Court of Appeal (WA)|2007-07-27|Before: Mr P, Wheeler JA, Like Wheeler JA, As Wheeler JA, Steytler P, Pullin JA

DELOOZE -v- HEALEY [2007] WASCA 157 (27 July 2007)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : DELOOZE -v- HEALEY [2007] WASCA 157

Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA

Citation : DELOOZE -v- HEALEY [2005] WADC 186

Contract - Interpretation - Implied term - Summary termination of contract - Turns on own facts

1 STEYTLER P: I have had the advantage of reading the judgment of Wheeler JA. I agree with her. I wish only to add a few comments of my own concerning ground 1, which challenges the trial Judge's finding of an implied term empowering the summary termination of the appellant's status as a student in the yoga teaching class taught by the respondent. Like Wheeler JA, I have grappled with the difficulty that an implied term of the kind found (albeit, with respect, not precisely enunciated) by the trial Judge might be thought to contradict an express term of the contract entered into by the parties.

2 As Wheeler JA has pointed out, the parties entered into a contract that the respondent would teach, and the appellant would undertake, a yoga teaching course from February to October 2003. The contract was partly oral and partly in writing. The written portion consisted of a document entitled "The Yoga Company Certificate IV in Yoga Teaching". It is apparent from the written part of the contract that, because of the nature of the course taught, it was important that there be a relationship of mutual respect between teacher and student. The document recorded that "a mature and responsible attitude" was an "informal pre-requisite" for eligibility for the course and that students had an overriding obligation to "respect the rights of others at all times". The following paragraph, entitled "Dismissal Policy" is important:

"Students are expected to observe the rights of others at all times. 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 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 [sic] an [sic] in writing before dismissal."

3 A number of observations can be made concerning this paragraph. The first is that it does not purport to be comprehensive in setting out reasons for dismissal. The second is that, as I read it, it could not have been the intention of the parties that two warnings were required to be given in the case of any breach of the contract justifying dismissal. Rather, it seems to me that the contractual intention is that warnings are to be given in the case of repeated conduct of the kind identified which occurs at a time when there is still a potentially workable teacher/student relationship between the contracting parties. So, to take an extreme example, if a student was to physically assault the teacher in a violent way it would be a surprising construction of the contract to conclude that the

student could not be dismissed without first being given two warnings. It consequently seems to me that, in a case of "severely disruptive behaviour", the two warnings policy is intended to apply only to ongoing behaviour which, while severely disruptive, is conduct of a kind that could reasonably be expected to be influenced by a warning, as opposed to conduct which, of itself, destroyed the very foundations of the relationship between student and teacher that underpinned the continued performance of the contract. As Wheeler JA has pointed out, it does not follow that all conduct which is "severely disruptive" will necessarily be destructive of the teacher/student relationship. The obvious example, suggested by Wheeler JA, is provided by the case of a student unintentionally disrupting the class while doing his or her incompetent best to comply with the teacher's instructions.

4 I consequently agree with Wheeler JA, for the reasons that she has given, as supplemented by these few comments, that it was an implied term of the contract that the appellant should not conduct himself in such a way as to destroy the relationship of confidence and trust between teacher and student and that breach of this implied term, of itself, was sufficient in the circumstances to justify an instant dismissal from the class. An implied term of this kind seems to me to satisfy all of the requirements identified in such cases as BP Refinery (Westport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 at 283 and Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 at 346 - 347.

5 For the reasons given by Wheeler JA, as supplemented by these short reasons, I would dismiss the appeal.

6 The appellant (plaintiff) sued the respondent (defendant) in the District Court for damages to compensate him for a potential loss of income said to result from a breach of contract by the respondent. The contract consisted of both a document entitled "The Yoga Company Certificate IV in Yoga Teaching" and an oral agreement between the parties that the respondent would teach, and the appellant would undertake, a yoga teaching course from February to October 2003.

