Truarn v Contract Power Management Australia Pty Ltd
[2007] WADC 29
•27 MARCH 2007
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: TRUARN -v- CONTRACT POWER MANAGEMENT AUSTRALIA PTY LTD [2007] WADC 29
CORAM: MULLER DCJ
HEARD: 21-23 FEBRUARY 2007
DELIVERED : 27 MARCH 2007
FILE NO/S: CIV 851 of 2003
BETWEEN: MARK TRUARN
Plaintiff
AND
CONTRACT POWER MANAGEMENT AUSTRALIA PTY LTD (ACN 064 688 562)
Defendant
Catchwords:
Contract - Wrongful dismissal of employee - Alleged variation of employee's roster - Refusal by employee to remain on mine site - Counterclaim by defendant for losses incurred by employee's conduct - Turns on own facts
Legislation:
Nil
Result:
Plaintiff's claim dismissed
Defendant's counterclaim dismissed
Representation:
Counsel:
Plaintiff: Mr M E Herron
Defendant: Mr D J MacLaurin
Solicitors:
Plaintiff: Gibson & Gibson
Defendant: Blakiston & Crabb
Case(s) referred to in judgment(s):
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Chappel v Hart (1998) 195 CLR 232
Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145
March v E & MH Stramare Pty Ltd (1991) 171 CLR 506
Case(s) also cited:
Adami v Maison De Luxe Ltd (1924) 35 CLR 143
Attorney-General for the United Kingdom v Heineman Publishing Australia Pty Ltd (1987) 8 NSWLR 341
Australian Telecommununications Commission v Hart (1982) 65 FLR 41
Australian Workers Union (NSW) v Grain Handling Authority of NSW (1987) 22 IR 447
Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435
Bayley v Osborne (1984) 4 FCR 141
BGC (Australia) Pty Ltd v Fremantle Port Authority (2003) 28 WAR 187
Bostik (Aust) Pty Ltd v Gorgevski (No 1) (1992) 36 FCR 20
Brickhill v Cooke [1984] 3 NSWLR 396
Bruce v AWB Ltd (2000) 100 IR 129
Bruce v AWB Ltd (No 2) [2000] FCA 1281
Byrne v Australian Airlines Ltd (1995) 185 CLR 410
Coco v AN Clark (Engineers) Ltd [1969] RPC 41
Commissioner for Government Transport v Royall (1966) 116 CLR 314
CTC Resources NL v Australian Stock Exchange Ltd (1997) 23 ACSR 418
DTR Nominees pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423
Federated Ship Painters & Dockers Union of Australia v Cockatoo Docks & Engineering Co Pty Ltd (1946) 57 CAR 137
Gregory v Philip Morris Ltd (1988) 80 ALR 455
Hacksall's Ltd v McDowell [1930] AR (NSW) 620
Izdes v LG Bennett & Co Pty Ltd (1995) 61 IR 439
Lane v Fasciale (1993) 35 AILR 339
Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 1 WLR 698
Lister v Romford Ice [1957] AC 555
National Coal Board v Galley [1958] 1 All ER 91
North v Television Corporation Ltd (1976) 11 ALR 599
O'Neill v Medical Benefits Fund of Australia [2002] FCAFC 188
Prince Jefri Bolkiah v KPMG (a firm) [1999] 2 AC 222
Printing Industry Employee Union of Australia v Jackson and O'Sullivan Pty Ltd (1957) 1 FLR 175
Quinn v Jack Chia (Aust) Pty Ltd [1992] 1 VR 567
Rapid Metal Developments (Australia) Pty Ltd v Anderson Formrite Pty Ltd [2005] WASC 255
Reynolds v Southcorp Wines Pty Ltd [2002] FCA 712
Robinson v Harman (1848) 1 Exch 850
Rowell v Alexander Mackie College of Advanced Education (1988) 25 IR 87
Savage v British India Steam Navigation Co Ltd (1930) 46 TLR 294
Scharmann v APIA Club Ltd (1983) 6 IR 157
Sinclair v Neighbour [1967] 2 QB 279
Smith Kline & French Laboratories (Aust) Ltd v Department of Community Services and Health (1991) 28 FCR 291
Spillane v Commonwealth Bank of Australia [2002] QSC 367
Tubemakers of Australia Ltd v Ferandez (1976) 10 ALR 303; 50 ALJR 720
Turner v Mason (1845) 14 M&W 112
Walker v Citigroup Global Markets Australia Pty Ltd [2005] FCA 1866
Wight v State Electricity Commission (1992) 17 MVR 243
Wyong Shire Council v Shirt (1980) 146 CLR 40
MULLER DCJ: In this action the plaintiff, who was employed by the defendant, has claimed damages from the defendant for loss of wages between 2 December 2002 and 9 July 2004 as a consequence of what is said to have been the defendant's unlawful dismissal of the plaintiff.
The defendant was a company involved in the manufacture, management and servicing of power station plant and equipment. On 1 July 2002 the defendant entered into a contract with another company, Afrika Mashariki Gold Mines Ltd ("AMGM"), to operate and maintain a power station for AMGM at a remote mining location in North Mara in Tanzania. On 5 July 2002 the defendant employed the plaintiff to operate the power station at North Mara mine for a two year period. The plaintiff's contract of employment required him to work on a roster of eight weeks at the site followed by four weeks off the site. The plaintiff claims that at the end of November 2002 the defendant insisted that he remain at work on the mine site after he had completed his eight week roster and, when he refused to do so, purported to terminate his contract of employment. As a consequence of the allegedly unlawful termination of his agreement the plaintiff had to find alternative work for the remainder of the period of his contract and claims damages for his loss of wages during that period.
The defendant, while admitting it employed the plaintiff on a roster system, alleges that the requirement for the plaintiff to remain on site for eight weeks was subsequently varied to 91 days to enable him to gain an exemption from having to pay tax in Australia on the income he received. The defendant claimed that following the agreed variation of the plaintiff's roster he was required to remain at the mine site while essential repairs were being done to machinery at the end of November 2002 and that by leaving after an eight week period he was in breach of a material term of the contract which justified the defendant in terminating his employment. In the alternative the defendant claimed its dismissal of the plaintiff was lawful because the latter's conduct in leaving the North Mara mine site at the end of the eight week period in November 2002 constituted a beach of an implied term of his contract of employment requiring him to perform his duties with reasonable skill and diligence as and when directed by the defendant.
