Regional Express Holdings Limited v McDonald
[2013] FCCA 1049
•9 August 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| REGIONAL EXPRESS HOLDINGS LIMITED v MCDONALD | [2013] FCCA 1049 |
| Catchwords: INDUSTRIAL LAW – Employee’s ambiguous notice of termination – whether employer obliged to clarify meaning with employee. |
| Fardell v Coates Hire Operations Pty Ltd (2010) 201 IR 64 Gunnedah Shire Council v Grout (1995) 134 ALR 156 Robinson v Becata Pty Ltd [2004] NSWSC 310 Minato v Palmer Corporation Ltd (1995) 63 IR 357 Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 Connally v Malifind Pty Ltd [1995] IRCA 84 |
| Applicant: | REGIONAL EXPRESS HOLDINGS LIMITED ACN 099 547 270 |
| Respondent: | STUART MCDONALD |
| File Number: | MLG 1331 of 2010 |
| Judgment of: | Judge Cameron |
| Hearing date: | 16 February 2012 |
| Date of Last Submission: | 16 February 2012 |
| Delivered at: | Sydney |
| Delivered on: | 9 August 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr Y. Shariff |
| Solicitors for the Applicant: | Clayton Utz |
| Counsel for the Respondent: | Mr M. Seck |
| Solicitors for the Respondent: | Cordato Partners |
ORDERS
The separate question be answered as follows:
The respondent’s employment with the applicant was terminated by him.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
MLG 1331 of 2010
| REGIONAL EXPRESS HOLDINGS LIMITED ACN 099 547 270 |
Applicant
And
| STUART MCDONALD |
Respondent
REASONS FOR JUDGMENT
Introduction
The applicant (“Regional Express”) operates an independent regional airline. From September 2008 until April 2009 it employed the respondent, Mr McDonald, as a pilot.
On 24 September 2010 Regional Express commenced proceedings in the Melbourne registry of the Court (MLG1331/2010) alleging that Mr McDonald had breached the Regional Express Pilots Certified Agreement 2005 (“Agreement”) and seeking to recover from him $13,125 which it alleged he owed by way of a training bond. On 28 June 2011 Mr McDonald commenced separate proceedings in the Sydney registry of the Court (SYG1347/2011) alleging, amongst other things, that Regional Express had breached the Agreement and the Workplace Relations Act 1996 (“WRA”) and seeking a declaration that the Agreement was invalid. On 22 July 2011 an order was made consolidating the two proceedings.
The parties agreed that a separate question should be answered as a preliminary matter. That question is whether Mr McDonald’s employment was terminated at his own initiative or at Regional Express’s initiative.
Agreement
Regional Express offered training to new pilots and in turn required them to enter into a two year training bond. The training bond requirement was found in cl.23.3 of the Agreement which relevantly provided:
A pilot who, upon initial employment, does not hold an endorsement on the aircraft type applicable to the initial equipment assignment is required to sign a two year training bond. This will be $15,000 in the case of a SAAB …. Should the pilot resign within the two year bond period, a residual amount, based on 1/8 reduction in the original bond every three months, will be paid to the Employer. This amount must be paid in full within twelve months of the pilot’s resignation date.
Clause 29 of the Agreement allowed for pilots to apply for leave of absence without pay. It relevantly provided:
A pilot may upon written request be granted leave of absence without pay. When such leave is granted the provisions to apply will be in writing and the pilot will retain seniority for an absence of twelve months. …
Clause 11 of Mr McDonald’s employment contract provided that he could terminate his employment at any time by giving written notice in accordance with the Agreement. Clause 8.5 of the Agreement provided that a pilot’s employment could be terminated in one of two ways:
8.5.1by the Employer or the pilot giving four weeks’ written notice except:
(a)where the pilot has completed less than twelve months continuous service, in which case two weeks’ written notice will apply …
8.5.2by payment to the pilot or forfeiture by the pilot from salary due, of an amount equal to the amount of salary otherwise payable to the pilot during the notice period, provided that a period of notice may be reduced or waived by mutual agreement in which case salary will be paid up to and including the last day of work.
Evidence
Chris Hine
Mr Hine was Regional Express’s Chief Operating Officer having previously been its General Manager Flight Operations and Chief Pilot. Mr Hine deposed that in the latter role he was also a member of Regional Express’s management committee and was responsible for all facets of Regional Express’s flight operations and all operational matters affecting the safety of flight operations.
On 22 September 2008 Mr McDonald commenced work with Regional Express as a Saab First Officer based in Sydney. As part of his contract and in accordance with the Agreement, Mr McDonald signed a Pilot Training Bond Declaration (“Training Bond Declaration”) on 25 September 2008. The training bond was for $15,000 and:
a)was for a period of twenty-four months from the date of his employment;
b)required that if Mr McDonald left Regional Express of his own accord during that period, he would pay Regional Express the residual amount of the training bond which would be based on a one eighth reduction in the original amount after every three months of service; and
c)required that the residual amount be paid in full within twelve months of the resignation date. The final payment to Mr McDonald upon resignation could be used to contribute to the amount owed.
