Cate Clunne v Nambucca Shire Council [1995] IRCA 355

CATCHWORDS INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - compensation. EMPLOYMENT CONTRACT - whether damages for psychiatric illness caused by wrongful dismissal - whether damages for lost opportunity for further employment at expiry of fixed term contract. Legislation No. NI1071 of 1995 CATE CLUNNE v NAMBUCCA SHIRE COUNCIL MOORE J SYDNEY (heard in Bellingen) 8 August 1995

IN THE INDUSTRIAL RELATIONS ) ) COURT OF AUSTRALIA ) No. NI1071 of 1995 ) NEW SOUTH WALES DISTRICT REGISTRY) BETWEEN: CATE CLUNNE Applicant AND: NAMBUCCA SHIRE COUNCIL Respondent JUDGE: Moore J PLACE: Sydney (heard in Bellingen) DATE: 8 August 1995 ORDER OF THE COURT THE COURT ORDERS: 1. Declares that the dismissal of the applicant was in contravention of s170DC of the Act. 2. The respondent pay the applicant compensation in the sum of $17,056. 3. Judgment for the applicant in the sum of $6,500. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.

IN THE INDUSTRIAL RELATIONS ) ) COURT OF AUSTRALIA ) No. NI1071 of 1995 ) NEW SOUTH WALES DISTRICT REGISTRY) BETWEEN: CATE CLUNNE Applicant AND: NAMBUCCA SHIRE COUNCIL Respondent JUDGE: Moore J PLACE: Sydney (heard in Bellingen) DATE: 8 August 1995 REASONS FOR JUDGMENT This is an application under s170EA of the Industrial Relations Act 1988 ("the Act") by Ms Cate Clunne whose employment with Nambucca Shire Council ("the Council") was terminated on 26 October 1994. A remedy is sought under s170EE though it is common ground that reinstatement is not now practicable. Damages are also sought in the Court's accrued jurisdiction for breach of contract. Ms Clunne commenced employment with the Council on 9 May 1994 as the business manager of Nambucca Valley Pheonix ("Phoenix"). She was employed for a term of one year. Pheonix is a facility provided by the Council, though funded by the Commonwealth, to provide employment for adults with an intellectual disability. It operates from premises in Bowraville. To understand the issues it is necessary to refer to the course the proceedings took. The hearing commenced on Tuesday 20 July 1995 in Bellingen. Mr Batley, solicitor, appeared for Ms Clunne. He submitted, when opening the applicant's case, that her dismissal had been in contravention of ss170DC and 170DE of the Act and that it was also in breach of her contract of employment. Damages flowing from that contractual breach included, it was submitted, the loss of income for the residue of the contractual term, the loss of the opportunity to obtain further employment at the end of the contractual term and compensation for the physical injury the applicant suffered as a result of the breach. This last matter related to depression the applicant suffered following her dismissal. The Council initially contested all issues. However on the third day of the hearing Mr Hodgkinson, appearing for the Council, formally admitted that the termination of Ms Clunne's employment was in contravention of s170DC of the Act and invited the Court to hear submissions from both the Council and Ms Clunne as to what remedy should be granted. This was an admission that before terminating Ms Clunne's employment, the Council did not give her an opportunity to defend herself against the allegations made. This admission was made at the conclusion of the applicant's evidence and before any evidence had been called by the Council. This invitation to make submissions was taken up by Mr Batley. As a result, the evidence on which the remedy for the admitted contravention of the Act and the contractual claim to be determined was the only evidence called on behalf of the applicant and some documents used to cross-examine her which would have formed part of the evidence the Council would have called. No admission was made that the termination of Ms Clunne's employment contravened s170DE though it appeared that both Mr Hodgkinson and Mr Batley did not view the resolution of that issue as necessary in view of the earlier admission concerning s170DC. The effect of the admission on the common law contractual claim was adverted to by Mr Hodgkinson when the admission was made, but it became apparent during submissions that the Council was not admitting, at least in a formal sense, any breach of contract or liability for damages at common law. I will return to this matter shortly. In view of the course the proceedings took it is unnecessary to deal with all factual issues that emerged in the proceedings. It is sufficient that I address the facts necessary to deal with the question of compensation under s170EE and the issue of whether there has been a breach of the contract of employment and, if so, what damages flow from that breach. It is convenient to deal with the relevant facts in essentially chronological order. Between August 1993 and March 1994 Ms Clunne was employed as a management consultant in Bathurst. She said in uncontested evidence that when she commenced employment as business manager of Phoenix she settled in the Nambucca Valley area with her de facto husband and son and purchased land at Hungry Head for the purposes of building a family home. She also said that when she was appointed business manager she expected that her contract would be renewed after twelve months if Pheonix had the resources to continue to pay her salary. At the time of her dismissal she was the only member of her family earning any income. Before commencing employment as business manager she signed a written contract of employment dated 5 May 1994. Clause 3 deals with the duration of the contract and was in the following terms: Appointment and Term 3.1 "the Council shall appoint Cate Clunne (name) as its business manager of Nambucca Valley Pheonix for a term of one year from 9 May 1994 until 4.30pm 8 May 1995 (date of "expiration")." The written agreement also dealt with renewal of appointment and the duties of the business manager in clauses 4 and 5 respectively which read: "4.0 RENEWAL OF APPOINTMENT 4.1 There will be no re-appointment or appointment to another position with Council in the absence of a written, signed agreement between the parties. 