Robertson v Knott Investments Pty Ltd
[2010] FMCA 142
•8 March 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ROBERTSON v KNOTT INVESTMENTS PTY LTD | [2010] FMCA 142 |
| TRADE PRACTICES – Misleading or deceptive conduct in relation to employment – representations as to future matters – where applicant approached recruitment agent seeking to relocate to Australia after 22 years abroad – whether respondent represented to applicant that he would be employed for a minimum of three years – where duration of employment not specified in contract and representations on the subject said to be “superseded” and “excluded” by “no reliance” clause – where applicant’s position made redundant after less than 18 months due to substantial economic downturn – whether applicant relied on representation in accepting offer of employment – whether representation based on reasonable grounds – evidentiary onus in s.51A(2) discussed. |
| Trade Practices Act 1974 (Cth), ss.51A, 53B, 82, 87 |
| Sheldrick v WT Partnership (Aust) Pty Ltd [1998] FCA 1794 Damien O’Brien, No Representation Clauses – The Franchisor Strikes Back (2006) 14(2) TPLJ 114 |
| Applicant: | KARL VERNON ROBERTSON |
| Respondent: | KNOTT INVESTMENTS PTY LTD |
| File Number: | SYG 1976 of 2009 |
| Judgment of: | Raphael FM |
| Hearing dates: | 22 & 23 February 2010 |
| Date of Last Submission: | 23 February 2010 |
| Delivered at: | Sydney |
| Delivered on: | 8 March 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr A Britt |
| Solicitors for the Applicant: | Michael Atkinson & Associates |
| Counsel for the Respondent: | Mr R Crow |
| Solicitors for the Respondent: | Workplace Law |
ORDERS
Application dismissed.
Applicant to pay Respondent’s costs to be assessed in accordance with Part 21 Rule 21.02(2)(b) and Schedule 1 of the FMC Rules.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1976 of 2009
| KARL VERNON ROBERTSON |
Applicant
And
| KNOTT INVESTMENTS PTY LTD |
Respondent
REASONS FOR JUDGMENT
Introduction
The applicant in this proceeding seeks relief by way of damages pursuant to s.82 or an order (unspecified) pursuant to s.87 for breach of s.53B of the Trade Practices Act 1974 (the “Act”) which prohibits a corporation from engaging in conduct that is liable to mislead persons seeking employment as to the availability, nature, terms or conditions of or any other matter relating to the employment. The misleading conduct which the applicant alleges was a representation as to the length of his employment which was a representation as to a future matter so that the provisions of s.51A of the Act were applicable. In order to resolve this matter evidence was received from the applicant, from the respondent’s recruitment agent, from two directors of the respondent and two other members of the respondent’s staff. The respondent put in issue the making of the representations, the applicant’s reliance upon them if they were made, their reasonableness if they were made and whether any loss or damage was suffered by the applicant that could be the subject of an order for damages under s.82. In these reasons I shall first refer to the history being those facts which I consider to be uncontroversial. I shall then discuss the evidence that I heard before discussing my conclusions as to whether the applicant has made out his case. As these matters must be considered with the relevant legislation in mind I set out below the provisions of ss.51A and 53B of the Act.
“51A Interpretation
(1) For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.
(2) For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation.
(3) Subsection (1) shall be deemed not to limit by implication the meaning of a reference in this Division to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead.”
53B Misleading conduct in relation to employment
A corporation shall not, in relation to employment that is to be, or may be, offered by the corporation or by another person, engage in conduct that is liable to mislead persons seeking the employment as to the availability, nature, terms or conditions of, or any other matter relating to, the employment.”
History
The applicant is an experienced and senior design engineer in the automotive industry. He is a US citizen by birth but resided in Australia from February 1969 until October 1986. He is married to an Australian citizen and he is himself an Australian citizen. He has held senior automotive design jobs with Ford in Australia, North America and Turkey. In April 2007 he was working and living in Detroit, Michigan USA. The respondent company designs and manufactures Winnebago Motor Homes. In April 2007 it had its head office and manufacturing plant at Emu Plains in Western Sydney. It is a family company. Mr Ben Binns is the chief executive officer. His father and sister are also directors. In March 2007 the company decided that it should employ a design manager. Mr Ben Binns contacted a recruiter, Michael Higgins, at a company known as SouthTech Personnel. Mr Binns provided Mr Higgins with some details of the position and of the company. He asked Mr Higgins to find a suitable candidate. Mr Higgins did this by preparing an advertisement to be placed on an internet job board on behalf of the respondent. The advertisement described the respondent as:
“The largest motor home manufacturer in Australia. They are committed to providing high quality, sleek, efficient designs and the best value motor homes (you will find) in Australia. Currently they employ over 170 dedicated workers who produce approximately 600 recreational vehicles (RVs) per year. Due to a restructure and evergrowing customer demand a new position of design manager has been established.
The Role
Reporting directly to the Managing Director this role is responsible for the design, document and delivery of high quality motor homes to meet customer’s needs and expectations while resulting in profitable business for our client.
This is an exciting opportunity to join an established Australian icon. On offer is an excellent salary package and the chance to enjoy a challenging role within a dynamic and supportive environment.”
