Bredel v Moore Business Systems Australia Limited

LOWER COURT Supreme Court - Equity Division JURISDICTION : LOWER COURT 50139/00 FILE NUMBER(S) : LOWER COURT Bergin J JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40300/02 SC 50139/00

MEAGHER JA HANDLEY JA SANTOW JA

15 MAY 2003 Patrick John BREDEL v MOORE BUSINESS SYSTEMS AUSTRALIA LIMITED Catchwords CONTRACT - construction of contract - whether the Respondent agreed to pay the Appellant 4% commission on incremental sales "for the life" of certain contracts won by the Appellant - alternatively, whether the Respondent agreed to pay Appellant 4% commission on incremental sales for 1999 of certain contracts won by the Appellant ESTOPPEL - whether the Respondent represented to the Appellant that he would be paid 4% commission on incremental sales "for the life" of the contracts won for the Respondent - alternatively, whether the Respondent represented to the Appellant that he would be paid a 4% commission on incremental sales for 1999 of certain contracts won by the Appellant - whether the Appellant relied upon representation to his detriment. EQUITABLE ESTOPPEL - whether the Appellant should be allowed, for the first time on appeal, to make an argument based on equitable estoppel - where argument based on equitable estoppel has fundamental difficulties, including whether there was a detriment, whether there was an inducement and the reasonableness of reliance COSTS - where sharp and deceitful conduct of successful party - no order as to costs Facts

The Appellant had been employed by the Respondent as a sale executive. In 1998, he resumed working with the Respondent following a period of leave due to ill health. The Appellant returned to work following discussions with various representatives of the company at a conference in the Pinnacle Valley. On the Appellant's return to work, he received a memorandum dated 25 March 1998 which sought to formalise his contractual entitlements. This memorandum differed from the Appellant's recollection of the discussion at the conferences. This memorandum provided confirmation of the Appellant's remuneration for 1998; that he was to be paid 4% commission on the incremental business sold to specified accounts in 1998 beyond the amounts sold in 1997; and that his total pay was to be no less than 1997 monthly earnings for a period of 6 months from March until end of August. The main account that the Appellant was to work on was securing the Boral Group print management services contract. During the course of 1998, it became clear that the Boral account would not be finalised until at least 1999. The Appellant sought a variation of his salary so that his fixed salary would be maintained at a higher level.

In May 1999, the Appellant and Respondent were advised that they had secured the Boral account. Contemporaneously, a remuneration plan (B2) had been devised for the Appellant, but never advised to him. The Respondent then, by a backdated letter advised the Appellant that his remuneration plan had been altered and offered him a far less attractive package (B3 Plan). Various discussions ensued. In March 2000, the Appellant ceased working for the Respondent.

The Appellant commenced court proceedings and claimed an entitlement to a 4% commission in respect of the incremental sales increases for the life of three commercial contracts he had successfully worked on, including the Boral Group account.

Bergin J, at first instance dismissed the Appellant's summons.

Held per Santow JA, with Handley JA agreeing and Meagher JA dissenting:

1. The Trial Judge erred in drawing the inference that the Appellant's protests in May 1999 about the substituted commission arrangement were hollow. The Appellant never accepted the substituted commission arrangement, even though he did not refuse the increased salary.

Held per Santow JA, with Meagher and Handley JJA agreeing: 2. However, in any event the Appellant did not have a contractual entitlement to a 4% commission on incremental sales for the life of the relevant contracts nor indeed an entitlement to a 4% commission for incremental sales for 1999 alone.

The disputed versions of the conversation at the Pinnacle Valley Conference were not shown by the Appellant to give rise to any different or wider contractual entitlement than as set out in the memorandum of 25 March 1998.

The Appellant also failed to establish that there was a continued contractual entitlement to a 4% commission by virtue of the 1998 remuneration plan "rolling over" into 1999. This is so even though the base remuneration paid into the Appellant's bank account "rolled over".

The Appellant is not now able, on appeal, to put an argument based on equitable estoppel which had not been raised in the trial court, having regard to the fact that the Respondent is thus denied the opportunity to adduce evidence. In any event, even if the Appellant were able to make this argument, it suffers from fundamental difficulties.

The Appellant failed to establish that he suffered a detriment in the relevant sense by returning and continuing to work for the Respondent.

The representations made to the Appellant were simply too vague and imprecise to ground the necessary expectation, assumption or belief. Additionally there was no conduct by the Respondent which amounted to an implied inducement to the Appellant of an expectation of a 4% commission or something equivalently attractive.

In the circumstances, the uninduced hope or expectation that the Respondent having discretion, in setting the bonus or commission, would act with generosity commensurate with the value the Appellant achieved for the company, was not reasonable.

Held per Santow JA, with Handley JA agreeing and Meagher JA dissenting: 9. In the circumstances of this case, where there has been sharp and deceitful conduct on the part of the successful Respondent, justice requires that the appeal be dismissed without any order as to costs. ORDERS Appeal dismissed. No order as to costs

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40300/02 SC 50139/00

MEAGHER JA HANDLEY JA SANTOW JA

15 MAY 2003 Patrick John BREDEL v MOORE BUSINESS SYSTEMS AUSTRALIA LIMITED Judgment 1 MEAGHER JA: I agree, in general, with Santow JA. However, I regret that I am unable to agree with what he says in paragraph 46 of his judgment. I would, respectfully, concur with what Her Honour the trial judge said in paragraph 167 of her judgment. As to costs, I think the appropriate order should simply be that the appeal be dismissed with costs. We should not punish the respondents for their behaviour, contemptible though it be. 2 HANDLEY JA: I agree with Santow JA 3 SANTOW JA: OVERVIEW This is in many ways an unfortunate case. The Appellant is a highly skilled and productive salesman. He was denied in 1999 the substantial commission he had anticipated. That anticipation was based on his 1998 remuneration package. His case is that he assumed his commission arrangement would, following his 1999 review, be extended into 1999 or be replaced with something comparable. What his employer, the Respondent, offered instead was much less. This was despite the Appellant having achieved success in negotiating for his employer a highly valuable print management contract in 1999 with the Boral Limited group. He later achieved two other print management contracts (with Bank of Queensland and the Commonwealth census contract) though these were after his salary review in 1999. 4 As I see matters, on the Appellant's case as presented before the Trial Judge, and as presented on appeal, her conclusion against the Appellant was unavoidable and correct though the Respondent's behaviour was both sharp and mean-minded. That is so, even if it be the case that, contrary to the Trial Judge's finding (Red, 32 [25], 81 [148], and 86 [164]) he did not seek to exchange his commission arrangement for a higher fixed salary. Rather he wanted his salary to include payment of part of the anticipated commission in advance, the negotiations centring on the terms of any such advance. Nor does his employer's backdating of the review, so it pretended to precede the Boral success, nor its distinctly ungenerous terms, alter that position. I shall return later to the reasons for that conclusion. They are essentially based on the proper construction of the Appellant's contract of employment and the limitations of his case in estoppel. 5 The relevant terms of his employment included salary and commission. This package in common with others, was set and reviewed on a year by year basis. The terms of his 1998 remuneration package were found to provide only for a 4% commission on incremental sales made in 1998, compared to sales in 1997. It said nothing about sales after 1998, such as derived from the Boral contract. The Appellant at trial put an "all or nothing" case. He did not merely claim 4% commission on incremental business sold in 1999. He claimed commission for incremental sales for all ensuing years during the life of the relevant contract, calculated by reference to the 1997 year. The Appellant sought to rely on a disputed oral conversation for this expansive entitlement. This was said to override or supplement the written contractual terms of his remuneration, first recorded in a memorandum of 25 March 1998. 6 The Trial Judge rejected that contractual claim. She did so on the basis "that the Plaintiff's compensation plan for 1998 was as stated in the 25 March [1998] memo" and in two subsequent 1998 documents (Red, 80 [145]). Having found that these recorded the terms of the Appellant's 1998 package, including commission, their construction left no room for the expansive claim put by the plaintiff at trial. But the Trial Judge's reasoning applied equally to preclude commission just on 1999 incremental sales, again as a matter of construction. On arguments directed to whether the 1998 arrangements carried over into 1999, or until replaced, the Trial Judge concluded: "[T]here is no doubt that the defendant was entitled to review the plaintiff's remuneration for 1999". "The plaintiff understood [in November 1998] that is just what was to be done …" (Red, 86 [164]). This is relevant, because the Appellant strongly protested at the proposed much less generous commission arrangements offered following that review, at the end of May 1999, though accompanied by some increase in base salary. 7 The Appellant based his case alternatively on estoppel. Before the Trial Judge it was put as a claim solely in estoppel by representation. It was based on assurances he claimed he received that if he continued to approach targeted clients, namely Boral Group companies, the Bank of Queensland and the Australian Bureau of Statistics, he would be paid 4% commission on sales to those targeted clients. The Trial Judge made no finding as to whether the so-called July (1999) assurance was given; being said to be by Mr Mackenzie to the effect "I will make sure you are covered". But it was rejected as any basis for commission for the life of the contracts. It was also held to be too imprecise to constitute a contractual term; Judgment [179] Red, 90. By implication the Trial Judge was rejecting it also as too imprecise to be relied upon for estoppel purposes. She also concluded against the plaintiff as to any detriment in financial terms, in his having stayed on with the defendant from July 1999, instead of taking early retirement on health grounds (he had suffered serious previous heart attacks). Essentially this was because his earnings exceeded what he would have received under early retirement ($69,750). 8 On appeal, against the Respondent's objection, the claim in estoppel was put for the first time as equitable estoppel, and seeking relief moulded to do minimum equity between the parties. For reasons I will explain, such a claim, even if now allowed to be brought, must fail.