In addition to its claim that the plaintiff's dismissal was lawful the defendant also brought a counterclaim against the plaintiff for the alleged losses it had incurred in arranging for a contractor to travel to the North Mara mine site to replace the plaintiff at the end of November 2002 when the plaintiff left the mine site upon the completion of what he claimed to be his eight week roster. Because the plaintiff left the mine site prematurely the defendant also claimed that other personnel it had engaged to repair the machinery were delayed in carrying out the necessary repair work. The defendant has claimed these expenses it incurred together with other losses in its counterclaim.
The contract
The plaintiff, who is now aged 43, qualified as a fitter/machinist specialising in the assembly and repair of mechanised equipment. He worked on mining sites in both Western Australia and overseas before July 2002 when he began doing some periodical work for the defendant. At this time he was told of a possible job opportunity with the defendant in Tanzania. He contacted a person named Leon Hodges, who was the Managing Director of the defendant company, and enquired about the Tanzanian position. Subsequently he met Hodges in Kewdale and more detailed discussions took place. Hodges told him what the basic conditions of his employment would be and emphasised that he would have to work on a roster of eight weeks on site followed by four weeks off site. He was told the salary would be US$96,000 less tax payable to the Tanzanian government. Hodges told him the duration of the contract would be for two years and that the plaintiff's responsibility would be to service and manage the machinery in the power station on the mine site. Following this discussion the plaintiff said he told Hodges he was interested and would consider his position.
Subsequently the plaintiff telephoned Hodges and accepted the offer. Arrangements were then made for the plaintiff to obtain a visa and complete the other necessary formalities before travelling to Tanzania.
On 5 July 2002 the plaintiff met Hodges at the defendant's office in Kewdale and signed a letter dated 4 July 2002 confirming that he accepted the terms and conditions of employment specified in the documents attached to that letter. These documents (exhibit 1) were as follows: first, Expatriate Conditions of Service which contained the general conditions of the plaintiff's employment; second, a schedule of employment which contained particular conditions applicable to the plaintiff including, for example, the details of his salary and the roster under which he was to work; and finally an annexure referred to as "Scope of Work" which basically summarised the services which the defendant had undertaken to supply to AMGM in terms of its contract with that company.
The document called Expatriate Conditions of Service contains some clauses of significance. The first of these related to amendment to the plaintiff's Contract of Employment and read as follows:
"2.MODIFICATION OF EMPLOYMENT CONDITIONS
2.1The terms and conditions of the Expatriate Conditions of Service can be amended by CPMA giving the Employee written notice equivalent to the notice period stated in the Schedule.
2.2Pursuant to Article 1.4, entitlements set in the Schedule are fixed for the duration of the Employment, unless CPMA and the Employee agree otherwise. Any change to the Schedule will become effective from the date agreed between the Employee and CPMA.
2.3As detailed Company Policies become available they will form part of the Conditions of Service. Company policies are subject to change which are effective from the date of their notice to the Employee."
There was a clause dealing with remuneration which provided:
"3.REMUNERATION
3.1Salary payments are made monthly in arrears at the end of each month.
3.2Details of the remuneration package are as included in the Schedule.
3.3Salaries will be reviewed annually based on personal and company performance, western world inflation and prevailing salary levels in Australia.
3.4You will be required to pay taxation in Tanzania as a resident of Tanzania. CPMA will structure your salary so that your taxation liability is legally minimised but will not take responsibility for any taxation commitments outside Tanzania."
The subject of rosters and working hours was also referred to in the Expatriate Conditions of Service in the following terms.
"4.WORKING ARRANGEMENTS
4.1The Employee is expected to work whatever reasonable hours are necessary to meet the responsibilities and objectives of the job description, or to complete specific work by set deadlines or during periods of short staffing.
4.2Work rosters for site‑based staff are based on a minimum of 224 days on site per year. The remaining days off include 20 days annual leave, field leave (days in lieu of weekends and public holidays worked) and travel to and from site. Employees will work a minimum 10 hour day, 7 days a week while at site."
The Expatriate Conditions of Service contained a clause precluding the employee from disclosing any confidential information concerning the defendant. This provision read as follows:
"11.CONFIDENTIAL INFORMATION
11.1It IS A CONDITION OF EMPLOYMENT THAT BOTH DURING AND AFTER EMPLOYMENT THE Employee shall not unless authorised to do so, reveal to any person or Company any information concerning CPMA which is not already in the public domain.
11.2The Employee shall not use any information concerning the affairs of CPMA for his/her personal benefit or enable others to use information for personal benefit."
The Conditions of Service also contained the grounds for summary termination of the contract. This clause was expressed in the following terms:
"13.TERMINATION
13.1Termination Without Cause
13.1.1After the first six months of service, either party has the right to terminate the Contract by giving notice in writing to the other party. The period of notice of termination is set out in the Schedule.
13.2Termination with cause
13.2.1CPMA may terminate the Contract at any time by giving twenty four (24) hours notice to the Employee for any one of the following causes;
a)gross misconduct
b)the Employee's failure to perform his duties in any material respect after having been requested to do so by CPMA, except on the grounds of health or safety
c)failure to obtain the appropriate visa or to meet any of the immigration requirements
d)regular and frequent malaria or other serious infections which affect the Employee's work attendance or productivity
0)conduct by the Employee which is grossly inconsistent with the policies and practices of CPMA or the local law, culture, customs and tradition of the country(ies) in which the Employee is working
f)violation of the obligation of confidentiality."
The annexure headed "Scope of Work" attached to the letter of agreement dated 4 July 2002 signed by the plaintiff contained a clause providing for the provision of a substitute power station operator by AMGM on those occasions when the plaintiff was off the mine site. The relevant clause read as follows:
"Site Operators Roster
The CPMA site operator will work an 8 week on site 4 week off site roster. The hours will be ten hours per day seven days per week. Call outs included when required.
