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[2026] NSWDC 38
General information, not legal advice.
District Court of NSW
2026-03-10
Montgomery DCJ
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Kennedy v K. & H. Geotechnical Services Pty Ltd [2026] NSWDC 38
Hearing dates: 3, 4, and 5 March 2026
Date of orders: 10 March 2026
Decision date: 10 March 2026
Jurisdiction: Civil
Before: Montgomery DCJ
Decision: (1) Judgment for the Defendant;
(2) Plaintiff pay the Defendant’s costs.
Catchwords: CONTRACTS — Construction — Implied terms — Terms implied in fact — Consistency with express terms of contract — Requirements for implication — Obviousness —Terms implied in law — Requirements for implication
EMPLOYMENT AND INDUSTRIAL LAW — Contract — Terms — Implied terms
Cases Cited: Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99
Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130
BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 180 CLR 266.
Byrne and Frew v Australian Airlines Ltd 185 CLR 410; [2025] HCA 24
Commonwealth Bank of Australia v Barker 253 CLR 169; [2014] HCA 32
Electricity Generation Corporation v Woodside Energy Ltd 251 CLR 640; [2014] HCA 7
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37
Category: Principal judgment
Parties: Francis John Kennedy (Plaintiff)
K. & H. Geotechnical Services Pty Ltd (Defendant)
Representation: Counsel:
Mr Young (Plaintiff)
Mr Hughes SC (Defendant)
Solicitors:
Blackwell Short (Plaintiff)
Thomson Geer (Defendant)
File Number(s): 2024/00435112
The plaintiff sues for recovery of pay for hours worked in excess of “reasonable additional hours” as expressed in clause 5 of a services agreement (“CE”) contained in a contract for sale of business. The plaintiff says that clause 5 of the contract omitted to provide for payment for work beyond reasonable additional hours (opening: T 15.22) which was a “lacuna” in the express terms of the contract (closing: T 126.39).
The background is that the plaintiff had, for approximately thirty years, carried on and developed a business of high reputation in the testing of structural strength of concrete used particularly in mining. For the last significant period prior to their sale of the business, he and his wife conducted the business by the corporate vehicle of the defendant (“K&H”). Counsel for the plaintiff properly described K&H as the alter-ego of the plaintiff. The plaintiff and his wife were sole directors and shareholders in K&H.
In 2022, the plaintiff and his wife contracted with a consortium of six individuals acting by way of their corporate entity Construction Material Solutions Pty Ltd (“CSM”) for the sale of the business, which took the form of a takeover of K&H.
CSM contracted with the plaintiff and his wife to purchase from them the business on 11 August 2022. The sale was by a Share Purchase Agreement (“SPA”) pursuant to which the plaintiff and his wife transferred to CSM their interest in K&H. The completion date of the agreement was 1 September 2022. The SPA named the plaintiff as representative of himself and his wife for the purposes of the transaction. Clause 4 of the SPA described the consideration for the purchase in the following terms:
4.1 Amount of Purchase Price
The Purchase Price is the sum of:
(a) the Completion Payment; plus
(b) the Earn Out Payment (if any); plus or minus
(c) the Adjustment Amount.
Nothing turns on the Adjustment Amount in the determination of this case.
The Completion Payment was $10.1 million. The Earn Out Payment provision, clause 10.4 provided for the plaintiff and his wife to be paid substantial sums in the event of EBIT targets being met by the business after purchase, in each of the following 3 financial years (30 June 2023; 30 June 2024 and 30 June 2025). For example, clause 10.4(a) provided: If EBIT for an Earn Out Period is not less than $3,625,000, then the Earn Out Payment for that Earn Out will be $1,466,667; and 10.4(b) provided: If EBIT for an Earn Out Period is less than $3,625,000 but more than $2,525,000, then the Earn Out Payment for that Earn Out Period will be determined [by a proportional formula].
In addition, pursuant to the SPA, the plaintiff and his wife agreed to lease to K&H a warehouse/office located in Parkes, New South Wales for a rental of $150,000 plus GST per annum for a term of 3 years.
In compliance with a condition of the SPA that he did so, on 1 September 2022 the plaintiff entered into the CE retaining him as Transition Manager until 31 July 2025. It is common ground that the purpose of the CE was for the plaintiff, over time, to transition the goodwill and skillsets of the business to the purchasers, in particular the four members of the consortium who became active directors of K&H in the conduct of the business from that date.
