Roberts, S.C. v Hongkongbank of Australia Ltd

Re: STUART CAMPBELL ROBERTS
And: HONGKONGBANK OF AUSTRALIA LIMITED
No. VG31 of 1991
FED No. 248
Number of pages - 19
Employment Contract

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIAN DISTRICT REGISTRY
GENERAL DIVISION
Lockhart J (1)

CATCHWORDS

Employment Contract - whether alleged representation formed part of terms of employment - breach of contract of employment - reasonable notice of termination - alleged misrepresentation in respect of staff loan - whether alleged misrepresentation clear and unambiguous and capable of constituting misleading or deceptive conduct - s. 52 Trade Practices Act 1974 - whether interest on housing loan in the nature of a penalty - whether terms of settlement signed by one promisor operated as a release of liabilities of other promisor.

Trade Practices Act 1974: s. 52

HEARING

SYDNEY, 6-8 April 1993

#DATE 28:4:1993

Applicant appeared for himself.

Counsel for the Respondent : Mr T Ginnane

Solicitors for the Respondent : Mallesons Stephen Jaques

ORDER

The Court orders that:

1. the application be dismissed;

2. the judgment be entered for Hongkongbank of Australia Limited against Stuart Campbell Roberts on the cross-claim of the Bank in the sum of $359,654.40;

3. there be no order as to the costs of the proceeding except orders that have been previously made by the Court or a judge of the Court which orders shall continue to subsist;

4. exhibits may be handed out unless an appeal is lodged from this judgment within 21 days from today.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

LOCKHART J Stuart Campbell Roberts sues Hongkongbank of Australia Limited ("the Bank"), claiming damages for breach of his contract of employment with the Bank. He also claims damages from the Bank for alleged contraventions by it of s. 52 of the Trade Practices Act 1974 ("the Act") arising from the making by the Bank of certain alleged representations in respect of a loan made by the Bank to him and his wife, Carolyn Joy Roberts, secured by mortgage over their home. Mr Roberts seeks an order under s. 87 of the Act varying the terms of the loan agreement and of the mortgage, and an injunction restraining the Bank from taking any steps to enforce the loan and mortgage.

The Bank cross-claims against Mr Roberts for recovery of the outstanding sums owing under the loan and mortgage by way of principal and interest.
It is a sad case of a man in middle age being retrenched from a senior position by his employer during a recession.
Mrs Roberts was an applicant in, and a cross-respondent to, the proceeding; but before the commencement of the hearing, the Bank settled the dispute between it and her relating to her claim and the Bank's cross-claim. Both Mrs Roberts and the Bank signed "Terms of Settlement" to which reference will be made later.
Mr Roberts was represented in the earlier stages of the case by counsel and solicitors, but he was unrepresented at the final hearing. Though he is not a lawyer, he is an experienced businessman and obviously intelligent. I did my best to assist him in the conduct of his case, in both the presentation of evidence and argument. I did not, of course, assume the role of his advocate.
I took a benevolent view about the admissibility of much of the evidence which Mr Roberts sought to adduce. I admitted certain evidence, rejected a great deal of it, and allowed a fair body of evidence to be given by him and witnesses called by him subject to objection and relevance. I took this course because it was very difficult to disentangle the relevant from the irrelevant, and no discernible prejudice was caused to the Bank. The course taken with the evidence of Mr Roberts himself (in the absence of his being able to ask himself questions in the witness box) was as follows. He had prepared a written statement in advance. Both parties and the Court treated the written statement as the evidence which Mr Roberts would have given if he had been asked questions and answers in accordance with the substance of that document. Mr Roberts verified his statement in the witness box.
I should say at this stage that I have reached the conclusion that all the evidence which I admitted subject to relevance and objection is inadmissible. However, if I had paid regard to it (and, I should add, to the evidence which I rejected) my findings in this case would have been the same as they in fact are.
Obviously it is a disadvantage to a party not to have lawyers appearing in Court; but I was at pains to ensure in this case that this disadvantage was kept to the minimum. At one stage Mr Roberts said that certain last minute amendments to the defence and cross-claim by the Bank left him at some disadvantage. Following discussion between Mr Roberts and the bench he did not seek to have the matter adjourned. Mr Roberts did not suffer any real disadvantage by reason of the late amendments to the defence and cross-claim of the Bank. I should add that Mr Roberts himself was given leave by me to file in Court on the first day of the hearing an amended reply and an amended defence to cross-claim (the document in fact being headed "Amended Defence and Amended Cross-Claim").
Most of the amendments embodied in the Bank's Amended Defence and Amended Cross-Claim filed in Court on the first day of the hearing were of a formal nature; and some allegations simply made specific what was covered by a general denial in the earlier defence. Though there were certain matters raised in the defence and cross-claim which had not been raised before, they did not in my view put Mr Roberts at a disadvantage.
The case for Mr Roberts is that:

