Day v Myer Stores Ltd

Federal Court of Australia|2000-04-07|Before: Kenny J

REASONS FOR JUDGMENT 1 On 24 November 1999, the applicant, Catherine Day, filed an application in this Court seeking relief for alleged breaches of a contract of employment with the respondent, Myer Stores Limited ("Myer") and associated claims under the Trade Practices Act 1974 (Cth) ("the Act"). The application and the accompanying statement of claim were amended in January this year. Before the Court is a motion by Myer for the dismissal or strike out of the trade practices claims, alternatively, for transfer of the whole matter to the County Court or the Supreme Court of the State. The motion is supported by affidavits of Paul Michael O'Grady sworn 21 December 1999, and 7 and 29 March 2000.

background facts 2 By her amended statement of claim, Ms Day alleges the following facts. 3 Myer had employed her for a period of approximately twelve years prior to the events in 1999 giving rise to this litigation. Pursuant to an agreement made in March 1998, Ms Day took up a position as Network Store Manager at Myer's central retail location in Melbourne. In order to do so, she relocated herself and her family from Queensland. She was forty-seven years old at the time the agreement was made. 4 In February 1999, Myer began conducting psychometric evaluations of its staff. Ms Day was evaluated on 12 February 1999. According to the amended statement of claim, the process of evaluation was flawed and the act of evaluation constituted a breach of implied conditions in the employment contract. On or about 19 March 1999, a Myer representative informed Ms Day that she was to assume the position of Joint Network Company Store Manager at Knox City and requested her again to relocate. In view of the relative size and significance of the stores, Ms Day viewed the proposed move as a demotion, though her remuneration remained unchanged. By her amended statement of claim, Ms Day claims that the "primary reason behind the decision to relocate and demote [her] was the results of the psychometric evaluation". Following a number of conversations with Myer representatives, Ms Day was ultimately directed, by a letter dated 21 April 1999, to report for duty at Knox City on 26 April 1999 or risk termination. She did not comply with the request, viewing it as a breach of her employment contract. Her employment was terminated by a letter dated 3 May 1999.

the trade practices claims 5 The only federal matters pleaded are alleged violations of ss 51AA and 52 of the Act. These claims are founded upon two letters sent by Myer to Ms Day. The first letter, dated 22 December 1998, confirmed changes to her vehicle allocation allowance. The second paragraph of the letter reads: Although your position is as stated above [Network Store Manager], the Company may, by agreement, require that you perform other duties in line with your skills and competencies. You may also be required to move to another suitable or comparable role that is deemed to be reasonable. Ms Day signed the letter on 9 January 1999. She claims that the above statement, which she refers to as a relocation clause, constituted a surreptitious alteration of the substance of her employment contract under the guise of a letter purporting only to alter the terms of her vehicle allowance. In her amended statement of claim, she states that Myer, by "attempting to insert the relocation clause without advising [her] that such a clause may be relied upon by [Myer] for the purpose of demoting and then terminating [her] employment", breached ss 51AA and 52 of the Act. Ms Day alleges that the insertion of the clause is unconscionable, in light of her special disadvantage in relation to Myer stemming from "an absence of any reasonable degree of equality between the parties" as well as a "relationship of trust and confidence" between the parties. She further alleges that the letter was "misleading or deceptive or was likely to mislead or deceive" in breach of s 52 of the Act. She claims that, for purposes of the Act, the representations contained in the letter were "conduct in trade or commerce". 6 The second letter, dated 19 March 1999, purportedly confirming details of Ms Day's transfer to Knox City, contained the following clause: Termination for whatever reasons apart from reasons which constitute summary dismissal (which may occur without notice), can be effected by either party giving one month's notice in writing to the other party, or by the payment of one month's base compensation in lieu of notice. Again, Ms Day claims that this clause, which she refers to as a termination clause, was inserted surreptitiously "for the purpose of avoiding payment in lieu of reasonable notice upon the termination of [her] employment with [Myer]" that, presumably, would otherwise have been required under existing contractual arrangements between the parties. Ms Day claims that she did not sign or otherwise accept this second letter; and, in any event, that it too constitutes a breach of ss 51AA and 52 of the Act. 7 The relief sought by Ms Day includes a claim for damages in the amount of $1,440,000 for loss of remuneration until retirement at age 60, as well as declarations that the relocation and termination clauses at issue are void ab initio and other relief. 8 Myer submits that the application and amended statement of claim assert what is essentially a wrongful termination of employment claim sounding in contract. In written submissions, it says that the trade practices claims are "artificially pleaded in order to justify the Court's jurisdiction". It also contends that these claims fail at the most basic level because the 22 December 1998 and 19 March 1999 letters do not amount to conduct "in trade or commerce", since they were internal communications between an employer and one of its employees. Further, Myer says that there is no tenable basis for the proposition that Ms Day was relevantly under any special disadvantage, or that Myer was under any duty to point out the import or potential use of the so-called relocation and termination clauses. Myer claims that, in any event, the termination clause in the March 1999 letter is irrelevant, because Myer disclaims any reliance upon the letter.

