BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1997) 180 CLR 266

Heimann v Commonwealth of Australia (1938) 38 SR (NSW) 691

Ansett Transport Industries (Operations) Pty Ltd v Commonwealth of Australia [1977] HCA 71; (1977) 139 CLR 54

Australian Meat Industry Employees Union v Frugalis Pty Ltd [1990] 2 Qd R 201

Bell v Lever Brothers Ltd [1931] UKHL 2; [1931] All ER Rep 1

Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410

Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337

Con­Stan Industries v Norwich Winterthur Insurance (Aust) Ltd [1986] HCA 14; (1986) 160 CLR 226

David Leahey (Aust) Pty Ltd v McPherson's Ltd [1991] VicRp 77; [1991] 2 VR 367

Gallagher v Pioneer Concrete (NSW) Pty Ltd [1993] FCA 59; (1993) 113 ALR 159

Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41

Howe v Teefy (1927) 27 SR (NSW) 301

Poseidon Ltd & Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332

Reigate v Union Manufacturing Co (Ramsbottom) Ltd [1918-19] All ER Rep 143

Smith v Welden [1922] HCA 35; (1922) 30 CLR 585

Southern Foundries (1926) Ltd & Federated Foundries Ltd v Shirlaw [1940] AC 701

The Moorcock [1886-90] All ER Rep 530

Wasson v Commercial & General Acceptance Ltd (1985) 2 NSWLR 206

1 MULLER DCJ: In this action the plaintiff claims damages from the defendant to compensate him for a potential loss of income he claims he would have earned but for the breach by the defendant of an agreement to teach the plaintiff yoga over a nine month period culminating in his attainment of a recognised yoga teaching qualification.

2 The plaintiff, who is now aged 39, has an engineering background and is the director of a business named FC Research Services Pty Ltd. His recreational interests include yoga, psychology and boxing. Apart from his engineering background he also competed as a professional boxer, moving between Australia and the USA, until 2001 when he abandoned his boxing career and returned to work permanently in Australia.

3 Having had a long standing interest in yoga the plaintiff began attending yoga classes at some time prior to 2001 but interrupted his yoga training only to resume it in September 2002 when he registered in a yoga teaching course run by the defendant. The defendant traded under the name of The Yoga Company and offered what was referred to as a certificate IV in yoga teaching attainable after a nine month course which ran from 1 February to 10 October 2003. The plaintiff first met the defendant in about September 2002 and discussed the question of his participation in the course. This led to the plaintiff attending a meeting in September 2002 when the defendant discussed the trainee teacher course with about 8-10 potential applicants. After the plaintiff decided to undertake the course the defendant gave him a document called a "Code of Practice" (exhibit 1) which explained the objects of the course and dealt with issues such as the refund of fees and appeal and grievance mechanisms. Clause 7 of the document related to disciplinary measures and read as follows:

Students are expected to observe the rights of others at all times. Infringements of this policy will be handled in accordance with the grievances and appeals mechanism. THE YOGA COMPANY reserves the right to request that a student leave the course should the student's participation in the classes be markedly less than expected. Other reasons for dismissal from the course include, but are not limited to: repeated tardiness or absences, severely disruptive behaviour, and failure to fulfil class assignments and requirements. A student will be given two warnings, in private, both verbally and in writing before dismissal."

4 This clause was repeated in the Yoga Company Handbook (exhibit 11) which the plaintiff was given at the outset of the course..

5 The plaintiff registered for the course and agreed to pay the total fee of $5,990 in two instalments, the first of $2,910 by 14 January 2003 and the second of $2,490 by 14 May 2003. The first instalment was paid but the second was not.

6 No written contract was ever signed by the parties. The plaintiff said the defendant asked other students to sign what was referred to as a "Confidentiality Agreement" but claimed the defendant never asked him to sign any such document. It was only later in early April 2003 after difficulties in his relationship with the defendant had arisen that the plaintiff claimed he was asked to sign the "Confidentiality Agreement". Apart from this document the only other material he received relating to the course was an eight page printed document referred to as a Handbook (Exhibit 11) which set out the qualifications for undertaking the course, the fees payable, the content of the course and other relevant material.

7 It is significant that the plaintiff claimed he never discussed the contents of any of these documents with the defendant at the start of the course when he registered as a student. The only discussions he had with the defendant at the commencement of the course related to his own experience and qualifications and the requirements of the course which he had to satisfy in order to attain a certificate in yoga teaching. He said that it was in the context of discussing this subject with the defendant that he told her he might not be able to attend all the classes because of travel commitments. He said the defendant assured him this would not be a problem and that another student named Peter Smith was in the same position as him. He agreed she did tell him, however, that he might have to warn her in advance of any travel commitments he had and would be expected to make up for lost class time.

8 Apart from these discussions the plaintiff said nothing else of significance was agreed upon. In particular he was certain there had been no discussion about the defendant's dismissal policy or any mechanism for the expression of grievances.

9 The course began on 1 February 2003. There were approximately 8-10 other students and the plaintiff had to attend as many as five to six weekly classes of which the majority were run by the defendant.