Mr Robertson saw that advertisement and forwarded an email to Mr Higgins applying for the position on 12 April 2007. Mr Higgins emailed Mr Robertson informing him that he would contact him by telephone that day, which he did, and obtained more details of Mr Robertson’s experience and forwarded his application to Mr Binns. Mr Higgins asked Mr Robertson what his salary expectations were but Mr Robertson did not advise him. Mr Binns received the CV on 13 April and asked Mr Higgins to follow up. Mr Higgins arranged for Mr Binns to speak directly to Mr Robertson. They spoke at the telephone on 16 April 2007. Both parties thought that the application was worth pursuing. On 19 April Mr Higgins and Mr Binns discussed the application and Mr Binns informed Mr Higgins that the salary for the position would be $120,000.00 plus super, a total package of $130,800.00. Mr Higgins informed Mr Robertson of this in an email in which he also said:
“Winnebago are committed to a review of this salary and you (sic) role. Winnebago are committed to this in the first six months of your employment. Winnebago are committed to developing a performance/incentive bonus linked to the other areas of the business that you could contribute to i.e. business planning for the next three to five years.”
Mr Robertson decided not to accept the position. This information was relayed to Mr Higgins after 19 April and prior to 3 May. However, it was agreed that Mr Higgins and Mr Robertson would keep in touch.
After 4 May Mr Binns and Mr Higgins continued the search for a candidate and on 23 July 2007 a Mr Dragan Music was employed as Design Manager. Mr Robertson in the meantime accepted a job in Chennai India working for Ashok Leyland in a design position. Mr Robertson’s salary at Ashok Leyland was US$156,000.00 rising to US$184,000.00 plus accommodation, motor vehicle, air flights and medical. In the course of the discussions between Mr Higgins and Mr Robertson, Mr Robertson had indicated that he was looking to return to Australia with his wife and family where he proposed eventually to retire. Mr Robertson was born on 21 September 1942 and was thus over 64 years of age when these discussions took place.
In late June 2007 Mr Robertson telephoned Mr Binns. He also telephoned Mr Higgins. Mr Higgins reported in an email to Mr Binns:
“[I]t seems as though Karl is not completely happy in his current role in India. He tells me he and one of his sons are both working in the same company in the automotive business in India. He wants to revisit opportunities with you at Winnebago. He understands the role of design manager has been filled. However, he believes he could still add value to Winnebago…”
Mr Binns responded:
“Yes Karl spoke to me last week and I was going to look at flying him out. I haven’t done anything yet but I need to discuss some dates so I can organise to have my father here at the same time and he is going away for a while. Is it possible to see what some available dates for Karl are.
These emails were sent on 2 and 3 July respectively but by 10 July Mr Binns had changed his mind.
“As discussed previously I have been communicating with Bruce (his father) about the possibilities of Karl coming over for a chat because if we were going to move forward with Karl now I believe that would be the best thing to do but I also don’t want to lead Karl on in the meantime. As you know since we originally spoke to Karl we have appointed a new design manager and we have also made some internal changes to our management structure so at this point of time I believe it would be better for us to settle in for a while before we look at making any further changes. I definitely would like to keep our lines of communication open with Karl but I believe it will be some time before we would go down that track. I appreciate you looking at this angle and I am happy to discuss this further with either Karl or yourself.”
On 23 July 2007 Mr Music commenced as the design manager but on 21 August, after only a month in employment, he resigned. Mr Binns told Mr Higgins to find another person and Mr Higgins contacted Mr Robertson. Mr Robertson indicated to Mr Higgins, who passed the information on to Mr Binns, that he was still interested in the position. On 1 September Mr Binns phoned Mr Robertson and had a conversation about Mr Robertson taking on the role. Mr Robertson sent an email to Mr Higgins on 3 September, it is Exhibit “F” to Mr Higgins’ affidavit.
“Michael
I have spoken to Ben on Saturday. He said he would contact you on Monday. As I explained to him, I would really like to go forward on this matter this time, but we need to start where we left off a few months ago. I do not want to have to start from scratch again.
As far as my current package goes, I am the head Cab and Body Engineering for Ashok Leyland responsible for all Current, Interim and New Vehicle programs. I am also responsible for Bus, Coach and Special Passenger vehicles. I have Military vehicles for the Armed Forces to take care of. All this and the job of establishing a Product Design Studio. My department has about 150 engineers and we intend to grow this to at least 450 in the next two years to complete our vehicle programs.
My compensation is currently US$13,000 a month or US$156,000 a year. The company pays for Accommodation, full Medical Coverage for my wife and myself, and a company car with fuel, maintenance, taxes and insurance.
The Company pays for Business Class air passage for my wife and myself at the start and end of my contract. I am eligible for 30 days Annual Leave.
The present contract of 3 to 5 years can be terminated by 1 months notice by either side or pay in lieu thereof.
I have mentioned that the first phase of establishing the goals and program processes here is well on the way to being done. We would consider an opportunity to return to Australia and work at this time because it would accelerate our personal plans and objectives. I believe that I can be of great benefit to the organisation, and meeting with the parties concerned will define this for everyone concerned.
Please call me if you intend to proceed further. I am willing to discuss the details of the plan with you further.