SALIENT FACTS AND ISSUES 9 The all or nothing character of the Appellant's case at trial becomes apparent from the Amended Summons, filed pursuant to the Trial Judge, Justice Bergin's order on 4 October 2001. It commences by seeking a declaration of entitlement to 4% commission on incremental purchases of print products for the life of the Boral Group contract and two others (the third only having a life of one year): "1. A Declaration that pursuant to the commercial contractual arrangements made by the Plaintiff with the Defendant the Plaintiff is entitled to be paid by the Defendant commission at the rate of 4% as follows: (a) In respect of the Boral Group contract ; on the amount of the difference between the yearly total purchases of print product by the Boral Group for the year 1997 and such total purchases from the Defendant thereafter for each year during the life of that contract; (b) In respect of the Bank of Queensland contract ; on the amount of the difference between the yearly total purchases of print product by the Bank of Queensland for the year 1997 and such total purchases from the Defendant thereafter for each year during the life of that contract; (c) In respect of the Commonwealth Census contract ; on the amount of $4.5m paid or to be paid by the Commonwealth Census, viz an amount of $180,800. " 10 The Amended Summons, in the form used in the Commercial List, then sets out the "Plaintiff's contentions" including reference to the Boral group contract (paras 16 to 25, 28 and 37(a) and (b)), the Commonwealth Census contract (paras 27, 31, 33 and 37(d)) and the Bank of Queensland contract (paras 29, 30, 31, 32 and 37(c)). 11 Apart from claiming a declaration as earlier set out, the Summons seeks an order that accounts be taken to ascertain the amounts due and payable or becoming due and payable to the plaintiff. It concludes with para 38, added by leave. It pleads estoppel by representation, as is clear from its elaboration below. It does not plead equitable or promissory estoppel as encapsulated in the passage from the judgment of Brennan J in Waltons Stores (Interstate) Ltd v Maher (1990) 170 CLR 394 at 442 with its six probanda. It was subsequently sought to be argued on appeal. The only pleading before this Court is the following: "38. the Defendant, by accepting the Plaintiff's work and services in obtaining the said contracts, is estopped in all the circumstances from denying the original term of his contract of employment including his right to 4% commission. FACTS MATTERS AND CIRCUMSTANCES by which it is alleged that the Defendant is estopped from denying the plaintiff's right to 4% commission on sales to targeted clients by it, and made by the Plaintiff. a) The Plaintiff relied on the assurances given to him by the Defendant and in particular Mr Malcolm Ian Mackenzie, at various times during the years 1998 and 1999 that if the Plaintiff continues to approach targeted clients namely the Boral Group of Companies, The Bank of Queensland and The Australian Bureau of Statistics, he would be paid 4% commission on sales to those targeted clients. The Plaintiff repeats seriatim the facts and matters set out in paragraphs 15, 16, 19, 20, 21, 27, 28, 29, 30, 31, 33 and 36 above. b) The Plaintiff in relying on the Defendant's assurances that he would be paid 4% commission and in obtaining the abovementioned agreements from the targeted clients to purchase there [sic] products from the Defendant has suffered a detriment in that he has not received payment of any commission at the rate of 4% of sales for those agreements from the Defendant. c) In these circumstances the Defendant is estopped from denying that the Plaintiff has suffered detriment and that it has behaved through its servants or agents, in the manner alleged. d) The Defendant is further estopped from denying that the Plaintiff is entitled to 4% commission on sales to targeted clients." 12 What was thus claimed was 4% commission on the difference between the yearly total purchases of print product by the Boral Group for the year 1997 and the Bank of Queensland likewise. That is, compared to total purchases from the Respondent thereafter for each year during the life of the relevant contract, not merely for the immediately ensuing year after 1997. 13 In respect of the Commonwealth Census contract the once only amount of $180,800 is claimed. The Appellant was in fact paid a bonus of $20,000 for "bringing in the Census contract". After tax he received $10,600 (Judgment [61] Red, 50). It can be taken that the Commonwealth Census contract was for a twelve month period only, hence the once only nature of the claim; see para 33 of the Summons. 14 On appeal, by Amended Notice of Appeal, there was some shift in the case originally presented, as is apparent from Grounds 1 and 2 quoted below [the bold representing amendments to the original Notice of Appeal]: "1. Bergin J. erred in finding that the appellant's entitlement to a 4% commission on sales generally subsisted only for calendar 1998 when she should have found that this commission arrangement extended beyond 1998 and for the life of the Boral contract, the Bank of Queensland contract and the Commonwealth census contract ("the relevant contracts") or some parts thereof . 2. Alternatively, Bergin J. erred in not finding that the Respondent was estopped from denying the Appellant's entitlement to a 4% commission on sales pursuant to the relevant contracts or some parts thereof when she should have found the Respondent was so estopped. The estoppel was equitable in nature, satisfying all six limbs of the test set out by Brennan J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428 - 429. Bergin J should have made findings as to what was necessary to do minimum equity as between the parties . 15 It will be apparent from the first ground of appeal that the claim that commission extends for the life of the relevant contract is put now in the alternative. The alternative is that commission extends "for … some parts thereof" meaning as can be taken from the submissions from the Appellant, the year 1999 at least. 16 The second shift is the pleading of equitable estoppel rather than estoppel by representation. The relief sought, as put in argument on appeal, was to be moulded to "determine the minimum equity to do justice between the parties". What that required was either 4% commission for "some parts" of the relevant contract, or as pressed, on the basis of an alternative commission arrangement called B2, which was never communicated to the Appellant, based on gross profit for 1999 and 2000. The Respondent took issue with this late change, first because the case below was conducted on a totally different basis so that its belated introduction on appeal would have required the calling of other evidence. This was particularly on minimum and competing equities; see Appeal transcript 73-5. Second, objection was taken to the applicability of equitable estoppel in the circumstances. I will return to that issue later. 17 The remaining grounds of appeal can be summarised so far as they were germane to the submissions put before this Court on appeal, as follows:

(1) The Trial Judge failed to give appropriate weight to the following matters in relation to either the construction of the contract issue or the estoppel issue: (a) The practice of the Respondent regarding entitlements to commission; (b) Letter of 25 March 1998; (c) Evidence of Respondent's own witnesses that the commission was to subsist; (d) Evidence of Respondent's documents were to that effect; (d) Evidence of witnesses regarding the Boral contract; (f) Evidence of the Appellant's witness, that there had been instruction to disentitle the Appellant to commission.

(2) The Trial Judge erred in allowing the Respondent to not produce a critical piece of evidence sought under a Notice to Produce.

(3) The Trial Judge erred in finding in relation to the Appellant's own memoranda that he knew future commission were at the Respondent's election.