On 22 and 23 December 2008 Mr McDonald did not attend work and was subsequently given annual leave for those two days. Mr Hine deposed that Mr McDonald telephoned him on 24 December 2008 and said that a degenerative disease suffered by his brother had become terminal and that his brother might have months to live. Mr McDonald told Mr Hine that he would be taking a “family before work” approach because he did not want to repeat an earlier situation in which he had seen his ill father only just before he died. Mr Hine deposed that Mr McDonald asked to use his accrued annual leave and then take leave without pay for approximately three months. He deposed that he told Mr McDonald that he would need to seek approval from Regional Express’s management committee as leave without pay was not an entitlement. Mr Hine deposed that Mr McDonald said that if he could not have leave without pay he would probably resign. Mr Hine deposed that although Mr McDonald did not make a request for leave without pay in writing, he (Mr Hine) did not believe that it was necessary in the circumstances.
On 24 December 2008 Mr Hine sent an email to Regional Express’s management committee explaining Mr McDonald’s situation. In it he said:
Basically I think if we were not to approve LWOP he would just resign so I see no reason not to anyway.
Mr Hine said that this statement was based on the discussion he had had with Mr McDonald and that he would not have come to that conclusion independently, without any discussion. The management committee decided to grant Mr McDonald leave without pay for three months, to commence upon exhaustion of his paid annual leave. Mr Hine deposed that he subsequently advised Mr McDonald of this. He deposed that he had not told Mr McDonald that his leave without pay would be for an indefinite period. He deposed that Mr McDonald commenced leave without pay on 29 December 2008 and was due to return to work on 29 March 2009.
Mr Hine deposed that during Mr McDonald’s leave, he telephoned him on a couple of occasions to find out how he was coping, how his brother was and to offer him some support. He deposed that it was not until mid-March 20009 that he raised with Mr McDonald the question of when he would return to work, at which time he asked him whether he expected to return to work at the end of his leave. He deposed that he wanted to determine whether Mr McDonald would be returning in time to be included in the next training roster. Mr Hine deposed that Mr McDonald said that he would not be returning to work and was unable to give a definite date for his return.
Mr Hine deposed that towards the end of March 2009 Mr McDonald advised him that he required a further period of leave without pay. On 24 March 2009 Mr Hine sent an email to the management committee advising them of Mr McDonald’s request. In response, Regional Express’s chairman said that he was prepared to extend the period of leave without pay until the end of April, after which Mr McDonald would have to resign if he could not return to work. Mr Hine deposed that on 25 March 2009 he spoke to Mr McDonald and advised him of the chairman’s response.
Mr Hine said that towards the end of April 2009 he had about three or four further conversations with Mr McDonald. He said that during one of those conversations he told Mr McDonald that the management committee had approved his leave until the end of April 2009, after which he would have to return to work or resign. He said that Mr McDonald was unable to give a date when he would return to work so Mr Hine told him that he would have to make a decision and let Regional Express know. Mr Hine said that Mr McDonald’s return to work, including the fact that at some point he would have to make a decision, was discussed on more than one occasion. He said that during their conversations Mr McDonald also asked if he would be able to re-apply to work at Regional Express and was told that he would be able to if he wished. Mr Hine said that from the beginning of their conversations, Mr McDonald had always had two options: returning to work after his leave without pay ended or resigning his employment, and that this was the basis of the arrangement from the very first discussion.
On 26 April 2009 Mr McDonald sent an email to Mr Hine which said:
As discussed in our recent phone conversations, I will be unable to return to Sydney to complete my remaining line training for at least the next three months. This is due to my brother’s ill health and my desire to remain with my family during this time. If continued leave without pay is not available for this period, I understand that my position with Rex will have to be terminated and that I may reapply in the future when vacancies arise. Thank you for your patience and understanding.
On 7 May 2009, Mr Hine replied to Mr McDonald’s email saying relevantly:
It is with regret that I note your decision and as further leave without pay was not available that you resign from Rex.
Mr Hine deposed that he did not receive a response from Mr McDonald. He further deposed that during his communications with Mr McDonald he had never said that Regional Express was terminating his employment but also accepted that Mr McDonald was not obliged to resign if he did not return from his leave without pay.
Mr Hine deposed that as Mr McDonald was on leave without pay when he resigned, he did not have to work out a notice period and did not have any accrued annual leave entitlements to be paid out. He deposed that following his resignation Mr McDonald returned Regional Express’s property and completed an “Employee Clearance Form” on 29 May 2009.