Best regards
Karl Robertson”
Arrangements were then put in place for Mr Robertson to visit Sydney. Prior thereto Mr Higgins wrote to Mr Robertson by email on 10 September, Exhibit “G”:
“Karl
Thanks for speaking with me again this morning.
As discussed, I need to clarify two aspects of the position currently being discussed with you at Winnebago Industries.
My concerns are that:
1. The duties of the current role at Winnebago are not concurrent with your existing role and responsibilities.
2. The salary that would be negotiated for this role would be in the vicinity of $150K Australian which is not concurrent with your existing salary package.
Before making arrangements for you to fly to Sydney and meet with Winnebago Industries I need you to confirm that you understand that:
1. Initially the existing role is of reviewing and improving current policies and procedures within the existing Design Team. This would involve standardisation of existing drawings and designs and complete review of all other policies and procedures that are currently in place.
2. The remuneration that can be negotiated for this role is up to $150K Australia.
I want to be very clear as to ‘what is on offer’ so your expectations are concurrent with the current role Winnebago.
As soon as you can confirm above, I will arrange with yourself and Winnebago Industries for you to visit Sydney on Thursday September 27th. I would envisage a stay of at least a couple of days in time for you to return back to India no later than Monday October 1st.
Could you please return email confirming your understanding of above.
Thanks Karl
Regards
Michael HigginsRecruitment Consultant
SouthTech Personnel
Ph) 9542 3011
Fx) 9542 1977”and Mr Robertson responded on 11 September, Exhibit “H”:
“Michael,
I understand the aspects of this position currently on offer from Winnebago Industries. In previous discussions with Mr Ben Binns, we both agreed that there was a need to work on many facets of the business over time, and that there are some areas that are more urgent than others. I am happy to come to Australia and discuss this with members of the company so that we all have a clearer understanding of the roles and responsibilities for the short term and the long term.
As far as the rest of the package goes, I do not think that we are too far apart, but again this will require a visit as neither I, nor my family, have lived in Australia for almost 21 years. Details of the payment plan and what it encompasses are still to be defined in detail.
I am flying back to the USA on September 16, returning to Chennai, India on September 24. I will be available for travel sometime after that, preferable around the end of the first or second week of October. Let me know what you think.
Regards
Karl Robertson”
Mr Robertson travelled to Australia and met Mr Binns on 22 October 2007 when he was shown around the Emu Plains premises and met with Mr Bruce Binns and other senior staff. There were discussions concerning the position and what it entailed. Mr Binns gave Mr Robertson a draft contract which included a probation period and a termination clause which appeared only to permit a termination for misconduct. The draft contract was accompanied by a letter of offer. It was explained by Ms Samantha Binns, who prepared the documents, and also by Mr Ben Binns, that these first documents given to Mr Robertson were straight off the boiler plate precedent for all their employees. It included references to an AWA. I accept this evidence. Mr Robertson considered the documents and discussed them with Mr Higgins at dinner that evening. He had concerns about the probation period. He did not wish to be dismissed within six months of arriving in Australia. The next day Mr Robertson discussed these matters with Mr Binns and after the conversation Mr Robertson agreed to accept the position at a salary of $150,000.00 per annum and informed Mr Higgins of this on 25 October. Mr Higgins wrote to Mr Binns:
“Spoke to Karl this morning and he tells me that he had a productive day of talks on Tuesday. Karl is happy to accept offer of package of $150K including super, enjoyed his discussions with Peter and believes a lot can be achieved to improve efficiency, production and ultimately the bottom line. Tells me he also enjoyed his discussions with your dad, he tells me he clearly understands the challenges of a design team and will be focused on developing the people, systems and procedures…”
On 26 October Ms Samantha Binns sent Mr Higgins a revised agreement and letter of offer. The letter of offer again made reference to the AWA but the agreement included the term that either party may terminate by giving the other four weeks notice in writing or in the case of the company paying in lieu of the notice. The probation period was still in the contract.
On 30 October 2007 Mr Higgins emailed Mr Binns advising him that he had had a number of discussions with Mr Robertson surrounding the draft contract. Relevantly, the email stated:
“Duration of employment
Karl is not comfortable with the probation period. Karl perceives a probation period as a need for him to demonstrate his abilities in doing what he says he can do. He believes that at this stage in his career he does not need to “prove” himself. He tells me he is prepared to pack up his life and move to Penrith and is seeking a minimum three year contract. He has no problems in his contract being terminated due to a serious breach such as sexual harassment or something else as serious of this nature.
Scope of contract
Karl would like the eleven points in his draft letter of offer written into his formal letter of offer. Karl wants to be measured on his performance in these areas and would like to be measured and rewarded as certain targets (to be discussed) are achieved in these areas.”
Annexed to that email was a document headed “Draft” which I am satisfied was prepared by Mr Robertson. It contains the eleven points under the heading “Scope of Contract and Reporting Relationship” that were referred to in the email.
Under the heading “Duration of Contract” it says:
“The contract will be valid for a minimum period of three (3) years from date of commencement. It could be extended thereafter by mutual consent.”
Under the heading “Notice of Termination” it states:
“The contract can be terminated by one month’s notice on either side or pay in lieu thereof.”
