Finnie v Berwick (Sunshine Coast) Pty Ltd [1993] QCA 349

IN THE COURT OF APPEAL [1993] QCA 349 SUPREME COURT OF QUEENSLAND Appeal No. 66 of 1993 Brisbane [Re Finnie v. Berwick (Sunshine Coast) Pty Limited] BETWEEN: ALEX MacKENZIE FINNIE (Plaintiff) Respondent v. BERWICK (SUNSHINE COAST) PTY LIMITED (Defendant) Appellant The President Mr. Justice Ambrose Justice White Judgment delivered 21/09/93 Judgment of the Court APPEAL ALLOWED. SET ASIDE THE ORDER MADE BELOW AND IN LIEU THEREOF ORDER THAT THERE BE JUDGMENT FOR THE RESPONDENT IN THE SUM OF $4,001. FURTHER ORDER THAT THE RESPONDENT PAY THE APPELLANT'S COSTS OF THE APPEAL TO BE TAXED. CATCHWORDS: Breach of employment contract - entitlement to damages. Counsel: Mr. R.A.I. Myers for the appellant Mr. D Fraser Q C for the respondent Solicitors: Klooger Phillips & Co for the appellant L J Thompson for the respondent Hearing Date: 30/08/93 -- 1 of 8 -- THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No. 66 of 1993 Brisbane Before President Ambrose J White J [Re Finnie v. Berwick (Sunshine Coast) Pty Limited] BETWEEN: ALEX MacKENZIE FINNIE (Plaintiff) Respondent v. BERWICK (SUNSHINE COAST) PTY LIMITED (Defendant) Appellant REASONS FOR JUDGMENT - THE COURT Judgment delivered 21/09/93 This is an appeal from a judgment in the District Court at Brisbane given on 31 March 1993 whereby the respondent recovered against the appellant the sum of $44,625.43 with costs to be taxed. The appellant contends that it should be determined that the respondent is entitled to less than the sum of $3,273 tendered to the respondent before action and subsequently paid into court and that the respondent should be ordered to pay the appellant's taxed costs of the trial and of the appeal. It is a matter for comment that the trial of the action took place on no fewer than seven days, although the basic issue between the parties was whether or not the respondent -- 2 of 8 -- 2 is entitled to damages for breach of a contract of employment which was summarily terminated by the appellant on 11 July 1992. The facts may be quite briefly stated. The respondent, who was 60 years of age at the time of the material events, had a long background in selling photocopier machines. Up until 1992 he lived and worked on the Gold Coast for a company with a name similar to that of the appellant. In January 1989 he had initial discussions with the controllers of the appellant, Mr and Mrs Galea, at a conference in Hong Kong about acquiring an interest in their photocopy business conducted by the appellant on the Sunshine Coast. Those discussions were resumed at the Sunshine Coast at the end of January with the Galeas and an accountant, Mr Aston. The parties proposed that the respondent would purchase an interest in the appellant's business, initially 40% and later 30%. The basis of the discussions was that the value of the business was $660,000. The respondent was to pay a proportion of that amount equivalent to the interest which he was to acquire in the business. Half was to be paid by a deposit, with the balance over four years with interest at bank overdraft rate. By March or at the very latest by the beginning of April, it was agreed between the parties that, until the purchase was completed, the respondent would work for the appellant in return for 15% of the net profits of its business, with $1,000 to be advanced each week against the amount to which the respondent was entitled. -- 3 of 8 -- 3 The respondent resigned his employment, put his home at the Gold Coast on the market and moved to the Sunshine Coast starting work with the appellant towards the end of March 1989. Initially he commuted on a weekly basis between the two locations but he and his wife finally moved to the Sunshine Coast in about mid June. Their house was sold at about that time. The respondent could not purchase his share of the appellant's business until he had sold his house and the Galeas needed some time to restructure the ownership of the assets of the business, the appellant being the trustee of a family trust, so that immediate settlement was by no means contemplated by either party. Payments were made and accepted by the respondent on the basis of $1,000 per week as an advance against 15% of the net profits of the business for the months of April and May. The total received by the respondent for April consisted of four weekly payments each of $1,000 plus an adjustment of $667.24 at the end of the month, and in May he received four weekly payments of $1,000 together with an adjustment of $835.67 at the end of the month. A meeting took place on 1 June 1989 between Mr Galea and the respondent and a Mr Hoiberg, an accountant associated with the appellant. His Honour accepted the respondent's evidence that, at the meeting, it emerged that the appellant was not prepared to continue with the proposed sale although there seems to have remained some slight possibility that the respondent might purchase the entire business at a higher figure than that originally nominated -- 4 of 8 -- 4 by the appellant as its value. Further discussion took place at