New South Wales Supreme Court CITATION : Network Ten Pty Ltd v Rowe [2005] NSWSC 1356 HEARING DATE(S) : 28 December 2005 JUDGMENT DATE : 30 December 2005 JUDGMENT OF : Simpson J DECISION : (i) the summons is dismissed; (ii) the plaintiff is to pay the defendant's costs of the proceedings. CATCHWORDS : contract of employment - date of expiration of employment contract - whether contract contains entire agreement - requirements for termination of contract - whether oral term limiting contract period to two years - conditions necessary for implied term of contract - whether plaintiff waived rights under contract and therefore ought to be estopped from asserting them - whether notice of termination of contract given - whether injunctive relief available BP Refinery (Westernport) Pty Ltd v President, Councillors and Rate Payers of the Shire of Hastings (1977) 180 CLR 266 CASES CITED : Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; 149 CLR 337 Network Ten Pty Ltd - Plaintiff PARTIES : Jessica Rowe - Defendant FILE NUMBER(S) : SC 50187/05 DP Robinson SC, with SR Meehan - Plaintiff COUNSEL : R Goot SC, with P Braham - Defendant Blake Dawson Waldron - Plaintiff SOLICITORS : Harmers Workplace Lawyers - Defendant LOWER COURT JURISDICTION : IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION SIMPSON J Friday 30 December 2005 50187/05 Network Ten Pty Ltd v Jessica Rowe JUDGMENT 1 HER HONOUR: In these proceedings the plaintiff, Network Ten Pty Ltd, claims injunctive, declaratory and other relief in relation to a contract of employment between it and the defendant. The proceedings were brought on, in Court vacation, as a matter of urgency, and requiring expeditious determination. If these reasons are less comprehensive, or less carefully expressed, than they otherwise would have been, that is the explanation. I am, however, confident that the luxury of additional time would not have affected the outcome. 2 The relevant facts and circumstances are scarcely in dispute. To the extent that there was any factual dispute, it was within an extremely narrow range, limited to two matters of conversation, neither of them of great moment. Background 3 The plaintiff owns and operates a television station, known as Channel Ten. The defendant is currently engaged, by contract, as a news presenter on the station. She has been so engaged, pursuant to a series of six contracts, since 1995. The contract under which she is currently engaged is contained in a letter written on the letterhead of the plaintiff and dated 10 December 2003, and accepted by the defendant, by her affixing her signature, on 12 December 2003. It is the proper construction of this contract that is at issue. The dispute between the parties involves one simply stated question: what is the expiration date of the contract? In my opinion, the answer is equally simple, derived from the terms of the contract itself, and favours the defendant. However, in order to do justice to the arguments of the parties, it will be necessary to say something about the history of their relationship. 4 All contracts between the parties follow a similar form. Each is contained in a letter written on behalf of the plaintiff to the defendant, addressing her by her first name, and opens with words to the following effect: "This letter confirms the (new) terms and conditions under which you have agreed to be employed by Network TEN ('TEN') as News Presenter ..." 5 There follows a series of provisions setting out the terms and conditions of the defendant's employment, including, in each document, the specification of the remuneration to be paid to the defendant. The first of these letters is dated 20 November 1995; the second 8 December 1997; the third 19 January 1999; the fourth 16 December 1999; the fifth 24 December 2001; and the final, and current, letter, 10 December 2003. There was never any issue that each letter constituted a contract between the parties. Each contains a provision to the effect that any prior agreement between the parties for the provision of the defendant's services is terminated upon the defendant's signing the letter, and is replaced by the terms of the new agreement. I can take the relevant provisions from the last mentioned document. It opens with the words: "I am pleased to confirm the new terms and conditions of your employment, commencing 1 January 2004, with Network Ten Pty Limited ..." 6 Thereafter the following provisions are of present relevance: "3. Entire Agreement This letter sets out the whole of the terms that relate to your entitlements arising from your employment by TEN. You will not be entitled to any other benefits whatsoever, financial or otherwise, during your employment by TEN or upon or following its termination, other than as set out in this letter. 4. Remuneration and Associated Arrangements (a) For the period from 1 January 2004 to 31 December 2004, you are entitled to receive total remuneration to the value of [$x] per annum before tax. (b) For the period from 1 January 2005 to 31 December 2005, you are entitled to receive total remuneration to the value of [$x + y] per annum before tax. ... 