Rogan-Gardiner v Woolworths Ltd
[2010] WASC 290
•22 OCTOBER 2010
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: ROGAN-GARDINER -v- WOOLWORTHS LTD [No 2] [2010] WASC 290
CORAM: HALL J
HEARD: 1-4, 8-11 JUNE 2010
DELIVERED : 22 OCTOBER 2010
FILE NO/S: CIV 2149 of 2004
BETWEEN: MICHELLE ROGAN-GARDINER
Plaintiff
AND
WOOLWORTHS LTD (ABN 88 000 014 675)
Defendant
Catchwords:
Employment contract - Implied term to act in good faith - Implied term to give adequate notice of termination - Implied term to pay severance payment in event of redundancy - Whether terms breached - Whether contract repudiated - Effect of maternity leave - Effect of Minimum Conditions of Employment Act 1993 (WA) - Period of notice required - Psychiatric injury - Causation
Legislation:
Evidence Act 1906 (WA), s 79B, s 79C, s 79D
Minimum Conditions of Employment Act 1993 (WA), s 33, s 38, s 39
Result:
Judgment for the plaintiff on breach of notice term only
Category: A
Representation:
Counsel:
Plaintiff: Dr P R MacMillan
Defendant: Ms G A Archer SC
Solicitors:
Plaintiff: Jackson McDonald
Defendant: Clayton Utz
Case(s) referred to in judgment(s):
Addis v Gramophone Company Ltd [1909] AC 488
Albrighton v Royal Prince Alfred Hospital (1980) 2 NSWLR 542
Aldersea v Public Transport Corporation [2001] VSC 169; (2001) 3 VR 499
Automatic Fire Sprinklers Pty Ltd v Watson [1946] HCA 25; (1946) 72 CLR 435
Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344
Bednall v Wesley College [2005] WASC 101
Blyth Chemicals Ltd v Bushnell [1933] HCA 8; (1933) 49 CLR 66
Burazin v Blacktown City Guardian Pty Ltd (1996) 142 ALR 144
Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410
Campbell v Encyclopaedia Britannica Australia Ltd [2008] NSWSC 1178
Carrigan v Darwin City Council [1997] IRCA 101
Conway‑Cook v Town of Kwinana [2001] WASCA 250; (2001) 108 IR 421
Creen v Wright (1876) 1 CPD 591
David Jones Ltd v Cukeric (1997) 78 IR 430
Eastwood v Magnox Electric plc (2004) 3 All ER 991
Fardell v Coates Hire Operations Pty Ltd [2010] NSWSC 346
Garbett v Midland Brick Company Pty Ltd [2003] WASCA 36; (2003) 129 IR 270
Grout v Gunnedah Shire Council (No 2) (1995) 58 1R 67; (1994) 1 IRCR 499
Hadley v Baxendale (1854) 156 ER 145
Intico (Vic) Pty Ltd v Walmsley [2004] VSCA 90
Johnson v Unisys Ltd (2003) 1 AC 518
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115
Lau v Bob Jane T‑Marts Pty Ltd [2004] VSC 69
Malik v Bank of Credit and Commerce International SA (in liq) [1998] AC 20
March v E & M H Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506
McDonald v The State of South Australia [2008] SASC 134; (2008) 172 IR 256
Perkins v Grace Worldwide (Aust) Pty Ltd (1997) 72 IR 186
Quinn v Jack Chia (Australia) Ltd (1992) 1 VR 567
R v Industrial Commission of South Australia; Ex parte Adelaide Milk Supply Co‑Operative Ltd (1977) 16 SASR 6
Rankin v Marine Power International Pty Ltd [2001] VSC 150; (2001) 107 IR 117
Reilly v Praxa Ltd [2004] ACTSC 41
Riverwood International Australia Pty Ltd v McCormick [2000] FCA 32; (2000) 177 ALR 193
Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney [2007] NSWSC 104; (2007) 69 NSWLR 198
Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney [2008] NSWSC 217; (2008) 72 NSWLR 559
Tanya Kerrison v Air International Pty Ltd [2006] AIRC 297
Taske v Occupational & Medical Innovations Ltd [2007] QSC 118; (2007) 167 IR 298
The State of New South Wales v Paige [2002] NSWCA 235; (2002) 60 NSWLR 371
Thomson v Orica Australia Pty Ltd [2002] FCA 939; (2002) 116 IR 186
Woods v WM Car Services (Peterborough) Ltd [1981] IRLR 347
TABLE OF CONTENTS
Introduction
The plaintiff's case
The defence case
Issues for determination
Evidence
Qualifications and employment history
Employment with Woolworths - Commencement and remuneration
The Restructure ‑ 'Project Refresh'
The National Financial Controller position
The Freestanding Liquor Finance Manager position
Maternity leave - 29 September 2002 ‑ 1 September 2003
Corporate Auditor position
Zone Business Analyst position
Breach of implied good faith term
Was there an implied term?
Was there a breach of the good faith term?
Breach of redundancy term
Breach of reasonable notice term
Was there an implied term?
Was valid notice given in April 2002?
Did Woolworths repudiate the contract in October 2002?
Effect of Minimum Terms and Conditions Act
Did the plaintiff repudiate the contract by rejecting offered positions?
Was the contract terminated on 11 September 2003?
What length of notice was required?
Damages - Breach of reasonable notice term
Damages - Provisional assessment for other alleged breaches
Admissibility of medical records
Causation
Conclusion
HALL J:
Introduction
Between 1995 and 2003, the plaintiff, Michelle Rogan‑Gardiner, was employed in an executive position by the defendant, Woolworths Ltd. In 2002, Woolworths commenced a nationwide internal restructure of its financial services operations. This was part of a larger restructuring called Project Refresh. As part of that project, Ms Rogan‑Gardiner's position was abolished. That occurred when she was on maternity leave between 28 September 2002 and 1 September 2003. Prior to her return to work, she was offered a number of alternative positions, but declined them. Further offers were made upon her return to work, which she also declined. Her employment with Woolworths then ended.
Ms Rogan‑Gardiner has brought proceedings against Woolworths alleging breach of her employment contract. In particular, she alleges that Woolworths:
1.breached an implied term requiring it to act in good faith;
2.breached an implied term requiring that she be given reasonable notice of termination; and
3.breached an implied term requiring that she be provided with severance benefits in the event of redundancy.
The matter proceeded to a trial over two weeks. Having considered the evidence, my conclusions, for the reasons that follow, are that:
1.there was no breach by Woolworths of any implied good faith term;
2.there was a breach in regard to notice in that Woolworths terminated Ms Rogan‑Gardiner's employment without reasonable notice on 11 September 2003;
3.there was no breach regarding redundancy benefits because the preconditions for a redundancy were not met.
Accordingly, Ms Rogan‑Gardiner is entitled to judgment in her favour to the extent that she has made out her case on the basis that Woolworths terminated her employment without reasonable notice, but not on the other bases. I have concluded that she was entitled to be given four months' notice of termination and that damages should be calculated accordingly.
The plaintiff's case
Ms Rogan‑Gardiner's case is that she was employed as the State Accountant for Woolworths Supermarkets in Western Australia pursuant to a contract made on or about 13 April 1995. The contract was said to be partly oral and partly in writing. Insofar as it was in writing the contract comprised a letter dated 13 April 1995. It was an express term of the contract that Ms Rogan‑Gardiner be paid a base salary of $65,000 per annum, provided with a fully maintained motor vehicle and eligible for a bonus to be paid of up to $19,500 per annum. Woolworths was to contribute 10% of Ms Rogan‑Gardiner's base salary to a superannuation scheme and it was also agreed that she would salary sacrifice 5% of her paid salary to be paid into the same scheme. She was also to be entitled to a 5% discount on all purchases of goods and services from Woolworths during her employment.
Ms Rogan‑Gardiner claims that it was an implied term of the contract that Woolworths would in its treatment of her, including any exercise of its rights to terminate her employment, act responsibly, fairly and in good faith. It is said that this term is to be implied as a matter of law or alternatively by reason that it is reasonable, obvious and necessary to give business efficacy to the employment contract.
It is claimed that a further implied term of the contract was that Woolworths was not to terminate the contract without providing reasonable notice to Ms Rogan‑Gardiner. Again, this term is said to be implied either as a matter of law or by reason that it is reasonable, obvious and necessary to give business efficacy to the contract.
Ms Rogan‑Gardiner's case is that the employment contract was subsequently varied. The first such variation was that with effect from 1 July 1999 the value of the fully maintained vehicle provided to Ms Rogan‑Gardiner was increased slightly in value, from $19,500 to $19,784 per annum. This variation was made partly in writing and partly by conduct. Insofar as it was in writing, it comprised a letter from Woolworths to the plaintiff dated 9 October 1999.
The second variation was that with effect from 1 September 1999, Ms Rogan‑Gardiner was entitled to participate in a plan entitled 'The Short Term Incentive Plan' in lieu of the bonus entitlement. Pursuant to the new plan, she was to be paid an incentive payment in September each year based on Woolworths' financial performance against its set targets for the division in which she worked in the preceding financial year. This variation was partly comprised in a letter dated 25 August 1999 and in a conversation between Ms Rogan‑Gardiner and Woolworths' General Manager WA in August or September 1999.
The third variation was that with effect from 1 September 2002 Ms Rogan‑Gardiner's base salary was increased to $103,000 per annum. That variation was contained in a letter dated 9 September 2002.
The fourth variation was said to be that if Ms Rogan‑Gardiner's employment was terminated on the grounds of redundancy, being that her position was no longer required by Woolworths and it could offer her no suitable alternative, she would be paid a sum equal to the value of her pro rated long service leave entitlement if termination occurred after more than five years' service and a severance payment of 16 weeks pay if termination of employment occurred after more than six years' service. This variation was said to be partly in writing and partly oral. Insofar as it was in writing it was said to be contained in Woolworths' Redundancy Policy for Management. Insofar as it was oral, it was said to comprise discussions held in or about April and August 2002 between Ms Rogan‑Gardiner and other employees of Woolworths in which she claimed to have been informed that the redundancy policy would apply to her employment contract.
The fifth variation was said to be that Ms Rogan‑Gardiner was entitled to participate in Woolworths' Long Term Incentive Plan pursuant to which she would become the registered holder of 70,000 options for fully paid ordinary shares in Woolworths at an exercise price of $5.11 per option. These options were to be exercised in four tranches. In the case of the fourth tranche of 35,000 options the exercise date was on or about 1 July 2004 but was subject to a total shareholder return target for 30 June 2004 being met and Ms Rogan‑Gardiner remaining in employment with Woolworths as at 30 June 2004. This variation was also partly in writing and partly oral. Insofar as it was in writing it comprised a letter dated 6 March 2000, an application for options signed by Ms Rogan‑Gardiner on 5 April 2000 and a letter dated 30 June 2000. The oral component was said to comprise a discussion between Ms Rogan‑Gardiner and Woolworths' General Manager WA held during or about September 1999.
