New South Wales District Court CITATION: de Marigny v Newcastle Soccer Pty Ltd [2008] NSWDC 52 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S): 14.12.07 JUDGMENT DATE: 19 March 2008 JURISDICTION: Civil JUDGMENT OF: Sidis DCJ 1. Verdict and judgment for the plaintiff in the sum of $165,502.49. DECISION: 2. The defendant to pay the plaintiff's costs on an ordinary basis up to and including 25 July 2006 and on an indemnity basis thereafter. 3. The order for payment of the judgment sum suspended to the extent of $65,000 for a period of 28 days or until further order. No other part of the orders made is suspended. 4. The exhibits will be retained for 28 days or until further order. CATCHWORDS: Breach of contract - Assessment of damages - Loss of opportunity Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 Hadley v Baxendale (1854) 156 ER 145 Murray v Donnelly & anor [2000] NSWSC 634 CASES CITED: (2000) 34 ACSR 630 NSW Cancer Council v Sarfaty (1992) 28 NSWLR 68 Robinson v Harman (1848) 154 ER 363 Scharmann v Apia Club Ltd (1983) 6 IR 157 WT Partnership (Aust) Pty Ltd v Sheldrick (2000) 96 IR 202 PARTIES: Jean Paul de MARIGNY NEWCASTLE SOCCER PTY LTD trading as Newcastle United Football Club ("The Jets") FILE NUMBER(S): Newcastle 467/06 COUNSEL: Plaintiff - R J A Sergi Defendant - T R Edwards SOLICITORS: Plaintiff - Palmieri Law Firm Defendant - Emery Partners JUDGMENT 1 On 17 November 2004 Mr Jean Paul de Marigny entered into a contract with Newcastle Soccer Pty Limited to act as head coach for the football team operated by the defendant under the name of Newcastle United Football Club, colloquially known as the Jets. The term of the contract was expressed to be the period from 1 December 2004 to 30 April 2008. On 4 April 2006 the defendant terminated the contract. The plaintiff claimed that the contract was wrongfully terminated and sought damages. 2 Two defences were filed on behalf of the defendant, each of which denied breach of contract. The amended defence filed on 4 June 2007 alleged that the plaintiff himself was in breach of implied terms of good faith and fidelity entitling it to terminate the contract. 3 On 13 December 2007 the defendant admitted that it had breached the contract by wrongfully terminating it and withdrew the allegations of breach made against the plaintiff. The defendant, at the same time, admitted that the plaintiff was entitled to damages for loss of income resulting from its own breach of contract in the sum of $64,977.28 together with a sum for distress. 4 The claim was heard the following day, 14 December 2007. 5 The remaining issue was whether the plaintiff was entitled to further damages for moving and other expenses incurred as a result of the termination of the contract and for loss of opportunity, and, if so, the compensation to be paid on this account. 6 The plaintiff's evidence was that his position as head coach entailed considerable responsibilities as well as control and supervision of other members of the Jets support staff. 7 In order to take up his position he moved with his wife and three young children from their home at Westleigh in Sydney and leased premises at Eleebana. The family home was also rented out. The children changed schools and the plaintiff's wife secured part-time work as a primary school teacher. 8 The termination of the contract left him in a period of overlap so that he was paying mortgage payments on the Westleigh property at the same time as he was obliged to continue to pay rent at Eleebana. He was without income and was therefore in urgent need of securing alternative employment. 9 After termination of the contract the plaintiff sought to enter into conciliation or arbitration as provided for in clause 10 of the contract. The defendant did not respond in any way to his request to proceed pursuant to that provision of the contract. 10 The Jets, at the time of the termination of the contract, were playing in the A League Football Competition. This is the highest level of professional football competition in Australia. 11 The plaintiff claimed that the urgency of his situation was such that it was necessary to take a position with Sydney United Football Club in the New South Wales State League, that is, at a lower playing level of the sport. In this period he was separated from his family. This, together with the financial stress that he was under, caused him considerable distress and put great strain on his relationship with his family. 12 He subsequently returned with his family to live at Westleigh incurring removal expenses. He obtained employment with the New South Wales Institute of Sport under a contract which expires in December 2008. He coaches 15 and 16 year-olds who play in the under 20s state competitions. This is said to be a third tier appointment. The plaintiff has no support staff and games are watched only by parents of the players. He said he therefore has no opportunity to secure a public profile. 