Maurice Hayes & Associates Pty Ltd ACN 063 758 181 v Energy World Corporation Ltd ACN 009 124 994

Federal Court of Australia|2006-06-22|Before: Siopis J

REASONS FOR JUDGMENT 1 The applicant is a private company of which Mr Maurice Hayes is and was at all material times, a director and shareholder. Mr Hayes' wife is the only other shareholder of the applicant. Mr Hayes is qualified as a certified practising accountant and a member of the Chartered Institute of Secretaries. On 28 September 1994 the applicant entered into a written consultancy agreement ('the consultancy agreement') with the respondent pursuant to which the applicant agreed to provide the services of Mr Hayes to the respondent. 2 The respondent is, and was on 28 September 1994, a publicly listed company carrying on business in the oil and gas industry. The relationship between the applicant and the respondent came to an end in 2003. This application has been brought because the applicant alleges that the respondent did not on the termination of the relationship pay to the applicant all the monies due to it. The applicant claims that there is outstanding to the applicant a total sum of $319 307.79 (inclusive of GST). The amount of $319 307.79 includes an amount of $8 632.54, claimed in respect of the services provided by the applicant to the respondent during the month of May 2003. At the commencement of the trial counsel for the respondent conceded that the respondent was liable to pay for those services subject only to argument as to the precise amount. 3 The applicant also claims damages for breach of contract arising from the alleged failure of the respondent to give reasonable notice of termination of the agreement between the applicant and the respondent. 4 The respondent also brought a cross‑claim against the applicant. At the commencement of the trial, counsel for the respondent also advised the Court that the respondent's cross‑claim was not pursued. Facts 5 There are no major factual disputes in this case. The differences between the parties relate to the inferences that are to be drawn and conclusions that are to be reached from primary facts which are materially not in dispute. 6 At the time that the applicant commenced providing the services of Mr Hayes to the respondent under the consultancy agreement in 1994, the Managing Director of the respondent was Mr Maurice Brand. 7 The consultancy agreement provided that Mr Hayes was to act as the respondent's Chief Financial Officer. The date of the commencement of the consultancy agreement was to be 1 July 1994. The duties Mr Hayes was to perform are described in a schedule to the agreement. The consultancy agreement also provided that the applicant would be paid a 'fee' of $128 400 per annum paid proportionately monthly in arrears on the first day of each month. The agreement provided that the fee was to be reviewed on the first day of July in each year during the term of the agreement as extended or renewed and increased by an amount of at least equal to the percentage increase of the Consumer Price Index (All Groups) for Western Australia. 8 The consultancy agreement also contained cl 8.6, which was to the following effect: 'In the event that the Company terminates this Agreement for any other reason other than as stated in clause 8.1 hereof or the Term (as extended or renewed) is not renewed the Company shall pay to the Consultant the Fee for the remaining period of the contract or six (6) months whichever is the lesser period.' 9 Clause 8.1 of the consultancy agreement permits the respondent to terminate the agreement where there has been 'fault' on the part of the consultant or there are insolvency related circumstances involving the applicant. 10 In 1996 Mr Allan Evans was employed by the respondent. On the employment of Mr Evans, Mr Hayes' title was changed to Project Finance Executive. In 1997 Mr Hayes' title was again changed to Executive Manager‑Finance. Not only did Mr Hayes' title change over time, but also, his duties changed from those which were described in the schedule to the consultancy agreement. On 12 November 1997, the parties agreed that the term of the consultancy agreement was extended to 30 June 2001. 11 In each of the years during the period 1995 to 1997 the applicant and the respondent agreed that the fee payable under the consultancy agreement would be increased. In 1997 it was also agreed that, the consultancy fee would be increased to $190 000 per annum. From 1994 the applicant invoiced the respondent monthly by reference to the number of hours worked per day. As Mr Hayes worked full time, these invoices reflected charges based on working eight hours per day. The rate charged in the invoice was calculated by reference to the annual fee. After the introduction of the Goods and Services Tax ('GST') in July 2000, the applicant invoiced the respondent at a rate of the agreed annual fee plus 10 per cent for GST. The invoices were paid by the respondent. 12 In February 1998 there were discussions within the management of the respondent about bringing into conformity the provisions in the contracts of all of the consultants and the employees relating to termination payments. Following these discussions the Managing Director, Mr Brand, sent a memorandum dated 20 February 1998 to an employee of the respondent, Mr Peter Wishaw which read:

'Subject: Termination Payments Peter, In reference to our conversation of today, in the case of termination through no fault please amend all Consultants Contracts and Employment contracts to afford the individual one (1) months fee/pay for each completed year of continuous service with EEC. This payment is to be calculated and backdated to the date of commencement for each individual.' 13 The applicant and the respondent did not enter into any written agreement varying the consultancy agreement to replace the existing cl 8.6 providing for a termination payment. Nevertheless, the applicant claims that the consultancy agreement was varied to include a clause in the terms stated in Mr Brand's memorandum referred to above. I will discuss this issue in more detail later in these reasons. 14 In late 1998, the liquidity of the respondent deteriorated. The respondent's banker, the Commonwealth Bank of Australia ('the bank'), required that the respondent engage upon an asset realisation programme and that it raise further capital. Mr Hayes, at the request of Mr Brand on behalf of the respondent commenced working with Mr Brand on this asset realisation programme. Mr Hayes' main duties were collecting information to be provided to the bank, answering queries and setting up due diligence rooms. 15 In late 1999 Mr Hayes had discussions with Mr Brand. During those discussions Mr Brand raised the prospect of the respondent terminating the consultancy agreement and engaging the applicant on a different basis. These discussions led to Mr Brand writing the following letter dated 21 December 1999 to Mr Hayes: 'Dear Maurice In reference to our discussions over recent months, it is proposed to continue with the current position of Executive Manager-Finance through to 31 March 2000, at which time it is proposed to abolish the position and retain you on a consulting role on specific projects. We will formalise these arrangements by the end of February. Should you wish to discuss them further with me prior to this time, do not hesitate to do so. Thank you for your contribution during 1999. We are looking forward to a much improved 2000! Yours sincerely ENERGY EQUITY CORPORATION LTD F M Brand MANAGING DIRECTOR' 16 Mr Hayes made a hand written notation on the letter recording that Mr Brand had offered him a 'redundancy payment' of nine months' fee. As it transpired, however, the proposal contained in that letter was never put into effect. 17 On 5 June 2000, the main shareholder of the respondent, Energy World International Limited ('EWI') entered into an agreement with the respondent to provide financial accommodation to the respondent. A major element of this financial accommodation was the provision of a Convertible Note and Subscription Facility to the respondent to assist the respondent in overcoming the liquidity problems which the respondent was then facing. It was a condition of the provision of this financial accommodation by EWI that Mr Stewart Elliott and various members of EWI participate in the management of the respondent and that the members of the respondent in a general meeting pass resolutions which would permit the implementation of the funding plan. 18 Prior to the introduction of the GST in July 2000 Mr Brand advised Mr Hayes and other consultants engaged by the respondent, that they should invoice the respondent for the amount of the agreed consultancy fee and an additional amount for GST. From that time onwards, the applicant rendered invoices which added an amount for GST to the fee charged. The invoices were paid. 19 Because of the respondent's straightened financial circumstances at the time, on 4 August 2000 Mr Brand requested Mr Hayes on behalf of the applicant not to claim the entirety of the consultancy fee, which was then $190 000 per annum, for the months of July, August and September 2000 but to invoice the respondent monthly by reference to the annual fee of $138 000. 20 On 4 August 2000 Mr Brand on behalf of the respondent wrote a letter in the following terms to Mr Hayes on behalf of the applicant: 'Dear Maurice To confirm our discussions whereby the Consulting Fees for Maurice Hayes & Associates will continue at the rate of $138,000 per annum, to be charged monthly for July, August and September 2000. We expect the Shareholders Meeting to be held at the end of September/first week of October, at which time funds will [be] available to the Company as part of its refinancing plan. In the meantime, we will be working with you to establish revised arrangements for the future and I have no doubt that this will be satisfactory to you. Thank you for your support and cooperation during this period.' 21 On 7 August 2000 Mr Hayes, writing on behalf of the applicant, wrote a letter addressed to Mr Brand, on behalf of the respondent, in the following terms: 'Dear Maurice EEC REQUEST TO MAKE PARTIAL PAYMENT OF MAURICE HAYES & ASSOCIATES PTY LTD CONSULTANCY INVOICES FOR THE THREE MONTHS OF JULY, AUGUST AND SEPTEMBER 2000 As per the letter dated 4 August 2000, Maurice Hayes & Associates Pty Ltd (MHA) is prepared to temporarily assist Energy Equity Corporation (EEC) with its cash flow short falls for the three months of July, August and September 2000. This assistance is offered to assist EEC with it's forecast cash flow short falls, and does not imply any agreement to change the terms of the existing contract between MHA and EEC executed in 1994, and amended from time to time by letter (12 November 1997, 5 August 1999 and 21 December 1999).' 22 At the meeting of the board of directors of the respondent held on 29 September 2000, Mr Brand was replaced by Mr Stewart Elliott as Managing Director of the respondent. Another nominee of EWI, Mr Ian Jordan, was appointed as a director of the respondent. These changes to the composition of the board of directors were made in implementation of the financial accommodation between the respondent and EWI referred to above. 23 The shareholders' meeting of the respondent which was referred to in Mr Brand's letter to Mr Hayes of 4 August 2000, did not occur as anticipated in the first week of October 2000. Mr Brand made a further request that Mr Hayes continue not to invoice the respondent in accordance with the agreed annual fee of $190 000.

24 On 9 October 2000 Mr Hayes, on behalf of the applicant, wrote a letter to Mr Brand, on behalf of the respondent, in the following terms: 'Dear Maurice EEC REQUEST TO MAKE PARTIAL PAYMENT OF MAURICE HAYES & ASSOCIATES PTY LTD CONSULTANCY INVOICES Further to our letter dated 7 August 2000, Maurice Hayes & Associates Pty Ltd (MHA) is prepared to further assist Energy Equity Corporation (EEC) with its cash flow short falls for the three months of October, November and December 2000. This assistance is offered to assist EEC with it's forecast cash flow short falls and does not imply any agreement to change the terms of the existing contract between MHA and EEC executed in 1994 and amended from time to time by letter (12 November 1997, 5 August 1999 and 21 December 1999). MHA will continue to invoice EEC as agreed in the 4 August 2000 letter amendment for the additional three months of October, November and December 2000. With respect to the unpaid amounts of the subject invoices [July, August, September, October, November & December], MHA will expect full repayment in January 2001, unless some other mutually agreed arrangement is made in the meantime.' 25 At a meeting of members of the respondent held on 29 November 2000, the members passed the necessary resolutions permitting implementation of the financial accommodation from EWI. 26 Mr Elliott did not, following his appointment as Managing Director of the respondent, work full time from the respondent's premises in Perth. Mr Elliott appointed Mr Ian Jordan to take day to day control of matters within the respondent. Mr Jordan commenced working from the premises of the respondent in West Perth in early 2001 in his capacity as Executive Director of the respondent. Further, Mr Brian Allen, who was also an employee of EWI became involved in dealing with the bank and the respondent's asset realisation programme. 27 In December 2000, Mr Brand again requested that Mr Hayes, on behalf of the applicant, not invoice the respondent at the annual rate of $190 000. By letter dated 22 December 2000, Mr Hayes on behalf of the applicant, wrote a letter addressed to Mr Brand, Executive Director of the respondent, in the following terms: 'Dear Maurice EEC REQUEST TO MAKE PARTIAL PAYMENT OF MAURICE HAYES & ASSOCIATES PTY LTD CONSULTANCY INVOICES Further to our letter dated 9 October 2000, Maurice Hayes & Associates Pty Ltd (MHA) is prepared to further assist Energy Equity Corporation (EEC) with its cash flow short falls for the month of January 2001. This assistance is offered to further assist EEC with it's forecast cash flow short falls until the Convertible Note and Subscription Facility Agreement is in place, and does not imply any agreement to change the terms of the existing contract between MHA and EEC executed in 1994, and amended from time to time by letter (12 November 1997, 5 August 1999 and 21 December 1999). MHA will continue to invoice EEC as agreed in the 4 August 2000 letter amendment for the additional month of January 2001. With respect to the unpaid amounts of the subject invoices [July, August, September, October, November & December 2000 and January 2001], MHA will expect full repayment in February 2001 unless some other mutually agreed arrangement is made in the meantime.' 28 In early 2001 Mr Hayes' title was changed to Senior Consultant/Financial and Commercial. Mr Hayes assisted Mr Allen in carrying out his functions of dealing with the bank and the asset realisation programme. Mr Allen dealt directly with the bank and its advisor, Price Waterhouse Coopers. Mr Hayes' duties were directed towards collecting information to deal with queries from the bank and to facilitate the sale of assets of the respondent as part of the asset realisation programme. 29 On 9 February 2001, Mr Brand wrote a memorandum to Mr Elliott. The memorandum relevantly stated: 'As requested, a summary of staff consulting arrangements are set out hereunder: 1. Corporate … (b) Maurice Hayes/Maurice Hayes & Associates Pty Ltd Maurice's remuneration arrangements are through his company, Maurice Hayes & Associates Pty Ltd to the expiry date of 30 June 2001.