9. Termination (a) Your employment may be terminated by the giving of 26 weeks notice in writing by either party or, in the case of termination by TEN, by payment of an amount equivalent to 26 weeks salary in lieu of notice. ... 11. Unique Services You acknowledge that the services you provide are of a special, unique and extraordinary character; and have a peculiar value, for the loss of which we could not be reasonably or adequately compensated in damages, and that a breach by you of the provisions hereof would cause TEN irreparable injury and damage. Accordingly you agree that TEN shall be entitled to seek such relief including injunctive relief to prevent any such breach." The letter closes with the following words: "Please sign both copies of this letter and return one copy to Human Resources confirming that these terms and conditions constitute the entire contract of employment between TEN and yourself." 7 There is provision for the defendant's signature under the words: "I accept by signing below that this letter sets out the Terms and Conditions of my employment with Network Ten Pty Limited ..." 8 On 12 December 2003 the defendant put her signature to the letter in the space provided. 9 It may here be noted that, with one anomalous exception, all preceding contractual letters followed a similar pattern. Unlike the subsequent letters, the first letter (of which only an unsigned copy is in evidence) does not specify a commencement date. Instead, the agreement is said to commence on a "date to be advised". 10 Relevant here to note is the pattern of the clauses containing the remuneration agreement. In the first letter the remuneration clause provides for a specified sum to be paid to the defendant in what was there described as "Year 1" and a specified, higher, sum to be paid in what was described as "Year 2". 11 Each subsequent letter opens with words to the effect that the document "sets out the new terms and condition under which you have agreed to be employed by Network Ten" and with the specification of a commencement date. 12 In no (except one) case is an expiry, or end, date of the contract expressly specified. In each (except one) case, the remuneration clause provides for a fixed sum of remuneration in each of two successive years, the second specified sum having an increment on the first. 13 The exception to which I have twice referred in the preceding paragraph is contained in the letter of 19 January 1999. That letter specifies that the agreement is for a period commencing on 1 January 1999, and expiring on 31 December 1999; and the remuneration clause, in accordance therewith, provides only for payment for that year. This letter follows the letter of 8 December 1997, containing an agreement said to commence on 1 January 1998. The remuneration clause provides for payment of one sum during year one, 1998, and another, larger, sum during year two, 1999. That amount is the same as the amount specified for the same year (1999) in the 19 January 1999 letter. Why the parties saw fit to enter into a new agreement replicating the ground they had, a year earlier, covered, does not emerge from the evidence. This anomaly appears to have little, if any, bearing on the outcome of the present proceedings. I mention it because these letters figured in the submissions of counsel and it will be necessary to mention those matters later in these reasons. 14 From the second contract, dated 8 December 1997, each contained provision for long service and sick leave entitlements: "... in accordance with the statutory provisions in force in this State at the time at which you become entitled to such leave." 15 From these documents it can be seen that, over a period of ten years, the parties have, on a biennial basis, renegotiated their contractual arrangements, and entered, following each negotiation, into a new agreement. The anomalous repetition of the agreement in relation to the 1999 year does not constitute any material alteration of that pattern. 16 Late in 2003, and prior to the signing of the 2003 agreement, the defendant entered into discussions with Mr Kelven Robards, who then held the position of General Manager in the plaintiff. 17 There is some dispute as to the precise terms of one of these conversations and the dispute, while apparently relatively minor in scope, is of some significance. The defendant's account of that communication is that Mr Robards said to her: "Jess, we need to talk about a new contract with you. Would you be interested in signing up for three years, instead of the two-year deal?" 18 The defendant declined to accept that offer, to which Mr Robards replied: "... so would you prefer to sign a new two-year deal?" to which the defendant replied: "Yes, I would be more comfortable sticking to our two-year contract arrangement." 