Ms Rogan‑Gardiner's case is that her employment with Woolworths continued until about 11 September 2003 when she was summarily terminated. She claims that the termination occurred because Woolworths had decided that the position occupied by her in Western Australia was no longer required and she was not offered a suitable alternative position.
Ms Rogan‑Gardiner also claims that Woolworths, by its conduct in the period 15 April 2002 ‑ 11 September 2003 and in terminating her employment and/or in terminating her employment in the manner referred to, did not act responsibly, fairly or in good faith. Paragraph 10 of the statement of claim details the basis for this claimed breach. That paragraph is of critical importance and reads as follows:
In breach of the term of the Employment Contract referred to in paragraph 4 the defendant by its conduct in the period 15 April 2002 to 11 September 2003 and in terminating the plaintiff's employment and/or in terminating the plaintiff's employment in the manner referred to in paragraph 9 did not act responsibly, fairly or in good faith in that:
(a)the defendant failed to interview and consider the plaintiff for the vacant position of National Financial Controller of the defendant, a position of an equivalent or higher status to that held by the plaintiff and for which she was suitably qualified which position the plaintiff would have accepted had it been offered to her;
(b)the defendant only offered the plaintiff alternative positions which:
(i)were not within the plaintiff's area of expertise and specialisation;
(ii)constituted a demotion;
(iii)did not comprise alternative suitable employment;
(iv)the plaintiff, in relation to one offer, did not have the necessary experience to fill;
(c)the defendant by letter dated 9 September 2003 informed the plaintiff that a refusal to assume the position of Corporate Auditor as to which position the plaintiff repeats paragraphs 10(b)(i), 10(b)(ii), 10(b)(iii) and 10(b)(iv) or Zone Business Analyst as to which position the plaintiff repeats paragraphs 10(b)(i), 10(b)(ii) and 10(b)(iii) would:
(i)be considered a refusal to perform suitable alternative duties;
(ii)leave the defendant with no alternative but to terminate the plaintiff's employment;
(iii)disentitle the plaintiff to severance pay;
(iv)result in a loss of entitlements under the share option scheme;
(d)the defendant failed on the plaintiff's return from 7 days sick leave on or about 9 September 2003 to provide the plaintiff with:
(i)a computer with which to work;
(ii)appropriate work or employment;
(iii)access to the defendant's computer and email systems in order to allow the plaintiff to work;
(e)the defendant summarily terminated the plaintiff's employment because the plaintiff did not accept any of the alternative positions offered to her;
(f)by reason of the summary dismissal the defendant avoided paying a severance payment to the plaintiff;
(g)neither the termination nor the summary nature of the termination of the plaintiff's employment was justified.
Particulars
(i)By reason of the facts referred to in paragraph 10(a) there were no grounds for a termination of the plaintiff's employment.
(ii)There were no grounds for a summary termination of the plaintiff's employment.
Ms Rogan‑Gardiner claims she suffered stress, anxiety, depression and sleep disorder by reason of her termination and the manner of it. She claims that the breach of the good faith term and the consequential impact on her mental health have resulted in loss and damage to the value of her remuneration package as from the date of termination being the 11 September 2003 for a period of 18 months. She also claims damages for the negative impact to her future employment prospects, damages for the impact to her mental health, damages in a sum equivalent to the value of the fourth tranche of share options and damages for loss of a severance payment of 16 weeks taxable salary.
Ms Rogan‑Gardiner also claims that the implied term requiring that reasonable notice be given was breached by her summary termination on 11 September 2003. She claims 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 claims that as a consequence of the breach of the notice provision, she has suffered loss and damage to the value of 18 months of her remuneration package from 11 September 2003, damages for the impact to her mental health and damages for impact on future employment prospects. It is said that the summary termination has impacted on future employment prospects because the plaintiff was employed by Woolworths for a period of over eight years, was unable to provide any prospective employer with a reference for this period and that the summary dismissal claim has been defended. She says that those facts, together with the impact on her mental health, have resulted in her being unable to secure equivalent alternative employment.
Ms Rogan‑Gardiner also claims that Woolworths breached an implied term of the contract relating to redundancy by failing to pay her any sum of money for the pro rated long service leave on her termination. It is claimed that the summary termination on 11 September 2003 occurred because Ms Rogan‑Gardiner's position was no longer required by Woolworths and it could offer her no suitable alternative position. It is said that by reason of this breach she suffered loss and damage equivalent to the value of pro rated long service leave owing as at the date of termination. It is also claimed that Woolworths failed to pay the plaintiff a severance payment on termination.
The defence case
Woolworths accepts that it employed Ms Rogan‑Gardiner as from about 13 April 1995. Nor is there any dispute as to the salary and benefits to which she was entitled upon commencement (other than to say that the 5% discount on purchases was discretionary and subject to review).
Woolworths does not admit that there was an implied term in the employment contract that it had a duty in its treatment of Ms Rogan‑Gardiner to act responsibly, fairly and in good faith. It also denies, if such a term did exist, that it extended to any exercise of Woolworths' right to terminate the contract. It does not accept that such a term is to be implied as a matter of law or by reason that it is reasonable, obvious and necessary to give business efficacy to the contract.
Even if a duty to act in good faith was implied, Woolworths denies that anything it did could have been in breach of such a duty. As to the failure to offer Ms Rogan‑Gardiner the position of National Financial Controller, Woolworths says that that position was one of higher status than she had previously held and would have amounted to a promotion. In regard to the offered positions of Corporate Auditor and Zone Business Analyst, the refusal by Ms Rogan‑Gardiner to perform the suitable alternative duties left Woolworths with no choice other than to regard her employment as having come to an end.
Woolworths accepts that it was an implied term that it would not terminate the employment contract without providing reasonable notice to the plaintiff. However, it denies that such a term was breached.
Woolworths denies that Ms Rogan‑Gardiner was summarily terminated on 11 September 2003, rather it claims that on or about 15 April 2002 it gave her notice that her employment contract would terminate on 31 October 2002. This was said to have occurred at a conference of managers in Sydney during which she was informed that as part of a reorganisation of the financial services division, her position and the department which she worked in would cease to exist at the end of October 2002. Woolworths asserts that this constituted good notice and resulted in the contract terminating on 31 October 2002 by effluxion of the notice period. It says that this period of approximately six months was reasonable notice in accordance with the implied term of the contract.
Alternatively, Woolworths says that Ms Rogan‑Gardiner commenced a period of parental leave on or about 27 September 2002. The period of that leave was 12 months and it was due to expire on 29 September 2003. Woolworths claims that the effect of s 33, s 38 and s 39 of the Minimum Conditions of Employment Act 1993 (WA) was to require Woolworths to leave the employment contract on foot until Ms Rogan‑Gardiner finished her parental leave and had an opportunity to accept or reject her entitlement to any available position comparable in status and pay to that of her former position and for which she was qualified and capable of performing. Woolworths claims that the effect of this was to extend the period of notice required under the contract until the end of the plaintiff's parental leave and the plaintiff had an opportunity to accept or reject any available positions which met the requirements of the Act. Woolworths states that between 1 and 11 September 2003 Ms Rogan‑Gardiner had an opportunity to accept or reject her entitlement to offered positions and that her employment then ended by expiry of the notice period after that opportunity was complete.
Alternatively, Woolworths says that by declining to perform the duties of any of the alternative positions offered to her by Woolworths between 1 and 11 September 2003, Ms Rogan‑Gardiner repudiated the contract by effectively refusing to provide services. Woolworths accepted that repudiation on or about 11 September 2003. In these circumstances no notice was required.
Alternatively, Woolworths says that on or about 31 October 2002 it repudiated the employment contract by eliminating the position that Ms Rogan‑Gardiner had occupied. It says that, accordingly, the contract was then at an end and Ms Rogan‑Gardiner could not have been summarily terminated on 11 September 2003 from a position that no longer existed.
As to redundancy, Woolworths claims that the Redundancy Policy for Management was a matter of policy only and exercisable at the absolute discretion of Woolworths. It denies that there was any agreement to vary the employment contract to include redundancy entitlements or that any offer to do so was made to the plaintiff. It denies that there was any intention to enter into any such agreement with Ms Rogan‑Gardiner. It also denies that there was any consideration from her to support such a variation.
As regards redundancy entitlements, Woolworths claims that even if the redundancy policy was incorporated into the contract, any entitlement under that policy was subject to specified pre‑conditions. Those pre‑conditions were that:
1.the relevant position was no longer required by reason of technological change or business unit closure or sale;
2.all efforts by Woolworths to find an alternative position which was in Woolworths' view suitable, had been unsuccessful;
3.the divisional general managers of Woolworths had agreed that termination of employment was the only appropriate course of action; and
4.the employment was consequently terminated by Woolworths.
If the pre‑conditions were met, the rights and obligations under the policy included that Woolworths could terminate the employment with any amount of notice and would pay four weeks pay in lieu of notice, a sum equal to the pro rated long service leave entitlement at that time, upon termination of employment after more than five years of continuous service and a severance payment as set out in a scale. Continuous service did not include any period of parental leave.
Woolworths says that the pre‑conditions for a redundancy payment under the policy were not satisfied. In particular, it says that efforts to find a suitable alternative position for Ms Rogan‑Gardiner had not been unsuccessful and that all the alternative positions offered to her were, in Woolworths' opinion, reasonably suitable for her. Furthermore, the requirement that divisional managers agree that termination of the plaintiff's employment was the only appropriate course of action had not been satisfied.
Woolworths also denies that Ms Rogan‑Gardiner has suffered the stress, anxiety, depression and sleep disorders as claimed by her to have been suffered by reason of her summary termination or the alleged failure of Woolworths to act in good faith. Insofar as she has suffered any such conditions, Woolworths says that they are not a consequence of any breach of contract on their part.
In regard to the options, Woolworths says that the fourth tranche of options was subject to a vesting condition that a specified target for total shareholder return must be met for the period ending 30 June 2004. It says that exercise conditions provided that unvested options lapsed and were not exercisable if employment ceased before the exercise date unless the period was extended by the board of the company, in writing. Accordingly, Woolworths claims that Ms Rogan‑Gardiner could not have exercised the fourth tranche of options as her employment ceased prior to 30 June 2004. It also says that the executive option plan rules precluded any claim against Woolworths for compensation for damages for loss of future rights with respect to options in the event that employment was terminated.
Woolworths also claims that if Ms Rogan‑Gardiner has suffered any loss and damage, she has failed to take all reasonable steps to mitigate her loss in that she failed to pursue or accept reasonable alternative positions available to her. Woolworths says that between 15 April 2002 and 10 September 2003 she was offered, or told she could be considered for, various positions within the company. It says that it was at all reasonable times willing to employ her in a suitable alternative position on financial terms identical to those that existed under the employment contract. Woolworths says that any loss was caused by Ms Rogan‑Gardiner's refusal to accept alternate jobs. In regards to loss of future employment prospects, it is said that any such loss was caused by her refusal to get recommended treatment for her mental health issues and her failure to look for alternative employment. Woolworths also asserts that the mental health issues were suffered prior to 11 September 2003 and were not caused or aggravated by any termination. Even if they were caused or aggravated by termination, any loss suffered by Ms Rogan‑Gardiner was, Woolworths claims, caused by her refusal to get recommended treatment.