Maurice's remuneration is $190,000 p.a. From July 2000, Maurice agreed to a reduction to $138,000 pending discussions on future arrangements.' 30 On 20 February 2001, Mr Hayes on behalf of the applicant wrote a letter addressed to Mr Elliott, Managing Director of the respondent, in the following terms: 'Dear Stewart, With the uncertainty as to whether the Commonwealth Bank of Australia would support an agreed go forward plan behind us, I thought we might jointly (1) review the role you may or may not have for me in the new EEC, and (2) address some outstanding payment issues relating to my service contract with EEC. [refer attached correspondence]. I look forward to discussing the above with you.' 31 The attached correspondence referred to in the letter to Mr Elliott comprised copies of each of the letters dated 4 August 2000, 7 August 2000, 9 October 2000 and 22 December 2000 to which I have referred above. 32 In around late February/early March 2001, Mr Hayes met with Mr Elliott and Mr Allen. At that meeting, Mr Elliott discussed with Mr Hayes the possibility of Mr Hayes terminating the consultancy agreement and becoming an employee of the respondent. Mr Hayes accepted in cross‑examination that he had attended a meeting with Mr Elliott at which Mr Elliott expressed the view that he preferred persons to work as employees rather than consultants. Mr Hayes also accepted that he had said at that meeting that he would be prepared to consider terminating the consultancy agreement if his claims for the outstanding matters were resolved. 33 On 5 March 2001 Mr Jordan, on behalf of the respondent, wrote to Mr Hayes, on behalf of the applicant, in the following terms: 'Dear Maurice I refer to your letter regarding termination of your Consultancy Agreement with the company, and your acceptance of employment with the company. I confirm our acceptance of your offer of termination of the Consultancy Agreement, and our intention to offer you employment with the company. The terms of conditions of employment will be conveyed to you in the near future, for your consideration and acceptance. While these matters are being resolved, a payment has been made, "without prejudice", on account.' 34 By a letter dated 14 March 2001, Mr Hayes on behalf of the applicant wrote to Mr Jordan in the following terms: 'Dear Ian Re: Consultancy Agreement and Proposed New Arrangements. Your letter dated 5 March 2001 refers. The current Consultancy Agreement has at this stage not been terminated. At a meeting in early March 2001 with Messrs Stewart Elliott and Brian Allen there was agreement for Maurice Hayes to be part of the new organisational structure of EEC as an employee, subject to a satisfactory resolution of matters outstanding with the Consultancy Agreement and the "new employment conditions" proposed. At this date we have not received payment for the February 2001 consulting services provided ($12540.00) nor has any "new employment" conditions been supplied for consideration by Maurice Hayes. Would you please as a matter of some urgency advise us as follows: 1. EEC's proposed settlement of outstanding partial payments ($30,985) as at end February 2001. 2. Payment of February 2001 consulting services invoice ($12,540.00). 3. Proposed terms and conditions for employment of Maurice Hayes.' 35 Mr Jordan provided a copy of this letter to Mr Elliott. There is no evidence of any written response to this letter by Mr Jordan, Mr Elliott or anyone else on behalf of the respondent. 36 In June 2001, there was a discussion where Mr Hayes sought clarification from Mr Jordan as to his position after 30 June 2001 when the term of the consultancy agreement expired. No agreement was reached during this discussion.