(4) The Trial Judge erred in failing to find that a letter backdated to 15 May 1999 was an unlawful attempt by the Respondent to unilaterally alter and deny the Appellant's commission on the Boral contract. In the alternate the Respondent should have been estopped from denying that Plan B2 was the remuneration package.

(5) The Trial Judge erred in finding that the Appellant's pay plan was B3 when it was B2.

(6) The Trial Judge erred in finding that there were only 2 pieces of evidence to base an estoppel. 18 Neither at trial nor on appeal was any claim made by way of quantum meruit on the principles explained in cases such as Way v Latilla [1937] 3 All ER 759, by way of alternative to a contract claim. Nor was there any attempt to argue that a term should be implied into the relevant contract, either by established mercantile usage or professional practice or by a past course of dealing between the parties; compare Deane J in Hawkins v Clayton (1988) 164 CLR 539 at 573. 19 The Respondent took issue with each of the claimed errors in the Trial Judge's reasoning. 20 It is necessary now to turn to the salient facts. These were carefully and comprehensively set out by the Trial Judge and I shall limit myself to their essential detail. It is convenient first to take the background from [3] to [11] of that judgment (Red, 24-6) as all of it is uncontroversial. "3. The plaintiff was born on 17 May 1937. On 2 March q1987 he commenced employment with the defendant as a sales executive in the Laser Printing Division. The defendant is principally engaged in the business of designing and printing business forms for clients pursuant to what has been described in the evidence as contracts for Print Management Services. Such services include the provision of electronic forms, security printing, customer communication services, corporate identity re-branding and national account management. 4. In 1988/89 the plaintiff transferred to the defendant's Banking and Finance Division as a sales executive. During the period 1988/89-1991 the plaintiff earned an average income of approximately $70,000. His salary package was $37,000 plus a bonus and 4% commission on sales attributed to him. In 1991 his salary package was increased to $90,000 excluding any commission or bonus. 5. In about 1993 the plaintiff was promoted to the position of National Manager of the defendant's Banking and Finance Division. His salary package, inclusive of car allowance and expenses, remained at about $90,000 per annum with a living away from home allowance of $10,000. the plaintiff's responsibilities were split between Sydney and Melbourne with such arrangement continuing until 1995. 6. In about 1995 the plaintiff was transferred to the defendant's Canberra office for the purpose of managing the Canberra office and to attempt to obtain the print contract for the 1996 Commonwealth Census. The plaintiff's salary package remained at about $90,000 per annum together with an allowance of $750 per week and a bonus in the sum of $5,000 if the Canberra office budgeted sales of $11 million was exceeded. The defendant obtained the print contract for the 1996 Commonwealth Census, however the plaintiff was not paid any bonus or commission in respect of the winning of that contract. 7. In 1996/1997 the plaintiff's health began to deteriorate and he applied for a transfer back to Sydney. That application was successful and in 1997 he was transferred to the defendant's office sat Rhodes in Sydney with responsibility for special projects business development. The plaintiff's remuneration remained at $90,000, consisting of salary of $67,500 per year and a guaranteed bonus of $22,500 per year. 8. In April 1997 the plaintiff suffered his first heart attack while working on a tender for the bank of Queensland printing contract in the defendant's Brisbane office. He apparently collapsed in his office and was transported to St Andrews Hospital in Brisbane in which he remained for five days. Dr James Cameron, cardiologist, reported on 12 May 1997 that the plaintiff had recently had problems with 'hypertension, and findings on echocardiography of hypertensive heart disease'. Dr Cameron reported that the plaintiff's cardiac condition was considered 'a serious one' and suggested that the plaintiff have a period of approximately two months off work to institute life style changes, to control his hypertension and to undergo further cardiac investigation in Sydney. Dr Cameron recommended that at the end of the two month period the plaintiff should be reassessed as to his cardiac status and his ability to continue working full time. He also cautioned that the plaintiff had to change to part time employment. It is apparent the plaintiff did not take the two months leave suggested by Dr Cameron. 9. In October 1997 the plaintiff suffered a second heart attack while in Canberra on a business trip for the defendant. He attended the Woden Valley Hospital and after discharge from that hospital returned and was admitted to the St Andrews Hospital in Brisbane where he underwent a quadruple by-pass and myomectomy, sectioning of the left ventricle. After this operation the plaintiff claims he convalesced from approximately October 1997 to April 1998. 10. After three months of convalescence the plaintiff had exhausted all his sick leave entitlements and was in financial difficulties. He approached the Human Resources Director of the defendant, David Farrar (Farrar) with a request for an extension of his paid sick leave. Farrar informed the plaintiff that he could either retire or take long service leave. The plaintiff then arranged to take three months long service leave. 11. In March 1998 the plaintiff was contacted by the defendant's then Sales Director, Barry Hughes (Hughes), and invited to attend the defendant's conference at Pinnacle Valley in Victoria. The Pinnacle Valley conference took place in early March 1998 over a period of three days. During the conference the plaintiff had a number of discussions with the defendant's Joint Sales Directors, Hughes and Ian Mackenzie (Mackenzie), during which he told them that he had been negotiating with the General Manager at Boral in relation to Boral changing their procurement methods. The plaintiff informed Hughes and Mackenzie that if he returned to work he would win the print management contract with Boral." 21 The Appellant states to the best of his recollection that he had the following conversation with Mr Mackenzie (Blue, 226) during the three day conference: "Bredel: 'I feel, if I come back, I will change their purchasing methods and will land the deal with Boral and the dollar volumes would be huge.' McKenzie: 'How much is the whole deal likely to be worth?' Bredel: 'I have been told by my contact that it would generate sales between $30 million and $40 million at about $6 million to $8 million per year for 5 years.' McKenzie: 'Jesus Rocky that would be the biggest sale in history. Can you really do it?' Bredel: 'I think so.' McKenzie: 'How long do you think it would take for you to sign them? The Company is in trouble and that sort of money could turn it around.' Bredel: 'About 6 months, maybe longer depending on whether or not we have to go to tender.' I recall having a similar conversation with Mr Hughes." 22 The Appellant also claims that some time after the conversation referred to above he had a further conversation with Mr Hughes at the Conference which he recounts to the best of his recollection as follows: "Hughes: This is the deal Rocky. One, if you return to work you will target securing a print contract with Boral. Two, you will target contracts with other prospective clients as agreed between us. There are plenty more opportunities out there. Three, you will report directly to me through the Company's New South Wales Manager. Four, for 6 months after your return to the Company we will pay you a salary based on $90,000 plus 4% commission on incremental sales over the 1997 purchases by the targeted clients. Five, after that 6 months' period your base salary will revert to $67,000 per annum plus a bonus component of $23,000 if you can do the Boral deal before Christmas, plus 4% commission on incremental sales over the 1997 purchases by the targeted clients.' Bredel: 'Okay. I accept all of that but I will want to concentrate for a few months at least on Boral.' Hughes: 'I will get David Farrar to send something through to you setting the substance of our deal.'" 23 Mr Mackenzie in his affidavit evidence states that while not recalling the plaintiff telling him he had been negotiating with Boral to have it change its procurement methods for business forms, nor words to the effect of "Jesus Rocky that would be the biggest sale in history. Can you really do it?", he does recall saying words to the effect of "How long do you think it would take for you to sign them? We are not travelling that well at present, the contract could turn it around." 24 Mr Hughes, in his affidavit evidence, has no recollection of the first of the two conversations quoted above. On the second of the two conversations he states that he did not have a single conversation but a number. These were condensed into that quotation. He does not specifically dispute its accuracy. He does say that the last-quoted conversation is inaccurate in that he did not say the words in the passage commencing with the words "Four, for six months after …" and ending with the words where they appear a second time "… the 1997 purchases by the targeted clients". 