Regional Development Australia Murraylands and Riverland Inc v Smith

The Full Court of the Supreme Court of South Australia heard an appeal concerning an employment dispute between Regional Development Australia Murraylands and Riverland Inc (the appellant) and Kenneth Smith (the respondent). The dispute arose from the respondent's employment as Chief Executive Officer of the Riverland Development Corporation (RDC), which subsequently amalgamated with the Murraylands Regional Development Board Inc to form the appellant. The appeal challenged a lower court's award of damages to the respondent for breach of his employment contract.

The primary legal issues before the Full Court were whether the respondent's employment contract had been frustrated by the amalgamation of the RDC and the Murraylands Regional Development Board Inc, and whether the respondent had adequately mitigated his loss by refusing an alternative position offered by the appellant. The court also considered, though ultimately found it unnecessary to decide, whether an implied term for termination upon reasonable notice existed in the respondent's contract due to the cessation of government funding.

The Full Court, in allowing the appeal, reasoned that the contract was not frustrated. Applying the principles of frustration as summarised in *oOH! Media Roadside Pty Ltd v Diamond Wheels Pty Ltd*, the court found that the amalgamation did not render performance of the contract radically different from what was undertaken, nor did it confound a mistaken common assumption essential to performance. Furthermore, the court concluded that the respondent had failed to mitigate his loss by refusing the alternative position of Economic Development Manager.

Consequently, the Full Court allowed the appeal and entered judgment in favour of the appellant. The court also indicated it would hear the parties on the application of the *Frustrated Contracts Act 1988* (SA).