. he was employed by the Bank in Melbourne in certain senior positions, ultimately as an Associate Director; . it was a term of his employment that the Bank would give him reasonable notice of any termination of his employment or pay him a reasonable sum in lieu of such notice; . the Bank would make available to Mr and Mrs Roberts a housing loan at a concessional interest rate repayable over a long term; . the Bank would in addition pay to him a reasonable sum or would make other arrangements to compensate him and Mrs Roberts for the economic prejudice which would be caused to them by reason of having to refinance any housing loan made to them in the event of the termination of Mr Roberts' employment; . in the event of any termination of Mr Roberts employment, the Bank would not insist upon immediate repayment of the loan but would exercise its discretion to make the loan repayable at a time and on terms different to the Bank's standard form of terms and conditions so as to protect their economic interest.

Mr Roberts employment was terminated on 27 February 1990. He alleges that the Bank in so terminating his employment breached the terms of the employment contract by failing to pay him a reasonable sum in lieu of giving him a reasonable period of notice of termination; by failing to pay him a reasonable sum or make other arrangements to compensate him and Mrs Roberts for the economic prejudice caused to them in the event of having to refinance their housing loan from the Bank; and by failing reasonably to exercise the discretion which it had expressly provided for in the terms of its loan to Mr and Mrs Roberts to make the loan repayable at a time and on terms different from the standard form, terms and conditions so as to protect their economic interests.
In addition, Mr Roberts asserts that the Bank made representations to him and Mrs Roberts which constituted misleading and deceptive conduct. The representations as pleaded are said to be:

1. that in the event of any termination of Mr Roberts' employment the Bank would not insist upon immediate repayment of the loan in accordance with the standard, form, terms and conditions purporting to apply in such circumstances; but would reasonably exercise the discretion which it had expressly provided for in the terms of its loan to Mr and Mrs Roberts to make the loan repayable at a time and on terms different to the standard form, terms and conditions so as to protect the economic interests of Mr and Mrs Roberts;

2. that Mr and Mrs Roberts could adequately service the payments required to be made to the Bank in respect of the loan because Mr Roberts' employment with the Bank was secure and would not be terminated and that the employment would continue until he reached the age of 60 years in 1998.

Mr Roberts asserts in his statement of claim that the Bank engaged in misleading and deceptive conduct in that it always intended to reserve to itself a right, despite the representations:

(a) to insist upon immediate repayment of the loan in accordance with the standard form, terms and conditions of its form of loan; and

(b) to terminate Mr Roberts' employment at any time, thus creating economic difficulty for himself and his wife in servicing the payments required to be made to the Bank in respect of the loan in the event of the termination of Mr Roberts' employment.

Mr Roberts alleges in his statement of claim that, as a result of the breach of contract and misleading and deceptive conduct, he sustained loss and damage, namely:

. the Bank failed to pay him an additional sum in lieu of notice representing an additional eight months salary; . the Bank failed to compensate him and his wife in respect of the economic prejudice which would be suffered by them if they were forced to refinance the home loan made to them by the Bank with another financier upon normal commercial terms; . alternatively to the last paragraph, as Mr and Mrs Roberts were (it is alleged) compelled, by reason of the economic prejudice suffered by them as a result of the Bank's action, to sell their home, they suffered loss and damage.

