Rogan-Gardiner v Woolworths Ltd

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: ROGANGARDINER -v- WOOLWORTHS LTD [2012] WASCA 31

CORAM: McLURE P
NEWNES JA
ALLANSON J

HEARD: 11 NOVEMBER 2011

DELIVERED : 21 FEBRUARY 2012

FILE NO/S: CACV 118 of 2010

BETWEEN: MICHELLE ROGANGARDINER
Appellant
AND
WOOLWORTHS LTD
Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :HALL J
Citation  :ROGAN-GARDINER -v- WOOLWORTHS LTD [No 2] [2010] WASC 290
File No  :CIV 2149 of 2004

Catchwords:

Employment law - Implied term that employer give reasonable notice of termination - Termination of employment without reasonable notice - Assessment of damages - Relevant principles - Determination of period of reasonable notice - Factors to be taken into account - State financial services manager - Middle management position - Appeal against finding that reasonable period of notice was four months dismissed

Legislation:

Minimum Conditions of Employment Act 1993 (WA), s 39(b)

Result:

Appeal dismissed

Category: B

Representation:

Counsel:

Appellant: Mr P R MacMillan
Respondent: Ms G A Archer SC

Solicitors:

Appellant: Jackson McDonald
Respondent: Clayton Utz

Case(s) referred to in judgment(s):

Addis v Gramophone Co Ltd [1909] AC 488
Australian Blue Metal Ltd v Hughes [1963] AC 74
Bagnall v National Tobacco Corporation of Australia Ltd (1934) 34 SR (NSW) 421
Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410
Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194
Dellys v Elderslie Finance Corp Ltd [2002] WASCA 161; (2002) 132 IR 385
Devries v Australian National Railways Commission [1993] HCA 78; (1993) 177 CLR 472
Edward Keller (Australia) Pty Ltd v Hennelly (1990) 35 IR 464
Gunton v Richmond‑upon‑Thames London Borough Council [1981] 1 Ch 448
Guthrie v News Ltd [2010] VSC 196; (2010) 27 VR 196
Harding v Harding (1928) 29 SR (NSW) 96
House v The Queen [1936] HCA 40; (1936) 55 CLR 499
IOOF Building Society Pty Ltd v Foxeden Pty Ltd [2009] VSCA 138; (2009) 23 VR 536
Irons v Merchant Capital Ltd (1994) 116 FLR 204
Lau v Bob Jane T-Marts Pty Ltd [2004] VSC 69
Macauslane v Fisher & Paykel Finance Pty Ltd [2002] QCA 282; [2003] 1 Qd R 503
Quinn v Jack Chia (Australia) Ltd (1992) 1 VR 567
Rankin v Marine Power International Pty Ltd [2001] VSC 150; (2001) 107 IR 117
Reilly v Praxa Ltd [2004] ACTSC 41
Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney [2008] NSWCA 217; (2008) 72 NSWLR 559
Saad v TWT Ltd [1998] NSWCA 199
Sorrell v Kara Kar Holdings Pty Ltd [2010] NSWSC 1315

McLURE P: I agree with Newnes JA. The trial and the appeal were conducted on the basis that the relevant legal principles are settled and provide a coherent framework for the determination of the issues between the parties.
It is certainly settled that, in the absence of an express provision relating to termination in a contract of employment, a term will be implied that the parties must give reasonable notice of termination except in circumstances justifying summary termination. What is a reasonable period of notice is to be determined as at the date of notification having regard to all relevant circumstances. The decision on the issue of reasonableness is discretionary in the sense explained by the High Court in Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194:
'Discretion' is a notion that 'signifies a number of different legal concepts'. In general terms, it refers to a decision-making process in which 'no one [consideration] and no combination of [considerations] is necessarily determinative of the result'. Rather, the decision-maker is allowed some latitude as to the choice of the decision to be made [19].
The approach to reasonableness in the cases is to list a wide range of factors said to be relevant without explaining why they are relevant or whether they weigh for or against the opposing positions of the employee and employer. See Rankin v Marine Power International Pty Ltd (2001) 107 IR 117 [217] ‑ [236]; Macauslane v Fisher & Paykel Finance Pty Ltd [2003] 1 Qd R 503.
The purpose of the objectively intended contractual requirement of reasonable notice is central to an understanding of what is relevant and why. It is said the length of the notice period is what is reasonable 'to enable the employee to obtain new employment of a similar nature': Rankin [220]; Macauslane [24] ‑ [26]. I have reservations as to the correctness of that proposition. The formulation is arguably wide enough to encompass all personal characteristics of a particular employee, including those unknown or not in existence at the date of entry into the contract, which would adversely impact on that person's actual future employment prospects. That cannot be correct. It would also bring to account difficulties in obtaining alternative employment due to labour market conditions. It would have the counterintuitive result of requiring longer periods of notice during challenging economic times when unemployment is high. Moreover, the emphasis on new employment of a 'similar nature' has had the consequence that very senior well‑paid employees are ordinarily entitled to longer periods of notice than lowly

paid employees in an unskilled or semi‑skilled position. That is to focus on the demand side of the equation (the number of available positions) without proper regard to the supply side (the number of persons qualified to fill the position). However, the disposition of this appeal does not require the determination of these issues of principle.

NEWNES JA: This appeal arises out of the termination of the appellant's employment by the respondent. The termination occurred after a national restructure of the respondent's business led to the appellant's position being abolished. The respondent offered the appellant a number of other positions but the appellant did not regard any of them as acceptable. Ultimately, the respondent concluded there was no realistic prospect of a solution being found and it terminated the appellant's employment. The appellant commenced proceedings against the respondent alleging that in terminating her employment it was in breach of the contract of employment in a number of respects, including in failing to give her reasonable notice of the termination.
Following an eight day trial, Hall J found that the appellant was entitled to four months notice of termination and awarded the appellant damages commensurate with that. His Honour found that the other breaches alleged by the appellant were not made out. The appellant appeals only against his Honour's decision that she was entitled to four months notice, contending that he should have found she was entitled to 12 months notice.
I would dismiss the appeal for the reasons which follow.

