Crowe Horwath (Aust) Pty Ltd v Loone [2017] VSCA 181

CONTRACT - Application for leave to appeal - Employer and employee - Restraint of trade clause - Termination of contract by employee's acceptance of employer's repudiatory conduct - Whether judge correct to find that employer not able to rely upon restraint clause in circumstances - Whether grounds had real prospect of success - Leave to appeal granted on all but one ground - Appeal dismissed.

PRACTICE AND PROCEDURE - Appeal - Whether applicant advanced arguments not raised at trial - Whether applicant should be allowed to raise new case on appeal - Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 77 ALJR 1598 applied.

1 On 4 April 2017, after a five day trial held some six weeks earlier in a proceeding brought by Crowe Horwath (Aust) Pty Ltd ('CHA' or 'the applicant') against Anthony Loone ('Mr Loone' or 'the respondent'), a judge in the Trial Division found that -

(1) the respondent (as employee) had accepted the repudiatory conduct of the applicant (as employer) in respect of an employment contract executed under seal on 1 November 2012 ('the 2012 contract', or, simply 'the contract'[1]), whereby the contract was brought to an end; and

(2) a restraint of trade covenant (for convenience, 'the restraint clause') in the contract,[2] though intrinsically unobjectionable, in the particular circumstances could not be availed of by the applicant. It is convenient to note, immediately, that the form of the clause which the judge found to be intrinsically unobjectionable, broadly described, precluded the respondent for a period of 12 months after termination of employment from engaging in competition with the applicant in a business situated within five kilometres of the location where the respondent had worked for the applicant, and from soliciting work from clients of the applicant with whom the respondent had had direct dealings.

2 The judge ordered, inter alia, that an interlocutory injunction which he had granted in favour of the applicant on 26 September 2016 - it related to the restraint clause - be discharged. But his Honour stayed the operation of that order until 7 April 2017. Thereafter, by orders of this Court, the operation of that part of his Honour's order has continued to be stayed. Presently, it is stayed until 11 July 2017 or further order.

3 Apart from the applicant's claim for injunctive relief, both the applicant and the respondent have raised money claims in the proceeding. The hearing and determination of those claims has yet to take place.

4 The applicant seeks leave to appeal against the judge's orders, specifically against the order discharging the interlocutory injunction; and seeks, if leave to appeal be granted, that the appeal be allowed and that a permanent injunction be granted, operative until 11 July 2017. The application also seeks disposition of the money claims.

5 In substance, the applicant contends that the judge erred by finding that the contract was terminated by the respondent's acceptance of repudiatory conduct by the applicant; and contends that, even if the contract did terminate in those circumstances, nonetheless the restraint clause operated according to its tenor.

6 The proceeding, commenced on 28 July 2016, has gone forward with commendable speed. It has been the subject of an interlocutory injunction hearing, trial, and now appeal. Nonetheless, the nominal period of operation of the restraint, held to relate to 89 clients of the applicant with whom the respondent had direct dealings,[3] is nearly at an end. The period will end on 11 July this year. Whilst abiding by the strictures of the restraint clause, in the interim the respondent has set up his own business.

7 The proceeding seems to us to come down to this: if the applicant did not engage in repudiatory conduct, then the respondent's claim that the contract terminated by his acceptance of such conduct must fall. His money claims would fall with it; and he has not been heard to say that the restraint clause (soon to run its course) would not operate according to its tenor. There would then be a question whether the applicant is entitled to judgment for a money sum of about $30,000. But if this Court holds that the judge did not err in concluding that the contract was terminated by the respondent's acceptance of repudiatory conduct by the applicant, then, regardless whether the restraint clause survived termination, the respondent will have a money claim against the applicant. If, in addition, this Court holds that the judge did not err in concluding that the applicant was not entitled to rely upon the restraint of trade clause, then the applicant's undertaking as to damages will come into play. But as McDonald J, the trial judge, in substance observed in his reasons for judgment,[4] a question would then arise about potential doubling up of damages.

8 By its amended application for leave to appeal, the applicant relies upon the following proposed grounds:

PRIMARY APPEAL GROUND APPEAL [sic]:[5] Repudiation

1. Ground 1(a): The trial judge erred in finding that CHA's exclusion of the DFG acquisition from the assessment of the Launceston bonus pool[6] was a refusal by CHA to comply with its contractual obligations in clause 75 regarding the assessment of Loone's discretionary bonus entitlement.
2. Ground 1(b): The trial judge erred in finding that CHA proposed a 20% deferral of the 2016 bonus and that such conduct evinced an intention to not be bound by clause 7.5.
3. Ground 1(c): The trial judge erred when, upon finding that Loone had determined to leave employment on 30 June 2016, he permitted Loone to rely on later conduct by CHA (the Roberts 1 July Statement) in asserting repudiation.
4. Ground 1(d): The trial judge erred in concluding that Loone could, on 12 July 2016, in claiming that CHA repudiated the 2012 Contract, rely upon earlier alleged repudiatory conduct by CHA that was not identical[7] to that which was not acted upon prior to the 1 July 2016 repudiation and acceptance of same by Loone.
5. Ground 1(e): The trial judge erred by finding that, for the purposes of clause 1.4 of the 2012 Contract, by 1 July 2016, CHA required Loone to occupy a position other than the position in Item 4 of the Sch 1 to the 2012 Contract, namely the Managing Principal position in the CHA Launceston office.
6. Ground 1(f): The trial judge erred in finding that, in the period to 1 July 2016, CHA breached clause 1.4(a) of the 2012 Contract by failing to consult with Loone about any change to his position (namely the position described in Item 4 of Schedule 1 to the 2012 Contract).
7. Ground 1(g): The trial judge erred in finding that CHA breached clause 1.4(b) of the 2012 Contract by directing Loone to occupy a position that was not equivalent in status to the position identified in Item 4 of Schedule 1 to the 2012 Contract.

PRIMARY APPEAL GROUND 2: The Restrictive Covenant was of no legal effect

1. Ground 2(a): The trial judge erred in his application of principle concerning discharge upon breach.
2. Ground 2(b): The trial judge erred in his construction of clause 19 of the 2012 Contract and clause 1.2(e) in Schedule 2 to the 2012 Contract.
3. Ground 2(c): The trial judge erred in applying the decisions in General Billposting and Kaufman and following those decisions.
4. Ground 2(d): The trial judge erred in concluding the Restrictive Covenant was rescinded ab initio and thereby erred by giving effect to the recission [sic] fallacy.
5. Further Ground: [T]he trial judge erred in invoking equitable considerations to refuse injunctive relief.

9 In what follows, except where we indicate otherwise, the circumstances to which we refer emerge either from a summary of facts provided to the Court by the parties,[8] or else from facts found by the judge.[9] In the course of this description of circumstances we will expose some parts, but not all, of his Honour's reasoning.

10 CHA provides financial services, including accounting and financial advice. It operates what is described as a group office structure. It owns all CHA branded businesses. They provide services throughout Australia and New Zealand. CHA operates approximately 112 group offices in Australia and New Zealand. Its head office is in Melbourne. It employs approximately 2,500 persons Australia-wide.

11 The company operates an office in Launceston. It is a stand-alone group office. As at July 2016, it employed approximately 80 people, and provided services annually to some 2,200 clients, generating gross fee income in the range of $9 million per annum.

12 In January 2015, CHA was acquired by Findex Group Limited ('Findex'). It was uncontroversial that, subsequent to this acquisition, Findex sought to rationalise and streamline CHA operations throughout all the CHA offices. The process was given a number of shorthand descriptors. We will mention them later in these reasons.

14 In the period leading up to 24 November 2000, Mr Loone was a senior accountant, partner and director in a precursor accounting business named Garrotts. At that time, the business was sold to a new owner. Mr Loone both took an equity in the new business and became an employee, entering into a written contract of employment ('the 2000 contract') with the new owner. The contract contained a restraint of trade clause.

15 On 19 December 2006, a new employment agreement ('the 2006 contract'), executed as a deed, was concluded between the respondent and WHK Business Services Pty Ltd ('WHK'). WHK was, as we understand it, the entity standing behind CHA. This contract also contained a restraint of trade clause.

16 On 1 November 2012, the 2012 contract was entered into between Mr Loone and WHK. We will refer to a number of its terms, and to the content of two schedules thereto, later in these reasons. It is common ground that it was this contract which governed the rights and obligations of CHA and Mr Loone in the period 2015 to 2016.

17 Until his employment ended on 12 July 2016, the respondent was the most senior executive in the Launceston office of CHA.

18 We should refer to provisions of the 2012 contract which are of key importance to the disposition of this matter.

• By cl 1.1, the contract stated 'You will be employed in the position set out in Item 4 of Schedule 1'.
• Item 4 described the respondent's position as 'Managing Principal'.
• The contract did not, itself, specify the duties to be performed in that position. But the respondent had been provided with a document entitled 'Managing Principal - Role Profile' before entering into the contract. It was common ground that the document accurately described the duties which the respondent was to perform in the position of Managing Principal under the 2012 contract. It was a lengthy document. We set it out as Annexure 1 to these reasons.
• Clause 1.4 provided as follows:

The Company may from time to time require you to occupy a position other than the position in Item 4 of Schedule 1, either on a temporary or permanent basis, but only if:

(a) it has consulted with you in relation to the change; and

(b) the other position is at least equivalent in status to, and has a level of remuneration which is at least equivalent to that of, the position in Item 4 of Schedule 1.

• We should refer also to cl 8, which reads as follows:

Your employment by the Company will continue to be subject to the terms of this Agreement, including the termination provision in clause 16, unless varied or replaced by an agreement in writing, despite any change to your position, duties, location of work and/or reporting responsibilities.

• By cl 31.19, 'Remuneration' was defined to mean -

Your Base Salary, superannuation contributions and, if you are a Principal, any discretionary bonus.

The Company will pay you a Base Salary in accordance with Item 8(a) and (b) of Schedule 1 subject to, and in consideration of, you performing your duties under this Agreement.

• Item 8 of sch 1 provided for a base salary of $280,000 per annum inclusive of superannuation.

• The definition of 'Remuneration', which we have set out above, referred to bonuses. In that connection, cl 7.5 stated that -

The bonus you may be eligible to get forms a discretionary component of your Remuneration. The Company will determine from time to time, at its absolute discretion, the amount of any bonus payment that may be made to you. This amount will be determined by consideration of various performance parameters including but not limited to your personal performance, the performance of the Group and the broader economic conditions. You will be eligible to receive a bonus in any year if, and only if, you are in the employ of the Company at the time that the bonus is to be paid and you have not, prior to that time, given or been given notice of termination of your employment.

• Clause 16.2 provided that the applicant's employment might be terminated on the giving of notice by either party to the contract, or by mutual agreement. Detailed provisions with respect to notice were set out in cls 16.3, 16.4 and 16.5. By cl 16.6, CHA retained the right to terminate the applicant's employment without notice or payment in lieu of notice in circumstances warranting summary dismissal.

The restrictive covenants in Schedule 2 of this Agreement are applicable to your Employment and form part of this Agreement.

• Clause 31.20 of the contract, which applied inter alia to the Schedules to the contract defined 'Restraint Period' to be

the period commencing on the date of cessation of your Employment (however that termination may occur) and for a period of...

and then followed descending periods, beginning with 12 months and ending with 3 months.

• By sch 2 to the contract, the respondent acknowledged a number of matters. They included an acknowledgment by sch 2 cl 1.2(e) that -

The obligations in this Schedule 2 survive the termination of the Employment in all circumstances and for any reason.

• By sch 2 cl 1.2(g) the employee acknowledged that

(ii) it is reasonable for [the employee] to continue to be bound by the obligations set out in this Schedule 2, which survive the termination of the Employment for any reason.

The Company is relying on the acknowledgments in this clause as a matter fundamental to the Employment.

• The restrictions which are pertinent for present purposes were set out in sch 2 cls 3.1(a)-(c):

Having regard to the acknowledgements set out in clause 1 of this Schedule 2, you will not, during the Restraint Period, either directly or indirectly, on your own account, jointly or with any other person or as an employee or otherwise:

(a) canvass, solicit, entice away or interfere with, or endeavour to canvass, solicit, entice away or interfere with, any Client for the purposes of having services of the nature provided by the relevant Group Member provided by anyone other than a Group Member;

(b) undertake or perform for a Client work of a kind which involves the provision of services which are, in whole or in part, the same as or similar to the services provided by the Company or any Group Company;

(c) if you were employed as a Principal, Associate Principal, Managing Principal, Chief Executive, Regional Chief Executive or Executive at the time of, or at any time during the 12 months prior to, the termination of the Employment - Engage in any business, activity or operation which is the same as, substantially similar to or competitive with the Business, or any material part of the Business, and which is based within a 5 kilometre radius of either:

(i) the location at which you were based immediately prior to the termination of the Employment; or

(ii) if you worked out of more than one location - all the locations out of which you regularly worked in the 12 months prior to the termination of the Employment.

23 A number of the words and terms used in sch 2 cl 3.1 were defined. Thus, for instance, 'Restraint Period', 'Client', 'Group Member', 'Group Company' and 'Business'. Equally, however, a number of terms found in that clause were not defined.[10] Words that were not defined included 'Principal', 'Associate Principal', 'Managing Principal', 'Chief Executive', 'Regional Chief Executive' and 'Executive'. As we have earlier noted, however, the applicant was provided with a written 'job description' of the term 'Managing Principal' before signing the contract.

The respondent's job activity up until the Findex acquisition of CHA

24 The judge at trial found that, prior to the acquisition of CHA by Findex in January 2015, Mr Loone exercised 'full autonomy' in the running of the Launceston office.[11] He performed his work consonantly with the role profile to which we have previously referred. He was the most senior employee in the Launceston office, and had very close personal relationships with his clients.[12]

25 The respondent's immediate superior was Bruce Roberts, CHA's Regional Chief Executive. From the time when Findex acquired the CHA business, which was on 1 January 2015, a man named Michael Wilkins, Chief of Advisor Services with Findex, became involved. Of Mr Wilkins, more later.

26 As will be seen, one of the serious breaches of contract complained of by the respondent related to bonus payments. There were two aspects to that complaint. One of them related to the acquisition of a Launceston accountancy practice, Davey Financial Group ('DFG'), by CHA.

27 In October 2014, the respondent entered into discussions with the principal of DFG with respect to the acquisition of DFG by CHA. The acquisition was finalised in August 2015. CHA purchased DFG for $2.2 million. DFG's business was thereafter incorporated into the Launceston office. The respondent, as the judge found, spent hundreds of hours of work in the acquisition process.

28 The acquisition of DFG was budgeted to generate $1.086 million in its first full year of operation. For the financial year ending 30 June 2016, the acquisition in fact contributed approximately $440,000 net profit to the CHA Launceston office. The respondent estimated that the acquisition was worth a minimum of $200,000 to the Launceston bonus pool, that pool being the source of distribution of bonuses to the respondent and other senior persons in CHA's Launceston office.

Events subsequent to the acquisition of CHA by Findex. The repudiatory conduct upon which the respondent claimed to have relied

29 We will address, first, the matters raised by proposed grounds (for convenience, 'grounds') 1(a)-(g). They relate to the judge's findings with respect to the conduct of CHA which the respondent claimed constituted its repudiation of the contract, repudiation which he accepted.

Claimed change in employment duties in breach of contract

30 Following the acquisition of CHA by Findex, a new Chief Executive Officer and Chief Operating Officer were appointed to CHA. Michael Wilkins, to whom we have previously referred, was appointed as Manager with overall responsibility for all of CHA's offices throughout Australia and New Zealand. The respondent, however, continued to report to Bruce Roberts, CHA's Regional Chief Executive.

31 From some time in 2015 - there was dispute between the applicant and the respondent as to when it was - CHA commenced to communicate and implement a program of changes to its business operations across all of its offices. It was the brainchild of the new owner of CHA. Its intended nature and implementation were identified by catchy phrases: 'one best way (to build the business)',[13] the 'family office model', the 'family office structure' and the 'family office initiative'. Some changes were implemented between late 2015 and mid-2016. Others, including the family office initiative, were to be introduced on 1 August 2016.

32 The judge made detailed findings as to the impact and further intended impact of the changes upon the respondent. We detail those findings later in these reasons. His Honour concluded that the respondent had established that the applicant had breached cl 1.4 of the contract, and that such breach was so serious as to constitute repudiatory conduct by the applicant.

Claimed financial matters in breach of contract

33 The respondent contended that two matters, one of which arose out of the acquisition of CHA by Findex, involved breach by CHA of cl 7.5 of the contract. He asserted that each breach went to the heart of the contract, and so constituted repudiatory conduct by CHA. As the respondent put his case, and as the judge accepted it, the two aspects of that breach were as follows.

34 First, according to the respondent's evidence (which we understand to have been uncontradicted in this connection), at a meeting held on 9 June 2016 in Melbourne ('the 9 June meeting'), in which a presentation was made by senior management of CHA, he and other regional executives were informed that CHA intended to introduce a new incentive model ('the incentive model') under which bonus payments would be divided into two components - a cash payment and a deferred incentive. The deferred incentive would be 20 per cent of any annual bonus awarded, and would be deferred for a three-year period.

35 The judge noted that there was evidence that, in the period between mid and end June 2016, the respondent had discussions with Messrs Roberts and Wilkins during which he expressed 'ongoing concerns regarding proposed changes which had been outlined during the presentation on 9 June 2016'.[14] There was, inter alia, a meeting with Messrs Roberts and Wilkins on 30 June 2016, in the course of which the respondent stated that he was reserving his position in relation to his employment.[15]

36 In the event, the judge concluded that the effect of CHA's decision to implement the incentive model, communicated to the respondent, constituted repudiatory conduct by the applicant. That conclusion required resolution of a construction issue with respect to cl 7.5 of the contract.