37 On 29 June 2001, Mr Hayes sent a letter on behalf of the applicant to Mr Jordan. The letter is in the following terms: 'Dear Ian, Re: Consultancy Agreement and Proposed New Arrangements Your letter dated 5 March 2001 and my letter dated 14 March 2001 refers. The current Consultancy Agreement expires on 30 June 2001, we are however prepared to continue the Agreement on the existing conditions. Would you please as a matter of some urgency advise us as follows: 1. EEC's proposed settlement of outstanding partial payments ($52,695.28) as at end June 2001. 2. Whether you will be extending the current Agreement or proposing new terms and conditions for employment of Maurice Hayes & Accociates [sic] and/or Maurice Hayes.' 38 There was no written response by Mr Jordan or Mr Elliott to this letter. 39 On 4 July 2001, Mr Hayes attended for work at the premises of the respondent where he continued doing the work that he had been doing before 30 June 2001 on the asset realisation programme. Thereafter, Mr Hayes continued working at the respondent's premises on a full time basis on the asset realisation programme and Mr Hayes, on behalf of the applicant, continued to render invoices to the respondent monthly which invoiced the respondent for fees. The applicant's invoices reflected claims for Mr Hayes working eight hours per day at an hourly rate of $75 (plus GST). The respondent paid the invoices submitted by the applicant. 40 As part of this work on the asset realisation programme, Mr Hayes assisted in preparing for sale, the respondent's interests in the Barcaldine Power Station in central Queensland, the pipeline and infrastructure linking this power station to the Gilmore gas field, and the Basin Bridge Power Plant in India. By February 2003, the due diligence processes for the sale of those assets were close to completion. In February 2003 there was a discussion between Mr Hayes and Mr Jordan. In the course of this conversation, Mr Jordan said that because of the progress that had been made on the asset realisation programme, there was less work for Mr Hayes to do. Mr Hayes said that he was prepared to reduce the number of hours that he worked for the respondent. 41 On 29 April 2003 there was a meeting between Mr Jordan and Mr Hayes. Mr Jordan advised Mr Hayes that there would be no ongoing need for his services, but there could be a need for him to do some ad hoc work in the future. Mr Hayes made a hand written note of that conversation. Mr Hayes recorded that he asked Mr Jordan to put in writing the 'termination of the contract'. 42 After the meeting, Mr Hayes continued to attend the respondent's premises and render services during the month of May 2003. 43 On 27 May 2003 Mr Hayes on behalf of the applicant received a memorandum from Mr Jordan on behalf of the respondent. The memorandum was in the following terms: 'Subject: Cessation of services Dear Maurie As I discussed with you recently, with the sale of the Company's assets now virtually complete, we will require you to wind down your Consultancy services with the Company. Unless specifically requested by myself or another Director, I would appreciate if you would not undertake further work on our behalf. I should like to express my personal appreciation and those of my colleagues for all the assistance you have given us, particularly since EWI became involved with the Company. With reference to your most recent invoice, for our records, would you please advise what work you undertook during the times you were in the office?' 44 On 5 June 2003, Mr Hayes on behalf of the applicant wrote to Mr Jordan on behalf of the respondent in the following terms: 'Dear Ian Re: Consultancy Services We refer to your memorandum dated 27 May 2003. We acknowledge that we will not be providing any further consulting services, unless requested to do so by either yourself or another EWC Director (terms & conditions to be agreed). As per your request, please find attached a schedule outlining the work undertaken during May 2003. We look forward to receiving the amount outstanding of $6270.00 by return mail. Given that the company is now terminating the services of Maurice Hayes, and that no alternative arrangements have been made, we will shortly issue our claim for the outstanding "short payments" and the "lump sum termination payment" as per the existing contract executed in 1994.' 45 There was attached to that letter a schedule detailing work undertaken by Mr Hayes for the month of May 2003. 46 On 11 July 2003 Mr Hayes on behalf of the applicant wrote to Mr Jordan on behalf of the respondent in the following terms: 'Re: Consultancy Services We refer to our letter dated 5 June 2003 regarding outstanding payments under the above consultancy agreement. We have attached the following further amounts due: o Payment - 3 Months in Lieu of Notice $ 57,000.46 o Payment - Loyalty for Continuous Service $180,500.00 o Payment - Outstanding Partial Payments $142,091.60 In addition the consulting services invoice for the month of May 2003 amounting to $6,270.00 remains outstanding. Would you please remit the amounts now due and payable by 1 August 2003.' 47 The respondent refused to make the payments claimed by Mr Hayes on behalf of the applicant with the consequence that this proceeding was commenced. The pleadings 48 In its further re‑amended statement of claim, the applicant pleads claims against the respondent based on breach of the consultancy agreement, misleading and deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) ('the TP Act') and quantum meruit. 49 The applicant pleads it entered into the consultancy agreement whereby the respondent engaged the applicant to provide the services of Mr Maurice Hayes to the respondent for a term of four years commencing on 1 July 1994. It is also pleaded that the agreement was renewable by mutual agreement. It was an express term of the consultancy agreement that the respondent pay the applicant the amount of $128 480 per annum payable proportionately monthly in arrears. It is pleaded that on or about 12 November 1997 the consultancy agreement was varied so that the term thereof was extended to 30 June 2001 (referred to in the pleading as the 'extended term') and the fee was increased to $190 000 (exclusive of GST) per annum with effect from 1 November 1997. 50 The applicant pleads that there was an express term of the consultancy agreement, that on the termination of the agreement save for misconduct by the applicant, the respondent would pay the applicant the fee for the balance of the term of the agreement or a period of six months whichever was the lesser period. It is then pleaded that the agreement was varied further to provide that where the agreement terminated, through no fault of the applicant, or was not renewed, the applicant would be entitled to one month's fee for each completed year of continuous service with the respondent - such period of continuous service to be calculated from 1 July 1994, being the commencement date of the agreement. 51 It is further pleaded that on 7 August 2004, and later on 9 October 2004 and 22 December 2004 at the request of the respondent, the applicant up until and including January 2001 forbore from claiming the entirety of the fee of $190 000 (exclusive of GST) per annum and claimed and was paid by reference to an annual fee of $138 000 (exclusive of GST). 52 The applicant pleads that it was acknowledged by Mr Brand for the respondent that the applicant retained its legal entitlement to the fee of $190 000 (exclusive of GST) per annum, and that the unpaid balance, at the rate of $52 000 per annum, would be paid to the applicant by the respondent later as and when the applicant so required. It is further alleged that until March 2003, at the request of the respondent, the applicant continued to forbear from claiming the entirety of the fee of $190 000 (exclusive of GST) per annum and the respondent paid the applicant at the rate of $138 000 (exclusive of GST) per annum. In April 2003 and May 2003 the applicant invoiced the respondent for services as at the rate of $138 000 (exclusive of GST) per annum. 53 It is pleaded that on 30 June 2001 the extended term expired, and that from 1 July 2001, at the request of the respondent, the applicant continued to provide services to the respondent which continued to accept the services, and pay the fee of $138 000 (exclusive of GST) per annum by way of monthly instalments. 54 The applicant pleads that by reason of the respondent accepting the services of the applicant after the expiry of the extended term and by paying for them on the terms of the consultancy agreement without informing the applicant that it no longer intended to pay the fee of $190 000 (exclusive of GST) per annum, nor that it proposed that the other of the applicant's terms and conditions of engagement in the consultancy agreement were to change, the applicant and the respondent agreed that: (a) the applicant would continue to render services and the respondent would accept them on the terms of the consultancy agreement; (b) all the terms of the consultancy agreement, other than in relation to the term, would continue to apply; and (c) the consultancy agreement could be terminated by either party upon reasonable notice. 55 The applicant pleads that the respondent breached the terms of the consultancy agreement by failing to pay, after demands, the following sums: (a) the outstanding balance as at 30 April 2003 between the amount paid by respondent and the amount due at the contractual rate of $190 000 (exclusive of GST) per annum being the sum of $153 930.25 (inclusive of GST); (b) the amount of $8 632.54 (inclusive of GST) being the amount due for services performed by Mr Hayes during May 2003; and (c) the termination payment of $156 745 (inclusive of GST) in respect of a period of service of nine years. This payment is calculated on the basis of a period of service from 1 July 1994 to 5 June 2003. 56 It is also pleaded that the respondent repudiated the consultancy agreement by informing the applicant by memorandum dated 27 May 2003 that it should stop providing the services forthwith and that the applicant accepted the respondent's repudiation by letter dated 5 June 2003. 57 The applicant claims damages in respect of the failure of the respondent to give the applicant a reasonable notice of termination of the agreement then on foot. The applicant pleads a reasonable period of notice would have been six months, alternatively, three months. The applicant also claims the loss of entitlement of one further month's payment as part of the termination payment which it is alleged would have accrued had the reasonable notice been given. 58 In support of the applicant's claim under the TP Act, it is pleaded that the applicant had a reasonable expectation as at July 2001 that if the respondent did not propose to pay the whole of the fee of $190 000 (exclusive of GST) per annum in respect of the services provided when required by the applicant, and proposed that any of the applicant's terms and conditions of engagement, save those relating to the term and method of termination, were to change, then the respondent would so inform the applicant. 59 It is further pleaded that by accepting, and by continuing to accept, the services of Mr Hayes after the expiry of the extended term, without informing the applicant that it no longer intended to pay the $190 000 (exclusive of GST) per annum fee, nor that it proposed that the other terms of the applicant's terms and conditions (save those relating to the term and the method of termination) were to change, the respondent represented to the applicant that: (a) the consultancy agreement was extended; (b) the respondent accepted and would continue to accept the services provided on the terms of the consultancy agreement; (c) all the terms of the consultancy agreement, save those relating to the extended term and the method of termination, would continue to apply to the applicant's engagement by the respondent and, in particular, the whole of the fee of $190 000 (exclusive of GST) per annum would be due and payable in respect to the services provided; (d) the consultancy agreement might be terminated on reasonable notice. 60 The applicant pleads that the representations referred to above were misleading or deceptive because the respondent did not accept, and did not intend to continue to accept the applicant's services on the terms of the consultancy agreement; and did not intend to pay the fee of $190 000 (exclusive of GST) per annum. The applicant also relied upon s 51A of the TP Act insofar as the representations were as to the future. 61 The applicant pleads that by reason of the respondent's misleading and deceptive conduct the applicant suffered loss and damage. In this regard, it is pleaded that had the respondent informed the applicant that it did not accept, and did not intend to accept the services provided after 30 June 2001 on the terms of the consultancy agreement and that the respondent did not intend to pay the fee at the rate of $190 000 (exclusive of GST) per annum, the applicant would: (a) not have continued to provide the services after 30 June 2001, (b) would have sought and obtained the opportunity to provide the services of Mr Hayes to others at a rate of remuneration of at least $190 000 (exclusive of GST) per annum, (c) would have enforced the right to the unclaimed balance of the applicant's fee as at 30 June 2001, and (d) enforced payment of the termination amount as at 30 June 2001 - being $121,916.69 (inclusive of GST) in respect of the period of service of seven years. 62 Finally, the applicant pleads, alternatively, that it is entitled to a reasonable sum for services provided on a quantum meruit basis. 63 In its amended defence, the respondent denied that it was an express term of the consultancy agreement that on the termination of the agreement, save for the misconduct by the applicant, the respondent would pay the applicant the fee for the balance of the term for a period of six months whichever was the less. 64 The respondent also denied that there was any agreement to vary the consultancy agreement to provide for the termination payment as pleaded by the applicant. The respondent said that if there was such a variation to the agreement, it was an express term of the consultancy agreement as thereby varied, that the applicant would be entitled to the fee for one month for each completed year of continuous service calculated from 1 July 1994 in the event that the consultancy agreement was terminated by the respondent, but not otherwise. 65 Otherwise, the respondent admitted the allegations as to the entry into and the terms of the consultancy agreement, but it denied that the annual fee was to be paid exclusive of GST. 66 The respondent also denied each of the allegations that the applicant had forborne from claiming the entirety of the $190 000 fee at the request of the respondent. It denied that Mr Brand, for the respondent, had expressly acknowledged that the applicant retained its legal entitlement to the original fee of $190 000 per annum. The respondent went on to plead that, to the knowledge of the applicant, Mr Brand, on each of the days relied upon by the applicant, or alternatively as at 9 October 2000 and 22 October 2000, did not have the authority to act on behalf of the respondent as alleged. 67 The respondent admitted that the applicant provided services to it after 1 July 2001 and that the applicant invoiced the respondent for those services on a monthly basis but denied that there was an agreement that the applicant would continue to render the services, and the respondent would continue to accept the services, on the terms of the consultancy agreement, and that the agreement could be terminated on reasonable notice. 68 The respondent pleaded that by a letter dated 29 June 2001, the applicant offered to extend the consultancy agreement but the offer was not accepted. Alternatively, the respondent said that if there was an agreement which occurred by the respondent continuing to accept the services of Mr Hayes and by meeting the invoices rendered by the applicant in respect of those services, then the agreement made was that the respondent be paid at an hourly rate of $75 (plus GST) for the services provided to the respondent. 69 As to the claims made pursuant to the TP Act, the respondent denied each of the allegations in relation to the 'reasonable expectation' which the applicant has pleaded. The respondent also denied that by continuing to accept the services of the applicant and paying for them without informing the applicant that it no longer intended to pay the fee of $190 000 per annum, that it represented that the consultancy agreement was extended on the same terms save those relating to the extended term and the method of termination. The respondent pleaded that the applicant knew or ought to have known at all material times after July 2000, that the respondent was in financial difficulties and might not be in a position to pay any amounts to the applicant in excess of the amount invoiced by the applicant on a monthly basis. 70 The respondent denied that it repudiated the consultancy agreement, that the applicant accepted the alleged repudiation and that the applicant suffered any loss or damage as a consequence of the repudiation. The respondent pleaded that the applicant was not requested or instructed to provide any services after 29 April 2003. It is pleaded that on 29 April 2003, the applicant was advised by Mr Ian Jordan, on behalf of the respondent, that there would no longer be any need for the services. 71 In response to the applicant's alternative claim that, if the consultancy agreement was not extended beyond the expiry of the extended term, then the applicant was entitled to a reasonable rate as remuneration, the respondent pleaded that an hourly rate of $75 (plus GST) was reasonable remuneration for the applicant's services. 72 The respondent also pleaded a specific response to the applicant's plea that both during the term of the consultancy agreement and after 30 June 2001, the respondent forbore from claiming the full remuneration to which he was entitled. That plea is that the applicant had agreed with the respondent to a permanent variation of the remuneration due under the consultancy agreement. This remuneration was to be at an hourly rate of $75 (plus GST). The respondent alleged that the variation to the consultancy agreement was made from 1 July 2000, alternatively from in or about October 2000, alternatively from in or about January 2001. The respondent also pleaded as a further alternative that from 1 July 2001 the applicant agreed to a permanent variation to the remuneration payable. 73 The respondent also pleaded that if there was an agreement to forbear, that it was a term of that agreement that any debt thereby accrued in favour of the applicant would not be payable until such time as 'the financial position of the respondent had significantly improved'. It is then pleaded that the financial position of the respondent had not significantly improved since 1 July 2000. 74 By way of a reply the applicant pleaded that there is estoppel by convention which precluded the respondent from denying that there was an agreement to vary the terms of the consultancy agreement to include the termination payment. The issues 75 The following issues arose from the pleadings: (a) Whether in or about February 1998, there was a variation to the consultancy agreement, whereby it was agreed that, if the consultancy agreement was terminated through no fault of the applicant, or was not renewed, the applicant would become entitled to a payment equal to one month's fee for every completed year of continuous service with the respondent. (b) If there was no agreement in February 1998 to vary the consultancy agreement to include the new termination payment term, whether the respondent was estopped from denying such variation, so that the variation is to be treated as having been agreed. (c) Whether the annual fee payable under the consultancy agreement was to be exclusive of GST after 1 July 2000. (d) Whether the applicant, through Mr Hayes, forbore from claiming the full amount of the annual fee of $190 000 from July 2000. (e) Whether the applicant, through Mr Hayes, at any time after July 2000 agreed to vary the terms of the agreement whereby the applicant's rate of remuneration was reduced to an hourly rate of $75 (plus GST). (f) What were the terms of the contractual relationship between the applicant and the respondent after 30 June 2001? (g) Was the contractual relationship between the applicant and the respondent after 30 June 2001 such as would entitle the applicant to a reasonable notice of termination of the contractual relationship? If so, what was the period of such notice, and did the respondent give the applicant the required period of notice of termination? (h) Did the respondent engage in conduct in contravention of s 52 of the TP Act; and if so, what are the consequences? (i) Is the applicant entitled to be paid a reasonable sum by way of quantum meruit, and, if so, what is the sum? (j) Is the applicant entitled to be paid any monies due and/or damages? If so, how much? The witnesses 76 Mr Hayes gave evidence on behalf of the applicant. Also Mr Brand and Mr Lindsay gave evidence on behalf of the applicant. Each was cross‑examined. 77 Mr Allen, Mr Jordan and Mr Elliott gave evidence on behalf of the respondent. Each was cross‑examined. There are no material factual findings which depend on findings of credit. Subject to what is said below, I accept the evidence of each of the witnesses. 78 I now turn to deal with each of the issues in the case. The termination payment issue 79 The applicant claims a termination payment equal to one month's fee for nine completed years of service. The termination payment claimed is based on an annual fee of $190 000 (exclusive of GST). The applicant claims it is entitled to this payment on the basis that there was a variation to the consultancy agreement to replace the existing cl 8.6 of the consultancy agreement with a clause whereby the applicant was entitled to a termination payment equivalent to one month's fee for each completed year of service. 80 The applicant claimed that the relevant variation to the consultancy agreement occurred in 1998. On 7 October 2004 the applicant provided the following further and better particulars of the pleaded variation agreement: 'The agreement was partly oral, partly implied and was evidenced in writing. The agreement was made in or about February 1998 at the Respondent's West Perth offices. Mr Hayes, on behalf of the Applicant, was told by Messrs Peter Wishaw and Robert Clark, on behalf of the Respondent, that the Respondent was bringing all consultancy agreements, including the Applicants, into conformity. This included ensuring that all consultancy agreements incorporated the same entitlement to a termination payment. The necessary amendments were to be formalised as consultancy agreements were renewed. However, it was intended that the amendments would have immediate effect, notwithstanding they had not been formalised. From February 1998, the Applicant, at all times, acted on the basis that the amendments in relation to the entitlement to a termination payment were incorporated into its consultancy agreement.' 81 In its re‑amended statement of claim, the applicant particularised the variation agreement as 'being partly oral, partly implied (or inferred by conduct), and evidenced in writing'. Further, the applicant referred to the particulars given on 7 October 2004 and said that variation was evidenced in writing by the memorandum dated 20 February 1998 from Mr Brand to Mr Wishaw. The applicant also stated in those particulars that the variation agreement was evidenced by, or was to be inferred from a memorandum from Mr Brand to Mr Punch dated 10 July 2000 and the respondent 'noting the applicant's payment entitlement on termination of the agreement in the respondent's June 2000 accounts'. 82 In evidence Mr Hayes said that in early 1998 he became aware through discussions with Mr Peter Wishaw, the respondent's Human Resources Manager, and Mr Robert Clarke, the respondent's Company Secretary, that an issue had arisen with respect to the entitlements of consultants upon the termination of their consultancy agreements. Mr Hayes became aware that new consultants were entitled to a payment on termination of their consultancy agreements, so long as they were not at fault, of one month's fee for each completed year of service. Mr Hayes said further that he attended a meeting of senior executives in early 1998 at which there was discussion of a proposal to bring into conformity all the provisions for termination payments in the contracts of all of the respondent's employees and consultants. The proposal was that the termination payment would be linked to length of service and calculated on the basis of one month's fee for each completed year of service. The necessary amendments would be formalised as consultancy agreements were renewed but the changes would have immediate effect. Mr Hayes said that shortly after the meeting he was shown the memorandum from Mr Brand to Mr Wishaw which is referred to in [12] above. Mr Hayes said that from that time onwards the applicant acted on the basis that its consultancy agreement with the respondent had been amended by the inclusion of the right to a termination payment in the terms of the memorandum. Mr Hayes said that the applicant acted on that basis by continuing to provide his services in accordance with the consultancy agreement. 83 Mr Hayes was not cross‑examined on this evidence. 84 In his evidence Mr Brand said that in early 1998 he was at a meeting of senior executives of the respondent at which there was discussion of a proposal to bring all the termination payment provisions into conformity on the basis of one month's fee for each year of service. Mr Brand said that in his capacity as Managing Director he decided to implement the proposal, and on or about 20 February 1998 he issued the memorandum to Mr Wishaw. Mr Brand said, in his witness statement, that after that date the respondent acted on the basis that each employee and consultant had an entitlement to a termination payment in accordance with his memorandum of 20 February 1998. He also said that the consultants' entitlements were recorded as a contingent liability and accounted for in the respondent's books of account. 85 When asked by counsel for the applicant to give examples of how after February 1998 the respondent acted on the basis that each employee and consultant had an entitlement to a termination payment in accordance with his memorandum of 20 February 1998, Mr Brand said: '…there was a general decision taken by the company that both employees and consultants would be treated in the same way and we instigated a system whereby there would be a payment made at the end of a contract period if it was without cause and I instructed Mr Wishaw to make amendments to all the contracts and at the same time we actually introduced a new employee contract into the company, so I was keen to make sure that it was all consistent throughout the company.' 86 Mr Brand was then asked by counsel for the applicant: 'Were payments in fact made to consultants other than Mr Hayes on that basis?' 87 Mr Brand replied: 'I believe so, yes.' 88 There was in evidence the memorandum of 10 July 2000 from Mr Brand to Mr Punch, the Chairman of the respondent. This is the memorandum referred to in the applicant's particulars. It was relied upon by the applicant as evidence of subsequent conduct supporting the inference that there was a concluded variation agreement between the applicant and the respondent. The memorandum contained, relevantly, the following information: 'Further to our discussions and your request for my suggestions and proposals to discuss with EWI, the following information and suggestions are submitted for consideration. … 3. Senior Management Outlined hereunder is the current basis of arrangements for Senior Management. The future regarding Executives and Management is discussed under section 4. 3.1 Maurice Hayes Maurice Hayes' contract is to 30 June 2001 and if not renewed a fee of six months is payable, i.e. $95,000. EEC has not past [sic] on any CPI adjustments from 1 July 1998 (by agreement with Maurie) on the basis that a "catch up" would take place. As it was proposed that Maurie's position would be abolished at the end [of] December 1999, then March 2000, then April 2000 and then May 2000, he was not requested to take a reduction. Based on workload and other factors, it was decided in December 1999 that Maurie's position would be abolished and that Clint Adams would continue. I agreed with Maurie that as his contract was to June 2001, plus six months, (i.e. total of 24 months at a total cash cost of $380,000) that we would pay nine months, i.e. $145,000 to terminate early. With Clint's departure, Maurie has been willing to continue until his position is further resolved. …

