Tokyo Network Computing Pty Ltd & Anor v Tanaka [2004] NSWCA 263

Tokyo Network Computing Pty Ltd & Anor v Tanaka [2004] NSWCA 263

The board resolution unconditionally and unequivocally purported to reduce Mr Tanaka's agreed salary, and nothing in the employment contract displaced the general rule that unilateral reduction of salary is a repudiation. Mr Tanaka validly accepted the anticipatory breach before the employer could withdraw it, bringing the employment contract to an end, and his contractual right to exercise the put option then arose. The later attempt to withdraw the breach did not defeat that entitlement.

Jurisdiction
Australia
Judgment Date
02 August 2004
Procedural Posture
Appeal / Appeal From a Decision of Bryson J in the Supreme Court Equity Division
Outcome
Appeal dismissed with costs.
Legal Topics
['master and Servant' 'unilateral Reduction in Salary' 'fundamental Breach' 'anticipatory Breach' 'repudiation' 'rescission' 'specific Performance of Put Option']
['contract Law' 'employment Law'] ['master and Servant' 'unilateral Reduction in Salary' 'fundamental Breach' 'anticipatory Breach' 'repudiation' 'rescission' 'specific Performance of Put Option']

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Procedural Posture

Appeal / Appeal From a Decision of Bryson J in the Supreme Court Equity Division

Legal Issues

  1. 1 ["Whether the first appellant's board resolution to reduce the respondent's agreed salary was an anticipatory breach or repudiation of the employment contract." 'Whether the salary term was an essential term of the employment contract so that unilateral reduction entitled the respondent to terminate.' 'Whether the respondent validly accepted the repudiation and exercised the put option.' 'Whether obligations of good faith and reasonableness prevented the respondent from exercising the put option after the employer attempted to withdraw its anticipatory breach.']

Ratio Decidendi

The board resolution unconditionally and unequivocally purported to reduce Mr Tanaka's agreed salary, and nothing in the employment contract displaced the general rule that unilateral reduction of salary is a repudiation. Mr Tanaka validly accepted the anticipatory breach before the employer could withdraw it, bringing the employment contract to an end, and his contractual right to exercise the put option then arose. The later attempt to withdraw the breach did not defeat that entitlement.

Court Disposition

Appeal dismissed with costs.

Orders

  • ['Appeal dismissed with costs.']