First Appellant v Respondent

1 The appellants, Noel Marshall and Wealth Foundry Pty Ltd ('Wealth Foundry'), appeal pursuant to s 109 of the Magistrates' Court Act 1989 (Vic) from the judgment and final orders of a Magistrate on 7 June 2024.

2 On 7 March 2023 the respondent, Synchron Advice Pty Ltd ('Synchron'), commenced proceedings in the Melbourne Magistrates' Court by filing a Complaint against Mr Marshall and Wealth Foundry alleging that the appellants had failed to indemnify Synchron in respect of monies paid to clients in settlement of a claim made to the Australian Financial Complaints Authority ('AFCA'), together with fees it had paid to AFCA.

3 After a hearing spanning six days, the learned Magistrate held that Synchron was entitled to enforce the contractual indemnity against Mr Marshall and Wealth Foundry and ordered that they pay Synchron the sum of $28,059.10 together with interest and costs.

4 The resolution of this matter requires answers to the following questions:

(a) To succeed in its claim, did Synchron have to show that the conduct of Mr Marshall or Wealth Foundry caused loss to the clients?

(b) Was Synchron required to establish that a settlement it reached with the clients was reasonable?

(c) If the answer to (a) is 'no' and the answer to (b) is 'yes'; was the settlement Synchron reached with the clients reasonable?

5 For the reasons that follow, the answers to those questions are:

(a) No;

(b) Yes; and

(c) It was reasonable to settle with the clients pursuant to the AFCA recommendation, but the evidence adduced only permits the Court to assess the quantum of $11,270.07 as reasonable. In addition, Synchron is entitled to recover fees it paid to AFCA.

6 Synchron holds an Australian Financial Services Licence ('AFSL') under the Corporations Act 2001 (Cth) ('the Corporations Act'). Pursuant to s 916A(1) of the Corporations Act Synchron may authorise persons (authorised representatives) to provide specified financial services on its behalf.

7 Mr Marshall is a financial advisor and is the director of Wealth Foundry, a firm that provides financial planning advice.

8 Under two separate agreements Synchron appointed Mr Marshall and Wealth Foundry as its authorised representatives.

9 On or around 17 June 2013 Synchron and Mr Marshall entered into an authorised representative agreement ('AR Agreement') governing the provision of financial services by Mr Marshall as an authorised representative of Synchron. The relevant clauses of that agreement are as follows:

8.2 The Authorised Representative must indemnify the Licensee from any Claims made against or upon the Licensee or any losses suffered by the Licensee (including the payment of any insurance excess) as a result of any negligent or wilful act or omission by the Authorised Representative.

...

8.5 The indemnity granted in this clause survives termination of this Agreement.

...

9.2 This Agreement may be terminated at any time by mutual agreement of the parties or by either party by the giving of thirty (30) days written notice to the other party.

...

1. Rules of External Disputes Resolution Schemes: The Licensee and the Authorised Representative must comply with the rules of the Financial Ombudsman Service (FOS) or any such other external resolution disputes scheme of which the Licensee is required to be a member.

...

(emphasis in original)

10 On or around 9 May 2014 Synchron, Wealth Foundry and Mr Marshall entered into an authorised representative agreement ('Corporate AR Agreement') governing the provision of financial services by Wealth Foundry as an authorised representative of Synchron, with Mr Marshall acting as guarantor. The relevant clauses of that agreement are as follows:

1.7 Claim means any claim, demand, legal proceedings, complaint, application to the Licensee's external dispute resolution scheme, cause of action or taxation sought to be imposed or raised upon the Licensee by any person, whether a Client or not, and whether fully concluded or in any way settled or compromised including one that may be:

...

1.7.4 pursuant to membership of an external dispute resolution scheme...

...

arising at any time from or in connection with the conduct of the business of the Authorised Representative or in connection with the authorisation granted pursuant to this Agreement...

...

8.2 The Authorised Representative must indemnify the Licensee from any Claims made against or upon the Licensee or any losses suffered by the Licensee (including the payment of any insurance excess and costs) as a result of or in any way connected to any act or omission by the Authorised Representative.

...

8.6 The indemnity granted in this clause survives termination of this Agreement.

...

9.2 This Agreement may be terminated at any time by mutual agreement of the parties or by either party by the giving of thirty (30) days written notice to the other party.

...

14.2.2 the Authorised Representative and the Guarantor indemnities and warranties for the benefit of the Licensee survive any termination of this Agreement including in respect of any Claim whether arising during or following this Agreement.

...

1. Rules of External Disputes Resolution Schemes: The Licensee and the Authorised Representative must comply with the rules of the Financial Ombudsman Service (FOS) or any such other external resolution disputes scheme of which the Licensee is required to be a member. The Authorised Representative acknowledges that the Licensee may settle or compromise any complaint, review or Claim before or with any external resolution dispute scheme with or without the involvement of the Authorised Representative who is nevertheless liable to indemnify and compensate the Licensee with respect to any Claim that may thereafter arise.

...

30.1 In consideration of the Licensee's agreement to appoint [Wealth Foundry] as a Corporate Authorised Representative, the Guarantor(s) covenant to:

30.1.1 Guarantee the punctual payment of any monies due to the Licensee by the Authorised Representative as if the Guarantor were the principal debtor; and

30.1.2 Indemnify the Licensee from and against all Claims, loss and damage which the Licensee may sustain by reason of either the Authorised Representative's default:

30.1.2.1 In payment of any monies owed to the Licensee; or

30.12.2 In the Authorised Representative's obligations under this Agreement.

(emphasis in original)

(a) the Magistrate approached the matter on the basis that it was sufficient to consider whether the liability of Mr Marshall and Wealth Foundry had been established pursuant to the Corporate AR Agreement and, as a result, he did not need to consider the AR Agreement. Subject to one qualification with which I deal below, the parties approached the matter before me on the same basis;

(b) it seems to have been accepted below and before me that if Wealth Foundry was liable under clause 8.2 of the Corporate AR Agreement to pay Synchron the amount it claims, Mr Marshall is liable under clause 30 of that agreement to pay the monies due to Synchron; and

(c) on 26 October 2018 the AR Agreement and the Corporate AR Agreement were terminated pursuant to clause 9.2. In each agreement, the indemnity granted in clause 8 survives termination and so the termination of those agreements had no impact on the matters I am required to consider.

12 On 1 November 2017 a company called Platinum Financial Hub Pty Ltd ('Platinum') provided advice to Mr Nathapon Teng and Ms Krittiya Permpanich regarding a potential property investment and the establishment of a self-managed superannuation fund.

13 On 14 November 2017 it appears as a result of a referral from Platinum, Mr Teng and Ms Permpanich engaged Eclipse Super Pty Ltd ('Eclipse') to set up a corporate trustee, a self-managed superannuation fund, a bare trust and a collateral deed. The terms of the engagement were in a document titled 'SMSF Gearing Structure' and signed by both Mr Teng and Ms Permpanich on 14 November 2017.

14 Mr Marshall was, at all material times, a director of Eclipse. Eclipse was not an authorised representative of Synchron.

15 On 14 November 2017 Mr Teng and Ms Permpanich engaged Wealth Foundry - as an authorised representative of Synchron, to provide them with financial advice and authorised Mr Marshall and Wealth Foundry to provide financial advice.

16 On 7 December 2017 Mr Marshall and Wealth Foundry provided financial advice to both Mr Teng and Ms Permpanich. The financial advice was provided in a document titled 'Interim Statement of Advice' ('Interim SoA') and was signed and dated by both Mr Teng and Ms Permpanich on 1 January 2018.

(a) notes that Synchron, as the holder of the AFSL, is responsible for the advice and financial services provided;

(b) states that the advice has been prepared by Mr Marshall and Wealth Foundry, as authorised representatives of Synchron;

(c) under the heading 'Purpose of this Document', states that:

(i) it has been produced to address 'only the time critical issues identified which include opening a bank account for your SMSF and rolling over superannuation funds into that account'; and

(ii) 'This is time critical in order to allow [the clients] to secure their chosen property';

(d) states that under an AFSL the authorised representatives are authorised to deal with financial services products 'only... after collecting relevant information from [the clients], making an appropriate recommendation and obtaining "authority to proceed" in order to implement any recommendations';

(e) says that until a full statement of advice has been provided it is important to preserve any insurance benefits in existing superannuation accounts and that this can be achieved by a partial rollover of funds leaving 'say $5,000' in the existing superannuation account;

(f) records the name, date of birth, address, occupation and annual income of each of Mr Teng and Ms Permpanich and that Mr Teng has a $102,000 superannuation balance in EISS Super;

(g) recommends opening a Macquarie Cash Management Account;

(h) recommends a full rollover or a partial rollover of Mr Teng's superannuation from EISS Super into the Macquarie Cash Management Account. In the event of a partial rollover, recommends Mr Teng leave $5,000 in his EISS Super account;

(i) under the heading 'Results of Our Recommendations', states that implementing the recommendations will 'achieve the time critical objective of establishing a bank account for [the client's] SMSF and having funds available, should [the client] need them, to facilitate an investment property purchase for the fund';

(j) makes various disclosures regarding fees and remuneration; and

(k) does not disclose Mr Marshall's relationship with Eclipse.

18 On its face the Interim SoA constituted financial product advice that was personal advice within the meaning of s 766B of the Corporations Act.