motion to transfer 9 I deal first with Myer's motion to transfer. Subsections 86A(1) and (2) of the Act provide: (1) Where: (a) a civil proceeding instituted (whether before or after the commencement of this section) by a person other than the Minister or the Commission is pending in the Federal Court; and (b) a matter for determination in the proceeding arose under Part IVA, IVB or Division 1, 1A or 1AA of Part V; the Federal Court may, subject to subsection (2), upon the application of a party or of the Federal Court's own motion, transfer to a court of a State or Territory the matter referred to in paragraph (b) and may also transfer to that court any other matter for determination in the proceeding. (2) The Federal Court shall not transfer a matter to another court under subsection (1) unless the other court has power to grant the remedies sought before the Federal Court in the matter and it appears to the Federal Court that: (a) the matter arises out of or is related to a proceeding that is pending in the other court; or (b) it is otherwise in the interests of justice that the matter be determined by the other court. Cf Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth), ss 5 and 10. The federal matters raised for determination in this proceeding arise under Part IVA and Part V of the Act. Subject to the jurisdictional limit on the County Court (see ss 3(1), 37(2)(a)), the State Supreme and County Courts have jurisdiction concurrent with this Court over these federal matters: s 86 of the Act and Kinna v National Australia Bank Ltd (1988) 81 ALR 410. The critical question on this application is whether it is "in the interests of justice" that a court other than this Court determines the matter.

Conduct occurring "in trade or commerce" 10 One relevant consideration is, so Myer submits, that there is a real doubt as to whether the present case can raise the alleged federal matters at all. There is a divergence of opinion in this Court as to whether conduct occurring in the course of negotiations for terms of employment, whether with a present or prospective employee, can constitute conduct "in trade or commerce" for the purposes of ss 51AA and 52 of the Act. On one hand, Wilcox J expressed the view, on a strike-out application in Barto v GPR Management Services Pty Ltd (1991) 33 FCR 389 at 394, that such conduct potentially falls within s 52 (and presumably s 51AA). His Honour held that the making of such a contract was "part of the total activities in trade or commerce of the corporation", and as such was "intrinsically commercial conduct." His Honour further held that there was no relevant distinction between negotiations for an initial contract and negotiations for variance of an existing agreement. The approach in Barto has been followed in some subsequent cases: see, e.g., Saad v TWT Ltd [1995] AILR 4208 and Chaplin v Birdogan (1998) 146 FLR 243. 11 On the other hand, in Martin v Tasmania Development & Resources (1999) 163 ALR 79 at 97-8 and Mulcahy v Hydro-Electric Commission (1998) 85 FCR 170, aff (1998) 85 FCR 248, at 212, Heerey J took the opposite position, holding that employment negotiations are essentially "internal affairs" of the corporation. His Honour relied particularly on the High Court's decision in Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 592. In that case, Mason CJ and Deane, Dawson and Gaudron JJ held at 603-4 that: [I]t is plain that s 52 was not intended to extend to all conduct, regardless of its nature, in which a corporation might engage in the course of, or for the purposes of, its overall trading or commercial business. … What the section is concerned with is the conduct of a corporation towards persons, be they consumers or not, with whom it … has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character. Weinberg J made a thorough review of the differing approaches in McCormick v Riverwood International (Australia) Pty Ltd (1999) 167 ALR 689 at 692-696, although his Honour ultimately held that, in the circumstances of that case, it was unnecessary to express a concluded view on the issue. I too express no concluded view. Counsel for Myer further submitted that even if the view expressed by Wilcox J in Barto were preferred, the conduct constituted by the letters of 22 December 1998 and 19 March 1999 could not amount to conduct "in trade and commerce" because the conduct did not have the requisite trading or commercial character. For the purposes of Myer's motion to transfer, it is enough to note that there is real doubt as to whether the case made by Ms Day can raise a federal matter of the kind alleged in the amended statement of claim.