10 In late February or early March, after the commencement of the course, the plaintiff allegedly reached an arrangement with a person named Wendy Orford, the manager of the Beaumaris Sporting Centre, to take a room at the Centre and begin teaching yoga students at the Centre by Christmas 2003 after he had attained his teaching qualification. He claimed he was told by Wendy Alford that demand for the course was very strong and that he could expect to teach three to five classes a week with approximately 20 students in each class. He said he was told he could charge each student $12 or $12.50 for each lesson and that he would have to pay $27.50 for the use of a room at the Centre. He said he calculated he would earn a net weekly income of $850. He claimed the agreement was an open ended one and no time limit was set for the duration of the course. He said he told the defendant and the rest of his class of this arrangement.

11 Wendy Orford, who was the other party to this arrangement, confirmed she had discussed and tentatively agreed on those terms and conditions with the plaintiff on the understanding that he would be able to begin conducting classes at the Centre within 2-3 months of their discussions.

12 Very soon after the commencement of the yoga training course the plaintiff claimed that the defendant began to show what can only be described as an unduly personal interest in him. He said he had always been on very friendly terms with the defendant who, shortly after the course began, asked him to communicate with her by email. A series of email exchanges were produced during the trial to show the nature of the relationship between the parties. The exchange of messages began on or about 13 February 2003. The early messages do tend to show what could be described as an unusual degree of familiarity between the plaintiff and the defendant. In one of the early exchanges dated February 14 2003, for example, the defendant referred to the plaintiff as "Dearest Tim" and exchanged in what can only be described as personal banter that showed, at the very least, that the parties were on good terms and prepared to exchange details of a quite personal nature. In a later email dated 25 February 2003 the defendant referred to the plaintiff's absence from a particular class when another person present at the class had apparently made favourable comments about the plaintiff. In this message the defendant seems to have associated herself with this praise and signed the email as "Your faithful bloopette". Similar terms of endearment, if they can be called that, and other instances of personal familiarity can be found in some of the other email messages exchanged between the parties. In an exchange dated 21 February 2003, for example, the defendant refers to the fact that she had not heard "the marvellous voice or read the amazing thoughts and philosophies of Tim Delooze for a couple of days." She went on to add:

"You do not call, you do not write - where's the love??? (joke)."

13 In yet another exchange dated 18 February 2003 the defendant expresses her respect for the plaintiff's opinions and thoughts and in an email message dated February 24 said the following:

"Beloved Tim or much loved Tim

Please do not fall out of your chair!!!

Miss not seeing you this morning and these were the endearments that sprung to my mind this morning during class when I realised how much I enjoyed and looked forward to your company. And that you have endeared yourself to a greater or lesser extent to most of the class. I already knew you are a powerful presence in the classes and have made your mark, but realised it more this am."

14 Apart from these and other exchanges, which as I have said do show a degree of personal familiarity that clearly went beyond a normal relationship of teacher and trainee, the defendant also invited the plaintiff to dinner at a restaurant in Cottesloe and paid for his meal. This was apparently done to compensate the plaintiff for the loss of his shoes which disappeared when he was at a yoga class. In another email message she invited him to go to the beach with her. The plaintiff did not respond to this invitation.

15 It was from this point on, according to the plaintiff, that the defendant's feelings for him became more serious. She invited him to dinner on 3 March 2003 and, according to the plaintiff, asked him what he thought about her. The defendant said he made it clear he was not interested in having a relationship with her. According to the plaintiff, however, she persisted and went on to suggest the prospect of a casual relationship. Once again the plaintiff said he refused and told her that such a relationship would not work.

16 On the following day the defendant apparently did not attend classes. The plaintiff went to her house that afternoon or the next afternoon and asked her how she was. He claimed he could see she was upset. She told him she was upset because he had refused to become involved in a relationship with her. She told him that she had confided in a friend who had organised what she described as a "pity party" for her. She allegedly went on to say that she had had a casual relationship in the past and could not understand why the plaintiff believed she could not have one with him. He said he told her again that, in his view, such a relationship could not work because of their respective positions as teacher and pupil at the Yoga Centre. The plaintiff went on to tell her that he did not have any special feelings of affection for her. He claimed it was at this point she told him she had had dreams of engaging in sexual intercourse with him in the course of which she had been lifted off the bed during the sexual act.

17 Following this conversation there was a further exchange of emails which, once again, pointed to the special regard the defendant had for the plaintiff. Because these email messages were tendered to reinforce the plaintiff's allegation of the defendant's romantic interest in him I believe it is necessary to refer to various extracts in these messages. The first is to be found in an email from the defendant to the plaintiff on 6 March 2003 (exhibit 12) where the following passages appear:

"I want to say thanks for coming over yesterday and making the effort to make things better. It was very good of you, and I'm glad to be able to smile again and think good thoughts. Your efforts have gladdened my heart and understanding. But don't let it go to your head!

. . .

I had planned on going to Kenny's class, and seeing if you were going and wanted to have a meal after class, but Kenny has just rang and is under the weather with hay fever, so probably Lynn will be teaching and I'm not sure if my legs could take that.

Would you like to come over for a meal? (not a date)."