The Bank cross-claims against Mr Roberts for the principal and interest due under the loan from and mortgage to the Bank.
I shall now make my findings of fact. For some years before 1981 Mr Roberts was a licensed real estate agent in Sydney, specializing in major city buildings and development sites for investment purposes. One of his clients was Wardley Australia Limited ("Wardley") with whose senior executives he developed a close relationship. He was invited to join Wardley as property finance manager. Wardley was a relatively new merchant bank in 1981: it was formed as a result of the amalgamation of Hongkong Finance Limited and Intermarine Australia Limited. Wardley was at that time, it seems, owned and controlled substantially by the Hongkong and Shanghai Banking Corporation, a Hong Kong company, ("the Hong Kong bank") one of the largest banks in the world, with its headquarters in Hong Kong.
Mr Roberts remained in the employment of Wardley until February 1986 when he commenced employment with the Bank. Mr Roberts' duties with Wardley involved travelling frequently interstate (he was based in Sydney). Melbourne was of particular importance, because the Melbourne branch office of Wardley was operating successfully under the new executive director, a Mr James Tomkins. Mr Roberts gave evidence that Mr Tomkins spoke to him on a number of occasions before he joined the Bank in February 1986 and in effect told Mr Roberts that it would be in the best interests of himself and his family if he became an executive with a bank to be formed following deregulation in Australia, the bank to be ultimately controlled by the Hong Kong bank and that in the future Wardley would probably become a subsidiary of the new bank to be formed. Mr Roberts had been offered and accepted a housing loan which, according to his evidence, Mr Tomkins said would be increased. The statements alleged to have been made by Mr Tomkins to Mr Roberts were made before he commenced his employment with the Bank and whilst he was employed by Wardley. Mr and Mrs Roberts moved house from Sydney to Melbourne in December 1984. Mr Roberts decided that he would take up a position with the Bank when offered to him.
The Bank was incorporated on 17 June 1985 as a public company limited by shares and on 5 February 1986 received authority under the Banking Act 1959 to carry on banking business in Australia.
On 6 February 1986 Wardley changed its name to Hongkong Finance Limited and on 30 December 1988 the Bank purchased forty-nine per cent of the shares in the issued capital of Wardley.
Mr Tomkins was not called as a witness. Mr Roberts informed the Court that he was available to give evidence, but that he was very unwell and Mr Roberts did not think he should, in effect, put his health at risk.
The evidence of Mr Roberts as to what Mr Tomkins said to him before he commenced his employment with the Bank is general in nature. I am prepared to accept that Mr Tomkins did in effect paint a fairly rosy picture to Mr Roberts of what his job would be if he left Wardley and accept a senior appointment with the Bank. In my opinion it falls short, however, of establishing the representations which are pleaded in the statement of claim. I am satisfied that Mr Tomkins probably said to Mr Roberts that if he took up employment with the Bank the prospects of his security and advancement were considerable and that Mr Tomkins said in effect that he would look after him.
I do not accept that statements of this general kind could be translated into an inducement that Mr Roberts would be able to remain in the bank's employ for the rest of his life or until he reached 60 in 1998. In short, I think Mr Tomkins engaged in some degree of puffing to obtain the services of Mr Roberts for the Bank (not then formed); but in my opinion they do not constitute promises of sufficient clarity and certainty to have contractual significance or to constitute representations which could found misleading or deceptive conduct under s. 52 of the Act.
Speaking generally, representations, to have contractual force or to fall within s. 52, must be clear and unambiguous or at least not so vague as to be illusory: see Legione v Hateley (1983) 152 CLR 406 at 435-6; Bio-Technology Australia Pty Limited v Pace (1988) 15 NSWLR 130 at 135-7, 144, 151-156.
I note also that a Full Court of this Court, in hearing an appeal in the present proceeding from a decision of a Judge of the Court granting leave to Mr and Mrs Roberts to amend their statement of claim (when Mrs Roberts was a party) (Northrop, Jenkinson and Lee JJ, 10 February 1992, unreported), said (at 8) that the statement of claim did not plead that:

"The bank as a separate entity was aware of and/or adopted the representations of Tomkins made as an employee of Wardley. The pleading may have been sufficient to expose a cause of action against Wardley, but in the absence of any further pleading it was wholly inadequate to raise any cause of action against the bank".

At that stage of the case Mr and Mrs Roberts were represented by counsel and solicitors. On 12 May 1992 the solicitors then acting for Mr and Mrs Roberts filed a "Notice of Withdrawal of Practitioner". No relevant amendments to the statement of claim have since been made.
On 17 December 1985 the Bank wrote a letter to Mr Roberts confirming that it wished to offer him the position of "Manager - Credit (Property)". The letter made it clear that the offer did not take account of "any possible promotion issue currently being evaluated" as part of a salary review. The letter mentioned certain of the proposed terms of engagement and concluded with a paragraph stating that a formal offer listing all the terms and conditions of Mr Roberts' employment would be sent to him as soon as "the Wardley salary review is complete".
By letter dated 31 January 1986, signed by Mr Snowden, the Managing Director of the Bank, the Bank informed Mr Roberts of the details of the terms and conditions of his employment by the Bank with effect from 1 February 1986. The letter covers a little more than two pages and was signed by Mr Roberts on 12 February 1986.
I shall not set out all the terms and conditions referred to in the letter, but they include the following:

