IOOF Building Society Pty Ltd v Foxeden Pty Ltd; IOOF Building Society Pty Ltd v Taylor & Anor [2009] VSCA 138

[2009] VSCA 138

[2003] VSC 356 (Habersberger J)

[2006] VSC 47 (Habersberger J)

CONTRACT - Agreement to operate branch of building society - Whether express term in respect of termination of agreement - Whether term should be implied that agreement terminable on reasonable notice - Period of reasonable notice - Breach by building society of implied term that reasonable notice be given.

CONTRACT - Estoppel - Agreement to operate branch of building society - Term of agreement that it be terminable on 60 days notice - Execution of agreement procured by building society's undertaking to negotiate a different and longer period of notice - Failure of building society to enter into negotiation - Purported termination of agreement by building society in reliance on 60 days' notice term - Whether 60 days' notice given - Whether building society estopped from relying upon 60 days' notice term - Nature of detriment suffered by operator of branch.

DAMAGES - Compensation - Loss of building society commissions and financial planning income during putative period of notice - Lost chance of obtaining financial planning income over time - Lost chance of negotiating compensation in lieu of notice - Whether damage constituted by lost chance of obtaining financial planning income over time too remote - Whether Judge erred in his findings as to integers to be used in valuing branch operator's lost chance of obtaining financial planning income over time - Whether Judge erred in valuing lost chance of negotiating compensation in lieu of notice.

1 These appeals are brought from orders made in two proceedings that were heard together in the Commercial and Equity Division. The proceedings were heard together as they involved a common substratum of fact. In each case liability and damages issues were tried separately and there were thus separate judgments,[1] and even a third judgment dealing with interest and costs.[2] Ultimately in each case the appellant was ordered to pay the respondents damages for breach of an agency agreement. The plaintiffs were Foxeden Pty Ltd ('Foxeden') in proceeding 2078 of 2000, and a married couple Kenneth and Janet Taylor (conveniently, if inaccurately, 'Taylor', except where it is necessary to refer specifically to Mr or Mrs Taylor) in proceeding 2085 of 2000. In each proceeding the defendants were the same, namely:

(a) IOOF Building Society Pty Ltd ('IOOF' or 'the Building Society');

(b) IOOF Ltd formerly known as IOOF of Victoria Friendly Society Ltd ('IVFS');

2 Allowing for differences in the facts pertaining to the creation and terms of the respective agency agreements (it is convenient to so describe them, although it begs the question of their true character), the nature of the claims made and the structure of the statement of claim followed the same lines in each case. The only claim that is now relevant is that which the judge upheld, broadly[3] that IOOF failed to give Foxeden and Taylor reasonable notice of termination of their agreement,[4] and in respect of which breach he ordered IOOF to pay damages as follows:

(a) to Foxeden - $435,747 plus statutory interest of $295,410; and

(b) to the Taylors - $405,100 plus statutory interest of $271,230.

It is from that conclusion and those orders that IOOF appeals, contending that in each case the orders should be set aside.

3 As to the plaintiffs' claims against the other defendants, the judge concluded that they all failed. The only order made in relation to those defendants was that there be no order as to their costs. No issue is raised as to those claims or that order.

4 IOOF was a building society which by 1996 conducted business through 20 branches and other outlets in Victoria. The second defendant, IVFS, was the parent company of the IOOF Group, of which IOOF and Winchcombe Carson Financial Planning Pty Ltd ('Winchcombe Carson') were subsidiaries. Placed between IVFS and IOOF was another entity, IOOF BS Holdings Limited ('BSH'), which held all the shares in IOOF. On or about 1 April 1999 100 per cent ownership of IOOF was acquired by Bendigo Bank pursuant to a share sale agreement with IVFS dated 5 March 1999. The fourth defendant, Turner, became managing director of IVFS and thus of the IOOF Group on about 14 August 1996, and from 14 April 1997 until 6 April 1998 he was chief executive officer of IOOF.

5 Foxeden was owned by Warwick Hawksworth who was the sole director and secretary of the company. Hawksworth, who is a practising accountant and financial planner, established Foxeden (which was incorporated in January 1997) for the purpose of it taking over the operation of IOOF's Building Society branch in Mildura, which occurred on 28 May 1997. The judge found that agreement for the transfer had been reached between Hawksworth and Robert Wood of IOOF in November 1996. IOOF submitted in this Court that the judge erred, and that he should have found that the agreement was concluded in May 1997 when the transfer occurred.

6 By way of background concerning Hawksworth, from 1981 to 1989 he was employed by IOOF as the Area Manager of its Ballarat branch. In 1989 he transferred his employment to Winchcombe Carson Financial Planning Pty Ltd, a financial planning organisation, and a wholly owned subsidiary of IOOF. On 1 January 1997 he became an external advisor to Winchcombe Carson. On 1 July 1999 he became a Winchcombe Carson franchisee. At time of trial, he had eight franchises in Victoria. At time of trial, he also conducted an accounting and tax practice, separate from Winchcombe Carson. That practice had eight offices in Victoria.

7 In 1996 Hawksworth neither had a Winchcombe Carson office in Mildura nor any role with an IOOF branch in Mildura. In May that year, Wood told Hawksworth that IOOF was going to close eight non-viable branches in the Building Society network. Hawksworth expressed interest in taking over the Mildura branch, provided that he owned 'the franchise'. Discussions followed in the course of which on 11 November 1996 Wood (it would seem) provided Hawksworth a draft agency agreement.

8 The judge found that the discussions had resulted in Hawksworth and Wood (on behalf of IOOF) on or about 18 November 1996 reaching agreement as follows:

(1) From a date to be agreed the operation of the Mildura branch be transferred to Hawksworth or his nominee;

(2) Hawksworth or his nominee was to assume the liabilities of the branch and be paid commissions to be agreed in return for acting as IOOF's agent for the purpose of accepting deposits from customers for their Building Society accounts, permitting customers to withdraw funds, accepting applications for loans and selling IOOF products;

(3) Hawksworth or his nominee would have exclusive access to the customers and the customer lists of the branch, and IOOF would not compete in the provision of financial services to those customers;

(4) For the duration of the agreement, Hawksworth or his nominee would 'own' the business conducted by the branch and, subject to IOOF's approval, he would have the right to sell the business and exclusive access to its client base.

9 Hawksworth described the arrangement as a 'franchise'; Wood accepted that description. Wood said, as the learned judge below recorded, that to his mind the proposed arrangement was quite different from the ordinary form of agency agreement which some branches had entered into with IOOF. An agent simply referred business to IOOF and received a commission in return. It did not have access to, or ownership of, any customer base.

10 Although his Honour concluded that agreement had been reached as at 18 November 1996, some important matters - including commissions, duration and termination - had not yet been agreed.

11 Hawksworth refused to sign the draft agency agreement as it did not represent what he had agreed. Among other things, it provided that the agreement could be terminated without cause by either party on 60 days' written notice. The judge found that Hawksworth never agreed to that term, considering that it was far too short a period. So also was the term as to duration unacceptable.

12 Certain other terms in the draft agreement, in particular rates of commission at the commencement, were the subject of ongoing discussion. In these discussions Hawksworth asked Wood when he could expect to receive a draft franchise agreement which reflected the agreement reached in November. He was advised that a draft was being prepared for consideration prior to his taking over the branch.

13 In January 1997 Foxeden was incorporated. It was to be the vehicle for the Mildura 'franchise' and Hawksworth so advised Wood. Also in January 1997 Hawksworth conducted a 'due diligence' of the Mildura branch. In early 1997 Hawksworth received a new draft agency agreement from Wood. Among other things, the agreement referred to the arrangement as an agency and not a franchise. It also contained the same term for termination on 60 days' notice as had the November draft.

14 Hawksworth did not sign this draft agreement. On his account, it did not reflect the agreement reached in November. As to the 60 day period of notice, Wood said that Hawksworth did not agree on it because termination clauses were not discussed.[5]

15 Eventually the date for the transfer of the Mildura branch was fixed for 28 May 1997. Wood confirmed that date in a memorandum dated 9 May 1997, to which he attached 'a draft franchise agreement as a basis for further discussion about other matters that need to be included'.[6] Among other provisions, the draft agreement contained a clause dealing with remuneration, and the same termination clause as the earlier drafts. Again Hawksworth did not sign the agreement as it did not reflect the agreement which he considered had been reached. The judge noted that Hawksworth did not immediately complain, however, about the termination clause, or about the remuneration clause.

16 Foxeden took over the running of the business on 28 May 1997. The judge found that Hawksworth did not agree to the 60 day notice clause. He also considered that, in light of his experience with Taylor on this point in March 1997 (to which reference is made below), Wood would not have pressed the clause. The judge found that Wood and Hawksworth were content to leave the term concerning termination unresolved, Wood until he was able to obtain legal assistance in drafting a comprehensive franchise agreement, and Hawksworth who expected the agreement would be terminable 'on some notice'. Rejecting rival submissions that Foxeden's rights were unlimited as to time or, on the other hand, that the agreement was terminable at will, the judge found that the parties intended that the agreement be terminable on notice and that there was an implied term that the agreement could be terminated on reasonable notice.[7]

17 An issue remaining unresolved when Foxeden took over the branch was the rate of commission payable by IOOF in respect of loans. Whilst the judge accepted Wood's evidence that agreement on a formula for such commission had not been reached by the time he left IOOF in August 1997, IOOF's position (stated in July 1997 and September 1998) was that it was prepared to pay commission at the rate of 0.25 per cent on loans written at the branch after 28 May 1997. The judge found that the agreement included an obligation to pay such commission.

18 A further matter which was unresolved as at 28 May 2007, and which continued unresolved, was the production by IOOF of a franchise agreement. For at least 12 months from about June 1997 Foxeden requested the document, to which IOOF would reply that it was being prepared or was being reviewed by the legal department. There was evidence that an agreement was prepared in August 1997 but that it was not signed by Foxeden; indeed it was not clear that it had been sent to Foxeden.

19 Then, in August 1998 IOOF sent Foxeden an agency agreement for signing. An agreement in the same general form was sent to Taylor on 13 August. Clause 12.2 of the agreement provided that either party might terminate the agreement by giving 60 days' written notice. Foxeden did not execute the agreement.

20 On 3 March 1999, it was announced publicly that Bendigo Bank would be taking over the IOOF Building Society branch network. This was Hawksworth's first knowledge of the takeover. Hawksworth gave evidence that, having heard nothing further, in April or May 1999 he contacted Vicki Pearce of IOOF. She advised him that Foxeden's ownership of the Mildura branch would be taken into account when the sale occurred. Ms Pearce, in a supplementary witness statement, agreed that she had had a telephone conversation with Hawksworth in about March 1999. On her account, she told him that 'his agency would be taken into account' when the sale to Bendigo Bank took place.

21 On 20 April 1999 Foxeden received a circular from Bendigo Bank referring to the purchase by the Bank of the IOOF branches. It listed Frankston and Mildura as branches to be merged with existing Bendigo Bank branches. Hawksworth agreed in evidence that by then he knew that the IOOF Mildura branch was to be merged into the existing Bendigo Bank branch by 30 June.

22 Led by the events affecting them, Hawksworth and Taylor instructed solicitors, Feingold Partners Pty Ltd, who on 3 May 1999 wrote to IOOF requesting a detailed explanation of what was intended to occur in relation to their franchises, and the timetable, so that full, proper and reasonable negotiations in relation to their rights and entitlements could be undertaken for the benefit of all parties. IOOF did not respond to the letter.

23 On 12 May 1999 Hawksworth met Dennis Bice of Bendigo Bank. In their conversation, as to which there were some differences in their accounts, Bice told Hawksworth that the Mildura agency would be closed down.

24 On 30 June 1999, without notice, the telephone lines for the Mildura branch were disconnected and all branch customers were electronically transferred to Bendigo Bank at premises nearby. The customers of the Mildura branch had previously been advised by IOOF and Bendigo Bank that all future banking would be with the latter.

25 A Bendigo Bank agency was offered to Foxeden, but not accepted as customer contact had been lost.

26 In these circumstances IOOF submitted that the public announcement on 3 March, or the circular on 20 April, or Bice's advice on 12 May, constituted valid notice of termination of the agreement because the agreement only required 60 days' notice of termination. Thus it denied having breached the agreement.[8] The judge rejected the submission, for reasons which he developed in dealing with the Taylor case. He concluded that there was to be implied into the agreement a term requiring that reasonable notice of termination be given; and that the reasonable period of notice, looking at the situation as at 30 June 1999, would have been one year.

27 What we have thus far said sets the scene for resolution of the liability issues as between IOOF and Foxeden. The issue of damages was, as we have said, the subject of a separate judgment. We will presently defer reference to the issues agitated in that connection.

28 Mr Taylor was in self-employment in the financial planning industry from 1985. Towards the end of 1990 he and a partner began to operate a financial planning business in Frankston under authority from Winchcombe Carson. His partner retired in 1991. In the same year, Mr Taylor moved his business into an office located within IOOF's Frankston branch office. At the outset, he was the only financial planner or non-branch person to have an office in the branch. He occupied office space rent free. This arrangement continued for about four years. Then he began to pay a nominal rent. When IOOF employed a financial planner at the branch, customers with less than $150,000 to invest were dealt with by the employee financial planner. Customers with a greater sum to invest were referred to Mr Taylor.

29 In January 1996 the manager of IOOF's Frankston branch told Mr Taylor that IOOF was intending to close the branch from 1 March 1996 because it was unprofitable. Mr and Mrs Taylor saw this as an opportunity to conduct the financial planning business and the IOOF business in tandem. There would be ability to cross-sell, this meaning that the overall business would grow, adding to goodwill.

30 Mr Taylor spoke to Wood about him taking over the branch. Discussions ensued and resulted, the judge found, in an agreement being concluded not long after 8 February 1996 between Taylor and Wood that the operation of the branch be transferred to Taylor. IOOF would pay certain operating expenses and Taylor would be paid certain commissions for acting as IOOF's agent for the conduct of customers' accounts and selling other IOOF products. It was also agreed that Taylor would have exclusive access to the customers and the customer lists of the branch and that IOOF not compete in the provision of financial services to those customers. It was also agreed that Taylor would 'own' the existing and new customer base of the branch and that this would form part of their goodwill. As to this concept of 'owning' customers, the judge considered that this meant that for the duration of the agreement Taylor would have exclusive access to the customers and the customer list of the branch, instead of IOOF.

31 The judge said it was difficult to decide what, if anything, was discussed or agreed at this stage as to the duration and termination of the agreement. He concluded that, although the parties contemplated a long-term agreement, specific attention had not been given to the related questions of duration and termination without cause. Nevertheless, on 4 March 1996 Taylor commenced operating the Frankston branch.

32 Then, on 8 July 1996, IOOF sent Mr Taylor a draft agency agreement which by cl VI(a) provided that 'The agency hereby appointed shall be terminated at the expiration of not less than sixty (60) days' written notice given by either party to the other at any time'. It is otherwise sufficient to note of the draft that it appointed Taylor to act as IOOF's agent in Frankston and contained provisions as to the respective obligations of Taylor and IOOF, remuneration and other matters. Wood described the draft as an early attempt to formulate a franchise agreement. But it was not satisfactory to the Taylors and they would not sign it. It was silent on the matter of the rights of Taylor to access and use the branch customer lists, it did not contain certain other matters, and termination on 60 days' notice was not acceptable. Later in 1996 the parties agreed to alter the rates of commission.

33 The next and critical step was that in March 1997 Wood proposed to the Taylors the signing of 'an interim agreement as a forerunner to the final form of a franchise agreement'.[9] This was a response to pressure from IOOF's internal auditors for a signed agreement. Accordingly on 13 March 1997 Wood met with the Taylors and provided them with an Agency Agreement, which he requested them to sign, and a letter which confirmed that:

• The Agency Agreement to be signed is to be treated as a fore-runner of a formal Franchise Agreement which will be completed as soon as practicable.
• As part of the Franchise Agreement process, we will renegotiate at this time your contribution to rental costs, and the amounts to be set-off against new business development.

The agreement included the same cl VI(a), providing for termination, as was contained in the earlier draft.

34 Mr Wood requested, as he said had been agreed, urgent return by fax of a copy of the agreement duly signed.

35 Mr Taylor then negotiated and agreed on all matters except cl VI(a). On 21 March 1997 Wood sent a memorandum to Mr Taylor stating that he had:

... basically agreed to all your requests without question, however at this time I am not prepared to delete clause VI(a) under Duration and Termination. To do so would be commercially irresponsible, from both the view of IOOF as franchisor and yourself as franchisee, as I firmly believe both parties need the protection of a 'get-out' clause, and should not sign an agreement that removes this completely.

