Plaintiff v Defendant

Whether by reason of the Plaintiff terminating the 2008 employment Agreement between the parties dated 31 March 2008 by letter of resignation dated 1 February 2016 and by giving four weeks' notice of her resignation, the Defendant has a complete defence to the Plaintiff's claim of repudiation alleged at paragraph 33 of the Plaintiff's Second Further Amended Statement of Claim dated 18 September 2018?[1]

2 By a second further amended statement of claim ('SFASOC') filed 18 September 2018, Ms Hine alleges that Macquarie Bank Limited ('Macquarie') breached various terms of her contract of employment. She alleges that the breaches constitute a repudiation of her employment contract.

3 Ms Hine also alleges that, on 1 February 2016, she accepted Macquarie's repudiation of the employment agreement and terminated the employment agreement by writing a letter to Ms Yvette Salem of Macquarie's Human Resources Division.[2] The letter stated:

I hereby tender my resignation effective immediately due to irreconcilable differences and an untenable work environment. As indicated in my agreement I provide 4 weeks notice.[3]

4 In its defence dated 3 December 2018, Macquarie pleads that:

(a) By a letter dated 1 February 2016 from Hine to Ms Yvette Salem of Macquarie, Hine terminated the 2008 Employment Agreement by tendering her resignation from Macquarie, such resignation being in accordance with the 2008 Employment Agreement as Hine gave four weeks' notice as required under the agreement (the Resignation);

(b) By reason of (a), the Resignation was not and was not capable of constituting any acceptance of any purported repudiatory conduct of Macquarie.[4]

5 Macquarie also denies that it engaged in any repudiatory conduct as alleged in the SFASOC.[5] However, for the purposes of the determination of the proposed separate question, Macquarie accepts that the court should proceed on the assumption that it did engage in the alleged repudiatory conduct.

6 Macquarie's contention is a narrow one. In effect, it submits that Ms Hine terminated her contract in accordance with its terms by the provision of four weeks' notice. It submits that this mode of termination precludes the finding that the contract came to an end by Ms Hine's acceptance of Macquarie's repudiatory conduct. It submits that this conclusion is reinforced by the fact that the letter of resignation was forwarded to Macquarie under cover of a letter from Ms Hine's solicitors, also dated 1 February 2016, which did not make any express allegation that the contract had been terminated by reason of Ms Hine's acceptance of Macquarie's repudiatory conduct.

7 The principles governing the exercise of the power conferred by r 47.04 are well established. They are conveniently summarised in the judgment of Derham AsJ in Vale v Daumeke[6] as follows:

(a) The discretion must be exercised with great caution, and only in a clear case;

(b) An order for the determination of a separate question before trial is generally only appropriate where the determination of the question will be likely to end the litigation or substantially narrow the issues in dispute, or where there is a clear demarcation between that issue and the other issues in the case;

(c) Where the preliminary question is one of mixed fact and law, it is necessary that the question can be precisely formulated (ensuring that the terms used have clear meaning) and that all of the facts that are on any fairly arguable view relevant to the determination of the question are ascertainable either as facts assumed to be correct for the purposes of the preliminary determination, as agreed facts or as facts to be judicially determined;

(d) The separate determination of the question should not be attempted where there is uncertainty inherent in the definition of the facts upon which the substantive question must be determined;

(e) In cases where the relevant facts are assumed by one party to be correct for the purposes of the preliminary determination, it is only possible to determine a question of law, not one of mixed law and fact;

(f) Care must be taken in utilising the procedure provided for in r 47.04 of the Rules to avoid the determination of issues not 'ripe' for separate and preliminary determination - for example, where it is simply one of two or more alternative ways in which an applicant frames its case, and determination of the issue would leave significant other issues unresolved;

(g) The advantages of trying separate questions for one party may unfairly disadvantage another party, including because the questions will be determined without the benefit of all the evidence relevant to the proceeding;

(h) Whether a question should be determined separately involves a two-stage process - the first stage requires that the questions for determination be identified clearly and with precision, while the second stage is the actual determination of the question - and the two stages should not be run together;

(i) If the questions involve issues of fact that need to be determined or proved, and the Court cannot see, on the basis of the material presently before it, that the facts can be properly determined, it is inappropriate to make the order;

(j) In some cases, perhaps most cases, it will be inappropriate to order the trial of preliminary questions before discovery of documents relevant to the questions, and before resolving grounds restricting production and inspection of them, such as client legal privilege or public interest immunity;