19 The Interim SoA was prepared without Mr Marshall or Wealth Foundry having had any communication with Mr Teng. In an attachment to an email sent by Mr Marshall to AFCA on 29 May 2019, Mr Marshall states that he had not spoken with or communicated in any way with Mr Teng prior to September 2018. At the hearing on 30 May 2024 the Magistrate confirmed with counsel for Mr Marshall and Wealth Foundry that there had been no contact with Mr Marshall or Wealth Foundry regarding the preparation of the Interim SoA.[1]

20 At some stage prior to 10 October 2018 (the evidence does not establish precisely when) it appears Mr Teng had made a complaint to Synchron regarding the advice he had received. On 10 October 2018 Mr Marshall sent two emails to Synchron setting out his position in relation to Mr Teng's allegations and stating a preparedness to refund the financial planning fee.

21 By letter dated 23 October 2018 to Mr Teng, Synchron set out its position regarding Mr Teng's allegations. This letter was later provided to the AFCA. That letter contained the following:

Based on the above information, it is Synchron's belief that you had already decided to establish an SMSF with the intention to purchase an investment property before you sought assistance from Noel Marshall. In addition, we believe that Noel Marshall, in his capacity as an Authorised Representative of Synchron, simply provided you with recommendations and assistance in regards to the establishment of the Macquarie CMA and rollover of your existing superannuation accounts into your SMSF.

We note that you have raised concerns in relation to fees deducted from your Macquarie CMA as follows:

• $7,997 paid to Platinum Financial Hub Pty Ltd
• $6,050 paid to Eclipse Super Pty Ltd
• $1,980 paid to Wealth Foundry Pty Ltd

The amounts of $7,997 paid to Platinum Financial Hub Pty Ltd for property related fees and $6,050 paid to Eclipse Super Pty Ltd for the establishment of the Trust Deed and administrative fees were not received by Synchron. We confirm that the only amount received by Synchron from your Macquarie CMA was $1,980 for the preparation of the advice document completed by Noel Marshall.

You have informed us that Platinum Financial Hub Pty Ltd has agreed to refund you the payment of $7,997.

Although the payment of $6,050 to Eclipse Super Pty Ltd was received by Noel Marshall, this company is not a Corporate Authorised Representative of Synchron and this payment was not received by Synchron. Therefore, this fee does not come under Synchron's jurisdiction and any request for a refund of this amount should be directed to Noel Marshall/Eclipse Super Pty Ltd.

However, as you are not happy with the services provided to you by Noel Marshall (in his capacity as an Authorised Representative of Synchron), we are willing to offer you a refund of $1,980. This is the full amount you paid in relation to the advice document provided to you by Noel Marshall/Wealth Foundry Pty Ltd. This offer does not constitute an admission of misconduct.

22 On 7 January 2019 Mr Teng made a complaint to AFCA against Synchron. Separate complaints appear to have been made against Platinum and Eclipse.

23 On 15 February 2019 Synchron wrote to Mr Marshall to inform him that it had been notified of a complaint lodged with AFCA by Mr Teng and invited him to discuss any questions he had about the complaint.

24 On 18 March 2019 Synchron emailed Mr Marshall to inform him that a conciliation conference between AFCA and Synchron on 1 May 2019 had been scheduled.

25 On 3 May 2019 Synchron emailed Mr Marshall advising him of their participation in a conciliation conference convened by AFCA. In that email, Synchron advised of an initial offer they had made to settle and said that AFCA had asked for a timeline of interactions with Mr Teng and asked Mr Marshall if he could 'provide [Synchron] with a brief timeline of events for the actions that occurred from your end? E.g., setting up the SMSF Trust Deed, issuing of the Interim SoA etc'.

26 On 29 May 2019 Mr Marshall wrote to the AFCA regarding the allegations made by Mr Teng against Eclipse and providing a timeline regarding those interactions. That correspondence does not directly address matters regarding Wealth Foundry and the Interim SoA.

27 On 30 August 2019 AFCA made a formal recommendation that Synchron pay $19,043.91 (plus interest) to Mr Teng, the former client of Mr Marshall and/or Wealth Foundry, regarding financial services provided to Mr Teng by Mr Marshall and/or Wealth Foundry in their capacity as authorised representatives of Synchron ('AFCA Recommendation').

28 Below I consider the AFCA Recommendation in more detail.

29 Following the AFCA Recommendation on 1 October 2019, Synchron and Mr Teng entered into a deed of settlement and release ('Deed of Settlement').

30 Under the Deed of Settlement, Synchron agreed to pay Mr Teng the sum of $22,624.10 in full and final settlement of the dispute between Synchron and Mr Teng as to the financial services provided by Mr Marshall and Wealth Foundry. This was paid on 4 October 2019. On 31 October 2019 Synchron also paid fees in the amount of $5,435.00 to AFCA.

31 On 31 January 2023 Synchron's solicitors wrote a letter of demand to both Wealth Foundry and Mr Marshall for payment in the sum of $28,059.10 pursuant to clause 8.2 of the Corporate AR Agreement.

32 On 7 March 2023 Synchron commenced proceedings in the Melbourne Magistrates' Court alleging that Mr Marshall had breached the AR Agreement and the Corporate AR Agreement and that Wealth Foundry had breached the Corporate AR Agreement by failing to indemnify Synchron for the amount paid under the Deed of Settlement and the fees paid to AFCA.

33 Both before the Magistrate and before me, the parties were keen to hold each other strictly to their pleadings. Before me there were also submissions on either side that the other party or parties was or were, in some respect or other, seeking to depart from the case they ran below.

34 For reasons which will become evident, the provisions of r 13.02 of the Magistrates' Court General Civil Procedure Rules 2020 (Vic) are of some significance, they provide:

(2) A defendant who, in the defence, does not state whether a fact stated in the statement of claim is -

35 For present purposes, it is sufficient to note that the following facts were admitted by Mr Marshall and Wealth Foundry:

(a) that the provision of the Interim SoA to Mr Teng and Ms Permpanich was an act of Wealth Foundry;

(b) the AFCA Recommendation was 'a result of' or 'connected to' the Wealth Foundry engagement and the Interim SoA;

(c) Synchron paid:

(i) $22,624.10 to Mr Teng in accordance with the AFCA Recommendation and the Deed of Settlement; and

(ii) Fees in the amount of $5,435.00 to AFCA;

(d) the payment made to Mr Teng whether pursuant to the AFCA Recommendation or the Deed of Settlement was a claim for the purposes of the Corporate AR Agreement.

36 In respect of each of the matters in paragraphs (a) and (b) above, Mr Marshall and Wealth Foundry denied that any financial advice they provided to Mr Teng and Ms Permpanich had caused any loss. In relation to paragraph (c), they denied causing Synchron to suffer loss and in relation to paragraph (d), they denied any liability for any payment made by Synchron pursuant to the AFCA Recommendation or the Deed of Settlement.

37 Synchron's Amended Complaint did not plead that the Interim SoA had caused loss to Mr Teng or Ms Permpanich. Both before the Magistrate and before me, Mr Marshall and Wealth Foundry alleged this matter was fatal to Synchron's claim.

38 In addition, Synchron's Amended Complaint did not allege that the settlement reached with Mr Teng and Ms Permpanich was reasonable. Before the Magistrate and on this appeal, Mr Marshall and Wealth Foundry argued that the failure to plead and prove reasonableness of the settlement was also fatal to Synchron's claim.

39 There are three matters which should be noted regarding issues related to the reasonableness of the settlement reached between Synchron and Mr Teng and Ms Permpanich.

40 First, Mr Marshall and Wealth Foundry did not contend that reasonableness of the settlement sum was a term to be implied in the Corporate AR Agreement. That much is clear from the following passage of the Magistrates' Court transcript:

HIS HONOUR: Now what you're saying, I think, Mr Ryan, is - maybe it's not the best word, but what you're saying seems to me to be that in 8.2, the word 'genuine' should appear before the word 'claims' and the word 'losses'. And furthermore, after the words, 'as a result of' or 'in any way', the word 'connected' should be substituted with the word 'caused'.

MR RYAN: No, the clause or element is a result of in- connected, but no, I don't require any of those words to be supplemented at all, Your Honour.[2]

41 Secondly, it is apparent that counsel for Mr Marshall and Wealth Foundry did submit to the Magistrate that there was an absence of evidence regarding the reasonableness of the settlement.[3]

42 Thirdly, it is plain that in its written closing submissions, Synchron's primary contention was that it did not have to prove reasonableness of the settlement; however, if contrary to that submission it was so required, it asserted there was evidence on which the Magistrate could find that the settlement was reasonable. In these proceedings, Mr Marshall and Synchron initially advanced a position that no such submissions had been made. When counsel's attention was drawn to the content of the written closing submissions it was ultimately submitted that those submissions as to reasonableness had not been pressed. It is plain from the transcript that that aspect of Synchron's submissions was not addressed orally but it is simply not open to suggest that the submission as to reasonableness of the settlement was not made or pressed on Synchron's behalf.

43 The Magistrates' Court proceeding was conducted entirely by reference to admissions (including, deemed admissions under r 13.02) and tendered documents. In the course of the proceeding a number of documents were admitted by the Magistrate subject to limitations, the most significant of these being the AFCA Recommendation.

44 It is somewhat difficult to discern from the transcript the precise point at which the AFCA Recommendation was admitted into evidence and the precise terms upon which it was admitted. Nonetheless, before me the parties agreed that it was admitted subject to a limitation under s 136 of the Evidence Act 2008 (Vic) and that it was not admitted for truth of its contents (in particular for the correctness of the determinations made) but for the fact of it having been made and the terms in which it was made.

