Plaintiff v Defendant

Supreme Court of Victoria|2011-02-21|Before: BEACH J

EMPLOYMENT CONTRACT - Plaintiff agreed to be employed by defendant as Business Development Manager or such other position as the defendant appointed him to - Plaintiff employed on term that he may also be required, within his skills, qualifications and experience, to undertake other responsibilities - Defendant requested plaintiff to perform other duties - Defendant requested/directed plaintiff to take long service leave - Whether defendant's conduct amounted to repudiation of the employment contract.

1 The plaintiff, Malcolm Cameron, was employed by the defendant, Asciano Services Pty Ltd between 26 October 1992 and 17 April 2009. The defendant was formerly known as Pacific National (ACT) Limited and is often referred to in contemporaneous documents as Pacific National or PN.

2 The issue in this case is whether, in March 2009, the defendant repudiated the plaintiff's contract of employment. On 6 April 2009, the plaintiff accepted what he contended was a repudiation of the contract, and rescinded the contract with effect from 17 April 2009.

3 In this proceeding, the plaintiff claims that, as a result of the alleged repudiation, he is entitled to be paid the sum of $273,424.65 pursuant to the terms of his contract.[2] As part of his claim, the plaintiff also contends that the defendant breached an implied term that it "would not act so as to destroy or seriously damage the relationship of trust and confidence between it and the plaintiff, including by not acting unlawfully, capriciously, unfairly or unreasonably".

4 The defendant denies that it repudiated the plaintiff's contract of employment or breached any implied term as alleged by the plaintiff. If there was a repudiation, the defendant does not contest that the plaintiff accepted the repudiation and rescinded the contract with effect from 17 April 2009. Additionally, the defendant does not contest the plaintiff's calculation of the sum of $273,424.65; nor that the defendant is liable to pay the plaintiff that sum if the plaintiff establishes the defendant repudiated his contract of employment.

5 The parties were agreed that the contract of employment governing the relationship between them as at 2009 was a contract described by them as "the 2002 contract". The 2002 contract was comprised of three documents:[3]

(a) a document headed "Appointment Agreement", executed as a deed, signed by the plaintiff and signed for and on behalf of the defendant;

(b) an email dated 27 September 2002 from the defendant to its employees (including the plaintiff) which attached a document headed "Common Appointment Agreement Issues & Responses"; and

(c) a letter from the plaintiff to the defendant dated 14 October 2002 in which the plaintiff stated that he was "pleased to accept and sign the Employment Agreement" with three qualifications - one of which was a change of the title of his position from "Business Development Specialist" to "Business Development Manager".

6 As executed, clause 1 of the 2002 contract provided:

a) You agree to be employed by the Company and any of its subsidiaries as Business Development Specialist or such other position as the Company appoints you to on the terms and conditions contained in this Agreement.
b) Your duties include, but are not limited to the duties set out in the Position Description attached as Schedule A. You may also be required, within your skills, qualifications and experience, to undertake other responsibilities and perform other such duties or projects from time to time as the Company may require to meet its operating needs.

c) As an employee of the Company, you shall perform such duties and exercise such powers, within your skills, qualifications and experience, with regard to the management and conduct of the business of the Company as the Chief Executive, Divisional Manager or direct line manager shall from time to time lawfully determine. In carrying out duties or exercising powers, you shall comply with and implement the business and operating policies of the Company.

d) You agree to faithfully and diligently perform the duties and exercise powers consistent with the position to which you have been appointed and keep the Company's confidential information secure.
e) You will devote the whole of your time, attention and skill, during normal business hours and at other times as reasonably necessary, to the duties of the position to which you have been appointed."

7 Whilst clause 1(b) refers to duties set out in a position description attached as schedule A, no document answering this description was ever created.

The plaintiff's position with the defendant from October 2002

8 The 2002 contract described the plaintiff's position as "Business Development Manager". However, it is clear from the defendant's internal documents that the plaintiff was also referred to as "National Customer Manager, Intermodal[4]" and "National Account Manager". According to the defendant's human resources manual, the two primary objectives of the position title "National Customer Manager, Intermodal", were:

"- Develop new profitable revenue with major Intermodal customers and develop strong customer relationships with them to achieve revenue and operating margin budgets.

Oversee the major customer needs and develop strategies to meet service quality targets."

9 On the other hand, the key responsibilities of the National Account Manager have been described as follows:

"Manage the national customer accounts to ensure that the operations of Pacific National deliver best practice services within agreed contractual parameters.

Monitor and review Pacific National's service delivery and ensure that required service levels are being met and all opportunities for improvement and increased efficiencies are identified and explored.

Monitor the profitability of the Intermodal group in relation to national customers by controlling day-to-day operating costs and maximising revenue through development of improved efficiencies.

Provide a key interface between Pacific National and the customer and manage the exchange of information, issues, queries or concerns in either direction.

Identify and seek new business opportunities to maximise the profitability of the business including growth opportunities for PN within customers (sic) operation.

Develop and implement performance measurement criteria (Key Performance Indicators) for customer service and profitability, and report KPI's and improvement strategies to senior management on a weekly basis."[5]

10 However, in a more detailed "Position Description"[6] of the position title "National Account Manager", 16 "action statements identifying the key priorities/deliverables required for the role to contribute to business success" are identified. Some of these mirror the key responsibilities referred to above. In this more detailed description (which Mr Hine agreed was the position description for the plaintiff[7]),[8] various so-called "competencies" are identified. These included:

"Develops and manages strategic relationships with external customers and internal stakeholders to facilitate the accomplishment of role deliverables.

...

Identifies opportunities and takes action to build strategic relationships with other individuals, teams, departments, or organisations to help achieve Intermodal's business goals."