The document also makes a reference to incentive based pay and says:
“The contract with Winnebago will be terminated on completion of the specified period unless it is extended by mutual agreement and notified a minimum of 6 months before the end of the contract.”
On 5 November 2007 a further revised letter of offer was sent by Ms Binns to Mr Robertson together with an attached contract of employment. Both the contract and the letter of offer referred to the eleven points under the heading “Scope of Contract and Reporting Relationship” that had been proposed by Mr Robertson. The contract itself was otherwise almost identical to the original one submitted to Mr Robertson on 22 October 2007. It contained the four weeks notice period, there was no reference to any fixed term or to the six months notice of intention to extend the term contained in the draft document annexed to the email. It is common ground that this document was signed by Mr Robertson on the second day of his employment which commenced in January 2008.
Mr Robertson remained employed with Winnebago throughout 2008. In December 2008 he telephoned Mr Higgins. He provided Mr Higgins with contact names at a company known as Jayco, which is a vehicle component manufacturer in Melbourne. He asked Mr Higgins to see whether Jayco might be interested in employing him. Mr Higgins called Jayco and then provided that company with some details of his organisation but no position eventuated. Towards the end of March 2009 Mr Robertson went on holiday. During that period his staff were asked to report to a Mr Naylor. They telephoned him and informed him of this. Upon his return Mr Robertson contacted Mr Higgins again informing him that he would like to “get out of Winnebago”. By this time Mr Robertson was aware of moves to significantly reduce the workforce and he had had a meeting with Mr Ben Binns and Jodie Harris. There was a further meeting with Mr Binns and Ms Harris on 6 April 2009 when Mr Robertson was advised that he was being made redundant and his position was terminated for reasons of redundancy. By the time Mr Robertson’s redundancy had occurred the workforce at Winnebago had been reduced by approximately 100 people.
Evidence
The most significant evidence given at the hearing was that of Mr Robertson on his own behalf and of Mr Ben Binns and Mr Higgins on behalf of the respondent. Mr Robertson in his affidavit and evidence sought to persuade the Court that in the various discussions he had had with Mr Higgins and Mr Binns, representations had been made that the position at Winnebago was his for the long term and that he was only persuaded to leave his secure and well paid employment in India because of those representations which he believed ensured that he would have an interesting and important job in Australia in his transition to retirement. Mr Higgins and Mr Binns sought to persuade the Court that no such representations were made.
All three witnesses swore affidavits. Mr Robertson’s first affidavit was sworn on 21 October 2009. I should say straight away that I do not believe that any of the witnesses went out of their way to be untruthful or to mislead the Court. I think that they gave their evidence to the best of their recollection. However, the manner in which their evidence was set out in their affidavits, particularly those of Mr Robertson and Mr Binns, seems to me to have been done with an eye more to persuasion of the strength of their respective cases than a fully researched and completely frank account. In Mr Robertson’s first affidavit paragraphs 2 and 3 relating to the first approach made to the Winnebago advertisement reads as if Mr Higgins approached Mr Robertson rather than vice versa. Although some of the email correspondence between Mr Robertson and Mr Higgins and Mr Binns is annexed to his affidavit not all of it is. Mr Robertson does not reveal the discussions he had with Mr Higgins and Mr Binns about re-opening his application after he had taken up the job in Chennai and before Mr Music had left Winnebago. Mr Robertson did not annexe to his affidavit the draft employment document that was annexed to Mr Higgins’ affidavit in which the three year contract period was referred to. In his affidavit in reply filed on 15 December 2009, Mr Robertson indicates that he gave Mr Higgins details of Jayco only in March 2009 when he was already concerned about his position.
In Mr Binns’ affidavit sworn on 17 November 2009 he appears to take issue only with those aspects of Mr Robertson’s affidavit where he is alleged to have made specific representations concerning the period of employment. He deals with the draft document submitted by Mr Robertson through Mr Higgins by saying:
“There is no way we will be accepting Karl’s drafted terms and conditions. Who is running the show here.”
although he did include in the revised draft the eleven points relating to the position that Mr Robertson had requested. Mr Higgins produced a number of documents that were annexed to his affidavit but they did not consist of all the notes of all conversations and emails that he had with Mr Robertson or with Mr Binns. It was only when he produced these documents that it became clear that the applicant’s request to move to Jayco was made in December 2008 and not March 2009.
Mr Robertson deposes to a number of occasions in which he says that representations were made by Mr Binns, the first being in the telephone conversation of around 16 April 2007 when it is alleged that Mr Binns asked him if he was prepared to make a commitment of between three and five years and Mr Robertson agreed. This conversation was in relation to the original application which Mr Robertson did not proceed with. The second representation is alleged to have taken place when Mr Robertson came to Australia on 22 October 2007. It came in the context of a conversation about Mr Robertson’s plans and his advising Mr Binns that he wanted to come back to Australia to work with his family because he had been on the road for something like 22 years. Mr Robertson alleges that Mr Binns asked him how long he intended to work and when he said three to five years Mr Binns said that that fitted in with his plans and that the role was permanent. They would require a long term commitment by him. At paragraph 22 of his affidavit Mr Robertson deposes to the following conversation with Mr Binns after he had received the draft contract on 22 October.
“KR:You have a six month probationary period. If I am signing a contract does that mean I come all the way to Australia and you can get rid of me in six months?