5.0 DUTIES AND RESPONSIBILITIES OF THE GENERAL MANAGER (sic) 5.1 The Duties and Responsibilities of the business manager are as detailed in the Job Description attached hereto in Schedule A." Schedule A referred to in clause 5.1 was constituted by four pages containing detailed provisions and two further pages setting out in summary terms Ms Clunne's performance objectives and remuneration. The description of her responsibilities commenced with a paragraph that assumes some significance in these proceedings and read: "PRIMARY PURPOSE OF THE JOB To provide managerial directions and marketing expertise for the various employment initiatives of Nambucca Valley Pheonix, being responsible for the day to day management of the Organisation and issues arising including between the Management Committee, the supervisors and other staff, and the clients. Although it may seem to be self-destructing, the business manager is to establish a management structure which will replace the business manager when phased out, such structure to address the development of business activities, the on-going viability of the Organisation, beyond the terms served by the business manager." (italics added) There exists a committee called the "Nambucca Disabilities Services Committee of Management" which had a supervisory management role in relation to Pheonix and generally managed the affairs of the facility. While its precise legal status was not made clear during the proceedings, it appears it is a sub-committee of a committee of the Council itself. The committee was constituted by members of Council, community representatives, parent representatives and client representatives. The reference to clients is to the intellectually disadvantaged adults who used the facility. From June 1994 onwards the committee met monthly. Ms Clunne was cross-examined about her expectations at the time she commenced employment. She accepted that part of her responsibilities was to make Pheonix self-sufficient and that if this had been achieved within the twelve months of her employment contract, there would then have been no further opportunity for employment as a business manager. What was not established by the evidence, however, was that there was an expectation both on Ms Clunne's part and those representing the Council who engaged her that she would achieve this objective within that period. I do not infer, as Mr Hodgkinson invited me to, that a term of twelve months was agreed to because there existed an expectation on Ms Clunne's part or Council's part that this objective would be met within that period. Between May 1994 and September 1994 Ms Clunne discharged her responsibilities as business manager without any incidents of significance save for one concerning a Mr Arnett. The operations of Pheonix were administered through several departments one of which was called Trades and Services. Until August 1994 Mr Arnett acted as the supervisor for that department. As a result of a recommendation from Ms Clunne the committee decided at a meeting on 4 July 1994 to re-structure the position of supervisor with the result that Mr Arnett and another person shared the position. That was done. A central issue in these proceedings had been the purported termination by Ms Clunne of Mr Arnett's employment in late September 1984. In view of the admission made by Council, and thus the issues that need to be addressed in this judgment, it is unnecessary to deal in detail with all the events leading up to and following that purported dismissal. On 16 August 1994 Ms Clunne had a meeting with Mr Arnett in which she counselled him about deficiencies she perceived in his conduct. In late September 1994 Mr Arnett arranged to meet with the Mayor of the Council, Mr Max Graham, who had taken a detailed and active interest in the operations of Pheonix both before and after Ms Clunne's employment in May 1994 and he chaired the committee. With what authority, if any, Mr Graham was able to meet with an employee of Council under the direction and supervision of Ms Clunne was not clear from the evidence unless it was as chair of the committee. If so, it was not clear whether this was within the ambit of the chair's responsibilities. On 20 September 1994 Ms Clunne had a second meeting with Mr Arnett in which he was counselled again about his performance as a supervisor. He was by then sharing the position with another employee, Mr Morton. The meeting between Mr Arnett and Mr Graham is likely to have taken place later that day. On 22 September 1994 Ms Clunne had another meeting with Mr Arnett and Mr Morton was also present. In Ms Clunne's account of that meeting she says Mr Arnett lent across her desk and shook his fist at her and manifest a generally aggressive demeanour. Her evidence was, in this