On 8 December 2014 I gave judgment in this matter: see Mitchell-Innes v Willis Australia Group Services Pty Ltd (No 2) [2014] NSWDC 250. In the course of that decision I stated at [178]:
"Although the parties have given evidence on the question of damages, the submissions on that aspect of the claim were necessarily general. It may be that my calculations are to some extent erroneous. For this reason, I will defer entry of the orders for two weeks to enable any party to make an application in respect of any error. If an application is filed, entry of judgment will be further deferred until the application is resolved."
Orders (1), (2), (4) and (5) made in the judgment were in the following terms:
"The orders of the Court are:
(1) Judgment in favour of the plaintiff against the first and second defendants in the sum of $296,650.75.
(2) Dismiss the cross-claim.
…
(4) Stay the entry of order (1) for two weeks, and thereafter until further order in the event that an application is made to correct an error in the calculation of the quantum of damages.
(5) Stay entry of order (3) for two weeks, and thereafter until further order in the event that an application is made in respect of the proper costs order."
[2]
QUANTUM
The defendants ("Willis") applied pursuant to order (4). They sought that the damages (excluding interest) be reduced from $265,895.01 to $135,524.14 and that interest also be reduced. The submitted bases for the substantial reduction in damages are that damages in the period to 31 July 2013 have not been reduced to reflect the value of the chance, and that no deduction has been made to reflect the vicissitudes of life.
The judgment stated at [138]-[141]:
"138 Doing the best I can, and bearing all these matters in mind, I have assessed Mr Mitchell-Innes as having a 60% chance of remaining in employment for a further approximately eight and a half months without being given notice until 31 July 2013.
139 After 31 July 2013 I have assessed Mr Mitchell-Innes' prospects of not being given notice as declining below 50%, and declining with time. There is also the prospect that over time his present employment would become as valuable as his employment with Willis would have been. The base salary differential is small, and bonus arrangements and prospects for the future with his new employer, and with Willis, grow more uncertain the further one attempts to peer into the future.
140 In these circumstances, I propose to assess Mr Mitchell-Innes' damages as if he was given notice on 31 July 2013. His employment would thus cease on 31 January 2014. Accordingly, he, on this approach, would be awarded 100% of the anticipated benefits until 31 July 2013, 100% of the anticipated benefits that would accrue to a person on notice in the period 1 August 2013 to 31 January 2014 and none of the anticipated benefits thereafter.
141 While this exaggerates the loss until 31 July 2013, it understates the loss thereafter and in my view fairly calculates his prospects of lost benefits in the future. It also fairly represents what I assess to be the point where the likelihood of receiving notice of termination exceeds the likelihood of not receiving notice, and also represents the midpoint in the assessment of the declining loss over time. There is some artificiality in the date, but assessment of future loss is not an exact science, and in my view the date represents the best assessment the Court can do on the evidence available."
Willis submits that the principal amount of damages awarded, $265,895.01, should be:
1. reduced by 40% to reflect the finding in [138] that the chance of Mr Mitchell‑Innes remaining in employment until 30 July 2013 was 60%; and
2. further reduced, by 15% of the figure resulting from the 40% reduction for the vicissitudes of life.
It might be doubted whether these amounts involve "an error in the calculation of the quantum of damages" rather than a submitted error in the assessment of the quantum of damages. However, as judgment was not entered and opposition to the application being heard (as distinct from its merits) was only faintly pressed if at all, I allowed the application to proceed.
I do not accept the proposition that damages should be reduced by 40%. To do so would not compensate Mr Mitchell‑Innes at all for the lost benefits that he would have received had his employment been terminated by notice after 31 July 2013. I assessed that chance as "declining below 50%, and declining with time" but nevertheless it was a lost chance of value that should be factored into the calculation. To do so is to make an "allowance for possible greater…earnings": see Tszyu v FightVision Pty Ltd & Anor; Fightvision Pty Ltd v Onisforou & Ors [1999] NSWCA 323 at [143]. As stated by me in different words in Mitchell‑Innes (No 2) at [128], while causation of damages is based upon proof on the balance of probabilities, "an assessment of whether the chance which is said to have been lost had a value is to be made upon the possibilities or probabilities of the case" (Daniels v Anderson (1995) 37 NSWLR 438 at [531] quoted in Tszyu at [139]).
Willis also referred to Walker v Citigroup Global Markets Australia Pty Limited (formerly known as Salomon Smith Barney Australia Securities Pty Limited) [2006] FCAFC 101 at [84]:
"Counsel for Walker has submitted that it should be found that Walker would have remained in employment until 30 June 2003 at a level of remuneration, including bonuses, comparable with employees of a similar rank but that a 25% discount be applied to take account of the possibility of earlier termination for one reason or another. We are satisfied that that is a proper approach to the assessment of damages. It is consistent with that of this Court in Amann Aviation Pty Ltd v Commonwealth (1990) 22 FCR 527, with the High Court in the appeal from that decision (Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64) and with the New South Wales Court of Appeal in TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 per Hope JA at 155G-156C."