11 In his evidence, the plaintiff described his position and role between 2002 and 2009 as one involving "responsibility for major national accounts and dealing with key customers at National Manager/CEO/Owner level, including Toll Group, FCL, K&S, Mayne Logistics, Patrick Logistics, Australia Post, TNT/CEVA Automotive Logistics, FreightLink, Chemtrans, Sadleirs, Austrans and international shipping companies". He also gave evidence that he negotiated contracts with a number of these organisations.[9]

12 On 11 March 2009, the plaintiff's manager, Simon Hine, called the plaintiff into a vacant meeting room for a discussion. There had been a downturn in the defendant's business as a result of the Global Financial Crisis. Mr Hine gave evidence of the meeting in the following terms:

"I had a two minute discussion with him [the plaintiff] along the following lines. I explained to [him] the current economic conditions, saying words to the effect, 'Things are tight, everyone is being asked to do a little bit more at the moment. We have a role at the Melbourne CSC[10] that we need to fill and I'd like to talk to you about how we can fit you with that role'. The plaintiff's response was quite sharp, and he said words to the effect, 'Not interested. Don't want to have this discussion any further'. I replied, 'Can we have a chat so I can explain what my thinking is?'. His response was, 'No need to. Not interested, don't bother'. He then stood up from his seat and walked out of the meeting room."

13 The plaintiff gives a different description of this meeting. He described being told that Mr Hine wanted him to "go down to the Dynon Road freight terminal and work in the position of Melbourne Customer Service Centre Manager for the next two years prior to retiring". He gave evidence as follows:

"I asked Simon Hine whether he meant for me to sit at James Rayner's desk. Simon said, 'Yes'. I said to Simon Hine that I would not do that role as it is two levels below my current role, reports to the Victorian Sales Manager who I hired and appointed, and is essentially a mechanical clerical role. ... In an effort to achieve Simon's perceived needs regarding the Customer Service Centre, I offered to move to the terminal in my current role and supervise James as the Customer Service Coordinator as well. I said I would be happy to be located at the terminal and would enjoy assisting the Customer Service Centre in successfully performing its role."

14 These versions of this meeting are not easy to reconcile. Whilst I accept that both the plaintiff and Mr Hine were endeavouring to give an honest account of the meeting as they recollect it, it may be that their differences in recollection stem from a failure to communicate the position each wanted to communicate and a failure to listen to what was being said to them. From Mr Hine's evidence, it is clear that what was envisaged for the plaintiff was a role at the Melbourne Customer Service Centre which was not some "mechanical clerical role" as described by the plaintiff, but rather something more sophisticated than that which had to date been performed by the Acting Customer Service Centre Coordinator, James Rayner. In those circumstances, Mr Hine was surprised by the plaintiff's vehement resistance to what was proposed. On the other hand, the plaintiff appeared to have firmly in his mind that any position such as that previously performed by Mr Rayner was not suitable for him - although he would be happy to work at the Centre supervising Mr Rayner (or a person in that position).

15 On the following day (12 March 2009), the failure of Mr Hine and the plaintiff to reach an agreement on the previous day was reported to Paul Garaty, the Divisional General Manager, Intermodal Division, for the defendant. Mr Garaty is the person to whom Mr Hine reported in the defendant's management structure.

16 A meeting was then convened between Mr Hine, Mr Garaty and the plaintiff. Again, there is a dispute as to what was said at this meeting. The plaintiff gave evidence of the meeting in the following terms:

"Paul Garaty said to me in an aggressive tone 'I am disappointed that you will not help Asciano out by moving to the Customer Service Manager job at the terminal'. I said, 'You may well be disappointed but I am a professional manager working for Asciano, not "helping out". I am happy to supervise the Customer Service Centre, have the Customer Service Coordinator report to me and to move to the terminal in the vacant office next to Bryan Linnell while continuing my current job. My workload is about 25 hours per week so I could take it on. I have done it before with success'. Paul Garaty said, 'You think the job is beneath you then!' I said, 'Not a phrase that I would use. The job was an Enterprise Agreement job. We want to upgrade it. But there are limits. It is a two shift 6am to 10pm plus Saturday morning call centre mechanical job that can and will be computerised by an improved "FreightWeb".' Paul Garaty said, 'I expect you to help the company out! I am amazed that you will not accept the position'. Now he was yelling across the desk at me, 'This is not the Public Service!' I said, 'I work under an Individual Employment Agreement. I doubt if you can downgrade my job two levels in the organisational structure, a job less than half my salary, meaningless for which I am not suited.' Paul Garaty yelled at me, 'You are angling for a payout!' Simon Hine said, 'Ha. No!' I laughed and said, 'No! Simon and I have discussed this. ...' Paul Garaty yelled, 'I will get your Employment Agreement gone through clause by clause and I will use every fucking means in my power to ensure the Agreement is not applicable'. I said, 'I will rely on the Employment Agreement and will not be doing the CSC job directly. I would expect you to read the Employment Agreement carefully clause by clause. But it is an Individual Agreement and as such should be treated fairly, not aiming to invalidate it by every available means'. Paul Garaty yelled, 'Then I will force you to take all your outstanding annual leave and long service leave from next Monday! You are only working 20 hours per week'. I said, '25 hours. More than most around here. I have no outstanding annual leave. I have a lot of long service leave. I already have two lots of 4 days approved. I am planning for August and later. I philosophically agree that people should take annual leave and long service leave with some kept for eventualities'. At this stage, Simon Hine left Paul Garaty's office and shortly after came back to the meeting stating that my outstanding long service leave balance was 101 days. I continued by saying to Paul Garaty, 'I doubt if you can do that. I will fall back on the Employment Agreement. I will get PN Legal to interpret the Agreement'. Paul Garaty said, 'You can get your own legal interpretation'. I said, 'I should not need to, but will if necessary. I have not looked at the Agreement for over 10 years.[11] I read it then and put it in a drawer at home. I will read it again tonight'. Paul Garaty terminated the meeting."

17 Mr Garaty gave evidence about the meeting (which evidence was largely corroborated by Mr Hine) in the following terms:

"In the meeting, I said to the plaintiff, words to the effect of -

'Malcolm, why are you not prepared to help out the business?

The plaintiff's response to me was, in substance, that he 'did not have to' and that 'I have a contract and I only have to do work in my current role and no other'. The plaintiff made this statement even though we had said that we would maintain his rate of pay. This astounded me.

During the meeting, I said to the plaintiff that he was not being forced into the position but being asked to help the business out.