45 For completeness, I note that the following emails were admitted on the basis that they were sent and not as to the truth of the representations contained in them:

(a) Emails from Mr Marshall to Synchron dated 10 October 2018;

(b) Email from Synchron to Mr Marshall dated 15 February 2019;

(c) Email from Synchron to Marshall dated 3 May 2019; and

(d) Email from Marshall to AFCA dated 29 May 2019.

46 On 31 May 2024, day five of the trial, the Magistrate delivered oral reasons ('Reasons').

47 The critical portion of the Reasons where his Honour construes clause 8.2 is as follows:

Moving back to the clause itself it seems to me that whilst one might argue that the words 'as a result of' indicate some sort of causal connection as being necessary to or by the act or omission, the word 'or' which thereafter immediately follows and precedes the words 'in any way connected' suggest to me that the person who designed this agreement and the people who chose to execute it should be taken to have in mind an extremely wide situation where causation of an act or omission is not required.

Even if I were wrong about that, what sort of act or omission would be said to be relevant causation. Superficially, of course, it may be acceptably, it's simply the entry into a business relationship. Superficially again, perhaps, or perhaps not as superficially, it may be the provision of an interim statement of advice. In my view, this particular clause was inserted to cover all possible situations.

Irrespective of fault finding. Irrespective of the opportunity to criticise. And whilst that produces an extremely onerous responsibility for the authorised representative, it nonetheless occurs in an industry where it is thought most desirable to conduct ones business under the [aegis] of a licensed organisation rather than to go out and get your own. It's an industry in which there are many rules and regulations to protect the public, the retail client.

...

I am therefore satisfied that the mere fact of engaging in a business relationship with the clients by the defendants, and thereafter the provision to the clients of an interim statement of advice, was an act or omission that fell within - I might say it was an act, that fell within clause 8.2 of the agreement.

And which was connected to the claim made against the plaintiff and the monies paid by the plaintiff to the clients. Being so satisfied, I find that the operation of clause 8.2 in the circumstances, requires the defendants to indemnify the plaintiff in the amounts that I have identified for which there shall be a judgment against the defendants in favour of the plaintiff.[4]

48 The Reasons record counsel's concession that Mr Marshall and Wealth Foundry were not contending for the implication of a term or an implied limitation in clause 8.2 regarding reasonableness. The Reasons do not address Synchron's alternative contention that if it was necessary to prove that the settlement reached with Mr Teng and Ms Permpanich was reasonable, it had done so.

49 On 7 June 2024 the Magistrate made final orders and heard the parties' submissions on costs. The final orders are as follows:

(a) Mr Marshall and Wealth Foundry pay Synchron $28,059.10 together with interest of $707.24 (later amended by agreement to $3,471.52);

(b) Mr Marshall and Wealth Foundry pay Synchron its costs of the proceedings in accordance with Scale E up to 17 October 2023 and thereafter on Scale E increased by 25% up to and including 31 May 2024 such costs to be taxed by the Costs Court in default of agreement; and

(c) There be a stay of execution of the orders until 7 July 2024.

50 By way of notice of appeal filed on 8 July 2024, Mr Marshall and Wealth Foundry commenced this proceeding appealing against the judgment and final orders of the Magistrate on 7 June 2024, pursuant to s 109 of the Magistrates' Court Act 1989 (Vic).

51 The notice of appeal sets out the following three questions of law:

1. Did the Magistrate err in law in construing the indemnity clause in such a way as to require the Appellants to indemnify the Respondent for the amount of the Respondent's claim in circumstances where the Magistrate made no finding, nor did the Respondent lead any evidence, that the Appellants' conduct caused loss to Teng and KP ("the clients")?
2. Did the Magistrate err in law in construing the indemnity clause in such a way as to require the Appellants to indemnify the Respondent for the amount claimed, in circumstances where the Respondent:

(a) led no evidence as to the reasonableness of the settlement sum paid to the clients?;

(b) led no evidence as to how the settlement sum was constituted and for what purported loss of the clients?;

(c) led no evidence as to any act or omission of the Appellants that caused the purported loss of the clients?

(d) led no evidence of any act or omission of the Appellants which caused the loss claimed by the Respondent?

1. Did the Magistrate err in law in failing to provide adequate reasons as to why the Magistrate construed the indemnity clause in the way the Magistrate did?

52 In their written submissions the way in which Mr Marshall and Wealth Foundry articulated their arguments relating to question three amounted to the submission that the Magistrate's reasons were inadequate because of the failures identified in the first two questions. In other words, if Mr Marshall and Wealth Foundry succeeded on questions one or two, they did not need question three and if they failed on both questions one and two, they would not succeed on question three. In those circumstances, I asked Senior Counsel for Mr Marshall and Wealth Foundry whether question three added anything to his clients' appeal. He agreed it did not and that I did not need to consider that ground.

53 In his oral submissions, Senior Counsel for Synchron drew my attention to an apparent disconformity between the way in which question two is expressed and the way in which Mr Marshall and Wealth Foundry ran their arguments on the appeal. He submitted that whilst question two posits an error of law in construing clause 8.2, Mr Marshall and Wealth Foundry did not argue for the implication of any term in clause 8.2 but rather relied upon a general principle regarding causation and remoteness. I accept that the characterisation of how Mr Marshall and Wealth Foundry ran their argument is accurate. As a result, there is a degree of infelicity in the expression of question two. In truth, the chapeau to the question would probably have been better expressed as follows:

Did the Magistrate err in law in requiring the Appellants to indemnify the Respondent for the amount claimed, in circumstances where the Respondent: ...

54 I am not satisfied, however, that anything turns on that infelicity. First, it is clear that the way in which Mr Marshall and Wealth Foundry seek to articulate the reasonableness argument on appeal was put in the Magistrates' Court, albeit that it was not the primary focus of their argument and the Magistrate was not taken to relevant authorities. Secondly, notwithstanding the way in which question two is expressed, the way in which the written submissions and the oral arguments were articulated relied on general principles regarding causation and remoteness. Senior Counsel for Synchron accepted he was in a position to meet those arguments.

55 The principles of construction of the Corporate AR Agreement were not in contest. They are well summarised by Osborn J in GLP Batesford Pty Ltd v 68 Bridge Road Land Pty Ltd:[5]

... The rights and liabilities of parties under a provision in a contract are determined objectively, by reference to its text and context (the entire text of the contract as well as any contract document or statutory provision referred to in the text of the contract) and purpose. The task involves determining what a reasonable businessperson would have understood the relevant contractual term to mean. This is done by reference to the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Ordinarily, the process of construction is possible by reference to the contract alone. If an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.

However, sometimes recourse to events, circumstances and things external to the contract may be necessary in identifying the commercial purpose or object of the contract where that task is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating. It may be necessary in determining the proper construction where there is a constructional choice'.

Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties' statements and actions reflecting their actual intentions and expectations.

A court is entitled to approach the task of giving a commercial contract an interpretation on the assumption 'that the parties...intended to produce a commercial result'.[6]

56 A commercial contract is to be construed so as to avoid 'making commercial nonsense or working commercial inconvenience',[7] but it is no part of the court's role to 'construe an agreement that otherwise has an explicable commercial result in a manner that increases the commercial benefits to one party to the agreement'.[8]

57 Finally, it is important to note that any ambiguity in an indemnity clause should be resolved in favour of the indemnifier.[9]

Did clause 8.2 require that Wealth Foundry's conduct caused loss to the clients?

58 As is evident from the way in which the first question in the notice of appeal is framed, Mr Marshall and Wealth Foundry contend that for the indemnity in clause 8.2 to operate, Synchron had to establish that Wealth Foundry had caused loss to Mr Teng and Ms Permpanich. In essence, Mr Marshall and Wealth Foundry contend that the Magistrate construed the phrase 'as a result of or in any way connected to' in clause 8.2 too broadly and that the clause requires a causal nexus between their acts and omissions and the losses Synchron claims to have suffered.

59 In support of their contention, Mr Marshall and Wealth Foundry say that the Magistrate's construction of clause 8.2 leads to a commercial nonsense and is contrary to the approach dictated by authority. In this latter regard, Mr Marshall and Wealth Foundry rely particularly on two decisions: Erect Safe Scaffolding (Australia) Pty Ltd v Sutton ('Erect Safe'),[10] and UGL Rail Pty Ltd v Wilkinson Murray Pty Ltd ('UGL').[11]

60 Synchron says that the words 'or in any way connected to' are words which imply a relational connection, rather than a causal connection. It relies particularly on the following cases: Lumley General Insurance Ltd v Port Phillip City Council ('Lumley'),[12] Horsell International Pty Ltd v Divetwo Pty Ltd ('Horsell')[13] and Speno Rail Maintenance Australia Pty Ltd v Hamersley Iron Pty Ltd ('Speno').[14] It says that when regard is had to the legislative regime established by the Corporations Act, there is an evident commercial purpose in construing clause 8.2 in the way for which it contends.

61 For the reasons which follow, I accept the construction advanced by Synchron and find no error in the way the Magistrate approached this aspect of his reasoning.

62 In Horsell, the Court was required to consider the scope of an indemnity under a policy of insurance granted by Liberty Mutual Insurance Company ('Liberty') in favour of Dive Two Pty Ltd ('Dive Two').