However, I agree that the 60 day period is also too short, again from both parties viewpoint.

Accordingly I commit to negotiation of this clause in the forthcoming franchise agreement, with a view to extending the period to a mutually acceptable one.

As you now have either my agreement, or commitment to negotiate, on all matters you have raised, I would appreciate your execution of the agency agreement as a matter of urgency.

36 In a conversation between 21 and 24 March 1997 concerning the length of the termination period, Mr Taylor told Wood that 60 days would not be sufficient time in which to make alternative arrangements and to find another institution to hold customers' deposits and loans in place of IOOF, and that he needed at least 12 months plus the original 60 days. Wood stated to Mr Taylor that that was not an unreasonable request.

37 In these circumstances, on 24 March 1997 Mr and Mrs Taylor signed the agency agreement in the form of the draft provided on 13 March 1997. Mr Taylor forwarded a copy with a facsimile in which he referred to his conversation with Wood and confirmed the details, viz:

You indicated that the original agency agreements were merely two pages long, or were compiled peace [sic] meal and require revamping.

1. Clause 1.(a) - This clause will not give rise to any agreement being terminated.
2. Clause 1.(j) - This clause will also not give rise to any agreement being terminated and is currently difficult to define.
3. Clause VI(a) - You have agreed to negotiate this clause and consider a period of 60 days after 12 months' notice is not unreasonable.

38 Mr and Mrs Taylor gave evidence that they believed that the agency agreement was a temporary or interim agreement and not legally binding. On the other hand, Wood gave evidence that he believed that the March 1997 agreement contained the terms negotiated by the parties, that he understood the agreement bound the parties and that it could be terminated on 60 days' notice. The judge did not accept the evidence of the Taylors that they considered the signed agreement did not bind them or have legal effect, even as an interim agreement. He found that they understood the significance of signing the agreement. He found:

... therefore, that the Agency Agreement signed by the Taylors on 24 March 1997 became part of the agreement between the Taylors and Mr Wood, purportedly on behalf of IOOF. As counsel for the defendants pointed out, in the Taylors' Claim itself it was pleaded that the terms of the initial agreement as varied continued to operate 'except where expressly inconsistent with' the terms of the Agency Agreement. Thus, I consider that the relationship between the Taylors and IOOF became one which could be terminated by either party on the giving of 60 days' notice in writing.[10]

39 It is convenient at this point to note that, for reasons discussed below and which IOOF submits are erroneous, the judge concluded that IOOF was estopped from relying upon cl VI(a) which allowed for termination on 60 days' notice.

40 Proceeding with the chronology, on 20 July 1998 Mr Taylor wrote to Ms Pearce at IOOF referring to the awaited formal franchise agreement which 'would not provide less benefits than the agency agreement' and 'would extend the cancellation period to 60 days after the expiration of 12 months'. He stated that he was looking forward to receiving 'the Franchise agreement in the short term and resolving other issues mentioned'. As to what he meant by '60 days after the expiration of 12 months', Mr Taylor deposed that what he had agreed with Wood was that a period of 12 months plus 60 days would not be unreasonable. However, as the judge observed, that was not what the letter said.

41 The response was unexpected. On 13 August 1998, IOOF's corporate solicitor wrote to Mr and Mrs Taylor giving 60 days' notice of termination of the Agency Agreement dated 24 March 1997 pursuant to cl VI(a). The letter noted the reference to a new agreement in IOOF's 13 March letter, and enclosed a new agency agreement for their consideration. This agreement contained many more terms than the March agreement but, relevantly, cl 12.2 provided that the agreement was terminable by either party by giving 60 days' written notice. Ms Pearce agreed in cross-examination that the purpose of the notice was to get the Taylors (and other agents) out of their agreements, and into a new agreement prepared by a Mr Regan.

42 Mrs Taylor contacted Ms Pearce about this agreement. She was told that IOOF wanted to re-negotiate the existing agreement. After further communications, Mr Taylor wrote to IOOF on 5 October 1998 noting that IOOF was 'not prepared to honour agreements and understandings entered into', that the new agreement was not a franchise agreement and that he looked forward to receiving as soon as practicable a final franchise agreement containing the previously agreed terms. That followed a letter faxed to Mr Taylor by Ms Pearce on 2 September 1998 in which she stated, inter alia, that -

Consideration put by a third party for what they deem as goodwill of your business is of no concern to IOOF. Accordingly we do not accept the claim that IOOF customers form part of your business and we will not recognize value or be bound by any contract you may enter into with another party.

43 In a conversation with Ms Pearce on 8 October, Mr and Mrs Taylor stated that IOOF could not terminate the agreement as it had done. Ms Pearce responded by a letter dated 12 October 1998 stating:

As we discussed on Thursday 8 October, 1998 there are still outstanding issues to be resolved in regard to the new agreement between IOOF and yourself.

The expired agreement will therefore continue for 30 days, from the date of this letter, expiring once again on 11 November 1998. Please note that Clause VI(a) will not be applicable for the extension of this agreement.

We will contact you in regard to the finalisation of the new agency agreement during the next couple of weeks.

Please contact me if you have any queries.

44 On 13 November 1998 Mr Taylor sent a facsimile to Ms Pearce seeking confirmation that IOOF would cancel all termination notices with a view to re-visiting the issues in the next year. On 30 November he sent her another facsimile requesting a timeframe for the resolution of a number of outstanding items, including the new proposed agreement and cancellation of termination. Ms Pearce responded by a letter dated 1 December 1998, expressed in the same terms as her 12 October letter save that this time it was stated that the expired agreement would continue to operate until 31 January 1999. By a separate memorandum sent with the letter Ms Pearce responded to Mr Taylor's 5 October letter. She stated that IOOF would not enter into a franchise agreement, saying:

We said that we would enter into a franchise agreement but we have entered into an agency agreement. IOOF wants an agency agreement set up with all of their agents - we are not proceeding down the franchise route.

She stated also that 'we do not accept the claim that IOOF customers form part of your business ...'. She further stated, concerning the period of notice of termination, that 'the current terms and conditions are in place until 31 January 1999, as per our attached letter'.

45 Mr Taylor said that in December 1998 he heard a rumour that IOOF was considering selling the Building Society network to Bendigo Bank. At a meeting with IOOF representatives on 21 January 1999, at which relocation of the Frankston branch was discussed (in view of pending building works at the shopping centre where the branch was located), and at which Mr Taylor raised the possible sale to Bendigo Bank, Turner told Mr and Mrs Taylor that a due diligence was being conducted. The parties discussed relocation of the branch office and deferred consideration of what the sale would mean to the Taylors. Agreement was reached as to the cost of renting new premises, but in the end the Taylors purchased their own office space. It was fitted out at IOOF's expense. The Taylors moved into the new premises in February 1999.

46 On 3 March 1999 the sale of IOOF to Bendigo Bank was announced to the public by a media release. We have already referred briefly to what it said. Later we must refer to its content in more detail.

47 On 3 May 1999 Feingold Partners sent the letter to IOOF to which we have earlier referred.

48 On 4 May 1999 Mr Taylor sent a facsimile to Turner expressing concern that the Building Society appeared to have been sold and that the Taylors' interest had not been addressed.

49 On 5 May 1999, before IOOF had responded (as was apparently intended), Dennis Bice of Bendigo Bank spoke to Mr Taylor at the Frankston branch and advised that the agency would be closed down.

50 On 26 May 1999 Mr Taylor and Hawksworth met with IOOF and Winchcombe Carson personnel.

51 On 27 May 1999 Bendigo Bank sent Mr Taylor a Bendigo Bank Agency Agreement for him to review and sign. He refused to sign it lest it compromise his claim against IOOF. Mrs Taylor would not sign for other reasons.

52 On 30 June 1999, without notice, all Frankston branch customers were electronically transferred to the nearest Bendigo Bank branch. Until that time the Taylors had continued to conduct the business of the Frankston branch. Effectively, however, their ability to do so came to an end on 30 June 1999.

53 In concluding his judgment concerning Taylor, the judge stated that:

... it was a term of the agreement that it could be terminated without cause by either party on 60 days' notice in writing. However, IOOF is estopped from relying upon or seeking to enforce that term. Instead, it became a term of the agreement that it could be terminated without cause by either party on reasonable notice.[11]

54 That left for determination the issue of breach of the agreement and damages. As to breach, the judge first rejected a submission of IOOF that it had validly terminated the agreement by any of a number of documents or by a conversation upon which it relied. Of this, more later. We leave also until later the damages issues which arose on the appeal.

55 The respective grounds of appeal attack certain of the findings in the judgments both as to liability and damages. With respect to liability, the essential points of IOOF's submission may be summarised this way:

(a) An Agency Agreement was concluded in May 1997, and not on 18 November 1996 as found by the judge.

(b) The May 1997 Agreement included the cl VI(a) provision for termination. The judge should have found that Hawksworth agreed to that provision. Alternatively, the like 60 day period of notice of termination should have been implied.

(c) Alternatively, the judge erred in finding that a reasonable period of notice was 12 months; a lesser period was appropriate.

(d) The judge erred in finding that IOOF breached its contractual obligation to give notice of termination of the agreement when it electronically transferred its Mildura branch customers to the Bendigo Bank branch on 30 June 1999 without prior notice to Foxeden. The judge should have found that notice was given by means of the public notice of the sale of 3 March 1999, or by Bendigo Bank's circular of 20 April 1999, or by Bice's advice on 12 May 1999. Further, contrary to the judge's finding, notice did not have to be in writing. In consequence, if the period of notice was 60 days, no breach occurred if notice was given on 3 March 1999 or 20 April 1999. If notice was not given on those dates but was given on 12 May 1999, the period in respect of which damages ought to have been awarded was significantly reduced.

(a) The judge erred in finding that IOOF was estopped from relying on cl VI(a).

(b) The judge erred in finding that to make good the assumption on which the estoppel was based, it was appropriate to treat the agreement as if there was an implied term that it could be terminated on reasonable notice, and in holding that a period of one year was reasonable notice of termination. Rather, the judge should have found that the agreement was terminable on 60 days' notice as provided by cl VI(a), or at will, or if on reasonable notice then on notice that was 60 days or near thereto.

(c) The judge erred in finding that IOOF breached its contractual obligation to give notice of termination of the agreement when it electronically transferred its Frankston branch customers to the nearest Bendigo Bank branch on 30 June 1999 without prior notice to the Taylors. The judge should have found as follows: If cl VI(a) remained enforceable, the 13 August 1998 notice of termination was sufficient. If an estoppel precluded reliance on cl VI(a) and a termination term was to be implied, notice was given in accordance with any such term that IOOF contends ought to have been implied. The notice was constituted by the public notice of the sale on 3 March 1999 or Bice's advice on 5 May 1999. Further, contrary to the judge's finding, notice did not have to be in writing. The consequence was that if the period of notice was 60 days, no breach occurred if notice was given on 13 August 1998 or 3 March 1999. If notice was not given on those dates but was given on 5 May 1999 the period in respect of which damages ought to have been awarded was significantly reduced.

56 The learned trial judge found, as we have said, that agreement was concluded in November 1996. At that stage, however, Hawksworth and Wood had not agreed upon a number of matters - a transfer date, rates of fees and commissions (at least in respect of loans), the duration of agreement, and the means of termination. It is also the fact - though in view of his Honour's finding it is not decisive - that Foxeden had not then been incorporated.

57 According to IOOF's submission, it ought be concluded that agreement was reached shortly before 28 May 1997, the date on which Foxeden took over operation of the Mildura branch. It ought further be concluded that the agreement was in the terms of the 'draft franchise agreement' sent to Hawksworth by Wood, attached to a memorandum dated 9 May 1997

58 Counsel did not argue, we add, that no agreement had been reached. That is so although the draft agreement was said by Wood in his memorandum to be 'a basis for further discussions about other matters which need to be included'; and despite Wood also stating that 'obviously we need to work through this document and once we have agreed on its content, formalise the franchise document through our respective solicitors'. Rather, as we have said, counsel relied upon the May 1997 draft which, by clause VIII(a), fixed a 60 day without cause termination period.

59 The submissions for Foxeden essentially focused upon a denial that Hawksworth ever agreed to a 60 day termination period. The parties, counsel submitted, 'drifted into an agreement'[12] without ever agreeing upon a termination provision, in which case implication of a term of reasonable notice was proper.[13] The submission was at odds with the pleading in the Amended Statement of Claim that an agreement was made 'in or about November 1996'. That is so although the statement of claim pleaded details of the alleged agreement and provided particulars that called in aid documents which came into existence, and conversations which took place, in the period November 1996 to May 1997.

60 Subject to one argument advanced for IOOF, the debate as to when agreement was concluded - it not being in issue that agreement was concluded - was essentially a sterile one. His Honour in substance concluded, and we respectfully agree, that the parties entered into an agreement which was partly in writing and partly oral. He concluded also that no agreement had been reached in respect of IOOF's insertion of a 60 day termination clause into various draft agreements sent by Wood to Hawksworth;[14] for which reason the agreement which was reached was silent as to without cause termination.

61 Even as at May 1997, as Wood acknowledged in his memorandum of 9 May, not every term of the agreement had been agreed. The draft agreement sent under cover of the 9 May memorandum provided some justification for that acknowledgment. Not even Foxeden's name as a party to the agreement was stated at the outset of the document; and no date, other than '1996', was stated for its commencement. Further, the draft made provision for employee transfers on 28 May 1997, but a sub-lease was to date from 2 December 1996 - likewise shop fittings and office equipment. Further still, there was no provision for the duration of the agreement.

62 For all that, it seems to be common ground that by May 1997 more had been agreed between the parties than was the case in November 1996; and by then Hawksworth had completed his 'due diligence' enquiries. In the event, the better view seems to us to be that agreement was reached in May 1997, such agreement incorporating the draft document sent to Hawksworth on 9 May 1997 so far as he accepted its contents; and that the agreement otherwise contained matters which had been orally agreed. In respect of the former (the draft document), his Honour found that Hawksworth did not accept clause VIII(a). In respect of the latter (what had been orally agreed), the learned trial judge made findings, with which we respectfully agree, as to what had and what had not been agreed.

Implying a Term that Reasonable Notice of Termination be Given

63 Counsel for IOOF submitted that a 60 day notice period had been agreed, because the draft document of May 1997 constituted the agreement between the parties. But if that was not so, then at least the 60 day notice provision represented what the parties must have agreed. So, if a term was to be implied, it must be a term requiring 60 days' notice. That period had been stated in every draft; Wood thought it had been agreed; Wood had only recently resisted attempts to remove it in respect of the Taylor agreement; and it could hardly be said that an implied term that reasonable notice be given was 'so obvious it goes without saying'.[15]

64 Counsel for Foxeden submitted, to the contrary, that the learned trial judge had correctly concluded that Hawksworth had never agreed to a 60 day notice period. In view of the financial commitment which Foxeden was undertaking, such a term would have made no sense. Absent actual agreement, the substantial choice was between an agreement unlimited as to time and the implication of a term dealing with notice.[16] IOOF's argument that a term should be implied permitting termination on 60 days' notice made no sense where, as the judge found, such a proposal had been made by Wood and had not been accepted by Hawksworth, leaving the issue unresolved.

65 In our opinion, the submissions advanced by counsel for Foxeden were correct, and the learned judge was right to imply a term that reasonable notice of termination was required. His Honour's findings, with which we agree, were to the effect that the draft agreement May 1997 was not the single repository of the agreement between the parties, and that in respect of notice it did not represent their agreement. It would make no sense, in the circumstances, to imply a term as to notice which replicated a term not accepted by one party. In circumstances where no term had been agreed but the objective circumstances demanded a conclusion that the parties did not intend to enter into an agreement unlimited in time, and where support was lacking for a conclusion that the agreement was terminable at will, implication of a term requiring reasonable notice of termination was both available and appropriate.

66 Counsel for IOOF submitted that, if this Court concluded that the learned trial judge had rightly held that a term should be implied into the Foxeden agreement that reasonable notice of termination[17] must be given, the judge had nevertheless erred by fixing a notice period of 12 months. For reasons which we have explained, we consider that his Honour was correct to imply such a term into the Foxeden agreement. Whilst we later conclude that he erred in implying such a term into the Taylor agreement, we also conclude that determination of a reasonable period of notice was relevant to determining the Taylors' entitlement to compensation. In the event, the appellant's challenge to the period of notice which his Honour determined was appropriate does arise in each case. For the moment, we focus upon the relevant principles, and their application in the Foxeden matter.

