It is part of the process of construction for the judge to come to a view about which of those meanings is most likely to be understood by a reasonable person in the position of the parties. The grammatical structure of the sentence in which the disputed phrase occurs is not something that is indisputable and apparent, and thus capable of providing a firm starting point for the process of construction. Rather, the grammatical structure is something that comes to be understood as part of the process of construction."
24In that case the Court was required to examine the meaning to be given to the phrase [i]f the employee ceases employment with Macquarie". Macfarlan JA said this about that expression at [13] as follows:
"[13] I agree with the orders proposed by Whealy JA and with the reasons that he gives. In particular, I agree that the condition '[i]f the employee ceases employment with Macquarie' did not require the employee to have brought about the cessation of employment. In its ordinary meaning the phrase is a reference to a state of affairs that might come about, not to who might bring it about. It operates similarly to a phrase such as 'if the man ceases to be married'. The example given in [46] in Whealy JA's judgment well makes the point: in answer to a question of 'When did you cease employment with Macquarie?', Mr Byrne would in ordinary parlance have been expected to say something to the effect of 'December 2008', not 'I did not cease employment with Macquarie, it terminated my services'.
Consideration
25So what did the parties intend? What would a reasonable person understand the contract in this case to mean having regard not only to the text, but also the surrounding circumstances known to the parties and the purpose and object of the transaction? The defendant contends that something in the nature of fault on one side, or the breakdown of the relationship between the parties, was what the parties intended in this case. It says that a reasonable person would understand the contract to mean that Dr Nair had to establish or point to a precipitating event or cause, and that the opening words of special condition 9.4 indicate or point to what the nature of that event or cause should be. This argument would appear to have as its impetus the not unreasonable underpinning wisdom that it is at least unfair for Dr Nair to be able to resign or terminate the agreement at any time for any reason (or for no reason) and still expect to receive a not insignificant termination payment. The defendant maintains that the text of the agreement, the surrounding circumstances and the purpose and object of the transaction all point in the opposite direction.
26By analogy with the reasoning adopted by his Honour Macfarlan JA in Byrne , I do not consider that there is any helpful distinction to be drawn between a resignation and a termination. If Dr Nair had the benefit of a clause that permitted or entitled him to bring a contract of employment to an end, it is no more than a semantic distinction to insist that he did not resign because he terminated the agreement unilaterally or that he did not terminate the agreement unilaterally because he resigned. It may be different if the agreement in question used the terms in different ways or in different contexts so that the distinction became significant. That does not seem to me to be the case here.
27The text is not altogether helpful but it is clear enough. Clause 8(b)(iii) on its face permits termination without cause or fault. The heading to the clause is simply " TERMINATION ". In contrast, the heading to special condition 9.4 speaks in terms of "termination for reason other than a breach". Breach or fault are cognate terms and contemplate the same idea. The opening words of special condition 9.4 appear to describe the breaches that are contemplated as those falling within or specified in clauses 8(b)(i) or (ii). Clause 8(b)(iii) is obviously excepted from this group. There is therefore clear scope for the two provisions to work together. If either party wishes to terminate the agreement for any reason other than a reason specified in clauses 8(b)(i) or (ii), which for presently relevant purposes means clause 8(b)(iii), then special condition 9.4 applies, providing as it does the details of Dr Nair's entitlement if he has unilaterally terminated the agreement pursuant to clause 8(b)(iii). That is what happened here.
28A unilateral right to terminate the agreement upon the giving of a specified period of notice does not need to be accompanied by a " reason " for its exercise before it can operate. There may be scope for speculation about what Dr Nair's reason was. The obvious reason would appear to be that Dr Nair wanted to resign and take his termination entitlement. In my opinion, he did not have to point to a reason, in the sense of a cause for making or coming to his decision to resign or to terminate the agreement, before he could do so. The expression "any reason other than a reason specified in clauses 8(b)(i) or (ii)" is clear and unambiguous. It means any reason not specified in those sub-clauses. That quite literally encompasses no reason at all beyond the desire of either party unilaterally on one month's notice to bring the agreement to an end. To adopt the rhetorical technique referred to by the Court of Appeal in Byrne , if Dr Nair were asked in the course of a hypothetical discussion, what was his reason for ceasing employment with LFE, a valid reply may well have been, "the reason I resigned was because I no longer wished to continue my employment there".