Background

After leaving school the appellant had, from 1976, held various positions in the finance industry in New Zealand. She then undertook studies in accountancy. The appellant completed her accountancy qualifications in New Zealand in 1987 and became a member of the Institute of Chartered Accountants in 1989. The appellant moved to Western Australia in 1989 and was employed by Sumich Group Ltd as a senior accountant. In 1993, she was promoted to manager of finance and administration of that company.
In May 1995, the appellant commenced employment with the respondent as state accountant. Her salary and other entitlements were to the value of $100,500. On 18 April 1996, her position was redesignated 'Financial Services Manager, Western Australia'. Her duties and remuneration remained unchanged. Her role included being in charge of

40 ‑ 45 staff members who carried out the functions of accounts payable, accounts receivable, systems/management accounting, payroll for some 6,000 employees and financial accounting. The staff supervised by the appellant included three qualified accountants.

In 1997, the appellant's role was expanded to include the supervision of the internal audit staff. Those staff comprised a manager and two staff, together with a stock-take team which comprised a manager and 30 casual staff.
When the appellant first commenced employment with the respondent her salary package included participation in an incentive bonus plan. In 1999, this plan was named the Short Term Incentive Plan (STIP). Under this plan, eligible employees were paid a bonus if the actual net profit achieved by the company in their State was equivalent to, and to the extent it exceeded, the net profit budget. In the last four years of her employment, the appellant was paid the following bonuses:
1.$24,889 for the 1999 ‑ 2000 financial year (based on 303 days by reason of maternity leave taken by the appellant for part of that year).
2.$54,880 for the 2000 ‑ 2001 financial year.
3.$25,728 for the 2001 ‑ 2002 financial year.
4.$10,046 for the 2002 ‑ 2003 financial year (based on 82 days by reason of maternity leave taken by the appellant for part of that year).
In addition to the STIP, the appellant was entitled to participate in an executive share option purchase plan. The latter operated until 1999. The executive share option purchase plan was replaced in 1999 with the Long Term Incentive Plan (LTIP). On 5 April 2000, the appellant accepted an offer to participate in the LTIP by completing an application form for 70,000 share options at an exercise price of $5.11. The options were to vest in four tranches. The appellant exercised the 35,000 options in the first three tranches but was unable to exercise the 35,000 options in the fourth tranche as her employment came to an end prior to the vesting date.
On 15 and 16 April 2002, the respondent held a conference in Sydney at which the restructure of its financial services division was announced. The announcement was made by the General Manager Finance (Supermarket Group), Mr Parle. The conference was attended by financial services division managers and human resource co‑ordinators from all of the State offices. The appellant attended in her capacity as the Western Australian Division Financial Services Manager. The purpose of the conference was to inform the managers of the proposed new structure and to provide them with the information necessary to enable them to communicate it to the employees they supervised in their own states. Mr Parle also proposed to have individual meetings with each of the managers to reassure them about their job security and to identify their interest in any of the new positions created under the restructure.
In substance, the restructure involved the centralisation of transaction processing in Tasmania, the centralisation of financial services in South Australia, the centralisation of payroll in Queensland and a business support component in each region across the states of Australia. The regions which were created did not necessarily coincide with individual states because of the differences in the populations of the various states. Thus, certain states contained several regions while other states contained only one region or the region covering the state was part of a larger region. The regions were management units and replaced previous state‑based structures. Western Australia was to remain a single region under the new structure.
The effect of the restructure was that, once implemented, the Financial Services Manager position in each state, including that of the appellant, would become obsolete. The most senior accounting position available in Western Australia would be the Regional Business Analyst, which was the remaining business support component for the Western Australian region after the centralisation of other functions to other states.
Over the course of the conference, the appellant had two meetings with Mr Parle concerning possible positions she might take up in the new structure. In the course of those discussions, the appellant rejected the position of Regional Business Analyst, on the basis that she considered she had moved beyond the type of work involved in that position. The appellant also rejected the position of Systems Accountant in the Financial Control Centre based in South Australia. The position of National Financial Controller, located in Sydney, was also discussed. There was a conflict in the evidence as to the precise circumstances in which that position was raised but nothing turns on that. Suffice it to say that nothing came of it. At trial, the appellant accepted that the person who was subsequently appointed to the position was better experienced and qualified than she was.
After the conference, in May 2002, Mr Parle raised with the appellant the possibility of her appointment as Finance Manager of the respondent's freestanding liquor division. In subsequent discussions, the appellant made it clear that she was not interested in the position as it would require her to relocate to Sydney and it would also involve working with another employee of the respondent with whom she had previously had difficulties.
On 29 September 2002, the appellant commenced 12 months maternity leave. In January 2003, the appellant was offered the position, on her return to work, of Corporate Auditor. The position was to be based in Perth, reporting to the Group Internal Audit Manager in Sydney. The appellant made some enquiries about the nature of the position and, on 19 March 2003, declined it. She did so on the grounds that the position was not commensurate with her experience, auditing involved a career change and limited progression opportunities, the position was at a lower level than her old position, and there were limited opportunities for team work and staff development.
The respondent's General Manager Human Resources, Ms Coates, wrote to the appellant on 2 April 2003 urging her to reconsider the position of Corporate Auditor. In the letter, Ms Coates noted the other positions the appellant had refused to accept and said that whilst it was the respondent's desire to retain the appellant as an employee, if the appellant continued to refuse the position of corporate auditor the respondent would have no choice but to conclude that the respondent did not intend to perform reasonable alternative duties on her return to work. Ms Coates went on to say that that was likely to lead to the termination of the appellant's employment.
The appellant responded on 14 April 2003, setting out why she considered that each of the positions she had been offered was unacceptable and not comparable to her previous position. She went on to express dissatisfaction with the way the respondent had handled the matter. Further endeavours on behalf of the respondent to persuade the appellant to accept the position of Corporate Auditor were unsuccessful.
On 18 July 2003, the appellant was offered the position of Zone Business Analyst, Supply Chain West, based in Perth and reporting to a manager in Sydney. The position included responsibility for a major new distribution centre in Perth. The letter of offer said that the position of Corporate Auditor also remained open. The appellant rejected both positions on the ground that they were not comparable to her previous position. A reiteration of the offers on 18 August 2003 received the same negative response.
All of the positions offered to the appellant were on the basis that she would continue to receive the same salary and entitlements as in her previous position.
The appellant reported for work on 1 September 2003. Ms Coates and the respondent's Human Resources Operations Manager, Mr Backshall, telephoned the appellant that day and asked her which of the offered position she was accepting. The appellant told them she was not accepting the Zone Business Analyst or Corporate Auditor positions and was not resigning. The following day the appellant consulted her doctor who declared her unfit for work from 2 September to 9 September 2003.
Ms Coates wrote to the appellant on 9 September 2003, encouraging her to accept either the Zone Business Analyst or the Corporate Auditor position, and assuring her that the respondent wished to retain her as an employee. Ms Coates also pointed out in the letter that if the appellant's employment with the respondent ceased before 1 July 2004 the appellant would lose the benefit of the 35,000 unvested share options which she held under the LTIP. The letter went on to say that if the respondent did not receive the appellant's agreement to take up one or other of the positions by 5.00 pm on 12 September 2003 it would presume that the appellant was not prepared to perform the duties of either position and the respondent would have to regard the appellant's employment as having come to an end.
The appellant responded by a letter of 10 September 2003, in which she reiterated that she was not accepting either position and asked to be provided with 'suitable alternative employment in a senior accounting role' [109]. The following day the appellant spoke by telephone with Ms Coates and Mr Backshall, and confirmed that that remained her position. A short time later that day the appellant received a letter by facsimile from Mr Backshall informing her that in light of that, her employment with the respondent 'has ceased'.