18 Although the plaintiff said he did not go to the defendant's home for a meal she continued to communicate her feelings for him. The next relevant extract appears in an email message sent by the defendant to the plaintiff on 18 March 2003 (exhibit 14):

"My bottom line, my truth, my realization was that yes you were interested in me at first and were coming on to me in that manner. We can agree to disagree on this matter but that is my truth or the truth, and I can not be asked to think or say otherwise. And I did not arrive at this realization from fear or delusion or having to be right. I can not deny what my heart, my mind, my intuition, my knowing all tell me.

In the interest of friendship and general harmony, I am now happy to agree to disagree. I do not feel I have to prove anything to you - I do not mean this in an arrogant or defensive manner, but it is enough that I have arrived at the truth.

And then at some point, maybe quickly after this initial attraction, you changed your mind or got confused or whatever, and the yes all the statements about being platonic (not plutonic) came about. And yes I could have spoken up sooner. And yes I was a fool in some respects. And yes you have categorically given all the evidence to say that you had made your intentions clear, but my beef has been about the denial of the initial - dare I say flirting? Or should I say interest - no need to answer this.

Anyway we could go on and on, but I think at this stage I would just like to bury the hatchet, move on and be friends.

Just to clarify a couple of points from your letter.

It was abundantly clear to me that there was not any hope 'that things would change as far as your feelings were concerned'. I did not hold any such conception or hope!!!! Also at no time have I ever mentioned my smitten state to anyone in the course. At no time have I mentioned matters of my heart with the others. I think you are jumping to conclusions there. I am actually quite shy in this and do not go dancing around the street, even with my very best friend I was very conservative."

19 In a later email message sent on 24 March 2003 the defendant said:

"I hope you can understand my situation and I ask that you too do not hold any animosity towards me as this morning did not appear that way. I hope you can treat me with the same courtesy and friendliness I am extending to you in the classes. Again I am sorry if I have hurt you in any way and do not wish to contribute to that in any way. I'm sure neither of us are entirely happy with the way things are, but hopefully now it can be better.

. . .

I do though need time to keep to myself, so please do not take any offence or think I have ulterior motives, if I hold myself at a distance for a while. I still need time to smooth things over in myself and keep myself on track. Please understand.

I am truly not trying to manipulate or play games with you, but I really feel I need to lay low and keep some peace so I can be happy and do my job. I hope you know that my friendliness, respect and professionalism are there for you in the yoga classes."

20 Messages from the defendant to the plaintiff continued to be sent along the same lines. In a message sent on 26 March 2003 (exhibit 16) the defendant said:

"Please do not think that my previous actions towards you were because I was gagging to bed you, because that is simply not how I operate. I am very cautious in all matters concerning relationships and the idea of a physical relationship was still a long way off for me, not to say that the idea did not enter the realm of possibilities, but it was definitely not top priority, nor was it in any way the driving force. I have been there done that many times before, and am at a stage now where I think I have a fairly good understanding of myself and my needs, and don't use sex to get things, nor get seduced by muscles.

So no, I was not like the hoards of floosies that you have to swat off, lusting after your body, and wanting something from you!!!! Like you said to me once - You did not want anything from me, the same sentiment was from me to you. But, meant to me, generally/mostly there could be freedom to give and not expect the other person to fill the gaps.

So, no I'm not superficial, nor deceptive, but was interested in you as a friend and actually tried to restrain my deeper feelings. In the same way now, I do not have ulterior motives, nor deviously try to rip you limb from limb in the classes.

The submarine request still stands. I need time and distance. I do truly hope the friendship can be restored to it's former unique position of fun, friendship, trust and good conversations. It has grieved me a lot, the loss of the friendship and the pain caused to both. But for now, this is what I need to do."

21 Other passages from messages sent by email from the defendant to the plaintiff follow the same lines and are to be found in exhibits 13 and 17. There is no need for me to refer to these particular passages. Suffice to say that the clear inference from the emails sent by the defendant to the plaintiff, particularly the earlier ones, is that she wanted to have a personal relationship with him. By his familiarity towards the defendant the plaintiff might have encouraged this attitude although there was nothing in the messages he sent her that showed he was interested in any form of lasting relationship or sexual liaison.

22 In the end the friendship between the parties came to an end. On or about 8 April 2003 the plaintiff said he went to a yoga class and the defendant asked him to sign the Confidentiality Agreement which she had not insisted he sign when he began the course. The plaintiff, who had already given the defendant a cheque for the second fee instalment for the course, told the defendant he would look at the document and discuss it with her later. When he tried to discuss the document with her after class he said she refused to do so. He said he went on to explain to her that the so called Confidentiality Agreement was inconsistent with her treatment of him and that she had failed to address his grievances in the past. He said he had complained particularly about rumours that had been circulating of his relationship with her. This meeting culminated with the defendant telling the plaintiff to see a lawyer if he did not sign the agreement.

23 Following this breakdown in their relationship the plaintiff wrote to the defendant attempting to restore their former relationship of teacher/trainee to allow him to complete the course and obtain a certificate. The plaintiff resumed attending classes. But the peace was short lived. After class on 14 April 2003 the plaintiff stood up and, in front of the entire class, aired his grievances in the presence of the defendant. He told the class there were rumours circulating of his involvement in an improper relationship with her and complained about the damage to his reputation and the adverse affect these disclosures had upon his performance as a trainee teacher. Following this public expression of his grievances the plaintiff agreed that the defendant had asked him to leave the class. Subsequently he received a letter dated 15 April 2003 from the defendant's solicitors refunding his fees and purporting to terminate his participation in the yoga course.

