SAAD v TWT LTD

Court of Appeal (NSW)|1997-10-02

SAAD v TWT LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

PRIESTLEY, HANDLEY and POWELL JJA 2 October 1997, 29 May 1998

TRADE PRACTICES - consumer protection - employer and employee - misleading or deceptive conduct - whether representations require qualification when made - Trade Practices Act 1974 (Cth) s52

CONTRACTS - breach - repudiation - repudiation - of contract by employer

mitigation of damage by employee - damages - reasonable notice

EVIDENCE - admissions - whether answer to interrogatories formal or informal admissions

The appellant was skilled at selling advertising time for television networks and had held a number of positions at various networks. In May 1990, the appellant was approached by the respondent to sell advertising time for WIN (the respondent's trading name) in the Wollongong area. The respondent's sales manager informed the appellant by telephone that she would be given a client list from which her predecessor had earned $68,000 (base salary plus commission) in the previous year. The respondent also offered a company car. The appellant accepted the offer (thereby foregoing a new job in Melbourne paying $60,000 per year) and asked for written confirmation. This was supplied in the form of a letter which detailed the proposed salary but omitted any details about the client list to be operated by the appellant. The appellant signed and returned a copy of the letter.

When the appellant reported for work on the agreed date (having moved from Melbourne to Wollongong) she was informed her predecessor had decided not to leave after all and that consequently the appellant would not be given the promised list of clients. Instead she was given a much less profitable list with accordingly lower commissions. The appellant protested but accepted the new position. She was dismissed almost a year later and successfully sued the respondent for wrongful dismissal. She also sued the respondent for breach of s52 of the Trade Practices Act 1974 (Cth); breach of express contractual terms; and breach of implied contractual terms. The appellant failed on these causes of action and appealed all three.

HELD: Allowing the appeal: (1) The representations made by the respondent to the appellant in the phone conversations - that the appellant's predecessor had resigned - were not false when made. This was in spite of an answer to interrogatories given by the respondent saying the predecessor had not resigned. The answer was an informal admission and contrary evidence could therefore be adduced. The trial Judge found upon weighing the evidence that the representation was true when made, therefore s52 of the Trade Practices Act 1974 (Cth) was not breached. Stateliner Pty Ltd v Legal and General Assurance Society Ltd (1981) 29 SASR 16 at 46, applied.

(2) There was no need in this case for the respondent to qualify the representations at the time they were made to the appellant. The lack of qualification did not breach s52. Wheeler Grace Pierucci Pty Ltd v Wright (1989) ATPR 49-940, applied; Bill Acceptance Corp Ltd v GWA Ltd (1983) 78 FLR 171, Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 and Squibb v Tully (1986) ATPR 40-691, considered.

(3) There was no breach of implied contractual terms, as the implied terms asserted by the appellant were unreasonable. BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, applied.

(4) Contrary to the arguments of the respondent, the telephone conversations formed part of the employment contract between appellant and respondent, as well as the letter. The contract was partly oral and partly written. SRA NSW v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170, applied; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, considered.

(5) Despite the fact that the respondent had a limited discretion to alter the client lists of its employees, the failure to give the appellant the promised list fell outside this discretion and was a breach of the contract of employment. R v Darling Island Stevedoring and Lighterage Co Ltd Ex Parte Halliday (1938) 60 CLR 601, applied; Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991)

24 NSWLR 1 and First Energy (UK) Ltd v Hungarian International Bank Ltd [1993] 2 Lloyd's Law Rep 194, considered.

(6) The appellant's decision to continue working for the respondent with the substitute list was not an agreed rescission of the contract. Rather it was an acceptance of the respondent's repudiation of the contract and an attempt by the appellant to mitigate her loss. Brace v Calder [1895] 2 QB 253 and O'Connor v Argus & Australasian Ltd (1957) VR 374, considered; Marriott v Oxford & District Co-operative Society Ltd (No 2) [1970] 1 QB 186 and Western Excavating Ltd v Sharpe [1978] 1 QB 761, distinguished.

(7) The damages awardable to the appellant are the difference between likely earnings under the contract and actual earnings during a period of reasonable notice. What period of notice is "reasonable" is decided in the light of the objective circumstances as they exist at the time the notice is, or should have been, given. In this case the period of reasonable notice was three months. Australian Blue Metal Ltd v Hughes [1963] AC 74, applied; The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 91, considered.