37 The second aspect of the breach of cl 7.5 contended for by the respondent turned on evidence given by him of a conversation with Mr Roberts on 1 July 2016. For simplicity, we will call it 'the bonus decision'. The effect of the respondent's evidence - the receipt of which for both hearsay and non-hearsay purposes was not the subject of objection - was that Mr Roberts told him that he had been told by Mr Wilkins that the profitability flowing from the DFG acquisition would be excluded from the calculation of the Launceston bonus pool. This was the pool out of which bonus payments were drawn.

38 Further, said the respondent, Mr Roberts told him that Mr Wilkins had said that the DFG acquisition would be excluded from the bonus pool because Findex had bought the business and should therefore get the benefits of the acquisition. Again, according to the respondent's evidence, he was told by Mr Roberts that Mr Wilkins had stated there should be no adjustment in the bonus pool in respect of the respondent's involvement in the acquisition because this was part of his role as Managing Principal of the Launceston office.[16]

39 The gist of the respondent's argument was that CHA had failed to give consideration to his personal circumstances when exercising its discretion whether to award him a bonus, and if so, in what amount, for 2015-16, this breaching a requirement stated in cl 7.5 of the contract.

40 Mr Wilkins gave evidence at the trial. We will refer to it in detail later in these reasons. It suffices for present purposes to note that the judge reached unfavourable conclusions as to the reliability of that witness's evidence.

41 Having reviewed pertinent evidence, his Honour concluded that - (1) evidence given by the respondent as to things said to him by Mr Roberts on 1 July 2016 represented the fact; (2) the bonus decision breached cl 7.5 of the contract and constituted repudiatory conduct by CHA; and (3) the respondent was entitled to and had relied upon it when he terminated his employment on 12 July 2016.

When and how did the respondent accept the applicant's allegedly repudiatory conduct? Upon what conduct did he rely?

42 As we have observed, the respondent alleged both change of position breach and financial matters breach. The change of position breach, as found by the judge, particularly focused upon things said by CHA representatives at the 9 June meeting. The financial matters breach had two independent components - the financial model breach and the bonus decision.

43 The judge, as we have said, found that the respondent had made out his case with respect to both change of position and financial matters breaches. But his Honour's reasons proceeded in the following way: he found that financial matters breaches had been established, were repudiatory, and had been accepted by the respondent. But then he went on, for completeness, to deal with change of position breach, which he also found had been established, was repudiatory, and had been accepted.

44 We have already described factual conclusions reached by the judge, and a little of the legal underpinning for those conclusions. We have not set out the way in which the judge dealt with questions as to the construction of cls 1.4 and 7.5 of the contract, with argument that, in point of law, the respondent was not entitled to rely upon evidence of change of position breach by the applicant before the respondent accepted a part bonus on 7 March 2016, or with his Honour's analysis why the restraint clause did not have continuing operation after the respondent's acceptance of the applicant's repudiatory conduct.[17] We will address those matters when considering individual proposed grounds of appeal.

The issues raised by grounds 1(a)-(g) with respect to repudiation[18]

45 Grounds 1(a), (b) and (c) relate to the judge's conclusion that the applicant repudiated the contract by conduct with respect to what we have called financial matters. Those grounds include the contention that the respondent was not entitled to rely upon the bonus decision because, as the applicant asserted, the respondent had already decided to terminate his employment before 1 July 2016. Ground 1(b) raises an issue of construction of cl 7.5 of the contract; and so, to an extent, does ground 1(a).

46 Grounds 1(d), (e), (f) and (g) all relate to the judge's ultimate conclusion that the applicant committed change of position repudiation. Ground 1(d) raises a legal issue.

47 None of grounds 1(a)-(g) raises an argument that, if the applicant did engage in the conduct complained of, if it was in breach of contract, and if the respondent was entitled to rely upon it, such conduct was not sufficiently serious as to amount to repudiation.

48 Before addressing grounds 1(a)-(g) discretely, it is necessary to refer to a particular submission advanced by Senior Counsel for the applicant. At the outset of his submissions, counsel said that he wished to emphasise that

at no time prior to 12 July was there an assertion by the respondent that he considered that the applicant was in breach or that the applicant refused to alter its position in the face of an asserted breach because in truth this was an anticipatory breach case.

We, your Honour, put the position below that there was no repudiation, but at best it was an anticipatory case that was being mounted by the respondent.

On 1 July Mr Roberts communicated an intention as to how the bonus would be calculated and whether the Davey work of the respondent would be taken into account. The applicant said that he regarded that to be unfair. So he made known he was unhappy about it ... There was no assertion by the respondent that he regarded that to be in breach of his contractual entitlements ...

A contrast was being drawn between the respondent's case at trial and his contention on the earlier interlocutory injunction application.

51 Having taken the Court through notes pertaining to the sequence of events on 30 June and 1 July 2016, counsel submitted that:

And you have to query what the hell's going on here, in relation to this matter. It's quite clear, at this point, they're locked in discussion. And that's quite important when we come to the third issue, your Honours, which is the relevant principles of repudiation in relation to breach or anticipatory breach, or prospective breach. And at the heart of the repudiation doctrine is the ability of a promisee to justify an election to terminate the performance of a contract.

52 Counsel then went to the decision of this Court in R & A Cab Co Pty Ltd v Kotzman.[19] Counsel submitted that the judgment of Ashley JA succinctly summarised 'the principles upon which we rely at paragraphs 45 through to 51'; and said, 'We'd like in particular ... to note the passage at paragraph[s] 49 and 50'.

53 The point of this reference was developed as follows:

Because what we had here was a statement by the applicant concerning the bonus payment under clause 7.5, that was not met with an assertion that there was no entitlement to assess the bonus pool in that manner. The only statement that was made was that it was not fair. There was no contention raised by the respondent, despite being the subject of legal advice during this period, where he asserted to the applicant that they could not do that, because his interpretation of the clause was that it had to be.

'Where one party to a contract persists in maintaining that it will only perform an obligation of essential importance in accordance with the untenable construction of the obligation, that conduct amounts to repudiation of the contract.'[20] That never happened here. There was no ... 'willy-nilly refusal' by the applicant to engage with the respondent, in relation to the matter of concern in relation to the bonus.

The respondent did not give the applicant any opportunity to engage with his contention, if it be a contention, as to why it was in breach of the obligation in clause 7.5; he never raised it, not once. And when he did come to raise it before this Court, it was based on a false premise.

54 In essence, the submissions sought to be advanced were that - (1) if the applicant had engaged in what might otherwise have been accounted repudiatory conduct, but that conduct was based upon mere honest misapprehension of pertinent contractual terms, of which the respondent should have, but did not, disabuse it, then the applicant's conduct should not be accounted repudiatory; and (2) at no stage did the applicant ever maintain (or persist in maintaining) that it would only perform obligations of essential importance in the contract in accordance with an untenable construction of those obligations. The respondent had not given the applicant any opportunity to engage with the contention as to why it was that the applicant was in breach of contract.

55 Senior counsel for the respondent commenced his argument in this Court with a complaint that the submissions to which we have just referred were never advanced at trial, were no part of the trial, and were not to be found anywhere in the applicant's written case. Counsel submitted that the arguments now sought to be relied upon by the applicant had been raised for the very first time at the hearing before us. Additionally, counsel noted that neither Kotzman nor Zwanenberg[21] were cited to the trial judge.

56 In reply, Senior Counsel for the applicant, while not accepting that the arguments he had advanced in chief were new, accepted that the decisions of Kotzman and Zwanenberg had not been raised at trial. But in an email sent to the Court after the conclusion of argument, the applicant stated that Kotzman had been referred to in a written outline of argument filed by the applicant prior to the commencement of the trial. As a result of that communication, we permitted the parties to provide to us outlines of argument that they had filed in anticipation of the trial.

57 Having read the written submissions at trial, and the transcript of the arguments put to the judge, we consider it very clear that the respondent was correct in submitting that the arguments sought to be advanced in this Court by the applicant were not advanced at trial.

58 An examination of the applicant's written outline before trial discloses that, while Kotzman was footnoted in the document as authority in support of four general propositions about repudiation,[22] it was not cited as authority for the two propositions now sought to be relied upon. Apart from that footnoted reference, neither Kotzman nor Zwanenberg were cited to the trial judge. The two propositions now relied upon by the applicant were never put to the judge.

59 In its written closing submissions at trial, the applicant submitted that employment contracts were not immune from the application of ordinary, and well settled, contractual principles, including those relating to repudiatory conduct. Footnoting the High Court's decision in Shevill v Builders Licensing Board,[23] the applicant identified two principles as follows:

(a) A party may repudiate a contract by renouncing its liabilities under it whether by evincing an intention no longer to be bound by it or by showing that it intends to fulfil the contract only in a manner substantially inconsistent with its obligations and not in any other way.

(b) Repudiation is a serious matter and is not lightly to be found or inferred. The Court must consider all the circumstances of the case.

Coincidently, these were two of the four propositions for which Kotzman was cited in the applicant's opening outline of argument at trial.

60 Nowhere in those written closing submissions at trial was it contended that, if the applicant had breached any of the relevant clauses of the contract, any such breach of contract did not amount to a repudiation by reason of the two propositions sought to be relied upon in this Court. Rather, it was submitted that what was relevant about the principles concerning repudiatory conduct was that there must be a focus on the objective acts of the parties, and that repudiation was not to be determined by reference to subjective matters, such as perceptions or uncommunicated intentions. Again, coincidently, these were the other two propositions for which Kotzman was cited in the applicant's written opening outline of argument.

61 In his oral closing submissions at trial, Senior Counsel for the applicant focused on whether the conduct alleged by the respondent constituted a breach of any of the clauses of the contract upon which the respondent relied. The gist of the applicant's submissions was that the respondent's repudiation case rose or fell on cl 7.5 of the contract. That was because the change of position argument must fail. It must do so because - (1) there had been no change of position before 1 July 2016; (2) any future changes would not constitute change of position, but, as with earlier changes, be merely matters of 'systems, protocols and procedures' - and were, in any event, still under discussion; and (3) up to the time when he terminated the contract, the respondent had affirmed that contract by continuing to perform it, and by accepting the part bonus on 7 March 2016.

62 Then it was submitted that, for more than one reason, the respondent's reliance on repudiation by alleged breach of cl 7.5 must fail. The respondent had determined to leave the applicant's employment before 1 July 2016 - that being the day on which, according to the respondent's evidence, Mr Roberts had conveyed to him that the bonus pool would not include an amount attributable to the DFG profits. Further, the evidence did not permit a conclusion that DFG's profitability would not be brought to account in assessing whether the respondent would receive, in the absolute discretion of the applicant, a bonus for 2015-16. Further again, a distinction was to be drawn between the obligation to consider the respondent's performance when determining whether to make a discretionary bonus payment, and the inclusion of profits from the DFG business in the Launceston bonus pool.

63 In the event, as we have already observed, it is very clear that the propositions sought to be relied upon by the applicant before us were not advanced at trial; and neither, for that matter, were they advanced in the applicant's outline of argument in this Court.

64 The question that arises in this Court is whether the applicant should now be permitted to advance those arguments. As was observed in Whisprun Pty Ltd v Dixon:[24]

It would be inimical to the due administration of justice if, on appeal, a party could raise a point that was not taken at the trial unless it could not possibly have been met by further evidence at the trial.[25]

Nothing is more likely to give rise to a sense of injustice in a litigant than to have a verdict taken away on a point that was not taken at the trial and could or might possibly have been met by rebutting evidence or cross-examination. Even when there is no question of further evidence, it may not be in the interests of justice to allow a new point to be raised on appeal, particularly if it will require a further trial of the action. Not only is the successful party put to expense that may not be recoverable on taxation but a new trial inevitably inflicts on the parties worry, inconvenience and an interference with their personal and business affairs.[26]

Moreover, as has also been observed, a trial is not a dress rehearsal for a rehearing in an appellate court.[27]

65 In our view, the applicant should not now be allowed to advance the arguments that were not run at trial. It cannot be said that the applicant's new arguments might not have been capable of being met, or dealt with, by the respondent calling further evidence or by further cross-examination of the applicant's witness, Mr Wilkins. Moreover, because the arguments were not raised below, the respondent could rightly complain if any prospect arose of this Court finally determining the merits of that argument upon potentially incomplete evidence. If the applicant's new arguments proved persuasive, it would seem inevitable, even if the application for leave to appeal otherwise lacked merit, that there might need to be remitter for a re-trial. In our opinion, it would be contrary to the interests of justice in this hard-fought litigation to require the respondent to undergo another trial on the liability issue by reason of arguments that could have been, but were not, advanced at trial.

66 We will not permit the applicant to rely upon the arguments to which we have been referring.

67 We have set out the gist of the respondent's evidence with respect to the bonus decision at [37]-[38] above. It focused upon a conversation which he had on 1 July 2016 with Mr Roberts, the senior CHA manager.

68 Only Mr Wilkins gave relevant evidence for the applicant. His Honour summarised Mr Wilkins' cross-examination with respect to the bonus pool, and expressed his conclusion about the witness's evidence, as follows:

Mr Wilkins was cross-examined regarding the statements attributed to him by Mr Roberts during the conversation with Mr Loone on 1 July 2016. Mr Wilkins stated that he did not recall any conversation with Mr Roberts prior to 1 July 2016 during which he had told Mr Roberts that the DFG acquisition would not be taken into account when fixing Mr Loone's bonus. Mr Wilkins agreed that the DFG acquisition would need to be taken into account when considering Mr Loone's personal performance and the performance of CHA as a whole. Mr Wilkins' evidence was that the DFG acquisition was ultimately taken into account for the purposes of determining the quantum of the Launceston bonus pool when the bonus was paid in late August 2016. However, he also gave evidence that the DFG acquisition was in fact taken into account prior to Mr Loone's departure on 12 July 2016.

It is impossible to reconcile Mr Wilkins' evidence with the account given by Mr Loone of his telephone conversation with Mr Roberts on 1 July 2016. That account, together with Mr Loone's contemporaneous notes, supports a finding that on 1 July 2016 Mr Roberts told Mr Loone that Mr Wilkins had stated that there would be no adjustment to the quantum of the Launceston bonus pool to take account of the profit arising from the DFG acquisition and no adjustment of the pool to reflect Mr Loone's role in relation to the acquisition.[28]

69 We should refer also to the failure of CHA to call Mr Roberts. Respecting that matter, which had a connection with the evidence given by the respondent as to the conversation on 1 July 2016, the judge said this:

CHA had ample opportunity to object to the admissibility of Mr Loone's evidence on the ground that it was hearsay. Its failure to do so constitutes a waiver of any right to object to the evidence, having been admitted, to be treated as evidence for all purposes. Further, there is the failure of CHA to call Mr Roberts to give direct evidence regarding his conversation with Mr Loone on 1 July 2016. There is a direct inconsistency between the evidence of Mr Wilkins that the DFG acquisition was in fact taken into account in the assessment of the Launceston bonus pool prior to Mr Loone's departure on 12 July 2016; and the evidence of Mr Loone of his discussion with Mr Roberts on 1 July 2016; ie that Mr Wilkins had told Mr Roberts that the DFG acquisition was to be excluded from the calculation of the Launceston bonus pool. This inconsistency called for an explanation. No explanation was provided for the failure to call Mr Roberts. I infer that had Mr Roberts been called to give evidence regarding the contents of his telephone conversation with Mr Loone on 1 July 2016, that evidence would not have assisted CHA's case.[29]

70 In our view, the judge's conclusion that the respondent was told what he said in evidence that he was told by Mr Roberts on 1 July 2016, and (so far as it was necessary) that it represented the fact, could not be impugned. Indeed, there was no challenge in this Court with respect to what the judge found that Mr Roberts told the respondent on 1 July 2016. The fact, as it seems, that the bonus pool for 2015-16 ultimately included a DFG acquisition component does not tell against acceptance of the respondent's evidence of the conversation on 12 July 2016. If that circumstance was to be taken into account at all,[30] then, when considered together with what Mr Roberts said on 12 July 2016, it would probably indicate a change in CHA's position after 12 July 2016. But that would not gainsay the respondent's reasonable belief as to a decided state of affairs as at 1 or 12 July.

71 His Honour analysed the situation with respect to the subject of ground 1(a) as follows:

Clause 7.5 confers upon CHA an absolute discretion as to the quantum of any bonus payment to be made to Mr Loone. However, the exercise of that discretion is subject to a mandatory contractual obligation that '[t]his amount will be determined by consideration of various performance parameters including but not limited to your personal performance, the performance of the Group and the broader economic conditions'. Mr Loone's contention that CHA repudiated the Contract is not based upon the quantum of his bonus. Rather, he contends that in the assessment of his bonus CHA failed to have regard to the mandatory criteria prescribed by cl 7.5.

If CHA failed to undertake the promised contractual process for the assessment of Mr Loone's bonus, such failure could constitute a breach of contract, notwithstanding the fact that the quantum of any bonus is subject to CHA's absolute discretion. The fact that cl 7.5 confers an absolute discretion upon CHA does not preclude a finding that a failure by CHA to have regard to the prescribed criteria in determining the quantum of any bonus payment would constitute a breach of cl 7.5.[31]

72 His Honour noted the key submission for the applicant as follows:

[Counsel] submitted that Mr Loone's evidence of his discussion with Mr Roberts on 1 July 2016 does not support a finding that Mr Loone had been told that his bonus assessment would not be in accordance with the terms of the Contract. [Counsel] submitted:

The evidence was - this is what Mr Loone said he was told - that the profitability arising from the Davey tuck-in would be excluded from the pool calculation for Launceston, nothing about his performance, Your Honour. So we're talking here about chalk and cheese, about the terms of the contract and what he was told. Nothing Your Honour has said at all, with the greatest respect, traverses what is in the contract because the evidence is different from the way it's been put by our friends. It is apt to mislead. You have got to go back to what he was told.