The pleaded case

The appellant subsequently commenced proceedings against the respondent alleging, in substance, that the respondent had acted in breach of her contract of employment. She alleged that it was an implied term of the contract that in its treatment of her, including any exercise of its right of termination, the respondent would act responsibly, fairly and in good faith. The appellant alleged that by its conduct in the period 15 April 2002 to 11 September 2003 and/or in terminating her employment in the manner that it did, the respondent had failed to act responsibly, fairly or in good faith. It is sufficient to say that the primary judge found that that ground had not been made out and that finding is not challenged.
Similarly, there is no challenge to the primary judge's rejection of claims that the respondent breached an implied term of the contract relating to redundancy by failing to pay the appellant any sum of money for pro‑rata long service leave on her termination, and that it wrongfully failed to pay the plaintiff a severance payment on termination.
Relevantly for present purposes, the appellant pleaded that it was an implied term of the contract of employment that the respondent would not terminate the contract without providing her with reasonable notice. The appellant alleged that by reason of the senior nature of her employment, level of remuneration, length of service, professional standing, age, qualifications and work experience, reasonable notice was a period of 18 months. She claimed that as a consequence of the breach of the notice provision, she had suffered loss to the value of 18 months of her remuneration package from 11 September 2003, damage to her mental health, and damage to her future employment prospects. The appellant alleged that the summary termination of her employment had adversely affected her future employment prospects. The fact that she was unable to provide a prospective employer with a reference after being employed by the respondent for a period of over eight years and the defence of the summary dismissal claim by the respondent, together with the impact on her mental health, had resulted in her being unable to secure equivalent alternative employment.
In its defence, the respondent admitted the implied term that it would not terminate the contract without providing the appellant with reasonable notice but denied that it was in breach of that term. It pleaded, among other things, that the appellant's employment was not summarily terminated on 11 September 2003, but rather that she was given notice on or about 15 April 2002 that her employment contract would terminate on 31 October 2002. That, it was alleged, constituted good notice and resulted in the contract terminating on 31 October 2002 by effluxion of the notice period. Alternatively, by declining to perform the duties of any of the alternative positions offered to her by the respondent between 1 and 11 September 2003, the appellant had repudiated the contract by effectively refusing to provide services. The respondent had accepted that repudiation on or about 11 September 2003. In those circumstances, it was pleaded, no notice was required.

