FEDERAL COURT OF AUSTRALIA Mastromanno v Temando Pty Ltd [2014] FCA 445 Citation: Mastromanno v Temando Pty Ltd [2014] FCA 445 Parties: ANDREW MASTROMANNO v TEMANDO PTY LTD (ACN 120 582 738) File number: VID 76 of 2014 Judge: JESSUP J Date of judgment: 30 April 2014 Catchwords: INDUSTRIAL LAW – interlocutory injunction – whether respondent be restrained from acting on notice of termination given to applicant – "stigma" of dismissal not a sufficient ground warranting an injunction – damages an adequate remedy – no injunction granted Legislation: Fair Work Act 2009 (Cth) s 340 Cases cited: Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 Date of hearing: 30 April 2014 Date of publication of reasons: 7 May 2014 Place: Melbourne Division: FAIR WORK DIVISION Category: Catchwords Number of paragraphs: 24 Counsel for the Applicant: J McDougall Solicitor for the Applicant: Peter Hull & Associates Counsel for the Respondent: I Latham Solicitor for the Respondent: BMM Law IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY FAIR WORK DIVISION VID 76 of 2014 BETWEEN: ANDREW MASTROMANNO Applicant AND: TEMANDO PTY LTD (ACN 120 582 738) Respondent JUDGE: JESSUP J DATE OF ORDER: 30 APRIL 2014 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The interlocutory application filed by applicant on 10 April 2014 be dismissed. 2. Commencing on the day upon which the Court publishes it's reasons for the previous order, the parties have leave to file and serve written submissions as to costs in accordance with the following time table; (a) the respondent within 7 days; (b) the applicant within a further 7 days; and (c) the respondent in reply, if necessary, within a further 7 days. 3. The applicant have leave to file and serve an amended originating application and amended statement of claim at or before 4:00 pm on 6 May 2014. 4. The respondent have leave to file a defence to any such amended statement of claim at or before 4:00 pm on 9 May 2014. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY FAIR WORK DIVISION VID 76 of 2014 BETWEEN: ANDREW MASTROMANNO Applicant AND: TEMANDO PTY LTD (ACN 120 582 738) Respondent JUDGE: JESSUP J DATE: 7 MAY 2014 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 On 30 April 2014, I dismissed the application of the applicant, Andrew Mastromanno, for an interlocutory injunction restraining the respondent, Temando Pty Ltd, from treating as valid or acting upon a notice of termination of employment given to the applicant on 1 April 2014. These are my reasons for having done so. 2 In this proceeding, which was commenced by Originating Application on 6 February 2014, the applicant alleges that the respondent breached the contract of employment between them, and contravened s 340 of the Fair Work Act 2009 (Cth) ("the FW Act"). Those allegations, as expressed in the Statement of Claim, relate to events which were recent as at the commencement of the proceeding, at which time the applicant was still in the employ of the respondent. The purported dismissal of the applicant from that employment on 1 April 2014 gave rise to an application by the applicant for leave to amend his Originating Application and Statement of Claim. Subject only to a possible question as to costs arising, that leave was not opposed, and it was granted on 30 April 2014. The terms of the amendments the subject of leave were not before the court, but the present interlocutory application proceeded on the assumption that the case would, when reconfigured, involve a challenge to the legality of the termination of the applicant's employment on 1 April 2014. 3 In his Statement of Claim, the applicant alleges the making of two agreements with the respondent which are relevant to his present claim for interlocutory relief. The first was made in or about August 2012 and, save in one important respect, is admitted by the respondent. It is common ground that, under this agreement, the respondent agreed to procure the issue of 200,000 shares, and of 200,000 share options, in its parent company, Temando Holdings Pty Ltd ("Temando Holdings"). The shares were later issued in accordance with this agreement, and no question presently arises in relation to that aspect. It is also common ground that, in September and October 2012, the options were offered to, and accepted by, the applicant in accordance with the agreement of August that year. There is a question as to the applicant's entitlement to exercise the options in the circumstances which have arisen, and I shall return to it later. 