Clause 3(a) of the CE provided that the plaintiff “must … carry out all lawful and reasonable instructions given to you by [K&H] in relation to your employment”. The Schedule to the CE provided that duties of the Transition Manager included that the plaintiff would report to the Board of Directors; and that this position purpose was to be “Responsible for the transition of the business (including transfer of knowledge about the business) to the new Board of Directors over the agreed three-year period, while working closely with Board to achieve this objective. Until the transition is finalised, will be responsible for the profitable operation and strategic development of the business within Australia, coordination of business functions and drive efficiency as well as fiscal planning and management. The transition is to include the day-to-day operation of the business, to transfer market knowledge as well as matters related to strategic development, staff (HR), customers, suppliers, tendering/pricing management”. The Schedule provided that the plaintiff would communicate with the Board of Directors ensuring business matters were recorded and available for discussion as needed and that he was to “spend sufficient time in the business – A minimum of 38 ordinary hours per week plus reasonable additional hours, as and when required.”
Counsel for the plaintiff identified the central issue in the trial to be construction of the words “reasonable additional hours” in clause 5 CE. I agree with defence counsel’s argument that for the purposes of that construction, contemplation of clause 6.4 and with specific focus on clause 6.4(a) is required. Otherwise, the defendant maintained that the express terms of Clauses 5 and 6.4(a) are clear.
5 Hours of work
You are expected to work during the Company’s usual business hours of 07:30am to 5:00pm, Monday to Friday.
You may be required to work outside these usual business hours (including on weekends and/or public holidays) as well as perform reasonable additional hours to meet the operational needs of the business of the Company and its Associated Entities and to achieve the efficient and effective performance of your duties without additional payment. Compensation for work outside usual business hours and reasonable additional hours is provided for as part of your remuneration.
6 Remuneration
6.1 Salary
You will be paid a salary of $200,000 gross per annum, exclusive of superannuation contributions to be made by the Company in accordance with clause 6.2 (Remuneration).
6.2 Superannuation
The Company will make superannuation contributions on your behalf into a superannuation fund nominated by you at a level sufficient that the Company is not liable to pay a charge under the Superannuation Guarantee (Administration) Act 1992 (Cth).
6.3 Payment
You will be paid the net salary component of your Remuneration (less applicable taxation and other authorised deductions), by regular instalment on a weekly basis into the bank account of your choice by electronic funds transfer.
6.4 Minimum Entitlements
From time to time, some of your conditions of employment will be regulated by legislation and/or an industrial instrument (such as a modern award), which will provide for minimum entitlements in your employment (Minimum Entitlements). These Minimum Entitlements might include (for example) entitlements to minimum hourly rates or salary, overtime or other penalties, or allowances. You agree that:
(a) the remuneration that you are paid under this Contract has been set at a level to take into account the duties and the hours worked by you (including any reasonable additional hours). You are not entitled to any additional benefits, monetary or otherwise, for any additional hours worked, unless agreed with the company.
[Note: A little unusually, paragraphs 7A and 7B express a response to Defence paragraph 9.]
7A. The subject matter of the "agreement" referred to in clauses 6.4(a) and (b) of the Service Agreement pleaded in paragraph 9 of the Amended Defence is, on its true construction:
(a) (a) the "remuneration" referred to in clause 6.1 of the Service Agreement which remuneration is payable with respect to the "hours of work" provided for in clause 5 of the Service Agreement which hours include "reasonable additional hours”; and (b) (b) not hours worked beyond the usual business hours and reasonable additional hours provided for in clause 5 of the Service Agreement ("Excess Hours").
7B. If, which is denied, as alleged as per paragraph 9 of the Amended Defence, the subject matter of the agreement referred to in clauses 6.4(a) and (b) of the Service Agreement includes, on its true construction, Excess Hours, then the Defendant agreed the Excess Hours within the meaning of clause 6.4(a) of the Service Agreement ("Excess Hours Agreement").
Particulars The Excess Hours Agreement is constituted by:
(a) The performance of the Excess Hours by the Plaintiff: (b) The approval given by the Plaintiff that the Plaintiff shall receive remuneration for the Excess Hours as communicated in the Plaintiff's solicitor's letter dated 5 December 2023 and as set out in the Statement of Claim; and (c) The Approval particularised in paragraph (b) was given by the Plaintiff on behalf of the Defendant where:
(i) the Plaintiff was responsible for the profitable operation and strategic development, efficiency, fiscal planning and management, strategic development, staffing (HR), maintaining staff levels and morale, staff retention, health and safety and preparation of budgets and operations and cost management of the Defendant; and,
Particulars Schedule to the Services Agreement
(ii) the members of the board of the Defendant reported to, deferred to the judgment of, and did not second guess, the Plaintiff in relation to the day-to-day operations of the Defendant.