The findings of the primary judge

The primary judge found that the respondent was in breach of the implied term requiring reasonable notice of termination. He rejected the respondent's contention that it had given the appellant notice of termination in April 2002 [152]. He also rejected its contention that by her conduct in refusing the positions offered to her the appellant had repudiated the contract [165]. His Honour concluded that the contract had been summarily terminated by the respondent on 11 September 2003 in circumstances where there were no grounds for the respondent to do so. The termination was therefore a breach of the contractual obligation to provide reasonable notice [166].
The primary judge then turned to the question of the length of notice the respondent was required to give under the contract. His Honour observed that the purpose of notice is to give employees a reasonable opportunity to reorganise their lives, which required a reasonable period in which to secure alternative employment. His Honour went on to say that a court should not impose a period of notice that is longer than the period either party would have considered reasonable had they turned their minds to it at the time [178]. He declined, however, to give any great weight to an unsigned service agreement which specified a notice provision of two months [179].
His Honour noted that what was reasonable notice depended upon the circumstances of the case. He found that relevant factors included the importance of the job, the amount of the salary, and the nature of the employment. Other relevant factors included the length of service, the employee's professional standing, age, qualifications, experience and degree of job mobility, the time it would take them to get alternative employment and the period it is likely they would have continued in the employment but for the dismissal [167].
In considering those factors, the primary judge noted that whilst the appellant's position had been classed as 'executive', there were some 496 employees of the respondent in that category, 14 of them in Western Australia. His Honour also observed that the grading of the appellant's position seemed to be a little higher than was warranted, as the appellant did not have the same level of responsibilities as her counterparts in Victoria and New South Wales. His Honour considered that the appellant's position was a State‑based accounting role which could appropriately be described as 'middle management'; that is, 'one with significant operational and supervisory responsibilities but not one with responsibility for making broader strategic management decisions'. In the context of the respondent's national organisation it was not one that could properly be characterised as a senior executive position. His Honour considered that the appellant's salary of $103,000 per annum, superannuation, motor vehicle and access to incentive plans, was consistent with that conclusion [168] ‑ [169].
His Honour found that the appellant's period of employment with the respondent was five years and eight months. That excluded some 20 months of maternity leave. I should mention in passing that on the appeal it was conceded by the respondent that his Honour's calculation of the period, based on figures provided by the appellant, was in error and the actual figure was six years and eight months.
In relation to the appellant's professional standing, his Honour noted that, aside from her employment with the respondent, the appellant had occupied senior accounting roles in medium sized businesses. He noted, too, that the respondent valued her skills.
His Honour observed that the appellant was 44 years of age at the time her employment was terminated and was a qualified accountant with 'over 30 years' experience in the financial sector and '20 years experience' as an accountant. (The correct figures appear to be some 28 years in the financial sector and some 16 years as an accountant.) She had good financial accounting and auditing skills [172]. He concluded that she had 'some degree of mobility' in terms of where she could seek work [173].
On the question of the expected time it would take the appellant to obtain alternative employment, his Honour noted that the appellant claimed she had experienced difficulty in that regard because she could not obtain a reference from the respondent. His Honour found, however, that she had not sought one and that the respondent would have provided a reference if one had been asked for [174]. The appellant had obtained three months employment in 2007 as Chief Financial Officer of a company and his Honour concluded that the reason for the delay in obtaining employment was due to the appellant's health. He concluded that the appellant's difficulties in obtaining long‑term employment were not related to the termination of her employment with the respondent, but were due to her mental health problems (which were not caused by the termination of her employment without notice [192]) and her perception that she could not cope with work while the legal action remained outstanding [175].
His Honour did not make any specific finding as to the likely period that the appellant would otherwise have stayed with the respondent, but noted that she had told Ms Coates that she did not know what she would be doing in five years time and that she was not prepared to take an unacceptable position with the respondent simply to ensure that the share options would vest [176]. His Honour also noted that the appellant's counsel had disavowed any contention that the vesting date of the options was sufficient of itself to extend the reasonable period of notice to that date [177].
As I have mentioned, whilst his Honour noted that the appellant had refused to sign a service agreement containing a two month notice provision for reasons unrelated to that provision, in assessing a proper notice period his Honour did not attach great weight to her non-objection to that provision [179].
After referring to a number of cases in which the appropriate period of notice had been considered, his Honour concluded that an appropriate period of notice in this case was four months. That, his Honour found, fairly reflected the appellant's position, length of service and prospects of future employment [186].
Consequent upon his Honour's finding, judgment was entered for the appellant for $59,623 plus interest from 12 September 2003. The respondent was ordered to pay the appellant's costs of the action to 16 March 2007 and the appellant was to pay the respondent's costs thereafter.

The ground of appeal

The appellant relied upon the following grounds of appeal:
The learned trial judge erred in law, or alternatively erred in fact, in finding that the appropriate period of notice in this case was one of four months, in that:
1.The learned trial judge erred in fact in finding that:
(a)the position formerly occupied by the appellant with the respondent was one of middle management. The learned trial judge should have found that the appellant was employed at a senior level;
(b)the appellant's period of service was of 5 years 8 months. The learned trial judge should have found that the appellant was employed by the respondent for a continuous period of 8 years and 4 months;
(c)the appellant prejudiced her chances of employment elsewhere by failing to seek a reference from the respondent. The learned trial judge should have found that by summarily dismissing the appellant in breach of her contract of employment, the respondent prejudiced the appellant's chances of employment elsewhere;
(d)the respondent did not proceed on the basis of refusing to pay the appellant severance pay.
2.(abandoned on the appeal)
3.The learned trial judge found that the appellant's difficulty in finding alternative employment was related to her mental health and took this into account in his assessment of what was a reasonable notice period. In so doing he erred in law in that, what is subjective to the appellant is irrelevant to such objective assessment.
4.The learned trial judge failed to take into account or give appropriate weight to the following:
(a)no weight should have been given to the finding that the appellant had some degree of mobility to move interstate to find other employment in that the appellant's future employment prospects were appropriately to be assessed in terms of a senior role in finance in Western Australia;
(b)the appellant was less likely quickly to find work after having not worked in the 12 months preceding her dismissal, owing to her maternity leave;
(c)the value of the appellant's salary package was in excess of $178,800 per annum in 2003, taking into account the Short Term Incentive Plan and the Long Term Incentive Plan;
(d)the appellant was entitled to participate in the Short Term Incentive Plan which provided for bonuses to be payable on achievement of certain objectives up to a maximum of 40% of base salary and that the appellant had received gross bonuses pursuant thereto being:
(i)$24,889 on 15 September 2000 (pro rata 303 days);
(ii)$54, 880 on 14 September 2001;
(iii)$25,728 on 13 September 2002; and
(iv)$10,046 on 10 September 2003 (pro rata 82 days);
(e)the appellant had worked for one employer, the respondent, for a period of 8 years and 4 months;
(f)the respondent in breach of the appellant's contract of employment summarily dismissed the appellant on 11 September 2003 and by so doing prejudiced the appellant's chances of employment elsewhere;
(g)the appellant was entitled to decline alternative positions offered to her by the respondent;
(i)if the result of this was that the appellant was not to remain in the respondent's employ, that circumstance was attributable to the respondent's restructure. In the absence of that restructure there is nothing to suggest that the appellant's employment with the respondent would not have continued to retirement age;
(ii)it was inappropriate for the respondent to attempt to force the appellant to accept one of the roles offered to her;
(h)the 35,000 options were to vest after 1 July 2004, some 9 months and 21 days after the summary dismissal. The benefit of such vesting was substantial for the appellant.

