Bryant v Defence Housing Authority [2002] ACTSC 43 (24 May 2002)

Last Updated: 11 June 2002

DANIEL BERNARD BRYANT v DEFENCE HOUSING AUTHORITY

[2002] ACTSC 43 (24 May 2002)

CATCHWORDS

CONTRACT - breach of contract of employment - whether contract for a specified task or for a specified term - early termination by employer - operation of Public Service Act 1999 and Workplace Relations Act 1996 (Cth) - measure of damages - mitigation of loss - onus of proof.

Public Service Act 1999, ss 22, 24, 29

Workplace Relations Act 1996 (Cth), s 170

Defence Housing Authority Act 1987, ss 11, 57

National Gallery of Australia v Douglas [1999] ACTSC 79

Suttling v Department of Education [1985] 3 NSWLR 427

Director General of Education v Suttling [1987] HCA 3; (1987) 162 CLR 427

No. SC 715 of 2001

Judge: Miles CJ

Supreme Court of the ACT

Date: 24 May 2002

IN THE SUPREME COURT OF THE )

) No. SC 715 of 2001

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: DANIEL BERNARD BRYANT

Plaintiff

AND: DEFENCE HOUSING AUTHORITY

Defendant

ORDER

Judge: Miles CJ

Date: 24 May 2002

Place: Canberra

THE COURT ORDERS THAT:

1.

1. This is an action for damages for breach of contract by wrongful termination.

PLEADINGS

2. By statement of claim annexed to originating application dated 29 October 2001 the plaintiff alleged that on 24 August 2000 he commenced employment with the defendant pursuant to contract for a fixed or specified term commencing on 24 August 2000 and expiring on 31 August 2003, alternatively for the duration of a specified task. The plaintiff further alleged that the contract was terminated by notice prior to the expiry of the term or alternatively prior to the completion of the specified task.

3. By its defence dated 17 December 2001 the defendant admitted the employment pursuant to contract for the duration of a specified task and the termination alleged. The defendant raised the following matters by way of defence:

* The termination was made when the task had come to an end by force of the contract and by operation of s 24 of the Public Service Act 1999.

* The plaintiff was estopped from bringing the action by cl 5.6 of the Workplace Agreement which was part of the contract. (This defence was abandoned at the hearing.)

* The plaintiff had elected to commence proceedings in the Australian Industrial Relations Commission pursuant to s 170CE of the Workplace Relations Act 1996 (Cth) (the Workplace Relations Act) and was bound by such election.

4. The defendant also relied or purported to rely on a counter-claim for an order that the proceedings be struck out as an abuse of process.

5. The plaintiff did not file a reply or a defence to the alleged counter-claim.

6. The plaintiff alleged that the contract was constituted by a letter from the defendant dated 21 August 2000. The defendant alleged that a draft Workplace Relations Agreement (AWA) which was amended to the letter was also part of the contract. During the trial the plaintiff accepted the position taken by the defendant on this aspect.

7. By a somewhat unorthodox sequence of events the proceedings were set down and fixed for trial on affidavit evidence.

FACTS

8. The facts are not greatly in dispute and emerge mainly from the affidavit of the plaintiff sworn 23 October 2001.

9. The defendant advertised in a local newspaper for a manager of part of its operations. The plaintiff responded and received the letter of 21 August 2000. The contents of that letter included the following:

"FORMAL ADVICE TO NON-ONGOING EMPLOYEE ON ENGAGEMENT

In accordance with Section 22 of the Public Service Act 1999 you have been selected for employment as an Executive Level 2, National Asset Manager, Head Office with the Defence Housing Authority for the duration of a specified task. It is anticipated that this task will have a duration of approximately 3 years; the General Manager Development and Sales will provide further details.

DETAILS OF ENGAGEMENT

...

Job Title Manager, National Assets

...

Commencement Date 24 August 2000

Expected Termination Date 31 August 2003

...

This offer of engagement for a specified task is subject to the following conditions:

...

4. Your employment is subject to the provisions of the Public Service Act 1999, the Workplace Relations Act 1996 and your Australian Workplace Agreement (once approved).

5. Your employment is subject to a period of 6 months on probation and during this period your employment may be terminated on one week's notice.

