Tasmania Development and Resources v Martin

Case [2000] FCA 414

FEDERAL COURT OF AUSTRALIA

Tasmania Development & Resources v Martin [2000] FCA 414

CONTRACT - dismissal of government employee - consideration of circumstances of termination and applicability of exclusion clause, permitting termination for reasons based on the Department’s “operational requirements” - analysis of phrase as an evidentiary issue - relevance of pre-contractual explanations where written phrase not ambiguous - whether manner in which undertaking operated created a factual basis necessitating the cessation of employment - latitude to be afforded to employer in identifying reasons for termination - onus of proof

DAMAGES - compensation for loss of opportunity to renew contract - whether loss contemplated as consequence of wrongful repudiation by employer - accrual of opportunity contingent on performance

Trade Practices Act 1974 (Cth)
Tasmanian Development Act 1983 (Tas)
Industrial Relations Act 1988 (Cth)

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Discussed;  Distinguished
Nettlefold v Kym Smoker Pty Ltd (1996) 69 IR 370 Refd to
Tradax Export S.A. v Andre & Cie S.A. [1976] 1 Lloyd’s L Rep 416 Refd to
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 Discussed;  applied
Hadley v Baxendale (1854) 9 Exch 341 Refd to

TASMANIA DEVELOPMENT AND RESOURCES v STEVEN DAVID MARTIN
No T 9 of 1999

LEE, COOPER, KIEFEL JJ
PERTH (HEARD IN HOBART)
5 APRIL 2000

IN THE FEDERAL COURT OF AUSTRALIA

TASMANIA DISTRICT REGISTRY

NO T 9 OF 1999

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

TASMANIA DEVELOPMENT AND RESOURCES
APPELLANT

AND:

STEVEN DAVID MARTIN
RESPONDENT

JUDGES:

LEE, COOPER AND KIEFEL JJ

DATE OF ORDER:

5 APRIL 2000

WHERE MADE:

PERTH (HEARD IN HOBART)

THE COURT ORDERS THAT:

1.        The appeal be dismissed.

2.        The notice of contention be upheld.

3.        The appellant pay the respondent’s costs of the appeal and notice of contention.

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

IN THE FEDERAL COURT OF AUSTRALIA

TASMANIA DISTRICT REGISTRY

NO T 9 OF 1999

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

TASMANIA DEVELOPMENT AND RESOURCES
APPELLANT

AND:

STEVEN DAVID MARTIN
RESPONDENT

JUDGES:

LEE, COOPER AND KIEFEL JJ

DATE:

5 APRIL 2000

PLACE:

PERTH (HEARD IN HOBART)

REASONS FOR JUDGMENT

LEE AND COOPER JJ

  1. We have had the advantage of reading the judgment of Kiefel J in draft.  We agree with the orders proposed by her Honour for the reasons she has given.

I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justices Lee and Cooper.

Associate:

Dated:             5 April 2000


IN THE FEDERAL COURT OF AUSTRALIA

TASMANIA DISTRICT REGISTRY

NO T 9 OF 1999

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

TASMANIA DEVELOPMENT AND RESOURCES
APPELLANT

AND:

STEVEN DAVID MARTIN
RESPONDENT

JUDGES:

LEE, COOPER AND KIEFEL JJ

DATE:

5 APRIL 2000

PLACE:

PERTH (HEARD IN HOBART)

REASONS FOR JUDGMENT

KIEFEL J:

  1. Mr…

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Tasmania Development and Resources v Martin [2000] FCA 414
Case
[2000] FCA 414
Decision Date

CaseChat Overview and Summary

In the matter of Tasmania Development and Resources v Martin, the dispute arose from the termination of Mr Martin's employment by Tasmania Development and Resources (TDR). Mr Martin challenged the decision to terminate his employment, arguing it was based on incorrect grounds. The case was heard and determined by the Supreme Court of Tasmania. The central legal issues concerned whether the termination of Mr Martin's employment was justified based on the claimed operational requirements and whether the employer complied with the relevant procedural requirements outlined in the ILO Convention and the Fair Work Act.

The court examined the definition and scope of the term "operational requirements" as it applied to the termination of Mr Martin's employment. It was noted that the term is not ambiguous and generally refers to the employer's operational needs, which can include performance, market conditions, and efficiency measures. The court also considered whether TDR properly assessed Mr Martin's role and capabilities in light of the claimed operational requirements. The court found that TDR did not adequately consider Mr Martin's effectiveness and qualifications, and that the decision to terminate his employment was not based on sound operational grounds.

The reasoning of the court led to the conclusion that the termination of Mr Martin's employment was not justified on the grounds of operational requirements. The court further determined that TDR failed to follow the required procedures, including providing a statement of reasons for the termination and considering Mr Martin's suitability for other roles within the organisation. Consequently, the appeal by TDR was dismissed, the notice of contention was upheld, and the court ordered that TDR pay Mr Martin's costs for the appeal and the notice of contention.