...

The complaint here is that on 1 July Mr Roberts said, allegedly, that the moneys arising from the profit on the acquisition would not go into the pool calculation for Launceston. That is a different proposition from asserting that his personal performance was not to be taken into account.[32]

Contrary to [counsel's] submission, Mr Loone's account of what he was told by Mr Roberts falls squarely within the terms of the criteria prescribed by cl 7.5. Mr Loone's contemporaneous note of his discussion with Mr Roberts records that he was told that there would be no adjustment to the Launceston bonus pool to take account of his role in the DFG acquisition because this was part of his role as a Managing Principal.

In addition to the express statement which was made by Mr Roberts on 1 July 2016, there is the practical consideration that Mr Loone expended between 300 and 600 hours on the DFG acquisition for the financial year ending 30 June 2016. Mr Loone told Mr Roberts on 1 July 2016:

... if I hadn't have invested 600 hours of time into the acquisition, I could have been generating revenue which would have then flowed into the bonus pool.

Mr Loone told Mr Roberts on 1 July 2016:

I said that is unfair that my time is not being reflected here because I had the opportunity - I would have done something else because one of the main motivations of the Davey acquisition was to increase the bonus pool for the Launceston principals.

I accept Mr Loone's evidence that by 30 June 2016 he had expended hundreds of hours of time in relation to the DFG acquisition. I accept his evidence that he was told by Mr Roberts on 1 July 2016 that the work he undertook on the DFG acquisition was not going to be taken into account in the assessment of the Launceston bonus pool of which he was a beneficiary. Clause 7.5 required CHA to have regard to Mr Loone's personal performance in the assessment of his entitlement to a bonus. Clause 7.5 did not confer upon CHA the right to excise from the assessment of Mr Loone's personal performance a project on which he had expended hundreds of hours.[33]

74 Whilst accepting that any bonus was not to be paid until August 2016, the judge nonetheless concluded that what was said by Mr Roberts for CHA on 1 July 2016 was not an anticipatory breach by the applicant, but was in breach of its contractual obligation at the time when the obligation (that is, the making of a decision whether the respondent was to receive a bonus, and, if so, in what amount) was due to be performed. If that was not so, however, it was an anticipatory breach upon which, viewed objectively, the respondent was entitled to rely.[34]

75 The applicant submitted in this Court, as it did below, that there was no evidence of breach of cl 7.5 of the contract. CHA had in fact considered the respondent's involvement in the DFG acquisition. Having done so, it had concluded that the Launceston bonus pool should not be increased because of his involvement in that acquisition. It considered that the respondent's involvement was part of his work as Managing Principal of the Launceston office.

76 It was submitted for the respondent that there was no evidence that the applicant undertook any of the mandatory considerations imposed upon it by cl 7.5 before it determined the 2015-16 bonus. Mr Wilkins was not involved in fixing the bonuses for staff at Launceston, and his evidence about inclusion or otherwise of profitability referable to the DFG acquisition was inconsistent, and in parts rejected by the judge. CHA had called no evidence as to what was considered in assessing a bonus for the respondent for 2015-16. The position taken by Findex - that as it had paid for the DFG acquisition, it should get all the benefits of the acquisition - was inconsistent with the arguments advanced for the applicant.

77 In our opinion, the judge's conclusion that the applicant breached cl 7.5 was sound. CHA's position, via Mr Roberts, that profitability flowing from the DFG acquisition would not be included in calculation of the Launceston bonus pool because, Findex having paid for the acquisition, it should get all the benefits, effectively excluded consideration of the respondent's personal performance in that connection.

78 The applicant's related submission, that in the exercise of the discretion CHA was to consider and/or had considered the respondent's personal performance, including his performance with respect to the acquisition of DFG, when deciding if he was to be awarded a bonus for 2015-16, but that the amount of any bonus awarded would take no account of the profitability of the acquisition, was, in our opinion, a forensic masterpiece which lacked a firm foothold when construing the proper scope and content of cl 7.5 of the contract. The idea that a large profit derived from the acquisition of another business - the acquisition and the resulting profit being much contributed to by the respondent's work - should be taken into account in assessment of the applicant's personal performance in deciding whether he should receive any bonus, but that the profit should be ignored in fixing the amount of any bonus, would amount to disregarding a very important aspect of the respondent's personal performance. An argument that achieving the acquisition and the resulting profit was all part of the respondent's work as Managing Principal, and so should not be brought to account in assessing the amount of any bonus, could be extrapolated to almost any aspect of the applicant's personal performance. Such an approach could not have been within the intention of the parties, objectively considered.

79 Ground 1(b) raises a question as to the construction of cl 7.5 of the contract. The judge accepted the submission for the respondent that, properly construed, cl 7.5 conferred no right on the applicant to withhold any part of a bonus once the applicant determined that a bonus should be awarded for a particular year. The exercise of the discretion was to be understood against the proper scope and content of the contract.[35] The clause showed that eligibility operated by reference to a 12-month period of employment.[36] Reading cl 7.5 in conjunction with the definition of 'Remuneration' in cl 31.19 and with item 8 of sch 1 of the contract - headed 'Annual Remuneration Package' - it was 'plain that the discretionary and non-discretionary components of [the respondent's] remuneration are payable within a 12 month period'.[37] The applicant's discretion whether to award a bonus, and to determine its amount, did not confer on CHA the right to withhold any portion of the bonus. The presentation made to the respondent and other senior employees at the 9 June meeting 'was such as to convey to a reasonable person in [the respondent's] position, renunciation of a fundamental obligation under the contract'.[38] There had been no affirmation of the contract by the fact that the respondent continued in employment between 9 June and 12 July 2016.[39] The repudiatory nature of the breach was emphasised if it was considered together with the bonus decision.[40]

80 It was submitted for the applicant that the judge had misconstrued cl 7.5. There was nothing in it 'to preclude an award of the discretionary bonus in the form of a grant of equity to vest at a future date'.

81 It was submitted for the respondent that the judge's reasoning was correct. The point had been made that what was described as a deferral might in fact operate to deprive an employee of the withheld part of an awarded bonus - that is, 20 per cent altogether. That was because the new scheme required an employee to be still in CHA's employment at the time - three years later - when the deferred amount became payable.

82 We have set out the relevant clauses and schedule item at [20] above.

83 In our opinion, the judge's reasoning and conclusions were sound. The concept of remuneration, including any discretionary bonus that was awarded, was based upon an employee's work, for which payment was to be made, in a particular year. This was emphasised, in the case of a bonus, by cl 7.5 stating that:

You will be eligible to receive a bonus in any year if, and only if, you are in the employ of the Company at the time that the bonus is to be paid and you have not, prior to that time, given or been given notice of termination of your employment.

84 The clause plainly contemplated that payment be made for a particular year. It required that, at the time of payment for that year, the employee was still to be in employment. Because, as it appears, a bonus for one financial year would not be paid until shortly into the next financial year,[41] it cannot be said that payment of the entire remuneration package (including any bonus) would take place within one financial year. But it would strain the meaning of cl 7.5 beyond breaking point if it was to be read as meaning that payment of part of a bonus might be deferred for years, and that, unless there was a subsisting employment after that period of years, the awarded payment would be lost. Such a reading would tie an employee to CHA for an extended period, a matter having little to do with a bonus awarded in respect of a particular year's work. Obligated employment for a matter of a month or two could not be compared with obligated employment for a matter of years.

85 The judge's conclusion that the contract had not been affirmed by the respondent's continuing in employment up to 12 July 2016 after what constituted, as his Honour found, the applicant's renunciation of a fundamental obligation under the contract,[42] is not challenged in this Court.

86 Ground 1(c) is related to ground 1(a). The gist of the ground lies in the contention that the respondent had decided to leave CHA's employment not later than 30 June 2016, for which reason any repudiatory conduct of CHA, communicated by Mr Roberts on 1 July 2016, was irrelevant to the respondent's announced termination of employment on 12 July 2016.

submitted that 'the Defendant cannot rely on the 1 July "event" as a trigger point for any assertion of [final] repudiation. It was not a repeated repudiation which was identical'. In support of this submission, CHA refers to the judgment of Mandie J in Marks v CCH Australia Ltd.[43] ...[44]

submitted that there was no basis upon which the Court could conclude that Mr Loone accepted CHA's conduct as bringing the Contract to an end. ... [T]he telephone conversation between Mr Loone and Mr Roberts on 1 July 2016 was irrelevant because Mr Loone had already decided by at least 30 June 2016, if not earlier, that he would leave CHA and set up his own accounting business. ... Mr Loone had made up his mind to go by 30 June 2016 and was 'stonewalling'.[45]

And

relied upon a file note which had been made by Mr Loone of a discussion which he had with Michael Wilkins over dinner on 30 June 2016:

1. MW and I sat together and during dinner I gave him some examples of frustrations - eg
   1. lengthy recruiting process had lost new people
   2. marketing over rides, non communication of staff changes
   3. we spoke of Danielle Maxwell and how she seems to have no regard for local leadership - MW said "knowing Patto (nickname?) the way I do, that doesn't surprise me"
   4. how "blanket policies" and "one size fits all" approach don't always work - especially when there are differing issues such as capital city vs regional, large vs small, accounting vs financial planning, good managers and not so good managers, etc
   5. hence the need for MP's & P's to have some discretion to act in the best interests in their known areas
2. I felt I needed to give him some examples so he didn't feel stonewalled and hence on notice that I would be leaving.[46]

88 The judge then referred to relevant evidence given by the respondent, and set out a chronology:

[Counsel] put to Mr Loone in cross-examination that his file note was evidence that he had already decided to leave CHA by 30 June 2016. Mr Loone responded:

I had made the decision, Mr Moses, that I couldn't stay and I had to work out whether I was actually going to implement that decision.

He also gave evidence:

At that stage I'd made a decision that I did not want to stay. I was then intending to take some time with my wife to work out - it's quite a significant decision - to decide whether I'd actually implement that and, if I did, at what particular time, meaning would it be - would I give it a few months, would I do it straightaway. We discussed quite a number of different options that I was going to consider with my career.

Mr Loone commenced one week's annual leave on 4 July 2016. He returned to the workplace on 11 July 2016. On the morning of 12 July 2016 he advised Mr Roberts of his decision to leave. He gave the following evidence as to the main factors that caused him to arrive at the decision to leave:

The main factors were they changed my role so significantly, I didn't have the autonomy that I'd asked for and accepted in 2012 when I became the Managing Principal, and that I just didn't have the decision-making capabilities to make a difference in the office. In addition to that, obviously my remuneration was also changing very significantly ... Because they were excluding the Davey acquisition profitability in the size of the pool.

On the morning of 12 July 2016, Mr Loone sent Mr Roberts an email in the following terms:

Dear Bruce

As per our phone discussion, I wish to confirm my decision to leave Crowe Horwath with immediate effect.

There is nothing personal in my decision, and I greatly value the friendships with you and my work colleagues forged over many years.

As discussed with you, I am leaving because Findex have not fulfilled their obligations to me under my employment contract, and after taking a short break, I will be embarking on a plan to build a new business.

My decision has been made because of the numerous events, especially in regard to the implementation of the Family Office program and the new Remuneration and Equity models.

Findex's new management and operating models are not what I agreed to when I was offered and signed on as Managing Principal for Launceston in 2012. They have resulted in a fundamental change to the management discretion I sought and was given by WHK at that time, and I believe the calculation of my remuneration is also an unacceptable major change.

I cannot accept what has occurred, and have determined to leave straight away.

I will clear out my office today and ask only that I keep my mobile phone ... which is the only number I have used for almost 20 years.

As discussed, I will advise the Principal group at a meeting we had pre-planned for this morning.

Could you please call to discuss any other matters that need to be addressed today.

Kind regards

Anthony.

At the conclusion of Mr Loone's cross-examination, the following exchange took place between myself and Mr Loone:

His Honour: Thanks. Can I just ask you, Mr Loone, if you hadn't made the decision before 30 June that you were going to leave, what was the catalyst for you to actually make the decision which you did convey on 12 July?

Mr Loone: This very page we're looking at, Your Honour. It was like the final straw. It was where they - Mr Wilkins had said to Mr Roberts, and Mr Roberts then said to me, that the Davey acquisition was not going to be included which amounted to a minimum of $200,000 to the Launceston principal group, and I felt that was the last straw. I had been accumulating some intent to think about the future beyond Crowe Horwath, but really I hadn't made the decision to absolutely leave and to do something about it until I went away with my wife and talked it over, because it had such an impact on our family.[47]

89 Then his Honour expressed pertinent conclusions:

By leaving on 12 July 2016 rather than waiting another six weeks, Mr Loone passed up the opportunity to receive a bonus of approximately $100,000 which would have been paid at the end of August. As to why Mr Loone did not simply stay in employment until the end of August and receive that bonus, he stated:

This goes back to the timing of - I decided I didn't want to stay and one of the considerations that I discussed with my wife was do I just hang out for a period of time, get my bonus, but when that meeting occurred on 1 July, I just thought I can't stay here, I don't trust them, and I left.

As at 30 June 2016 Mr Loone had made a decision that he would be leaving CHA. However, he had not made a decision as to the exact timing of his departure. This is not surprising given that, as at 30 June 2016, he had a legitimate expectation that he would be receiving a bonus payment. Further, as at 30 June 2016, he was not aware that the size of that bonus payment would not take into account his involvement in the DFG acquisition and/or the contribution of that acquisition to the profitability of the Launceston office.

[Counsel] put to Mr Loone in cross-examination that his evidence that he decided to leave CHA on 12 July 2016 was a lie. [Counsel] put to Mr Loone that he had already made a definite decision that he would be leaving by 30 June 2016. I do not accept [counsel's] submission that Mr Loone lied when giving evidence that he only made the decision to leave Crowe Horwath upon his return from leave on 11 July 2016. I accept Mr Loone's evidence that he had made a decision by 30 June 2016 that he would be leaving at some stage in the future but had not made a definite decision as to the timing of his departure. I accept his evidence that the 'final straw' which prompted the decision to leave as conveyed to Mr Roberts on 12 July 2016, was his telephone discussion on 1 July 2016 when he was told of the exclusion of the DFG acquisition from the Launceston bonus pool. The fact that Mr Loone had made a decision as at 30 June 2016 that he would be leaving CHA at some point in the future did not preclude Mr Loone from relying upon the advice he received on 1 July 2016 as a basis for terminating the Contract.

Mr Loone telephoned Mr Roberts at about 9.30 am on 12 July 2016:

I said to him that I was ringing to tell him that I was leaving, that I felt Findex and Crowe Horwath had not fulfilled their obligations to me and they'd changed my role, changed my REM, as in my remuneration, and I no longer had the autonomy that I'd signed on for and I couldn't accept that ... Mr Roberts said to me that there were others in the same boat and he accepted that - he said that he agreed that all of those things had changed.

The email which Mr Loone forwarded to Mr Roberts on the morning of 12 July 2016 made specific reference to changes to his remuneration:[48]

My decision has been made because of the numerous events, especially in regard to the implementation of the Family Office program and the new Remuneration and Equity models. ... I believe the calculation of my remuneration is also an unacceptable major change.[49]

90 It is crystal clear, not only from his Honour's reasons, but also from cross-examination of the respondent, and from closing submissions made by applicant's counsel, that the respondent's credibility was heavily attacked. He was accused, in terms, of having lied about matters which are presently pertinent. But the judge, having heard and seen the respondent give his evidence, accounted him a witness of truth.

91 It was submitted in writing for the applicant that the judge had in fact found that the respondent had decided he would leave CHA as at 30 June 2016. The judge had necessarily erred in finding that the respondent could rely upon what Mr Roberts said on 1 July 2016. Moreover, his Honour had erred in holding that the respondent could rely upon the cumulative effect of the applicant's conduct before and after 30 June 2016.

92 Orally, applicant's counsel submitted that the judge had found that the respondent had made a definite decision to leave CHA's employment by 30 June 2016. All that remained was a question of timing.

93 It was submitted in writing for the respondent that it was wrong for the applicant to have submitted that the respondent had decided to terminate his employment on 30 June 2016. Termination by acceptance of repudiation takes place on communication of acceptance to the wrongdoer. The respondent was entitled to consider the bonus decision when accepting CHA's repudiation on 12 July 2016.

94 It was further submitted that, according to the respondent's evidence, his decision to 'absolutely leave' was made whilst he was on leave between 4 and 11 July 2016. It was a step which, when communicated, meant loss of a bonus of $100,000 which was due to be paid at the end of August 2016.

95 Again, it was submitted that, even if the judge had erred in his finding as to when and why the respondent accepted the applicant's repudiation of the contract, the respondent was entitled to rely, in this proceeding, upon any circumstances supporting a right to repudiate, whether the same was known at the time and whether or not it was actually relied upon. Counsel cited Shepherd v Felt and Textile of Australia.[50] That submission was advanced in reliance upon a notice of contention filed by the respondent.

96 Orally, counsel added a little to his written submissions. He contended that for a person to say that he or she wants to leave a job does not mean that the person is going to leave. People stay in jobs that they hate. But, in any event, the respondent's decision to leave had been made in the course of detailed discussion with his wife whilst he was on leave.