25 What he does contend he said were words to the following effect, during the Pinnacle Valley Conference which are considered with this being a remuneration plan for just the 1998 year (Blue, 255): " Until the end of this year , we'll be paying you your old salary of $67,000 and a commission of 4% on incremental sales to the targeted clients. We'll guarantee your earnings at the 1977 level for six months after your return." [emphasis added] 26 Mr Hughes' account of the conversation is consistent with the memo which came from Mr David Farrar, the Respondent's former Human Resources Manager, as to the remuneration terms he said he had agreed with the Appellant, and which he states accurately sets out those terms. The Trial Judge rejected the plaintiff's evidence that he regarded the 25 March memo as "inoperative" and also his submission that it was "rejected" by him. She concluded that "the evidence is in my view overwhelmingly against such a position" (Red, 79 [141]) evidence which she carefully reviews by reference to the Appellant's own correspondence in 1998 and 1999 where he expressly relies upon that memorandum with no mention of any rejection then or otherwise. I quote below this important memo of 25 March 1998: " Subject: 1998 Remuneration Plan As discussed, this memo is to confirm for you your remuneration plan for 1998. You will be paid 4% commission on the incremental business sold to the accounts attached in 1998 beyond the amounts sold in 1997. Your total pay will be guaranteed to be no less than your 1997 monthly earnings for a period of six months from March inclusive, i.e. until the end of August. You will report directly to Ian Mackenzie. Your shipments budget for 1998 is $2,000,000 and we look forward to seeing your account plans and progress toward that target. Please sign and return to me a copy of this memo as acknowledgment of your understanding of your terms. Best regards, [signed] David Farrar Human Resources Director" 27 There are significant variations between the above stated "1998 Remuneration Plan" and the disputed items "four" and "five" from the Appellant's claimed conversation with Mr Hughes. First, it is clear from the memorandum that this is a remuneration plan for 1998 and does not purport to cover any subsequent year. Second, the 4% commission on incremental business is in the memorandum clearly limited to incremental business sold in 1998. It does not, unlike the Appellant's version of his conversation with Mr Hughes, provide for commission so to continue thereafter. 28 The Trial Judge (Red, 80 at [145]) makes a finding which was not essentially challenged on appeal: "145 I am satisfied that the plaintiff's compensation plan for 1998 was as stated in the 25 March memo and the memo from Farrar to the plaintiff dated 2 October 1998 and the letter containing the list of accounts (Ex. 1). That plan relevantly entitled the plaintiff 'for 1998' to 4% commission on the incremental business sold beyond the amounts sold in 1997 to the accounts contained in the list ultimately agreed. There is nothing in this memo and I am satisfied nothing in the conversations at the conference that would entitle the plaintiff to the declaration that he is entitled to 4% commission on incremental sales over 1997 for the life of each of the contracts." 29 The Appellant on appeal argued only faintly that the 4% commission on incremental sales over 1997 extended for the life of each of the contracts. The Appellant sought rather to contend that the contractual position as at 1998 "rolled over" to 1999 so as to apply in the events that happened, at least to incremental sales made in 1999. That this was by reference to sales in 1997 as the benchmark year, not 1998, is itself a difficulty with the plausibility of that contention. No doubt with an appreciation of the contractual difficulties of that position, the Appellant pressed an argument based on estoppel; indeed for the first time on equitable estoppel rather than estoppel by representation, having failed to establish the latter. 30 Dealing first with the contractual position, it is necessary to return to events and correspondence following the memorandum of 25 March 1998. 31 On 21 August 1998 the Appellant wrote to Messrs Mackenzie and Hughes with a letter headed "Salary" in the following terms: "As you are aware, the ugly subject of salary has arisen as I approach the end of my initial six months following my return. I have a letter from David Farrar attached) dated 25.3.98 setting out a shipments budget of $2,000,000 and guaranteeing a salary to be no less than my earnings in 1997. As you know, I have focused on four particular accounts with a view of bringing them to Moore on a Print Management basis. Those four major accounts have been:- 1. Boral 2. On Demand 3. Employment National 4. Merck, Sharp & Dohm ….. " [He then lists activities in relation to Boral 'the number one target before coming to the critical passage below.] To further complicate the issue, I am unable to sustain a loss in income due to my future retirement benefits. Unfortunately Ian, you were misinformed by Human Resources of the final 3 year role. A check with John Muir (and my solicitor/accountant) agrees that only the final 3 years count for the average. Consequently, I am not in a position to continue should my salary drop $22,000p.a. and diminish my final average. It would have a disastrous effect. I am therefore, going to ask that my salary continue at its present rate for the last quarter, or at least until the $10 million Boral tender is awarded. The monetary figure involved is only $5,500 and for that amount it seems inconceivable that Moore would destablise [sic] me at this late stage. I am aware that this subject is currently under discussion and I ask that it be finalised one way or another to allow me to consider my options before the salary drop affects my benefits. I would dearly love to bring Boral to completion for both the company and myself. As you know, I am particularly confident of this enhanced bid and of course would back this confidence with some kind of payback situation when full benefits flow (probably Jan/Feb 1999). …." 32 That elicited a response from Mr Farrar. the Human Resources Manager, a copy of which was sent, inter alia, to Mr Mackenzie, on 22 September 1998 in the following terms: " Subject: 1998 Bonus Potential Dear John, As discussed, this is to confirm for you your further bonus potential for 1998. Moore will pay you the remainder of your currently unearned bonus potential for 1998 on the successful signing of a Forms Management Contract with Boral. The contract needs to be for a minimum of $3,000,000 shipments per annum in the first year, and Moore reserves the right to subtract the bonus paid from future earnings in the event that the shipments do not happen. This bonus only applies if the contract is signed before 31 December, 1998. If you have any questions please let me know. Regards, David Farrar Human Resources Director " 33 The events which follow are then conveniently taken from the Trial Judge's account. Important is the quoted memo of 2 October 1998. It makes continuance of the extra salary ($22,000) for the last four months of 1998 (or $5,500 gross per month) contingent on a contract with Boral being successfully signed in the remainder of 1998. Such contract had to be for a minimum of $1,000,000 shipments per annum in the first year instead of the $3 million per annum in the first year, as earlier stipulated in the memo of 22 September 1998. I would add that the first year of shipments would necessarily extend into 1999 as the contract would already be in the latter part of 1998 if signed at all. I quote now from the judgment (Red, 30 [21] to [25]): "25. On 23 September 1998 the [Appellant] wrote to Mackenzie. In that letter he stated 'as you know in recent weeks I have attempted to preserve my retirement benefits by preventing my salary from decreasing until the delayed Boral deal is signed'. After confirming that Mr Mackenzie was aware of causes of the delay the plaintiff continued. 'it has impacted on me by the expiration of my salary guarantee'. The letter continued 'I had asked that my guarantee continue until Boral is signed and a payback arranged should it not be signed . Several days ago I was informed that the remainder of my 1998 salary would be paid on the signing of a contract'. The [Appellant] complained that 'the controllers of my salary wish to impose conditions that (1) the contract be signed by 31 December, (2) that a minimum of $3,000,000 shipments be delivered in the first year and (3) that Moore reserves the right to subtract the 'bonus' (restoration of salary) in the event that these shipments do not happen'. The [Appellant] stated that he did not want to be humiliated. 26. The [Appellant] then met with Mr Mackenzie. At that meeting there was a teleconference call to Mr Farrar. Mr Mackenzie's evidence was that the [Appellant] was 'upset' about the stipulation for $3 million minimum shipments to Boral and that he informed Mr Farrar that it could not be done. Mr Farrar said 'it has to be signed by 31 December'. The [Appellant] then asked 'suppose it goes into next year' to which Mr Farrar responded 'well that's a different ball game. This is for 1998'. The [Appellant] received a further memorandum from Mr Farrar reducing the minimum shipments to $1 million but maintaining the stipulation that the contract had to be signed before 31 December 1998. That memo dated 2 October 1998 was in the following terms [Blue 30]: Subject: 1998 Bonus Potential Dear John