7 In broad terms, the relevant facts found by the learned trial Judge were as follows. The appellant met the respondent in September 2002, which is when they first discussed the question of his participation in the

respondent's yoga teaching course. Over the next six months they developed a friendship that went beyond a normal relationship of teacher and student. This is apparent from the series of emails that passed between the appellant and respondent, some of which were set out in the judgment Delooze v Healey [2005] WADC 186.

8 By March 2003, the respondent had developed what she described as a "crush" on the appellant. She did not, however, want to enter into a physical relationship with him at that time, and invited the appellant to dinner in order to ask him what his attitude towards her was. The appellant said that he did not want to enter into a relationship with the respondent and denied having acted in a flirtatious manner towards her. The trial Judge accepted, however, that he did flirt with the respondent and encouraged her interest in him [33] - [38], [40].

9 Their relationship began to change soon after that discussion. The appellant repeatedly demanded that the respondent make a "complete admission" that her feelings towards him had been misplaced. The respondent was uncomfortable with the tenor of the appellant's emails, and said that she wished to restore the relationship to a professional level. It was for this reason that on 7 April 2003 the respondent asked the appellant to sign a confidentiality agreement, which had been handed out to all students prior to the course beginning, but which she had previously agreed that the appellant did not have to sign.

10 The appellant objected to several of the clauses in the confidentiality agreement and did not sign it. On 8 April 2003 the appellant approached the respondent at the end of a class in the presence of other students. He asked her what she wanted him to do with the confidentiality agreement and proceeded to say, in front of the other students, that he did not trust her and doubted her integrity. He also mentioned showing the document to his lawyer. The respondent said that it was an inappropriate time to discuss the issue. When she attempted to leave, the appellant followed her downstairs and continued to ask what he should do with the confidentiality agreement. The trial Judge accepted that given the appellant's "express and public assertion of mistrust in the [respondent] any balanced discussion at that stage would, from her point of view, have been impossible" (at [45]).

11 The most significant event occurred on 14 April 2003, when the appellant confronted the respondent during a class. During a particular phase of the class the appellant turned off the musical tape and began to walk around the room, publicly accusing the respondent of treating him unfairly in relation to the confidentiality agreement because he had rejected her advances. The respondent told the appellant that it was an inappropriate time to discuss the matter and asked him to leave the room. Following this confrontation, the respondent sought legal advice and asked her lawyers to write to the appellant terminating his participation in the course.

12 There were, of course, differing accounts of the events leading up to the incidents of 8 and 14 April, and of what took place during those incidents. The learned trial Judge rejected the accounts given by the appellant. He said of the appellant:

"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."

13 Due allowance must be made for the advantage of a trial Judge in assessing the demeanour of a witness, but it is the duty of an appellate court to ensure that that advantage has not been misused. Having read the transcript, my impression is that his Honour's conclusion was, with respect, amply justified. The tone of the appellant's evidence was at once evasive and dogmatic.

14 His Honour's views about the significance of the relevant events were as set out in [54] and [55] of his reasons:

"54 ... 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.

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."

15 There are a number grounds of appeal. Only the first involves a question of law, although it is asserted that the second does so as well. It is convenient to deal with all the factual issues, before turning to the question of law raised by ground 1.

16 Before I turn to the grounds of appeal concerned with matters of fact, it is desirable to mention one further matter concerning the facts. It does not emerge expressly from his Honour's reasons, but it should be noted that it is clear from the evidence of the witnesses that there are a number of characteristics of the yoga classes which may be relevant to a characterisation of the appellant's conduct, and of the effect which that conduct had on the teacher/student relationship. As a number of the witnesses endeavoured to explain to his Honour the learned trial Judge, sometimes in rather tedious detail, yoga - or at least the particular type of yoga the subject of these classes - is concerned with questions which have a philosophical, or spiritual, or psychological aspect. As the appellant said in the course of his evidence-in-chief, his interest in yoga stemmed initially from his interest in "personal development, the pursuit of knowledge" (t/s 9). He felt "religious" about it (t/s 9). During the course of a class, during what was described as a "meditation" period, it was the respondent's practice to make a few philosophical remarks apparently directed towards the philosophy underlying yoga. The meditation period is obviously one during which it is important that students are able to feel calm and relaxed. A witness, Ms Spear, went so far as to describe the students as having been "in a very fragile place" (t/s 235) during that phase of the class. It is relevant, in considering his Honour's assessment of the appellant's conduct, to remember that a yoga class is apparently concerned with the imparting of a philosophy, with self-examination, and with meditation and relaxation. The degree of respect and of mutual trust and confidence required in a teacher/student relationship of that kind is necessarily greater than that required in classes which are concerned merely with the transmission of information in a conventional classroom setting.