Stuart McDonald
Mr McDonald deposed that he read the Agreement before starting work with Regional Express on 22 September 2008. He deposed that he read the Training Bond Declaration when he signed it on 25 September 2008.
Mr McDonald deposed that in December 2008 his brother was diagnosed with leukaemia and started receiving chemotherapy. He deposed that his brother began having severe mood swings and suicidal thoughts. Mr McDonald deposed that given the severity of his brother’s condition and his mental state, he decided to go home to the Gold Coast to be near him. He deposed that in 1999 while he was working for the air force his father was diagnosed with terminal cancer. When he asked his commanding officer for compassionate leave or a posting near to his father, he was told that he could only take three days of compassionate leave before his father died or after, for his funeral. Mr McDonald deposed that he took three days off before his father died and was home when he did die. He deposed that as a result, when his brother was diagnosed with leukaemia, it was important to him to put his family before work.
Mr McDonald deposed that on 20 December 2008 he telephoned Mr Hine and that they had the following conversation:
Mr McDonald: My brother has been diagnosed with leukaemia. He is not coping well. As my father died of cancer in 1999 and I wasn’t able to spend much time with him due to my posting with the air force, I know that I don’t want this to happen again. What are my options? Do I have any leave available? If so, how much? Is there any way I can go home and spend some time with my brother? Can I go and work closer to the Gold Coast?
Is it possible to have leave without pay?
Mr Hine:I will need to speak to the management committee about it. How much time off do you need?
Mr McDonald: I don’t know, it could be a week, a month, a year, I’m really not sure. It depends on my brother’s medical condition.
Mr Hine:If leave without pay isn’t approved, what will you do?
Mr McDonald: If there is no other option, no other way I can get back to be with my family, I would probably resign.
Mr McDonald denied that he had said to Mr Hine that he would need up to three months off work. He said that he had never mentioned a time period because he had not known what that would be. He denied saying that his brother might have months to live.Mr McDonald deposed that he and Mr Hine also discussed other options such as him being based somewhere other than Sydney, but none was feasible. He deposed that Mr Hine told him that Regional Express might be establishing a base in Brisbane but that at that point it was uncertain and therefore not an option available to him. Mr McDonald said that he had initially had four options: annual leave, leave without pay, a transfer to Brisbane or, as a last resort, resignation. He conceded that once Mr Hine told him that a transfer to Brisbane was not an option and once his accrued leave ran out he only had two options, leave without pay or resignation. He later said that one further option was termination of his employment by Regional Express.
Mr McDonald deposed that after speaking to the management committee Mr Hine telephoned him and told him that his leave without pay had been approved. He deposed that Mr Hine said that he should let them know as soon as he could how long he would need but did not give him an end date for the leave.
Mr McDonald’s evidence was that after his leave without pay commenced, he had six to eight telephone conversations with Mr Hine during which Mr Hine would ask him when he was returning to work, saying the management committee wanted a definite date for his return. On each occasion Mr McDonald said he did not know when he would return. Mr McDonald deposed that he started to become offended by the telephone calls as he felt that he was being asked to predict when his brother would die, although he understood and sympathised with the position in which Mr Hine was being put by the management committee.
Mr McDonald said that Mr Hine told him in a discussion in March 2009 that his leave without pay would end by the end of April 2009. Mr McDonald later said that he only became aware that his leave without pay would finish at the end of April when Mr Hine telephoned him towards the end of that month.
Mr McDonald deposed that in April 2009 Mr Hine telephoned him and told him that the management committee had decided that if he did not return to work by the end of that month, they would have to “take [him] off the books”, which he understood to mean that Regional Express would terminate his employment. He said that Mr Hine had not said during that conversation that if he did not return by the end of April he would have to resign. He deposed that after he told Mr Hine that he understood Regional Express’s position Mr Hine asked him to send an email confirming that if further leave without pay was not approved he would be “taken off the books” and his understanding that he would have to re-apply if he wanted to work for Regional Express in the future.
Mr McDonald deposed that following their conversation, he sent Mr Hine the email set out at [14] above. Mr McDonald said that he did not use Mr Hine’s words “take [him] off the books” in his email because he did not think it was appropriate to use that phrase in the email. He confirmed that Mr Hine responded on 7 May 2009 stating:
It is with regret that I note your decision and as further leave without pay was not available that you resign from Rex.
Mr McDonald deposed that he did not pay any particular attention to Mr Hine’s use of the word “resign”. He deposed that he did not reply to the email as there was no request for a response and he considered that he had made his position clear in his email of 26 April 2009. He saw no reason to clarify anything. He deposed that he saw Mr Hine’s email as a polite response to his own email.
Mr McDonald deposed that he had not wished to resign from Regional Express but had wanted to extend his leave and return when his brother’s condition permitted.