BB:No. That is not our intention. We want you for the long term as I have told you. With respect to the contract it is just our standard contract we give all of our employees to sign. We have the ability to work out these issues between ourselves. Don’t worry it won’t happen to you, you will be here for the long term.
KR:I don’t know if I can start on the 3rd December as I need to give Ashok Leyland some notice.
BB:That’s fine. We’ll work with you, just tell us when you can start.”
He deposes to a further conversation at paragraph 24 that took place the following day:
“BB:We are pleased with everything Karl. We want to offer you the position.
KR:I still have a problem with the contract.
BB:We don’t have our own legal department and the contract is a boilerplate contract we use for all of our employees. The probationary period will not be an issue. We want you here for the long term until you retire.”
I am satisfied that a conversation of this nature occurred. It would appear to be corroborated by conversations Mr Robertson had with Mr Higgins. However, it is interesting that in neither of these conversations does Mr Robertson refer to the three to five year term which he had indicated was most important to him. In cross examination he was asked why nothing was put about this in any emails or letters to which Mr Robertson responded that he was not trying to establish a record to prove the promises. He said that he told Mr Higgins about those statements but Mr Higgins in cross examination said that Mr Robertson had never said anything to him about being told the job was a long term one or one for three to five years. However, he did agree that he knew that Mr Robertson was seeking a position for three years, presumably because that was what was put in the draft document. In his oral evidence Mr Robertson said in response to questions in cross examination that a short term assignment was not what he was looking for because he wanted a job that would last until his retirement.
Having seen these three witnesses in the witness box and listened to them give evidence under cross examination I have come to the conclusion that I cannot accept Mr Binns’ denials that there were never any discussions about the length of time Mr Robertson might have remained with the company. I asked Mr Binns myself how long he thought Mr Robertson would be there and he responded that he thought he would be there until retirement, one to two years. Given that Mr Robertson was 65 when he met Mr Binns in October 2007 I believe that it is more likely than not that there were some discussions of that nature. In particular the discussion in which Mr Binns is alleged to have said that they would need Mr Robertson to mentor and train up his successor rings particularly true. I think that in truth Mr Binns did see Mr Robertson being employed with the company for about three years and that this is a reasonable conclusion to come to given the nature and seniority of the position.
As I have indicated in the “History” section of these reasons I have accepted that there were discussions about the draft contract given to Mr Robertson on the Tuesday and Mr Robertson produced a variation of the document which was submitted to Mr Binns through Mr Higgins. Mr Binns was not challenged about the views that he had expressed in his affidavit about that draft document and I am of the view that the draft prepared by Mr Robertson was intended to be the pre-cursor to a fixed term agreement.
I have also considered the evidence of Mr Higgins. Mr Higgins is the most disinterested of the witnesses. I note that I have no evidence about what Mr Higgins may have said to Mr Robertson after his draft contract had been submitted and rejected. I note that the three year term was never again mentioned. I note that all the draft contracts which were submitted by Mr Binns to Mr Robertson contained a clause in the form of Clause 23 which states:
“23. Pre Contractual Negotiation
This document and your letter of offer:
(a)supersede and exclude any prior or collateral negotiation, understanding, communication or agreement or term of agreement by or between the parties; and
(b)without limiting the generality of (a) above, supersede and exclude any (or any alleged) references to length of service, promotion, career path or increases in remuneration by the Company, its agents, contractors or employees, or any Recruitment Agency on the Company’s behalf.”
This clause makes specific reference to length of service. I note that even Mr Robertson’s draft contract contained a one month mutual notice period.
Discussion
It is trite law that an applicant who seeks redress under the Trade Practices Act for a breach of s.53B must prove the following:
· That the representations were made.
· That the representations were misleading.
· That (subject to the deeming provisions of s.51A) if the representations are of a future matter (as they are here) the corporation did not have reasonable grounds for making them.
· That the applicant relied upon the representations; and
· That the applicant suffered loss or damage because the representations were misleading.
I am satisfied that Mr Robertson did indicate during conversations with Mr Binns that he saw himself remaining in the position for a period of three years or more and that Mr Binns did not raise any objection thereto. I am also satisfied that during the many discussions between Mr Robertson and Mr Binns that Mr Binns did indicate the position was a permanent one, although that is not the same as saying that Mr Robertson could have it permanently; Sheldrick v WT Partnership (Aust) Pty Ltd [1998] FCA 1794. I believe Mr Robertson would, prior to the negotiations for the contract, have understood he was going to be employed for a period of at least three years if he accepted the position. I have assumed for the purposes of these reasons that his belief arose out of representations made by Mr Binns or on his behalf by Mr Higgins. I am satisfied that these statements were made in connection with an offer of employment and thus come within s.53B of the Act. But there are two points upon which I am not satisfied which are fatal to the applicant’s case. The first point is that I am not satisfied that Mr Robertson relied upon those representations to leave his job in Chennai and accept employment with the respondent. A person claiming damages under s.82 must show either that he has been induced to do something or to refrain from doing something which gives rise to damage or has been influenced to do or refrain from doing something giving rise to damage by the conduct contravening Part V; Kabwand Pty Ltd v National Australia Bank Ltd (1989) ATPR 40-950. The question of reliance was considered by the High Court in Kenny & Good Pty Ltd v MGICA [1999] HCA 25; 199 CLR 413 per Gaudron J at [19]:
“When a person claims to have taken, or refrained from taking, a particular course of action in reliance upon another's representation, the critical question, assuming the representation is one that might reasonably be relied upon, is whether, but for that representation, he or she would have taken that action. In that context, "but for" does not signify a sine qua non or causative factor which, although necessary, is not sufficient to produce the result in question. Rather, it signifies the decisive consideration or one of the decisive considerations for taking the course of action in question. It was in the former sense that the "but for" test was rejected as the exclusive test of causation in March v Stramare. In the sense of asking whether a representation is a decisive consideration, "but for" is always the test of reliance.”