AMGM will provide competent personnel to operate and maintain the power station during the CPMA site operators 4 week break period. Training of the relief operator will be carried out by CPMA operator if requested."
The most significant of these documents is the Schedule of Employment. This read as follows:
"1. Employee Mark Truarn
Address
Point of Engagement Perth Western Australia
2. Position
Title: Power Station Operator
Location Nyamongo, ‑ Tanzania
Reports to:Rick Webster, Peter Spivey, Leon Hodges, Marc Grosser
Duties & Responsibilities: See attached Annexure #1
Your work will vary depending upon circumstances, and from time to time you may be required to work on other projects as directed.
3.Employment Details
Commencement date 9th July 2002
Term of this Contract 2 years
4.Salary Fly in/Fly Out Basis
Base Salary$81,600.00 USD pa
Housing Allowance (tax free) $14,400.00 USD pa
Note only – 15% of gross salary is a tax free housing allowance for employees who live on site
TOTAL GROSS SALARY $96,000.00 USD pa
Tax Payable $23,773.00 USD pa
Total Net SALARY $72,227.00 USA pa
Salary paid into an Australian Bank account on the 15th of each month at the exchange rate US on the last working day of the period.
5.Roster
On/off:The employee is required to work 8 weeks of site based work followed by 4 weeks off site leave break.
a)Annual leave 20 days
6.Air fares CPMA will provide one economy class return air fare to city of engagement for each leave break in addition to a flight at commencement and termination of contract.
7. Notice Period for Termination or Amendment of Contract
Period Three months"
The significance of clause 2.2 of the Expatriate Conditions of Service was that the entitlement set out in the schedule – which included the eight week on four week off roster – could be changed by agreement between the plaintiff and defendant. Counsel for the plaintiff submitted that the roster was not simply an "entitlement" but rather a fundamental term of the contract and that any amendment to the roster would require changes to the written contract, including, for example, cl 4.2 and other provisions as well. I am unable to accept that submission. Given the inclusion of the eight week on/four week off roster in that part of the contract termed the "Schedule of Employment" I am satisfied an oral agreement to change the roster was all that was required, and that, by implication, any consequential amendments to the contract would necessarily follow.
The plaintiff's case
The plaintiff left Australia on 9 July 2002 and arrived at the North Mara mine site in Tanzania on 12 July 2002. His arrival coincided with the pre‑production phase of the mine. His role was to service and maintain the diesel engines that operated the generators. He worked 10 hours a day for seven days a week. While at the mine site he reported to a person named Rick Webster who was the electrical supervisor employed by AMGM. He communicated with his employer by telephone and email.
After completing his first eight week roster the plaintiff returned to Perth. He contacted Leon Hodges and arranged to meet him. When they met Hodges told him there was some uncertainty as to whether the plaintiff's eight week roster would qualify as overseas service and gain him an exemption from having to pay Australian tax. He said he had engaged a firm named Mann Judd to obtain a ruling from the Australian Taxation Office on the issue. Following this conversation the plaintiff said he spoke to Ms Violet Lim, an employee of Mann Judd, who said she intended applying for a private ruling from the Taxation Office to obtain the plaintiff a tax exemption. She asked him to provide her with the necessary material to substantiate the claim and, in particular, to focus upon the conditions of hardship at the remote mining site where the plaintiff was required to work. The plaintiff said he complied with her request and subsequently provided her with written notes containing the material he thought she needed (exhibit 14). He emphasised he had never met her and had no further discussions with her other than this one occasion on the telephone.
It was at this point that the plaintiff said Hodges suggested a possible change to his work roster. He was told by Hodges that because of the uncertainty surrounding any private tax ruling it may be necessary to make changes to his roster. The plaintiff was adamant that no details of any proposed change were discussed. He was emphatic that he was never asked to consider working on a 13 week roster.
The plaintiff left Perth for Tanzania on 4 October 2002. The defendant had provided him with an air ticket a few days earlier. Before leaving Perth he and Hodges had discussed a crack in the generator casing on one of the machines at the mining site. Hodges told him he had discussed the problem with a firm named Marelli which had manufactured the machinery.
On his return to the North Mara mine site on 7 October 2002 the plaintiff found that the damage to the generator casing was more extensive than originally thought. After communicating his concern to Hodges he was told that Marelli would replace the defective panel. The plaintiff said he and Hodges disagreed as to the cause of the defect. The plaintiff told Hodges he believed the fault lay in the way the unit had been assembled whereas Hodges believed that the fault lay with the alternator itself and that Marelli would bear the cost of replacing the defective cover.
The defendant then made arrangement for Marelli technicians to travel to the mine site to repair the generator casing. Up to this point there had been an exchange of emails between the plaintiff and Hodges about the problem with the machinery. Following his return to the site the plaintiff checked the generators as he had been asked by Hodges to do and found at least two other generators had developed vibrations. After an exchange of emails Hodges told the plaintiff he had arranged for the manufacturer Marelli to send technicians to the site to replace the casing on the No 10 generator and check the other machinery as well. The exchange of emails between the plaintiff and the defendant, which I shall turn to in more detail later, reveals that both Hodges and the plaintiff expected the Marelli technicians to arrive at the mine site in mid November while the plaintiff was still there. The arrival of both the new equipment and the technicians, however, was delayed. It was only on 26 November 2002, during the last week of what the plaintiff claims was his eight week roster, he learned the technicians had arrived in Tanzania and made arrangements to transport them to the mining site. When they eventually arrived the plaintiff said he assisted them by familiarising them with the layout of the Power station and introducing them to other personnel. Because he had other functions to perform he then left them to their task. The plaintiff said he always intended to leave the site at the end of his eight week roster. At first he thought there would not be any problem because the Marelli technicians were due to arrive earlier in November. When it was obvious they were going to be delayed he told Hodges in a series of emails that he intended leaving the mine site on 30 November. He agreed Hodges had replied telling him he had to remain on the mine site until the Marelli employees had completed their tasks and the machinery was functioning properly. The plaintiff, however, maintained his roster only required him to remain until 30 November and he left the mine site while the Marelli technicians were still working on the faulty equipment. He agreed that when he left the site his employer was left with no representative at the mine.