3.5 Richard Rutherford Richard Rutherford's contract has expired but has effectively been extended to 1 July 2000 at the rate of $120,000 per annum. Termination for Richard would be based on our standard one month for each year of continuous service from 15 April 1996. 3.6 Dennis Jones Dennis Jones is an employee commencing August 1996. Dennis' salary is $105,000 and is due for review on 1 July 2000. Non renewal for Dennis would be based on our standard one month for each year of continuous service.' 89 The 2000 Annual Report of the respondent was in evidence. The Annual Report contained a notation under the heading 'Contingent Liabilities' to the following effect: '… (ii) The maximum contingent liability of the chief entity for termination of service agreements with Directors and executives of the company is $1,575,853 (1999: $1,105,542). …' 90 This notation was also referred to in the applicant's particulars and is relied upon by the applicant as subsequent conduct and an admission supporting inference that there was a concluded written agreement as alleged by the applicant. 91 Mr Mark Lindsay, who acted as Financial Controller of the respondent from 1997 to 2000, and as Company Secretary of the respondent in 2000, said in evidence that he had accounted for termination payments for consultants in the annual accounts for the financial year ending 30 June 2000. He said a contingent liability of $1 575 853 was recorded for payments which were expected to arise on the termination of service agreements. 92 Mr Lindsay said that he calculated the contingency entitlements on the basis of two months' base payment plus a payment of one month for each year of completed service. He did this because, when the respondent had terminated a number of consultants in 1999, the respondent had paid them a termination payment of two months' fee for each year of service. 93 Mr Lindsay also said in evidence that as Company Secretary he had seen the contracts with the respondent's consultants and his recollection was that all the contracts contained a clause providing for a termination payment of a minimum of four weeks for every year of completed service. 94 There was also in evidence an undated document, tendered by counsel for the applicant in opening, as exhibit 5 headed 'Consultancy Contracts'. This document was tendered on the basis that Mr Lindsay in evidence would identify this document as being used in his calculation of the contingent liability figure in the respondent's 2000 accounts. It contains a list of the names of each company with a consultancy contract with the respondent. The schedule contains a column headed 'Termination'. In that column, opposite the name 'Maurice Hayes & Assoc. P/L', a figure of $119 399 is recorded. There are other amounts in the same column opposite the names of each of the other consultants' companies. 95 There was also in evidence a document which was tendered as exhibit 41 as part of the applicant's case. It provided as follows: 'PAYMENT CALCULATION FOR M HAYES SALARY PER ANNUM $ 190,000 TERMINATION DATE 30/04/2000 START DATE 01/07/1994 TOTAL TERM 5 YEARS 10 MTHS MULTIPLIED BY $15,833.33 = $92,361.09'. 96 The main questions between the parties on the 'termination payment' issue were: (i) whether the respondent made any offer to the applicant to vary the existing termination payment clause in the consultancy agreement; (ii) if so, whether there was any communication of the acceptance of that offer by the applicant to the respondent; and (iii) in any event, was it necessary to assess whether there had been a variation agreement by reference to the 'classical rules' of offer and acceptance. 97 Counsel for the applicant submitted that it was not necessary to identify separately an offer and an acceptance for the Court to conclude that a binding contract had been made. Counsel submitted that the existence of a contract may be inferred from the conduct of the parties. This conduct included subsequent conduct which showed that the parties have conducted their relationship on the basis that the contract was on foot. In that regard, counsel for the applicant relied upon the evidence of Mr Hayes, Mr Brand and Mr Lindsay and also the inferences which he contended were to be drawn from the 'contingent liability' notation in the 2000 accounts and the contents of the documents referred to in [88], [94] and [95] above. 98 Counsel for the respondent submitted that the classical rules of offer and acceptance should be applied, and that on the application of the rules there was no agreement to vary the consultancy agreement as alleged. 99 Counsel for the respondent submitted that the memorandum from Mr Brand to Mr Wishaw of 20 February 1998 did not comprise an offer to Mr Hayes on behalf of the applicant. The memorandum was only an instruction to Mr Wishaw and could have no contractual effect. Further, argued counsel, if the memorandum was an offer there was no evidence of any acceptance by Mr Hayes on behalf of the applicant. Counsel submitted that no document containing the amendment in the terms pleaded was ever prepared and signed by the parties. Counsel for the respondent also submitted that the conduct of the applicant in continuing to provide consultancy services after Mr Hayes saw the 20 February 1998 memorandum, is equally consistent with no variation having been made, and the consultancy agreement continuing with cl 8.6, the existing termination provision remaining intact. Counsel also submitted there was no consideration for a variation to the agreement to incorporate the new terms. 100 Further, counsel for the respondent submitted that the subsequent conduct relied upon by the applicant was not unequivocal and the conduct did not support the applicant's contention. 101 Counsel for the respondent submitted that no weight could be placed on exhibit 5, the document headed 'Consultancy Contracts' recording the sum of $119 399 as a potential termination payment to the applicant. It was contradictory to the applicant's pleaded case. This was because this sum reflected a fee based on 7.5 months' service, whereas the variation as pleaded never contemplated there would be payments for part of a year's service. Further, counsel said, that the applicant had said that this document was brought into existence in June 2000, in which case the amount to which the applicant would have been entitled to was a fee based on 6 months' service not the 7.5 months as reflected in the document. 102 Counsel also submitted the memorandum to Mr Punch from Mr Brand of 10 July 2000 was also inconsistent with the terms of the pleaded variation. If there had been a variation to the consultancy agreement to incorporate the pleaded term, the payment which would have been payable to the applicant would have been seven months, not the six months referred to in the memorandum. Further, counsel said that the memorandum reflected a misconstruction of cl 8.6 of the consultancy agreement because on its proper construction, no amount was payable if the consultancy agreement terminated by effluxion of time. 103 Counsel for the respondent also submitted that by the memorandum Mr Brand instructed Mr Wishaw to amend the contracts so as to include a termination payment 'in the case of termination through no fault' of the consultant. Counsel argued that there is nothing in the memorandum which requires the respondent to make the termination payment if the consultancy agreement was not renewed, as the applicant had pleaded in its statement of claim. Termination is to be distinguished from effluxion of time, said counsel, because termination involves some 'act or action' by the respondent. Counsel submitted that the consequence, therefore, was that even if there was the variation, once the consultancy agreement came to an end on 30 June 2001, the clause had no application because there was no 'termination'. Counsel submitted further that the right to a termination payment under that clause could not revive thereafter. 104 It is accepted, as counsel for the applicant submitted, that there will be cases when it is not essential or appropriate to apply the classical rules of offer and acceptance in determining whether a contract has come into existence between two or more parties. It is well established that the assessment can also be made by reference to the conduct of the parties, including the subsequent conduct of the parties. 105 In Integrated Computer Services Pty Ltd v Digital Equipment Corp (Australia) Pty Ltd (1988) 5 BPR 11,110 at 11,117 ('Integrated Computer Services'), McHugh JA (Hope JA and Mahoney JA concurring) observed:

'…a contract may be inferred from the acts and conduct of parties as well as or in the absence of their words:…The question in this class of case is whether the conduct of the parties viewed in the light of the surrounding circumstances shows a tacit understanding or agreement. The conduct of the parties, however, must be capable of proving all the essential elements of an express contract:…Care must also be taken not to infer anterior promises from conduct which represents no more than an adjustment of their relationship in the light of changing circumstances.' 106 Further, at 11,118, his Honour observed: 'Moreover, in an ongoing relationship, it is not always easy to point to the precise moment when the legal criteria of a contract have been fulfilled. Agreements concerning terms and conditions which might be too uncertain or too illusory to enforce at a particular time in the relationship may by reason of the parties' subsequent conduct become sufficiently specific to give rise to legal rights and duties. In a dynamic commercial relationship new terms will be added or will supersede older terms. It is necessary therefore to look at the whole relationship and not only at what was said and done when the relationship was first formed.' (Authorities omitted) 107 In Vroon BV v Foster's Brewing Group Ltd [1994] 2 VR 32 Ormiston J said at 81: '…I am prepared to accept…that agreement and thus a contract can be extracted from circumstances where no acceptance of an offer can be established or inferred and where the most that can be said is that a manifestation of mutual assent must be implied from the circumstances.' 108 The assessment of whether the conduct of the parties gives rise to a concluded contract is to be made by reference to the objective standard (Meates v Attorney General [1983] NZLR 308 at 377; Integrated Computer Services at 11,118). 109 I find that in early 1998 there was a meeting at which the senior executives of the respondent discussed a proposal to bring the provisions in the contracts of the respondent's consultants and employees, in relation to the termination payments, into conformity on the basis of one month's fee for each completed year of service. I also find that Mr Brand made the decision after the meeting to implement the proposal and that he communicated this to Mr Wishaw by the memorandum of 20 February 1998. I also find that Mr Hayes subsequently saw the memorandum. I find that after having read the memorandum Mr Hayes continued to perform his services under the consultancy agreement and believed that the terms of the memorandum applied to the consultancy agreement. 110 Whichever of the two approaches advanced by each counsel is applied, I have, for the following reasons, come to the view that there was no agreement between the applicant and the respondent to vary the consultancy arrangement to introduce the pleaded term. 111 Firstly, I accept the submission of counsel for the respondent that there was never an offer made by the respondent to the applicant to vary the consultancy agreement. I find that the memorandum from Mr Brand to Mr Wishaw was no more than an internal direction to Mr Wishaw from Mr Brand. When viewed objectively, the memorandum did not amount to a communication from the respondent to the applicant qua contracting party to vary the terms of its existing consultancy agreement. There is no evidence that Mr Hayes saw the memorandum in any capacity other than as part of his dealing with Mr Wishaw as a fellow senior executive of the respondent. In other words, on the balance of probabilities, the capacity in which Mr Hayes saw the memorandum was as a senior executive of the respondent, and not in the capacity as a director of the applicant as a potential contracting party with the respondent. In addition, the memorandum was not couched in the language of a communication intended to be read and responded to by third parties. 112 Further, even if the disclosure of the memorandum to Mr Hayes by Mr Wishaw could constitute the communication of an offer to the applicant which was capable of acceptance, it is not contended by the applicant that there was any express acceptance of the offer by Mr Hayes on behalf of the applicant. The applicant says rather that the agreement is to be inferred by the conduct of the parties including the subsequent conduct of the parties. The applicant relies on the evidence of Mr Hayes to the effect that he continued to perform his duties in the belief that the consultancy agreement had been varied. However, the subjective belief of Mr Hayes is irrelevant in considering whether the performance by Mr Hayes of the consultancy agreement was conduct from which it could be inferred that the variation was made. This is because the assessment must be made objectively and Mr Hayes was under an obligation to perform the duties under the consultancy agreement in any event. Therefore, Mr Hayes' conduct in performing the consultancy agreement was objectively equally consistent with no variation having been made to the consultancy agreement. 113 In this regard, the position of the applicant is to be distinguished from the position where the content of one of the party's conduct can provide a basis from which an inference can be drawn that an agreement has been reached, in the sense that the conduct evidences the performance of one or other of its provisions. The position is distinguishable from that in Integrated Computer Services, where McHugh JA said at 11,118: 'By the end of October 1983, I think that the parties had entered into a contract which embraced the seven matters to which I have referred. The terms of the June 1983 arrangement may not have been specific enough to be enforceable. But by June 1984 when access to the VAX was cut off, the parties had acted under the arrangement and given effect to it. What they did is explicable only on the basis of a binding agreement. …' (emphasis added) 114 Secondly, I accept the submissions of counsel for the respondent that the subsequent conduct of the respondent did not point to the existence of the pleaded variation to the consultancy agreement. The memorandum of 10 July 2000 from Mr Brand to Mr Punch was not, in my view, an item of subsequent conduct evidencing the pleaded variation to the consultancy agreement. In fact, the contrast between the way in which Mr Brand in the memorandum describes the termination payment provisions in relation to Mr Hayes, on the one hand, and the reference to the respondent's 'standard' provision on termination in relation to Mr Rutherford and Mr Jones, on the other, supports an inference that there was a different regime in place for the payment of a termination payment to the applicant when compared to the other consultants. Indeed, the evidence of Mr Lindsay that he had seen the consultancy agreements and they all contained an express clause providing for payment of four weeks' fee for each year of service, serves further to distinguish the contractual position of the applicant (which did not have such a clause in its contract) from that of the other consultants. 115 Thirdly, I do not find that the notation in the respondent's Annual Report for the year ending June 2000 of a contingent liability of $1 575 853 in respect of termination payments for directors and executives, supports the inference that there was a variation to the applicant's consultancy agreement in the terms pleaded. The evidence as to how that sum was derived was unsatisfactory. During his opening counsel for the applicant tendered as exhibit 5 the document described in [94] on the basis that Mr Lindsay would identify this document as one of the documents which he used in deriving the $1 575 853 contingent liability and which he had sent to the respondent's auditors. However, when he came to give evidence Mr Lindsay did not in fact identify exhibit 5 as being the document referred to at par 21 of his witness statement or as being among the documents which he said he sent to the auditors to explain how the sum of $1 575 853 was derived. Further, in his evidence Mr Lindsay said that the contingent liability figure in the 2000 accounts was calculated by reference to a consultant's termination payment being payable on the basis of two months' base pay plus a payment of one month for each year of service. This method of calculation also does not support the applicant's contention that there was a standard practice of paying consultants' termination payments at the rate of one month's fee for each year of completed service. In any event, even if exhibit 5 had been used by Mr Lindsay in deriving the contingent liability figure in the 2000 accounts, the figure of $119 399 in respect of the applicant does not, for the reasons referred to by counsel for the respondent, support the applicant's contention. Neither is that figure of $119 399 explained by the methodology involving the two months' base pay described by Mr Lindsay. This would have resulted in the applicant being entitled to termination payment based on eight months' fee. 116 Fourthly, I can place no weight on the document comprising exhibit 41 because the provenance of that document is not known and the information contained therein is sparse. There is no evidence that the content of the document is the work of anyone within the respondent with authority to bind the respondent. The document appears to be a calculation of what might be payable as a termination payment to the applicant as at April 2000, if it was calculated on the basis of one month's fee for each year of service. However, the probative value of that document is, in any event, overtaken by the 10 July 2000 memorandum of Mr Brand written some two to three months later, which demonstrates that Mr Brand regarded the termination arrangements of the applicant to be the subject of special arrangements outside the 'standard' provision of one month's fee for each year of service. 117 Fifthly, I do not regard Mr Brand's evidence in his witness statement, that after February 1998 the respondent acted on the basis that 'each of the employees and consultants were entitled to termination payment of one month's fee for each year of service' as having weight in respect of the specific question of whether there was a variation to the consultancy agreement in the terms pleaded. Whilst it may be the case that a termination payment calculated on the basis of one month's fee for each completed year of service was the standard practice of the respondent, the evidence shows that it was not the invariable practice. Mr Lindsay's evidence that payments to terminated executives in 1999 were based on two months' fee for each year of service, is an example of the respondent's departure from the 'standard' practice. Further, Mr Brand's memorandum to Mr Punch shows Mr Brand regarded the applicant's consultancy agreement as standing outside the standard provision. Estoppel 118 As an alternative to its plea that there was an agreement to vary the consultancy agreement, the applicant pleaded that there was an estoppel which precluded the respondent from denying that there was a variation to the consultancy agreement. The applicant pleaded that there was an estoppel by convention founded on a common assumption of the applicant and the respondent that the consultancy agreement had been varied. 119 It follows from the foregoing that I am not satisfied on the balance of probabilities that there was indeed a common assumption of the parties that the consultancy agreement had been varied as pleaded by the applicant. In particular, I am of the view that the memorandum from Mr Brand to Mr Punch of 10 July 2000 does not support that contention, and that it, in fact, constitutes evidence that the respondent regarded the applicant's contractual entitlement to be different to the standard provisions for other consultants which did provide for a termination fee of equal to one month's fee for each year of service. 120 I, accordingly, reject the applicant's claim that there was an estoppel by convention which precluded the respondent from denying there was a variation to the consultancy agreement. Was the applicant entitled to a termination payment under cl 8.6 of the consultancy agreement? 121 The applicant did not make a specific alternative claim that it was entitled to the payment of the termination payment under cl 8.6 of the consultancy agreement. However, it followed that if the Court accepted the case advanced by the respondent, it would find that cl 8.6 of the consultancy agreement continued. Accordingly, although there was no alternative plea by the applicant founded on the continued existence of cl 8.6, it was a live issue because it was an incident of the case advanced by the respondent at trial (see, Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in liquidation) (1916) 22 CLR 490 at 517‑518). 122 Clause 8.6 of the consultancy agreement provides: 'In the event that the Company terminates this Agreement for any other reason other than as stated in clause 8.1 hereof or the Term (as extended or renewed) is not renewed the Company shall pay to the Consultant the Fee for the remaining period of the contract or six (6) months whichever is the lesser period.' 123 After trial I asked the parties for submissions on the proper construction of cl 8.6 of the consultancy agreement - and in particular, whether in the absence of rectification, the word 'lesser' should be construed as 'greater'. 124 Counsel for the respondent submitted that the clause had meaning as drafted. The applicant would be entitled to a six month fee only where the respondent terminated the consultancy agreement when there was more than six months of the fixed term still to run under the consultancy agreement. However, if the termination occurred when there was less than six months to run on the term then the consultant would only receive an amount reflecting that 'lesser' period. By the time that the term of the contract expired that 'lesser' period had diminished to zero. The consequence, argued counsel for the respondent, was that the applicant was not entitled to any amount by way of termination payment once the term of the consultancy agreement expired on 30 June 2001. 125 In my view, counsel for the respondent's contention cannot be accepted. It is clear that the contractual intention was to provide the applicant with a termination payment of a minimum of six months, regardless of whether the relationship between the parties ended by the non renewal of the term of the consultancy agreement on the expiry of the existing term or by the termination of the agreement (other than for a reason set out in cl 8.1) during the currency of the term, of the consultancy agreement. This construction is consistent with the presence in the clause of the words 'or the Term (as extended or renewed) is not renewed'. The construction contended for by the respondent is inconsistent with the presence of those words in the clause and renders those words otiose. In my view, it is obvious that there was a mistake by the draftsman in using the word 'lesser' when the word 'greater' should have been used to give effect to the obvious intention of the parties. Where there is an obvious mistake the Court can give effect to the true contractual intention of the parties without there being any need for rectification. The principle was expressed thus by Santow J in the case of Spunwill Pty Ltd v Bab Pty Ltd (1994) 36 NSWLR 290 at 299: '…Where a court can discern the intent of the parties from an examination of the document as a whole, words may be supplied, omitted or corrected in the instrument, where it is clearly necessary in order to avoid absurdity or inconsistency: Fitzgerald v Masters (1956) 95 CLR 420 at 426‑427. In such cases rectification of the document is not required: Re United Pacific Transport Pty Ltd [1968] Qd R 517; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (at 346).' 126 In the case of Fitzgerald v Masters (1956) 95 CLR 420 the word 'inconsistent' was read to mean 'consistent'. 127 I have found below that, on the expiry of the term of the consultancy agreement on 30 June 2001, the term was not renewed. I am of the view that on the non‑renewal of the consultancy agreement, the applicant became entitled to a termination payment under cl 8.6 of the consultancy agreement. It follows that, in my view, on the expiry of the term of the consultancy agreement on 30 June 2001, the applicant became entitled to a termination payment in a sum equal to six months' fee measured by reference to the annual consultancy fee of $190 000 (exclusive of GST). I will hear the parties on whether a GST component is to be included in that sum, as I apprehend the applicant to contend. Was the amount of the consultancy fee after 1 July 2001 exclusive of GST 128 The evidence of Mr Hayes and Mr Brand established that there was an agreement by conduct that the consultancy fee of $190,000 per annum payable to the applicant under the consultancy agreement was from the date of the introduction of GST to be a fee that was to be free of GST. In other words, the applicant was entitled to earn that fee exclusive of GST and so it could add the amount of GST payable on the fee to the invoice furnished to the respondent. Such an agreement can also be inferred by the respondent's practice in paying the invoices rendered by the applicant and other consultants after 1 July 2001 which invariably included an additional amount in respect of GST. The forbearance issue 129 Counsel for the applicant submitted that after July 2000 there was a forbearance by the applicant, at the request of the respondent, from claiming the full amount of the contractual fee. That forbearance, submitted counsel, was temporary and undertaken on the basis that the applicant reserved its right to claim the difference between the amount invoiced and the contractual entitlement. Counsel for the applicant referred specifically to the letters of Mr Hayes, on behalf of the applicant, dated 7 August 2000, 9 October 2000 and 22 December 2000 as demonstrating that the applicant reserved its rights to claim the difference between the amount which the applicant invoiced the respondent and the full contractual fee. Counsel for the applicant also said that the reference to the outstanding fee payments in the applicant's correspondence with Mr Elliott and Mr Jordan in early 2001 and Mr Hayes' letter to Mr Jordan of 29 June 2001 further demonstrated that the forbearance of the applicant was temporary and that it had not abandoned its right to claim the full contractual fee. Counsel for the applicant also said that the temporary nature of the forbearance by Mr Hayes on behalf of the applicant was reflected in the respondent's internal records. 130 Counsel for the applicant also argued that where a party forbears from enforcing rights under a contract, it becomes entitled to the other party's performance in accordance with the contract. Further, counsel submitted that the defence based on Mr Brand's alleged lack of authority to procure the forbearance from the applicant was, on proper analysis, a false issue. This was because it was the applicant which, when requested to do so, chose to forbear enforcing its rights temporarily, whilst expressly reserving its rights to claim at a later time, its full entitlement. There was no contract which was entered into between the parties and, therefore, the question of authority was irrelevant. It followed, said counsel, that if the respondent's defence was that Mr Brand should not have requested the forbearance, the corollary was that the applicant is entitled to its full annual fee. Having obtained the benefit of the applicant's forbearance at the request of Mr Brand acting on behalf of the respondent, the respondent could not approbate and reprobate. 131 Counsel for the applicant further submitted that there were objections to the plea made by the respondent in its defence that if, which was denied, there was an agreement to forbear, that agreement was subject to an implied term that the outstanding balance of the fee, would not be 'payable until such time as the financial position of the respondent significantly improved'. Firstly, counsel submitted that the act of forbearance was an act on the part of the applicant and did not give rise to any agreement. Secondly, such an implied term was too uncertain to be enforceable. I accept counsel for the applicant's submissions on this point. 132 Counsel for the applicant also submitted that the respondent's attempt in its defence to characterise the contractual relationship between the applicant and the respondent after 1 July 2001 as that of a 'casual' engaged on an 'as requested' basis to provide services at an hourly rate of $75 (exclusive of GST), was flawed. No such inference could be drawn from the fact that after 1 July 2001 the applicant invoiced the respondent in respect of the provision of Mr Hayes' services by reference to the number of hours that Mr Hayes spent working for the respondent each month or that the amount invoiced was $75 per hour (exclusive of GST). Counsel submitted that this was no different to the way the applicant had invoiced for Mr Hayes' services prior to 1 July 2001. The applicant had consistently prior to 1 July 2001 invoiced the respondent by reference to a time sheet reflecting the number of hours per day worked by Mr Hayes. What was significant, said counsel for the applicant, was that the amount had been invoiced by reference to the agreed annual rate, and that each of the parties had characterised the consultancy fee payable under the consultancy agreement as an annual fee. The figure of $75 per hour (exclusive of GST) was the hourly rate measured by reference to the annual fee of $138 000 (exclusive of GST), which was the reduced rate which Mr Brand had asked the applicant to use in invoicing the respondent. 133 Counsel for the applicant accepted that, as alleged in the defence, Mr Hayes had after 1 July 2001 not provided the services which had been specified in the schedule to the consultancy agreement. However, counsel said Mr Hayes had, at the direction of the respondent, undertaken duties different to those described in the schedule well before 1 July 2001. He also said that the applicant and the respondent had, thereafter, continued to regard the services as varied as being rendered under the terms of the consultancy agreement, and that the consultancy agreement continued to bind the parties thereto. There is abundant evidence to this effect and it is consistent with the case advanced by the respondent at trial that the consultancy agreement continued until 30 June 2001, subject only to the variation of the fee payable after February 2001. I accept counsel for the applicant's submissions on this point. 134 In his submissions, counsel for the respondent distinguished between three periods of forbearance. The first period is from July 2000 to January 2001; the second period is from February 2001 to June 2001; and finally the period July 2001 until May 2003.