19 Mr Robards denied using the words attributed to him by the defendant, and claimed to have said words to the following effect: "Are you interested in a three-year remuneration deal so that we both know where we stand in regards to costs going forward? What we would be locking in would be a three-year remuneration deal with a rolling six months notice period." (emphasis added) He said that he also used the words "a never ending contract"; in oral evidence he said that by this he intended to refer to "an open-ended contract". 20 I will return to the significance of this contested factual matter in due course. 21 In about the middle of July 2005 some organs of the Sydney media carried reports suggesting that the defendant's contract with the plaintiff was coming to an end, and speculating that she might transfer to a different television station, Channel Nine. 22 In August the defendant had some discussions with Mr Grant Blackley, the recently appointed (though longstanding employee) Chief Executive Officer of the plaintiff, and with other executive employees of the plaintiff. These discussions concerned the defendant's future engagement at Channel Ten. The defendant expressed a wish for some variation in the nature of her work at Channel Ten. The plaintiff's employees were sympathetic to the defendant's ambitions and explored alternative options, as a result of which she was offered a position hosting a new morning programme to be broadcast from Melbourne. Ultimately, on 28 November, the defendant declined the offer on the basis that it would have involved her relocating to Melbourne. 23 The defendant applied for and was granted long service leave for the period between 28 November 2005 and 16 January 2006. 24 On 12 December the defendant emailed Mr Blackley in the following terms: "Dear Grant, As you know my two-year contract comes to an end at the end of this month. If possible, I would like to catch up with you on Monday 19th December. What time suits you? Thanks, Jess." 25 Mr Blackley replied by asking the defendant to contact another Channel Ten employee, Tim Clucas, the Network Head of Marketing and Development: "... as we have been considering another option." 26 Discussions continued, during the course of which the defendant said to Mr Clucas: "As you know my two-year contract comes to an end in a couple of weeks ..." She repeated the need to discuss: "... my two-year contract coming to an end." 27 During November and December the defendant entered into negotiations with a rival television network, which owns and operates the station Channel Nine. On or about 18 December, she finalised these arrangements and entered into an agreement for employment for three years with Nine Network Australia Pty Ltd, commencing 1 January 2006. On 18 December (a Sunday) she spoke to Mr Blackley by telephone and said, inter alia: "... I wanted to tender my resignation and to let you know that the last day of my employment with Ten will be 31 December." 28 Mr Blackley expressed disappointment, particularly in the light of the efforts that had been made (presumably to accommodate the defendant's ambitions in respect of the nature of her employment), and asked her to confirm that she was leaving Channel Ten. She answered: "Yes, I am resigning." Mr Blackley expressed acceptance of the "resignation" and asked where the defendant was going, which she declined to disclose. According to the defendant Mr Blackley then said: "But I respect your decision." 29 Initially, when questioned about this, Mr Blackley denied having used those words. When pressed, he accepted that, during the course of the conversation that occupied about twenty minutes, he might have said something to that effect. The relief sought 30 The plaintiff seeks declarations that the contract contained in the letter of 10 December is in full force and effect; that the defendant is required to give to the plaintiff 26 weeks' notice in writing of the termination of the contract; that the defendant has not given valid notice of termination; and an order that the defendant be restrained from (I summarise the injunctive relief sought) engaging in any form of employment with "the Nine Network". The issues 31 In the first instance the issue between the parties concerns the proper construction of the contract. The plaintiff contends that the contract is, to use Mr Robards' words, "an open-ended" one, requiring, for termination, 26 weeks' notice in writing by either party (or, in the case of termination by the plaintiff, payment of 26 weeks' remuneration in lieu of notice). The defendant contends that the contract is for a closed period of two years commencing on 1 January 2004, and expiring on 31 December 2005. 32 Each relies upon the terms of the contract itself. Each also relies, as an alternative, upon extraneous circumstances to aid in the construction of the contract, on the principles stated in Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; 149 CLR 337. 