not have involved additional salary.
On the material before me I am unable to determine with sufficient prevision whether there was a significant increase in salary and prefer to find that the applicant decided to ultimately accept employment with the respondent at a locality of his choice primarily due to the challenge based upon the restructuring as it then was promoted of the respondent.
I am satisfied that in the present case the applicant at all times was concerned about the issue of job security and would not have left his former employment had he thought that within a very short period of time his position would be changed and then ultimately the altered position declared redundant.
It is understandable that this conduct by a respondent would lead to concern and disappointment for a person in the applicant’s position who had been actively pursued by an agent of the respondent to the point where he was persuaded to leave his then secure employment.
The issue however for the court to determine is whether in fact representations as claimed were made either by the respondent’s agent and/or by Ms Lauchlan and Ms Longland of the respondent.
The applicant gave clear evidence he believed that he had told Ms Longland that he would not leave his current employment for anything for the short term and that Ms Longland replied that this was for the long haul or words to that effect.
It is acknowledged that both Ms Longland and Ms Lauchlan disputed the suggestion that reference was made to the position being for the ‘long haul”. Ms Longland specifically denied stating the position was for the “long haul”. Ms Lauchlan was less emphatic however and indicated she would not recall whether Ms Longland made any reference to employment being for the “long haul”.
It is common ground that at no stage did either the applicant or representatives of the respondent reduce to writing any acknowledgment that the position offered to the applicant would be one providing long term employment.
Having heard the evidence of the applicant and to some extent taking into account the evidence of his then partner Ms O’Laughlin it is my view that on the balance of probabilities it is more likely than not that the applicant did raise the issue of long term security. I find it inconceivable that a man in his early 50’s having been approached in this somewhat aggressive fashion and enticed to leave secure employment would agree to such a significant change at that time of his life without any reference at all to the long term security. I find that in the circumstances the applicant raised the issue of security of employment and that Ms Longland did say to him something like the position was for the “long haul” or an expression of a similar kind which constituted a representation made for and on behalf of the respondent. I also find that Mr Ramsey at all material times was acting for and on behalf of the respondent and that during the course of discussions with the applicant was made aware that the applicant was concerned that he was leaving a position that he had held for a significant period of time, that he was concerned about the long term nature of the employment with the respondent. Initially it is clear and I find that the applicant had expressed the sentiment of “Why should I move from where I was with National Mutual to this job?” It was in the context of that apparent intransigence that Dr Ramsey acting in the events of his principals endeavoured to persuade the applicant to move from his then current secure position. A crucial part of the evidence in my view from Dr Ramsey was where he said, “I think he said Look I am in a secure job now. I want to be assured that this job is a secure one that I am going to”. And although Dr Ramsey may have indicated it was as secure as any job these days and took care to say something like that, I am satisfied that in the circumstances of the discussions he had effectively represented to the applicant that at the very least the job that he was being offered by the respondent would be as secure as his current secure position with National Mutual.’
Hence I find that representations were made in the circumstances described by both Dr Ramsey and Ms Longland.
The next issue to arise in applying the authorities to which I have been referred is whether the representations that have been made can constitute misleading and deceptive conduct for the purposes of s 52 of the Trade Practices Act. In applying the principles referred to in Equity Access Pty Ltd v Westpac Banking Corporation, it is my view that in fact the conduct described can and does constitute misleading and deceptive conduct and is in breach of s 52 of the Trade Practices Act. I am satisfied that the conduct of the respondent and/or its agents was such that there was a real possibility of misleading or deceiving the applicant in relation to the longevity of the employment. Had it not been for that misleading conduct I am satisfied and so find that the applicant would not have left his then secure employment.
The events which occurred after the representation involved a downgrading of the applicant’s position and within a very short time frame a declaration that that position was redundant. I am not satisfied on the material before me that there was any reasonable basis for the declaration that the applicant’s position should be redundant. I find that in the circumstances in the absence of any other significant executive’s position being declared redundant and in the absence of any documentary material which would show a reasoned and objective re-assessment of the respondent’s employment structure that on this occasion the applicant had been singled out for reasons which are not clear and his position downgraded and ultimately the downgraded position declared redundant.
