Robinson v Thirlwall

[1992] QCA 220

IN THE COURT OF APPEAL

[1992] QCA 220

SUPREME COURT OF QUEENSLAND

Appeal No. 76 of 1991

BETWEEN:

RODERICK WALTER ROBINSON

(Plaintiff) Respondent

AND:

JULIAN ROBERT THIRLWALL

(Defendant) Appellant

JUDGMENT OF THE COURT

Delivered the Twenty-seventh day of July 1992

This is an appeal from a judgment of his Honour Judge Botting given in the District Court in an action for damages for repudiation of a contract of employment. The appeal raises two points, the first being the legality of the contract found and the second a question as to the amount of damages awarded.

The evidence of the respondent, which was accepted by the judge, was to the effect that in early June 1987 he had a discussion with the appellant. He made an oral agreement with the appellant to work for him as a lawyer in Port Moresby, at an annual remuneration of K50,000, for a period of two years. In consequence of that agreement, the respondent gave notice to his then employers, but the appellant changed his mind and repudiated the agreement. The judge gave judgment for a total of $27,513 in damages and interest.

The outline of argument on behalf of the appellant, which is dated 8 May 1992, takes a number of points, but only two were pursued. Complaint was made by counsel for the respondent - not unreasonably, as it seems to us - that he was given no notice by his opponents of this substantial diminution of the issues raised by the appeal.

The first argument put forward by Mr. Dutney Q.C., senior counsel for the appellant, was that the law of Papua New Guinea governed the dispute and prohibited the making of a binding contract, because of the absence of a work permit.

There was evidence, accurately described by Mr. Dutney as "somewhat sketchy", of the content of relevant Papua New Guinea law. The appellant gave evidence to the effect that there were "work permit rules" which were "strictly enforced". The rules were not tendered, nor was their content defined by the appellant. He did say, however, that:

"The then practice was that one had to get advance approval from the Department of Labour to employ non-citizens and that approval was usually for a period of three years and covered all the non- citizen positions in the firm".

In answer to a further question, the appellant said that that practice was "pursuant to" the "Employment of Non- citizens Act". That Act was not tendered, nor was its content explained. The appellant said that he had a "preliminary approval" to the employment of the respondent, the legal effect of which presumably depended upon either the Act or the rules or the practice, but was not defined by the appellant. He did not say that he had ever studied any of these provisions, so as to familiarise himself with their effect. The general tenor of his evidence, vague as it was, seemed to be that he understood what the Papuan New Guinea authorities did. He was asked what would the position be if he employed somebody without having a work permit and answered:

"I would be in grave trouble. People frequently get deported for not having a work permit. When I say 'frequently', it happens not infrequently that people get deported".

He went on to explain, in response to leading questions, that the Act he had mentioned prohibited employment of non-citizens without a work permit. One would have to know the terms of the Act to form a view as to whether it or any subordinate legislation made under it had the effect of making such a contract as was sued on void, or merely that of suspending its operation until a work permit was obtained.

It seems to us clear that the Court could make no
accurate findings, as to the state of the relevant law of
Papua New Guinea, on the basis of the appellant's evidence.

The case was plainly one in which, if a point as to illegality was to be taken, the relevant law should have been properly proved; it was not. It is unnecessary to go into the question as to whether if Papua New Guinea law did prohibit the making of such a contract as was sued on, it would operate in the present case.

The first ground of appeal fails.

The second ground argued was that the judge was wrong in his assessment of quantum, in failing to take into account the incidence of taxation. After referring to the decision of Gray J. in Wheeler v. Phillip Morris Ltd (1989) 32 I.R. 323 at 353, the primary judge held that the appropriate measure of damages was to calculate the respondent's loss by having regard to his gross salary payable under the agreement. The damages consisted largely of lost earnings in the sum of $15,710, the total damages before an allowance of interest being $18,590.

It is convenient to speak of "net earnings" as descriptive of the basis of calculation of damages favourable to the appellant - i.e. damages calculated with respect to earnings from which the tax which would have been payable has been deducted.

Where it is held that damages are to be awarded on a net earnings basis, that is so because: first, there is a general rule that where damages are awarded for lost earnings, then the calculation should be on a net earnings basis, but only if the damages are not themselves taxable; secondly, because in the particular circumstances the damages are not taxable. As to the first point, it was decided by the High Court in Cullen v. Trappell (1980) 146 C.L.R. 1 that the principle established in British Transport Commission v. Gourley [1956] A.C. 185 should be applied in Australia, from which it follows that in this country the general rule we have mentioned is law. In Cullen v. Trappell, it was also determined that the result of application of that rule in a personal injuries suit is that damages should be based on net earnings; the assumption was made that the component of the award which represents loss of earnings would not itself be taxable, although one finds in the reasons no discussion of the correctness of that assumption.