Upon his return to Perth the plaintiff said his contract was summarily terminated by the defendant. He sought alternative employment and began work on a casual basis in July 2003 with an employer named Transfield Worley. He also did casual work for two other employers before finding a permanent position with Transfield Worley in August 2004.
The defendant's case
Leon Hodges, the Managing Director of the defendant company, confirmed that the defendant had contracted to operate the power station at the North Mara project for the mine owner AMGM. He said he employed the plaintiff as the power station operator. While the plaintiff was working on his first eight week roster at the mine site Hodges said he received advice that recent changes to the Australian taxation laws might make the plaintiff liable to pay tax in this country on the income he received.
When the plaintiff returned after his first eight week roster he met with Hodges at the defendant's offices in Perth. After examining photographs of the damage to No 10 alternator and discussing the problems on site Hodges said he gave the plaintiff a list of directions to follow in relation to the defective machinery when he returned to the site. He then told the plaintiff of a recent ruling by the Australian Taxation Office which might make it necessary for him to work 91 days outside Australia before qualifying for a tax exemption. He recalled showing the plaintiff the ruling and suggesting he would have to work 91 days on the site and then spend his off site time at Bali before returning to Tanzania. He claimed the plaintiff asked him if his salary could be paid into an off‑shore account and Hodges said that he would investigate this. While the plaintiff was still with him he made a telephone call to a person named Violet Lim, an employee of an accountancy practice named Mann Judd, who had earlier advised him about the possible need for employees to work 91 days out of the country before qualifying for a tax exemption. While speaking to Violet Lim on the telephone Hodges said she told him she would need the plaintiff's assistance to make an application to the Australian Taxation Office for a special ruling. He said he gave the telephone to the plaintiff and asked him to speak to Violet Lim. During this conversation he heard the plaintiff say he would send Violet Lim whatever material she needed to assist her make the application.
After the plaintiff had finished his conversation with Violet Lim Hodges said he and the plaintiff had another general discussion during which he told the plaintiff he believed he would have to go onto a 91 day roster while an application to the Australian Taxation Office was made and a ruling obtained on the eight week roster. He said he could not recall what the plaintiff's response was. He did concede, however, that the plaintiff did not say anything about the roster he would work under when he returned to the mine site after his four weeks off site. Hodges then said he did not see the plaintiff again before he left for Tanzania.
On the second day of his evidence Hodges added to his previous account of his dealings with the plaintiff. He said the first meeting with the plaintiff took place on Wednesday 25 September 2002. That was the meeting when, according to Hodges, the plaintiff had spoken to Violet Lim on the telephone in his presence. He went on to add that he had a second conversation with the plaintiff on the telephone two days later on Friday 27 September 2002. During this conversation he said he again told the plaintiff he would have to pay tax on his salary or agree to work on a 91 day roster. He claimed the plaintiff told him he did not want to pay tax and would have to go onto a 91 day roster. Hodges said he told the plaintiff to prepare the material which the accountant, Violet Lim, had asked for. He also said he told the plaintiff he anticipated it would take 30‑60 days to get a ruling on whether working on an eight week roster would qualify the plaintiff for a tax exemption.
It was after this conversation that the plaintiff returned to the mine site on what Hodges believed was a 91 day roster.
Hodges' assertion that the plaintiff had agreed on Friday 27 September 2002 to work on a 91 day roster was supported by the evidence of the tax accountant, Violet Lim. She was asked by Leon Hodges to advise the defendant whether it was obliged to deduct income tax from the plaintiff's income based on the eight week roster he was working on. In the light of recent amendments to the income tax regulations Ms Lim came to a tentative conclusion that the plaintiff did not qualify for a tax exemption under the eight week roster. Contrary to the evidence of both the plaintiff and Leon Hodges Violet Lim said she did not speak to either party on Wednesday 25 September 2002. She said she telephoned Leon Hodges on Friday 27 September 2002 and told him what her preliminary views were. She added there was considerable uncertainty about the matter but that if he wanted an answer he would have to obtain a private ruling from the Australian Taxation Office. She also stressed that she advised Leon Hodges to change the plaintiff's roster to comply with the 91 day rule.
Following this conversation with Leon Hodges Ms Lim said she telephoned the plaintiff on the same date to ask him for information to enable her to make an application for a private ruling from the Australian Taxation Office. She asked him for information relating to his personal circumstances at the North Mara site. According to Ms Lim the plaintiff told her he would return to North Mara on an amended 91 day roster.
Subsequently, both Leon Hodges and Ms Lim were sent facsimile copies of the material which the plaintiff had been asked to supply (exhibits 13 and 14). The two facsimile documents sent to both Hodges and Ms Lim were identical except that the copy sent to Ms Lim had an additional paragraph added to it. Nothing really turns on the addition. In both facsimile transmissions the plaintiff stated as follows:
"I have spoken to Leon and we agreed that compliance with the 91 day rule should take place forwith (sic) and a ruling on a 2 year contract is the best option. Following the ATO's response then it may or may not be required to change rosters."
Violet Lim confirmed in evidence that this statement made by the plaintiff was consistent with her understanding of the conversation she had with him on 27 September 2002. She believed the plaintiff intended to work on a 91 day roster but to go back onto an eight week roster if the Australian Taxation Office ruled in his favour.
Ms Lim then made an application for a private ruling to the Australian Taxation Office. This was a detailed document which contained submissions as to why the eight week roster should qualify the plaintiff for a tax exemption.
Not long after the plaintiff had returned to the mine site and reported on the potential problems involving other generators in the power station Hodges said he made arrangements for Marelli's, the manufacturer of the equipment, to deliver replacement equipment and send technicians to the mine site to work on the generators. Although these arrangements were put in place as early as October 2002 the arrival of the Marelli technicians on site was delayed. As late as 15 November 2002 Hodges was told the technicians would probably be at the site by 22‑23 November 2002. He relayed this information to the plaintiff who confirmed that he had arranged the necessary accommodation and said it would be desirable for them to remain on site for a week to do the required work and carry out the necessary checks. When it became obvious that the arrival of the Marelli technicians on the mine site would be delayed, and the plaintiff continued to insist he was going to leave on 30 November 2002, Hodges tried to persuade him that the defendant had to have a representative on the site when the work was done and that it was essential for the plaintiff to remain there until the work had been completed. By 30 November 2002 Hodges said there were potential problems with six generators and two were out of operation. When he realised it was futile trying to convince the plaintiff to remain at the site, and that the latter had made it clear he was determined to leave on 30 November at the end of what he claimed was his eight week shift, Hodges said he made alternative arrangements for a person named Fenton to leave Perth on the night of Saturday 30 November to replace the plaintiff at the mine site while the Marelli technicians completed their task.