6. Your period of employment will end upon the completion of the task for which you are engaged (ie 3 years) and may then be renegotiated.

7. The terms and conditions of your employment will be as specified in a mutually agreed Australian Workplace Agreement (AWA). A draft version of your AWA is attached.

...

If you accept this offer of employment and are in complete agreement with the terms and conditions hereof, would you please signify your agreement by signing in the space provided below and returning this letter to me. The date of effect of your engagement will be the date on which you commence duty with the Authority.

..."

10. There were a number of documents enclosed with the letter and identified in a list at the end of that letter. They included the draft AWA and a document described as a "Duty Statement (or other description of duties)".

11. The plaintiff signed in the space provided for acceptance of the offer contained in the letter and presented it to the defendant. It is not in dispute that he commenced work with the defendant on 23 August 2000.

12. The draft AWA enclosed with the letter provided amongst other things:

"2. PERIOD OF OPERATION

2.1 In accordance with subsection 170VJ(2) of the Act, the starting day for this AWA shall be 24 August 2000 or the day after a filing receipt is issued for this AWA by the Office of the Employment Advocate, whichever is the later.

2.2 In accordance with section 170VH of the Act, the nominal expiry date of this AWA is 28 February 2002, but may be extended for a further period of up to one year, by agreement in writing signed by the Employer and the Employee.

2.3 This AWA shall stop operating at the earlier of the following times:

(a) the time when a termination under section 170VM of the Act takes effect;

(b) the time when another AWA between the Employer and the Employee starts to operate; or

(c) if the employee ceases to perform the duties of an Executive Level Two Manager in the Head Office of the Defence Housing Authority.

...

4. EMPLOYEE'S DUTIES

4.1 The Employee shall perform, with due care and diligence, the duties of National Asset Manager in the Defence Housing Authority, in accordance with the Duty Statement for the position and the mutually agreed Performance Agreement.

4.2 The Employee agrees to carry out such other duties as may be directed from time to time by the Employer, provided that such other duties are consistent with the laws of the Commonwealth.

4.3 The Employee agrees to work an average of not less than 73 hours and 30 minutes per two week period (subject to public holidays and approved leave). The employee may be required to be on duty at such times as is reasonably necessary to achieve agreed outcomes and as dictated by workload or government needs.

...

5. GENERAL TERMS AND CONDITIONS OF EMPLOYMENT

...

No Access to Appeal Committees Upon Termination

5.6 An employee will have the right to bring an action under Division 3 of Part VIA of the Workplace Relations Act 1996 in respect of the termination of his or her employment for any reason. This will be the sole right of review in respect of such actions.

...

Resignation or Redundancy

5.14 The Employee shall provide four weeks notice to the Employer of their intention to resign from the position covered by this AWA."

13. Schedule 3 to the draft AWA made provision for what it described as:

"...the framework for managing poor performance."

14. With regard to the remainder of the draft AWA it is sufficient to say that where the employee's performance was assessed as unsatisfactory in accordance with the provisions of Schedule 3, the managing director of the defendant had the power to issue a Notice of Intention to retire or transfer the employee or to reduce the employee's work level and change the duties of the employee. Schedule 4 to the draft AWA made provision for disciplinary procedures in the case of misconduct, including the power of termination of employment by the defendant "as provided for in Public Service legislation."

15. Amongst the documents attached to the letter of 21 August 2000 was a document headed "National Development and Construction Manager" the contents of which contained a provision that the National Development and Construction Manager was to report to the General Manager, Development and Sales and that the position had specific responsibility for the delivery of major development projects within a specified budget and time frame. The document also provided that the management of a major project was generally to be contracted to a specialist project manager and it set out the duties or some of the duties of the project manager. It specified that the National Development and Construction Manager was to prepare a monthly report to the General Manager, Development and Sales outlining certain matters. I find that this document is the "Duty Statement (or other description of duties)" referred to in the list of enclosures at the end of the letter of 21 August 2000.

16. There was nothing enclosed with the letter of 21 August 2000 expressly referring to the duties of National Assets Manager.

17. On 4 October 2000 the employment advocate approved the AWA and the plaintiff was notified accordingly. I have not detected any difference in the terms of the draft AWA and the approved AWA, and counsel did not inform me of any such difference.

