Willis v Health Communications Network Ltd - [2007] NSWCA 313

NEW SOUTH WALES COURT OF APPEAL

CITATION: Peter Willis v Health Communications Network Ltd [2007] NSWCA 313

FILE NUMBER(S):
40673/06

HEARING DATE(S): 8 October 2007

JUDGMENT DATE: 6 November 2007

PARTIES:
Peter Willis
Health Communication Network Limited

JUDGMENT OF: Mason P Tobias JA McColl JA

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): DC 4065/05

LOWER COURT JUDICIAL OFFICER: Finnane DCJ

LOWER COURT DATE OF DECISION: 26 September 2006

COUNSEL:
A: J de Meyrick
R: R Goot SC

SOLICITORS:
A: Bryan Gorman & Co, Sydney
R: Clayton Utz, Sydney

CATCHWORDS:
EMPLOYMENT LAW – Termination of employment – Whether payment in lieu of notice should include superannuation that would otherwise have been due for notice period - EMPLOYMENT LAW – Contract of employment – Whether unpublished redundancy policy impliedly incorporated into contract of employment by law - – Whether unpublished redundancy policy impliedly incorporated into contract of employment by custom - PRACTICE AND PROCEDURE – Court of Appeal – Whether supplementary submissions filed after hearing without leave can be taken into account

LEGISLATION CITED:
Superannuation Guarantee (Administration) Act 1992 (Cth)

CASES CITED:
Alexander v Standard Telephones & Cables Ltd [1991] IRLR 286
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Byrne v Australian Airlines Ltd (1995) 185 CLR 410
Carr v Finance Corporation of Australia Ltd [No 1] (1981) 147 CLR 246
Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Chapmann v Caska [2005] NSWCA 113
Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur (Australia) Ltd (1986) 160 CLR 226
In the matter of an application by the Chief Commissioner of Police (Vic) [2005] HCA 18; (2005) 79 ALJR 881
Dwyer v Commonwealth of Australia (1995) 31 ATR 48
Kirwan v Cresvale Far East Ltd (In liq) [2002] NSWCA 395
Liverpool City Council v Irwin [1977] AC 239
Reynolds v Southcorp Wines Pty Ltd [2002] FCA 712; (2002) 122 FCR 301
Riverwood International Australia Pty Ltd v McCormick [2000] FCA 889; (2000) 177 ALR 193
Scally v Southern Health & Social Services Board [1992] 1 AC 294

DECISION:
Parties directed to file written submissions within 14 days of the date of this judgment on
1) the costs of the appeal
2) the costs of litigating the superannuation issue in the District Court
3) whether any such costs should be paid on an indemnity basis

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40673/06
DC 4065/05
MASON P
TOBIAS JA
McCOLL JA
Tuesday 6 November 2007

PETER WILLIS v HEALTH COMMUNICATION NETWORK LTD

Judgment

MASON P: I agree with Tobias JA.
TOBIAS JA: On 13 April 2005 the appellant, a qualified accountant employed by the respondent as its Chief Financial Officer since 10 December 1999, was summarily dismissed and his employment terminated. Pursuant to the terms of his contract of employment he was only paid six months’ salary in lieu of notice. He thereafter pursued two claims…

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: [2007] NSWCA 313
Decision Date: 6 November 2007

CaseChat Overview and Summary

The appeal concerned a dispute between an employee, Mr Willis, and his former employer, Health Communications Network Ltd (HCN). Mr Willis had accepted employment as Chief Financial Officer in December 1999, with his terms and conditions of employment detailed in a letter dated 6 December 1999 and a separate document titled 'Terms and Conditions of Employment'. Subsequent variation letters were issued, including one dated 26 November 2002 which extended the notice period for termination to six months and allowed HCN to pay in lieu of notice. A further variation letter dated 11 January 2005 outlined a "total remuneration" package, specifying a base salary and a superannuation component. Mr Willis's employment was terminated, and he instituted proceedings in the District Court of New South Wales, claiming redundancy benefits and superannuation contributions. The primary judge rejected both claims, and Mr Willis appealed to the Court of Appeal.

The Court of Appeal was required to determine two principal legal issues. Firstly, whether an unpublished redundancy policy was impliedly incorporated into Mr Willis's contract of employment, either by law or by custom, such that he was entitled to benefits under it. Secondly, the court had to consider whether the payment in lieu of notice made by HCN to Mr Willis should have included superannuation contributions that would otherwise have been due during the notice period. The court also had to consider whether supplementary submissions filed after the hearing, without leave, could be taken into account.

The court's reasoning addressed the redundancy claim by affirming the primary judge's finding that Mr Willis was dismissed for misconduct, rather than made redundant. The court accepted the evidence that the employer's decision to terminate Mr Willis's employment was based on a belief that he was not fulfilling his duties, and that his position was not abolished. Regarding the superannuation issue, the court agreed with the primary judge that a payment in lieu of notice did not constitute "salary or wages" for the purposes of the Superannuation Guarantee (Administration) Act 1992, and therefore did not attract a compulsory employer superannuation contribution.

The Court of Appeal directed the parties to file written submissions within 14 days on the costs of the appeal, the costs of litigating the superannuation issue in the District Court, and whether any such costs should be paid on an indemnity basis.

