Network Ten Pty Ltd v Rowe [2006] NSWCA 1 (10 January 2006)

CITATION: Network Ten Pty Ltd v Rowe [2006] NSWCA 1

FILE NUMBER(S):

40001/06

HEARING DATE(S): 10 January 2006

DECISION DATE: 10/01/2006

EX TEMPORE DATE: 10/01/2006

PARTIES:

Network Ten Pty Ltd - Appellant

Jessica Rowe - Respondent

JUDGMENT OF: Giles JA Santow JA Hunt AJA

LOWER COURT JURISDICTION: Supreme Court - Common Law Division

LOWER COURT FILE NUMBER(S): SC 50187/05

LOWER COURT JUDICIAL OFFICER: Simpson J

COUNSEL:

D P Robinson SC & A Scotting - Appellant

R Goot SC & T Donaghey - Respondent

SOLICITORS:

Blake Dawson Waldron - Appellant

Harmers - Respondent

CATCHWORDS:

Employment contract - whether for closed period or open-ended but terminable by notice - construction of particular document in light of earlier documents.

LEGISLATION CITED:

DECISION:

Appeal dismissed with costs, including the costs of the interlocutory application in this Court.

JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40001/06

SC 50187/05

GILES JA

SANTOW JA

HUNT AJA

Tuesday 10 January 2006

NETWORK TEN PTY LTD v ROWE

Judgment

1 GILES JA: Ms Jessica Rowe had been employed by Channel 10 as a news presenter since 1995 under a series of six contracts. The most recent contract was in a letter from Channel 10 dated 10 December 2003. In December 2005 Ms Rowe took employment with Channel 9, a rival television station, to commence on 1 January 2006. Channel 10 contended that she was not free to do so because her 2003 contract with it continued until terminated by the giving of six months written notice, which had not been given. Ms Rowe contended that the contract was for a period expiring on 31 December 2005 unless terminated prior to that date by the giving of the six months written notice.

2 This principal issue between the parties was decided by Simpson J adversely to Channel 10. In my opinion, this appeal from her Honour’s dismissal of Channel 10’s summons should itself be dismissed. It is not necessary to consider the availability of injunctive relief if Channel 10’s contention had been upheld. My reasons are as follows.

3 The contracts preceding the 2003 contract were all in letter form. The first, in a letter dated 20 November 1995, began, “This letter confirms the terms and conditions under which you have agreed to be employed ... “. The subsequent contracts began, “This letter sets out the new terms and conditions under which you have agreed to be employed ... ” or “I am pleased to confirm the new terms and conditions of your employment ... “. The 2003 contract began in the last-mentioned manner.

4 The first contract was expressed to commence at a “date to be advised” and to be “continuous subject to the termination provision provided herein”. It stated salary and benefits from its “effective date” for year 1 and for year 2, followed by -

“Review

TEN shall have an option to review the remuneration and benefits of this agreement for a further period of one (1) year on terms to be mutually agreed upon. Either party to inform the other of its intention six months prior to the end of year two salary and benefits.”

5 The later contracts all provided for commencement of the employment on a stated date, but did not have the reference to continuity or the option to review remuneration and benefits for a further year.

6 A letter of 8 December 1997 provided for commencement on 1 January 1998, and stated remuneration for 1998 and for 1999. A letter of 19 January 1999 provided for commencement on 1 January 1999 until 31 December 1999; it nonetheless stated remuneration “per annum”. It was the only contract to express an end date for the employment, and was effectively a replacement for 1999 in the 1997 contract. It referred to annual review, but did not provide for review, during 1999 or at all. A letter of 16 December 1999 provided for commencement on 1 January 2000, and stated remuneration for 2000 and for 2001; it included that following the increase on 1 January 2001 salary “will be reviewed annually and as a result of this review the total remuneration may be subject to adjustment by TEN at TEN’s absolute discretion.”

7 The immediate predecessor to the 2003 contract was in a letter dated 24 December 2001. It provided for commencement on 1 January 2002, and stated remuneration for 2002 and for 2003. It included as cl 4(f) -

“(f) Following the increase on 1 January 2002, your salary will be reviewed annually and as a result of this review the total remuneration may be subject to adjustment by TEN at TEN’s absolute discretion, but will be no less than the amounts referred to in 4(a) for each of the periods mentioned in 4(a).”

8 In each of these letters, including the first, it was said that any prior agreement between the parties for the provision of Ms Rowe’s services was terminated on her signature of the letter and replaced by its terms. Each provided, with some variation in language, for termination by the giving of six months notice in writing by either party or, in the case of termination by Channel 10, by payment of six month’s salary in lieu of notice, or for termination summarily by Channel 10 for misconduct. Each also provided, again with some variation in language, that it set out the whole of the terms relating to Ms Rowe’s entitlements arising from her employment by Channel 10 and that she would “not be entitled to any other benefits whatsoever, financial or otherwise, during [her] employment by TEN or upon or following its termination, other than as set out in this letter”.

