Harden v Willis Australia Group Services Pty Ltd; Willis Australia Group... [2021] NSWSC 939 | Case summary

Harden v Willis Australia Group Services Pty Ltd; Willis Australia Group... [2021] NSWSC 939 | Case summary | Zoe

[5]

Implied term of good faith

The implied duty of good faith may arise in different contexts and may apply to one or all parties to a contract.
The Full Federal Court in Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199 ("Paciocco") described the implied duty of good faith as a concept that has been recognised, though not by all courts in Australia, as a feature of Australian contract law attending the performance of the bargain and its construction and implied content (at 272 [287]). Allsop CJ described the concept as "well-known to the common law" (at 272 [287]).
The Court noted (at 273 [288]) that the content of the implied term includes: …an obligation to act honestly and with a fidelity to the bargain; an obligation not to act dishonestly and not to act to undermine the bargain entered or the substance of the contractual benefit bargained for; and an obligation to act reasonably and with fair dealing having regard to the interests of the parties (which will, inevitably, at times conflict) and to the provisions, aims and purposes of the contract, objectively ascertained.
At 273 [289] the Court continued, clarifying that: None of these obligations requires the interests of a contracting party to be subordinated to those of the other. It is good faith or fair dealing between the parties by reference to the bargain and its terms that is called for, be they both commercial parties or business dealing with consumers. As Posner J said in Market Street Associates Ltd Partnership v Frey 941 F (2d) 588 (1991) the contractual notion of good faith varies in what is required for its satisfaction by reference to the nature of the contract. But the notion is rooted in the bargain and requires behaviour to support it, not undermine it, and not to take advantage of oversight, slips and the like in it…
The actual standard of fair dealing or reasonableness that is to be expected in any case will vary depending on the nature of the contract or relationship and interests of the parties. While the implied duty introduces a normative standard it does not call for the same acts from contracting parties in all cases which instead depends on the contractual and factual context in each case (Paciocco at 273 [290]). Good faith does not import fiduciary obligations, but rather promotes commerce by creating a requisite degree of trust (Paciocco at 274 [292]-[293]).
His Honour Bathurst CJ in Cordon Investments (with whom Macfarlan and Meagher JJA agreed) summarised the position in NSW in relation to the implied term to act in good faith (at [144]-[145]): [144] Lesdor did not dispute that it was appropriate to imply into the Agreement an obligation that the parties would act in good faith towards each other. That is consistent with the approach adopted in a number of decisions of this court: Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234; Burger King Corporation v Hungry Jack's Pty Ltd [2001] NSWCA 187 ; (2001) 69 NSWLR 558 at [186]; Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349 at 369; United Group Rail Services Ltd v Rail Corporation (NSW) [2009] NSWCA 177 ; (2009) 74 NSWLR 618 at [58]-[61]; Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268 at [11]-[12], [146]-[147]. However, these decisions have emphasised that the obligation does not require a party to act in the interests of the other party or subordinate its own legitimate interests to those of the other party, although it does require it to have due regard to the rights and interests of the other party. The necessity for the implication of such terms in commercial contracts has not been universally accepted: Service Station Assn Pty Ltd v Berg Bennett & Associates Pty Ltd (1993) 45 FCR 84 at 91-98; Royal Botanic Gardens & Domain Trust v South Sydney City Council [2002] HCA 5 ; (2002) 240 CLR 45 at [88], [155]. However, it is not necessary to discuss the matter further in the present case. [145] The content of the obligation has commonly been held to embrace three related matters: 1 An obligation on the parties to co-operate to achieve the contractual objectives. 2 Compliance with honest standards of conduct. 3 Compliance with standards of conduct that are reasonable having regard to the interests of the parties. A F Mason "Contract, Good Faith and Equitable Standards in Fair Dealing" (2000) 116 LQR 66 at 69; Alcatel Australia Ltd v Scarcella supra at 367; Burger King Corporation v Hungry Jacks Pty Ltd supra at [171]; Macquarie International Health Clinic Pty Limited v Sydney South West Area Health Service supra at [12]; [146].
There is an implied term in employment contracts that an employee must act in good faith (X v Commonwealth (1999) 200 CLR 177 at 187 [31]). An employee is under a duty not to engage in conduct which "impedes the faithful performance of his obligations, or is destructive of the necessary confidence between the employer and employee" (Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 at 81 per Dixon and McTiernan JJ).

[6]

Repudiation

In Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 ("Koompahtoo") the Court referred to repudiation in the sense of a breach of contract justifying termination by the other party as "failure of performance" (at 136). It was clarified that there are two relevant circumstances in which breach of contract may justify termination, including the breach of an essential term (at 136) and at sufficiently serious breach of a non-essential term (at 138). The other type of repudiation was termed "renunciation", the test for which is "whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it" (at 135).
In Shevill v The Builders Licensing Board (1982) 149 CLR 620 ("Shevill") at 625-626 (references omitted), Gibbs CJ stated that: …a contract may be repudiated if one party renounces his liabilities under it - if he evinces an intention no longer to be bound by the contract or shows that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way…
At 626, Gibbs CJ distinguished between the right to terminate for fundamental breach and the right to terminate for repudiation as elaborated on by Mahoney JA in Honner v Ashton [1980] ANZ ConvR 343: In Honner v. Ashton, Mahoney J.A. said that he thought that the right to terminate for fundamental breach should be seen as, in principle, distinct from the right to terminate for repudiation. For present purposes, it is immaterial whether repudiation and fundamental breach are treated as separate categories, for in either case the innocent party can rescind the contract and recover damages to compensate him for the failure to perform the contractual obligations. Counsel for the respondent, in their alternative argument, sought to bring the case within this principle. A third situation in which a right to rescission arises is where there has been a breach of a fundamental or essential term of the contract.
In Satellite Estate Pty Ltd v Jaquet (1968) 71 SR (NSW) 126 (at 140) the Court also commented on the test to determine whether repudiation (in the sense of renunciation) had occurred. The ultimate question is to ask whether it should be concluded that one party acted in such a way as to evince an intention not to carry out the contract. That intention may be inferred from conduct and it is a question of fact, the answering of which may involve consideration of the nature of the contract and all circumstances of the case (see also Dainford Ltd v Smith (1985) 155 CLR 342 at 366).
In Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 ("Laurinda") at 634, Mason CJ outlined the requisite intention for repudiation to arise: There is a difference between evincing an intention to carry out a contract only if and when it suits the party to do so and evincing an intention to carry out a contract as and when it suits the party to do so. In the first case the party intends not to carry out the contract at all in the event that it does not suit him. In the second case the party intends to carry out the contract, but only to carry it out as and when it suits him. It is much easier to say of the first than of the second case that the party has evinced an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with his obligations and riot in any other way. But the outcome in the second case will depend upon its particular circumstances, including the terms of the contract. In some situations the intention to carry out the contract as and when it suits the party may be taken to such lengths that it amounts to an intention to fulfil the contract only in a manner substantially inconsistent with the party's obligations and not in any other way.
Further, at 658 of Laurinda, Deane and Dawson JJ highlighted that an objective approach must be taken: An issue of repudiation turns upon objective acts and omissions and not upon uncommunicated intention. The question is what effect the lessor's conduct "would be reasonably calculated to have upon a reasonable person" (per Lord Herschell L.e., Carswell v. Collard; Forslind v. Bechely-Crundall). It suffices that, viewed objectively, the conduct of the relevant party has been such as to convey to a reasonable person, in the situation of the other party, repudiation or disavowal either of the contract as a whole or of a fundamental obligation under it. Restraint of trade
At common law, any restraint of trade is prima facie void. To be lawful, it must be "reasonable…in reference to the interests of the parties concerned, and reasonable in reference to the interests of the public…" (Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Limited [1894] AC 535 ("Nordenfelt") at 565).
The burden of justifying the restraint's reasonableness lies on the party seeking to impose it (Adamson v New South Wales Rugby League Limited (1981) 27 FCR 535 ("Adamson") 554 per Hill J).
In New South Wales, "a restraint of trade is valid to the extent to which it is not against public policy, whether it is in severable terms or not" (s.4(1) Restraints Act). The effect of the Restraints Act is to allow the restraint to be read down so as to be valid to the extent necessary only to capture the conduct of the offending party, if a restraint to that extent would have been valid (Steadfast IRS Pty Ltd v Latchmi Mesuria [2020] NSWSC 947 ("Steadfast") at [43] per Sackar J).
Therefore the correct approach in New South Wales is to first determine whether the offending conduct comes within the clause as properly construed. Then to determine whether the restraint in its application to that breach is against public policy. If it is not, the restraint is valid, although the Court may make an order under s.4(3) of the Act that the restraint be, as regards to the applicant invalid wholly or to such extent not exceeding the extent to which the restraint is not against public policy (Woolworths Ltd v Olson [2004] NSWCA 372 ("Woolworths") at [42]).
The validity and reasonableness of the restraint is to be determined as at the time it is entered into (Portal Software v Bodsworth [2005] NSWSC 1179 per Brereton J at [83], citing Nordenfelt at 574; Woolworths at [40]). When exercising its discretion to grant relief, the Court must consider matters as at the date of the hearing (Otis Elevator Company Pty Ltd v John Nolan [2007] NSWSC 593 at [17] to [30]), including matters pertaining to the conduct of the defendant.
As I noted in Steadfast at [46], these principles were reiterated by Gleeson JA (with whom Bathurst CJ and Beazley P agreed) in Izaac v Dargan Financial Pty Ltd (2018) 98 NSWLR 343 ("Dargan") at [59]-[72]: [59] At common law a restraint of trade is contrary to public policy and void unless justified by the special circumstances of the particular case. A restraint may be enforced if the restraint is reasonably necessary for the protection of the parties concerned and reasonable in the interests of the public: Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Company Ltd [1894] AC 535 at 565 (Lord Macnaghten); Lindner v Murdock's Garage (1950) 83 CLR 628 at 633 (Latham CJ); [1950] HCA 48; Buckley v Tutty (1971) 125 CLR 353 at 376, 379-380; [1971] HCA 71. [60] In New South Wales, it is necessary to have regard to the Restraints of Trade Act 1976 (NSW) … [61] The correct approach to the application of s 4(1) of the Restraints of Trade Act is well settled. In Orton v Melman [1981] 1 NSWLR 583 at 587 McLelland J (as his Honour then was) explained that first, the court determines whether the alleged breach (independently of public policy considerations) does or will infringe the terms of the restraint properly construed. Next, the court determines whether the restraint, so far as it applies to that breach, is contrary to public policy. If it is not, the restraint is valid, subject to any order which may be made under s 4(3)… [62] The effect of s 4(1) of the Restraints of Trade Act is to require, for the purpose of determining the validity of a restraint, that attention be focused on the actual or apprehended breach, rather than on imaginary or potential breaches: Cactus Imaging Pty Ltd v Peters (2006) 71 NSWLR 9; [2006] NSWSC 717 at [10] (Brereton J). [63] The validity of a covenant in restraint of trade is to be judged at the date of its creation: Lindner v Murdock's Garage at 653 (Kitto J); Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288 at 318 (Gibbs J); [1973] HCA 40; Geraghty v Minter (1979) 142 CLR 177 at 181 (Barwick CJ); [1979] HCA 42. Nonetheless, the court may take into account future events that could have been foreseen: Lindner v Murdock's Garage at 653. Hence, when exercising its discretion whether or not to grant relief, the court considers matters as at the date of the hearing: Sidameneo (No 456) Pty Ltd v Alexander [2011] NSWCA 418 at [70] (Young JA; Beazley and Basten JJA agreeing); Tullett Prebon (Australia) Pty Ltd v Purcell (2008) 175 IR 414 at 440; [2008] NSWSC 852 at [88] (Brereton J). [64] The nature of the interest meriting protection under a covenant in restraint of trade will differ according to the type of restraint under consideration. In Tullett Prebon (Australia) Pty Ltd v Purcell, a case involving restraints in an employment case, Brereton J said at [47]: [47] … Whether a restraint is reasonable having regard to the interests of the parties depends on two, albeit related, considerations: first, whether the covenantee has a legitimate protectable interest, and secondly, whether the restraint is no more than reasonable for the legitimate protection of that interest. A covenantee is not entitled to be protected against mere competition; the legitimate interests which may be the subject of protection by covenant are in the nature of proprietary subject matter [Vandervell Products Ltd v McLeod [1957] RPC 185; Tank Lining Corp v Dunlop Industries Ltd (1982) 40 OR (2d) 219; 140 DLR (3d) 659 at 664], including trade secrets and confidential information, and goodwill including customer connection. [65] However as Young JA explained in Sidameneo (No 456) Pty Ltd v Alexander at [31]-[32], the word "proprietary" is used in a special sense and will include legitimate commercial interests. In this regard, his Honour referred to the view he had expressed in Twenty-First Australia Inc v Shade (Supreme Court (NSW), Young J, 31 July 1998, unrep) and Stokely-Van Camp Inc v New Generation Beverages Pty Ltd (1998) 44 NSWLR 607 at 612-613. [66] "Goodwill" has been described as a rather elusive concept: Sidameneo (No 456) Pty Ltd v Alexander at [54]. Goodwill has been referred to as the product of combining and using the tangible, intangible and human assets of a business for such purposes and in such ways that custom is drawn to it: Commissioner of Taxation of the Commonwealth of Australia v Murry (1998) 193 CLR 605; [1998] HCA 42 at [24]. It has been said that it is more accurate to refer to goodwill as having sources than being composed of elements, given that goodwill is to be seen as adding value to a business "by reason of" situation, name and reputation, and other matters, not because goodwill is composed of such elements: Commissioner of Taxation v Murry at [24], citing Commissioners of Inland Revenue v Muller & Co's Margarine Ltd [1901] AC 217 at 235 (Lord Lindley). It has also been recognised that many of the sources of goodwill are not themselves property, nor assets for accounting purposes: Commissioner of Taxation v Murry at [25]. [67] Generally, a stricter and less favourable view is taken of covenants in restraint of trade between employer and employee than in commercial agreements. As Mason P explained in Woolworths Ltd v Olson at [38]: [38] The courts in general take a stricter and less favourable view of covenants in restraint of trade entered into between employer and employee than of similar covenants in commercial agreements (Geraghty v Minter (1979) 142 CLR 177 at 185). The reasons are explained in J D Heydon, The Restraint of Trade Doctrine (2nd ed, 1999) at pp68-9. It is nevertheless well established that an employer may have interests capable of protection by a restraint covenant. These interests go beyond protection of goodwill and retention of customers and extend to trade secrets … [68] The same point is made by JD Heydon in the most recent edition of The Restraint of Trade Doctrine (4th ed, 2018, Chatswood, LexisNexis Butterworths) at 96-97, where four main reasons are given for the court's approach in employment cases. First, the inequality of bargaining power between the parties. Second, the employee may be giving up that employee's only asset, which depends on specialised training and which may not be at all negotiable. Third, when labour is hired it remains valuable whether or not the employee later competes. Fourth, once the employee accepts the post-employment restraints, the employer's power during the contract is much increased by reason of the inhibition on the employee's ability to threaten to leave and seek work elsewhere. … [71] BB Australia Pty Ltd v Karioi Pty Ltd (2010) 278 ALR 105; [2010] NSWCA 347 concerned restraints in a franchise agreement. Macfarlan JA remarked at [61]: [61] Franchise agreements commonly have characteristics relevant to both employment and vendor/purchaser categories … As a result, to determine whether the stricter, less favourable view taken in the employment cases should be applied to the present case, it is necessary to look carefully at the features of the particular franchise relationship in question, without presuming in advance that the approach relevant to one rather than the other of the categories is necessarily applicable. [72] In Bridge v Deacons [1984] 1 AC 705, doubt was expressed as to whether the legitimate interests can be necessarily ascertained by placing the relevant agreement in a particular category and then trying to align that category with existing cases, such as employment cases or sale of business agreements. Bridge v Deacons involved a restraint clause in a partnership agreement. Lord Fraser, delivering judgment of the Privy Council on behalf of the other Lordships, observed at 714 that: The agreement in the present case, being one between partners, does not conform exactly to either of the types to which reference has just been made, although it had some resemblance to both. Their Lordships are of the opinion that a decision on whether the restrictions in this agreement are enforceable or not cannot be reached by attempting to place the agreement in any particular category, or by seeking for the category to which it is most closely analogous. The proper approach is that adopted by Lord Reid in the Esso Petroleum case [1968] A.C. 269, where he said, at p. 301: I think it better to ascertain what were the legitimate interests of the appellants which they were entitled to protect and then to see whether these restraints were more than adequate for that purpose.
Additionally, it is accepted that an employer's customer connection is a protectable interest. In Cactus Imaging Pty Ltd v Peters (2006) 71 NSWLR 9 ("Cactus Imaging"), Brereton J (as his Honour then was) said (at [25], [36]): 25 It is plain that an employer's customer connection is an interest which can support a reasonable restraint of trade [Hitchcock v Coker (1837) 6 Ad & El 438, 454; [1835-42] All ER Rep 452, 456-7 (Tindal CJ); Herbert Morris Ltd v Saxelby, 709; Dewes v Fitch [1920] 2 Ch 159, 181; Coote v Sproule (1929) 29 SR (NSW) 578, 580 (Harvey CJ in Eq); Lindner v Murdock's Garage, 633-634 (Latham CJ, Webb J agreeing), 650 (Fullagar J), 654 (Kitto J); Koops Martin v Reeves, [29]-[33]]. Such a restraint is legitimate if the employee has become, vis-à-vis the client, the "human face" of the business, namely the person who represents the business to the customer - or, as it was put by Hoover J in Arthur Murray Dance Studios of Cleveland Inc v Witter 105 NE (2d) 685, 706 (Ohio, 1951): "The personal relation between the employee and the customer [is] such as to enable the employee to control the customer's business" [Twenty-First Australia Inc v Shade (NSWSC, Young J, 31 July 1998, unreported), BC9803667, 12; Koops Martin v Reeves, [34]]. While the employer is not entitled to be protected against mere competition by a former employee, the employer is entitled to be protected against unfair competition based on the use by the employee after termination of employment of the customer connection which the employee has built up during the employment - which, because the employee has in effect represented the employer from the customer's perspective during the employment, might at least temporarily appear attached to the employee, but in truth belongs to the employer [Koops Martin v Reeves, [30]]. … 36 … Generally, the test of reasonableness for the duration of a non-solicitation covenant, when it is supported by customer connection, is what is a reasonable time during which the employer is entitled to be protected against solicitation, which in turn depends on how long it would take a reasonably competent replacement employee to show his or her effectiveness and establish a rapport with customers [Stenhouse v Phillips; Daly Smith Corporation (Australia) Pty Limited v Cray Personnel Pty Limited (NSWSC, Young J, 14 April 1997, unreported)]. A related, albeit subsidiary, consideration is how long might the hold of the former employee over the clientele be expected to last before weakening [Koops Martin v Reeves, [88]]…