4 The second agreement was a contract of employment made between the respondent and the applicant on 30 September 2012. I shall refer only to such of the terms of this contract as are relevant to the present interlocutory application. The term of the contract was three years from 10 September 2012. The printed form of the contract provided for the contract to be terminable "by the employer" in a range of circumstances, including the giving of notice of various periods depending on the circumstances, and without notice if the employee: A. is unable or unwilling to perform the Responsibilities or fulfil the obligations for a period of more than five (5) working days and does not rectify that failure after giving the Employer notice; B. is guilty of misconduct, negligence or acts without due diligence and skill; C. engages in conduct which in the opinion of the Employer may injure or tend to injure the Business or the reputation of the Employer; D. commits any criminal offence for which the Employee is convicted which in the reasonable opinion of the Employer, impairs the Employee's ability to perform his duties; E. commits a serious or persistent breach of any of the terms or conditions of this Agreement; or F. commits any other act which would entitle the Employer to dismiss the Employee summarily. However, these provisions (including those providing for termination on notice) were, by the parties' special agreement in the schedule to the contract, rendered inapplicable to the applicant. 5 The respondent contends that, notwithstanding that exclusionary provision, the contract expressly allowed for termination by the employer in a situation of redundancy, where either party to the contract repudiated it and the repudiation was accepted by the other party, and where the applicant was "guilty of serious and wilful misconduct". While I note these aspects of the respondent's Defence, for reasons which will appear it was not necessary to rely on them for the disposition of the application which came before me on 30 April 2014. 6 Although not directly relevant to the applicant's title to the interlocutory relief which he sought, some of the allegations which he makes in his Statement of Claim, and the respondent's responses to them, convey some idea of the unsatisfactory nature of the relationship between them over the last year or so. The applicant alleges that, on 25 June 2013, he was suspended from his employment, denied access to the respondent's information technology systems and told not to discuss the suspension, or his employment, with any of the respondent's staff, customers or competitors, or with third parties. The respondent admits the fact of the suspension, and makes certain allegations as to the conduct of the applicant which are said to have justified the suspension. The applicant alleges that the respondent refused to allow him to return to his employment until 23 September 2013, and that, when it did so at that time, it placed him in a position which was subordinate to that previously occupied and for which the contract provided, and effectively excluded him from dealing with customers at the level of organisational seniority that he previously held. Many of the applicant's factual allegations in this area of his case are admitted by the respondent. 7 The applicant's next allegation is that, at various times between 19 June 2013 and 21 January 2014, the respondent threatened to terminate his employment in breach of the term in the contract that provided for that employment to be for three years. Here the respondent denies that it made any such threat, but admits that it was "investigating" the actions of the applicant and had told him that the result of any such investigation may be termination of employment. 8 The applicant alleges that the respondent threatened "to prevent [him] working in accordance with the normal practices of the respondent". This allegation seems to relate to the respondent's insistence that the applicant not carry out the duties, have the information technology resources, or have access to the contacts or communications, which his contracted position required. These allegations are denied by the respondent. 9 That brings me to the termination of the applicant's employment, which lies at the centre of his application for an interlocutory injunction. As mentioned above, this event is not yet the subject of a pleading, but soon will be. 10 On 21 March 2014, the Chief Financial Officer of the respondent, Michael Vamos, wrote to the applicant in the following terms: Following consideration of the events of the last 12 months and more recent performance management, we wish to inform you that we are suspending your employment with pay with immediate effect. The following are the grounds upon which this outcome has been reached; 1. Serious and wilful misconduct in the form of abusive and disrespectful behaviour and conduct to a number of people including Managers, peers and customers: • Inappropriate use of language, including swearing towards the CEO, colleagues, Manager and customers; • Bullying and harassment of colleagues; • Regular email criticising the business' direction and instructions from your Manager; • Falsely accusing your Manager, CFO and People & Culture Manager regarding tone and instructions provided in your performance management conversations and reviews 2. Failure by you to follow reasonable and lawful direction on an ongoing basis in both your position of Senior Solutions Manager and employee of Temando: • Ongoing lack of adherence to KPIs; • Inconsistent performance against the responsibilities in your position description; • Failure to follow instructions in relation to communications with customers; • Lack of proactivity in regards to general communication and continuation of work on a day to day basis and in preparation for leave. 