Automatic Fire Sprinklers Pty Ltd v Watson [1946] HCA 25

The second case is Woolley v. Allen Fairhead & Sons Ltd. (2), by Atkinson J. The facts were that the employee was d by a week's notice given without the permission of the service officer and, by agreement, ceased work a day or so the expiration of the notice. A fortnight later the national ce officer gave his permission for the termination of the service, the employee successfully appealed against that decision and his statement was ultimately ordered. He sued for his wages for the

J. held that the notice was ineffective to terminate the nent, since permission had not been given and, therefore, the contract of service continued throughout and the employee entitled to wages.

ed the Regulations as attempting to prevent the unpermitted lischarge of a man from employment only by penalizing it and

as making the relationship legally infrangible. But I think that should apply the two decisions I have mentioned to the Man Regulations. No doubt points of distinction may be found en the United Kingdom Order and these Regulations. But points of distinction do not appear to affect the ratio decidendi Mackinnon and Goddard L.JJ. (1) or of Atkinson J. (2), and I

• (1) (1943) 59 T.LR., at p. 156. (2) (1946) 62 'T.L.R. 294,

tutory condition or provision on the contract. If a statute says *})

yecame liable to prosecution but the plaintiff has no claim for his H. ©. or A.

intermediate period from the time he had ceased work. -

HIGH COURT (od see no reason why in the interests of consistency of decision this Court should not follow their authority.

I am, therefore, of opinion that we should hold that the empl in the present case is entitled to salary or remuneration until the Man Power Regulations went out of operation. a

I would, therefore, answer the questions of law submitted by the Award for the opinion of the Court as follows : - c

(1) The purported dismissal referred to was ineffectual in law terminate the respondent's employment as general manager, reason of reg. 14 of the National Security (Man Power) Regulatic

McTiernan J. This appeal arises out of an award, stated in the form of a special case for the opinion of the Court, in pursuance of s. 9 (a) of the Arbitration Act 1902 (N.S.W.), upon questions of law. I do not repeat the facts found by the arbitrator and the question of law submitted by him.

As regard Question 1 (a), it is clear that the intention of reg. 14 (1) (a) is to prohibit the termination of the employment in a prote undertaking of any person employed therein, save with the prescribed

will not lend its aid to give any effect to.an act done in breach of the regulation. Such an act can have no effect upon the contractual relationship between the employer guilty of the breach and employee in respect of whose employment the breach is committed See Whiteman v. Sadler (1); Cope v. Rowlands (2). By the letter dated 29th September 1944, the appellants purported to terminate the respondent's existing employment in their undertaking. The sending of that letter was a contravention of the regulation. answer to the question, whether this purported dismissal " ineffectual in law " to terminate the respondent's employment as general manager, should in my opinion be: Yes. The arbitrator states in the special case what his award is if Question 1 (a) is answered in the affirmative. The question whether, if Question 1 (a) is thus answered, the award is right, is not submitted by the arbitrator. This award decides that the respondent ceased to be general manager on 19th September 1945 and that certain amounts are due to the respondent for salary and other remuneration respectively from 29th September 1944 to 19th September 1945 ; also a sum by way of damages for the wrongful dismissal of the respondent on 19th

(1) (1910) A.C. 514, at pp. 525, 526, (2) (1836) 2 M. & W., at p. 157 [150 ER., at p. 710].

ember 1945. The regulation having ceased to apply to the appel- ' undertaking, he was excluded from it on that date. If the ion had not been in force on 29th September 1944, the dis- of the respondent from the employment of general manager, although made in breach of the contract of employment, would have effective at common law to terminate the respondent's service

• general manager and the remedies of a servant for wrongful di would have been available to the respondent.

Tt was a term of the agreement that the respondent was to receive it as consideration for his services and the performance of spart of the agreement. The facts of the present case are peculiar. 'appears that although the appellants purported to terminate the spondent's employment as general manager, he attended their office from 29th September 1944 down to 15th September 1945 and ormed work previously done by him as general manager; the ondent did not acquiesce in his dismissal; and after 29th ptember 1944 he did not receive any payment from the appellants. If the appellants had not purported to dismiss the respondent he uld have been entitled to be paid for such attendance and work consideration which the appellants agreed to pay him for his as general manager. The termination of his employment as ] manager being illegal and void, the appellants cannot rely upon it to relieve themselves from liability to pay the respondent the salary and remuneration which the arbitrator says he awards if Question 1 (a) is answered yes.