In the meeting, the plaintiff said that he was only occupied for about 25 hours a week and had insufficient work to cover his role. I asked the plaintiff again why he would not help out in the Customer Service Centre for the rest of the hours for which he was currently unoccupied. The plaintiff again refused.

In this context, the issue of long service leave arose. I said to the plaintiff, words to the effect of -

'Malcolm, if you're not prepare (sic) to help out in the Customer Service Centre and you're telling me that you're only half occupied, then you may as well go on long service leave starting Monday and we will assess your position on your return'.

The plaintiff responded to me and said, 'ok'.

In the meeting I thought that the plaintiff's motivation was about angling for a redundancy, and in that context, I recall saying to the plaintiff that he would not be made redundant because there was a job to be filled and that we were restructuring the area and that there was work to be done."

18 In handwritten notes made by Mr Garaty within a day of the meeting, Mr Garaty noted:

"Mr Cameron was asked why he wouldn't move to the role in the Customer Service Centre. He advised that he only had to do work in his current role, no other notwithstanding the company would maintain his rate of pay. During discussions Mr Cameron indicated that he was only working a 25 [hour] week and had insufficient work to cover his role. He was then asked would he go to the Customer Service Centre for 15 hours [a] week. He advised that he would not consider that position. Given that Mr Cameron did not have a full time role at that [time] due to the downturn we advised that we had no alternative but to direct Mr Cameron on leave and LSL [long service leave] then assess the position on his return. ..."

19 Again, the competing versions of this meeting are not easy to reconcile. The different accounts of this meeting may be due, at least in part, to the level of heat that was generated by what was being discussed. Clearly, Mr Garaty was disappointed in what he saw as the plaintiff's stubborn refusal to accept the position that he (Mr Garaty) regarded as different from that previously occupied by Customer Service Centre supervisors. On the other hand, the plaintiff was very firm in his view that his contract did not require him to take any position at the Customer Service Centre which was in any way mechanical or clerical or involved duties of a lower order of magnitude from those he was used to performing.

20 After the meeting of 12 March 2009 and later that day, Mr Hine sent the plaintiff an email confirming that he had 101 days of long service leave and stating "Based on going on leave Friday 20 March, your return date will be 13 August".

21 Following receipt of this email, the plaintiff sought advice from David Thompson, a partner of the firm of solicitors Hunt & Hunt. On 16 March 2009, Mr Thompson wrote, on behalf of the plaintiff, to the defendant contending that attempting to force the plaintiff into the role suggested at the Melbourne Customer Service Centre "including the punitive measure of forcing him to immediately take long service leave", amounted to a repudiation of the plaintiff's employment contract. In the letter it was also pointed out that the direction to the plaintiff to take his long service leave immediately was in breach of s 66 of the Long Service Leave Act 1992.

22 On 18 March 2009, the defendant responded to the letter from Hunt & Hunt setting out its position. The letter referred to the significant impact caused by the Global Financial Crisis, saying that to combat this, a number of programs had been undertaken to reduce costs. These programs included an annual and long service leave program and asking employees to undertake some variations in their roles while the defendant rode out what was said to be "the current crisis which [had] affected freight volumes in Australia". The letter concluded with an offer to arrange a time to discuss its contents.

23 On the same day, the defendant wrote to the plaintiff in the following terms:

"Re: Variations to Employment

Dear Malcolm

Further to our discussions concerning the impact of current downturn on job roles in Intermodal Sales & Marketing, the need to vary your job role to assist the Division meet its operational requirements in the Victorian Customer Service Centre and the program to introduce leave reduction measures to preserve ongoing jobs, I wish to advise that:

You are requested to take 101 days of accrued Long Service Leave effective 90 days from 12 March 2009
You will be required to undertake the role of Victorian Customer Service Manager, based at the Melbourne Freight Terminal, effective from 27th March 2009

Please find attached a position description for the Victorian Customer Service Centre role which outlines the accountabilities and performance expectations.

Your current remuneration package and benefits will be maintained whilst you are in this role and all other conditions of your current Appointment Agreement will remain unchanged.

Please see me to discuss the transitional arrangements required to be put in place prior to taking up this variation in your role."

24 The change in the required commencement date of the plaintiff's long service leave was no doubt brought about by Hunt & Hunt's letter advising the defendant of the terms of s 66(2) of the Long Service Leave Act.[12]

25 The "position description" enclosed with the letter to the plaintiff described the primary objectives of the Victorian Customer Service Manager as follows:

"Lead and manage the Victorian Customer Service Centre to provide a range of sales, marketing, business development and liaison functions which ensure effective service provision through direct interface with customers.

As part of the state sales and marketing team, assist with research, development and implementation of strategies to market Pacific National freight services to improve Intermodal Division profitability.

Actively promote and enhance a quality customer service culture within the Customer Service Centre team to meet business performance requirements.

Maximise utilisation of services through agreed processes with the terminal operations team and through proactive customer contact.

Increase Freight Web usage and decrease cancellation rate of permanent bookings."

26 The necessarily qualifications and experience for the position were described in the position description as follows:

"The Victorian Customer Service Manager will have demonstrated experience in:

Liaising with customers, developing relationships and providing customer services which deliver commercial outcomes.
Coordinating and leading a work team engaged in customer service activities related to the transportation and/or rail freight industry.
Analysis of data and preparation of sales strategies and operational plans to meet customer servicing requirements.

In addition, the Customer Service Manager will have:

Excellent interpersonal and communication skills.
An understanding of the rail freight business and detailed knowledge of the freight services provided by Pacific National.
A thorough working knowledge of PC based word and spreadsheet applications, and experience in the use of Pacific National computer based Freight Management Systems.
Appropriate tertiary qualifications in a sales, marketing, logistics or business management stream."

27 Additionally, "key accountabilities" were described as:

"• Plan, coordinate and lead the operation of the Customer Service Centre ...

• Develop customer relationships and maintain direct customer contact ...

• Gather and analyse a range of statistical data to assist with the development of operational plans and monitor compliance with performance measurement projections ...

• Develop and maintain a backup contingency plans (sic) ...

• Perform and monitor a range of general administrative functions ensuring a business resource database is developed and maintained ...

• Perform and monitor specific financial activities ...

• Develop and maintain a strong Customer Service Centre team interface ..."