Issues for determination
The issues for determination in this case are as follows:
1.was there an implied term in the contract that Woolworths would act reasonably, fairly and in good faith in its treatment of Ms Rogan‑Gardiner?
2.did any such good faith term apply to termination of the contract?
3. what other conduct could it apply to?
4.was there a breach of the good faith term here?
5.was valid notice to terminate given by Woolworths in April 2002?
6. did Woolworths repudiate the contract in October 2002 by abolishing Ms Rogan‑Gardiner's position?
7.what effect on the contract did the Minimum Terms and Conditions Act have?
8.did Ms Rogan‑Gardiner repudiate the contract by rejecting the positions offered to her between 1 and 11 September 2003?
9.was the contract terminated on 11 September 2003?
10.was any or reasonable notice given for such termination?
11.what length of notice was required?
12.was there an implied term that a severance payment would be made in the event of redundancy?
13.did the circumstances for making such a payment arise in this case?
14.to what extent, if at all, were the losses and damage claimed by the plaintiff caused by the alleged breaches?
Evidence
Much of the historical sequence of events was not in substantial dispute. Where dispute arose between the parties it was predominantly in regard to details of what was said or as to the interpretation of what occurred and the conclusions that could be drawn.
The following represents my findings based upon the evidence. Where there was a substantial dispute, I have referred to the conflicting evidence and explained how I have resolved it and why. Where there were written communications, I have relied on them to the extent that they represent an accurate record of what was said by the writer at that time.
It is appropriate to make some preliminary comments regarding the witnesses. Ms Rogan‑Gardiner was the principal witness in her own case. She was extensively cross‑examined by senior counsel for Woolworths. She presented as a determined witness with a firmly held view that she had been treated unfairly by her former employer the defendant. Sometimes this view appeared to be not merely firm but fixed, such that she refused to entertain other possibilities that were reasonably open.
It was clear that the proceedings had assumed great significance in Ms Rogan‑Gardiner's life. The case represented an obstacle to her committing to treatment for her depression. The personal significance of the case became greater as time passed without a resolution.
Giving evidence can be a difficult, even traumatic, experience and allowance must be made for that. In Ms Rogan‑Gardiner's case, the experience was made more difficult because she continued to suffer a depressive illness at the time of the trial that remained largely untreated. She appeared to be somewhat fragile and said she had declined medication as she did not want it to affect her recollection. Her fragility manifested itself in a breakdown in the witness box during cross‑examination. The questioning at that point had been firm, but not aggressive or offensive. She was unable to continue further at that point. She subsequently completed her evidence.
It is important to note that one of the predisposing factors for the depressive illness was Ms Rogan‑Gardiner's vulnerable personality type. The psychiatric evidence referred to narcissism and obsessionality in this regard. The evidence was that Ms Rogan‑Gardiner perceived herself in a way that meant that her self‑esteem was significantly dependant on her employment. A belief that others had failed to recognise her worth and reward it appropriately produced feelings of anger, indeed fury, according to the psychiatric evidence. There were times in the evidence where that anger became apparent.
The significant evidence for the defence came from three senior executives, Mr Anthony (Tony) Parle, Ms Julie Coates and Mr Anthony (Tony) Backshall. Each of those witnesses was cross‑examined in detail. They impressed me as honest and careful in their evidence. It was apparent that, particularly by late 2003, they all considered that Ms Rogan‑Gardiner presented a difficult management problem. There were some differences of views at the time as to the approach to be taken in handling the matter, but the Woolworths' witnesses were candid about this. They all said that they had made genuine efforts to accommodate Ms Rogan‑Gardiner's wishes with a view to retaining her as a valued employee. I had no cause to doubt them in that regard. Their evidence accorded with letters written to Ms Rogan‑Gardiner at the relevant time.
Qualifications and employment history
Ms Rogan‑Gardiner is a qualified accountant with 30 years experience in the finance sector and over 20 years experience working as an accountant. She completed professional accountancy examinations at the Auckland Technical Institute in 1987. She became a member of the Institute of Chartered Accountants of New Zealand with a designation of Associate Chartered Accountant on 1 May 1989. Prior to undertaking her accountancy qualifications, she had worked in the finance industry. From February 1976 ‑ October 1984 she worked as a bank officer with the Bank of New Zealand and from October 1984 to February 1986 she worked as an assistant accountant with Anchor Farm Products Co‑operative Ltd. She studied full time from March 1986 to January 1987. In January 1987 she commenced employment as a financial accountant with Inter Pacific Equity Ltd and was responsible for the supervision of five accounting and clerical staff. In January 1988 she was promoted to the position of Corporate Accountant. In March 1989 she was retrenched from Inter Pacific Equity Ltd as they relocated their head office from Auckland to Sydney.
Ms Rogan‑Gardiner moved to Western Australia and in May 1989 commenced employment with Sumich Group Ltd as a senior accountant. In October of that year she was promoted to the position of chief accountant with the responsibility of managing 10 accounting and clerical staff. In February 1993 she was again promoted, this time to the position of manager of finance and administration. In this role, she was responsible for all the company's statutory accounting and taxation requirements including management of the accounting, data processing, administration and credit functions of the group. She had direct supervision of four accountants and indirect supervision of 15 clerical staff. She remained in this position until she commenced employment with Woolworths.
Employment with Woolworths - Commencement and remuneration
Ms Rogan‑Gardiner commenced employment with Woolworths on 15 May 1995 in the position of State accountant with a total salary package to the value of $100,500. On 18 April 1996, the position occupied by Ms Rogan‑Gardiner was retitled 'Financial Services Manager, Western Australia'. Neither her duties nor salary changed at this time. 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 who were supervised included three qualified accountants. In 1997 the role expanded to include the additional responsibility of supervising 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 Ms Rogan‑Gardiner first commenced employment with Woolworths her salary package included the potential to earn a bonus under an incentive bonus plan. This plan was subsequently renamed the Short Term Incentive Plan (STIP). Pursuant to this plan, eligible employees were paid a bonus of 15% of their gross annual salary if the actual net profit achieved by the company in their State was equivalent to their net profit budget. A further bonus capped at 15% would be paid to eligible employees equal to each 1% achievement over budget. This plan was substantially altered in 1999 to reflect additional financial ratios which were from then on required to be met in order for eligible employees to receive bonus payments. It was at this time that the plan was changed in name to STIP. In the last four years of her employment, the plaintiff was paid the following bonuses:
1.$24,889 for the 1999 ‑ 2000 financial year (this was pro rated for 303 days as she was on maternity leave 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 (pro rated for 82 days as the plaintiff was on maternity leave for part of that year).
In addition to the bonus plan, Ms Rogan‑Gardiner was entitled to participate in an executive share option purchase plan. This operated until 1999. She was allocated 10,000 options under this plan in the 1996 financial year and 2,000 options in each of the 1998 and 1999 financial years. She subsequently exercised those options. The executive share option purchase plan was replaced in 1999 with the Long Term Incentive Plan.
On 25 August 1999, Ms Rogan‑Gardiner was informed that Woolworths would be introducing the Long Term Incentive Plan under which she would be offered share options. On 6 March 2000, she received an offer in writing to participate in the plan and was offered 70,000 options. On 5 April 2000, she accepted the offer to participate by completing an application form. She applied for the 70,000 options, which had an exercise price of $5.11.
The options were to vest in four tranches. The first tranche of 8,750 options would vest and be exercisable on 1 July 2002. The second tranche of 8,750 options would vest and be exercisable on 1 July 2003. The third tranche of 17,500 options would vest and be exercisable on 1 July 2004. The fourth tranche of 35,000 options would also vest and be exercisable on 1 July 2004 but were subject to different conditions. Exercise of the first three tranches depended upon there being growth of Woolworths' earnings per share from one financial year to the next. In respect of the fourth tranche, exercise was conditional upon relative growth in Woolworths' accumulative index (being a measurement of its total shareholder return) over a period of 60 months.
Due to Woolworths achieving a growth in earnings per share above that prescribed in the conditions, the third tranche of shares vested on 1 July 2003 rather than 1 July 2004. On 10 September 2002, Ms Rogan‑Gardiner exercised the first tranche of 8,750 shares. On 7 November 2003, she exercised the second and third tranches of shares totalling 26,250. She did not exercise the fourth tranche as her employment came to an end prior to the vesting date. However, that tranche forms part of the claim for damages.
The Restructure ‑ 'Project Refresh'
In April 2002, Woolworths held a conference in Sydney in regard to the restructure of its financial services division. The conference was attended by financial services division managers and human resource co‑ordinators from all of the State offices. Ms Rogan‑Gardiner attended in her capacity as the Western Australian Division Financial Services Manager. The conference was held over two days from 15 to 16 April 2002.
In broad terms, the financial services restructuring 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 did not necessarily coincide with states as some states obviously had larger populations than others. Thus, certain states contained several regions and others only one or the region was made part of a larger region. The regions were management units and would replace previous state‑based structures. Western Australia would remain a single region under the new arrangements.
The effect of the restructure was that the Financial Services Manager position in each state, including that of Ms Rogan‑Gardiner, would become obsolete. The most senior accounting position available in Western Australia would be the Regional Business Analyst which represented the remaining business support component for the Western Australian region after the centralisation of other functions to other states.
Tony Parle, the General Manager Finance (Supermarket Group), announced the proposed new structure at the Sydney conference. A number of documents were provided and presentations made at this conference. Mr Parle said that the purpose was to inform the managers of the proposed new structure and to provide them with the information necessary for them to communicate back to their teams in the states. Mr Parle said that he also took the opportunity to have individual meetings with each of the managers to comfort them about their job security and to identify any interest in new positions.
Mr Parle said that he met with Ms Rogan‑Gardiner twice over the course of the two day conference. At the first meeting, he asked Ms Rogan‑Gardiner which roles she would like to be considered for. She replied with words to the effect that she was only interested in the role of Manager (Financial Control Centre). He informed her that the role had already been filled by an internal candidate with strong technical skills in the area of process management and compliance and the only position that was available in the Financial Control Centre was that of Systems Accountant based in South Australia. Ms Rogan‑Gardiner told him that she was not interested in that role.
Mr Parle then told Ms Rogan‑Gardiner about the Regional Business Analyst position in Western Australia which was considered to be similar to her existing role. She responded by saying that she was not interested in the Regional Business Analyst position because it was beneath her. She then asked about the National Financial Controller position. Mr Parle informed her that the position had not been finalised but that if it did become available, she was welcomed to apply for it. He also told her that anyone with appropriate skills to perform the role would be entitled to apply for it and that the position would be based in Sydney. He asked if she would consider relocating from Perth. Ms Rogan‑Gardiner said that she was not sure.
Ms Rogan‑Gardiner's evidence in this respect differs slightly, mostly in emphasis and interpretation. She says Mr Parle had asked whether she was interested in the position of the Regional Business Analyst and she told him she was not. The reason for this, she said, was that she believed she had outgrown this type of work several years previously. She said that Mr Parle 'put forward' the position of Systems Accountant in South Australia as a second option. She said that she was not interested in this position and considered it a step backwards.