Before arranging for Fenton to replace the plaintiff Hodges sent an email to the plaintiff on Friday 29 November 2002 reminding him that he had agreed to work on a 91 day roster and that no income tax had been deducted from his salary because of the agreed change in his working arrangements. In the same email Hodges warned the plaintiff that if he returned to Australia prior to the expiration of the 91 day period the defendant would be required by law to withhold tax from his salary for the last three months of his service. When the plaintiff left the site Hodges wrote to him on 2 December 2002 terminating his employment.
Exchange of emails
Both the plaintiff and the defendant focused on the emails that were exchanged between them after the plaintiff's return to the North Mara mine site. I will have to deal with these email exchanges in some detail because of their significance. The starting point is an email from Hodges to the plaintiff on Tuesday 29 October 2002 which states:
"Hi Mark I got a letter from the lawyer lady today basically its 91 days out of the country or tax is paid here, she has stated in her letter that we have amended the contract to reflect this and will now file for a special ruling on your behalf, so here's hoping. If you can get me a fax number I will fax the letter to you for your records."
In a later email sent on 31 October 2002 the plaintiff asked Hodges what the outcome of the taxation enquiry had been. Hodges replied by email sent on the same date in the following terms:
"It points to a 91 day on 6 week off deal and we are currently now pushing for a special ruling re the exemption we are trying to get this though asap so its all happy."
These two communications do not show that there had been a change to the plaintiff's eight week roster before he returned to the mine site. In the first communication Hodges refers to having amended the plaintiff's contract to incorporate a 91 day roster in order to win him a tax exemption pending the making of a special application to the Australian Taxation Office. But there is no evidence the plaintiff had agreed to this variation to the contract before he left Perth. The email suggests the amendment was made unilaterally by Hodges who believed the plaintiff would have to work on a 91 day roster to gain the tax benefit he wanted.
The second communication made by Hodges is also equivocal. In it he refers to the expert advice pointing to a 91 day on six week off deal and confirms that the defendant was applying for a special ruling in relation to the tax exemption. This might be interpreted to mean nothing had been finalised before the plaintiff returned to the mine site. What it does demonstrate is Hodges' belief that the contract would need to be varied to protect the plaintiff from having to pay tax in Australia. But that is as far as either communication went.
From this point on numerous emails were exchanged between the plaintiff and Hodges dealing with the problems at the plant and the arrangements being made for Marelli to send technicians to the mine site. An examination of these communications reveals one theme common to all of them: the plaintiff consistently told Hodges that he intended leaving the mine site once his eight week roster was finished. As early as 6 November 2002 he told Hodges what his itinerary was and later emphasised that he could not leave the mine site later than 30 November because of special arrangements he had made to meet his wife who was passing through Perth on her way to see her parents.
The other common theme to the emails exchanged between the parties was the problems being experienced at the site and the need for the machinery to receive urgent attention. In an email sent on 13 November 2002 the plaintiff referred to excessive vibrations in the alternators and in a second communication on the same date reported problems in generators 2 and 3. A third communication on the same date revealed the plaintiff's concern that the excessive vibrations might occur in other generators. On 14 November 2002 Hodges sent an email to the plaintiff telling him the Marelli technicians would be on site as soon as the replacement equipment had arrived. On 18 November 2002 the plaintiff told Hodges he had arranged accommodation for the technicians at the mine site.
It was from this point on that Hodges apparently realised the plaintiff did not intend to remain on the site until the work by the Marelli technicians had been completed. In an email sent on 19 October 2002 he told the plaintiff he would not be able to leave until the Marelli technicians had completed the work and pointed out they could not be left on the mine site without the defendant being represented because of the doubts surrounding the nature of the problem. In a reply sent the same day the plaintiff told Hodges that his "flights are all fixed up solid". He went on to say that he did not believe there would be a problem because he would work additional hours to get what had to be done completed. He repeated he intended leaving the site on the morning of 30 November.
On 22 November 2002 Hodges told the plaintiff the Marelli technicians were due to arrive on 25‑26 November and added that his flight out of Tanzania could be postponed to 4 December. He apologised for insisting on the plaintiff delaying his departure. The plaintiff replied that he only had one and a half days in Perth to see his wife before she left and that he could not change the date of his departure. He went on to add he was only required to work for eight weeks and the contract required the defendant to have a competent person on the site while he was off site. Hodges replied by saying that if the plaintiff believed the work could be completed before 30 November his travel arrangements could remain as they were but that he would be very disappointed if the work was not completed while the plaintiff was still at the mine site. He stressed the financial risks involved for the defendant if the problem was not resolved and reiterated his belief that it was essential for the defendant to have its representative on site until the Marelli technicians had completed their task.
The plaintiff's response was to tell Hodges that, while he understood his concerns, the Marelli technicians could do what they had to do whether he was on the site or not.
Exchanges along the same lines continued for the rest of the time the plaintiff remained at the mine site. Hodges continued to insist on the plaintiff staying there until the work was done while the plaintiff was equally adamant that he would not change his travel plans. On 29 November 2002, the day before the plaintiff was due to leave, Hodges sent him an email saying:
"Mark, it seems we have now reached an impasse and I am obliged to point out the following.
In our recent exchanges of correspondence you referred to the contract of employment entered into with Contract Power Management Australia Pty Ltd and to the fact that pursuant to the roster referred to in that contract, you were to work a roster of 8 weeks on and 4 weeks off.