[7]

Rectification

Rectification may be undertaken at law or in equity, both of which are discussed in Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (In liquidation) (2019) 99 NSWLR 317 ("Seymour Whyte") at [6] 322 to [19] 325. The Court at [6] 322) stated that "at common law, if the error is clear, and it is also clear what a reasonable person would have understood the parties to have meant, then the mistake may be corrected as a matter of construction." The Court gave examples of linguistic errors such as "inconsistent" being read as "consistent" (at [7] 322). In order to correct the contractual language by construction there are two necessary conditions: firstly, the literal meaning of the contractual words must be an absurdity, and secondly, it must be self-evident what the objective intention is to be taken to have been (at [8] 322, citing Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633 at [117]-[119]). The Court must be satisfied of these to a high level of conviction and it must be "clearly necessary in order to avoid absurdity or inconsistency" (at [10] 322 quoting Dixon CJ and Fullagar J in Fitzgerald v Masters (1956) 95 CLR 320 at 426-427).
The Court in Seymour Whyte then contrasted the position in equity where a contract may be rectified "where it is shown that there was at the time the document was executed, a common intention which, through a common mistake, was not reflected in the document" (at [12] 323, citing Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 at 346 and 350-351). A high standard of proof is required, often expressed as "clear and convincing proof" (at [13] 323).
The Court in Seymour Whyte reiterated that "the doctrines at law and in equity remain conceptually distinct" and described this difference (at [15] 324) as follows: The requirements of ex facie absurdity or inconsistency and clarity as to what the parties must be taken to have intended ensure that rectification by construction remains an aspect of determining the objectively manifested legal meaning of contractual words, and accommodates the truth that sometimes, even in a formal legal document, the parties will make mistakes which are nonetheless readily identified and corrected. On the other hand, rectification in equity turns on the discrepancy between the written instrument and a separately proven contrary common intention, which was intended to have been incorporated into the instrument, such that it is unconscientious for a party to insist on performance in accordance with the written instrument. Rectification in equity is a departure - albeit one which is narrowly circumscribed by the insistence on cogent proof - from the objective theory of contract.
In Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329 at 331, Mahoney AP (as his Honour then was) set out the principles concerning rectification in equity as follows: In my opinion, the principle upon which rectification is granted involves two things: that the party (in the case of a unilateral transaction) or the parties (in the case of a transaction between parties) had at all relevant times an intention which was to be given effect by the document to be rectified; and that that document does not give effect to that transaction. (I put aside the requirements as to proof of such intention and to the other matters peculiar to the equitable nature of the remedy: see generally Joscelyne v Nissen [1970] 2 QB 86; Meagher, Gummow and Lehane, Equity: Doctrines and Remedies, 3rd ed (1992) par 2610 et seq.)
In Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 ("Ryleldar"), his Honour Tobias JA (with whom Mason P agreed) commented (at [122]) on the principles observed in Meagher, Gummow and Lehane Equity, Doctrines & Remedies (2002, 4th ed, Butterworths) at [26-010] 886 where the authors stressed the importance of recognising that a court merely reforms a contract in which the parties have mistakenly expressed their agreement. At [123], his Honour noted that: The authors then observed that the need for rectification will thus arrive when the court can discern from the document itself and the surrounding evidence that "something must have gone wrong" which cannot be cured by the process of construction…
In Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85 ("Simic"), Gageler, Nettle and Gordon JJ (at [103]-[104]) also commented on rectification, noting that it: [103] … is an equitable remedy, the purpose of which is to make a written instrument "conform to the true agreement of the parties where the writing by common mistake fails to express that agreement accurately". For relief by rectification, it must be demonstrated that, at the time of the execution of the written instrument sought to be rectified, there was an "agreement" between the parties in the sense that the parties had a "common intention", and that the written instrument was to conform to that agreement. Critically, it must also be demonstrated that the written instrument does not reflect the "agreement" because of a common mistake. Unless those elements are established, the "hypothesis arising from execution of the written instrument, namely, that it is the true agreement of the parties" cannot be displaced. [104] The issue may be approached by asking - what was the actual or true common intention of the parties? There is no requirement for communication of that common intention by express statement, but it must at least be the parties' actual intentions, viewed objectively from their words or actions, and must be correspondingly held by each party.
The reference to "actual intentions" is a reference to the subjective intentions of the parties (Seymour Whyte at [124]; Ryledar at [182], [269] and [272]).

[10]

Instruction to lie

Mr Harden submitted that Willis repudiated the employment contract by instructing him to be untruthful to clients during his notice period.
It was asserted that this instruction to lie was found in a letter from Gilchrist Connell (Willis' solicitors) of 1 July 2020 giving Mr Harden directions on behalf of Willis Re that he was required to put into effect during his notice period ("1 July Letter").
The letter stated that Mr Harden "must comply" (para 1.1) with the following direction found at para 5.3: If a client of Willis Towers Watson contacts you by any means during your notice period, you are directed to say or reply only the following and nothing else: I'm sorry I cannot assist you because I am on leave. You should contact [name] on [number]. There's nothing further I can say at this time.
Mr Harden rejected Willis' assertion that he was on "gardening leave" and submitted this instruction was therefore a lie. He had given notice of termination, and was told by Willis that he was "required to attend for work at his current place of work" (para 5.1 of the 1 July Letter). In requiring him to attend work, Mr Harden was demonstrably not on leave. He submitted that contemporaneous documents demonstrate that Willis decided against putting him on "gardening leave" (Harden Tender Bundle, pp.1-5). Mr Harden accepted that Mr Green admitted in cross examination that his tentative belief that Mr Harden was on gardening leave was an assumption (Green XXN, Confidential Transcript, D3/7/17-20). Further, Mr Phillipsz's affidavit did not contradict the contemporaneous documents.
Mr Harden argued that contemporaneous internal documents produced by Willis in the proceedings confirmed in express terms that Mr Harden was not on gardening leave (Mr Harden's Tender Bundle, pp.1-5). For instance, on 15 December 2020, in response to a query from Carmella Micallef, Mr Philipsz said in relation to Mr Harden: "No decision on last day in office. Not officially put on gardening leave as yet".
Willis relied on evidence from Mr Philipsz but that evidence did not address the question of gardening leave at all, so Mr Harden argued that it should be inferred that this Mr Philipsz' evidence on the topic would not have assisted Willis (Wormald v Mardaca Pty Ltd [2020] NSWCA 259 at [108]-[110]).
Mr Harden noted that Willis defined "garden leave" as a "colloquial or euphemistic term" referring to an exclusion from work direction. He submitted, however, that he was not obviously instructed to tell clients he was subject to an exclusion of work direction, rather to tell them he was "on leave" which was untrue.
Mr Harden submitted that paragraph 5.3 of the 1 July Letter was an instruction to lie and was effectively acknowledged in para 5.4 of the Letter which stated that "You are not permitted to tell the client that you have resigned or the details of your new employer or anything to this effect…"
That this was an instruction to lie was accepted by Mr Green in cross examination (Green XN, D3/150/22-28, D3/150/49 - 151/2). Furthermore, in cross examination Mr Green accepted that an instruction to lie was a fundamental breach of the contract (Green XXN, D3/155/17-19; D3/156/1-10, 26-31) and admitted that Willis should not have directed Mr Harden in the way it did (Green XXN, Conf Tran, D3/6/3-5). Mr Harden submitted this acknowledgement should carry significant weight.

[11]

Implied terms

Mr Harden submitted that it should be recognised that the law implies on parties a duty to act in good faith in the performance of contracts of employment at a minimum, or in the performance of all contracts. Further, that the implied duty of cooperation applies.
Mr Harden recognised that while the High Court has left open the issue of whether Australian law should recognise a duty of good faith generally in contract performance (see, e.g., Barker at 195-196 [42], 214 [107]), it should be accepted that it was a term, implied by law, of the employment contract that the parties would act in good faith in the performance of the contract (Paciocco at [287]-[293] per Allsop CJ). Further, this implied term is well entrenched in NSW (Cordon Investments at [144]).
Mr Harden submitted that the Court should reject Willis's contention that he was under a duty to act in good faith in relation to it, but it was not bound to do the same. Mr Harden quoted Rothman J in Russell v Trustees of Roman Catholic Church for Archdiocese of Sydney (2007) 69 NSWLR 198 in support of his submission, who stated (at [106]) that "there is no reason to expect that the obligations imposed on an employer are any less likely to require an act of good faith than obligations imposed on an employee."
Mr Harden submitted that in such circumstances the test of "necessity is satisfied" in that it would be absurd and contrary to community values if such an asymmetrical duty were to be implied, and any rights of the employee under the contract would be rendered nugatory, worthless or be seriously undermined.
Mr Harden argued that, at the very least, an obligation of good faith would apply when Willis was exercising a discretion contained in the employment contract, such as the discretion to determine what directions it gives to its employees (Bundanoon at [154]-[155] per Gleeson JA with whom Meagher and McCallum JJA agreed).
Mr Harden submitted on the facts that each of the conditions precedent to imply a term in a contract on an ad hoc basis as outlined in BP Refinery are satisfied in respect of the implication of a duty to act in good faith in the performance of the contract or, alternatively, in the exercise of powers or discretions conferred under such a contract. It was also submitted that such a duty satisfied the test of "necessity".
Mr Harden submitted that the obligation of good faith embraces at least three related matters. These are first, an obligation on the parties to cooperate to achieve the contractual objectives, second, compliance with honest standards of conduct, and third, compliance with standards of conduct that are reasonable having regard to the interests of the parties (Cordon Investments Pty Limited v Lesdor Properties Pty Limited [2012] NSWCA 184 at [145]). Furthermore, it was argued that dishonest conduct can never be in good faith (Virk Pty Limited (In Liq) v YUM! Restaurants Australia Pty Limited [2017] FCAFC 190 at [164], [173], [174]; Trampoline Enterprises Pty Limited v Fresh Retailing Pty Limited [2019] VSCA 74 at [63]).
Mr Harden submitted that it was also an implied term of the employment contract that neither party would, without reasonable cause, conduct itself in a manner likely to damage the relationship of trust and confidence between Mr Harden and Willis Re. Mr Harden noted that while such a term is not implied into all employment contracts, here, it is to be implied as a matter of fact (in contrast to the position in Barker at [1], [36] and [43] per French CJ, Bell and Keane JJ in which there was no "particular feature" of the agreement in that case which would support the implication of the proposed term in fact).
Harden argued that for cl.12.2(d) of the Agreement to make sense, there must logically be a pre-existing (contractual) relationship of trust and confidence between the employee and company that might be damaged such as to trigger the company's rights under cl.12.2. Therefore, this implication is contained in the express words of the contract (see Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 at [28] per Heydon JA). Alternatively, it is necessary to give business efficacy to the contract, and is reasonable, equitable, capable of clear expression and, particularly in light of cl 12.2(d), so obvious as to go without saying.
Mr Harden argued that Willis' reliance on the High Court decision of Barker could not be used to undermine his contention concerning the implied duty of good faith. The passage Willis cited had no application to the question of whether a duty of good faith should be implied, which was expressly reserved by the Court in that case.
Mr Harden submitted that Willis' suggestion that while the duty of good faith is implied into "commercial contracts" the position in employment contracts is different was a false distinction (see, for e.g. Renard Construction (ME) Pty Ltd Minister for Public Works (1992) 26 NSWLR 234 ("Renard") at 268 per Priestly JA). Moreover, Willis proffered no sensible reason why such a duty should exist in commercial contracts, but not the employment context when the latter is a far more intimate relationship.
Furthermore, Willis' argument that a duty to cooperate "covers the field" is contradicted by Court of Appeal authority finding that both duties existed in the same contract in Burger King Corporation v Hungry Jack's Pty Ltd (2001) 69 NSWLR 558 ("Burger King") at [144], [171] per Sheller, Beazley and Stein JJA.
Mr Harden also rejected Willis' submission that a duty of good faith should not be implied due to legislative intervention in the field of employment contracts. This legislative scheme was in fact cited as one of the reasons in Renard (at 268) for finding an implied duty of good faith to exist (see also Burger King at [151] per Sheller, Beazley and Stein JJA).
Mr Harden accepted Willis' submission that an implied duty of good faith cannot extend to imposing obligations on the parties that are in effect inconsistent with the terms of the agreement (see Cordon Investments at [146] per Bathurst CJ (with whom Macfarlan and Meagher JJA agreed), but asserted that there is no term in his contract which would be contradicted by an implied term of good faith.
Willis' suggestion that any instruction for Mr Harden to lie could not have deprived him of the substance of what he bargained for under the Contract should be rejected as false. By instructing an employee to lie the employer deprives them of the ability to enhance their reputation or standing through employment (see, for e.g., Downe v Sydney West Area Health Service (No 2) (2008) 71 NSWLR 633 ("Downe") at [425]-[427] per Rothman J).
Willis' submission that the duty of good faith is not reciprocal was not supported with an explanation and should be rejected.
Mr Harden also argued that it was an implied term of the Agreement that Willis would not instruct Mr Harden to do any unlawful act and/or to lie and/or to engage in any dishonest conduct. This is because at common law an employer may only give reasonable and lawful directions to its employee (James Cook University v Ridd (2020) 382 ALR 8 ("Ridd") at [284] per Rangiah J). Mr Harden admitted that while it may be correct that he was not obliged to obey the direction, that does not mean that Willis was not obliged to ensure it only gave lawful and reasonable directions.

[13]

Affirmation

Mr Harden rejected the primary defence to his repudiation case advanced by Willis in opening. It was said that even in the event of repudiation, Mr Harden had affirmed the contract by continuing to accept his salary and continuing to comply with directions made by Willis in relation to his employment.
Mr Harden argued firstly that despite this being a matter on which Willis bears the onus and was obliged to put in issue, Willis had no pleaded case of affirmation (see Wendt v Bruce (1931) 45 CLR 245 at 261). In the absence of such a pleading Mr Harden submitted that the affirmation case does not arise for determination.
Mr Harden submitted that, regardless, Willis's approach misunderstands the doctrine of affirmation in several ways. First, Mr Harden does not contend that he has already terminated the contract, rather he seeks a declaration that Willis has repudiated which if granted, will allow him to terminate.
Secondly, an act constituting an election to affirm must be unequivocal: the question is whether, having regard to all the facts, the conduct can only be explained as involving a decision to affirm the contract rather than to terminate it (Donau Pty Ltd v ASC AWD Shipbuilder Pty Ltd (2019) 101 NSWLR 679 at [86] per Bell P (with whom Basten JA agreed)). While consistent with the continuation of the contract, Mr Harden's acceptance of his salary and compliance with the directions was said not to be an unequivocal act. Instead, it merely reflected a sensible course in which Mr Harden instigated proceedings to determine whether Willis had repudiated without wrongfully repudiating himself.
Willis wrongly elided the concept of conduct consistent with the contract remaining on foot (on the one hand), with that of conduct that is only consistent with Mr Harden electing to affirm the contract (on the other). As outlined above, the former is not sufficient, Willis must show the latter.
Further, commencing proceedings to seek a declaration from the Court as to the existence of that repudiatory breach protects the innocent party from themselves being in repudiatory breach of the contract by wrongly seeking to terminate it (2020, 6th ed, Thomson Reuters), [22.65]).
Thirdly, for an election to be effective it is necessary that the promisee have "full knowledge" of the circumstances relevant to the right to terminate (United Australia Ltd v Barclays Bank Ltd [1941] AC 1 at 30 per Lord Atkin, adopted in Sargent v ASL Developments Ltd (1974) 131 CLR 634 ("Sargent")). Willis did not establish that Mr Harden knew of all the circumstances surrounding his right to terminate and elected not to cross examine Mr Harden on this topic.
Fourthly, where a party has expressly reserved its rights, this will constitute an important part of the context in determining whether such unequivocal conduct has occurred (Champtaloup v Thomas [1976] 2 NSWLR 264 at 269 Glass JA (with whom Street CJ agreed)). By commencing these proceedings Mr Harden has unequivocally indicated he was not electing to affirm the contract. That he waited three months to commence proceedings is not "unprecedented" as Willis suggested, rather Mr Harden was using this period to consider his legal rights, consult lawyers and then take action.
Fifthly, the direction of the 1 July Letter was a continuing one which Mr Harden is still subject to and is therefore a continuing breach. In such a case, an aggrieved party will retain a right to terminate if the breach continues.