The disposition of the appeal

It is well‑established that where an employer terminates a contract of employment in breach of an obligation to give reasonable notice of termination, the general rule is that the employee is entitled by way of damages to the amount that he or she would have been earned during the period of reasonable notice (less any amounts actually received during that period): Bagnall v National Tobacco Corporation of Australia Ltd (1934) 34 SR (NSW) 421, 429; Gunton v Richmond‑upon‑Thames London Borough Council [1981] 1 Ch 448, 469; Dellys v Elderslie Finance Corp Ltd [2002] WASCA 161; (2002) 132 IR 385 [39]; McGregor on Damages (18th ed, 2009) pars 28‑002, 28‑006, 28‑010.
In accordance with ordinary principles, the employee must take reasonable steps to mitigate his or her loss, the onus of establishing a failure to mitigate being on the employer: Harding v Harding (1928) 29 SR (NSW) 96, 106; Gunton (468); Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410, 428; Dellys [39]. In the present appeal, no question of mitigation was raised.
It was not in issue on the appeal that the appellant's contract of employment contained an implied term that the respondent would give reasonable notice of termination, except in circumstances of misconduct justifying summary dismissal: see Byrne (429). Nor was it in issue that the respondent was in breach of the implied term by failing to give the appellant notice of the termination. The fundamental question on the appeal was whether the primary judge erred in finding that the appropriate period of notice was four months.
The object of a term requiring the giving of reasonable notice to terminate a contract at will was described by the Privy Council in Australian Blue Metal Ltd v Hughes [1963] AC 74, in the context of a commercial agreement, as follows:
The implication of reasonable notice is intended to serve only the common purpose of the parties. Whether there need be any notice at all, and, if so, the common purpose for which it is required, are matters to be determined as at the date of the contract; the reasonable time for the fulfilment of the purpose is a matter to be determined as at the date of the notice. The common purpose is frequently derived from the desire that both parties may be expected to have to cushion themselves against sudden change, giving themselves time to make alternative arrangements of a sort similar to those which are being terminated (99).
That has since been applied in respect of a term requiring reasonable notice of termination of an employment contract: see Saad v TWT Ltd [1998] NSWCA 199; Rankin v Marine Power International Pty Ltd [2001] VSC 150; (2001) 107 IR 117; Guthrie v News Ltd [2010] VSC 196; (2010) 27 VR 196 [196]. In Rankin, Gillard J reiterated that the primary purpose of giving a period of notice was to enable the employee to obtain new employment of a similar nature [220]. A like view was expressed by the Queensland Court of Appeal in Macauslanev Fisher & Paykel Finance Pty Ltd [2002] QCA 282; [2003] 1 Qd R 503 [24], [26]. See also Irons v Merchant Capital Ltd (1994) 116 FLR 204, 209; Harding (103).
It is evident that in the present case the parties proceeded on that basis.
The length of the required notice in any case is a question of fact to be decided in the light of the objective circumstances as they exist at the time the notice is, or should have been, given: Saad and Macauslane.
In the fourth edition of Macken, McCarry and Sappideen, The Law of Employment (1997) 166 ‑ 168, the authors state that the considerations which may be relevant to the determination of the period of reasonable notice include the 'high grade' and importance of the position; the size of the salary; the nature of the employment; the employee's length of service; the professional standing, age, qualifications, experience and job mobility of the employee; the expected period of time it would take the employee to find alternative employment; and the period that, apart from the dismissal, the employee would have continued in the employment. The authors note that the factors which are relevant in any particular case must, of course, depend upon the particular facts of the case.
The relevant passages of that text have been cited with approval in a number of cases; see, for instance, Saad [18]; Macauslane [27]; Rankin [223]; Guthrie [196]; Quinn v Jack Chia (Australia) Ltd(1992) 1 VR 567, 580; Irons (208); Lau v Bob Jane T-Marts Pty Ltd [2004] VSC 69 [65]; Sorrell v Kara Kar Holdings Pty Ltd [2010] NSWSC 1315 [91] (referring to the 6th ed, 2009, 269 ‑ 272). The factors listed in the current (7th) edition of The Law of Employment (289 ‑ 291) do not differ in any material respect from those contained in the 4th ed. The case both at trial and on appeal was fought on the basis of such factors and the appeal should be so determined.
The approach to be taken by an appellate court to a finding by a trial judge as to a reasonable period of notice is not settled. In Macauslane the Queensland Court of Appeal appears to have taken the view ([2] ‑ [3], [14]) that such a finding involved the exercise of a judicial discretion, which could only be disturbed on appeal by application of the principles in House v The Queen [1936] HCA 40; (1936) 55 CLR 499, 505. In IOOF Building Society Pty Ltd v Foxeden Pty Ltd [2009] VSCA 138; (2009) 23 VR 536, the Court of Appeal of Victoria found it was unnecessary to consider whether that was the correct approach [87], although the court was inclined to the view that the preferable approach may be to equate a determination of a period of reasonable notice with an assessment of damages in a personal injuries case; that is, the court must be satisfied that the judge has acted on a wrong principle of law, or has misapprehended the facts, or has for these or other reasons made a wholly erroneous assessment [88]. The court concluded, however, that ordinarily (and in that case) appellate review of a determination as to the reasonable period of notice would be unlikely to lead to a different result depending upon which approach was taken [89].
In the present case, I am likewise of the view that it would make no difference to the result whichever approach was taken and accordingly it is unnecessary to consider the question.
Against that background, I turn to the particulars of the ground of appeal relied upon by the appellant in support of her contention that the primary judge erred in finding that the appropriate period of notice was four months.