29A reading of the Workplace Agreement as a whole leads me to conclude that special condition 9.4 means that if Dr Nair's employment ceased for any reason other than one of the reasons encompassed by clause 8(b)(i) or (ii), he would be entitled to receive the termination payment for which the special condition provides. Special condition 9.4(b) also makes it clear that the defendant's obligation to pay the termination entitlement to Dr Nair applies "notwithstanding anything else in this agreement". In my opinion, the words or phrases in the special condition that the defendant relies upon do not mandate or require the identification of the terminating party or the circumstances leading to the cessation of the employment relationship, in particular any fault arguably or allegedly attributable to either party that has led to that result. As Whealy JA said in Byrne at [55]:
"[55] I am, in the end, persuaded ... that the relevant phrase in the particular sentence is simply neutral as to who is to initiate the outcome of the cessation of the employment. It is, as senior counsel submitted, a reference to a resultant status. One would ask, "has the employee ceased employment?" If the answer is that the bilateral relationship between the employer and the employee has come to an end (no matter who initiated the cessation), the consequences stipulated in the sentence come into play."
30Does a consideration of the surrounding circumstances known to the parties or the purpose and object of the transaction lead to a different result? In my opinion the words of the Workplace Agreement are unambiguous and I am required to give effect to them. The defendant presumably contends that in doing so the result that is produced is capricious or unreasonable or both. It would presumably also contend that it might be guessed or suspected that the parties intended something different and that my conclusion leads to a result that is both inconvenient and unjust. However, these considerations are beside the point unless the language of the agreement is open to two (or more) constructions. I do not think that it is. Nor do I consider that there is any inconsistency between the provisions in question and the rest of the agreement.
31The surrounding circumstances include the fact that Dr Nair was and had been for some time an important and valuable employee, whose services were held in high regard by the defendant and whose contribution to the company had a corresponding value. Indeed, there is a specific acknowledgment by the employer that the agreement has been entered into in order to procure the services of Dr Nair, which are described as "critical to the successful transition of the Life Sera business to the merged business with Kedrion". The cost of retaining Dr Nair's services and the beneficial nature of the termination provisions are a reflection of these things. The object of the transaction presumably therefore included the provision of beneficial conditions of employment that were capable of attracting and retaining Dr Nair in the designated role. In this context it is not without significance that the defendant was also able on one month's notice itself without reason or fault to terminate the agreement. There was to that extent a degree of mutuality in the way in which clause 8(b)(iii) operated. The cost to the defendant of utilising the sub-clause was the corresponding obligation to pay a termination benefit for which special condition 9.4 provides.
The res judicata / issue estoppel / Anshun issue
32It follows from what I have said earlier that I consider that Dr Nair is entitled to be paid a termination benefit. In its original defence, the defendant relied upon s 200B of the Corporations Act to plead that the special condition 9.4 termination entitlement was void because member approval had not been obtained. The defendant filed a motion and Davies J determined three separate issues that were ultimately identified as arising from it. Dr Nair contends that his Honour's decision entirely forecloses the defendant's ability to revisit any of the issues determined by his Honour. However, despite the decision of Davies J on the separate issues, the defendant continues to assert that Dr Nair's entitlement remains subject to approval by the members of the defendant at a general meeting.
33The three questions that his Honour was asked to decide were as follows:
"(a) Whether, assuming the Termination Entitlement referred to in paragraph 23 of the Statement of Claim (Termination Entitlement) is otherwise payable by the Defendant, it was required to be approved by the members of the Defendant at a general meeting, pursuant to section 200B of the Corporations Act 2001 (Cth) (Act);
(b) Whether the Termination Entitlement was approved by the members of the Defendant at the Annual General Meeting of the Defendant held on 28 November 2007;
(c) Whether, assuming the Termination Entitlement is otherwise payable by the Defendant, it is prohibited for the purposes of section 200B of the Act, because member approval has not been obtained."
34His Honour answered the first two questions "No" and did not need to answer the third. At [26] of his judgment his Honour said this:
"[26] In my opinion, the termination entitlement was exempt from the requirements of s 200B by reason of being a benefit that fell within s 200F(2)(a)(ii)."
35Mr Pike submitted that his Honour dealt with s 200F(2)(a) but did not deal with s 200F(2)(b). The transcript of the proceedings before me reveals that he put the matter in the following way:
"PIKE:...It is clear that his Honour determined under (2)(a)(ii) that the benefit in clause 9.4 was given to Dr Nair in consideration for Dr Nair agreeing to hold the office that he held under the 23 June 2007 agreement. I have to accept that that issue is estopped in respect of that. I can't seek to reagitate that and I don't seek to reagitate that. That is obvious.
What his Honour did not determine was whether (2)(b), which is the quantum of the benefit requirement, his Honour did not determine whether that had been exceeded such that shareholder approval was required for that reason. No matter how hard one tries to look at Davies J judgment, his Honour did not determine the (2)(b) issue so there is no reason why, given we are still in the same proceedings, I ought not be permitted to agitate the point now."
36A little later in the proceedings the following exchange occurred:
"HIS HONOUR: You say in effect that (a) and (b) are, if you like, cascading factors.
PIKE: Yes.
HIS HONOUR: Each has to be established. Davies J was called upon only, for the reasons that can be either assumed or speculated about, was asked only to determine the first issue.
PIKE: I would more accurately say only determine the first issue.
HIS HONOUR: Didn't I say that?
PIKE: You said only asked to determine the first issue. I don't necessarily agree that the way the case was conducted below, accepting that I was not there; I don't accept that his Honour was only asked to consider the (2)(a) issue. Perhaps it is not relevant on my case to your Honour making a decision about that. What is clear is that he hasn't determined the (2)(b) issue."
37Although I was not referred to it at the time, the transcript of the proceedings before Davies J on 19 April 2010 is instructive on this topic. Mr Silver of counsel, who appears now and who appeared then for Dr Nair, said the following things to his Honour:
"SILVER: The defendant says that it was the agreement that was approved, not the payment. So that is what your Honour has to decide on that point. The first issue is whether the exception applies, and there are two aspects to that. I will read the section briefly. The exemption is s 200F(2), and the relevant portion of that is (a)(ii), there doesn't seem to be a dispute that we qualify (b), in other words the dollar amounts [sic] seems in order. So that your Honour will be asked to make a decision under s 200F(2)(a)(ii), and that reads...
Moving to the formula, that is the second part of the exemption in the s 200F(2), and that's under s 200F(2)(b), that has not been put into contention in the submissions but the dollar figures, if one fills them into the formula, we say fulfil the requirements of the exemption. If there's any argument about that, we can address it but it hasn't been raised."
38Nor was any voice raised at that time by counsel then appearing for the defendant in opposition to anything that Mr Silver said on the topic. Although Mr Pike indicated that he does not accept that Davies J was only asked to consider the s 200F(2)(a) issue, the position seems to be that that was because the s 200F(2)(b) issue was not put in contention. Mr Silver's offer to argue it before his Honour would appear not to have been taken up by the defendant's counsel and the transcript suggests that the defendant accepted that it was not in dispute. If that were so, a very strong case arises in favour of Dr Nair that the Anshun principles should now prevent the defendant from seeking to agitate the issue again before me.
39Mr Silver provided me with written submissions on the Anshun point. However, they do not in terms address the detail of what occurred before Davies J in the way exposed by the transcript I have quoted. The submissions were relevantly in these terms:
"67. If it is found that res judicata or issue estoppel do not apply, then the defendant is estopped because the defence under consideration was so relevant to the subject matter of the separate question that it was unreasonable not to rely on it in the proceedings: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 602.