[14]

Issue 2: whether Willis has suspended Mr Harden during his notice period

Mr Harden submitted that he was effectively suspended from his employment with Willis such that the period of his post-termination restraint should be reduced by the period of that suspension. He submitted that cl.12.5 and 13.8(a) should be read together so that if an employee is suspended in accordance with cl.12.5(d), the period of restraint shall be reduced by the period of suspension.
Since in construing restraint clauses a narrower construction is to be preferred, no limitation should be read into cl.12.5 and 13.8(a) without good reason (Koops Martin v Dean Reeves [2006] NSWSC 449 (Koops Martin) at [18] per Brereton J).
A "suspension" involves a "temporary abrogation, as of a law or privilege", or to "debar" someone from "the exercise of an office or function or the enjoyment of a privilege". The employee has not been dismissed, but is not performing work (Downe at [294]-[295] per Rothman J). Applying this definition, Mr Harden argued that he had been suspended as per cl.12.5. In particular, pursuant to the 1 July Letter: 1. Mr Harden was directed to deliver up all of Willis' electronic devices in his possession (para 2.1) which he did on 2 July 2020. This left him without any means of conducting business for Willis. After he gave up his access card he was required to remain away from Willis' premises. 2. Mr Harden's access to the Willis information technology system and email system was expressly suspended (para 4.1). 3. Mr Harden was required to "attend for work at your current place of work" (at home due to the pandemic and therefore in satisfaction of cl.12.5(d)) and was not to "perform any duties or responsibilities, other than as expressly directed by Willis Towers Watson" (para 5.1). 4. Further, Mr Harden was instructed to inform clients that he was "on leave" and could not assist them.
The only work Mr Harden was directed to perform was complete "handover notes" on a new laptop which had no access to any documents or records of Willis (requested by a letter of Gilchrist Connell dated 1 October 2020). When he was given access to this laptop on 4 November, Mr Harden completed the notes and has not been directed to perform other work since.
This suspension has continued from 1 July 2020 until the date of termination on 26 June 2021. Mr Harden submitted this period should be deducted from the 12 month restraint in cl.13.2 of his employment contract.
Mr Harden submitted that the question the Court should consider is whether he is still performing the role of President - Asia-Pacific for Willis, or has his right and duty to perform that role been abrogated? The answer to that question is plainly that his right and duty to perform that role has been abrogated, therefore he has been "suspended".
Mr Harden rejected Willis' contention that cl.12.5 does not currently apply, because it is a clause "clearly directed at a situation where, because of disciplinary or potential disciplinary reasons" the employee is suspended from work.
First, cl.12.5 uses the word "or" to convey that the terms "disciplinary action", "counsel" and "suspend" are disjunctive. Therefore, the clause expressly applies to circumstances other than where the company is taking disciplinary action.
Secondly, Mr Harden rejected Willis's claim that cl.12.5 is necessary to allow it to suspend an employee for threatened misconduct. Willis had cited Australian Workers' Union v Stegbar Australia [2001] FCA 367 ("Stegbar") for this assertion, which Mr Harden argued was misconceived. Rather, the principle of that case is that an employer cannot suspend an employee without pay at common law. An employer is able to do so provided they are on full pay (see De Belin v Australian Rugby League Commission Limited [2019] FCA 688 at [295] per Perry J.)
Thirdly, the provisions of cl.12.3 do not require cl.12.5 to be given an artificially limited scope. That cl.12.3 only has operation where notice has been given of termination of employment, as occurred here, does not exclude the operation of cl.12.5 where its requirements are satisfied. There may be many cases where an employee has given notice of termination, and cl 12.3 has been applied, where the employee has not been "suspended". The most obvious example is where the employee is put on "gardening leave" (in that the employee is required not to attend for work or to perform different duties "for the balance of the period of notice", as set out in cl 12.3(b) and (c)). The evidence demonstrates in the present case, however, that Mr Harden has not been put on gardening leave. Rather, and to the contrary, it is obvious that Mr Harden has been suspended.

[15]

Issue 3: whether the restraint of trade imposed on Mr Harden beyond his notice period is lawful

Mr Harden began by outlining some of the relevant principles to restraints of trade. First, that any restraint is prima facie void and to be lawful must be "reasonable…in reference to the interests of the parties concerned, and reasonable in reference to the interests of the public…" (Nordenfelt at 565). Furthermore he emphasised that the burden is on the party seeking to impose the restraint to justify its reasonableness (Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337 ("Curro") at 344 per Meagher, Handley and Cripps JJA).
Mr Harden noted that it was accepted by Willis that reasonableness of a restraint is to be determined as at the time at which it is imposed (Dargan at [63]) and that if something could not have been reasonably foreseen at the time of the contract, it is not to be taken into account in assessing reasonableness (Cactus Imaging at 671 per Brereton J).
Mr Harden accepted Willis' argument that when exercising its discretion to grant relief the Court considers matters as at the date of hearing, however, additionally argued that this discretion is only enlivened if the Court finds that the restraint is otherwise reasonable (John Fairfax Publications Pty Limited v Birt [2006] NSWSC 995 ("Birt") at [45]-[46]). That is, matters as at the date of the hearing are not relevant to the prior question of whether the restraint is reasonable.
Any restraint of trade must seek to protect a legitimate protectable interest (Wright v Gasweld at 329 per Gleeson CJ; Cactus Imaging at [11] per Brereton J).
In relation to the restraint of trade, Mr Harden emphasised that the restraint provision set out in cl.13.2 of the Agreement applies only to the "Restraint Area" as defined in cl.13.8. Paragraph 1 of the "Relief Claimed" in the Willis Amended Statement of Claim ("ASOC") does not appear to reflect this limitation. Mr Harden submitted it was not clear whether this was an error, but in any event, the highpoint of Willis' case is a restraint limited to activities in Australia.
All parties agreed that cl.13.2 of the Agreement contains a restraint of trade. The question to be answered was whether that restraint is reasonably necessary to protect the legitimate interests of Willis.
Mr Harden submitted that the starting point in consideration of this issue should be that he has been shut out of Willis' business since his resignation on 26 June 2020 and will continue to be until the expiry of his notice period on 26 June 2021. Mr Harden is restrained from competing with Willis during this period or doing anything else contrary to his duties as an employee. This period preceding the restraint should be taken into account in assessing the reasonableness of the restraint (DP World Sydney Ltd v Guy [2016] NSWSC 1072 at [18] per White J).
Mr Harden submitted this is especially so because during his notice period he is prevented from competing with Willis globally whereas the restraint in cl.13.2 applies only to Australia. Therefore, in the first 12 months that Mr Harden is shut out of the Willis business, has been subject to a restraint wider in scope than that agreed by the parties in cl.13.2.
Mr Harden submitted that despite Willis arguing that only a 12 month restraint is sought that fails to take into account the 12 month notice period and therefore that the true period of restraint would be 24 months.
Mr Harden argued that, putting aside the repudiation issue, there is no doubt that some period of restraint is reasonable given his seniority, knowledge and important connections. A 12 month restraint imposed through the notice period is therefore justified, but a restraint of 24 months is unreasonable.
Mr Harden argued that through attempting to impose a restraint of 24 months, Willis was seeking to prevent him from relying on his "skills, experience and know-how" acquired while working for it which, as Gleeson CJ said in Wright (at 329), an employer is not entitled to do.
Mr Harden argued that Willis' assertion that the current case is on all-fours with the decision in HRX Holdings Pty Ltd v Pearson [2012] FCA 161 ("Pearson") (upheld on appeal in Pearson v HRX Holdings Pty Ltd (2012) 205 FCR 187; [2012] FCAFC 111 ("HRX") was wrong, and that there are numerous key differences.
First, Mr Pearson was often publicly, and by himself, referred to as the cofounder of HRX (Pearson at [2]). By contrast, Mr Harden was "part of the team" that grew Willis in Australia (Harden XXN, Transcript D1/35/18-23 & D1/38/9) rather than the founder of the business.
Secondly, Mr Pearson was originally the only employee of HRX and its Managing Director (at [5]). He was the person responsible for getting the business off the ground, and recruited all employees (at [10]). The business was built around him (at [16]). There was no such evidence that Mr Harden played such a role at Willis. Mr Harden confirmed in cross examination that the business was not built around him (Harden XXN, Transcript D1/38/1-6).
Thirdly, Mr Pearson was a leader of innovation in the techniques and technology used by HRX (at [5]) while there was no evidence of Mr Harden having any such responsibility.
Fourthly, Mr Pearson was the lead who presented to major prospective clients and was relied on to provide an inventive to current clients to renew contracts. Mr Harden was the Advocate Partner for the Key Clients (being only 7 of Willis' total client base), but that was the extent of the evidence.
Fifthly, Mr Pearson was to be paid for almost the entire period of restraint and received 8% of the shares in HRX (see [17], [24], [25], [35], [60]). This additional remuneration was critical to the finding that the restraint was valid ([25], [35], [60] per Buchanan J; at [36], [63] per Keane CJ, Foster and Griffiths JJ). By contrast, Mr Harden will be paid during the 12 month notice period, but not in the remaining 12 months of the restraint period.
Pearson is the only case that Willis identified in which a 2 year restraint period was valid, but is clearly distinguished on the basis of pay. Here, Mr Harden would not receive remuneration for the 12 months following his notice period.
Mr Harden also rejected Willis' contention that because Mr Harden agreed to the restraint he should be held liable to it. While cl.16 of the Employment Contract contains a term acknowledging the restraint in cl.13 as reasonable, the authorities establish an acknowledgement that a restraint is reasonable does not make it so (Steadfast at [108] per Sackar J). It is ultimately for the Court to decide the validity as a matter of law (Heydon on Contract [19.120]).

[16]

The need to find a replacement and customer connection

Willis relied primarily on the need to protect its goodwill in the form of its customer connections which Mr Harden submitted was insufficient to give rise to an independent justification for the 24 month restraint period sought.
Generally, the test of reasonableness for the duration of a restraint preventing solicitation of clients, when justified by the need to protect customer connection, will be the time that would be considered reasonable for the employer to find a replacement and allow that replacement an opportunity to build a connection with the employer's clients: Cactus Imaging at [36] per Brereton J; Steadfast at [47] per Sackar J. This question must be answered by reference to the position at the date of the contract, not the date of the hearing.
Mr Green, however, explained that the reason the longer period of 24 months is pressed is because of the COVID-19 pandemic and the AON merger which have prevented Willis from finding a suitable replacement and building those connections (See also Willis oral opening, Transcript, Day 1, p. 15, lines 6-18). Mr Harden submitted that these two events were not foreseeable at the date of the contract so should be set aside in consideration of reasonableness.
Further, Mr Green said in evidence that "[i]n normal conditions it could take a year to find someone of Mr Harden's seniority, experience and entice them across to Willis Re for such a senior position" (Green 1, para 189 [B/1/6/169]), adding weight to the notion that 12 months is a sufficient period of restraint.
Mr Harden also highlighted the decision of Hanna v OAMPS Insurance Brokers Ltd (2010) 202 IR 420 ("OAMPS") at [47] per Allsop P (with whom Hodgson JA and Handley AJA agreed) (and see Hammerschlag J at first instance [2010] NSWSC 781 at [93]-[99]) where it was held, in an insurance context, that it is reasonable to protect a former employer for the duration of a single renewal cycle.
Mr Harden noted that Willis claimed he has a strong connection with 7 of its clients (defined as the "Key Clients" in the ASOC). Mr Green in cross-examination admitted that these were not the 7 most important clients of Willis, but rather Mr Harden's key clients (Green XXN, Transcript, D3/145/12-14). Willis has approximately 45 key clients and therefore of the remaining 38 Mr Harden either has no responsibility or they are not considered to be key clients for him. Mr Harden submitted this could be contrasted with the position in Koops Martin in which Mr Reeves was personally responsible for 700 clients, and in the 12 months prior to his departure had contact in respect of 600 client accounts (at [6]). Mr Harden submitted it could not be said he had connections with clients from a significant part of Willis' business in the absence of evidence demonstrating this point.
Mr Harden admitted that he was responsible as Advocate Partner for maintaining relationships with the Key Clients, however, submitted there was no evidence that he was the "face of the Willis business", rather, the person with overall responsibility for managing the relationship. Further, he argued that there was no explanation or evidence supporting the nature of the "personal knowledge and influence over" the Key Clients Willis said he had.
Mr Harden submitted it was incumbent on Willis to show the actual contact between himself and representatives of the Key Clients (Birt at [31] per Brereton J), however, there were no documents, emails or presentations relied on to show that he regularly met with representatives any more than anyone else at the company.

[17]

Protection of confidential information

Mr Harden submitted that while the protection of an employer's confidential information is a legitimate aim when seeking to justify a restraint, that restraint must still be reasonable in the circumstances.
Mr Harden argued that the critical question is not whether he had access to confidential information in the past, but the extent to which he is likely to retain it now that there may be a risk of disclosure.
Mr Green confirmed in cross examination that Willis was not concerned Mr Harden had taken any copies of documents with him, rather of what is "in his head" (Green XXN, Transcript, D3/194/1-12; D3/204/49 - D3/205/4).
Mr Harden submitted that many of Willis' allegations about possible misuse of confidential information by Mr Harden now appear to have fallen away, giving many examples in his closing submissions of 12 May 2021 (at paras [136]-[144]). For instance, Mr Harden highlighted that Mr Green had contended in his affidavit that Mr Harden held information confidential to Willis about the skills of the Other Employees, and that he would be able to exploit this information if allowed to work for Guy Carpenter (see, for example as to Mr Jones, Green 1, para 106 [CB/B/1/6/156]). This was the allegation made in Particular G of para 12 of Willis' ASOC. However, in cross examination, Mr Green accepted this could not be described as information confidential to Willis, and abandoned the assertions made in his affidavit (Green XXN, Confidential Transcript, D3/13/11-43). No reference was made to this allegation in Willis' Closing Submissions of 29 April 2021, so Mr Harden assumed it had been abandoned. Mr Harden argued accordingly that it is a concern that Willis would make such allegations without reasonable basis and which were quickly abandoned by Mr Green in cross examination.
Mr Harden also submitted that it was not clear what other information Willis maintains he has been able to hold "in his head" since 1 July 2020. Willis' Closing Submissions of 29 April 2021 suggested the primary form of information still relied on is the "Portfolio" details provided by the clients as part of the reinsurance renewals, however, the evidence suggested this was voluminous, complex and data-heavy rendering it unlikely Mr Harden could retain such information in his head.
Moreover, Mr Harden argued that even if this Portfolio information from the 2020 renewal could be retained in his head, it would (if he were to join Guy Carpenter in June 2021 to work on the July 2022 renewal) be information related to a renewal two years previous. There was no basis to contend this information would be of use to those effecting the then current renewal so could not justify the restraint sought.
Mr Harden also submitted that this is information confidential to the clients and not Willis so falls out of the scope of a legitimate interest (Koops Martin at [13] per Brereton J). Mr Harden made the same argument in relation to Willis' contention that he was aware of various aspects of the business of Key Clients.
Willis contended that Mr Harden has knowledge of confidential information as a result of his attendance at "Production Board" meetings and in its Closing Submissions of 29 April 2021, outlined the type of information to which Mr Harden might have therefore had access. Mr Harden submitted, however, that Willis did not put into evidence any of the actual information that was disclosed at the meetings for the Court to determine for itself whether it was likely Mr Harden could retain such information.
Mr Harden accepted in cross-examination that he had access to information confidential to Willis concerning the Key Clients and an intimate knowledge of Willis' sale techniques and the strategies it might help employ in relation to the Key Clients, however, Willis did not specify the types of information being relied on. Therefore, this could justify at most a 12 month restraint.
Mr Harden made two comments in relation to Willis' reliance on the decision of Miles v Genesys Wealth Advisers Limited [2009] NSWCA 25 ("Genesys").
First, that the Court of Appeal in Genesys did not find it unnecessary for an employer to show the employee had access to specifically identified confidential information, rather the Court found the information in the employee's possession was confidential and could be used to the detriment of the employer (see [26] to [27] per Hodgson JA). Here, Willis has not demonstrated that Mr Harden is in possession of confidential information that could be used to Willis' detriment.
Second, in Genesys, Handley JA considered whether the information would likely become obsolete or public knowledge before the expiry of the restraint period (at [65]). Here, Mr Harden has been shut out of the business for 12 months so any information he has retained will likely be largely obsolete.
Finally, Mr Harden noted that the mere existence of an employee/employer relationship does not give rise to a fiduciary duty. However, a fiduciary duty may arise in any employment context depending on the circumstances: see Woolworths at [212]-[216] per Einstein J.

[20]

Issue 5: whether Mr Harden unlawfully solicited employees of Willis to leave their employment in breach of his duties in his employment contract, in equity and under the Corporations Act to cause Willis loss and damage