Ground 1

Under this particular the appellant contends, in effect, that the primary judge erred in that he should have found that:
1.the appellant's position was not middle management, but a senior executive position;
2.the appellant's period of service was eight years and four months, not five years and eight months;
3.the appellant's chances of employment elsewhere were prejudiced by the respondent's conduct in summarily dismissing her, not by her failure to seek a reference from the respondent; and
4.the respondent acted as it did so that it could refuse to pay the appellant severance pay.
The first challenge is to his Honour's assessment of the status and importance of the appellant's position with the respondent. In considering that issue, little is to be gained by debate about imprecise nomenclature such as 'middle management' or 'senior executive'. The appellant does not attack the findings of fact of the primary judge as to the nature, scope or seniority of the appellant's position with the respondent. That is, there is no challenge to the findings that the appellant was one of 496 employees of the respondent classed as 'executive' and one of 14 in this State; that her position did not have the same level of responsibility as her counterparts in New South Wales and Victoria; that she had no national role or responsibilities but that her responsibilities were State-based; and that whilst she had significant operational and supervisory responsibilities in the State-based operations of the respondent, it did not involve responsibility for broader strategic decisions.
It is evident that his Honour was fully cognisant of the nature of the appellant's position, and its status and importance. His Honour's description of the appellant's position as 'middle management' is not the important consideration, although in my view it is an apt description having regard to those findings. In the context of the respondent's national operations and organisation, it is evident that the appellant's position was not at the highest levels of management of the respondent. Indeed, it was not at the highest level in this State. In my view, no error has been shown in his Honour's assessment in that regard. This contention is not made out.
The second challenge is to the primary judge's finding as to the appellant's length of service. The respondent conceded that his Honour erred in finding that the appellant's period of service was five years and eight months - an error which the respondent acknowledged that it may inadvertently have brought about. As I have mentioned, on the appeal the respondent said the correct period was six years and eight months. The appellant said it was eight years and four months. The difference lies in the three periods of maternity leave taken by the appellant, totalling 20 months. The issue between the parties was whether his Honour erred in excluding that time. In my view, he did not. Section 39(b) of the Minimum Conditions of Employment Act 1993 (WA) provides (relevantly) that such leave is not to be taken into account when calculating the period of service for a purpose of a contract of employment. I accept the respondent's submission that, pursuant to that provision, his Honour appropriately did not take those periods into account in assessing the appellant's length of service.

It follows that the error in respect of the appellant's length of service was a period of one year. However, in the context of the overall assessment required to be made by his Honour as to the appropriate period of notice, I do not consider that the difference between a period of five years and eight months and one of six years and eight months is material.
On the third issue, it was submitted on behalf of the appellant that in assessing the expected time it would take the appellant to obtain suitable employment, the primary judge erred in failing to give any weight to the fact of the appellant's 'summary dismissal' and in finding that the appellant had prejudiced her own future employment prospects by not asking for a reference [174]. In the latter regard, it was argued that in the circumstances it was not reasonable to expect the appellant to ask for a reference.
It was the appellant's case at trial that the lack of a reference from the respondent was an impediment to her obtaining alternative employment and accordingly a factor which bore upon the time it would reasonably take her to do so. In cross‑examination, the appellant admitted, however, that she had not asked for a reference. And Mr Parle was not cross‑examined on his evidence that if she had asked he would have given her one, as he considered she had good skills and would be a valuable employee. I do not accept the appellant's contention that in the circumstances of the termination of her employment it was neither sensible nor reasonable to expect her to ask for one. The circumstances were not such as to give the appellant reasonable grounds to expect that the response would be negative. The primary judge was entitled to conclude that so far as the appellant's employment prospects were prejudiced by the lack of a reference, that was a situation of her own making.
I would also reject the appellant's submission that the fact she was dismissed without notice was a consideration which his Honour should have taken into account in assessing the time it would take the appellant to obtain suitable alternative employment. As I understand the appellant's argument, termination without notice (or what her counsel referred to as 'summary dismissal') bore a stigma that would adversely affect her prospects of alternative employment.
I do not think it is necessary to reach a concluded view as to whether, where an employee is dismissed in breach of an implied term requiring reasonable notice, the manner of an employee's dismissal is a relevant consideration in assessing the likely period it will take the employee to find alternative employment (as to which see, for instance, Addis v Gramophone Co Ltd [1909] AC 488, 491; Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney[2008] NSWCA 217; (2008) 72 NSWLR 559, 572 ‑ 573; cf Rankin [232].) That is because on the facts of this case there is no reason to consider that the manner of her dismissal was likely to have any bearing on her future employment prospects. No stigma could reasonably arise by reason of the termination of her employment without notice. Her employment was not terminated without notice on the ground of serious misconduct, with which the term 'summary dismissal' is usually associated. It was terminated without notice because the respondent wrongly believed that notice was unnecessary in circumstances where, after protracted negotiations, the appellant had declined to accept any of the number of alternative positions offered to her. The respondent had no complaints about her work. On the contrary, it was not in issue that the respondent valued the appellant as an employee and wanted to retain her services [40]. On the basis of Mr Parle's uncontroverted evidence, it is to be inferred that any enquiry by a prospective employer would have elicited that opinion.
I have difficulty in understanding the final issue. As I understand it, however, the appellant contends that his Honour should have found that the respondent terminated the appellant's employment without notice, rather than make the appellant redundant, in order to avoid having to make a severance payment to her. It is not apparent how that is relevant to the assessment of reasonable notice but, in any event, the submission must be rejected.
In the first place, the primary judge found that the appellant had failed to establish that she was entitled to severance pay upon a redundancy [142]. That finding is not challenged. Further, his Honour found as a fact that the respondent terminated the appellant's employment because the respondent concluded (not unreasonably in his Honour's view) that the appellant was effectively refusing to render any services to the respondent [136]. His Honour accepted the evidence of the respondent's witnesses that they made genuine efforts to accommodate the appellant's wishes with a view to retaining her as an employee [40], and that they ultimately reached the view that her employment must be terminated as she was refusing to work [134] ‑ [136]. His Honour concluded that the fact the termination obviated any requirement to make the appellant redundant was a consequence, not an objective, of the termination [137]. Those were findings of fact based upon his Honour's assessment of the relevant witnesses and no grounds have been established which would justify this court interfering with them: see Devries v Australian National Railways Commission [1993] HCA 78; (1993) 177 CLR 472, 479.
In my view, there is no substance in these grounds.