17 Turning to deal with the grounds of appeal which raise matters of fact, they are as follows.

18 This ground asserts that his Honour erred in "finding" that a series of emails by the appellant demanding an admission of misplaced affection constituted justification for the termination of the appellant's enrolment in the course, because the respondent did not plead the emails as a ground for termination.

19 As is clear from the passages which I have quoted from his Honour's reasons, he did not make such a finding. Rather, he considered that the emails were "evidence" of the complete breakdown of the personal and professional relationship. In an earlier paragraph, he had agreed with a submission by counsel that those emails "marked the onset of the deterioration" (at [53]) in the professional relationship. It is plain that his Honour had regard to those emails as an important part of the context, as he was entitled to do. This ground cannot succeed.

20 This ground asserts that certain of his Honour's findings were "against the evidence and the weight of the evidence". The findings attacked are, in broad terms, those to the effect that the appellant's conduct on 8 April was so extreme as to constitute a breakdown of the teacher/student relationship. There are two points made in support of this ground. The first point, relying upon the fact that the incident on 8 April revolved around the respondent's request that the appellant sign the confidentiality agreement, effectively repeats submissions made on behalf of the appellant at trial to the effect that he had a "reasonable grievance" about being asked to do so. The difficulty with this submission is that his Honour had, in earlier findings which appear to me not to be open to challenge, rejected the appellant's characterisation of his grievance concerning the confidentiality agreement. It is very plain from the evidence, and his Honour appears to have accepted, that the appellant did not wish to sign the confidentiality agreement. However, it is equally plain from his Honour's reasons that he took the view that the appellant's choice of time, place, and language for the discussion on 8 April was entirely inappropriate.

21 The second point made in relation to this ground is that the respondent's evidence under cross-examination was that she appreciated that the appellant was not happy at being asked to sign the confidentiality agreement and that she accepted that the appellant had a "valid grievance" about that. The problem with this point is that the respondent's subjective opinion about what the appellant's grievance may have been, and whether or not it was valid, was not relevant or admissible evidence. It was for his Honour, based upon the nature of the conduct which he found to have occurred, to draw a conclusion about what, if anything, the appellant's grievance may have been, and whether it was "valid". It was also for his Honour to determine whether or not, even if there were a valid grievance, the appellant's way of manifesting it was, nevertheless, so inappropriate as to cause a breakdown in the teacher/student relationship. This ground, too, cannot succeed.

22 This ground, broadly, asserts that his Honour erred in fact in his conclusions about the appellant's conduct on 14 April 2003. Again, it is said that the findings were "against the evidence and the weight of the evidence". A number of points are made in support of this ground. They appear to fall into three broad categories.

23 First, there is, as in relation to ground 3, some reliance upon the respondent's acknowledgement at certain points during cross-examination that the appellant had a valid grievance or grievances. As I have already said, that was a matter for the trial Judge.

24 Next, there are submissions made which appear to replicate argument made to his Honour, to the effect that the appellant was merely seeking, in a proper way, to protect his rights. His Honour plainly rejected the appellant's evidence in certain important respects, and this submission, it seems to me, is based upon evidence rejected by his Honour. It therefore cannot be made, unless it can be demonstrated that his Honour was wrong to reject the evidence of the appellant. As earlier noted, it seems to me that his Honour's view of the appellant's evidence was correct.

25 Finally, it is pointed out that the respondent's defence at trial included a pleading that a number of "warnings" were given to the appellant about the potential for his behaviour to lead to his dismissal from the class. It is pointed out that the respondent agreed in cross-examination that she did not give the appellant any verbal or written warnings before he was dismissed from the class. It is submitted that the discrepancy between the pleading and evidence should have "called into question the overall credibility of the Respondent".

26 Whether that matter should have had a significant or any impact upon the respondent's credibility was a matter for his Honour. It seems reasonably clear from the transcript that the respondent did not attempt to dissemble or prevaricate about whether warnings were given; rather, she freely admitted that they were not. However, it should also be noted that there was a series of emails between the appellant and the respondent, which his Honour considered in some detail. Those from the respondent on a number of occasions contained suggestions to the effect that the relationship should be restored to a more professional, and less personal, level. They appear at certain times to suggest or acknowledge that there will be a difficulty for the teacher/student relationship if personal issues cannot be resolved or set aside. It may be that an unduly optimistic view was taken at the time of framing the defence, that these references might in some way be understood as warnings that the appellant would be dismissed from the class if his behaviour continued. A discrepancy of this kind between the pleading and evidence does not appear to me to be a matter which would justify this Court in concluding that his Honour had misused the advantage which he undoubtedly had as trial Judge, in preferring the evidence of the respondent and, based upon it in reaching the conclusions of fact which he did. Nor does it seem to me to be a matter of such significance that his Honour was required expressly to deal with it in his reasons.

27 This is the only ground which raises a legal issue. A related legal issue is the subject of the respondent's notice of contention. In order to understand both this ground and the notice of contention, it is necessary to have regard to the document "The Yoga Company Certificate IV in Yoga Teaching", and, in particular, to a clause appearing under the heading "Dismissal Policy" in that document, to the respondent's pleading about the implication of a term in the agreement, and to his Honour's findings in relation to that pleaded implied term. The most convenient way of setting out all of these matters is to quote verbatim from [47] - [52] inclusive of his Honour's reasons, which read as follows:

"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.'

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.
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:

(1) It must be reasonable and equitable;

(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';

(4) It must be capable of clear expression;

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

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

28 It is not suggested that his Honour misunderstood or misstated the law. Rather, the five particulars of ground 1 boil down to two propositions. The first proposition is that, in the light of the "dismissal policy" in the written document, no term concerning summary dismissal could be implied. The second was that the implied term was not capable of clear expression and, to the extent that his Honour had defined it, it was defined in a circular way. It was submitted that his Honour had, in effect, defined the circumstances entitling the respondent to terminate a student's enrolment as being "conduct or behaviour of such a disruptive nature as to warrant summary termination".

29 By the notice of contention, the respondent asserts that the appellant's conduct on 8 and 14 April evinced an intention no longer to be bound by the contract on the part of the appellant, and was therefore to be characterised as a wrongful repudiation of it, which was accepted by the respondent in her solicitor's letter of 15 April 2003. There was some discussion at the hearing before us about whether the pleadings did or did not encompass the contention contained in the notice of contention. However, it was clear that the factual issues relevant to the alleged repudiation were identical with the factual issues relevant to the existence or otherwise of the implied term found by his Honour, and had all been canvassed at trial. The case is therefore one in which, even at this late stage, it would be open to the respondent to apply to amend in the event that the Court formed the view that its defence did not raise a question of repudiation.

30 In my view, it is not necessary to turn to the question of repudiation, although it seems to me that it would have been open to his Honour to have characterised the appellant's behaviour as repudiatory. It is sufficient, however, to deal with ground 1, which should not succeed. My reasons for that conclusion are as follows.

31 His Honour does not appear to have formulated in his reasons the term which he was prepared to imply in the contract. Instead, he simply observed, at [51], "that 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", and that there was an implied term that the agreement could be terminated summarily "in appropriate circumstances" (at [52]).

32 I do not understand either of those findings to be held out by his Honour as the implied term which he found to exist. However, in my view, a term of appropriate clarity consistent with his Honour's findings and the respondent's submissions can be formulated. The respondent relies upon the principles applicable to summary termination in employment contracts. So far as employees are concerned, there is implied in a contract of employment a term to the effect that the employee will render faithful service, and will not "do anything inconsistent with the continuance of confidence" between employer and employee (Shepherd v Felt and Textiles of Australia Ltd [1931] HCA 21; (1931) 45 CLR 359 at 372 per Starke J; Blyth Chemicals Ltd v Bushnell [1933] HCA 8; (1933) 49 CLR 66 at 72 - 73 per Starke and Evatt JJ at 81 - 82 per Dixon and McTiernan JJ). So far as employers are concerned, there is implied in contracts of employment, a term that employers will not (without reasonable and proper cause), conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee (Easling v Mahoney Insurance Brokers [2001] SASC 22; (2001) 78 SASR 489 at 514 per Olsson J; Thomson v Orica Australia Pty Ltd [2002] FCA 939; (2002) 116 IR 186 at [141] per Allsop J).

33 As I have noted, the nature of the classes in question here necessarily imports a requirement of trust and confidence between teacher and student. I would accept the respondent's submission that an implied term would be formulated in a way analogous to that implied in employment contracts. It would be to the effect that the appellant would not conduct himself in such a way as to destroy the relationship of confidence and trust between teacher and student. His Honour's references in [54] and [55] of his reasons, to the breakdown of the teacher/student relationship, and to the appellant's attacks on the respondent's integrity demonstrate, in my view, that a term of that kind was contemplated by his Honour when finding that there was an implied term that the agreement could be terminated summarily "in appropriate circumstances". I would therefore reject the appellant's submission that no term of the kind contended for by the respondent could be formulated with clarity.

34 If the implied term is understood to be a term that the appellant not conduct himself in a way that is calculated to destroy the relationship of confidence and trust between teacher and student, then at least some of the appellant's submissions concerning the inconsistency between that implied term and the express "dismissal policy" fall away. It cannot, in my view, be said that a term of that kind would be unreasonable or inequitable. Nor can it be said, in my view, that the parties would not have agreed to it. The very entry into a teacher/student relationship in relation to a class of this kind suggests, in my view, that the parties must objectively have contemplated that a relationship of respect, trust and confidence between them was essential for each successfully to complete the course as student and teacher respectively.

35 The principal difficulty so far as the implication of this term is concerned relates to the appellant's submission that the implication of such a term would be unnecessary in circumstances where the contract itself provided for a dismissal procedure, and that the implication of a term of this kind would contradict the express terms of the "dismissal policy". It is pointed out, with some force, that the "dismissal policy" expressly refers, inter alia, to "severely disruptive behaviour". It is pointed out that conduct which is destructive of the relationship between student and teacher will necessarily be "severely disruptive".

36 That is, of course, correct, but it does not follow that all conduct which is "severely disruptive" will necessarily be destructive of the teacher/student relationship. For example, a student may be unintentionally disruptive while, nevertheless, doing his or her incompetent best to comply with the instructions of the teacher, or may be disruptive simply because he or she has not stopped to consider what the effects of his or her actions may be upon the teacher or the class, but without expressing any lack of respect for or lack of confidence in the teacher. In order to determine whether the implied term is inconsistent with the express dismissal policy, it is necessary to ask the question whether the dismissal policy is to be construed, in its reference to "severely disruptive behaviour", to encompass severely disruptive behaviour of a kind which is entirely destructive of confidence between teacher and student, or whether it is intended to extend only to behaviour falling short of that extreme kind. There are two reasons for considering that the policy may well be intended to extend only to disruptive behaviour which falls short of that extreme. The first is that "severely disruptive behaviour" is referred to in the policy together with other kinds of behaviour, such as repeated tardiness and failure to fulfil assignments, which may well detract from the student's ability to learn or to fulfil the course requirements, but which are most unlikely to be entirely destructive of the teacher/student relationship. The second is that the reference to "two warnings" in the policy suggests that it is directed to behaviour which can be remedied. Where the behaviour of the student is such that the teacher/student relationship is destroyed, there would appear to be no point in warnings.

37 I would therefore agree with his Honour's reading of the dismissal policy as being, on its proper construction, not directed to the situation where a student's misbehaviour is so extreme "as to destroy the relationship between that student and the teacher" (at [51]). An implied term directed to the latter type of behaviour is not therefore, inconsistent with it.

38 If the construction of the dismissal policy which I have set out above is correct, then it follows that the appellant's contention that an implied term of the kind identified would be unnecessary in the light of the express "dismissal policy" falls away. On the construction reached by his Honour, with which I agree, the dismissal policy does not extend to

conduct which is so extreme that it destroys the teacher/student relationship. Rather, it is directed to conduct falling short of that extreme, which has the potential to, or does, detract from, or impair, either the learning of the particular student or the experience of other students. The implied term would, on that construction, complement the "dismissal policy".

39 In my view, therefore, the learned trial Judge was correct in the conclusions which he reached. I would dismiss the appeal. It is not necessary to consider the notice of contention.

40 PULLIN JA: I agree with Wheeler JA that grounds 2, 3 and 4 should be dismissed for the reasons given by her Honour. However, in relation to ground 1 I have reached a different conclusion. I would uphold that ground. The term which the trial Judge held should be implied was one which in my opinion contradicted an express term of the agreement between the parties. The express term was the one which provided that for a breach of the agreement by reason of "severely disruptive behaviour" the appellant was to be given two warnings, verbally and in writing before he could be dismissed. To imply a term that the appellant could be dismissed without warning is to contradict the express term.

41 Having upheld ground 1, it is then necessary to consider whether the appellant's conduct on 14 April 2003 (which followed the incident on 8 April 2003) amounted to a repudiation of the contract by the appellant which was accepted by the respondent. Whether there has been a breach of contract is measured by reference only to whether or not a contractual obligation has been broken or not. Repudiation is conduct in rejection of a party's contractual obligations. The appellant may not have intended to repudiate but actual intention to repudiate is not necessary. The issue is determined by an objective consideration of a party's conduct: Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623 at 658. A contract is repudiated when a party evinces an intention (by an objective assessment of his conduct) to be no longer bound by the contract or to fulfil it only in a manner substantially inconsistent with his obligations: Carr v JA Berriman Pty Ltd [1953] HCA 31; (1953) 89 CLR 327 at 351 - 352; Progressive Mailing House Pty Ltd v Tabali Pty Ltd [1985] HCA 14; (1985) 157 CLR 17 at 33. The parties agreed (by par 2 of the statement of claim and par 2 of the defence) that the appellant's obligation under the contract was to undertake the yoga teacher training course. The appellant by his behaviour on 14 April 2003, in the light of his earlier conduct, particularly on 8 April 2003, evinced an intention to fulfil the contract only in a manner substantially inconsistent with his obligation. To disrupt the class

by peremptorily turning off the tape and then walking around the room making accusations against the appellant was in breach of his agreement to undertake the yoga training course. The two incidents combined had a significance which might not have been legitimate to attach to the first alone: Carr v JA Berriman (supra) at 351. I would therefore uphold the respondent's notice of contention that the appellant repudiated the contract. The respondent accepted that repudiation.

42 The respondent had not pleaded repudiation in the defence but during the hearing of this appeal the respondent foreshadowed an amendment to her defence in order to do so. The appellant objected to the proposed amendment on the basis that he would be prejudiced because (his counsel asserted) he would have conducted the trial differently if that had been an issue. That assertion was not backed up by any particulars. In the absence of any particulars I would reject the assertion and allow the amendment.

43 The result is that the judgment of the trial Judge is supported by the result on the notice of contention and so the appeal must be dismissed.

DELOOZE -v- HEALEY [2007] WASCA 157 (27 July 2007)

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DELOOZE -v- HEALEY [2007] WASCA 157 (27 July 2007)

Cases Cited (10)