33 I am satisfied that the issue can be resolved by reference only to the terms of the contract. Even if that were wrong, I am satisfied that the same result emerges after recourse to the evidence of surrounding circumstances. The contract 34 I will deal firstly with the construction of the contract in its own terms. As both counsel agreed, the heading to Clause 3, "Entire Agreement", does not accurately reflect what is contained in the clause. However, that the contract does contain the entire agreement is evident from the closing words of the letter, which I have set out above. Some attempt was made by senior counsel for the defendant to suggest that, because she had not expressly given the confirmation mentioned in the closing words, it could not be held that the contract does contain the entire agreement. (This was done by way of preserving a subsidiary argument that, even if the defendant were unsuccessful on her primary position, there was, nevertheless, an oral term of the contract limiting the contract to a two-year period. I will deal with this below.) 35 I reject the argument that, because the defendant did not, in her own words, give the confirmation mentioned, the agreement she signed did not constitute the entire agreement. In my opinion the closing passage should be interpreted as meaning that the defendant's signature on the document amounted to that confirmation; and, in any event, the note above the defendant's signature, that the letter "sets out the Terms and Conditions of [the defendant's] employment with Network Ten Pty Limited ..." incorporates that closing passage. 36 I am therefore satisfied that the document does contain the entire employment agreement. 37 In my opinion, the issue of construction is determined by a combination of Clauses 3 and 4. Clause 4 sets out the defendant's remuneration in each of the years 2004 and 2005. It is important to recall that Clause 4(b) is framed in the following terms: "For the period from 1 January 2005 to 31 December 2005, you are entitled to receive total remuneration to the value of ..." 38 Counsel for the plaintiff accepted that the contract contains no provision for remuneration after 31 December 2005, but argued that it should be construed as providing for continuing employment after that date, and for payment, on the same basis as specified in Clause 4(b) (that is, at the same rate), after 31 December 2005. This, in my opinion, is in direct conflict with the clear words of Clause 3, which provides, relevantly: "... You will not be entitled to any other benefits whatsoever, financial or otherwise, during your employment by TEN or upon or following its termination, other than as set out in this letter." 39 This can only construed as meaning that, after 31 December 2005, the defendant, even if she were to remain in the employ of the plaintiff, after that date, but in the absence of a new contract, would not be entitled to any remuneration. 40 Heavy reliance was placed by the plaintiff on the termination clause, Clause 9. It was argued that, even as late as 31 December 2005, and thereafter, the defendant is contractually bound to the plaintiff unless and until she gives 26 weeks' notice of termination. The reliance on Clause 9 and the construction sought to be placed on that Clause was, in my view, misplaced. That clause simply means that either party may terminate the contract, during its currency, by the giving of 26 weeks' notice in writing (or by the payment of an amount equivalent to 26 weeks' salary). That is consistent with the opening words, which do not contain an expiry date. 41 I am therefore satisfied, by reference only to the contract itself, that the plaintiff's proposed construction is misconceived, and that the defendant's proposed construction is correct. For that reason alone, the plaintiff cannot succeed in obtaining any of the orders it claims. In fact, neither party was bound to the other for the full period of two years envisaged by the contract; the maximum term of the contract was two years, terminable as provided by Clause 9; the contract otherwise comes to an end on 31 December 2005. 42 If it were necessary to have recourse to extraneous evidence for the purpose of construing the contract (which, in my opinion, it is not), I would also find that the history of the relationship and dealings between the parties points to the same conclusion. They have regularly renegotiated the contract on a biennial basis. Nobody on behalf of the plaintiff protested when she, on a number of occasions, alluded to the two-year term. It is in this respect that the disputed conversation between the defendant and Mr Robards has some significance. It is not easy to resolve the factual dispute – there were no considerations of demeanour that would permit me to prefer the evidence of one over the other. Nevertheless, I do, on this issue, prefer the evidence of the defendant. This is simply on the basis that, in my opinion, her account is inherently more probable that that of Mr Robards. Mr Robards' account has overtones of a reconstruction created in such a way as to dovetail with the stance adopted on behalf of the plaintiff. 