Ground 3

The appellant contends that, having found that the appellant's difficulty in finding alternative employment was related to her mental health, the primary judge erred in taking this into account in assessing what was a reasonable notice period. In my view, there is no substance in this ground. It proceeds upon a misunderstanding of his Honour's reasons.
As I have mentioned, the primary judge found that if, as the appellant contended, she had experienced difficulties in obtaining alternative employment because she did not have a reference from the respondent, that was simply because she had not asked for one [174]. His Honour went on to observe that the difficulties she had apparently subsequently experienced in obtaining alternative employment appeared to be unrelated to the circumstances of the termination of her employment, but instead to be attributable to her mental health and her perception that she could not cope with taking on work while the legal proceedings remained unresolved [175]. His Honour did not take the appellant's mental health into account in assessing a reasonable notice period.

Ground 4

It is appropriate to take in turn each of the factors in respect of which the appellant says the primary judge erred in assessing a reasonable period of notice.

Mobility

His Honour concluded that the appellant had 'some degree of mobility', including mobility to move interstate, to obtain alternative work [173]. The appellant submitted that his Honour erred in having regard to any ability of the appellant to move interstate, contending that the relevant consideration was solely the availability of equivalent alternative employment in this state.
I do not understand why that should be so, in circumstances where the appellant had previously indicated some capacity and willingness to move interstate in her employment with the respondent. I do not accept that his Honour's conclusion was in error.

The effect of maternity leave

It was submitted that the primary judge failed to take into account or to give adequate weight to the fact that the appellant had not worked for 12 months preceding the termination of her employment by reason of her maternity leave, a factor which it was submitted would make it more difficult for her to find work. The difficulty with that submission is that there was no evidence that the period of maternity leave was something which would adversely affect the appellant's ability to obtain alternative employment. Nor does such a contention appear to have been raised by the appellant at trial. The submission must be rejected.

The salary package

It was submitted that the primary judge did not take into account, or failed to give adequate weight to, the fact that the value of the appellant's salary package was in excess of $178,800, including the STIP and the LTIP. With respect, I do not understand that submission. His Honour expressly took into account that the appellant had a base salary of $103,000 per annum and that, in addition, she was entitled to superannuation, use of a motor vehicle, and eligibility to participate in the incentive plans [169]. It was unnecessary for his Honour expressly to assess the value of the entitlements in dollar terms. There is nothing to suggest that his Honour was under any misapprehension as to the value of the salary package. The submission that his Honour failed to take this factor into account must be rejected. There is also nothing in his Honour's reasons to suggest that he failed to give it proper weight.

The STIP

It was submitted that the primary judge did not take into account, or failed to give adequate weight to, the fact that during the course of her employment by the respondent the appellant had received bonuses under the STIP. The submission is without merit. His Honour noted at [44] that in the previous three years the appellant had received a bonus in each year. He expressly referred at [169] to the appellant's entitlement to participate in the bonus plan and at [187], in assessing damages, he ordered that the amount of damages should include a pro‑rata amount by way of a bonus for the incomplete financial year ending 30 June 2003. There is no basis for a conclusion that his Honour failed properly to take into account the bonuses the appellant had received. There is also nothing in his Honour's reasons to suggest that he failed to give it proper weight.

The period of employment

As I understand this contention from the appellant's written submissions, the appellant says that the primary judge failed to give proper weight to the appellant's length of service with the respondent because he wrongly found that the appellant's period of employment was five years and eight months whereas in fact it was eight years and four months. I have dealt with this issue earlier. As I have said, in my view the relevant period was six years and eight months and the difference between that period and a period of five years and eight months was not material in the context of the overall assessment the primary judge was required to make.

'Summary dismissal'

The appellant submitted that in assessing the period of reasonable notice the primary judge gave no weight to the 'distress' and 'dislocation' that the respondent caused to the appellant by dismissing her without notice, and to the respondent's persistence in denying that it was in breach of contract in doing so.
It is again, with respect, unclear what is intended by this contention. In so far as it refers to 'distress' it would appear to duplicate the third factor under ground 1, with which I have already dealt. Insofar as it refers to 'dislocation', it is not apparent what it means. The ground was not elaborated upon in the appellant's written submissions and in oral argument counsel for the appellant explained it as a failure to deal with the appellant's termination 'in a calm and orderly way' (appeal ts 10). As I understood counsel's submission, it was in substance no more than a repetition of the alleged effect of summary dismissal, with which I have dealt above. Moreover, counsel for the appellant conceded (rightly in my view) that any personal distress which may have been felt by the appellant because of the circumstances of her dismissal was not a relevant factor (appeal ts 10). I do not consider the primary judge erred.
It was further submitted, in effect, that in assessing the period of reasonable notice the primary judge should have taken into account that, after the termination, the respondent persisted in contending that it was entitled to summarily dismiss the appellant. That submission is misconceived. The assessment of reasonable notice is to be made as at the date of termination. The respondent's conduct in subsequently pursuing its defence of the claim is not relevant to the assessment. There is no merit in this contention.