67 Counsel for IOOF did not submit that the learned judge had misdirected himself as to the correct approach in fixing the appropriate period of notice. Neither did he contend that his Honour could be seen to have brought irrelevant matters to account, or that any relevant matter had evidently been ignored. Correctly allowing that the answer to the question admits of imprecision, and that a trial judge must be given a degree of latitude, counsel submitted, simply, that in both the Foxeden and Taylor matters a period of 12 months' notice was 'outside the range'. Invited by the Court to state what the range was, he essayed[18] a range of 60 to 120 days.

68 Counsel for Foxeden submitted, to the contrary, that the period fixed upon by his Honour was unexceptional. He pointed to Foxeden's assumption of branch operating costs, the expectation of the parties that the relationship would be long-term, and evidence that financial planning can take a long time to convert customer connection into business.

69 In our opinion, focusing only upon the Foxeden matter at this stage, the judge's conclusion should be upheld. To explain that conclusion, we begin with what his Honour did.

70 The issue of reasonable notice - including its duration - was dealt with as part of the trial of liability issues. Those issues, by order, were heard and determined before damages issues were agitated. In the event, although expert evidence might well have been relevant to issues falling for consideration in determination of the length of the notice period, no such evidence was adduced by either party.

71 Next, there was evidence before his Honour as to the genesis of the agreement; the nature of the tasks assumed by Foxeden; the commitments which Foxeden made in order to undertake those tasks; when those commitments were made; and whether any expenditure or effort which was made should be accounted extraordinary. There was also evidence bearing on the time which would reasonably be needed to give some return on investment - bearing in mind the fact that, as the parties knew, the Mildura branch was unprofitable when Foxeden began to conduct it.

72 It appears that his Honour was directed to some relevant authority. So, he noted, correctly, that 'the reasonableness of the period of notice depends upon the circumstances existing when the notice is given',[19] which in the case of Foxeden meant when notice should have been given. Further, his Honour set out this passage from the reasons for judgment of McHugh JA (as his Honour then was) in Crawford Fitting Co & Ors v Sydney Valve and Fittings Pty Ltd & Anor:[20]

The chief purpose of a notice for a reasonable period, therefore, is to enable the parties to bring to an end in an orderly way a relationship which, ex hypothesi, has existed for a reasonable period so that they will have a reasonable opportunity to enter into alternative arrangements and to wind up matters which arise out of their relationship. Matters to be wound up will include carrying out existing commitments, bringing current negotiations to fruition, and, where appropriate, obtaining the fruits of any extraordinary expenditure or effort carried out within the scope of the agreement. The line between ordinary recurrent expenditure and effort and extraordinary expenditure and effort will not always be easy to draw. But in general it will be determined by what the parties would reasonably have contemplated was extraordinary effort or expenditure.

Counsel, in this Court, accepted that the passage was a correct statement of principle.

What then was reasonable notice to terminate the agreement with Foxeden in June 1999? By that time, the agreement had been in existence for just over two years. Under the agreement, Foxeden had agreed to take over an excessive lease payment and to meet substantial other expense. [Counsel for Foxeden] submitted that three years' notice was reasonable. He relied on Mr Hawksworth's evidence that five years was the minimum period of time he would have considered to warrant incurring the burden of operating the branch. In my opinion, despite the heavy initial expenditure which Foxeden committed itself to and the relatively short period which had elapsed since Foxeden commenced operating the Mildura branch, a longer period of notice than I have found the Taylors were entitled to is not required. In all the circumstances, bearing in mind the nature of the relationship between Foxeden and IOOF which was being brought to an end without default on the part of Foxeden, I consider that a period of one year would have been reasonable notice of termination to Foxeden at the end of June 1999.[21]

74 Finally concerning the course of events at trial, we make this observation: it seems that in each case fairly short argument was addressed to the issue now under consideration. Counsel for the respondents appears to have made 'a bid' in each instance; and (at least in the case of the Taylor agreement) counsel for the appellant to some extent demurred.

75 We turn to the function of this Court when considering the attack upon the conclusions reached by the learned trial judge. The issue was addressed by counsel for the respondents, who first of all focused upon the nature of the task engaged in by the trial judge. In that connection he referred to this passage in the reasons for judgment of Hansen J in The Wine Company Pty Ltd v The Wine Company Pty Ltd[22] -

It has been observed time and again that what is a reasonable time is a question of fact. As Brooking J said in Alivar v Calandra & Co Pty Ltd (Unreported, 29 February 1988 at 19) it 'is a matter about which opinions will probably differ substantially ...'.

76 Counsel also referred to a passage in the reasons for judgment of the Full Court of the Federal Court in Energy World Corporation Ltd v Maurice Hayes & Associates Pty Ltd.[23] That case raised, inter alia, a question as to the length of the period of reasonable notice in a contract for the provision of services by an individual who was engaged through a contract made with his corporate alter ego.

77 In Energy World, the trial judge had made a positive finding that Mr Hayes had been equipped with sufficient information to understand that the likely duration of his contract beyond the actual day of termination was not long. The Full Court said that -

The positive finding of the primary judge set out above is persuasive. The determination of a reasonable period of notice is very much a question of fact.

The question of reasonable notice of termination of the 2001 agreement is very much tied up with the nature of that agreement in general which was considered by the primary judge. The factors relied upon by the consultant are amongst the factors which might merit consideration but they are certainly not mandatory.[24]

78 It being clear that the question of length of reasonable notice is a question of fact, upon which minds might substantially differ, we turn to the appellate function.

79 In Crawford Fitting, one party had given the others six months' notice of termination of agreements. It was held at first instance that the reasonable period of notice should have been two years. By a majority, an appeal succeeded. The giving of six months' notice was held to be reasonable.

80 McHugh JA delivered the main judgment for the majority. He concluded that the trial judge had - or may have - reasoned wrongly in principle. But he said that the question remained 'whether six months was sufficient'.[25] His ultimate conclusion was that -

Although the matter [was] near the borderline ... the [appellants] have failed to prove that the notice given by the [respondent] was unreasonable.[26]

That looks like a determination of the issue as on a general appeal, though probably allowing the assessment of the trial judge considerable latitude.

not persuaded that [the trial judge] erred in holding that the appellant was in breach of contract in purporting to terminate upon the expiry of only six months' notice.[27]

His Honour tended, however, to the view that the period of notice fixed by the trial judge was too long. But, his opinion as to the appropriate period being a minority one, there was -

little point in ... fixing on a precise period.[28]

Again, his Honour not having discerned specific error, his apparent willingness to substitute a different period for that fixed by the trial judge suggests reconsideration of a finding of fact in the course of general appellate review.

82 Counsel for the respondents relied upon Macauslane v Fisher & Paykel Finance Pty Ltd,[29] which concerned the term of an employment contract and the fixing of a period of reasonable notice in that connection. The Queensland Court of Appeal seems to have concluded - although the leading judgment, of Holmes J, was not expressed unequivocally - that a decision as to what constitutes reasonable notice involves the exercise of a judicial discretion, which could only be disturbed on appeal by application of the principles enunciated in House v The King.[30]

[Counsel for the employer] argued that what constituted a reasonable period of notice was a question of fact which permitted only one answer, rather than a question of discretion requiring the application of House v The King principles. I have considerable difficulty in accepting that the determination of what is reasonable can be reduced to a calculation admitting of only one correct answer. It seems to me that the exercise is more akin to that which was the subject of appeal in Norbis v Norbis. The trial judge in the Family Court in that case had to determine what was 'just and equitable', taking into account factors prescribed by statute, for the purpose of making an order as to property interests. In the judgment of Mason and Deane JJ in the High Court the order was described as:

' ... discretionary because it depends upon the application of a very general standard - what is "just and equitable" - which calls for an overall assessment in the light of the [relevant statutory] factors ... each of which in turn calls for an assessment of circumstances. Because these assessments call for value judgments in respect of which there is room for reasonable differences of opinion, no particular opinion being uniquely right, the making of the order involves the exercise of a judicial discretion. The contrast is with an order the making of which is dictated by the application of a fixed rule to the facts on which its operation depends.'

Whether one characterises the process undertaken by the trial judge as exercise of discretion or fact-finding, one concludes, inevitably, that there is not a unique correct answer, and that what is reasonable must cover a range of possibilities. A view taken in this court that a finding as to the length of the relevant period, while within the range of what was reasonable, fell towards the side of generosity or, for that matter, of frugality, should not of itself lead to interference with the award:

'if the questions involved lend themselves to differences of opinion which, within a given range, are legitimate and reasonable answers to the questions, it would be wrong to allow a court to appeal to set aside a judgment at the first instance merely because there exists just such a difference of opinion between the judges on appeal and the judge at the first instance [Norbis v Norbis] [1986] HCA 17; (1986) 161 CLR 513 at 518.'

84 White J addressed the point in her concurring judgment. She said -

I agree with [Holmes J] that deciding what constitutes reasonable notice of termination of employment is a question for the exercise of a discretion. As Starke J noted in Opera House Investment Pty Ltd v Devon Buildings Pty Ltd 'Reasonable is a relative term.'

The cases and/or authorities are replete with 'lists' of key considerations from which the court will make the decision. The cases clearly reveal some factors will assume greater significance than others. In selecting and weighing the various circumstances in a wrongful dismissal case a judge is required to do so judicially and a decision arrived at may only be disturbed on appeal by the application of well-established principles.

85 So far as we can see, the approach that the determination of what is reasonable notice involves the exercise of a judicial discretion has been accepted (as it must have been) by a single judge of the Queensland Supreme Court,[32] but has not otherwise been considered by a court of the Commonwealth.

86 We have read, but unrewardingly for present purposes, certain appellate decisions referred to by McHugh JA in Crawford Fittings. Neither Winter Garden Theatre (London) Ltd v Millenium Productions Ltd[33] nor Australian Blue Metal Ltd v Hughes& Ors[34] had cause to address the issue now under consideration.

87 We consider, in the end, that it is unnecessary in this case to resolve the question whether the approach suggested by Macauslane is consistent with the approach implicit in Crawford Fittings - a question pertinent to determining what approach this Court should take. For it seems to us that the likely alternative to the Macauslane approach is to equate a determination of a period of reasonable notice with an assessment of damages in a personal injuries case by a judge sitting alone - as to which see Miller v Jennings,[35] Precision Plastics Pty Ltd v Demir,[36] Gamser v The Nominal Defendant,[37] and Rogers v Nationwide News Pty Ltd.[38]

Where, however, the award is that of the judge alone, the appeal is by way of rehearing on damages as on all other issues, but as there is generally so much room for individual choice so that the assessment of damages is more likely an exercise of discretion than an ordinary act of decision, the appellate court is particularly slow to reverse the trial judge on a question of the amount of damages.

It is difficult to lay down any precise rule which will cover all cases, but a good general guide is given by Greer LJ in Flint v Lovell. In effect the court, before it interferes with an award of damages, should be satisfied that the judge has acted on a wrong principle of law, or has misapprehended the facts, or has for these or other reasons made a wholly erroneous estimate of the damage suffered. It is not enough that there is a balance of opinion or preference. The scale must go down heavily against the figure attacked if the appellate court is to interfere, whether on the ground of excess or insufficiency.

89 That statement closely equated appellate review of an award of personal injuries damages made by a judge sitting alone with appellate review of an exercise of judicial discretion; but in terms did not go quite so far.[39] It is the approach which, assuming the issue to be open, we prefer. Nonetheless, at least ordinarily, and in this case in any event, appellate review of a conclusion as to the reasonable period of notice would seem unlikely to lead to a different result depending upon whether the House v The King test or the assessment of damages test was applied.

90 We cannot conclude that the period of notice which his Honour fixed was definitely erroneous. There is no signpost of specific error. The considerations which his Honour mentioned, relevant as at 30 June 1999, to our mind well justified him fixing the reasonable notice period at 12 months. He could only act upon the evidence which was before him.[40]

91 As we have said earlier, IOOF submitted at trial that the obligation to give notice was satisfied by one or more of: (1) the public announcement made on 3 March 1999 that Bendigo Bank would be taking over the IOOF Building Society branch network; (2) a circular from Bendigo Bank, received by Hawksworth on 20 April 1999, in which the Bank listed the Mildura branch as one which was to be merged with an existing bank branch; (3) advice allegedly given Hawksworth by Bice of Bendigo Bank that the Mildura agency would be closed down.

92 The learned judge dealt with the issue, with respect to Foxeden, by referring to what he had already said about the public announcement and the Bendigo Bank circular in connection with the Taylor matter. He added:

Also, the conversation in which Mr Bice told Mr Hawksworth that 'the Mildura agency would be closed down' was not notice of termination of the agreement, but a statement of intent by Bendigo Bank regarding the future of the Mildura branch.[41]

93 In the passage in his reasons pertaining to Taylor which dealt with the public announcement and the circular, his Honour said:

The defendants then seek to rely on either the public announcement of the sale of IOOF to Bendigo Bank made on 3 March 1999, or on a circular dated 20 April 1999 sent by the Bendigo Bank to all IOOF staff which they allege the Taylors received on or about 22 April 1999. I consider that neither of these documents could constitute valid notice of termination. General announcements to the world at large do not satisfy the requirement to notify the other party to the contract of its termination. Further, there was no necessary reason for the sale to Bendigo Bank to cause the agreement with the Taylors to be terminated. Thus, whilst the media release announcing the sale on 3 March 1999 stated 'that it is expected that the IOOF branch network will be converted to Bendigo Bank branches in July 1999', this did not necessarily mean that the agreement with the Taylors could not continue in some form or other with the Taylors running the Bendigo Bank branch in Frankston as a franchise operation. The same reasoning applies to the information conveyed by the 20 April circular. ... Finally, although the documents relied on by the defendants were in writing, neither was notice from IOOF of its intention to terminate the agreement.[42]

I therefore consider that IOOF has not been able to show that it gave valid notice of termination in accordance with the requirements of clause VI(a) of the Agency Agreement, even if that clause were applicable. ... In my opinion, all of the reasons for each of the alleged notices of termination not being valid are equally applicable to a requirement to give reasonable notice, with the possible exception that the notice be in writing. However, I see no reason why the same formality should not be required in the case of the implied term as was contained in the express term.[43]

95 We conclude[44] that in the case of the Taylor agreement it was not a question of implying a term as to notice. Nonetheless, the conclusion which we last cited could be applied to the Foxeden situation.

96 In this Court, counsel for IOOF submitted that the judge had erred in concluding that the public announcement and the circular were not notice of termination because the information which they conveyed was given to the world at large and because they did not necessarily imply that the agency would be terminated. According to the submission, the former was not a proper basis for rejecting the notice, whilst the latter was contradicted by the facts - as was demonstrated by Hawksworth seeking legal advice. Then, as to what Bice told Hawksworth on 12 May 1999, 'there could be no conclusion other than that the agreement between IOOF and Foxeden was terminated'.

97 For Foxeden, counsel submitted that the learned trial judge's reasons were sound. The public announcement was just that - an announcement to the world at large. It made no mention of Foxeden. The prospective sale did not necessarily mean that the agreement with Foxeden would be terminated. The circular carried the situation no further. The statement by Bice was oral, not in writing. It was, as the judge said, a statement of intention. Bice was not shown to have had authority to bind IOOF. The solicitors' letter did not show that Foxeden accepted that it had been given notice of termination.

98 In our opinion, the learned judge was correct in holding that none of the three communications relied upon by IOOF constituted notice of termination.

99 The public announcement, headed 'Media Release', took the form of an extended advertisement of the merits of IOOF and Bendigo Bank, and of the desirability of their 'working alliance', which was said to involve the sale of IOOF's 'Building Society for $20 million cash plus 3.7 million ordinary shares in Bendigo Bank'.[45] It is noted that 'the two companies will now proceed to formal contracts and will seek appropriate regulatory approvals as soon as possible.' So hurdles had to be jumped before the agreement, however it might affect Foxeden, was consummated. Continuing in that vein, the release said that it was 'expected that the IOOF branch network will be converted to Bendigo Bank branches in July 1999'. But what that expectation might mean to Foxeden was left undescribed.