respect, corroborated by evidence from Ms Parkhouse who said she saw the shaking of the fist. Ms Parkhouse is a friend and co-worker of Ms Clunne. Having regard to the cross-examination of both Ms Clunne and Ms Parkhouse by Mr Hodgkinson, it was clear that had evidence been called by Council, this account of the meeting would have been put in issue. However no such evidence was called. While the evidence given by Ms Clunne, when viewed in its entirety was not completely credible in some respects, I nonetheless accept her account of the meeting on the 22 September 1994. I accept that Mr Arnett behaved in a threatening way towards her. The suggestion made in cross-examination by Mr Hodgkinson was that Ms Clunne decided to dismiss Mr Arnett at the end of this meeting because he refused to tell her what had transpired at the meeting with Mr Graham two days before. However I find it inherently improbable that Ms Clunne would have been prompted to dismiss Mr Arnett for that reason alone and that it is more likely than not that her decision to dismiss flowed, in part, from the way he conducted himself at the meeting. During the hearing Mr Batley admitted on Ms Clunne's behalf that the dismissal of Mr Arnett was unfair and, at least by implication, Mr Arnett would have succeeded in any application brought to an industrial tribunal alleging unfair dismissal. The context in which the admission was made indicated that it related to unfairness flowing from a denial of procedural fairness. Having regard to this admission it is unnecessary to explore fully the evidence concerning Mr Arnett's conduct and the dismissal more generally. One issue in these proceedings was whether Ms Clunne had the authority or power to dismiss Mr Arnett or any employee of Council employed at Pheonix. I am satisfied that, as a matter of fact, at the time Ms Clunne dismissed Mr Arnett she believed she had power to do so. I express this view for three reasons. Firstly her evidence was to that effect, secondly, she had executed a contract employing Mr Morton some short time before in which reference is made to termination of his employment by the business manager, and thirdly, it is improbable, in my opinion, that Ms Clunne would have taken the step of dismissing Mr Arnett if she doubted at the time that she could do so. Even if Ms Clunne drafted Mr Morton's contract, the reference to dismissal by the business manager, was consistent with her then believing her powers extended to dismissal of staff. The dismissal of Mr Arnett gave rise to a meeting of the management committee on 26 September 1994 when it considered the dismissal. What occurred at that meeting is not entirely clear though the committee had an opportunity to consider both Ms Clunne's justification for the dismissal and Mr Arnett's and Mr Morton's account of the meeting on 22 September 1994. Ms Clunne did not remain at the meeting while the members of the committee heard Mr Arnett's account and in her evidence Ms Clunne was critical of the way the meeting was conducted. The meeting resolved to reinstate Mr Arnett and to not recognise that the business manager had the power to dismiss him. It passed other related resolutions. On 29 September 1994 Ms Clunne wrote to the General Manager of the Council, Mr Port, identifying items that she believed needed to be addressed which related to her role as business manager. A meeting occurred on 4 October 1994 attended by Ms Clunne, her brother and Mr Port and Mr Graham. The evidence as to what occurred at that meeting is limited though Ms Clunne said in evidence that its purpose was to resolve the dispute between her and Council and that at that meeting she did not refuse to accept the reinstatement of Mr Arnett. At that meeting she asked Mr Port to ring Mr Arnett and Mr Morton to ask them to co-operate with her. She accepted in cross-examination that the meeting involved the invoking of the disputes settling clause of her contract which is a matter I will consider in more detail in due course. A meeting of the committee took place on 17 October 1994 which Ms Clunne attended. She had prepared a report for that meeting referring to her unresolved dispute which was a reference to the nine points contained in her letter of 29 September 1994 to Mr Port. The committee resolved as follows: "Resolved that this meeting of the Committee of Management be adjourned for the business manager, the Mayor and the General Manager to meet and discuss and come back to the Committee, with a total solution to the "unresolved disputes" given that matters raised in the business manager's report in the open part of this meeting should not be discussed in the open part because staff and client matters are involved." A further meeting of the committee occurred the following day though Ms Clunne was not present. At that meeting the committee resolved that Mr Port should direct Ms Clunne to take annual leave immediately. The next meeting that took place was on 26 October 1994. By this stage Ms Clunne had retained the services of a solicitor, Mr McCarty. There is, in evidence, a transcript of part of that meeting produced from a tape-recording made by Mr McCarty. Mr McCarty was sent by facsimile by Council on the 25 October 1994 a draft agenda of matters to be discussed at the meeting the following day. That draft concluded with a note that the contract with the business manager is terminated with pay in lieu of one month's notice from the date of the meeting, that is, 26 