97 Counsel referred next to the judge's acceptance of the respondent as a witness of credit. He submitted that this was a hurdle which the applicant could not get over.

98 Again, counsel submitted that the 'stonewalling' reference in the respondent's note of 30 June 2016 fell flat. The fact was that the respondent had told both Mr Wilkins and Mr Roberts on 30 June 2016 that he would be re-assessing his position. His evidence had been that he was basically threatening to resign.

99 Counsel referred also to the respondent's evidence that the bonus decision was 'like the last straw'. He submitted that this evidence was credible.

100 In our opinion, on a thorough review of the evidence, but bearing in mind and giving proper weight to the judge's assessment of the respondent as a witness of truth, his Honour's conclusion that the respondent was entitled to bring to account the bonus decision when terminating the contract cannot be successfully impugned.

101 Standing against such a conclusion, the applicant strongly contended, was the respondent's file note with respect to his conversation with Mr Wilkins on the evening of 30 June 2016. We must therefore address that note, whilst remembering that it was not the only pertinent evidence.

102 All but one of the matters set out in the note imply that the respondent was a person concerned to ensure that working arrangements should improve. Raising those matters was incompatible with the respondent being a person who no longer had any interest in CHA's business because he had decided to leave the employment.

103 The applicant relied upon the note so far as it stated, 'I felt I needed to give [Mr Wilkins] some examples so he didn't feel stonewalled and hence on notice that I would be leaving'.

104 Obviously, that entry could be read as meaning that the respondent had made a firm decision to leave CHA's employment, but was talking about problems in the business to distract attention away from that decision. But to conclude that the respondent had engaged in such a tactic could be said to make little sense. Only hours earlier, the respondent had told both Mr Wilkins and Mr Roberts that he would be re-assessing his position. He had, as he said in evidence, basically threatened to resign. There would seem to have been little, if any, point in the respondent concealing from Mr Wilkins, in the conversation later on 30 June 2016, an intention, finally reached, to terminate the employment if, indeed, the respondent had that intention. The more likely interpretation is that the respondent had not formed a definite intention to leave CHA as at the evening of 30 June 2016, but was strongly so inclined. One would think that the lure of a bonus payment in a considerable amount, due to be paid to the respondent in August 2016, would have been a brake on both reaching and implementing a decision to leave the employment forthwith.

105 Such an interpretation fits in, we think, with the respondent's description of the bonus decision as 'like the last straw'. Within a fortnight thereafter, the respondent was gone. Except for the part payment in March 2016, the 2015-16 bonus was lost. Further, in terminating the employment, by his email of 12 July 2016, the respondent referred, inter alia, to financial matters.

106 The interpretation of that part of the 30 June 2016 file note upon which the applicant relied, which we consider to be the preferable one, when taken together with the evidence which the respondent gave as noted in the judge's reasons, is not contrary to the overall thrust of the respondent's evidence, in cross-examination, that he had made a decision that he could not stay at CHA, but had to work out whether he was actually going to implement that decision.

107 This also needs to be remembered. The respondent accepted the applicant's repudiatory conduct on, not before, 12 July 2016. By then, that conduct included the bonus decision.

108 We should finally refer to the applicant's submission that the judge erred in holding that the respondent could rely upon the cumulative effect of the respondent's conduct before and after 30 June 2016. There is nothing to the point. The judge dealt with it at [50] in his reasons. He made it clear that the bonus decision was repudiatory conduct on a standalone basis. His observation that, alternatively, the conduct was cumulative with the proposed changes to the remuneration model - that is, what we have called the incentive model - was beside the point.

109 Ground 1(d) is curiously expressed. Although we have set it out earlier, we should do so again:

Ground 1(d): The trial judge erred in concluding that Loone could, on 12 July 2016, in claiming that CHA repudiated the 2012 Contract, rely upon earlier alleged repudiatory conduct by CHA that was not identical to that which was not acted upon prior to the 1 July 2016 repudiation and acceptance of same by Loone.

110 The question of 'repeated repudiation which was identical', as we have already noted when considering ground 1(c), was of no relevance to the judge's conclusion that the bonus decision was standalone repudiatory conduct, upon which the respondent was entitled to rely. But his Honour did deal with the applicant's submission with respect to 'repeated repudiation which was identical' later in his reasons. He did so when addressing the respondent's change of position case.

111 By the applicant's written outline, it was submitted that the judge should have followed the decision of Mandie J (as his Honour then was) in Marks.[51] It was submitted that the trial judge had refused to do so at [50] and [112] in his reasons. It was further submitted that a party should not be permitted to exhume earlier conduct for the later purpose of asserting repudiation.

112 Orally, counsel said nothing about the judge's non-reliance on earlier breaching conduct when considering the character of the bonus decision on 1 July 2016. Rather, he concentrated his submissions on what the judge had said with respect to change of position breach.

113 It was submitted in writing for the respondent that the judge's conclusions at [110]-[112] of his reasons were correct.

114 Orally, counsel added that, as the applicant would have it, an employer, in deciding whether to dismiss an employee, could bring the employee's past conduct to account in the event of further misconduct. There was no need for the misconduct to be identical. But it was said to be otherwise if the misconduct was that of the employer. There was no basis for such a distinction.

115 Interesting as the submissions were, in our opinion it is unnecessary to address this ground of appeal. That is so for three reasons.

116 First, as drafted, ground 1(d) seems to fix on the significance of the bonus decision and CHA's earlier breaching conduct. But the judge decided that the bonus decision was standalone repudiatory conduct, unaffected by any past breaching conduct.

117 Second, the judge decided that breaching conduct sufficient to justify acceptance of repudiation by the respondent was constituted, independently, by communication of the incentive model to the respondent, and the bonus decision. His Honour only dealt with the respondent's change of position case for completeness' sake.

118 Third, his Honour decided that the respondent made out his change of position case in reliance on CHA's presentation on 9 June 2016. Earlier breaching conduct there had been. But it was brought to account simply as providing context in which to consider the significance of the so-called family office initiative; and then only on the footing that the breaching conduct was relevantly identical.

119 In the event, his Honour's opinion as to the true limit of Marks was unnecessary to his determination of breaching conduct of the two kinds upon which the respondent relied.

120 The question raised by ground 1(e) is whether the judge erred in finding that by 1 July 2016[52] the applicant required the respondent to occupy a position other than that of Managing Principal, and so breached cl 1.4 of the contract - that is, putting to one side for the moment the possible application of sub-pars (a) and (b) of that clause.

121 We have set out cl 1.4 and item 4 of sch 1 at [19] above. The content of a Managing Principal's role was set out in the document headed 'Managing Principal - Role Profile' which is annexed to these reasons. The judge set out parts of that document at [88] in his reasons.

122 The judge observed that much of the respondent's evidence regarding changes that were introduced between late 2015 and mid-2016 and which impacted on his role as Managing Principal was unchallenged.[53] His Honour then set out, in careful detail, the changes which took place:

Mr Loone was responsible for setting the strategy in the Launceston office. Strategic decisions included setting goals for the next three year period. This included strategic decisions as to service lines 'and how we wanted to operate as a business, what our key messages were to both our staff and to our clients'. Strategy also meant 'things like training; it meant, obviously, recruitment and staff management; it meant incentive programs; it meant overhead management, all of those types of things'. However, with the introduction of CHA's 'one best way' approach across all 112 offices 'everything had to fit in with that'.

Prior to January 2015, Mr Loone had full autonomy to spend money in the Launceston office without seeking approval. From late 2015, all expenditure had to be authorised via the Task Project Request System. In addition, he would sometimes have to present a business case for expenditure. By early 2016, Mr Loone had no authority to authorise any expenditure. All decisions had to go through the Task Project Request System.

From late 2015 human resources, marketing and finance functions no longer reported to Mr Loone or worked under his authority and oversight. From late 2015 Mr Loone no longer had authority in respect of budgeting, 'the budgeting process was consolidated back to head office and, apart from some consultation, a little bit on wages, there was nothing'.

Prior to late 2015 Mr Loone had complete oversight in regards to debtor management which he delegated to Principals in the Launceston office. From late 2015 the discretion in respect of debtor management was governed by a tight policy on work in progress. A Head of Credit was appointed in respect of these matters who was located in Sydney.

Prior to late 2015 Mr Loone was personally involved in high level appointments and final decisions regarding staff recruitment. He delegated the vetting of candidates to Principals in the Launceston office. Mr Loone would then see the last two or three candidates and make a decision. Mr Loone not only had authority to hire people, but also to dismiss staff as well. From late 2015 Mr Loone's authority to recruit and terminate staff was 'effectively taken away'. Thereafter Mr Loone had to submit a request for permission to appoint someone. If the request was approved the Talent Acquisition Team would place the advertisements, undertake the initial interviewing and create a short list of potential candidates. The final selection had to go back to the Talent Acquisition Team for approval.

Prior to late 2015 performance management of staff was Mr Loone's responsibility. He delegated each member of staff's performance reviews to be conducted by their relevant Principal, as each Principal was responsible for a team of 12 to 18 people. After late 2015, the HR department, which was based in Hobart, ran performance management and they reported directly to head office.

Prior to late 2015 Mr Loone set key performance indicators for staff in the Launceston office. As part of this responsibility he developed position descriptions for staff and built an incentive model to reward people that fulfilled these tasks. Post late 2015 Mr Loone no longer had any real say in these matters. There was a national remuneration committee appointed and the incentive for staff had to be approved by this committee.

Prior to late 2015 Mr Loone had responsibility for training and development of staff in Launceston. He delegated this responsibility to two Principals in Launceston. After late 2015 this responsibility was centralised in Sydney and thereafter all training was standardised, even in regards to staff that may have particular strengths and skill-set gaps.

Prior to late 2015 Principals had credit cards to meet travel expenses and Mr Loone had oversight of this expenditure. After late 2015 all travel expenditure had to be approved by the regional chief executive.[54]

123 Of particular importance to the alleged change of position breach was the 9 June meeting at the Melbourne office of CHA. It was attended by the respondent and by other senior people from the southern region. The respondent gave what the judge described as 'largely unchallenged' evidence about the meeting. Relevantly, it concerned implementation of the family office initiative.

124 The meeting built upon what had previously been said about that initiative. His Honour stated in that connection:

During the second half of 2015, CHA provided information to all of its employees regarding a proposed 'family pilot program' which would precede the introduction of the 'Family Office Initiative' throughout all parts of CHA's business in 2016. The company wide publication 'Radar', dated 6 October 2015, provided an update on the Family Office Initiative. The update included the following:

Family office update

In order to deliver our family office strategy, which seeks to provide a holistic suite of services to match the needs of our clients, we know that more collaboration and teamwork is required across different parts of our business. Within this framework, getting our Principals and senior-client facing staff working together across brands and service lines is essential.

We have categorised our service lines into 'general' and 'specialist' areas. General service lines are of our most common areas, being business advisory, financial planning and general tax. Our specialist service lines are less common but equally critical in delivering the family office strategy to our clients. Examples of specialist service lines include corporate finance, audit, lending, general insurance and risk insurance, among others. We believe these specialist services should each come together in their own company-wide 'specialist families'.

Structuring ourselves around internal 'families' will help drive the collaboration our clients are looking for. This week we are launching a 'Family Pilot Program' to road test our approach before launching to all parts of the business in 2016.

Here are some of the key facts about the 'Family Pilot Program':

• We have formed nine 'general families' (five in Sydney and four in Melbourne)
• Each general family comprises of a handful of Principals, who we are asking to meet together regularly as a 'family' to work on joint business development opportunities
• We have formed a specialist Corporate Finance Family, comprised of representatives from Sydney, Melbourne, Brisbane, Perth and

Auckland, who we are asking to be a central port of call for all corporate finance work across the group.

• We have formed a specialist Lending Family, at this stage comprised only of representatives from Sydney and Colac, to work closely with the general families in Sydney and Melbourne on lending opportunities for our clients
• In Auckland, we have formed a hybrid family, comprised of representatives from general and specialist service lines, to test a different model for the New Zealand market, given that at

present we do not have financial planning presence in New Zealand.[55]

125 His Honour summarised what transpired at the 9 June meeting, and its significance for the respondent, this way:

Earlier in this judgment I have referred to the presentation which Mr Loone attended in Melbourne on 9 June 2016. During the course of this meeting, CHA executives provided detailed information regarding the reporting structures which would be implemented as part of the Family Office Initiative. The presentation on 9 June 2016 consisted of a series of slides which a relevant senior CHA manager would speak to. One of the slides was headed 'Managing the Pathway Transition'. The slide provided as follows:

Managing the Pathway Transition

• The Findex Operations department have combined with HR People & Culture to formally roll out the new development pathways in conjunction with feedback from local offices.

― Each team will be provided with an overview of the new pathways.

― Operations and HR People & Culture will work with local leaders to align their staff to the new structure and effectively communicate the changes where required.

― Two key streams in Client Services and Adviser Services.

• We want those on the Adviser Pathway to focus purely on clients and not have to worry about the performance of support staff.
• We can achieve this by empowering two key positions:

1. Senior Client Service Manager.

2. Senior Adviser Support Manager.

Mr Loone's evidence regarding the presentation on 9 June 2016 was largely unchallenged. During the meeting he was told that a person would be introduced that would look after accounting teams and that position would 'mostly' be a regional position. Previously, administration and accountants were supervised by team Principals in the Launceston office who in turn reported to Mr Loone. Under the Family Office Initiative there would be a 'pool structure' where these persons would be supervised by a regional appointment and the Principal (and the Managing Principal in supervising the Principal) would no longer have a role.

The Family Office Initiative established two discrete reporting structures: client services and adviser support. Prior to the Family Office Initiative, client services staff took direction from their team Principal and from Mr Loone as Managing Principal. This was also the case of adviser support staff. Under the new structure, in the case of client services, staff would be under the direction of a person in a new position, Regional Senior Client Service Manager. In the case of adviser support, staff would report to a person known as Regional Adviser Support Manager. The Managing Principal's responsibility for the areas of client services and adviser support would be removed.

One of the slides on 9 June 2016 was entitled 'Managing Partner Role'. The slide confirmed that the Managing Partner 'does not manage staff on the Client Service Pathway'. Mr Roussos stated in respect of this slide that the Managing Partner role was 'to be removed of a lot of the administrative and management functions so that they could then spend a lot more time in a client-facing role'. Previously 60 per cent of Mr Loone's role as Managing Principal involved administrative and management functions and only 40 per cent involved dealing with clients.

One of the slides presented on 9 June 2016 was entitled 'P & L Responsibility - Partners/Principals. The slide was presented by Mr Jovanovich and Mr Owen Maher, CHA executives. They explained that a Managing Partner's profit and loss responsibilities would be confined to gross margin and indirect revenue of the families at the Launceston office. Gross margin was confined to the revenue of the family, less wages of the advisers in the family. In contrast, Mr Loone, as Managing Principal was 'responsible for the full profit and loss, which would have been revenue, wages, overheads, a typical profit and loss right down to the net operating profit line', and this was in connection with a firm, not a family. Mr Loone stated that this was 'quite a significant change because it removed the staff management component of my role' and 'it meant the efficiency improvements and those sort of things out of developing those position descriptions and incentive models, that was all taken out of my hands. It was now being done at a corporate level'. The effect of the change was that he would no longer be responsible for managing overheads and expenses and trying to get a better net profit.

The Family Office Initiative was scheduled for implementation in the Launceston office on 1 August 2016. During the presentation on 9 June 2016, Mr Loone was presented with detailed information regarding the impact of the Family Office Initiative on the Launceston office. Viewed objectively, the information provided on 9 June 2016 could have left Mr Loone in no doubt that the Family Office Initiative would have a profound impact upon the work he performed personally on a daily basis, and upon his management responsibilities in respect of the staff of the Launceston office. At the heart of the initiative was the objective of significantly increasing the amount of time which fee earners such as Mr Loone would have to engage in fee earning activities. In order to facilitate this, management responsibilities of other staff was to be taken away from Mr Loone.

The question for determination is not whether the Family Office Initiative made good business sense. Rather, it is whether Mr Loone was entitled to have formed the opinion that CHA no longer intended to be bound by fundamental provisions of the Contract. This question is to be answered in the affirmative. The presentation on 9 June 2016 in respect of the Family Office Initiative would have conveyed to a reasonable person in Mr Loone's position renunciation by CHA of a fundamental obligation under the Contract. He was being stripped of his management responsibilities in respect of all of the administrative and support staff in the office. His profit and loss responsibilities were being significantly wound back. His management responsibilities in respect of employees in client facing roles were being significantly eroded by the creation of the new position of Senior Adviser Support Manager.[56]

126 It having been submitted for the applicant that the proposed changes were still subject to discussion at the time when the respondent terminated his employment, having analysed certain evidence in that connection,[57] the judge concluded that:

As at 12 July 2016 it was unclear whether by reason of the new management structure to be introduced as part of the Family Office Initiative Mr Loone would be able to retain the title of Managing Principal. There is, however, no evidence of anybody telling Mr Loone that he could no longer use the title of Managing Principal. Whilst this aspect of the Family Office Initiative was up in the air at 12 July 2016, there was no question of any uncertainty regarding the other matters which were the subject of the presentation on 9 June 2016. The implementation date of 1 August 2016 was presented as a fixed date. Trials of the Family Office structure had been in place since late 2015. A reasonable person in Mr Loone's position on 9 June 2016 was entitled to assume that all of the changes presented on 9 June 2016 would in fact be implemented on 1 August 2016.[58]

127 In response to a submission for the applicant that the changes which were to be introduced were 'policies, guidelines or procedures' within cl 5.1(i) of the contract, and thus matters in respect of which the applicant could permissibly require the respondent to act in the particular manner, the judge concluded that

[t]he changes to be introduced on 1 August 2016, through the implementation of the Family Office Initiative, significantly reduced the responsibilities which had hitherto been exercised by Mr Loone. Changes of this magnitude cannot be properly described merely as 'policies, guidelines or procedures'. So construed, they would permit CHA to breach the commitment contained in cl 1.4.[59]

The changes were of a magnitude which, if categorised as the applicant contended they should be, would have permitted the applicant to breach an obligation to consult with the respondent set out in cl 1.4 of the contract.