As I believe you have discussed with Ian, this is to confirm for you a change to your further bonus potential for 1998.

Moore will pay you the remaining currently unearned bonus potential for 1998 on the successful signing of a Forms Management Contract with Boral. Following your discussion with Ian, and the assessment of the projected shipments for this year and next year, the contract needs to be for a minimum of $1,000,000 shipments per annum in the first year. Moore reserves the right to subtract the bonus paid from future earnings in the event that the shipments do not happen. This bonus only applies if the contract is signed before 31 December 1998.

If you have any questions please let me know. 27. The Boral negotiations stalled in late 1998 because the person with whom the [Appellant] was negotiating at Boral, Dominic Severino (Severino), took approximately one months leave in about September/October 1998.

28. In October 1998 the [Appellant] discussed with the Australian Bureau of Statistics (the ABS) representatives a planned visit by ABS representatives to Wodonga on 4 and 5 November 1998 in relation to the planned Census. That visit took place and a dinner was held at the Country Comfort Inn, Albury on 4 November 1998. A number of representatives from the [Respondent] were present including the [Appellant], Mr Mackenzie and his wife, and Mr Mike Letch (Letch). ….. During the dinner the [Appellant] discussed with the ABS representatives the topic of the ABS reverting to the original design for the Census. If this was to be achieved it would make the choice of the [Respondent] to provide the print management for the Census more likely because it was apparently the only company in the industry that had the machinery and the capacity to produce the Census in that particular design. This agreement was achieved during the dinner and the [Respondent's] minute recorded that "the importance of this method of construction is that it eliminates 99% of competitors" (Ex 4).

29. After the dinner the plaintiff had a discussion with Mr Mackenzie in the presence of Mr Mackenzie's wife and Mr Letch (the Albury discussion). The [Appellant] gave evidence that he informed Mr Mackenzie of the ABS agreement and said "Ian this means that only Moore can produce it again and like 1996 I will get you another $1.5 million profit" to which Mr Mackenzie responded "I will see to it that you get at least $50,000 commission". The [Appellant] gave evidence that he then said to Mr Mackenzie "Ian, on my commission, I will earn over $200,000" to which Mr Mackenzie responded "at least $1.5 million profit, it will be worth it". In December 1998 Mr Mackenzie appointed the plaintiff Project Manager responsible for the research, planning and negotiation of the design and printing of the Census.

30. On 9 November 1998 the plaintiff wrote to Mackenzie in relation to his "remuneration adjustment" [Supplementary Blue, 292, transcribed]. That letter included the following: In October my salary was reduced by the commission component ($1,833 per month). As you know I have been on a flat or guaranteed salary for the past 5 years (or more) as my commission would have far exceeded any salary plan. The plan formulated by David Farrar had included a commission component for product. During the last six months opportunities have presented themselves which currently do not involve product but more to project development. For example, the Census will produce an income in excess of $4 million - but late in 1999/2000. Boral has been delayed by circumstances beyond my control but will now probably commence in April 1999 with the major cash flow to follow in six months when full implementation takes place. ANZ will be a huge project with a long gestation period prior to a very large financial opportunity. These three "special" projects will consume my time and I would ask that my salary be restored to its normal guaranteed $90,000 pa. I am of course prepared to be measured, like any other employee, perhaps milestones or hurdles with a payback should they not be reached... Any success fee for contracts in excess of say $3 million to be negotiated. Ian as you know I am very anxious to preserve my level of salary for an average over my last 3 years. Should any of this prove too hard perhaps our original conversation of early retirement and consultancy fees could be examined - but I do prefer the salary adjustment back to what it has been for the past five years." 34 The negotiations with Boral recommenced in late 1998. Following a formal presentation of the Respondent's tender proposal carried out by the Appellant on about 14 May 1999, the Appellant was advised by telephone on 21 May 1999 that he could officially announce that the Respondent had won the contract with Boral. At a social function on that day, the Appellant did advise a number of the executives of the Respondent and then it was publicly announced with other executives being informed by 24 May 1999. Mr Severino's Assistant, Janet Pursehouse, sent a faxed confirmation on behalf of Boral on 27 May 1999 in the following terms: "Dear Mr Bredel,

Re: Provision of Print Management Services to Boral

I am pleased to advise that Boral has selected Moore Business Systems Australia Ltd for the provision of Print Management Services, as described in your proposal of 12 March 1999 (RFI), tender response of 4 May 1999 and subsequent correspondence.

It should be noted that this decision is subject to your signing a formal agreement with Boral, as per clause 16 of the RFI document.

Thankyou for your efforts throughout the tender process and I look forward to developing an effective business relationship." 35 The Appellant immediately took the fax to an executive of the Respondent, Mr Wells, who made several photocopies and faxed one to Mr Mackenzie in Melbourne and posted copies on several notice boards around the office; Judgment Red, 36 at [36]. 36 I pause to dismiss one matter that was but faintly argued by the Respondent. It was that no contract was ever entered into with Boral, with consequential disentitlement to commission. The short answer is that commission, if otherwise payable, was based on "incremental business sold", not on the signing of a contract. Incremental business was undoubtedly sold to Boral. Second, no argument was able to be plausibly put against the proposition that there was a contract constituted by the letter of 27 May 1999, coupled with the accepted tender followed by performance. No-one evidently fell any necessity to have any further formal contract signed, itself supporting there already being a contract requiring no further formality. 37 Next day, Friday 28 May 1999, the Appellant received a document (Blue, 32) from the Respondent dated 15 May 1999 signed by John Muir, the then Human Resources Manager, and unusually, also signed by Ian Mackenzie. It was addressed to the Appellant in the following terms: "I am pleased to advise you that, effective from 1 April 1999, your salary will be $80000 per annum. In addition you will be paid commission on new business, copy of B3 plan is attached. Parameters of the commission structure will be discussed by your manager. As you know, ownership of the Company changed on 1 January 1999, and it is our intention to continue the practice of 'pay for performance' and be market competitive in our remuneration programs. During the balance of 1999 we will be reviewing our remuneration practices. It is our intention to administer the program to tie in with the Company's financial year. Thank you for your efforts and contribution to Moore. Yours Sincerely Moore Business Systems Australia Ltd. [signed] [signed] John Muir Ian Mackenzie Human Resources Manager Sales Director" 38 The attachment to that letter was in the following terms: "1999 Sales and Sales Support Profit Participation Plans PLAN B3New Business Development Manager Plan Sales role · Nil established business · Longer sell cycle · New Signings