. Mr Roberts' salary would be $51,000 per annum with salary reviews conducted in December each year; . he would be entitled to membership of the Bank's superannuation scheme;

. he would be entitled to annual leave and sick leave; . he would be entitled to reimbursement of fees for membership of professional associations and a club; . his telephone costs up to $500 per annum would be reimbursed at the Bank's discretion;

. "(h) You will, subject to the terms and conditions of our housing loan program, be entitled to a housing loan of up to $200,000 at an interest rate determined from time to time by the bank. The present interest rate is 5 per cent per annum. The full details of this program will be advised to you in due course." . he would be provided with the full use of a motor vehicle and reimbursement of certain expenses associated with its use; . "(j) Your employment is subject to termination by one month's notice on either side. However, the bank reserves the right to give pay in lieu of that at its discretion."

The letter concluded by asking Mr Roberts to sign and return the attached copy of it to the Bank if it was satisfactory to him. Mr Roberts signed the attached copy and return it to the Bank. Above his signature appear the words "I agree to the above terms and conditions and I accept the offer of employment with the Hongkongbank of Australia Limited contained herein".
The letter also stated that the terms and conditions of the offer would be subject to change if the proposed tax on fringe benefits was introduced; and it said that the Bank would be sending him a "job description" in due course.
Mr Roberts gave evidence that at the time he signed the letter of appointment on 12 February he mentioned to Mr Snowden "that there were special conditions applicable to me." Mr Roberts said that Mr Snowden said "You are in the process of being appointed senior manager, those conditions will be reflected in your new letter of offer". Mr Roberts said that the conversation with Mr Snowden was on about 12 or 13 February 1986 and that it took place in Mr Snowden's office in Melbourne. Mr Roberts said he questioned Mr Snowden about the provision in the letter of the right of the Bank to terminate his employment on 30 days notice, and reminded him of the undertakings that had been given by Mr Tomkins, to which Mr Snowden said in effect:

"Don't worry about it, your senior management promotion is coming through and you'll get a new letter of appointment".

Mr Roberts said he did not see any subsequent letter of appointment. Mr Roberts described this statement by Mr Snowden as "a throw-away sentence".

Evidence was later given that Mr Snowden has retired from the Bank and lives in Scotland. The first that the Bank heard of any relevant alleged discussions between Mr Snowden and Mr Roberts was when Mr Roberts referred to this in his evidence on the afternoon of the first day of the hearing before me.
I am not satisfied that Mr Snowden did make statements of the kind which Mr Roberts attributes to him; though in fairness to Mr Roberts his recollection of the conversation with Mr Snowden which he alleges took place is cast in the most general terms. Even if the statements were made I am not persuaded that they could be statements having the force of terms of a contract of engagement between himself and the Bank or representations of the kind contemplated by s. 52.

I should say at this point that I found Mr Roberts basically a truthful witness, but I have reservations about the remarks said to have been made by Mr Snowden, and am not persuaded that they were made.
When Mr Roberts joined the Bank in February 1986 he first occupied the position of "Manager - Credit (Property)" for a few months, then became "Senior Manager Property Finance" until 31 December 1989 and then an "Associate Director Project Finance and Property Services", a position which he held until the termination of his services on 27 February 1990.
The hierarchy within the Bank structure in Australia was, from the most senior position in the Bank down (I leave aside the Board of Directors), namely, Chief Executive Officer, to the Joint Managing Directors, then to divisional directors (of whom there were ten) and below that to Associate Directors (of whom there were 45), Mr Roberts being one of them. His appointment to that office did not entail any increase in salary.
By letter dated 4 August 1987 from the Bank to Mr Roberts, the Bank set out the details of the proposed housing loan to Mr and Mrs Roberts, said that it was made pursuant to the Bank's staff housing loan scheme and described the borrowers as Mr and Mrs Roberts and the amount to be borrowed as $305,000. Clause 3 reads as follows:

"Term: Twenty-five years or to the date of retirement whichever comes first. This loan is repayable in full at the expiration of three months from the date of your ceasing to be an employee of Hongkongbank of Australia Limited for any cause whatsoever or such later date as Hongkongbank of Australia Limited must in its discretion determine."

The interest rate was said to be 5 per cent. The security was expressed to be a registered first mortgage over the home of Mr and Mrs Roberts at 676 Toorak Road, Malvern.