3. Breakdown of the employer/employee relationship: • Lack of trust held by us; • Inability by you to hold interactions in a productive and positive manner via phone and email; • Cessation of constructive performance management reviews given your constant disagreement with the meetings' occurrences and versions of events. 4. Inability to demonstrate a level of engagement to ensure your achievement of your performance management plan: • Little improvement over a two month period of deliverables consistent with the normal tactical expectations of your position description • Not undertaking activities that address improvement in the behavioural aspects outlined in the plan • Not demonstrating an interest or efforts to achieving the KPIs and objectives of the plan 5. Lying to your employer: • False claims re conversations had occurred between yourself and colleagues • False claims re meetings held/planned with customers Your access to Temando IT accounts have been suspended. In relation to phone and other business interactions you may incur, please advise recipients that you are currently on leave and direct them to liaise with Fran on either email [sic] or on her mobile [sic]. You are requested to respond to the matters raised in this letter by 5pm Friday 28 March 2014 for our consideration. Failure to respond may result in the termination of your employment. Please note that the result of this process may result in disciplinary action including termination. By letter to the respondent's solicitors dated 25 March 2014, the applicant's solicitor asserted that the prospect of termination of employment on conduct-related grounds was expressly excluded in the contract of employment made on 30 September 2012, and sought undertakings that the respondent take no further steps to terminate the applicant's employment and that the suspension of the applicant from his duties be withdrawn. In a letter in reply dated 26 March 2014, the respondent's solicitors indicated that it would not be providing any such undertaking. 11 By email sent on 28 March 2014, the applicant replied to Mr Vamos's letter of 21 March 2014. Omitting formal parts, the email was in the following terms: I refer to your email letter to me of 21 March 2014. You asked me to respond to the matters raised in your letter by Friday 28 March 2014 and you said also, "the result of this process may result in disciplinary action including termination". Your letter causes me some difficulty. First, please tell me what the process is that you refer to, and what rights I have under that process. Second, I ask that you give me details of the grounds you refer to: for example, the use of inappropriate language and swearing; the emails criticising the business' direction and instructions from my manager; and so on through to the ground of lying including false claims re conversations between me and my colleagues and false claims re meetings held/planned with customers. As you know, our solicitors have exchanged correspondence disputing the basis of your letter. Although that remains in dispute, I wish to cooperate so far as possible but, to do so, I need to know the substance of the grounds you raise. Mr Vamos's reply email, also sent on 28 March 2014, was as follows: I find your email response to be quite disingenuous. The substance for the grounds behind your suspension outlined in the [sic] 21 March 2014 are well documented and not new to you. However, in order to jog your memory we are prepared to outline some of that documentation and correspondence regarding events that have occurred over the last 12 months. These include but are not limited to: 25 June 2013 – email from Michael Vamos notifying of suspension of employment 1 July 2013 – allegations from staff members constituting suspension 8 August 2013 – letter outlining investigation findings and final written warning 28 October 2013 – email – false accusations of management 1 November 2013 – email – false accusations of management 1 November 2013 – formal letter re Professional Conduct 5 – 23 December 2013- multiple emails between yourself, Fran Ereira and others where you criticise Fran and others, make false accusations and use inappropriate language and question the business' direction 24 December 2013 – formal written warning and commencement of performance management process [sic] 24- 27 December 2013- emails with inaccuracies regarding performance management process 11 – 20 February 2014 – emails regarding Forever New 17 – 18 February 2014 – emails regarding your performance management plan 19 February 2014 – email -false accusations of management 24 February 2014 – emails regarding underperformance 27 February 2014 – email – false accusations of management 3 March 2014 – emails with actions from Fran resulting from formal review 3 March 2014 – emails regarding lack of performance and false claims regarding actions items 4 March 2014 – email with inaccuracies surrounding your performance management 6 March 2014 – emails outlining lack of cooperation and attendance at formal review 7 March 2014 – emails regarding actions prior to leave In the interests of providing you with every opportunity to respond to our letter of 21 March 2014 we will extend the deadline for your response to 5pm Monday 31 March 2014. 