Tullett Prebon (Australia) Pty Ltd v Purcell - [2009] NSWSC 1079

CITATION: Tullett Prebon (Australia) Pty Limited v Purcell [2009] NSWSC 1079

HEARING DATE(S): 9 September 2009

JUDGMENT DATE :
9 October 2009

JURISDICTION: Equity Division

JUDGMENT OF: Ward J

DECISION: Judgment for the plaintiff

CATCHWORDS: EMPLOYMENT LAW - the contract of service and rights, duties and liabilities as between employer and employee - discharge and breach - contract of employment between plaintiff employer and defendant employee subsisted but employment relationship did not - defendant failed to respond to a direction by the plaintiff to attend for work - plaintiff purported to terminate contract and claim debt under liquidated damages clause - whether plaintiff entitled to terminate for breach or repudiation - whether plaintiff’s conduct in previous proceedings had waived right to issue direction or rendered present proceedings an abuse of process - held that plaintiff entitled to terminate contract - plaintiff had not waived right and present proceedings not an abuse of process - CONTRACTS - general contractual principles - construction and interpretation of contracts - penalties and liquidated damages - liquidated damages calculated by multiplying half of average monthly brokerage by number of months remaining in contract with minimum fixed term - whether clause unenforceable as a penalty - whether a genuine pre-estimate of loss - whether out of all proportion to damage likely to be suffered - held that clause not a penalty - clause was a genuine pre-estimate of loss - not out of all proportion to damage likely to be suffered

CATEGORY: Principal judgment

CASES CITED: Alcatel Australia Limited v Scarcella (1998) 44 NSWLR 349
Australian National Airlines Commission v Robinson [1977] VR 87
Automatic Fire Sprinklers Pty Limited v Watson (1946) 72 CLR 435
Bechaz v Mariah Hovercraft Australia Pty Limited [2005] AIRC 252
Byrne v Australian Airlines Limited (1995) 185 CLR 410
Consolidated Press Limited v Thompson (1952) 52 SR (NSW) 75
Dunlop Pneumatic Tyres Pty Limited v New Garage & Motor Co Limited [1915] AC 79
Eastwood v Magnox Electric plc [2005] 1 AC 503
Foran v Wight (1988) 168 CLR 385
Gunton v Richmond-on-Thames London Borough Council [1981] 1 Ch 448
Harrison v P & T Tube Mills Pty Limited [2009] FCA 220
Koompahtoo Local Aboriginal Council v Sanpine (2007) 233 CLR 115
Laws v London Chronicle (Indicator Newspapers) Limited [1959] 1 WLR 698
Murray v Leisureplay plc [2005] EWCA Civ 963
Pastrycooks v Gartrell White (No 3) (1990) 35 IR 70
Peter Turnbull & Co Limited v Mundus Trading Co (Australasia) Pty Limited (1954) 90 CLR 235
R v Dowling Island Stevedoring and Lighterage Co Limited
Ex parte Halliday & Sullivan (1938) 60 CLR 601
Rigby v Ferodo Limited [1988] ICR 29
Ringrow Pty Limited v BP Australia Pty Limited (2005) 224 CLR 656
Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney (2007) 69 NSWLR 198
Sargent v ASL Developments (1974) 131 CLR 634
Thomas Marshall (Exports) Limited v Guinle [1979] Ch 227
Tullett Prebon (Australia) Pty Ltd v Simon Purcell [2008] NSWSC 437
Tullett…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] NSWSC 1079
Decision Date: 9 October 2009

CaseChat Overview and Summary

Tullett Prebon (Australia) Pty Ltd, an employer, brought proceedings against Purcell, an employee, to claim outstanding debt under a liquidated damages clause in their employment contract. The Federal Circuit Court of Australia was tasked with determining whether the employer was entitled to terminate the employment contract for the employee's failure to respond to a direction to attend for work and whether the employer's conduct in previous proceedings had waived their right to issue such direction or rendered the current proceedings an abuse of process.

The central legal issue was whether the employer was justified in terminating the employment contract for the employee's breach of contract or repudiation. Additionally, the court needed to determine if the employer's conduct in previous proceedings had waived their right to issue a direction to attend for work or rendered the present proceedings an abuse of process. Another issue was whether the liquidated damages clause in the contract was enforceable as a genuine pre-estimate of loss or constituted a penalty.

The court held that the employer was entitled to terminate the employment contract as the employee failed to respond to a direction to attend for work. The employer had not waived their right to issue such direction, and the present proceedings were not an abuse of process. Regarding the liquidated damages clause, the court found that it was not a penalty but a genuine pre-estimate of loss and not out of proportion to the damage likely to be suffered. The clause was calculated by multiplying half of the average monthly brokerage by the number of months remaining in the contract, with a minimum fixed term.

The court ruled in favour of the employer, ordering the employee to pay the outstanding debt under the liquidated damages clause. The decision highlights the importance of adhering to contractual obligations and the enforceability of liquidated damages clauses in employment contracts.

Orders