The mortgage which Mr and Mrs Roberts gave over their home in favour of the Bank appears to be the Bank's standard form of mortgage with certain additional clauses including annexure "B", clause 5 of which states:

"5. Notwithstanding the generality of further provision 1. hereof the secured money shall become repayable in full at the expiration of three months from the date of Stuart Campbell Roberts ceasing to be an employee of the Bank for any cause whatsoever or such later date as the Bank may in its absolute discretion determine."

Clause 1 (also included as a further provision in annexure "B") states that the secured monies shall be payable "on the date on which the same become due for payment under any agreement or obligation and if there is no date otherwise applicable then upon demand in writing being served upon the Mortgagor".
By letter dated 18 August 1988 the Bank informed Mr Roberts that it had approved the provision to him of a staff housing loan on the basis that the amount of the loan was increased to $410,000 repayable over 25 years "or to the date of retirement whichever comes first" and provided for acceleration of the repayment date to the same effect as in clause 5 of annexure "B" to the mortgage.
The amount of the loan to Mr and Mrs Roberts was increased from time to time on the security of their home namely to $500,000 in March 1989, $540,000 in August 1989 and finally $550,000 in October 1989.
On 27 February 1990 Mr Dickinson, a senior executive of the Bank, spoke to Mr Roberts and in the course of the discussion handed him a letter dated 27 February 1990 which said that "due to a restructuring of the bank your position has become redundant."
The letter then said that Mr Roberts would receive a severance payment, leave payments and certain other monies to be paid to him. His last working day with the Bank was said to be that day itself, 27 February 1990, and his actual day of leaving the service of the Bank would be the end of a period of notice, namely, 27 March 1990 (30 days later). It said that all benefits, entitlements and accruals would continue until 27 March 1990. It said that the housing loan of $550,000 would:

"revert to the Fringe Benefits Tax Benchmark Rate (currently 14.25%) one (1) month from today, being 27 March 1990 and you will then have a period of up to three (3) months to refinance your loan. Your loan is repayable in full on 27 June 1990."

The letter referred to the fact that "outplacement services" (a form of counselling) would be provided by Davidson and Axsmith of Melbourne at the Bank's expense. The letter concluded by thanking Mr Roberts for his services.

There was communication between Mr Roberts and the Bank after he had been retrenched. The Bank informed him by letter of 6 March 1990 that the Bank was not in a position to vary the interest rate due on his housing loan from that offered in the letter of 27 February 1990, being 6% on $550,000 until 27 March 1990 and thereafter 14.25%. The Bank said in its letter that it would be prepared to continue to carry the loan at 14.25% for a maximum period of twelve months and that the loan would be repayable in full on 27 March 1991 or when Mr Roberts was again employed, whichever was the earlier.
There was further communication between Mr Roberts and the Bank.
Shortly after the termination of his employment the Bank paid Mr Roberts a gross sum of $178,686.80 (net $170,280.78) in respect of his annual leave, back pay and approximately ten months pay by way of notice and severance pay. The Bank also paid for outplacement counselling for Mr Roberts in the sum of $11,610 and Mr Roberts' legal costs of $4,147.60 of attempting to obtain an estate agent's licence under the relevant Victorian legislation.
On 13 February 1991 the present proceeding was commenced by Mr and Mrs Roberts.
Mr Roberts' solicitors wrote to the solicitors for the Bank on 12 July 1991 saying that Mr and Mrs Roberts had arranged for their home at Malvern to be auctioned on 31 August 1991 and that they intended to sell the property provided they received a reasonable offer. Mr and Mrs Roberts were concerned that if the net proceeds of the best acceptable offer were insufficient to discharge the amounts claimed by the Bank as being due under the mortgage, the Bank might refuse to discharge the mortgage on settlement. A statement of the Bank's attitude was requested in the letter.
The solicitors for the Bank replied by letter dated 15 July 1991 saying that the Bank could not give an undertaking to discharge the mortgage unless the borrowings secured by the mortgage were paid in full. The letter said that it might be possible for part of the required payment to be financed by separate borrowings obtained through the Bank or another financial institution. It asked Mr and Mrs Roberts' solicitors to inform them of any assets held by Mr and Mrs Roberts which would constitute sufficient security for any further borrowings to finance the payment for discharge of the mortgage.
Mr and Mrs Roberts' solicitors replied by letter of 23 August 1991 saying that they had received an offer to purchase the property, but were not in a position to proceed with the sale because of the Bank's statement that it would not discharge the mortgage on settlement unless payment was made in full. This provoked a response from the solicitors for the Bank of 28 August 1991 rejecting any suggestion that the Bank had acted to hinder or obstruct the sale of the home. It said that the Bank's position was:

"simply that which is inevitably taken by a bank in relation to a mortgage over a property; it is axiomatic that the monies secured by a mortgage must be repaid to the bank before the mortgage is discharged. Your client, with his many years of banking experience, would be familiar with the fact that a bank will not allow part payment only and then extinguish its rights over the security that it holds for repayment of the full amount."