Reference was also made to [80] which read:
"We agree that the period to be considered should end at 30 June 2003. By 1 January 1999, Walker would have occupied a position of some prominence with NatWest for many months. On the primary judge's findings, it is likely that he would have performed his duties well. It can be assumed that he would have continued to competently perform his duties which, by then, would have involved a promotion to a Director of Research. There is no basis for thinking that Walker would have left for greener pastures prior to 30 June 2003."
Willis submitted that these passages, in particular at [84], required a determination on the balance of probabilities of the date until which the wrongfully terminated employee would have remained in employment and a discount to take account of earlier termination.
I do not think that these passages are authority for such a requirement. Rather the use of the indefinite article in "a proper approach" (in [84]), the reference to the approach being "consistent with" authority in [84], and the indication in [80] and [84] that the Court accepted a date proffered by counsel for Walker rather than independently determining a date speak against this approach being mandatory.
Of course calculation of the loss must bear in mind the particular circumstances of the case including the provisions of the contract. That also suggests that there is not only one unique approach applicable to every assessment.
I am not persuaded that there was an error in the approach I adopted at [141] of Mitchell‑Innes (No 2) or that the finding at [138] in Mitchell‑Innes (No 2) in the context of [139] to [141] required a reduction of damages.
In respect to vicissitudes, Willis referred to Walker at [79] as authority supporting such a deduction. That paragraph reads:
"The objective of the award of damages for breach of contract is to place the innocent party in the position it would have been in if the contract had been performed, so far as money can do so. We see no difficulty in making the assessment of damages based upon the findings of primary fact and having regard to uncontested facts. The damages up to 31 December 1998 are straightforward, being the appropriate proportion of the agreed annual salary, together with the guaranteed bonus. Walker lived through the period. There is no occasion for any deduction for the vicissitudes of life. Thereafter, an assessment needs to be made as to the chances of termination by either party." [Underlining added.]
Likewise, Mr Mitchell‑Innes also lived well beyond the period for which damages were calculated in the earlier judgment and so "an assessment needs to be made as to the chances of termination by either party". Willis raised the possibility of termination resulting from resignation by Mr Mitchell‑Innes, perhaps to retire or engage in a less demanding job, or for misconduct on his part. None of these matters were raised at the hearing nor were there any questions asked of Mr Mitchell‑Innes in respect of them. Further, Mr Mitchell‑Innes, soon after his termination by Willis, obtained a similar position in the industry with a new employer and so far, as the evidence indicated, continued to be so employed. There was no other suggestion of non‑alcohol related misconduct in his eight and a half years employment with Willis and no issue of sickness. The question of alcohol related misconduct has been considered in the judgment in Mitchell‑Innes (No 2) at [136].
I do not think any deduction should be made for fanciful possibilities, such as that Mr Mitchell‑Innes would have resigned to take a similar job at a lower pay, especially when his substantial bonuses were becoming due. I sought to bear in mind all reasonable possibilities in adopting the methodology stated at [140] ‑ [141] although the matters in [129] ‑ [139] of Mitchell‑Innes (No 2) do not explicitly identify every possibility that can be surmised.
For these reasons, I decline to make any changes to the decision already made in respect of damages.
Willis also provided written submissions asserting a small error in the calculation of interest. The Willis methodology for calculating interest was not identified and the matter was not raised as an error in oral submissions. After repeated checks I could identify no error in the interest calculation and so I do not propose to amend it.
Willis also submitted that there were two errors in the calculation of the value of long service leave. The first, which I accept, operates to increase the damages. The second alleged error was accepted by Willis in oral submissions itself to contain an error in relation to the proper meaning of "ordinary pay" under the Act. The term "ordinary pay" directed attention to the 12‑month period before employment would have concluded, a period of 365 days in this case, not a period including leap years as originally submitted by Willis.
Thus, the only error identified by Willis would operate to increase damages by a small amount, an increase that was not sought by Mr Mitchell‑Innes, and, accordingly, I do not propose to amend the judgment in respect of it.
[3]
COSTS
Mr Mitchell‑Innes sought an order for indemnity costs from and including 23 May 2014, the day following the date of an offer of compromise. The only opposition to this order was that if damages were reduced to a figure below $220,000, the amount of the offer of compromise, then the rules would not provide for such an order. Willis agreed with Mr Mitchell‑Innes that if damages remained at or above this level, the orders sought by Mr Mitchell‑Innes should be awarded and that there was no reason for the Court to order otherwise than in accordance with r 42.14(2) of the Uniform Civil Procedure Rules 2005.
As the quantum of damages remains unchanged at $296,650.75, Mr Mitchell‑Innes is entitled to indemnity costs as sought in accordance with that rule.
[4]
ORDERS
Accordingly, the orders of the Court are:
1. Costs of the proceedings awarded in favour of the plaintiff in order 3 on 8 December 2014 (see Mitchell-Innes v Willis Australia Group Services Pty Ltd (No 2) [2014] NSWDC 250 at [183(3)] to be assessed on an indemnity basis from 11am on 23 May 2014 up to and including today.
2. Dismiss the application of the defendants to vary the calculation of quantum of damages.
3. Order that the stays referred to in orders 4 and 5 on 8 December 2014 (see Mitchell-Innes v Willis Australia Group Services Pty Ltd (No 2) [2014] NSWDC 250 at [183(4) and (5)]) are hereby terminated.
[5]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 05 March 2015