24 The defence called the defendant, Linda Healey, and a number of other witnesses to describe what was said to be the plaintiff's unacceptable behaviour culminating in his confrontation with the plaintiff during the class on 14 April 2003. The plaintiff said she began what she described as the accredited teacher training course in 2003 with approximately 12 students. She said she had two formal meetings with the prospective students prior to the course beginning and gave them a document that was referred to as the Handbook for the course (Exhibit 11) and the Confidentiality Agreement (Exhibit 10). She said the plaintiff was one of the persons present when the documents were handed out. She agreed, however, that the plaintiff never signed the Confidentiality Agreement and that she told him at a later meeting there was no need for him to do so.

25 The defendant described how the exchange of emails began on February 13 2003. She said the plaintiff had asked her for her email address which she had given him on the assumption that he intended sending her his assignments to that address. On 19 February 2003 she received an email from the plaintiff which I have referred to earlier and in which the plaintiff described her as an amazing person (Exhibit 4). Up to this time she and the plaintiff had spoken to each other frequently and been on friendly terms. After receiving this email she said she believed the plaintiff wanted to forge a closer friendship and was encouraging her to do so.

26 The defendant's perception that the plaintiff was interested in her was borne out by other encounters she claimed took place. She referred, for example, to conversations she had with the defendant about her former partner and his response to that conversation. She also mentioned the plaintiff's insistence that she take him out for a meal after his shoes had been stolen from class.

27 As I have already indicated a regular exchange of emails took place following 19 February 2003. What the plaintiff said in these emails gave the defendant the impression that he was developing an interest in her and she decided to raise the issue at a dinner party at her house on 3 March 2003. She said she asked the plaintiff what his attitude to her was. She agreed that by this stage she had developed what she described as a crush on him and she said she told him she was flattered by what he had said to her and the way he had treated her. She said she also made it clear, however, that she was not interested in entering into a physical relationship with him but, if there was any potential for a more intimate relationship to develop, she certainly was not interested in that happening until the course had been completed. She claimed the plaintiff expressed surprise at her description of his conduct as flirtatious and said he, like her, was not interested in a sexual relationship. She said they agreed to put matters behind them and continue with the teaching course as friends.

28 Following this discussion at dinner both parties continued to exchange email messages. Two days later on 5 March 2003 the plaintiff sent the defendant the email message I have referred to earlier where he remarked that she was "back out there playing the field again" (Exhibit 19). Once again the plaintiff said she regarded this remark as flirtatious and yet another sign of the plaintiff's encouragement towards her.

29 It was at about this point in time that the relationship began to change. The defendant described how the plaintiff began to demand an admission from her that he had not been flirting with her earlier. This was a theme she claimed the plaintiff continually returned to and was manifested in many of his email messages from about that date. In a message dated 25 March 2004 (Exhibit 19), for example, the defendant asked for what he described as "a more complete admission" and said he needed this in order to move on from that point. The defendant said the plaintiff's repeated insistence on her making what he described as an admission along these lines began to concern her to the point that she believed he was becoming obsessed with getting his own way and trying to persuade her to say something she was not prepared to concede. Further email messages (Exhibit 21) from the plaintiff to the defendant repeated this theme and culminated in the defendant's reply (Exhibit 22) pointing out to the plaintiff that she was uncomfortable with his remarks and asking him to stop sending her any further messages. In that same message, however, she emphasised that she still considered him a valuable student and that she would like to put any misunderstandings behind her and continue working with him on a professional level.

30 Following this email message of 30 March 2003 the plaintiff continued to attend the defendant's classes. On 7 April 2003 an incident occurred which, according to the plaintiff, brought matters to a head. By then the defendant said she had come to a decision to ask the plaintiff to sign the Confidentiality Agreement in the expectation that it would restore their professional relationship onto an even keel and bring an end to the plaintiff's persistent demands for an admission from her that he had never flirted with her. At this class the defendant asked the plaintiff to sign the Confidentiality Agreement which she had earlier agreed he did not have to sign. At the end of the class she said the defendant approached her and asked her what she wanted him to do with the Confidentiality Agreement. She said that other class members were present and that she asked him not to make it difficult and enquired whether he was prepared to trust her to do the right thing. She alleged the plaintiff responded by saying that he did not trust her and did not believe she had any integrity. She said he went on to add that he intended showing the document to his lawyer. Other members of the class were present during this exchange and, when the defendant tried to leave, the plaintiff allegedly followed her downstairs and continued to harass her demanding to know what he should do about the Confidentiality Agreement and waving it front of her. She described his conduct as bullying and unreasonable.

31 Following this incident the plaintiff said she received three text messages on her mobile phone and one email message which she did not read. She said she then sought advice on how to deal with the situation.