Your recent correspondence has caused me to refer to our agreement and in doing so I realise that we had both overlooked an amendment we had made to that original contract. You may recall this amendment was agreed to in order to satisfy your desire to receive a concessional tax treatment on the basis of continuous foreign service.
For the purpose of ensuring your advantageous taxation treatment we negotiated and agreed that you would work a 91 day roster being 13 weeks on and 6 weeks off. You may well have overlooked the fact that this agreement was confirmed in writing by you to HLB Mann Judd.
As further evidence of our agreement I refer you to the fact that this Company has since that time paid you on the basis of you working a 13 week and 6 week roster, i.e., no tax has been deducted from your monthly payment. You have accepted your salary on this basis.
Should you choose to leave the site and return to Australia prior to the expiry of the 91 days, we will be required by law to withhold tax for the past three months at ATO prescribed amounts commensurate with your income. For your information this amount is in the order of $5,408.71 Aud (Aust) for each month.
In light of the above I wish to confirm you are required to stay in the country for a further 5 weeks in order to fulfil your contractual obligations."
In the end the plaintiff left the mine site on 30 November before the technicians had completed their work.
Findings on credibility
There is a clear conflict between the evidence of the plaintiff and Leon Hodges as to what was agreed to at the meeting in late September. What the parties agreed upon at that time is vital to the outcome of this case. In making a finding on this issue I must necessarily examine the credibility of the various witnesses.
The first witness whose credibility is in issue is, of course, the plaintiff himself. At the end of his testimony I was left with an unfavourable impression based on his stubbornness and unwillingness to concede anything that might impact unfavourably on him. An example of this was his insistence that he need only follow those directions from his employer he considered to be reasonable. Other examples of his obstinacy are to be found in the various emails he exchanged with Hodges. Time and again his response revealed an unwillingness to even consider Hodges' request to extend his stay at the site beyond 30 November 2002. I gained the distinct impression that the plaintiff had made up his mind he was leaving on 30 November 2002 regardless of what he might have agreed to earlier. There were other occasions in cross‑examination when he was abrupt and, occasionally, evasive. Many of his answers were designed to give the minimum information possible when, to any reasonable person, a more detailed explanation was clearly required. Many of the assertions he made were, in my view, without foundation. His belief that by telling the General Manager of AMGM that he intended leaving the mine on 30 November 2002 somehow justified his refusal to comply with Hodges' directions and was a sufficient discharge of his obligation to his employer was, I thought, quite unacceptable.
By contrast I found Leon Hodges to be a convincing witness. I believe his recollection of the relevant events was to a large extent accurate. Where his evidence does need to be examined carefully, however, is in the area of the vital meeting he had with the plaintiff at the end of September 2002. Leaving aside his assertion that the plaintiff spoke to Violet Lim on the telephone in his presence on 25 September 2002 which I believe was a genuine error on his part but is of no particular significance, the fact remains that having told the Court he did not see the plaintiff again after this meeting he returned to Court after an overnight adjournment and appeared to contradict this by saying he had spoken to the plaintiff again on 22 November when the latter agreed to return to the site on a 91 day roster. His failure to mention this conversation at an earlier stage in his evidence is, in my view, very significant. This alleged conversation was absolutely vital. It was the occasion on which, according to Hodges, the plaintiff agreed to change his roster. Hodges' failure to mention this telephone conversation in his earlier evidence before the adjournment must cast doubt both on his ability to recollect events and the accuracy of his evidence. He admitted that his recollection of this conversation had only returned after he had had the opportunity of reflecting overnight on what he had said.
If the evidence of Hodges on this particular issue stood on its own I do not believe I could have accepted it. But it does not stand on its own. There is other compelling evidence which confirms his assertion that the plaintiff agreed to vary his roster. That evidence is to be found in Ms Lim's testimony and in exhibit 14.
Ms Lim was a most convincing witness. She kept an account on her file of what happened on 27 September 2002. She said she clearly remembered what took place because she had a duty as the defendant's professional adviser to ensure that he complied with the taxation law and, because of the uncertainty surrounding the question of the rosters, realised the necessity of stressing the importance of complying with the 91 day rule. She said she told the plaintiff during their only telephone conversation it was her understanding that he and Hodges had reached an agreement to amend the roster. She went on to say he had replied: "That is correct." She added she told him that was satisfactory because she would proceed on that basis and obtain a private ruling from the Australian Taxation Office. She then asked him to provide her with the necessary details to enable her to make that application.
The second important piece of evidence which confirms Hodges' insistence that the plaintiff agreed to change his roster is the document exhibit 14. This was a handwritten note prepared by the plaintiff himself and sent by facsimile transmission to Ms Lim. I have already quoted the relevant extract from this document. What the plaintiff said in this passage in relation to his roster is unequivocal. In the first sentence of this passage he clearly agreed to work on a 91 day roster with immediate effect subject to a ruling by the Australian Taxation Office on whether the eight week roster would qualify him for a tax exemption. That this is the only meaning attributable to his words is reinforced by the next sentence in the same passage. This reads as follows:
"Following the ATO's response then it may or may not be required to change rosters."
In the context of the preceding sentence the plaintiff's reference to a change of rosters could only have meant a return from the 91 day roster to the original eight week roster if the Australia Taxation Office's ruling was favourable. When asked in cross‑examination to explain what he meant the defendant initially said that Leon Hodges had asked him to include this statement in the material he provided Violet Lim and that he would not have done so if he had not been asked. In re‑examination, however, he attempted to explain this passage in a different way. When asked to explain his reference to the 91 day rule he said [at p 78 of the transcript]:
"You said in your evidence that you're not saying you would immediately change to a 91‑day roster or immediately implement a 91‑day roster. What did you mean by referring to the 91‑day rule there?‑‑‑In that line there, when I spoke to Leon, we're referring to, you know, we agree to comply with the 91‑day rule basically. If tax was deemed to be necessary to be taken out, it would – being in Africa I'd have no control over that and then that would start immediately upon further discussions between them and HLB Mann Judd concerning that matter and then a ruling on the eight and four roster would be the best option.
MULLER DCJ: Don't understand.
HERRON, MR: Okay. His Honour, you've heard, doesn't understand?‑‑‑okay.