She said that she was upset that the positions that were offered to her were not ones that utilised her financial strengths. She had expressed interest in a management position at the Financial Control Centre in South Australia but was told by Mr Parle that the position had already been filled. She then requested a further meeting with Mr Parle on 16 April 2002 because she was concerned about the quality of the positions that had been offered to her.
At the second meeting, Ms Rogan‑Gardiner she told Mr Parle that she wanted a job that was more appropriate to her level of experience and her desire to 'grow her strengths'. Mr Parle then suggested that she consider the position of National Financial Controller, which was second in charge to his role. He also suggested she put her name down for this role when it was offered in a few months' time. She said Mr Parle indicated that both internal and external candidates would be interviewed for this position but that she should rank fairly highly against them. She said Mr Parle also told her that he would send her a job description for the position. Mr Parle and Ms Rogan‑Gardiner then discussed her willingness to move to Sydney and she indicated that she needed to first discuss the matter with her husband. She said that she did discuss it with her husband later and they had decided in particular, that the best opportunity for her career advancement and continued employment with Woolworths, was for the family to move to Sydney.
The National Financial Controller position
It should be noted at this point that at the commencement of the trial counsel for Ms Rogan‑Gardiner sought to amend the statement of claim by broadening the conduct said to be in breach of the good faith term beyond that which related to the termination or the manner of the termination of the contract. In respect of that amendment certain concessions were offered. Firstly, it was accepted that the person who was later appointed to the position of National Financial Controller was better experienced and better qualified for that position than Ms Rogan‑Gardiner. It was also accepted that Mr Parle had the opinion that Ms Rogan‑Gardiner did not have the necessary skills for the position and it was conceded that no evidence would be led that she possessed such relevant skills.
The argument on behalf of Ms Rogan‑Gardiner was, in effect, that she was offered the position of National Financial Controller, or led to believe that she would be considered for it, when there was no realistic possibility that this was so. The suggestion is that this conduct together with subsequent conduct leads to a conclusion that Woolworths had not acted in good faith towards Ms Rogan‑Gardiner.
It is difficult to understand what interest Woolworths would have in encouraging Ms Rogan‑Gardiner to believe that she was being offered a position (or to believe that she was suitable for a position) that she was in fact not qualified. There would be no advantage in creating unreasonable expectations that would ultimately have to be crushed. Any sense of grievance about loss of her own position could only be expected to resurface with greater intensity once the inevitable disappointment of being rejected for such a new position occurred.
When Mr Parle was cross‑examined in this regard, he accepted that Ms Rogan‑Gardiner had emphasised her financial accounting experience and that such experience was relevant to the position of the Financial Controller position. However, Mr Parle said that he believed that she was overemphasising this aspect of her experience because it appeared inconsistent with the functions of her existing position. He said that he turned the conversation more to the Regional Business Analyst role as that position was geared more to business support management accounting as opposed to financial accounting and that it was in the former area that he considered Ms Rogan‑Gardiner's skills lay. Mr Parle denied making any firm offers to Ms Rogan‑Gardiner. He said that the conversation in Sydney was simply an opportunity for employees to talk to him about what they had done and where he thought they might consider moving to. There was some attempt in cross‑examination to suggest to Mr Parle that he did not know in any detail the nature of Ms Rogan‑Gardiner's experience or skills and was not therefore in a position to be able to match her to appropriate positions. Mr Parle rejected this.
Mr Parle accepted that by an email dated 14 May 2002, he arranged for a job description for the National Financial Controller position to be sent to Ms Rogan‑Gardiner. He said he did that because she was focussed on the role and was keen to know more about it. He said that the job description was sent to Ms Rogan‑Gardiner and also to a number of other people, not because they were considered suitable but to give them an understanding of the role. He said he sent her a copy of the job description because she had expressed an interest in the position at the meeting and he had made a commitment that he would send it to her.
Mr Parle denied that he had at any time suggested to Ms Rogan‑Gardiner that she should come to Sydney to interview for the National Financial Controller position. Ms Rogan‑Gardiner was travelling to Sydney regularly at this time to complete some other work she was doing for the company.
Shortly after the Sydney conference, Mr Parle had contacted Ms Rogan‑Gardiner to ask if she could assist with a reconciliation project in New South Wales. She agreed, and for the following few months, travelled to Sydney on a regular basis for one to two weeks at a time. This role related to the accounting in respect of liquor stores and warehouses; a division of Woolworths that was referred to as 'freestanding liquor'. She said that whilst in Sydney she began to look at accommodation in anticipation of taking up the position of National Financial Controller. She said that on one occasion, Mr Parle agreed that instead of flying her back to Western Australia for the weekend, the company would pay for a hire car so that she could look at some properties. She said that at this period she contacted Mr Parle twice as she had still not received the job description for the National Financial Controller position that Mr Parle had promised her at the meeting in April. She received that job description by email on 14 May 2002. She said that she then telephoned Mr Parle to confirm her interest in the position and he requested that she come to Sydney for an interview. She sent Mr Parle an email on 22 May 2002 asking him to confirm a time for the interview.
On 24 May 2002, Ms Rogan‑Gardiner had a meeting with Mr Parle where she brought up the National Financial Controller position and he said that he had someone in mind for the position. She said that she was surprised by this and left the meeting confused. Following the meeting, she received a telephone call from Mr Parle in which he raised two possible alternative positions for her; one in the freestanding liquor division and the other in the mergers and acquisitions division. She said that she had previously advised Mr Parle that she was not interested in working in freestanding liquor and reiterated that when speaking to him. She said that she told Mr Parle that the reason for that was that she did not wish to work with another person who was in that division due to a prior bad experience. She confirmed her disappointment at the outcome of the meeting in an email dated 29 May 2002.
Mr Parle said that he was aware that in the email Ms Rogan‑Gardiner expressed disappointment and he understood that that was because she had an expectation that they were going to talk about the National Financial Controller position when they met on 24 May 2002. He said that at that meeting he had indicated that the role in relation to that position was still being clarified, that he had sent her the job description so that she had an understanding of what it was about, but that was all that he could offer at that point. He said that they were not interviewing for the position and there was nothing more to say about it at that stage.
Mr Parle said he thought the issue had been resolved on 24 May 2002 and that when Ms Rogan‑Gardiner sent the email of 29 May, he believed she was straying back into issues that had been canvassed previously. He said that he had made it clear to her on 24 May that he had not invited her for an interview in respect of that position. The position was not in fact filled until October 2002.
I accept that Ms Rogan‑Gardiner had an interest in the National Financial Controller position and that Mr Parle appreciated this. However, I accept his evidence that he did not offer her this position, nor did he ever seek to create an impression that she would necessarily be eligible for it. I accept Mr Parle's evidence that the existence and responsibilities of the position were not finalised at this time and that his provision of the job description was not an indication to Ms Rogan‑Gardiner that she was suitable for appointment. There does appear to have been a degree of vagueness about the nature of the position and when it would be filled. Mr Parle could, nonetheless, have made it clear to Ms Rogan‑Gardiner as to whether he considered her to be a possible candidate for the position. This lack of clarity may well have encouraged Ms Rogan‑Gardiner to believe that she had a chance of obtaining that position.
In my view, Ms Rogan‑Gardiner's hopes, fed by concerns regarding her future job security and by her own view of her ability and experience, led her to mistakenly infer that she was being favourably considered for the National Financial Controller position, when that was not so. That mistaken belief was not, however, one that was deliberately created or actively fostered by Mr Parle. However, the disjunction between Ms Rogan‑Gardiner's beliefs and Mr Parle's intentions inevitably resulted in confusion and disappointment. I have referred to these early events in some detail as they affected how Ms Rogan‑Gardiner viewed all that followed. She thereafter doubted the sincerity of the senior officers who dealt with her and viewed offers with suspicion.
The Freestanding Liquor Finance Manager position
As mentioned, at the meeting with Mr Parle in Sydney on 24 May 2002, there had been discussion regarding the position of Finance Manager of Freestanding Liquor. Mr Parle considered Ms Rogan‑Gardiner suitable for that position because she had done some work for the company when it had acquired the business of Liberty Liquors and that gave her relevant experience. He said that she told him in a telephone conversation that she was not interested because the position was based in Sydney and she did not want to move from Western Australia.
In June 2002, whilst in Sydney, Ms Rogan‑Gardiner said she had an interview with Mr Parle and another executive regarding the freestanding liquor position. She said that she was told that this would be a substantial promotion and she felt that this showed that Woolworths valued her services and recognised her skills. She said that a few days later she again expressed her concerns regarding working with the person with whom she had previous difficulties. She said the Freestanding Liquor position was never formally offered to her but she conceded that this was not a position that she would have accepted had it been offered.
Whichever version is correct, it is clear that Ms Rogan‑Gardiner declined the opportunity to pursue this position. She appears to have done so for personal reasons, either due to an inability to work with another person or because she did not wish to move interstate. She declined notwithstanding that the position would have been a substantial promotion and bring a pay rise of nearly $30,000 per annum.
Maternity leave - 29 September 2002 ‑ 1 September 2003
Ms Rogan‑Gardiner said that as 2002 progressed, she felt increasingly frustrated by a lack of certainty in regard to her future. She said that this became exacerbated by the fact that she became pregnant, that she was the breadwinner of her family and that she would shortly have a husband and three children to support. She said that on 1 July 2002 she informed Mr Parle that she was pregnant and was concerned that her pregnancy would affect her job opportunities. She said that Mr Parle said words to the effect that she should not worry and that they would sort it out when she returned from maternity leave. She applied for 12 months maternity leave; it was approved and commenced on 29 September 2002.
Prior to commencing maternity leave, a conference was held in Canberra in August 2002. Ms Rogan‑Gardiner said that she met Mr Parle at the conference and inquired about the progress that had been made towards finding her a new position. She said that he replied with words to the effect that they would worry about it when she returned from maternity leave. Soon after the Canberra conference, Mr Parle contacted Ms Rogan‑Gardiner and asked if she was willing to go to Tasmania for a few weeks to sort out problems they were having with the Transaction Processing Centre. She declined as she could not risk the pregnancy at that late stage.
In September 2002, shortly before Ms Rogan‑Gardiner was due to commence maternity leave, she received a letter offering her a new service agreement. Woolworths offered these agreements to all executives to replace existing employment contracts. To encourage employees to sign the service agreement, Woolworths offered additional options with leverage in excess of $200,000. Whilst employees were not compelled to accept the offer, any new position would clearly be subject to the signing of a service agreement.
Ms Rogan‑Gardiner declined to sign the service agreement. She said that she was concerned that her entitlements under the agreement were less than that under the existing employment contract. She later expressed some concerns in writing in response to the offer of another position in early 2003. She said in evidence that one of her concerns was that the new agreement would remove existing redundancy entitlements. Whether such entitlements existed was an issue. In any event, Ms Rogan‑Gardiner did not state any such concern at the time.