32 The next and final incident was the confrontation on 14 April 2003 when, during a particular phase of the yoga class, the plaintiff turned off the musical tape and began moving up and down the room with his fists clenched addressing the class and saying he had heard rumours spread about himself which he wanted to correct because yoga was about telling the truth. He added in front of the class that he would not sign the Confidentiality Agreement and would take legal advice if necessary. The defendant, who described the plaintiff's conduct as being totally out of control and disrespectful, said she told him she had not mentioned their relationship to anyone in the course. She said she had to ask him to leave the room on three occasions but he refused and responded by saying that, if the other members of the course wanted to find out more, they could accompany him for coffee after the class had ended. The defendant said she was forced to bring the class to an end. It was after this that the defendant went to see her lawyers and arranged for them to write to the plaintiff terminating his participation in the course.

33 While the plaintiff persistently denied he had flirted with the defendant, or in any way encouraged or cultivated her interest in him, the email messages he sent her tend to contradict that denial. I will refer to some of the email messages sent by the plaintiff to the defendant which tend to suggest he was encouraging her admitted interest in him. In one of the earlier exchanges (exhibit 4) the plaintiff commented:

"Linda Healey, you have mentioned that you think I am amazing, let me then say, if you truly think I am, then you must by definition truly respect what I have to say, and if that is so then please allow this into your mind as today's pleasant thought 'I think that you are an amazing person with an equally amazing fellowship here in Perth of women that all look to you as a role model, but are all happy if all they get from your class is a portion of the genuity that you radiate and discard. I see this happen during most classes and it is something that most really good yoga studios just do not have.

This is a direct reflection of your character. I salute you."

34 The same message ends with the following comment:

"Also, it is truly amazing you are of such character that we can have such incisive discussion about issues so close to your heart and soul without ego and emotion playing a negative part."

35 When cross-examined about these passages the plaintiff denied he was encouraging the defendant to discuss with him matters close to her heart. He asserted he was simply complimenting her and not encouraging her in any way. I find that assertion difficult to believe. What the plaintiff said on this and on subsequent occasions was consistent only with a flirtatious approach towards the defendant. Another example of his attitude towards her occurred on 5 March 2003 after he had been to her house and told her he did not want a relationship with her. Following this meeting he sent her an email message on the same date (exhibit 19) responding to her earlier comment that she had had breakfast at Cottesloe Beach with one of the runners who exercised with her. In his response to that information the plaintiff said:

"Excellent, and look at you (at breakfast) you're back out there playing the field again. How easily replaced am I??? (Joke)."

36 Once again this was clearly a flirtatious comment insinuating that the defendant, whom the plaintiff claimed wanted to have a relationship with him, finding someone else in his place. While the comment may have been made in a jocular sense it was still clearly flirtatious.

37 The flirtatious behaviour of the plaintiff was not limited to the email messages he sent the defendant. He also behaved in a flirtatious way with her on several occasions. On one occasion while he was having coffee with the defendant and other students after class he asked the plaintiff if she had been in a relationship and what had happened to that relationship. When told that the relationship was at an end the plaintiff said that if the defendant were available he would sit next to her. He moved next to her and asked her why she had left her former partner. When she explained that her partner was not the person she originally thought he was the plaintiff said he did not want her to think of him in the same light. On yet another occasion, after the plaintiff's shoes had been stolen from class, the defendant offered to compensate the plaintiff for his loss but he persuaded her to take him out for a meal instead. On that or another occasion when the plaintiff took the defendant out he told the defendant's neighbours that he was going out on a "hot date". These are clear instances of occasions when the plaintiff flirted with the defendant and encouraged her to believe he was interested in her. His subsequent denial that he had flirted with her, and his constant demands for an admission from the defendant that her romantic interest in him had been misplaced, are clearly contradicted by his own conduct on the occasions I have referred to. These contradictions in what became a material issue in the trial reflect adversely on the plaintiff's credibility. I am at a loss to understand his insistence that the defendant's interest in him was completely one sided when all the evidence points the other way.

38 Another unusual feature of the plaintiff's conduct was his continuing insistence that the defendant admit her romantic feelings for him and declare that those feelings were misplaced. His insistence on such an admission is curious because, as it emerged in cross-examination, the defendant sent the plaintiff an email message on 18 March 2003 (exhibit 14) in which she said she would just "like to bury the hatchet, move on and be friends." This was a clear indication from her that she wanted the relationship to return to a more normal level. Instead of accepting this assertion at its face value the plaintiff began persistently to demand an admission from the plaintiff that she was attracted to him. These demands were made in a series of email messages that were tendered as exhibits (Exhibits 19, 20 and 21). The defendant apologised and expressed the wish that their relationship could return to one of friendship and respect (exhibit 20) but the plaintiff would not leave it there. He continued to press for what he referred to as a complete admission. One example of many is to be found in the plaintiff's email to the defendant as late as 8 April 2003 (Exhibit 23) when he said:

"Surely now Linda, a personal admission that you have just misplaced your love and feel very disappointed, but acknowledge that you should move on, put it all behind you, and act professionally and as previously agreed, is a much better option that what you are now facing, considering the potential for this issue to be a legal, and therefore public matter, should you continue to deny the standard options of conflict management. Believe it or not, I am still considering your best interests regarding this issue, and for this reason and due to the emotional content of your actions, I am happy to receive an apology from you (preferably with those present who attended your outburst tonight) regarding your actions tonight."