Other authorities emphasise that the question of reliance or causation is essentially a question of fact to be determined by reference to common sense and experience and one into which policy considerations and value judgments necessarily enter; March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506; McCarthy v McIntyre [1999] FCA 784.
Whilst the evidence is that Mr Robertson had a well paid and secure job in Chennai he was clearly not happy there. He decided to take that job in preference to the job with Winnebago in or around May 2007 but within a very few weeks he was in contact again with Mr Binns and Mr Higgins to try and recover his position. I accept Mr Higgins’ evidence that Mr Robertson told him that he was not happy in Chennai and he therefore had a strong motive for accepting the Winnebago position when it opened up again in October. Mr Robertson had a fixed term contract with Ashok Leyland but was quite happy to use the notice period to break it. But the stronger ground for coming to my conclusion about reliance is what occurred in relation to the negotiation for the contract. I accept that Mr Robertson wanted a three year term. I also accept that Mr Binns did not want to commit to such a term and wanted Mr Robertson to sign the standard form of contract that all his employees had signed. I think that Mr Binns thought that Mr Robertson would be a permanent employee but did not want to lose the ability to dismiss him upon notice that was contained in the contract. Mr Robertson tried to obtain the assurance that he felt he needed by submitting the draft contract through Mr Higgins. The draft contract was rejected. The length of service was not the only issue with which Mr Robertson was concerned. He was rightly concerned about the probation period contained in the contract. He sought and obtained what I believe were firm representations that the probation period would not apply to him. He sought but did not receive a three year contract. But even the contract he sought contained a one month’s notice period and so was not a contract that carried the right to be employed for the full term. He now seeks to say that he signed the contract relying on the previous representations. How could he have done that when the terms of the representations were not translated into the contractual document and when he had received no further representations? He had received that type of assurance in relation to the probation period from Mr Higgins (see exhibit “N” to the affidavit of Michael Higgins sworn 28 November 2009) but he neither asked for nor received that assurance in relation to the term. In my view Mr Robertson signed the contract because he had no reason to believe that he could not competently carry out the demands of the position and because he believed that this would add to the success of the Winnebago company who would have no reason not to continue to employ him. This is not the same as signing it on the basis of the representations that he claims he relied upon.
There was some discussion during the hearing of the relevance of Clause 23 in the employment contract extracted in these reasons at [20]. That clause provides that the contract and letter of offer “supersede and exclude any (or any alleged) references to length of service … by the company, its agents, contractors or employees, or any Recruitment Agency on the Company’s behalf”. Although not worded in the conventional way, Clause 23 amounts to a “no reliance” clause and, as such, it has evidentiary value to the issue of reliance. In Poulet Frais Pty Ltd v The Silver Fox Company Pty Ltd (2005) 220 ALR 211 (“Leonard’s case”), a case concerning a franchise agreement, the Full Court (Branson, Nicholson and Jacobson JJ) acknowledged that the authorities recognised that reliance is a question of fact and that the existence of an exclusion or qualification clause is relevant to a determination of whether an applicant has established reliance [101] – [103]:
“As the learned author of Trade Practices Law: Restrictive Trade Practices, Deceptive Conduct and Consumer Protection observes at [11.720], there are numerous authorities for the proposition that clauses seeking to exclude liability for contraventions of s 52 of the TPA are not effective but the authorities admit of the possibility that in some circumstances such a clause may be operative (JD Heydon, LBC, Vol 2, Sydney; see also C Lockhart, The Law of Misleading or Deceptive Conduct, 2nd edn Lexis Nexis Butterworths, Sydney, 2003 at [10.17]-[10.18]).
We do not need to resolve the divergent explanations given in the cases. It is sufficient to say that the authorities recognise that reliance is a question of fact and that the existence of an exclusion or qualification clause is relevant to a determination of the question of whether an applicant has established reliance.
In Keen Mar Corporation Pty Ltd v Labrador Park Shopping Centre Pty Ltd (1989) ATPR (Digest) 46-048 (`Keen Mar') Morling and Wilcox JJ were of the view that a well-drafted disclaimer, drawn to the attention of the contracting party and acknowledged in writing to have been made, was sufficient to negate reliance. Their Honours reversed a finding of reliance made by the primary judge (see at 53,147 and 53,151). As in the present case, there was evidence that the applicant had legal advice.”
See also Damien O’Brien, No Representation Clauses – The Franchisor Strikes Back (2006) 14(2) TPLJ 114. In addition to the evidence concerning the course of negotiations, the fact that Mr Robertson signed the agreement containing Clause 23 indicates to me that he did not rely on the representations as to length of employment.
