Uen v Honeywell Limited

REASONS FOR JUDGMENT 1 Presently before the Court are an Application and a Statement of Claim both filed on 13 April 2010. 2 The Applicant claims damages for breach of a contract of employment. Damages are claimed for a failure to provide reasonable notice of termination and also for failure to pay a "bonus" for the year 2009. 3 The Statement of Claim alleges that the Applicant was employed from 31 May 2004 by the Respondent. It sets forth claims for a breach of an "inferred" or an implied term that he would receive a bonus payment from what is described as "the Honeywell Management Incentive Plan" and a further breach of a term to be "implied by law" that he would be given "reasonable notice of … termination". A breach of a term as to "good faith", which is againto be "implied by law", is also alleged. Estoppel and misrepresentation are also pleaded. 4 No particulars have as yet been provided in respect to the quantum of damages claimed. 5 The proceeding first came before the Court on 3 May 2010 and then again on 17 May 2010. On 17 May 2010, an order was made standing the proceeding over to today with a view to the parties resolving what was then seen to be a comparatively simple matter readily susceptible of compromise. 6 A mediation voluntarily pursued by the parties has, regrettably, proved unsuccessful. 7 At the forefront of the position advanced by the Respondent on 17 May 2010 were the assertions that the Applicant's annual remuneration was about $230,000; that the contract of employment contained an express term permitting termination on one month's notice; and that any entitlement to a "bonus" was only a discretionary entitlement. The position was put on behalf of the Respondent that one month's notice had already been provided and there was no discretionary reason why any "bonus" should be paid. 8 In the absence of any particulars having been provided as to the quantum of damages sought to be recovered, any assessment at this stage is speculative. Subject to that very necessary qualification, and assuming success on the part of the Applicant, damages could possibly be in the range of about $100,000 to $230,000. But any assessment at this stage is but a "guesstimate". The Respondent may ultimately prevail and be found not to be liable to pay any further monies than it already has. 9 Whatever may be the amount of any damages that may ultimately be recovered, if the claim is not resolved quickly there remains a very real prospect that the legal costs to be incurred will quickly exceed any relief that may be granted. The course of standing the proceeding over on 17 May 2010, whilst making no directions which could have involved the incurring of further legal costs, was considered warranted by reason of s 37M of the Federal Court of Australia Act 1976 (Cth) and the objective of attempting to resolve disputes "as quickly, inexpensively and efficiently as possible". 10 No estimate was provided by either party as to the potential length of the hearing that now seems inevitable or the number of witnesses that may be called. 11 It is considered that the proceeding should be remitted to the Federal Magistrates Court of Australia pursuant to s 32AB of the Federal Court of Australia Act 1976 (Cth). That section provides in part as follows: Discretionary transfer of civil proceedings to the Federal Magistrates Court (1) If a proceeding is pending in the Court, the Court may, by order, transfer the proceeding from the Court to the Federal Magistrates Court. (2) The Court may transfer a proceeding under subsection (1): (a) on the application of a party to the proceeding; or (b) on its own initiative. (3) The Rules of Court may make provision in relation to transfers of proceedings to the Federal Magistrates Court under subsection (1). (4) In particular, the Rules of Court may set out factors that are to be taken into account by the Court in deciding whether to transfer a proceeding to the Federal Magistrates Court under subsection (1). … (6) In deciding whether to transfer a proceeding to the Federal Magistrates Court under subsection (1), the Court must have regard to: (a) any Rules of Court made for the purposes of subsection (4); and (b) whether proceedings in respect of an associated matter are pending in the Federal Magistrates Court; and (c) whether the resources of the Federal Magistrates Court are sufficient to hear and determine the proceeding; and (d) the interests of the administration of justice. The order transferring this proceeding is made on the initiative of the Court itself, as permitted by s 32AB(2)(b). 12 The "Rules of Court" to which s 32AB(3) to (6) make reference are those found in O 82 r 7 of the Federal Court Rules which provides as follows: Factors to be considered In deciding whether to transfer a proceeding or an appeal to the Federal Magistrates Court, factors that the Court or a Judge may take into account, in addition to the factors to which the Court or the Judge is required to have regard under subsection 32AB (6) of the Act or subsection 44AA (7) of the Tribunal Act, include: (a) whether the proceeding or appeal is likely to involve questions of general importance, such that it would be desirable for there to be a decision of the Federal Court on one or more of the points in issue; (b) whether, if the proceeding or appeal is transferred, it is, in the opinion of the Court or the Judge, likely to be heard and determined at less cost and more convenience to the parties than if the proceeding or appeal is not transferred; (c) whether the proceeding or appeal is, in the opinion of the Court or the Judge, likely to be heard and determined earlier in the Federal Magistrates Court; (d) the wishes of the parties. The circumstances in which an order may be made pursuant to s 32AB and in accordance with O 82 r 7 were reviewed in Sagacious Legal Pty Ltd v Lumley General Insurance Ltd t/as Lumley Special Vehicles [2009] FCA 763 and need not be repeated. 