Mr Harden asserted that Willis' submissions as to the inferences it alleges should be drawn about Mr Harden's conduct lack any proper basis.
Mr Harden submitted that it remained unclear what was meant by his being "responsible or heavily involved in the process of recruiting" the key employees and that no submissions were made by Willis on the question of what confidential or commercially sensitive information Mr Harden is alleged to have disclosed or used in order to solicit these employees.
Further, Mr Harden argued that a "suspicion" that certain action had been taken was insufficient to found a serious claim and that the wrong approach had been taken to assessing a circumstantial case.
Mr Harden submitted that the correct approach to assessing a circumstantial case was outlined by the Court of Appeal in Jagatramka (per Bathurst CJ, Bell P and White JA): 1. While reasoning by inference is permissible, it is not enough that the "links in the chain" of the reasoning process considered as a whole "lend support" to the ultimate conclusion sought to be reached. Rather, it is necessary to find that the circumstances proved make it reasonable to reach that conclusion on the balance of probabilities (at [45]). 2. The circumstances must give rise to more than conflicting inferences of equal degrees of probability and the choice between those conflicting inferences cannot be a mere matter of conjecture (at [45]). 3. While it is necessary to look at the circumstantial case as a whole, that does not mean that the strength of the individual pieces of evidence that are said to make up the links in the chain of reasoning should not be scrutinised (at [48]). 4. Where a "link" is unequivocal, this will obviously not support the drawing of the inference sought (at [52], [87]).
Mr Harden also highlighted that due to the seriousness of the allegations, the principles of Briginshaw v Briginshaw (1938) 60 CLR 336 should be take into consideration (Jagatramka at [42]) and the Court should not lightly make a finding that Mr Harden has been guilty of such conduct (Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170 ("Neat Holdings") at 171 per Mason CJ, Brennan, Deane and Gaudron JJ).
Mr Harden submitted there was no evidence to suggest that he persuaded or attempted to persuade the other employees to leave their employment with Willis. To the contrary, the starting point of any inference should be that he is a longstanding and loyal employee of Willis without a history of disrespecting his contractual obligations.
Mr Harden submitted that the evidence demonstrates that Mr Harden did not persuade Mr Cooper or Ms Fisher to leave Willis. A text from Mr Cooper to Ms Stanghieri on 27 June 2020 demonstrated his lack of awareness of the resignation of the other employees which Mr Green accepted in cross examination was inconsistent with the allegations made against Mr Cooper (Green XXN, Transcript, D3/184/9 - D3/185/2). Further, none of the private Whatsapp messages between Mr Harden and the Other Employees extracted by Willis revealed any information in itself.
In text conversations between Ms Fisher and Mr Green, she stated she had not been speaking to Mr Harden which Mr Green stated he believed (Green XXN, Transcript, D3/174/8-10; D3/175/32-40). Mr Green's evidence was that Ms Fisher had clarified her prior lack of awareness of the Other Employees' departures (Green 1, para. 261 [CB/B/1/6/180]).
Mr Harden submitted that since Willis' case regarding Mr Cooper and Ms Fisher must fail there is little reason to think that he would have persuaded the remainder of the Other Employees to also leave, and that there is no reason why the approach from Guy Carpenter to the Other Employees would have come as a result of Mr Harden.
Mr Harden highlighted the evidence which demonstrated that there are many individuals in the reinsurance broking market who have worked at both Willis and Guy Carpenter, including Mr Green himself (Green 1, para 14 [CB/B/1/6/141]; Green XXN, Transcript, D3/189/13-16). Mr Green had also accepted that there were many employees of Guy Carpenter who would know the key employees of Willis and that it made sense that these were the individuals Guy Carpenter would be most likely to approach (Green XXN, Transcript, D3/38-44; Green XXN, Transcript, D3/189/46-50). Further, each of the Other Employees were well known within the Australian reinsurance market (Harden 1, paras. 134-136 [CB/B/3/875-876]).
Therefore Mr Harden submitted that there are many other realistic explanations for how Guy Carpenter and/or the recruiter, Mr Roberts, came to contact the Other Employees.
Mr Harden submitted there were numerous nonsensical arguments within Willis' claim. First, the Willis narrative begins with an approach by Guy Carpenter to Max Garratt which results, in Willis' own evidence, in Mr Harden telling Mr Garratt to stay at Willis. Guy Carpenter had a different source of information from Mr Harden as to who it wanted to recruit from Willis and therefore there is no reason to think this differs in relation to the Other Employees. In his submissions of 12 May 2021 at [40] to [58], Mr Harden rebuked Willis' narrative and argued the interactions between himself and various others did not support the assertion he was persuading employees to leave.
Mr Harden submitted that the argument that his sign-on bonus and level of remuneration he will receive when employed by Guy Carpenter was a wholly inadequate basis on which to justify Willis' case. His remuneration merely reflected his level of skill and experience, and there was no evidence demonstrating inconsistency with industry standard for an employee with Mr Harden's background.
Willis argued that Mr Harden's evidence about his knowledge of the Other Employees taking up employment with Guy Carpenter demonstrated he was not a reliable or truthful witness. Mr Harden rejected this claim, noting that Willis' own case is that Mr Harden was duty-bound not to discuss matters of this nature with the Other Employees and was therefore acting in the way Willis contends he should have behaved.
Further, Mr Harden argued that there was no basis whatsoever for any Jones v Dunkel (1959) 101 CLR 298 ("Jones v Dunkel") inference to be drawn from the fact that he did not call evidence from the Other Employees, as Willis suggested should be done. A Jones v Dunkel inference cannot be applied unless it would be natural for the party to call the witness or the party might reasonable be expected to call the witness (Crossman v Sheahan [2016] NSWCA 200 at [342] per Ward JA). None of the Other Employees continue to work at Willis, have a work relationship or close personal relationship with Mr Harden. Further, there is no evidence any of those employees would have been willing to give evidence voluntarily. Each was available to be called by Willis which offered no explanation for not calling them.
The significance to be attributed to the fact a witness did not give evidence depends on whether in the circumstances it is to be inferred that the reason they were not called is because the party expected to call them feared to do so (Fabre v Arenales (1992) 27 NSWLR 437 at 449-450). Mr Harden submitted he had nothing to fear from the evidence of Ms Fisher and Mr Cooper because the uncontroverted evidence is that they left Willis without Mr Harden playing a part in that.
Instead, Mr Harden suggested it was Willis who feared calling these witnesses out of suspicion they would not support the allegation Mr Harden enticed them to join Guy Carpenter. Mr Harden submitted therefore that in needing to prove Willis' claim this evidence was available to it, so a court will be very hesitant in drawing an inference in that party's favour from indirect and second-hand evidence, when the party doesn't call the direct evidence that prima facie it could have called (Cook's Construction Pty Ltd v Brown (2004) 49 ACSR 62 at 69 [42] per Hodgson JA).
Mr Harden ultimately submitted that Willis' argument concerning a Jones v Dunkel inference is based on an unspecified allegation: there is no suggested inference about a particular aspect of Mr Harden's case. Further, Willis alleged a large part of Harden's evidence relied on conversations with Guy Carpenter. This, however, was evidence in cross-examination and the Jones v Dunkel principles only apply to the failure of a party to call a witness in chief.

[21]

Issue 6: whether Mr Harden unlawfully solicited clients of Willis in breach of his various duties, such as to cause Willis loss and damage

Willis alleged that 13 calls to individuals said to represent different clients or prospective clients between 26 June 2020 and 30 June 2020 ("Client Contact") were said to be "undertaken for the purpose of soliciting the clients identified…and/or for the purpose of interfering with [Willis'] relationships with those clients" (Willis ASOC paras 30A-30B).
Mr Harden noted that in light of the questions put to him in cross-examination, Willis' pleaded case was not that it was improper for Mr Harden to tell clients that he had resigned before Willis did so; and it was not that it was improper for Mr Harden to say that he had left Willis because he did not like the AON merger. Rather, the pleaded case was that Mr Harden made the calls with the purpose of soliciting the clients or for the purpose of interfering with Willis' relationships with those clients, and this was the case Mr Harden must meet.
Mr Harden submitted that there is no evidence to support these allegations, so they should be dismissed.
Mr Harden highlighted that no one at Willis had asked any of the Client Contacts whether they were solicited by Mr Harden and argued that Mr Green's reasons for failing to do so were inadequate. He had said that he did not ask the clients because it was Willis' fight rather than the clients' and it was not a relevant subject to discuss with them (Confidential Transcript 19.02.21 at p.22.25).
Secondly, Mr Harden submitted that it is concerning that Willis made these allegations in relation to Mr Richard Harding of Tower, when it had deployed direct evidence demonstrating Mr Harden did not call Mr Harding to solicit clients of Willis. Mr Green's evidence contained a contemporaneous text message exchange between with Mr Harding, which Mr Green did not suggest was a lie, in which Mr Harding stated: "[h]e's [Mr Harden's] fine. Clear on the risk he's taking and [not] seeking anything just a friend telling me what he's doing" (CB/B/1/7/485). Therefore, in cross-examination Mr Green accepted he had no basis to make an assertion that Mr Harden had solicited Mr Harding's business (Green XXN, Transcript, D3/166/42-46, D3/167, lines 19-24).
Thirdly, Mr Harden argued it was bizarre that Willis submitted any impropriety in Mr Harden calling Damian Sullivan when, on Mr Green's own evidence, Mr Sullivan had retired from Chubb (who he was said to "be of" in particulars J and K) years ago (Green 1, para. 59 [CB/B/1/6/148]).
Fourthly, the evidence Willis put forward from various employees to assert that Mr Harden had no business to contact the Client Contacts was limited under s 136 of the Evidence Act 1995 (NSW) ("Evidence Act") only to the witness' understanding and belief, so cannot demonstrate there was no business reason for these calls. Regardless, they were all junior employees and unlikely to be privy to Mr Harden's dealings with key contacts which they acknowledged in cross-examination.
Fifthly, the calls relied on by Willis were all explained by Mr Harden in his second affidavit (Harden 2, para 15. [CB/D/6/1084]). For example, in relation to the calls to Jarrod Hill and Cassandra Ho on 26 June 2020, these were for purposes related to the Chubb renewal. This is consistent with the evidence from Mr Kunvarji (a reinsurance broker at Willis) who confirmed that Mr Hill and Ms Ho were both involved in the Chubb placement as at 26 June 2020 and that Mr Harden was also involved in the daily operations of the account (Kunvarji (8 Feb 2021), para 6 [CB/C/1053]; Kunvarji (15 Jan 2021), para 26 [CB/B/15/809]; Kunvarji XXN, D4/237/43-47). Mr Kunvarji also confirmed that Mr Harden had told him about the calls immediately after they occurred (Kunvarji (8 Feb 2021), para 9 [CB/C/1054]) which Mr Harden submitted could not speak of any improper action.
Mr Harden submitted that Willis' complaint appears to be that Mr Harden had called many of these individuals to tell them he had resigned. However, not only was this not Willis' pleaded case, there was also nothing wrong with this as he was only directed not to inform clients of his resignation on 1 July 2020.
Sixthly, there is no evidence that any of the clients Mr Harden spoke with left or contemplated leaving Willis as a result of the conversation. Mr Harden submitted this highlights a contradiction inherent to Willis' claim: that Mr Harden was the face of the business who could convince clients to move their business at will, and yet (in light of the fact none of the clients appear to have left Willis), its case that he must have tried to convince them to do so, but failed on every count.
Seventhly, Mr Harden noted that Willis did not advance evidence from the clients demonstrating what Mr Harden supposedly said to them. As they remain Willis' clients one would expect them to proffer such evidence and in its absence a Jones v Dunkel inference should be drawn against Willis.
Eighthly, Willis relied on the fact that there are said to be no emails evidencing the telephone calls between 26 June and 30 June 2020, but Mr Harden submitted there are numerous problems with this. Although Mr Green asserted that Willis produced all of Mr Harden's emails from June 2020 this was limited under s 136 of the Evidence Act to his understanding and belief. Therefore, there is no evidence the email set is complete and indeed there is reason to believe it is incomplete. Mr Harden tendered various emails from the June 2020 period to which he was a party (produced in discovery) which are not included in the email set exhibited to Mr Green's evidence (Harden Tender Bundle, pp. C84-C97). Further, the email set exhibited by Mr Green contains no emails on 27-30 June 2020 which is inherently unlikely and suggests something has gone wrong in the email collation process. Mr Harden argued that even if the email set was complete, he did not have a practice of making file notes of calls or recording them in emails (Harden 2, paras 12-13 [CB/D/6/1084]).
Ninthly, Willis sought to compare the number of calls made by Mr Harden in April to June 2020 with those made between 26 to 30 June 2020 (Green 2, paras. 7-8 [CB/C/2/1044-1045]). Mr Harden submitted there are numerous issues with this approach. For instance, Mr Green appeared only to have used records from Mr Harden's mobile phone, however, Mr Harden explained he also used a landline in his office to conduct calls (Harden 2, para 29(a) [CB/D/6/1088]). Further, the phone records may not show incoming calls and if so, Willis has not attempted to produce any records of Mr Harden's incoming calls, making it impossible to know how many relevant calls took place in that period. Additionally, the phone records cannot disclose conversations that occurred face-to-face, and Willis has not produced any emails to or from Mr Harden in the period prior to June 2020 which would allow such meetings to be identified.
Willis relied on a Client Contact Direction made to Mr Harden on 22 December 2020 which it contended was a reasonable direction with which he failed to comply (Willis ASOC [30D]-[30E]). Mr Harden submitted that even if this were correct (which it was said not to be), Willis had not made an effort to demonstrate that it has suffered any loss as a result.
Mr Harden submitted that regardless, the Client Contact Direction was plainly unreasonable, because it was made a few days before Christmas, demanding a response by noon on Christmas Eve, and was sent to Mr Harden personally, despite Willis being aware that Mr Harden was legally represented in these proceedings (CB/C/6/T105). Furthermore, there was no explanation why it was sent in December and not earlier.
Mr Harden also argued that Willis' suggestion that the 19 January 2021 letter is incomplete is incorrect. Willis' letter of 22 December 2020 sought an explanation only in relation to Mr Harden's calls with Youi, Tower, RACQ and IAG which Mr Harden provided in the 19 January letter.
Mr Harden also rejected Willis' suggestion that the response was inadequate. As to RACQ, Mr Gregan accepted in cross-examination that the company was still seeking Willis' views on various points in relation to its renewal, even after the renewal debrief. In relation to Youi, Mr Harden submitted it was legitimate not to provide further explanation because it was not a client of Willis, where Willis' request was for information about his contact with "Clients". As to IAG, Mr Dearmun's evidence was admitted only as evidence of his understanding and belief, and he acknowledged in cross-examination that his role did not involve overseeing what Mr Harden was doing (Dearmun XXN, Transcript, D4/248/29-35) and had never suggested he would be aware of every time Mr Harden spoke with Mr Grove of IAG (Dearmun XXN, Transcript, D4/249/12-14; D4/250/28-40). As to Tower, the implication seems to be that Mr Harden's account of his call with Mr Harding was untruthful, but Mr Green's own evidence demonstrates Mr Harden's account is accurate.
Mr Harden also repeated his submission that his remuneration is a wholly inadequate basis on which to justify the inference for which Willis contends, for the same reasons as in relation to the Other Employees.
He also repeated his submission that he was a truthful witness and that there was no basis for Willis' characterisation of his evidence as "contradictory" or "tailored to suit".

[22]

Issue 7: whether Willis is entitled to rectification of Mr Harden's employment contract

Mr Harden submitted that Willis argued that the reference to "Company" in cl.13.4 of the Employment Contract (which is defined as Willis Services alone, not Willis Australia) was a common mistake and should have read "Willis Group" and pleaded a case of equitable rectification.
Mr Harden denied that there was any "mistake" or that the contract did not reflect the "common intention" or that Willis was entitled to rectification.
Mr Harden noted Willis' contention that its claim was "not limited to equitable rectification" but also included "rectification at common law" and argued that it was unclear what Willis means by the latter concept. Willis had described a "common intention" of the parties and "mistake" in the language of the contract contrary to the "common intention". Mr Harden submitted that this is the language of equitable rectification.
Mr Harden submitted that it might be that Willis was referring to the principle at common law that if an error is clear and it is clear what a reasonable person would have understood the parties to have meant, the mistake may be corrected as a matter of construction (Seymour Whyte at [6], [44] and [45]). Mr Harden argued that if this is the case, it should rejected as an unpleaded allegation. If it had been pleaded an attempt would have been made to adduce evidence of the surrounding circumstances to rebut the suggestion of "absurdity", further supporting the submission that a belated attempt should be rejected (Talacko v Talacko [2021] HCA 15 at [62]).
Mr Harden argued that in any event, even if Willis was permitted to run its alternative argument, it should be rejected. To correct an obvious error by construction, the Court must be satisfied to a "high level of conviction" (BH Australia Constructions Pty Ltd v Kapeller (2019) 100 NSWLR 367 ("BH Australia") at [108]) that the literal meaning of the contractual words is an absurdity and that it is self-evident what the objective intention is taken to be (Seymour Whyte at [8]-[9]).
Mr Harden argued that neither test is satisfied. The contractual words are not absurd on their face and it is not self-evident what the objective intention should be taken to have been. In particular, it was note that cl.13.4 appears with the heading "Exceptions". That is, the permission granted by cl.13.4(a) was objectively intended to restrict the scope of the restrictions otherwise imposed by the remainder of cl.13. On Willis' approach, cl.13.4(a) would simply provide that Mr Harden is not prohibited from being involved in a company that does not compete with the Willis Group, in circumstances where the only prohibition placed on him by cl.13.2(a) is being involved in a company that competes with the Willis Group.
The only way in which cl.13.4(a) can be given any work to do is if it is given its ordinary and literal meaning, namely as an "Exception" to the wider prohibition in cl.13.2(a).
Mr Harden contrasted the law in relation to equitable rectification and the correction of a mistake as a matter of construction of the contract at common law, citing a summary of the differences in BH Australia at 390-391 [105]-[109] per Leeming JA. Mr Harden also highlighted the comments of Leeming JA in Seymour Whyte. At 324 [15], his Honour stated that "the doctrines at law and in equity remained conceptually distinct". Further, that rectification in equity is a departure from the objective theory of contract which turns on the discrepancy between the written instrument and the proven common intention, which was intended to have been incorporated into the contract such that it is unconscientious for a party to insist on performance of the written agreement.
Mr Harden submitted there is a requirement of "clear and convincing proof" to achieve equitable rectification (per Seymour Whyte at 323 [13]). It must be demonstrated that at the time of the execution of the written agreement sought to be rectified that there was a common intention and the written instrument was to conform to that (Simic at [103] per Gageler, Nettle and Gordon JJ).
Mr Harden argued that, contrary to the principles expressed in Simic, there was no evidence of the subjective intention of the parties at the time of the execution of the written agreement sought to be rectified. Willis did not call anyone to say what their intention was at the time, despite the fact that the main individuals involved in Mr Harden's move back to Australia from Bermuda (Mr Melia, Mor Morley, Mr Green and Mr Philipz) giving evidence on Willis' behalf. Furthermore, Willis did not cross examine Mr Harden on the topic. No documentary evidence of negotiations was offered either.
Further, although there is no requirement for the communication of the common intention by express statement (see Simic at [104]), Mr Harden submitted that there must be disclosure in some form by one party to the other of the parties' actual intention prior to or at the time of the execution of the written agreement sought to be rectified (per Campbell JA in Ryledar at [281], [305]-[306], Mason P and Tobias JA in agreement on these points at [1] and [189]). It is this "disclosure" which creates the "unconscientiousness" required to justify rectification (Seymour Whyte at [15]). Mr Harden submitted that there was no evidence of any disclosure by one party to the other of its actual intention at the date the contract was entered into.
Mr Harden submitted that Willis' reliance on the other provisions of the contract is tantamount to an objective approach to rectification which is plainly wrong (Simic at [19], [48]-[49] and Seymour Whyte at [14]).
Mr Harden therefore reiterated that Willis did not put its case as one of construction curing mistake and should be precluded from seeking to change its case at such a late stage. Even if they were allowed to do so, however, their case would be hopeless, because there is no "absurdity".
Therefore, if any restraint is found to be reasonable, it should be limited to involvement in a business that competes with Willis Services alone.