39 When asked to explain why he had adopted this attitude and was so insistent on obtaining the admission he sought he said he was concerned about rumours which he claimed the defendant had circulated that affected his reputation and his ability to perform satisfactorily at yoga classes. He added he believed that if the defendant made the admission he sought she would accept that what had happened in the past was wrong, put it all behind her and stop circulating rumours that affected his reputation. I found this explanation quite remarkable. If, as he claimed, he was concerned about the defendant telling people falsely that she was having a relationship with him it was open to him to confront her directly with that issue. I cannot see any reason for his trying to address the issue by persistently demanding an admission from her of something which he already knew and had evidence of in the form of a series of email exchanges. She had made no secret of her affection for him. His persistent demands for what he called an admission are, in my view, completely inexplicable. I am unable to reconcile those demands with any genuine sense of grievance. In the end, faced with these persistent demands, the defendant reacted as might have been expected by sending the plaintiff a message saying she was uncomfortable with the tone and nature of some of his remarks and asking him to stop sending her any further messages.

40 I am satisfied the defendant was infatuated with the plaintiff. The plaintiff may also have gained the impression the defendant wanted to have a sexual relationship. But I am not satisfied the affair was all one sided as the plaintiff asserted it was. I find that the plaintiff encouraged and cultivated the defendant's interest in him and frequently made flirtatious comments, often in a jocular manner, in his email exchanges with her. While the defendant may have persisted in expressing her interest in the plaintiff even after he had told her there was no prospect of his having any relationship with her, I am satisfied that in the end she saw the futility in what she was trying to accomplish and tried to bring the matter to an end and return to a relationship of teacher/pupil. In my view it was the plaintiff, not the defendant, who refused to let the matter rest. It was he who persistently demanded what he called an admission which, in the light of what had occurred, seemed meaningless. It was he who became obsessed with the notion that she had spread false rumours about her relationship with him. It was he who decided to bring matters to a head by confronting her about her behaviour in open class.

41 I was not impressed with the plaintiff as a witness. Apart from the criticisms I have of the substance of his evidence I also found him to be evasive at times, overbearing and often unnecessarily dogmatic. I realise it is difficult, and often dangerous, to judge a person's veracity and reliability from his or her demeanour and in rejecting the plaintiff's account where it conflicts with that of the defendant, as I unhesitatingly do, I have relied primarily on my findings on the evidence he gave and what I believe to be the implausibility of his version of events.

42 By contrast with the plaintiff I found the defendant to be a very convincing witness. She was calm, relaxed and balanced in her demeanour and her evidence was free of any major improbability. Unlike the plaintiff, whose assertions were often materially inconsistent with the email messages exchanged between the parties, the defendant's account of her relationship with the defendant and how it culminated in the confrontation at the end of class on 14 April 2003 was entirely plausible and, even more important, consistent with the tenor of the email exchanges between her and the plaintiff. I have no hesitation in accepting her evidence in preference to that of the plaintiff. While I have already found she was clearly infatuated with the plaintiff during the initial phase of their relationship I accept her evidence that she did not tell other students in the teacher's training class what was happening. The allegation by the plaintiff that she spread false rumours among the students in the class of their relationship is, in my view, quite without foundation. While students in the class may have suspected that the plaintiff was interested in the defendant such suspicions may have arisen from the interaction of the plaintiff and the defendant in classes and at social gatherings after classes. This was certainly the case with the witness Peter Smith who said he gained the impression during classes that the defendant was showing interest in the plaintiff.

43 The plaintiff's allegation that the defendant wanted him to enter into a sexual relationship is again, in my view, without foundation. I am quite satisfied that the defendant did not express an interest in having a casual affair with the plaintiff. I accept her evidence that at the social meeting she had with the plaintiff on 3 March 2003 she revealed her feelings for the plaintiff but made it quite clear that, if their relationship was to progress to something more intimate, she was not prepared to allow that to happen until the course had been completed. I also accept her assertion that at the end of this meeting she accepted that her feelings for the plaintiff were not reciprocated and agreed with him to put their previous behaviour behind them and simply continue their relationship as friends.

44 In this context I do not accept the plaintiff's assertion that the defendant's subsequent behaviour, including her insistence that he sign the so-called Confidentiality Agreement, was motivated by malice or vindictiveness because of his refusal to have a relationship with her. As I have said I am satisfied that on 3 March 2003 she accepted the inevitable and realised that her romantic feelings for the plaintiff were not shared. Following this acceptance on her part I am satisfied she tried to continue in a normal relationship as between yoga teacher and student but, as she claimed, was inundated with email messages from the plaintiff which became increasingly bizarre and demanding in his insistence upon an admission from her that he had not encouraged her to have a relationship. I find it was this almost unrelenting series of demands for such an admission that led her to ask the plaintiff to sign the confidentiality agreement. I accept the defendant's evidence that she believed this would restore their professional relationship and bring an end to the plaintiff's demands. That belief may have been misguided because there does not appear to be anything in the Confidentiality Agreement that would necessarily have helped the defendant achieve the result she wanted. But that is not the point. I accept her evidence she genuinely believed that, by getting the plaintiff to sign the agreement, their relationship would be restored to that of teacher and student and she could continue teaching the course with the plaintiff as a participant. I reject the plaintiff's assertion that the only reason the defendant asked him to sign the Confidentiality Agreement was because she felt jilted by his refusal to enter into a relationship with her and was acting maliciously and vindictively.