During her maternity leave, Ms Rogan Gardiner contacted the Human Resources Manager at the Kewdale office of Woolworths on approximately four occasions between mid‑October and November 2002. This person was not called as a witness but Ms Rogan‑Gardiner said in her statement that she was told that Mr Parle had agreed that she would be made redundant. This may well be so, but it appears clear that the Human Resources Manager for Western Australia was not in a position to approve any such redundancies. Nor, indeed, was Mr Parle.
There was a redundancy policy but, in practical terms, it required a decision by the Chief Executive Officer. I will return later to the question of whether the redundancy policy ever became part of the contract of employment with Ms Rogan‑Gardiner. The evidence for Woolworths was that that policy only operated in circumstances where there was no available alternative employment. The consistent view of the Woolworths witnesses was that Ms Rogan‑Gardiner was a valued employee who they always believed should, if possible, be retained and was suitable to fill a number of alternative positions. Accordingly, the pre‑conditions for redundancy were never met and no proposal was ever put to the Chief Executive Officer or approved by him.
On 9 December 2002, Ms Rogan‑Gardiner contacted Julie Coates, Woolworths (General Manager Human Resources) in the corporate office in Sydney. She said that she did so because she had been told by the human resources manager in Western Australia that Mr Parle had approved a redundancy. She said that Ms Coates responded by saying words to the effect that Mr Parle did not have authority to make that decision and that the Chief Executive Officer had to approve all redundancies. She said that Ms Coates said that she understood that Ms Rogan‑Gardiner was going to be offered a job in Western Australia. Ms Coates' own evidence was to the same effect. It is difficult to understand how Ms Rogan‑Gardiner could maintain a belief that she was entitled to a redundancy payment in the face of this apparently authorative statement to the contrary.
Corporate Auditor position
Ms Coates contacted Ms Rogan‑Gardiner on 16 December 2002 and told her that Woolworths wished to offer her a position as a Corporate Auditor and that the company valued her abilities and wished to retain her services. Ms Rogan‑Gardiner viewed the Corporate Auditor's role as a demotion and did not regard it as a genuine attempt to find her a suitable position. She said that she was annoyed that Woolworths appeared to be offering any position to her in order to avoid a redundancy. She said she had not taken any auditing roles in her career and that she did not find auditing work stimulating or interesting. She said she told Ms Coates that to take up such a role would be 'going backwards' and would involve extensive travel and that this would be unfair on her husband. She said she had not received a job description and Ms Coates said she would provide a full job description and offer to Ms Rogan‑Gardiner after 6 January 2003, when she, Ms Coates, returned from leave. Ms Coates said that there was no urgency for a decision given that Ms Rogan‑Gardiner was currently on maternity leave.
Ms Rogan‑Gardiner said that she was upset at being offered a role of this type, but did not say so to Ms Coates as she did not wish to appear rude. A formal offer for the Corporate Auditor's position was received by Ms Rogan‑Gardiner on 15 January 2003. That position was to be based in Perth reporting to the Group Internal Audit Manager who was based in Sydney.
On 31 January 2003, Ms Rogan‑Gardiner wrote to Ms Coates with several queries relating to the Corporate Auditor position. She said in her statement that she needed a response to those queries in order to give further consideration to the offer. On the face of it, this seems inconsistent with her view that the role did not reflect her experience and that the position was, in effect, a demotion. The queries included questions regarding the service agreement, in particular the extent to which the CEO could change the scope of the job and the circumstances in which notice of termination could be given.
A response to the queries was received by letter dated 21 February 2003. In that letter, Ms Coates set out the reasons why the position was being offered. She said:
The Refresh project has led to several functions being centralised, finance being one of those. This has meant that your previous state based role no longer exists in the new structure. Woolworths has made every effort to redeploy employees to suitable roles taking into consideration their knowledge, skills and experience. Where redeployment has not been possible, and only as a last resort, we have terminated employees. In relation to your own personal circumstances, these principles have been applied. We are therefore pleased to be able to offer you this position without the customary job interview.
As regards the service agreement, Ms Coates said:
The Service Agreement reflects the position title of the role being offered and is the standard agreement required to be signed by all Woolworths executives. As such it is written to ensure flexibility to meet both employee and business requirements eg. promotions, demotions, transfers etc. We are not prepared to change the document from its present standard format.
…
The Termination on Notice clause would be involved in most normal company instigated terminations and could include for example, but not be limited to the following:
(i)the results of any formal, written counselling process or
(ii)business restructures
On 19 March 2003, Ms Rogan‑Gardiner declined the position and explained her reasons for doing so. Those reasons were that the position was not commensurate with her experience, that auditing involved a career change and limited progression opportunities, that the position was at a lower level than her old position and that there was limited opportunity for team work and staff development.
Notwithstanding that Ms Coates had told Ms Rogan‑Gardiner that no redundancy had been approved or was even in contemplation, it would appear that she continued to harbour a belief that she should be given a redundancy payment. This belief appears to have strengthened her resolve not to accept any position that she considered was not an improvement to the position that she had previously occupied. She concluded her letter of 19 March 2003 by stating:
Please find suitable alternative employment for me or apply the usual redundancy package per the company policy I have been given and the precedents set in making the Financial services staff in Western Australia redundant.
It must be pointed out here that Mr Parle and Ms Coates consistently denied that there was no suitable position. Indeed they were of the view that any of the several positions offered to Ms Rogan‑Gardiner were suitable. Suitability might well be something about which reasonable people can differ, however, as will shortly be seen, one factor that must be significant is whether the employee is able to retain the same level of remuneration and entitlements. Suitability can also be viewed differently by an employer and employee. The employer might be more focussed on utilising an employee's existing skills and experience to its best advantage. The employee might be more focussed on how a position assists in the achievement of long‑term career goals. That difference was evident here.
On 2 April 2003, Ms Coates wrote to Ms Rogan‑Gardiner urging her to reconsider her position and giving her until 23 April 2003 to do so. That letter states:
Your career history has not been overlooked in taking into consideration the various opportunities which have been available to you in the business since the commencement of the Finance Restructure. These opportunities have been made available to you via ongoing communication from your General Manager Tony Parle and have included discussions to consider the role of Regional Business Analyst in WA, Senior Accounting roles in SA, the opportunity to undertake a temporary acquisition project based in WA and a reconciliation project based in Sydney in order to give you the opportunity to consider a permanent move to NSW.
The company considers that the Corporate Audit role is a strategic role within the business and would allow you to use your financial qualifications and business acumen in order to actively participate in business review and improvement. Performing this role would in the company's opinion, provide further breadth to your experience and would not preclude you from taking on future roles in financial accounting. Further, the role does not require you to relocate from your home state and you salary and benefits will be maintained.
As such, the Company considers the role to be one of suitable alternative employment. It is also consistent with the Company's obligations under section 38 of the WA Minimum Conditions of Employment Act 1993 in respect of your return from parental leave. That section requires the Company to offer you the most comparable available position for which you are qualified, and which you are capable of performing.
The Company's clear desire is to enable you to continue in meaningful and rewarding employment. It is not our wish to lose your services. For this reason, the Company is prepared to give you until 23rd April 2003 in order to reconsider your position. Please let us know by then whether or not you are prepared to accept the role. Should you continue to refuse the role of Corporate Auditor, then the Company will have no choice other than to conclude that you do not intend to perform reasonable alternative duties on your return to work. This is likely to lead to the termination of your employment.
Should a termination occur, you will not be entitled to redundancy benefits. In this regard, I should point out that the Company's redundancy policies do not form part of your contract of employment. Your refusal of an offer of suitable alternative employment would also mean that redundancy pay is inapplicable.
In the circumstances, I urge you to reconsider your current stand.
On 14 April 2003, Ms Rogan‑Gardiner responded, explaining why each of the positions that had been discussed were not acceptable to her and were not comparable, in her view, to the position of Financial Services Manager. She then went on to express dissatisfaction and, under a heading 'Unequal and unfair treatment' stated as follows:
There are 3 points worth noting on the activities that have taken place in Western Australia in the Financial Services Department. They indicate that I am being treated less favourably than other Financial Services staff members.
My role became redundant when the functions in my department were transferred in September 2002, 2 weeks prior to the start of my maternity leave period.
A number of my staff were offered positions within Woolworths which they declined, because the staff felt the positions were unsuitable for them for a variety of reasons, and all staff still employed by Woolworths were made redundant when their jobs no longer existed at the time the functions transferred to either the Transaction Processing Centre in Tasmania or the Financial Services Centre in South Australia. To state that I will be terminated when others have received different treatment under the same employer would be ignoring a precedent already set in the same set of circumstances.
Another employee in Western Australia was also in the advanced stages of pregnancy and was due to have her baby 2 weeks after mine. Like myself, she had approved maternity leave, yet, as there was no job available for her on her return from maternity leave, as at September 2002, she was made redundant.
There is also the circumstance of the Chief Accountant for Liberty Liquors, Sanjay Patel, who was made redundant in February 2002 only 8 months after Woolworths acquired the liberty Liquors group. Sanjay was offered a position in Sydney but chose not to accept it. Like myself, Sanjay had desired to continue working within the financial accounting field. He was not required to accept an auditing position in Western Australia but was paid redundancy instead. At the time of his redundancy the restructure process had already identified that there would no longer be a Financial Services Department in Western Australia.
The threat to terminate my services without payment of a redundancy payment amounts to unequal treatment and constitutes a detriment to me. I believe that the Company's attitude in this regard relates directly to my gender and family responsibilities and that the Company is taking this action in the hope of forcing me to resign, knowing that I am a breadwinner in the family and am unable to move easily given that I have a young baby. That is unfair and unlawful conduct.
Redundancy payment
For all the reasons I have already given, I do not believe the role of Corporate Auditor is comparable to the previous role I held as Financial Services Manager, as an executive of Woolworths in Western Australia.
Contrary to what you say in your letter, I believe that the Redundancy Policy is incorporated in my contract of employment. When the restructuring was discussed with me, I was handed a copy of the policy and told that it would apply to all positions made redundant in my Department. I accepted that the policy would apply to me if I were made redundant.
As I have said before, I will not accept the role of Corporate Auditor because it is not comparable alternative employment. I accordingly request the Company to offer comparable alternative employment or redundancy (including a full redundancy payment in accordance with the policy) by 30th April 2003.
If the Company attempts to terminate my services without paying me a redundancy package, I will take all necessary legal steps to protect my position.
Ms Rogan‑Gardiner's contentions regarding redundancy were rejected by Ms Coates in her evidence. Ms Coates said that the only policy of which she was aware was a schedule for calculating entitlements in the event of severance that had not been used to her knowledge since at least June/July 2002. She said that at that time she had a discussion with the then CEO of Woolworths who instructed that no employee would have their employment terminated on grounds of redundancy unless both he and Ms Coates authorised it. In fact, Ms Coates said, the policy was to retain employees, redeploy them and only terminate for redundancy if their skills could not be utilised anywhere else within the company. Ms Coates said that throughout Project Refresh and until the commencement of 2010, only 11 executive employees had their employment terminated on grounds of redundancy. The references in Ms Rogan‑Gardiner's letter to others having been given redundancy payouts almost all related to non‑executive employees.