Submissions
It is convenient to set out Mr McDonald’s arguments before those of Regional Express.
Mr McDonald
Mr McDonald submitted that the starting point of consideration in this matter was whether he resigned by the methods prescribed by the Agreement because, he said, when a contract or instrument codifies a method of termination then that method must be followed.
Mr McDonald submitted that all he had to demonstrate was that he had not resigned.He submitted that a resignation involves a decision by an employee to terminate the employment relationship voluntarily and lawfully and that to effect a valid resignation from Regional Express, a pilot who was party to the Agreement had to do so in accordance with that agreement. Mr McDonald submitted that cl.8.5 of the Agreement established two alternate methods for a pilot to terminate his or her employment: by giving written notice of a prescribed period or by forfeiting salary equal to the notice period. He submitted that in his case, he had had to give two weeks’ written notice. He pointed to cl.8.5.2 and submitted that it had to be demonstrated that there was mutual agreement between the parties for the notice period to be waived. Mr McDonald submitted that it could not be ascertained from his email or inferred from the circumstances that he had given notice of resignation in the sense of a period of notice.
Mr McDonald submitted that whether on not a contractual notice confused or misled its recipient and whether or not the recipient responded were irrelevant.He submitted that in construing his 26 April 2009 email, its meaning had to be determined by what a reasonable person in Regional Express’s position would have understood it to mean based on the language used, the surrounding circumstances known to the parties, the purpose of the email and the objects which it was intended to achieve. Mr McDonald submitted that Regional Express’s concentration on the circumstances surrounding his cessation of employment improperly emphasised antecedent discussions and Mr Hine’s subjective beliefs rather than the words used in the email.
Mr McDonald submitted that antecedent conversations could not overcome the language of the notice if that language were found to be clear and unambiguous or, to put it another way, if the notice was clear and unambiguous then there would be no need to have regard to the surrounding circumstances. He submitted that his email only suggested his understanding that Regional Express would find it necessary to terminate his employment if he did not return to work. In addresses, he submitted that his email was sufficiently clear on that point and thus the Court did not need to consider its surrounding circumstances.
In writing, Mr McDonald submitted that his 26 April 2009 email was neither clear nor unambiguous in conveying to a reasonable person that he had given notice of termination. He submitted that the email did not state that he was resigning or intended to terminate his employment and therefore the requirement for a resignation under the Agreement had not been satisfied. Mr McDonald submitted that nothing in the email stated that notice had been given, nor a termination date and one could not be inferred. He submitted that the absence of a termination date suggested that he had not intended to terminate his employment.
Mr McDonald submitted that the clear impression given by his email was that he wished to continue his employment by extending his leave of absence. Referring to his statement in the email:
If continued leave without pay is not available for this period, I understand that my position with Rex will have to be terminated …
Mr McDonald submitted that the first part (if … leave … is not available) was a condition precedent which had to be satisfied before the second part (my position with Rex will have to be terminated) could be enlivened. He submitted that satisfaction of the condition turned on Regional Express approving or declining his application for leave and, in the event that it declined his application, the second part of the statement set out his understanding of the likely consequences.
Mr McDonald submitted that he had a right to make a written request for leave without pay, which he did in the first part of the statement in that email. He submitted that Regional Express had to grant or decline his application in writing. He submitted that there was no evidence that Regional Express had notified him in writing of its decision to decline his application until after it had taken the view that his employment had already ended, i.e. in Mr Hine’s email of 7 May 2009. Mr McDonald submitted that Regional Express combined its decision to decline his request for further leave and its characterisation of his email as a resignation into a single communication when they should have been discrete steps.
Mr McDonald submitted that even assuming that Regional Express had already refused his application for further leave, his 26 April 2009 email merely set out his understanding of what would occur in the future, that his position would be terminated. He submitted that it was neither clear nor certain that he intended to convey that he would, or did, initiate the termination of his employment.
Mr McDonald submitted that the phrase “my employment will have to be terminated” contemplated that his employment could be terminated by someone’s future action. He submitted that the phrase did not clearly state whether that person would be him or Regional Express. Mr McDonald submitted that the fact that he used the word terminated rather than resigned suggested that any termination would be at Regional Express’s initiative.
Mr McDonald submitted that if he had intended to resign he would have used more direct language and that his use of the passive voice suggested that he understood that Regional Express had the power to take further action to terminate his employment. He submitted that the word “have” suggested that the termination would be by necessity or pursuant to some duty or obligation and that he had been under no obligation to terminate his employment. He submitted that his use of that word suggested that he had accepted that if he did not return to work, Regional Express would find it necessary to terminate his employment.