12 The applicant's next correspondence with Mr Vamos was by way of the following email, sent on 31 March 2014: I continue to be confused about the type of response you are anticipating, as the below references past events most of which occurred some time ago and have already been discussed and dealt with. Please revert to my previous individual responses to these issues. I understand suspension of employment is normally utilised for the purposes of an investigation and not for the purpose of performance management. Therefore, I cannot see the legitimacy around this suspension as you are clearly not undertaking an investigation. If I am in fact being investigated, please provide me a list of the matters under investigation, as the list you have provided me is about past events that I have responded to. Would you please respond to my request for information about the process you have undertaken and my rights under that process. 13 It was in this state of things that the respondent sent its letter of 1 April 2014 terminating the applicant's employment. The letter was in the following terms: I note your email response of 31 March 2014. It is non-responsive to the matters we have invited you to comment on. Given the allegations as to serious and wilful misconduct made about you and your choice not to provide any relevant material in response to these matters a decision has been made to terminate your employment with immediate effect. 14 On an application for an interlocutory injunction of the kind now sought, the first question which arises is whether the applicant has established a prima facie case, that is to say, "a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial": Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57, 82 [65]. The cause of action upon which counsel for the applicant relied in the present case was wrongful dismissal, that is to say, the termination of the applicant's employment otherwise than in accordance with the contract under which that employment subsisted. No reliance was placed upon the cause of action arising under the FW Act. 15 For his part, counsel for the respondent accepted that the applicant had a fairly arguable case of wrongful dismissal. Counsel for the applicant submitted that his client's case in this respect was more than fairly arguable: it was an apparently strong one, and this was, according to the submission, a circumstance proper to be taken into account in the discretionary exercise involved in the disposition of an interlocutory application such as the present. I accept that submission at both levels. 16 There are, however, quite obvious discretionary considerations counting against the applicant's interlocutory claim. For the moment I shall put aside what I consider to be an ambiguity in the terms of the orders which he seeks, and deal with the matter at the level of substance. A major difficulty is that there would have to be, in my understanding of the law, some special circumstance before the court would, at trial, grant the applicant permanent injunctive relief requiring the respondent to maintain him in its employment until 9 September 2015. Counsel for the applicant accepted that, traditionally, courts have been reluctant to order the specific performance of a contract of employment, or to express an injunction in terms which, although negative in form, have that positive effect. This is neither the time nor the place to expound upon the rationale for that reluctance; nor upon the relaxation of the firmness of it that may be observed in some of the more recent cases. It is sufficient to say that there has to be something more than a breach of contract as such in the facts of the case to justify a specific remedy of that kind. 17 It seems that the applicant did, for a time at least, apprehend that the exercise of the share options to which I have referred above might be put at risk by the termination of his employment. It was contemplated that, to protect his position under the Temando Holdings options plan, the court might be persuaded to make a specific order having the effect that the employment, as a relationship, was kept on foot. However, in its Defence the respondent has admitted that Temando Holdings has waived the rules of the plan "to the effect that vesting of any share options granted to the applicant would not be affected by a termination by the respondent of the applicant's employment". The prospect of the applicant being deprived of the opportunity to exercise the options that have been granted to him is not, therefore, a consideration bearing on the question whether the interlocutory injunction which he seeks should be granted or withheld. 