45 In cross-examination counsel for the plaintiff repeatedly suggested to the defendant that she had deliberately refused to discuss the plaintiff's grievances in relation to the so-called Confidentiality Agreement. The defendant agreed but said her refusal arose because of the inappropriate timing which the plaintiff chose to discuss the document. Once again, I accept the defendant's evidence on this point and agree that in the circumstances it would have been impossible for her to deal with the plaintiff's so-called grievance in a calm and rational atmosphere. On the first occasion the issue was raised after class on 8 April 2003 other students were still present and the plaintiff had told the defendant at the time that he did not trust her and intended showing the document to his lawyers. Given his express and public assertion of mistrust in the defendant any balanced discussion at that stage would, from her point of view, have been impossible. The atmosphere was too emotionally charged and the plaintiff was obviously in no mood for a rational discussion. The same can be said of the incident at the end of class on 14 April 2003. The behaviour of the plaintiff on that occasion was, as the defendant asserted, completely inappropriate and made the possibility of any rational discussion between the parties exceedingly remote.

46 The incident in class on 14 April 2003 is obviously very significant. The plaintiff led evidence from one Peter Ross Smith, another student in the same class, to describe what happened at this meeting. The witness had begun attending the defendant's yoga classes in 2001 when he completed a beginner's course before commencing a teacher's training course in 2003. Like the plaintiff he had been given a copy of the document introduced as exhibit 11 explaining the terms and conditions of the teaching course. He also agreed he had eventually signed what was known as the Confidentiality Agreement on 31 January 2003 but believed he had done so after he had already paid for and commenced the course. He described how the plaintiff and defendant appeared to be on friendly terms and said he gained the impression that the defendant was showing an interest in the plaintiff. Focusing on the incident in the class on 14 April 2003 the witness described how the plaintiff raised concerns with the defendant in the presence and hearing of all the other students who attended on that occasion. While the plaintiff did not appear to be agitated at the time, and spoke in what was described as a polite and controlled manner, the witness claimed the plaintiff unequivocally accused the defendant of unfairness in asking him to sign the Confidentiality Agreement after having earlier expressly exempted him from having to do so. The witness, Peter Smith, described how the plaintiff said he had tried to raise the issue with the defendant in accordance with the grievance procedure that was in place but because of her lack of response he felt he had no option other than to raise it with her in class in front of the other students. The witness, Peter Smith, went on to say he heard the plaintiff tell the defendant that he believed his rejection of her advances towards him was the reason why she had gone back on her previous undertaking that he need not sign the Confidentiality Agreement. From what the witness, Peter Smith, said it was clear that the plaintiff publicly accused the defendant of treating him unfairly because of his rejection of her advances. Following this confrontation, during which the plaintiff apparently did most of the talking, the witness, Peter Smith, said the defendant asked the plaintiff to leave the room. After he had left a discussion ensued among those present as to what had occurred. The witness, Peter Smith, said he was so concerned by what had happened, and the potential adverse impact it might have on the teaching programme and the others involved in it, that on the following day he telephoned the defendant and suggested that he mediate between her and the plaintiff. He said the defendant told him that she already had the matter in hand.

Was summary termination of the contract justified?

47 In the statement of claim it was alleged that the agreement between the plaintiff and the defendant was both oral and recorded in the document "The Yoga Company Certificate IV in Yoga Teaching" ("Exhibit 11). I have already referred to the clause in Exhibit 11 which purported to govern the dismissal of a student from the course. The relevant portion of this provision provided that:

"Other reasons for dismissal from the course include, but are not limited to: repeated tardiness or absences, severely disruptive behaviour and failure to fulfil class assignments and requirements. A student will be given two warnings, in private, both verbally and in writing before dismissal."

48 Counsel for the plaintiff submitted this provision exclusively determined the defendant's right to terminate a student's contract and the procedure that had to be followed. It was submitted that it was not possible to go outside this provision in considering the question of dismissal. Mr Segler went on to submit that if the plaintiff's behaviour at the end of class on 8 April 2003 had been considered by the plaintiff to be severely disruptive she had had ample opportunity between this incident and the subsequent confrontation on 14 April 2003 to give the plaintiff the requisite warnings required by the Handbook (Exhibit 11). As this was not done it was submitted that the defendant had no right to terminate the plaintiff's participation in the class. She had, it was argued, failed to follow the dismissal procedure prescribed by the contract.

49 While admitting that the terms of the Handbook (Exhibit 11) were part of the contract between the parties the defendant pleaded that it was also an implied term of the agreement that the defendant could summarily terminate a student's enrolment in the event that the student demonstrated conduct or behaviour of such a disruptive nature as to warrant summary termination. In BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1997) 180 CLR 266 at 283 the High Court said that, for a term to be implied, the following conditions (which may overlap) must be satisfied:

(2) It must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;

(3) It must be so obvious that "it goes without saying";

(5) It must not contradict any express term of the contract.