If the respondent had not attended the undertaking after the al termination of his employment on 29th September 1944, I 10uld doubt whether the cases of George v. Mitchell & King Ltd. (1) nd | Adrema Ltd. v. Jenkinson (2) would establish that the appellants' ity to pay salary or other remuneration continued after 29th ember 1944.

In regard to Questions 1 (5) and 2, it is apparent from the terms the special case that if Question 1 (a) is answered: Yes, these tions do not arise.

Wiu1ams J. This is an appeal from the answers given by the Full reme Court of New South Wales to certain questions of law sul mitted in the form of a special case for the opinion of the Court er the Arbitration Act 1902.

From the facts stated by the arbitrator in the special case it appears by an agreement under seal made on 12th October 1938 the

1946, ed Avromatic Fire SPRINKLERS Pry. Lrp. v. Watson.

appellant companies appointed the respondent general manager of their respective businesses for a term of six years computed from 1st October 1937. Clause 8 of the agreement provided that if in the opinion of the directors of the first-named company the respondent should become unfit to act as general manager the board of directors might, in their discretion, give him one month's notice of terminatic or pay him one month's salary in lieu of notice. Clause 12 provid that in the event of his continuing in their employ (which happer after the expiration of six years the conditions of the agreeme should apply to and be binding on the parties during such contim employment, provided that either the first-named company or respondent should have the right to determine such continu employment by giving to the other three months' notice in writing. Clause 5 provided that as consideration for his services the responder should be paid £850 per annum payable weekly, and certain travellin; and entertainment expenses and annual bonuses.

By letter dated 29th June 1944 the company gave the respondent notice that the agreement would terminate at the expiration of - three months from that date. But the letter was not handed to the respondent until the following day and it was conceded before the arbitrator and he found that this letter was not therefore a proper - notice of termination within the meaning of clause 12.

On 29th September 1944 (the date on which the previous notice . if valid would have expired) the company handed the respondent a - further letter purporting to dismiss him on the ground that the directors of the company were of the opinion that he had become unfit to act as general manager, and tendering him a cheque for one month's _ salary in lieu of notice which he refused to accept. This letter stated that the termination of the agreement did not terminate hi employment with the appellants, and that until further notice his position and duties would be New South Wales sales manager at @ - salary of £10 per week. It also stated that he was given six months' - leave of absence on full pay from 3rd October. i

The arbitrator found that the directors of the company were not at the time of passing the resolution really of the opinion that the - respondent was unfit to act as general manager. Upon the whole - of the evidence before him relating to 29th September 1944 he - found as a fact that on that date each of the companies purported to - dismiss the respondent from his position of general manager, but that he did not at any time accept either of such purported dis- - missals as terminating his employment. He also found that through- _ out the period from that date to 19th September 1945 the respondent - continued to attend the joint office of the companies and was ready -

willing to perform the duties of general manager, and did per- form some of the work previously done by him as general manager, d that he maintained the attitude that his employment as general er was still subsisting ; but that the companies maintained the ude that his employment as general manager had been deter- mined on 29th September 1944 and were ready and willing to pay him the salary of £10 per week ; but he declined to accept that salary, nd in fact received no payment from the companies. The arbitrator urther found that on 19th September 1945 the companies excluded he respondent from their office, and that the respondent was on that te wrongfully dismissed from his employment as general manager under the agreement, if such employment had not been terminated n 29th September 1944. The questions of law which the arbitrator submitted for the opinion of the Court were as follows : - (1) Whether, on the facts as found by me, the purported dismissal of Watson by the companies on 29th September 1944 was ineffectual law to terminate Watson's employment as general manager, by reason of: (a) reg. 14 of the National Security (Man Power) Regula- ons, or (b) Watson's non-acceptance of the purported dismissal terminating his employment. (2) If Question 1 be answered: (a) No, (b) No, Whether the neasure of the damages to which Watson is entitled by reason of his wrongful dismissal on 29th September 1944 is limited, having regard to the facts stated in pars 7 to 16 inclusive of this case, to an amount equal to the remuneration he would have earned by the continuance of his employment for one additional day. _ 'The Supreme Court answered Question (1) in the affirmative on both grounds and it therefore became unnecessary to answer Ques-