28 The position description enclosed with the 18 March letter also stated that the Victorian Customer Service Manager reports to the Victorian Sales Manager. Prior to this date, the plaintiff and the Victorian Sales Manager both reported to Mr Hine. This suggested change in the reporting structure was not satisfactory so far as the plaintiff was concerned. Additionally, the plaintiff gave evidence that the position description was one which he had observed Mr Rayner (the former acting CSC Coordinator) performing. Notwithstanding the terms of the position description, the plaintiff said that the position did not require any senior level experience.

29 Following the sending of the two letters of 18 March 2009, there was further communication between Mr Thompson and the defendant, which culminated in a meeting being held on 26 March 2009. In his evidence, the plaintiff said that he attended this meeting at Mr Thompson's instigation.[13] The meeting was attended by Mr Hine and Dennis Bingham (the then Human Resources Manager, Intermodal Division for the defendant) and the plaintiff and Mr Thompson.

30 The plaintiff gave evidence of what occurred at this meeting in the following terms:

"At this meeting Simon Hine said for the first time that he wanted a different customer service role to how it had been done to this date. I asked how was it different. They did not explain how it was different. I said I'd move down to the terminal next door to Brian Linnell and supervise James Rayner and would produce results after a period of about three months. The meeting ended with a proposal by Simon Hine that he would provide some explanation of the 'different' CSC manager role for me to consider."

31 From the evidence of Mr Thompson, Mr Bingham and Mr Hine, it is clear that this meeting commenced with some discussion, before a break was called and then the meeting was resumed. The break was taken to allow the plaintiff to speak to Mr Thompson in private. After the meeting resumed, it would appear that the discussion became more productive. Mr Thompson gave evidence that after the meeting resumed, he listed some of the plaintiff's concerns. Mr Thompson then gave evidence:

"I recall Simon Hine said that there would be no change to Malcolm's salary and reporting lines but that he had to be based at the Melbourne Freight Terminal and Simon Hine then said words to the effect that Malcolm Cameron could continue some aspects of his current role and asked Malcolm what he was prepared to consider. Simon Hine did not say what parts of his existing role Malcolm would be able to perform or what his new role would be at the Customer Service Centre, so I asked him to put in writing what duties Malcolm would be required to do so Malcolm could properly consider it and Mr Hine agreed to this request. The meeting then ended.

32 Mr Bingham's handwritten notes of the meeting[14] record Mr Hine as advising that the Customer Service Centre role being offered to the plaintiff "would complement" the plaintiff's existing role. Mr Bingham also recorded that the plaintiff:

"Rejected all notion of taking on expanded roles. Did not want to discuss possibilities. Kept referring to 'old coord role', did not want to consider or advise options that would make role suitable/acceptable."

33 In his handwritten notes, Mr Bingham also records himself as saying:

"Reiterated that role was 'new' and sought advice from Malcolm on what would make it acceptable - (no response)."

34 Mr Bingham recorded the conclusion of the meeting in the following terms:

"PN to provide update on requirements of role as per discussions.

Malcolm to provide feedback on what would be acceptable."

35 Whilst Mr Thompson has no notes of the meeting, he gave evidence that later in the meeting (presumably after the break), the plaintiff said that he was prepared to help the Customer Service Centre Coordinator and that whilst he was not prepared to be based in the Customer Service Centre, he was "prepared to help out including by going there on a regular basis".

36 Mr Hine gave evidence about what was said at the meeting. As part of his evidence, Mr Hine said:[15]

"I concluded my opening remarks saying that we wanted to extract from the plaintiff the actual items or issues that he found unacceptable in the correspondence we had exchanged, so that we could work through and find a compromise."

The plaintiff, in cross-examination, agreed that Mr Hine made this statement during the meeting.[16]

37 Mr Hine gave evidence of what occurred after the break and upon the resumption of the meeting in the following terms:[17]

"The conversation was being led by Mr Thompson. Mr Thompson then outlined a number of concerns of the plaintiff which were as follows:

a) the job title.

b) the plaintiff's accommodation at the Melbourne Freight Terminal.

c) the plaintiff's reporting line.

d) our expectations of his role at the Melbourne CSC.

e) the plaintiff's current customer accounts and his continued management of those accounts.

We then dealt individually with each item of concern. I confirmed the following by telling the plaintiff and Mr Thompson in substance that:

a) there would be no change in job title.

b) the reporting line was to remain the same - that is reporting to me.

c) that he was fully responsible for the management of the Melbourne CSC.

d) that in the initial training phase the plaintiff would be required to work in the Melbourne CSC environment but after that he would have a separate office to operate out of at the Melbourne Freight Terminal.

e) the plaintiff was still required to account manage his major accounts.

Mr Thompson asked whether we would reconsider our request for the plaintiff to take leave. In light of what appeared to be a very positive discussion about the plaintiff's concerns, I said that we would reconsider but that we would still require him to take some of his leave (given that everyone else was taking leave in accordance with the business' leave reduction program).

To conclude the meeting, Mr Thompson asked us to confirm in writing our discussion and also some of the key responsibilities that the plaintiff would be required to do in the Melbourne CSC. I personally felt that we had reached a compromise and that we were heading in a direction where the plaintiff would take the role. We ended on a high note with us all shaking hands and I left with a positive expectation that we had reached agreement."

38 In his oral evidence, Mr Hine agreed that it was going too far to say that the parties had now agreed.[18] He said that what had happened is that the parties had "gone a long way in a very short period of time" to alleviate concerns, and that he felt confident that they were heading down a track that would sort matters out.[19]

39 Whilst the descriptions of the 26 March meeting are not uniform, they are easier to reconcile than the descriptions of the meetings of 11 and 12 March. The important point to be noted is that at the end of the 26 March meeting, the parties were closer to reaching an agreement than they had been in the past. In my view, properly characterised, the 26 March meeting concluded with the parties being in a state of negotiation as to the terms upon which the plaintiff would perform work at, and in relation to, the Customer Service Centre.

40 Following the meeting of 26 March, the defendant (on 31 March) wrote to Mr Thompson in the following terms:

"Dear David,

Re: Malcolm Cameron

Thank you for the opportunity last Thursday 26th March, to discuss employment issues and related correspondence with regard to Malcolm Cameron's role with Pacific National.