128 Even before the 9 June meeting, the respondent had not remained silent. In September 2015, he met with Tony Roussos, then the Chief Operating Officer of CHA, and Bruce Roberts, his immediate superior. He asked what the position of Findex was on retaining the autonomy and decision-making capabilities that the Launceston office had at that time. He specifically raised the application of the 'one best way' approach in Tasmania. Mr Roussos replied that the one best way was 'very important' and 'it was too difficult to manage businesses if they weren't doing it all the same way'.[60]

129 The judge accepted that the respondent continued to complain, in the remaining period of his employment, about the changes in his role which we have described.

130 Having reviewed the pertinent evidence, the judge accepted the submission of respondent's counsel that

the cumulative effect of the changes in Mr Loone's responsibilities from late 2015 resulted in a significant reduction in the responsibilities which he had exercised between November 2012 and January 2015.[61]

131 This led on to his Honour's consideration of two questions, viz:

(i) at what point in time did the cumulative effect of the diminution in responsibilities constitute a repudiation; and

(ii) at any point thereafter did Mr Loone affirm his contract?[62]

132 These questions involved analysis of both factual and legal matters. Relevant at a factual level was the respondent's acceptance, on 7 March 2016, of an advance part bonus payment for 2015-16. This did not mean, his Honour said, that position changes introduced before acceptance of the part bonus became irrelevant to the repudiation which was asserted by the respondent.

133 As we have earlier noted, his Honour's analysis of pertinent authority was challenged in this Court. But the judge's conclusion with respect to change of position breach did not depend upon the correctness or otherwise of that analysis. That was so because - (1) his Honour held that the family office initiative would have conveyed to a reasonable person in the respondent's position renunciation by CHA of a fundamental obligation under the contract;[63] (2) at its highest, the judge treated changes instituted before receipt of the part bonus payment as providing context in which to examine the significance of the family office initiative;[64] and (3) on a narrow reading of Marks, his Honour concluded, there was a significant position change subsequent to the respondent's acceptance of the part bonus - that is, the family office initiative - which was of 'identical character' to the applicant's impugned conduct preceding acceptance of the part bonus.[65]

134 It was submitted for the applicant in writing that cl 1.4 of the contract was not engaged, because no person had directed the respondent to occupy a different position. As at both 1 and 12 July 2016, he was the most senior executive in the Launceston office, the Managing Principal. There was no evidence that the respondent was told he would cease to be the most senior employee in that office.

135 It was submitted in writing for the respondent that the judge had found that the implementation of the family office initiative 'entailed a significant reduction in [the respondent's] management responsibilities'. That finding was not challenged. Rather, CHA was suggesting that cl 1.4 was not engaged because what occurred was a mere change in policies, guidelines or procedures; and so, must be complied with by the respondent by reason of cl 5.1(i) of the contract. But the judge had resolved that question of fact against CHA. Moreover, on 12 July 2016, Mr Roberts had agreed with the respondent that the latter's management discretion had been stripped from his role and that he no longer had the autonomy and the decision-making capabilities that he had when he signed on for the role of Managing Principal in 2012. That account of the conversation between the respondent and Mr Roberts had not been challenged.

136 Orally, counsel submitted that it was a non-sequitur for the applicant to contend that there had been no change in the respondent's position because he was always the senior person in the Launceston office. It was erroneous to simply empty the content of cl 1.4 of the contract and say that there was no position change because the respondent kept the same title and remained the most senior person in the Launceston office.

137 In our opinion, the judge's conclusion that, at the least because of the family office initiative, the applicant was requiring the respondent to occupy a position other than that of Managing Principal was correct. Putting to one side changes in role that were instituted up to the time when the respondent accepted the part bonus (in March 2016) and concentrating only upon the changes that were to be implemented under the family office initiative, we think it is very clear that the changes were such as to vastly affect the role of Managing Principal as that role had been described in the Managing Principal - Role Profile document which applied before the acquisition of CHA by Findex. His Honour's detailed account of the changes to be wrought by the family office initiative show why that is so. They show also why the changes went far beyond 'policies, guidelines or procedures'.[66]

138 The question then becomes whether it can be said that CHA required the respondent to occupy a position other than that of Managing Principal for the purposes of cl 1.4. The position advanced by the applicant reduced to this: that if the title remained, or if seniority in a particular workplace remained, then it could not be said that an employee was being required to occupy a different position. Any change then fell within 'policies, guidelines or procedures'. In our opinion, that submission involved the proposition that form should triumph over substance. We do not accept that an employment contract should be read in an unrealistic, uncommercial way. And that is what, as it seems to us, the applicant's submissions invited the Court to do.

139 Upon an assumption that the applicant did require the respondent to occupy a different position than that of Managing Principal, the applicant was entitled to and did rely upon sub-par (a) of cl 1.4 of the contract. That is, the applicant contended that it had consulted with the respondent in relation to the change. The judge found against that contention. That finding is the subject of ground 1(f).

140 Upon the same assumption, the applicant was entitled to rely upon sub-par (b) of cl 1.4. That is, it was entitled to contend that the different position was at least equivalent in status to, and had a level of remuneration which was at least equivalent to, the position of Managing Principal. The judge concluded that cl 1.4(b) could not be successfully availed of by the applicant. That finding is the subject of ground 1(g).

141 The judge's reasons with respect to the cls 1.4(a) and 1.4(b) arguments built upon his Honour's extensive analysis of the circumstances in which the change of position, most particularly the family office initiative, was to be implemented. His Honour said:

Clause 1.4 conferred upon CHA the right to require Mr Loone to occupy a position other than the position of Managing Principal if it consulted with him in relation to the change and the other position was at least equivalent in status and remuneration. Whilst it is clear that Mr Loone was provided with information regarding the implementation of the Family Office Initiative, there was no meaningful consultation regarding this change. The obligation to consult in cl 1.4(a) is a personal obligation as between Mr Loone and CHA. The Launceston office was but one of 112 offices of CHA nationally and in New Zealand. CHA had a 'one best way' policy, which involved standardised practices throughout all of its offices. There is a significant tension between the requirement under cl 1.4(a) to personally consult with Mr Loone regarding changes which impacted upon his position, and the implementation of the Family Office Initiative throughout all offices in the CHA network. At no stage was Mr Loone given a meaningful opportunity to contribute to the decision as to whether or not the Family Office Initiative would be implemented in the Launceston office. The provision of information regarding the implementation of the Family Office Initiative did not constitute consultation as required by cl 1.4(a) of the Contract.

If I am wrong in the conclusions set out above and the provision of information to Mr Loone did constitute consultation within the meaning of cl 1.4(a), the position which he was to occupy post the implementation of the Family Office Initiative was not of at least equivalent status to that which he had previously occupied. The significant diminution in the responsibilities which he would undertake under the new structure translated into a reduction in status.

I accept CHA's submission that there is no evidence that Mr Loone was told that post the implementation of the Family Office Initiative he would cease to be the senior employee in the Launceston office. However, this is not determinative of whether the position he would occupy post the implementation of the Family Office Initiative was of at least equivalent status. The reference to status in cl 1.4(b) embraces not only the seniority of the position, but the management responsibilities vested in the occupant of the position.[67]

142 It was submitted in writing by the applicant that the judge's conclusion that there had been no meaningful consultation by the applicant with the respondent was not open on the evidence. Alternatively, the judge erred in his construction of what was embodied within the verb 'consulted' and failed to take a commercial and sensible approach in that connection.

143 The applicant drew attention to evidence, accepted by the judge, that the respondent had engaged in face-to-face discussions with CHA senior executives about possible changes to the CHA operating model in 2015; had attended various presentations on the family office model, including a detailed presentation on 9 June 2016; and had engaged in ongoing discussions with Messrs Roberts and Wilkins subsequent to 9 June 2016. So, it was submitted, the judge ought to have found that these discussions were direct, personal and meaningful opportunities to discuss the changes being proposed in the workplace.

144 It was further submitted that the judge had erred in relying, with respect to the concept of consultation, upon Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v QR Ltd.[68] There, the concept of consultation had been considered in the context of statutory regulation of collective bargaining relations and quasi statutory instruments. That was a quite different context.

145 Orally, with respect to ground 1(f), counsel submitted that there was no justification for importing the requirement of meaningful consultation and contribution into cl 1.4(a). Furthermore, the judge had not given any indication of what that would require.

146 With respect to ground 1(g), it was submitted for the applicant in writing that the respondent was not directed nor required to work in a new position at Launceston. He remained the most senior executive in the office. He suffered no reduction in remuneration. He was not asked to move office. By cl 5.3 of the contract, the applicant was entitled to vary the respondent's duties as it considered necessary from time to time. Further, the respondent continued to have direct dealings with CHA senior management. No person was interposed in the management structure.

147 It was submitted in writing for the respondent that the judge had been correct to conclude that the obligation to consult in cl 1.4(a) was personal as between the respondent and CHA; and that his Honour was correct to find that the group presentation on 9 June 2016 was not a genuine and meaningful consultation with the respondent.

148 As to ground 1(g), it was submitted that the judge's finding at [133] that '[t]he reference to status in cl 1.4(b) embraces not only the seniority of the position, but the management responsibilities vested in the occupant of the position'[69] was correct, and that, his Honour having found that there had been a significant diminution in the respondent's status and responsibilities,[70] the applicant must fail in its reliance on cl 1.4(b) of the contract.

149 In our opinion, the judge was correct to find that the applicant could not successfully rely upon cl 1.4(a). There is an evident distinction between consultation and an edict. The applicant's 'one best way', and its family office model, family office structure and family office initiative all indicated a centralised decision to implement change across the 112 Australian and New Zealand CHA offices. It was the imminent implementation of the family office initiative which the judge treated as being the repudiatory conduct with respect to the change of position. The implementation of that initiative had been foreshadowed in the second half of 2015, and, as the judge recorded,[71] a company-wide publication dated 6 October 2015 had updated the initiative. The 9 June 2016 meeting, in context, could not be seen as engagement in consultation, but as rather proclamation of an edict. It is not difficult, in our opinion, to understand what his Honour was getting at when he said that, for cl 1.4(a) to be engaged, consultation must be 'meaningful'.

150 His Honour was further entitled to conclude that such concerns as the respondent thereafter expressed were no more than whistling in the wind. There was not the slightest prospect, realistically, that the family office initiative was going to be tailored to suit the respondent's concerns. A reasonable person in the respondent's position would have so concluded.

151 Whether Queensland Rail was a useful or an appropriate comparator with respect to the concept of consultation is, in our opinion, beside the point. Focusing simply upon the language of cl 1.4(a), for the reasons which we have indicated, the judge was well-entitled to conclude that the applicant did not consult with the respondent in relation to the change of position.

152 Because sub-pars (a) and (b) of cl 1.4 are expressed conjunctively, it follows that, because sub-par (a) could not be successfully availed of by the applicant, the argument directed to sub-par (b) is beside the point. For sake of completeness, however, we should say that we agree with the judge's conclusion that the fact, as it appears, that there was no evidence that the respondent was told that he would cease to be the senior employee in the Launceston office after implementation of the family office initiative was not determinative whether the position he would then occupy was of at least equivalent status. We think there is force to the judge's observation that status requires consideration not simply of seniority, but of the responsibilities vested in the occupant of a position.

153 Here, according to the judge's findings, those responsibilities were to be greatly reduced after implementation of the family office initiative. It follows, in our view, that his Honour's conclusion that the 'significant diminution in the responsibilities which the respondent would undertake under the new structure translated into a reduction in status'.[72]

154 For the reasons we have given, grounds 1(a), (b), (c), (e), (f) and (g) must be rejected, whilst it is unnecessary to address ground 1(d). None of the grounds has a real prospect of success. We should refuse the applicant leave to appeal on grounds 1(a)-(g).

155 The judge decided, as we have earlier noted, that the restraint clause - despite sch 2 cl 1.2(e) of the contract - was unenforceable against the respondent in the circumstances of the case. Those circumstances were that the applicant had repudiated the contract and the respondent had accepted such repudiation.

156 Grounds 2(a)-(d) attack that conclusion. Ground 12 addresses an observation by the judge, obiter dictum, that if the restraint clause had been otherwise enforceable against the respondent, he would have refused to grant the injunctive relief having regard to equitable considerations.

157 A starting point for consideration of grounds 2(a)-(d) is the language of the acknowledgments in sch 2 cl 1.2(e) and sch 2 cl 1.2(g)(ii), those sub-clauses forming part of the agreement between the parties by operation of cl 19 of the contract.

158 We have earlier set out the acknowledgments contained in sch 2 cls 1.2(e) and 1.2(g)(ii), but it is convenient to do so again:

The obligations in this Schedule 2 survive the termination of the Employment in all circumstances and for any reason.

(ii) it is reasonable for [the employee] to continue to be bound by the obligations set out in this Schedule 2, which survive the termination of the Employment for any reason.

159 The judge considered authorities, both old and recent, in reaching his conclusion. They included General Billposting Co Ltd v Atkinson,[73] Kaufman v McGillicuddy,[74] Automatic Fire Sprinklers Pty Ltd v Watson,[75] Geraghty v Minter,[76] Rock Refrigeration Ltd v Jones,[77] Bond v Rees Corporate Advisory Pty Ltd,[78] and Richmond v Moore Stephens Adelaide Pty Ltd.[79]

160 His Honour noted that neither side had referred him to any Australian case in which a court had made orders enforcing a restraint covenant in circumstances where an employee had terminated a contract by accepting the employer's repudiatory conduct.

161 We pause to note that no decision to that effect was identified in this Court, either.

162 His Honour first approached the matter, as we perceive it, on the basis of the statement by Gibbs J in Geraghty that:

The answer to the appellants' arguments that the respondents may be in default under the deed and yet enforce the restraint lies in the principles of equity. He who comes to equity must do equity, and parties who seek equitable relief by injunction to enforce a covenant in restraint of trade 'cannot obtain such relief unless they allege and prove that they have performed their part of the bargain hitherto and are ready and able also to perform their part in the future': Measures Brothers Ltd v Measures [1910] 2 Ch 248 at 254, cited in Kaufman v McGillicuddy [1914] HCA 63; (1914) 19 CLR 1 at 10-11.[80]

Applying Gibbs J's reasoning to the present case, the restrictive covenants do not survive termination of the Contract brought about by Mr Loone's acceptance of CHA's repudiatory conduct. First, CHA did not comply with the mandatory criteria prescribed by cl 7.5. Second, the proposal to defer 20 per cent of the bonus payments for three years breached the requirement under cl 7.5 to pay in full the amount of any bonus determined by CHA. Putting to one side my findings regarding CHA's repudiation by reason of the diminution in Mr Loone's responsibilities as Managing Principal, CHA did not perform its part of the bargain under the Contract.[81]

164 His Honour returned to, and restated that conclusion at [162]-[163] of his reasons.

165 His Honour then considered an alternative approach, which he said was based upon the reasons of Stephen J in Geraghty, to the effect that a restraint covenant might be held inoperative for public policy considerations. Looked at that way -

If the effect of cl 1.2(e) of sch 2 is that the restrictive covenants survive termination effected by Mr Loone's acceptance of CHA's repudiatory conduct, the clause could not be construed as doing no more than is reasonably necessary to protect the legitimate interests of CHA, either as to the duration of the clause or its extent.[82]

166 In that connection, his Honour considered the different circumstances in which an employee might accept the employer's repudiatory conduct. He did so when considering the applicant's implicit contention that the nature of its breach was immaterial, and that the answer to the issue was to be found only in certain contractual terms. His Honour said this:

For example, if CHA falsely accused Mr Loone of misconduct and suspended him without pay, Mr Loone would be entitled to accept this repudiatory conduct as bringing the Contract to an end. Notwithstanding the nature of this repudiatory conduct, if CHA's contention is accepted, the post-employment restraints would continue to operate. If cl 1.2(e) in conjunction with the restraints has this effect, the clauses are unenforceable as an unreasonable restraint of trade.[83]

167 His Honour dealt with another way in which the matter might be approached:

A further way of approaching the question of the enforceability of the restrictive covenants post-termination is to adopt the approach endorsed by Blue J in Richmond.[84] In considering whether the restraints in the service agreement would survive termination effected by acceptance of the Principal's repudiation, Blue J considered whether continued operation would be inconsistent with the 'substantive consideration' for the restraint clause.[85] The substantive consideration for the restraint clauses in Mr Loone's contract of employment was the agreement to pay remuneration in accordance with cl 7. Mr Loone's entitlement to have his bonus assessed in accordance with the prescribed criteria in cl 7.5 and to have the full amount so determined paid to him formed part of the substantive consideration for the post-employment restraints. Properly construed, the parties' intention as manifested in the contract is that the post-employment restraints would not operate where the termination arose out of Mr Loone's acceptance of CHA's repudiatory conduct where such conduct constituted a failure by CHA to comply with the prescribed criteria which underpinned the assessment and payment of Mr Loone's bonus.[86]

168 His Honour addressed a submission for the applicant that

there was no scope for the application of the doctrine of clean hands 'because the contract expressly provides for those restraints to continue to have force, despite repudiation or termination of the contract'. [Counsel] submitted that there would have to be 'some other disentitling conduct' separate from a breach of the terms of the Contract to disentitle CHA from obtaining equitable relief.[87]

I reject this submission. Clause 1.2(e) of sch 2 does not preclude the Court, when considering whether equitable relief should be granted, from taking account of the nature of any breach of CHA's contractual obligations. However, for the reasons set out above, it is unnecessary to have recourse to equitable principles to deny CHA the relief which it seeks. The restraint clauses are unenforceable by reason of the Contract having been terminated by Mr Loone's acceptance of CHA's repudiatory conduct.[88]

169 In all, his Honour decided that the restraint clause should be held unenforceable because -

(1) the applicant had not performed its part of the bargain and was not ready and able to do so in the future; or

(2) it would be contrary to public policy to treat sch 2 cl 1.2(e) as operating subsequent to the respondent's acceptance of the applicant's repudiatory conduct. The applicant's argument meant that this clause, and hence the restraint clause, would have continuing operation despite the gravest breach of contract by it; or

(3) continued operation of sch 2 cls 1.2(e) and 3.1 would be inconsistent with the applicant not having given substantive consideration for the restraint clause; or

(4) as a matter of construction, the clause was not to have operation in the event of the applicant's repudiation of the contract, accepted by the respondent; and

(5) regardless which was the correct analysis, no case in Australia had held a restraint covenant to be operative against an employee who had accepted an employer's repudiatory conduct; and also

(6) high authority, binding upon him, dictated that sch 2 cls 1.2(e) and 3.1 be held inoperative against the respondent.