October 1994. That meeting was attended by Ms Clunne, Mr McCarty, Mr Port and Mr Graham. It is unnecessary to detail what was said though at the conclusion of the meeting Ms Clunne's employment was terminated. I have read the transcript of that part of the meeting which was recorded and Ms Clunne's account of the remainder. I am left with the clear impression that the meeting and the way it developed became, in essence, a conflict of wills involving personalities who had a firm view about the correctness of their own action. It became a debate about form rather than substance. Though it is said for the benefit of hindsight, it would appear to me to have been a meeting at which considerably more could have been achieved in a productive and positive sense had a third party been involved who had no interest in an outcome other than reaching one. The principle reason for Ms Clunne's dismissal was, so I was informed by Mr Hodgkinson, her conduct in bringing about the dismissal of Mr Arnett and her refusal to accept the position taken by the committee that he should be reinstated. It is against this general background that I consider the issues in the case. COMPENSATION UNDER s170EE At the time of her dismissal, Ms Clunne had 27 weeks of her contract to run, though she was paid, upon dismissal, four weeks salary in lieu of notice. Mr Hodgkinson submitted that any compensation that might be awarded under s170EE should not be great having regard to the fact that the events leading to Ms Clunne's termination were essentially of her own making. This submission is founded on the admission made by Ms Clunne that the dismissal of Mr Arnett was unfair. Section 170EE (2) and (3) provides: (2) If the Court thinks, in respect of a contravention of a provision of this Division (other than section 170DB or 170DD) constituted by the termination of employment of an employee, that the reinstatement of the employee is impracticable, the Court may make an order requiring the employer to pay to the employee compensation of such amount as the Court thinks appropriate. (3) In working out the amount of the compensation for the purposes of subsection (2), the Court is to have regard to the remuneration that the employee would have received, or would have been likely to have received, if the employer had not terminated the employment, but the amount of compensation: (a) must not exceed, in respect of any employee, the amount of remuneration that would have received by the employee in respect of the period of 6 months that immediately followed the day on which the termination took effect if the employer had not terminated the employment and the employee had continued to receive remuneration in respect of the employment at the rate at which he or she received remuneration immediately before the termination took effect; and (b) must not exceed, in respect of an employee who is not employed under award conditions, the applicable amount on the day on which the termination took effect. It can be seen that these provisions are silent as to the basis upon which compensation is to be determined save that the opening words of s170EE (3) direct attention to the remuneration an employee would have received but for the termination. In the present case that would have been the remuneration for the remainder of Ms Clunne's contract subject to the possible lawful termination of Ms Clunne's contract in accordance with its terms in circumstances when she had been given the opportunity contemplated by s170DC to answer allegations and subject to the possibility that her employment might continue by her contract being renewed. Section 170EE(3)(a) limits the amount of compensation that can be awarded. On one view of the events leading to her termination on 26 October 1994, there was a likelihood that her services would have been terminated in any event even if she had been given that opportunity. However, as I earlier noted, I view the circumstances that gave rise to her dismissal, and in particular the meeting of 26 October 1994, as the manifestation of a conflict between strong willed individuals. I am satisfied that had Ms Clunne not been dealt with in the comparatively peremptory way she was on 26 October 1994, a considerable amount of the tension that had by then been generated between her, Mr Port and Mr Graham, would have dissipated. If so, it would have been by no means inevitable or even likely that her contract would have been terminated. Indeed by 26 October 1994 Ms Clunne's attitude to her earlier dismissal of Mr Arnett appears to have moderated somewhat. Had she been given an adequate notice that intransigence on her part on that issue would lead to her dismissal, I have little doubt that a compromise would have been reached between her, Mr Port, Mr Graham, and to the extent relevant, Mr Arnett. In my opinion, Ms Clunne is entitled to compensation representing at least the salary she would have earned for the residue of her contractual term. I do not accept a submission made by Mr Hodgkinson that the amount of compensation should not be great because of Ms Clunne's conduct in dismissing Mr Arnett. I have already indicated that, in my opinion, Ms Clunne believed she had a right to dismiss Mr Arnett at the time and nothing emerged in the evidence which demonstrates that such a belief was an unreasonable one even if it was mistaken. Moreover, I have concluded, on the evidence before the Court, that aspects of Mr Arnett's conduct justified