Handley JA This is an appeal by the plaintiff from a decision in what in substance was an action for wrongful dismissal. The appellant claimed damages from her former employer, TWT Ltd, trading as WIN Television (WIN) for breach of her contract of employment, and for breach of s52 of the Trade Practices Act.

The appeal stems from events in 1990-1991 when the appellant left a well paid job in Melbourne and moved to Wollongong to sell advertising for WIN in reliance upon statements made to her by its Sales Manager. She claimed these statements were not honoured by WIN.

The appellant was employed by WIN during 1988 selling advertising time. In January 1989 she received an offer from Channel 7 Melbourne to sell advertising time for that company which she accepted. She remained at Channel 7 for twelve months and then moved to Channel 9 Melbourne for about six months. At this stage her annual salary package was $35,000 plus car and expenses.

In April 1990 she was approached to work for Interscreen International in Melbourne at a gross salary of $60,000 from which she had to maintain a vehicle. The appellant was then involved in a relationship with a Mr Masters, a solicitor in Wollongong and he made arrangements to join the Melbourne Bar to be near the appellant. They were later married.

In May 1990 the appellant received a telephone call in Melbourne from Mr Lyons, the Sales Manager of WIN. The Judge accepted her account of this conversation as follows:

"Mark rang and said "Wendy Matthews has resigned. How would you like to come back and have your old job back?' I said to him, - I asked him what the conditions would be; and he said I would be on a salary of $24,000 plus a motor vehicle.

I said I couldn't justify leaving Melbourne at that time because I was about to take up a position at Interscreen International for $60,000 and it was just too much of a drop to go backwards in that way.

He said to that - he said, 'Did you know what the commission has been' - 'I have restructured the commissions and they're a lot more attractive, the commissions being four percent to budget and twelve percent over budget; also, you will be getting your old list back which you built up and Wendy took over. Wendy last year earned $68,000 - that's what she earned from that list, and Wendy is a single parent and only works 'til 3.30 in the afternoon. So, she doesn't work a full day. I know that you would work a full day and that you could build up the list that she has. She is going to New Zealand'.

I said, 'That makes it quite a different proposition and that does sound interesting, however, it is not just myself that I have to consider I will have to... talk to my partner John and I'll talk to him and get back to you'."

The appellant later phoned Mr Lyons back, accepted his offer, and asked for written confirmation. She received a letter dated 29 May 1990 which she signed and returned. This was as follows:

"This letter confirms your appointment as Sales Executive, Wollongong Direct Sales. Your appointment is effective 18th June, 1990. You are required to commence duties at 9am on that date. A three month probationary period will apply.

Your duties will include selling and servicing existing clients and obtaining new business.

Your retainer will be $462 per week. The commission scheme is as follows: from 50% of budget to budget you will receive 4% of any monies written in that area. This is paid monthly. Any monies written over budget for the quarter you will receive 12% of and of course this is paid quarterly. A fully maintained company vehicle will be supplied

Please note that the company's trading terms are 30 days. If a client does not pay the company and the debt is sent to our debt collector commission on that sale will be deducted.

Yvonne, I am looking forward to you joining us again and I am sure that you will be happy and successful in your new position with WIN Television. Could you please sign the copy of this letter and return it to me as soon as possible.

I accept the appointment on the conditions stated above".

The appellant then resigned from her position at Interscreen and returned to Wollongong to work for WIN. When she reported for work on 18 June 1990, she was told that Ms Matthews had not left, and she could not have her job or client list. She was offered the client list of a Mr Paul Turner who had moved to the company's Canberra office. The appellant protested, but accepted the Turner list and started work. Her list was altered a number of times over the following months to assist her to increase her income. She remained with WIN until 26 April 1991 but only earned $26,762. Her employment was terminated on 26 April 1991 in circumstances which led to a successful claim for wrongful dismissal.

The appellant relied on four causes of action: (a) contravention of s52 of the Trade Practices Act 1974 (Cth); (b) breach of implied terms; (c) breach of express terms; and (d) wrongful dismissal. The appellant failed on the first three causes of action and has appealed against their rejection.