9 The 2003 contract followed the same format. The letter provided for commencement on 1 January 2004, and stated remuneration for 2004 and for 2005. It did not have a provision equivalent to cl 4(f) set out above, nor did it otherwise provide for review. Its provisions particularly relevant to the issue between the parties were -

“2. Previous Agreement and Release

Any prior agreement between us for the provision of your services is terminated upon your signing this letter and replaced by the terms of this agreement. Salary owing for work already performed and continuity of service are unaffected by this clause.

3. Entire Agreement

This letter sets out the whole of the terms that relate to your entitlements arising from your employment by TEN. You will not be entitled to any other benefits whatsoever, financial or otherwise, during your employment by TEN or upon or following its termination, other than as set out in this letter.

4. Remuneration and Associated Arrangements

(a) For the period from 1 January 2004 to 31 December 2004, you are entitled to receive total remuneration to the value of [$X] per annum before tax.

(b) For the period from 1 January 2005 to 31 December 2005, you are entitled to receive total remuneration to the value [$X] per annum before tax.

(c) The case component of your remuneration package will be paid by Electronic Funds Transfer in equal monthly instalments into a bank account agreed by TEN and you.

(d) Your total remuneration has been assessed so as to include any superannuation contributions TEN is required to make as a result of the operation of the Superannuation Guarantee (Administration) Act 1992 (Cth) (“the SGA”) and the Superannuation Guarantee Charge Act 1992 (Cth) (“the SGC”) (the compulsory superannuation payment”).

(e) Any increases in the compulsory superannuation payment after the date of this letter will be absorbed into your total remuneration through a reduction of one or more of the other components so as to preserve the same total remuneration. TEN will advise you in writing prior to any such reduction and will consult with you on the adjustment to the components of your package.

(f) Other than for the compulsory superannuation payment, your total remuneration may be taken by agreement between you and TEN as follows:

(i) in cash; and/or

(ii) as a motor vehicle through a fully costed novated lease agreement, the cost of which may vary from time to time according to vehicle usage, maintenance, resale and prevailing interest rates; and/or

(iii) by way of TEN making superannuation contributions to an agreed complying superannuation fund, in excess of the compulsory superannuation payment (the employee superannuation contribution) and/or

(iv) in such other manner as may be agreed in accordance with the TEN Salary Packaging Policy in force from time to time.

A Schedule setting out the initial components of your salary package is attached to this Letter. The components of your package may be varied by agreement and in accordance with the TEN Salary Packaging Policy in force from time to time.

(g) The value of your total remuneration is in full compensation for all incidents of your employment including but not limited to work at night, on weekends and public holidays and no additional remuneration or benefit will be provided therefore.

(h) TEN will cover the rental costs of your personal mobile telephone and reimburse in full the costs of all work related mobile telephone calls, on receipt of appropriate documentation in support of all such claims.

(i) In addition to the above benefits, upon signing this Agreement you will receive a one-off sign on bonus of [$X].

...

9. Termination

(a) Your employment may be terminated by the giving of 26 weeks notice in writing by either party or, in the case of termination by TEN, by payment of an amount equivalent to 26 weeks salary in lieu of notice.

(b) Notwithstanding paragraph (a) above, TEN may terminate your employment summarily in the event of serious misconduct such as, but not limited to, theft, fraudulent acts, sabotage, gross insubordination or destruction of company property.”

10 Ms Rowe signed the letter by way of acceptance on 12 December 2003.

11 The 2003 contract did not state an end date for the employment, as did the contract in the letter of 19 January 1999. However, the express and detailed statement of remuneration for the two years 2004 and 2005, with no provision for fixing remuneration for any further period, is a powerful indication that the contract was for employment to terminate on 31 December 2005. Even without regard to the history of fresh contracts at the end of the periods for which remuneration was stated (or in one case replacing one of those periods), one would not readily attribute to Ms Rowe (as Channel 10 contended) the contractual intention to leave for later agreement or for ascertainment of a reasonable sum the not insignificant remuneration for her services for later years, or to Channel 10 the contractual intention to place an important member of its establishment in that position. This is more especially when there was no minimum amount stipulated as a base for what was reasonable, as for example by reference to the immediately preceding year’s remuneration.