43 I have not overlooked two aspects of the evidence pointing in a contrary direction. The first is the evidence that the defendant sought and was granted long service leave taking her to 16 January 2006. This, on one view, may be taken as an indication that she, and whoever made the arrangement on behalf of the plaintiff, perceived that her employment would continue until at least that date. But that is not sufficient to dissuade me from the view I have taken. It simply means either that those individuals were mistaken, at that time, as to the nature of the contract; or, alternatively, that both envisaged that a new contract would be negotiated, in similar terms (except for remuneration) as those which preceded it. 44 The second contra-indication is the defendant's conduct in tendering her "resignation". If it is correct that the contract expires on 31 December, then "resignation" was unnecessary and inappropriate. But this only means that the defendant did not have a clear understanding of the legal effect of the contract, or of her position. It does not mean that her (clouded) understanding of the contract was correct and it does not shed any light on the proper construction of the contract, whether as a stand-alone document, or on Codelfa principles. 45 I mentioned earlier submissions put on behalf of the plaintiff in relation to the contract of 19 January 1999. These submissions drew attention to the dates contained in that document. The letter is dated, as I have indicated, 19 January 1999. The contract contained therein is expressed to commence on 1 January 1999 and expire on 31 December 1999. The signature of the defendant was affixed on 18 March 1999. This, it was said, indicated that the parties had, in the past, made retrospective arrangements. During the course of argument I made it plain that I found this a difficult contention to accept. The opening paragraph states that the letter sets out the terms and conditions "under which you have agreed to be employed ..." (italics added). This clearly indicates to me, as I made plain in argument, that the letter, unsurprisingly, documents an agreement that had been negotiated at some earlier time. Further, it was pointed out by senior counsel for the defendant, this is the contract which effectively replicates that made previously, by letter dated 8 December 1997. The existence of the letter of 19 January 1999 and the dates contained in it do not affect the conclusion I have reached. Alternative bases 46 On behalf of the defendant a number of alternative bases for the same result were proposed. These were: (i) that the conversation between the defendant and Mr Robards in late 2003 constituted an oral term limiting the contract period to two years; (ii) that there ought, in accordance with established principle, be implied into the contract a term limiting its duration to two years; (iii) that, even if the plaintiff's construction of the contract were to be accepted, nevertheless, by his conduct on 18 December, Mr Blackley ought to be held to have waived any rights to advance the plaintiff's preferred construction, or to insist on the notice of termination provisions of the contract, and that the plaintiff ought to be estopped from relying on that construction, or on any rights thereunder; (iv) finally, the defendant argued that injunctive relief is an inappropriate remedy to enforce contracts of employment. (i) Oral term 47 For two reasons I reject the contention that the conversation between the defendant and Mr Robards amounted to the addition of an oral term to the contract. Firstly, there was no evidence that Mr Robards had appropriate authority to bind the plaintiff to such a term; secondly, the conversation did no more than indicate that the defendant and Mr Robards had a common understanding as to the legal effect of the agreement. Whether this was a correct understanding or a misconception does not matter. The understanding of the parties, or of an employee of a party, seldom, if ever, can determine the correct construction of the contract, other than as shedding light on the intention of the contracting parties. There was no evidence that Mr Robards had had any previous involvement in the negotiations preceding the contracts, such has to render his intention a relevant matter. Certainly, a conversation such as the one here in question cannot, and does not, incorporate an oral term into the agreement. (ii) Implied term 48 The next position argued on behalf of the defendant was that a term, limiting the duration of the contract to two years, ought to be implied in order to give business efficacy to the agreement. The circumstances in which an unexpressed term might be implied into a written contract were stated by the Privy Council in BP Refinery (Westernport) Pty Ltd v President, Councillors and Rate Payers of the Shire of Hastings (1977) 180 CLR 266, and cited with approval by Mason J (as he then was), with whom Stephen J and Wilson J agreed, in Codelfa. The conditions were stated as follows: "(1) It must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract." 49 In my opinion, the term proposed to be implied on behalf of the defendant fits these criteria. In this regard, it is relevant to take into account, on the question of whether it is reasonable and equitable (the first criterion), the history of