68. The principle is that parties should bring forward their whole case and not seek to reopen issues in subsequent litigation, not only to avoid the possibility of inconsistent decisions but also to make efficient use of court resources and judicial time.
69. Some guidance as to what is meant by "unreasonable" is found in Port of Melbourne to the effect that generally it would be unreasonable not to raise a defence in prior proceedings if, having regard to the nature of the plaintiff's claim and its subject matter, it would be expected that the defendant would raise it and thereby enable the relevant issues to be determined in the one proceeding: Port of Melbourne at 602.
70. In regard to the notion of conflicting judgments - conflict arises where judgments appear to declare rights which are inconsistent in respect of the same transaction ( Port of Melbourne at 603), or where one judgment contradicts an assumption which was fundamental to an earlier decision in the sense that if the assumption had not been made, the decision would have been different: Woodson Sales v Woodson (1996) 7 BPR 14,685.
71. The separate question concerned whether membership approval was required for the termination entitlement, as defined, taking into account the (two legs of) the statutory test.
72. The purpose of the determination of separate questions was obvious. If the answer to the questions favoured the defendant, a much longer hearing would be avoided. The questions were able to be determined because they were discrete and could be disposed of on some basic facts.
73. The two legs of the exemption test could have been addressed on the evidence, and could have been addressed at the same time. The test and the questions were intimately linked. The extra argument would not have taken much time. (All of this is on the assumption that the matter was not before the court which is somewhat artificial because the plaintiff did raise and argue the point.) Also one wonders why the court would have allowed a separate question to be decided on one part of the necessary statutory test.
74. In the circumstances it would be expected that the defendant would raise both issues in one proceeding.
75. The possibility of conflicting judgments also arises, because:
a.Different courts might come to different views about whether member approval was necessary;
b.It was a necessary part of the first judgment to decide that the second part of the test had been satisfied."
40Mr Pike did not deal with the Anshun point in his written submissions. His argument was entirely encapsulated in the following oral submissions before me:
"PIKE: If one then deals with Anshun , again I haven't found any authority that deals with the point. I thought there was some authority for the proposition that says an Anshun can't arise out of an interlocutory decision but I can't find that. But if one looks at what Anshun is, again, it is, proceedings A dealt with to their finality, then later proceedings one of the parties seeking to agitate a point, that for whatever reason was so inextricably linked with what was at issue in the earlier proceedings that the Court determines it is reasonable to have a second go and generally the touchstone is because of the prospect of inconsistent judgments and the like. Posited that way it doesn't neatly fit into an answer to a separate question type analysis as we are dealing with here. In my submission Anshun does not supply either. If there is to be any attraction for Mr Silver, it is in the notion of issue estoppel."
41I am concerned in these circumstances that I have not had the benefit of an informed debate on this aspect, and correspondingly that the parties have not had notice from me that there is an issue, which is potentially very significant that requires consideration in the light of what transpired before Davies J. There should be further submissions from the parties on this aspect before I finally dispose of it.
42It will also be convenient to postpone a consideration of the so-called issue estoppel and res judicata points until that has occurred. There is some prospect that the manner in which the case proceeded before Davies J may also bear upon further submissions that the parties may wish to direct to these questions as well.
Conclusions
43It will be apparent that my answers to the first two questions favour Dr Nair. I consider that the Workplace Agreement came into effect and was not subject to a condition precedent that was not met. I have also found that upon a proper construction of that agreement, Dr Nair was entitled to be paid a termination benefit upon his resignation. Having regard to the concerns that I have expressed about the third issue, I will invite the parties to furnish me with further submissions, or to relist the matter for further argument at some convenient time to be arranged in consultation with my Associate. I will also hear the parties at that time on the question of costs if required.
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Decision last updated: 06 May 2011