18. On 9 October 2000 the plaintiff received from the defendant a two page document, one of which was headed Development & Sales - Functions. The page was divided into three columns, headed respectively National Manager Development, National Manager - Asset Management and National Manager - Sales & Leasing. In the second column appeared the following:

"Strategic Portfolio Management

Development of National Provisioning Plan (in partnership with each HMC Manager)

Heritage Property Management

Management/Board reporting"

19. The plaintiff performed his duties according to the contract and the AWA. I am prepared to find and do find that those duties were substantially as described in the Development and Sales-Function document, although I am not exactly sure what the terms of that document mean. I find that by the conduct of the parties the duty statement enclosed with the letter of 21 August 2000 had no application to the plaintiff's position.

20. On or shortly after 16 February 2000 the plaintiff received a letter from Mr Bob Eames, Manager Corporate Services, on behalf of the defendant. It commenced as follows:

"I am writing to confirm the status of your position with the Defence Housing Authority.

With the restructure of the Finance function within the Authority, the position that you currently hold will be abolished and some of the responsibilities transferred to the Finance area.

In these circumstances I regret that you no longer hold a position. I therefore wish to advise that you are now in the position of an excess employee of the Defence Housing Authority at the classification of Executive Level 2."

21. The letter went on to offer advice by way of assisting the plaintiff on planning his future and set out proposals as to what the defendant expected the plaintiff to do between then and 20 April 2001. The proposals included the plaintiff continuing as an employee until that date, with an alternative of ceasing employment in the meantime.

22. The plaintiff chose the former option. On 20 April 2001 the plaintiff received a formal Notice of Termination attached to a letter of that date. The letter was signed by Mr Greg Schmidt, Personnel Manager, and stated inter alia:

"The reason for your termination as an excess employee of the Defence Housing Authority is that your former position of Manager, National Assets, is no longer required. Due to a restructuring of the Authority's Head Office, the bulk of your former duties are now to be performed by existing officers within our Finance Branch."

23. The notice, omitting some formal parts, was as follows:

"PUBLIC SERVICE ACT 1999 - SECTION 29

NOTICE OF TERMINATION

I, Gregory John Schmidt, delegate of the Managing Director of the Defence Housing Authority:

(1) being satisfied that you are, within the terms of your Australian Workplace Agreement, an employee who is excess to the requirements of the Defence Housing Authority;

(2) having considered whether it would be in the interests of the efficient administration of the Defence Housing Authority to assign you to other duties under section 25 of the Public Service Act 1999; and

(3) having been unable to find alternative suitable employment for you in the Australian Public Service;

GIVE NOTICE TO YOU, Bernard Daniel Bryant, that your employment in the Australian Public Service will be terminated with effect from the expiration of 20 April 2001."

TERMS OF CONTRACT

24. Under s 11 of the Defence Housing Authority Act 1987 the defendant is a body corporate. By s 57 of that Act the staff and officers are appointed or employed under the Public Service Act 1999 (the Public Service Act) which refers to them as APS employees. The latter Act in s 22(2) also provides that the engagement of an APS employee must be:

"(a) as an ongoing APS employee; or

(b) for a specified term or for the duration of a specified task; or

(c) for duties that are irregular or intermittent."

25. Clearly the engagement of the plaintiff was intended to be pursuant to s 22(2)(b).

26. Neither "specified term" or "specified task" is defined. However it is to be observed that s 22(2)(b) contains a temporal element. Either the employee is to be employed for the duration of a term which is specified or for the duration of a task which is specified. The plaintiff, through particulars, alleges that the task in question was the management of the national assets of the defendant and asserts that that task had not been completed at the time the defendant terminated the contract.

27. The defendant, in par 6 of its defence, asserts that it was entitled to terminate the contract when the specified task had come to an end "both by force of the contract and by operation of s 29 of the Public Service Act".

28. It is well established that provisions like s 29 of the Public Service Act empower a public service employer to bring a contract of employment to an end, but they do not avoid the consequences in damages if the termination is in breach of the provisions of the contract: see eg. National Gallery of Australia v Douglas [1999] ACTSC 79. The statutory power to bring the employment of a public servant to an end is subject to the terms of the contract so long as they do not contravene the statute, see Suttling v Department of Education [1985] 3 NSWLR 427 at 446, Director General of Education v Suttling [1987] HCA 3; (1987) 162 CLR 427.