tember 1944 to 19th September 1945 the respondent was able to e some of his duties as general manager and was always ready id willing and offered to perform all these duties completely. But

sufficient. Neither the notice of 29th June nor that of 29th Sep- tember 1944 was a valid termination of the agreement. His dismissal from the position of general manager on 29th September 1944 was therefore wrongful. The appellants were then protected undertak- ings within the meaning of the National Security (Man Power) Regulations and they continued to be so until 19th September 1945.

This no doubt explains why they did not exclude the respo from the joint office prior to this date. They evidently thought tl , if they continued to employ him in some capacity they would infringe the provisions of reg. 14. But they maintained that a 29th September 1944 the respondent was employed only as South Wales sales manager at a salary of £10 per week and th would not allow him to act as general manager. He was respect to his services in an analogous position to the vendor of go in which the property has not passed, which the purchaser wrong refuses to accept. Such a vendor can only sue for the damage which he has suffered by the refusal of the purchaser to accept the goods, So an employee Who is wrongfully dismissed can only sue for the damage which he has suffered by the employer depriving him of th right to give his services and thereby earn his remuneration, cannot continue to offer his services and sue for his remuneration a debt as and when it becomes due and payable under the terms of employment. The law is, I think, correctly stated in Halsbi Laws of England, 2nd ed., vol. 22, pp. 167-169, where the cases are collected. It is epitomized in the judgment of Erle J. in G n vy. Pocock (1). He said, "1 think that the servant cannot wait til i the expiration of the period for which he was hired, and then sue fo his whole wages on the ground of a constructive service after dis- missal. I think the true measure of damages is the loss sustained at the time of the dismissal. The servant, after dismissal, may and ought to make the best of his time ; and he may have an opportunity of turning it to advantage." In Barnsley v. Taylor (2), Lush J. said, "The . . . contract was broken by the wrongful dismissal of the respondent ; he had at that time no other cause of action except for that breach of the contract." The employer cannot discharge the contract of employment by a unilateral breach. But if he refuses to allow the employee to do his. work and earn his remuneration, the employee cannot sue for specific performance. The result is that, while the contract is not discharged, its purposes have failed. The employee is relieved from further fulfilling the obligations which he has undertaken by the contract to the employer and the contract survives only for the purpose of measuring the claims arising out of the breach ; General Billposting - Co. Ltd. v. Atkinson (3); Heyman v. Darwins Ltd. (4).

(J) (1850) 15 Q.B., at pp. 583, 584 - (3) (1909) A.C. 118. (117 F.R., at p. 580], (4) (1942) A.C, at p, 374. xi (2) (1867) 37 L.Jd. (C.L.), at p. 42.

Question (1) (0), although somewhat awkwardly expressed, ws to be addressed to the question whether the respondent would, in the circumstances, have been entitled at common law for his remuneration as general manager between 29th September 1944 d 19th September 1945, and so construed should, in my opinion, be answered in the negative. It remains to consider the position under the National Security Power) Regulations. The purpose of reg. 14 was to ensure that ted undertakings should retain an adequate staff who could be solicited and enticed away to other work. The regulation ids an employer terminating the employment of an employee 'ithout the written permission of the Director-General or to stand

hout such written permission. Regulation 14 (3a) provides that if an employee is stood down or suspended from duty otherwise than

sus ed the remuneration which would have been paid to him if had performed his duties. Regulation 16a provides that an employer can suspend an employee from duty if he has reason to believe that he has been guilty of serious misconduct. The Director- General (or on appeal, the Appeal Board) must then decide whether the suspension should be confirmed or be removed unconditionally or be removed but the person suspended should be employed in his former position or in some lesser position and the date from which and e conditions on which (including loss or partial loss of wages or pay for the whole or portion of the period of suspension) he should be so employed. If the suspension is confirmed the employment of the person suspended is deemed to have been terminated on the date on which he was suspended. If the suspension is removed uncon- ditionally the employer must pay the person suspended the wages which he was deprived during the period of his suspension. _ Regulation 14 therefore makes it illegal and void for the employer employee to terminate the relationship of employer and employee without permission. Regulation 16a gives an absolute right to the "Payment of wages in respect of the period of suspension to an employee who is lawfully suspended from work under reg. 16a but whose suspension is removed unconditionally, and a conditional tight to an employee whose suspension is removed subject to con- ditions. Regulation 14 (3a) gives an absolute right to the payment