Particulars Affidavit of Gary Schwartz dated 16 October 2025 paragraphs 27(d), 36, 40 and 46.
[Note: Mr Schwartz’s affidavit was not read.]
(a) was expected to work during the Defendant's usual business hours of 07:30am to 5:00pm, Monday to Friday; and,
(b) may be required to work outside those usual business hours (including on weekends and/or public holidays) as well as to perform reasonable additional hours to meet the operational needs of the business of the Defendant and its associated entities and to achieve the efficient and effective performance of his duties without additional payment. Compensation for work outside usual business hours and reasonable additional hours is provided for as part of his remuneration. Particulars Clause 5 of the Services Agreement
(a) $101.21 per hour for additional ordinary hours worked, calculated as $200,000 per annum divided over a 38-hour week: "Ordinary Hourly Rate") (b) 150% of the Ordinary Hourly Rate for hours worked on Saturdays, being $151.80 per hour;
(c) 200% of the Ordinary Hourly Rate for hours worked on Sundays, being $202.40 per hour; and,
(d) 250% of the Ordinary Hourly Rate for hours worked on public holidays, being $253.03 per hour.
Particulars The term is implied by law.
In the period from 1 September 2022 to 2 November 2023, the Plaintiff provided the Services to the Defendant in accordance with the terms of the Services Agreement.
In performing the Services, the Plaintiff worked a total of 1089.35 hours outside usual business hours and reasonable additional hours.
Particulars The Plaintiff worked a total of 1089.35 hours in addition to working usual business hours plus 50 hours per week of reasonable additional hours ("Additional Hours").
Particulars Letter from the Plaintiff to the Defendant dates 4 October 2023.
Particulars The 1089.35 of Additional Hours comprised:
| (a) 277.1 hours at the Ordinary Hourly Rate of $101.21 per hour | $ 28,045.29 | | (b) 436.5 hours for work on Saturdays at $151.80 per hour | $ 66,260.70 | | (c) 292.25 hours for work on Sundays at $202.40 per hour | $ 59,151.40 | | (d) 83.5 hours for work on public holidays at $253.03 per hour | $ 21.128.01 | | Total compensation at reasonable rates for the Additional Hours | $174,585.40 |
By reason of the breaches pleaded above, the Plaintiff has suffered loss and damage by reason of his failure to be paid the Compensation.
T****he defendant pleaded its case on this principal issue as follows:
In answer to paragraph 7 of the Amended Statement of Claim, K. & H. Geotechnical Services:
(a) admits that it was a term of the Services Agreement that would be paid a salary of $200,000 gross per annum, exclusive of superannuation contributions to be made by K. & H. Geotechnical Services in accordance with the Services Agreement; and
(b) otherwise relies on the terms of the Services Agreement as if they were set out in full in this defence.
7A. K. & H. Geotechnical Services denies paragraph 7A of the Amended Statement of Claim.
7B. K. & H. Geotechnical Services denies paragraph 7B of the Amended Statement of Claim.
8. K. & H. Geotechnical Services admits paragraph 8 of the Amended Statement of Claim.
(a) The Services Agreement included the following terms:
(i) Mr Kennedy agrees that the remuneration he is paid under the Services Agreement has been set at a level to take into account the duties and the hours worked by him (including any reasonable additional hours).
Particulars
Clause 6.4(a) of the Services Agreement.
(ii) Mr Kennedy is not entitled to any additional benefits, monetary or otherwise, for any additional hours worked, unless agreed with K. & H. Geotechnical Services.
Particulars
Clause 6.4(a) of the Services Agreement.
(iii) Mr Kennedy agrees that, as far as is possible, the remuneration that he is paid under the Services Agreement is paid to him in satisfaction of the minimum entitlements in his employment, regulated, by legislation and/or an industrial instrument, over a 12 month period and Mr Kennedy will not be entitled to any additional payments.
Particulars
Clause 6.4(b) of the Services Agreement.
(iv) The Services Agreement contains the entire agreement between the parties about its subject matter.
(v) Any previous understanding, agreement, representation or warranty relating to the subject matter of the Services Agreement is replaced by the Services Agreement and has no further effect and
Particulars
Clause 20 of the Services Agreement.
(b) Mr Kennedy otherwise relies on the terms of the Services Agreement as if they were set out in full in this defence.