[23]

Issue 1: whether Willis repudiated the employment contract with Mr Harden

Willis submitted that Mr Harden's allegation of repudiation is baseless and contrary to the facts of this matter as well as established principles as to what constitutes repudiatory conduct.
Willis argued that Mr Harden's contention that the direction given to him on 1 July 2020 was an instruction to lie was founded on an unsound premise that because he was not on "annual leave" or "sick leave" he was not on leave at all. Willis submitted that this ignores the meaning of the term "garden leave" and how it is used in the context of employment contracts, incorrectly relies on the subjective views of Mr Green when the objective facts establish Mr Harden was clearly on "garden leave" and ignores Willis' express contractual right under cl.12.3 of the Contract (the "Garden Leave Provision").
Willis noted that the term "garden leave" is not used in the Agreement, rather the right to put an employee on what is colloquially known as this leave is set out in cl.12.3(b).
"Garden leave" was explained by Habersberger J in BearingPoint Australia Pty Ltd v Hillard [2008] VSC 115 ("BearingPoint") (at [84]) as the: …term for an employer insisting that an employee, who has given notice, stay away from work for the duration of the notice period, whilst continuing to pay the employee's remuneration.
While on "garden leave" an employee is still "working" in the sense of performing what they have been directed to do in order to be paid (BearingPoint at [107]). This was found to also be the case in Newton v Australian Postal Corp (No 2) (2019) 292 IR 396 ("Newton") in which Bromberg J found (at [296]) that the relevant "garden leave" clause in the employment contract addressed the employer's right to make an exclusion from work direction, being that no duties be performed, no contact with the company's employees, customers or associates be made and that the employee be excluded from the business premises.
Willis submitted that the Direction under cl.12.3 had the effect of putting Mr Harden on "garden leave", requiring him to attend for work at his current place of work but to perform different duties to those he would otherwise be required to perform. Willis argued therefore that it was irrelevant whether he was put on "official garden leave" or that Mr Green considered he was not on garden leave, because these objective facts make it clear that Mr Harden was indeed on "garden leave". Further, Mr Green's subjective opinion should not be attributed weight and cannot be relevant to the question, as a matter of fact, of whether Mr Harden was on leave.
To the extent that Mr Harden was not on "official leave", Willis argued the Direction must be examined in the context of the Contract and the conduct of the parties objectively ascertained.
Willis argued that on any view of the above, it is clear that the Direction could not constitute repudiatory conduct, drawing particular attention to the principles as summarised in Steadfast at [39]-[40] that: Whether there has or has not been a repudiation will depend on the facts in any particular case and it is not to be inferred lightly - it is a serious matter because the effect of it is to give the other party to the contract the right to terminate it. What can be said, however, is conduct must be objectively identified as amounting to conduct which is "substantially inconsistent" with the plaintiff's obligations. It must amount to a renunciation of the plaintiff's obligations, either of the contract as a whole or a fundamental obligation under it…
Willis submitted that first, it is clear that the Direction did not contain a "lie".
Secondly, to the extent that the Direction did not accurately reflect Mr Harden's employment status, the Direction could not amount to "a renunciation of the plaintiff's obligations".
Thirdly, at no stage did Mr Harden raise any issue about the Direction until he commenced proceedings almost 3 months after it had been given.
Willis asserted that it is telling that Mr Harden has not identified any express provision in the contract, instead relying on alleged pleaded terms.
Fourthly, Mr Harden did not advance any evidence that he was in fact required to "lie" to any clients and therefore has failed to establish a factual basis to assert any repudiatory conduct. In fact, before the Direction was given, Mr Harden had already informed various clients of his circumstances and, further, on 3 July 2020, Insurance Insider, a daily insurance newspaper circulated by email, published an article stating Mr Harden was leaving Willis to move to Guy Carpenter (Confidential Transcript, 16.02.21, pg. 21 ln 24 to ln 43, Exhibit D#3).

[25]

Alleged implied term of good faith

Willis submitted that Mr Harden failed to properly articulate precisely what the scope of the alleged "duty of good faith" is said to entail.
In Barker, French CJ, Bell and Keane JJ commented on the duty of mutual trust and respect proposed in the proceedings at [37] to [41]. Their honours noted that: 1. while the duty to cooperate satisfies the criterion of necessity, the implied term of mutual trust and confidence imposes mutual obligations wider than those that are "necessary" and goes to the maintenance of a relationship (at [37]). 2. "The implied term cannot be treated as a particular application to employment contracts of the duty to cooperate, which applies to contracts generally. That duty is directly related to contractual performance, which explains to some degree why it can arguably be characterised as a rule of construction" (at [37]). 3. The implication of a duty of mutual trust and confidence imposes obligations on employers and employees alike, many of the latter whose voices will not be heard in a hearing beyond the single employee-party (at [38]). 4. This wide-ranging impact on a range of interests and its intertwinement with a view of desirable social policy renders the implication outside the scope of judicial law-making and that which is better undertaken by the legislature (at [38] and [41]).
Willis therefore submitted that there is no basis to imply a general duty of "good faith" applicable to all employment contracts, especially in the absence of a prior High Court decision to that effect.
Willis argued that the duty to co-operate covers the field of the substance of the bargain in an employment contract: that the employee is paid to perform duties as directed by their employer. Having regard to the industrial relations framework that exists in Australia there is no requirement for any duty of good faith beyond this pre-existing notion. Furthermore, given the duty to co-operate already exists there can be no "necessity" in a duty of "good faith".
Willis submitted, given the principles outlined in Barker, it is improper of Mr Harden to seek for the Court to imply a general duty of "good faith" based on notions of "social conditions and desirable policy".
Further, Willis submitted that it would be wrong for the Court to imply a general "good faith" term in the manner advanced by Mr Harden as it strays beyond the substance of what was bargained for by the parties. This would take the term beyond what Courts have already recognised as constituting, being an obligation to act with fidelity to the bargain and not to undermine the bargain or agreed contractual benefit (Paciocco at [288] per Allsop CJ). Mr Harden was not being deprived of the substance of what he bargained for under the contract through a direction to inform clients if contacted that he was "on leave".
Willis additionally argued that the existence of a one-way duty of good faith or fidelity does not result in a corresponding mutual duty as a matter of necessity. In Barker, the High Court recognised the existence of the employee's duty of fidelity but found that no corresponding duty of mutual trust and confidence flowed from that (see [30] and [63]).

[28]

Affirmation

Willis rejected Mr Harden's allegation that its primary defence is that of affirmation. Rather, the primary defence to the Direction is that it was not a repudiation.
Further, Willis asserted that Mr Harden had wrongly stated the requirements to demonstrate affirmation and that all that is required is establishing that Mr Harden was aware of the material facts giving rise to the right to avoid the contract (as opposed to facts and law) (Sargent at 640, 642, 658).
In Sargent at 645, Stephen J commented that (citations omitted): Where election is in question between contracting parties and, as in these appeals, the contract itself confers the inconsistent rights there can be no question whether a party had knowledge of his choice of rights. He is deemed to know the terms of his own contract and the rights it confers, at all events he cannot take advantage of his own ignorance (L'Estrange v. F. GraucobLtd); moreover he must take his contract as bearing whatever meaning the court will assign to it when it is called upon to interpret it, he is bound "by the interpretation which a court of law may put upon the language of the instrument." (Stewart v. Kennedy, per Lord Watson).
His Honour continued at 646 (citations omitted): The words or conduct ordinarily required to constitute an election must be unequivocal in the sense that it is consistent only with the exercise of one of the two sets of rights and inconsistent with the exercise of the other; thus for a lessor to continue to receive rent ·under a lease will be consistent only with his rights as lessor and inconsistent with the exercise of a right to determine the lease (Viscount Dilhorne in the Kammins Bal/rooms Case (54); Herring CJ in the Coastal Estates Case; Kitto J in Tropical Traders Ltd. v. Goonan…
Willis argued that similarly in the present matter, having been made aware of the alleged repudiatory conduct on 1 July 2020, Mr Harden has not indicated acceptance of the alleged repudiation, has continued to accept payment of his salary, and critically continued to comply (as late as 19 January 2021) with directions by Willis in respect of his employment.
Willis rejected Mr Harden's contention that he did not accept the alleged repudiatory conduct for a number of reasons.
First, it would be unprecedented for an employee in Mr Harden's position to continue to accept the benefit of the contract for almost three months before commencing proceedings in September 2020. Therefore this period is a blatant affirmation of the contract.
Secondly, the law of repudiation does not recognise a situation in which an employee in essence hedges their bets by not taking a stand on repudiation and waiting for the Court to give an advisory opinion to determine whether they accept that behaviour.
Further, Willis argued it is incorrect to characterise the alleged repudiatory conduct as a "continuing one". Although the Direction remains extant it did not require Mr Harden to lie, and in any event, the purported repudiatory conduct can only arise if a client approaches Mr Harden forcing him to "lie". No evidence was adduced to show this ever occurred. To the extent the Direction constituted repudiatory conduct when it was issued (which is denied), that time is now passed and the Contract has been affirmed.

[29]

Issue 2: whether Willis has suspended Mr Harden during his notice period

Willis submitted Mr Harden's reliance on cls.12.5(d) and 13.8 of the Contract is misplaced.
Willis submitted that cl.12.5 of the Employment Contract is clearly directed at a situation where, because of disciplinary or potential disciplinary reasons, the "Employee" is suspended from work and remains away from the Company's premises.
Therefore, the Court should have regard to the Court of Appeal decision in Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603 at [295] to [297] (per Campbell JA, with Allsop P and Giles JA agreeing). In particular, his Honour's emphasis on authorities highlighting that the modern approach to interpretation requires context to be taken into consideration at first instance, especially in the case of general words, and not at a later stage when some ambiguity might arise. Further, his Honour's comments that general considerations about how words convey meaning apply equally to the interpretation of contracts and statutes.
Here, Mr Harden was seeking to divorce the word "suspension" from the preceding words of cl.12.5(d) to erroneously arrive at the conclusion that he must have been "suspended" from his employment because he had been directed not to perform his normal duties. However, the preceding words to "suspension" make it clear that the clause is directed at situations where Willis may take the specified actions against Mr Harden for potential disciplinary reasons without being in breach of the Agreement.
Even if the clause is not limited to disciplinary situations (which is denied), it is clear that the properly construed clause requires Mr Harden to have been suspended from his duties, and required to remain away from Willis' premises, and required to attend or not attend for work or work from another place. Mr Harden, however, was not subject to these cumulatively so cl.12.5(d) could not have been triggered.
Clause 13.8 cannot have been triggered because Willis never made reference to cl.12.5(d) to Mr Harden, and furthermore, Mr Harden continues to be paid his normal annual salary.
To the extent that Mr Harden was directed to perform duties or different duties, Willis asserted that was a right it was entitled to exercise pursuant to cl.12.3.
The Direction to Mr Harden required him to work at his current place of work (his home due to COVID-19), required him to remain reasonably available by telephone during business hours, and required him to perform work by providing handover notes.

[30]

Issue 3: whether the restraint of trade imposed on Mr Harden beyond his notice period is lawful

Willis reiterated law a restraint of trade is contrary to public policy and void unless it can be shown it is reasonable in the circumstances of the case (Nordenfelt at 565). The onus falls on the party seeking to argue for the reasonableness of the restraint in demonstrating that the restraint goes no further than is reasonably necessary to protect the legitimate interests of that person (Adamson at 554 per Hill J).
Willis noted that the validity and reasonableness of the restraint is to be determined as at the time it is entered (Koops Martin at [27]). When exercising its discretion to grant relief, the Court considers matters at the date of the hearing, including those pertaining to the conduct of the defendant (Birt at [45]-[46]).
In New South Wales, a restraint is valid to the extent to which it is not against public policy, even if not in severable terms (Restraints Act s 4(1)), allowing the restraint to be read down so as to be valid to the extent necessary only to capture conduct of the offending party (Orton v Melman (1981) 1 NSWLR 583).
Willis submitted that while the categories of protectable interests are not closed the usual asserted grounds are trade secrets, confidential information and goodwill, including customer connections (Cactus Imaging at [11]). Here, customer connections forms the "essence" of the goodwill Willis sought to protect (Koops Martin at [29]).
Willis also submitted that a non-competition restraint can be supported by one or more of these interests, depending on the circumstances. Thus, a restraint against competition is legitimate where the employer is entitled to protection against its former employee's use of "personal knowledge of and influence over" its customers or prospects to undermine the employer's customer connections (Jardin and Jardim Investments Pty Ltd v Metcash Ltd and Metcash Trading Ltd [2011] NSWCA 409 at [97]).
Furthermore, confidential information will be protected by law even where it does not fall into the category of being a trade secret (Wright v Gasweld (1991) 22 NSWLR 317 at 329). Where the information is sensitive to the business or goodwill so could potentially be used to act in competition with the former employer, the restraint will be legitimate (Two Lands Services Pty Ltd v Cave [2000] NSWSC 14 per Santow J at [51]; Birt at [29; Woolworths at [62]-[68]).
Further, the existence of other remedies for breach of contract or tort for misuse of confidential information is not, of itself, sufficient reason to refuse the enforcement of a restrictive covenant (Aircraft Pty Ltd v Chandler [2003] QSC 102 per Muir J at [27]). In the absence of a competition restraint there remains the risk of inadvertent misuse of confidential information, where, for example, the employee could "hardly help but use it" (Cactus Imaging at [13] per Brereton J).
Willis argued that the Employment Agreement restricts Mr Harden from competing with the plaintiffs post-termination of his employment for a period of 12 months, from soliciting or enticing away any person or company who would have been a customer of the plaintiffs during his employment, also for a period of 12 months. Therefore if Mr Harden were to commence with Guy Carpenter in the period between 30 June 2021 and 30 June 2022 he would be in breach of these obligations. This is because each of the non-competition and non-solicitation clauses is valid and enforceable as it protects legitimate interests of the plaintiffs, being customer connections and confidential information.
Willis relied on two justifications for the restraint of trade clause to be upheld against Mr Harden. First, the need to protect customer connection, and second, the need to protect confidential information about its business or clients. Willis argued these concepts are so inextricably intertwined that in isolation they do not properly reflect the legitimate business interests is seeks to protect.
Willis submitted that a non-competition restraint can be supported by a number of protectable interests and therefore a restraint against competition is legitimate where the employer is entitled to protection against its former employee's use of "personal knowledge of and influence over" its customers or prospects, which the employee might acquire in the course of their employment, so as to undermine its customer connections (Jardin at [97]).
Willis rejected Mr Harden's reliance on his characterisation of the notice period as a "restraint" to then submit that the restraint in cl.13.2 of the Contract is unreasonable.
To the extent that Mr Harden relied on White J's decision in DP World Sydney Ltd v Guy [2016] NSWSC 1072, Willis made several comments, including that the matter concerned an interlocutory application for injunctive and not final relief. Willis also noted that although his Honour stated at [18] that the validity of the restraint period must take into account that it might begin after gardening leave, his Honour did not determine that question an further, such a process of reasoning becomes circular as the Court must then consider the reasonableness of the restraint where the employee is not put on gardening leave.
Additionally, Willis argued it is wrong to assert, as Mr Harden does, that it was seeking a 24-month restraint. Rather, what is sought is a 12 month restraint following a 12 month period in which Mr Harden was directed not to perform his usual duties, remain otherwise reasonably available and continue to be paid full salary and superannuation.
Willis submitted that the validity of the restraint is to be determined as at the time it was entered into which here leaves little doubt that the restraints were a legitimate protection, particularly with regard to Mr Harden's senior position and access to information it entailed. Mr Harden conceded as much by express words as part of the agreement. Further, he did not seek to change this term in the agreement in May 2018 when he was altering the notice period.
In assessing the reasonableness of the restraint, the Court should give full weight to the commercial practices and the generality of contracts made by the parties bargaining on equal terms (Esso Petroleum Co Ltd v Harper's Garage (Stourport) Ltd [1968] AC 269 at 323, cited in Curro at 344. Further, one aspect of public policy is the promotion of commercial agreements by allowing appropriate protection to their parties (Industrial Rollformers Pty Ltd v Ingersoll-Rand (Australia) Ltd [2001] NSWCA 111 at [188].
In relation to the assessment of the reasonableness of the duration of a restraint, Willis submitted that the analysis of Angel J in Extraman (NT) Pty Ltd v Blenkinship (2008) 23 NTLR 77 ("Extraman") at [69]-[81] is applicable. The decision on the question of reasonableness depends upon a judgment the reason for which do not admit of great elaboration (Extraman at [81] citing Walsh J in Amoco v Rocca Bros (1973) 133 CLR 233 at 308).
Willis submitted that the same conditions as outlined by Hammerschlag J in assessing the length of a restraint in an insurance broker context in OAMPS Insurance Brokers Ltd v Hanna [2010] NSWSC 781 apply here. At [76], Hammerschlag J commented that "the critical point of time is the date of renewal" of an insurance program and that "if, during the period leading up to renewal another broker is appointed, it is almost inevitable that the revenue will be lost to OAMPS. A history of dealing with the client is undoubtedly an important factor in the further retention of the broker."

[31]

Customer connection

Willis argued that Mr Harden's role within the company as Advocate Partner for each of the Key Clients required him to develop a deep knowledge and understanding of each of these clients' business and strategy. Therefore his role required him to spend significant time with each of the Key Clients to build his relationships and gain a better understanding of their business requirements. He was in this sense the "face" of Willis Reinsurance in respect of the clients he dealt with and should be subject to a valid restraint (Koops Martin at [34]). This is especially so where, as here, the establishment of a customer connection is not merely incidental to the employment, but its purpose (Koops Martin at [44]).
Willis submitted that the facts concerning Mr Harden's customer connection are very similar to those in HRX Holdings Pty Ltd v Pearson [2012] FCA 161 ("Pearson") (upheld on appeal in Pearson v HRX Holdings Pty Ltd (2012) 205 FCR 187; [2012] FCAFC 111 ("HRX").
Mr Pearson was, like Mr Harden, instrumental in establishing and growing HRX, and also its director, as Mr Harden was in respect of Willis Reinsurance (Pearson at [2]-[3]). Willis rejected Mr Harden's attempt to distinguish his circumstances from that of Mr Pearson's. He played an important role in the team that built Willis from what he described as a "start-up" company (T 15.02.21, pg.34 ln 41 to 50) to second biggest reinsurance broker in Australia (T 15.02.21, pg. 35 ln 9 to 19).
In HRX (at [58]-[59]), the Full Federal Court identified the two main aspects of HRX's interest in securing the benefit of its bargain which were relevant to the question whether the restraint was reasonable. First was the preservation of the value of the goodwill generated for HRX by Mr Pearson which it was aid may not be adequately protected by a non-solicitation provision if the customers were to follow Mr Pearson even without discussing the moving with him. Second was HRX's interest in the expansion of its business while Mr Pearson was employed.
Similar to Mr Harden, Mr Pearson was regarded as having a very special ability to connect with prospective clients and convince them of the benefit of engaging his business, meaning that he was a key component of HRX's successes (Pearson at [5]). The factors cited by the Court in Pearson at [6] (such as HRX's reliance on him to retain new clients, his intimate knowledge of client relationships, and of the strategies and techniques HRX might use to maintain relationships with clients) were submitted to apply to Mr Harden. These factors led to the Court in Pearson holding that a two year restraint period was not unreasonable (at [35]).
Mr Harden's assertion that he was not a leader in technology or innovation like Mr Pearson merely distracts from the more important point that he was involved in the development and pricing strategies of Willis to secure reinsurance work from the Key Clients (T 15.02.21, pg 42 ln 15 to 17; T 15.02.21, pg 43 ln 14 to 29). Further, contrary to Mr Harden's argument that there was no evidence of his role in presentations, he conceded in cross examination that he was invariably the lead presenter to Chubb and other Key Clients (T 15.02.21, pg 42 ln 3 to 5; T 15.02.21, pg 43 ln 14 to 29).
Willis submitted that Mr Harden's attempt to distinguish Pearson ignores the fact that Mr Harden has been paid for 12 months of the so-called "24 month restraint" while in Pearson the contractual provisions were such that Mr Pearson was not paid for the first 3 months of the restraint period and amounts paid to Mr Pearson in the restraint period were reduced by an alternative remuneration or income received by Mr Pearson.
Although Mr Harden will not be paid for the 12 month restraint period he accepted the terms of the contract and received significant remuneration during his employment. He also will receive a substantial sign-on bonus from Guy Carpenter when he commences employment with it.