Estimated Annual Shipments Payment

0-$0.5M $0 Commission and Bonus Plan Elements $0.501M - $1.0M $5,000

$1.001M - $2.0M $10,000

$2.001M + To Be Negotiated

39 At the bottom of Plan B3 appears the following words: "This plan substitutes and supersedes any compensation arrangements which may have previously been applicable. This plan may be subject to modification at any time as deemed necessary to deal with unanticipated effects or to meet the changing needs of the business. This plan becomes part of the representative's employment agreement." 40 The Trial Judge made a number of findings and inferences all of which I would accept, concerning that communication and the earlier plan designated B2. She did so in the context of what was described as "the 1999 Remuneration Review" (Judgment, [96] to [122], [161] and [167]). She concluded that Plan B2 was initially intended for the Appellant, it being so decided not earlier than 14 May 1999 and partially acted upon. But it was never communicated to him that Plan B2 existed, let alone that it was being replaced by Plan B3. Plan B3 was only communicated to him on 28 May 1999, having been backdated to 15 May 1999, in the circumstances elaborated below. 41 Plan B2 contained both the box quoted above for "new signings" but also a box not included in B3 headed "Incremental Business". 42 The latter provided for a sliding scale of commission starting at 4% on gross profit in excess of total budget escalating to 8%; see Blue, 331 and 383. 43 Plan B2, like Plan B3, provided for an increase in base salary from $68,000 to $80,000 backdated to 1 April 1999. That increased salary was actually paid in an amount of $1,666.66 (Blue, 109L) before Plan B3 was communicated. Plan B2 also contained authorisation to lend $7,500 against the Appellant's salary, as he had requested, to cover some share dealing. That too was done. 44 The Trial Judge concluded that notwithstanding what was done with regard to B2 it was never operative so far as any agreement with the Appellant was concerned. Instead the Respondent communicated a different remuneration plan, B3 with a letter bearing the date 15 May 1999, but backdated to that date. She found that this letter was signed after the success in obtaining the Boral contract was known to the Respondent, that is to say was signed not before 24 May 1999; see conclusions Judgment, [115] and [116] (Red 70) and earlier in relation to the Plan B2 at [120] (Red, 72). 45 The Trial Judge recounts that Plan B3 followed a conversation between Mr Griffiths (then Financial Sales Administrator) and Mr McDonald (interim Managing Director) wherein Mr McDonald said that there was no way he would pay $1.6 million on a $40 million contract so he had Mr Griffiths prepare the Plan B3 specifically tailored as the Trial Judge held for the Appellant; Judgment, [102] to [103] (Red, 64-5). The inference is overwhelming that the Respondent, conscious of the size of the commission that would have been earned under Plan B2 chose to ensure the Appellant would neither get such a commission nor the original 4% commission applicable in 1998. By then the successful landing of the Boral contract was known. So too the likely magnitude of the gross profit. By substituting Plan B3 this left the Appellant merely with the prospect of a payment of $10,000 for up to $2 million of estimated annual shipments with anything above "to be negotiated". By backdating the letter to 15 May 1999, this furthered the pretence that it pre-dated the Boral success or any knowledge of it by the Respondent. Its retrospectivity to 1 April 1999 reinforced this. But that date was also the date applicable to other employees following their review. It evoked, as one would expect, furious protest from the Appellant; indignant at the way he was being treated. 46 The protests from the Appellant were such, as I explain below, that I consider that he never accepted the substituted commission arrangement though he did not refuse the increased salary. In that regard I do not agree with the Trial Judge's finding at [167]: "167 Although the plaintiff was originally 'furious' when he received the 15 May letter he continued working and accepting the increased salary. He retains those payments until today. I agree with the defendant's submission that the protest is hollow. No real effort was ever made to pay back the increases." 47 The objections, vociferously and understandably expressed by the Appellant, are elaborated in the Appellant's affidavit; paras 41 to 44, Blue, 15-16. Thus he spoke to Mr Mackenzie immediately after receiving the memo saying, "I've just received your memo changing my pay scheme. This is a rort. What are you trying to do?" He also protested to Mr Colin Wells, the New South Wales State Manager, making unmistakeably clear his protestation at the Respondent "trying to change my commission". 48 On 25 June 1999 he suffered his third heart attack in the employ of the Respondent. He underwent surgery and remained in hospital for approximately six days. On 2 July 1999 he wrote to Mr Muir, the Human Resources Manager, and Ian Mackenzie. Again he makes crystal clear that while he appreciates the rise in basic salary from $68,000 per annum to $80,000 per annum he is "unable to accept the 'B3 commission adjustment from my previous 4% on incremental sales' and that he 'consequently must reject the offer'". He adds "I have been instructed to return all increase in salary paid on the 15th June 1999 and would appreciate a figure being advised to enable me to do so in the near future". He appoints a financial adviser Mr Czinner to act on his behalf in future negotiations. 49 At that point the Respondent involves its solicitors, Mallesons, and there is further exchange of correspondence. The approach of the Respondent is to resist any attempt to obtain any greater commission than B3 allowed. That becomes evident in a letter from the Company's secretary, Mr Wadey, dated 26 November 1999 (Blue, 62). Mr Wadey puts a number of propositions to the Appellant, which can be summarised as follows: (i) the basis of the 4% commission incentive was that it be paid on the incremental business sold in 1998 over 1997 but ceasing thereafter in accordance with its terms; (ii) as sales to Boral in 1998 were $41,000 down from 1997 sales of $129,000 no commission at the 4% rate was paid or payable in 1998 as the incremental business was negative; (iii) the "guaranteed commission for six months until August 1998" was not payable as it was applicable only if the contract with Boral was executed before 31 December 1998. As it was not executed before 31 December 1998, remuneration for 1999 continued only at the base salary rate of $68,000 pending finalisation of the 1999 pay scheme; (iv) it was agreed to make a further $7,500 advance commission on the still yet to be signed Boral contract; (v) the letter dated 15 May 1999 advised of the remuneration scheme for 1999 including an increase in base salary of $12,000 and what Mr Wadey describes as "scope for significant bonus/commission earnings given the still imminent conclusion of the Boral contract and several other identified potential new signings"; (vi) the Boral contract remains unsigned;