Ms Clunne in taking a firm position. Whether her actions in dismissing Mr Arnett was entirely justified, putting aside her failure to afford him procedural fairness, is something I need not determine. However I am not satisfied that her conduct warrants some discounting of the compensation that would otherwise be awarded to her. S170EE authorises compensation up to six months salary which would have been slightly more than the residue of her contractual term. The limit is to be determined by reference to "remuneration that would have been received": see s170EE(3)(a), which does not include amounts that would have been paid by way of superannuation to a third party: see Ardino v Count Financial Group Pty Ltd, (1994) IRCR 221. In this case I consider that the expression "would have received" can be treated as including income from employment arising from a renewal of her contract which, as I discuss shortly, may wll have occurred. It was common ground that the remuneration was $656 per week. Accordingly the maximum compensation that might be awarded is $17,056. I award compensation in the sum of $17,056. In view of this conclusion I do not view it as necessary to canvass the question of damages for wrongful dismissal as the damages would be, prima facie, the salary for the residue of her contract. I turn to consider the other issues arising in the cause of action brought in the Court's accrued jurisdiction. No submission was made that the Court should, as a matter of discretion, not exercise the Court's accrued jurisdiction to deal with this common law claim: see Association of Professional Engineers, Scientists, and Managers Australia (APESMA) & Ors v Skilled Engineering Pty Ltd (1994) 122 ALR 471 at 479; and Stack v Coast Securities (No. 9) Pty Ltd (1985) 154 CLR 261 at 294-295. It is first necessary to determine whether the termination of Ms Clunne's employment involved any breach of her contract of employment. Ms Clunne was given a month's pay in lieu of notice. The written agreement provided for termination by giving notice of that length. Clause 13 dealt with termination and read: "13.1 The Contract may be terminated before the date of expiration in any of the following circumstances: 1 by written agreement between Council and the Business Manager; 2 by the Business Manager, with 1 month's written notice, although if the business Manager gives such notice Council may choose to pay the Business Manager's remuneration for 1 month or so much of that period remaining in which case the Business Manager's employment will be terminated on and from the date of such payment; 3 by Council with 1 month's notice in writing or by the payment of 1 month's remuneration in lieu of notice if the Business Manager does not meet the performance criteria specified in the Performance Agreement; 4 .... 5 By Council for any reason other than those specified in paragraphs 17.1(1), 17.1(3) and 17.1(4) provided Council gives the Business Manager 1 month's notice or pay in lieu of notice as though the Business Manager had worked during the period of notice. Where Council elects to terminate this contract under the provisions of this sub-clause within a period of 1 months prior to the Business Manager the Business Manager's remuneration calculated as if the Business Manager had worked until the date of expiration. 13.2 Upon termination of employment for any reason the Business Manager shall immediately return to Council all property of Council. 13.3 In this clause "remuneration" means the base salary component of th remuneration specified in Schedule C as varied from time to time." Clause 13.1(4) deals with situations permitting summary dismissal. There was no suggestion in submissions that those provisions had application to Ms Clunne's employment in October 1994. The reference in clause 13.1(5) to "17.1(1), 17.1(3) and 17.1(4)" is, as is apparent from the context, a reference to 13.1(1) etc. While clause 13.1(5) appears to give the Council an unqualified right to terminate the employment by giving one month's notice, Clause 13 has to be read in conjunction with other provisions of the contract. Clause 16 deals with dispute resolution and provides: "16.0DISPUTE RESOLUTION 16.1 Unless a party to the Contract has complied with subclauses 16.2, 16.3, 16.4 and 16.5 hereof, that party may not commence court proceedings (other than for urgent interlocutory relief) or arbitration relating to any dispute arising from or under the Contract. 16.2 All questions or difference whatsoever which at any time may arise between the parties with respect to the Contract, or any obligations, duties or restrictions contained in the Contract or arising out of or in relation thereto, whether as to construction or otherwise, shall in the first instance be referred to Council for decision. 16.3 Any party to the Contract claiming that a dispute has arisen under the Contract between the parties to the Contract shall given written notice to the other party designating as its representative in negotiations relating to the dispute a person with authority to settle the dispute (which in the case of the Business Manager may be the Business Manager), and the other party given such written notice shall promptly give notice in writing to the first party designating as its representative in negotiations relating to the dispute a person with similar authority. 16.4 The designated persons shall, within 14 days of the last written notice given under Clause 16.3 above, seek to resolve the dispute. 