Mr McDonald submitted that as there was ambiguity in his alleged notice, Regional Express had a duty, which it had not discharged, to clarify with him its true meaning. He submitted that the evidence did not demonstrate that it was plain and clear to him that his only option was to resign if leave without pay was not granted or that Mr Hine understood that that was the option he, Mr McDonald, was exercising.
Mr McDonald submitted that Regional Express’s reliance on his lack of response to Mr Hine’s email of 7 May 2009 was contrary to the general principle that it is not legitimate to use as an aid to a document’s construction anything which the parties said or did after it was made. He argued that in any event, there was no reasonable basis to infer that his lack of response meant that he accepted Mr Hine’s view of his email. Mr McDonald submitted that he did not have to respond to Mr Hine’s reply to his email of 26 April 2009, not because he accepted Mr Hine’s characterisation of it as a resignation, but because he did not think anything would flow from it, specifically this litigation.
Mr McDonald submitted that if there was more than one construction of the notice available, the Court should prefer the construction which would avoid capricious, unreasonable, inconvenient or unjust consequences. He submitted that Regional Express’s construction of his email would produce a capricious, unreasonable and unjust result in that had he been dismissed for serious misconduct by reason that he failed to present for work, he would not have been required to repay the training bond. He submitted that that construction would lead to the anomalous and capricious outcome that he would have been in a better position had he engaged in serious misconduct to provoke Regional Express to dismiss him summarily so as to avoid payment of the training bond. He submitted that it would also be unjust because he would be required to repay the training bond and thus would have a penalty imposed on him for breach of the Agreement in circumstances where he had already incurred expenses in this case which exceeded the amount sought.
Mr McDonald also submitted that a conditional resignation did not operate automatically and that his case was distinguishable from Fardell v Coates Hire Operations Pty Ltd (2010) 201 IR 64 which dealt with a conditional notice of resignation.
Regional Express
Regional Express submitted that it had not been obliged to comply with the method of termination set out in the Agreement. Referring to Gunnedah Shire Council v Grout (1995) 134 ALR 156, Regional Express submitted that it was open to it as recipient to accept an inadequate notice of termination which did not comply with formal requirements. It submitted that it was not correct to say that a failure to comply with a contract’s requirements for the provision of notice would make a notice invalid. Specifically, it submitted that the Agreement did not impose a positive obligation to provide two weeks’ notice if there was contrary agreement between the parties and that in this case the evidence established that the parties had agreed that it was not necessary for Mr McDonald to give two weeks’ formal notice.
Regional Express also submitted that it was not necessary for a notice of termination to state the date of termination, as long as the date could be inferred or ascertained and that a notice may be conditional or contingent on a future event, citing Fardell v Coates Hire.
Regional Express submitted that post-contractual conduct could be used to determine the terms of a contract and that in determining what happened in this case the Court would be assisted by the context of conversations which preceded and followed the purported resignation. Referring to Robinson v Becata Pty Ltd [2004] NSWSC 310 and other authorities, Regional Express submitted that a notice of termination had to be construed by reference to a reasonable person in the position of the recipient of the notice, having regard to that person’s knowledge of the circumstances surrounding the provision of the notice and their knowledge of the background of the dealings between the parties. It submitted that Mr McDonald’s email of 26 April 2009 was to be considered in the context of the surrounding circumstances. Regional Express submitted that a reasonable person in Mr Hine’s position would have read the email, having regard to the surrounding circumstances, and understood it to mean that Mr McDonald was resigning. Regional Express submitted that the authorities did not establish that it is impermissible for the Court to look at the circumstances in which a notice of termination is given in order to determine its effect. It submitted that it did not seek to rely on Mr Hine’s subjective beliefs concerning Mr McDonald’s termination but rather relied upon the circumstances surrounding the resignation.
Regional Express submitted that, contrary to Mr McDonald’s submissions, it was not evident from the authorities that the “canons of contractual construction” applied to determining the validity of a notice of termination. It submitted that if they did apply, it was also appropriate to consider other canons applicable to a contract formed by a course of conduct, namely oral exchanges, written documents and inferences that could be drawn from the parties’ words and conduct.
Regional Express submitted that the evidence established that:
a)from the outset Mr McDonald knew that he would have to resign if he was unable to return to work and obtain leave without pay;
b)from mid-March 2009 Mr McDonald knew that he would have to resign if he could not return to work by the end of April 2009;
c)it was clear from the 26 April 2009 email that Mr McDonald knew that his employment would end if leave without pay was not available;
d)it was entirely within Mr McDonald’s power to determine whether his employment would end if leave without pay was unavailable as it was his choice whether or not to continue his employment; and
e)it was clear from Mr McDonald’s lack of response to Mr Hine’s email of 7 May 2009 that he did not demur to the statement that he had resigned.