There was no suggestion that the applicant had not performed satisfactorily or at least had performed in a manner which would justify dismissal.
I am not satisfied that a one month termination notice should be seen as a matter of law as negating the effect and impact of the misleading and deceptive conduct in this case. That termination period was simply a standard provision in the contract which does not in my view replace and/or negate the significant impact of the misleading and deceptive conduct which has occurred in this instance.
Employers who engage in conduct which is designed to deliberately persuade senior executives to leave secure employment ought to be aware that in making such an approach care needs to be taken to ensure that the person is given a clear indication that he or she is leaving secure employment for an uncertain future if that be the case. And although in this case neither the applicant nor respondent sought to reduce to writing and thereby provided a degree of security the issue of longevity, it was sufficient in the manner in which the applicant was recruited, the conversations with the recruiting agent Dr Ramsey and the conduct of the interview as I have found between the applicant and Ms Longland and Ms Lauchlan to indicate that this was indeed a core issue which ought to have been clearly understood by all parties. That is, the parties including the applicant at all material times would have realised that security of employment was a key issue which had been the subject as I have found of the representations made in the context of the concern being expressed by the applicant as to the issue of security of employment.
I am satisfied that the contravention of s 52 has occurred in these circumstances where the respondent is clearly liable. Corporations who engage “head hunting” agencies must be responsible for representations made for and on their behalf during the course of that recruitment process. The background circumstances in relation to the recruitment together with the evidence of the applicant, his then partner and the recruiting agent Dr Ramsey are sufficient to satisfy me that the representations found were made, were relied upon and constituted conduct which in my view should be the responsibility of the respondent.
It is sufficient in my view in a case of this kind that an applicant can rely upon a recruiting agent saying something like, “employment will be ongoing” and that representation along with the representation I have found about employment being for the “long haul” does constitute a sufficient representation upon which a breach of s 52 of the Trade Practices Act can be based. The mere fact that the standard written contract does not contain the specific clause is not surprising in circumstances where employers are reluctant to give any guarantee of long term employment. However, in my view, where a person is recruited in the manner described and representations made then employers ought to bear responsibility and be aware of the fact that this conduct at least has the potential of exposing respondents to the risk of a claim for breach of s 52 of the Trade Practices Act.
I am satisfied that in making the representation the respondent had little regard to whether the representation was true or not and was simply concerned to recruit from a competitor an employee then thought to be an appropriate acquisition for the respondent. I am satisfied that the respondent did not take any reasonable steps or indeed have reasonable grounds for making the representation and otherwise accept the submissions made by counsel for the applicant that in this case the representations could not be described as a mere prediction and if that even if it could then the contravention still occurred as the respondent did not have an honest and reasonable belief that the representations would be fulfilled (see Stack v Co Securities No 9 Pty Ltd (1983) 5 TPR 130 at 134).
I am persuaded in the present case therefore that there has been misleading and deceptive conduct and that the applicant relied upon that conduct.
In relation to the submission by the applicant that I should further find that there has been a breach of his employment contract and that I should imply into that written contract a term including the redundancy provision which was part of the respondent’s “Termination of Employment Policy” it is my view in the present case as a matter of law the inclusion of that term by implication cannot be maintained. It is a term which is clearly desirable and as a matter of principle one which ought to have been followed in the present case. It is regrettable that having enticed the applicant from his previous secure employment that the respondent did not even attempt to secure alternative comparable employment for the applicant with the respondent. Nevertheless I do not believe that that term as a matter of law needs to be implied in the written contract between the applicant and the respondent.
I therefore find that the termination of the applicant’s employment whilst regrettable was within the terms of the contract and indeed find that the period of notice was greater than the period required by that contract. Therefore in the circumstances I do not find that there has been a breach of the agreement between the applicant and the respondent and even if there had been a breach then I am not satisfied that any damages would flow from that breach on the material presently before me.