The only issue on this part of the appeal concerned the representations said to have been made by Mr Lyons in the phone conversations. These were alleged to be:

Wendy Matthews had resigned and her position was available; and

if the appellant accepted that position she would regain her old client list which had passed to Wendy Matthews.

The question is whether these were representations, and if so whether they were "misleading or deceptive", and in particular whether they were true when made or needed qualification. The appellant argued that the statements were not true and relied heavily upon WIN's answer to interrogatory 3:

"Matthews had not formally resigned from her employment at the time of either of the conversations. Matthews never submitted a formal resignation. Matthews did withdraw an oral indication of intention to resign after 28 May".

The appellant argued that this was a formal admission which prevented WIN leading evidence to the contrary but this submission must be rejected. Answers to interrogatories are informal admissions and the answering party is not prevented from adducing contrary evidence (Stateliner Pty Ltd v Legal and General Assurance Society Ltd (1981) 29 SASR 16 at 46). In this case a large body of contrary evidence was adduced, notably from Wendy Matthews who said she had resigned and made plans to go to New Zealand, but then changed her mind and was allowed to retain her job. The Judge accepted this evidence and found that Ms Matthews had resigned before the representations were made. These findings cannot be disturbed and this ground of appeal fails.

The appellant also asserted that the representations contravened s52 because they were not in a qualified form. There are circumstances in which a representation needs to be qualified to avoid a contravention of s52(1) (Bill Acceptance Corp Ltd v GWA Ltd (1983) 78 FLR 171; Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82; Squibb v Tully [1986] ATPR 40-691). The appellant relied in particular on the following remarks by Lee J in Wheeler Grace Pierucci Pty Ltd v Wright [1989] ATPR 49-940 at 50,251:

"A positive unqualified prediction by a corporation may be misleading conduct in trade or commerce if relevant circumstances show the need for some qualification to be attached to that statement or the possibility of its non-fulfilment to be disclosed as a requirement of fair trading... The misleading or deceptive conduct may be found in the failure to qualify the statement or disclose the risk of non-fulfilment". [emphasis added]

The Judge was clearly correct in finding that there was no need at the time for these representations to be qualified. Ms Matthews had resigned and had taken steps to move to New Zealand. The character of a representation must be judged when it is made (Bill Acceptance Corporation Ltd v GWA Ltd (1983) 78 FLR

171 at 178), and at that time Mr Lyons had no reason to suspect that Ms Matthews would change her mind and seek to retain her position with WIN.

The appellant did not plead that these were continuing representations (Briess v Woolley [1954] AC 333 at 344, 349, 354) which although true when made became false once Ms Matthews was allowed to withdraw her notice of resignation and keep her old job. Mr Lyons and WIN, knowing that their representations had become false, had a duty to correct them and were guilty of fraud if they failed to do so. With v O'Flanagan [1936] 1 Ch 575. Such a case, not having been pleaded or litigated at the teal, must be ignored.

The appellant pleaded that the agreement contained the following implied terms -

(a) that the defendant would co-operate in enabling the plaintiff to earn and maximise her commission pursuant to the agreement; and

(b) that the defendant would not frustrate attempts by the plaintiff to introduce business and thereby earn commission.

These were admitted by the respondent in the pleadings. The appellant contended that the respondent breached these terms when it prevented the appellant from dealing with Sutherland Car Dealers and the Campbelltown Chamber of Commerce. However the Judge held that these were legitimate commercial decisions by WIN. These clients were outside the local market area and were in direct competition with existing clients within the area. Mr Lyons considered that taking on these accounts would risk relations with existing clients. The appellant acknowledged that WIN had a discretion to make such decisions and the Judge held that it would not be reasonable to imply terms which ignored normal commercial considerations. To do this would fail to give business efficacy to the contract. See BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 282-3. The appellant therefore fails on her case based on implied terms.