16.5 If the dispute is not resolved within the following 14 days (or within such further period as the representatives may agree is appropriate) the parties in dispute shall attempt to settle the dispute by the process of mediation. 1 administered by the Australian Commercial Dispute Centre Limited (the Centre) or by any other person or organisation agreed in writing between the parties; 2 conducted at Sydney or at any other place agreed in writing between the parties; and 3 held in accordance with the rules of the Centre in force at the date of commencement or as otherwise agreed in writing between the parties from time to time. 16.6 Each party will meet its own costs of and associated with the mediation. 16.7 The parties acknowledge that the purpose of any exchange of information or documents or the making of any offer of settlement pursuant to this clause is to attempt to settle the dispute between the parties. No party may use directly or indirectly any information or documents obtained through the dispute resolution process established by this clause for any other purpose than in an attempt to settle a dispute between that party and other parties to this agreement. While a clause of this type might not be a common one in an employment contract, it nonetheless forms part of the written agreement between Ms Clunne and the Council. The import of clause 16 is that the parties to the agreement can require disputes to be addressed by mediation. In my opinion reading the contract as a whole the right to dismiss arising under Clause 13.1(5) is qualified by the contractual obligation to mediate. That is, if the Council was dissatisfied with Ms Clunne's employment or wished to terminate the contract by giving notice because it was in dispute about some matter, the Council was obliged to follow the procedures in clause 16 before exercising the contractual right to terminate if the provisions of clause 16 had been invoked by Ms Clunne. The language of clause 16 in its entirety is not in terms that suggests that it is limited to disputes arising after the employment relationship had terminated. In the present case the Council did not follow the provisions of clause 16, and in particular the procedures in clause 16.5, before terminating the employment of Ms Clunne. She had requested them to follow those procedures. Accordingly her termination was other than in accordance with the terms of the contract and constituted a breach of the contract and a repudiation of it. That repudiation has been accepted and the contract has been terminated. At issue is what damages flow from that breach. Ms Clunne claims damages for lost opportunity which is now a matter recognised in the general law of contract as a matter that may, in certain situations, be considered in assessing damages for breach of contract: see The Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64. The contract in these proceedings was for a fixed term though it contained a provision that permitted termination by either party giving one month's notice. It is, in this respect, different from many employment contracts where either expressly or impliedly there is a right to terminate by giving notice though the contract is otherwise silent as to duration. Before dealing with the legal issue I set out findings of fact relevant to it, some of which I have already discussed. I am satisfied that when Ms Clunne entered the contract she had an expectation which was reasonable that at the end of twelve months further employment might be offered to her. Mr Batley pointed to various provisions in the written agreement concerning matters such as sick leave and annual leave, that indicated as a matter of construction, the agreement contemplated employment beyond the twelve months. Save for one matter, I have found these references in the agreement of no assistance. The contract, in terms, was plainly for a period of twelve months. Any entitlement to sick leave or leave of any description had relevance only during the period for which the contract was to operate, namely twelve months. References in the agreement to benefits based on more than twelve months service are, in my opinion, a manifestation of inelegant drafting flowing probably from the use of a pro-forma contract which was not adapted in all respects to employment for a period of twelve months. However the reference in the first paragraph of schedule A, which I set out earlier, to "beyond the terms served by the business manager" (emphasis added) does indicate that the parties contemplated at the time the contract was entered into, the term of twelve months might not be the only term served by the business manager. Clause 4.0 referred to the means by which this could be done. Schedule A was a provision drafted especially for Ms Clunne's employment. While a clause dealing with the interpretation of the contract allows for "words denoting the singular number as including the plural number and vice versa", that does not alter, in my opinion, the comparatively clear import of the words I have just set out. In support of his submission that the parties anticipated further employment at the end of the twelve months, Mr Batley relied on evidence of a conversation between Ms Clunne and Mrs Frost, who was a committee member, in August 1984 in which Mrs Frost indicated support for further employment of Ms Clunne. However, as Mr Hodgkinson pointed out, they are the views