170 The fifth of those matters was implicit in his Honour's recognition that, whilst a number of alternative explanations had been given for a restraint covenant being inoperative against a repudiating employer, there was simply no recorded instance in Australia of such a covenant being held operative in such circumstances.

171 The sixth of the matters just referred to was implicit in his Honour's observation that the reasoning of Tate JA in Bond was supported by a considerable body of authority, including three judgments of the High Court - Kaufman, Geraghty and Watson - and there being no High Court authority overturning those judgments. His Honour used those circumstances to state that the judgment of this Court in Bond was authority for the proposition that a restraint covenant does not operate in circumstances such as the present. But lying behind that was his Honour's recognition that the High Court cases to which he referred have not been overturned by subsequent authority. As will be seen, it cannot be said that it was necessary to decide the particular issue in each of those three cases. But, so far as what was said was in those cases was dicta, it should attract the appellation 'considered dicta'.

172 The applicant addressed each of these grounds discretely in written argument. So, though not entirely discretely, did the respondent. We will maintain the distinction when recapitulating counsel's submissions. We will not recapitulate, however, submissions founded upon what we have described as the applicant's new arguments.

173 The arguments raised under different grounds overlapped. Often, the same authorities were cited in support of argument on different grounds. In those circumstances, we will analyse all the arguments at the one time.

174 The applicant contended in writing that, upon discharge by breach, not all obligations contained in a contract are divested or discharged. Counsel cited McDonald v Dennys Lascelles Ltd[89] and observations in Re Dingjan; ex parte Wagner.[90] He also referred to the decision of this Court in Sopov v Kane Constructions Pty Ltd (No 2),[91] and to several English authorities.

175 Orally, counsel submitted that the (dissenting) opinion of Slatter J in the Alberta Court of Appeal's decision in Globex Foreign Exchange Corporation v Kelcher[92] accorded with Australian law as to repudiation and discharge.

176 Returning to the written submissions, it was contended that the judge did not apply the established orthodoxy and fell into error. The judge erred because he did not consider whether CHA had unconditionally acquired its right to enforce the restraint clause. Clearly, CHA had done so and the covenant was triggered by termination and thereby endured.

177 Orally, counsel submitted that CHA had unconditionally acquired the benefit of the restraint clause because it had performed the whole of the contract. Its unconditional acquisition of the benefit occurred immediately when the respondent accepted employment on the terms set out in the body of the contract and in sch 2, this enabling him to continue his established relationship with CHA clients.

178 The respondent's written submissions addressed grounds 2(a) and 2(d) together. It was submitted that -

(1) when the judge stated that the restraints prescribed in sch 2 cl 3.1 were of no legal effect,[93] he was simply summarising the consequences of CHA's repudiatory conduct. Contrary to the applicant's submission, the judge did not find that the restraints were void ab initio;

(2) his Honour correctly concluded, using several different legal pathways, that the restraint clauses were not enforceable. In that condition, his Honour applied Bond, the reasoning of Gibbs J in Geraghty, the reasoning of Stephen J in Geraghty and the methodology proposed by Blue J in Richmond. Finally, obiter dictum, his Honour indicated that he would, if necessary, have applied orthodox discretionary principles to refuse injunctive relief to a contractual wrongdoer;

(3) no Australian authority had been identified in which a court had made orders enforcing a restraint covenant in circumstances such as the present;

(4) the applicant's reliance on Re Dingjan involved overreach. There was no question before the court in that case with respect to the validity of the principle in General Billposting or in Kaufman. Further, the judgment cited was that of Brennan J (not Mason CJ, as the applicant had submitted), and was strictly obiter. It was a general observation in relation to the survival of restraint clauses in normal circumstances. Neither of the authorities which Brennan J had cited had involved an employer wrongdoer; and

(5) the right of one contracting party to restrain the other from engaging in competitive conduct after termination of their contract is not unconditionally acquired where the employer has not performed its side of the bargain. CHA's submission to the contrary was against the weight of authority.[94]

(1) the only authority relating to restraint of trade cited by Brennan J in Re Dingjan was Home Counties Dairies Ltd v Skilton.[95] That was a case about the reasonableness of a restraint clause, but not in a repudiation situation;

(2) no English decision had enforced a restraint covenant in circumstances such as the present. In all, there was a 'clear line of authority of over 100 years';

(3) with respect to the applicant's argument that it unconditionally acquired the benefits of sch 2 cl 1.2(e) at the time of entry into the contract, it would be absurd if the clause should operate in the event that the employer repudiated the contract on the first day of its operation; a submission which applicant's counsel contended, in reply, was met by the decision of Brereton J in Otis Elevator Company Pty Ltd v Nolan;[96] and

(4) the justification for the restraint - see sch 2 cl 1.2(a) - was forward looking. It was not intended, on its face, to address knowledge which the respondent had acquired before the commencement of the contract.

180 The applicant submitted in writing that the judge erred in the construction task because he did not construe sch 2 cls 1.2(e) and 3.1 in accordance with the objectively ascertained intention of the parties and with the purpose and object of the restraint clause. That covenant was intended to regulate the respondent's post-employment conduct. It had a manifest purpose - the protection of CHA's goodwill and customer connection in its business. CHA had unconditionally acquired the benefit of the restraint clause. The parties had bargained for the contract in circumstances where the respondent was a former business owner and senior executive. The mutually beneficial bargain had been given effect.

181 It was further submitted that an employer's legitimate interests, protected by the taking of a post-employment restraint covenant, do not vary with the nature of the termination of the contract. However the contract might come to an end, the employer's need for protection of that interest remained.

182 Finally, the submissions drew attention to the fact that, in the context of considering whether there must be later 'identical' breaching conduct to revive prior conduct which has been affirmed, the judge had observed that whether repudiatory conduct is engaged in by an employer or employee should make no difference to the application of legal principle governing the termination of a contract by acceptance of repudiatory conduct.[97]

183 Notwithstanding that the context in which his Honour made that observation was discrete from the issue now falling for consideration, the applicant framed a rhetorical question: upon what basis could it be reasoned that employer repudiation releases an employee from a contractual promise intended to operate in the post-contractual period? That, it was submitted, would be absurd.

(1) the judge had correctly identified the purpose of the restraint clause: to protect CHA's goodwill and its client base for a 12-month period;

(2) the judge had erred by finding that the substantive consideration for the restraint was remuneration under cl 7 of the contract;

(3) the judge had erred, when considering the reasonableness of the restraints, by having reference to CHA's repudiatory conduct. Reasonableness was to be ascertained within the contract;

(4) the intended ambit of the restraints was clear from the language of sch 2 cl 1.2(e). They were intended to be enforceable regardless of the reason for termination of the contract;

(5) although no Australian decision had hitherto held that a restraint clause operates against an employee who accepts an employer's repudiatory conduct, there is no 'rule of law' which dictates such a result in every case; and

(6) the judge had erred in relying upon what he said was the reasoning of Stephen J in Geraghty. In the passage referred to by the judge, Stephen J had simply been reciting an argument advanced by the appellant in that case. Stephen J had in fact concluded that analysing the circumstances in which a restraint might be enlivened was, counsel submitted, 'not a fruitful enquiry to understanding whether in fact it is reasonably adapted to protect the legitimate interests of the employer'.

185 It was submitted for the respondent that clear words would need to be used to construe sch 2 cl 1.2(e) as surviving an occasion of unlawful conduct by the employer.[98] That was not this case. The clause should not be construed on the footing that the parties agreed that it would be extended to include unlawful termination.

186 Again, it was submitted that the construction of an employment agreement does not necessarily determine whether a 'survival for any reason' clause renders unenforceable a post-employment restraint where the employer has repudiated an employment agreement. That is because the repudiatory conduct will also render such a clause unenforceable.[99]

187 It was submitted in writing for the applicant that -

(1) the judge erred in applying General Billposting and Kaufman. General Billposting was distinguishable. Likewise, Kaufman. In any event, the decision in McDonald had since reshaped the orthodoxy on discharge and terms that are intended by the parties to survive termination. The judge erred by not attributing any weight to McDonald;

(2) BearingPoint Australia v Hillard[100] was wrongly decided;

(3) the observations of Latham CJ in Watson were obiter dicta; and

(4) both judges and authors had questioned the correctness of General Billposting and Kaufman. In that connection, counsel cited Cavill Business Solutions Pty Ltd v Jackson[101] at [41] and following, Rock Refrigeration at 20, Bond at [47] and following, Richmond at [210], Hurts v Bryk[102] and an article by Francis Dawson, 'Survival of Restraint of Trade Clauses'.[103]

188 Orally, counsel accepted that observations by Blue J, in Richmond, upon which he relied, were obiter dicta. Counsel described them as 'at best well-reasoned obiter'.

(1) the principle derived from General Billposting and Kaufman is that an employer cannot enforce post-employment restraint of trade obligations against an employee where the employer has repudiated the employment agreement and the employee has accepted the repudiation. The judge was right, and was obliged, to follow Kaufman and apply the principle enunciated in General Billposting;

(2) the judge was correct to note that the reasoning of Tate JA in Bond was supported by a considerable body of authority, including three judgments of the High Court - Kaufman, Geraghty and Watson;

(3) the judge's conclusions were consistent with the extra-judicial writing of Heydon J (as his Honour then was) in The Restraint of Trade Doctrine;[104]

(4) the judge did not err, in any event, in concluding that the restraints were unenforceable applying the considerations reasoned by Gibbs J in Geraghty. The same could be said in respect of the pathway identified by Stephen J in Geraghty;

(5) if sch 2 cl 1.2(e) survived termination effected by the respondent's acceptance of CHA's repudiatory conduct, the clause could not be construed as doing no more than was reasonably necessary to protect the legitimate interests of CHA;

(6) assuming repudiation by an employer, the survival of some clauses in an employment agreement, such as a consent to arbitration or the protection of the employer's property (including trade secrets), did not render the General Billposting principle illogical and unsound. Some clauses may survive repudiatory conduct, and some not. One that does not is a restraint clause;

(7) whilst it might be arguable that an employer's legitimate interests will not vary with the nature of the termination of the contract, the need for protection of the interests remaining, it does not follow that the right to such protection will accrue in certain circumstances. Such accrual should be conditional upon the employer's conduct; and

(8) with respect to Richmond, two points should be made. First, there was no reference in that case to the decision of this Court in Bond. Second, the reasons of Blue J in Richmond, which suggest that the survival of a restraint depends on the proper construction of the contract, relied upon Measures v Measures Brothers,[105] and the approval of Measures by Gibbs J and Stephen J in Geraghty. But Measures did not support the approach of Blue J in Richmond, and the citation of Measures by Gibbs J in Geraghty addressed a different point. Further, in Kaufman, Barton J referred with approval to the observations of Cozens-Hardy MR in Measures, they being the reasons cited with approval by Gibbs J in Geraghty. Moreover, the English Court of Appeal, in Measures, had approved the General Billposting principle.

(1) Kaufman is a decisive High Court decision against CHA. If it was to be disturbed, it must be by a decision of the High Court. It was not for this Court to go behind Kaufman and analyse it; and

(2) the judge applied, inter alia, the approach of Gibbs J in Geraghty. It was not a question of CHA having acted in bad faith, but of it not coming to the Court with clean hands, in circumstances where it had repudiated the contract and now wished to enforce a contractual term.

191 It was submitted for the applicant that the judge had erred in finding that the restraint clause was 'of no legal effect'. This treated the repudiation as an event of discharge or rescission ab initio. That approach to termination was incorrect. It is a fallacy that was dispelled by the High Court in McDonald. 'The recission [sic] theory of repudiation has long since been viewed as heretical. Termination for breach is prospective not retrospective. Accrued rights are left intact'.[106]

192 We have noted the respondent's pertinent submissions at [178]-[179] above.

193 In our opinion, the judge did not err in concluding that the applicant should not have the injunctive relief which it sought. In what follows, we acknowledge circumstances favourable to the applicant, but explain why the applicant's overall submission must, in our opinion, fail:

(1) It is clear that sch 2 cls 1.2(e), 1.2(g)(ii) and 3.1 were designed to protect the interests of CHA. They were intended to operate after the contract terminated.

(2) The respondent was familiar with the concept of a restraint clause. There had been such a clause in the 2000 and 2006 contracts. The version contained in the 2006 contract was, we note, significantly different from that contained in the contract. It provided:

in view of the importance of the restraints contained in this clause for the protection of the proprietary interests of the Employer, the obligations contained in this clause 6 will survive the Employee's termination of employment with the Employer in all circumstances, including the repudiation by the Employer of a provision of this Deed.[107]

The 2006 version cannot be used to construe sch 2 cl 1.2(e). But possibly, if not probably, CHA apprehended that its attempt to protect the survival of the restraint clause by including reference to its own repudiatory conduct was a step too far.

(3) A series of decisions in the High Court, and in courts of high authority in England and Canada, have stated, over the course of more than a century, that a restraint clause is not enforceable against an employee whose employment ends by the employer's wrongful conduct - whether it be wrongful dismissal or the employee's acceptance of the employer's repudiatory conduct. Sometimes, that affirmation has been the ratio of the decision. In other instances, it has been by way of obiter dictum.

(4) So far as the researches of counsel, the trial judge and this Court have revealed the situation, there is no reported case in a court of superior jurisdiction in Australia or England which has decided that a restraint clause is enforceable against a former employee in such circumstances.

(5) A number of rationales have been offered why a restraint clause has not been held enforceable in such circumstances. Tate JA adverted to three of the prominent explanations, obiter dicta, in Bond.[108]

(6) Although some decisions would go so far, it is not necessary to conclude that there is a 'rule of law' which dictates the result to which we have referred in every factual situation involving an employee's acceptance of an employer's repudiation of the contract between them. The cases illustrate at least that all factual circumstances considered to date have produced the same outcome.

(7) Applicant's counsel submitted that some of the reasoning in cases favourable to the respondent has been criticised, both judicially and extra-judicially. He submitted also that decisions favourable to the respondent were in some instances distinguishable. Respondent's counsel submitted, to the contrary, that the authorities provided support not simply for the overall position, but for more than one path of reasoning leading to the ultimate conclusion. We will say something about the authorities a little later in our reasons. But, anticipating our conclusions, we are not persuaded that the applicant's submissions put in doubt the relevance of the overall body of decisions adverse to CHA. In the event, if stare decisis still has any part to play in the law - and it does - then CHA's overall argument under cover of grounds 2(a)-(d) must be rejected, without more.

(8) It is the fact that some contractual provisions have been held to survive termination. One instance is a submission to arbitration clause. In that connection, we will say something later in these reasons about Heyman v Darwins Ltd,[109] an authority upon which the applicant relied.

(9) The fact that some contractual provisions survive termination is compatible with the long-established principle that discharge of a contract by breach does not mean that rights which have been unconditionally acquired are lost.[110] But there is always a question how that principle applies, at a factual level, in any case; and decisions holding that an employer cannot enforce a restraint clause against an employee where that employee has accepted the employer's repudiatory conduct do not mean that the principle has been discarded.

(10) The applicant's submission that it unconditionally acquired the benefit of the restraint clause immediately upon the respondent entering into the contract, because it was protecting confidential information and contacts earlier-acquired by the respondent, was not persuasive. That is not the language of sch 2 cl 1.2(a) of the contract. Moreover, it was relevant, according to authority, that the applicant still had contractual obligations to perform which, viewed from the perspective of a reasonable person in the respondent's position as at 12 July 2016, it refused to perform.

(11) If the construction of sch 2 cl 1.2(e) is approached, as the applicant submitted it should be, by ascertaining the objective intention of the parties, and their purpose and object, it by no means follows that the results should be that for which the applicant contended. That is so for a number of reasons:

• First, the meaning of sch 2 cl 1.2(e) should be considered by reference to the contract read as a whole.

• Second, the contract set out detailed provisions relating to circumstances of termination. We have summarised them at [21] above. Termination, in any of the ways there mentioned, would have been a termination within the contract.

• Third, it could not be doubted that termination, in any of the ways contemplated by the agreement, would mean that sch 2 cl 1.2(e) would operate in favour of the applicant.