The Bank said that if Mr and Mrs Roberts wished to provide particulars of the offer to purchase the property which had been received by them, the Bank would consider whether the mortgage was able to be discharged and in the case of there being a shortfall between the sale price and the amount secured by the mortgage whether any arrangements for financing of the remaining balance could be made in accordance with the solicitor's earlier letter of 15 July 1991.

The home of Mr and Mrs Roberts was sold by them in May 1992 and the settlement was completed in October 1992. It appears from the evidence that the Bank was paid the net proceeds of sale, leaving a substantial deficiency.
The Bank and Mrs Roberts settled the present proceeding in so far as it involved Mrs Roberts, culminating in the signing by the Bank and Mrs Roberts of terms of settlement which are dated November 1992. I will refer to the terms of settlement later, but it is sufficient for present purposes to say that under the terms Mrs Roberts was to pay to the Bank $5,000 and bear her own costs of the proceeding and cross-claim and that in turn the Bank would bear its own costs of the proceeding and the cross-claim and that each party (the Bank and Mrs Roberts) would release and discharge the other from all suits and claims which either may have against the other arising out of the subject matter of the proceeding or the cross-claim. The $5,000 was paid, so the settlement has taken effect. A judge of the Court made an order on 7 December 1992 that the proceeding brought by Mrs Roberts against the Bank be struck out and that the cross-claim by the Bank against Mrs Roberts be also struck out and that there be no order as to costs.
Mr Roberts is 55 years of age. He has not been employed since he left the Bank except for a period of about three months (between May and August 1991) in the office of a firm of accountants where his salary was at an annual rate of $90,000, so that he received something in the order of $22,000 to $23,000.
These are the basic facts on which the case turns.
In my opinion the terms of employment of Mr Roberts by the Bank are those contained in his letter of appointment of 31 January 1986, signed by him, and varied thereafter by the increase in the amount of the housing loan extended to him and his wife. The critical terms and conditions of his appointment were that the Bank was entitled to terminate his employment by one month's notice to him or, at the Bank's discretion, by giving payment in lieu of notice.
Mr Roberts was entitled to one month's salary in lieu of notice; yet he received more than this. In fact he received ten months salary in lieu of notice plus the value of counselling fees ($11,600) (although he did not think highly of the counselling service provided) and the legal costs of applying for an estate agent's licence ($4,147.60). None of the statements that may have been made to Mr Roberts by Mr Tomkins or Mr Snowden can be regarded as supplementary to or in substitution for the terms of the letter of engagement of 31 January 1986.
If I had been of the view that the letter of 31 January 1986 did not govern the question of reasonableness of notice, I would have found that what is reasonable notice would depend on the circumstances of the case. There is no hard and fast rule. As to reasonableness of notice see Thorpe v South Australian National Football League (1974) 10 SASR 17 at 35-6; Dyer v Peverill (1979) 2 NTR 1 and Quinn v Jack Chia (Australia) Limited (1992) 1 VR 567. A reasonable period of notice would have been something under ten months notice. Reliance was placed by Mr Roberts in argument as to the reasonableness of notice upon Exhibit 11 which consists of various termination, change and redundancy agreements, one of which is part of the Hongkongbank of Australia Award of 1988. Another such agreement is the Bank Officials' (Federal) Redeployment and Redundancy Memorandum of Agreement of 1992 between Westpac Banking Corporation and the Finance Sector Union of Australia and the third is an equivalent document dated 1992 between the Australian and New Zealand Banking Group Limited and the Finance Sector Union of Australia. I do not regard these documents as relevant. Even if they were relevant and I had taken them into account, the maximum period of notice regarded by those agreements as being the appropriate notice is on one view of it nine months and on another view something in the order of three months; but on any view no greater than the ten months salary in lieu of notice which Mr Roberts received. I note, however, that those documents relate to persons holding lower positions than Mr Roberts held with the Bank.
For the reasons which I gave earlier, the case of Mr Roberts based on alleged representations made by him before he took up his employment with the Bank fails because of the vagueness and uncertainty of the alleged representations, and because I do not accept that they were all made to him. Also, I have no doubt that when the letter of engagement from the Bank to Mr Roberts dated 31 January 1986 was given to and signed by him, its terms governed his employment: nothing that may have been said to him earlier, inconsistent with those terms, could on the facts of the case have any relevance at law on either branch of the case.
It is not necessary to consider finally the submission of counsel for the Bank that any representations that may have been made by the Bank to Mr Roberts were not made in trade or commerce and therefore could not fall within s. 52 of the Act. However, as at present advised, in my opinion, any such representations, if they had been made, would have been made in trade or commerce.