The second point which is fatal to the applicant’s case is that Mr Binns appears to have had reasonable grounds for making the representations that Mr Robertson would remain with the company for three or more years. That a promise or prediction is not fulfilled is alone insufficient to establish that it was misleading or deceptive: Bill Acceptance Corp Ltd v GWA Ltd (1983) 50 ALR 242. A prediction will only amount to misleading conduct in circumstances where the person making the statement knew it to be false or made the statement with reckless disregard as to whether the statement was true or false: Thompson v Mastertouch TV Service Pty Ltd (No 2) (1977) 15 ALR 487. As I will explain below, I am not satisfied that either of these is an accurate description of Mr Binns’ conduct in making the representations to the applicant.
Section 51A shifts the onus of proof to the maker of the representation to establish that the representation was made on reasonable grounds. The applicant submitted that the respondent had produced no such evidence since the respondent’s case has been that Mr Binns did not make the representations alleged. This particular difficulty was considered by the Full Bench of the Federal Court, Sheppard, Neaves and Cooper JJ in Cummings v Lewis & Ors (1993) 41 FCR 559 in relation to s.41 of the Fair Trading Act 1987 (NSW). That section is in substantially the same terms as s.51A of the act currently under consideration. At [565] Sheppard and Neaves JJ considered the position of a respondent who has denied making a representation, perhaps due to mistake, and so failed to lead evidence relating to whether there were reasonable grounds for making that representation:
“There are many cases, whether under s 52 of the Trade Practices Act or s 42 of the Fair Trading Act, where the principal protagonists are not dishonest or fraudulent. Each gives evidence to the best of his or her ability of conversations which took place before a transaction was entered into or other steps were taken. One party alleges inducement by misleading or deceptive conduct. The other party denies it because he or she says that nothing of that kind was said. That evidence is given honestly and to the best of the witness's recollection. Yet so often a judge will find that party's evidence unreliable, but it will be rejected, not because it is dishonest but because it is mistaken. The question arises how, from a practical point of view, can a witness in that situation face up to what is to him or her a false position. Evidence needs to be given to show reasonable grounds for the making of a statement that the witness claims never to have made. That was the position both Mr Leckie and Mr Lewis would have been placed in if an attempt had been made to elicit evidence of reasonable grounds from them.
Evidence of reasonable grounds may be established by evidence other than that of the persons who are alleged to have made particular representations as to a future matter. Indeed, as in so many other areas, a court may find the overall probabilities to which the circumstances of a given case give rise, the background to it and the conduct of parties prior to conversations taking place as providing better guides to whether or not they had particular states of mind or whether particular factors existed which would establish evidence of something such as reasonable grounds. It was the overall circumstances of the case which enabled his Honour to say, in relation to both Mr Leckie and Mr Lewis, that each genuinely believed the encouraging assertions which his Honour found them to have made. If one changes the exercise to an inquiry, not into genuine or honest belief, but into whether there were reasonable grounds, it is again the overall circumstances of the case which will provide more reliable guidance than would oral evidence on the part of interested parties.”
This approach was taken by Einfeld J in Sheldrick v WT Partnership (Aust) Pty Ltd [1998] FCA 1794. In that case, his Honour found that the respondent employer had made representations to the applicant, Sheldrick, that it had a long term commitment to him despite the employer’s denials that it had made the representations. After relocating to Asia, Sheldrick was summarily dismissed after just one year in the position. In concluding that the partnership had reasonable grounds for making the representations that it did, Einfeld J referred to the general circumstances in which the representations were made. These included the fact that the director responsible for making the representations had faced significant opposition to Sheldrick’s relocation to Asia from other directors and had gone to extreme effort and expense to secure Sheldrick’s position:
“It would be perverse in the extreme that Lowndes undertook this effort and involved his group in this expense to relocate Sheldrick and his entire family to a place so far away from home and with all the personal disruption involved, including separation from wider family and friends, and interruption to the education of his children, if it was not his intention that they should remain there for the long term.”
Einfeld J also commented that there was no evidence to doubt the genuine intentions of either party during the negotiations.
O’Neill v Medical Benefits Fund (“O’Neill”) [2001] FMCA 61 is another case which concerned representations of secure, long term employment. In that case the applicant, O’Neill, was actively pursued by the respondent to leave his current, secure employment and accept employment with MBF instead. Having signed the employment contract with the respondent, the applicant’s position was subsequently downgraded and, within two years of commencement, the applicant’s position was made redundant. McInnes FM found that the representation as to secure, long term employment had been made with little regard to whether or not it was true. The overall circumstances of that case included the fact that the termination of the applicant’s employment was not a genuine redundancy.