(a) admits that Mr Kennedy provided services to K. & H. Geotechnical Services in the period from 1 September 2022 to 31 October 2023; and
(b) otherwise denies paragraph 11.
K. & H. Geotechnical Services does not admit paragraph 12 of the Amended Statement of Claim.
In answer to paragraph 13 of the Amended Statement of Claim, K. & H. Geotechnical Services:
(a) admits that, by letter dated 4 October 2023 from Mr Kennedy to Construction Material Solutions and K. & H, Geotechnical Services, Mr Kennedy gave notice of termination of his employment;
(b) says that Mr Kennedy's employment ceased on 31 October 2023; and
(c) otherwise does not admit paragraph 13.
(a) admits that it has not paid any compensation to Mr Kennedy;
(b) denies that it is liable to do so; and
(c) otherwise denies paragraph 14.
15. The Services Agreement provided Remuneration for usual hours and “reasonable additional hours” i.e. “reasonable” additional hours, not “all” additional hours. The word “reasonable” must have some work to do. Given the duties the Plaintiff was required to perform, and it is not suggested that the Plaintiff was contractually entitled not to perform them, it is so obvious that it goes without saying that the Plaintiff should be remunerated for the hours he performed beyond reasonable additional hours.
16. The Defendant resists the implication of such a term on the basis that clause 6.4(a) is said to be an express term to the contrary. This is incorrect. Clause 6.4 relates to a different subject matter. It relates to the interaction between entitlements available to the Plaintiff under an applicable award and the Plaintiff’s entitlements under the Services Agreement.
20. Clause 6.4 is thus directed to the interaction that may exist (if any) between the Award and NES on the one hand and the terms of the Services Agreement on the other. As stated, those instruments have no application to the Plaintiff or to the Services Agreement. Clause 6.4 is thus directed to a circumstance that has no application to the Plaintiff or to the Services Agreement.
21. In any event, in this context, it is even clearer that the “remuneration” referred to in clause 6.4(a) must be the Remuneration referred to in clauses 5 and 6, namely, Remuneration for usual hours and reasonable additional hours. It is not remuneration for hours beyond usual hours and reasonable additional hours. Accordingly, the requirement to obtain “agreement with the Company” referred to in clause 6.4(a) of the Services Agreement is not a requirement that relates to remuneration for working hours beyond reasonable additional hours (“Excess Hours”) and is, therefore, not inconsistent with the implied term which provides for such remuneration (“Implied Term”).
The defendant relies on the CE existing within the context of the sale transaction, it being a condition of the SPA, that the plaintiff enter that contract and provide those services (MFI 4 [5]) and, that the CE came into existence only as a component of the sale transaction and clauses 5 and 6 are unambiguous: MFI 4 [17; 19]. The defendant points to the prescription of loadings for weekend and public holiday work in the plaintiff’s claim, not to be found in the SPA or the CE. The defendant says that the implied term will not be found to be necessary for business efficacy of the contract, that the proposed term is contrary to the express terms of the contract and indeed is flatly inconsistent with clauses 5 and 6.4: MFI 4 [8-12].
The plaintiff tendered both spreadsheets and handwritten sign-on/sign-off attendance records showing that he worked extensive hours, including on weekends and public holidays, regularly commencing at 7am and finishing at around 9pm on weekdays. There is no dispute he worked extensive hours. The quantum of hours actually worked by the plaintiff over the 14 months of his employment under the CE was agreed by the parties as 3667.1 hours: amended MFI-2.
In relation to the plaintiff’s claim at 7B ASOC that, in accordance with the authority of his position as Transition Manager: responsible for the profitable operation and strategic development of the business, he agreed and approved payment for the excess hours worked by himself; in closing submissions I asked counsel for the plaintiff that even if he assumed that he did possess the required authority to do so, given his oral evidence that during the term of his employment he did not take any action of agreeing that own increase of remuneration, or apply to the Board for an increase in his remuneration beyond that prescribed in clause 6.1; whether the claim that he agreed the Excess Hours within the meaning of clause 6.4(a) was pressed: T 116.5-20; 117.1-2; 118.45.
In response, counsel for the plaintiff put that the plaintiff had the four director Board members under his day-to-day direction and was responsible for all operational matters and the profitable operation and strategic development of the business and human resources power, which meant that he was possessed of the required authority to agree his own salary increase.