29. I reject the defendant's case that the specified task was to perform such functions and undertake such responsibilities as might from time to time be assigned to the plaintiff or required of him as the Manager, National Assets. The specification of the plaintiff's "job title", as Manager, National Assets as contained in the letter of 21 August 2000 is not the specification of a task. Further, if the description of the functions of the Manager, National Assets as set out in the document received by the plaintiff in October 2000 amount to the specification of a task or tasks, then part of that task or some at least of those tasks were ongoing tasks which had not been completed at the time of the termination of the contract in April 2001. The management of the assets of a national authority such as the defendant was a task that may reasonably be inferred to be necessary so long as the defendant had national assets. This was an issue that was not precisely addressed on the evidence but I am prepared to find and do find that it clearly did have national assets at all relevant times. In any event, the evidence discloses that the task of managing the defendant's national assets had been assigned to other persons, namely officers of the Chief Financial Officer's Branch, by the time of the termination. It was agreed between branch managers within the defendant's operations that the task of managing the national assets did not come to an end prior to or at the time of the plaintiff's dismissal. It cannot be said that the assignment of the task or tasks to someone other than the plaintiff meant that the task or tasks no longer subsisted.

30. It is not a reasonable interpretation of the language of the contract to say that the decision as to whether or not the task was completed was to be made by the defendant. As the employer, the defendant was in control of the organisation of its undertaking, including arrangements for the acquisition maintenance and disposition of its assets, including its national assets, in so far as the latter were to be distinguished from assets of a non-national character. However, a decision whether to continue or to discontinue the management of assets was not to be taken capriciously having regard, amongst other things, to the interests of the plaintiff. The task of management of assets was not brought to an end by transferring the responsibility of management from the plaintiff to officers in the Chief Financial Officer's Section or by relieving the plaintiff of the duties of the Manager of National Assets.

31. The plaintiff is accordingly entitled to whatever damages flow from the breach of contract constituted by the defendant's termination prior to the completion of the specified task.

32. It is desirable also to decide whether the plaintiff succeeds on his primary case that the contract was for a fixed period of time, since the measure of damages may be different.

33. The possibility that the specified task might be completed within three years is clearly contemplated by the terms of the letter which referred to "approximately three years, expected termination date 31 August 2003" and also to "termination within the probation period of six months". The contract was not, in my view, one for a specified term.

34. Putting the most sensible construction that I can on the words used, I conclude that the contract was one for the duration of a specified task, namely the management of national assets of the defendant for a period of up to three years so long as the task remained uncompleted during that period. The task remained uncompleted and the termination by the defendant during that period was therefore a repudiation of the contract which was accepted by the plaintiff. The repudiation renders the defendant liable in damages for breach.

ESTOPPEL AND ELECTION

35. The defendant did not press the defence of estoppel, but did press the common law or equitable defence of election, which is of similar nature. Reliance was placed on clauses 5 and 6 of the AWA. The words "action" and "actions" in cl 5 are unfortunate, in my view, and confusing. Where it is first used, the word is used in the general sense of claim or proceedings to enforce a substantive right. Where it is next used it is used in the sense of the conduct of the employer which constitutes the termination. In the first instance, the particular reference is to proceedings under the Workplace Relations Act to have a contract set aside where the terms are harsh, unjust or unreasonable: see ss 170HA, 170HB and 170CG. In specifying that such proceedings will be the sole right of review of the defendant exercising the power of termination of employment, cl 5.6 does not exclude the employee's right to bring an action for damages of contract. The determination of such an action for damages is not a review of the employer's conduct which empowers the Industrial Relations Commission to grant relief under the Workplace Relations Act.

36. The "right of review" under the Workplace Relations Act is not a right of action in a court of law for breach of contract. Nor is the right of review conferred by the Workplace Relations Act a right of action for damages. The right of review exists side by side with the right of action.