I comment that this was a particularly transparent attempt to deny the Appellant even the B3 commission given that there clearly was a contract with Boral, as earlier explained. (vii) it is acknowledged that "there would appear to be two aspects of this scheme [B3] which remain uncertain and require further clarification" namely the mechanism and who determines the estimated annual shipments for potential new signings and, importantly, "the criteria for and who determines the appropriate payment for new signings with an estimated annual shipment in excess of $2 million where the words 'as negotiated' are stated." (viii) As regards B3, "to clarify any possible ambiguity the following clarification is submitted: (i) each potential New Signing is allocated an Estimated Annual Shipments (EAS) $ figure for the initial year of the potential contract …" [emphasis added] 50 Not surprisingly the Appellant responded by stating again that he "was unable to accept the unilateral decision to diminish my potential earnings by a large amount", and reiterated his offer to return any payment made from June and confirmed that he still awaits the response to that request, protesting at "the decision to retrospectively change my remuneration by such a huge amount downwards" and referring to "the coincidence" of the Boral contract just preceding his receipt of the letter. 51 He protests also at the words "initial year" referred to in (viii) above as not appearing, as he rightly says, anywhere in the letter containing B3. 52 He then highlights the sharp practice of the Respondent in these paragraphs, which deserve to be quoted in full: "The conditions of my remuneration, set out in David Farrar's letter of 28-3-98, were well known to, and widely discussed with, various senior managers, none of whom raised the spectre of changed remuneration until after the account was won. A perusal of my pay notification slips for January, February, March, April, May 1999 show a continuation of my 1998 remuneration. Not a word, hint, or suggestion was made that I was not on the same package as in 1998. In fact over the past 7 years no change, other than that imposed by David Farrar on 28-3-99, was made nor notified. As far as 'clients practice' is concerned mine is demonstrably shown to be one year running into the next. It is remarkable that on the very day a $40 million tender was won by me that a huge reduction of my earnings potential should occur. During the three weeks prior to the official notification on 27-5-99 I had indicated our imminent success to the Managing Director, Sales director, Financial Director, State Manager, and Business Services Manager. All were fully aware that my 'enhanced' bid, 12 months in the making, was about to succeed." 53 Sharp practice as it was, an intractable obstacle remained in the express terms of his 1998 employment contract. The clear terms of the memorandum of 25 March 1998 relates only to incremental sales in 1998. That commission on its plain terms was payable by reference only to incremental sales in 1998, compared to 1997. That position was unaffected so far as 4% commission is concerned by any subsequent memoranda, which related only to the so-called "guaranteed commission" terms involving this extra $22,000. The contract in its terms is clear; it is not concerned with incremental sales after 1998. Indeed if the contract were to go beyond 1998 sales in terms, or roll over in some undefined sense, there is an immediate difficulty. As the Trial Judge said "if it was to 'roll over' one unanswered question is, against which years sales were the incremental sales to be measured. Was it 1998 or 1997? … to which accounts would such an arrangement relate?" (Judgment [165], Red, 87). I would add that if the benchmark for calculating the incremental increase were 1997, that much lower benchmark would operate unduly generously to the Appellant, where sales markedly increased in succeeding years. There is no logic for substituting 1998 as the benchmark year. If the benchmark were instead each immediately preceding year, there is simply no warrant in the words used. One can envisage the temporary continuance into 1999 of his monthly remuneration by way of fixed salary, as occurred. That does not entail such carry over for commission or overcome the difficulty in reconciling it with the contract. 54 For reasons unexplained, any claim outside contract in terms of quantum meruit was abandoned at trial. Nor was any implied term pressed beyond that the salary arrangements were understood to "roll-over" into 1999, until replaced. 55 In unequivocal terms the Appellant did reject the substituted remuneration plan B3 for commission. In so doing he forewent the possibility of attempting to give content to the words "to be negotiated" though there would have been difficulties in so doing. This the Trial Judge recognised in recording the submissions of the defendant (at [168]) and the fact that the plaintiff was then pressing for 4% commission on incremental sales "for the life of" the named contracts; (at [169]). 56 There is however a matter which emerges at [164] of the Judgment (Red, 86) to which much of the Appellant's argument on appeal was directed. Essentially the Trial Judge concluded that the Plaintiff asked to remove his 4% commission, substituting the higher fixed salary of $90,000. I quote [164] below: "164 There is no doubt that the defendant was entitled to review the plaintiff's remuneration for 1999. I am also satisfied that the plaintiff understood that is just what was to be done as evidenced by his 9 November 1998 letter to Mackenzie. Even if the peculiarities of the way in which the plaintiff's salary was reviewed lead to a conclusion that the defendant was motivated to remove the 4% commission, it must be remembered that it was the plaintiff who asked for the change. In his letter in relation to his "remuneration adjustment" on 9 November 1998 he requested restoration of a "guaranteed salary" which I am satisfied was intended to be in exchange for removal of the bonus and commission. His review was consistent with what he had asked for except that the difference between $80,000 and $90,000 was not guaranteed, it had to be earned by new signings with a bonus for contracts over $2 million to be negotiated. 57 The written submissions from the Appellant (paras 12 to 23, Orange, 5-7) demonstrate that a fair reading of the correspondence and associated evidence was this. That in requesting a restoration of a "guaranteed salary" in order to maintain his remuneration at the maximum for the last three years for superannuation purposes, he was not, contrary to the conclusion of the Trial Judge, intending to give up his full commission rights. Such a surrender in return for that advance on bonus in terms of guaranteed salary to the end of the year simply makes no sense. The amount involved for the remaining months of September to December 1998 was only some $5,500. It would be absurd to suppose that the Appellant would have wished to forego the later prospects of a 4% commission for so small a sum. That sum, as also the $7,500 advance were simply advances on commission when earned and were repayable if not earned. 58 I agree that as the end of August 1998 approached, it was clear landing the Boral contract was going to be delayed. But I would readily infer that it nonetheless remained in the Appellant's mind as a sound and highly valuable prospect with consequent expectation of a substantial commission. The Appellant's remuneration was due as of the end of August 1998 to fall from $90,000 to $67,000 according to the terms of the 25th March 1998 memorandum (Blue, 28). It was with an eye to the pension plan implications in terms of lowering his final average pay, that the Appellant wrote the first in a series of three letters dated 21 August 1998 (Blue, 239 at 241D-G). That letter shows he was principally concerned to preserve undiminished an average salary for 1998 so as not to dilute the three year average for maximising his pension entitlements (see Blue, 126). Thus the Appellant said in his letter: "I am unable to sustain a loss in income due to future retirement benefits … I'm therefore going to ask that my salary continue at its present rate for the last quarter, or at least until the $10 million Boral tender is awarded". [emphasis added] 59 Reference to "the last quarter" and the word "until the $10 million Boral tender is awarded", indicates that had Boral tender been awarded say in September 1998, the Appellant still expected to be paid his commission at 4%. However, there would be hardly likely to be any significant incremental deliveries in the few months remaining of 1998 for the new Boral contract. The incremental effect of the contract would only be felt in 1999. He was not, I infer, foregoing his anticipated 4% commission, payable against incremental sales in 1999, though that still depended on the 1999 review. Rather he was giving credit for what was an advance on that anticipated commission in terms of addition to salary. The second letter in the series dated 23 September 1998 (Blue, 236M) simply repeats this theme where the letter says: "…I have attempted to preserve my retirement benefits by preventing my salary from decreasing until the delayed Boral bid is signed". [emphasis added] 60 The remaining evidence is conveniently set out at paras 17 to 22 of the Appellant's written submissions, which I quote below: "17. conversations immediately preceding (3 days) the writing of the letter of 9 November, 1998 show that the Appellant still considered himself to be entitled to commission on 'landing' his large contracts. Mr Letch (the chief estimator of the Respondent) said at black 217 at 14 that he recalled the Appellant bringing up the question of his commission entitlement at a meeting between him, Sales Director Mackenzie and the Appellant, and Mackenzie agreeing to pay commission. He could not recall the details as to quantum of commission. This meeting was at Albury on 6 November, 1998. Mackenzie (at black 357 line 25) could also recall the meeting. He agreed this question of paying commission could have been said. The Appellant said he speculated that his commission would be in the order of $200,000 (black 93 at 5). 18. Against this background, the letter of 9 November, 1998 was written. The Appellant was about to be paid for October at the reduced rate on 12 November. Blue 104W shows the Appellant's October payment of $7,547 gross was about to be reduced and was indeed reduced to $5,666 at 105W. The difference is approximately $1,800 which the Appellant had foreseen. He did not wish his pension plan to be affected. The letter was thus written in that context. He was prevailing upon his employer not to upset his averages, but he was not , as found, surrendering the 'real incentive' for which he returned to work. 19. The Respondent's own company secretary agreed that the letter was taken by him to refer to the last quarter of 1998 - see Black 325 line 26-29. 20. There was also evidence given concerning the existence of the 'current remuneration spread sheet' (Black 253 line 2), which was a payroll record showing that as at April 1999, the Appellant was still on commission. This document was called for (Black 253 line 40), but not produced, wrongfully it will be submitted. 21. It is to be observed that during the conversations held between Griffiths, MacDonald and Mackenzie in April 1999 (Black 432 - 446) about the appellant's change of remuneration, no-one mentions the letter of 9 November as a reason to take the Appellant 'off commission'. The answer is self evident, no-one placed the interpretation on that letter which her Honour did. 22. Further, if her Honour's conclusion was correct that the letter was referring to the indefinite future, why would B2 have even come into existence? The fact that the Respondent devised B2 illustrates that it did not take the Appellant's letter of 9 November in the manner suggested." 61 I agree with the Appellant's submission that in light of this evidence, it was not open to her Honour to find that the letter of 9 November 1998 extended beyond the signing of the Boral contract and was in substitution for the 'real incentive'. 62 I thus conclude that the Trial Judge was in error in so finding. But this was but a make-weight reason. It was not necessary for her overall conclusion, clearly correct, that the Appellant was not contractually entitled to commission for either the remaining years of the Boral contract or just for 1999 under the 4% commission terms. These only applied for incremental sales in 1998 and not sales thereafter. The same applies to the Bank of Queensland and Census contracts by parity of reasoning.

RECAPITULATION OF CONCLUSIONS ON CONTRACTUAL BASIS 63 While the Trial Judge was in error in drawing the inference she did that the Appellant was motivated to forego his right to commission in the manner set out above, the question still remains whether, in the events that happened, the Appellant was entitled to commission. The contractual position is, regrettably, clear. There was no contractual entitlement to 4% commission on incremental sales for the life of the relevant contracts, nor indeed for 1999. The Appellant refused the substituted and less generous basis of commission under the specially tailored B3 plan, backdated as it was in terms of when it was sent to him. 64 I agree with the finding of the Trial Judge that the disputed versions of the conversations that occurred at the Pinnacle Valley Conference have not been shown by the Appellant to give rise to any different or wider contractual entitlement than as set out in the memorandum of 25 March 1998. 65 The further argument that the terms of the 1998 remuneration plan "rolled over" into 1999 may be true enough so far as the base remuneration paid into the Appellant's bank account. But it did not go so far as to support a continued contractual entitlement to 4% commission, there being no case put based on contract justifying such a conclusion. 66 It is true that this result is a harsh one. It also involves the consequence that as 1998 drew to an end, any incremental business arising from the Boral contract signed in the last months could only reflect itself in 1999. That, no doubt, is why the Appellant expected the 1999 remuneration plan to be on similar lines to his 1998 terms. Indeed B2 would have been on similar lines, though substituting a gross profit basis, had the Respondent not decided at the last minute to substitute B3 at the Appellant's cost. But B2 was never contractually operative nor the B3 commission plan accepted by the Appellant, backdated as it was to 15 May 1999 and expressed to be effective from 1 April 1999. 67 The new commission structure, had the Appellant accepted it, might have provided him with some basis for negotiating an additional amount. This is under the category of "new signings" above $2 million, where the commission is "to be negotiated". But he would have been faced with the difficulty of whether the words "to be negotiated" carried with them more than an obligation to negotiate in good faith. As I have said, the Appellant never put a case in quantum meruit in respect of the period up to the date of his receiving the letter of 15 May 1999, namely up to 28 May 1999 when the Boral contract had come home, as he might have done.