Before us, the question was raised whether the law of Australia or that of Papua New Guinea is to be applied to the problem. At the time when the respondent gave evidence in the District Court, he was a resident of Papua New Guinea and did not intend to return to this country until December last year. There is no evidence as to the content of the relevant tax law of Papua New Guinea, except insofar as that law may be deduced from the content of the reasons in Rooney v. Forest Industries Council of Papua New Guinea (National Court of Justice - Papua New Guinea, Wood J., 26 October

1990), which were tendered at the trial by consent.

It is convenient to approach the problem by first
considering the position as was explained in those reasons.
There, the plaintiff was dismissed during the currency of a

contract of employment. She sued for and obtained damages for wrongful dismissal. After referring to Gourley's case and to Atlas Tiles Limited v. Briers (1978) 144 C.L.R. 202, Wood J. in the National Court of Justice held that since the amount of the judgment was taxable, damages should be awarded on the basis of gross and not net earnings. Counsel for the appellant criticised the decision in Rooney's case on the basis that there, Cullen v. Trappell was not referred to. However, the reasoning ultimately adopted by Wood J. was in accordance with the principle of Gourley's case; his Honour decided the case on the basis that the principle of Gourley's case required that damages be assessed on a net earnings basis, only if the award was not taxable under Papuan New Guinea law.

Counsel for the appellant also said that Wood J. drew an invalid distinction between personal injuries cases and wrongful termination of employment cases. In our view, that distinction is a proper one, if the award of damages for lost earnings in cases of the latter kind is itself taxable.

What Cullen v. Trappell did was to uphold the dissenting judgment of Gibbs J. in Atlas Tiles Ltd. v. Briers: see Cullen v. Trappell at pp.10, 11 and 24. In Atlas Tiles Ltd. v. Briers, his Honour had held that damages for personal injuries should be assessed on a net earnings basis, as was held in Gourley, but his Honour said:

"Speaking generally, the principle will apply only where the earnings or profits lost would have been taxable if the plaintiff had received them but the damages awarded to compensate the plaintiff are not taxable ..." (p.220).

Admittedly, this general rule is not to be found stated by Gibbs J. in Cullen v. Trappell itself, but it was unnecessary for Gibbs J. there to repeat it. Cullen v. Trappell certainly does not establish a rule that net earnings only are to be allowed where the damages awarded are themselves taxable; that would in general be unjust.

In our view, on the evidence of the judgment of Wood J., which was the only evidence on the point, the law of Papua New Guinea and that of Australia are at one, insofar as in each country the law is as stated in the passage quoted from Gibbs J. in Atlas Tiles v. Briers. The tax law of Australia differs, of course, from that of Papua New Guinea. Since the salary which the respondent would have earned under the agreement, as well as the payment to the respondent under the judgment, would have been subject to Papua New Guinea taxation, the result arrived at by Wood J. in Rooney's case is applicable here.

In the result, it is our opinion that the learned reference to gross salary.

Therefore, both the points taken on the appeal fail and it must be dismissed with costs.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 76 of 1991

BETWEEN:

RODERICK WALTER ROBINSON

(Plaintiff) Respondent

AND:

JULIAN ROBERT THIRLWALL

(Defendant) Appellant

_______________________________________________

Mr. Justice Pincus Mr. Justice Davies Mr. Justice Derrington

_______________________________________________

Judgment of the Court delivered on 27th July

1992.

_______________________________________________

APPEAL DISMISSED WITH COSTS.

_______________________________________________

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 76 of 1991

Before the Court of Appeal
Mr. Justice Pincus
Mr. Justice Davies

Mr. Justice Derrington

BETWEEN:

RODERICK WALTER ROBINSON

(Plaintiff) Respondent

AND:

JULIAN ROBERT THIRLWALL

(Defendant) Appellant

JUDGMENT OF THE COURT

Delivered the Twenty-seventh day of July 1992

MINUTE OF ORDER:	The appeal is dismissed, with costs.
CATCHWORDS:	DAMAGES - CONTRACT - MEASURE OF - Appeal from assessment of damages for repudiation of contract of employment by reference to gross salary - whether trial judge correctly concluded law of PNG would have subjected payment to respondent under it to taxation.
Counsel:	P.R. Dutney Q.C., with him, Miss K. Ryan for the Appellant T. Griffin Q.C., with him, N. Nunan for the Respondent
Solicitors:	Cantrell & Associates for the Appellant Cleary & Lee for the Respondent
Hearing Date(s):	22 May 1992