The appellant was entitled to decline alternative positions offered by the respondent

Once more, it is not clear what is intended by this contention. The first limb appears to be directed to the length of time that the appellant would have continued in the respondent's employment but for the termination. As I understand it, the appellant submits, in effect, that in assessing that period of time no account should have been taken of the effect of the respondent's restructure and the fact that only limited positions were available to the appellant as a result. Once the restructure is put aside, it is said, there is no reason to think that the appellant would not have remained in the respondent's employment until she reached retirement age.
That submission proceeds on a false premise. The period of reasonable notice is not to be determined on the basis of the circumstances as the appellant wished they had been, but in the light of the circumstances as they in fact existed at the time notice should have been given. The respondent's restructure, and its consequences in respect of the positions available to the appellant, was one of the objective circumstances at that time. The primary judge found that as a result of the restructure the appellant wished to be made redundant [176]. His Honour also found that the appellant had told Ms Coates that she (the appellant) did not know what she would be doing in five years time and had made it clear that she would not accept any position with the respondent that she considered unacceptable. She had refused a number of positions, including the most senior accounting position available in Western Australia following the restructure [51], and insisted that she be provided with 'a senior accounting role'. Those factors were properly taken into account by the primary judge. It was not, contrary to the appellant's submission, relevant what the duration of the appellant's employment would have been if circumstances had been otherwise than they were and the restructure had not occurred.
It is not entirely clear as to the point to which the second limb of this particular is directed. From the appellant's written submission (it was not touched upon in oral argument), it appears to be contended that the respondent attempted to force the appellant to accept one of the positions offered to her following the restructure, leading to a relationship of 'hostility' between the appellant and the respondent. It is said that that relationship of hostility was one of the circumstances of the appellant's dismissal and it was therefore relevant to the length of time it would take her to obtain alternative employment. I am unable to see how such a relationship (if it existed) would be relevant to the length of time it would take the appellant to obtain alternative employment. In my view, it was not relevant. I should add that I am also not persuaded that the evidence establishes the existence of such hostility, at least on the respondent's part. Indeed, it is not easy to reconcile with the unchallenged evidence of Mr Parle that he would have provided the appellant with a reference if she had asked for one.

The vesting date of the options

The appellant contended that the primary judge failed to take into account or to give adequate weight to the benefit to the appellant of the options which were exercisable after 1 July 2004.
The primary judge found that the appellant's entitlement to exercise the options after 1 July 2004 was one of the factors to be taken into account in assessing what was reasonable notice [177]. But as I understand the appellant's written submissions on the appeal, it was contended that in view of the value of the options to the appellant his Honour should have found that reasonable notice of termination was a period sufficient to enable the appellant to exercise the options. That, I must say, appears to be inconsistent with the concession made by the appellant's counsel at trial that the availability of the options after 1 July 2004 did not have the effect that the period of notice must necessarily extend to the vesting date (ts 85 ‑ 86).
In oral argument on the appeal, however, counsel for the appellant put the case more narrowly. He argued, in effect, that if the proper period of notice was greater than the four months found by the primary judge and came close to the vesting date, then it was appropriate for the notice period to extend to the vesting date (appeal ts 6).
I do not think it is possible to consider the merits of that submission in such abstract terms. And as I would not disturb the finding of the primary judge that the appropriate period of notice was four months, the question does not arise.
It was also submitted by the appellant that in considering the issue of the options the primary judge had misdirected himself that the period of notice was to be assessed on the basis of what the parties would have considered reasonable at the time the employment contract was made, rather than at the time notice should have been given [178]. I do not accept that submission.
At [178] his Honour observed that a court should not impose a period of notice longer than the period of notice that either party would have considered reasonable had they turned their minds to it at the time, referring to Reilly v Praxa Ltd [2004] ACTSC 41. In fact, the statement in Reilly v Praxa is a quote from The Law of Employment and its provenance can be traced to the decision of the New South Wales Court of Appeal in Edward Keller (Australia) Pty Ltd v Hennelly (1990) 35 IR 464. In that case, Meagher JA (with whom Priestley AP & Mahoney JA agreed) referred to discussions between the employer and employee prior to the termination of the employee's employment in which a notice period of either one month or three months had been discussed. In that context, his Honour went on to say that the court should not impose on the parties a period of notice in excess of what either of them considered reasonable

when they turned their minds to it [6]. Meagher JA found that a period of three months notice was appropriate.

In the present case, I do not understand the statement of the primary judge to be a reference to reasonable notice in the context of the vesting of the options but rather to the terms of a service agreement which the appellant had declined to sign, which his Honour went on to discuss in [179]. His Honour noted that the service agreement provided for a notice period of two months and that whilst the appellant had refused to sign it, she had refused for reasons unconnected with the notice provision. His Honour concluded, however, that the notice provision was not a factor to which he would give great weight.
In my view, it is clear that in determining what constituted a reasonable period of notice the primary judge understood, as he specifically stated, that it depended upon the circumstances at the time notice should have been given [147]. There is nothing to suggest that he determined the matter otherwise. The appellant's contention must fail.

Conclusion

In my view, the grounds of appeal have not been made out. The finding of the primary judge that a period of four months was reasonable notice was a conclusion which was clearly open to him and I am not persuaded that he was wrong in reaching that conclusion.
I would dismiss the appeal.
ALLANSON J: I agree with Newnes JA.

[2012] WASCA 31

21/02/12