100 The circular was not sent to Foxeden. It was described as an 'Open memo to all IOOF Building Society Branch Staff'. It was concerned with the 'employment prospects' for IOOF staff with the Bendigo Bank. It stated, in that context, that a number of branches, including Mildura, would be 'merged into the existing Bendigo Bank branches'. It stated also that 'all these relocations or rebrandings will be effected from June when we convert IOOF accounts to Bendigo'. It concluded by telling staff that ' we will keep you informed as more information comes to hand'.

101 By no stretch of the imagination, in our view, did this constitute notice of termination of the agreement between IOOF and Foxeden. It was not addressed to Foxeden. It apparent purpose was to relieve staff concerns. It said nothing about implications of the 'merger' of branches for the Foxeden agreement.

102 The solicitors' letter of 3 May 1999[46] sent on behalf of Foxeden and the Taylors expressed the uncertainty which had been created. Thus:

We are instructed that certain arrangements have been entered into by IOOF with Bendigo Bank in circumstances which may suggest that our clients' entitlements in relation to their franchises may be affected.

We further understand that at some time, still to be determined and advised to our clients, the goodwill in the IOOF Building Society franchises at Frankston and Mildura is intended to be transferred and re-identified in the name of Bendigo Bank.

You will appreciate that these matters, without full and complete consultation with our clients, would cause them considerable concern and despite ongoing dialogue and enquiry to date no formal advice, time table or details of what is intended to take place taking into account our clients' rights and entitlements has been provided.

Our clients wish us to formally request of you a detailed explanation of what is intended to occur in relation to our clients' franchises and the time table for same so that full, proper and reasonable negotiations in relation to our clients' rights and entitlements can be undertaken for the benefit of all parties.- all parties

103 We mention finally Bice's conversation with Hawksworth in early May 1999. It was not notice of termination of the agreement; it was not notice given by IOOF; it was not shown to have been made by a person authorised by IOOF; and it was not notice in writing.

104 In the event, the learned judge was correct, in our respectful opinion, to hold that IOOF breached its agreement with Foxeden on 30 June 1999 by repudiating the agreement without having given Foxeden any notice of termination.

105 Before referring to the reasoning by which the judge found the estoppel, and the submissions to this Court, it is necessary to refer to the pleadings on the point.

106 The statement of claim alleged that, in about February 1996, the Taylors and IOOF agreed on the Taylors taking over the conduct of the Frankston branch. A raft of terms were alleged, one of which was that IOOF would not terminate or in any way modify the rights of the Taylors under the agreement without the Taylors' consent or without reasonable notice to them. For present purposes it is not necessary to refer to the other terms. It was then alleged that on about 4 March 1996 the Taylors began operating the business. It was alleged that in about September 1996 the agreement was varied in respect of certain matters. Then, by paragraph 10, it was alleged that on about 24 March 1997:

... the Taylors and IOOF, in consideration of formalising the arrangements between the parties for the performance of the Agency Functions and providing further incentives for the growth of the Business to the mutual benefit of the Taylors and IOOF, entered into a further agreement ('the Agency Agreement') as follows:

(a) except where expressly inconsistent with the terms set out below the terms of the Agreement as varied by the Variation continued to operate;

...

(h) the terms of the Agency Agreement could be terminated by either party on the giving of no less than sixty days' written notice to the other party;

(i) the Agency Agreement would be a forerunner to a 'Franchise Agreement' between IOOF and the Taylors on terms which would contain at least the same benefits to the Taylors as the Agency Agreement.

10A The Taylors entered into the Agency Agreement relying upon representations made by Mr Wood on behalf of IOOF that:

(a) it was only an interim agreement until the Franchise Agreement was documented;

(b) the Franchise Agreement was in the course of preparation by IOOF;

(c) the terms of the Agreement would be the subject of the Franchise Agreement; and

(d) IOOF would negotiate the terms in Clause VI(a), including as to the period of notice and that a period of 12 months and 60 days was not unreasonable.

[Particulars were provided].

10B As a result, IOOF is estopped from seeking to rely upon or enforcing the agency Agreement and in particular Clause VI(a) thereof.

108 It was then alleged, by paragraph 11, that by its 13 August 1998 letter IOOF gave the Taylors 60 days' notice of termination of the agency agreement; and, by paragraph 12, that the parties agreed to extend the date of termination indefinitely. From this point the statement of claim referred to subsequent events and alleged breach of the agreement (being the initial agreement as varied and the March 1997 agency agreement), and that loss and damage had been suffered.

109 By their defence the defendants, in summary, admitted the existence of 'an' (initial) agreement but differed as to the terms; admitted that the agreement was varied but did not admit all of the allegations made by Taylor in that connection; admitted that on 24 March 1997 the varied agreement as specified in the defence was 'wholly replaced by an agency agreement', the terms of which were contained in the written agreement of that date; and denied the allegations in paragraph 10(a) of the statement of claim. As to the plea of estoppel in paragraphs 10A and 10B, the defence simply denied the allegations.

110 It was in the context of these pleadings, and the circumstances to which we have earlier referred, that the judge concluded that IOOF was estopped from relying on cl VI(a). It is now convenient to refer to the reasoning by which he reached that conclusion.

111 Following the passage in his judgment cited at [38] above, the judge considered and rejected the defendants' submission that the March 1997 agency agreement was 'whole and complete' and represented the full extent of the agreement between the parties a[47]that date.47 The submission, he concluded, ignored the fact that at the time of signing the agreement the parties recognised that important matters remained to be agreed and that a formal franchise agreement setting out the full extent of their agreement was to be prepared as soon as possible.

112 The judge then considered the Taylors' submission that IOOF was estopped from relying upon or enforcing cl VI(a) of the agency agreement.

[291] ... Mr Taylor only reluctantly agreed to accept clVI(a) to remain in the document to be signed, expressly relying on Mr Wood's stated 'agreement or commitment to negotiate' this matter which he agreed was 'too short' from 'both parties viewpoint' and his oral indication, according to Mr Taylor's account of the conversation, that he considered a period of 12 months and 60 days was 'not unreasonable'. In the course of the same negotiations, Mr Wood also represented that the signed document would only be an interim agreement until the comprehensive franchise agreement was drafted. [Counsel for the Taylors] submitted that, as the Taylors relied on these representations to their detriment, IOOF was estopped from relying upon or enforcing clVI(a) of the Agency Agreement.

[292] In my opinion, the Taylors did suffer detriment by signing the Agency Agreement on 24 March 1997.

114 The judge then explained the way in which the Taylors had suffered detriment. If cl VI(a) had not been a term of the agreement, there would have been no express agreement on duration of the relationship or whether it could be terminated and with what period of notice. The submission for Taylor had been that in that situation their right was unlimited as to time, whilst the defendants had submitted that the agreement could have been terminated at will. Referring to the judgment of McHugh JA in Crawford Fitting Co v Sydney Valve and Fittings Pty Ltd,[48] the judge considered that the parties intended the agreement to be terminable on notice, and not that it be unlimited as to time or terminable at will. Hence, in the circumstances and given the nature of the relationship between the parties:

[293] ... there was an implied term that the agreement could be terminated on reasonable notice ... Thus by signing the Agency Agreement in reliance on the promise to negotiate a longer period of notice, the Taylors substituted a period of 60 days' notice for a period of reasonable notice. It is most unlikely, in my opinion, that reasonable notice would have been 60 days or less.

115 Having thus identified the detriment suffered by the Taylors in entering into the March 1997 agreement, the judge continued:

[294] It is unnecessary to consider whether Mr Wood's failure to produce a draft of the formal Franchise Agreement or to negotiate an extension of the 60 day period of notice within a short space of time after March 1997 or at all before his departure in August 1997, would have given rise to an estoppel. This is because I am quite satisfied that there was a change of policy within IOOF at some time in 1998, probably in about August, and that it was decided that, whatever Mr Wood had said or promised, the Building Society would not be proceeding with what had become known as the 'franchise agreement' with the Taylors.

[295] Whether or not the relationship between the Taylors and IOOF is correctly described as a franchise is not strictly relevant. What is important is what was actually agreed between the parties, whatever label is given to the relationship. However, what the detailed examinations of the dealings between the Taylors and the Building Society and the internal discussions within the IOOF Group show is that the relationship was seen as something more than a mere agency and that over time it came to be described as 'a franchise'.

[296] It is clear from the exchange of correspondence in 1998 between Mr Taylor and Ms Pearce that IOOF had changed its policy towards the Taylors. Indeed, in an uncharacteristically frank statement, Ms Pearce summed up the new approach when she said in her letter of 1 December 1998 that IOOF had said it would enter into a franchise agreement but that it was no longer proceeding down that route and it wanted to enter into a new agency agreement with all of its agents. This last statement was a reference to the draft Agency Agreement sent to the Taylors by Ms Sugimoto on 13 August 1998. Ms Pearce said that she was told of this change of policy by either Mr Regan or Mr Turner.

[297] [Counsel for the defendants] argued that the sending of the draft Agency Agreement in August 1998 was the taking of the step promised by Mr Wood. I do not agree. Not only does the document not contain any provisions dealing with 'franchise' matters such as exclusive access to customers and customer lists, it also can not constitute a genuine attempt to renegotiate the 'too short' period of 60 days' notice because it simply repeats that provision. More importantly, the sending of the draft Agency Agreement was not, I find, an attempt by IOOF to meet the promise made by Mr Wood. Rather, it was done as part of the implementation of the new IOOF policy to renege on the idea of entering into franchise agreements and to put all agents (whether or not they were previously considered franchisees) on the same basis. Further, as [counsel for the defendants] fairly pointed out, the commission structure in the draft Agency Agreement bore no resemblance to that actually agreed with the Taylors. On no view, therefore, could the sending of that document be seen as a start of the promised negotiation of the final form of the comprehensive franchise agreement.

116 Counsel for IOOF submitted that, rather than find an estoppel as he did, the judge should have found that:

(a) the Taylors assumed that at some future time after March 1997 they and IOOF would negotiate a new or varied agreement, and would negotiate for a longer period of notice;

(b) until such negotiation occurred and produced a different agreement, the existing Agency Agreement was binding and it was not unconscionable to enforce it or any part of it, including terminating the agreement pursuant to cl VI(a);

(c) the outcome of any such negotiation was wholly speculative and dependent upon the prevailing circumstances at the time of such negotiation;

(d) there was no evidence upon which it could be concluded that the failure to negotiate a further agreement or longer notice period by August 1998 was due to any unconscionable conduct on the part of IOOF;

(e) the Taylors expected the issue of notice to be dealt with by contract and it was inappropriate in that circumstance to apply an estoppel at all;

(f) alternatively, an estoppel that prevented reliance upon the express contractual term, and substituting 'reasonable notice', was not justified as a means of meeting whatever the equity was that arose - because of the speculative nature of the promise and the time that elapsed there was no justification in constraining the operation of the written contract at all.

117 On behalf of Taylor it was submitted, in essence, that the conclusion of estoppel was correct because it was unconscionable for IOOF to depart from the assumption induced by Wood in the Taylors, and relied on by them in signing the agreement, that the notice period 'would be renegotiated and extended and that the 60 day period would not be enforced. Mr Taylor relied on such assumption by entering into the agreement. Any subsequent attempt by IOOF to renege on the assumption it had induced would amount to unconscionable conduct'. An alternative basis for the like conclusion was that the 21 March 1997 memorandum 'gave rise to an implied representation that IOOF would not rely upon' cl VI(a). This alternate submission was founded on evidence of Mr Taylor that he regarded IOOF as precluded from enforcing the 60 day term, as the agreement 'was just a forerunner to a full franchise agreement'. The submission cannot stand in light of the judge's findings referred to at [38] above.

118 As articulately as they were expressed in writing, and presented orally, IOOF's submissions founder on the rocks of the communications between the parties in March 1997 and the facts found by the judge, which properly base the finding of an estoppel precluding reliance on cl VI(a). It is necessary to refer to principle and then to examine the reasons for judgment before explaining why that is so.

119 In Thompson v Palmer[49] Dixon J said that:

The object of estoppel in pais is to prevent an unjust departure by one person from an assumption adopted by another as the basis of some act or omission which, unless the assumption be adhered to, would operate to that other's detriment. Whether a departure by a party from the assumption should be considered unjust and inadmissible depends on the part taken by him in occasioning its adoption by the other party. He may be required to abide by the assumption because it formed a conventional basis upon which the parties entered into contractual or other mutual relations ... or because he directly made representations upon which the other party founded the assumption. But, in each case, he is not bound to adhere to the assumption unless, as a result of adopting it as the basis of action or inaction, the other party will have placed himself in a position of material disadvantage if departure from the assumption be permitted.

120 In Grundt v Great Boulder Pty Gold Mines Ltd[50] Dixon J emphasised the 'indispensable' condition of the suffering of detriment. The condition is:

That the other must have so acted or abstained from acting upon the footing of the state of affairs assumed that he would suffer a detriment if the opposite party were afterwards allowed to set up rights against him inconsistent with the assumption. In stating this essential condition, particularly where the estoppel flows from representation, it is often said simply that the party asserting the estoppel must have been induced to act to his detriment.

Dixon J proceeded to explain that detriment for this purpose meant the harm that 'would flow from the change of position if the assumption were deserted that led to it'. The fact of entry into a contractual or other relationship, on an assumption induced by, for instance, a representation, does not constitute detriment for this purpose. For, as Dixon J said, 'So long as the assumption is adhered to, the party who altered his situation upon the faith of it cannot complain'. It is only when and if the opposite party acts in denial of the assumption, in the way and with the effect described by Dixon J, that detriment can be found in the original entry into the relationship.

121 Different types of estoppel were developed by the courts of common law and equity, that referred to by Dixon J in Thompson being estoppel by conduct at common law. In The Commonwealth of Australia v Verwayen[51] Dawson J observed that the description of estoppel by conduct given by Dixon J in Thompson and Grundt was equally applicable to common law estoppel and equitable estoppel. Sometimes that which founded the assumption was a representation of present fact but at other times it might be of future acts or matters and be promissory in that respect. In relation to promissory representations inducing the adoption of an assumption, equity developed promissory estoppel, the extent of the application of which in relation to non-contractual voluntary promises was settled in Waltons Stores (Interstate) Ltd v Maher.[52] The difficulty in the enforcement of such a promise by way of estoppel had lain in the refusal of the common law to enforce a promise unsupported by consideration, and the consideration that a promissee may reasonably be expected to appreciate that, even if acted upon, to render it binding such a promise must form part of a binding contract or contractual variation.[53] The resolution of the difficulty was found in a requirement that the conduct constituting departure from the assumption adopted by the other party was unconscionable or unconscientious. Indeed Waltons Stores decided that the presence of such conduct was required to found an equitable or promissory estoppel. Such an estoppel can be met by relief appropriate to meet the detriment suffered by reliance on the promise or other inducing act of the opposite party. In Verwayen Brennan J referred to this as the minimum equity to do justice.[54]

122 It is important to pause here and refer back to the way in which the estoppel was pleaded in paragraphs 10-10B of the statement of claim. The estoppel was alleged to arise as a result of the Taylors entering into the March agency agreement relying upon the representations alleged in paragraph 10A. To so allege, and to allege nothing as to the subsequent conduct of IOOF, was to fall into the error of which Dixon J warned. No detriment in the sense required as a condition of founding an estoppel could arise simply by reason of the entry into the March agency agreement. Detriment in the required sense arose only when, if at all, IOOF acted on a basis contrary to an assumption adopted by the Taylors in entering into the agreement, departure from which by IOOF would be unjust or unconscientious. The pleading was thus incomplete. What was omitted were the material facts relied on by the Taylors as evidencing the departure by IOOF from the basis of acting induced in the Taylors by the representations alleged in paragraph 10A, and the consequent suffering of detriment if IOOF be permitted to so act.

123 It was doubtless these inadequacies in the pleading that led the judge to deal with the issue of detriment as he did. That was to confine consideration of the issue of detriment to the point of entry into the March agency agreement. It may be accepted as correct that in a contractual relationship such as that between Taylor and IOOF, in the absence of an express term as to duration and termination of the relationship a court would imply a term that termination be on a reasonable period of notice.[55] But that was not the point. When Taylor entered into the March agency agreement, it lost the opportunity to negotiate on the terms of the period of notice of termination. It is not known what the precise result of such a negotiation might have been. It is however clear that, consistently with the commitment of the parties to that end, there would have been agreement on some different and greater period of notice. But because cl VI(a) was part of the agreement as an express term, detriment was not to be found by resort to the principles on which the common law would imply a term of reasonable notice. What was necessary to establish an estoppel was a finding that, subsequent to entry into the March agency agreement, IOOF unjustly departed from an assumption induced by it and adopted by the Taylors in entering into the agreement, in which circumstances the Taylors would suffer detriment if held to their agreement, in particular cl VI(a) thereof. But his Honour did not analyse the matter in that way.