When you say you would agree that compliance with the 91‑day rule should take place forthwith?‑‑‑Yes.
Explain please what you mean by that?‑‑‑That necessarily meant that when I returned, if there was a need to take taxation out to comply with that so I didn't suffer any disadvantage of penalty later, we agreed that it would be beneficial to do that, both the CPMA and myself. Then it would not put them in a position where they have paid me but not paid tax.
MULLER: DCJ:
I've spoken to Leon and we agreed that compliance with the 91‑day rule should take place forthwith and a ruling on the ATO accepting an eight‑week on, off roster running on a two‑year contract is the best option.
HERRON: MR: Perhaps I can take it this way, your Honour. I'm conscious of not trying to lead the witness.
MULLER DCJ: Break it down.
HERRON, MR: What did you understand was the effect of the 91‑day rule if it applied?‑‑‑If it applied, I would have to pay tax.
So if it applied?‑‑‑I would pay tax.
Would you have to comply with it?‑‑‑Yes.
If you had to comply with that rule, from your point of view what were the consequences?‑‑‑The consequences would've been that CPMA would've deducted that from my wage.
Yes. So you would pay Australian tax?‑‑‑That's correct, yes.
Then you go on to say in those notes:
And a ruling on the ATO accepting an eight‑week on, four off roster running on a two‑year contract is the best option.
What did you mean by that?‑‑‑Awaiting the taxation return, the return of the ruling on the eight and four would be the best option, just to wait. Take tax out, wait and then after that, if necessary, whatever may happen transpires."
What the plaintiff seems to have said is that if the 91 day rule did apply he would just have to pay tax on his salary and await a ruling on the eight week roster. But the first sentence in the passage conveys exactly the opposite. Rather than agreeing to stay on the eight week roster and pay tax on his income the plaintiff clearly said that he agreed to work on a 91 day roster pending a decision by the Australian Taxation Office on the eight week roster and that, following a ruling, he might have to change rosters. That could only mean changing from the 91 day roster back to an eight week roster if the decision was a favourable one.
That interpretation is consistent with everything that followed. The plaintiff, despite his assertion to the contrary, continued to receive an income that was not taxed. At the same time an application was made to the Australian Taxation Office for a ruling on whether the eight week roster would attract an exemption.
It was submitted by counsel for the plaintiff that the application to the Australian Taxation Office for a ruling on the eight week roster constituted an acknowledgment that the plaintiff was still employed by the defendant on that basis. I do not accept this submission. The application for a private ruling was certainly predicated on the plaintiff working an eight week roster. It had to be made on that basis because that was the very issue the defendant wanted the tax office to address. It would not have helped for the submission to the tax office to have asserted that the plaintiff had changed to a 91 day roster at the time the application was made. That information would have been superfluous and completely irrelevant to the application that was being made. The only ruling that was sought was whether the eight week roster would attract a tax exemption.
In the end I am left with what I consider to be the unconvincing assertion of the plaintiff that he never agreed to change his roster. This was contradicted by the evidence of both Hodges and Lim and the very terms of what the plaintiff himself wrote in Exhibit 14. Both the weight of the evidence and the probabilities strongly favour an acceptance by the plaintiff of a new working arrangement. To insist, as he has done, that he never accepted any change to his roster but agreed to pay tax on his salary, pending a ruling on the issue is, I believe, both implausible and inconsistent with all the other evidence.
I am satisfied that on 27 September 2002 the plaintiff and Hodges agreed to change the details of the roster from an eight week arrangement to a 91 day commitment. I am also satisfied this alteration was allowed by cl 2.2 of the plaintiff's contract of employment. I find the plaintiff's decision to leave the site on 30 November 2002 constituted a breach of a fundamental term of his contract of employment justifying the summary termination of the contract by the defendant in accordance with cl 13.2.1 of the contract.
Alleged breach by plaintiff of other express and implied terms of contract
The defendant pleaded in the alternative that the plaintiff had breached his contract of employment by failing to act in accordance with other express and implied terms of the contract.
It was submitted that his failure to remain on site to complete repairs to the generators constituted a breach of cl 4.1 of his contract of employment which required him to work whatever reasonable hours were necessary and to meet the responsibilities and objectives of his job description or to complete specific work by set deadlines or during periods of short staffing. Although it is not really necessary for me to make a finding in relation to this allegation I do not believe the plaintiff's conduct in leaving the site necessarily constitutes a breach of this provision of the contract. This clause, in my view, was subject to the plaintiff's roster and his obligations under cl 4.1 had to be met during but not outside the period of his roster. Again everything seems to turn on the terms of his roster.
The defendant also alleged that, contrary to directions from his employer, the plaintiff breached an implied term of the agreement to exercise reasonable skill and diligence in the performance of his work. While the contract might have been subject to such an implied term the scope of that term would, in my view, be confined to the quality of the work he actually did and would not necessarily extend to a decision to leave the site when he was not entitled to.
It was also alleged that the plaintiff breached an implied term that he would perform the duties and responsibilities of power station operator as set out in his job description as and when directed by his employer. I believe there may be substance in that pleading. I think such a term meets the test in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283. I also believe his premature and unjustified departure from the site did constitute a failure to perform the duties and responsibilities of power station operator as set out in the contract and as directed by the defendant but, because of my earlier finding on the breach of the fundamental term relating to his roster, I need not reach a definite finding on this issue.
Finally, it was alleged that by disclosing internal CPMA email communications to Peter Spiley, the General Manager of AMGM, the plaintiff breached cl 11 of the agreement which prohibited him from revealing confidential information to any person. The plaintiff admitted disclosing at least two of these email exchanges with the defendant to the General Manager of AMGM. A statement by the General Manager introduced into evidence pursuant to s 79C of the Evidence Act asserted that a number of email messages were given to him by the plaintiff. I accept that the content of some of the emails included information which would not have been in the public domain. I also accept that some of the information in these emails related to defects at the power station which the defendant was not obliged to reveal to AMGM. Reference was made by counsel for the defendant to particular emails containing material that might be said to constitute an admission that the defendant would be responsible for some of the defects at the power station. Other comments made by the plaintiff in these emails were critical of some of AMGM's employees and would clearly have been embarrassing to the defendant if disclosed to AMGM. But I do not think the material disclosed in these emails was of such a confidential nature as to fall within cl 11.1 of the agreement. Much of the material relating to problems with the machinery must have been known to AMGM particularly as the Marelli technicians were at work at the site at the time of the disclosures. Some of the other comments made in the emails, although perhaps embarrassing to the defendant, were not of such a nature as to be described as confidential.