37. The defence of election applies where a plaintiff has the choice of two (or more) inconsistent remedies and chooses to exercise one of them. For instance, if a plaintiff obtains an injunction to restrain a nuisance, then that plaintiff cannot ask for damages which would flow if the nuisance were not restrained. In contrast, in the present case, the contract of employment has been terminated in circumstances which amount to breach, but the termination is nevertheless valid until set aside by a court or tribunal of competent jurisdiction. The proceedings commenced in the Industrial Relations Commission by the plaintiff were abandoned before any determination was made by that tribunal. Therefore, no matter of election arises in the present case. There was no inconsistency between the plaintiff making and discontinuing a claim for relief under the Workplace Relations Act on the one hand and seeking to obtain judgment for damages of breach of contract in this Court on the other.

DAMAGES

38. It was submitted that prima facie the measure of damages for breach of a contract for a fixed term is to put the plaintiff in the same position as the plaintiff would have been if the contract had run its full term. No authority was cited for that principle.

39. As I have already found that the contract was for the duration of a specified task and not for a fixed term, the principle (if it is a principle) does not apply. Nevertheless, in the circumstances the plaintiff was entitled to remain in employment under the contract until the specified task of managing the national assets of the defendants was completed. Whilst the onus is on the plaintiff to show that completion of the task was not achieved or was not likely to have been achieved in the period during which the contract might otherwise have continued, namely up to three years, the onus is easily discharged in the present case. The task remained but the defendant allocated it to people other than the plaintiff.

40. The plaintiff was of course bound to mitigate his loss by taking reasonable steps to find a remunerative way of occupying the time that had been put at his disposal by his dismissal from the service of the defendant. In other words he was bound to look for, accept and stay in suitable employment or income-earning activity. The plaintiff says that he has taken the steps but has been unable to find suitable employment. He claims that the defendant is liable for the whole of the salary that he was likely to have earned if he had remained in employment with the defendant as Manager, National Assets until August 2003. He claims that although he has made reasonable efforts, not only to find suitable employment but to engage in remunerative business, the results have ended in financial failure so that his damages should not be reduced for anything he might have earned if he had gone into business successfully or if he had earned wages or salary in some suitable employment.

41. Prior to his engagement by the defendant, the plaintiff had been the New South Wales Manager of Pioneer Homes, which I take to be a company engaged in the housing industry and in the land development industry. There is no evidence of his age or otherwise of his working experience but I infer from what evidence there was that he was a man of middle age with managerial experience and skills in both industries. Clearly, suitable employment opportunities for such a person occur from time to time both in Canberra and in the surrounding areas of New South Wales, as well as in Sydney where the plaintiff previously worked. However, it must be acknowledged that middle age is not necessarily a great advantage in the general employment market today. The fact (which I find) that the plaintiff has applied unsuccessfully for 24 jobs since his dismissal suggests that the prospects are not good, but it by no means proves that it is unlikely that the plaintiff will continue to be unable to find suitable employment until August 2003, the latest date when the contract would have expired according to its own provisions and when the plaintiff was likely to have been in the same position as he has been since his dismissal.

42. In these circumstances the plaintiff, who is otherwise fit and competent, has sensibly sought to use his time by seeking to engage in consultancies and by embarking on land development projects in which he shares interests with another person or other persons. Indeed in his final weeks with the defendant he was provided with a serviced office and staff without being required to perform any services for the defendant in the joint expectation that he would use that time and facilities to seek further employment and, I am prepared to find, to take whatever steps he chose to secure his financial future by way of consultancies or otherwise. So far he has carried out consultancy work for which he said he has "rendered one invoice only", that is for $6,600 including goods and services tax. There is no evidence about how many hours he spent in order to become entitled to the consultancy fee which he charged. The fact that the fee remains unpaid is not a matter for which the defendant is responsible. I also infer that the plaintiff has done some consultancy work for which he has not rendered any invoices. It is impossible to assess the value of the latter.

43. Also the plaintiff performed consultancy work under the business name BDB Consulting, for which he rendered an invoice for professional services and advice on the Kingston Foreshore Development. This was for an amount $3,080 (including $280 for the goods and services tax) to be paid by 29 March 2001. It was submitted on behalf of the defendant that it was entitled to claim credit for this amount (it also appears not to have been paid). The evidence discloses that the Kingston Foreshore consultancy work was performed during the time when the defendant provided facilities for the plaintiff to do other work, whilst also providing him with his usual salary. In my view, the defendant has not shown that it is not a part of the plaintiff's reasonable expense incurred in order to mitigate his loss and the defendant should not be given any credit for it.

