Commonwealth Bank of Australia v Barker [2014] HCATrans 74 (9 April 2014)

Last Updated: 9 April 2014

[2014] HCATrans 074

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Adelaide No A1 of 2014

B e t w e e n -

COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124)

Appellant

and

STEPHEN JOHN BARKER

Respondent

FRENCH CJ
KIEFEL J
BELL J
GAGELER J
KEANE J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 9 APRIL 2014, AT 10.17 AM

(Continued from 8/04/14)

Copyright in the High Court of Australia

FRENCH CJ: Yes, Mr Kenzie.

MR KENZIE: Thank you, your Honour. At the adjournment yesterday I was making submissions in relation to the interaction of the common law and legislation. It is put against us that the extent of the intervention by the legislature in relation to matters that affect work in Australia is suggestive of a need for caution in relation to the common law. The other side of the coin, which bears on a question that Justice Kiefel asked us at the commencement of our submissions yesterday which was concerning the question of what had changed, is that that heavy impact of legislation on the workplace has itself affected the considerations that underpinned the basis of the judgment in cases like Malik.

There is no doubt that there is a welter of legislation in Australia, as there was in the United Kingdom, that was reflective of the social policy that people were to be treated properly in the workplace. The other side of the symbiotic relationship between the common law and the statute is that the intervention of statute, which has been extensive over the years and is not only recent, has led to the developments that underpinned what was being said in cases like Malik and Johnson. In Johnson, as I reminded the Court yesterday, Lord Hoffmann referred to the fact that a contract of employment gives rise to:

not only a livelihood but an occupation, an identity and a sense of self-esteem. The law has changed to recognise this social reality.

That was a correct statement. The law has changed. The statute law has changed to reflect that social reality. It is clear. The intervention in employment is reflective of a general social policy to ensure, amongst other things, that people are treated properly in a working environment. The implied term recognised in Malik supports that social policy and does not move the other way. The implied term - - -

KEANE J: Is that so to the point that this policy crystallises in an obligation in employers to ensure the job satisfaction, and so forth, of their employees?

MR KENZIE: No, your Honour. What is being said in statements like that is that there is a recognition that a contract of employment involves these things. What is sought in relation to the implied term is not the result that everyone will spend every day happy at work, but that people, when they are at work, are not exposed to intolerable conduct which is totally inconsistent with that, so, no.

KEANE J: Well, to be not exposed to intolerable conduct, sounds like another way of putting the Mackay v Dick kind of obligation.

MR KENZIE: Save that it goes further, and is not itself dependent upon what is otherwise the structure in terms of the contract - - -

KEANE J: It is freestanding.

MR KENZIE: It is freestanding, your Honour, correct.

KEANE J: Can I ask you, if you have got a manager of a meat exporter that exports to Indonesia, and the manager’s remuneration includes bonuses that reflect the quantum of sales, if the employer bungles arrangements to ensure that the cattle are slaughtered in accordance with halal requirements, so that the contracts are cancelled – the export contracts are cancelled – can the manager sue his employer on the basis that there has been a failure on the part of the employer which causes the employee, or the manager, to lose confidence in the employer’s ability to conduct its business?

MR KENZIE: The implied term contemplates conduct by an employer which would give rise to a loss of confidence if the conduct relied on is conduct of the employer which is caused by the employee himself or herself - - -

KEANE J: No, no, by another member of the organisation.

MR KENZIE: Well, your Honour, the speeches in Malik dealt with the question of whether conduct was directed to an employee or whether the duty existed in circumstances – the duty existed on the basis of the objective result to the employee and regardless of whether it was aimed at the employee.

KEANE J: Well, this is not aimed at the employee, but it affects the employee, the employee earns less money. Can the employee sue for damages to recover the bonuses that he would have got if the employer had not been a bungler?

MR KENZIE: Well, in a sense Mr Barker is complaining about a bungler, your Honour, so we do not flee from the notion – for reasons expressed in Malik, which had to do with the objective result as far as the employee is concerned – we do not flee from the notion that conduct that is undertaken careless of, or without regard to the particular position of the employee, would fall within the implied duty. When the defendants acted in Malik they did not have the employees in mind, they did what they did.

KEANE J: So in the example I gave you, you would answer yes, the employee can sue for damages for the loss of bonuses that he did not earn?

MR KENZIE: The implied term has to be given some content. If the conduct took place in circumstances where the employer – which was suggestive of a relationship between the conduct and the fate of the employee - we would say that it would be open to argue that the implied term applied.

KEANE J: That could happen in circumstances where the manager in my example wants to stay on in employment so the manager could say, I want damages from you, my employer, because you conducted yourself in a way that has destroyed my confidence in you and I want to remain in your employ as well?

MR KENZIE: Yes. Well, your Honour, the question is predicated on the notion that somehow this is opening some form of undesirable outcome. If the employee affirms the contract - - -

KEANE J: Well, I am not saying it is undesirable or not.

MR KENZIE: No.

KEANE J: I am just saying that we have got to explore the operation of this term and the outcome that you would support does seem to be a little incongruous.

MR KENZIE: The passage I was searching for in Malik was at page 42 of the report where Lord Nicholls refers to:

circumstances in which an employee’s reputation may suffer from his having been associated with an unsuccessful business . . . In the ordinary way this will not found a claim of the nature made . . . even if the business or department was run with gross incompetence.

So the implied term might be activated in circumstances where, instead of dishonesty, you had gross incompetence with an impact on the employee. Your Honour, if the employee affirmed the contract, to take your Honour’s example, he is simply holding on to his contract. He has not got an entitlement to damages because he has not suffered any damages for loss of wages. The thing that needs to be borne in mind in relation to - - -

KEANE J: No, in the example that I gave you, he has suffered loss. He has not earned bonuses that he would have earned had the contracts been able to be performed.

MR KENZIE: Well, your Honour, there will be some cases where you will be able to point to a loss. For example, a loss which flowed in circumstances like that. In rare cases like Barker, if there is an affirmation of the contract, there will be a capacity to seek damages, which would be in excess of the four-week notice period. Rare cases like that, cases like the one your Honour puts, we would not flee from that, your Honour.

There is no innate difference between a situation in which an employer, as a result of gross incompetence, takes action which would have gross consequences for an employee and so unreasonably affects an employee that the employee could lose confidence in the employer in the same way as Malik. That must flow.

KIEFEL J: But the general question then arises, putting aside Justice Keane’s more concrete example, how do you assess damages for breach of a term and loss of confidence?