The applicant submits that O’Neill is on all fours with the instant case. However, there are elements present in that case which are absent from this one. First, the status of the applicant’s termination as a redundancy is not in issue. Second, whereas O’Neill had been “head hunted” by MBF to leave secure employment in a move to disadvantage a competitor, Mr Robertson had made the initial approaches to the respondent through Mr Higgins. In the absence of these elements, there is no reason to suspect the genuine intentions of Mr Binns when he indicated that the applicant’s employment would be long term. The fact that the respondent had been experiencing growth when it employed Mr Robertson also supports this conclusion. The evidence annexed to the affidavit of Benjamin Bruce Binns dated 4 December 2009, indicates that prior to about June 2008, Winnebago was experiencing growth in sales, production and employment. The advertisement for the position of Design Manager alluded to this growth, noting that “a restructure” and “ever growing demands” were the reasons for the new role. If all had gone to plan and the company had continued to expand as it appeared to be doing there would be no reason to dismiss Mr Robertson. Mr Binns could not be expected to foresee the coming of the global financial crisis or its affect upon his business when he was negotiating with Mr Robertson in October 2007.
I am satisfied that these circumstances indicate that the respondent had reasonable grounds for making the representation that the Mr Robertson’s employment would be long term.
It was suggested by the applicant that the response of Mr Binns in cross-examination to certain questions as to how long he expected Mr Robertson to be employed with the company, which responses revealed a period of one to two years, established that the company did not have reasonable grounds for making the representation because the representation indicated a period in excess of one to two years. These matters were debated with Mr Binns at two points in his evidence, first, in cross-examination by Mr Britt. At [T39] the following exchange takes place:
“You asked him how long he intended to work for?---Yes.
Why did you ask him that?---He was 64/65 years old
…
So you don’t agree with me, that Mr Robertson said – as indicated to you earlier this year – probably between three and five years, when you asked how long did you continue to work for?---Sorry, what’s the point of that question?
Well, you would agree with me, sir, that when you asked the question to the applicant
How long do you intend to continue to work?
He said to you:
As I indicated to you earlier this year, probably between three and five years.
?---I don’t recall that
But you don’t take issue with it, sir, in your paragraph 21?---No, I don’t.”
This is cross-examination about an evidentiary dispute. The applicant says he told the respondent that he expected to work between three and five years and the respondent says that he thought that the applicant told him that he intended to work between one and two years. I cannot see how what the applicant told the respondent could constitute on the part of the respondent a representation as to a future fact. If it is suggested that the respondent’s acquiescence in what the applicant said constituted such a representation, then I cannot see how it could be said that this representation was unreasonable because, to my mind, neither the extract from the transcript, nor anything said by Mr Binns in his affidavit, establish that the company wished to employ Mr Robertson for two years maximum. I prefer Mr Robertson’s evidence on the matter i.e. in response to the question, he indicated a period of between three to five years. Mr Binns certainly did not argue with that. The contract the parties eventually entered into did not preclude Mr Robertson from serving from three to five years so, to the extent that there was a representation, it was not unreasonable because when it was made it could have been carried out.
The second reference in the transcript is to questions I asked Mr Binns. These appear at [T50]:
“HIS HONOUR: Just tell me this. How long – you employ a man, you’re going to pay $150,000 to, you had never paid anybody as much as that. You thought you were going to get him for how long?---Well, I honestly thought it was one to two years. He was 64 years old – 65.
But you signed an agreement with him that had no end date, did it?--- That’s correct.
If you thought it was one to two years and he wrote to you – somebody wrote to you and put “three years” into the contract and there were some – seem to be some discussions about it, why didn’t you go back and say, “No, no, no. We have him two years. You have him on a two-year contract.”?---Well, the draft terms that he sent us had “three to five years” and we actually said, “No, I will not commit to that particular period.”
No, but you said one to two years. You just told me “one to two years”?---I made an assume of one to two years, that’s correct, yes.
What do you put a man on for $150,000 to revitalise your entire thing and you only expect him to work for one to two years?---Well, it could be because of his age, yes. That’s correct, yes.
…
He doesn’t look too old. I just don’t understand, if you’re going to employ somebody for two years, why don’t you say to them, “I’m going to employ you for two years.”?---Well, I mean, the contract didn’t have an end date. I mean, you are correct in saying that. At the end of the day, we needed what I saw were some of the skills that he had. We needed to boost our engineering department. I thought it was a good fit because he wanted to come back to Australia.”
If the whole of this exchange is read carefully, it will be seen that Mr Binns does not suggest that he only intended for Mr Robertson to work for two years. That was the period he thought Mr Robertson would work for. Mr Binns in the exchange points out that the contract did not have an end date. He does not want to commit to a three to five year period but that is not the same as the allegation made against him which is that he made a representation that a three to five year period would be given but he had no intention of acting upon it. The evidence indicates that if there had not been a global economic crisis, and Mr Robertson had performed for Winnebago as well as he did for all his previous employers and there had been a harmonious relationship between him and the respondent, he would have remained in employment for the period he sought.
For these reasons I am unable to say that the respondent engaged in conduct that was liable to mislead the applicant in connection with his employment. If the applicant’s draft document constituted his intended terms of service then by reason of the notice period he did not have the security of a fixed term. He did not obtain even the mention of such a term in the document he did agree to sign. He does not claim to have received any further representations between the time the final version of that contract was put to him in November 2007 and the time he signed it. More importantly, he received no further representations prior to his resignation from Ashok Leyland which is the relevant date for this claim. The course of the negotiations between him and the respondent negates any reliance upon such earlier representations as were made. The applicant’s claim must fail.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date: 8 March 2010
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