• Fourth, repudiation of a contract is its renunciation by the offending party.

• Fifth, termination of a contract by an employee's acceptance of an employer's repudiatory conduct can be said to stand outside the contractual provisions relating to termination.

• Sixth, in our opinion, there is a strong argument, despite the language of sch 2 cl 1.2(e) relied upon by the applicant, that the intention of the parties, objectively ascertained, was that that clause would not operate in those circumstances. Rather, the words 'in all circumstances and for any reason' should be understood to embrace any and all of the circumstances of termination set out in the contract together with repudiatory conduct of the employee accepted by the employer - but not the converse.

• Seventh, such a construction is compatible with the fact that the restraint clause was designed to benefit the employer but recognising that there is good reason to differentiate, on objective consideration of the contract, between the consequences of gross default by the party claiming the benefit of such a clause and gross default by a person bound by the burden thereof.

(12) There is clear authority that language such as that used in sch 2 cl 1.2(e) will not save a restraint clause where an employer's repudiatory conduct is accepted by an employee.

(13) The applicant's submission that the employer's legitimate interest - that is, protection by the restraint clause - was no different regardless how the contract came to an end, was true so far as it went. But it does not follow that it was therefore irrelevant how the contract came to an end.

(14) The applicant's argument that the judge committed the so-called 'rescission fallacy' should be rejected. We accept the respondent's contention that the judge's reasons at [3] simply summarised the consequences of CHA's repudiatory conduct. That is clear, in our opinion, when one considers that his Honour advanced a number of different reasons why the applicant's overall submissions should be rejected.[111]

194 We stated at [193(7)] above that we would refer to authorities upon which the parties relied. We do so to explain the key propositions which we have stated in the preceding paragraph.

195 We were referred to decisions of high appellate courts, and also single judge decisions. We will address, in the main, the appellate court decisions. It is convenient to do so in chronological order.

General Billposting Company Ltd v Atkinson****:[112]

196 An employee was wrongfully dismissed without notice. Assignees of the employer brought an action against the employee in reliance on a restraint clause. The employer's contention was that the covenant by it to give notice and the covenant by the employee not to engage in another business were wholly independent of each other. This contention was rejected by the House of Lords, as it had been in the Court of Appeal.

197 Lord Collins, with whom the Earl of Halsbury agreed, concluded that the Court of Appeal had ample ground for inferring that the acts and conduct of the employer evinced an intention no longer to be bound by the contract. The employee had been dismissed in deliberate disregard of the terms of the contract and 'was thereupon justified in rescinding the contract and treating himself as absolved from the further performance of it on his part'.[113]

198 Lord Robertson rejected the employer's contention that, in substance, it was entitled both to deprive the employee, against the contract, of the right to serve it and also of the right to serve himself. His Lordship stated that, 'the covenant not to set up business is not only germane to but ancillary to the contract of service and ... once the contract of service is rescinded, the other falls with it'.[114]

199 There was no replica in that case, so far as the report reveals the situation, of sch 2 cl 1.2(e). Further, as counsel for the applicant stressed, the language used by Lord Collins and Lord Robertson referred to rescission, and so might be criticised, in light of later jurisprudence, as being based on the 'rescission fallacy'. But at the heart of the decision was the notion that the employer, having breached the contract and brought it to an end, should not be permitted to rely upon the restraint clause contained within it. That is the notion which underlies subsequent authority, although the juridical explanation of it has varied.

200 An employee was assaulted by one of his employers. The employers were constituted by a partnership. The employee gave notice purporting to determine his agreement and left the service. He set up a business in competition. There had been a restraint clause in his employment contract. The employers sought an injunction restraining him from carrying on business in breach of the restraint clause. In the meantime, one of the employers had left the partnership.

201 In the High Court, the decision of the Supreme Court of Western Australia favourable to the employee was affirmed. There were two bases for the affirmation. The first was, as had been held at trial, that the employee was entitled to treat the contract as at an end and to leave the employment. This, as Barton J observed, 'evidently embraced the conclusion that the [employee] was released from the restrictive clause as well as from the obligation of further service'.[116] The second was that the employer had been a partnership. But, one of the partners having retired shortly after the employee left the firm, the firm which had been the employer was not ready or able to perform its part of the bargain in the future.

202 Barton J referred to General Billposting. He said this:

Lord Robertson held [p 121] that once the contract of service was "rescinded," the other fell with it. Lord Collins, with whom Lord Halsbury agreed, held [p 112] that the true test applicable to the facts (above stated) was laid down by Lord Coleridge C.J. in Freeth v. Burr, and approved of in Mersey Steel and Iron Co. v. Naylor in the House of Lords - that the true question is "whether the acts and conduct of the party evince an intention no longer to be bound by the contract." There is a necessity in such case for clear, and not merely doubtful, construction to show the stipulations to be separate contracts, and that the one is to survive after the other has been brought to an end; otherwise the inference in such a case as the present is very strong that they depend on each other in the sense that each is the consideration for the other, or part thereof, so that the dissolution which puts an end to the service also puts an end to the restriction. It cannot be said that the employing firm would have agreed to employ the respondent without the restriction, or that he would have consented to the restriction without having as part of his consideration an employment which suited him in salary, duration and otherwise.[117]

203 In that connection, Barton J referred to the judgment of Cozens-Hardy MR in Measures, where his Lordship said:

I prefer to base my judgment upon the ground that the plaintiffs, who are seeking equitable relief by way of injunction, cannot obtain such relief unless they allege and prove that they have performed their part of the bargain hitherto and are ready and able also to perform their part in the future.[118]

204 Having observed that, after the dissolution of the partnership, the remaining partners could no longer give the employee the consideration which the employing partnership had agreed to give him - by performance on their part of the bargain and by readiness and ability to perform it in the future - Barton J stated, with respect to the second basis for rejecting the employer's appeal, in reliance on General Billposting and Measures, that

the maintenance by injunction (as by specific performance) of such a restrictive clause as that in question is hopeless in face of a breach of the stipulations by the [employers,] which are the [employee's] consideration for agreeing to the restriction, and which the contracting partnership could no longer perform on its part, since it had been dissolved.[119]

In our opinion, the whole agreement must be read as one contract containing a number of reciprocal stipulations, and the plaintiffs cannot ask for what is in effect specific performance of one part of the contract while claiming to be exempt from the performance of the duties under another part.[120]

206 Barton J, referring to Lord Robertson's opinion in General Billposting, used inverted commas when speaking of his Lordship's rescission analysis. Perhaps that was intended to highlight doubt about the particular approach. Be that as it may, in our view, the pervasive analysis in Kaufman is that the employer could not claim the benefit of the restraint clause when it was not ready and able to perform its obligations under the contract - an analysis explicable either on the basis that the employer had not unconditionally acquired the right to rely upon the restraint clause, or alternatively that equitable principles would deny the employer equitable relief in such circumstances.

207 True it is, so far as the report discloses the situation, that there was no equivalent of sch 2 cl 1.2(e) in Kaufman. But in light of later authorities, that would seem to make no difference to either of the alternative explanations for the decision.

208 In all, in our opinion, Kaufman stands heavily, if not decisively, against the applicant's case under cover of grounds 2(a)-(d); and the same may be said with respect to ground 12.

Automatic Fire Sprinklers Pty Ltd v Watson****:[121]

209 The question in Watson was whether an employer had unlawfully dismissed its employee. No question arose with respect to a restraint clause. But Latham CJ[122] said this about an employer's repudiation or breach of contract:

Neither repudiation nor an actual breach in itself brings about a discharge of the contract independently of [the employee's] acceptance ... The servant need not accept a wrongful dismissal as discharging the contract. Generally, however, it would be immaterial whether he did so or not ...

But it might be important to him to accept the breach as discharging the contract in some cases in order to relieve himself of obligations by which he would otherwise be bound, as, for example, a covenant in restraint of trade (see General Billposting Co. Ltd. v Atkinson, [1909] AC 118).[123]

210 His Honour's observation was obiter dictum. What it did do, more than 35 years after the decision in General Billposting, was to suggest that a general principle derived from that earlier case still represented the current state of thinking, notwithstanding the decision of the High Court in McDonald.

211 The question was whether a restraint clause was reasonable in circumstances where a partnership agreement under seal which contained it was lawfully terminated. Persons entitled to carry on the partnership sought to rely upon the restraint clause against retiring partners who set up in competition.

212 This was not a case, then, which involved repudiatory conduct by either party to the proceeding. It was held that the restraint was reasonable and valid, and that an injunction would go to restrain its infringement.

213 Although acceptance of repudiation was not in issue, Gibbs J, with whose reasons Aickin J agreed, addressed a particular argument that the restraint was unreasonable:

Considerable reliance was placed by the appellants on the provisions of cl 17. It was pointed out that, under that clause, the partnership might be determined because of some improper, indeed criminal, act of the respondents, and it was said that it was unreasonable that, in those circumstances, the appellants, being the innocent party, and exercising the right to determine the partnership because of the respondents' default, should be prevented from carrying on a similar business of their own. ... The answer to the appellants' arguments that the respondents may be in default under the deed and yet enforce the restraint lies in the principles of equity. He who comes to equity must do equity, and parties who seek equitable relief by injunction to enforce a covenant in restraint of trade "cannot obtain such relief unless they allege and prove that they have performed their part of the bargain hitherto and are ready and able also to perform their part in the future": Measures Bros Ltd v Measures [1910] 2 Ch 248 at 254, cited in Kaufman v McGillicuddy [1914] HCA 63; (1914) 19 CLR 1 at 10-11.[125]

214 It cannot be said that his Honour's observations, which would apply to a situation of acceptance of repudiatory conduct, were beside the point in Geraghty. They met a particular argument advanced by the appellants, albeit with respect to the reasonableness of the restraint clause.

215 Next, it is the fact that his Honour referred to the solution to the problem lying in the principles of equity. But then his Honour tied that statement to what had been said in Measures and Kaufman. What was said in those cases was capable of explanation that the defaulting party had not acquired an unconditional right to enforce the restraint clause where it was not ready and able to perform the contract in the future - being disabled from doing so by its repudiatory conduct, accepted by the employee.

216 But whether that alternative explanation be correct or not, what is at least clear is that Gibbs J treated Kaufman as establishing, in Australia, a position as to the non-enforceability of a restraint clause by a defaulting party.

217 Stephen J also dealt with the issue as to reasonableness relied upon by the appellants. He noted that they relied upon the fact that the restraint clause was imposed only upon them, and not upon all parties to the partnership agreement. Their point was that

the restraint clause might come into operation even though the partnership came to an end not merely through no fault of theirs but due to some positive fault of the [respondents] perhaps even involving fraud. A restraint clause which, in conjunction with the rest of the deed, is capable of such an operation cannot be supported as no more than a reasonable restraint of trade. On the contrary it is unconscionable and opposed to public policy.[126]

218 As his Honour observed, the appellants' submission must equally apply whenever such a 'unilateral' restraint clause appears in any partnership, either at will or which is determinable by notice.

219 His Honour's answer to the appellants' submission was this:

The reason why all such restraint clauses, otherwise perfectly valid as reasonable restraints, are not rendered invalid, as the appellants' submission would have it, is because the submission mistakes the criteria of invalidity of covenants in restraint of trade: it concentrates upon the circumstances in which the restraint may come into operation, rather than upon the reasonableness of the restraint itself.[127]

220 His Honour was there dealing with the reasonableness of the restraint clause. That question was to be considered on its merits, not having regard to the circumstances in which it was called into operation. But that is distinct from the question, considered by Gibbs J, whether a party in default under a contract would be precluded from enforcing a restraint clause, an issue not turning upon the intrinsic reasonableness or otherwise of the clause.

221 The applicant submitted, as we have earlier noted, that the judge's reliance upon the first passage in the judgment of Stephen J in Geraghty which we have cited was mistaken, because it referred to an argument unsuccessfully advanced by the appellants. There is force to that submission. But public policy considerations may nonetheless be relevant to the question whether injunctive relief, based upon a restraint clause, should be granted in favour of an employer whose repudiatory conduct is accepted by an employee. Further, even if the judge misunderstood what Stephen J said in Geraghty, it does not mean that his Honour's reasoning was otherwise put in doubt.

Re Dingjan; ex parte Wagner****:[128]

222 The main questions in this case were (1) whether provisions of the Industrial Relations Act 1988 (Cth) which empowered the Australian Industrial Relations Commission to review a contract on the grounds that it was unfair, harsh or against the public interest purported to confer judicial power on the Commission; and (2) whether the provisions were laws with respect to constitutional corporations within s 51(xx) of the Constitution. The answer to the first question was, by majority, no; and to the second question, no, for which reason the laws were invalid.

223 A subsidiary question, which did not need to be answered, was whether the power given to the Commission to set aside or vary the terms of the contract could be exercised in relation to a contract that had been discharged. Brennan J, who dissented on that question, very briefly referred to a matter which is pertinent in the present case. He stated that, when a contract is terminated, one or more of the parties may have a cause of action against the other party or parties, but, 'generally speaking, no contractual right or obligation survives termination so as to be enforceable as such'.[129]

224 His Honour footnoted to the words 'generally speaking' the following:

That is, leaving aside contracts which contain clauses intended to survive termination of the substantive provisions of a contract - for example, clauses relating to arbitration ... confidential information ... and restraint of trade ...[130]

225 In this last connection, his Honour referred to Home Counties Dairies Ltd v Stilton.[131] That was a case about the reasonableness of a restraint clause. It had nothing to do with a situation of an accepted repudiation of contract by another party.

226 In all, nothing which Brennan J said puts in doubt the general proposition enunciated in Kaufman, taken up by Gibbs J in Geraghty.

Rock Refrigeration Ltd v Jones****:[132]

227 The plaintiff company employed the first defendant (conveniently, 'the defendant') under a contract which contained restraint clauses variously expressed to take effect after termination of the contract 'howsoever arising' or 'howsoever occasioned'. The employee gave notice, left the employment and went to work for a competitor. The employer commenced proceedings, claiming damages and an injunction. The trial judge held that the restrictive covenants were necessarily unreasonable since, by their terms, they could apply even if the employer repudiated the contract.

228 The plaintiff's appeal was upheld in the Court of Appeal.

229 In Rock Refrigeration, the employee had to argue that insertion of the words into the restraint clause 'howsoever occasioned' rendered it necessarily unreasonable. That was because his employment had been terminated in a regular way, no question of repudiation by the employer arising.

230 In rejecting the employee's argument, the gist of the reasons of Simon Brown and Morritt LJJ was that, in the event of an employer's repudiatory conduct, the phrasing of a restraint clause - whether containing words such as 'howsoever caused' or 'for any reason whatsoever' or 'for whatever reason' or 'whether lawful or unlawful' - would be beside the point. The clause would be unenforceable because of the General Billposting principle, which was explained by Simon Brown LJ this way:

The whole point about the General Billposting principle is that, in cases of repudiatory breach by the employer, the employee is on that account released from his obligations under the contract and restrictive covenants, otherwise valid against him, accordingly cannot be enforced. Once that principle was decided, its future application necessarily postulated that such restrictive covenants upon their true construction would otherwise be enforceable against employees.[133]

logically it matters not whether covenants include or exclude phrases such as 'whether lawfully or not'. If they do, then to that extent they are merely writ in water, unenforceable under the General Billposting principle.[134]

231 Morritt LJ also referred to General Billposting, as an application of basic propositions to contracts of employment. Referring to the argument in the instant case, his Lordship said this:

Counsel for the employee accepted that, however expressed, the post-employment restrictions were unenforceable in the event of the employment terminating because of the employer's repudiation accepted by the employee. He accepted that in those circumstances the employee would be discharged from any further performance of the contract. But he contended that the covenants were wholly invalid on the grounds of unreasonable restraint of trade because the claim, implicit in the form of covenants, to be entitled to enforce them in such circumstances, though an empty one, might have an effect on the mind of the employee in deciding whether or not to accept the employer's repudiation. I acknowledge the ingenuity of the submission but I am unable to accept it.[135]

There, his Lordship was referring to covenants which made use of the terms 'howsoever arising' or 'howsoever occasioned'.

232 Phillips LJ (as he then was) agreed in the result. But although the case was not one in which repudiatory conduct by the employer was in issue, his Lordship nonetheless concluded that 'the rule in General Billposting accords neither with current legal principle nor with the requirements of business efficacy'.[136] He explained what he perceived to be the difficulties in applying Lord Diplock's statement in Photo Production Ltd v Securicor Transport Ltd[137] that upon acceptance of repudiation the unperformed obligations of the party not in fault are discharged, to the negative obligations placed on an employee by a restrictive covenant in relation to the period after the employment has ceased.[138]

233 His Lordship took as an example of problems which might arise the situation in which an employer exercised a right of summary dismissal. Was it then to be suggested that the employee was discharged from his obligation to observe negative restrictions imposed under the contract of employment? This, his Lordship said, 'would seem to follow if one applies the principles underlying General Billposting to such obligations, yet such a result borders on the absurd'.[139]

234 Pausing, the result bordering on absurdity about which his Lordship expressed concern does not appear to be grounded in any decision that an 'innocent' employer who accepts an employee's repudiation is unable to rely upon a restraint clause; or upon any case in which such an argument, reliant on General Billposting, has been advanced.

