Industrial Court of New South Wales CITATION: Abood v Heartland Motors Pty Ltd [2010] NSWIRComm 52 PARTIES: Kevin Abood (Appellant) Heartland Motors Pty Ltd (Respondent) FILE NUMBER(S): IRC 1523 of 2009 CORAM: Walton J Vice-President; Haylen J; Staff J CATCHWORDS: APPEAL - decision of Chief Industrial Magistrate - Long Service Leave Act 1955 - whether employee entitled to pro rata long service leave - whether contractually employer could unilaterally make material changes to employee's duties and responsibilities - whether changes so fundamental as to constitute repudiation of contract - construction of refinement clause in contract - appeal conducted substantially on issue not raised at first instance - conclusion open to his Honour on evidence adduced at first instance - no evidence called to enable assessment to be made of changes after implemented - no public interest in issue raised on appeal to require grant of leave to appeal - subject matter of appeal does not extend beyond interests of individual parties to appeal - no error to warrant grant of leave to appeal - leave to appeal refused LEGISLATION CITED: Long Service Leave Act 1955 CASES CITED: Westen v Union des Assurances de Paris [1998-9] 88 IR 259 HEARING DATES: 1 March 2010 DATE OF JUDGMENT: 5 May 2010 Mr R Alkadamani of counsel (Appellant) Haywards Solicitors Pty Ltd LEGAL REPRESENTATIVES: Mr C Magee of counsel (Respondent) HWL Ebsworth Lawyers JUDGMENT: - 1 - INDUSTRIAL COURT OF NEW SOUTH WALES FULL BENCH CORAM: WALTON J Vice-President HAYLEN J STAFF J Wednesday 5 May 2010 Matter No IRC 1523 of 2009 KEVIN ABOOD v HEARTLAND MOTORS PTY LTD Application by Kevin Abood for leave to appeal and appeal against a decision of Chief Industrial Magistrate Hart given on 11 September 2009 in CIM file no 88607/08 JUDGMENT OF THE COURT [2010] NSWIRComm 52 1 This is an application by Mr Kevin Abood ("the appellant") for leave to appeal and, if leave is granted, to appeal against a decision of Chief Industrial Magistrate Hart given on 11 September 2009 dismissing an application for a money order brought pursuant to s 4 of the Long Service Leave Act 1955 ("the Act"). Background 2 In June 1998, Mr Abood commenced employment as the Company Secretary of a predecessor to Heartland Motors Pty Ltd ("the respondent") and resigned his employment in October 2007, after a period of approximately 9.3 years service. It was common ground that during the appellant's employment he agreed to changes to his duties sought by the respondent, which constituted only a refinement of the terms and conditions of his employment: at all times, nevertheless, Mr Abood remained the Company Secretary. However, towards the end of his employment, the appellant's case was that the respondent proposed significant changes to the appellant's duties and responsibilities to which the appellant did not consent. Those changes did not involve removing Mr Abood from the position of Company Secretary. The respondent informed the appellant that it intended to implement the changes regardless of the appellant's objection. The appellant contended that he was entitled to treat the respondent's conduct as a repudiation of the contract. 3 The appellant was an employee whose service with the respondent was for a period of more than five years and less than 10 years. As such, an entitlement to the payment of long service leave would only arise if the appellant fell within the terms of s 4(2)(iii) of the Act. This section provides: 4 Long service leave ... (2) (a) Subject to paragraph (a2) and subsection (13) the amount of long service leave to which a worker shall be so entitled shall: ... (iii) in the case of a worker who has completed with an employer at least five years service, and whose services are terminated by the employer for any reason other than the worker's serious and wilful misconduct, or by the worker on account of illness, incapacity or domestic or other pressing necessity, or by reason of the death of the worker, be a proportionate amount on the basis of 2 months for 10 years service (emphasis added). Leave to appeal 4 We propose to refuse leave to appeal in respect of all matters, including the appellant's alternate case, which we will discuss shortly. There is no public interest in the issue raised on appeal to require the grant of leave to appeal. The subject matter of the appeal does not extend beyond the interests of the individual parties to the appeal and does not otherwise warrant the grant of leave to appeal in respect of an issue which was not argued at first instance. There is no error which may, by its nature, warrant the grant of leave to appeal for the proper administration of justice. Decision of Chief Industrial Magistrate 5 We observe that the judgment of his Honour contains a careful analysis of the factual circumstances before the Court. His Honour's conclusions, included the following: [18] ... [t]here is no evidence to suggest that the Respondent was making the changes because it desired the outcome of having the Applicant resign from his employment. I am satisfied on the evidence before me that at all times the Applicant was regarded as a highly valued member of the senior management group of five, and that there was no desire or intention that he leave. Further, in the circumstances where the Applicant's core duties as Company Secretary remained intact, and there was a history of his supplementing that role with a range of other tasks