The reference in Ms Rogan‑Gardiner's letter to a copy of a policy which she was handed, is to a document which she says she was given in August 2002 by a human resources officer in Western Australia. The only document that this could refer to is entitled 'Redundancy Policy for Management' which appears to be an extract from a larger manual bearing a date of September 1997. There is nothing to suggest that this was current in 2002 ‑ 2003. Indeed, Ms Coate's evidence is to the contrary. In any event, that document provides that an employee would only be made redundant if a position was no longer required, all efforts to find a suitable alternative position had been unsuccessful and Divisional General Managers had agreed it was the only appropriate course of action.
On 12 May 2003, Ms Rogan‑Gardiner received a telephone call from Tony Backshall, Woolworths Human Resources Operations Manager. Mr Backshall asked Ms Rogan‑Gardiner to reconsider the offer of the position of Corporate Auditor. He offered to organise for the Woolworths Group Internal Audit Manager to come to Perth to discuss the position with her. She declined this offer because, she said, she had no intention of taking the position. She said she had no training or qualifications as an auditor and did not want to change her career at that stage. She said that she explained this to Mr Backshall and said words to the effect that if there was not anything suitable for her, they had to consider offering her a redundancy. He said that he would have to discuss this with Ms Coates and the Chief Executive Officer and he would get back to her.
Zone Business Analyst position
On 11 July 2003, Ms Rogan‑Gardiner sent an email to Mr Backshall expressing concern that she had not heard from him since May. On 12 July 2003, she received an email from Mr Backshall in which he apologised for the delay, explained that he still needed to speak to a couple of people and would get back to her shortly.
On 18 July Mr Backshall wrote in the following terms:
Since our last phone conversation on Monday 12th May 2003 in regards to your decline of our offer to you to take up the role of Corporate Auditor based in Perth, a significant amount of time and effort has been invested in looking at alternatives for you to consider.
I have been speaking to Kathryn McLay our Internal Audit Manager and Matthew Lawrance who is the National Finance and Strategy Manager for Supply Chain.
As a result of these discussions, I am very pleased to be able to offer to you, for your consideration, the role of Zone Business Analyst, Supply Chain West, based in WA. This role has a direct reporting line to the National Performance and Planning Manager based in Supply Chains National Office here in Strathfield NSW.
…
Michelle, this is a great opportunity for you to be a part of and add enormous value to what is going to be a very exciting time in Supply Chain, with the development of the new state of the art Perth Regional Distribution Centre due to open in October 2004.
The role will enable you to utilise and broaden your existing skill set and experience, whilst still giving you the opportunity for further advancement in the company when appropriate opportunities present themselves and you wish to take advantage of them.
Michelle, the Company's clear desire is to enable you to continue in meaningful and rewarding employment. It is not our wish to lose your services. At this point in time, both the role of Corporate Auditor and Zone Business Analyst are available and offered to you for consideration. Can you please read and give careful consideration to the position description and Business Analyst Activities Plan as Matthew Lawrance will contact you during the course of next week to organise a time to meet and discuss this role further.
Ms Rogan‑Gardiner considered that this was not a position comparable to her previous position as it was neither a managerial nor executive role. On 1 August 2003, she wrote to Mr Backshall explaining that she felt that neither the Corporate Auditor nor the Zone Business Analyst positions were at a comparable level to her previous position. At this time, Ms Rogan‑Gardiner said she was feeling very stressed about her future and as a result decided to return to work early in order to bring matters to a head. In her letter, she said that she intended to return to work on 1 September 2003.
On 6 August 2003, Mr Backshall sent an internal memorandum to Ms Coates outlining the present position and the issues as he saw them. As the plaintiff has placed some emphasis on this memo, I will set the relevant parts out in full:
Listed below are some of the issues for us to consider before making a call on how we handle and my recommendation.
ISSUES:
•Can't verify what it is Michelle has been told by Tony Parle in relation to Redundancy.
•It appears from the timeline todate and her version of events, that communication with her, prior to us getting involved in December 02 has been pretty loose, in particular around the issue of not only redundancy but also the role of National Financial Controller reporting to Tony Parle.
•It appears that she was asked to apply for it, was issued with a PD, then had to chase Tony Parle for an interview, which when it happened, was not an interview at all and culminated in her being told by Tony that he was looking for an external recruit and consequently appointed Peter King.
•Michelle allegedly being told by Tony at the National conference in August last year when approached by Michelle in regards to what was happening with her and his reply of 'we will worry about it when you get back from maternity leave'
•Us being able to prove that the Corporate Audit role was a real role and not one that was concocted to get her back into the workplace and potentially avoid paying a redundancy.
•Michelle claims that both roles offered to her are beneath her and don't give her an opportunity to further develop and take up other opportunities.
•Michelle has also stated she is not prepared to relocate based on her family situation and understands that to move forward she would need to move out of WA.
•Has issues with Service Agreement and to date has refused to sign.
•Her claim that we are discriminating against her based on her family circumstances and her gender, she believes we are trying to put her in a position where she resigns.
…
•I don't have the degree of confidence that the Auditor Role was a real role and I think Kathryn Mclay would support that view.
•I have a degree of discomfort in regards to the role Tony Parle has played and how he has played it and believe that a number of holes could be 'punched' in it by a half smart lawyer. I believe that from day 1 of the restructure announcement Michelle knew that the only way she would be able to continue to play a Senior role in Finance would be if she relocated and I don't believe it has ever been her intention to do this if asked or offered. The heart of this I believe is her ego and the fact that she wasn't asked and given the opportunity to say no.
•She was offered the roles of RBA WA IT Accountant SA, neither of these in her eyes were senior enough.
•You would also assume from what transpired in regards to the Financial Controller role reporting to Tony, which would be the role she would have wanted to be offered, and the way Tony has handled it, that he couldn't have been to keen to have her their anyway, if he was I believe he would have ensured it happened.
•The difference in dollars between us terminating her or making her redundant is just under $30000. Under either of these scenarios she loses $237000.00 options after exercising them.
•I believe we are on good ground in regards to how we have treated her in relation to her family circumstances and how we intended treating her going forward if she accepted the Supply Chain role.
•I believe we could prove that this role is suitable alternative employment, with still the opportunity for growth.
•The fact we want to continue her employment and that we can prove we have given her counsel around not resigning or putting us in a position of terminating, due to the financial impact on her, in relation to her options, goes to the fact we are looking after her interests and being transparent.
•We have given her the same counsel around redundancy and the fact that she will lose access to the TSR component of her options.
•So I believe she is on shaky ground stating that we are discriminating against her based on her gender/family situation and trying to force her to resign.
•We have stated on more than one occasion in writing and verbally that we wish to retain her services.
•The call we need to make is that when you consider all that has transpired, do you want to force her to work for us and what value will it add to either party.
•She will be hard to manage going forward both locally and remotely.
•It will end up in litigation, which will tie up You, me, Tony Parle, legal counsel, and the outcome will more than likely be that we pay redundancy.
•It will end up in a common law court not commission as there is no redundancy standard for WA and the common law precedent will if we lose will probably be to pay 6 months based on her position and length of service, this would equate to approx $52000.00 plus costs
•The redundancy calculation come out at $53534.00.
There are no doubt some potentially embarrassing features of this memo. It appears to contain concessions that there was some doubt as regards whether Ms Rogan‑Gardiner had ever been offered a redundancy payment and as to whether the Corporate Auditor position was 'a real role'. However, in cross‑examination Mr Backshall said that this memo was an expression of his own views at that point in time and was written for the purposes of discussion. He wrote it without having an opportunity to speak to Mr Parle. He said that the Corporate Auditor role was not 'real' only in the sense it was created especially to accommodate Ms Rogan‑Gardiner's desire to remain in Western Australia, the rest of the audit team being based in Sydney. He said whether that role was functional depended substantially on Ms Rogan‑Gardiner being an active and willing participant in the arrangements. He said it was a role created to facilitate a return to work by Ms Rogan‑Gardiner, not to avoid paying a redundancy payment. In the event that Ms Rogan‑Gardiner did not take up the position, that role would not be filled in Western Australia.
In closing submissions, counsel for the plaintiff said that some records were admitted and others put to the plaintiff in evidence would not be the subject of submissions in opposition. As to the balance, it was said that insofar as they purported to record what the plaintiff had said and were 'somewhat cryptic and laconic' it would be unduly prejudicial to admit them. This was an appeal to exclude documentary evidence otherwise admissible in the exercise of the court's discretion.
I accept the risk of prejudice referred to by the plaintiff. However, those records not specifically referred to or put to Ms Rogan‑Gardiner were only relied upon by the defendant for the limited purpose of determining whether she had reported the symptoms of depressive illness at other times. That is, they were relied on only to evidence a lack of complaint and not as a reliable account of the exact words used on occasions (other than those actually put). Accordingly, the prejudice identified is avoided by only allowing the records in question to be used for that limited purpose.
Accordingly, the whole bundle of medical records is accepted in evidence. However, other than where records were specifically admitted or put in cross‑examination, I have only used them for the limited purpose of determining what the presenting condition was at the relevant time. Where, on the other hand, records were admitted or put, I have treated them as being admissible for the purpose of determining what was said by Ms Rogan‑Gardiner taking into account the considerations in s 79D and the fact that the notes are usually a summary rather than a verbatim account of the words used.
Causation
Ms Rogan‑Gardiner suffers from chronic depression. According to her, that has been a debilitating condition that, at times, has limited her ability to work, to socialise and to enjoy a normal family life. It has had a significant impact on her ability to engage in alternative work. Indeed, other than the lack of a reference from Woolworths, Ms Rogan‑Gardiner attributed her mental health as being the principal impediment to her obtaining and holding any long term position.
The plaintiff called Dr Orr, a psychiatrist, who confirmed the depressive illness. He was of the view that the causes of the illness were a number of predisposing and precipitating factors. In regard to predisposing factors, Dr Orr referred to significant personality vulnerability, the experience of being made redundant in New Zealand and work‑related stressors. The latter included uncertainty in relation to her work future, that uncertainty continuing whilst she was pregnant and her failure to achieve a redundancy (an outcome that she wished for). There was also a possibility that Ms Rogan‑Gardiner's unplanned pregnancy and some tension with her husband in this regard may have led to post‑natal depression or had at least fuelled existing anxiety.
Dr Orr said that Ms Rogan‑Gardiner had suffered anxiety prior to her dismissal on 11 September 2003. He said that this deteriorated into a major depressive episode thereafter. He believed that the precipitator for her anxiety was uncertainty about her job situation, though hormones from pregnancy could also have been a trigger. He said it was possible she may have developed a depressive illness even if she had not been employed by Woolworths. However, in his opinion, the major trigger for that illness was the dismissal, which he described as a traumatic blow. He said it was following that, that the symptoms accelerated into depressive illness. These conclusions were based upon information supplied by Ms Rogan‑Gardiner to Dr Orr and assumed the veracity and completeness of that information.