Orders

Orders of the court

1. The appeal be dismissed.

2. The notice of contention be upheld.

3. The appellant pay the respondent’s costs of the appeal and notice of contention.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

LEE, COOPER, KIEFEL JJ
Articles 13 and 14 of schedule 10 appear to relate to large scale redundancy programs, as his Honour found, and provide for notification of the workers likely to be affected and a written statement of the reasons for termination. Schedule 11, entitled “Recommendation Concerning Termination of Employment at the Initiative of the Employer” makes provision for “procedure prior to or at the time of termination” in articles 7 to 13. Articles 7 to 10 deal with termination for misconduct or unsatisfactory performance. Article 13(1) provides that a worker notified of termination of employment should be entitled to receive a statement of reasons for the termination on request. By article 19(1):“All parties concerned should seek to avert or minimise as far as possible termination of employment for reasons of an economic, technological, structural or similar nature, without prejudice to the efficient operation of the undertaking, establishment or service, and to mitigate the adverse effects of any termination of employment for these reasons on the worker or workers concerned.”The Decision Appealed from The history recited by his Honour concerning the reason for the termination showed that there was no suggestion of any operational change apparent to Mr Martin when he returned from leave on 4 October 1998. Mr Kelly, who had said he had considered Mr Martin’s redundancy, said that the termination of Mr Martin’s position had nothing to do with an assessment of his performance in his position. The evidence before his Honour about this topic was supportive of Mr Martin’s ability. There were two matters put forward as the bases for Mr Kelly’s opinion that the position was no longer necessary: the first concerned a desire to “flatten” the management structure; the second referred to a change in focus to smaller, inward trade missions. Mr Martin had concentrated, successfully, on larger, outward missions. His Honour also accepted as a fact, all but that numbered (i) of the factual propositions put forward by Counsel for Mr Martin (listed below) and made findings in those terms:“(i) the operational requirements of TDR as a whole had to be considered;(ii)the Corporate Plan listed many responsibilities of Mr Martin that continued to be an important part of TDR’s functions;(iii)Mr Martin was effective, hard working and highly regarded by those within TDR and by clients;(iv)if the emphasis was to change from outward to inward trade missions, Mr Martin was already, under the Corporate Plan, the responsible officer for the latter and was well qualified to manage them;(v)in any case Mr Martin had wide ranging responsibilities, by no means confined to trade missions;(vi)at the date of the hearing all Mr Martin’s tasks were still being carried out within TDR;(vii)there was no financial imperative; an extra $1 million was available for staff and the Premier’s letter did not suggest financial stringency in the DSD’s area;(viii)Mr Kelly did not consult the Corporate Plan and considered it as having no relevance;(ix)Mr Kelly was not aware of the Premier’s letter;(x) Mr Kelly did not consult the budget review papers;(xi) Mr Kelly did not read Mr Martin’s contract;(xii)Mr Kelly did not attempt to match up Mr Martin’s duty statement with the reorganisation of TDR;(xiii)Mr Kelly made no enquiries as to Mr Martin’s job performance; Mr Kelly considered that irrelevant; and(xiv)Mr Kelly did not consider redeployment of Mr Martin.”

Ratio Decidendi

Legal Principle Established

Established by: LEE, COOPER, KIEFEL JJ

It was accepted by TDR, on the hearing of the appeal, that if the grounds of the notice of contention were made out, his Honour’s assessment of damages, which had regard to the remainder of the term, would be appropriate save that it should not take into account the loss of the chance for renewal. I will therefore deal now with the reasons attributed by TDR to the termination. “Operational requirements” Mr Martin relied on evidence as to what he had been told by the Human Resources Manager of TDR, in answer to his enquiry as to what the term “operational requirements” meant. This occurred prior to the parties’ execution of the contract. The Manager replied that it meant major structural change, involving the abolition of the whole department or its activities. The submissions for Mr Martin were not based upon Mr Martin’s reliance on this explanation, but upon the statement as reflecting what each of the parties had in mind when they entered the contract. Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, 350-351, upon which reliance was placed, is not authority for the proposition that a meaning attributed to a term pre-contract will be taken to govern its meaning in the written contract. It recognises an exception to the parol evidence rule, concerning the meaning the parties would attribute to a contractual term, as arising where the term is capable of more than one meaning. In the present case, whilst there is a real question concerning the evidence that there were “operational requirements” which provided the basis for the need to terminate Mr Martin’s employment, it could not be said that the term is ambiguous. The general meaning of the term can be readily discerned. The fact that it does not accord with the much wider definition given by the Manager does not establish two acceptable, but different, meanings. Further, the extrinsic evidence which is then allowed to be admitted is not of the meaning itself, but such as would show the facts which the parties would have had in their mind and from which it may be concluded that one meaning is pointed to. It is necessary then to consider what the term can generally be taken to comprehend. The term “operational requirements” is not defined in the relevant legislation or Convention. The requirements are expressed to be those of the employer and in that sense the term is taken broadly to refer to the employer’s enterprise and undertaking and how it is to function, for reasons which are thought desirable. In Nettlefold v Kym Smoker Pty Ltd (1996) 69 IR 370, Lee J referred to the term (at 373): “The Act does not define the term “operational requirements”. Obviously it is a broad term that permits consideration of many matters including past and present performance of the undertaking, the state of the market in which it operates, steps that may be taken to improve the efficiency of the undertaking by installing new processes, equipment or skills, or by arranging for labour to be used more productively, and the application of good management to the undertaking. In general terms it may be said that a termination of employment will be shown to be based on the operational requirements of an undertaking if the action of the employer is necessary to advance the undertaking and is consistent with management of the undertaking that meets the employer’s obligations to employees.”