MR KENZIE: If the employee affirms the contract, then, subject to circumstances such as those in the question asked, the employee will not suffer a loss of wages. He or she will not be able to claim damages for loss of hurt feelings or humiliation, or the like. If, as in the case of Barker, the employer wished to continue to employ the employee but the employee’s services were lost because of the incompetence of the employer, the damages would be reflective of a loss of opportunity as in the case of Mr Barker. The damages, upon establishment of the breach, would not differ from the assessment of damages in relation to breach of any other term of the contract.

FRENCH CJ: Damages do not flow from the employee going around thinking, “I don’t trust my employer” - - -

MR KENZIE: No.

FRENCH CJ: - - -or “I don’t have confidence in my employer”. It arises, in each case, in a concrete application of this implied term. But they can be myriad. An analogy I think of in a statutory sense is the prohibition on misleading and deceptive conduct which opened up, if you like, a whole common law process which lines of authority in different classes of application of that broad norm, and that is what we are looking at here, are we not - unimaginable applications of a very broad norm which would have to be developed in a common law process.

MR KENZIE: The term is - it is broad, although qualified, and questions must arise where it is alleged to have been breached, as to matters like, when was it breached; what are the damages that can be shown to have extended from that time. In Mr Barker’s case, his contract was breached at some point of time after 2 March when, within a reasonable time, no steps at all were taken to facilitate the redeployment process. Questions like that must inevitably be asked. But, your Honour, they would have to be asked in relation to any breach of any term of a contract.

There is nothing new – the debate in relation to this term is frequently attended by considerations that seek to separate the issues arising from this term from other obligations under contract. Content is one of those. If it is accepted, it is another term of a contract, and will have to be addressed in the normal way. That will raise factual questions, such as, well, when did this breach take place? But when you identify when the breach takes place, which you have got to do in the case of any contract, then normal contractual principles apply. One of the things about this debate is that it is assumed that this implied term has to jump through some hurdles that other implied or express terms do not.

KIEFEL J: Does it not follow from what you are saying that the term, or the implied term, which is the concrete circumstance upon which damages will operate in a particular case, such as in this case, is the failure to attempt to deploy the employee? It is not causing a loss of confidence in the employee in that sort of abstract sense. It is a failure to attempt to deploy - to find another position for Mr Barker. That is the circumstance, that is the term, maybe it has to be implied, maybe it is found as a question of construction, but that is the term.

MR KENZIE: But that loss of confidence has to be related to a particular fact.

KIEFEL J: It is not a loss of confidence; it is a failure on the part of the employer to do something, which they are expressly or impliedly required to do.

MR KENZIE: Well, your Honour, it can arise in relation to the employer doing something that it was not obliged to do, as in the case of Malik. It is conduct, whether it is active or passive, that has the result on the employee, and that is what it is. It is conduct that is analogous to that which would be examinable in the case of an employee in relation to the principle that I was making submissions about and being asked a question about by Justice Keane yesterday, that is, the employee’s obligation not to take action to destroy the contract or its subject matter.

You do not say that cannot work because you need to know more about the facts, there are no different principles that are applicable or at play here on the other side of the ledger than there are in relation to a determination of a question like that in Shepherd. You have to say, has the employee’s conduct been such as to answer the description? You make a finding about that and the result is the result, and it does not matter whether it is inaction or action; that is how it works on the other side of the ledger. There is no reason to say that there are different barriers or hurdles because this submission involves the question of what happens on the employer’s side of the ledger. As a matter of logic that must be so.

BELL J: To raise another example, this time removed from considerations of incompetence, in the case of a corporation having bonus payments of some character as an incentive to employees does the Court in enforcement of the obligation consider an instance where the basis of bonus distributions in a given year does not seem equitable as has happened in the United Kingdom?

MR KENZIE: The answer to that must be that that is within – if the circumstances disclose an unconscionable series of actions on the part of the employer designed to single out a particular employee, if the employer denies the longest standing and most experienced employee bonus entitlements and gives them to everyone else for malevolent reasons, because he or she does not like the employee, the answer to that question is yes, and should be yes.

BELL J: What if there is no evidence of the motive of the employer?

MR KENZIE: Well, motive must intrude in some way. I mean, Barker is a case of incompetence, as I have said, but it would have to be some conduct that would logically entitle the employer to say, look, our relationship, the relationship between us is fundamentally undermined by your conduct and that conduct is in accordance with the terms sought without reasonable cause.

So it is not an open-ended clause, it is a heavily qualified implication that has been accepted by the House of Lords. So again, there have been cases in which discriminatory approaches to employees have been held to be such as to demonstrate that a situation exists in which an employee is entitled to say, look, our relationship has completely broken down because you are treating me so badly, and it is intolerable conduct of the nature that the House of Lords was describing in Malik, and it goes that far and it is designed to go that far. It is designed to protect people from intolerable conduct in the workplace, and it goes that far.

KIEFEL J: Where is the intolerable conduct in this case?

MR KENZIE: Well, in this case the position was that on 2 March the Bank communicated with Mr Barker - - -

KIEFEL J: We know the facts. What is the intolerable conduct?

MR KENZIE: The intolerable conduct is allowing a situation to prevail in which, with all the resources at the Bank’s disposal, they took no action to facilitate the process of redeployment in Mr Barker’s case. So an employee of 23 years’ standing at the time of the entry into the contract was effectively emptied out into the workplace at an advanced age because the Bank chose to do nothing.

KIEFEL J: So intolerable conduct is not conduct by which an employee can no longer function as an employee. It is conduct on the part of an employer which a court would regard as less than doing the right thing - not doing the right thing by the employee. Is that what this implied term is? It is not a fiduciary duty, but it is doing the right thing by the employee?

MR KENZIE: It is not taking action that is seriously undermining the relationship.

KIEFEL J: So it is a question of degree of conduct and that attracts the term?

MR KENZIE: It must be because the term itself is qualified by aspects of reasonability and it is - - -

KIEFEL J: So conduct which attracts some sort of opprobrium will qualify under the implied term?

MR KENZIE: It must, as must conduct of an employee attract some form of opprobrium to give rise to the situation described in Blyth, yes, your Honour, and it is not synonymous with, and not intended to be synonymous with, a situation in which the continuation of the actual work is impossible. So, if we conceive of a situation in which an employer undertakes a vendetta against an employee, not for the purpose of dismissal but for collateral purposes, or if one conceives of a situation in which employees are unfairly discriminated against, if one conceives of a situation in which they are the victim of discrimination of various types caught by legislation, their employment can continue.

These are people who are being oppressed in the workplace but who are people who can say, “I want to affirm my employment. I value my job and I want to stay”. These are people who can say, “I am being discriminated against by my employer and it is discrimination to the extent that I want to go”, but they should have the right to affirm or go in the face of conduct of the nature that is described in Malik. That was described in Johnson and Malik as intolerable conduct which an employee should not have to tolerate.