124 Having concluded that the detriment was as he identified it, the judge went on to describe the way in which IOOF had acted subsequent to entry into the March agency agreement. As evidenced by its letter of 13 August 1998 and its subsequent conduct, it had a change of heart as to a franchise agreement and never undertook 'the promised negotiation of the final form of the comprehensive franchise agreement' - which would, of course, have included negotiation as to the period of notice of termination.

125 His Honour concluded with a reference to making good 'the assumption on which the estoppel is based'. He did not identify precisely what that assumption was. On one view of the pleading and the discussion, it was the assumption that there would be agreement on a comprehensive franchise agreement. But it could have been an assumption that there would be negotiation for such an agreement. More narrowly, but consistently with paragraph 10A(d) of the statement of claim, it might have been an assumption that IOOF would not enforce cl VI(a) without first undertaking a negotiation of the terms thereof, including in particular the period of notice of termination. His Honour's want of precision might well be attributable, as we have said, to the inadequacy of the pleading. But however that may be, there was imprecision as to the actual act or acts of IOOF that relevantly constituted the denial of an assumption adopted by the Taylors in entering into the March agency agreement, which denial produced detriment by reason of their having entered into that agreement.

126 The representations pleaded in paragraph 10A of the statement of claim were a mixture of present fact and future conduct. That sounding in the future was the pleading that IOOF would negotiate the terms in cl VI(a), including as to the period of notice, and that a period of 12 months and 60 days was not unreasonable. It is that representation, as to a negotiation to occur after entry into the March agency agreement, which lies at the heart of the Taylor case. For it was that representation, combined with IOOF seeking to enforce cl VI(a) according to its terms without any prior attempt to re-negotiate the termination period, which Taylor contended in this Court gave rise to an estoppel barring IOOF from relying on cl VI(a) according to its terms.

127 In essence, IOOF represented to the Taylors that if they signed the March agency agreement IOOF would subsequently negotiate the period of termination in cl VI(a), having acknowledged that the period of 60 days was too short from both parties' point of view. Furthermore, Wood had conceded that a period of 12 months and 60 days was not unreasonable.

128 The commitment to such negotiation was promissory in nature. This led counsel for IOOF to submit that the Taylors should be confined to their rights in contract - which would exclude any role for equitable or promissory estoppel. The submission treated IOOF's representation as a voluntary promise, unenforceable as a contract because of a lack of consideration and of such a nature as generally not to be enforceable by way of estoppel. Counsel referred in this regard to the discussion in Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd[56] and Waltons Stores.[57] In particular counsel relied on a passage in the joint judgment of Mason CJ and Wilson J in Waltons Stores, where their Honours referred[58] to the judgment of Robert Goff J in Texas Bank and to his Lordship having observed as to instances of common law or conventional estoppel that:

Such cases are very different from, e.g., a mere promise by a party to make a gift or to increase his obligations under an existing contract; such promise will not generally give rise to an estoppel, even if acted on by the promissee, for the promisee may reasonably be expected to appreciate that, to render it binding, it must be incorporated in a binding contract or contractual variation, and that he cannot therefore safely rely upon it as a legally binding promise without first taking the necessary contractual steps.

129 IOOF's counsel submitted that this approach was appropriate in the present case. Whilst IOOF had committed to negotiate for a longer period of notice of termination, pending that negotiation cl VI(a) was binding according to its terms. The outcome of a negotiation was speculative and dependent upon the circumstances and the views of the parties at the time of negotiation. In these circumstances the Taylors should be taken as expecting that the issue of notice would be dealt with by contract in order to render it binding. No contract having been made, it was inappropriate to enforce the voluntary promise by estoppel.

130 It is axiomatic, but no answer, that the negotiation was to produce a different and longer period of notice of termination. The Taylors, however, only entered into the March agreement on the faith of the concession that the period in cl VI(a) was not appropriate from either party's point of view, and on the faith of IOOF's representation or promise to renegotiate a longer period. It is true that this would require cl VI(a) to be there in the meantime, which would carry the consequence of it being enforceable in theory. But to so induce the Taylors' signature to the agreement, and then to seek to rely on cl VI(a) without any bona fide attempt to negotiate cl VI(a), constituted a negation of the basis on which the Taylors entered into the agreement. Doubtless the Taylors, and IOOF, expected the negotiated cl VI(a) to take its place in the parties' written agreement. But that expectation was premised on IOOF doing what it said it would do. In the event, however, IOOF acted to the contrary of its promise. It gave with one hand and took away with the other, without even a pretence of doing that which it had promised. IOOF's conduct in this regard was a singular illustration of that which may lead equity to enforce a voluntary promise, namely, the representor acting in denial of an assumption induced by it, in circumstances in which the conduct constituting the departure from and the denial of that assumption is unconscionable. It is the presence of this element that resolves the tension between the traditional refusal to enforce a voluntary promise and relief in equity by way of estoppel founded on departure from the promise. The present is a clear case for the invocation of the equitable principle.

131 These reasons are a sufficient answer to IOOF's submission that there was no evidence on which to conclude that the failure to negotiate a longer notice period by August 1998 was due to any unconscionable conduct of IOOF. But it may further be observed that the facts found by the judge disclose that overall, not merely with respect to negotiation of the period of termination, IOOF 'reneged' on its position with the Taylors. Of course a party to a contract can seek to change its position but there was more to this case than that. The case concerns a party which, having led its opposite contracting party into a new agreement on the faith of an assumption as to a negotiation on cl VI(a), reneged on that assumption and sought to enforce the very provision that was to be re-negotiated. For their part the Taylors were entitled to expect that IOOF would not enforce cl VI(a) without first bona fide honouring its commitment to negotiate. Furthermore, nothing in the conduct of the Taylors could have warranted IOOF in acting as it did.

132 The above analysis, it will be apparent, relies upon circumstances not pleaded in support of the alleged estoppel; and circumstances not relied upon by the learned judge to constitute detriment to Taylor related to unconscionable conduct by IOOF. On the other hand, his Honour heard evidence and made findings about the conduct and motivation of the Taylors and IOOF which provide an ample basis for our analysis of the situation.

133 Counsel for IOOF argued that Taylor should not be able to rely upon such analysis, the matter not having been pleaded in that way. But counsel was unable to show any reason why the matter should not be considered on the basis of the evidence adduced at trial, evidence which the learned judge considered and about which he reached conclusions. It was not demonstrated that the course of evidence would have been any different had the matter been differently pleaded, and counsel was able to address the issue fully in this Court.

134 For these reasons, in our view, the judge was correct to conclude that IOOF was estopped from relying upon or enforcing the provision in cl VI(a) allowing termination without cause on 60 days' notice in writing. Having so concluded it was then necessary to consider the matter of relief. Put shortly, what relief was appropriate to satisfy the equity? As to this, the judge concluded[59] that to make good the assumption on which the estoppel was based, the matter should proceed on the footing that there was an implied term that the agreement could be terminated without cause on reasonable notice. The judge's summary of this conclusion[60] makes clear that his finding was that the right to terminate 'became a term of the agreement'.

135 In truth, the matter was to be resolved by determining the relief appropriate to satisfy the equity. This was not to be achieved by the imposition of an implied term on the common law approach. For one thing, the contract contained an express term to the contrary. Rather, whilst the common law approach would provide guidance as to the purpose and content of an implied term relating to notice of termination, equitable relief was to be determined upon a consideration of all of the relevant circumstances, so as to arrive at the position appropriate to cater for the detriment which would otherwise be suffered by the Taylors.

136 In determining the appropriate relief, consideration should first be given to deciding what the period of notice of termination ought to have been in all the circumstances - for that was to be the subject-matter of the promised negotiation. Second, having decided what the period of notice ought to have been, that should be compared to the period of notice actually given. Third, to the extent that the period of notice actually given was inadequate, compensation ought be assessed so as to remedy any detriment suffered thereby. In assessing compensation, assistance would be provided by the approach of the common law to the assessment of damages for breach of a contractual term requiring a period of notice of termination of engagement.[61]

137 It is plain that the Taylor agreement should not be approached as if it was terminable at will. Nor in light of the circumstances is a period of 60 days (or near thereto) to be regarded as a period of notice sufficient to cater for the Taylors' detriment. In that respect, Wood's written and oral concessions as to the inappropriateness of the period of 60 days are properly to be considered, as they were material inducements to the Taylors in entering into the March agency agreement and their denial feeds the detriment. At the same time equity will have regard to all the circumstances and not necessarily be limited by Wood's statements. Nor will it seek to do more than impose by relief that which is necessary to satisfy the equity. Bearing in mind the position of the parties in the overall circumstances, we consider that a period of notice of 12 months was reasonable and appropriate. That is the period the judge determined upon, although he did so on the different basis of an implied term.

138 In arriving at that conclusion we have taken into account, as a partial but incomplete guide, the kind of considerations which inform determination of a period of reasonable notice in the common law context. We set them out earlier in connection with the Foxeden matter.

139 We also consider, although the analogy is incomplete, that the way in which the common law approaches challenge to determination of a period of reasonable notice should not be entirely ignored simply because the question is the relief which equity requires. For the same reason, it is relevant to consider what period of notice, if any, was actually given. For in the end, in the present case, equity required assessment of compensation by reference to a period of reasonable notice; and so the length of that period, and what notice (if any) was in fact given are pertinent matters. His Honour dealt with each of those matters. As to the first, he made an assessment on an erroneous juristic basis. But that is not to say that his assessment should be readily disregarded. Indeed, counsel for IOOF approached both the Foxeden and Taylor matters in the same way, submitting simply that 12 months notice was 'outside the range'.

140 As with Foxeden, the judge had before him evidence as to the genesis of the Taylor agreement; the nature of the tasks undertaken by the Taylors; the financial commitments which they made; when they made those commitments; whether any expenditure or effort which they made should be accounted extraordinary; and the time which would reasonably be needed to get a return on investment in a business which was unprofitable when the Taylors took over the agency.

There was no evidence of any 'extraordinary expenditure or effort' by the Taylors which would be relevant to this question.

I do not consider that the answer to this question is necessarily found in the discussion between Mr Taylor and Mr Wood in March 1997 about what period of notice should be included in the formal franchise agreement. Obviously Mr Taylor wanted 14 months and Mr Wood had expressed the view that this was 'not unreasonable'. If the matter had been the subject of further negotiations, I very much doubt whether the parties would have agreed to 14 months. I consider Mr Wood would have negotiated a shorter period. In any event, what was reasonable in March 1997 is not necessarily the same in June 1999.

[Counsel for the Taylors] submitted that two years' notice was reasonable bearing in mind that five years would have been an appropriate minimum term and three years had already run by June 1999. (In fact, the agreement had been in existence for three years and four months.) On the other hand, [counsel for IOOF] made the point that there was a risk of the agent/franchisee being inconvenienced or worse if the period of notice required from either party was too long. In all the circumstances, bearing in mind the nature of the relationship between the Taylors and IOOF which was being brought to an end without default on the part of the Taylors, I consider that a period of one year would have been reasonable notice of termination to the Taylors at the end of June 1999.[62]

142 Again, as with Foxeden, counsel for IOOF complained of no specific error. His submission was simply that a year's notice was 'outside the range'.

143 The learned trial judge noted the submission for Taylor that -

Two years' notice was reasonable bearing in mind that five years would have been an appropriate minimum term and that three years had run by June 1999.

But his Honour's determination of the notice period was founded on -

all the circumstances, bearing in mind the nature of the relationship which was being brought to an end without default on the part of the Taylors.

144 Had his Honour relied upon what would have been an 'appropriate minimum term' of the agreement to fix the period of notice, then it is at least arguable that he would have taken an irrelevant consideration into account. But his Honour did not do so, and counsel for IOOF was correct not to so submit.

145 Thus, in the end, and as we said earlier, we consider that IOOF failed in its challenge to the period of notice which (albeit on a false basis) the learned judge held was appropriate.

146 That takes us to the question whether, as IOOF contended, Taylor was given notice of termination. The learned judge first rejected a submission of IOOF that it had validly terminated the agreement by any one of a number of documents or by a conversation upon which it relied. He further found that in any event there was no evidence that one of the communications relied upon by IOOF had received by Taylor. Again, he concluded, even if cl VI(a) was applicable, that provision required notice of determination to be in writing, and no such written notice had been given.

147 In this Court, counsel for IOOF accepted that the 13 August 1998 letter, because it offered a new contract, was not intended to terminate the relationship between his client and Taylor completely; and, in any event, Taylor did not accept the new agreement. Nonetheless, he argued, the date for termination had not been extended indefinitely by agreement, and the judge had erred in concluding, because Taylor continued to operate the Frankston branch for five months after January 1999, that the notice had simply lapsed.

148 Counsel further challenged the conclusions of the learned trial judge that the media release of 3 March 1999 did not constitute notice of termination. He made the same submissions as in the case of Foxeden.

149 Counsel also relied upon the conversation between Bice and Taylor on 5 May 1999. He argued that it was notice of termination, and that there was no reason why the formality of writing should have been required in the case of an implied term.

150 These submissions all proceeded upon the basis that cl VI(a) was a term of the Taylor agreement. It was not, and for the reasons which we have explained no term as to notice was to be implied. Rather, in determining the equity required to redress the Taylor detriment, it becomes relevant to consider what length of notice of termination would have been appropriate. In that context, it is relevant whether notice was given in fact.

151 In our opinion, the learned judge was correct to conclude that no notice was given. In the case of the 13 August 1998 letter, we adopt his Honour's reasons. In respect of the circular of 3 March 1999, we refer to and adopt what we earlier said in connection with Foxeden. Further, what we said about the conversation between Bice and Hawksworth applies equally to the conversation between Bice and Taylor.

152 It follows that, as at 30 June 1999, IOOF had not given notice of termination to Taylor.

153 According to the findings of the learned trial judge, Foxeden was entitled to damages for breach of contract. We agree that such was the case.

154 Having delivered his reasons in respect of the liability issues in both the Foxeden and Taylor matters, his Honour heard further evidence. He later held, as we have noted, that Foxeden should recover $435,747 plus statutory interest of $295,410.

155 There were two components to damages as assessed:

(1) Loss of building society commissions which would have been received in the one year's period of notice: $98,915.

(2) Loss of the chance of earning financial planning income over time: $385,320.

Allowing for some savings of expenses, these sums combined to produce $427,985. This was a greater amount than that calculated by the judge on another basis - viz: the lost opportunity to negotiate commission for agreeing to waive the period of notice. His Honour assessed damages on the latter approach at $400,000.

156 The damages assessed by his Honour were very much less than Foxeden had claimed by its statement of claim dated 4 August 2000, its further amended statement of claim dated 4 April 2002, a statement of loss and damage dated 8 December 2003, a further amended statement of loss and damage dated 11 August 2004 and a final further amended statement of loss and damage dated 21 October 2004. Indeed, amendment of the claim did not even stop there. Application was made to amend, and granted in part, after the evidence had been taken and final written submissions had been exchanged.

157 In the event, as the learned judge understandably said, assessment of damages was an 'extremely complicated exercise, not the least for the reason that the plaintiff(s) have frequently changed the ways in which their claims were put'. That very considerable difficulty recognised, in the end his Honour was able to put aside the flummery and concentrate on the key issues. They were reflected in his reasons for judgment.

158 IOOF's appeal against the judgment raised six broad issues. But only three of them were ultimately pursued:

(1) The damage claimed for loss of financial planning income was too remote.

(2) The evidence did not support the ingredients used in the calculations.

(3) Damages should not have been awarded for the lost chance to negotiate compensation - at all, or at least in the sum assessed.

The third issue challenged an alternative basis upon which his Honour assessed damages.

159 On the hearing of the appeal, only the first and second issues were fully pursued. The third was pursued only in respect of the sum assessed.

160 Before addressing the individual grounds of appeal, we should refer to his Honour's statement of the principles informing assessment of damages in a breach of contract case.