135 During the course of his oral submissions, counsel for the respondent, in my view, correctly, accepted the applicant's submission that the defence that Mr Brand lacked authority to contract for the applicant's forbearance, would not assist the respondent. Counsel for the respondent did not, therefore, press the defence based on Mr Brand's alleged lack of authority. 136 Further, as to the first period of forbearance, counsel for the respondent also accepted that the letters dated 7 August 2000, 9 October 2000 and 22 December 2000 from Mr Hayes on behalf of the applicant to the respondent showed that the applicant did not intend to waive the entitlement to the difference between the amount of its contractual fee and the lesser amount which the applicant had invoiced. 137 I, therefore, find that the applicant at the request of Mr Brand, on behalf of the respondent, forbore from claiming its full entitlement to its fee, based on the annual sum of $190,000 (exclusive of GST), during the months of July 2000 to January 2001, and the applicant reserved its right to claim the difference between the contractual amount and the invoiced sum for that period. I find, therefore, that the applicant is entitled to be paid the difference between those amounts for the period July 2000 to January 2001. I will receive submissions on whether that amount is to be inclusive of GST, as the applicant claims. 138 As to the other two periods identified by counsel for the respondent, counsel submitted that the applicant agreed to vary permanently the fee payable under the consultancy agreement to $75 per hour (plus GST), that this sum has been paid by the respondent, and that there was, therefore, no further liability on the respondent. Counsel submitted that the applicant's agreement to the permanent variation is to be inferred from the conduct of the parties. 139 As to the period between February 2001 to 30 June 2001, counsel for the respondent submitted that by presenting invoices which charged for services on an hourly basis, without expressly reserving his rights, the applicant abandoned its claim to be paid calculated by reference to $190 000 per annum, and the applicant accepted as a matter of 'commercial reality' that the rate at which it was to be paid was $138 000 per annum. The commercial reality, said counsel, was the parlous financial position of the respondent and the change in control of the management of the respondent after October 2000. Counsel for the respondent submitted that the applicant's letter dated 20 February 2001, did not assist the applicant in its claim, because there had been no response to that letter by the respondent. By that letter of 20 February 2001, Mr Hayes on behalf of the applicant advised Mr Elliott of the respondent, that the applicant had, at the request of the respondent, not been claiming the full amount of the agreed annual fee, provided copies of his letters of 7 August 2000, 9 October 2000 and 22 December 2000 to the respondent, and said that he wanted this 'outstanding payment' issue dealt with. 140 I do not accept that the applicant agreed permanently to reduce the annual fee payable under the consultancy agreement for the months of February 2001 to June 2001 (inclusive) by its conduct in furnishing invoices during that period claiming a rate assessed by reference to the sum of $138 000 per annum. Such a contention is contrary to the evidence. It is clear from the terms of the applicant's letters of 20 February 2001, 14 March 2001 and 29 June 2001 that the applicant had not agreed to a permanent reduction in the annual fee. In each of the letters the applicant refers to the difference between the contractual fee and the payment of the amount invoiced as giving rise to 'outstanding payment' issues. In his letter of 14 March 2001 Mr Hayes on behalf of the applicant, specifically alleges that an amount of $30 985 is due in respect of 'partial payments' including for the month of February 2001. In his letter of 29 June 2001 the amount that Mr Hayes on behalf of the applicant says is due in respect of 'partial payments' has grown to $52 695.28 for the period 'as at the end of June'. 141 I, therefore, find that there was no agreement by the applicant to reduce the annual fee to $138 000 for services performed during the months of February 2001 to June 2001. Nor was there any abandonment of his claim in respect of the 'partial payments' claimed and made during that period. On the contrary, Mr Hayes on behalf of the applicant, was during that period insisting that there were amounts due by the respondent to the applicant in respect of the applicant's continued forbearance from claiming the fee to which it was contractually entitled. I find, therefore, that the applicant is entitled to the difference between the amount received and the contractual amount based on the annual fee of $190,000 (exclusive of GST) for services rendered during the period February 2001 to 30 June 2001. 142 As to the third period of forbearance referred to by counsel for the respondent, namely, the period July 2001 until May 2003, counsel argued that the position must be assessed by reference to the plea made by the applicant that until and including 21 May 2003, at the request of the respondent, the applicant continued to forbear from claiming the entirety of the fee of $190 000 per annum (exclusive of GST). 143 Counsel for the respondent said that there was no evidence that after July 2001 until May 2003 any one of Mr Allen, Mr Elliott or Mr Jordan requested Mr Hayes on behalf of the applicant to continue to forbear from claiming the entirety of the fee. Counsel for the respondent submitted that during the period the applicant presented invoices which on their face indicated an amount owing which was calculated at the rate of $75 per hour (plus GST), giving a total of $82.50, and that Mr Hayes on behalf of the applicant had not claimed or reserved any right in relation to some other payments not disclosed on the face of the invoice. 144 Counsel for the respondent submitted that the position that Mr Hayes, on behalf of the applicant, adopted in expressly reserving its rights in writing to claim the differential amount prior to 30 June 2001, has to be contrasted with the failure to do so after 30 June 2001. Counsel also submitted that the contractual relationship changed after 30 June 2001 to a relationship which he described as a 'do and charge arrangement' and that this relationship was fundamentally different from that which existed under the consultancy agreement until 30 June 2001. Counsel for the respondent argued that prior to that date in any event, the applicant had voluntarily abandoned any claim to a contractual fee assessed by reference to $190 000 per annum. 145 In my view this question is related to the next question, namely, the terms of the relationship between the parties after 30 June 2001, and I will defer dealing with the question until I have dealt with that issue. The post 30 June 2001 contractual position 146 Both parties accepted that there was a contractual relationship between the applicant and the respondent after 30 June 2001 - it was the terms of the contract that was the issue. 147 As already mentioned, the respondent submitted that from July 2001 the respondent engaged the applicant to provide Mr Hayes' services on a casual basis to work, as and when requested, at an hourly rate of $75 (exclusive of GST). 148 Counsel for the applicant submitted that the contractual relationship between the applicant and the respondent after 30 June 2001 was on the same terms as the consultancy agreement, save that the agreement was of an indefinite duration which was terminable on reasonable notice. 149 Counsel for the applicant submitted that this contract was to be inferred from the conduct of the parties after the expiry of the term of the consultancy agreement on 30 June 2001. The relevant conduct comprised the delivery by Mr Hayes to Mr Jordan of the letter of 29 June 2001, the respondent thereafter providing Mr Hayes with the same work that he was doing prior to 30 June 2001, Mr Hayes continuing to work every day for eight hours a day and doing the work provided to him, the applicant continuing to render invoices in the way that it had done before 30 June 2001 and the respondent continuing to pay the invoices in the same way that it had prior to 30 June 2001. In summary, the applicant submitted everything continued after 30 June 2001 as if nothing had changed. 150 Counsel for the respondent submitted that an objective approach must be taken in determining whether there was an agreement as alleged by the applicant. Counsel submitted that, applying an objective test, there could be no such agreement. In particular, counsel relied upon the following matters: (a) Mr Hayes had been informed by Mr Brand in 2000 that it was likely that his services would no longer be required; (b) Mr Hayes had been informed by the respondent that it viewed consultancy agreements as undesirable and would be looking to terminate the existing agreement; (c) there had been a reduction of Mr Hayes' duties following the assumption of control of the respondent by EWI; (d) the expiration of the consultancy agreement on 30 June 2001; and the respondent's failure to respond to Mr Hayes' letter of 29 June 2001 regarding the extension of the agreement.