Orders

Orders of the court

Parties directed to file written submissions within 14 days of the date of this judgment on; 1) the costs of the appeal; 2) the costs of litigating the superannuation issue in the District Court; 3) whether any such costs should be paid on an indemnity basis (Tobias JA , with Mason P and McColl JA agreeing)

Background

Background to the litigation

Accordingly, on 20 September 2005 the appellant instituted proceedings in the District Court of New South Wales by way of Statement of Liquidated Claim. The proceedings were heard by his Honour Judge Finnane QC who, on 26 September 2006, rejected each of the appellant’s claims and entered a verdict for the respondent. Pursuant to leave granted on 4 April 2006, the appellant appeals to this Court from that decision. The relevant facts On 10 December 1999 the appellant accepted an offer from the respondent to employ him as its Chief Financial Officer on the terms and conditions set out in a letter from the respondent to the appellant dated 6 December 1999 (the 1999 letter). That letter made provision, inter alia, for the appellant’s total gross remuneration, the notice each party was required to give to the other of termination of employment and certain terms with respect to the receipt by the appellant of confidential information. Finally, under the heading “Other Terms and Conditions” it provided that:“Additional terms and conditions of your employment are set out in the Company’s document ‘Terms and Conditions of Employment’ dated December 1999, a copy of which has been provided to you.If you are in agreement with the above and the enclosed Terms and Conditions, please sign and return the duplicate copy of this letter.”Under the notation “I have read and accept the enclosed Terms and Conditions of Employment”, the appellant signed a duplicate copy of the 1999 letter which he dated 10 December 1999. Following each annual review of the appellant’s remuneration, the respondent provided to the appellant a letter relating to that review setting out variations to his “contract of employment dated 6 December 1999”. Each of those variation letters provided that it should be read in conjunction with “your contract of employment dated 6th December 1999 provided that where there is any inconsistency between the two, the contents of this letter will prevail.” As a consequence of a review of the appellant’s remuneration effective 1 July 2002, the respondent wrote a variation letter to the appellant dated 26 November 2002 (the 2002 letter) in which the period of notice of termination of his employment was varied from that contained in the 1999 letter so as to provide as follows:“Notice Period on TerminationThe notice period for yourself or HCN to terminate your employment has been extended from three months to six months. In the case of termination by HCN, HCN may make payment in lieu of all or part of this period of notice at its discretion. All other terms and conditions of employment as outlined in your existing contract dated 6th December 1999, remain the same.” Of particular significance to the issues in the appeal was a variation letter dated 11 January 2005 (the 2005 letter) following the appellant’s July 2004 remuneration review and which was relevantly in the following terms:“Following the July 2004 remuneration review I wish to confirm your new remuneration details.HCN now uses a ‘total remuneration’ approach for packaging salaries and benefits.Effective 1 July 2004, you will receive a total fixed remuneration package (‘TFRP’) of $227,788.20 per annum, which is inclusive of fringe benefits taxation, or other tax or government impost payable upon any benefit taken in lieu of salary, and compulsory employer superannuation contributions in accordance with HCN’s obligations from time to time.…Your TFRP currently consists of the following breakdown:____________________________________________Base $208,980.00Superannuation (9%) $18,808.20Total (Gross) $227,788.20…HCN will contribute superannuation in accordance with the applicable superannuation legislation, to a complying superannuation fund.…Remuneration Review…All other terms and conditions of employment as outlined in your existing contract dated 6 December 1999, and subsequent letters dated 26 November 2002 and 10 October 2003 remain the same.”

Evidence

Evidence Before The Court

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Decision

Reasons for decision

The appellant also gave evidence that after the takeover and prior to his dismissal, more and more of his responsibilities had been taken over by others and that after his dismissal no-one was appointed to the position of Chief Financial Officer of the respondent. He therefore claimed that in terms of the Policy, the job which he performed had been abolished and he had therefore become “surplus”. Messrs. Bateman denied this but the primary judge did not resolve the issue. The decision of the primary judge After stating the facts in summary form, the primary judge articulated his reasons for his decision in the following paragraphs of his judgment:“13.I have no doubt that the plaintiff genuinely believes that he is entitled to benefits from the company redundancy policy. I find as a fact that before the takeover of the first defendant, it had adopted the redundancy policy contained in exhibit A and that the plaintiff was entitled to the benefits of that policy. If he had been made redundant, the plaintiff would have been entitled to the payment of redundancy benefits. However, in my opinion, he was entitled to a redundancy payment only if he could show that he was made redundant in accordance with the terms of policy.14.‘Redundancy’ is defined in the company’s policy document, to which I have already referred, as ‘termination of an employment contract by the company following the company’s decision that the job being performed by the employee is abolished and the employee is surplus’.15.What the plaintiff believes, is that many other employees were given benefits under this policy, and he also should have been given these benefits. However, the directors of the company decided to dismiss him. I accept the evidence of Dr Edmund Bateman that he decided to do this because he decided that the plaintiff was not acting accordance with his duties as an employee. He was not making the plaintiff redundant, by abolishing his position. He was dismissing the plaintiff for what he saw as misconduct.16.There is no doubt that the plaintiff believes that Dr Bateman was making him redundant, but the facts are otherwise. The action is not one for unlawful dismissal and the plaintiff is entitled to a verdict in relation to this matter only if he can show on the balance of probabilities that he was made redundant and was not paid for that redundancy. In my opinion, he was not made redundant, but was dismissed.17.His second claim is to the payment of the employer’s superannuation contribution assurance to The Superannuation Guarantee (Administration) Act, 1992.18.Dr Bateman required him to leave the premises immediately and paid him 6 months pay in lieu of notice. If he had continued to remain in the premises and been paid for six months work, the employer would have had to pay the superannuation contribution provided for under this legislation. However, that requirement extends to an obligation to pay a contribution in respect of salary or wages paid. A payment of money in lieu of notice, in my opinion, is not a payment of salary or wages. Accordingly, there the plaintiff has no legal entitlement to the payment of the superannuation contribution.”The issues on the appealThe redundancy issue

Ratio Decidendi

Legal Principle Established

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