(k) Factors that tend to support the making of an order include that the separate determination of the question may:

(x) Contribute to the saving of time and cost by substantially narrowing the issues for trial, or even lead to disposal of the action; or

(xi) Contribute to the settlement of the litigation; and

(l) Factors that tell against the making of an order include that the separate determination of the question may:

(i) Give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of trial;

(ii) Result in significant overlap between the evidence adduced on the hearing of the separate question and at trial - possibly involving the calling of the same witnesses at both stages of the hearing of the proceeding - which will be of particular significance if the Court may be required to form a view as to the credibility of witnesses who may give evidence at both stages of the hearing of the proceeding; or

(iii) Prolong rather than shorten the litigation.[7]

8 The discretion conferred by r 47.04 of the Rules must be exercised with great caution and only in a clear case. One of the factors which weighs against the making of an order for determining a separate question is whether such an order may prolong rather than shorten litigation.

9 The trial of the current proceeding has been set down to commence on 13 August 2019. Pre-trial directions were made by Ierodiaconou AsJ on 7 February 2019. I shall return to those directions in due course. The basis of Macquarie's proposed preliminary question is, in effect, articulated in paragraph 34 of the defence filed on 3 December 2018.

10 Macquarie could have made an application at that time for the determination of a separate question in the same terms embodied in the summons of 8 April 2019. It did not do so. Rather, it consented to the making of the pre-trial orders which were made on 7 February 2019.

11 Mr Bourke QC, who appeared with Ms Leoncio on behalf of Macquarie, candidly acknowledged that Macquarie did not turn its mind to making an application under r 47.04 until shortly prior to 8 April 2019.[8] Macquarie's delay in bringing the current application is compounded by the real prospect of appeal if the proposed separate question is heard and determined.

12 In Western Excavating (ECC) Ltd v Sharp,[9] Lord Denning MR stated:

If the employer is guilty of conduct which is a significant breach going to the root of the contract of employment; or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract; then the employee is entitled to treat himself as discharged from any further performance. If he does so, then he terminates the contract by reason of the employer's conduct. He is constructively dismissed. The employee is entitled in those circumstances to leave at the instant without giving any notice at all or, alternatively, he may give notice and say he is leaving at the end of the notice.[10]

13 This passage supports a finding that the provision of four weeks' notice by Ms Hine does not preclude termination of her contract by acceptance of Macquarie's repudiatory conduct. Mr Bourke submits that Lord Denning MR's statement in Sharp is not good law insofar as it allows for an employee to terminate his or her contract of employment by accepting the employer's repudiatory conduct while simultaneously giving notice of termination in accordance with the terms of the contract.

14 Mr Bourke submits that the reasoning of Lord Denning MR cannot be reconciled with a judgment of a five-member Full Court of the Federal Court of Australia in Melbourne Stadiums Limited v Sautner,[11] particularly at paragraphs 89 to 118. Mr Bourke submits that Sautner compels the conclusion that Ms Hine is bound by the choice which she made to terminate her contract upon the provision of four weeks' notice in accordance with the terms of the contract.

15 It is unnecessary to express any concluded view as to the strength of this submission. Suffice to say, the passage from Sharp, which I have set out above, has been cited with approval on numerous occasions. I cited the same passage with approval in Crowe Horwath (Aust) Pty Ltd v Loone.[12] The passage was cited in the context of a finding that a delay of eleven days between repudiatory conduct of Crowe Horwath and the acceptance of that conduct by Mr Loone did not preclude Mr Loone from bringing the contract of employment to an end by the acceptance of that conduct. That finding was not disturbed on appeal.[13]

16 If Macquarie's proposed preliminary question is answered in its favour, it would, in all likelihood, require a finding that Lord Denning MR's statement of principle in Sharp is no longer good law in Australia insofar as it countenances an employee terminating his or her contract of employment by accepting the employer's repudiation of the contract albeit upon the provision of notice as prescribed by the contract.

17 I have no hesitation in concluding that, if the proposed separate question was determined, there is a real prospect of appeal by whichever party was unsuccessful in the application. Such an appeal would be unlikely to be heard until the latter part of 2019. Whatever the outcome of the appeal, the current proceeding would not be able to resume until sometime in the first half of 2020. In this regard, it is to be noted that both parties agree that, irrespective of the outcome of the preliminary question, there remains issues for determination.

18 The proceeding was commenced by writ filed on 28 July 2017. I consider that the risk that the trial date scheduled for 13 August 2019 will be lost, together with the prospect of further delay pending resolution of any appeal, is a matter which weighs heavily against the granting of the defendant's application.