[32]

Confidential information

Mr Harden's role also gave him access to each of the Key Clients' policy portfolio containing all of the insurance policies the client had underwritten in a given year as well as claims from previous years. He was a senior member of Willis Reinsurance's management group and sat on its Production Board, gaining an insight into the pipeline of the business, client retention, and event responses amongst other information. The opportunities discussed at Production Board meetings concerned multi-year plans for at least two to three-year periods.
Therefore, it was submitted that Mr Harden was aware of information regarding the Key Clients that is vital to a profitable business in the relevant industry, and that he is aware of sufficient confidential information as to give him a distinct advantage in winning work from Willis. This was said to give rise to a legitimate interest of Willis in the protection of such information. Willis submitted that it is not a question of whether or not Guy Carpenter or Mr Harden will make use of this information, or whether Mr Harden might disclose it, but rather whether Mr Harden could make use of such information to the material detriment of Willis' business (Kone Elevators Pty Ltd v McNav (No 2) (1997) ATPR 41-564; (1997) Aust Contract R 90-080 ("Kone Elevators") at 43,835).
Willis asserted that based on this evidence any claims by Mr Harden denying having confidential knowledge should be rejected. Furthermore, that his access to such information is a sufficient basis on which to support his restraint, because in many circumstances he could hardly help but use it (as per Cactus Imaging at [13]). Further, the Courts have recognised that "a reasonable employment restraint is easier to enforce than a breach of confidence" (Woolworths at [67]). In Provida Pty Ltd v Sharpe [2012] NSWSC 1041 at [20], Pembroke J observed that imposing a restraint on trading in competition is the most satisfactory method of protecting an employer's interests, rather than restraining improper use of confidential information alone.
Further, it was submitted that the type of confidential information to which Mr Harden had access remains current and can continue to do so for two to three years, particularly where this information is aimed at encouraging clients to renew.
Willis rejected Mr Harden's attack on its case on the basis that it had not put into evidence the actual information that was disclosed. Willis argued this submission was based on a misinterpretation of the authorities surrounding restraints based on confidential information. Willis supported this contention by reference to the comments of Hodgson JA in Genesys at [20] to [27]. There, his Honour distinguished between cases relying upon an equitable obligation of confidentiality, the existence of a trade secret, a direct restraint against use of confidential information, or as was the case in Genesys, "where there is a restraint on engaging in certain conduct, by reference to the potentiality for confidential information to be used to the promisee's detriment", as in Kone Elevators (at [22]). In the first three of those categories it is necessary to identify with some precision the confidential information; however, in the latter case different considerations apply. Therefore, Hodgson JA (at [27]) concluded that being in the latter category in that case sufficient identification of information that was sufficiently confidential had occurred to justify a restriction.
In Genesys, Handley JA (with whom Basten JA agreed) (at [64]) also highlighted the comments of the Court in Kone Elevators where Sheller JA stated at pp 90596-7 that it was possible to avoid: … the difficulties and impracticabilities of investigating whether or not and to what extent the employee possessed confidential information or was likely to pass it on to [the new employer]. That is not the question the covenant poses. The question is whether the employee proposed to engage in any business in Australia as a consultant or employee which could make use of confidential information as defined to the material detriment of Kone's business…. In my opinion, Kone is entitled to protect itself from having the employee engage in a business as employee which 'could' make use of such information to the material detriment of Kone's business.
Willis submitted the same considerations should apply presently. That is, that it is unnecessary for Willis to identify with precision what information Mr Harden can recall and that such matters are often not capable of proof. Rather, the assessment is whether the restraint is reasonable, having regard to Mr Harden's access to confidential information and whether such information could be used.

[35]

Discretionary considerations for the Court to take into account when seeking to enforce an injunction on a final basis

Willis submitted that Mr Harden does not appear to contend that it should not be entitled to injunctive relief on a final basis because of discretionary considerations. Regardless, the Court need not consider issues of the balance of convenience as this only applies to questions of interlocutory relief.
Further, Willis relies on Orleans Investments Pty Ltd v Mindshare Communications Ltd [2009] NSWCA 40; (2009) 254 ALR 81 ("Orleans") at 107-8, [94]-[95] for the proposition that the breach of a negative covenant, especially where private rights only are concerned, "constitutes a strong foundation for relief by way of injunction" and submit that, in the absence of "good reasons to the contrary", the correct course is to grant the relief sought. In Orleans at [93], Spiegelman CJ, Allsop P and Giles JA referred to what was said by Lord Cairns in Doherty v Allman (1878) 3 App Cas 709 at 719-720 that: …if parties for valuable consideration, with their eyes open, contract that a particular thing shall not be done, all that a Court of Equity has to do is to say, by way of injunction, that which the parties have already said by way of covenant, that the thing shall not be done…
It was submitted that if the Court is satisfied the restraints are reasonable, it should grant the injunctions sought by Willis, consistent with the provisions of cl.13.
To the extent that the Court determines discretionary matters are relevant, Willis submitted that it is significant in cases such as these that Mr Harden resigned from his position rather than being dismissed. It was his decision to accept a role with a competitor so is the author of his own misfortune (Birt at [49]).
Further, where a defendant can still take employment of another kind to that which was promised would not be undertaken, this is a relevant factor of consideration (Hitech Contracting per Austin J at [40]). Where a defendant is not required to terminate their employment with their new employer, this is also a relevant factor. There is no evidence that Guy Carpenter will withdraw its offer of employment if Mr Harden does not commence until after 26 June 2022, indeed it is supporting him in his litigation financially.

[37]

Willis submitted that Mr Harden's conduct during his employment gives rise to a clear inference that: 1. he was responsible or heavily involved in the process of recruiting Mr Jones, Mr Wang, Mr Cooper, Mr Sullivan and Ms Fisher to resign from their employment with the first plaintiff and to commence employment with Guy Carpenter; 2. the Client Contract was undertaken for the purpose of soliciting the clients identified in paragraph 30A of Willis' ASOC and / or for the purpose of interfering with Willis Reinsurance Australia's relationships with these clients.
Willis acknowledged that the evidence on which it sought to rely to prove misconduct by Mr Harden is largely or entirely circumstantial. It submitted that the relevant principles were considered in Palmer v Dolman [2005] NSWCA 361 at [33]-[47] (Ipp JA, with whom Tobias and Basten JJA agreed) were summarised as follows: 1. it is sufficient in a civil case that the circumstances raise a more probable inference in favour of what is alleged; 2. the Court must consider the weight which is to be given to the united force of all the circumstances put together. The onus of proof is only to be applied at the final stage of the reasoning process. It is erroneous to divide the process into stages and, at each stage, apply some particular standard of proof. To do so destroys the integrity of a circumstantial case; 3. the inference drawn from the proved facts must be weighed against realistic possibilities as distinct from possibilities that might be regarded as fanciful; 4. where the competing possibilities are of equal likelihood, or the choice between them can only be resolved by conjecture, the allegation is not proved; and 5. the inquiry is simply, taking due account of what was said in Neat Holdings has the allegation bene proved on the balance of probabilities?
Further, Mr Harden did not call evidence from Mr Jones, Mr Wang, Mr Cooper, Mr Sullivan or Ms Fisher, so the Court ought to make a Jones v Dunkel inference. No person was called from Guy Carpenter to give evidence where large parts of Mr Harden's evidence relied on conversation with Guy Carpenter.
Willis set out a chronology of interactions between Mr Harden and the relevant employees between January and July 2020. It submitted that based on these interactions it is clear that, by June 2020, each of the relevant employees had been provided with employment contracts by Guy Carpenter and continued to communicate with each other regularly by mobile phone. On 26 June 2020, Mr Harden and the relevant employees all gave notice of resignation from their employment with Willis.
Willis submitted that Mr Harden's denial of this claim should be rejected as he was not a reliable or truthful witness, and that his evidence was contradictory and at times appeared tailored to suit his case theory.

[40]

Mr Harden's Evidence

In either set of proceedings Mr Harden's evidence is of central importance. It is appropriate therefore that the salient features of it be recorded in some detail.
He filed three affidavits, on 5, 12 and 15 February 2021.
In his affidavit of 5 February he gives a good deal of detail of his employment history. He started working for Willis in the United Kingdom in the postal room in 1976. He left Willis in 1985 and emigrated to Australia, re-joining Willis in Australia in 1991. Prior to his resignation in 2020 he was President of Willis -Re, Asia Pacific, [6]-[15].
Although he was responsible for a number of countries in those regions he did not oversee a team of employees, [19]-[20].
He also stated he was not involved in the creation of spreadsheets or memorandums but did give presentations and attended to strategic planning sessions, [21]-32].
He gave evidence of the renewal process for reinsurance clients, which typically commences from 1 July of each year, [35]-[53].
He had always intended to end his career at Willis. In 2017 he had a conversation with a Mr John Cavanagh and as a result agreed he would commit for another 3 to 5 years, [60]. He later discussed a structured plan for retirement with Mr Tony Melia on 15 February 2018, [64].
Amendments were made to his contract in 2018 and he signed further amendments in January and August 2019, [67]-[70]. He had heard rumours about a merger between AON and Willis from about the first quarter of 2018, [75]-[77].
He had over the years been approached by persons on behalf of AON but had resisted because he thought AON's culture did not align with his values, [79]-[80].
He tendered his resignation on 26 June 2020, [81].
He then set out the detail of correspondence passing between himself and the solicitors for Willis, [83]-[107].
He then asserted that any communications he had with any other employees was for a legitimate business purpose and in effect none other, [108]-[113].
He then responded in some detail to the evidence of Mr Cameron Green, [114]-[163], in particular that he has not carried out any work or had any dealings with any clients of Willis since June 2020, [146]. He then responded to other affidavits, [164]-[183].
In his affidavit of 12 February he largely responds to additional affidavits of numerous witnesses. The purpose of his evidence was to explain the extent to which he had had access to materials or had communications with other employees.
Until he received the letter of 1 July from the solicitors of Willis he was for example working on finalising the IAG reinsurance program, [7]. He also explained the conversations he had had with various persons from clients, [15]-[28].
His third affidavit of 15 February is again responsive and he deals with his records including his notepads, [5]-[14].
He was asked in cross examination who the main clients were in 1991 and he said most of them did not exist today, T.35/20-30. He did mention GIO and Suncorp.
He agreed that he was responsible for business development in the 90's, T.35/33-35.
He was asked numerous questions about type of information and relationships he needed to have from and with clients, TT. 36-38.
He also agreed that he was the advocate partner for a number of major clients such as IAG, RACQ, Sure Insurance, Liberty and Chubb, T.38/20-50.
He was responsible for bringing RACQ into Willis, T.39/20-30.
He also agreed that he was a personal friend of Mr Brad Heath, the CEO of RACQ from 2014 to 2016, T.40/35-50.
He agreed that he had had access to confidential material concerning Chubb at the time he tendered his resignation, T.42/30-30. He accepted that he had intimate knowledge of the reinsurance needs of clients, T.43/5-15.
He agreed that there were service letter agreements in place with clients which imposed strict confidentially obligations on him and other employees in relation to the use of client information, T.45/35-50.
However, Mr Harden stated that information can be out of date very quickly and it must be reviewed on an annual basis, T.47/35-40.
In confidential session he was asked about attending a meeting in Singapore in 2018, and other matters concerning profitability of clients, TT. 50-55.
He accepted that his reason for departing Willis was because he was unhappy about the AON merger, T.60/15-20. He also stated that he made contact with a Mr Keith Ahern, the CEO of Guy Carpenter, T.60/15-40. In the course of that conversation the CEO raised the question of whether he would work at Guy Carpenter, T.61/5-25.
He told Mr Heath that he thought "we" were being sold out by the senior management of Willis, that he had worked for Willis all of his life and he did not believe AON shared the same cultures and values as Willis, T.61/30-40.
He did not consider he needed to disclose his discussions because the person he spoke to was a personal friend, T.62/15-30.
He was later contacted by a Mr Nash, T.63/1-15.
He agreed that the contact with Mr Nash was around the middle of March 2020, T.69/20-25.
He did not feel it was necessary to inform the board of Willis that he would like to work for Guy Carpenter, because he had not accepted a job and it is common in the industry to discuss opportunities with other employers, T.71/25-30.
On the question of the notice period under his contract he stated he would never have agreed to twelve months in the light of the AON talks that were going on and senior management knew about that, T.78/35-50.
He said he did not focus on the post termination restraints, but he was aware of the notice period, T.80/10-20.
He was asked about his contract with Guy Carpenter, TT.89-92.
He agreed that on 8 May he attended a board meeting of Willis as a director and he did not disclose he had received a letter of appointment from Guy Carpenter, T.94/15-45.
He was asked about is work with a number of employees, T.95. He denied he discussed he was going to leave with James Sullivan, T.95/45-50.
He denied further that on the 25 June he discussed with Mr Sullivan that he was going to be resigning from Willis, T.99/5-10. He told him after he had resigned, T.99/45-50. He believed he told Mr Sullivan he was going to Guy Carpenter and he told Mr Harden he had resigned as well, T.100/ 5-15.
He was not aware at the time any other employee was going to Guy Carpenter, T.100/40-45.
He said he was not aware on the day he resigned and before he handed in his resignation that other employees had resigned, T.101/10-15.
He believed he told Mr Wang he had resigned after he had resigned and he told him he was going to Guy Carpenter, T.101/40-50.
He was surprised others had resigned and he believed he told Mr Karl Jones after he resigned, but on the same day, T.102/15-30.
He agreed that he told Caitlin Fisher after he resigned that he was going to Guy Carpenter, T104/30-35. He also told Mr Cooper after he had resigned and told him he was going to Guy Carpenter, T.105/5-20. But he was not aware that Ms Fisher or Mr Cooper had resigned when he resigned, T.105/10-25.
He agreed that he had a meeting with Mr Ben Connelly from Findlay Roberts in July 2020 which was the first time he had met him, T.106/20-40.
He had not dealt with Mr Connelly before he resigned but he after he resigned he became aware that he was the person who had been negotiating with the other employees to go across to Guy Carpenter, T.107/35-45.
He denied knowing that each of the other employees intended to resign prior to his own resignation, T.109/15-45.
He agreed that on the day of his resignation he did make contact with clients to tell them he had resigned. He also did so in the days following 26 June, T.111/25-40.
He felt obliged to tell them rather than they hear it from the marketplace, but he never intended to take them to Guy Carpenter, T.111/40-50.
He was asked about his phone calls from various phone records, T.112/5-45. He agreed that he did make personal contact with some clients because he regarded himself as having a strong personal relationship with certain individuals, T.117/15-35.
He denied on or about 25 April telling Mr Sullivan or Mr Wang to provide Mr Connelly with their remuneration details, T.122/25-45.
He did not recall have a discussion with Mr Jones and Mr Sullivan on 30 March about his going to work for Guy Carpenter, T.124/40-45. He also denied ever telling them that they ever told him they were having discussions with a recruiter to go to Guy Carpenter, T.125/30-35.