13 As to Rule 7(a), and unlike the position in some other cases (e.g., Koutouvas v Coca-Cola Amatil (Aust) Pty Ltd [2009] FCA 1125), it is not considered that the present proceeding involves any question of general importance such that it should be resolved in this Court. Questions as to breach of contract, estoppel and misrepresentation are well-trodden areas of the law. The claim that there is an implied term of "good faith" is perhaps less well settled. Divergent views have been expressed as to the circumstances in which such a term may be implied: cf. N. A. Retail Solutions Pty Ltd v St George Bank Ltd [2010] FCA 259 at [18]. The Applicant contends that such a term is "implied by law". Some guidance as to the circumstances in which such a term may be implied may be gleaned from the decision of the New South Wales Court of Appeal in Burger King Corporation v Hungry Jack's Pty Ltd [2001] NSWCA 187, 69 NSWLR 558. Sheller, Beazley and Stein JJA there reviewed the authorities and concluded: [163] This necessarily brief survey of the case law post Alcatel Australia indicates that obligations of good faith and reasonableness will be more readily implied in standard form contracts, particularly if such contracts contain a general power of termination. Clearly, however, the cases where these terms are to be implied are not limited to standard form agreements. … And in Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd [1999] FCA 903, (1999) ATPR 41-703 Finkelstein J has ventured the view that: [34] … Recent cases make it clear that in appropriate contracts, perhaps even in all commercial contracts, such a term will ordinarily be implied; not as an ad hoc term (based on the presumed intention of the parties) but as a legal incident of the relationship … But for present purposes it may be accepted that whether such a term should be implied in the present proceeding is a question readily susceptible of resolution by a Federal Magistrate. 14 Reference was made this morning by both parties to the decision of the Supreme Court in Victoria in Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567. That was also a decision in which the plaintiff claimed damages consequent upon termination of employment. A question arose as to whether a change in duties amounted to a termination of an existing contract and the creation of a new contract. Ashley J there concluded (in part) at 576 as follows: … where employer and employee agree to an alteration in the employee's duties and responsibilities which is profound, a court should be more ready to hold (unless the original contract of employment provided for the contingency) that a new contract has replaced the old; or at least that the old contract, as varied, contained terms objectively appropriate to the new relationship created. The relevance of that decision to the present proceeding is not self-evident from the Statement of Claim.Presumably the inference sought to be advanced was that Mr Uen may have found himself in comparable circumstances to the plaintiff in the Victorian case. Whatever may be the relevance of the decision, the legal issues to be resolved are again well capable of resolution by a Federal Magistrate. 15 As to the second factor prescribed by the Rules to be taken into account, it is considered that the costs to be incurred will be less in the Federal Magistrates Court than in this Court. That conclusion is also based in part upon O 62 r 36A of the Federal Court Rules which provides as follows: Reduction in costs otherwise allowable (1) Where a party is awarded judgment for less than $100,000 on a claim (not including a cross‑claim) for a money sum or damages any costs ordered to be paid, including disbursements, will be reduced by one‑third of the amount otherwise allowable under this Order unless the Court or a Judge otherwise orders. (2) If the Court or a Judge is of the opinion that a proceeding (including a cross‑claim for a money sum or damages) brought in this Court could more suitably have been brought in another court or in a tribunal and so declares, then any costs to be paid, including disbursements, will be reduced by one‑third of the amount otherwise allowable under this Order. (3) This rule does not apply to a proceeding under the Admiralty Act 1988. The Applicant was unable this morning to provide any better estimate as to means of estimating the quantum of damages that may be ultimately recoverable. "Reasonable notice" for the purposes of termination, it was submitted, could be as long as 12 months with damages being commensurate with the Applicant's annual salary. Whether such a submission so boldly advanced will ultimately prevail remains, however, a matter for evidence and judicial resolution. Even so, there nevertheless remains a very real risk that any costs that the Applicant may ultimately recover may fall within the reach of O 62 r 36A. 16 As to the third of the factors to be taken into account pursuant to O 82 r 7(c), it is difficult to form any firm view as to whether the proceeding would be more likely to be "heard and determined earlier in the Federal Magistrates Court" than in this Court. As was the case, however, in Kheir's Financial Services Pty Ltd v Aussie Home Loans Ltd [2008] FCA 1602 at [6] per Jagot J, there is no reason to conclude that any hearing would be delayed if the matter were transferred to the Federal Magistrates Court. 17 As for the final factor to be taken into account, namely the wishes of the parties, neither the Applicant nor the Respondent opposed the proceeding being transferred. The Respondent sought, however, an order that such costs as it has already incurred (estimated to be about $2,900) should be paid by the Applicant. 18 For the purposes of s 32AB(6)(b) of the Federal Court of Australia Act, the present proceeding is not part of any associated matter pending in the Federal Magistrates Court; nor is there any reason to question the resources of the Federal Magistrates Court to "hear and determine the proceeding" for the purposes of s 32AB(6)(c). Such a question may arise for more detailed consideration in circumstances where a proceeding is potentially lengthy. But, on any view, that is not the present case. 19 In ordering that the proceeding be transferred, it is considered clearly in the interests of the administration of justice to do so because: · the proceeding has only been recently commenced in this Court and no delay will be occasioned by the transfer; · the Federal Magistrates Court will in all likelihood be just as able as this Court to resolve the claims at an early point of time; · no Defence to the Statement of Claim and no evidence have as yet been filed in this Court and a Federal Magistrate will thus be placed in the position at the outset to give such directions as to the future conduct of the proceeding as is seen fit; · the claims advanced do not involve any legal or factual difficulty or any peculiar reason why the proceeding should be retained in this Court; and · it is expected that the legal costs that will be incurred will be less in the Federal Magistrates Court. 20 The proceeding is simply a claim for an alleged wrongful termination of a contract of employment. There is no reason why it should remain in this Court and every reason why it should be transferred to the Federal Magistrates Court. It is not considered appropriate at this stage to either order that such costs as have been incurred by the Respondent should be its costs in the cause or that the Applicant should be now ordered to pay those costs. All questions of costs are to be reserved for the consideration of the Federal Magistrate to whom this proceeding is docketed.