A recruiter has lost an appeal and must repay a $21k placement fee, after two courts differed on what constitutes a fulfilled recruitment guarantee.
The Supreme Court of NSW heard that heavy equipment company Screenmasters employed a candidate put forward by Key Recruitment, and paid its invoice of $21,102.40 within a week.
Screenmasters told the Court the candidate started in May 2010, but proved to be "incompetent in the role", and resigned in mid-June.
The contract between Key and Screenmasters provided for a six-month replacement guarantee, in circumstances where the placement fee was paid within seven days.
It stated: "If the Client is not satisfied with the placed Candidate's performance and Key Recruitment is notified within the guarantee period, Key Recruitment will undertake the assignment for one replacement Candidate for that same position without charging additional professional Fees."
Screenmasters contacted Key and activated its guarantee clause. Key sourced a new candidate in October 2010, but following an interview Screenmasters told Key this person was only partly suitable.
Key sent a second candidate for interview in November, and Screenmasters told Key it was interested in employing him, but not until January, due to a seasonal slowdown.
In late January 2011, Screenmasters emailed Key Recruitment to say it had made numerous attempts to reach the candidate and offer him the job, but he was no longer contactable.
Key never responded to this email, and in March, Screenmasters terminated its contract with Key and sought to have its fee refunded.
In a December 2012 decision of the Bathurst Local Court, Magistrate Graeme Curran said Key's contract clearly stated that it would provide one replacement candidate, and he found that this didn't mean the new candidate had to be hired.
"The interpretation that would require the hiring of the replacement candidate as being a basis for satisfaction of the guarantee would possibly lead to what I would regard to be 'commercial nonsense'.
"It would mean that [Key] could well be in a position where endless candidates are introduced, objectively suitable for the position, and for many reasons, such as delay on the part of the client, or just capricious dislike of the candidate, are not hired."
Claim hinges on meaning of "placement"
Hearing the employer's appeal case, Justice Ian Harrison said Magistrate Curran had erred in his interpretation of the contract.
He noted that 'placement' was defined in the contract as a "candidate who obtains a position with the client, through Key Recruitment".
"The definition of 'placement(s)' also applies to 'replacement(s)'... The meaning of placement and replacement is not merely to find a candidate for the position."
Screenmasters offered the second candidate employment, Justice Harrison said, and had he accepted, this would have constituted a replacement and Key would have satisfied the guarantee clause.
He set aside the Local Court decision and ordered Key to pay Screenmasters $21,102.40, plus interest and costs.
Screenmasters Australia Pty Ltd v Key Recruitment Pty Ltd [2013] NSWSC 1569 (31 October 2013)