I accept the submissions of counsel for the respondent in relation to the law concerning implied terms and in particular rely upon the Decisions to which I have been referred namely Byrne v Australian Airlines Limited (1995) 185 CLR 410, Hawkins v Clayton (1988) 164 CLR 539 and Australian National Hotels Pty Ltd v Louis Peter Jager (2000) TASSC 42 (11 May 2000). I am satisfied that the written contract provided for a notice of termination which the respondent was entitled to rely upon and did so in circumstances where it in fact has made an allowance beyond the notice period in that contract and it is common ground in this application that the applicant in fact received 17 weeks salary with full pay until he commenced his present employment on 4 October 2000.
The more difficult question in this case is the issue of damages if any which flow from the finding that I have made that the respondent has contravened s 52 of the Trade Practices Act. The task of the court in assessing damages has been made particularly difficult in the present case by the lack of evidence which would assist in making an assessment of damages. The applicant did not call any evidence from his former employer, did not produce any tax returns and/or records of past or current income and did not otherwise adduce evidence which may have assisted the court in determining the full extent and nature of loss if any arising from the misleading and deceptive conduct of the respondent.
I have read the exhibits and transcripts on a number of occasions in order to glean as best I can sufficient information upon which I could make a finding in relation to damages. Whilst there is evidence from the applicant that his current employment resulted in a daily rate of an amount less than his salary with the respondent, it is not clear whether in acting upon the representation the applicant’s employment with the respondent resulted in an increase or decrease in salary which he had earlier earned. It is also not clear whether the salary currently received by the applicant, even if at a reduced level, is a direct consequence of the misleading and deceptive conduct. No attempt was made to undertake any comparative analysis between the income which the applicant would have earned had he continued in the secure employment which he enjoyed prior to being recruited by the respondent.
I accept the submissions of counsel for the respondent that in the present case it is difficult to establish the amount of salary the applicant had received with his former employer. I further accept that in any event after the expiration of 17 weeks where he received his full salary the applicant was successful in obtaining full time employment which appears to be suited to his qualifications. I should add that at no stage did the respondent suggest that the applicant was not a competent and capable employee and certainly to the extent that I was able to assess his competence in giving evidence I could not find any basis upon which it could be suggested that the applicant not a competent and capable person. He has proved his competence by successfully managing to be re-employed and like other members of the workforce will no doubt face uncertainty from time to time in future employment.
The task of this court however in applying the relevant authorities to which I have been referred is to determine whether there is in truth and fact a loss which could be said to be consequential upon the misleading conduct. In trying to determine whether the applicant has suffered a loss of a sum which could be said to follow as a consequence of altering his position due to the misleading and deceptive conduct I have been unable to reach a conclusion which on the balance of probabilities would satisfy me that it is appropriate to award any damages.
I should add for the sake of completeness that in the assessment of damages it is not for the court to embark upon idle speculation or to indeed try to draw a conclusion from inadequate or deficient evidence. It would not be difficult in a case of this kind to establish a claim for damages by presenting appropriate documentary material which at least provided the court with evidence upon which it could rely by way of comparative analysis between income received by the applicant in employment prior to joining the respondent and consequential loss which may have flowed from the misleading and deceptive conduct. That evidence would also include both viva voce and documentary material possibly from experts as to the projected income of the applicant had he remained in his secure employment and not accepted the position with the respondent. Regrettably that evidence was not available to this court.
Applying the passage from Hill J in Argy & Blunts (1990) 94 ALR 719 to the present case, it is my view that I am unable to conclude that there was any loss and damage suffered arising from the misleading and deceptive conduct in this matter.
Conclusion
In my view it is appropriate having regard to the findings to therefore limit the relief to be granted by this court. I propose making an appropriate declaration and in the circumstances where there has been a significant finding in misleading and deceptive conduct it is my view I should make an order that the respondent pay the applicant’s costs.
The orders I propose making are:
I declare that the respondent has engaged in misleading and deceptive conduct in breach of s 52 of the Trade Practices Act 1974 by representing to the applicant that employment with the respondent would be secure and/or for the long term.
The respondent pay the applicant’s costs including reserved costs, if any, to be taxed in default of agreement pursuant to Order 62 of the Federal Court Rules.
I certify that the preceding one hundred and fifty-six (156) paragraphs are a true copy of the reasons for judgment of McInnis FM
Associate:
Date: 9 November 2001
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