ESTOPPEL BASIS 68 Thus the Appellant did attempt on appeal to put a case, but for the first time, based on equitable estoppel. This was clearly distinct from the case put at trial, of estoppel by representation. The Appellant attempted to show that he satisfied the six probanda for equitable estoppel, as enunciated by Brennan J in Waltons Stores (interstate) Ltd v Maher (1988) 164 CLR 387 at 428-9. He claimed relief no longer on an all or nothing basis, "but sought the minimum equity to do justice between the parties". The passage relied upon is quoted below: "In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed or expected that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs." [per Brennan J at 428-9] 69 The Respondent justifiably objects to so radical a shift in the basis for the Appellant's case as argued below. The Respondent correctly points to the fact that if equitable estoppel had been argued below, it could have led evidence about the competing equities and what is the minimum required to do equity; see Transcript on Appeal at 74.17. Moreover there was no such lesser relief sought below so that there can hardly be ground for alleging error by the Trial Judge in failing to consider it. I agree that the Appellant may not now introduce this new basis for its case. While argument on appeal may, particularly in a novel case, permit shifts in emphasis in the way the argument is put (Yorta Yorta v Victoria 77 ALJR 356 at 363 per Gleeson CJ), this is not a novel case. Moreover Gleeson CJ's observations clearly recognised that this latitude does not arise where the conduct of the proceedings below precludes such a shift, involving here the clear possibility of such shift calling for additional evidence in response. But even if such latitude were allowed there are fundamental difficulties in the way of making out equitable estoppel, to which I turn. These were briefly addressed by the Respondent. 70 One such difficulty is establishing that "the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled". At para 37 of the Appellant's written submissions it is stated that "the relevant detriment was working for the Respondent under an erroneous belief induced by it that commission would be paid. Non-payment of commission is the non-fulfilment of the expectation". It was also put that the parties were in unequal bargaining positions so as to invoke the doctrine of unconscionability in Commonwealth Bank of Australia v Amadio (1983) 151 CLR 447 by reason of their unequal bargaining positions. But that is wrong. An unequal bargaining position, even if made out, is not by itself sufficient to establish the necessary special disadvantage. As Mason J explains, the relevant disability must "seriously affect the ability of the innocent party to make a judgment as to his best interests" (at 462). There is no such disability here. The Appellant was a forceful, resourceful individual, well able to make such a judgment. 71 An initial difficulty in establishing the relevant detriment ("working for the Respondent") lies in its implicit assumption. It is that the Appellant was induced to go back to work for the Respondent to his detriment, rather than take early retirement following heart problems. But the Appellant, as the Trial Judge sets out at [177] of her Judgment, was actually better off in financial terms by coming out of retirement for ill-health and working. The Trial Judge at [177] (Red, 94) explains why his going back to work was not to his financial detriment: "177 The plaintiff claimed that the detriment he suffered by staying on with the defendant from July 1999 was that he lost the benefit of a medical retirement. It is submitted that such a retirement at 75% of the average salary earned in the last three years would have meant the plaintiff was entitled to an amount of $69,750 per annum, which he claims was more then the amount he received from the defendant. From March to September 1998 the plaintiff was paid at the base rate of $90,000 per annum and then from September 1998 to 1 April 1999 at the base rate of $68,000 per annum. From 1 April 1999 to 22 March 2000 he was paid at the base rate of $80,000 per annum together with the $7,500 advance and the $20,000 bonus. I am satisfied there was no financial detriment suffered by the plaintiff in staying in employment with the defendant. I am also satisfied that the plaintiff did not lose any entitlement to retire on medically unfit grounds. That remained available to him so long as he could qualify for such a retirement. The continuation of his employment did not remove that entitlement." 72 Irrespective of any later inducement, if such were made, the Appellant had agreed to return to work on the basis of the contractual arrangements first recorded on 25 March 1998. These did not hold out any prospect of 4% commission on incremental business sold after 1998. There is no evidence that he would have retired from employment once he re-commenced, had he known that his commission was at risk were the contract not signed in 1998 but 1999. 73 The most that could be said is that he might have been inclined to use such leverage as he had to bring about a replacement remuneration and commission basis for 1999 which gave him a comparable commission to 1998 before he brought home the Boral contract. This is had he realised that the Respondent company would vary the terms of the remuneration for 1998 when it came to equivalent terms for 1999, in the manner it did. However, understandably, no such case was argued. There would be formidable difficulties in the way of doing so not least that he would have been in potential breach of his duties as an employee had he desisted from achieving the Boral contract till his own position was secured. 74 There is a second difficulty. It is the defendant's "unconscionable conduct which gives rise to the equity". It consists of "the leaving of another to suffer detriment occasioned by the conduct of the party against whom the equity is raised" (Walton's case (supra) at 426-7 per Brennan J). What is the conduct of the Respondent here which is said to occasion the Appellant's detriment? It is not representational, for the reasons reached by the Trial Judge ([170] to [176] Red, 89-90). Thus Mr Mackenzie in July 1999 may have said to the Appellant that he "would be covered". But even if said, this was simply too vague and imprecise to ground the necessary expectation, assumption or belief (Foran v Wright (1989) 168 CLR 385 at 410-11). Nor would the expectation, assumption or belief, if based on that representation, be reasonably induced by it; see "Meagher Gummow & Lehane's Equity, Doctrines & Remedies", 4th ed R Meagher, D Heydon, M Leeming (LexisNexis Butterworths, 2002) at 17-050 and the authorities there cited. 75 Given that the conduct relied on by way of inducement of an expectation, assumption or belief is not to be found in positive acts of representation by the Respondent then all that is left is that the Respondent impliedly induced the Appellant's expectation of a 4% commission or, perhaps, something equivalently attractive. This would have to be by letting him proceed with his sales effort to bring the Boral contract to fruition, knowing of his expectation and not disabusing him of it. There are, however, two difficulties for the appellant, the first a threshold one. It is that the second of the Walton probanda - inducing the assumption or expectation - must require, if not positive acts of inducement then at least acquiescence in the assumption or expectation, mistaken as it may be. But even if there was an inducement derived from the Respondent's history of annual reviews, it would be only of an expectation to the effect that a commission arrangement, not necessarily as generous as last year, would continue next year. Offering the much less generous B3 would still fulfil such an expectation though it can be reasonably inferred that the Appellant hoped for more. Even if the Appellant in fact expected more, namely a commission arrangement no less generous than the 4% commission (presumably over the life of the contract though that is belied by the lesser relief now sought in the alternative), that was never an expectation induced by the Respondent. It was certainly not induced by statements as vague as he "would be covered". Rather it was the Respondent's uninduced hope, even expectation, that his employer, though having a discretion in setting bonus and commission, would exercise it with a generosity commensurate with the value of what the Appellant had achieved for his employer. In that hope or expectation he was to be disappointed. Given the way the Appellant put his case, he did not rely on the absence of a contract dealing with commission during the period up to 28 May 1999 to sue in quantum meruit. 76 When B3 was offered, he refused it, being distinctly a less generous commission arrangement than the 4% commission on incremental sales (or B2, though the latter was never communicated). The Respondent behaved sharply and meanly. But that is not sufficient to make the Appellant's case in equitable estoppel, even were the case now able to be brought on appeal. 77 The failure of the Appellant's case in regard to Boral contract applies mutatis mutandis to the other two contracts. What the Appellant submits (Orange, 14 para 34, elaborated in oral argument) essentially concedes the vagueness of the representations said to have been made. I refer for example to Mr Perkins the Queensland State Manager of the Respondent (as regards the Bank of Queensland contract) saying to the effect that the Appellant would make "plenty". Likewise any representation merely giving encouragement that a solution acceptable to both parties would be found.

OVERALL CONCLUSION 78 It follows that the Appellant must fail in his appeal. The Appellant who had laboured hard and skilfully for the great benefit of his employer was treated unfairly and harshly. This conduct, of itself, does not disentitle the respondent to an order for costs. However, the deceit and deception in backdating the Appellant's remuneration review, which rendered the litigation highly likely, is a different matter. Basic fairness at least required the employer to offer the Appellant Plan B2, as it had decided to do until the Boral contract was awarded. Strictly this would be a reason for depriving the Respondent of its costs at first instance but in the circumstances justice will be done if the appeal is dismissed without costs.

ORDERS Appeal dismissed. No order as to costs **********

Last Modified: 05/21/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.