I should add that even if the representations of Mr Tomkins and Mr Snowden upon which reliance was placed by Mr Roberts had been made and were not too vague and uncertain to establish his case, I am satisfied that he did not rely upon them so as to cause any of the loss or damage of which he complains.
I turn to another argument of Mr Roberts, namely, that the Bank had unreasonably prevented Mr and Mrs Roberts from selling their home when they wished to do so in 1991; and that as a result of the Bank's attitude and the consequential delay in selling the home, the sale was made by Mr and Mrs Roberts (it was not a mortgagee's sale) in May 1992 in a more unfavourable economic climate than prevailed in August 1991 when the home could have been sold at a higher price. Mr Roberts claims the consequential loss.
There is no substance to this submission. It was not unreasonable for the Bank to maintain the attitude that it would not discharge the mortgage until the loan secured by the mortgage had been paid in full. (The Bank appears later to have changed its attitude.)
I should add that evidence was led by Mr Roberts as to the valuation of the home, situated at 676 Toorak Road, Malvern. The valuer who gave evidence was a Mr R A Daly whose valuation is in evidence. He valued the property as at 31 August 1991 at $555,000. I regard the figure of $555,000 as high. The house was situated on the corner of two very busy streets (Glenferrie and Toorak Roads) with trams running outside the property on both roads. There was at that time a decline in the real property market, not only in Melbourne but in other cities in Australia. But these matters were taken into account by the valuer. Mr Daly's valuation strikes me as a high figure for the property in all the circumstances; but I am not satisfied that it has been demonstrated that the valuation was so high as to be excessive or unreasonable. No valuation evidence to the contrary was called.
One matter debated in the course of argument and which indeed I raised with counsel for the Bank was as to whether or not certain of the payments of interest due under the loan agreement and the mortgage were in the nature of a penalty. The mortgage provides that, in the event of interest being overdue, interest is payable thereafter (not interest upon interest) at what is referred to as "the higher rate", an expression defined in the mortgage (clause 27(h)) as relevantly meaning the rate which is 5% above the base lending rate established by the Bank from time to time. This lastmentioned rate at material times was 14.25%, so that if 5% is added to it an interest rate of 19.25% is reached.
I am satisfied that the interest rate charged by the Bank, since the commencement of the making of defaults in the payment of interest by Mr and Mrs Roberts, is not in the nature of a penalty: see David Securities Pty Limited v Commonwealth Bank of Australia (1990) 23 FCR 1 (the judgment of a Full Court of this Court) at 27-31; on appeal to the High Court reported at (1992) 66 ALJR 768. Although the High Court reversed the Federal Court on one question, the High Court judgment did not effect this point.
There remains one question, namely, whether the terms of settlement signed between the Bank and Mrs Roberts operated as a release of the liabilities and obligations of Mr Roberts to the Bank.
It is long and well established that the release of one promisor to a joint contract, discharges the others. The reason for the rule is that the joint promise is regarded as single, so that if discharged for one it is discharged for all. Hence logically, it was impossible to contract out of the rule, so that a clause in a release purporting to save the remedy against the other promisors was void. See Pinnel's Case (1602) 5 Co. Rep 117a at 117b, 77 ER 237 at 238 (the rule in fact is older, it goes back to at least 1314); Everard v Herne (1628) Litt Rep 190, 124 ER 202; Glanville Williams, Joint Obligations 1949 at paras. 50 and 63. It is also established that a release of one joint and several covenantor discharges the others just as it does with purely joint covenants. This is a rule that can hardly be supported on the grounds of logic, but certainly it is well established. Glanville Williams suggests the reason for the rule is "an early uncertainty as to the nature of a joint and several obligation" (para. 63). But as the learned author states in that paragraph the rule became settled by a series of cases "that followed each other uncritically, and prevails at the present day".
A doctrine has been developed in cases of some antiquity (it goes back to at least 1815: Hutton v Eyre (1815) 6 Taunt 289, 128 ER 1046) that, although the release of one joint debtor discharges all, a covenant not to sue that joint debtor does not. The rationale for the rule appears to be that where there is a single promisor a release will discharge him by putting an end to the obligation, whereas a covenant not to sue does not directly put an end to the obligation but is a contract not to enforce it against a particular party. For a discussion of this principle see Price v Barker (1855) 4 E and B 760, 199 ER 281; Wolmershausen v Wolmershausen (1890) 62 LT (NS) 541; Kenworthy v Avath Holdings Pty Limited (1974) WAR 135; Glanville Williams, paras. 50 and 63.
It is a question of construction of the relevant instrument in each case as to whether its language evinces an intention of the parties to preserve the rights of the creditor against other debtors than the debtor that the creditor has agreed not to sue.
In the terms of settlement, clauses 5 and 6 provide as follows:

"5. In consideration hereof, the Bank hereby releases and forever discharges Roberts (i.e. Mrs Roberts) from all suits, actions, causes of action, claims, demands, damages and costs which the Bank has or at any time had against Roberts arising out of or in any way related to the mortgage and the subject-matter of the cross-claim.

6. In consideration hereof, Roberts hereby releases and forever discharges the Bank and its directors, officers, servants, agents, successors and assigns from all suits, causes of action, claims, demands, damages and costs which Roberts at any time has or had against the Bank or such persons jointly or severally arising out of or in any way related to the subject-matter of the proceedings."

Clause 9 is the vital provision; it reads as follows:

"9. These terms shall not in any way be construed as limiting or qualifying in any way the rights, causes of action, actions, demands, damages and costs which the Bank has or at any time had against Mr Roberts in respect of the loan and the subject-matter of the proceeding (i.e. the present proceeding) or in any way adversely vis-a-vis the Bank interfering with or affecting the cross-claim in the proceedings brought by the Bank against Mr Roberts."

Clause 9 provides therefore that the terms of settlement shall not be construed as limiting the Bank's rights against Mr Roberts "in respect of the loan and the subject matter of the proceeding", though it does not specifically mention the mortgage which is mentioned in clause 5. However, I think nothing turns on this. The loan is defined in recital "A" to the terms of settlement as the monies borrowed, namely, $500,000 by Mr and Mrs Roberts from the Bank. The fact that the Bank purports to preserve its rights against Mr Roberts in respect not only of the loan but, "the subject-matter of the proceedings", and the Bank's cross-claim in the present proceeding brought by the Bank against Mr Roberts, in my view makes it clear that the Bank seeks to preserve its position in every relevant respect against Mr Roberts with respect to the loan, the security therefor and the cross-claim by the Bank which is directly based upon its claims as mortgagee.
The terms of settlement signed by Mrs Roberts and the Bank did not release Mr Roberts from his obligations and liabilities to the Bank.
I would dismiss the claim of Mr Roberts against the Bank and find for the Bank on its cross-claim against him.
The amount for which judgment shall be entered on the Bank's cross-claim is the sum of $356,617.52 plus interest at the daily rate of $138.04 from 6 April 1993. These figures are agreed between the parties.
Counsel for the Bank informed me that in the event that the Bank wholly succeeds in the proceeding on both the claim of Mr Roberts and the Bank's cross-claim, no order for costs of the proceeding is sought against Mr Roberts except in the case of the order of the Full Court made on 10 February 1992 that Mr and Mrs Roberts pay the Bank's costs of the appeals to the Full Court and of the application for leave to amend the statement of claim which was the subject matter of the appeal. That order for costs cannot and should not be disturbed. Accordingly, the order for costs I propose to make is that there be no order as to the costs of the proceeding save for orders which have previously been made by the Court or a judge of the Court, which orders shall not be disturbed.
The orders of the Court are as follows:-

1. That the application be dismissed;

2. That judgment be entered for the respondent against the applicant on the cross-claim of the respondent in the sum of $359,654.40;

3. That there be no order as to the costs of the proceeding except orders that have been previously made by the Court or a judge of the Court which orders shall continue to subsist;

4. That exhibits may be handed out unless an appeal is lodged from this judgment within 21 days from today.

[1993] FCA 248

28 APRIL 1993