So, yes, there are value judgments, but there are value judgments that have to be made if you are going to apply the law in Shepherd and Blyth. There is no additional barrier to the recognition of this term on those grounds. Decisions have to be made as to whether the circumstances are such as to give rise to the application of the term.

That leads me to the further point in relation to constructive dismissal which is dealt with in paragraph 42 of our submission which arises in relation to the questions that your Honours have been just asking me. Your Honours, the law of constructive dismissal – as we say in our submission – is a settled part of Australian employment law. No one doubts the existence of constructive dismissal. But constructive dismissal – which acknowledges that an employee can, for the purposes of unfair dismissal litigation and the like, say that I have been constructively dismissed, notwithstanding the fact that I have actually gone – is based on the identification of a term.

What was happing in Malik was that the House of Lords was addressing the need for an identification of a term in a context in which intolerable conduct took place. So as we say in paragraph 42, no doubt:

A constructive dismissal can arise when there is a serious breach or repudiation of . . . an express term -

There is no doubt about that. But examples of breach of an existing term aside, there is a range of conduct that would not constitute a breach of a term without the term of trust and confidence and which, accordingly, will not support a constructive dismissal. We have given some examples. Your Honour Justice Bell may take us up on one of the examples there which is the sexual harassment – a matter your Honour raised yesterday - but the list is long. The opportunity for mistreating people at work is – the opportunities are significant. There needs to be some form of coherence with the law of constructive dismissal which is accepted without the implied term.

GAGELER J: You have listed a number of cases in footnote 38. Were they cases where the existence of constructive dismissal was based on the implied term for which you contend?

MR KENZIE: There are some – Orica. The answer is some but not all, your Honour. Thomson v Orica and Easling v Mahoney are examples of that.

GAGELER J: And the others?

MR KENZIE: I do not know the answer to that. In the case of each of them – as I speak your Honour – I will turn that up. I am told that, with the exception of the decision in Martech, all of the other decisions in the footnotes refer to and rely on the implied term, your Honour. Martech not – Martech was based on another express term.

So, your Honour, what was happening in Malik – although for statutory reasons in that case – my learned friend, Mr Walker, has explained the history – but the House of Lords was saying, you need to fill the void by implying the term otherwise conduct like this will not sound in relief. It will simply be out there in the wilderness. The issue in this case is whether it ought to be left out in the wilderness or not.

The House of Lords said no. Here are the things that have happened in the world of employment that make it undesirable to leave it out in the wilderness, and they responded. This case raises, though in a slightly different statutory context, because in our case, as the appellant’s submissions remind us, the unfair dismissal laws to the extent that they operate deal with constructive dismissal by focusing on dismissal at the initiative of the employer, and so there is a statutory description of the constructive dismissal role. But outside the unfair dismissal regime, the position addressed by the House of Lords remains. If you do not have an implied term, matters like this are left, as they have historically been left, at the whim of the employer. That is the issue that is at the heart of this case.

Our friend says, with some justification, that some of the platitudes that emerge in these cases do not really help you very much. He said that if you look at the importance of a job and you ask the same question of a shearer in the 1890s, they would tell you that their job was important too, and that can be acknowledged. But when you come to issues in relation to protection of people in the workplace, the issues that are discussed here, different considerations apply. If you asked that same shearer in 1890 whether he thought that the boss could exercise any one of a number of discretions against him, without care, the answer of that shearer would be, he is the boss. If you ask people today that question, after the influence of legislation over decades, the answer would be, no, that is not appropriate. They are the practical changes that are picked up in the judgments; they are the matters to which the implied term was addressed.

FRENCH CJ: Given the logic which supports the implied term, looking at 43 of your submissions as an inherent feature of the relationship of employer/employee, would it be possible to draft an employment contract that excluded it?

MR KENZIE: Well, Justice Rothman in Russell thought not. He thought that if you sought to exclude an implied term holus-bolus, it would raise questions as to whether the contract continued to answer the description of a contract of employment. The line of decisions flowing from Malik is suggestive of the application of the position accepted in Byrne that an implied term could be overcome by an express term. That is the theory that their Honours Justice McHugh and Justice Gummow discussed in Byrne, and said that is the way things work. The intersection of those two matters is, I think, not addressed in any judgment, but the prevailing view appears to be as discussed by Justice McHugh and Justice Gummow. They discussed an earlier decision of Justice Gray’s, which doubted that you could exclude a term like the one in question, and said, no, that is not the way things work. So, your Honour, authority would suggest that the answer to your Honour’s question is that you could. The issues addressed by Justice Rothman in Russell have not been categorically addressed, but authority would suggest that the answer is yes.

You could certainly read it down. You could certainly expressly provide that the doing of certain things would be permissible. You could eat into the operation of the term. You could provide that matters could be the subject of absolute decision and not challengeable. You can do all those things but the bigger question that your Honour asks, I think the state of the authorities is as I have answered.

Your Honour, could I just make some submissions about the issue of damages? In our submissions, we submit, in paragraph 75, that the general principles of contract law governing damages should be applied in assessing for damage for breach of the implied term and there is no reason not to apply the ordinary rule, as was done in Malik. Malik determines that the term is implied and determines that damages are awardable.

In paragraph 84 of the decision of the Full Court majority, their Honours discuss the judgment of Justice Basten in Russell. It was provided to us last night by our learned friend, and we understand your Honours would have Russell [2008] NSWCA 217; 72 NSWLR 559. In Russell Justice Basten, observed in paragraph 84 of the majority that:

a claim for damages for steps taken up to a dismissal would be likely to be inconsistent with statutory remedies for unfair dismissal -

In paragraph 63 of the judgment in Russell, I am trusting that your Honours do have that - - -

FRENCH CJ: Yes.

MR KENZIE: - - - Justice Basten dealt with that. He said there were three possible consequences of upholding:

a claim to damages because of steps taken by an employer leading up to a dismissal, has three consequences which require consideration. The first is that, because the loss will almost inevitably flow from the termination of employment, rather than the manner in which the decision to terminate was made, the effect will be to sidestep the rule in Addis and hence authorities . . . upholding the rule as the law in this country.

So his Honour was saying if it is a step leading up to dismissal, perhaps an investigation prior to dismissal, perhaps not, something that might take place slightly before dismissal but leading up to it, then that question would arise.

Secondly, as recognised by the House of Lords in Eastwood, such a course is likely to be inconsistent with statutory remedies for unfair dismissal –

and again, depending upon the nature of the statute, if you have got something that is inherently bound up with dismissal, it might be said to be caught by the statute and inconsistent with the statute.