[42]

Mr Green

In my view the most significant witness was Mr Green whose evidence where relevant is dealt with throughout the judgment.
The evidence called by Willis has limited impact on the ultimate outcome. It was not that it was irrelevant but it did have some aspects to it derived it seems by a desire to denigrate a loyal and long-time employee of the company.
Some of the evidence was obviously to assist the court understand Mr Harden's functions and his activities to found, no doubt the assertion he persuaded employees to leave or that had had access to confidential information. All of that evidence is clearly relevant.
But much of the evidence did not, nor could it, rise above speculation. I will deal with these affidavits below. I should say however I did not find the Willis evidence particularly helpful.
A good deal of the evidence was ultimately admitted on the basis of, understanding or belief if it was not already obvious.
Mr Melia for example described Mr Harden's running of the Bermudan office as "moderately successful" and that he "brought some discipline to the office and did a reasonable job there", [11]. He upon request of a Mr Cavanagh created a new role for Mr Harden upon his return to Australia (although he expected that he would retire) of President Willis Re- Asia Pacific which had "no dominant or functional responsibility but was designed to support Mark Morley", [15].
He dealt with Mr Harden about an alleged bonus but could not find any emails supporting such a claim, [20]-[21]. He also agreed on a retirement plan for Mr Harden , [23].
He accepts that Mr Harden was "adding value " to the business especially in Singapore, [31] so his arrangement was extended but only on four days a week. A further extension of his contract was agreed, [33].
Mr Morley in his 23 December 2020 affidavit gave evidence of his understanding of Mr Harden's role in the business, [10]-[11]. He found Mr Harden useful to him and a good sounding board, [13]. Mr Harden assisted him with some strategic plans, [15]-[16].
He telephoned Mr Harden on 26 June about his resignation and he tried to persuade Mr Harden he was making the wrong call but he was aware Mr Harden had reservations about the AON merger, [20]-[22]. He became aware Mr Harden had changed his hours, [27].
John Phillipsz in his 24 December 2020 affidavit, that he has not had close dealings with Mr Harden , but he has had dealings with him as a director of Willis Re and also as a member of the Production Board a senior management group, [9]-[10].
The Production Board meeting met monthly to discuss new business and new business initiatives, [11]. The meeting is the context in which budgets are discussed including renewal income. Mr Harden attended meetings from February 2020 onwards but did not attend the June meeting, [16].
On 26 June 2020 Mr Harden telephoned Mr Phillpsz to tell him he had resigned from Willis and was going to Guy Carpenter. Mr Harden said he had clear views about AON, [22].
The affidavit deals with the provision of a new laptop and handover notes, [23]-[42].
In his affidavit of 30 December 2020, Mr Green he explains the nature of the Willis business, and his professional background , [1]-[22].
He then purports to give evidence of Guy Carpenter, [23]-[27] and then gives some evidence of Mr Harden, stating that not only did Mr Harden resign on 26 June 2020 but so did a number of other employees, (five in number) resign simultaneously, [36]-[37].
Resources had to be redeployed as a result which in turn caused disruption, [38]-[41]. He asserted that Mr Harden retains a large amount of Willis Re confidential information and particular client information , [42].
It would appear that the issue of resignation was in early 2020 somewhat of a global trend, [45]-[50].
He makes a number of assertions as to Mr Harden's client contacts [51]-[62] and his access to client information, [63]-[81].
He then deals in some detail with those other employees who left at the same time as Mr Harden, [83]-[169].
Under the heading "Why I believe Mr Harden would wish to solicit WAGS employees" Mr Green advances in effect various arguments to support the proposition, [170]-[181]. The balance of the affidavit is to similar effect raising various arguments about aspects of the Willis business and his beliefs as to the time to be taken to replace Mr Harden etc, [182]-[260].
It is plain from [261] that Mr Green was informed by Ms Fisher that the whole resignation process was a well-executed arrangement undertaken with the employees who left in a secretive fashion.
Mr Harden, according to Mr Green, told him on 2 July that he never wanted to work for Aon and he was upset at the prospect, [268].
In his affidavit of 8 February 2021, he purports to have reviewed "all" emails in the period 1 June to 30 June, [5]-[6].
He has also reviewed a record of phone calls, [7]-[8].
In his affidavit of 12 February 2021, he responds to Mr Harden and amongst other things he expresses views as to what he believes Mr Harden with his skill and expertise might retain, [8].

[45]

Issues one and two

The first issue is whether the Plaintiff was told to lie about his being on leave, which is what he was directed to say if he was contacted by a client, and if so whether that direction was a repudiation on the part of Willis entitling Mr Harden to terminate with immediate effect.
This issue to some extent turns not only upon the effect of the direction given to Mr Harden on 1 July but which in turn must also be seen in the context of Mr Harden's resignation on 26 June. In my view together they shed light on Mr Harden's employment status.
On 26 June 2020, Mr Harden gave notification of his "resignation" as and from 30 June and purported to give 12 months' notice, "as required by my contract". He also invited a discussion on "how I will serve my 12 months' notice".
On 1 July he got a long response from Willis' solicitors, Gilchrist Connell. He was told that its terms were concerned with his "immediate obligations".
It dealt with arrangements to take possession of his electronic devices, credit card, user name and password. It also stated "each direction given in this letter is a lawful and reasonable direction …with which you must comply", which was set out in the second of two clauses 1.1 of the letter.
In clause 4.1 of the letter he was told that Willis was suspending him from the "information technology and email system" but added that the letter "does not constitute and should not be taken as any sign of the termination of your employment but is simply a precautionary step to protect [Willis']…..interests".
Pursuant to the letter (5.1) and under a heading in bold "Obligations During Your Notice Period" Mr Harden was required to work, "at your current place of work" (which was at his home due to COVID), but not to do certain things without the prior written permission of Willis.
There is clearly a dispute factually and legally as to whether that direction(s) is a direction to the plaintiff to tell and untruth and if so if that was repudiatory conduct on the part of Willis. The issue turns upon his precise employment status after the 1 July letter.
Willis was clearly concerned about Mr Harden's resignation and went into entirely understandable damage control.
There is no doubt the move by Willis in contriving the directions in the way they did was provoked by a desire to minimise the impact of Mr Harden's resignation on clients. Given his status and longevity with Willis there was no doubt a genuinely held fear his merely telling clients he had resigned and was moving to a new employer might cause them to become unsettled and decide to follow him.
On several occasions in the 1 July Letter there is reference to "notice period" as a description of the interim situation Mr Harden was in (see cl.5 heading and cl.5.3 and cl.5.5).
On 13 July the solicitors for Willis sent a further email making reference to their earlier email of 1 July. He was told he was being given a new laptop for the purposes of doing his handover notes and undertaking separate duties "as directed". The email went on to state that specific details of the handover notes and "other work you are required to complete will be provided in due course". The email gave further directions about confidential materials.
Leave is not as such defined in the contract, however in clause 8 there are three types of leave provided for. Annual leave, personal/carer's leave and a species called "Other leave".
The first is self-explanatory. The second is described as 10 days paid personal/carer's leave per annum. The third refers to a period of unspecified leave (paid or unpaid) for "compassionate, community service, parental leave etc". None of these in my view is apposite in the case of Mr Harden. There is nothing called "gardening leave" in the contract. Willis submits that is the appropriate characterisation of his situation.
The notion of gardening leave in the employment context means in effect a period when an employee is usually serving out his or her notice period away from the place of employment on full pay. But as the authorities Willis refer to point out, it would normally (subject to perhaps the specific terms of a particular clause) involve an employee staying away from work and performing no duties (BearingPoint at [84] per Habersberger J, and Newton at [296] per Bromberg J).
Here of course that is not the case. Mr Harden was to continue to work from home but on strictly identified or permitted tasks.
It is accepted that Mr Harden's email of 26 June was a notice of termination pursuant to clauses 12.1 and/or 12.3. Pursuant to the latter subclause there are options available to the employer in the event the employee gives notice.
The employer can pay the employee out in lieu of notice (cl.12.3(a)) or require the employee not to attend work for the balance of the notice (cl.12.3(b)) or to attend work for the balance of the notice or to attend work, or work from another place for the balance of the notice but perform different duties provided the employee has the requisite skill set for that work (cl.12.3(c)).
I agree with Willis that the option contained in cl.12.3(b) closely resembles what might be described as "gardening leave". That sub-clause contemplates, however, an employee not attending work (and by implication, not working) for the balance of the notice period. But as I have pointed out, that is not the regime to which Mr Harden was subjected. More to the point that clause was not called in aid by Willis' solicitors in either of their letters of 1 or 13 July. I put entirely to one side Mr Green's concession as to his view about the matter as carrying little if any weight (see T.150/11-28).
It may be argued that cl.12.3(c) was applicable which would permit the employer to direct the employee to attend work or work from another place and/or perform different duties to those he or she would normally perform.
Here Willis insisted that Mr Harden prepare handover notes and be available to do certain specific work as may be required. He was also required to attend his current place of work (which was at his home) but was prohibited from doing work other than as directed.
His duties were entirely different from those he would routinely have been performing but he was to perform some duties as and when directed.
He was also directed to be available reasonably during business hours to answer business related questions (1 July Letter, cl.5.6).
It was submitted on behalf of Mr Harden that what occurred was more in keeping with cl.12.5 because he was in effect suspended from his usual duties.
He certainly was not paid out in accordance with cl.12.3(a). Nor in my view was he required not to attend for work pursuant to cl.12.3(b), which is in effect gardening leave. However, as I have said cl.12.3(c) is arguably applicable because he was required to attend work (albeit from home due to COVID) and to perform different duties from those he was usually required to perform.
Clause 12.5 applies in the context where the employee is the subject of some sort of disciplinary action. The employee may be disciplined, counselled or suspended from duties. But the suspension may be partial in that the employee performs duties but different ones to those usually performed and may or may not be required to work form another place. Clause 12.5 also can apply "notwithstanding any other provision" of the contract.
Neither email of 1 or 13 July purport to identify any provision of the contract that was being invoked in the action taken, but it cannot seriously be gainsaid that both letters were hostile in tone and terms, each containing a series of "directions" delivered tersely. And I consider the letter of 13 July in effect accuses him of a lack of candour (see cl.3.2 and 3.3).
There was nothing amicable about these letters. One thing is clear: it is not asserted in either letter by the solicitors for Willis that he was to be on leave. Rather, he was said not to be terminated but on full pay and in a strictly controlled employment.
In the circumstances what Willis did was to in effect suspend him from his usual day to day activities and significantly restrict his access to materials and severely circumscribe his possible activities. The action taken against him was in substance and in form disciplinary in nature and the better view is that he was being suspended from most if not all of his usual duties as Wills was perfectly entitled to do pursuant to cl.12.5, although they did not do so expressly. However, it seems to me that in substance Willis was indeed invoking the provisions of that clause by reason of the fact that they regarded Mr Harden's conduct as requiring sanction.
When the letter of 1 July is carefully examined it is in my view tolerably clear the terms of cl.12.5 were being invoked. Willis did in fact "suspend" (in the sense of temporarily preventing Mr Harden) from undertaking most if not all of his duties. However, the letter did make clear that it was not to be taken to be a termination (1 July Letter cl.4.1 which mirrors contract cl.12.5(b)). In other words the employment continued in accordance with contract, cl.12.5 (a). He continued on full pay (1 July Letter cl.5.5 and contract cl.12.5(b)). He was required to perform duties, but different ones (1 July Letter cl.5 and contract cl.12.5(c)). He was required consistently with cl.12.5(d) to continue to attend work.
Mr Harden was not in my view in fact on leave, gardening or otherwise. In my view he was in truth suspended from his usual duties and heavily restricted in what he could or could not do. It was intended he do (apart from the handover notes) only that which he may be directed to do and then under quite controlled conditions. The period of suspension in my view was under the terms of the letters to be the period of notice.
It follows that for him to be directed to inform clients he was on leave was an untruth. He was in fact suspended from his usual activities and placed as far as could be achieved in a cryogenically controlled setting. Understandable though it was from a commercial point of view, it was to direct him to parrot a prepared script which was a deliberate untruth.
But the effect of the letter, upon the assumption the direction is properly characterised as a direction to tell an untruth, is said by Mr Harden to amount to repudiatory conduct on the part of Willis.
There are two aspects to the direction, or perhaps two directions. Mr Harden has in my view focussed on only one. The first was to say he was on leave if contact was made by a client. The second was he was not permitted to tell any clients he had resigned and/or who his new employer was to be. This latter direction is for good reason not the subject of complaint.
As to the latter I regard that really as direction not to make any comment or to discuss the circumstances of his leaving. But if a client asked for further information he was presumably intended to say that he could not provide an answer. I do not see a problem with such a direction. I consider that whilst in employment and on full pay, the contract continues and the employer in my view should be permitted to direct an employee to in effect make no comment. That in itself is, however, rather self-defeating because it would seemingly give the game away.
Whilst I am prepared to find consistent with Cordon Investments an implied term to act in good faith there is a real question in my mind as to whether the particular direction was a breach of it. As the Chief Justice pointed out in Cordon Investments the obligation is to act in good faith towards each other.
The authorities explain the obligation to act in good faith requires compliance with honest standards of conduct, at least in the employment context (Paciocco at [287]-[293] per Allsop CJ and Cordon Investments at [144] per Bathurst CJ). I consider here such a term is to be implied by either necessity or on an ad hoc basis.
I, of course, accept that the Chief Justice in Cordon Investments explained the content of the term would include an obligation to comply with honest standards of conduct and also to comply with standards of conduct that are reasonable having regard to the interests of the parties. He also stated that the decisions on the implied term do not require a party act in the interests of the other party or to subordinate its own legitimate interests to those of the other party, although due regard must be had to the rights and interests of the other party.
Further, I accept Mr Harden's assertion that for this duty only to be owed by the employee to the employer would be absurd and contrary to community values. Such an argument is supported by legislative intervention in employment law emphasising the importance of this mutual obligation to foster this relationship of trust. Additionally, for cl.12.2(d) of the Agreement to make sense, there must logically be a pre-existing (contractual) relationship of trust and confidence between the employee and company that might be damaged such as to trigger the company's rights under cl.12.2.
In my view the sum total of the relevant evidence generously viewed from the Willis viewpoint at its best is that Mr Green was confused about whether or not Mr Harden was on leave. There is no doubt he regretted having authorised the letter in those terms. There is also no doubt in my mind it was an ill-conceived and ill-considered move on the part of Willis and it was a move undertaken by Willis consistent entirely with their interest in damage control.
It is not consistent with compliance with honest standards of conduct nor with standards of conduct that are reasonable having regard to Mr Harden's interests and his reputation. To that extent, strictly speaking the direction does in my view amount to a breach of the implied term to act in good faith.
But did the conduct amount to a repudiation? I think not.
Put another way, could it be said that such a direction should be seen, objectively on the facts of this case as a renunciation of the party's obligations either of the contract as a whole or a fundamental obligation under it (Shevill at 625-627)? To describe it as conduct which is "substantially inconsistent" with a party's obligations clearly imports matters of degree (Laurinda at 647-658 per Brennan J). Can it be seen as an intention no longer to be bound by the contract?
Repudiation is a serious step to take and a court must look to objective acts and omissions and not uncommunicated intention. The question is what effect the party's conduct would be reasonably calculated to have upon a reasonable person. And as Deane and Dawson JJ said in Laurinda at [16], the conduct of the party when viewed objectively has to be such as to convey to a reasonable person in the situation of the other party repudiation or disavowal of the contract as a whole or of a fundamental obligation under it.
That it is a matter of degree is highlighted by the analysis of Mason CJ in Laurinda at [22], because the distinction that needs to be appreciated as to whether the conduct can be said to expose that the party's intention is to carry out the contract only "if and when" it suits the party to do so, as opposed to evincing an intention to carry out the contract "as and when" it suits the party to do so. Mason CJ thought it easier to evince an intention on the part of the party no longer to be bound by the contract or to fulfil in a manner substantially inconsistent with its obligations and not otherwise in the first scenario as opposed to the second.
In my view in this case there is ample evidence objectively viewed that this was an "as and when" scenario.
First, Willis expressly said it was not terminating the contract. It was clearly fearful of the damage that could be done if Mr Harden was let loose. It sought to hold him to various of his key contractual obligations and to do so, kept him on full pay and did not wish to run the risk of paying him out and partially severing its ties contractually with him.
Secondly, the direction was only to have effect in a particular circumstance should it arise, namely an approach from a client.
Thirdly, apart from placing him in effect on suspension it only required his co-operation in the handover notes and in relation to any other matters that may arise.
In addition, there was no complaint from Mr Harden. He appears to have shrugged his shoulders. As it turned out he never was in fact called upon to tell any untruth. Indeed, he had informed some clients before the direction was given that he was leaving. His leaving was it seems an open secret in the industry and was mentioned in an insurance newspaper as early as 3 July 2020. I must say there is an element of artificiality and contrivance about this aspect of Mr Harden's case.
Willis' statement in its solicitors' letter of 1 July that the contract from its point of view was remaining on foot (by reason of it not terminating the contract), was greeted with not the slightest demur from Mr Harden.
Mr Harden decided it seems clearly to get on with it and work out what he believed was his notice.
When looked at objectively I am not satisfied as a matter of law that either there can be evinced an intention on the part of Willis to either no longer be bound by the contract or a fundamental obligation under it.
In addition, Willis says there could be no repudiation because Mr Harden has affirmed the contract.
Mr Harden says (and with justification) that such a case should have been pleaded as it would have put Mr Harden on notice that the precise state of his knowledge of his rights at the time would have been clearly in issue. Notwithstanding his objection, the Court has received detailed submissions on the topic from Mr Harden. The simple fact is he obviously read the letter, clearly understood what it directed him to do or not do and he relevantly ignored the direction it seems to me in full knowledge that it was entirely academic because he told a number of people he was leaving and therefore he carried on as directed. If there was a need to find affirmation, election or acquiescence I would have no difficulty in doing so.
Because I am of the view that there has been no repudiation this part of the case in my view can safely remain largely theoretical.
The finding however that he was suspended from his employment duties does have a significant impact on the period on any view for which he should be the subject of any post contractual restraint. Pursuant to cl.13.8(a) if the two year restraint is reasonable it is effectively exhausted because the twelve month suspension falls by reason of that clause to be deducted from the two years. Therefore it ceased to operate on 1 July 2021.