and responsibilities, I find that the implementation of Mr Ware's plan did not constitute a repudiation of the contract of employment, and did not have the effect of bringing the provision of services by the Applicant to an end within the meaning of the Long Service Leave Act. [19] In my view, the evidence before the Court reveals that the Applicant, given his senior position within the respondent, was aggrieved that, notwithstanding his seniority, he was to be given a role which he did not want, and that by losing the operational role and being given a greater involvement in human resources, his opportunities to "shine" would be damaged when compared with the position of other senior management executives within the group. [20] It is clear that at all material times his duties and responsibilities involved the core function as Company Secretary, and that this could be supplemented by a range of other duties and responsibilities which inevitably changed from time to time. The Applicant submits that such changes could only occur with his consent, or in circumstances where the changes were minor, and constituted only a "refinement" of the duties previously existing. I reject that interpretation of the contract. In my view, the established position between the parties was that the Applicant would fill the position of Company Secretary, and as this did not require his fulltime commitment, he would be given other tasks from time to time at an appropriate senior level commensurate with his status within the company, and consistent with his skills and abilities. [21] If the Applicant had an apprehension that he lacked the necessary skills and abilities to perform the human resources role, and therefore believed that he was being set up for failure in some way, no such apprehension was voiced by the Applicant in his Affidavit or other evidence, and the Applicant's case was never pleaded on that basis. [22] Given my finding that the conduct of the Respondent did not constitute repudiation of the contract, it follows that I find that the employment was brought to an end by Applicant's resignation, and that in those circumstances, given that his continuous employment was for less than ten years, he has failed to establish that he was entitled to receive long service leave payments under the Long Service Leave Act 1955. Submissions 6 In his application for leave to appeal, Mr R Alkadamani of counsel, who appeared for the appellant, submitted that leave should be granted because his Honour did not properly ascertain the intentions of the parties in construing the employment contract. The employment contract required the parties to agree to any variation other than minor refinements. Counsel contended that the respondent accepted that the changes were not minor refinements, however, his Honour rejected that view, holding that so long as the employee continued performing his "core" function as Company Secretary, the employer could give the employee further tasks, or take away tasks, notwithstanding that the employee did not consent to that course. 7 Mr C Magee of counsel, who appeared for the respondent, submitted that the appeal did not raise any important questions of principle. Counsel submitted the appellant simply invited the Full Bench to re-examine the findings of fact and to redetermine the matter. Counsel also submitted that the appeal demonstrated no "clear and manifest error" on the part of his Honour, which was a matter of such importance that it was in the public interest that leave to appeal should be granted. Consideration 8 The appellant's case at first instance, concerned whether, contractually, the respondent could unilaterally make, material changes to the appellant's duties and responsibilities. 9 His Honour was required to consider whether the evidence supported a conclusion that the respondent's conduct evidenced an unwillingness or inability to render substantial performance of the contract. His Honour correctly identified the test he was required to apply to determine the case before him, observing at [5]: There were, however, changes in the duties and responsibilities to be performed by the Applicant which, he contends, were so fundamental as to constitute a repudiation of the contract of employment. 10 The appellant sought to develop on appeal, a different case to that which his Honour had determined. The appellant contended that a clause in the employment contract which permitted a refinement of the terms and conditions of the contract did not enable the respondent, without the consent of the appellant, to amend the contract to something which was unrecognisable. It was submitted this would be unreasonable and unfair and amount to a repudiation of the contract. We will consider this aspect of the appeal shortly. 11 In essence, the case conducted by the appellant at first instance alleged a repudiation of the contract. 12 His Honour undertook an analysis of various matters which were relevant to the determination of whether it could be concluded on the evidence that the conduct of the respondent manifested an unwillingness or inability to perform the contract, such that the appellant was entitled to conclude that the contract could not be performed substantially according to its requirements. 