Thirdly, his Honour said, well, you might have some anomalous results; for example, you might have a right to recover damages for a case of suspension of employment, but not in the case of dismissal. So, there his Honour was dealing with steps that were innately related to, or leading up to, dismissal. The Full Court majority looked at that and then applied it to the facts in Barker’s Case and said at 86:

But we do not read his Honour’s remarks in Paige –

referring to Chief Justice Spigelman –

as addressing the question of whether the term applies in conduct that is independent of the act of dismissal. This seems to us to be borne out by his endorsement of the observations of Lord Hoffman in Johnson v Unisys. Those observations were directed at the primacy of statute law on the question of unfair dismissal but left untouched the authority of Malik on the application of the implied term of trust and confidence to an ongoing employment relationship.

So, what their Honours did is to say, what is before us in this case in relation to Barker is steps in relation to his process of redeployment, which was aimed at saving his job; nothing to do with dismissal. What he was complaining about was a failure to take action to redeploy him during his employment. True it is that the consequence of not doing that down the track would have been termination, but this was not an act in relation to dismissal, and what the Full Court said is that this is the area that Malik covers and it is not affected by the judgment and the issues that are raised by Justice Basten in Russell.

It might also be added that Johnson itself involved the House of Lords dealing with the issue of what is on one side and what is on the other and saying, yes, there can be difficult factual situations that arise, but it did not doubt the correctness of recognising and protecting a cause of action that clearly rose before dismissal, and that appears clearly from Magnox.

GAGELER J: The measure of damages depends on there being dismissal.

MR KENZIE: Yes, it depends on there being a subsequent dismissal, that is, when the damage is crystallised, but the breach is a breach during your employment, and the question of the extent of damages is something that will be affected by the question of whether an express or implied period of notice is present, or the rare circumstances of which Barker’s Case is an example where the employer wanted to keep him and the Court was able to proceed on the basis that if these things had not happened his employment would have gone on because the employer wanted it to go on; they had just acted towards him on a basis that destroyed it.

Your Honour, there are just a couple of other matters in conclusion. Yesterday your Honour Justice Keane asked me some questions about the relationship between fiduciary obligations and the position in Blyth. Could I just remind your Honour that our submissions in relation to that are found at paragraphs 37 and 38, and we have done our best there to identify cases which appear to involve the application of Blyth in circumstances that could not in any way, shape or form be described as a breach of a fiduciary obligation. One of the examples is sex with a student, for example; nothing to do with fiduciary obligations but spelt an end to the employment of the person concerned because the obligation was implied in law as a term.

Your Honours, we put submissions in relation to the implied duty of co-operation yesterday and we were asked questions as to the way in which the matters discussed by the Full Court arose. I have nothing to add to that, but I remind your Honour that there has been full debate on the implied duty of co-operation in the submissions in this case. The applicants in their submissions filed in this proceeding in the wake of the Full Court decision addressed the implied duty of co-operation and put in issue its operation and application.

KIEFEL J: But I do not think you were able to say yesterday whether or not it was argued before the Full Court.

MR KENZIE: No, I am suggesting – we have been unable to say anything. I am told that it was referred to in passing but not specifically argued as such. There is certainly nothing that we have been able to find that goes further than that, your Honour.

KEANE J: Justice Jessup at paragraph 316 refers to the suggestion having been made.

MR KENZIE: He does, and it arose in that way, and that is as high as we – Justice Jessup describes it in a manner as high as I can put it, your Honour. It was then dealt with. The judgment of the majority indicates that they had seen the judgment of Justice Jessup in draft which raised issues of co-operation and the majority then did what they did in the paragraphs that we have relied on. It led to a result and we have put submissions on that result. But following that result, the issue has been fully engaged in proceedings in this Court where the applicants, in their submissions, their original submissions, put squarely in issue the issue of the application of the implication of co-operation. Your Honours, that only - - -

KEANE J: Just in relation to that, having regard to the particular circumstances of this case and the thrust of your case being a failure to take steps to redeploy, why would not a provision like clause 8, in accordance with the usual canons of interpretation, exclude any broader implied obligation? Once it is said that the relevant breach here is a failure to take steps in relation to redeployment, why is it not clause 8 that governs?

MR KENZIE: If your Honour is putting that - - -

KEANE J: Adelaide Corporation and Jennings, that sort of thing.

MR KENZIE: This matter could have been resolved by simple recourse to clause 8 which, on that basis properly construed, would have provided the obligation – in the alternative – to providing a foundation for the duty of co-operation. In Malik, the House of Lords described the implied duty in terms of it being an overarching duty which co-existed with other duties and there is no doubt that that is so.

The House of Lords regarded the existence of other narrower duties as, in some respects, being swept up in this and said, at the end of the day, the duty added little to the employee’s side because of historical considerations but added on the other side. So it is a different and wider obligation but not inconsistent with the obligation which might be spelled out at clause 8, although that was never directly argued in the proceeding, your Honour.

FRENCH CJ: It would not be too difficult to imagine circumstances in which breaches of an express term of an employment contract might also be characterised as conduct by the employer in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust.

MR KENZIE: That must be so. But that is the sort of interaction that is being addressed in Malik itself. It must be so, your Honour, because if there are duties – for example, a duty of care to employees or a duty of reimbursement, or any one of a number of duties that might arise – they might well fall within the penumbra of the more global duty. That was the concept that was being addressed in Malik. So the answer to your Honour’s question is it must be so. But not inconsistent and clause 8 would not be read in the way of standing in the way of the application of the implied term, in our respectful submission.

Your Honours, that only leaves the notice of contention and I do not want to say too much about the notice of contention. We have put written in about it, but we have to address and acknowledge the difficulty – if I can make a submission against myself for a minute – that the notice of contention asserts the implication that if the implied term is not implied into all contracts of employment – it is implied into this contract of employment because of the particular relationship between the Bank and Mr Barker.

Mr Barker was a senior banking employee. He had had a long and distinguished career with the Bank and his contract was otherwise silent in relation to matters of trust and confidence. It is not difficult to suggest that it would have been readily understood – as between the Bank and Mr Barker – that issues of trust and confidence permeated their relationship.

It is another step, I acknowledge, to assert that the particular trust and confidence term that is being debated hotly in this proceeding was so obvious to all and sundry that it was implied on the basis of BP, and our submissions acknowledge that, or at least our oral submissions do. It is not, however, impossible to assert that as between a senior bank employee and the Bank some form of acknowledgement of trust and confidence, particular trust and confidence, and the preservation of it, would be implied.