151 In the case of Brambles Ltd v Wail (2002) 5 VR 169 ('Brambles'), the Court of Appeal (Winneke P, Charles and Batt JJA) held that where the parties to a fixed term contract for the provision of services had, following the expiry of the fixed term contract, continued to deal with each other on the same basis as prior to the expiry of the term of the contract, there could be an implied or tacit agreement that a new contract between the parties was formed on the same terms as the previous contract except as to the term. The new contract would instead be terminable on reasonable notice. 152 In the course of its reasons the Court of Appeal in Brambles at 185‑186, at [57] referred with approval to the following statement which appears in Chitty on Contracts 28th ed, (1999), vol i, p 21, para 1‑034: 'There may also be an implied contract where the parties make an express contract to last for a fixed term, and continue to act as though the contract still bound them after the term has expired. In such a case the court may infer that the parties have agreed to a newly expressed contract for another term.' 153 The Court of Appeal also considered at some length the North American cases on this issue and also referred with approval (at 186, at [59]) to the following statement in Corbin on Contracts Rev ed, (1993), vol 1, p 60, para 1.19 ('Corbin'): 'Parties who have made an express contract to be in effect for one year (or any other stated time) frequently proceed with performance after expiration of the year without making any new express agreement, of extension or otherwise. From such continued action a court may infer that the parties have agreed in fact to renew the one‑year contract for another similar period. Illustrations can be found in leaseholds, employment transactions and contracts for a continuing supply of a commodity…' 154 The Court of Appeal continued at 187, at [59]: '… In one of the cases cited by Corbin, Steed v Busby 268 Ark 1; 593 SW 2d 34 (1980) at 38 the Supreme Court of Arkansas, having stated that in determining whether a "tacit" but actual contract exists the prior course of dealing between the parties is to be considered, went on: "When an agreement expires by its own terms, if without more the parties continue to perform as before, an implication arises that they have mutually assented to a new contract containing the same provisions as the old, and the existence of a new contract is determined by an "objective" test, ie, whether a reasonable man would think, from the actions, that they intended to make a new binding agreement…In such a case, when the parties continue to do business together, their conduct may permit, or even constrain, a finding that they impliedly agree that their rights and obligations should continue to be measured as provided in the old contract. …" ' 155 Further, the Court of Appeal referred to a New York Court of Appeals case, Cinefot International Corporation v Hudson Photographic Industries 13 NY 2d 249; 196 NE 2d 54 (1963), which had been cited in Corbin in support of the statement referred to above, and said: 'Desmond CJ speaking for the majority, stated that the rule that there was available an inference or implication of fact that the parties intended to renew was not really one of substantive law, but of evidence.' 156 The Court of Appeal went on to say at 188, at [61]: 'The question whether an implied or tacit agreement to continue dealing on the same terms save that the agreement should be terminable on reasonable notice is to be inferred is, as Desmond CJ stated and as the other cases and the treatises make abundantly clear, an evidentiary or factual question. On the facts we have set out earlier we consider that such an inference should be drawn here.' 157 In my view, these principles are applicable to the resolution of this issue. 158 I find on 29 June 2001, Mr Hayes on behalf of the applicant delivered a letter to Mr Jordan on behalf of the respondent in which he stated that the applicant was prepared to continue the contract on the same terms as before, and that, there was no express response from the respondent to the letter. 159 I also find that on 4 July 2001, Mr Hayes presented himself for work at the respondent's premises, that the respondent admitted Mr Hayes to its premises and continued thereafter to provide Mr Hayes with the same work as he was performing immediately prior to 30 June 2001. This was work on the asset realisation programme.

160 I find that after 4 July 2001 Mr Hayes continued to work for the respondent for eight hours a day in the same way as he had done before 30 June 2001. I also find that after 30 June 2001, the applicant, by Mr Hayes, continued the practice of rendering monthly invoices by reference to an hourly rate of $75, plus GST, in respect of the services provided by Mr Hayes on an eight hour a day basis to the respondent ‑ in the same form as it had been doing prior to 30 June 2001. Mr Jordan accepted in cross‑examination that Mr Hayes continued to work after 30 June 2001 as if he were a full time employee. 161 I do not accept the respondent's submissions set out at [150] above, for the following reasons. 162 According to the authorities approved by the Court of Appeal in Brambles, the relevant conduct that is to be assessed on an objective basis, is the conduct between the parties which occurred after the expiry of the consultancy agreement. Whilst it is possible that events prior to the termination date may colour the inferences to be drawn from the post termination conduct, this does not arise on the facts in this case. 163 I do not regard the fact that in late 1999 and early 2000, Mr Brand and Mr Hayes had discussed the prospect of terminating the consultancy agreement as being of any weight in assessing whether a tacit agreement was made after 30 June 2001. The discussions between Mr Brand and Mr Hayes in late 1999 and early 2000 did not lead to any agreement being concluded between the applicant and the respondent. Further and significantly, those discussions were superseded by subsequent events, including, of course, Mr Brand's own letter of 4 August 2000 and the applicant's letters of 7 August 2000, 9 October 2000, 22 December 2000, 20 February 2001, 14 March 2001 and 29 June 2001. All of these letters show that the applicant throughout this period regarded the consultancy agreement as being on foot, and the letter of 29 June 2001 shows that the applicant was prepared to continue to supply services on the then existing terms of the consultancy agreement after the termination of the consultancy agreement. When viewed in its full context this evidence does not support an inference that there was any abandonment by the applicant of the consultancy agreement prior to 30 June 2001. Rather, the evidence demonstrates a dogged insistence on the part of the applicant on the continued existence of the consultancy agreement right up until the termination date of the agreement and a willingness to continue to provide services on the existing terms thereafter. Insofar as the evidence shows that there was a preparedness by Mr Hayes on behalf of the applicant to consider alternative arrangements, it also shows that Mr Hayes was insistent that such alternative agreement be made and recorded, before there would be any abandonment of the consultancy agreement. 164 Likewise, no weight can be placed on the fact that there was a meeting between Mr Elliott and Mr Hayes in February 2001 where Mr Elliott expressed his dislike of consultancy agreements, and discussed with Mr Hayes the possibility of the applicant terminating the consultancy agreement and coming to a different contractual arrangement with the respondent. This conduct also predates termination of the consultancy agreement. Further, after that meeting, Mr Jordan wrote the letter to the applicant which is referred to in [33] above suggesting Mr Hayes had agreed to terminate the consultancy agreement. However, by his letter dated 14 March 2001 and referred to in [34] above, Mr Hayes rebutted the statements made in the letter and asserted the continuance of the consultancy agreement. This evidence must also be assessed in light of all the evidence including the applicant's other letters referred to in the previous paragraph. The comments I made in the preceding paragraph about the overall effect of that evidence, are equally applicable here. 165 Further, no weight can be accorded to the alleged 'reduction in Mr Hayes duties' following the assumption of control of the respondent by EWI. I accept that the duties that Mr Hayes performed in assisting in the asset realisation programme represented a reduction in the duties which he was originally engaged to perform under the consultancy agreement. However, this variation of duties occurred prior to the assumption of control of the respondent by EWI which occurred in about October 2000. Thereafter, Mr Hayes worked with Mr Elliott and Mr Allen performing essentially the same duties, except that it was Mr Allen who dealt directly with the bank. However, what is significant is that the reduction in Mr Hayes' duties occurred well before the expiry of the consultancy agreement. It is common cause that immediately before and immediately after 30 June 2001, Mr Hayes continued performing the same duties for the respondent, namely, working on the asset realisation programme. It is this element which is of significance in assessing the character of the post 30 June 2001 relationship and not the fact that there was a variation to Mr Hayes' duties some time prior to 30 June 2001. 166 I accept that it is relevant that there was no express response by the respondent of the applicant's letter of 29 June 2001. However, I do not regard this fact as undermining the inference that there was a tacit agreement between the parties that their continuing relationship after 30 June 2001 was to be on the same terms as the consultancy agreement save as to the term thereof. The question of 'silence' or the absence of response to that letter which indicated a preparedness by the applicant to continue to provide services on the existing terms of the consultancy agreement, cannot be looked at in isolation. As is illustrated by the authorities referred to in Brambles, the relevant conduct in assessing whether an agreement is to be inferred, is not confined to the words or absence of words, of the parties. What is crucial is how the parties deal with each other in that period after the expiry of the original term. In this case, on the basis of the findings that I have made, the parties conduct after the expiry of 30 June 2001, when viewed objectively, showed that the parties continued to behave towards each other in the same way as before 30 June 2001. 167 In my view, on the facts that I have found, it is to be inferred that the applicant and the respondent tacitly agreed that the applicant was to provide the services of Mr Hayes to the respondent on the same terms as those in the consultancy agreement, save that the agreement was to be of an indefinite duration. I consider below whether it was a term of that contract that it was terminable on reasonable notice. It follows that I reject the contention of the respondent that the post 30 June 2001 contract between the applicant and the respondent was for the supply by the applicant of Mr Hayes' services on a casual basis at the rate of $75 per hour (exclusive of GST). 168 In [145] above, I said that I would defer consideration of the respondent's contention that there was no forbearance by the applicant during the period 1 July 2001 to May 2003 because the applicant agreed to supply the services of Mr Hayes after 1 July 2001 at a rate of $75 per hour (exclusive of GST) ‑ being the amount reflected in the invoices which the applicant furnished after 30 June 2001. 169 In light of my findings that on the expiry of the consultancy agreement the applicant and the respondent entered into a successor contract on the same terms save as to duration, as the consultancy agreement, I reject the respondent's submission that there was any agreement whereby the applicant would provide the services of Mr Hayes at the rate of $75 per hour (exclusive of GST) for the period after 30 June 2001.