13 The plaintiff acknowledged that his contract with the Jets was for a term with no option and with no guarantee that it would be renewed. He acknowledged that his future as an A League coach depended on the success of the club that he coached during the season, but he noted that in the 2005/2006 season under his tutelage the Jets had finished in the top four of the A League. 14 The plaintiff acknowledged that he had moved his family a number of times to take up positions as he moved up the scale as a coach and he agreed that this was a feature of his career choice. The plaintiff acknowledged that he had applied, unsuccessfully, for only one position as an A League coach since the date of termination of the contract notwithstanding that other positions had become available. However, he pointed to the fact that throughout this time he had been under contract to the New South Wales Institute of Sport. 15 Looking at the evidence I do accept that the defendant's treatment of the plaintiff was, as described by the plaintiff's counsel, appalling. The termination of the contract was a clear breach. Redundancy was invented as a basis for terminating him. The defendant did not attempt to respond on the issue of conciliation and arbitration and the excuse put forward at the hearing that this obligation no longer applied because the contract was terminated, was distinctly at odds with the concession made that the termination was unlawful. 16 The plaintiff was offered no reference. He was offered no assistance in securing an alternative coaching position. The termination left him in a position where he was financially constrained to accept a coaching position at a level below his capacity. 17 The defendant not only denied breach of contract in its initial defence, it directly attacked in the amended defence the plaintiff's reputation and integrity by adding allegations of breach of fidelity and good faith. I have no hesitation in finding that this conduct caused the plaintiff personal distress and damage to his professional reputation. The question is whether the law allows him an award of compensation for his loss and damage as a result. 18 I was referred by the parties to a number of authorities which were said to represent their various positions. The defendant referred in particular, to the decisions of New South Wales Cancer Council v Sarfaty (1992) 28 NSWLR 68 and Murray v Donnelly [2000] NSWSC 634, (2000) 34 ACSR 630. 19 The Sarfaty decision dealt with the question of damages for loss of benefits which had been made available during the term of employment but which the defendant was not contractually bound to pay. This is not the basis upon which the plaintiff claims this additional element of compensation in this case. 20 Murray, again, was not a decision analogous to the current situation. In that case there was no contract of employment, simply an agreement to enter into a contract on terms to be negotiated. The plaintiff was, however, awarded compensation for the loss of the opportunity to earn bonuses that it was envisaged would be provided for in the contract. The bases for this award were not stated by Bryson J who delivered the judgment in the matter. 21 There were three decisions of significance in my determination that this head of damage is available to the plaintiff. In Scharmann v Apia Club Limited (1983) 6 IR 157 Wootten J dealt with the wrongful termination of the services of a football player. The plaintiff came from Austria and the evidence was that at the time his contract was terminated the European football season was at a point that made it difficult for him to secure engagement with an Austrian football team. He was therefore allowed damages to the point where acting reasonably he could secure a new football playing engagement. 22 In WT Partnership v Sheldrick (2000) 96 IR 202 the Full Court of the Federal Court of Australia dealt with the dismissal of the respondent from a position as a cost engineer in Malaysia. On termination of his employment visa requirements demanded that he and his family leave Malaysia immediately. The court at first instance awarded damages for distress, relocation and vexation arising out of the wrongful termination of his contract and the haste with which he was required to relocate. The Full Court allowed in addition damages for the loss of opportunity to secure alternative employment in Malaysia at a time when the evidence suggested the Malaysian economy was expanding rapidly. This opportunity could have been afforded to him by allowing him to work the three months period of notice provided for in the contract. 23 In my view, any doubt on the subject was dispelled by the High Court in The Commonwealth v Amann Aviation Pty Limited (1991) 174 CLR 64 where references were made to the basic principles for assessment of damages for breach of contract set out in two early English decisions. 24 In Robinson v Harman (1848) 154 ER 363 at 365 Parke B said: Where a party sustains a loss by reason of a breach of contract he is, so far as money can do it, to be placed in the same situation with respect to damages as if the contract had been performed. 