13 In summary, his Honour firstly found that the appellant held the position of Company Secretary and that his core role had not changed. Secondly, during his employment there had been additions to and subtractions from his duties and responsibilities which, on occasions, although not consented to by the appellant, were not sufficient to give rise to a repudiation. 14 The essential obligation placed upon the respondent under the contract was the employment of the appellant in the role of Company Secretary. A trial of the removal of some operational responsibilities, and the addition of some administrative and supervisory tasks, in an attempt to allow the appellant to focus his energies on the core functions of the role was implemented by the respondent. The nature of the industry and the relationship between the appellant and the respondent clearly envisaged an ability to vary the duties of the appellant. 15 In our view, the intention of the parties, at the time of entering into the contract, contemplated variations to the duties of the appellant, either by addition, refinement or the removal of ancillary duties or function, such that they would not be regarded as giving rise to a serious breach of the contract that would justify termination of the contract by the appellant. The core role of Mr Abood would remain as Company Secretary. 16 We agree with the observations of Madgwick J in Westen v Union des Assurances de Paris [1998-9] 88 IR 259. In that case the applicant had been offered new and different employment to that provided for in his contract of employment which he declined. The respondent made clear that it would not continue to employ the applicant to do his previously contracted work. Madgwick J found that the applicant was entitled to treat the contract of employment as breached in a fundamental way by the respondent and to regard it as terminated at the instance of the employer. 17 The principle that may be extracted from his Honour's decision is that, in the absence of a contract allowing it, an employer cannot force changes of duties or a regrading on an employee. Any attempt to do so will involve the employer in a breach of contract if the employee presses his or her requirements. His Honour observed, however, that there must be some reasonable give and take and that in a rapidly changing world, it would be uncommon for the parties to a contract of employment to envisage no change in aspects of their job. His Honour concluded that undesirable inflexibility was to be avoided. 18 In the case under appeal his Honour looked at the appellant's duties and responsibilities and was persuaded that the core duties of Company Secretary remained the same. His Honour found that the addition of Human Resources responsibilities was not such as to give rise to a repudiation. His Honour regarded the Human Resources responsibilities as a further addition on to the duties of the appellant. That conclusion was open to him on the evidence adduced at first instance. Further, the evidence before his Honour strongly suggests that Mr Abood's main concern was the removal of ancillary operational duties rather than accepting a higher level of responsibility for Human Resources. This aspect did not feature in the case for leave to appeal. 19 We turn to briefly consider the alternate case advanced by the appellant. To the extent that the appellant contended that it had argued the alternate case before his Honour, Mr Alkadamani relied upon what he said at the conclusion of his submissions [AB 73 - 74]: Your Honour, the only reason I handed up Riverwood International v McCormick is to take your Honour, if [it] be put against us, that there was an entitlement to refine the contract to something unrecognisable, and that that provision to refine the duties was a unilateral power to change the duties. Mansfield J of the Federal Court at para 152, p 223 of that decision, in dealing with an employer's power to change policies that bind the employer and employee, talked about that power being constrained by and implied to in that it would act with due regard for the purpose of the contract of employment, and so it could not act capriciously and, arguably, could not act unfairly. His Honour also said, "it might also be a power which, by implication, must be exercised reasonably having regard to the nature of the contract and the entitlements which exist under it." Even if the respondent in this case could somehow construct that clause referring to refinement as being a unilateral power to amend, those amendments were beyond (not transcribed). To do so without consent would have been unreasonable. They are my submissions. 20 After taking the Full Bench to this submission, the following exchange occurred. WALTON J, V-P: That's not the case you put to us today. ALKADAMANI: With respect your Honour, we say that if the changes were unreasonable, if your Honour accepts they were unreasonable, as I put in the alternative, then that would be repudiation, it is a renunciation, it went beyond what was allowed. We could not have a contract of employment where changes would be unilaterally imposed. WALTON J, V-P: You understand I think that there is a difference between a proposition that the terms of the change are such as go to the heart of the contract in fundamental terms and therefore represents repudiation and something else which says the contract has an implication for fairness, reasonableness et cetera the breach of which constitutes repudiation - they are simply two different things. ALKADAMANI: With respect your Honour, the first point is to identify what