It seems to me that the following statements of legal principle are applicable to the task of assessing the damages to be awarded to Foxeden and the Taylors:

(a) '... where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed' (per Parke B in Robinson v Harman);

(b) '... the plaintiff is entitled to recover such damages as arise naturally, that is, according to the usual course of things, from the breach, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach' (per Mason CJ and Dawson J in The Commonwealth v Amann Aviation Pty Ltd restating Alderson B's 'renowned formulation' in Hadley v Baxendale);

(c) 'The award of damages for breaches of contract protects a plaintiff's expectation of receiving the defendant's performance' (per Mason CJ and Dawson J in Amann);

(d) '... a plaintiff is not entitled, by the award of damages upon breach, to be placed in a superior position to that which he or she would have been in had the contract been performed' (per Mason CJ and Dawson J in Amann) and '... the parties to the contract are kept to the benefits and the burdens of the contract they have made: the plaintiff recovers no more than the net benefit he would have received under the contract; the defendant acquires no right to profit by his breach' (per Brennan J in Amann);

(e) 'If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring. The probability may be very high - 99.9% - or very low - 0.1%. But unless the chance is so low as to be regarded as speculative - say less than 1% - or so high as to be practically certain - say over 99% - the court will take that chance into account in assessing the damages. Where proof is necessarily unattainable, it would be unfair to treat as certain a prediction which has a 51% probability of occurring, but to ignore altogether a prediction which has a 49% probability of occurring. Thus, the court assesses the degree of probability that an event would have occurred, or might occur, and adjusts its award of damages to reflect the degree of probability' (per Deane, Gaudron and McHugh JJ in );

161 His Honour observed that those statements of principle applied equally to the Foxeden and Taylor claims. As the case was conducted at trial and on the appeal, this was so. It was not contended by either party that some different approach should be taken in assessing compensation in the Taylor claim. We consider that the matter should be dealt with on that footing. There is no occasion to embark upon an excursus, uninformed by argument, whether some different approach ought inform assessment of the Taylor compensation.

162 Ground 19 of the Notice of Appeal reads as follows:

The trial judge erred in not finding that the loss of the chance to earn financial planning income through marketing activities described by the respondent as necessary to realise such a chance, was too remote to be compensable in damages as a consequence of the appellant's repudiation of the Foxeden Agreement.

163 The learned judge accepted evidence adduced for Foxeden that it would have approximately doubled its income from financial planning in the financial year 1999/2000. That was because it was still in the early stages of development of the financial planning side of the business, and because there had been a marked increase in financial planning income over the financial years 1997/98 and 1998/99.[63]

164 Acceptance of that evidence did not have, however, any practical impact upon his Honour's assessment of damages. There was an overlap between Foxeden's claims that it had lost IOOF commissions and loss of financial planning income in the 'lost' 12 month period of notice, and its claim for loss of the chance of earning financial planning income over a lengthy period. His Honour dealt with the matter by assessing loss of IOOF commissions in the 12 month period, and loss of the chance of earning financial planning income over a period which embraced but was not confined to that 12 months.[64]

165 In addressing the latter claim, his Honour had to consider evidence that, had Foxeden been given 12 months' notice of termination, it would have made strenuous efforts to convert building society customers into financial planning clients.[65] Such efforts would have succeeded in a large way, it was said for Foxeden, many IOOF customers becoming financial planning clients. So it was claimed that Foxeden had lost the chance of generating a large amount of financial planning income by way of up-front and trailing commissions.

166 His Honour accepted that Foxeden would have undertaken such an exercise. But he rejected evidence led by Foxeden as to its likely scale and success rate. For one thing, 'many of the customers at [the branch] would not have had the funds to warrant them being considered as potential financial planning clients.'[66] For another thing, the historical success rate of converting financial planning interviewees into financial planning clients had been quite low.[67] For another thing again, his Honour considered that Foxeden had been already doing its best to attract financial planning clients.

167 Having analysed the evidence, his Honour expressed these conclusions -

... I am not prepared to accept Foxeden's claim that, if it had been given the required one year's notice of termination, it would have held interviews with each of its 1,410 depositors who were not already financial planning clients or that it would thereby have gained over time 846 extra financial planning clients. Nor am I prepared to accept the Taylors' claim that, if they had been given the required one year's notice, they would have held interviews with each of their 1,292 depositors who were not already financial planning clients or that they would thereby have gained over time 775 extra financial planning clients

It seems to me that realistically the maximum number of 'prospecting interviews' which would have been obtained by Mr Hawksworth and Mr Smart at the Mildura branch in the notice period and the five subsequent years would have been about 353. I have calculated this figure by taking 25% of the 1,410 depositors who were not already financial planning clients. The reduction of 1,057 or 75% is my best estimate of the number of depositors at Mildura who were either not sufficiently wealthy to justify using the services of a financial planner, or for some other reason wee not a suitable target for conversion, or were not interested in receiving financial advice, or were already receiving financial advice from other sources, or simply did not want to attend a 'prospecting interview' with Mr Hawksworth or Mr Smart. It should be noted that my reduction of 1,057 is below the number of building society customers who had less than $2,000 in their savings account or term deposit. Thus, I have recognised to some extent that even some of these customers were potential financial planning clients. Adopting what I understood to be the clearly accepted standard success rate of 60% would mean that over time 212 new financial planning clients would have been gained by Foxeden. In using the 60% figure I have borne in mind that whilst Mr Hawksworth might have achieved a higher success rate, the relatively inexperienced Mr Smart might have achieved a lower rate. Finally, I note that on the assumption accepted by both sides that 50% of the new clients would have been gained in the first year, a figure of 106 in that first year would be a significant increase on what had previously been achieved at the Mildura branch.[68]

That led on to his Honour making an assessment of average investment. He said this:

In the welter of figures for Foxeden set out above, the one that impressed me as the most relevant and helpful was that as at 30 June 1999 a total of $8,101,482 was held in 169 savings and term deposit accounts of more than $15,000 each by depositors who were not financial planning clients of Foxeden, at an average of approximately $47,937 per account. Everyone agreed that it was sensible to assume that the customers who held these accounts would have been the primary target for Foxeden's drive for more financial planning business. This is not to say, however, that all of these customers would have attended a 'prospecting appointment', or that, if they had, they would have become clients. Assuming, not strictly accurately, that the 169 accounts represented 169 potential clients I have calculated that 51 would have become clients, by assuming 50% (or double the earlier figure) would have attended a 'prospecting appointment' with Mr Hawksworth or Mr Smart and that 60% of these would have become clients. Given the evidence about the existence of other more substantial assets held by the depositors outside the Building Society accounts, it seems to me not unreasonable to proceed on the basis that each of these 51 new clients would have had on average an amount of $143,811 to invest, or three times the average amount of $47,937 in the 169 savings and term deposit accounts.

As far as the remaining 161 new clients are concerned, they would have had to come from those depositors holding the 526 savings and term deposit accounts of between $2,000 and $15,000 and the 1,070 such accounts of less than $2,000. The average amount in the 526 accounts was approximately $6,234. Again, it seems to me not unreasonable to proceed on the basis that each of the 161 new clients would have had on average an amount of $18,702 to invest, or three times the average amount in the 526 accounts.

By my calculations, 51 clients with an average financial planning investment of $143,811 and 161 clients with an average investment of $18,702 would generate funds of $10,345,383, or approximately $48,800 for each of the 212 new clients of Foxeden. [69]

168 Then his Honour dealt with (1) the rates of commission, (2) the likely period of lost investments, and (2) the appropriate discount rate. As to the first, he noted that there was really no dispute. As to the second, he adopted broad industry-wide statistics. As to the third, he took account of both the risk that what he had concluded would have come to pass would not in fact have eventuated, and a discount for present value.

169 Pausing for a moment, no challenge was made by IOOF to the first and second of those integers; and little, if anything at all, was said about the third of them.

170 The approach which we have described culminated in his Honour's conclusions that -

... the appropriate calculation of Foxeden's lost chance to earn financial planning income over time is as follows:

212 clients at an average financial investment of $48,800 each resulting in an additional $10,345,600 in investments over seven years. The lost 3% up front commission is therefore $310,368 and the lost 0.39% trail commission is $282,435. This totals $592,803, which discounted by 35% comes to a net present value as at 1 July 1999 of $385,322, or $385,320 in round figures.

As what has been lost is the chance to earn further financial planning income, I do not consider it appropriate to make any deduction for any financial planning income actually received in the 2000 financial year. That income flowed from efforts made in the previous years or from business not related to the building society customers and not from the efforts which would have bee made in the one year's period of notice to convert building society customers into financial planning clients. Nor do I consider it to be necessary to include a figure for any savings in expenses given that the work proposed in my calculations could have been handled with the existing resources.[70]

171 According to the submissions for IOOF in this Court, damages for the lost opportunity to earn financial planning income were too remote. The loss claimed could not be said to be one that arose naturally in the ordinary course of things from the breach, nor could it reasonably be supposed to have been within the contemplation of the parties when the agreement was entered into. Counsel relied upon Hadley v Baxendale[71] and the reasons for judgment of Brennan J in Commonwealth v Amann Aviation Pty Ltd.[72] The modus operandi which Hawksworth stated he would have undertaken, counsel submitted, differed radically from the course followed up to that point. It would have involved, in effect, replicating IOOF's customer list for later use. It had not been in the parties' contemplation, when they reached their agreement, that the whole IOOF business might be sold to another financial institution. Moreover, it would have involved a use of the notice period which was incompatible with the purposes served by a notice of termination. The judge's approach, counsel pointed out, meant that allowing for trail-off commission, the assessment contemplated a further 13 years of income.

172 Counsel for Foxeden submitted, in response, that it is the kind of damage suffered, not the precise manner in which the damage is suffered, which must be within the reasonable contemplation of the parties. He cited Koufos v C. Czarnikow Ltd,[73] Alexander v Cambridge Credit Corporation Ltd,[74] and National Australia Bank Pty Ltd v Nemur Varity Pty Ltd.[75] The kind of damage suffered was the lost opportunity of earning financial planning contributions. IOOF was taking issue not with the kind of damage suffered, or even with the precise way in which his Honour went about finding that the commissions would have been earned, but rather with the degree or amount of damage suffered. That was not a question of remoteness.

173 Counsel further submitted that it was within the reasonable contemplation of the parties when they entered into that agreement that Foxeden would actively seek to generate financial planning business. It was, indeed, one of the very purposes of the agreement. Both IOOF and Foxeden stood to gain. IOOF stood to benefit because Foxeden might generate investment in financial products offered by IOOF group entities. Foxeden stood to benefit by having access to IOOF customer lists, which it could use to convert IOOF customers into financial planning clients.

174 Counsel finally submitted that it was a mischaracterisation for IOOF to contend that the notice period would have been used to replicate IOOF's customer lists. Rather, Foxeden would have 'gathered information necessary to enable [it] to prioritise customers and then pursue the best prospects'.[76] Foxeden would then have had contact details for, inter alia, IOOF customers whom they had identified as future prospects.

175 In our opinion, it is correct to characterise the particular damages claimed by Foxeden as damages for the lost chance of obtaining further financial planning commissions. Then, applying the statement by Lord Reid in C Czarnikow Ltd v Koufos[77] that -

The crucial question is whether, on the information available to the defendant when the contract was made, he should, or the reasonable man in his position would, have realised that such loss was sufficiently likely to result from the breach of contract to make it proper to hold that the loss flowed naturally from the breach or that loss of that kind should have been within his contemplation.[78]

and assuming for the purpose that the parties then had in mind the breach which occurred, we consider damages of that kind were 'sufficiently likely'[79] as to fall within the boundaries of remoteness.

176 Thus, IOOF's breach definitely cost Foxeden the prospect of earning further financial planning commission; and that lost opportunity fell to be compensated. The question then became, how was the lost opportunity to be valued. It could not be open-ended, for IOOF's breach had deprived Foxeden of only 12 months' opportunity of securing new financial planning clients. So the 12 month period was pertinent to quantification of the loss. That left for consideration the manner in which the lost opportunity should be assessed, having regard to that 12 month period.

177 IOOF's complaint, as it seems to us, resolved itself into this: assuming, against its argument, that the kind of damage was not too remote, the method by which the learned trial judge assessed the loss was faulty because it assumed a course of action by Foxeden which departed from the course which it had previously followed. That seems to us raise an issue properly dealt with under the second ground which IOOF pursued.

178 But if the method of assessing the value of the lost opportunity was capable of transforming a kind of loss which was within the limits of contractual remoteness into a kind of loss which was not, we would still consider that the loss, insofar as the judge treated it as constituted by the product of a regime not previously adopted by Foxeden, was not too remote. When the agreement was struck, the parties contemplated it continuing in the long term. This would give Foxeden the opportunity of obtaining financial planning income as the quid pro quo for conducting a business which had hitherto been unprofitable. In those circumstances, viewed from the standpoint of a reasonable entity in the position of IOOF when the agreement was made, any loss flowing from denying Foxeden the opportunity of maximising the acquisition of financial planning clients, by steps taken within what should have been the period of notice, was a loss sufficiently likely to result from the breach. It could hardly be doubted that, had notice been given as it should have been, Foxeden would have sought to maximise the acquisition of financial planning clients in the time available. It was hardly likely to have done so simply by following a well-worn path. The acquisition of financial planning clients basically depended upon Foxeden conducting interviews with prospective clients, as IOOF must have known. The IOOF customer lists facilitated approaches by Foxeden to IOOF customers in respect of financial planning matters. In those circumstances, it seems to us well within the realisation of IOOF when the agreement was made, whether considered subjectively or objectively, that had there been no breach, and had Foxeden been given the notice which it should have been , then it would have accelerated and multiplied client contact. To say that such conduct would not have been consistent with the purposes which explain the giving of notice does not deny the apprehended likelihood that Foxeden would have acted in such a way.

Did the Evidence Support the Ingredients Used in the Calculations?

1. The trial judge erred in finding that the loss of the building society and financial planning commission income during the period of 12 months from 30 June 1999 ('notice period') was $126,760.
2. The trial judge should have found that the respondent suffered no loss of building society and financial planning commission income during the notice period.
3. It was against the weight of the evidence for the trial judge to find that the maximum number of prospecting interviews which would have been obtained by the respondent at the Mildura branch in the notice period and five subsequent years would have been about 353.
4. It was against the weight of the evidence for the trial judge to find that over time 212 new financial planning clients would have been gained by the respondent.
5. It was against the weight of the evidence for the trial judge to find that the new financial planning clients would generate funds of $48,800 each.
6. Having regard to all of the evidence, the sum of $385,320 was an excessive assessment of the value of the chance to earn financial planning income over time.

180 Grounds 21 and 22 address the 12 months 'lost' notice period. In part - that is, in respect of financial planning commissions - they address an approach to damages which the judge did not adopt.[80] To that extent, those grounds could only be relevant if, perhaps, Foxeden's claim based upon a long-term lost chance of obtaining financial planning income had failed for remoteness. Since we have concluded that such a claim was not too remote, we will say only a little about the subject-matter of grounds 21 and 22.

181 The learned judge found, as we have said, that Foxeden's lost financial planning income for 1999/2000 was $150,000. That was a great increase on the previous year, but the judge concluded that the particular business was rapidly increasing.

182 According to the submissions for IOOF, there was no evidentiary basis for the conclusion. The financial planning business had been operating for two years in conjunction with the IOOF business, and the whole business had been operating at an overall loss in that period. This would have continued in the 1999/2000 year. Hawksworth's evidence about an increase in commissions should have been rejected as being too unreliable. His Honour should have accepted the evidence of an expert called for IOOF, who concluded that the maximum loss of financial planning income for the year 1999/2000 was $15,000.[81]

183 We turn to IOOF's submissions concerning the judge's conclusion, reached by the steps which we described at [106]-[170], that Foxeden lost the chance to earn $385,320 financial planning income.

184 It was submitted for IOOF that his Honour's finding as to the number of prospecting interviews which would have been conducted was against the weight of evidence. It could not fit with Foxeden's actual performance in the several years during which it had conducted the Mildura agency.

185 It was further submitted for IOOF that his Honour had erred in using a 60 per cent success rate of interviewees being converted into clients. IOOF had not accepted such a success rate, and it ran contrary to Foxeden's actual performance at Mildura, which demonstrated a success rate of only about 12 per cent.