There were, however, reasons to doubt whether Ms Rogan‑Gardiner had provided all relevant information to Dr Orr. She did not tell him initially that the pregnancy in 2002 was unplanned and that her husband had wished for her to have a termination. Dr Orr became aware of this after reading the report of the defendant's psychiatrist. He then asked Ms Rogan‑Gardiner about it and she said it was not a big issue. However, in evidence, Ms Rogan‑Gardiner conceded that she was distraught when she saw her general practitioner about the pregnancy in March 2002. When this was put to Dr Orr, he said that this was information he would like to have followed up and that, given this occurred before the restructure was announced, it would have been at least a predisposing, and possibly a precipitating factor for subsequent illness.
Medical records also revealed that on 13 May 2002 the same general practitioner had written a referral for counselling for Ms Rogan‑Gardiner. The doctor had written that the reason for this was that the pregnancy had been a major source of stress. However, Ms Rogan‑Gardiner denied that this was correct and said she had never attended counselling.
On the basis of Dr Orr's view that the dismissal had been the trigger for depressive illness he said he would expect Ms Rogan‑Gardiner to be significantly worse when she went to see her doctor on 15 September 2003 than when she had seen him on 3 and 9 September 2003. However, medical records, which Ms Rogan‑Gardiner accepted were correct, showed that she was feeling less stressed on 15 September 2003 and had resumed shopping and going out and had reduced headaches. She also told the doctor that she felt more able to relax and enjoy her family because her work issues were all in the hands of her solicitors. She did not see her doctor again for six months. This was not information available to Dr Orr and was not consistent with the account given to him.
The medical records did not reveal any expressions by Ms Rogan‑Gardiner of concerns regarding Woolworths as being the cause of her illness. On the other hand, there were references to involvement in 'complicated court cases' relating to her deceased mother. Ms Rogan‑Gardiner conceded that issues relating to her mother's death in October 2004 had caused her to be very angry and upset at that time. She did not report that to Dr Orr.
When Ms Rogan‑Gardiner saw Dr Orr he asked her whether she easily dislocated her joints. He had noted that she was tall and thin and had previously had a broken wrist and considered that Marfan's Syndrome was possible. Another symptom of this syndrome is hyper‑mobility. Ms Rogan‑Gardiner denied any problems with being too flexible or easily dislocating joints. Yet within the previous month she had in fact asked her general practitioner for information about hyper‑mobility. There was evidence that she had complained of continuing joint pain and had suffered other fractures. Indeed, on 13 August 2007 she saw Dr Orr and had earlier that day attended Fremantle Hospital complaining of significant pain to her thumb.
Dr Orr asked Ms Rogan‑Gardiner if anyone in her family had suffered from depression. She denied that anyone did. However, in evidence she conceded that her mother had suffered from depression as a consequence of chronic illness.
The discrepancies in what Ms Rogan‑Gardiner reported to Dr Orr must significantly undermine the foundation for his opinion. This is for two reasons. First, some of the information that was not revealed was at least relevant to Dr Orr's assessment of the aetiology of the depression. Dr Orr was unable to say that it would necessarily change his view, but it would cause him to make further inquiry. Second, the discrepancies lead to a conclusion that Ms Rogan‑Gardiner was not a reliable historian and may also cause doubts as to her credibility. Her explanations for why she did not reveal information to Dr Orr showed a tendency to deliberately withhold or edit. In regards to hyper‑mobility, she said she did not consider it to be a problem, but would have revealed it if asked. That, of course, is inconsistent with Dr Orr's evidence. As regards pain, she said she did not tell Dr Orr about that as she was taking pain killers. As regards litigation involving her mother, she said she did not tell Dr Orr about that because she considered it to be family related stress and had nothing to do with Woolworths. That last answer is revealing. It tends to show that Ms Rogan‑Gardiner attended Dr Orr with a view that only those matters that related to her employment with Woolworths were relevant. This, of course, assumed the very issue that he was seeking to determine.
The response of Ms Rogan‑Gardiner as to why she did not tell Dr Orr of her mother's depression was unconvincing:
Dr Orr said he asked you if there was any family history of depression and that you said no. Do you accept that?‑‑‑If that's what he said, yes.
Are you saying that you didn't tell him about your mother's depression because you thought it wasn't relevant because she was a special case?‑-‑I suppose I probably only thought about my immediate family, which my mother wasn't one of them at that time, she had already passed on.
So is the reason you said no because you thought he was asking about your husband and your children?‑‑‑No, I thought he would have been talking about my siblings and that because we were adults. My mother's depression would have been wholly and solely something completely different to anything because I never ‑ I was a child growing up with somebody like that.
I'm not entirely sure I've understood your answer. Are you saying you didn't tell him about your mother's depression because you didn't think that by family history he meant your parents, or is it that you're saying you didn't think her depression was relevant because she was a special case? I'm just not clear?‑‑‑I'm saying that her depression was related to her chronic illness. It wasn't a life depression because she was an extraordinarily happy person. She was always happy so I didn't think that there was anything like a family history of depression.
But you knew when he asked that question that he was including your parents, didn't you?‑‑‑Yeah, but I don't ‑ ‑ ‑
Sorry, is your answer yes?‑‑‑Yes.
Yes. So before, when you told his Honour that you thought he was talking about your siblings, that wasn't a truthful answer?‑‑‑From the point of view that I don't count my mother as having depression from anything other than her chronic illness. I don't think of it as being anything else because she was such a happy person.
Now you say the reason you didn't tell Dr Orr was because you thought her depression was a unique thing to her. It was to do with her chronic pain and so you didn't need to tell him about it. Is that correct?‑‑‑Yes, and she was dead so ‑ ‑ ‑
It had nothing to do with you thinking that he was only asking you about your siblings?‑‑‑I thought that that didn't make ‑ that it was only my siblings were left.
I know that I am labouring this, your Honour.
I do want to give you another opportunity to explain that because you have given two different answers. When Dr Orr asked you if there was any family history of depression, who did you think he was asking you about?‑‑‑My siblings, and I probably discounted anything for my mother.
Did you understand him to be asking about your parents?‑‑‑I think he probably was.
Right, and your reason for not telling him about your mother was because you believed that her depression was related to her chronic pain?‑‑‑Yes, because she was so happy (ts 297 - 299).
Whilst it is not necessary for a breach to have been the dominant cause of the injury, there must nonetheless be a causative link. The question is whether it has been proven that the defendant's conduct has caused or materially contributed to the harm suffered: March v E & M H Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506. I could not so conclude on the evidence. There are good reasons to suppose that other factors caused the illness which are independent of anything done by defendant. Whilst I accept that Dr Orr maintained his view that termination was the trigger factor, this was in circumstances where he was continuing to assume, in the absence of an opportunity to make further inquiry of Ms Rogan‑Gardiner, that the information she provided was reliable. On the evidence available to me that is not an assumption that I could possibly make. Indeed the evidence is such that I am unable to attach any significant weight to the opinion as to the cause of the depression because the foundation for the opinion is unreliable. Accordingly, the evidence does not satisfy me on the balance of probabilities that the conduct of Woolworths caused or materially contributed to Ms Rogan‑Gardiner's depressive illness.
In any event, Dr Orr's conclusion was that the triggering event was the dismissal. This presents the problem raised in Eastwood of the difficulty in determining the effect of pre‑termination conduct where termination is said to be the precipitating event. It is not possible on the evidence to say that the pre‑termination conduct had a causative effect in respect of the depression.
Accordingly, even if there had been a breach of the implied good faith term, the evidence does not establish that such a breach caused any recoverable damages. In these circumstances it is not possible to make any provisional assessment of damages in that regard.
I should note that in any event, damages arising from psychiatric injury in this case would fail the tests in Hadley v Baxendale (1854) 156 ER 145, 151. That is to say that the injury could not be said to flow according to the usual course of things from the breach. The injury could not be said to be 'a not unlikely result' of any such breach. Nor could damages for such injury be reasonably said to have been in the contemplation of the parties when the contract was made. In this regard, I note that there was no evidence to suggest that Woolworths was aware of any of the predisposing factors that made Ms Rogan‑Gardiner vulnerable to depression.
Conclusion
The contract of employment did contain an implied term that both parties would act in good faith. That term did not apply to termination or the manner of it, but did apply to conduct preceding the termination. That term was not breached by Woolworths in its conduct between April 2002 and September 2003 as particularised.
Even if there had been a breach by Woolworths of the implied good faith term, the evidence does not establish that any injury or recoverable damages were caused by such breach.
The contract also contained an implied term that Woolworths would not terminate Ms Rogan‑Gardiner's employment without adequate notice. I have found that the contract was terminated by Woolworths on 11 September 2003 and that no notice was given of that termination. Thus, there was a breach of that term and Ms Rogan‑Gardiner is entitled to damages. Those damages are limited to the value of the salary and benefits for the appropriate notice period, which I have found to be four months.
Insofar as it is accepted that there was also an implied term in the contract that a severance payment would be made in the event of a position being made redundant, I have found that there was no breach of such a term. This is because the preconditions for such a payment were not met.
Even if there had been a breach by Woolworths of the redundancy term, damages would not flow from that breach in circumstances where the termination on notice payment exceeds what would have been paid on a redundancy in any event.
I will hear from the parties as to the precise terms of the orders and as to costs.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: ROGAN-GARDINER -v- WOOLWORTHS LTD [No 2] [2010] WASC 290 (S)
CORAM: HALL J
HEARD: 1-4, 8-11 JUNE, 1 NOVEMBER 2010
DELIVERED : 22 OCTOBER 2010
SUPPLEMENTARY
DECISION :4 NOVEMBER 2010
FILE NO/S: CIV 2149 of 2004
BETWEEN: MICHELLE ROGAN-GARDINER
Plaintiff
AND
WOOLWORTHS LTD (ABN 88 000 014 675)
Defendant
Catchwords:
Costs - Whether costs should be apportioned where plaintiff not wholly successful - Order 66 r 1(3) - Turns on own facts
Order 24A r 3(a) - Offer of compromise - Whether offer not sufficiently clear - Whether costs awarded to defendant should be set off against the judgment sum
Legislation:
Supreme Court Act 1935 (WA), s 32, s 37
Supreme Court Rules 1971 (WA), O 24A r 3, O 24A r 10, O 66 r 1
Result:
Costs orders made
Set off of costs against judgment sum
Stay of execution pending taxation of costs
Category: B
Representation:
Counsel:
Plaintiff: Dr P R MacMillan
Defendant: Ms G A Archer SC
Solicitors:
Plaintiff: Jackson McDonald
Defendant: Clayton Utz
Case(s) referred to in judgment(s):
Danidale Pty Ltd v Abigroup Contractors Pty Ltd [2007] VSC 552
Gray v Sirtex Medical Ltd [2009] WASC 126
Mok v Minister for Immigration, Local Government and Ethnic Affairs (No 2) (1993) 47 FCR 81
Naidoo v Williamson [2008] WASCA 179; (2008) 37 WAR 516
Pringle v Gloag (1879) 10 Ch D 676
Re Elgindata Ltd (No 2) (1992) 1 WLR 1207
Rogan‑Gardiner v Woolworths Ltd [No 2] [2010] WASC 290
Thiess v TCN Channel Nine Pty Ltd (No 5) (1994) 1 Qd R 156
X&Y (by her Tutor X) v Pal [1991] NSWCA 302
HALL J: On 22 October 2010 I delivered judgment in this matter: Rogan‑Gardiner v Woolworths Ltd [No 2] [2010] WASC 290. The plaintiff was successful in respect of her claim that the contract of employment was breached when her employment was terminated without adequate notice. However, she was unsuccessful in respect of other claims relating to alleged breaches of implied terms to act in good faith and to make a severance payment in the event of redundancy.