[46]

Issues three, four, five and six

I propose to deal with issues three, four, five and six together. In each case Willis alleges either Mr Harden should be the subject of orders about confidential information, or that he unlawfully solicited employees to leave, or unlawfully solicited clients in effect to leave. These matters also have some impact on the issue of the reasonableness of the restraint.
These are all serious allegations and proper regard must be given to the usual principles which govern a court's approach when invited to make findings of this sort. The allegations invite findings of a deliberate course of conduct calculated to cause damage to Willis.
I will deal with each of the allegations in turn but I should observe that I accept Mr Harden's denials as to his purpose in relation to contact with other employees and clients and further I accept in particular his denials in relation to his attempts or otherwise to persuade employees or clients to follow him to Guy Carpenter.
He rose to the top as it were to Willis I infer for several reasons. First, he has obvious competence and experience in the relevant industry. Secondly, I can only assume he not only rose to the top of Willis because of his leadership qualities but also because he was a person of integrity. He was a loyal and long-standing employee. That is indeed how he also impressed me. He was, I am satisfied as would be obvious, exposed to a good deal of confidential information over the years but I am also satisfied he was fully aware not only as to his own contractual restrictions on misusing that information but he was also aware that Willis had entered Service Agreements with some of its clients the effect of which was a promise by Willis not to disclose confidential information about its clients. There is a very real issue as well in such a dynamic industry such as reinsurance as to how long information remains crucial and current. There is also an issue about documents or other information and how long any person including Mr Harden would or could keep such information in their head.
As to the employees it is clear that a recruiter had been retained by Guy Carpenter in effect to sound out if anyone wanted to leave. He was in my view successfully able to entice a number of persons away and at the same time seemingly ensure no-one spoke to anyone else about it or at least that is finding I am prepared to make on the available evidence. With someone of his status and reputation the word was bound to get out and did that Mr Harden was leaving. By 3 July the industry press was onto it.
But to put the matters in summary form at this stage I am not satisfied there is any reliable or credible evidence to support the various allegations of coercing employees or clients. Willis after all bore the onus of proof in respect of those allegations.
It was alleged that Mr Harden had directly and/or indirectly persuaded or attempted to persuade certain named employees to resign from Willis.
There is no direct evidence that Mr Harden disclosed or used any information confidential or otherwise to solicit the nominated employees. Mr Green's suspicions were it seems excited by the employees resigning on the same day. But that is as crude as a smoke and fire theory. This is a circumstantial case and Willis must confront all of the difficulties which come with such forensic exercises.
My perception is that Willis has left no stone unturned and yet the evidence from which I am asked to draw inferences in my view is not adequate to prove Willis' case either in relation to employees or clients.
There was a particular telling piece of evidence from Mr Cooper (a nominated employee) in a text message between himself and a Ms Suzie Stanghieri which occurred on 27 June 2020. That supports the proposition that the recruiter had ensured apparently successfully that Mr Cooper speak to no-one (CB/B/2/9/739). I am satisfied that was not just a one-off event.
Ms Fisher (another nominated employee) according to Mr Green in a conversation he had with her on 26 June told him she had not been speaking to Mr Harden but instead had been called by a recruiter (CB/B/1/7/483). What is more, in a subsequent conversation she told Mr Green she had not spoken to the others who resigned and she did not know who they were until it had happened (CB/B/1/6/180 at [261]).
I am satisfied the evidence supports the inference that the profiles of the nominated employees were relatively well known in the relevant reinsurance market place and therefore they would I infer well known by relevant persons at Guy Carpenter. Rivalry between Willis and Guy Carpenter has been both in Australia and elsewhere in the world de rigueur leading to a good deal of mobility in the respective workplaces.
Willis relies for example upon a meeting on 30 March 2020 between Mr Harden and Messrs Sullivan and Jones (two of the nominated employees) as evidence of some form of conspiracy or collusion. There is evidence to suggest a client meeting was scheduled for 30 March concerning a client RACQ, (CB/B/2/9/650). That provides a sufficient reason for them to meet in my view given their involvement with the client.
Willis sought and obtained extensive phone records from which it invited certain inferences be drawn. A detailed dossier was prepared entitled "Chronology of Employee Interactions". Extensive and detailed as it is it simply does not enhance Willis' case at all in my view. It shows contact by no relevant content.
What Willis did not wish to concede but what appears to have occurred is that they were outwitted by a clever recruiter and employees who were ripe for persuasion and who did not want to work for an AON controlled organisation and found the Guy Carpenter offer more appealing.
The other problem is that the period between March 2020 and June 2020 was a key reinsurance renewal period and it is entirely innocuous for employees to be communicating with each other and Mr Harden at this time of year. The evidence was that Mr Harden and the nominated employees were intimately involved in the renewal process and it is hardly surprising that they were doing so and as a result communication with each other.
The evidence of Mr Kunvarji, Payne and Dearmum all called by Willis do not do any more than suggest that Mr Harden and others were doing anything other than communicating with each other than conducting business for Willis. Put another way given the seriousness of the allegations the requisite proof is in my view lacking.
On the Sure/Liberty account alone the evidence discloses twenty eight meetings that took place between 3 March and 25 June 2020 in relation to that client (Payne affidavit at [17]-[19]).
The Court is entitled to conclude that what Willis has put before it is its best case. On the evidence I am unable to exclude reasonably a perfectly legitimate reason why these communications were taking place.
The evidence instead portrays a hyperactive and highly successful recruiter in Findlay Roberts and its employee Mr Ben Connelly in particular. There were some brokers who Connelly targeted including Ms Gregan and Mr Garratt who were not convinced to leave Willis. But in my view, there is nothing beyond mere conjecture to link either of those persons with Mr Harden. Likewise, the other nominated employees. Clearly, as I have said, nothing of any substance emerged from Findlay Roberts itself either which from an evidentiary point of view probatively implicates Mr Harden.
Nor do I see as relevant Mr Harden's failure to call any of the nominated employees. Willis bore an onus to prove its allegations. There is no evidence which would in my view make it reasonable to expect Mr Harden to have called any of them. Part of the problem as I see it for Willis is that the evidence as it stands is that each left most obviously with the encouragement of the recruiter and not Mr Harden.
I am not persuaded Willis has made out its case as to the nominated employees.
So far as the allegations concerning clients it is alleged that between 26 June and 30 June there was contact with clients by Mr Harden for the purpose of interfering with Willis' relationship with those clients.
As I best understand the Willis case it is not said it was inappropriate for him to contact them, rather he did so with a particular purpose. Willis provided no evidence from any of the nominated clients that they were solicited by Mr Harden. Mere contact alone would prove nothing in itself.
Willis had in its possession a text message from a Mr Harding of Tower, one of the nominated clients, that the contact he had had was merely the contact from Mr Harden who he clearly regarded as a friend (CB/B/1/7485).
Willis also contended Mr Harden's contact with a Mr Damian Sullivan formerly of Chubb. The problem is that Mr Sullivan had three years prior retired from Chubb. Mr Green could not offer the reason why he was included in the pleading.
I am satisfied with Mr Harden's explanation in relation to Mr Hill and Ms Ho that his contact with them was for business purposes of the Chubb renewal. In addition, his call to Ms Green of RACQ on 26 June was likewise for business purposes. He gives a fuller explanation in his second affidavit at [15] (CB/D/6/1084).
There is no evidence from any client as to what, if anything, Mr Harden said to them or that any have left Willis.
As to the phone records Willis relies upon there is nothing in my view disclosed by them. More to the point it is not entirely clear they are comprehensive. Again, there is simply no evidence any of the clients to whom Mr Harden spoke with has left or even thought about leaving. I am not satisfied Willis has made out its case as to clients.
As to the restraint issue Mr Harden accepts that some period of restraint is reasonable in the circumstances of the case. It is correctly conceded he was a very senior employee with strong connections with some of Willis' customers.
In this regard Willis relies upon Mr Harden's contacts with clients over the years and of course their concern to protect their confidential information.
In my view the restraint of two years (leaving aside my finding on suspension) is unreasonable. I take into account that he agreed to that period and that he is a very senior and experienced employee. But is also relevant that he is towards the end of his working life and he is entitled to use his skills experience and know how, even if in competition with Willis. And more importantly if a two year restraint were to apply he would not be remunerated for the second 12 months. As Mr Harden noted, that is a distinguishing feature from the facts in Pearson and is an important factor.
There is no doubt that Mr Harden is an experienced and, I infer, a sought after employee and he should be able at this stage of his career to utilise all that experience and know-how. In my view it would have been unnecessary to protect the legitimate interests of Willis to keep him out of active employment for a total of two years beyond his resignation.
Whilst Willis may be justifiably concerned at his being available to a competitor, he is entitled in my view to work in a stimulating and remunerative employment. His skill should be available to his chosen employer.
It is certainly reasonable for Willis to have the Court take into account on the length of the restraint the time it would take to find a replacement for Mr Harden. The recent COVID-19 pandemic in my view is not one such factor. The AON merger is said to be another. Neither was or indeed reasonably could have been in contemplation at the time the contract was entered into.
Mr Green in his evidence said he thought would in normal conditions take about a year to fill the role previously held by Mr Harden. That is in my view further justification for 12 months. That period coinciding with the annual (generally speaking) period of the renewal cycle in the insurance/ reinsurance industry.
Mr Harden on the evidence did have a particular relationship with at least seven clients. In all however Willis has it seems in excess of 40 clients (see document at CB/F/1/C246). That, of course on one view, does not diminish the significance of his client contacts. But Mr Green also conceded that they were not the seven most important clients of Willis. However the evidence is silent as to what proportion of Willis' business the seven clients comprise. He was not of course the only Willis person having contact with these seven, but it may be accepted he was the most senior and as such he responsible the management of the relationship. But equally he has not had any contact with them for some time. Having spent considerable effort and no doubt cost there is no evidence as to the precise contact he had with such Key Clients.
Willis also relies upon its need to protect its confidential information. Willis asserts quite correctly that Mr Harden has obviously had access to a whole range of confidential information during his tenure at Willis.
This aspect of the case requires an assessment of the likelihood of Mr Harden retaining confidential information and the risk of disclosure to or for the benefit of a competitor. The evidence supports the fact that Mr Harden has not been shown to have taken any hard copy or electronic documents with him, nor has he had any access to any Willis information since 1 July 2020.
The question is what might Mr Harden have retained in his head. Given he has not had access to up to date information since 1 July 2020 whilst he may have a very good memory it would seem unlikely he could any more than speculate about the present day details and needs of clients in relation to their business. He could not be privy for that matter to any of Willis' current strategic considerations.
It may be accepted that some of the material to which Mr Harden was undoubtedly exposed was confidential information of Willis' clients and not that of Willis. However, it can be inferred that that kind of information would be constantly updated or perhaps refined which only serves to highlight no significance of Mr Harden's absence from Willis since 1 July 2020.
Absent him having actually taken historic information with him, about which there is no evidence I am satisfied that it is highly unlikely Mr Harden or for that matter anyone else could retain such information, especially precise figures given at meetings, algorithms contained in in-house modelling tools, or for that matter precise calculations of any kind.
One example relied upon by Willis was said to be knowledge of confidential information obtained during what is described as the meetings of the "Production Board". However, the actual information was not put before the Court and it is difficult to make any assessment of that.
And whilst it goes without saying Mr Harden would have been aware of some clients' intimate details his knowledge of any particular detail is not before the Court.
In all the circumstances even had I found Mr Harden was on gardening leave I would have regarded a two year restraint unreasonable to protect the legitimate interests of Willis.
In summary, as to the questions concerning confidential information, solicitation of employees and clients I am of the view that there is no plausible evidentiary basis for concluding he has or is likely to act unlawfully in either regard.
At risk of repetition, in so far as he denied any such activity, I accept his denials.
In all of the circumstances I do not regard any injunctive relief as appropriate or warranted. I do not consider on the facts there is sufficient risk to bind Mr Harden by an injunction of any sort.

[48]

Conclusion

For convenience I record my views on the various issues as follows.
First, in determining whether Willis repudiated the employment contract with Mr Harden I began by determining whether Mr Harden was told to tell a lie. I found that he was directed to lie in telling clients he was on leave when in reality Willis had suspended him from his usual daily activities pursuant to cl.12.5 of the Agreement. The second question was whether the direction disallowing Mr Harden from telling clients he had resigned or who his new employer was to be was another direction to lie. I answered this question in the negative. It was not a lie, rather a direction not to make any comment or discuss the circumstances of Mr Harden's leaving and there was nothing wrong with doing so while Mr Harden was still in Willis' employment and on full pay.
The next was whether any direction to lie amounted to repudiation. I found, consistent with Cordon Investments that there is an implied duty in the employment context to act in good faith. I therefore find that an implied term to act in good faith exists in the Agreement and that strictly speaking the direction to lie was a breach of this term.
This, however, was insufficient to amount to repudiation. There was not evinced an intention by Willis to no longer be bound by the contract or a fundamental obligation under it. Willis indicated its intention for the contract to remain afoot, explicitly stating that Mr Harden was not being terminated. The direction was only to have effect in particular circumstances, namely an approach from a client. Further, the direction required Mr Harden's cooperation in other matters. Mr Harden did not complain and indeed was never in reality called upon to tell any untruth.
On the lawfulness of the restraint I noted that Mr Harden is a very senior employee with strong connections with some of Willis' key clients, however, I believe the restraint of two years is unreasonable, taking into account Mr Harden's age, the fact that the second year would be unpaid, and a reasonable period in which to find a replacement, among other factors.
Therefore even if I had found Mr Harden was on gardening leave I would have found a two-year restraint unreasonable. As it stands, the finding that Mr Harden was suspended has a significant impact on the period for which he should be subject to restraint. Pursuant to cl.13.8(a) if the two year restraint is reasonable it is effectively exhausted because the twelve month suspension falls by reason of that clause to be deducted from the two years. Therefore it ceased to operate on 1 July 2021.
In relation to possible orders regarding confidentiality I found that while Mr Harden was exposed to expansive confidential information I am satisfied he was aware of his own contractual restrictions on misusing that information and aware of the service agreements between Willis and its clients restricting the disclosure of information confidential to the clients.
Furthermore, I am not satisfied there was sufficient evidence to establish that Mr Harden disclosed or used any confidential information or otherwise to solicit the nominated employees. Rather, it appears that Guy Carpenter had hired a highly effective recruiter who was able to entice a number of persons away from Willis who were well known within the industry. Similarly, the evidence did not satisfy that Mr Harden was speaking with the clients about anything other than business. Nor was there evidence that the clients he spoke with have left or even thought about leaving.
Finally, I found that the issue of rectification is open as a matter of construction, but of no real relevance due to my other findings.
I would invite the parties to send to my Associate short minutes of order reflecting my decision. I will reserve the question of costs and will hear the parties on this issue if required.

Legislation Cited (3)

Evidence Act 1995(NSW)

Restraints of Trade Act 1976(NSW)

Corporations Act 2001(Cth)

Cases Cited (115)

Cas 709 Donau Pty Ltd v ASC AWD Shipbuilder Pty Ltd (2019) 101 NSWLR 679 Downe v Sydney West Area Health Service (No 2) (2008) 71 NSWLR 633 DP World Sydney Ltd v Guy [2016] NSWSC 1072 Emeco International Pty Ltd v O'Shea (No 2) (2012) 225 IR 423; [2012] WASC 348 Esso Petroleum Co Ltd v Harper's Garage (Stourport) Ltd [1968] AC 269 Extraman (NT) Pty Ltd v Blenkinship (2008) 23 NTLR 77 Fabre v Arenales (1992) 27 NSWLR 437 Fitzgerald v Masters (1956) 95 CLR 320 Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603 Hitech Contracting Limited v Lynn (unreported, ex tempore, 31 May 2001) Honner v Ashton [1980] ANZ ConvR 343 HRX Holdings Pty Ltd v Pearson [2012] FCA 161 Industrial Rollformers Pty Ltd v Ingersoll-Rand (Australia) Ltd [2001] NSWCA 111 Izaac v Dargan Financial Pty Ltd (2018) 98 NSWLR 343 Jagatramka v Wollongong Coal Ltd [2021] NSWCA 61 James Cook University v Ridd (2020) 382 ALR 8 Jardin and Jardim Investments Pty Ltd v Metcash Ltd and Metcash Trading Ltd [2011] NSWCA 409 John Fairfax Publications Pty Limited v Birt [2006] NSWSC 995 Jones v Dunkel (1959) 101 CLR 298 Kone Elevators Pty Ltd v McNav (No 2) (1997) ATPR 41-564; (1997) Aust Contract R 90-080 Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 Koops Martin v Dean Reeves [2006] NSWSC 449 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633 Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 Miles v Genesys Wealth Advisers Limited [2009] NSWCA 25 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170 Newton v Australian Postal Corp (No 2) (2019) 292 IR 396 Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Limited [1894] AC 535 OAMPS Insurance Brokers Ltd v Hanna [2010] NSWSC 781 Orleans Investments Pty Ltd v Mindshare Communications Ltd [2009] NSWCA 40; (2009) 254 ALR 81 Orton v Melman (1981) 1 NSWLR 583 Otis Elevator Company Pty Ltd v John Nolan [2007] NSWSC 593 Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199 Palmer v Dolman [2005] NSWCA 361 Pearson v HRX Holdings Pty Ltd (2012) 205 FCR 187; [2012] FCAFC 111 Portal Software v Bodsworth [2005] NSWSC 1179 Provida Pty Ltd v Sharpe [2012] NSWSC 1041 R v The Darling Island Stevedoring and Lighterage Co Ltd; Ex parte Halliday; Ex parte Sullivan [1938] HCA 44; 60 CLR 601 Renard Construction (ME) Pty Ltd Minister for Public Works (1992) 26 NSWLR 234 Russell v Trustees of Roman Catholic Church for Archdiocese of Sydney (2007) 69 NSWLR 198 Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 Sargent v ASL Developments Ltd (1974) 131 CLR 634 Satellite Estate Pty Ltd v Jaquet (1968) 71 SR (NSW) 126 Secured Income Real Estate (Australia) Limited v St Martins Investments Pty Limited (1979) 144 CLR 596 Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (In liquidation) (2019) 99 NSWLR 317 Shevill v The Builders Licensing Board (1982) 149 CLR 620 Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85 Steadfast IRS Pty Ltd v Latchmi Mesuria [2020] NSWSC 947 Streetscapes Projects Pty Ltd v City of Sydney (2013) 85 NSWLR 196 Talacko v Talacko [2021] HCA 15 Trampoline Enterprises Pty Limited v Fresh Retailing Pty Limited [2019] VSCA 74 Two Lands Services Pty Ltd v Cave [2000] NSWSC 14 United Australia Ltd v Barclays Bank Ltd [1941] AC 1 Virk Pty Limited (In Liq) v YUM! Restaurants Australia Pty Limited [2017] FCAFC 190 Wendt v Bruce (1931) 45 CLR 245 Woolworths Ltd v Olson [2004] NSWCA 372 Wormald v Mardaca Pty Ltd [2020] NSWCA 259 Wright v Gasweld (1991) 22 NSWLR 317 X v Commonwealth (1999) 200 CLR 177 Texts Cited: Meagher, Gummow and Lehane Equity, Doctrines & Remedies (2002, 4th ed, Butterworths) Robertson and Patterson, Principles of Contract Law (2020, 6th ed, Thomson Reuters) J D Heydon, Heydon on Contract (2019, Thomson Reuters) Category: Principal judgment Parties: 2020/315224 Michael Harden (plaintiff) Willis Australia Group Services Pty Ltd (defendant)

[2003] QSC 102

[2008] VSC 115

[2012] WASC 348

[1938] HCA 44

[2019] VSCA 74

[1971] HCA 71

[1998] HCA 42

(1981) 27 FCR 535

(1973) 133 CLR 233

(2019) 100 NSWLR 367

(1933) 49 CLR 66

(1951) 217 ALR 1