Counsel for the plaintiff agreed that the documentary evidence showed that during his employment the plaintiff considered himself to be subject to the authority of the Board in relation to salary (T 122.10-13), that the plaintiff's recommendations to the Board concerning remuneration of salaried officers were not always adopted by the Board (T 122.25), that there is no evidence in relation to any employee having unilaterally increased their income or in any other way determined their salary (T 120.10-17) and there is no evidence that the plaintiff in fact determined to increase his remuneration or even in his own mind agreed to the claimed implied term for overtime rates of pay prior to, about six weeks following his termination and by his solicitor's letter of demand of 5 December 2023, making that claim: T 118.10-19; 118.40-45; 119.20.
The plaintiff's further response in closing submissions was that the plaintiff’s understanding that he could not unilaterally agree an increase in his remuneration and that he did not do so during that time that he was employed with the authority of Transition Manager is "irrelevant" because what is relevant is what was provided for in the contract: T 122.15. Further, that evidence that the plaintiff worked in cooperation with the board and did not exercise that unilateral authority did not mean that he did not have the authority under the contract: T 123.20-25.
In my opinion all of the documentary evidence of communications with and minutes of the Board can be properly characterised as dealing predominantly with the plaintiff having raised that other salary earners and himself were working excessive hours and that remuneration for other salary workers should be raised. The correspondence between the plaintiff and the Board shows that he made recommendations in that direction in relation to other salary workers, which recommendations the Board did not always agree with and did not increase salaries. My conclusion is that the objective, contemporaneous, documentary evidence shows that the plaintiff worked with the Board by making recommendations to the Board but did not at any time during his employment action increase of salary for any salary worker unilaterally – that is, independently of Board determination.
“It is trite will that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every claw must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the Court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guest or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust.”
I reject the plaintiff’s closing argument that the CE is a contract of a different nature to the SPA and a “stand alone agreement”: T 125-126. The CE is to be construed with the whole of the written contract of which it was part; i.e. the SPA contract for the sale of the business: Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [46].
The provision in clause 5 CE for ordinary hours 7.30am to 5pm, Monday to Friday would equate to 47.5 hours for weekday work. The evidence was that during negotiations the draft contract provided for an 8:30am start and it was the plaintiff who proposed the earlier start time: T 75.01. Clause 5 expressly states that additional time was required to be worked on Saturdays, Sundays and public holidays and with the conjunctive/accumulative expressions “as well as” and “and” any additional hours required for the defendant to satisfy his duties pursuing the transition of the business.
In my opinion of particular importance are the closing words of clause 5 “…and to achieve the efficient and effective performance of your duties without additional payment. Compensation for work outside usual business hours and reasonable additional hours is provided for as part of your remuneration". Immediately following those words is clause 6 and the subheading Remuneration. Clause 6.1 prescribed the salary of $200,000 gross per annum exclusive of superannuation. In my opinion it is clear that the "remuneration" referred to in clause 5 is the salary prescribed in clause 6.1. The plaintiff did not make any submission to the contrary. Indeed, when opening the case, counsel for the plaintiff provided that the reference to "remuneration" in clause 5 "notionally should be part of clause 6": T 15.9.
Those words show a clear contractual intention that a salary of $200,000 plus superannuation per annum was the fixed remuneration for the work described in clause 5.
In my opinion clause 6.4(a) and in particular the words “[y]ou are not entitled to any additional benefits, monetary or otherwise, for any additional hours worked, unless agreed with the Company” mean that even in a circumstance where statutory employment law or an industrial award were to apply – a circumstance which did not in fact arise – the plaintiff would not be entitled to greater remuneration except by agreement with the Board. Further, clause 6.4 clearly expresses the plaintiff's agreement with the defendant that – as provided for in clause 6.4(a) – the remuneration prescribed in clause 6.1 took into account his duties and hours worked including – expressly "any reasonable additional hours”. That the agreement would be triggered in a circumstance of statutory minimum entitlements becoming relevant does not neutralise that express acknowledgement that the salary prescribed was the whole remuneration unless something else was agreed to by the Board. What is more, it is an express provision which is of effect opposite the plaintiff's argument that loadings for overtime are to be implied, or could even be contemplated without agreement of the Board.
10.4(e) Despite any other provision of this Agreement, if Francis John Kennedy ceases to be engaged by the Company pursuant to the Kennedy Services Agreement, the Earn Out Payment for any Earn Out period which ends after the date that Francis John Kennedy ceases to be engaged will be $0 unless otherwise agreed by the parties in writing.
So, what of the plaintiff claim for payment of hours said to be in excess of “reasonable additional hours” provided for in clause 5, and at Award based loadings?