As we stated at the meeting, to satisfy business requirements at a time when Malcolm is under utilised in his current role, Pacific International is looking to use Malcolm's skills and experience to manage and develop a young team within our Customer Service network. The role will also require ongoing application of his business development, account management and selling skills.

As requested at the meeting, further clarifications of the requirements of the role are as follows:

Malcolm's current title would not change
Malcolm would be based at Melbourne Freight Terminal
Malcolm will maintain report direct (sic) to GM Sales & Marketing, and work along side the Victorian Sales Manager
The role is fully responsible for the management of the Melbourne Customer Service Centre
Initially while in the training phase, the expectation is that Malcolm would work within the CSC environment
Following completion of training Malcolm would relocate to an office near the Melbourne CSC
Malcolm will be required to maintain account management of specified accounts

The key responsibilities of the role in managing the Customer Service Centre are;

To manage the CSC team - roster, sick leave etc
While developing the culture with CSC, improve key performance indicators, eg call drop outs, response times etc
Identify non Freight Web users and convert with assistance from Sales team
Improve train utilization - upgrade services, manage hubbed/standby bookings
Monitor customer performance of permanent bookings

Originally we requested Malcolm to reduce his accrued long service leave as part of Pacific Nationals leave reduction program. Pacific National acknowledge that Malcolm has already allocated dates to help reduce his accrued long service leave, however we still request that Malcolm take 10 weeks of long Serviced Leave from the 3rd July 2009. This time will align with leave requested for August as per pervious correspondence. When Malcolm returns from leave at Easter on the 20th April, his role will be based at the Melbourne Freight Terminal."

41 There were no further communications between the parties concerning the terms of the plaintiff's employment or the nature of the plaintiff's duties. Instead, on 6 April 2009, the plaintiff's solicitors (Hunt & Hunt) wrote to the defendant referring to the letter of 31 March 2009 and alleging that the conduct of the defendant amounted to a repudiation of the plaintiff's contract of employment. The conduct relied upon by the plaintiff's solicitors came under three headings: "Removal of responsibilities from current role", "Being isolated from meetings" and "Direction to take long service leave".

42 By letter dated 6 April 2009, the plaintiff accepted what he alleged was the repudiation of his contract of employment in the following terms:

"Given the conduct of Pacific National discussed in the letter from my solicitors, Hunt & Hunt, to which this letter is attached, I accept the repudiation of my employment contract and hereby resign, effective from 17 April 2009.

If you would like to extend my cease date to allow additional time for a handover, please let me know."

43 The conduct constituting the alleged repudiation was subsequently pleaded in paragraphs 12 and 13 of the plaintiff's statement of claim in the following terms:

"12. The defendant in breach of the 2002 contract sought to coerce the plaintiff to accept the position of Victorian Customer Manager.

PARTICULARS

(a) In the meeting on 12 March 2009 Mr Garaty and Mr Hine threatened to force the plaintiff, with no reasonable notice and in breach of section 66 of the Long Service Leave Act 1992 (Vic) (Long Service Leave Act), to take all his accrued long service leave immediately if he did not accept the position of Victorian Customer Manager.

(b) By email sent by Mr Hine to the plaintiff on 12 March 2009 the defendant, with no reasonable notice and in breach of section 66 of the Long Service Leave Act, purported to direct the plaintiff to take all his accrued long service leave commencing 20 March 2009.

(c) The defendant purported to direct the plaintiff to undertake the position of Victorian Customer Service Manager by letters dated 18 March 2009 and 31 March 2009, copies of which are available for inspection by appointment at the offices of the plaintiff's solicitors.

13. The defendant in breach of the 2002 contract sought to punish the plaintiff for refusing to accept the position of Victorian Customer Manager.

(a) By its letter dated 18 March 2009 the defendant purported to direct the plaintiff to take 101 days of accrued long service leave effective 90 days from 12 March 2009, with no reasonable notice and in breach of section 66 of the Long Service Leave Act.

(b) By its letter dated 31 March 2009 the defendant required the plaintiff to take 10 weeks of long service leave from 3 July 2009 with no reasonable notice.

(c) The requirements for the plaintiff to take long service leave in both the 12 March 2009[20] and the 31 March 2009 letters were capricious, unfair and unreasonable."

The principles governing the repudiation of employment contracts

44 The principles to be applied concerning repudiation and the repudiation of employment contracts are not in dispute. The question for determination is whether, objectively considered, the defendant's conduct to 6 April 2009 constituted a repudiation of the plaintiff's employment contract. This issue falls for determination at the time the plaintiff elected to treat the defendant's conduct as a repudiation, on 6 April 2009.

45 The applicable legal principles governing the repudiation of an employment contract were analysed by Ross J in Whittaker v Unisys Australia Pty Ltd.[21] These principles were recently summarised by Hargrave J in Earney v Australian Property Investment Strategic Pty Ltd.[22] I respectfully adopt Hargrave J's summary of Ross J's analysis in the following terms:[23]

"(1) The term repudiation is used in a number of senses. Relevantly, the High Court has recently stated that repudiation:

may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party's obligations. It be may termed renunciation. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it.[24]

(2) It is not necessary to prove a subjective intention to repudiate. The test is an objective one.[25]

(3) Whether there has been repudiation is a question of fact.[26]

(4) Repudiation is not to be inferred lightly. It is a serious matter.[27]

(5) Repudiation may be evidenced by a single act or by an accumulation of conduct in circumstances where no individual act on its own constitutes a repudiation.[28]

(6) Repudiation does not bring an end to a contract. It is necessary for the innocent party to elect to accept the repudiation.[29]

(7) Repudiatory conduct may be 'cured' by the party in breach, but only prior to the acceptance of the repudiation.[30] Accordingly, once the innocent party has elected to terminate the contract for breach, it cannot thereafter be cured.[31]

(8) In the context of employment contracts, a significant diminution in remuneration, status or responsibility may constitute a repudiation. Whether or not this is so is a question of fact in each case.[32]

(9) There may be a significant diminution in status or responsibility, even where the employee retains the same remuneration and title.[33]

(10) However, there are circumstances where a considerable change in the nature of an employee's duties may not amount to a repudiation. Although an employer cannot usually force changes of status and responsibility upon an employee, the circumstances of a particular case may permit a degree of flexibility in approach, with each party being required to provide 'some reasonable give and take'.[34] In such cases, repudiation may not be inferred in the absence of serious non-consensual intrusions upon the status or responsibilities of the employee.[35]"

46 Before turning to the question of whether the defendant repudiated the plaintiff's employment contract, it is necessary to deal with the principles to be applied in construing the contract.