44. In addition, the plaintiff has a one-sixth interest in a company, R J and B D Pty Limited, which has acquired an option to purchase four adjacent residential properties in Forrest and hopes to acquire an option over a fifth. I infer that it is part of the option agreement that the present owners have applied or will apply for development approval, so that the whole of the five blocks may be the subject of residential development. If and when approval is granted, the company plans to exercise the option and then sell the whole of the land to a developer. Clearly, there is a possibility of a handsome profit. The plaintiff concedes that it may be hundreds of thousands of dollars. It may be more. The plaintiff took out a mortgage for a loan of $110,000 from which he contributed $100,000 to the Forrest project.

45. The plaintiff also has or had an interest in a project concerned with the development of land presently or previously used as a sporting oval at Braddon. That project did not go ahead, or has not gone ahead to date. The plaintiff also owns an investment property in Weetangera which is rented out.

46. The defendant does not dispute the plaintiff's evidence that if he had remained employed with the defendant until 31 August 2003 he would have earned "at least $306,753.83" for the whole of the period of the contract commencing on 24 August 2000. The defendant has made payments to the plaintiff in respect of his performance of the contract amounting to some $57,264. Thus according to the plaintiff's claim there is a balance of about $249,489.83 which it is submitted is the measure of his damages.

47. The defendant submits, on the other hand, that it should be given credit at least for the value of the consultancy work for which the plaintiff has charged his clients but has not yet been paid. I see no reason why the plaintiff should not expect to receive payment. Accordingly, he should not be compensated in damages to the extent of the likely receipt.

48. Further it is submitted, as I understand it, on behalf of the defendant that the notional value of what the plaintiff should have received from his clients does not represent the true value of the plaintiff's capacity to mitigate his loss by taking reasonable efforts. However, I do not think that the defendant has discharged the onus in this regard of showing that the plaintiff's efforts have been less than reasonable.

49. In addition, the defendant claims that it should be given credit for the value of what the plaintiff should be expected to derive by way of income through business activities and consultancy, or in employment, or both, from the date of hearing to August 2003. In this regard I think it unlikely that the plaintiff would have engaged in private business as a consultant or as a developer so long as his employment with the defendant endured. Conversely, I also think it unlikely that the plaintiff will continue to remain unemployed until August 2003 if he is prepared to limit his business and consultancy activities. The choice is his. His available employment opportunities should not be regarded as restricted to those of the same type or at the same level as his position with the defendant. It is very difficult to put a figure on the value of his capacity to mitigate his damages in the future. The onus lies on the defendant.

50. I am satisfied that either by seeking to pursue a career as an employed manager in the housing and real estate development industries or by putting his capacity to use as an active businessman and consultant in those industries, or by a combination of both, the plaintiff can be expected to earn at least two-thirds of what he would have earned if he had remained in the employment of the defendant until 31 August 2003. This is a very imprecise approach, but counsel have not been able to suggest a more appropriate or more accurate way of going about it. Bearing in mind that the total hypothetical income from the contract, if performed, would have been $306,753.83 over a period of 36 months, the plaintiff's earnings during that period may be averaged out at some $8,521 per month. Assuming, as I do, that he was properly paid until the date of dismissal, his loss to the date of trial should be assessed as follows:

20/04/01 to 12/02/02 9.5 months @ $8,521 $80,950

Less earnings since date of dismissal: - $6,600

______

$74,350

12/02/02 to 31/08/03 (approx. 18.5 months)

hypothetical earnings @ $8,521

per month, allow one third thereof

(without discount for present payment) $52,546

______

Total $126,896

______

51. I will give leave to counsel to address further on the arithmetic, although not on the principles of assessment of damages, after they have had an opportunity to read these reasons. I will therefore defer giving leave to enter final judgment for a further 21 days during which written submissions may be lodged. The case will be relisted for mention on a suitable date.

I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour Chief Justice Miles.

Associate:

Date: 24 May 2002

Counsel for the plaintiff: Mr M J Heath

Solicitor for the plaintiff: J S O'Connor Harris & Co

Counsel for the defendant: Mr W B Loftus

Solicitor for the defendant: Clayton Utz

Date of hearing: 12 February 2002

Date of judgment: 24 May 2002