18 The only other factor upon which the applicant relied for the proposition that the court might, at trial, grant him a permanent injunction was the avoidance of the "stigma" which presumptively attached to him having lost his employment by dismissal. But counsel for the applicant was unable to refer me to any precedent for the granting of an injunction – permanent or interlocutory – to restrain an employer from acting upon a notice of termination on this ground. For my part, I am unaware of any. 19 Even assuming that the applicant's amended Originating Application, when it is filed, includes a claim for a permanent injunction having the practical effect of maintaining him in his employment until 9 September 2015, the prospect of him achieving such an outcome on his contractual cause of action must be regarded as remote. Assuming he succeeds on that cause of action, I see nothing in the facts of the present case that would incline the court to soften its traditional reluctance to use the specific remedies of equity to bring about an outcome of that kind. Indeed, the circumstances bespoken by the most recent correspondence between the applicant and the respondent, referred to above, show that the present case is, if anything, a conspicuous exemplar of the kind of situation which has led to that reluctance. 20 The application now before the court must, therefore, be approached on the understanding that, if successful under the contract at trial, the applicant would be confined to damages. That makes it very difficult for the applicant to succeed in a submission that, for the interlocutory period, damages would not be an adequate remedy. It would, in my view, be a most unusual case in which a convincing discretionary ground existed for the maintenance of an employee in his or her former employment during an interlocutory period, only to have that employment replaced by a remedy in damages upon him or her succeeding at trial on an allegation that the dismissal in question was wrongful. The present is not such a case. 21 Another way of expressing the same conclusion is to ask a question which is commonly asked in situations such as that now before the court: if the applicant were ultimately successful, but had been denied interlocutory relief, how would that be detrimental to him? In the present case, the damages to which he would presumptively be entitled at trial would, subject to all proper deductions and allowances, date from his wrongful dismissal. His not having been in active employment with the respondent in the meantime would not compromise his ability to achieve that result. There may, of course, be issues of mitigation which arise, but, as it seems to me, either the applicant secures alternative employment and must account for the remuneration which he receives from such a source, or he fails to secure such employment, despite his reasonable attempts. In the latter case, the applicant's entitlement to damages would remain undiminished. 22 On the other side of the ledger, as it were, it is apparent from the affidavits filed on behalf of both sides that the relationship between the parties is now in a most difficult situation. To say that a relationship has "broken down" may not always be responsive to the reality of the contractual obligations which employers and employees have to each other, but in the present case – and here I make no more than a provisional finding such as is appropriate to the interlocutory occasion on which it is made – such a metaphor seems to be very close to the truth. We are not here concerned with a blue collar or clerical worker who might be returned to his or her workplace with little impact on the overall organisational welfare of the employer concerned. It seems that the applicant worked alone in Melbourne, while the centre of the respondent's operations, and the base of its other staff, were located elsewhere. Under the role which was given to him when he returned to work in September 2013, the applicant was engaged in selling the respondent's product. To use his counsel's phrase, he "worked from home". Notwithstanding the geographical separation implied by these arrangements, clearly the applicant's role was one which involved a number of relationships, both internal and external. As to the former, there is little doubt but that, before he was dismissed from his employment, the applicant's relationship with others to whom he was obliged to report, and with whom he had to work, was close to dysfunctional. As to the latter, I would be most reluctant to impose upon the respondent, against its opposition, an obligation to have the applicant represent it in its dealings with those whom it has, or seeks to have, as its customers. 23 If the applicant succeeds in this case, he will secure the monetary remedies which he seeks, or something like it. His prospect of doing so will not be diminished by the reality that he was not maintained in his employment over the interlocutory period. He will, of course, be held out of earning his regular remuneration in the meantime, but this will be a matter of timing more than quantum, in which respect I note that the applicant has claimed interest on any award of damages which is made in his favour. As against that, I accept that the respondent would be considerably disadvantaged in the conduct of its business if it were forced to have the applicant back at work while he conducts this litigation against it. The case appears to have all the features of one in which the difficulties of supervision provide clear grounds for the court's reluctance to impose specific obligations in an employment situation, even on an interlocutory basis. 24 It was for the foregoing reasons that I rejected the applicant's claim for interlocutory injunctive relief on 30 April 2014. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup. Associate: Dated: 7 May 2014