Principles to be applied in construing the 2002 contract

47 As with the principles to be applied concerning repudiation and the repudiation of employment contracts, the principles to be applied in construing the 2002 contract are not in dispute. The relevant principles were, again, recently summarised by Hargrave J in Earney.[36] His Honour said:

"It is necessary to construe the relevant provisions of the contract in accordance with general principles of contractual interpretation. This requires the Court to consider what reasonable persons in the position of the parties would have understood the words to mean by reference to the text of the agreement, the surrounding circumstances known to the parties and the purpose of the transaction.[37] In interpreting the words and resolving any ambiguity, the Court should proceed in a common sense and non-technical way and give the agreement a commercially sensible construction.[38] The Court should have regard to all of the words used in the agreement 'so as to render them all harmonious with one another'[39] and to ensure the 'congruent operation of the various components as a whole.'[40]"

Did the defendant repudiate the plaintiff's employment contract?

48 The evidence discloses that in late 2008 there had been a significant downturn in the defendant's business. Cost saving measures were undertaken. These included: first, a directive to managers to reduce untaken leave entitlements by staff; secondly, a directive that no new employees were to be hired without Mr Garaty's approval; and thirdly, staff were being asked to help the defendant by taking on more duties. So far as the plaintiff is concerned, it is common ground that as at March 2009 he had significant long service leave entitlements (101 days) and he was not being fully utilised - working only 25 hours per week.

49 Whilst the plaintiff's outline of argument[41] asserts, under the heading "Contended facts", that "In the period from about October 2008 until the termination of his employment the defendant substantially reduced his duties and responsibilities by assigning his responsibilities for client accounts to other employees, removing or diminishing his role in client meetings and negotiations, and by excluding him from the defendant's strategy meetings", this contended fact forms no part of the repudiatory conduct pleaded by the plaintiff in this proceeding. Further, whilst there was some evidence concerning the engagement by the defendant of another National Account Manager (Nick Reeman) in or about October 2008, on no view could it be said that the employing of Mr Reeman and giving him duties appropriate to a National Account Manager amounted to a repudiation of the plaintiff's employment contract. The evidence of Mr Hine was that at various times there were other National Account Managers.[42]

50 The question in this case, as pleaded and run, was whether the defendant's conduct in March 2009 amounted to a repudiation of the plaintiff's employment - or more precisely, whether, objectively considered, the defendant's conduct to 6 April 2009 constituted a repudiation (that issue falling to be determined on 6 April at the time when the plaintiff elected to treat the defendant's conduct as a repudiation).

51 By the terms of the 2002 contract, the plaintiff agreed to be employed by the defendant "as Business Development Manager or such other position as [the defendant] appoints [the plaintiff] to on the terms and conditions contained in [the agreement]" (clause 1(a)). Insofar as it was submitted on behalf of the plaintiff that by clause 1(a) the plaintiff agreed to be employed only in the position of Business Development Manager,[43] I reject that submission. Notwithstanding that the plaintiff's concern at and prior to the time he entered into the 2002 contract that his position description be "Business Development Manager", rather than "Business Development Specialist", the words "or such other position as the company appoints you [the plaintiff] to" have to be given some meaning. In my view, the meaning and content of those words can be gleaned from clause 1(b), wherein it is stated:

"You may also be required, within your skills, qualifications and experience, to undertake other responsibilities and perform other such duties or projects from time to time as the [defendant] may require to meet its operating needs."

52 Additionally, counsel for the plaintiff submitted that clause 1(a) "did not give the defendant a unilateral power to appoint the plaintiff to other positions; rather it provided that in the event of an agreed appointment to some other position, the plaintiff's employment would remain subject to the terms and conditions set out in the 2002 agreement".[44] In support of this submissions, counsel for the plaintiff relied upon the statement of Murray CJ in Federated Mutual Insurance Co of Australia Limited v Sabine:[45]

"The true view, I think, is that unless the original agreement gave the employer the right to the services of the employee in any capacity he chose to direct from time to time, there would be a new employment whenever a change was made in the duties to be performed, and it would be a question of fact in each case what the terms of the new employment were."

53 Counsel for the plaintiff contended that this statement was cited with approval by Ashley J[46] in Quinn v Jack Chia (Australia) Limited.[47] However, Ashley J, after setting out the relevant part of Murray CJ's judgment, said:

"Whether his Honour went too far in that proposition is open to question."

54 Further, in Easling v Mahoney Insurance Brokers,[48] Doyle CJ expressed the view that Murray CJ stated the matter "too widely", before saying:[49]

"In my respectful opinion the issue is whether the original agreement gives the employer the right to make the changes that have been made, and if it does, then neither a varied contract nor a new contract arises."

With respect, I agree. In the present case, assigning to the plaintiff other duties within the plaintiff's skill, qualifications and experience would not have resulted in a varied or new contract.

55 Turning now to the issue of the plaintiff's skills, qualifications and experience, it was submitted on behalf of the plaintiff that the Customer Service Centre duties and position offered to the plaintiff were not within his skills, qualifications and experience, in essence, because he was over-qualified for that position and duties. The skills, qualifications and experience relied upon in support of that submission were said to include:[50]

"(a) a PhD in physics;

(b) senior managerial experience in a large manufacturing company;

(c) senior marketing, business development and customer management roles with the defendant and its predecessor organisations; and

(d) as the defendant's Business Development Manager, securing and managing contracts with major national clients including negotiations with the most senior levels of client management, introducing new and improved services, equipment and methods within the defendant's business, responsibility for determining charge rates and rate structures for client services, and management and guidance of State sales managers."[51]

56 Undoubtedly, the plaintiff has a PhD in physics. Additionally, his skills, qualifications and experience include the matters set out in (b) and (c) above. Having heard the evidence of Mr Garaty and Mr Hine, some of what is asserted in (d) as to the extent of the plaintiff's role in negotiating or preparing contracts may be capable of debate.[52] Nevertheless, it is clear that, as a National Account Manager employed by the defendant, the plaintiff's responsibilities were significant - he reporting to a manager who reported to a Divisional General Manager.[53]

57 During his final submissions, counsel for the plaintiff conducted an analysis of the position description enclosed with the defendant's letter of 18 March 2009 addressed to the plaintiff. In the plaintiff's outline of argument,[54] various "key accountabilities" and required qualifications and experience were identified for the purpose of submitting that there was no evidence that the plaintiff had the specified experience or qualifications.[55] Whilst on their face these submissions were capable of being understood as suggesting that the position being offered to the plaintiff was one that involved duties that were beyond his capacity, in his final address, counsel for the plaintiff eschewed any such suggestion.[56]

58 In my view, the short answer to the plaintiff's claim in this proceeding is that there was no repudiation by the defendant. Objectively considered, the defendant's conduct to 6 April 2009 did not constitute a repudiation of the plaintiff's employment contract. Discussions were ongoing. Even the plaintiff's description of the 26 March 2009 meeting finishes with:

"The meeting ended with a proposal by Simon Hine that he would provide some explanation of the 'different' CSC Manager role for me to consider." (emphasis added)

59 Specifically, from the handwritten note of Mr Bingham, I accept that the 26 March meeting concluded with the defendant to provide an update on its requirements in relation to the plaintiff's role and with the plaintiff to provide feedback on what would be acceptable. What was required upon receipt of the 31 March letter (which foreshadowed that the defendant was "looking to use [the plaintiff's] skills and experience to manage and develop a young team within [its] customer service network") was feedback by the plaintiff as part of what had been (to that point in time) a continuing discussion between the parties.[57]

60 In answer to the notion that discussions were ongoing as at 31 March, counsel for the plaintiff submitted that the terms of the letter of 31 March were "trenchant".[58] Whether or not that is so, negotiation (in the sense of further feedback from the plaintiff and the potential for the defendant to make further adjustment to what it required) was still ongoing. Insofar as it was submitted that the 31 March letter somehow brought matters to an end from which there could be no further discussion or adjustment, I reject that submission.

61 Further, even if the letter of 31 March could somehow be construed as a directive to the plaintiff concerning which there could be no further negotiation, I am not satisfied that the posited changes in the plaintiff's position amounted to a repudiation of the 2002 contract. The letter of 31 March 2009 notes that the plaintiff would still have been required to maintain account management (that is, his old duties and responsibilities) of specified accounts.[59] Further, the plaintiff's title, terms on which he was employed and reporting obligations would remain unchanged. The plaintiff would maintain his position in the defendant's management hierarchy, reporting to Mr Hine.

62 Whilst the views of the parties clearly differed as to the significance of the duties the plaintiff would have had to perform at the Customer Service Centre (and whether such duties were appropriate for someone with the plaintiff's skills, qualifications and experience), the fact that the plaintiff never took up the "new" role makes it impossible to conclude that what was being offered or required by the defendant was not appropriately within the plaintiff's skills, qualifications and experience. A comparison of the language used in the various position descriptions of a National Customer Manager and a National Account Manager on the one hand and the position description enclosed with the defendant's letter of 18 March 2009 to the plaintiff does not enable one to say that the duties or position being offered by the defendant to the plaintiff in March were outside the operation of clause 1 of the 2002 contract, or such a significant diminution in status or responsibility as to constitute a repudiation by the defendant. Even if it could be concluded that some aspects of the new duties being put forward by the defendant were of lesser significance and involved the exercise of less responsibility, any requirement by the defendant for the plaintiff to perform the same did not, in my view, amount to a repudiation.

63 I turn now to consider the plaintiff's complaints concerning the various directives in March 2009 that the plaintiff take long service leave. Clause 10(a) of the plaintiff's employment contract provided:

"Long service leave will accrue, and must be taken, in accordance with relevant State legislation. However, long service leave can be taken at time (sic) mutually agreed between you and the company, in accordance with relevant State legislation. The company may direct you to take your accrued long service leave upon reasonable notice being given by the company."

64 Insofar as there was a direction on 12 March 2009 for the plaintiff to take his long service leave commencing on the following Monday (alternatively, on 20 March), such a direction was not given upon reasonable notice; nor did it comply with the three months written notice requirement in s 66(2) of the Long Service Leave Act.[60] However, upon being advised of the three months written notice requirement in s 66(2), the defendant's requests that the plaintiff take long service leave were modified. For example, in the 18 March letter to the plaintiff, the plaintiff was "requested" to take his accrued long service leave "effective 90 days from 12 March 2009". Subsequently, the letter of 31 March "request[ed]" the plaintiff take ten weeks of long service leave from 3 July 2009. Whatever may have been the position prior to the 31 March letter, the request in the 31 March letter complied with the notice requirements of s 66(2) and clause 10(a) of the plaintiff's employment contract.

65 Whether one considers the various requests of (or the various directives to) the plaintiff concerning long service leave in March 2009, either on their own or in combination with the defendant's attempts to have the plaintiff take up a new position and/or new duties, objectively considered, I cannot conclude that the defendant's conduct to 6 April 2009 constituted a repudiation of the plaintiff's employment contract. As at 6 April 2009, the parties were still negotiating concerning a new position which, on the material, could not be said to be one outside the ambit of clause 1 of the plaintiff's employment contract. Further, the request then on the table to the plaintiff to take long service leave complied with clause 10(a) and was in accordance with s 66(2) of the Long Service Leave Act.