I do not accept that it is unreasonable for an employer to seek to impose restraints on his employees that will subsist, even should the employment come to an end as a consequence of a repudiation by the employer. On the contrary, it seems to me commercially desirable that it should be possible to achieve this end ...[140]

236 As we have said, Phillips LJ considered an issue which did not squarely arise in the case before him. There is nothing to indicate that any submission was advanced in that case as to why General Billposting might not dictate the result to which his Lordship referred. Moreover, his Lordship evidently did not accept that it was unreasonable for an employer to seek to impose restraints on an employee that would subsist even should the employment come to an end as a consequence of repudiation by the employer, its continued operation being commercially desirable from the employer's standpoint. Notwithstanding that such a clause is designed, in an employment context, to work to the employer's benefit, there are two parties to such a contract, and each is potentially affected. The position postulated was, arguably, an essentially one-sided way of looking at the issue. His Lordship's analysis has been criticised in a well-known text.[141]

237 In all, the judgments of Simon Brown and Morritt LJJ in Rock Refrigeration, representing the majority view with respect to the reach of General Billposting, strongly endorse what we have described at [199] as being at the heart of the latter decision. Rock Refrigeration also stands strongly for the proposition that words such as those used in sch 2 cl 1.2(e) - 'in all circumstances and for any reason' - will not preserve a restraint clause in the event of an employer's repudiatory conduct which is accepted by t[142]employee.142

238 This also may be said. Despite changes in legal understanding of the effect of termination of a contract since General Billposting was decided - McDonald in Australia; Photo Production in England - decisions in England, Australia and Canada have continued to follow at least the result in General Billposting. Rock Refrigeration is an instance of this.

Globex Foreign Exchange Corporation v Kelcher****:[143]

239 The employment of the three men came to an end in different circumstances. For present purposes, we focus upon the wrongful dismissal of one of the men. By majority, the Court of Appeal of Alberta[144] held that the employee was discharged from having to comply with a restraint clause. The majority opinion was given by Hunt J. Her Honour exhaustively reviewed Canadian authorities and texts, when showing that General Billposting had been applied for many years in the Dominion. She considered whether Photo Production and the decision of the Canadian Supreme Court in Tercon Contractors Ltd v British Columbia (Transportation and Highways)[145] dictated a different result. She concluded that they did not do so.

240 Slatter J, dissenting, observed that whilst General Billposting was still treated as binding authority in England, and had been followed in some Canadian cases, it appeared to be inconsistent with Photo Production and Tercon.

Bond v Rees Corporation Advisory Pty Ltd****:[146]

241 There was a sale of business. Part of the arrangement was that a key man in the vendor should be engaged as a consultant by the purchaser. The consultancy agreement, renewed more than once, contained a restraint clause. Bond, the key man, purported to terminate the contract. The purchaser accepted the notice of termination. The purchaser brought a proceeding alleging breach of the restraint clause, claiming damages and an injunction. It succeeded at first instance, and again on appeal.

242 Although the proceeding at first instance had not been argued by Bond (who appeared unrepresented both at trial and on appeal) on the footing that the employer had repudiated the contract, that he had accepted the repudiation, and that therefore the restraint clause was not enforceable against him, he applied on the appeal to amend his grounds to raise such a contention. This Court refused the application, and so the observations of Tate JA with respect to the continuance or otherwise of a restraint clause as between employer and employee, in the event of the employer's repudiatory conduct accepted by the employee, were obiter dicta.

243 That said, her Honour approached the matter from first principles, referring to the general rule with respect to the consequences of the acceptance of repudiatory conduct stated in Sopov.[147] She observed that to consider otherwise is to commit the 'rescission fallacy'.[148]

244 Her Honour noted that it was accepted by the respondents to the appeal that, for sake of argument, an employee might be released from a post-employment restraint of trade obligation if the employment contract was terminated as a result of the employer repudiating the contract and the employee accepting this repudiation. There, the respondents had relied upon General Billposting.[149]

245 Her Honour then considered the decisions in General Billposting and Kaufman before observing that -

The decisions in General Billposting and Kaufman have been interpreted as standing for the proposition that an employee's post-employment restraint of trade obligations do not survive the termination of the employment contract where termination is effected by the employee accepting the employer's repudiation of the contract.[150] However, the reason why the general rule does not apply and why these obligations do not survive termination of the employment contract is not clear,[151] particularly given the development of the law since General Billposting and Kaufman with respect to the consequence of the acceptance of a repudiation upon continuing obligations.[152] It may be that the rationale for the proposition for which General Billposting and Kaufman stand is that parties to an employment contract will be presumed to have intended that the employee's restraint of trade obligations will not survive termination of the contract where termination is effected by the employee accepting the employer's repudiation of the contract.[153] Alternatively, it may be that the enforcement of a restraint of trade clause in an employment contract following termination, where termination is brought about by the employer's repudiatory conduct, is contrary to public policy.[154] Further, it may be that the right of one contracting party to restrain the other contracting party from engaging in competitive conduct after the termination of the contract is not unconditionally acquired until the whole of the contract has been performed.[155]

246 As can be seen, Tate JA was concerned to explore the juridical basis for the long history of cases denying to an employer the right to rely upon a restraint clause where the employer's repudiatory conduct had been accepted by the employee - not the correctness of the result in those cases.

Richmond v Moore Stephens Adelaide Pty Ltd****:[156]

247 There was a sale of business by the appellant to the respondent. There was provision for key employees to provide services to the respondent. There were restraint of trade clauses. The appellant alleged breach of the agreement by the respondent amounting to repudiation. In reliance on the restraint clause, the respondent sued the appellant, seeking an injunction. The appellant's response was that the respondent had repudiated the contract, for which reason the restraint of trade clause could not be relied upon against him.

248 The Full Court of the Supreme Court of South Australia decided that, although the respondent had breached the contract, there was no breach amounting to repudiation. So the appellant's argument, founded on what may be called the General Billposting consequences of an employer's repudiatory conduct accepted by the employee did not arise.

249 Nonetheless, Blue J, with whom Kourakis CJ and Stanley J agreed, gave consideration to the issue which arises for consideration in the present appeal.

250 His Honour expressed the general rule with respect to the effects of termination of a contract this way -

The general rule and the corollaries and qualifications identified above can be expressed as a single rule: termination of a contract discharges those obligations of a party that are not contingent upon its subsistence or future events dependent on its subsistence or future obligations discharged by its termination. Whether an obligation is or is not contingent in this sense is to be determined as a matter of construction of the contract.[157]

251 Then he turned to consider General Billposting and later cases, including Kaufman and Geraghty. His Honour did not accept that General Billposting created a rule of law. He said this -

Mr Richmond contends that General Billposting Company Ltd v Atkinson is authority for the proposition that it is a rule of law that a party who has repudiated a contract leading to its termination by the innocent party can never enforce a restraint clause expressed to operate after termination and this was endorsed by the High Court in Kaufman v McGillicuddy. Mr Richmond's contention should be rejected because the question whether the restraint clause survives must depend on the proper construction of the contract. This was the approach adopted by the Court of Appeal in Measures v Measures Brothers Ltd which was cited with approval by the High Court in Kaufman v McGillicuddy and by Gibbs J, with whom Aickin J agreed, and Stephen J in Geraghty v Minter. To the extent that Lord Collins' judgment in General Billposting Company Ltd v Atkinson might be read as suggesting that there is a rule of law regardless of the parties' intention as manifested in the contract that restraint clauses cannot survive termination for repudiation by the party in whose favour they operate, this might be explained by the fact that in 1909 the common law had not yet been clarified that termination for repudiation does not operate by way of rescission ab initio.[158]

252 But his Honour concluded, on the proper construction of the contract, that the restraint clause did not in fact survive termination.

253 His Honour, then, proceeded on the basis that the answer to the question whether a restraint clause survives repudiatory conduct by an employer, accepted by an employee, is to be found in the contract itself. It is a question of construction. Although, in our opinion, criticisms advanced by respondent's counsel as to his Honour's reliance on Measures, and what was said about that case in Kaufman and by Gibbs J in Geraghty had force, it is enough for us to say that, if viewed as a question of construction, we consider that, in the present case, the restraint clause did not survive.

254 For sake of completeness, we should address two single judge decisions which were referred to in argument: Douglass Automated Laboratories and Allied Services Pty Ltd v Sonic Technology Australia Ltd[159] and Cavill Business Solutions Pty Ltd v Jackson.[160]

255 In Douglass, there was a sale of business which included a restraint clause. Giles J of the New South Wales Supreme Court held that the respondent, the purchaser, had not repudiated the contract, so that no question of the consequences of acceptance of repudiation arose. Nonetheless, his Honour referred briefly to General Billposting, Measures, Kaufman and Watson. He noted that there was some divergence in the reasoning in those cases, and stated that, 'It must remembered that it is necessary always to pay regard to the terms of the contract'.[161] He noted also that some obligations remain enforceable by the innocent party after termination for breach, there referring to an arbitration clause, obligations protecting confidential information, and restraint clause. In that last connection, his Honour was referring to the survival of restraint clauses generally.

256 In Cavill, Hasluck J, sitting in chambers in the Supreme Court of Western Australia, refused to strike out certain paragraphs in a defence which, in effect, pleaded that the plaintiff had engaged in repudiatory conduct which had been accepted by the employee defendant. His Honour nonetheless referred to there being some problems with General Billposting in that the law in relation to the discharge of contractual obligations by acceptance of a repudiation had been developed and clarified since that case was decided. Nonetheless, his Honour stated that he was 'compelled to hold' that the defendant had an arguable line of defence despite the reasoning of Lord Diplock in Photo Production.[162]

257 We refer to this case out of chronological order because it did not involve a restraint clause.

258 A manufacturer appointed an agent to sell its product. The agent alleged that the manufacturer had repudiated the contract. It did not, however, allege acceptance of repudiation.

259 The agent brought a proceeding for damages. There was an arbitration clause in the contract. It was held at first instance, in the Court of Appeal and finally in the House of Lords, that the arbitration clause survived termination of the contract.

260 It was emphasised by both the Lord Chancellor[164] and Lord Porter[165] that the governing consideration in every case must be the precise terms of the language of the arbitration clause.

261 Heyman was relied upon by the applicant to show that contractual obligations can survive termination of a contract. So much is not in doubt. Indeed, in ordinary circumstances, a restraint clause, subject to being reasonable, does survive termination of a contract. But there are passages in the judgments to which we should draw attention.

I venture to think that not enough attention has been directed to the true nature and function of an arbitration clause in a contract. It is quite distinct from the other clauses. The other clauses set out the obligations which the parties undertake towards each other hinc inde; but the arbitration clause does not impose on one of the parties an obligation in favour of the other. It embodies the agreement of both parties that, if any dispute arises with regard to the obligations which the one party has undertaken to the other, such dispute shall be settled by a tribunal of their own constitution. Moreover, there is this very material difference that, whereas in an ordinary contract the obligations of the parties to each other cannot in general be specifically enforced and breach of them results only in damages, the arbitration clause can be specifically enforced by the machinery of the Arbitration Acts.[166]

In this, I think, the right to insist upon arbitration differs from the claim to require the further performance of the other terms and conditions of the contract. In respect of these latter the injured party may be excused from further performance after essential breach and acceptance of that breach as a renunciation of the contract: see General Bill Posting [sic] Co., Ld. v. Atkinson, a case in which a servant wrongfully dismissed was held no longer bound by a clause restricting his right to trade after the determination of his service.[167]

264 The particular nature of an arbitration clause was thus emphasised; whilst Lord Porter's observation, in the passage just cited, explained why the situation would be different in a case of the present kind.

265 True it is that the observation of Lord Porter preceded the decision in Photo Production. Nonetheless, his Lordship, in our respectful opinion, gave a rational explanation why it is that clauses of different complexions in a contract ought be given differential treatment following termination of the contract.

266 Standard texts on contract law address the issue now under consideration. So did a text and a journal article to which we were specifically referred: J D Heydon, The Restraint of Trade Doctrine,[168] and Francis Dawson, 'Survival of Restraint of Trade Clauses'.[169]

267 J D Heydon treats the line of authority which started with General Billposting as being correct. It seems that he prefers the solution that '[a]n injunction will not lie at the suit of covenantees who cannot do equity in the sense that they cannot prove that they have performed their part of the bargain hitherto or are ready and able to do so in the future'.[170] This derives from the judgment of Gibbs J in Geraghty.

268 The author notes that the law is similar in America.

269 Francis Dawson's note focused upon the decisions in Globex and Bond. The author expressed the view that General Billposting could not be regarded as establishing an inflexible rule, that the case was principally about the interpretation of a contract, and that there were 'obvious challenges' in rationalising a decision which turned on now largely discarded techniques (involving dependent and independent promises) in modern terms involving the release of primary obligations.

270 The author's ultimate conclusion was expressed this way:

The primary focus should however always be on the intention of the parties. One would ordinarily expect that on a repudiation by the grantor (employee) a restraint clause would survive acceptance of the repudiation and would apply notwithstanding termination because that is the purpose of the clause which is intended to apply after termination of the contract. By contrast on a repudiation by the grantee (employer) the presumed intention would ordinarily be that the restraint provision would not survive termination.[171]

271 In summary, the authorities show, as we have previously noted, a consistent trend, though with different juridical explanations - denying to an employer who has repudiated a contract of employment, such repudiation having been accepted by the employee, reliance upon a restraint clause against the employee.

272 The applicant's submissions with respect to ground 12 were founded on the propositions that CHA did not repudiate the 2012 contract, that the parties had contracted for what might occur - that is, that a restraint clause would operate even in the event of a repudiation by one party - and that there was no basis for a finding that CHA did not have clean hands, because the contract provided for the very circumstances. So, it was submitted, there was no discretionary basis to deny it relief.

273 The fundamental propositions upon which the applicant relied were not made good. For that reason alone, the ground lacks substance.

274 Further, one of the explanations that has been given why a restraint clause will not be enforced in the circumstances which we have been discussing is that, other considerations apart, equity will refuse relief not only for the reason described by Gibbs J in Geraghty but also on the grounds of hardship or that the 'unfair' conduct of the covenantee meant it was coming to equity without doing equity.[172]

275 So, all else apart, we agree with the judge that, in the circumstances, discretionary relief ought to have been denied to CHA.

Summary with respect to grounds 2(a)-(d) and ground 12

276 We consider that CHA should have leave to appeal in respect of grounds 2(a)-(d), but that the appeal should be dismissed. We consider that leave to appeal on ground 12 should be refused.

277 We will order that leave to appeal be refused on grounds 1(a)-(g) and on ground 12. We will grant leave to appeal on grounds 2(a)-(d), but dismiss the appeal.

[1] There were earlier contracts to which the respondent was a party. We will refer to them as 'the 2000 contract' and 'the 2006 contract'.

[3] This finding as to the ambit of operation of the clause is not now challenged.

[4] Crowe Horwath (Aust) Pty Ltd v Loone [2017] VSC 163, [168]-[169] ('Reasons').

[5] Probably, the second 'appeal' should be '1'.

[6] Judgment at [84] (citation in original).

[7] Judgment at [50] in finding that Mandie J was too narrow in his approach in Marks v CCH Australia Ltd [1999] 3 VR 513 (citation in original).

[8] Which we take to refer to the situation at relevant times.

[9] Either findings of fact to which there is no challenge, or else findings now under challenge. We will indicate the findings where a challenge is raised.

[10] At least in the contract made between the applicant and respondent.

[13] Communicated to senior CHA people by the chief executive officer of CHA and Findex, Mr Spiro Paule, at a presentation at Queenstown, New Zealand, in April 2015.

[17] That is, as the judge found the facts.

[18] As can be seen from the statement of grounds set out at [8] above, all but one of the grounds was identified by the prefix 1 or 2 and then a bracketed letter. But the grounds were also identified by a numbered series 1-12. In what follows in these reasons, we will use the identification of the first kind except in the case of 'Further Ground' 12.

[19] [2008] VSCA 68 ('Kotzman').

[20] Counsel was here quoting Zwanenberg Australia Pty Ltd v Moira Mac's Poultry and Fine Foods Pty Ltd [ 2014] FCA 1072 [304] (Jessup J) ('Zwanenberg'), itself quoting Velik v Steingold [2013] NSWCA 303 [86] (Sackville AJA, McColl and Gleeson JJA agreeing).

[21] A second case to which applicant's counsel referred in the present connection. See above n 20.

[22] Of which three were specifically mentioned in Kotzman.

[23] [1982] HCA 47; (1982) 149 CLR 620 ('Shevill').

[24] [2003] HCA 48; (2003) 77 ALJR 1598.

[25] Ibid 1608 [51] (Gleeson CJ, McHugh and Gummow JJ).

[26] Ibid (citations omitted). See, also, McMahon v National Foods Milk Ltd [2009] VSCA 153; (2009) 25 VR 251, 268-9 [25].

[27] Preston v Harbour Pacific Underwriting Management Pty Ltd [2008] NSWCA 216, [25]; Powell v Chief Executive Officer of Customs [2012] QCA 338; (2012) 272 FLR 5, 12 [41]; Levy v Bablis [2013] NSWCA 28 [17].

[28] Reasons [28]-[29] (citations omitted).

[31] Reasons [37]-[38] (citations omitted).

[33] Ibid [40]-[43] (citations omitted).

[39] Ibid [83]. That finding was not challenged in this Court.

[41] Excepting any part payment in advance.

[42] Notwithstanding that the new regime was to commence operation on 1 August 2016.

[43] [1999] 3 VR 513, [55] ('Marks').

[48] His Honour considered, but dismissed, a possible argument that, by not resigning until 12 July the respondent had affirmed the contract: Reasons [63]-[72]. That was not a matter agitated in this Court.

[50] (1931) 45 CLR 319, 378 (Dixon J).

[51] [1999] 3 VR 513, [55].

[52] Or should it be 12 July 2016, when the respondent, on his case, accepted the applicant's repudiatory conduct?

[54] Ibid [94]-[102] (citations omitted).