Your Honour, I do not otherwise want to address our submissions, I acknowledge what I do about an assertion that the implied term of trust and confidence is implied in circumstances we were arguing about in this proceeding and where Justice Jessup spent 150 or so paragraphs asserting the contrary. That must be accepted and I do not want to waste your Honours’ time, but issues of trust and confidence, in some way or other would have been in that contract, in our respectful submission. Your Honours, I am sorry to have taken so long. Unless your Honours have anything - - -

FRENCH CJ: Thank you, Mr Kenzie. Yes, Mr Walker.

MR WALKER: Your Honours, could I just remind you of the pleading? The contrast is with what might be hypothesised as the three-page pleading which would have been a claim for breach of clause 8. It starts in the appeal book at page 3, the first of the subheadings is “Background” and does not matter, the second of the subheadings is “Terms of the Contract”, found on page 4, before paragraph 8, and it suffices to say there is nothing there found, expressly or impliedly, to pick up anything to do with clause 8. Paragraph 14 on page 5 is the critical one for later references, which convey the claim which is still in play in this Court.

You will see that there is an allegation there of further terms being implied into the contract and it is alleged in terms which appears to be a Moorcock invocation. In any event, 14.2 will strike your Honours as having familiar content. There is nothing else under that subheading that comes anywhere near clause 8. On page 7, starting under the heading “Repudiation” at the foot of that page in paragraph 24, one sees evocatively - I am sorry if this seems a cheap point - but in particular 24.2, the letter of 2 March is dubbed by the plead of the termination letter. Not surprisingly, termination was one of the possibilities if redeployment did not ensue.

To say, as my learned friend did today, that the process - and I quote verbatim - had nothing to do with dismissal, is unrealistic and unfactual. We then come to the matter which was, I am told, the burden of the hearing, and including at first appeal, and that is the role of what is called the policy to redeploy and the subheading found on page 10 just before paragraph 31. The fight, which had different outcomes at first instance and on the first appeal, was whether the written policy of redeployment had contractual force and then, of course, if it did not have contractual force did it in some phantom fashion supply content to what might otherwise be criticised, as we have criticised it here, as a nebulous implied term. In any event, one sees there the policy talked about. Then not surprisingly, bearing in mind that this is a claim for damages framed as it was, on page 13 above paragraph 44, the subheading reads “Termination”. That is what the claim was about.

KIEFEL J: I see, Mr Walker, that at page 4, paragraph 10 of the amended statement of claim, the redeployment policy was said to be “contractual in nature by force of clause 8”. I am not quite sure how that works but somehow incorporated by virtue of clause 8.

MR WALKER: Because clause 8 refers to redeployment and because the policy was about redeployment is I think the best I can do.

KIEFEL J: That was to give the content to the term, something like that.

MR WALKER: Something like that. That failed eventually and is not persisted in. So one then comes to what is persisted in, page 15, above paragraph 55, the subheading is “Breach of Implied Terms”. That is obviously a reference back to the paragraph 14 terms to which I drew attention. Paragraph 56 is where it comes to ground for present purposes. The Chief Justice drew to attention the way it starts by wrapping up all the conduct which includes what I will call the hapless mucking up of the redeployment efforts following 2 March. The applicant asserts, so the pleading says:

that the conduct of the Bank was in breach of the implied term of mutual trust and confidence and resulted in the Applicant being denied the opportunity of redeployment and the opportunity to thereby retain his employment with the Bank. The Applicant thereby lost a chance.

Now, those words themselves as a matter of words are a complaint about the termination, a complaint of losing a chance of retaining employment because that was perhaps tautologously explained as being what redeployment would have resulted in, that is, retaining employment.

So, in our submission, it is as clear as one could possibly have it that a choice was made on the part of the applicant not to characterise clause 8 as itself containing an obligation of which the Bank was in breach. It is easy to see that as, as I say, a three-page pleading could have advanced a claim for breach of clause 8, probably without any reference to implication of any kind, but if any were used it would be a reference to the Mackay v Dick term only, and perhaps to those terms implied by law so as to supply a reasonable period for the doing of things where an express time limit is not agreed between the parties. But it was not done and, in our submission, it is too late for that. The way in which that was dealt with in the Full Court is instructive. I hope your Honour Justice Keane will not take this amiss - I think I heard your Honour refer to paragraph 316.

KEANE J: Yes.

MR WALKER: But I think it is paragraph 315. Now, that is at 541 of volume 2 of the appeal book, 214 FCR at 521, the foot of that page, paragraph 315. His Honour is there, as he says, “Returning to the duty of co-operation” - I will go back early in his reasons in a moment - and there is there a discussion, the point of which is to say that what I might call his Honour clearly had in mind as the orthodox term, implied term which imposes a duty of co-operation is, as his Honour puts it, anchored in a term or obligation of the contact itself. It is to co-operate in performance of, and each party obtaining the benefit of, the contract, which gives rise to the Mackay v Dick necessity which is that well-recognised term.

His Honour contrasted that possibility – which is orthodox and, plainly, his Honour thought the case before him was unorthodox – contrasted that with a case before him. At about line 51 on page 541 of the appeal book, his Honour says:

As I understand the case being advanced by the respondent and the intervener, the implied term –

and I can assure your Honours that is a reference to what I will call the “fancy” one – not the Mackay v Dick one -

would have the effect of imposing upon the employer a corresponding duty to act –

and here is the contrast with Mackay v Dick coming up -

in the absence of any contractual point of anchorage. The premise would be, rather, that the employer owes a duty of trust and confidence to the employee unrelated to any other, substantive, entitlement of the latter under the contract.

His Honour says, in one of the passages that in-chief was the subject of my compendious, respectful adoption and urging of his Honour’s reasoning -

The introduction of such a duty would, in my view, take the law of contract beyond any principled development of the duty of co-operation.

So, in paragraph 315, it is plain to demonstration that his Honour understood that though, of course, legal theory presents Mackay v Dick and clause 8 as a means by which the case could have been put, it was not thus put. Something was put which had, for purposes of doctrinal discussion that his Honour has engaged in here, a most important distinction – the anchorage of Mackay v Dick as an ancillary term rendering possible what the parties have agreed, whereas there is this unanchored or at large and excessively vague term upon which the ambitious case of the applicant was based.

I said I would go back in Justice Jessup’s reasons – that is to page 538 of the appeal book – 214 FCR 518, paragraphs 306 and following under the subheading “The contractual duty of co-operation”. There is there reference to what is not the law either in England or, of course, here, that is, one of the possible explanations ventured by Lord Steyn in Malik as Justice Jessup puts it, with great respect, accurately, Lord Steyn:

surmised that the origin of the implied term –

Again, that is the one in question in these proceedings:

lay in the duty of co-operation –

Then his Honour Justice Jessup goes on to cast somewhat refreshing liquid on the way in which Lord Steyn had reached that surmise. The discussion that then follows, that is between paragraph 306, culminating in 315, is of course the discussion that reveals the real difference between the Mackay v Dick term and the term which was in question in the case.