Regional Express submitted that, having regard to the background facts and context, it was evident that Mr McDonald’s 26 April 2009 email was clear and unambiguous. It submitted that it contained a notice of termination or resignation which was conditional on the availability of leave without pay. It submitted that Mr McDonald’s email was analogous to the situation in Fardell v Coates Hire in that it expressed Mr McDonald’s intention to terminate his employment if leave without pay was not available. It submitted that the date the notice took effect was ascertainable by reference to the condition.
Regional Express submitted that the statement in the second part of Mr McDonald’s 26 April 2009 email that:
If continued leave without pay is not available for this period, I understand that my position will have to be terminated…
did not merely express a subjective or passive understanding of the likely consequences of a lack of further unpaid leave but was an acknowledgement or acceptance by Mr McDonald of those consequences. It submitted that the terms of the email and the events leading up to it made it clear that Mr McDonald was not merely communicating his subjective perception that his employment would have to terminate, but rather communicated that he knew and accepted the inevitability that his employment would terminate because of his decision to not continue his employment if he was not granted leave without pay.
Regional Express submitted that the word ‘resign’ did not have to be used in order for there to be a termination of employment at an employee’s initiative. It submitted that the words Mr McDonald intended to use in his email were irrelevant and the question was instead whether the words he used would convey to a reasonable person in its position that he was resigning. Regional Express submitted that parsing the words of the email instead of reading it against the background of the dealings of the parties was approaching it in too technical a fashion. It submitted that to a reasonable recipient of the email in its position, Mr McDonald was clearly communicating that if leave without pay was not available his employment would be at an end by reason of his decision not to continue with it.
Regional Express submitted that given the history of dealings between the parties, if leave without pay was not available and Mr McDonald was not ready, willing and able to perform his duties or was unwilling to continue his employment, termination could only have been at his initiative. It submitted that it was unreal to say that the termination occurred at its initiative in circumstances where it was Mr McDonald who had expressed his unwillingness to continue his employment. Regional Express submitted that the 26 April 2009 email should also be read in the context of earlier communications where Mr McDonald had accepted that he would resign if leave without pay was unavailable and was on notice that this was likely to happen by the end of April 2009. It submitted that there were never any discussions or communication about it terminating Mr McDonald’s employment.
Regional Express submitted that Mr Hine’s email of 7 May 2009 was a written refusal of leave without pay as required by cl.29 of the Agreement. It submitted that as a result of the email the condition set by Mr McDonald was satisfied and it was therefore correct for Mr Hine to note that as a result of the non-fulfilment of the condition Mr McDonald had resigned. Regional Express submitted that the non-fulfilment of the condition triggered the termination, and, once this occurred, it was open to it to immediately accept a lesser period of notice and to accept the informality of Mr McDonald’s notice.
Regional Express submitted that it had no obligation to clarify with Mr McDonald the true meaning of his notice but that in any event, Mr Hine’s 7 May 2009 email put Mr McDonald squarely on notice that he had resigned. It submitted that Mr McDonald’s evidence that he saw no need to respond to the email was a telling admission. Regional Express submitted that Mr McDonald saw no reason to reply to Mr Hine’s email of 7 May 2009 because it was accurate. It submitted that Mr McDonald was content with its characterisation of what had happened until he faced a demand for payment of the training bond in the second half of 2009. Regional Express submitted that Mr McDonald was aware of his training bond obligation and the circumstances surrounding leave without pay and argued that if he had not resigned as stated in Mr Hine’s email, he would have raised that issue.
Regional Express submitted that if the 26 April 2009 email was open to two or more constructions, it should be construed against Mr McDonald’s interest as the author of the notice.
Regional Express submitted that it was difficult to determine what would amount to a capricious conclusion. As to whether it should have sought clarification of Mr McDonald’s email, Regional Express submitted that Minato v Palmer Corporation Ltd (1995) 63 IR 357, and related cases, should be treated with caution because they dealt with resignation that had been made in the heat of the moment and related to a specific statutory context. It was submitted that there was no suggestion that Mr McDonald had written his email in the heat of the moment but rather that it came at the end of a five month period during which there had been ongoing discussions.
Consideration
The question ordered to be determined separately is whether Mr McDonald’s employment was terminated at his initiative or at the initiative of Regional Express. As noted earlier, according to the Agreement, Mr McDonald’s employment could be terminated on two weeks’ written notice given by him or by Regional Express. It could also be terminated without notice by payment to Mr McDonald, or by him forfeiting, the salary applicable to the notice period. The parties agreed that Mr McDonald’s employment had terminated but disagreed on how that had occurred.