of one member of the committee only and, if relevant, should be given minimal weight. I accept that this is so save that it indicates the perception of one member of the committee that Ms Clunne was performing her work satisfactorily. That is consistent with remarks recorded in a minute of the meeting of the committee of 15 August 1994 made by Mr Wright who was the project officer from the Department of Health, Housing and Community Services which oversaw the funding of Pheonix on behalf of the Commonwealth. He is recorded as addressing the meeting and speaking highly of the efforts of Ms Clunne in addressing and implementing a number of items. While views of the committee changed, and at a meeting in November 1994 the members of the committee endorsed Ms Clunne's termination, I have little doubt had Ms Clunne, Mr Port and Mr Graham, settled their differences, that would have been accepted by other members of the committee. There was no evidence suggesting unsatisfactory performance on Ms Clunne's part apart from the evidence concerning her treatment of Mr Arnett. I find that generally Ms Clunne was discharging her duties satisfactorily. I also find that Ms Clunne moved to the North Coast and purchased a block of land on the basis that she would work for the Council for twelve months and that she then believed that at the expiry of her contract there was a prospect of further employment for at least the same period and at least on the same terms. I also find that there was a real prospect the contract would have been renewed upon its expiry in May 1995. I have already referred to Amann (supra) and adverted to the principle of general application discussed in it. Increasingly, contracts of employment are dealt with in accordance with contractual principles of general application. There are still decisions of high authority that may be viewed as setting apart, in some respects, contracts of employment. One is Automatic Fire Sprinklers Pty Ltd & Anor v Watson (1946) 72 CLR 435 in which it was decided that damages is the appropriate remedy for an employee who is wrongfully dismissed but who does not terminate the contract by accepting the repudiation arising from the wrongful dismissal. However, that approach is itself now far from universally accepted as correct or appropriate as, indeed, is the very language of "wrongful dismissal": see Skilled Engineering Pty Ltd (supra) at 478-479 and the cases referred to at 479.3. Proceeding on the basis that relevant contractual principles of general application may be called in to aid in assessing damages in the present case, it is necessary to consider in more detail what is the principle emerging from Amann supra. Those proceedings concerned a contract for the provision of aerial coastal surveillance. Amann Aviation Pty Ltd ("Amann") had contracted to the Commonwealth to provide such surveillance for three years. To do so, it was necessary for Amann to purchase and specially equip aircraft and hire staff. Shortly after the commencement of the contractual term, the Commonwealth repudiated the contract by purporting to terminate it and Amann elected to accept the repudiation, thus terminating the contract. Amann sued for damages. One issue was whether, in assessing damages, allowance could be made for the position Amann may have been in at the expiration of the contract. It could then have been in a commercially advantageous position to tender for any contract for surveillance work in the period following its contractual term. This issue was considered in the context of whether Amann was entitled to recover expenditure it had made in placing itself in a position to perform the original contract, that is, wasted expenditure or reliance damages. Mason CJ and Dawson J approached the question on the basis that wasted expenditure might be recovered unless the Commonwealth was able to establish that the expenditure would have been wasted in any event, that is, even if the contract had run its course. Their Honours viewed as a relevant consideration in determining whether the Commonwealth had discharged that onus, the prospect of the contract being renewed and the expenditure under the initial contract being applied to the performance of the renewed contract. Their Honours concluded at 94 that had the contract run its course there was a strong prospect of it being renewed. It was thus incumbent on the Commonwealth to demonstrate that the value of the prospect of renewal together with expenses recovered as gross receipts was less than the total expenses to be incurred by Amann in the performance of its contractual obligations. The Commonwealth was unable to demonstrate this and thus Amann was entitled to damages reflecting wasted expenditure. Brennan J at 103, Deane J at 131 and Toohey J at 144 accept that the prospect of renewal was a relevant consideration, though for reasons which I need not detail, their Honours' views were not entirely in accord with those of Mason CJ and Dawson J. The prospect of renewal of a contract in these proceedings does not arise in the context of expenditure made directly to perform the contract which was wasted by its repudiation. The performance of the contract in this case was an entirely personal one which involved no expenditure on the part of Ms Clunne directly for its performance. Amann supra does not provide a foundation for awarding damages for the loss of the opportunity to obtain further employment. That is so notwithstanding