12 Channel 10 submitted that Ms Rowe was able to terminate her employment by giving six months notice if she was dissatisfied with the future remuneration. But unless negotiations commenced earlier than six months prior to 31 December 2005, yielding known remuneration, her future remuneration would be unknown for at least some time. That is not a sensible situation to contemplate. Further, cl 3 of the letter, the entire agreement provision, most naturally meant that Ms Rowe would not be entitled to any remuneration other than that stated in cl 4 during her employment, and therefore that her employment did not extend beyond the two years for which remuneration was stated in cl 4. Channel 10 submitted that cl 3 was there to exclude other allowances, instancing a dress allowance, related to Ms Rowe’s employment, but that is difficult to accept when cl 4(g) was a significant exclusion in that respect and in the face of the strong words “any other benefits whatsoever, financial or otherwise” in cl 3.

13 Channel 10 relied on the provision in cl 9(a) for termination on six months notice, allied with the absence of an express termination date. It said that the six months notice reflected the value to it of the services of a news presenter, and that it was not reasonable that a news presenter could leave on short notice as did Ms Rowe; it said also that the termination clause provided a means of resolving any disagreement over remuneration for the period after 31 December 2005. The first proposition begs the question, since if on its proper construction the 2003 contract terminated on 31 December 2005 there was no question of short notice of that termination. I have earlier indicated that I do not find the second proposition attractive, and the parties to a contract such as this would not readily be found to have bound themselves to a further six month relationship although they may be disputing the remuneration to be paid by one to the other. Clause 9 of the 2003 contract could sensibly operate as a provision for early termination during 2004 or 2005, at the least until 1 July 2005, and it is not necessary to determine how it might operate thereafter. However, when earlier operating, the payment by Channel 10 of an amount equivalent to six months salary in lieu of notice could be given effect, where it would be difficult to give it effect if there were termination after 31 December 2005 when, or because, remuneration was in dispute.

14 Channel 10 put three ancillary submissions.

15 First, it submitted that the construction of the contract for which Ms Rowe contended left an hiatus, because by cl 3 of the 2003 contract the prior agreement was terminated on 12 December 2003 and the new terms and conditions of Ms Rowe’s employment did not commence until 1 January 2004. It said that this meant that cl 2 could not be read literally, and that because cl 2 could not be read literally neither could cl 3. If there was a, hiatus, it may be that it would be filled on a quantum meruit basis, but any hiatus was not overcome by the construction for which Channel 10 contended, whether of the 2003 contract or of its predecessor. The reading of cl 2 does not reflect upon the meaning of cl 3. I do not think this assists Channel 10’s position.

16 Secondly, Channel 10 sought to gain support from the presence in some of the predecessor contracts of provisions for remuneration review. The first of the contracts did contemplate a further period of a year, on terms as to remuneration and benefits “to be mutually agreed upon”, notwithstanding that it contained an equivalent to cl 3 of the 2003 contract. Clause 4(f) of the immediately preceding contract provided for review and adjustment of remuneration, on Channel 10’s submission extending to adjustment so as to arrive at remuneration for periods after 31 December 2003 if the contract had not been terminated by the giving of notice or payment in lieu of notice. Channel 10 acknowledged that the absence from the 2003 contract of a clause equivalent to cl 4(f) told against its construction of the contract, but it said that the parties had in the past been prepared to leave undetermined the remuneration to be paid to Ms Rowe, and that the 2003 contract should not be approached as if that were ananathema.

17 Thirdly, Channel 10 relied on the reference to “continuity of service” in cl 2 of the 2003 contract, a provision found in all but the first contract. It said that this supported its construction of the contract as an open ended one. The expression “continuity of service” was introduced into the contracts at the same time as the first reference was made to long service leave. This indicates that it was intended to refer to the respondent’s entitlement to such leave, not to the length of each of the contracts for which an expiry date was not identified.

18 It is far from evident that cl 4(f) extended to adjustment beyond 31 December 2003, notwithstanding its reference to review “annually”; the reference to “each of the periods mentioned in 4(a)” is difficult when there were different amounts for the periods. Be that as it may, the deficiency of leaving an amount to be agreed in the first of the contracts, which was differently structured from the 2003 contract, is of little significance; and there is a considerable difference between adjustment subject to a necessary minimum and a possibly contentious arrival at a reasonable amount. Of more importance, when the 2003 contract did not have an equivalent to cl 4(f), that is an indication that the parties declined any relationship beyond 31 December 2005.

19 Simpson J construed the contract as having a maximum term of two years ending on 31 December 2005, terminable by either party giving 26 weeks’ notice or by the appellant paying an amount equivalent to 26 weeks’ salary in lieu of notice. In my opinion, her Honour’s construction is correct.

20 The appeal should be dismissed with costs, including the costs of the interlocutory application in this Court.

21 SANTOW JA: I agree with Giles JA

22 HUNT AJA: I agree with Giles JA.

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LAST UPDATED: 15/03/2006