170 I also find that as at 30 June 2001, the respondent by Mr Elliott and Mr Jordan, was aware through the letters of 20 February 2001, 14 March 2001 and 29 June 2001 from Mr Hayes, that the annual contractual fee to which the applicant was entitled was $190,000 (exclusive of GST) and that although the applicant was prepared to invoice the respondent for a lesser sum it was not abandoning its rights to claim the difference. I do not find that by continuing to invoice the respondent after 30 June 2001 at a rate of $75 per hour (exclusive of GST), without expressly reserving its right to claim the difference, that an inference is to be drawn that the applicant thereby abandoned or intended to abandon its rights to the difference between the contractual fee and the invoiced amount. It had not been the applicant's practice during the period of forbearance during the term of the consultancy agreement prior to 30 June 2001 to record an express reservation of rights on the invoices. However, the applicant had by its letter of 29 June 2001, immediately before the entry into the post 30 June 2001 contract, again made its position on the reservation of rights plain. That letter restated the applicant's position expressed in its previous letters, namely, that whilst it was prepared to continue to render invoices at a reduced rate, that conduct was not to be construed as an abandonment of its entitlement to the contractual rate. The respondent well knowing that the applicant was maintaining its position that the contractual rate governing the relationship was $190,000 (exclusive of GST), made the post 30 June 2001 contract with the applicant without demur. By entering into the post 30 June 2001 contract in those circumstances, the respondent thereby impliedly endorsed its request that the applicant continue to render invoices at the reduced rate, whilst recognising the applicant continued to reserve its rights to claim the balance. It is irrelevant, therefore, that there was no evidence of any of Mr Elliott, Mr Allen or Mr Jordan making an express request of the applicant to forbear from rendering invoices at the full contractual rate. 171 I find, therefore, that the applicant is entitled to the difference between the amount invoiced during the period 1 July 2001 and 30 April 2003 and the amount that would have been payable had the applicant rendered those invoices at a rate by reference to an annual consultancy fee of $190 000, exclusive of GST. Was the applicant entitled to reasonable notice of termination? 172 The next question is whether the post 30 June 2001 contract included a term that the contract was terminable on reasonable notice. 173 The applicant relied on the Brambles case as authority in support of the proposition that the post 30 June 2001 contract was terminable on reasonable notice. 174 Further, the applicant submitted that, in deciding whether the post 30 June 2001 contract was terminable on reasonable notice, an analogy was to be drawn between the position of an employee under a contract of employment and the position of the applicant under a consultancy contract. It was submitted that, at common law, it was an implied term of any employment contract of indefinite duration that the agreement would be terminable on reasonable notice. The applicant argued that, by analogy, such a term should be implied as a term of the post 30 June 2001 contract between the applicant and the respondent. 175 The respondent argued that it was not necessary to imply a term that the contract be terminable on reasonable notice to give the contract business efficiency. Further, counsel for the respondent submitted, that it was not open to the applicant to rely, by way of analogy, on cases involving an employment relationship. 176 There are similarities between the facts in this case and those in Brambles. In the Brambles case the Court was also concerned with an independent contractor agreement. The contract in that case was a written contract whereby the contractor company, Andar Transport Pty Ltd, was to provide services to Brambles for a period of three years. On the expiry of the term the parties continued to deal with each other in the same way as they had before the term expired. The implication of the reasonable notice term in the successor agreement was necessary to accommodate the circumstance that the initial fixed term had expired and that it was necessary for there to be some procedure for the termination of the agreement. Likewise, in this case, by providing that the consultancy agreement would terminate on the expiry of the fixed term, the parties manifested an intention that the contract, which was essentially a contract for the provision of personal services by Mr Hayes, would be of limited duration. In other words, there was no intention that the respondent would engage Mr Hayes's services through the applicant, for the duration of Mr Hayes' working life. In light of my findings that parties did not transform the contractual relationship after 30 June 2001 into a casual contractor relationship, and, in the absence of an express agreement as to a further fixed term, it is necessary to imply the term that the successor contract be terminable on reasonable notice to give effect to the common intention that the contract was to be terminable in circumstances other than by way of mutual agreement. 177 In my view, it was also open to the applicant to rely, by analogy, upon the position of employees under contracts of indefinite duration. In the case of Martin‑Baker Aircraft Co Ld v Canadian Flight Equipment Ld [1955] 2 QB 556, McNair J considered whether a 'reasonable notice' term was to be implied into an agreement, which he characterised as an agency agreement, between a company and an individual. The agreement required the agent to work full time to promote the interests of the company. In deciding whether to imply a reasonable notice clause into the agreement, the learned judge had regard to the nature of the agent's duties and the restrictions imposed upon him. At 581‑582 McNair J determined that there were similarities between the duties of, and the restrictions on, the agent and those of an employee. He held that, by analogy, with the implication of a reasonable notice term into an employment contract of indefinite duration, such a term should be implied into the agency agreement. In this case, also, Mr Hayes provided services on a full time basis to the respondent and the analogy with an employee was apt. 178 I find, therefore, that the post 30 June 2001 contract between the applicant and the respondent contained an implied term that the contract was terminable by either party giving to the other party reasonable notice of termination. It also follows from this finding that the provisions in cl 8 of the consultancy agreement, which are premised on the absence of any power in the respondent to terminate the agreement by notice, did not form part of the post 30 June 2001 contract. What was the reasonable period of notice 179 The question of what period of notice is reasonable must be assessed at the date when the notice is given, not when the contract is entered into (Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567 ('Quinn')). 180 As to the question of what period of notice would be reasonable, the applicant relied upon the following observations of Ashley J at 580‑581 in Quinn: 'It was common ground that the content of "reasonable notice" is to be determined as at the date when notice is given, not when the contract is entered into. In this context matters occurring antecedently to the making of and in the course of the performance of the contract up to the date of termination are not irrelevant.

Macken et al Law of Employment, pp 157‑8, lists certain pertinent considerations. Thus, for example: the duration of the hiring; industry practice, the seniority of the position held; the importance of the position held; the size of the salary; the worker's age; the worker's length of service; what the worker gave up to come to the present employer; the worker's prospective pension or other rights. In the present case I regard as principally important the worker's age when he entered the August 1985 contract, the seniority and importance of, and salary commanded by that position, the fact that the parties would have envisaged - in August 1985 as they did in January 1985 - that the job would be a long term one, the fact that the plaintiff had given up security to enter the defendant's employment in January 1985 (albeit that this was under a different contract) and the fact that the plaintiff's reasonable expectation of getting superannuation protection was destroyed by the termination which was effected.' 181 The applicant argued that taking into account the senior position Mr Hayes held with the respondent, the consultancy fee payable, the applicant's length of service and Mr Hayes' age, a reasonable period of notice was six months. 182 The respondent argued that such notice as was given to Mr Hayes by Mr Jordan in his conversation with Mr Hayes in April 2003 was reasonable in all the circumstances, and the applicant was, accordingly, not entitled to any greater notice of termination than he received. 183 The factors mentioned by Ashley J related specifically to an employment contract. This was a consultancy agreement. The factors there mentioned are of some assistance as a guide to assessing what would be reasonable notice in a consultancy contract, but each case must be assessed by reference to its own circumstances. Another factor which has been held to be relevant in assessing reasonable notice in a commercial context is the time that it would take for a party to make alternative contractual arrangements (see Crawford Fitting Co v Sydney Valve and Fittings Pty Ltd (1988) 14 NSWLR 438 at 444‑445). 184 I find that the question of what is a reasonable period of notice should be assessed as at 23 April 2003 - being the date of a crucial conversation between Mr Hayes and Mr Jordan. I find that during the course of that conversation, Mr Jordan on behalf of the respondent, informed Mr Hayes on behalf of the applicant, that the applicant should cease providing services under the post 30 June 2001 contract. The note which Mr Hayes made of that conversation indicates that Mr Hayes understood that it was Mr Jordan's intention to give the applicant notice of termination of the contract. Mr Hayes' note refers specifically to the termination of the contract. There was no requirement on the part of the respondent to give notice of termination of the post 30 June 2001 contract in writing. 185 In my view, a reasonable period of notice in the circumstances of this case was one month's notice. This was in fact the period of notice which the applicant received. After the 23 April 2003 conversation, the applicant continued to provide Mr Hayes' services during the month of May 2003. 186 In assessing the period of reasonable notice as one month, I take into account the following factors. 187 Firstly, I take into account the nature of the post 30 June 2001 contract and the limited scope of the duties which Mr Hayes was required to perform thereunder. The post 30 June 2001 contract was in effect a contract whereby the applicant was to provide Mr Hayes' services to assist in relation to the asset realisation programme. It was not a senior executive position. Further, it would have been apparent to Mr Hayes that the work which would be available in that capacity under the post 30 June 2001 contract would be of a finite duration. I find that Mr Hayes was in a position to assess progressively the amount of work that was left to do in order to complete the asset realisation programme. Further, he would also have been aware from his conversation with Mr Elliott in February 2001 that the respondent under the control of EWI did not generally favour consultancy agreements. Accordingly, Mr Hayes was in a position himself to make a continuing assessment of the likely duration of the post 30 June 2001 contract. 188 Secondly, the applicant submitted that the length of the notice period should reflect the fact that the applicant had provided Mr Hayes' services to the respondent for almost nine years. In my view, it would not be appropriate to approach the question on that basis. Seven years of the almost nine years referred to by the applicant was served under the consultancy agreement. In my view, the applicant cannot rely upon a nine year period of service as a factor justifying a six month period of notice, because seven years of that service has already been taken into account by the respondent in the termination payment made under the consultancy agreement of six months' fee. The remaining period of service (namely, one year and 10 months) under the post 30 June 2001 contract, must be considered in the context referred to above, namely, that by reason of the nature of the work remaining to be performed, Mr Hayes would have known that the post 30 June 2001 contract was likely to be of a finite duration. 189 Thirdly, similar considerations apply in relation to the question of Mr Hayes' age as apply in relation to the question of length of service. Mr Hayes was born on 19 January 1943 and would, therefore, have been 60 years of age when the April 2003 notice was given. The question of age is also accommodated by the fact that the consultancy agreement contained the provision for the six months' fee termination payment. The fact that Mr Hayes was 58 years of age when he entered into the post 30 June 2001 contract must be viewed in light of the fact that Mr Hayes would have been aware at the time of entering into the contract of the uncertain duration of that contract. Very little weight is placed on the amount of the applicant's fee of $190,000 (excluding GST) because there was no evidence of comparative salaries or consultancy fees paid by the respondent at the date of the giving of the notice. 190 Fourthly, as to the question of the applicant having sufficient time to make alternative contractual arrangements, I regard the fact that Mr Hayes was in a position to make a continuing assessment of the likely duration of the contract, as an important consideration. If Mr Hayes, on behalf of the applicant, wished to obtain an alternative engagement with more secure long term prospects he was in a position to assess when he should start exploring other opportunities. There was no need for the respondent to give Mr Hayes, on behalf of the applicant, a long period of formal notice of the termination of the contract to satisfy this requirement, because each party was able to monitor the extent of the continuing need for the services of Mr Hayes. That Mr Hayes was able to assess the amount of work that was left to be done in the asset realisation programme and the opportunity for further work with the respondent, is manifest by the offer to work on a part time basis that Mr Hayes made in February 2001. From early 2001, Mr Hayes was aware that the writing was on the wall and that the need for his services was likely to come to an end in the near future. 191 It follows that I reject the applicant's claim that the respondent breached the provisions of the post June 2001 contract by failing to give the applicant a reasonable period of notice of termination.

The Trade Practices Act claim 192 The findings I have made in relation to the post 30 June 2001 contractual position, mean that I do not have to deal with the applicant's alternative claim founded on a contravention of s 52 of the TP Act. However, in the event that I am wrong in relation to the contractual position, or that the matter goes further, it is appropriate that I briefly record what I would have found. 193 I would have found the conduct of the respondent after 30 June 2001, in acting as if the pre‑existing relationship was continuing without advising Mr Hayes that it regarded the relationship as a casual contractual relationship at the rate of $75 per hour, exclusive of GST, created the misleading impression the continuing relationship was on the same terms as the consultancy agreement, save as to the term of the consultancy agreement. I would accordingly have found that the respondent contravened s 52 of the TP Act. 194 I would also have found that by reason of this conduct the applicant continued to provide Mr Hayes' services to the respondent and did not claim the outstanding payments comprising the difference between the contractual fee and the amounts invoiced, and any termination payment. 195 Mr Hayes also gave evidence that the applicant would have entered into a contract for the supply of Mr Hayes' services with a different third party on the same terms and conditions as under the consultancy agreement. Mr Hayes was not cross‑examined on this evidence. However, the evidence was at too high a level of generality to have sufficient probative effect, when considered in light of Mr Hayes' age and the state of the industry at the time to support a finding that the applicant could and would have been able to contract with other parties for the provision of Mr Hayes' services at a fee of at least $190 000 per annum (exclusive of GST). I would, therefore, not have found that the applicant could and would have entered into a contract for the provision of Mr Hayes' services to a third party at the rate of $190,000 per annum (exclusive of GST). 196 It also follows from the findings that I have made that the question of quantum meruit does not arise. Conclusion 197 I have found that: (a) The applicant is entitled to a termination payment of six months' fee based on an annual fee of $190,000, exclusive of GST, under cl 8.6 of the consultancy agreement. (b) The applicant is entitled to the difference between the amount invoiced during the period July 2000 to April 2003, and the amount which would have been payable in respect of those invoices had they been rendered by reference to the contractual fee of $190,000 per annum, exclusive of GST. (c) The applicant is entitled to be paid in respect of the services provided during May 2003 calculated on the basis of the contractual rate of $190,000 per annum, exclusive of GST. (d) The respondent did not breach the terms of the post 30 June 2001 contract by failing to give the applicant reasonable notice of its termination. The applicant is not entitled to any damages on that ground. 198 There was no issue taken at the trial in relation to the quantum that would be payable in the event that the applicant was successful in respect of each head of claim. However, as I have indicated earlier the applicant claimed that the amounts that should be awarded to the applicant should include a component for GST. I will require the parties to provide submissions on that issue as well as the questions of interest and costs. I will, accordingly, adjourn the matter to hear further submissions on those issues. I dismiss the cross‑claim. I certify that the preceding one hundred and ninety‑eight (198) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.

Counsel for the Applicant and First and Second Cross Respondents: Mr D M Stone

Solicitor for the Applicant and First and Second Cross Respondents: Williams & Hughes

Counsel for the Respondent and Cross Claimant: Mr P G McGowan

Solicitor for the Respondent and Cross Claimant: Christensen Vaughan

Date of Hearing: 18, 19 and 20 July 2005

Date of Last Written Submissions: 13 June 2006

Date of Judgment: 22 June 2006

Trade Practices Act 1974(Cth)s 51A, s

At a glance

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Before

Source

Judgment (20 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (5)

Cited By (1)