New South Wales Supreme Court CITATION : Hartnett v Delta EMD Australia [2003] NSWSC 361 HEARING DATE(S) : 16 April 2003 JUDGMENT DATE : 1 May 2003 JURISDICTION: Common Law Division JUDGMENT OF : Master Malpass DECISION : The Summons is dismissed. The plaintiff is to pay the costs of the proceedings. CATCHWORDS : Appeal - Magistrate has regard to material not admitted into evidence - variation of contract of employment - consideration and estoppel. LEGISLATION CITED : N/A CASES CITED : N/A Peter Hartnett (Plaintiff) PARTIES : v Delta EMD Australia Pty Limited (Defendant) FILE NUMBER(S) : SC 12516 of 2002 COUNSEL : Mr P Cummings (Plaintiff) Mr J Connors (Defendant) SOLICITORS : Harris Wheeler (Plaintiff) Braye Cragg Solicitors (Defendant) LOWER COURT Local Court JURISDICTION : LOWER COURT 302 of 2002 Local Court Toronto FILE NUMBER(S) : LOWER COURT K Pogson LCM JUDICIAL OFFICER : IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION Master Malpass Thursday 1 May 2003 12516 of 2002 Peter Hartnett v Delta EMD Australia Pty Limited JUDGMENT 1 MASTER: This is an appeal from the Local Court. The decision was delivered on 20 August 2002. 2 The plaintiff's Summons was filed on 11 September 2002. It brings an appeal from the decision and it sets out the grounds of appeal. The plaintiff bears the onus of demonstrating an error of law that justifies the disturbing of the decision. 3 The plaintiff in this Court was the plaintiff in the Local Court. He made a claim for money said to arise out of a contract of employment. The dispute between the parties concerned provisions relating to the payment of an incentive bonus. The learned Magistrate found in favour of the defendant. 4 The material before the learned Magistrate consisted of inter alia agreed facts, agreed issues, a witness statement, affidavits and oral evidence. The oral evidence was given by the plaintiff and Mr Scanlon. Only the plaintiff was cross-examined. He was employed as the Human Resources Manager and a member of what has been described as the management team. Mr Scanlon was the Finance Director. Other members of the management team provided affidavits and the witness statement. 5 Certain portions of the written material were not admitted into evidence following objection taken to admissibility (inter alia paragraph 14 and the last sentence of paragraph 17 of an affidavit sworn by Mr Scanlon). 6 The defendant commenced trading on 1 February 1998. The court has been told that it earned its income from export. 7 The calculation of the bonus under the contractual provisions has been expressed to be a complex process. One factor has been referred to as a targeted profit. The calculation of that profit involved the application of an exchange rate of 0.75cents. Another factor was said to be the actual profit. The calculation of this profit took into account fluctuations in exchange rate. A formula was then applied to determine the bonus. 8 The principal issue litigated in the Local Court was whether or not there had been a variation of the bonus provisions. There were two aspects to this issue (was there a consensus and was it supported by consideration). The case was conducted on the basis that the plaintiff was entitled to succeed unless the defendant made good the allegation of variation. The effect of the variation was to exclude the currency fluctuations from the calculation of actual profit. In other words, it was to be determined by the application of an exchange rate of 0.75 cents. An issue of estoppel was also litigated. 9 The relevant financial year was 1998. The year ran from January to December. 10 Certain discussions took place in December 1998. An interim bonus of 12% of salary was paid. Further discussions took place in February 1999. A further bonus of 13% was paid (making a total of 25%). The moneys paid by way of bonus in fact exceeded what would be payable had the provisions of the alleged variation been strictly applied. It seems that this was done because during the conversations there had been an indication that a bonus of 25% would be paid. 11 The thinking behind the alleged variation involved various considerations. I shall refer to certain of the matters thrown up by the evidence. 12 The defendant had a policy of rewarding senior executives for effort and for not rewarding or prejudicing them for things outside their control (such as fluctuation in the exchange rate). During 1998, there was exchange rate volatility and it was having an effect on sales revenue. 13 The effect of evidence given on behalf of the defendant as to the discussions had in December and February was inter alia that the variation was well known to members of the management team and was accepted by them. The plaintiff also gave evidence concerning these matters. 14 In the case of the plaintiff, he accepted the payments without complaint. There is no evidence of him having expressed any objection to other members of the management team. The payments made to the other members of the team were calculated having regard to the variation. 15 Subsequently, the plaintiff became redundant. He received a redundancy package (including an ex gratia payment). Thereafter, he commenced these proceedings. He is seeking the recovery of bonus moneys in addition to the 25% bonus ($15,000) which was paid to him for the 1998 year. 16 Both parties have prepared detailed written submissions. For present purposes, it is unnecessary to embark on a detailed consideration of the submissions. 17 The plaintiff has agitated three questions during this appeal. Firstly, it is said that the learned Magistrate erred in reaching a decision that the defence of variation had been made out. Secondly, it is said that he erred in not finding that there was a lack of consideration to support the alleged variation. Thirdly, it is said that he should have found that the defence of estoppel had not been made out. 18 The principal thrust of the plaintiff's case is that the learned Magistrate took into account material that had not been admitted into evidence and misconceived evidence that had been given. As a result, it is said that the findings are flawed and that there is no evidence to support them. 19 The defendant takes a contrasting position. It points to various pieces of evidence and says that there was ample evidence to support the findings that were made. 20 The learned Magistrate delivered a relatively short judgment. It comprises 25 paragraphs. It is common ground that an error has been made. There is issue between the parties as to whether or not the error is of any significance. The error is to be found inter alia in paragraph 8 of the judgment (in which the learned Magistrate recites evidence said to have been given by Mr Scanlon concerning a discussion in which he is said to have told the plaintiff that the bonus would be calculated using an exchange rate of 0.75 cents). The observations had in mind what appeared in paragraph 14 of the affidavit sworn by Mr Scanlon. This paragraph had not been admitted into evidence. 21 There is evidence that in discussions had involving the management team material to similar effect had been said (that the bonus scheme would exclude variations in the exchange rate). 22 There is conflict between what was said by the plaintiff in his evidence and what appears in the material adduced by the defendant. In paragraphs 18, 19 and 20 of the judgment the learned Magistrate addressed questions of conflict and determined them adversely to the plaintiff. He accepted the evidence of other members of the management team. 23 Whilst there was error on the part of the learned Magistrate, in the light of the other material before him it seems to me that it lacks significance. In my view, it does not justify the disturbing of the decision made on the issue of the variation. This is not a case where there was no evidence to support his decision on this issue. His decision was open on the material that was before him. 24 Whilst it may be unclear as to what led him to his decision on the issue of consideration, he decided it adversely to the plaintiff. I am not satisfied that this decision should be disturbed. The variation excluded the fluctuation of the exchange rate from the process of calculation of the bonus. In my view, there was a sufficiency of consideration. It was not a variation which was of value to the defendant only. Depending on the circumstances, it could be of value to either the employer or the employee. 25 There remains the issue of estoppel. It was an issue which did not seem to loom large in the hearing before the learned Magistrate. It did not occupy much attention in this Court. The question in issue was whether or not there was any detriment. In the light of what has been earlier said in this judgment, it is a question that does not need to be now determined. 26 Accordingly, the Summons is dismissed. The plaintiff is to pay the costs of the proceedings. ********** Last Modified: 05/02/2003 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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