25 The principle in Hadley v Baxendale (1854) 156 ER 145 was stated by Mason CJ and Dawson J to be that; the plaintiff is entitled to recover such damages as arise naturally, that is, according to the usual course of things, from the breach, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach. 26 These authorities make it clear that the law does not, as contended by the defendant, limit damages to amounts provided for in the contract. In this case the measure of damages conceded by the plaintiff is the difference between the amount that the plaintiff would have earned had the contract with the defendant run its full term and the amount he actually received through the employment he was able to secure after termination, together with a small amount for distress. 27 This amount does not recognise the obligation of the defendant to provide for the plaintiff to be put in the position he would have enjoyed but for the defendant's breach of contract. That position would have been as the head coach of an A League football club with an income well in excess of $100,000 and with his reputation intact. 28 Further, he was denied the prospect contained in his contract of appointment as the manager of the Jets, the prospect of renewal of his contract and the prospect of engagement with an alternative football club. In my view, these prospects were of compensable value. 29 There is some difficulty in assessing the value because the market in Australia for coaches of the plaintiff's calibre is small and positions are hotly contested. I consider compensation in the amount of $100,000 suggested by the plaintiff must be significantly discounted to allow for these features of the market in which he operated. I have therefore determined that the award for loss of opportunity will be in the sum of $65,000. 30 There was no medical evidence in respect of the distress or the consequences to the plaintiff of the distress that he suffered and I have no means therefore of assessing the level at which he is to be compensated. I have therefore allowed the amount volunteered by the defendant of $2,000. 31 I have allowed the plaintiff additional rental expenses of $5,880. His evidence was that the overlap period was between three and four months. I have taken a halfway point of 14 weeks and allowed $420 per week. I have allowed the plaintiff his removal expenses of $1,400. I have also allowed for loss of income in the agreed sum of $64,977.28. 32 Interest is to be paid on the total of these sums. 33 The parties are agreed that the interest component is $26,245.21 making a total judgment sum of $165,502.49. 34 In respect of costs the plaintiff asks for indemnity costs from 25 July 2006 on the basis of a letter addressed to the defendant's lawyers on that date offering to accept the sum of $150,000 inclusive of costs in settlement of his claim. That offer was not accepted. The matter went to arbitration and an award was made by the arbitrator on 20 September 2007 in the sum of $127,957.28 plus interest and costs. 35 The defendant sought a rehearing of the proceedings by motion filed on 19 October 2007. By letter dated 22 November 2007 the plaintiff offered to accept the sum of $120,000 plus costs in settlement of his claim. That offer was not accepted. 36 The award that I have delivered this morning I am told exceeds that given by the arbitrator by about $10,000 prior to the addition of interest. 37 It seems to me that the letter of 22 November 2007 cannot be regarded as a proper Calderbank offer, having regard to the plus costs component. The letter of 25 July 2006 is inclusive of costs and therefore states the precise amount which the defendant is asked to pay in settlement of the sum. 38 Nothing was said to me by the defendant concerning the question of whether it was reasonable for it not to have accepted this offer. In the circumstances it appears to me that the offer was one which was sensible and appropriate. 39 In the absence of material to persuade me that the defendant acted reasonably in not accepting the offer, I propose to award indemnity costs from 25 July 2006. ORDERS 1. Verdict and judgment for the plaintiff in the sum of $165,502.49. 2. The defendant is to pay the plaintiff's costs on an ordinary basis up to and including 25 July 2006 and on an indemnity basis thereafter. The defendant seeks a stay of the orders insofar as they relate to the sum awarded for loss of opportunity and reputation. That application is not opposed. 3. The order for payment of the judgment sum is therefore suspended to the extent of $65,000 for a period of 28 days or until further order. No other part of the orders made is suspended. 4. The exhibits will be retained for 28 days or until further order. ********** 11/09/2008 - Formatting of short case title and parties name as to P/L and t/a - Paragraph(s) Short case title and parties DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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