Mr McDonald did not suggest that Regional Express had expressly terminated his employment and no evidence was adduced which indicated that Regional Express ever sought to do so, whether by an exercise of its rights under cl.8.5 of the Agreement or otherwise. Regional Express never relevantly said anything other than that it accepted Mr McDonald’s resignation. Nevertheless, on 29 May 2009 Mr McDonald went back to Regional Express to return its property at which time he also signed an “Employee Clearance Form” which, amongst other things, noted that his employment had ended on 17 May 2009, which it might be noted, was less than fourteen days after Mr Hine’s email of 7 May 2009.
Notwithstanding Mr McDonald’s evidence to the contrary, for the reasons which follow I have concluded that because of the events leading up to Mr McDonald’s email of 26 April 2009, Regional Express and Mr McDonald both understood that Mr McDonald’s employment ended because he terminated it. That is to say, they recognized that once Regional Express advised that no further leave without pay would be available, nothing more than Mr McDonald’s email of 26 April 2009 was required to terminate his employment.
This understanding was correct but it does not decide the separate question. Mr McDonald’s email of 26 April 2009 was not unambiguously a notice of termination and whether it should be regarded as such, regardless of the parties’ subjective appreciation of it, is a matter of construction.
Notices such as a notice of termination under cl.8.5 of the Agreement do not require acceptance or rejection by the receiving party and belong to the general class of unilateral notices which may be served pursuant to a contractual right: see Fardell v Coates Hire at 88 [93]; Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 at 768; Robinson v Becata at [49]. Such notices are construed according to principles which are analogous to those applied in the consideration of contracts: Robinson v Becata at [53], Mannai at 767, 779-780. That is to say:
[A]n effective notice is one which conveys its message clearly … and distinctly to a reasonable reader in the position of the recipient of the notice. Being “in the position of the recipient” involves, in particular, having the knowledge of the circumstances surrounding the transaction in which the notice is given which the recipient has or ought to have. (Robinson v Becata at [49])
A statement to similar effect was made in Fardell v Coates Hire at 85 [92]. However, evidence of surrounding circumstances will not be admissible unless the language of the notice is ambiguous or susceptible of more than one meaning. It will not be admissible to contradict language which has a plain meaning: cf. Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352. As already noted, Mr McDonald’s 26 April 2009 email was less than completely clear.
The fact that a notice of termination is expressed to be conditional on the occurrence of an identified event does not prevent it from being effective. In Fardell v Coates Hire, the plaintiff gave written notice of the termination of his employment agreement with the defendant conditional upon a certain event happening which did, in the result, occur. White J held that the plaintiff had given notice of termination of the employment agreement upon satisfaction of the condition and that a conditional notice of termination operates from the fulfilment of the condition as long as the party receiving the notice is in a position to know whether the condition has been satisfied or not. The evidence in that case did not clearly identify when the condition had been satisfied but, as it arose out of a decision taken by the defendant, that did not matter because the defendant knew when that was. It therefore had notice as to when the notice period commenced, namely the date when the condition was satisfied by its own actions.
A notice of termination must specify when it takes effect or that time must be ascertainable: Fardell v Coates Hire at 85 [82]. In Fardell v Coates Hire the notice of termination did not expressly state any particular period of notice but instead referred to and relied on an identified provision in the employment agreement which stated that an employee could resign at any time by giving three months’ notice. White J held that it would have been clear to a reasonable person in the circumstances that the plaintiff was giving three months’ notice if a particular event was to occur, with the consequence that the notice did specify a time when it would take effect should its condition precedent be satisfied.
Construction of Mr McDonald’s email of 26 April 2009 begins with his conversation with Mr Hine in December 2008, when he first sought leave without pay in order to be with his ill brother. The evidence of both Mr Hine and Mr McDonald was to the effect that in December 2008 Mr McDonald said that he would probably resign from Regional Express if he was unable to take that leave. Further, neither Mr McDonald nor Mr Hine suggested in connection with any of their conversations concerning Mr McDonald’s leave and return to work that Regional Express had stated expressly that it would dismiss Mr McDonald if he failed to return to work once his leave concluded. It can be inferred that such a step was unnecessary because Mr McDonald had, from the outset, foreshadowed the probability that he would resign if he could not get the leave he sought. I infer that the conversations between Mr Hine and Mr McDonald prior to the 26 April 2009 email took place in the context of that December 2008 concession.
Whether or not by March 2009 Regional Express had for some time been pressing Mr McDonald for a definite date for his return, and regardless of the terms in which the unpaid leave was granted, specifically whether it was open-ended or initially for only a three month period, I am satisfied that by the end of March 2009, Mr McDonald was under no illusion that his leave was not indefinite and that Regional Express wanted to know when he planned to return. As a consequence, it would also have been apparent that the continuation or termination of the employment relationship would be at his election, based on whether he returned to work when his leave finished. It is therefore significant that Mr McDonald did not suggest in his evidence that he had, at any point before his conversation with Mr Hine which led to the 26 April 2009 email, given Regional Express any reason to doubt that he was likely to resign if he could not obtain the leave he sought, as he had indicated the preceding December.