This argument centres on whether the May 1990 telephone conversations were part of the contract. The Judge held that they were pre-contractual and that the references to Wendy Matthews' job and client list were representational and not promissory. He said:

"Ms Masters requested written confirmation of the offer with WIN television from Mr Lyons. The proximity of the conversations with the arrival of the letter lend weight to the proposition that if the alleged promises were contractually enforceable, going to the root of the contract, then Ms Masters should have insisted that they were included in the letter since the letter recorded most other material aspects of the conversation. I am of the view that the starting point of analysis must be the written contract, which is a written record of the conversations between Ms Masters and Mr Lyons and that the oral statements are pre-contractual in nature".

The Judge then considered whether the oral statements were capable of supporting a collateral contract. He found that there was such a contract with respect to the appellant's moving expenses which were to be paid by the respondent. The relevant principles were stated by Gibbs CJ in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 61:

"A representation made in the course of negotiations which results in a binding agreement may be a warranty - ie it may have binding contractual force - in one of two ways: it may become a term of the agreement itself, or it may be a separate collateral contract, the consideration for which is the promise to enter into the main agreement. In either case the question whether the representation creates a binding contractual obligation depends on the intention of the parties. In JJ Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435 at 442 and Ross v Allis-Chalmers Australia Pty Ltd (1980) 55 ALJR 8 at 10 and 11, it was said that a statement will constitute a collateral warranty only if it was "promissory and not merely representational", and it is equally true that a statement which is merely representational" - ie which is not intended to be a binding promise - will not form part of the main contract. If the parties did not intend that there should be contractual liability in respect of the accuracy of the representation, it will not create contractual obligations".

Thus an oral exchange between persons who become contracting parties may include a promissory statement which is not collateral, but is part of the main agreement. The contract may be partly written and partly oral. Evidence may be received to establish that a written document is not a binding record of the whole contract but that there were also oral terms. See SRA NSW v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170 at 191 per McHugh JA.

In determining whether the phone calls also formed part of the contract, the intention of the parties is the critical factor (Hospital Products above). The fact that parts of the oral discussions were not included in the letter of 29 May 1990 is some evidence that they were not intended to be contractual. However as the Gibbs CJ pointed out in Hospital Products, this is not conclusive. The test he adopted was that of an intelligent bystander in the situation of the parties. See also Oscar Chess Ltd v Williams [1957] 1 WLR 370 and Reardon Smith Line v Hansen-Tangen [1976] 1 WLR 989.

The letter confirmed the appellant's salary and commission details rather than the type of work to be undertaken. Its description of the appellant's new position as "Sales Executive, Wollongong Direct Sales" and her duties as "selling and servicing existing clients and obtaining new business" was very broad. This was not inconsistent with a further oral agreement that she would have a particular job and client list. Since the occasion and reason for the contract was the job vacancy created by the pending departure of Ms Matthews, it is not surprising that the parties took this for granted and did not bother to record it.

In Macdonald v Longbottom (1859) 1 E & E 977 [120 ER 1177], which was approved by Mason J in Codelfa Constructions Pty Ltd v State Rail Authority (1982) 149 CLR 337 at 349-50, the Court held that evidence was admissible to identify the subject matter of the expression "your wool" in a written agreement. The evidence consisted of a pre-contractual conversation in which one of the plaintiffs informed the defendant's agent that they had wool from their own farms and wool bought in from other farms as well.

The letter of 29 May 1990 stated "your duties will include selling and servicing existing clients and obtaining new business". In my judgment oral evidence was admissible to establish that the parties had identified and agreed upon a particular group of "existing clients" namely those on Ms Matthews' list. I therefore respectfully disagree with the Judge's conclusion that the letter was a written contract and as such a binding record of its terms (apart from the collateral term as to removal expenses). Even if had been a written contract, oral

evidence would still have been admissible to identify the "existing clients" referred to and the result would be the same.

The appellant's contract of employment therefore included terms that entitled her to Ms Matthews' job and client list. Ms Matthews had resigned and was going to live in New Zealand and the appellant would step into her shoes at the company. WIN found itself in difficulties when Ms Matthews sought to withdraw her resignation, but it had already committed itself contractually to the appellant. When WIN agreed to let Ms Matthews have her job back, it necessarily placed itself in fundamental breach of its contract with the appellant.