that Ms Clunne's prospects of obtaining further employment would have been good had she not been dismissed in October 1994 and had the storm occasioned by the dismissal of Mr Arnett been permitted to pass. The last issue is a claim for damages arising from what is said to be an injury caused by the breach of contract of Ms Clunne. The injury is a psychiatric illness suffered by Ms Clunne from the time of her dismissal. In Baltic Shipping Co v Dillon (1993) 176 CLR 344 the High Court had to consider whether damages should be awarded for distress and disappointment flowing from a breach of contract. Each of the judgments affirm the general principle that distress and disappointment are not compensable. In so far as it concerns employment contracts, that involved an affirmation of the principle enunciated in Addis v Gramaphone Co Ltd (1909) AC 488. It is plain that Mason CJ, with whose reasons Toohey J agreed, and McHugh J, did not view that principle as an entirely satisfactory one. However it is also clear that the general principle is subject to accepted exceptions, one of which is that damages may be awarded for distress arising from physical injury occasioned by a breach of contract: see Mason CJ at 362, Dean and Dawson JJ at 381 and McHugh J at 405. Physical injury includes nervous shock: see Mount Isa Mines Ltd v Pusey (1970) 125 CLR 383 or, as expressed by McHugh J in more contemporary language at 405,: "Furthermore because damages for personal injury may be recovered in an action for breach of contract and because psychiatric illness constitutes personal injury, damages for mental distress associated with psychiatric illness or physical injury must also be recoverable in an action for breach of contract." I proceed on the basis that Ms Clunne is entitled to damages for any physical injury, including psychiatric illness, resulting from the breach of contract and any mental distress associated with that psychiatric illness. Ms Clunne lead evidence from a psychiatrist, Dr Ian Hayes, who is a staff specialist psychiatrist at the Mid North Coast Health Service in Coffs Harbour. A report from Dr Hayes dated 18 May 1995 was tendered without objection. It was not suggested by Mr Hodgkinson that his client wished Dr Hayes to be made available for cross-examination. There is no basis upon which I should reject the opinion of Dr Hayes who was a treating specialist. It was to the effect that since her dismissal Ms Clunne has shown symptoms of a depressive illness and post traumatic stress disorder. He recounts symptoms as being tearfulness, poor sleep, poor appetite and decreased concentration and a loss of interest in her usual activities. Dr Hayes goes on to note these symptoms as nervousness and flashbacks and intrusive memories of the events surrounding her dismissal. He attributes her depression and post traumatic stress disorder as highly probably a result of losing her employment. Ms Clunne's prognosis at 18 May 1995 was that she would be unlikely to go to work for at least the next three months and that the majority of her symptoms of depression would clear within six months. He goes on to say that evidence of her post traumatic stress disorder may endure for a year or more. Mr Hodgkinson pointed out that Ms Clunne did not give evidence herself about any of these matters though nor was she cross-examined about them. The submission then made by Mr Hodgkinson was that it was conceded I could treat the record made by Dr Hayes of statements of Ms Clunne of her symptoms as proof of the truth of the statements, but that would only establish the existence of symptoms up to the time of the making of the report, namely 18 May 1995. That fact, together with the prognosis of Dr Hayes that Ms Clunne may be able to return to work within three months of the date of the report, are considerations to be taken into account in assessing the severity of the psychiatric illness. Also relevant, it was submitted, was that the opinion of Dr Hayes did not pay regard to stress that may have arisen, not from the dismissal of Ms Clunne, but from the events following the dismissal of Mr Arnett which was of Ms Clunne's own making. Further, that one of the factors operating on her depressive illness was the division in the community which arose from Mr Arnett's dismissal and the hostility Ms Clunne has experienced as a result. I have taken these matters into account as I have the evidence of Dr Hayes more generally. The effect of the dismissal was, on Dr Hayes' evidence, something more than mere stress or anxiety. Consistent with the observations of Mason CJ and McHugh J in Dillon (supra) it is a matter in respect of which damages may be awarded. A distinction is to be drawn between mere stress and anxiety arising from dismissal: see Addison (supra), and distress associated with a clinical depressive state. While there may be a measure of artificiality about this approach it is a distinction that must be drawn to give effect to two legal principles that need to be reconciled. I propose to award damages in the sum of six thousand five hundred dollars ($6,500) for physical injury and associated distress resulting from the breach of contract. I will order compensation under s170EE in the sum of $17,056 and damages in the sum of $6,500. Associate: ............................. Dated: 8 August 1995 APPEARANCES Solicitor for the Applicant: Mr Batley Counsel for the Respondent: Mr Hodgkinson Dates of Hearing: 18, 19 & 20 July 1995