the breach is and then to see what type of breach it is. WALTON J, V-P: That is the very issue I am raising with you. ALKADAMANI: Your Honour, the breach was if we put aside our primary argument, varying the contract unreasonably and unilaterally, in other words if it was consensual it could be done. But seeking to impose changes which are unreasonable. And then the court must analyse if that was repudiation or is it just a breach. That is true. Why would it be repudiation because we are dealing with someone's employment contract and dealing with duties which the person was not trained to perform. How can any employee, we would say, how could it not be a repudiation of a term going to the root of the contract if they are required to perform an important function for which they were not trained. ... WALTON J, V-P: I think the question I was asking a bit earlier went to this; what did the Chief Industrial Magistrate understand he was resolving in the present case. And I must say for my part having been taken to the passage going from [AB 73 - 74], I'm not sure that his Honour would have understood he was dealing with other than the primary point, ... 21 As we have observed, the appellant sought to develop a different case on appeal. Mr Alkadamani contended that the refinement clause in the contract did not enable the respondent, without the consent of the appellant, to amend the contract to something which was unrecognisable: such changes to the duties and responsibilities being unreasonable. 22 The appellant relied on a written term contained in the contract of employment dated 5 September 2001, which provided under the heading "Performance of duties" as follows: The job description for the position is attached. You acknowledge that in a business like Heartland it may be necessary to refine this job description from time to time. Any refinement will be done in consultation with you. 23 The appellant submitted that the proper construction of this clause allowed the respondent to make any refinements without the consent of the appellant and such refinements must be made in consultation with him. If what was proposed was more than a refinement, it could not be done without the consent of the appellant. The appellant contended that this term was breached and that the breach had represented a repudiation of the contract. 24 We do not agree that the Performance of Duties clause should be given such a narrow construction, as contended for by the appellant. The clause required consultation and that is what occurred. 25 His Honour did not address the question of consent, being satisfied that changes had occurred in the past. His Honour found that so long as the "core" Company Secretary functions remained, duties and responsibilities could be added to or subtracted from the appellant's position. To the extent that the appellant advanced a case that the introduction of human resources duties were outside the boundaries of the contract of employment of the appellant and amounted to critical changes, his Honour was never called upon to analyse the extent of the work involved in the additional human resources duties. His Honour was not called upon to assess what was the true effect of the amended responsibilities, in particular those involving human resources. Furthermore, there was no evidence called that would have enabled such an assessment to be made after the changes were implemented. This meant that his Honour understandably did not make an assessment of the extent of the changes to the work of the appellant. 26 The evidence was that the appellant was performing the role of managing Human Resources from perhaps March, but certainly May 2007 prior to any further changes being proposed to his role in August 2007. The appellant accepted that essentially from March 2007, the Human Resources function reported to him. The appellant also acknowledged from March 2007 that he played a significant role in managing Human Resources. 27 It was the respondent's case that what was proposed in August 2007 was merely a refinement of how the Human Resources function would operate within the business. From 9 August 2007 for a trial period of three months, further changes to the role of Company Secretary were made. They remained until the appellant gave notice of his resignation on 6 September 2007. The appellant did not advise the Chief Executive Officer of the respondent of the non-acceptance of the changes, or express any concerns regarding such changes prior to tendering his resignation. 28 Mr Alkadamani submitted that his Honour had erred in finding that the human resources function was just an addition to core duties. Counsel contended on appeal that this was a critical change to the appellant's position. This was not a matter that his Honour was called upon to determine at first instance and it is therefore not appropriate that we grant leave to appeal in respect of this issue. 29 We are unable to agree with the appellant that his Honour misassessed the nature of the changes to appellant's position and how far it went beyond the boundaries of the contract. 30 In all the circumstances, the Court refuses leave to appeal. ORDERS 1. Leave to appeal is refused. 2. The appellant is to pay the respondent's costs of the appeal as agreed, or, as assessed. ---------------------------------------- DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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