Stripped of the legal technicalities which do not avail WIN, the case is one where Mr Lyons induced the appellant to give up a $60,000 a year job in Melbourne to return to Wollongong to take up a job with a base salary of $24,024 plus commission which both parties believed would enable the appellant to achieve total earnings of more than $68,000 a year. The appellant had personal reasons for wishing to return but a most material inducement, as the telephone conversation demonstrates, was the availability of her old client list which Ms Matthews was relinquishing. It is obvious that the appellant would never have agreed to return to WIN to take up a lesser job with a lesser list such as that held by Mr Turner. Why should she?

Moreover if Mr Lyons' promise that the company would pay her removal expenses from Melbourne was contractual in nature, it would be remarkable if the more important promises about taking over the job and client list of Ms Matthews, were not. The statement by Mr Lyons that Ms Matthews had resigned was representational because it was a statement of an existing fact, but his statements that the appellant could have her old job back with her old client list related to the future and were promissory in substance. As a matter of commonsense, fair dealing and business efficacy, the statements by Mr Lyons about Ms Matthews' job and client list were contractual in nature, and fortunately, for the reasons previously given, legal technicalities do not stand in the way.

The Judge held that WIN's power to vary the clients' lists of its employees enabled it to withdraw Ms Matthews' list from the appellant at will, without being in breach of contract. This amounts in substance to a finding that its promises, through Mr Lyons, that the appellant could have Ms Matthews' list was in legal terms "illusory".

An illusory contract is one where words constituting a promise are "accompanied by words which showed that the promisor was to have a discretion or option as to whether he would carry out that which purported to be the promise". See Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR | at 42. However WIN's letter did not reserve any such discretion which would have been completely inconsistent with Mr Lyons' promises to the appellant. The question then is whether the discretion of an employer to vary the duties of an employee under a continuing contract of service has the effect contended for by Mr Buchanan QC for WIN. His submission was that WIN had the power under its contract with the appellant, notwithstanding its express oral terms, to withdraw Ms Matthews' client list from her at any time, in whole or in part, and to substitute other clients.

I approach this submission bearing in mind the observations of Steyn LJ in First Energy (UK) Ltd v Hungarian International Bank Ltd [1993] 2 Lloyd's Law Rep 194 at 196:

"The theme that runs through our law of contract is that the reasonable expectations of honest men must be protected. It is not a rule or a principle of law. It is the objective which has been and still is the principal moulding force of our law of contract. It affords no licence to a Judge to depart from binding precedent' On the other hand if the prima facie solution to a problem runs counter to the reasonable expectations of honest men, this criterion sometimes requires a rigorous re-examination of the problem to ascertain whether the law does indeed compel demonstrable unfairness".

The co-existence of a discretion of the width contended for by Mr Buchanan QC with the contract established in this case, if that discretion were to prevail, would defeat the reasonable expectations of honest men and women. Such a discretion would enable WIN, as it submitted to this Court, to convert the appellant's employment from one carrying a good "chance" of enabling her to earn $68,000 a year into one which only enabled her to earn some $8,000 over her base salary of $24,024.

I am satisfied that the law conferred no such discretion on WIN. The implied power of the employer is that of giving reasonable commands or directions to an employee. The established test in such cases is that stated by Dixon J in R v Darling Island Stevedoring and Lighterage Co Ltd Ex Parte Halliday (1938) 60 CLR 601 at 621-2:

"Tf a command relates to the subject matter of the employment and involves no illegality, the obligation of the servant to obey it depends at common law upon its being reasonable. In other words the lawful commands of an employer which an employee must obey are those which fall within the scope of the contract of service and are reasonable".

See also McManus v Scott-Charlton (1996) 70 FCR 16 at 21 and foll per Finn J.

WIN made no attempt to justify the substitution of Mr Turner's list for that of Ms Matthews as being "reasonable". It relied upon an unfettered discretion which does not exist.

The Judge held that the appellant's acceptance of the Turner list when she started work again with WIN supported the view that the statements made by Mr Lyons during the telephone conversations were not intended to have contractual force. Subsequent conduct is not available for this purpose under English law. See L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235. It seems that this is also true of Australian law. See The Administration of the Territory of Papua and New Guinea v Daera Guba (1973) 130 CLR 353 at 405, per Menzies J at 446, per Gibbs J, and at 459 per Stephen J, AMP Society v Allan (1978) 52 ALJR 407 at 411, per Lord Fraser and Codelfa Construction Pty Ltd v State Rail Authority (1982) 149 CLR 337 at 348 per Mason J. Compare Hide and Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310.