Essentially a claim for damages for breach of contract 12 In any event, I accept that the case as pleaded by Ms Day is, as Myer submitted, essentially one for damages for breach of contract over which the Court has no jurisdiction apart from its accrued jurisdiction. This claim is, so it seems to me, the critical one. Whilst the amended statement of claim includes claims for declaratory relief and damages pursuant to s 87 and s 82 of the Act, those claims are at best peripheral to the common law claim for damages. 13 Take, for example, the claim for a declaration that the termination clause is void ab initio. Counsel for Myer stated at the hearing of this motion that the company did not rely on the termination clause in the March 1999 letter as justifying the termination of Ms Day's employment. (This position had earlier been maintained in written submissions, in an affidavit sworn on the company's behalf in these proceedings, and in correspondence between the parties' solicitors prior to amendment of the statement of claim.) Consequently, unless Myer seeks to alter its position (a course Ms Day would doubtless oppose), the claim for declaratory relief in respect of the termination clause in that letter appears to be of little practical moment. 14 There are, as counsel for Myer pointed out, other deficiencies in the pleading of the trade practices claims. For reasons stated below, I note only those that indicate the claims were not central to Ms Day's complaint. Thus, the amended statement of claim did not allege that Ms Day had signed the December 1998 letter containing the so-called relocation clause because Myer had misled her in some way. Nor was there any pleading to the effect that she had in some way relied upon some (unpleaded) representations made by the company in this regard. Further, as already noted, in her amended statement of claim, Ms Day claims that the primary reason for her demotion was the results of the psychometric evaluation conducted on 12 February 1999. Yet the letter containing the relocation clause was dated 22 December 1998, which was well before the evaluation. Without more, the allegation made in pleading the trade practices claim, that the clause was inserted for the purpose of enabling the company to demote her and to terminate her employment, would appear to be in the nature of an imperfect after-thought. 15 The same may be said of Ms Day's claim for damages pursuant to s 82 of the Act: it too would appear to add little to her common law claim for damages. The amended statement of claim includes an allegation that she suffered loss and damage by reason of the alleged contractual breaches. The particulars, though sparse, accord with a breach of that nature. Nothing is alleged in the pleading about loss and damage sustained by reason of the alleged breaches of the Act. 16 The above observations on the amended statement of claim make plain enough the auxiliary nature of the trade practices claims. Counsel for Myer submitted that the so-called trade practices claims were not properly included in a statement of claim in any event and ought to be pleaded, if at all, by way of reply to Myer's defence. Whilst noting that the submission had some force with respect to some claims, it is unnecessary to deal with this matter any further. 17 Another matter which, so counsel for Myer submitted, was relevant to the question of transfer was the likely quantum of any award of damages. Myer referred to O 62 r 36A of the Federal Court Rules which operates to reduce by a third the allowable costs in a case where a party is awarded judgment for less than $100,000 on a claim. Myer submitted that there was a real chance that the rule might apply to this case. Although Ms Day particularised damages in an amount of $1,440,000, her solicitors initially failed to respond to Myer's request, in December 1999, for information about her current employment or remuneration arrangements. In response to a further request for this information in March 2000, her solicitors said: We refer to your letter dated 14 March 2000 requesting confirmation of Ms Day's current employment and current remuneration arrangements. We have written to our client requesting her employment details and will make these available at the appropriate time. At the hearing of the motion, counsel for Ms Day conceded that she is now employed, though he was unable to give any information about her level of remuneration. Under her contract with Myer, she was in receipt of a total remuneration package of $120,000 per annum. Ms Day is, of course, under a duty to mitigate her alleged loss, including by seeking new employment. That it seems she has done to some extent. If she prevails, her recovery for lost wages will be limited by the fact that she has resumed employment. Bearing in mind her level of remuneration with Myer, the fact that she has in fact found new employment, and her failure, notwithstanding Myer's requests, to provide information as to when she resumed employment and her current remuneration package, I infer that the quantum of her loss is considerably less than that presently particularised in the amended statement of claim. Without expressing any settled view, on the scanty information before me, it seems likely that Ms Day's claim should properly lie within the jurisdictional limit of the State's County Court (namely, $200,000). As Northrop J said in Kinna at 415: It would need a strong case to show that the interests of justice require litigants to be made liable to costs at a higher rate for the determination of matters which are within the jurisdiction of a court of record of the standing of the County Court and where the liability for costs are at a lower rate than in the Federal Court. I am unable to accept that, as Ms Day submits, there are "no benefits in transferring this proceeding to a State court". Further, I accept that in such a case as this there is no preference to be given to a hearing in this Court on account of the fact that the applicant chose to institute proceedings in it: see Bankinvest AG v Seabrook (1988) 90 ALR 407 at 421 and Overall v Permanent Trustee Co Ltd [1999] FCA 1385.