Now, that leads back naturally to a matter that was the subject of some questioning by your Honour Justice Kiefel of my learned friend. We, with respect, differ utterly from the answers given by our learned friend concerning the proper reading of paragraph 118 in the majority’s reasons but it requires going back in the appeal book to page 475, 214 FCR 455, paragraph 7, where Justices Jacobson and Lander note the:

alternative claim . . . based upon an implied term of mutual trust and confidence –

and noted the first instance conclusion that that term was consistent with Malik and that the existence of such a term had been assumed in this Court, et cetera.

Now that is the implied term, which one then finds repeatedly and consistently referred to by their Honours – see appeal book page 476, paragraph 10, “Two critical issues”:

The first is whether the contract of employment contained the implied term.

We know that is the implied term, as I am putting it, because of the way in which that paragraph ends. Paragraph 11, the same thing, an analysis by Justice Jessup of the authorities on the existence of the implied term; same reference in paragraph 12, second-last line; second line of paragraph 13; third line of paragraph 16. Over to appeal book, page 479, paragraph 46, their Honours expounding the way in which the matter had been dealt with below note that his Honour at a point turned to the implied term.

Under the important subheading on page 480 of the appeal book, “The UK authorities”, paragraph 59, again, “the implied term”. Then the Australian authorities, appeal book 482, paragraph 77, “the implied term”. Appeal book page 484, subheading “nature and content of the implied term”, paragraph 96, turning to the content. Of course it is being used consistently and unambiguously and plainly. When one then comes to the critical subheading for present purposes, page 486 of the appeal book, above paragraph 118, it is “An alternative approach: the implied duty of co-operation” that is being distinguished from the implied term, the recognition of which in Australia was the issue in hand. Their Honours say:

One of the various bases for recognition of the implied term was stated by Lord Steyn in Malik –

Lord Steyn was not ignoring what Lord Blackburn had said. Lord Steyn referred to what Lord Blackburn had said in the course of – surmising - the bases of the implied term, not the Mackay v Dick term, which was not in question in Malik, but which was the subject of the comments by Lord Steyn to which I have drawn attention. So, “the implied term” in the first line of 118 is of course the fancy one, the one that the respondent in this Court maintains is necessary in order to reflect a zeitgeist, the beginning of which, or the relevant change of character of which, the respondent still has not located, historically or in any material capable of proper reception by this Court. Hence the reference in the second last line of paragraph 118 to it having “its origin in the general duty of co-operation”; that is the Mackay v Dick term.

Of course, all the references that one finds on appeal book page 487, paragraphs, for example, 124 through to the foot of that page and over in the passage concerning a breach, is a reference to the implied term which is in question in this case as a matter of doctrine, not the implied duty of co-operation which is not in question and was not pleaded and was not argued and has still not been relied upon by the respondent either in a notice of contention or otherwise.

Now, it was said by my learned friend that under the heading “Was there a breach” in paragraphs 129 and following, appeal book pages 487 and 488, it was said by my learned friend that yes, the words are words which are appropriate to a breach of the implied term, the fancy one. But, his submission ran, they should also be read, or may also be read, or were intended – it is not quite clear – to be findings of a breach of the duty of co-operation. They are not.

The reason they are not is because their Honours were well aware, with respect, that there was not a case put of that kind. They would not have been responding to a pleading or a submission by finding a breach of Mackay v Dick. It is to be recalled that the main issue in this area, both at first instance and on the intermediate appeal, was whether or not the printed bank policy was contractual.

Now, it is against that setting, in our submission, that one does turn to the matters that have been the subject of considerable questioning by your Honours of my learned friend and about which we have the following matters to put in reply. It requires going back to the contract in volume 1 of the appeal book, pages 131 and 132.

In clause 6 on page 131, line 52 or thereabouts, there is, as I drew to attention in-chief, the mutual termination on four weeks’ notice with the employer’s capacity to pay out the period of notice. That is not expressed either in clause 6 or in any other part of the contract, nor could it be a consequence of its interpretation or any implication that is not expressed to be unavailable during any particular time for the duration of the employment. That last comment, however, raises a question in relation to clause 8 to which I am about to come. It means that, in theory, the four weeks is a period of notice which Mr Barker could have given straight after signing this document. It would be odd. The Bank could also have given it. That would be really odd, but they could. The fact that it would be odd does not give rise to any difficulty at all.

If it had been given, by the way, by either of them, one cannot imagine anything more destructive of confidence between them. You have just signed a contract and now you have said you are off in four weeks or, I have just signed a contract and now you say you do not want me four weeks from now on. No one would suggest that could possibly be the breach of a term which obedient to the rule of necessity, the common law implies into this contract.

One notes clause 7. Clause 7 applies if clause 8 does not, or I should say if no payment is received made under clause 8 but, of course, it only applies in case of termination of employment, and so it is a class of termination of employment which will, one imagine, encompass every four week notice because one assumes that misconduct or unsatisfactory performance would be four week notice but misconduct would lead to summary dismissal, one assumes.

Clause 8 has the effect for those who had been in employment the day before this agreement. This is not just for long-term employees. In practice, that may be exactly what it is intended to benefit, but this is not for 23 year veterans, distinguished or otherwise. It applies only where the employee was already employed by the bank immediately preceding the date of this agreement, that is all it singles out, and it puts in what I am going to call a guaranteed minimum of the 107,000-odd in a case described as the position becoming redundant and the bank being unable to place the employee in an alternative position.

Now, I regret to say that employment contracts are no more immune to mealy mouth language as any other HR publication, and “unable to place” may be a choice of words about which that comment can be made. It reminds one of the cliché, I am afraid we have to let you go. “Unable to place” cannot possibly mean, for example, that there is a perverse altruism required of the employer whereby somebody who really will not fit well into any other business unit, notwithstanding superb technical skills, because they are rebarbative of personality, for example, should be imposed on some other existing team.

“Unable”, in short, has to be read as a word used in the milieu of employment where the employer is permitted to favour its own interests, including its assessment that may well be contestable, but its assessment as to whether this person really is the person I want in a particular place; that is the first point we make about “unable”. It is the kind of argument which had clause 8 been sued on, quite simply in a straightforward pleading of it being breached, would have led one imagines to a quite different framing of the case.

FRENCH CJ: Now, it assumes, does it not, that that condition of inability being satisfied clause 6 can be engaged?

MR WALKER: I may not have heard what your Honour said.