The parties have submitted conflicting minutes of proposed orders. The primary source of dispute is in respect of costs. The defendant seeks its costs in respect of those matters on which the plaintiff was unsuccessful. Further, the defendant proposes that in respect of the reasonable notice claim it should only pay the plaintiff's costs to 16 March 2007 and thereafter the plaintiff should pay the defendant's costs. The reason for the latter submission is that an offer to compromise was made by the defendant on 16 March 2007 pursuant to O 24A of the Rules of the Supreme Court 1971 (WA). That offer was for an amount greater than will be awarded pursuant to the judgment.
The plaintiff opposes the orders sought by the defendant. In particular, it is submitted that the plaintiff has been substantially successful and should be able to recover her costs. As regards the compromise, the plaintiff submits that the terms of the offer were uncertain and, therefore, it cannot form the basis of an award of costs to the defendant following the making and rejection of that offer.
Section 37(1) of the Supreme Court Act 1935 (WA) provides that the costs of and incidental to all proceedings in the court shall be in the discretion of the court, subject to the provisions of the Act and the rules of the court. Order 66 r 1(1) of the Rules provides that subject to the express provisions of any statute and of the rules, the costs of and incidental to all proceedings shall be in the discretion of the court but, without limiting the general discretion, the court will generally order that the successful party to any action or matter recover their costs. The discretion is wide, only being limited by such fetters as are contained in the Act or rules (or any other Act) and by the fact that the discretion must be exercised judicially: Naidoo v Williamson [2008] WASCA 179; (2008) 37 WAR 516 [39] (Steytler P).
Costs orders are intended to be compensatory in nature. The purpose of a costs order is to compensate a party for costs that they have incurred in respect of a matter where they have proven to be successful. The rationale behind the general rule that a successful party is entitled to their costs is that this is generally a just outcome where a party turns out to have been unjustifiably brought to court or to have been unjustifiably caused to have recourse to the court: Gray v Sirtex Medical Ltd [2009] WASC 126 [62] (Le Miere J).
It would, however, be simplistic to assume that the party who achieves a judgment in their favour is necessarily entirely successful, or even substantially so, for the purpose of costs. The power exists to apportion costs to make orders relating to different parts of the proceedings where that is appropriate. Order 66 r 1(3) provides that where a successful party has introduced an issue upon which he or she has failed and that issue has increased the costs of the proceedings, the court may order that party to pay costs in respect of that issue. Order 66 r 2(a) provides that where there are multiple causes of action, costs may be allowed to the plaintiff on those on which he or she succeeds and to the defendant on those on which he or she succeeds, in the same manner as if separate actions had been brought.
It has been suggested that these rules create no more than a starting position and do not impinge upon the court's wide discretion to make orders that reflect the justice of the case: Dal Pont GE, Law of Costs (2003) 243. Nonetheless, they permit the distributing of costs according to the outcome of particular issues in the action: Dal Pont, 243; Thiess v TCN Channel Nine Pty Ltd (No 5) (1994) 1 Qd R 156, 208 (in regard to the former Queensland rule which was similar).
There can, however, be difficulties in assessing liability of the costs on the basis of who won or lost a particular issue. Even where the issues are capable of identification, the costs relating to each may not be readily separated. Evidence may have been led which was relevant both to a successful and an unsuccessful issue. Nor would an order that determines liability for costs to be borne by a party based on the number of issues they lost necessarily reflect the costs expended on those issues. This is because some issues may be more or less important than others, or because an issue is subsidiary to or overlaps with another. It has been suggested that it is only if it is possible to isolate an issue that was unnecessarily pursued would it be proper to deprive a successful party of all costs in respect of that issue; otherwise a more general assessment is usually made: Dal Pont, 241; Re Elgindata Ltd (No 2) (1992) 1 WLR 1207, 1218 (Beldam LJ).
Circumstances may exist that justify a successful party who has failed on certain issues not only being deprived of the costs in those issues but also being ordered to pay the other party's costs in relation to them: X&Y (by her Tutor X) v Pal [1991] NSWCA 302 [15] (Clarke JA) quoted in Dal Pont at page 239. However, courts are more likely to order a successful litigant to pay costs on issues upon which they have failed where those issues have been improperly or unreasonably raised: Mok v Minister for Immigration, Local Government and Ethnic Affairs (No 2) (1993) 47 FCR 81, 84 (Keely J). This discretion is reflected in the terms of O 66 r 1(2) of the Rules. A successful party who neither improperly nor unreasonably raises issues nor makes allegations on which he or she has failed is not generally ordered to pay any part of the unsuccessful party's costs: Re Elgindata (No 2) (1214) (Nourse LJ).
In the present case there were three primary issues; whether there was a breach of the implied term to give reasonable notice of termination, whether there was a breach of the implied term to act in good faith and whether there was a breach of an implied term to make a severance payment in the event of redundancy. Some evidence was arguably relevant to only one of these issues. However, other evidence was relevant to more than one issue. In particular there was evidence that was relevant to an issue in respect of which the plaintiff was successful and also to an issue in respect of which she was not successful. For example, evidence relating to the restructure and job offers made to the plaintiff between April and September 2002 were relevant to the unsuccessful issue of the alleged breach of the good faith term. However, that evidence was also relevant to the breach of the reasonable notice term because in its defence, the defendant sought to argue that reasonable notice of termination had been given at the time the restructure was announced in April 2002 and that the plaintiff's employment had in fact terminated when the position that she formerly occupied was abolished later that year. Accordingly, as is evident from my reasons for judgment, it was necessary to consider that possibility and the evidence relating to it in dealing with the breach of reasonable notice provision. In these circumstances, orders that would simply award costs in respect of each issue to the successful party would be problematic. It would not be in the interest of either party to make orders that would be unclear in regards to their application to the costs incurred.
It is important to note at this stage that because of the rejected offer of compromise the only costs which it is suggested by the defendant should be apportioned are those incurred prior to 16 March 2007. Those costs would clearly be pre‑trial costs. It is also important to note that the character of the issues changed at trial, or at least one of them did.
Initially the pleadings in respect of the alleged breach of the good faith term referred only to that term having been breached by termination of the employment or the manner of that termination. At trial an amendment was permitted which extended the ambit of that claim to cover the conduct of the defendant between 15 April 2002 and 11 September 2003. In opposing that amendment the defendant submitted that it had prepared its case on the basis that the alleged breach of the good faith term was limited to the act of termination and the manner of it. Thus, at the relevant time, that is prior to 16 March 2007, the breach of good faith claim was more confined and more closely aligned to the issue on which the plaintiff was ultimately successful. Indeed, on the basis of how the pleadings stood at that time, it would be difficult to say that either the breach of good faith claim or the severance payment claim so clearly increased the costs as to justify the court exercising the discretion referred to in O 66 r 1(3). Nor am I of the view that the issues upon which the plaintiff was unsuccessful were improperly or unreasonably raised. In these circumstances the appropriate order will be that the defendant pay the plaintiff's costs prior to 16 March 2007.
In regard to the offer of compromise, that offer relevantly provided that the defendant would pay to the plaintiff a sum which was larger than the judgment sum has proved to be and then had a paragraph which read:
The action be dismissed and the defendant pay the plaintiff's costs to be taxed if not agreed.
The plaintiff submits that the terms of this paragraph were contrary to O 24A r 3(9) in that if the compromise had been accepted, the plaintiff would have been entitled to apply for judgment in her favour in accordance with the terms of the offer. It is submitted that it is inconsistent with the offer stating that the action would be dismissed for the plaintiff to be entitled to judgment in her favour. For this reason the plaintiff suggests that the offer was not reasonably certain and therefore should not have costs consequences. I queried with counsel for the plaintiff whether any question regarding the certainty of the offer had been raised at the time it was made. He stated that no such question had been raised.
In my view there can be no realistic doubt as to the certainty of the offer. In context, reference to the action being dismissed could only reasonably have been understood as meaning that an acceptance of the offer would bring the proceedings to an end. The offer was entirely clear as to the amount that was to be paid, the interest to be payable, the obligations of the parties as to costs, that the offer was intended to resolve the entire proceedings and the length of time for which the offer was to remain open. In these circumstances, I cannot accept the submissions of the plaintiff. Accordingly, O 24A r 10(5) applies and the defendant is entitled to an order against the plaintiff for its costs following rejection of the offer.
There is a final issue. The defendant seeks that there not only be a set off of costs against costs but that the costs to which it is entitled should also be set off against any monies due to the plaintiff pursuant to the judgment. The parties are in agreement that judgment should be entered for the plaintiff in the sum of $59,623 plus interest. Bearing in mind what I have said earlier in respect of costs, it is likely that there will be a net amount after setting off costs that is due to the defendant. Order 66 r 7 is broad enough to permit damages to be set off against costs. That circumstances may exist where justice requires that such a set off occur has been recognised since at least 1879: Pringle v Gloag (1879) 10 Ch D 676, 679.
In Danidale Pty Ltd v Abigroup Contractors Pty Ltd [2007] VSC 552 Habersberger J considered a similar submission and concluded that the appropriate course was to order a stay of execution of judgment pending the taxation of costs. His Honour considered that it would not be just to expose the defendant in that case to the risk, however remote, that having paid the judgment sum to the plaintiff it could find itself unable to recover the costs awarded to it. His Honour also took into account that the stay would not prejudice the plaintiff because interest would continue to accrue during the period that the taxation of costs was taking place.
In the present case I am satisfied that justice requires that there be orders which will facilitate the setting off of costs due to the defendant against both costs due to the plaintiff and the judgment sum due to the plaintiff.
Accordingly, the orders of the court will be:
1.Judgment be entered for the plaintiff in the sum of $59,623 plus interest calculated at 6% pursuant to s 32 of the Supreme Court Act from 12 September 2003 to the date of payment.
2.The defendant pay the plaintiff's costs of the action on a party and party basis until 16 March 2007, to be taxed if not agreed.
3.The plaintiff pay the defendant's costs of the action on a party and party basis to be taxed if not agreed from 17 March 2007.
4.Execution of the judgment be stayed pending finalisation of the quantum of the above orders for costs, either by agreement or taxation, and the ascertainment of the amount owed by the plaintiff to the defendant for costs (after deducting the costs owed by the defendant to the plaintiff) or until further order.
5.That any net amount of costs payable by the plaintiff to the defendant be set off against the judgment sum.
16
8
2