sufficiency of the trade practices claims 18 As I have indicated, Myer pointed to other deficiencies in the amended statement of claim. It submitted, for example, that, for the purposes of the s 51AA pleadings, there was no relevant special disadvantage that could lead to a finding of unconscionability under the Act. In particular, counsel for Myer referred to the observations of Heerey J in Mulcahy at 243: see also Garcia v National Australia Bank Ltd (1998) 155 ALR 614 at 619-620. There may be merit in this submission, but, in light of the conclusion I have reached as to the desirability of transferring the proceedings, I express no definitive view. Whether or not the applicant's trade practices claims raise an arguable case sufficient to withstand a strike-out application is, in my view, a matter for the court that is ultimately to decide the case.

disposition 19 In all the circumstances it appears to me that it is in the interests of justice that the matters in this proceeding be transferred to the appropriate State court. Accordingly, I would grant the motion. 20 As I have indicated, it seems to me likely (at least on what is before me) that Ms Day's claim properly lies within the jurisdictional limit of the County Court (namely, $200,000). But as we have seen, an amount of $1,440,000 is mentioned in her amended statement of claim. The County Court Act 1958 (Vic) operates to exclude from the jurisdiction of that Court claims for amounts in excess of the jurisdictional limit (where jurisdiction is, as in a case of this kind, limited) in the absence of the consent in writing of the parties: see ss 3 and 37(2)(a) of the County Court Act. As the pleadings presently stand, it would not be appropriate for me to transfer the proceeding to the County Court, even though that is, so it seems to me, the likely proper venue. The alternative is the State Supreme Court. At the hearing of the motion, counsel for both parties indicated that they might reach some agreement about the appropriate forum should I conclude transfer is appropriate. I would give the parties the opportunity to do so. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.

Associate: Dated: 7 April 2000 Counsel for the Applicant: Mr A McNab

Trade Practices Act 1974(Cth)

Cf Jurisdiction of Courts (Cross-Vesting) Act 1987(Cth)

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