FRENCH CJ: It assumes that that condition of inability to place an alternative position, if that is satisfied, the inability, then termination pursuant to clause 6 may be made, clause 7 does not apply.

MR WALKER: Yes, it does. That is right, it does.

FRENCH CJ: So those two read together as part of the one - - -

MR WALKER: Quite. That needs then to be teased out. Let me assume against us – this is hypothetical because it was not the case we faced and there is a strong Suttor v Gundowda objection to all of this now – let me assume there is a Mackay v Dick promise raised by the word “unable”, with great respect, an attractive assumption on the merits. It would, as my learned friend I think recognised, surely involve notions of reasonableness, not least because there is no express specification otherwise, so something within a reasonable time and reasonable efforts. I have already mentioned that one does not under Mackay v Dick impose on the party who is the promisor bound by that obligation the burden of behaving in ways which are contrary to self-interest, subject, of course, to good faith of the kind that involves a lack of dishonesty, that is, fraud, lies.

If the way clause 8 would operate - clause 8 is about a redundancy payment. That means a payment made available if you do not stay in employment; a payment made available if your employment is terminated with the four-week payment and the clause 15 outstanding entitlements coming your way as well. It is an extra payment for the subset of terminations which will be upon inability of redeployment where the original position has been made redundant.

Now, if the employer offers a position to the employee by way of redeployment which the employee, without any breach of contract on the employee’s part, of course, decides not to take up - it is in a place, or it may be with possible co-workers, that the employee does not find sufficiently attractive, or the redundancy payment, according to bad advice received by the employee, looks attractive - that surely would not be any more a case for a redundancy payment because, although he would not have been placed in the position, that is, the employer would literally be unable to put him there because we do not practice slavery, clause 8 would not give him the payment.

Clause 8 obviously enables an employer to say, “This position is redundant and there are the following 15. You pick one of them. If you don’t want any of them, well, of course, either you give notice or I give notice, but we are going to part our ways”, but you will not get the redundancy payment then, and no one could surely argue to the contrary. So, “unable” is not a word which can be straightforwardly given a full or literal meaning. That is why I say, had there been a straightforward case of breach of clause 8, there would have been a quite different framing of the issues concerning what might be called an outbreak, not unknown in human affairs, of error on the part of the Bank.

The human error involving the glitch in procedures, the breakdown of communications which was recovered, but on the findings of fact against us that we cannot raise in this Court, not recovered sufficiently or in time. No question of malevolence. I realise my friend uses those epithets hypothetically, not in reference to us, but this is not a malevolence case. This is not a repudiatory conduct case. I have got to come back to that as a matter of doctrine because it was constantly referred to by my learned friend by his reference to affirmation.

That, in our submission, is the kind of inquiry that would have been given rise to had there been a pleaded and mounted case that we were in breach of a Mackay v Dick obligation attached to, or invoked by, this condition of inability to place the employee in an alternative position contained in clause 8.

Your Honours, in relation to clause 8 if, by breach, on the part of the employer it becomes impossible to say that the Bank is unable to place the employee in an alternative position, a literal reading – probably, with respect, a correct reading – would suggest that the condition not appearing the payment is not available. But if that was by breach, one asks what is the loss caused and the loss is, of course, the loss of the $107,000-odd guaranteed minimum. No other loss.

That then leaves the case that Justice Keane has raised, with respect, repeatedly with my learned friend, but only once with an answer, that tended to the affirmative, that is, is it being said that under clause 8 with Mackay v Dick attached, action could have been brought suing in a way that leaps over the four-week period of notice that would otherwise as a matter of hitherto unchallenged common law in this country provide the ceiling of recovery for a wrongful termination. We think ultimately the answer to Justice Keane by my learned friend was yes.

In our submission, that is precisely what is answered by the considerations brought to light, evoked by a consideration of these problematic English authorities, in the reasons of Justice Basten in Russell to which my learned friend has most recently drawn your attention, agreed in, relevantly, if in both cases narrowly, by Justices Giles and Campbell. In [2008] NSWCA 217; 72 NSWLR 559 at 574 to 575, paragraphs 63, 64 and 65 – I do not need to read it – it is very clear that principled and, in our respectful submission, independently sufficient objections to recovery of a kind that my learned friend seeks by his eventual answer to Justice Keane’s questions are set out by Justice Basten.

There has hitherto in this country not been a suggestion that where an employer can perform a contract of employment by giving four weeks’ notice, without reason, without cause, and paying in lieu of the actual time, it has not hitherto been suggested that that can be outflanked, so that the principle of least onerous performance referred to repeatedly by this Court – see, for example, Amann Aviation – that well-accepted principle can be outflanked by resort to this nebulous implied term. Still less could it be outflanked by reference to clause 8 which works in tandem with, and, as the Chief Justice pointed out, requires eventual resort in one of the events it looks forward to, to clause 6. For those reasons in our submission there is nothing in what I might conveniently call a clause 8 point.

Your Honours, there was repeated reference to the position of a man like Mr Barker, of affirming the contract. Now, for all practical purposes in a contractual setting, affirmation only has meaning as one of the two possible elections presented to an innocent party by the event of a repudiatory breach by the other party. I am not talking about equitable rescissions, presently; we are talking about just the common law operating in the context of breach. I realise that repudiation is pleaded against us, but that is a repudiation by way of wrongful termination.

It could not possibly have been repudiatory for us to have mucked up so that the right hand did not know what the left hand was doing with redeployment being our preference, but let us cut off the communications. That is not repudiatory. It is a glitch, it is a mistake, it is human error that presumably, even Mr Barker, as an officer of the Bank had committed from time to time.

Still less is it a phrase which captures perhaps the notion of repudiation that my learned friend used repeatedly, borrowing from English authorities, that is “intolerable conduct”. Unless one has a view, that seems with me to occur more frequently as I get older, namely that all human error is intolerable, until I look in the mirror, it is absurd to suppose that this unhappy course of events, of which we are not proud, we have nothing good to say about it, amounted to intolerable conduct or repudiation. It was not a question of affirmation.

It may be that my learned friend here was hinting, as it were, sidelong at the notion of constructive dismissal which played a part in the argument this morning. If so it has to be said it does not actually have a footing in any of the facts that call for decision between these parties at all. We can put constructive dismissal to one side. Its part in this argument is the unprincipled way in which the implied term was invented in England in order to produce a constructive dismissal so as to engage a statutory jurisdiction which required dismissal. That is its only role. It has no role in the actual concrete dispute between these parties.

KEANE J: Mr Walker, if one took Occam’s razor to intolerable conduct and conduct destructive of confidence, would one be on a more orthodox path if one simply sought to analyse the problem in terms of conduct on the part of the employer which is either a breach or an anticipatory manifestation of an unwillingness to allow the employee the benefit of its contract?