19 Mr Bourke pointed out that the plaintiff is currently in default of orders made by Ierodiaconou AsJ. The plaintiff should have provided a list of documents by 28 March 2019. Further, the plaintiff's witness outlines were due to be filed by 15 April 2019. Mr Bromley, who appeared for Ms Hine, informed the court that Ms Hine will be in a position to file her list of documents within seven days and the outlines of evidence within four weeks.

20 I shall amend the orders previously made by Ierodiaconou AsJ. Whilst the plaintiff's non-compliance with the pre-trial orders is unsatisfactory, it should not result in the loss of a trial date of 13 August 2019.

21 A further consideration which weighs against the granting of the defendant's application is the potential for the plaintiff to be unfairly disadvantaged if the question was determined absent all of the evidence relevant to the question of whether the defendant repudiated Ms Hine's contract of employment.

22 The determination of the proposed question would require the court to make a finding as to whether Ms Hine's letter of 1 February 2016:

(i) constituted an acceptance by her of Macquarie's repudiatory conduct; or

(ii) constituted termination of the contract by Ms Hine in accordance with the terms of the contract.

23 Notwithstanding Macquarie's acceptance that any determination of the proposed question is premised upon it having engaged in repudiatory conduct, the question of whether the letter of 1 February 2016 is properly characterised as an acceptance by Ms Hine of Macquarie's repudiatory conduct may be informed by evidence in respect of the alleged repudiatory conduct, particularly in respect of the period leading up to 1 February 2016.

24 One of the matters alleged by Ms Hine to constitute repudiatory conduct is the alleged failure by Macquarie to pay her annual Certified Financial Planning membership with the Financial Planning Association.[14] The letter from Ms Hine's solicitors to Macquarie of 1 February 2016, which attached Ms Hine's letter of 1 February 2016, stated:

Our client: Carolyn Hine

We attach our client's letter of resignation, for your attention.

As previously discussed, we are communicating with the FPA to have our client's CFP membership retrospectively reinstated without the need to otherwise comply with the FPA's reinstatement requirements.

If the FPA agree to retrospectively reinstate our client's membership, we expect that Macquarie will make the necessary retrospective payments to the FPA.

If the matter cannot be resolved soon in this manner, our client reserves all her rights to take appropriate action and pursue all available remedies against Macquarie.

Please contact our office to discuss our client's termination arrangements and accrued leave entitlements.[15]

25 Although this letter does not contend acceptance by Ms Hine of Macquarie's repudiatory conduct, it does state in respect of the reinstatement of Ms Hine's CFP membership, 'If the matter cannot be resolved soon in this manner our client reserves all her rights to take appropriate action and pursue all available remedies against Macquarie'.[16]

26 Evidence in relation to this correspondence, as well as any other open communication between Ms Hine's solicitors and Macquarie prior to 1 February 2016 in respect of conduct by Macquarie alleged by Ms Hine to be in breach of her contract, may be relevant to the question of whether Ms Hine's letter of 1 February 2016 is properly characterised as an acceptance by her of Macquarie's repudiatory conduct.

27 I am not satisfied that it is appropriate to determine the question of the proper characterisation of Ms Hine's letter of 1 February 2016 without the benefit of all evidence relating to Macquarie's alleged repudiatory conduct.

28 Macquarie's application pursuant to r 47.04 is dismissed.

[1] Defendant, 'Summons', 10 April 2019, [1].

[2] Plaintiff, 'Second Further Amended Statement of Claim', 18 September 2018, [34].

[3] Exhibit DF-21 to the affidavit of Dominic James Fleeton affirmed 9 April 2019.

[4] Defendant, 'Defence', 3 December 2018, [34] (emphasis in original).

[6] [2015] VSC 342.

[8] Transcript of proceeding (30 April 2019), 17.29.

[9] [1977] EWCA Civ 2; [1978] IRLR 27 ('Sharp').

[11] [2015] FCAFC 20; (2015) 229 FCR 221 ('Sautner').

[12] [2017] VSC 163, [64].

[13] See Crowe Horwath (Aust) Pty Ltd v Loone [2017] VSCA 181.

[14] See Plaintiff, 'Second Further Amended Statement of Claim', 18 September 2019, [13], [33], [38].

[15] Exhibit DF-21 to the affidavit of Dominic James Fleeton affirmed 9 April 2019 (emphasis in original).