Defendant's counterclaim
The defendant's counterclaim comprises four separate heads of alleged loss: first, the cost of sending a replacement for the plaintiff to and from the site; second, the fees charged by Mann Judd for the professional services they provided in relation to the application for a private ruling; third, the fees charged by the person sent to replace the plaintiff from 30 November 2002‑16 December 2002; and finally the costs of standing down the Marelli technicians between 30 November 2002 and 2 December 2002.
Having found that the plaintiff was in breach of a fundamental term of his contract of employment the next question I have to decide is whether the alleged losses incurred by the defendant were a consequence of that breach. In Cheshire & Fifoot's Law of Contract (8th Australian edition) the learned authors state at par 23.31:
"The plaintiff has the onus of showing that the loss for which compensation is claimed was caused by the breach of contract relied on. However, if the loss in question is the apparent or likely result of the breach the onus shifts to the contract‑breaker to prove that it was not."
Having considered the defendant's four heads of loss I am not satisfied either that they are sufficiently causally connected to the plaintiff's breach or that they are not too remote to be recoverable. The issue of causation has to be determined by applying the criteria of common sense. March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 at 509. It has also been held that a sufficient causal connection will usually be established if the plaintiff would not have suffered the damage complained of but for the defendant's breach of duty. Chappel v Hart (1998) 195 CLR 232 at 269 and 282. In relation to the issue of remoteness a loss is considered too remote if the breach does not make it reasonably foreseeable. Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145.
Dealing with the various heads of loss claimed by the defendant I am not satisfied the evidence established the need to replace the plaintiff with another contractor. Counsel for the defendant submitted that when the plaintiff left the site there was no competent representative of the plaintiff at the power station to advise and direct the Marelli employees or liaise with and keep the defendant informed of developments that took place. The evidence disclosed that the plaintiff's usual replacement when he was not on site was a person employed by AMGM, not by the defendant, and that this person was in any event not qualified to do the type of work the plaintiff was required to do. It was submitted that the plaintiff was familiar with the machinery and had specific instructions to realign the generators that were being worked on by the Marelli technicians. Counsel for the defendant emphasised the amount of time the plaintiff had acknowledged he spent with the Marelli specialists assisting them with their work. Reference was also made to the amount of work the plaintiff's replacement, the person named Fenton, had to do when he later went to the site. These factors, it was suggested, demonstrated the need for the plaintiff to be replaced. In my view, however, the evidence falls short of establishing that the cost of sending a replacement contractor to the mine site was a reasonably foreseeable consequence of the plaintiff's breach. I have no reason to doubt the plaintiff's evidence that he did all he could to assist the Marelli staff. He assisted them to familiarise themselves with the machinery and organised extra labour for them to call upon. Having done what he could he said he then left them to their task. There is no evidence that he could have done more than that. The Marelli staff were the experts called in to repair the defective machinery. It is to be expected they must have known what faults they had to attend to and how the defects could be rectified. There is no evidence that the plaintiff could have assisted them in any material way. Even the process of realignment, which the plaintiff was supposed to undertake, was not the subject of any evidence. It is quite unclear whether this was simply incidental to the work the Marelli specialists had to do or whether they could undertake the realignment themselves.
There was certainly no emergency at the power station. There was no evidence of any threat to the power supply and, in one of his reports to his employer, the plaintiff confirmed that satisfactory progress was being made. In a later email sent on 25 November 2002 the plaintiff told Hodges he could understand his concern but pointed out that the conclusions would be the same whether he was on the site or not. I believe that comment is reflected by the evidence before the Court. While it might have been useful for the defendant to have its own representative on site while the repairs were undertaken by the Marelli personnel I do not believe it was really necessary. The Marelli technicians must be presumed to have known what they had to do. Issues of who was responsible for the defects could only have been resolved later when the causes of the cracking and vibration had been discovered. There was nothing the plaintiff could have done in relation to this. While the absence of a representative on the site might have led to some difficulties in communication the defendant was always able to liaise with the AMGM staff who obviously had a mutual interest in getting the machinery back into proper working order.
For these reasons I am not satisfied the expenses incurred by the defendant in sending a replacement technician to the mine site or paying his fees from 30 November 2002 ‑ 16 December 2002 are recoverable as a consequence of the plaintiff's breach.
Given that finding it follows that the costs of standing down the Marelli technicians between 30 November 2000 ‑ 2 December 2002 are also incapable of being recovered from the plaintiff. I have already said I was not satisfied on the evidence available that the Marelli technicians needed a representative of the defendant at the Power station when they did their work. They could have done what they had to do on their own. There was little evidence as to why it was necessary for the defendant to stand them down. I am not convinced there was any substantial reason for doing so. This particular claim must also fail.
The defendant has also claimed the fees charged by Mann Judd for their professional services in relation to the application for a private ruling from the Taxation Office. I accept the plaintiff agreed to the application being made and provided the material upon which it was based. The costs incurred by the defendant in making the application were to some extent wasted by the plaintiff's decision to leave the site. The defendant had to accept, however, that in a broader sense it did receive some benefit from the application. While the application was certainly personal to the plaintiff it was conceded that the results would be beneficial to the defendant in the sense that it would know what offers to make to other prospective employees to induce them to work at what was a very remote and rather forbidding location. Hodges seemed to acknowledge this in an email sent to the plaintiff on 19 November 2002 when he referred to the defendant's attempt to get a tax exemption for work on the North Mara site. Again, I am not convinced this claim constitutes a loss to be met by the plaintiff. It is too remote a consequence of the plaintiff's breach.
I find that the defendant's counterclaim must fail.
Conclusion
I would dismiss the plaintiff's claim against the defendant.
I would also dismiss the defendant's counterclaim against the plaintiff.
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