Subject to the terms of this Policy, [Liberty] will pay to or on behalf of the Insured all sums which the Insured shall become legally liable to pay by way of compensation as a result of a Claim(s) both first made against the Insured and notified to [Liberty] during the Period of Insurance for Injury and/or Damage in connection with the Insured's Business.[15]

64 McColl JA, in a passage cited with approval by the Victorian Court of Appeal in Lumley, said:

The phrase "in connection with" in the insuring clause is a relational term, whose operation will depend upon the context in which it appears: R v Khazaal [2012] HCA 26; (2012) 86 ALJR 884 (at [31]) per French CJ; see also in Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32; (2010) 241 CLR 390 ("Kostas") (at [24]) per French CJ. It is a "'prepositional phrase' of indefinite content" (Kostas at [24]), but may be said to be of considerable width, satisfied by a link or an association summed-up in the phrase "having to do with": Elkateb v Lawindi (1997) 42 NSWLR 396 (at 402) per Giles CJ Comm D; see also Derrington & Ashton (at [3-122]).

Nevertheless, while the words "may have a very wide operation they do not usually carry the widest possible ambit, for they are subject to the context in which they are used, to the words with which they are associated and to the object or purpose of the statutory provision in which they appear": Hatfield v Health Insurance Commission [1987] FCA 286; (1987) 15 FCR 487 (at 491) per Davies J; referred to with approval by Spigelman CJ (with whom Grove and Sully JJ agreed) in R v Orcher [1999] NSWCCA 356; (1999) 48 NSWLR 273 (at [31]).

The question that remains in a particular case is what kind of relationship will suffice to establish the connection contemplated by the statute: Taciak v Commissioner of Australian Federal Police (1995) 59 FCR 285 (at 295) per Sackville J. However, the relationship must be relevant, so that "usually a remote connection would not suffice"; the "sufficiency of the connection or association will be a matter for judgment which will depend, among other things, upon the subject matter of the enquiry, the legislative history, and the facts of the case": HP Mercantile Pty Ltd v Commissioner of Taxation [2005] FCAFC 126; (2005) 143 FCR 553 (at [35]) per Hill J (Stone and Allsop JJ agreeing).

As the primary judge accepted (at [53]), and the parties did not controvert, statements made about the meaning of the phrase "in connection with" in a statutory context, also apply to the interpretation of commercial contracts: see Thomas v State of New South Wales [2008] NSWCA 316 (at [19] - [21]) per Campbell JA; Fraser v The Irish Restaurant & Bar Company Pty Ltd [2008] QCA 270 (at [43]) per Muir JA.

The relational words "in connection with" also operate to widen the ambit of the cover beyond the activities expressly referred to in the insuring clause while, at the same time, requiring, as the primary judge found, that an activity must have a connection with the insured's business before it comes within the terms of the Policy.[16]

65 Ultimately, in Horsell, the Court found that the relational requirement was not established because the particular circumstances in which a claim on the insurance policy had arisen were as a result of recreational activities and not in connection with Dive Two's business.

66 In Lumley, the Court of Appeal considered whether Lumley General Insurance Ltd ('Lumley GI') was required to indemnify Port Phillip City Council ('the Council') under a policy of insurance.

67 The Council had retained a construction contractor ('Kane') to perform construction works at its town hall. Kane took out a policy of insurance with Lumley GI. The relevant term of the insurance policy provided as follows:

The Insurer(s) hereby agree, subject to the limitations, Exclusions, terms and Conditions hereinafter mentioned that they will:

(1) Pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as compensation for:

(a) Personal Injury; or

...

that happens during the Period of Insurance as a result of an Occurrence which arises in connection with the Business and Activities of the Insured and Insured Contracts...[17]

68 An employee of another contractor was injured performing work at the town hall. He sued in relation to his injuries and each of the Council and Kane were ordered to pay a proportion of the worker's damages. The Council claimed an indemnity under Kane's insurance policy with Lumley.

69 The Court of Appeal was required to consider whether the Council was an 'Insured' for the purposes of the clause. It concluded that it was. Next, the Court of Appeal considered whether the relevant personal injury in respect of which the Council had made a payment, and in respect of which it claimed under the insurance policy, could be said to 'arise in connection with the Business and Activities of the Insured and Insured Contracts'.

70 In that context, the Court of Appeal noted that the relevant clause of the insurance policy raised a 'connection' or a 'relationship' issue in contradistinction to a 'causation' issue. The Court of Appeal noted that there might be a requirement to indemnify a beneficiary of the insurance contract notwithstanding the absence of any negligence by the insured. Santamaria JA (with whom Nettle and Weinberg JJA agreed) said:

The phrase 'arises in connection with' is, as I have suggested a relationship phrase; it is not a 'causal' phrase save in the most attenuated sense. It seeks to relate one thing (here: the Occurrence) with another (here: 'the Business and Activities of Kane and Insured Contracts'). It will take its meaning from the context in which it is used. It is used in the insuring clause in a public liability contract taken out by a contractor that has dozens of projects under way throughout Australia in which a variety of persons will be involved, some obviously at risk of claims for liability from others.[18]

71 His Honour Santamaria JA then went on to cite with approval Horsell, which I have discussed above, and noted that Speno was another case where a prepositional phrase, in that case 'arising out of the performance by the insured', did not require that liability be 'caused by the performance' of the contract, but rather, whether it 'arose out of the performance' of the contract.

72 In UGL, the New South Wales Supreme Court considered an indemnity clause in the following terms:

The Consultant indemnifies the Principal against:

(1) any costs and expenses incurred, and losses and damages suffered by the Principal; and

(2) any legal costs (on a solicitor and own client or full indemnity basis, whichever is greater) and other costs and expenses incurred by the Principal in connection with a demand, action, arbitration or other proceeding (including mediation, compromise, out of court settlement or appeal);

arising directly or indirectly as a result of or in connection with any breach or non-performance of any of the obligations of the Consultant or any negligent act or omission of the Consultant under this Agreement whether express or implied.[19]

...In some of its submissions, UGL Rail relied on the width of the indemnities given by Wilkinson Murray - and, in particular, the width of the connecting phrase "in connection with" used in both cls 6.1 and 18.1 - as supporting its claim. It pointed out that courts had frequently held that the expression "in connection with" is one of "broad meaning and wide connotation requiring merely a relationship between one thing and another"... In my opinion, although the indemnities are undoubtedly wide, the words "in connection with" when used in the indemnities still require a causal connection between the loss in respect of which indemnity is sought and a breach by Wilkinson Murray of its obligations under the agreement. The parties could not have intended, for example, that Wilkinson Murray would be liable to indemnify UGL Rail for losses it suffered because the tunnels did not meet the reverberation specification even if that came about through no fault of Wilkinson Murray. Similarly, even assuming that the test of causation is not governed by section 5D of the [Civil Liability Act], it seems to me that it still requires that the settlement be reasonable before it can be said that the loss arising from the settlement occurred in connection with Wilkinson Murray's breach of the agreement. Clear words would be required to exclude that principle of causation.[20]

74 Mr Marshall and Wealth Foundry also referred to Erect Safe[21] where the New South Wales Court of Appeal considered an indemnity clause in the following terms:

The Subcontractor must indemnify Australand Constructions against all damage, expense (including lawyers' fees and expenses on a solicitor/client basis), loss (including financial loss) or liability of any nature suffered or incurred by Australand Constructions arising out of the performance of the Subcontract Works and its other obligations under the Subcontract.[22]

75 Giles JA considered the nature of the relationship implied by the words 'arising out of':

There is no easy test for the nature or extent of the causal or consequential relationship involved in the words "arising out of", and a substituted form of words should not be devised to replace the words chosen by the parties to the subcontract. The words are wide, but the relationship with Australand's damage etcetera which they require is informed by their presence in an indemnity clause. So far as ambiguous, the clause should be construed in favour of Erect Safe...The relationship should not be remote, but one of substance albeit less than that required by words such as "caused by" or "as a result of"; beyond that, it is a question of judgment on the particular facts.[23]

76 McClellan CJ at CL reviewed a range of authorities regarding indemnity clauses and concluded as follows:

The resolution of any disagreement about a particular clause in a contract must be approached by considering the terms of the relevant document. Although the resolution of disputes in other cases may provide guidance, each dispute must be resolved by the application of the accepted principles of construction to the particular contract.

The question in the present dispute is whether cl 11 confines the liability of Erect Safe to indemnify Australand for liabilities arising from Erect Safe's performance of the Subcontract Works or whether it extends to a liability of Australand which arises in relation to those Works. To my mind the indemnity is confined. Although the appropriate meaning may have been more obvious if the word "its" had been included before the words "performance of the Subcontract Works" I do not believe the clause lacks clarity. However, if the clause is ambiguous, it would have to be construed in favour of the surety, Erect Safe (see Ankar).

...

In the present case the liability of Australand does not "arise" out of the performance by Erect Safe of any of its contractual obligations. Although it is true that the occasion for the liability of Australand was the erection by Erect Safe of the faulty scaffold, the liability of Australand arises from its own independent act of negligence in failing to maintain an appropriate safety regime.[24]

77 Emerging from those authorities are the following propositions:

(a) first, my task is to construe the agreement before me. The approach adopted by other courts to other clauses may provide guidance, but it is not a substitute for the determination of the particular meaning of clause 8.2 in the particular context of the Corporate AR Agreement and its purpose;

(b) the phrase 'in any way connected to' is indicative of a relational, rather than causational, requirement, but its precise meaning will depend upon the context in which it is used; and

(c) notwithstanding the breadth of the words 'in any way connected to', some relationships will, on a proper construction of the relevant clause, simply be too remote to fall within those words.