that meeting concerning the continued employment of the respondent by the appellant and altered terms were discussed. However, his Honour found that there was no concluded agreement with respect to such matters and that the respondent continued thereafter to be employed on the same terms as previously pending the settlement and execution of a written contract. Thereafter, the respondent made efforts to obtain finance in connection with the possible purchase of the appellant's business but, early in July 1989, he informed the appellant that he did not propose to purchase. The appellant sought advice from its accountant and, on 11 July 1989, Mr Galea terminated the respondent's employment forthwith on behalf of the appellant. The central issue on this appeal is whether the trial judge was correct in his conclusion that the respondent was entitled to reasonable notice of termination which he concluded to be three months. Mr Myers for the appellant was most reluctant to characterise the arrangements between the parties whereby the respondent was to receive 15% of the net profits of the business paid by way of $1,000 weekly advances as a contract of employment. It is difficult to see by what other name it might be described. But it was an employment contract of a limited kind. The arrangement was clearly entered into as an interim measure pending the purchase by the respondent of an interest in the appellant's business. That failed to -- 5 of 8 -- 5 eventuate. As found by the trial judge, the parties attempted to work out a new arrangement not involving the acquisition by the respondent of a share in the appellant's business. They failed to do so and the respondent does not seek to cross-appeal to disturb his Honour's finding in that regard. The respondent continued to work for the appellant up until 11 July 1989 doing the same work, admittedly under the mistaken impression that a new contract was merely awaiting reduction to writing. In that circumstance the earlier arrangement continued between them. The trial judge thought that since the relationship was one of employer and employee reasonable notice was required for the termination of the relationship. But that proposition must give way to the intention of the parties and the conclusion is inescapable that, once the basis for the interim employment agreement, namely pending the purchase of a share in the business of the appellant, came to an end, it was open to either party to end the employment summarily. Accordingly, it follows that the trial judge erred in his conclusion that the contractual arrangement between the parties required that three months notice be given. He seems to have been influenced in coming to that conclusion by certain findings that neither party sought to uphold, in particular, that the position which the respondent held with the appellant had been advertised. It is then necessary to consider what the respondent was entitled to receive by way of remuneration for June and -- 6 of 8 -- 6 up to 11 July 1989. The evidence discloses that no profits were earned in June because of end of financial year tax considerations and that there were consequently substantial billings and receipts in July. Contrary to his Honour's finding there is no basis for concluding that the arrangement between the parties contemplated that the respondent would be entitled to a share in profits made in the whole month in which he discontinued working for the appellant. The arrangement was that he would be entitled to 15% of the profits and in the past it was convenient to calculate that monthly and make necessary adjustments against the advance. There were no profits for June, but there was no suggestion that the respondent was to share in the losses. He received $6,000 by advances for June and July. Because the appellant carried over its June billings into early July unusual payments were received early in that month. Both parties called accountants but his Honour preferred the calculations of the respondent's accountant reflecting as they did the respondent's submissions as to the terms of the agreement. The appellant's accountant proceeded on the same basis as had been used to calculate the respondent's entitlements in April and May and it reflects the conclusions reached as to the terms of the contract of employment on this appeal. In cross-examination (at R. p. 356) the appellant's accountant conceded that the correct figure to represent the amount owing to the respondent should have been $4,001 not $3,273 which was offered to the respondent prior to trial and subsequently -- 7 of 8 -- 7 paid into court. The appeal was conducted on the basis that the respondent was entitled to less than that amount. He has recovered more and there seems to be no basis for altering the costs order made below whereby the defendant was ordered to pay the plaintiff's taxed costs of the action. The appeal is allowed. In lieu of the judgment for $44,625.43 it is ordered that there be judgment for the respondent in the sum of $4,001. The respondent must pay the appellant's taxed costs of the appeal. -- 8 of 8 --