On Mr McDonald’s allegation, Mr Hine said in April 2009 that he would be taken “off the books” if he was unable to return to work at the end of his leave. If those words were said I do not infer that they implied a future dismissal of Mr McDonald. The expression “take off the books” is no more indicative of a dismissal than it is of the steps an employer would take following a resignation and it might be expected that a person in Mr Hine’s position and with his experience would not have minced words if he had intended to convey to Mr McDonald that he would be dismissed if he failed to return from leave. I conclude that in context this expression, if it was used, did no more than describe what Regional Express would have to do if Mr McDonald terminated the employment relationship.
In argument reference was made to the fact that in his email of 7 May 2009 Mr Hine had characterised Mr McDonald’s 26 April 2009 email as a resignation and that Mr McDonald had not contemporaneously challenged this. Although that conduct sheds light on Mr McDonald’s subjective appreciation of the situation, it is of no relevance to the task of construing the 26 April 2009 email. Nor can construction of Mr McDonald’s email of 26 April 2009 be undertaken by reference to the fact that, without any more having been said by the parties, and specifically no express dismissal by Regional Express, not long after Mr Hine’s email of 7 May 2009 Mr McDonald returned Regional Express’s property and signed off. Nevertheless, that conduct is suggestive of Mr McDonald’s own understanding of the situation.
I find that in the circumstances which existed at the time Mr McDonald’s email of 26 April 2009 was received by Regional Express, a reasonable recipient in the circumstances would not have read it as foreshadowing the possibility that Regional Express would have to dismiss him. Rather, the reasonable person would have understood it to mean that Mr McDonald accepted that he would have to bring his employment with Regional Express to an end because he felt unable to return to work at the end of his leave. Even though the word “terminated” was used in that email, in context it was no more than a reference to the administrative step of taking Mr McDonald “off the books” consequent upon his termination of the employment relationship.
Because the context of the 26 April 2009 email would have made it clear to a reasonable recipient in the circumstances that its reference to termination was a reference to termination at Mr McDonald’s election, the fact that it was expressed to be conditional upon there being no extension of his unpaid leave is of no particular significance. Fardell v Coates Hire shows that a termination can be expressed in conditional terms. In this case, because of the substance of the communication between Mr McDonald and Mr Hine which led to the 26 April 2009 email, Regional Express knew, upon receipt of that email, that the condition which the email expressed had already been satisfied and thus that the notice was effective upon receipt.
Reference should also be made in this connection to Mr McDonald’s argument that any refusal of further leave should have been in writing. To the extent that was necessary, that condition of the Agreement was satisfied by Mr Hine’s email of 7 May 2009. Nevertheless, the matter in question is not whether further leave was refused in accordance with the Agreement but whether conditions existed such that a reasonable person in the circumstances would have understood Mr McDonald’s email of 26 April 2009 to have been a notice of termination of his employment.
The fact that the email did not expressly refer to the fourteen day notice requirement of cl.8.5 is of no importance if Regional Express was willing to accept it and act on it nonetheless. Plainly it did so, as evidenced by Mr Hine’s email of 7 May 2009 and the separation date recorded in the “Employee Clearance Form”. Further in connection with that form, it might be noted that the stated separation date was more than fourteen days after Mr McDonald’s 26 April 2009 email and so no abbreviation or waiver of the contractual notice period needed to be agreed between the parties.
Regional Express submitted that the 26 April 2009 email should be construed against Mr McDonald’s interests because he was its author. However, the circumstances surrounding that email have led me to conclude that its meaning would have been sufficiently clear to a reasonable person in the circumstances such that there is no need to construe it contra proferentem.
Similarly, it is neither unreasonable, unjust nor productive of a capricious outcome to construe the email according to its objective meaning in circumstances where the parties understood the email to have that meaning, as I have found was the case.
Mr McDonald also submitted that, if his email was indeed ambiguous, Regional Express should have clarified its meaning with him. In this regard he referred to Minato v Palmer Corporation Ltd and Connally v Malifind Pty Ltd [1995] IRCA 84. Those decisions do not accurately state the law relevant to the present case. A contractual notice means what a reasonable person in the circumstances of the recipient would understand it to mean. An employer is not obliged to invite a resigning employee to suggest that his or her notice of termination means something different from what it objectively conveys.
Conclusion
The question for separate determination was not expressed as well as it might have been. The issue it presented was whether Mr McDonald’s employment was terminated by him or by Regional Express. I find that it was terminated by him and that the separate question should be answered accordingly.
I certify that the preceding seventy-five (75) paragraphs are a true copy of the reasons for judgment of Judge Cameron
Associate:
Date: 9 August 2013
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