In any event where subsequent conduct has been relied upon in the past as an aid to the construction of a written contract, that conduct has been consensual. In this case the subsequent conduct was not. When the appellant reported for work on 18 June 1990 she was in effect presented with an accomplished fact. Ms Matthews still had her old job and her client list and the appellant was offered Mr Turner's former list. The appellant had burnt her boats in Melbourne for the time being and really had no alternative but to accept WIN's offer. Her acquiescence in this offer under protest is a most unsatisfactory guide to the parties' contractual intentions.

The Judge also found that the appellant "elected to continue the contract anyway disregarding and not relying upon any statements made". This statement may be thought to beg the question by assuming that the appellant continued "the contract". In my view the appellant did not continue the contract evidenced by the letter of 29 May and the prior telephone calls but accepted a new contract with Mr Turner's list.

When the appellant reported for work on 18 June 1990 she did not become involved in what could reasonably be described as a re-negotiation of her contract. She was confronted with its unequivocal repudiation by WIN on a take it or leave it basis, accompanied by an offer of a different and less advantageous contract. The appellant would have been fully justified in walking out immediately and suing for wrongful dismissal. Her acceptance of the new contract cannot be construed as part of an agreed rescission, without breach, of the existing contract. It was the acceptance by the appellant of the repudiation by WIN of the existing contract. Compare Rigby v Ferodo Ltd [1988] ICR 29 at 35 per Lord Oliver.

The appellant was merely acting to mitigate her loss. A wrongdoer, especially a party in breach of contract, may provide the injured party with an opportunity to mitigate his or her loss. See Payzu Ltd v Saunders [1919] 2 KB 581. Such offers have been made in wrongful dismissal cases where it has generally been held that the plaintiff's refusal of the offer was reasonable and had no effect in diminishing the damages. See Shindler v Northern Raincoat Co Ltd (1960) 1 WLR 1038 and Yetton v Eastwoods Froy Ltd (1967) 1 WLR 104.

In Brace v Calder [1895] 2 QB 253, the wrongful dismissal arose by operation of law on the retirement of some of the partners, and it was held that the dismissed employee should have accepted an offer of re-employment by the continuing partners and was only entitled to nominal damages.

Some of the cases which consider the effect of an offer by the employer of a less advantageous contract have been decided in the context of legislation or industrial awards which create civil or criminal remedies for unlawful or unfair dismissals. Many of these cases are not helpful in the present context because of their focus on the termination of the employment relationship. In my opinion the decisions in Marriott v Oxford & District Co-operative Society Ltd (No 2) [1970] 1 QB 186 and Western Excavating (ECC) Ltd v Sharpe [1978] 1 QB 761 are in this category.

The distinction between the termination of a contract of employment, and the termination of the relationship of employer and employee is clearly drawn in O'Connor v Argus & Australasian Ltd [1957] VR 374 at 388 by O'Bryan J. The employer had terminated its existing contract of employment with the journalist, although its offer to re-employ him at a lower grade had been accepted, but it was not in breach of the award because it had not terminated the relationship of employer and employee.

In my opinion therefore the repudiation of the contract by WIN and its acceptance of that repudiation by the plaintiff operated as a wrongful dismissal and gave her an immediate cause of action for damages for loss of her bargain. The measure of those damages will be her probable earnings under the lost contract for the period of reasonable notice, less her actual earnings during that period.

The contract contained no general provision for its termination and was therefore terminable on reasonable notice. The length of the required notice is a question of fact to be decided in the light of the objective circumstances as they

exist at the time the notice is, or should have been, given. See Australian Blue Metal Ltd v Hughes [1963] AC 74 at 99. When the appellant agreed to accept the position offered by Mr Lyons, she had only just terminated her employment with Channel 9 Melbourne and she would have to leave her new job with Interscreen International Pty Ltd after only a few days. It would be reasonable to suppose that she had no immediate employment prospects in Melbourne at an equivalent level. Her previous employment had been with WIN in Wollongong and it does not appear that alternative employment opportunities were available in her area of expertise in that city.