66 For these reasons, the plaintiff's claim that the defendant repudiated the 2002 contract must fail.

67 As I said above, as part of his claim, the plaintiff also contended that the defendant breached an implied term that it "would not act so as to destroy or seriously damage the relationship of trust and confidence between it and the plaintiff, including by not acting unlawfully, capriciously, unfairly or unreasonably". During the course of the plaintiff's final address, I raised with counsel for the plaintiff whether this claim could assist the plaintiff in this proceeding. As the plaintiff's claim is for the contractual sum of $273,424.65 (payable if the defendant repudiated the contract), a breach of the implied term alleged could not result in the plaintiff being entitled to be paid this contractual sum unless the breach also constituted a repudiation of the contract. Ultimately, counsel for the plaintiff conceded this point.[61] This concession was rightly made. However, I should say for the sake of completeness that, had I been required to determine whether there was a breach of the implied term alleged, I would have concluded on the material that there was no such breach.

68 For the reasons given above, there will be judgment for the defendant.

[1] Prior to being known as Pacific National (ACT) Limited, the defendant was known as National Rail Corporation Limited.

[2] Whilst the plaintiff initially framed his claim as a claim for damages, at trial the plaintiff pursued the claim as a claim for the sum of $273,424.65 payable pursuant to the terms of his contract. The defendant did not oppose this course (see T133.2 - T133.19).

[3] See the particulars subjoined to paragraph 6 of the statement of claim and paragraph 1 of the defendant's outline of argument dated 31 January 2011 - and note also the plaintiff's allegations that the contract was partly implied and "insofar as it was implied, it was implied by law and so as to give business efficacy to the agreement".

[4] Intermodal is the name of the relevant division of the defendant to which this proceeding relates.

[5] CB 177. At the conclusion of the evidence, the parties submitted a revised Court Book index, agreeing that only the documents in the revised index (marked Exhibit D) were and would be in evidence. Whilst this list did not originally contain CB 177, after the hearing, the parties agreed (and conveyed their agreement by email) that this page formed part of the evidence (the page having been put to the plaintiff at T68).

[7] And also Nick Reeman, who was subsequently appointed to the position of National Account Manager in or about October 2008.

[9] Paragraph 29 of the plaintiff's witness statement (Exhibit A) and T65-66.

[11] The statement to Mr Garaty that the plaintiff had not looked at the agreement for over ten years appears now to be untrue. In cross-examination, the plaintiff agreed that on 11 March 2009, he had looked at his contract of employment (T121.28).

"In the absence of an agreement under sub-section (1), the employer may direct the employee to take long service leave at a particular time by giving the employee at least three months written notice."

[13] Paragraph 75 of the plaintiff's witness statement (Exhibit A).

[14] Made one to two days after the meeting, with the assistance of other less legible notes taken during the meeting.

[15] Paragraph 47 of Mr Hine's proof of evidence (Exhibit 2).

[17] Paragraphs 51 to 54 of Mr Hine's proof of evidence (Exhibit 2).

[19] Note the proof of evidence of Mr Thompson (Exhibit B) cavils with the notion that an agreement had been reached, but does not address specifically all of Mr Hine's evidence as to what occurred following the break in the meeting.

[20] As there is no letter of 12 March 2009 (only an email from Mr Hine to the plaintiff), it is likely that the plaintiff means to rely upon the letter of 18 March 2009. In any event, as both the email of 12 March and the letter of 18 March are relied upon as repudiatory conduct, it is necessary to consider them both.

[24] See Koompahtoo Local Aboriginal Land Council & Anor v Sanpine Pty Limited & Anor [2007] HCA 61; (2007) 233 CLR 115, [44].

[25] Earney v Australian Property Investment Strategic Pty Ltd (2010) 192 IR 311, [33].

[33] Ibid, [42]-[46], adopting the approach of Madgwick J in Westen v Union des Assurances de Paris (1996) 88 IR 259.

[37] Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451, [22]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165, [40].

[38] Hillas & Co Ltd v Arcos Ltd [1932] UKHL 2; [1932] All ER 494, 499, 503-4; Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429, 437; Di Dio Nominees Pty Ltd, v Brian Mark Real Estate Pty Ltd [1992] VicRp 99; [1992] 2 VR 732, 740; MLW Technology Pty Ltd v May [2005] VSCA 29, [76]-[81]; Mannai Investments Co Ltd v Eagle Star Life Assurance Co Ltd [1997] UKHL 19; [1997] AC 749, 770-1.

[39] ABC v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99, 109.

[40] Wilkie v Gordian Runoff Ltd [2005] HCA 17; (2005) 221 CLR 522, [16].

[43] See paragraph 9 of the plaintiff's outline of argument dated 4 February 2001. See further, paragraph 34 of the plaintiff's outline of argument (undated).

[44] See paragraph 35 of the plaintiff's outline of argument (undated).

[50] See paragraph 14 of the plaintiff's outline of argument dated 4 February 2011.

[51] But note that in paragraph 62 of the plaintiff's outline of argument (undated), the plaintiff's experience is said to include:

"(a) marketing national rail freight services to major customers;

(b) introducing new products and services to met (sic) customer needs;

(d) the negotiation of major freight contracts involving issues of service, delivery and equipment purchases."

[52] See for example T137.20 - T139.20, T167.28 - T170.23 and T171.31 - T172.4.

[53] Whether one looks at the plaintiff's skills, qualifications and experience as described in the plaintiff's outline of argument dated 4 February 2011 or whether one looks at the same matters as described in the plaintiff's outline of argument (undated).

[55] See for example paragraphs 69 and 73 of the plaintiff's outline of argument (undated).

[57] Cf Easling v Mahoney Insurance Brokers [2001] SASC 22; (2001) 78 SASR 489.

[58] See paragraph 52 of the plaintiff's outline of argument (undated) and T226.18.

[59] Remembering that Mr Garaty's handwritten notes of the meeting of 12 March 2009 disclose that the suggestion was being made to the plaintiff that as he was only working 25 hours a week, he could go to the Customer Service Centre for 15 hours.

[60] Whilst clause 18 of the 2002 contract provided that the laws of the State of New South Wales would govern the agreement and that the parties submitted to the jurisdiction of the Courts of that State, both parties agreed that it was the Victorian Long Service Leave Act that had application in this case. Further, no point was taken in this proceeding concerning clause 18.

Service Leave Act 1992

At a glance

Court

Decision date

Before

Source

Judgment (174 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (9)