186 Still further, according to IOOF's submission, the average investment amount determined by the learned judge was too high.[82] It involved making assumptions which were not justified by the evidence. In particular, his Honour had assumed that-

(1) a relatively high percentage of IOOF savings account holders with a credit balance of more than $15,000 would have attended an initial interview, and that 60 percent of those interviewees would have become financial planning clients. Some of the IOOF savings account holders with the highest credit balances had already been approached. The better target group was IOOF term depositors, not the savings account holders;

(2) the new financial planning clients drawn from the savings account holders with the largest credit balances would invest an average of about $144,000. But whilst it might be concluded that these persons would have additional funds, it was pure guesswork to treble their average savings account balances;

(3) the remaining new financial planning clients would have come from persons with savings account balances of between zero and $15,000. This was 'the only option left'. It was otherwise not sustained by reasoning;

(4) the new clients referred to in (3) would invest an average of about $18,700. This was speculative, and in any event his Honour took as his starting point only the average credit balance in the savings accounts of depositors in the $2,000-$15,000 range.

187 In all, counsel for IOOF submitted, the conclusion expressed by its expert, that the loss of financial planning income was a maximum of $19,000, was the most reliable.

188 Counsel for Foxeden submitted that there was no error in the learned judge's statement of relevant principles concerning assessment of damages. So much is not in debate.

189 Counsel next submitted that assessment of damages for lost opportunity is one of great difficulty. It involves 'attempting to fix degrees of probability of the occurrence of events'. For that reason, a 'trial court must be allowed considerable latitude' - that is, by an appellate court.[83] Again, this proposition was unremarkable.

190 With respect to the loss of commissions in the financial year 1999/2000, counsel submitted that the judge had not erred in finding that Foxeden's financial planning income would have doubled. Its income had increased by 75 per cent from year one to year two. Because it takes time to build up a relationship of trust and confidence with customers, a potential increase of 100 per cent in year three was not unreasonable. IOOF's witness, Mr Schoer, had accepted, in substance, that there is a significant period of time before a customer feels comfortable enough to come to an advisor for financial planning services.

191 Counsel further submitted, upon this aspect of the assessment of damages, that the fact that the Mildura business had traded at an overall loss in its first two years was irrelevant, because the trial judge had allowed for expenses saved by reason of Foxeden not operating the business for the 12 months in question.

192 With respect to the lost opportunity to earn ongoing financial planning commissions, counsel submitted that IOOF's attack upon some of the integers used by his Honour did not take account of the fact that his Honour had enjoyed a unique opportunity to assess the potential capacity of Hawksworth and Smart[84] to engage with customers and convert them into financial planning clients.

193 Counsel next submitted that the integers which IOOF attacked were his Honour's 'best estimates of what might have occurred', which had then been subjected to a very substantial discount as against the risk that 'the matters might not have come to pass in part or at all'.[85]

194 Counsel submitted that, if one was to reduce the number of new clients that would have been obtained, it would be necessary to increase the likely amount which would on average have been invested, for in general 20 per cent of the customer base of a financial institution hold 80 per cent of the wealth. Further, if there was to be any reduction in the figures adopted by the learned trial judge for prospecting interviews and new clients, then the general discount of 20-25 per cent used by his Honour should be reduced.

195 As to the integers used by his Honour with respect to prospecting interviews and new clients, counsel submitted that it had been open to find, for reasons which we have previously discussed, that historical results did not tell the whole story.

196 Concerning the average investment figure used by his Honour, counsel submitted that the evidence was clear that it was very likely the amounts invested would have been considerably larger than the amounts which the investors held in their savings accounts. Based upon their experience, both Hawksworth and IOOF's witness, Mr Schoer, had given evidence to that effect. The only question was how much larger. Hawksworth had given evidence that, as at 30 June 1999, 50 clients selected at random from his Shepparton clientele had an average amount invested of nearly $140,000. He had also given evidence that as at 30 June 2004 (a time still relevant as his Honour approached the matter) he had a total of 3263 financial planning clients statewide. The average investment was then $78,000. Counsel added that from 1 July 1999 IOOF was a joint venturer with Bendigo Bank in Bendigo Investment Services, a funds management business. IOOF could have adduced its own evidence as to the magnitude of funds invested by clients at the Mildura branch (and likewise in the case of Frankston); but it did not do so.

197 Ms Murone, IOOF's expert witness, gave evidence that the likely average investment amount would have been only $18000. Counsel criticised that evidence. He submitted that she had based her figure solely upon the average amount held in term deposit accounts, and that she had not allowed for any other available funds - whether held in savings accounts or otherwise.

Compensation for the Lost Chance to Negotiate Compensation in Lieu of Notice

198 Counsel for IOOF did not submit, in the end, that damages for the lost chance of negotiating compensation in lieu of notice would necessarily be too remote. But he contended that, if such damages were assessed by reference to their ransom or nuisance value, then they would be too remote. So, if damages had been assessed by reference to what IOOF might have had to pay to get Foxeden to leave so that it could take up Bendigo Bank's generous offer, such damages would have been too remote. In any event, counsel submitted, the evidence did not show that Hawksworth (or Taylor) understood the ransom or nuisance value of making life difficult for IOOF as at mid 1999.

199 Other than that, counsel submitted, as we understood it, that the judge had overestimated damages under this alternative head because he had been influenced by his assessment of damages on the other basis. The latter assessment had taken account - wrongly, as counsel contended - of unusual steps which his Honour accepted Foxeden would have taken had the breach not occurred.

200 Counsel for Foxeden submitted that the judge would not have been at fault had he assessed damages for loss of the opportunity to negotiate compensation in lieu of notice by having regard to the fact that in 'the first half of 1999 there was an irresistible commercial incentive for the building society to be sold to Bendigo Bank'. But his Honour had not in fact done so. Counsel further submitted that the other basis upon which his Honour had assessed damages was fault-free.

Resolution of the Appeal Against the Foxeden Damages Award

201 This was the first aspect of grounds 21 and 22; but it was not addressed in argument. We do not understand it to have been a live issue on the appeal. But if it was, we consider that there was nothing to it. The learned judge carefully analysed past performance data. Taking a conservative approach, he determined likely lost building society commissions for the 1999/2000 year at $103,500. That was very close to the figure of $101,000 advanced for IOOF, and was then subject to a small reduction to account for anticipated funds' transference to financial planning products. He thus arrived at lost commission of about $99,000.

202 Then there were savings in expenses. These were assessed by his Honour at $56,250, an amount close to the estimate advanced for IOOF. These two amounts, of anticipated building society commissions and savings in expenses, were used by his Honour in his final assessment of damages. In our opinion they withstand any attack mounted on them.

203 His Honour assessed loss of financial planning income for the year 1999/2000 at $150,000. He assumed a rate of increase in such income which IOOF disputed. Despite the criticisms of his Honour's analysis, we are not persuaded that it was unsound. The financial planning income deriving from the Mildura branch operation had increased substantially from one year to another. Although a number of the perceived best or better prospects had been approached, the evidence was clear that time is needed to build up the necessary trust and confidence to convert building society depositors into financial planning clients.

204 So, if it mattered, we would accept his Honour's assessment of lost financial planning income for 1999/2000. But it does not matter, because his Honour discarded the amount assessed in favour of assessment of the lost chance of earning financial planning income over time, and that assessment was in a larger amount.

205 We agree that the amount assessed was rightly discarded. We have already concluded that the approach to assessing damages which his Honour adopted did not fail for remoteness. We also conclude, see below, that damages thus assessed considerably exceeded the judge's assessment of loss of financial planning income for 1999/2000.

The Lost Chance of Earning Financial Planning Income Over Time

206 Respecting his Honour's conclusion that the value of Foxeden's lost chance of earning financial planning income over time was 385,320, IOOF's attack, as we have noted, focused upon the number of prospecting interviews that would have been conducted, the conversion rate of interviewees into clients, and the average investment amount.

207 His Honour undertook a task which was evidently difficult. It did not admit of any certain answer. He was confronted by a 'welter of figures' which he thoroughly and carefully analysed. He also had the opportunity of seeing each of Hawksworth and Mr Taylor give evidence. Whatever he thought about the reliability of some of their evidence, he was able to assess their ability to 'sell a product'. Each of them had proven to be quite successful in that activity over a period of time.[86] His Honour clearly exposed his reasoning to his intermediate conclusions and to his final conclusion. His task was such that an appellate court should give, as it has been said, considerable latitude to the conclusion which he reached. The exemplary manner in which his Honour carried out his task emphasises why that should be so in the particular case.

208 His Honour accepted that Foxeden, given appropriate notice of termination, would have much increased its attempts to obtain financial planning clients - though not to the extent of which Hawksworth gave evidence. In our respectful opinion, that conclusion is unimpeachable. The only question is whether the number of 'prospecting interviews' was set too high. In our opinion it was not. It represented only 25 per cent of the Mildura branch customers who had not been interviewed as at 30 June 1999. It was not too high only because Foxeden had sought to interview the 'best prospects' in the two years of the Mildura operation.

209 We turn to his Honour's estimate that 60 per cent of the interviewees would have been converted into financial planning clients. His Honour referred to this as a 'clearly accepted standard success rate'. But whether or not it was an industry standard, it far exceeded Foxeden's success rate at Mildura - which was something between 12 and 20 per cent (it depended upon the precise number of persons who had been interviewed). It is also true that the low success rate at Mildura had been achieved despite attention being focused upon the best (or better) prospects. On the other hand, Foxeden had only been involved in running the Mildura office for two years as at June 1999, and so the opportunity, said to be important, of building up trust and confidence with depositors had not yet fully developed. Further, the conversion rate took no account of 'referrals' - that is, additional clients who might have been obtained by referral from financial planning clients who were IOOF depositors. His Honour accepted[87] that 'much of a financial planner's business comes from such word of mouth referrals and [I] have taken it into account in reaching my figures'. But, as against that, from 1 July 1999 IOOF and Bendigo Bank in joint venture were conducting a financial planning service; and so Foxeden's attempts to secure financial planning clients would have faced very direct opposition. That competition would have been emphasised as the years passed, and as Foxeden's immediate relationship with IOOF depositors dimmed.

210 For reasons previously stated we do not lightly reach a conclusion which differs from that reached by his Honour. But, taking into account all the matters which we have mentioned, we consider that it was wrong to assume a success rate exceeding 30 per cent.

211 We turn to the attack upon his Honour's conclusion as to the average amount likely to have been invested. The only question is whether the multiple of three which his Honour adopted was, as IOOF contended, 'pure guesswork' - or at least against the weight of evidence. We do not accept the criticisms which were made.

212 There was evidence which permitted a conclusion that the amounts likely to be invested were a substantial multiple upon amounts deposited in building society accounts. There was also evidence as to the average amount placed for investment up to June 1999 by those (relatively wealthy) depositors who had become financial planning clients, and as to average amounts placed for investment, both in 1999 and in later years, by clients at other Hawksworth operations. The amounts in each instance considerably exceeded the average investment amount settled upon by his Honour.

213 It is true that his Honour built into his calculations an interview rate which was greater than in the case of IOOF customers whose deposits were at the higher end than he assumed in the case of other IOOF customers. That had the effect of increasing the average investment amount at which he arrived. But this approach was quite logical. No doubt Foxeden would have concentrated its efforts primarily on those persons whose deposits were at the higher end; and those persons, on the face of it, had more scope to invest in financial planning.

214 The criticism that his Honour failed to take into account, sufficiently or at all, the fact that the success rate which he assumed brought in depositors with only a very small amount to invest - and thus that the average investment amount at which he arrived was too great - was an argument at the margin. Assume a success rate of 30, not 60, per cent, and the criticism becomes more marginal again - particularly since it could reasonably be assumed that it would be the persons with the very smallest amounts deposited who would be the most improbable financial planning clients.

215 We add this, for the sake of completeness. The criticisms made by Foxeden's counsel of the methodology adopted by IOOF's expert in calculating the likely average investment amount were in our opinion powerful.

216 His Honour adopted an overall discount rate of 35 per cent, of which about 20-25 per cent was a discount for contingencies particularly related to the assumptions which he had made with respect to the lost opportunity of obtaining financial planning income over time, and about 10-15 per cent was to account for present value. Counsel for Foxeden submitted that if, inter alia, the assumed success rate was reduced, the former should also be reduced. There was force to that submission, but it does not cause us to conclude that the overall discount rate adopted by his Honour should be adjusted. His Honour's reasoning[88] shows the necessary imprecision of the task, and that the rate ultimately adopted was itself a compromise of competing considerations.

Damages for the Lost Chance to Negotiate Compensation in Lieu of Notice

217 Neither party suggested, assuming that this head of damages was available, that it could yield a higher amount than that arrived at by an accumulation of net lost building society commissions and damages for the lost chance of obtaining financial planning commission over time. That common position was consistent with his Honour's conclusion. It is unnecessary to do more than say that we agree with his Honour's conclusion that the amount of damages which would be awarded on such a claim would be less than the amount assessed by reference to lost building society commissions and the lost chance of obtaining financial planning income over time. That is so although, for reasons explained, we consider that his Honour assessed the latter at too large an amount.

218 In the event, we would substitute, in his Honour's analysis, an assumed success rate of 30 per cent, but otherwise act upon the integers which he adopted. That would have the effect of halving the amount to be allowed for damages representing the lost chance of earning financial planning income over time. The calculation would be as follows:

219 We would therefore assess Foxeden's damages as follows:

220 To that sum should be added statutory interest.

221 The learned judge concluded, and we agree, that Taylor was entitled to compensation. The fact that our reasoning differs somewhat from the way in which his Honour reasoned to his conclusion makes no difference. In that connection we refer to what we said at [161] above.

222 In the event, it is convenient (which is not to say that it is accurate) to refer to 'damages' rather than compensation when dealing with the attacks upon the award which his Honour made in favour of Taylor.

223 After trial of the damages issues, the learned trial judge gave judgment for Taylor in an amount of $405,100 plus statutory interest of $271,230. There were two components to the assessment:

(1) Loss of building society commission which would have been received in the one year's period of notice: $62,675.

(2) Loss of the chance of earning financial planning income over time: $392,425.[89]

224 Allowing for savings of expenses in an amount of $50,000 these items were combined to produce the judgment sum - which was higher than the $400,000 assessed by his Honour to be the value of the lost opportunity to negotiate compensation for agreeing to waive the period of notice.

225 IOOF's notice of appeal raised, by grounds 14-30, the same five broad issues as were raised by the Foxeden damages appeal.[90] But, as in the Foxeden matter, three issues only were agitated, the third in a limited way; that is -

(1) The damage respecting loss of financial planning income was too remote.

(2) The evidence did not support the ingredients used in the calculations.

(3) Damages should not have been awarded for the lost chance to negotiate compensation in lieu of notice - or at least in the sum assessed.

226 The issues thus identified by counsel for IOOF said nothing about the contention, raised by paragraphs 19 and 20 of the Notice of Appeal, that the judge had erred in his finding as to the quantum of building society commissions lost in 1999/2000. That is so although the written outline of submissions did address that issue. But then again, a number of issues raised by the Notice of Appeal, and even in the written submissions, were not ultimately pursued. In the event, out of abundance of caution, we shall say a little about the particular matter.

227 Of the three issues identified by counsel, the first depended upon the same arguments as IOOF raised in the Foxeden matter. We have rejected them and have explained why. We will not repeat what we have said.

228 In assessing damages, his Honour concluded that Taylor lost building society commissions and financial planning commissions in the year 1991/2000 in a total amount of $136,135. Within that total were anticipated building society commissions of $62,675 and anticipated financial planning income of $568,800, from which were deducted savings in expenses of $50,000 and actual income received of $445,310. The anticipated financial planning commissions of $568,800 represented an approximate year on year increase of about 30 per cent.

229 IOOF challenged his Honour's conclusion as to the likely increase in the amount of financial planning commissions which would have eventuated in the 1999/2000 year. The challenge was this: that his Honour made the estimate in the absence of a clear trend, and in any event by reference to Taylor's total financial planning business, rather than by reference to likely growth only through IOOF customers.

230 As with Foxeden, in the end nothing turns on it, because his Honour did not use the particular amount in his assessment of damages. Rather, as with Foxeden, he assessed the value of Taylor's lost chance of obtaining financial planning income over time.

231 In making the assessment last-mentioned, his Honour concluded that Taylor would have conducted about 388 prospecting interviews which would have been converted - at a 60 per cent success rate - into 233 new financial planning clients investing an average of $45,220.[91] Using a 3 per cent up-front commission and a 0.39 per cent trailing commission over a seven year average period of investment, his Honour calculated lost earnings at $603,728, which he then discounted by 35 per cent so as to yield a figure of $392,425.

232 With respect to that assessment, IOOF initially attacked his Honour's findings as to the number of prospecting interviews, the likely success rate, and the average likely investment amount. But in submissions in reply, counsel for IOOF specifically stated that no challenge was made in respect of the matter last-mentioned. We will only say, in the circumstances, that had it been pursued, we should have rejected it.