50 Counsel for the defendant submitted that the right to terminate a student's participation in the course summarily was a clear necessity: Heimann v Commonwealth of Australia (1938) 38 SR (NSW) 691. Without such a term, it was submitted, the contract would be potentially unworkable. BP Refinery (Westernport) Pty Ltd v Shire of Hastings (supra). This view was challenged by Mr Segler who submitted that the right to dismiss a student summarily for severely disruptive behaviour was inconsistent with the dismissal clause in the written part of the contract (Exhibit 11).

51 I do not believe the dismissal clause in Exhibit 11 was ever intended by the parties to exclude summary dismissal. It simply purports to list some of the grounds upon which a student might be dismissed and sets out a basic and common sensical procedure designed to protect a recalcitrant student and provide him or her with an opportunity to modify his or her behaviour before the final step of dismissal is taken. I do not believe it purports to address the situation where a student's misbehaviour is so extreme as to destroy the relationship between that student and the teacher and otherwise jeopardise the entire course and the rights of the other participating students. I agree with counsel for the defendant that without the right to dismiss a student summarily the contract between teacher and student could be rendered completely unworkable. The disruptive behaviour of a student may be so extreme that immediate termination of the contract may be the only means of continuing the class and preserving its integrity.

52 For those reasons I am satisfied the agreement did contain an implied term that the agreement could be terminated summarily in appropriate circumstances.

Whether plaintiff's conduct justified summary termination

53 The defendant focused on three particular aspects of the plaintiff's behaviour as justification for his instant dismissal from the course. First, the series of emails demanding an admission of misplaced affection; second, the remarks and behaviour of the plaintiff at the end of the class on Tuesday 8 April 2003; and finally, the conduct of the plaintiff during the class on 14 April 2003. I agree with the submission made by counsel for the defendant that the series of demand emails sent by the plaintiff to the defendant marked the onset of the deterioration in their professional relationship and was the first step in what later became an impossible situation. Earlier in these reasons I have said I found these demand emails inexplicable. In the last of the plaintiff's emails on 8 April 2003 (Exhibit 23) it was suggested that if the admission sought by the plaintiff was not made there was a very strong possibility of the plaintiff resorting to legal action. In this context it is impossible to see how the professional relationship could have survived. The subsequent conduct of the plaintiff must also be judged in this context. His remarks at the end of class on 8 April 2003, when he told the defendant in front of other students that he did not trust her and doubted her integrity, before following her down the stairs and continuing to harass her, clearly revealed the complete breakdown in both their personal and professional relationship. Mr Segler submitted that, even at that late stage in the deterioration of the relationship, the defendant ought to have followed the dismissal policy prescribed in Exhibit 11 and given the plaintiff the necessary warnings. Counsel for the plaintiff emphasised that the defendant had ample opportunity between 8 April 2003 and 14 April 2003 to comply with the dismissal policy prescribed by the contract.

54 I am unable to accept this submission. In my view a warning was hardly necessary. The plaintiff's behaviour both before and on 8 April 2003 was so extreme as to manifest a complete breakdown of the student/teacher relationship. To have accused his instructor in front of the class of being untrustworthy, and refusing to sign the Confidentiality Agreement as requested, publicly announcing at the same time his intention to show the agreement to a lawyer, was, in my view, behaviour of such an extreme nature as to constitute a breach of a material term of the contract between teacher and student. This open verbal attack on the defendant's integrity must also be considered in the context of the plaintiff's earlier persistent and unrelenting demands for an acknowledgment by the defendant that she had tried to entice him into a relationship. These demand emails were, as I have previously said, themselves evidence of the complete breakdown of both the personal and professional relationship. I would have thought that the defendant would have been justified in summarily terminating the plaintiff's contract after the incident on 8 April 2003. Instead she sought advice as to what to do.

55 The professional and personal relationship, if not already fatally undermined, was irretrievably destroyed by what I find to have been the blatantly hostile conduct of the plaintiff towards the defendant during the class on 14 April 2003. Piecing together the accounts of the plaintiff, the defendant and Peter Smith as to what happened on this occasion I am satisfied the plaintiff chose this particular moment as an opportune one to confront the defendant in front of the other students and attack her integrity as the teacher. When the plaintiff, according to Peter Smith, publicly accused the defendant of making advances towards him and asserted she was only insisting upon him signing a confidentiality agreement that previously she had said he need not sign because of his rejection of those advances, his continued participation in the class became untenable. The public exposure of the defendant's romantic interest in him, and the clear insinuation that she was motivated by spite or vindictiveness in demanding that he sign the Confidentiality Agreement, clearly had the tendency to undermine the plaintiff's integrity in the eyes of the other students present when the accusations were made. The exposure of the defendant's romantic interest in the plaintiff may not necessarily have fatally undermined her position with the other students; but the accusation that she was singling the plaintiff out and treating him unfairly because of his rejection of her advances clearly jeopardised her position in relation to the other students as well. Her motives had been impugned and her authority undermined. The continued participation of the plaintiff in the course had clearly been rendered impossible. The course could only have been salvaged by removing the plaintiff from it immediately. That is exactly what the defendant did and, in my view, was entitled to do.

56 I am satisfied the agreement between the parties did contain an implied term entitling the defendant to terminate the contract summarily.

57 I find the plaintiff's conduct was so disruptive as to have justified the summary termination of the agreement by the defendant.

58 Accordingly, I would dismiss the plaintiff's claim for damages.