MR WALKER: Yes. Your Honour anticipates the next matter, I hope sequentially from what I have already said, to which I wanted to turn, that is this. Another way of saying there is absolutely no necessity for an implied term which negatively protects, that is will do nothing to destroy, negatively protects the trust and confidence of the relationship, query whether that is truly different from saying it protects the relationship. It does not matter for present purposes. You do not need any of that, that is, it is simply not necessary because you have the common law doctrine of repudiation.

It is the employee’s equivalent, if you like, and we are certainly not advancing a principle of reciprocity because each party has different interests, it is the employee’s functional equivalent of the employer’s right of summary dismissal for misconduct, which misconduct will include, for example, disobedience to a lawful direction. So if there is something which either in an anticipatory or an accomplished fashion evinces the attitude no longer to be bound to supply that which the employee is due under the contract, then there is a capacity to treat that as a repudiation, elect to, as I would have put it years ago, rescind, by which I mean terminate, not ab initio of course, and sue for loss of bargain damages plus any other accrued claims that you had beforehand.

The loss of bargain damages, however, will be in a familiar fashion limited by the period of notice. You are not going to be treated as a lifetime employee of somebody who was entitled to terminate you on four weeks, one can say very seriously. The dealings between an employee and an employer that had reached that stage, you are repudiating, says the employee, it need hardly be said that is completely destructive of trust and confidence as well; one would have thought, but for the formal act of – but for the substantive act of notifying the election to terminate, pretty much destructive of the relationship as well. No one could possibly suggest that is in breach of any implied term or anything to that effect or that you need such a term when you have got such robust, simple and comprehensible ways of protecting the interest of somebody not to have their contractual rights trampled on in that fashion.

GAGELER J: Do we also see summary dismissal then as simply the acceptance of repudiatory conduct on the part of the employee?

MR WALKER: I do not think I am solid ground in saying that it has been simply and straightforwardly treated as an instance of a general doctrine of repudiation, but I do put as a submission that that is exactly how it should be seen, and the fact that there is a particular nomenclature not limited to employment law, so-called, for both terms and breaches and outcomes such as summary dismissal, does not mean that it is not, in truth, simply part of a class of acceptance of repudiatory conduct so as to terminate the contract, brevi manu, as it used to be put, no notice to complete or notice to perform necessary.

Justice Bell asked my learned friend about what might be called whinging by people who have forgotten the parable of the vineyard about an inequitable bonus scheme, which always translates to “he gets more than I do”. But apart from mourning the ignorance of the gospels, your Honour, it needs to be said that the notion that the discretions to act gratuitously, which still exist in certain so-called bonus schemes, may or may not, probably ad hoc – that is, under The Moorcock – attract a focused and narrow implied term such as will not be exercised, shall we say, arbitrarily or capriciously. It goes without saying it will not be exercised corruptly, in the proper sense of that word.

It certainly would not give rise to something as nebulous, vague, problematic as will not behave so as to destroy or seriously endanger the trust and confidence of the employment relationship, all of which is rather ironic to the point of perversity where somebody is saying “I like this job so much; I want to keep earning bonuses in it”, but the relationship is endangered by destruction of trust and confidence, which is all rather odd. Rather, one would say if there is to be anything actionable in relation to truly gratuitous or discretionary bonus schemes – we are not suggesting there should be – but if there is, it would attract as a matter of common law only the implication of that which would be necessary. It is only the avoidance of arbitrariness and capriciousness or corruption which would be necessary.

Then, there are the matters that my learned friend raised in answer to Justice Keane’s question about what might be called the botched halal abattoir, denying a manager the bonuses that come from shipping north. My learned friend, again, put at the centre of his answer this choice to affirm a contract. In our submission, for the reasons I have already put, that really is destructive of the need for any such implied term. But, in our submission, our friends’ answers also fall foul of the established common law considerations, not a single one of which has been challenged or, indeed, referred to by our learned friends, concerning the least onerous performance by the defendant employer.

Thus, for example, in a bonus case no consideration was given by our friend in his answer to how does one fix the length of time over which in a once-and-for-all award of contract damages for breach of the implied term, constituted by mucking up halal procedures, how long into the future – subject, no doubt, to a discounted cash flow assessment – are these bonuses going to be estimated on.

In our submission, this highlights the very problem which gives rise to the rather clumsy and ill-delineated Johnson exclusion area and which explains the repeated references, both in Johnson and in Magnox – as my friend calls it – to the need for government – one of their Lordship says – or parliamentary attention to the matter.

It is, as I drew to attention in a passage yesterday, regarded by their Lordships as an unsatisfactory state of the law. In our submission, that

is why there could not or should not have been in orthodox common law terms, the recovery that was upheld for Mr Barker in this case.

Finally, can we turn to a matter that also came out of our learned friend’s answer to Justice Keane’s example? It is to be recalled that BCCI was a criminal organisation. It was behaving criminally, not just carelessly, so as to endanger the prospects of what might be called the employee stake in the employer prosperity – the bonus, lost bonus case.

It was the reputational slur suffered by association with BCCI which was the gravamen of the claim in Malik. There are other ways to suffer by the fortunes and fates of your employer, if you are an employee. A criticism that your Honours will be aware of, of our society, is that we are not as risk-taking as entrepreneurs as Americans are said to be. We will not tolerate as many failures as they will. Well, this implied term, does it attach to the risk-taking by the board in making the purchase or the investment of a kind that some would see as incredibly risky venture capital, and others would see as a piece of brilliant Bill Gates prescience, and no one knowing the outcome for perhaps a few years, or even decades?

But, one might be very scared, as someone who wants long-term employment, by the risks being taken. In psychological terms, and they have not been referred to at all in the respondent’s defence of this implied term, in psychological terms or actual terms one can imagine that those are the very cases where trust and confidence will be utterly destroyed. I am very scared what they are doing.

You do not need the implied term, because if that is how you feel about how the proprietors of the business and the managers of the business put in place by the proprietors want to spend their capital you give your four weeks’ notice and go to a less risk-taking, safer employer. You do not need an implied term by which the absurdity would be committed of an employer being in breach of an individual contract with an employee for having a bold, others might call it mad, business plan.

In our submission, no attention has been given to the breadth of coverage which these extraordinarily general words proposed for the implied term threatens in relation to, not merely the relations under employment contracts, but also for the enterprises in which those contracts are employed – are used. May it please, your Honours.

FRENCH CJ: Thank you, Mr Walker. The Court will reserve its decision. The Court adjourns until 9.30 tomorrow morning.

AT 11.54 AM THE MATTER WAS ADJOURNED