233 Concerning the first of those matters, IOOF noted that his Honour had concluded that 388 interviews would be held out of a total number of 1292 depositors. That is, some 30 per cent of the depositors would have been interviewed. But, in the three and a quarter years that Taylor had operated the Frankston branch, only about 300 depositors - the 'best prospects' - had been interviewed. The figure of 388, counsel submitted, was thus out of proportion with historical reality.

234 We turn to the issue of the success rate. Counsel for IOOF submitted that the 60 per cent success rate had not been accepted by his client. In any event, it was at odds with Taylor's historical performance, which was about a 28 per cent conversion of interviewees into clients. This was - as the expert called for Taylor, Professor McMaster - had said, well below the average. Further, most of the term deposits had matured at least once in the preceding three years. So Mr Taylor had already had an opportunity to solicit clients for his financial planning business. Further again, Taylor had operated its financial planning business in the Frankston branch for nine years in all. There had thus been every opportunity for it to obtain financial planning clients. Further still, from 1 July 1999 it would have had to compete with the Bendigo Bank/IOOF joint venture financial planning business.

235 Counsel for Taylor submitted that there was no error in the judge's assessment of building society commissions for 1999/2000. His Honour had sufficiently allowed for the effect of some account holders putting funds into financial planning products.[92]

236 As to his Honour's assessment of lost financial planning income in the same period, counsel submitted that IOOF's attack rested on Ms Murone's approach, which was flawed. In particular, she had asserted that term deposits were the potential pool of new financial planning clients. This excluded those IOOF clients who had substantial amounts in savings accounts. At Frankston, about 8.4 per cent of the clients had about 71.5 per cent of the total funds deposited in savings accounts. In the event, counsel submitted, the increase in financial planning income postulated by his Honour was reasonable.

237 Concerning the challenged integers in his Honour's assessment of the value of the lost opportunity to obtain financial planning income over time, counsel submitted that -

• Any decrease in the number of depositors converted to clients was likely to have meant a greater average investment amount.

• Any decrease in the number of prospecting interviews or new clients meant that the discount rate should be reduced, the uncertainties being the less.

• The judge had been correct to find that in the postulated circumstances Taylor would have made greater efforts to obtain new clients, beginning with prospecting interviews. Reference to history did not tell the whole story.

• In fact, the financial planning commission earned by Taylor had increased a great deal in the three year period that Taylor had been operating the Frankston branch.

• IOOF's calculations made no allowance for referrals; or for the fact that Mr Taylor, on his account, had negotiated with a local solicitor who banked his trust money with IOOF to offer financial planning services to the solicitor's clients, and expected to generate further business in this way.

• IOOF's submission made no allowance for the build-up of trust and confidence over time, this leading to a likely ability to 'harvest' the IOOF customer base.

• The 233 new clients would have represented only 18 per cent of the IOOF customers who were not already financial planning clients as at 30 June 1999.

• The evidence of Ms Murone with respect to the likely number of new clients and the average amount likely to have been invested by them was flawed for the reasons advanced in the Foxeden matter.

238 We should finally mention argument addressed to the third issue raised by IOOF - that is, the judge's assessment of damages on the basis of the lost opportunity of negotiating compensation in lieu of notice. It is enough to say that it followed the pattern of argument in the Foxeden matter.

Resolution of Appeal against the Taylor Damages Award

239 IOOF mounted a faint challenge, as we have explained, to his Honour's estimate of lost building society commissions. In our opinion, his Honour's conclusion was well-supportable; likewise his estimate of expenses saved.

240 We have already explained that his Honour's assessment of lost financial planning income for 1999/2000 was not ultimately brought to account in his assessment of Taylor's damages. Further, on the view which we have taken about IOOF's remoteness argument, the amount assessed is not relevant to the damages award. But for the sake of completeness we should say that in our opinion his Honour's conclusion was unremarkable. Acknowledging evidentiary difficulties, he concluded that Taylor's financial planning income, derived from IOOF customers, was likely to have grown by 30 per cent in 1999/2000. The strongest arguments against that conclusion are that Taylor had already had nine years working out of IOOF's Frankston office, having thus had time to build up necessary trust and confidence; that approaches had already been made to the best prospects; and that Taylor relied on growth in the Taylor business generally to make out its asserted likely growth in business derived from IOOF customers.

241 It is true that Taylor had a certain relationship with IOOF customers for nine years or so. But it only ran the Frankston branch, and had access to customer lists, for about three years. We would not conclude that the maturation time necessary to convert depositors into financial planning clients was exhausted as at 30 June 2009, although it should be accepted that Taylor had made approaches to the perceived 'best prospects' by that time. Finally, we do not consider that the growth generally in Taylor's business was irrelevant. For one thing, it supported other evidence that there was at the time a growing community interest in financial planning. There seems no reason why IOOF depositors should have been immune from that growing interest, except in the case of very small depositors.

The Lost Chance of Earning Financial Planning Income Over Time

242 In connection with the Foxeden matter, we have already noted the difficult task which his Honour undertook, and why it is that conclusions which he reached should not lightly be disturbed.[93] The same considerations apply in Taylor's case.

243 In our opinion, his Honour was correct to conclude that Taylor was likely, had it been given adequate notice of termination, to have much increased its attempts to obtain financial planning clients from amongst the IOOF customers. The question is whether his Honour's estimate of 388 prospecting interviews was too great. In our opinion, for the reasons which follow, it was not.

244 First, his Honour gave a clear and cogent explanation how he arrived at the figure. Thus

At Frankston, there were 1,047 savings accounts, including those with a negative balance, with less than $2,000 invested. The average amount in the savings accounts with a positive balance was only $3,094. In my opinion, these figures indicated that it was probable that many of the customers at each of the two branches would not have had the funds to warrant them being considered as potential financial planning clients.[94]

... it seems to me that realistically the maximum number of 'prospecting interviews' which would have been obtained by Mr Ken Taylor and his son, Greg Taylor, at the Frankston branch in the notice period and the five subsequent years would have been about 388. I have calculated this figure by taking 30% of the 1,292 depositors who were not already financial planning clients. The reduction of 904, or 70% is my best estimate of the number of depositors at Frankston who were either not sufficiently wealthy to justify using the services of a financial planner, or for some other reason were not a suitable target for conversion, or were not interested in receiving financial advice, or were already financial advice from other sources, or simply did not want to attend a 'prospecting interview' with Mr Ken Taylor or Mr Greg Taylor. I have used a slightly higher percentage in the case of the Frankston branch compared with the Mildura branch because Mr Ken Taylor's connection with potential clients should have been stronger than Mr Hawksworth's given that Mr Taylor had been full time rather than part time at the Frankston branch and that he had been there over a longer period. Again, it should be noted that my reduction of 904 is below the number of building society customers who had less than $2000 in their savings account or term deposit. Thus, I have recognised to some extent that even some of these customers were potential financial planning clients.[95]

245 Second, for the reason which we stated a little earlier, we do not accept IOOF's argument that Taylor's attempt to obtain financial planning clients from amongst IOOF depositors had, in effect, already run its course.

246 Third, the mere fact that the figure selected by his Honour postulated an increase in activity does not tell against its validity. The hypothetical situation involved new and different circumstances.

247 Fourth, the way in which IOOF's expert witness approached the matter took out of the reckoning a pool of IOOF depositors who were potential interviewees.

248 We turn to his Honour's assessment of the success rate. In our respectful opinion it was much too optimistic. We consider that 30 per cent ought be substituted.

249 It should immediately be noted that Taylor's circumstances were not identical to Foxeden's. It is not a question of saying that what is good for Foxeden is good enough for Taylor. Rather, different circumstances tell in different ways in the overall assessment of the two cases. The relevant circumstances in the case of Taylor, as we see it, are as follows:

250 First, Taylor's historical success rate over a three year period was about 30 per cent. That was considerably higher than Foxeden's success rate over a shorter period; but it was only half the success rate which his Honour adopted; and that, despite attention being paid to the 'best prospects'.

251 Second, Taylor's success rate was achieved against the background of its presence in the IOOF Frankston branch for a number of years before Taylor began to run the branch. Although it should not be concluded that by 30 June 1999 Taylor had fully built up the necessary trust and confidence to convert depositors to clients, or had fully exploited the customer lists, we consider that its higher success rate was probably a more accurate portrayal of what was reasonably achievable than was Foxeden's lower success rate.

252 Third, we consider that IOOF made a fair point in respect of the Frankston term depositors - that is, that their deposits had, in most cases, matured at least once in the period that Taylor had been running the branch; in which circumstances Taylor had already had an opportunity to solicit those depositors for its financial planning business.

253 Fourth, as from 1 July 1999 Taylor would have been in competition with the financial planning entity conducted as a joint venture by Bendigo Bank and IOOF. As with Foxeden, that competition, logically, was likely to have been more difficult for Taylor as time passed and as Taylor's immediate relationship with IOOF depositors faded.

254 Fifth, and telling in a contrary direction, his Honour stated that he had built 'referrals' into his figures. This must mean that he built some allowance for this factor into his assessment of the number of new clients. Possibly, because of the evidence given by Taylor of his arrangement with the local solicitor, the referral factor should be accounted more important with Taylor than with Foxeden.

255 We must finally make mention of the discount rate. For the reasons which we stated in respect of the Foxeden matter, we reject the submission for Taylor that the discount rate used by his Honour should be reduced.

Damages for the Lost Chance to Negotiate Compensation in Lieu of Notice

256 We repeat the conclusion which we expressed in the Foxeden matter.[96]

257 We would substitute an assumed success rate of 30 per cent but would otherwise respectfully adopt the other integers which his Honour concluded were appropriate. That would have the effect of halving the amount to be allowed for damages representing the lost chance of Taylor earning financial planning income over time. The calculation (ignoring cents) would be as follows:

Additional funds invested over seven years $5,290,740

258 We would therefore assess Taylor's damages as follows:

259 To that sum should be added statutory interest.

260 We would allow each appeal in part, so as to substitute for the damages awards made by the learned trial judge damages in favour of Foxeden in an amount of $235,326 plus statutory interest, and in favour of Taylor in an amount of $209,728 plus statutory interest.

[1] Foxeden Pty Ltd v IOOF Building Society Ltd [2003] VSC 356 ('the liability judgment') and (No 2) [2006] VSC 47 ('the damages judgment') respectively.

[2] Foxeden Pty Ltd v IOOF Building Society Ltd (No 3) [2006] VSC 207.

[3] The juristic basis for his determination was not the same in the two cases.

[4] Having so concluded, the judge did not consider the plaintiffs' alternative claims against IOOF. No issue is now raised concerning those alternative claims.

[8] Except if the only notice was that allegedly given by Bice on 12 May - and then any breach would have been of small moment.

[12] Cf Husain & Ors v O & S Holdings (Vic) Pty Ltd [2005] VSCA 269 [51] (Nettle JA).

[14] Drafts were sent in July 1996, November 1996 and May 1997.

[15] Citing Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337, 347 (Mason J).

[16] Neither party argued for the former, although counsel for Hawkswoth had done so at trial.

[17] In a 'without cause' situation. We will not keep repeating it.

[18] This pertained to the Taylor agreement, but counsel drew no distinction between that agreement and the Foxeden agreement.

[19] Liability judgment [315], citing Crawford Fitting Co & Ors v Sydney Valve and Fittings Pty Ltd & Anor (1988) 14 NSWLR 438, 444D (McHugh JA).

[20] (1988) 14 NSWLR 438, 448.

[21] Liability judgment [348], [361].

[23] [2007] FCAFC 34; (2007) 239 ALR 457 (Moore, Tamberlin and Gyles JJ).

[25] (1988) 14 NSWLR 438, 451.

[29] [2002] QCA 282; [2003] 1 Qd R 503, Court of Appeal (McMurdo P, White and Holmes JJ).

[30] [1936] HCA 40; (1936) 55 CLR 499, 505.

[31] With whom McMurdo P and White J agreed.

[32] Taske v Occupational & Medical Innovations Ltd [2007] QSC 118, [148] (Moynilan J); and see also [2007] QSC 147, [21].

[33] [1948] AC 173.

[34] [1963] AC 74.

[35] [1954] HCA 65; (1954) 92 CLR 190, 195-196 (Dixon CJ and Kitto J).

[36] [1975] HCA 27; (1975) 132 CLR 362, 369 (Gibbs J).

[37] [1977] HCA 7; (1977) 136 CLR 145, 148-149 (Gibbs J), 159 (Aickin J).

[38] (2003) 216 CLR 327, 348-349, [62]-[66], (Hayne J).

[39] But compare Rogers v Nationwide News Pty Ltd (2003) 216 CLR 327, 348 [62] (Hayne J).

[40] See [70]-[71] above.

[45] In fact, a share sale agreement was executed on 5 March 1999 by which IOOF's shares were sold to Bendigo Bank, conditionally, for about $14.8 million plus 3.7 million Bendigo Bank shares. There was also provision for excluded assets - two properties which were to be transferred to the IOOF holding company by IOOF for a consideration of $4.5 million in one instance.

[46] See [22] above.

[48] (1988) 14 NSWLR 438, 444.

[49] [1933] HCA 61; (1933) 49 CLR 507, 546-547.

[50] [1937] HCA 58; (1937) 59 CLR 641, 674-677.

[52] [1988] HCA 7; (1988) 164 CLR 387.

[53] See at 403, Mason CJ and Wilson J; and see Amalgamated Investment and Property Co Ltd (in liq) v Texas Commerce International Bank Ltd [1982] QB 84, 106-107 (Robert Goff J).

[54] (1990) 170 CLR 394. 428-429; see also 445-446 ( Deane J).

[55] Australian Blue Metal Ltd v Hughes [1963] AC 74 (PC); Decro-Wall International SA v Practitioners in Marketing Ltd [1971] 1 WLR 361; Barro Group Pty Ltd v Fraser [1985] VicRp 59; [1985] VR 577 (FC); Crawford Fitting Co v Sydney Valve and Fittings Pty Ltd (1988) 14 NSWLR 438.

[56] [1982] QB 84, 106-7, (Robert Goff J).

[57] [1988] HCA 7; (1988) 164 CLR 387, 400-406 ( Mason CJ and Wilson J).

[61] See n 51 and, as an instance, The Wine Co Pty Ltd v The Wine Co Pty Ltd (unreported, Supreme Court of Victoria, Hansen J, 16 May 1996).

[62] Liability judgment [316], [317], [318].

[71] [1854] EngR 296; (1854) 9 Ex 341.

[72] [1991] HCA 54; (1991) 174 CLR 64, 98-99.

[74] (1987) 9 NSWLR 310, 365-366 (McHugh JA).

[75] [2002] VSCA 18; (2002) 4 VR 252, 269-270 [44] and 273-275 [49]-[55] as demonstrating the application of principle to the facts of the case.

[76] Damages judgment [81], referring to a submission advanced for Taylor.

[78] [2002] VSCA 18; (2002) 4 VR 252, 270.

[79] Just what will satisfy the test of 'sufficiently likely' was discussed by Batt JA in National Australia Bank Ltd v Nemur Varity Pty Ltd [2002] VSCA 18; (2002) 4 VR 252, 270 [44].

[80] Other than that, they raise an issue about his Honour's assessment of building society commissions for 1999/2000. There was apparently no challenge in this Court to that aspect of his Honour's assessment, but we deal with it later for sake of completeness.

[81] The consequence was, as IOOF would have it, was that 'the maximum loss of financial planning income and building society commissions was actually a loss of $8,240'.

[82] These submissions were made in writing. Towards the end of his oral submissions in reply, counsel stated, in relation to the Taylor claim, that the average amount invested was not in dispute. That is so although, in that case also, the written outline was to the contrary. It is not clear to me whether, in the end, the average investment integer was challenged in Foxeden's case; but we will deal with the issue out of abundance of caution.

[83] See, G W Sinclair & Company Pty Ltd v Cocks [2001] VSCA 47; (2001) V Conv R 54-648, [48] (Charles JA, with whom Brooking and Buchanan JJA relevantly agreed).

[84] The latter was employed in the Mildura branch.

[86] In Hawksworth's case, we mean generally, rather than specifically at Mildura.

[90] See grounds 14-32 in the Foxeden Notice of Appeal.

[91] Damages judgment [98], [99]-[106], [110]-[112].

[92] This was a criticism of his Honour's approach made in IOOF's written outline.

[93] [207] above.

[96] [217] above.