The plaintiff opened by arguing that the words in clause 5 “reasonable additional hours” must have “work to do” and pointed to evidence of a post-contractual conversation between the plaintiff and a director of the defendant, Mr Schwarz, in which Mr Schwarz said he thought for directors of the company, 50 hours per week was reasonable time. I do not see it is reasonable to equate reasonable hours for other salaried workers with the plaintiff. Unlike other directors, he was as both vendor of the business and its goodwill and an officer of the company responsible for its transition and in addition to salary, he was entitled to be remunerated for his transition efforts specifically as provided for by the Earn Out Payment if the EBIT targets were met and his $200,000 per annum plus superannuation remuneration terms. Working hours on account of the opportunity of the Earn Out Payments was unique to the plaintiff.
There is no evidence of agreement at the making of the contract that the plaintiff would be entitled to remuneration for having worked in excess of 50 hours per week or any other number. The high point of the plaintiff argument is construction of the word “reasonable”. The plaintiff did not contemplate entitlement to recovery for excess hours at Award related loadings until after he terminated his employment.
In my opinion, the “work to do” (to adopt the plaintiff’s terminology) of the words “reasonable additional hours” in clause 5 of the CE, was to give harmonious context to the description of hours in clause 5 with the whole of the obligations and entitlements of the plaintiff in the sale transaction including receiving the $10.1 million for the business and its goodwill, and his contemplated entitlement to Earn Out bonuses. In this way, clause 5 expressly made clear that the remuneration of $200,000 gross per annum exclusive of superannuation (clause 6.1) contemplated his working outside of those stipulated hours on weekdays, working on weekends and public holidays, as well as additional hours required to meet the transition and operational needs of the business of K&H and to achieve the efficient and effective performance of his duties. That expressed layer upon layer upon layer of hours performing his obligations, expressly was to be “without additional payment” because compensation for work outside usual business hours and reasonable additional hours “is provided for” (meaning composed within) “as part of your remuneration”.
Having come to the view that because clause 5 of the CE is clear in its express terms; the plaintiff’s claim must fail: Mount Bruce Mining supra at [48]. But there are other reasons against a term being implied that the plaintiff be paid additional remuneration at the Award-located multiples for categories of overtime including weekends and public holidays. Those grounds are:
(a) The commercial purpose of the EC Schedule Position description of Transition Manager, read in context of the commercial purpose of the commercial sale transaction provided for in the SPA, contemplated that the plaintiff would be responsible for transitioning the business to K&H under its new proprietors. Clause 6.1 Remuneration was fixed with that commercial purpose in mind. A reasonable business person would construe the meaning of clause 5 in harmony with the commercial purpose and objects to be secured by the contract: Mount Bruce Mining supra at [47]. Indeed, the effect of the plaintiff’s evidence is that was how the clause 6.1 remuneration was agreed.
(b) The evidence of the plaintiff recommending increase of remuneration for other salary earners is not only not persuasive when answering questions of a claim for increase of his own remuneration because those other persons were not, as was he, the vendor with an obligation to transition the goodwill and skills of the business to the purchaser; they were also not working with the incentive of the Earn Out potential remuneration and for the benefit of the sale, as was he: Mount Bruce Mining supra at [46]. The plaintiff understood at the time of making of the contract that the Earn Out Payments in addition to his salary, that he negotiated, gave him a stake in the profitability of the business as long as he continued to work for the company: T 72.30-36. Further, the plaintiff agreed in cross-examination that the Board did not direct him to work the hours that he did and which he claims were excessive. His evidence was that he worked those hours, at his own volition, having formed the view himself that those hours were reasonably necessary for the proper discharge of his role as Transition Manager: T 101.14-36.
(c) It is inappropriate to imply the term sought by the plaintiff because it is not required to do so to give business efficacy to the agreement: BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 180 CLR 266.
(d) It is not appropriate to imply the term sought by the plaintiff because it would contradict the express meaning of clause 5 that the plaintiff would perform the hours reasonably required in satisfaction of his duties without payment additional to the salary of $200,000 gross per annum plus superannuation (clause 6.1): Mount Bruce Mining supra at [46].
(e) It would be inconsistent with clause 6.4(a) to find that the plaintiff is entitled to any additional benefit, monetary or otherwise, for his hours of work in the absence of that having been agreed with the Board. Clause 6.4 is entirely consistent with the express meaning of clause 5 which I have found because it provides that absent that further agreement, the salary fixed by clauses 5 and 6.1 remains unchanged.