the dealings between the parties; this puts beyond doubt that the proposed term is reasonable and equitable. It is entirely in accordance with the way they had, over a decade, conducted their relationship. The proposed term is clearly capable of clear expression (the fourth criterion) – that is, that the contract is for a period of two years; the proposed term does not contradict any express term of the contract (the fifth criterion). That leaves criteria (2) and (3). I am satisfied that the proposed implied term is necessary to give business efficacy to the contract. This arises because of the terms of Clauses 3 and 4, to which I have already made sufficient reference. The only remaining doubt in my mind is whether the proposed term can be said to be so obvious that "it goes without saying". In my opinion, again particularly having regard to Clauses 3 and 4, that is, that, on the plaintiff's proposed construction, the defendant would be obliged to remain in its employ, but without any entitlement to remuneration, it is so obvious that it goes without saying. 50 Even if I am wrong in concluding that the contract is clear, and on its face is limited to a two-year duration, I would imply a term to that effect. (iii) Waiver/estoppel 51 Having regard to the conclusions I have reached, it is unnecessary to deal in any degree of detail with the defendant's reserve position that, even if the plaintiff were otherwise successful in its contentions, it should be held to have waived its rights, and be therefore estopped from asserting those rights. The factual basis for this argument was as follows. Since the middle of 2005 the parties had been in discussion about the defendant's future. The senior executives of the plaintiff could have been in no doubt that she was contemplating severing or terminating her employment relationship with the plaintiff. Rumours had been published in the media to the effect that she may take up different employment. 52 At no time during the course of these discussions did any executive of the plaintiff convey any view that, even after that time, it would be necessary for the defendant to give 26 weeks' notice of termination of the agreement. Reliance was also placed upon the evidence that Mr Blackley, when told of the defendant's intention, said that he respected her decision and did not suggest that the notice she had given was in any way inadequate, or not in conformity with the requirements of the contract. 53 I have not found this an easy matter to resolve, and am of the opinion that I do not have to reach a concluded view. On balance, I would incline to rejecting the defendant's contention. The defendant at some time obtained legal advice concerning the term of her contract. It was not for the senior executives of the plaintiff to advise her of what her obligations under the contract were. Further, Mr Blackley had been in the position of Chief Executive Officer only for about six months. There was no reason to believe that he had immediately in the forefront of his mind the details of the contracts of the various employees of the plaintiff. He was not obliged immediately to investigate whether the defendant's assertion that her contract expired on 31 December was correct. Further, her own repeated use of the word "resignation" and her insistence on tendering her resignation would suggest, not that the contract terminated on 31 December, but that it was continuing. The terms of the conversation of 18 December suggest that Mr Blackley accepted the defendant's decision but they do not, to my mind, suggest that he consciously forfeited any rights that the plaintiff had. 54 Accordingly, while it is not necessary finally to decide this, my tentative view is that I would reject the defendant's contention in this respect. Notice 55 A further argument was raised, that, having regard to the discussions from July, the defendant had, effectively, given the notice required by Clause 9. I reject this contention. Clause 9 requires notice in writing; and, in no way could the early discussions, or any discussions prior to 18 December, be construed as the defendant giving notice. The discussions were conventional negotiations with a view to entry into a new contract on the expiration of the current contract. They do no more than indicate that both parties were aware that the contract was coming to an end and that, if the defendant's employment with the plaintiff were to be continued, it would be necessary that a new contract be entered. (iv) Availability of injunctive relief 56 Given that I have, on a number of bases, found in favour of the defendant, it is unnecessary to restate the circumstances or the principles on which injunctive relief in relation to contracts of employment will be granted. They are well known. 57 The plaintiff has not established any basis for relief. The orders I make are: (i) the summons is dismissed; (ii) the plaintiff is to pay the defendant's costs of the proceedings. ********** 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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