• of wages in respect of the period of suspension to an employee who is stood down or suspended from duty otherwise than in pursuance

of reg. 16a. Regulation 14 does not, like the corresponding En, Essential Work Order, give an express statutory right to the ment of wages whilst the employment continues and has not be lawfully terminated with the consent of the Director-General. an undertaking was protected because it was engaged on work of national importance and employees were compelled to remain in the employment and forbidden to enlist because their services we required for this work. The whole basis of the Regulations is th

employer and employee must continue to exist. The exp provision for the payment of wages where the employment is su pended necessarily implies a right to such payment where an empl

terminate or change his employment without permission, so that unless he is entitled to his remuneration he would starve. I

can repudiate what he has agreed to do, but he cannot repudiate a statutory duty such as that imposed by the order, claiming that is on the same level as a term of a contract."

The ordinary principle is that, in the absence of a sufficient indication of intention to the contrary, a transaction which is made illegal by statute is void. But the statute may indicate, either expressly or by implication, that it is not intended that the illegality _ shall avoid the transaction, but only that the wrongdoer shall incur some punishment. It was submitted that an employer in a protected - undertaking who illegally dismissed an employee would incur - punishment, but that the employee would be limited to the same - remedies as he would be in the case of wrongful dismissal. But there is no indication either express or implied in the Regulations that the attempt to dismiss the employee would not be void. The indications - of intention are all to the contrary. Even if the employer purported - to terminate the employment without permission, the employee could not without permission accept such termination as a breach" of the contract of employment. He would still have to offer his services to the employer and could not lawfully accept employment - elsewhere. Any attempt by the employer or employee to repudiate the employment without permission is avoided by the Regulations. In George v. Mitchell & King Ltd. (2), Goddard L.J. said in reference to the English Essential Work Order : " It seems to me that the Order imposes a statutory condition or provision on the contract. If a statute says that a person shall not terminate a contract except

(1) (1946) 62 T.LR., at p, 295. (2) (1943) 59 T.LR., at p, 156.

ith the permission of a third person, in my opinion it follows that he is incapable of terminating it without that permission. If he s to employ the person he commits an offence, but the contract ot terminated." The same view of the effect of the English order s again taken by the Court of Appeal in Marshall v. English ectric Co. Ltd. (1) and Hivac Ltd. v. Park Royal Scientific Instru- ents Ltd. (2). The decisions in Sputz v. Broadway Engineering Co. Ltd. (3), and Trussed Concrete Steel Co. Ltd. v. Green (4), and Alexander Tredegar Iron & Coal Co. Ltd. (5) are based on the same assump- In the last-mentioned case Lord Simonds said (of a master) : - he to be responsible for the acts of those servants of whom he annot, without permission of the national service officer, be rid, but rest under a new responsibility to his own servants because they cannot, if they would, be rid of him ?" (6). 'The attempted repudiation by the appellants of the agreement rith the respondent on 29th September 1944 without the written ssion of the Director-General was therefore illegal and void erreg. 14. It was equally a breach of the regulation and therefore and void to attempt to demote him to the position of New South Wales sales manager without this permission (Powell Duffryn r. Rhodes (7) ). In my opinion Question (1) (a) should be answered in the affirma-

Order of the Supreme Court varied by substituting for the words " on both grounds" the words "on ground (a)." Otherwise appeal dis- missed with costs.

_ Solicitors for the appellants, Laurence & Laurence.

(2) (1946) 62 T.L.R. 231. (6) (1945) A.C., at p. 302.

(8) (1944) 171 LT. 50. (7) (1946) 62 T.L.R, 441. (4) (1945) 174 L-. 122.