(f) The defendant, with reference to Commonwealth Bank of Australia v Barker 253 CLR 169; [2014] HCA 32, correctly makes the point that a term of mutual trust and confidence should not be implied into the EC to the effect that the plaintiff’s remuneration be increased because he worked diligently and in long hours toward achieving his obligations under the contract for sale. That proposition is no doubt correct and whilst the plaintiff did not expressly put his case on a term arising from the relationship of mutual trust and confidence between himself and the Board, that characterisation is not opposite his claim.
(g) The plaintiff's argument that the terms of the loadings for overtime are reasonably claimed by him, they being consistent with the Manufacturing and Associated Industries and Occupations Award 2020, in my view would make the express provision of clause 5 in the context of the whole transaction under the SPA a nonsense and work a commercial inconvenience: Electricity Generation Corporation v Woodside Energy Ltd 251 CLR 640; [2014] HCA 7 at [35]. Not only did the Award not apply to the plaintiff's employment because of his remuneration level, but even had over time the Award come to apply; then, pursuant to clause 6.4(a) the plaintiff would not have been entitled to an increase in remuneration unless it was agreed to by the Board. The evidence is against the proposition any custom or usage of industry in the circumstances of the plaintiff, being the effective vendor of the business and having entered the EC as a condition of the transaction of sale and at a remuneration level beyond the reach of the Award would justify importation of its provisions as a term of the contract: Byrne and Frew v Australian Airlines Ltd 185 CLR 410; [2025] HCA 24.
(h) Clause 11 of the EC weighs against any notion that because he was working extensive hours to achieve the efficient and effective performance of his duties, an entitlement under contract arose for his remuneration to be increased. That he was entitled to terminate his employment on 30 days’ notice in writing, as in fact he did do on 4 October 2023 effecting his termination on 2 November 2023, meant that he was free to choose to work the hours that he did for the total monetary remuneration and those other benefits of the sale transaction under the SPA, which he agreed to accept. It is reasonable to infer that he agreed to those terms whilst aware of the opportunity of profit sharing should he have achieved the Earn Out payments. Ultimately, six weeks after his termination he claimed to give entitlement to overtime loadings, without having been directed by the Board to work those hours and whilst it was free to terminate his employment by giving notice under clause 11.
(i) If there is a “lacuna” in clause 5 as the plaintiff argues, a proposition I do not accept; then the case for the plaintiff does not satisfy the requirements for implied term set out in Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 and the plurality at paragraph 35 in Electricity Generation Corporation v Woodside supra. The fundamental plaintiff proposition that the implication that he be paid overtime arises because it would amount to a sum of money deemed to be right because it would be associated with the rates under the Award as compensation for the labour he performed, proposes an illusory consideration, unavailable for the implication of a term: Biotechnology v Pace supra per McHugh JA at page 151A-B. The proposal to imply rates of overtime pay or any other rate of pay for hours worked, other than as provided for in the express remuneration according to clause 6.1, proposes a contractual intention which cannot be ascertained from the agreement between the parties and therefore is not a basis for the implication of a term: Biotechnology v Pace supra per Kirby P at 135E. The plaintiff's case that the Court would spell out the hours which are to be discerned as "excess" of reasonable additional hours worked and – as the plaintiff puts it – beyond the description of hours to be worked in clause 5; proposes the Court rewrite the contract to an unacceptable extent and to an extent which the parties themselves did not agree. The plaintiff's case, in that way, does not ask the court to clarify something ambiguously expressed but to write a term of contract not agreed. That is not an available basis for implication of a term: Biotechnology v Pace supra per Kirby P at 135F.
Counsel for the defendant confirmed in closing address that in the event that I make the findings that I have done, I am not required to determine the set-off defence.
The parties have agreed that the total hours worked by the plaintiff under the CE amounted to 3667.10 hours: comprised of 2950.83 hours on weekdays; 376.67 hours on Saturdays; 257.85 hours on Sundays; and 81.75 hours on public holidays: amended MFI-2.
If I am wrong; then on the evidence, I remain unable to determine the hours to which the calculations of rate claimed in the plaintiff’s MFI-2 schedule should be applied. The evidence does not in my opinion, identify the quantum of hours found to be “excess” of “reasonable additional hours”: ASOC 7A; MFI-3 [11-15]. The evidence does not infer an agreement that CE 5 and 6 in the context of the SPA contemplated that the plaintiff would work only 50 hours per week, which is the basis of the plaintiff’s calculation in MFI-2.
Therefore, I am unable to assess the quantum of the claim, other than to note how the plaintiff would calculate his loss.