Her acceptance of Mr Lyons' offer involved her moving from Melbourne. The job she was offered, and accepted, was that of the top advertising sales executive for the company. Such jobs would not become available with any frequency. The considerations relevant to the determination of the period of reasonable notice, and the relevant cases, have been helpfully summarised in Macken, McCarry and Sappideen, "The Law of Employment", 4th Ed, 1997, at p166-p168. These factors would indicate that a substantial period of notice was required as at June 18 1990.

The contract however was not entirely silent on this issue because it contained a term that "a three months' probationary period will apply". This meant that WIN could have terminated the contract at the end of the three months period without breach. The general principle is that in an action for breach of contract, a defendant is not liable in damages for failing to do what it has not promised to do. See The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 91, 102, 152.

There is a further principle which is also relevant that where the defendant has the option of performing the contract in different ways damages should be assessed on the basis that it will be performed in the way most beneficial to the defendant. See McGregor on Damages, 15th Ed, 1988, at p228-p229. These principles require a finding that on 18 June the plaintiff was not entitled to more than three months' notice, but they also require a finding that she was entitled to no less.

The power of WIN to give reasonable orders or directions to its employees, including any power to vary her list of clients, does not require her damages to be discounted. She had a contractual right to Ms Matthews' job and client list and was entitled, so long as she adequately and efficiently serviced those clients, to retain that list substantially unchanged, at least during the probationary period. She was therefore contractually entitled to the chance to prove herself to WIN with the customers on that list. WIN thus had a legal obligation to provide the appellant with the chance or opportunity to earn commissions from writing business for clients on that list. See The Commonwealth v Amann Aviation Pty Ltd at 90, 102, 152.

Moreover the appellant was entitled to that chance as the top sales executive of the company. The continued employment of Ms Matthews by WIN, but on an inferior list, may not strictly have been a breach of its contract with the appellant, but that was an unlikely situation in practice. There is therefore no reason to discount the appellant's damages for loss of her chance to earn commissions from exploitation of Ms Matthews' client list.

There is also no reason why the Court should not accept Mr Lyons' own estimate of the value of the lost contract to the appellant as more than the $68,000 a year gross that Ms Matthews earned working only until 8.30 pm. On the basis of Mr Lyons' estimate, and approaching the task as a jury would, I estimate the

appellant's probable gross earnings at $75,000 a year. This, over the period of reasonable notice, results in a figure of $18,750. The appellant's actual earnings over the ten months she was employed by WIN totalled, on the Judge's finding, $26,762. This period comprised 44.5 weeks so that her average weekly earnings were $601.39. Over the 3 months' period of reasonable notice, this amounts to $7,818, giving a figure for damages of $10,932 which must be adjusted for tax and interest.

The parties should be directed to bring in short minutes to reflect these reasons. Interest at Court rates should be calculated from the mid point of the three months, period of notice without any discounting for acceleration of the benefit. Tax should be allowed for at the appropriate rates in force in 1990-91, but it will be necessary to gross up the appellant's judgment to compensate her for the tax payable on it as an eligible termination payment. See NSW Cancer Council v Sarfaty (1992) 28 NSWLR 68 at 79-80. The appellant is entitled to the costs of the appeal, and to half her costs of the trial (SCR Pt52, 124(3)(d)).

Judgment for damages of $10,932 in favour of the appellant.

The above figure to be adjusted for tax and interest. Interest to be calculated from the midpoint of the three months' notice (ie. 2 August

without any discounting for acceleration of the benefit. Tax to be allowed for at the appropriate rates in force as at 1990-91, but appellant's judgment to be grossed up to compensate her for the tax payable on it as an eligible termination payment.

Parties to bring in short minutes to reflect the reasons for judgment (including the above).

Appellant to be entitled to the costs of the appeal and half her costs of the trial (SCR Pt52, 124(3)(d)).

Solicitors for the appellant: Russell McLelland & Brown Wollongong Counsel for the respondent: R J Buchanan QC/I Neil

Solicitors for the respondent: Maguire & McInerney, Wollongong (Sydney Agents: Mervyn Finlay, Thorburn &

Trade Practices Act 1974(Cth)

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