78 The starting point in construing clause 8.2 of the Corporate AR Agreement is the text of the agreement. There are a number of textual indicators which support a construction that does not require Synchron to demonstrate that Wealth Foundry caused loss to Mr Teng and Ms Permpanich:

(a) first, consistent with the above authorities, I accept that the words 'in any way connected to' imply a relational, rather than causational, requirement;

(b) secondly, it is plain that the words 'as a result of' in clause 8.2 are apt to impose a causational requirement. If the clause were to operate only when the act or omission of Wealth Foundry caused claims or losses, the words 'or in any way connected to' would have been entirely unnecessary;

(c) thirdly, clause 8.2 operates in relation to 'any' act or omission of Wealth Foundry. It does not require that the act or omission be negligent or wrongful or contrary to statute; and

(d) further, clause 8.2 applies to 'Claims' or losses. The definition of 'Claim' includes an array of circumstances in which the authorised representative may not have caused loss to a client (or indeed other person). The definition includes:

(i) applications to AFCA, the resolution of which might result in payments to a person in circumstances where no loss cognisable at law has occurred; and

(ii) the clause applies to settlements and compromises more generally where no loss may, in fact, have occurred to the person whom the licensee pays.

79 Synchron also refers to clause 18 of the Corporate AR Agreement which relevantly provides that:

The Authorised Representative acknowledges that the Licensee may settle or compromise any complaint, review or Claim before or with any external resolution dispute scheme with or without the involvement of the Authorised Representative who is nevertheless liable to indemnify and compensate the Licensee with respect to any Claim that may thereafter arise.

80 It says clause 18 is consistent with a contractual intention to provide Synchron with the broadest possible indemnity from Wealth Foundry for any act or omission arising under the agreement. I agree that the relevant portion of clause 18 does provide an indication of such a contractual intention.

81 Synchron relies on two contextual matters arising outside the agreement as supporting its interpretation of the clause:

(a) the legislative imposition of liability upon an AFSL holder for the acts of its authorised representative; and

(b) the contents of the AR Agreement.

82 Insofar as it relies on the regime established by the Corporations Act, four provisions are particularly relevant:

(1) This Division applies to any conduct of a representative of a financial services licensee:

(a) that relates to the provision of a financial service; and

(b) on which a third person (the client) could reasonably be expected to rely; and

(c) on which the client in fact relied in good faith.

917B Responsibility if representative of only one licensee

If the representative is the representative of only one financial services licensee, the licensee is responsible, as between the licensee and the client, for the conduct of the representative, whether or not the representative's conduct is within authority.

917E Responsibility extends to loss or damage suffered by client

The responsibility of a financial services licensee under this Division extends so as to make the licensee liable to the client in respect of any loss or damage suffered by the client as a result of the representative's conduct.

(1) If a financial services licensee is responsible for the conduct of their representative under this Division, the client has the same remedies against the licensee that the client has against the representative.

(2) The licensee and the representative (along with any other licensees who are also responsible) are all jointly and severally liable to the client in respect of those remedies.

(5) An agreement is void in so far as it purports to alter or restrict the operation of section 917B, 917C, 917D or 917E.

(6) However, subsection (5) does not apply to the extent that the agreement:

(a) provides for a representative of a financial services licensee to indemnify the licensee for a liability of the licensee in respect of the representative.

...

83 Synchron says that these Corporations Act provisions create a regime where the licensee is responsible for acts of the authorised representative that are outside the scope of the representative's authority and that s 917F(6)(a) expressly recognises that the licensee may ameliorate this liability by permitting the licensee to obtain indemnity from the authorised representative. So much may be accepted but, in my view, that does not provide any real assistance in interpreting clause 8.2. The liability in s 917E is in respect of loss or damage 'as a result of' the representative's conduct. If clause 8.2 is to be given the interpretation for which Synchron contends, it has to be accepted that the clause provides protection against a greater range of liability than that imposed by s 917E.

84 Synchron submits that the AR Agreement may be used as an aid to the construction of the Corporate AR Agreement. It says the Corporate AR Agreement was, in a practical sense, negotiated between the same parties as the AR Agreement, with Mr Marshall being the directing mind of Wealth Foundry. Synchron points to the following differences in the two agreements:

(a) the absence of a definition of claims in the AR Agreement;

(b) the limitation of clause 8.2 of the AR Agreement to Claims of losses 'as a result of any negligent or wilful act or omission' of Mr Marshall; and

(c) the absence from clause 18 of the AR Agreement of the sentence:

The Authorised Representative acknowledges that the Licensee may settle or compromise any complaint, review or Claim before or with any external resolution dispute scheme with or without the involvement of the Authorised Representative who is nevertheless liable to indemnify and compensate the Licensee with respect to any Claim that may thereafter arise.

It says that the parties to the Corporate AR Agreement have plainly adopted language which is broader than the language adopted in the AR Agreement. Again, I accept that objectively this is so, but I am not persuaded that, ultimately, it assists me in interpreting clause 8.2.

85 Thus, I do not regard either of the contextual matters arising outside of the agreement which are relied upon by Synchron as assisting in the construction of clause 8.2 of the Corporate AR Agreement.

86 Finally, in this respect, I reject the argument of Mr Marshall and Wealth Foundry that interpretation of clause 8.2 in this manner creates a 'commercial nonsense'. There is an evident commercial purpose in Synchron limiting its exposure to liability for acts of Wealth Foundry. It is plainly in Synchron's interests to have a clause which requires an indemnity without having to prove that Wealth Foundry's conduct has caused loss to clients (or others). Such a clause is undoubtedly less favourable from Wealth Foundry's perspective but, as noted above, it is no part of my role to 'construe an agreement that otherwise has an explicable commercial result in a manner that increases the commercial benefits to one party to the agreement'.

87 Mr Marshall and Wealth Foundry further rested their 'commercial nonsense' proposition on the fact that this interpretation would leave them exposed to indemnifying Synchron for fraudulent or unreasonable settlements. I do not accept this is so. For reasons set out below, I have held that it is necessary to prove the reasonableness of the settlement. This precludes recovery under clause 8.2 for an unreasonable settlement (which would clearly also cover the unlikely circumstance of a settlement where Synchron was aware a claim was fraudulent but settled anyway). If Synchron reasonably settled a fraudulent claim and then, before it claimed indemnity, became aware of the fraud, in my view, it could not recover under clause 8.2; the payment would not be in any way connected to an act or omission of the authorised representative.

88 For these reasons, I am satisfied that it was not a requirement under clause 8.2 of the Corporate AR Agreement that Synchron needed to show that Wealth Foundry's conduct had caused loss to Mr Teng and Ms Permpanich. It was enough that Synchron's payment to Mr Teng and Ms Permpanich was in any way connected to Wealth Foundry's activities as an authorised representative of Synchron. Whatever the precise metes and bounds of a sufficient connection for the purposes of clause 8.2, I am satisfied that in this case a sufficient connection is established because:

(a) Wealth Foundry provided the Interim SoA to Mr Teng and Ms Permpanich;

(b) Mr Teng complained to AFCA regarding that Interim SoA;

(c) AFCA recommended a payment to Mr Teng and Ms Permpanich related to its view of the Interim SoA; and

(d) Synchron entered the Deed of Settlement and made the payment under that deed to give effect to AFCA's recommendation.

89 The answer to question 1 in the Notice of Appeal is 'No'.

90 Was Synchron required to prove that its settlement with Mr Teng and Ms Permpanich was reasonable? Synchron says it was not. Mr Marshall and Wealth Foundry say it was. For the reasons that follow, I agree with Mr Marshall and Wealth Foundry.

91 The starting point in a consideration of whether proof of reasonableness of the settlement is required is the High Court decision in Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd ('Unity').[25] Rocco Pezzano Pty Ltd ('RP') appointed Unity Insurance Brokers Pty Ltd ('Unity IB') to arrange a policy of insurance for industrial special risks. Unity IB arranged a policy with an insurer. RP's premises were damaged by fire. It made a claim on the insurance. The insurer denied liability on the basis of material non-disclosure by RP of prior claims. Unity IB was aware of RP's claims history when it arranged the policy. RP sued both the insurer and Unity IB and settled its claim against the insurer for $900,000. RP's claim against Unity IB proceeded to judgment at first instance with judgment for RP in the sum of $1,041,166, being the difference between the full indemnity amount under the policy and the amount of the settlement, plus interest. A majority of the High Court (Brennan CJ, McHugh and Hayne JJ) held that, provided the settlement was reasonable, that was the correct measure of damages. Two members of the High Court (Gummow and Kirby JJ) dissented, they held RP's damages should be reduced by the amount which RP would have recovered from the insurer and that it had not been shown this was the settlement amount.

92 Each member of the majority in Unity approached the consideration of how the settlement should be taken into account as a question of causation and remoteness and considered that, provided the settlement was reasonable, the gap between the settlement and the full indemnity sum was caused by Unity IB's breach and was either foreseeable (for the claim in negligence) or within the reasonable contemplation of the parties (for the claim in contract). Brennan CJ said:

When a claim is met by an arguable defence, a compromise is a natural and foreseeable result. Therefore it is a natural and foreseeable result of whatever creates an arguable defence to a claim that the claim will be compromised... The acceptance in settlement of the insured's claim against the insurer of a sum less than a full indemnity was something which occurred in the natural course of events or which was in contemplation of the parties at the time of the engagement of the broker or was reasonably foreseeable at the time of the broker's negligence. A shortfall below a full indemnity was not so remote from the insurer's breach of retainer or negligence as necessarily to fall outside the area of compensable loss. The critical question is whether the insureds acceptance of a sum less than a full indemnity should be regarded as a result of breach of contract or of negligence. If the sum accepted in settlement were a reasonable sum to accept in settlement of the insured's claim for an indemnity against the insurer, a shortfall in the amount of the indemnity is, as a matter of common sense and experience, the result of the broker's negligence. But if the sum accepted were unreasonably low, the insured could not establish that the entire shortfall was the result of the broker's negligence. As the insured was obliged to act reasonably to mitigate any loss suffered by reason of the broker's breach of retainer or negligence, the loss incurred by the acceptance of an unreasonably low sum in settlement could not be attributed to the broker's wrongful conduct, either because the acceptance of such a sum was not a reasonable step to take in mitigation of the insured's loss or because it was not foreseeable that the insured would act unreasonably.[26]

...As long as the decision of the insured to accept the settlement was reasonable, the act of the insured in accepting the settlement was directly connected with the broker's breach of duty.

However, to succeed in its action against the broker, the insured must show more than that its loss was causally connected with the broker's breach of duty. Damages in contract are recoverable only for a loss which is the kind of loss which was within the contemplation of the contract breaker or would have been within the contemplation of a reasonable person in his or her position.

Was it or ought it to have been within the reasonable contemplation of the broker that, if it failed to carry out its obligation to exercise reasonable care and skill in obtaining the policy, the insured might be placed in a position where it was forced to compromise a claim for indemnity under the policy? In my opinion it was.[27]

The fact that the dispute between insured and insurer may be resolved by agreement does not lead to any different result. The loss suffered by the insured, if the compromise is reasonable, is caused by the broker's breach of obligation. To the extent that policy is to be considered in answering the question whether the breach caused the loss, policy considerations reinforce the conclusion that the breach caused the loss.

No doubt the broker may be wholly excluded from any negotiations to resolve the differences between insured and insurer and it seems that that was the case here. But that does not mean that the broker is left to the mercies of parties over which it has no control or that those parties may impose on the broker any liability that they choose. The settlement between insurer and insured must be reasonable. (It will be necessary to return to explore what is meant by saying that the settlement must be "reasonable'').[28]

95 Synchron says that consistent with the majority holding in Unity, the approach here must be to ask what loss was in reasonable contemplation of the parties for a breach of the indemnity in clause 8.2 of the Corporate AR Agreement. It says when one analyses the terms of the contract there is no requirement to demonstrate reasonableness. In this regard, it points to:

(a) the breadth of the definition of 'Claim' and the fact that settlement of AFCA complaints is specifically contemplated;

(b) the relational phrase 'in any way connected to' in clause 8.2 which (as I have held) does not require Synchron to establish that Wealth Foundry caused loss to the client or other person; and

(c) clause 18 which specifically provides Synchron with the right to settle claims without the involvement of Wealth Foundry and without affecting the operation of the indemnity.

96 I do not accept that submission. In this case Synchron sues for breach of contract and it has to demonstrate that the loss it suffered, as a result of Wealth Foundry's breach, was in the reasonable contemplation of the parties. Ultimately, it is my view that a reasonable person in the position of the parties would not have contemplated that Synchron could settle a claim against it on terms which were objectively unreasonable and seek to impose that liability upon Wealth Foundry.

97 I am fortified in that view by the approach taken in subsequent authority. In particular in Protec Pacific Pty Ltd v Steuler Services GmbH & Co KG ('Protec')[29] the Court of Appeal expressed the requirement to prove reasonableness of a settlement in apparently unqualified terms:

In a case such as the present, the question of whether a settlement amount is reasonable arises in the following legal context:

(a) A and B settle their legal dispute for a particular amount; and

(b) B seeks to recover the settlement amount from C and relies on the settlement to establish one or more elements of B's claim against C as well as quantum.

In this context, proof that the settlement amount between A and B was reasonable may assist in establishing:

(a) that B has suffered loss;

(b) that there was a causal relationship between C's wrongful conduct and B's loss;

(c) that B's loss was not too remote; and

(d) the quantum of B's loss.

The onus of demonstrating that a settlement amount is reasonable rests on the party relying on a settlement as proof of its loss.

The test of reasonableness is an objective test. The subjective reasoning of the party relying on the settlement does not determine whether the settlement amount was reasonable.[30]

98 I accept that in this case, as a result of the way I have construed clause 8.2, proof of reasonableness is not necessary to show a causal relationship between C's wrongful conduct and B's loss (to use the nomenclature used in Protec), but nonetheless, I do not regard that factor as enough on its own to take the circumstances of this case outside the principle established in Protec.

99 Finally, in this respect, I note that in UGL Ball J said clear words would be required to exclude the principle of causation that requires proof of reasonableness of a settlement. Here, notwithstanding the breadth of the language employed in clause 8.2 and clause 18 of the Corporate AR Agreement, I am not satisfied that the requirement to prove reasonableness has been excluded.

100 In his decision, the Magistrate noted that Mr Marshall and Synchron did not contend for an implication in clause 8.2 that words 'Claim' or 'loss' should be read as 'genuine or reasonable Claim or loss'. That finding is unimpeachable. However, although not articulated before the Magistrate as clearly as it was on appeal, I am satisfied that Mr Marshall and Wealth Foundry squarely raised the proposition that it was for Synchron to prove the reasonableness of the settlement. For the most part, this was linked to a submission that the failure to prove reasonableness demonstrated why clause 8.2 should not be construed in the way Synchron contended regarding proof of loss; but a fair reading of the submissions as a whole indicates that it was separately contended that the failure to prove reasonableness of the settlement was a matter which was fatal to the plaintiff's claim (though the Magistrate was not taken to Unity, Protec or UGL). In his reasons the Magistrate did not consider the reasonableness of the settlement. In that regard, I am persuaded that Mr Marshall and Wealth Foundry have demonstrated an error of law.

101 I raised the question with the parties as to what should occur if, as I have held, I formed the view that Synchron was required to prove reasonableness and that it had advanced a case before the Magistrate that the settlement was reasonable. Mr Marshall and Wealth Foundry submitted that I should remit the matter back to the Magistrates' Court. Synchron submitted that I should determine whether the evidence established reasonableness.

102 I am satisfied that it is appropriate that I should determine whether the settlement was reasonable for the following reasons:

(a) all of the relevant facts bearing on reasonableness are either the subject of admissions on the pleadings or documentary evidence. This is not a case where the Magistrate heard witness testimony. Nor would there be any further evidence adduced on a remittal. I am in as good a position as the Magistrate to determine the reasonableness of the settlement; and

(b) this case has already resulted in very considerable cost and expense, arguably out of all proportion to the quantum involved. It is consistent with my obligations under the Civil Procedure Act 2010 (Vic) to exercise any discretion I have as to the consequences of my findings in a way which advances the overarching purpose. In this case that purpose is better facilitated by having this Court determine reasonableness of the settlement based on the evidentiary materials which were before the Magistrate.

(a) such a course would be inconsistent with the nature of the appeal in this matter, being an appeal in the strict sense rather than a re-hearing. I reject that submission. An appeal in the strict sense must be decided on the basis of the law as it applied at the time of the original hearing and on the basis of the materials before the Magistrate. That is exactly what will occur;

(b) having this Court determine whether the settlement was reasonable would create prejudice because that was not how Synchron had run its case below and that Mr Marshall and Wealth Foundry would have adduced evidence going to the reasonableness. I have made clear that I reject the argument that Synchron did not run a case as to reasonableness below. Having regard to the written closing submissions filed by Synchron I regard that argument as untenable. Further, as will be seen from the discussion below, the evidence identified by Mr Marshall and Wealth Foundry was led before the Magistrate; and

(c) having regard to Protec, the evidence in this case is insufficient to establish reasonableness. I consider that submission below.

104 In their submissions on appeal Mr Marshall and Wealth Foundry give examples of evidence they would have tendered below as an indicator of the prejudice they suffer if Synchron is allowed to run a case of reasonableness of the settlement on appeal when it did not run such a case before the Magistrate. I have already indicated that I do not accept the premise that Synchron did not run such a case before the Magistrate but in any event, each of the examples they give in their submissions, being that:

(a) Mr Marshall provided Synchron with a response as to why he believed the claims against him and Wealth Foundry were baseless;

(b) Synchron sent the letter of 23 October 2018; and

(c) Synchron offered a sum of $1,980 to Mr Teng without admissions of liability,

were the subject of evidence before the Magistrate.

105 Mr Marshall and Wealth Foundry make a further submission that they would have been entitled to test any evidence called by Synchron regarding its legal advice, its assessment of risk, what matters it took into account in settling and what investigations it made. Synchron has led no such evidence. Synchron contends that the settlement was reasonable because there was evidence that the Interim SoA was defective and that it was reasonable to follow the recommendation of AFCA - its case as to reasonableness stands or falls on the sufficiency of that evidence.

106 As noted above, Mr Marshall and Wealth Foundry contend that Synchron was required to plead reasonableness of the settlement. I do not accept it was necessary to plead reasonableness. Synchron had pleaded that it had suffered loss by reason of the refusal of Wealth Foundry and Mr Marshall to indemnify it for the settlement sum. Mr Marshall and Wealth Foundry advanced the proposition that Synchron needed to prove reasonableness in order to establish its loss. In these circumstances, in my view, reasonableness of the settlement was a matter of evidence not a matter which needed to be pleaded.

107 There is no dispute between the parties and the authorities in any event clearly establish, that an assessment of reasonableness of the settlement is an objective one by reference to the circumstances that existed at the time of the settlement. There is however a dispute as to the nature of the evidence which will suffice in this regard.

108 In this regard Mr Marshall and Wealth Foundry particularly rely on Protec where the Court of Appeal said:

In these circumstances, it was incumbent upon Protec to adduce evidence which explained how the settlement amount was reasonable having regard to an assessment of Protec's potential legal liability to WMC on the pleadings that were current and the evidence that was known at the time of the settlement. No such explanation was provided. There was no evidence that Protec had analysed the causes of action upon which WMC relied against it, the defences available to Protec in relation to them and the prospects of WMC succeeding based on the applicable legal principles and the evidence as it was known at that time. There was also no evidence that Protec had analysed the quantum claimed by WMC and the amount of any damages to which WMC would be entitled if it established liability on the part of Protec.

....

While many factors are relevant to the question of whether a settlement amount is legally reasonable, one factor is fundamental and must always be present. That factor is that the settlement amount is informed by an assessment of the relevant party's potential legal liability to the other party on the pleadings that were current and the evidence that was known at the time of the settlement. As discussed above, a settlement between A and B for an amount which is commercially attractive but is not based on the legal merits of their cases cannot constitute a reasonable settlement amount for the purpose of determining issues of causation, remoteness and quantum in a proceeding brought by B against C which seeks to impose on C liability for the settlement amount.[31]

109 I am not satisfied that the Court of Appeal in Protec were intending in these (and other surrounding) paragraphs to set up an immutable rule regarding the mode of proof of the reasonableness of a settlement. The circumstances referred to in the first of the paragraphs cited above are described in the immediately preceding paragraph:

The unusual features of the settlement were as follows:

(a) The Final Deed did not impose an express obligation on Protec to pay to WMC the settlement amount of $15 million or specify a time for payment. It is true, however, that upon entry of judgment in favour of WMC, WMC could take steps to enforce the judgment.

(d) Pursuant to the Final Deed, Protec ceded control of the Protec proceeding to WMC. Smith gave evidence that he informed WMC that Protec lacked assets and would not be able to pay the settlement amount. Accordingly, WMC was aware that the only real benefit that it was acquiring by entering into the settlement was the potential to recover the settlement amount from Steuler if judgment were given in favour of Protec in the Protec proceeding. In that sense, through the settlement, WMC was acquiring an additional legal basis for seeking damages from Steuler for the same loss it allegedly suffered as a result of the alleged unsuitability of the Bekaplast HDPE liner. For its part, Protec saw the settlement as a means of extricating itself from the litigation not only without making any payment to WMC but also with a release from the Bank Guarantee.

(e) As Protec's assets since 2005-06 comprised approximately $20,000 in cash, the settlement was effectively a mechanism for Protec to exit the costly litigation in return for giving control of the Protec proceeding to WMC. As a matter of practical reality, the settlement amount was academic as between Protec and WMC because the consequences as between those companies would have been the same whether the amount was $100,000 or $30 million. The real significance of the settlement amount lay in the potential for WMC to recover it from Steuler by means of judgment in the Protec proceeding.

(f) There was no indication as to how the settlement amount of $15 million was arrived at.

(g) The settlement did not result from any recommendation or specific legal advice from Protec's legal advisers.[32]

110 It is immediately apparent that many of the features of the settlement here are different to those which existed in Protec:

(a) the Deed of Settlement obliged Synchron to pay Mr Teng and Ms Permpanich;

(b) there is, on the face of the AFCA recommendation, an indication of how the settlement amount was made up; and

(c) the settlement resulted from a recommendation from AFCA.

111 Synchron says that the Interim SoA is defective and that it made the payment to Mr Teng and Ms Permpanich in accordance with the AFCA recommendation. It says that, in the circumstances, that was a reasonable thing to do.

112 The Interim SoA is defective or at least it was objectively reasonable in the circumstances for AFCA and Synchron to reach this conclusion.

113 First, it should be observed that under the Corporations Act a statement of advice is a statement of advice, there is no category of 'interim' statements of advice which attract less onerous requirements.

114 Section 961B of the Corporations Act provides:

Provider must act in the best interests of the client

(1) The provider must act in the best interests of the client in relation to the advice.

(2) The provider satisfies the duty in subsection (1), if the provider proves that the provider has done each of the following:

(a) identified the objectives, financial situation and needs of the client that were disclosed to the provider by the client through instructions;

(i) the subject matter of the advice that has been sought by the client (whether explicitly or implicitly); and

(ii) the objectives, financial situation and needs of the client that would reasonably be considered as relevant to advice sought on that subject matter (the client's relevant circumstances);

(c) where it was reasonably apparent that information relating to the client's relevant circumstances was incomplete or inaccurate, made reasonable inquiries to obtain complete and accurate information;

(d) assessed whether the provider has the expertise required to provide the client advice on the subject matter sought and, if not, declined to provide the advice;

(e) if, in considering the subject matter of the advice sought, it would be reasonable to consider recommending a financial product:

(i) conducted a reasonable investigation into the financial products that might achieve those of the objectives and meet those of the needs of the client that would reasonably be considered as relevant to advice on that subject matter; and

(ii) assessed the information gathered in the investigation;

(f) based all judgements in advising the client on the client's relevant circumstances;

(g) taken any other step that, at the time the advice is provided, would reasonably be regarded as being in the best interests of the client, given the client's relevant circumstances_._

115 In the face of the concession that Mr Marshall and Wealth Foundry had had no contact with either Mr Teng or Ms Permpanich prior to the provision of the Interim SoA and, based on the content of the document itself, the advice provided by Mr Marshall and Wealth Foundry did not satisfy the requirements of s 961B(2)(b)(ii), (c) and (f) of the Corporations Act. Mr Marshall and Wealth Foundry had little, if any, information regarding the client's relevant circumstances, made no inquiries to obtain further information regarding those circumstances and, as a result, could not have based their judgements on those circumstances.

116 Section 947B of the Corporations Act sets out the requirements of a statement of advice relevantly, they include:

(a) information about any other interests, whether pecuniary or not and whether direct or indirect, of the providing entity that might reasonably be expected to be or have been capable of influencing the providing entity in providing the advice (s 947B(2)(e)); and

(b) any information required by 947D, if applicable.

117 Section 947D of the Corporations Act relevantly provides:

(1) This section applies (subject to subsection (4)) if the advice is or includes a recommendation that:

(a) the client dispose of, or reduce the client's interest in, all or part of a particular financial product and instead acquire all or part of, or increase the client's interest in, another financial product; or

(2) The following additional information must be included in the Statement of Advice:

(b) information about any other significant consequences for the client of taking the recommended action that the providing entity knows, or ought reasonably to know, are likely.

118 The Interim SoA did not disclose that Mr Marshall was director of Eclipse. It also provided no information at all regarding the potential (significant) consequences of the rollover of Mr Teng's superannuation into the Macquarie account.

119 I have referred briefly to the AFCA Recommendation above. In this context it is worth setting out in some more detail what that recommendation contains. In the recommendation:

(a) Mr Teng is the person referred to as 'Mr T';

(b) Mr Marshall is the person referred to as 'Mr M';

(c) Synchron is the entity referred to as 'financial firm 2';

(d) Eclipse is the entity referred to as 'financial firm 3';

(e) the references to Mr Marshall include Wealth Foundry, each in their respective capacities as authorised representatives of Synchron; and

(f) the references to 'SoA' are to the Interim SoA.

120 AFCA set out its key findings and recommendation in sections 1.2 and 1.3:

1.2 Issues and key findings

Was Mr M's conduct appropriate?

No, the SMSF should not have been established.

Mr M was bound to provide advice in Mr T's best interest. A financial planning fact find was not conducted and Mr M had an undisclosed conflict of interest between his roles with financial firms 2 and 3.

Though Mr M was not licenced to provide SMSF advice, he had a best interests duty as a financial adviser to assess the appropriateness of the strategy for Mr T, and failed to do so. Furthermore, Mr M's Interim Statement of Advice (SoA) was non-compliant and key disclosures were missing.

What is Mr T's loss?

Under the Corporations Act 2001, financial firm 2 is responsible for the conduct of Mr M. A loss of $19,043.91 was incurred.

1.3 Recommendation

This recommendation is substantially in favour of the complainant.

The financial firm is to compensate Mr T's superannuation $19,043.91 plus interest to the date of payment. This is to be paid within 14 days from the date of acceptance.[33]

121 In the body of its recommendation AFCA sets out its reasons for its conclusions as to the appropriateness of the conduct of Mr Marshall and Wealth Foundry. In these reasons it:

(a) provides a short summary of the facts leading to the preparation of the Interim SoA;

(b) sets out the best interests duty;

(c) finds that a financial planning fact find was not conducted;

(d) states that Mr Marshall had an undisclosed conflict by reason of his interest in Eclipse;

(e) summarises the terms of the engagement of Mr Marshall and Wealth Foundry by Mr Teng;

(f) says Mr Marshall was not accredited to provide SMSF advice;

(g) finds that the Interim SoA did not provide the information required by s 947D of the Corporations Act;

(h) finds the Interim SoA did not comply with s 947B the Corporations Act;

(i) concludes that Mr Marshall and Wealth Foundry had failed in their best interests duty because there was no evidence they had conducted any analysis, assessment or advice regarding the strategy of establishing the SMSF; and

(j) says that under the Corporations Act, Synchron is liable for the conduct of Mr Marshall and Wealth Foundry.

122 The AFCA recommendation was not adduced for the truth of its contents. However, in assessing the objective reasonableness of Synchron's conduct in accepting the AFCA recommendation, it is appropriate to have regard to the fact that as at the date of that acceptance there was objective evidence on which Synchron could assess the accuracy of the matters set out in that recommendation.

123 For the reasons I have set out above, the independent evidence establishes each of the matters in paragraphs 121(c), (d), (g), (h), (i) and (j) above. That independent evidence was available to Synchron at the time it was considering the AFCA recommendation and it was before the Magistrate.

124 Mr Marshall and Wealth Foundry say the finding that Mr Marshall was not accredited to provide SMSF advice is simply wrong and note that under the AR Agreement he was specifically authorised to give advice regarding superannuation and superannuation products. In my view nothing turns on this. That conclusion was not central to the AFCA recommendation (indeed the way in which the key finding is characterised it is plain that the presence or absence of accreditation is irrelevant to the critical finding regarding the best interests duty) or to Synchron's potential liability.

125 Nor, in my view, does anything turn on the involvement of Platinum or any advice they gave. Mr Marshall and Wealth Foundry had a retainer to provide financial advice and obligations to ensure that advice complied with the Corporations Act.

126 AFCA plays a significant and important role within the framework of Part 7 of the Corporations Act which deals with financial services and markets. Under s 1051(4) of the Corporations Act, AFCA must satisfy operational requirements which relevantly include:

(a) the complaints mechanism under the scheme is appropriately accessible to persons dissatisfied with members of the scheme; and

(b) complaints against members of the scheme are resolved (including by making determinations relating to such complaints) in a way that is fair, efficient, timely and independent; and

(c) appropriate expertise is available to deal with complaints; and

(d) reasonable steps are taken to ensure compliance by members of the scheme with those determinations; and

(e) under the scheme, determinations made by the operator of the scheme are:

(i) binding on members of the scheme; but

(ii) not binding on complainants under the scheme;

...

127 Section 912A of the Corporations Act requires AFSL holders to be members of AFCA.

128 In this case AFCA had not made a determination (which would have been binding on Synchron) but it had made a recommendation after a conciliation hearing. In these circumstances, I do not regard it as necessary for Synchron to adduce evidence of legal advice or its internal considerations regarding the settlement. That there was a recommendation from AFCA and that Synchron then determined it should settle with Mr Teng and Ms Permpanich is, subject to issues discussed below regarding quantum, in my view, sufficient to establish reasonableness on Synchron's part.

129 I am satisfied that, as at the date of the Deed of Settlement:

(a) it was objectively reasonable for Synchron to conclude that it had a liability to Mr Teng based on the failure of Mr Marshall and Wealth Foundry to comply with the relevant provisions of the Corporations Act in the provision of the Interim SoA; and

(b) it was objectively reasonable for Synchron to follow the AFCA recommendation and seek to settle with Mr Teng and Ms Permpanich.

130 Notwithstanding my conclusion above, I consider that Protec requires me to consider the reasonableness of the quantum of the settlement.

If the court concludes that the settlement was unreasonable, it may award as damages an amount that reflects a reasonable settlement: BNP Paribas v Pacific Carriers Ltd at [260]-[263] per Giles JA (with whom Sheller JA agreed on this point; Handley JA dissenting).[34]

132 In Protec, the Court of Appeal said that the approach adopted in BNP Paribas v Pacific Carriers Ltd[35] was not appropriate where there was no evidence of loss. For the reasons I discuss below, in this case I am satisfied there is some evidence of loss and that Synchron can prove an amount which reflects a reasonable settlement.

133 Having considered the conduct of Mr Marshall and Wealth Foundry, the AFCA recommendation then considers the quantum of Mr Teng's loss. It starts by stating that it will determine the loss on a 'but for' basis. It first calculates the amount Mr Teng would have received in his superannuation account had he not rolled over the $96,000 in accordance with the advice of the Interim SoA; this sum is calculated as $5,814.48. The AFCA recommendation then produces a summary of loss calculations as follows:[36]

Per SMSF bank statements including SMSF audit fees, ATO levy, ASIC fee and other charges

134 The AFCA recommendation has an objectively rational approach to loss calculation but it was not admitted for the truth of its contents.

135 The evidence independently establishes that Mr Teng paid fees to Wealth Foundry of $1,980 and to Eclipse of $6,050. I am satisfied it was reasonable for Synchron to repay the fees paid to Wealth Foundry. The AFCA Recommendation makes Synchron liable for the Eclipse fees on the basis that if Mr Teng had not received the Interim SoA he would not have incurred those fees. Mr Marshall and Wealth Foundry refer to the fact that AFCA 'closed' a complaint Mr Teng made against Eclipse. I am not persuaded anything turns on that. The question is whether AFCA could appropriately make Synchron liable for the Eclipse fees on the basis it did. On balance, I am satisfied it was reasonable for Synchron to pay the amount in respect of the Eclipse fees.

136 I have no evidence upon which I could conclude whether the difference calculated between the performance of the superannuation fund and the interest on the bank account is accurate. The methodology of the calculation is reasonable. In the scheme of things, the amount is relatively modest, being a net difference of 4.5% over 18 months or approximately 3% per annum. In the absence of some objective evidence, however, that the superannuation fund did in fact outperform the bank account, I am not satisfied Synchron has discharged its onus in respect of this aspect of the settlement.

137 There is no evidence regarding the precise quantum of wind down costs or the running costs of the SMSF. However, I am satisfied that there would have been running costs and wind down costs associated with the SMSF. I am satisfied that the amount allowed for running costs in the AFCA recommendation appears reasonable. When regard is had to the level of running costs and the amounts charged in setting up costs, an overall allowance of $3,000 for these items is likely then to represent a conservative estimate of a reasonable settlement amount.

138 For completeness, I note that in my view the fact that:

(a) Mr Marshall provided Synchron with a response as to why he believed the claims against him and Wealth Foundry were baseless;

(b) Synchron sent the letter of 23 October 2018; and

(c) Synchron offered a sum of $1,980 to Mr Teng without admissions of liability;

have no bearing on the assessment of the reasonableness of the quantum of the settlement. Notwithstanding Mr Marshall's view, Synchron were entitled to form a different view having regard to the AFCA Recommendation. I have set out above why I am satisfied that was objectively reasonable. The fact that, in the 23 October 2018 letter and in its offer of $1,980, Synchron sought to resolve the matter for an amount which was less than the ultimate settlement figure arrived at after the AFCA recommendation does not affect my assessment of the reasonableness of the quantum of the settlement.

139 In the circumstances, and based on the evidence before the Magistrate, I am satisfied that Synchron can prove that it was reasonable to pay Mr Teng and Ms Permpanich a settlement in the sum of $11,030.

140 I should make clear that in so holding it is my expectation that, had Synchron adduced the evidence, it may have been able to justify each item in the AFCA recommendation. However, in this respect, Mr Marshall and Wealth Foundry are right that it is bound by the case it ran before the Magistrate.

141 The AFCA Recommendation allowed for an amount of interest at the rate of 1.8% from 9 March 2018 on the fees payable to Wealth Foundry and Eclipse, and from 26 June 2019 on the operating and wind down costs. I regard both the interest rate allowed and the dates from which it was applied as reasonable. The Deed of Settlement was entered on 1 October 2019. Applying 1.8% to the amounts I have allowed, from the respective dates used by AFCA to the date of settlement, produces $225.72 interest on the fees payable to Wealth Foundry and Eclipse and $14.35 interest on the running costs and wind down amount.

142 In other words, I would regard Synchron as having established that a settlement in the sum of $11,270.07 reflects a reasonable settlement in all the circumstances.

143 Finally, there is no dispute that Synchron was required to pay fees in the amount of $5,435 to AFCA, and on the view I hold, that amount is plainly recoverable under clause 8.2.

145 The parties are to provide consent orders reflecting my reasons, including as to costs, in seven days. In the event the parties are unable to reach a consent position, they may file competing orders together with brief submissions (no more than four pages) in support of their position.

[1] Court Book 245 ('CB'); Magistrates' Court Transcript 30 May 2024, 227/6-26.

[2] CB 170; Magistrates' Court Transcript 28 May 2024, 154.

[3] CB 174; Magistrates' Court Transcript 28 May 2024, 158-159.

[4] CB 310-312; Magistrates' Court Transcript 31 May 2024, 291-293.

[5] [2024] VSC 182.

[6] Ibid [60]-[63] (citations omitted).

[7] Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640, 656-7 [35] (French CJ, Hayne, Crennan and Kiefel JJ).

[8] Apple & Pear Australia Ltd v Pink Lady America LLC [2016] VSCA 280, [152] (Tate JA).

[9] Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424, 433-437, [17]-[23] (Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ).

[10] [2008] NSWCA 114; (2008) 72 NSWLR 1.

[11] [2014] NSWSC 1959 ('UGL').

[12] [2013] VSCA 367.

[13] [2013] NSWCA 368.

[14] [2000] WASCA 408; (2000) 23 WAR 291.

[15] [2013] NSWCA 368, [54].

[17] [2013] VSCA 367, [56].

[21] [2008] NSWCA 114; (2008) 72 NSWLR 1.

[25] (1998) 192 CLR 603.

[26] Ibid 607-608 [3] (citations omitted).

[27] Ibid 612-613 [23]-[25] (citations omitted).

[28] Ibid 651 [122]-[123] (citations omitted).

[29] [2014] VSCA 338.

[30] Ibid [742]-[745] (Tate, Santamaria and Kyrou JJA) (citations omitted).

[35] [2005] NSWCA 72.