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Francis John Kennedy
K. & H. Geotechnical Services Pty Ltd [2026] NSWDC 38
(1973) 129 CLR 99
(1988) 15 NSWLR 130
(1977) 180 CLR 266
(2015) 256 CLR 104
Counsel for the plaintiff referred to clause 6.4 as a “boilerplate” provision because it contemplated minimum entitlements under industrial law, none of which applied because the plaintiff’s salary provided for in clause 6.1 was too high. Counsel for the defendant relied on the wording of clause 6.4(a) as a component of the contract made by the parties, relevant for determination of their contractual intention and which provisions would have applied had industrial law minimum entitlements become applicable during the contemplated three-year term of the plaintiff’s employment. I agree with the defence argument that clause 6.4(a) is to be appropriately considered as an expression of contractual intention. For efficiency I set out below only the terms of clauses 5 to 6.4(a), albeit I have considered the whole of clause 6 and the SPA of which the CE was part.
The plaintiff was a frank and honest witness. He displayed his willingness to give answers which were against his self interest in the case. His oral evidence during cross-examination was:
That he was engaged in and instructed his lawyers during negotiation of the terms of the SPA, including the CE.
When making the contract he understood that he would be required to work from 7:30 AM to 5 PM (9.5 hours) on weekdays, additional hours outside of those including on Saturdays, Sundays and public holidays for a gross salary of $200,000 (clause 6.1) a figure he negotiated and he understood at the time he signed the agreement that he would not receive any payment for additional hours worked unless that payment was first agreed to by the company: T 75.16; 76.14.
Whereas he expected to work extensive additional hours to those weekday hours at the commencement, he also expected his hours would reduce as time went on: T 75.16-40. That reduction did not happen in the 14 months before he resigned.
At no point did the Board resolve to increase his remuneration: T 76.15
At no point during his employment did he ever complain about his weekly payslips or that he was entitled to overtime pay (T 78.3) because he did not think that any overtime was due to him for his services: T 78.9.
During his employment the plaintiff’s power was to recommend and ask the Board to agree and in that way work in conjunction with the Board but the decision of how much to pay staff lay with the Board and not unilaterally with himself: T 80.30; 81.45; 83.40-50.
At no time during his employment did the plaintiff claim to be paid overtime rates for hours worked above the ordinary hours of 7:30 AM to 5 PM, or hours worked above 50 per week or otherwise for additional hours worked: T 88.30; 89.22.
When the plaintiff answered that whilst he had never in fact approved entitlements to overtime for his work as Transition Manager, he said that the “option was there”: T 96.30. That answer is inconsistent with the course proved in the documentary evidence and acknowledged in his oral evidence that he never unilaterally actioned increased earnings for salaried staff or himself and his specific evidence that in those determinations he worked “in conjunction” with the Board.
The plaintiff’s claim pursuant to 7B ASOC must fail because the evidence did not establish the necessary fact of the plaintiff's agreement to increase his own remuneration. I find another problem with the proposition to be that he did not at any time contemplate the overtime rates claimed but it is most efficient to deal with that when considering the plaintiff’s claim of implied term of contract, below. Separately, but not less importantly, the terms of clause 3(a) and the position description of his role as Transition Manager in the Schedule plainly provide that he was to maintain communication with the Board and to work closely with the Board, which provisions are inconsistent with Counsel for the plaintiff's argument that the contract provided the plaintiff with unilateral authority to increase his own remuneration. Again, it is most efficient to deal with this point when considering the plaintiff's claim of implied term below. But it is at least necessary to observe that if I am wrong as to the provision for his authority, the argument for the existence of the fact of him having been possessed of such unilateral authority is defeated by the express terms of clauses 5 and 6.4(a), as will be seen.
There is no factual case of an agreement being struck for the plaintiff to be remunerated beyond the fixed sum of $200,000 per annum plus superannuation, during the term of his employment. The plaintiff’s proposition is having terminated his employment on 2 November 2023, after approximately 14 months of the contemplated three-year period, on 5 December 2023 his solicitor first notified the defendant of his claim for additional payment, sought in these proceedings.
In my opinion, it is not without significance that either party could terminate the service agreement on 30 days notice: CE clause 11. I understand the importance of that provision to be that the plaintiff was free to continue with his energies pursuant to the SPA contemplated CE transition provision pursuant to the written terms of clauses 5 and 6. In the event that he sought variation of remuneration, it was available to him to seek the Board’s agreement to such variation or to terminate his employment.
A consequence of early termination would be sacrifice of any chance of achieving any further Earn Out Payment. The SPA provided: