Miller Heiman Pty Ltd v Sales Principles Pty Ltd

Court of Appeal (NSW)|2017-02-22|Before: McColl JA, Macfarlan JA

[1983] HCA 11 Lynch v Stiff (1943) 68 CLR 428; [1943] HCA 38 M K & J A Roach Pty Ltd v Metro Edgley Pty Ltd [2005] NSWCA 39; 6 App Cas 251 Moratic Pty Ltd v Gordon (2007) 13 BPR 24,713; [2007] NSWSC 5 Nominal Defendant v Hook (1962) 113 CLR 641; [1962] HCA 50 Palmer v Clarke (1989) 19 NSWLR 158 Queensland Independent Wholesalers Ltd v Coutts Townsville Pty Ltd [1989] 2 Qd R 40 Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603; [2007] NSWCA 65 Seltsam Pty Ltd v Ghaleb [2005] NSWCA 208 Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 Spencer v Bamber [2012] NSWCA 274 Thompson v Palmer (1933) 49 CLR 507; [1993] HCA 61 TMA Australia Pty Ltd v Indect Electronics [2015] NSWCA 343 Tomasetti v Brailey [2012] NSWCA 399 Tre Cavalli Pty Ltd v Berry Rural Co Operative Society Ltd [2013] NSWCA 235 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7 Texts Cited: K R Handley, Estoppel by Conduct and Election, (2016, Sweet & Maxwell) J D Heydon, M J Leeming and P G Turner, Meagher Gummow & Lehane's Equity Doctrines & Remedies, (5th ed 2015, LexisNexis Butterworths) Piers Feltham, Daniel Hochberg and Tom Leech, Spencer Bower Estoppel by Representation, (4th ed 2004, LexisNexis UK) Category: Principal judgment Parties: Miller Heiman Pty Ltd (Appellant/Cross-Respondent) Sales Principles Pty Ltd (Respondent/Cross-Appellant) Representation: Counsel: Mr A C Casselden SC (Appellant/Cross-Respondent) Mr B Coles QC / Mr Y Shariff (Respondent/Cross-Appellant)

Solicitors: Marque Lawyers (Appellant/Cross-Respondent) Hicksons (Respondent/Cross-Appellant) File Number(s): CA 2016/188493 Decision under appeal Court or tribunal: District Court Jurisdiction: Civil Date of Decision: 17 August 2016 Before: Sorby ADCJ File Number(s): DC 2015/113392

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] In March 2010 the appellant and the respondent executed a Secondment Agreement under which Mr Michael Light, a director of the respondent, was appointed as managing director of the appellant's business. The appellant was to pay the respondent a fee for Mr Light's services calculated by reference to revenue earned by the appellant. During a visit to a prospective client, the National Australia Bank ("NAB"), Mr Light made a remark that a NAB employee thought was offensive. As a result of a complaint concerning this remark coming to the attention of the appellant, Mr Light ceased to have any involvement with the appellant's tender for NAB work, or with its performance of the contract with NAB that was later entered into. Nor did the appellant pay the respondent fees referable to the NAB account. The Secondment Agreement expired by the effluxion of time on 31 December 2010. On 16 April 2015 the respondent commenced proceedings against the appellant in the District Court, claiming fees referable to the appellant's NAB revenue. The appellant contended that Mr Light was estopped from claiming these fees as from June 2010 the parties had adopted and acted upon a common assumption to the effect that: (a) Mr Light would continue to have no involvement with the appellant's NAB tender or contract; (b) the appellant would not terminate the Secondment Agreement and Mr Light would therefore continue as managing director of the appellant; and (c) the respondent would receive no fee in respect of remuneration that the appellant received from NAB. By judgment of 27 May 2016 Sorby ADCJ found in favour of the respondent and entered judgment for it for the relevant fees. The appellant then filed a notice of motion seeking an order under s 126 of the District Court Act 1973 (NSW) that a new trial take place on the ground that the primary judge had overlooked the pleaded defence of conventional estoppel. By a judgment delivered on 27 May 2016, his Honour dismissed the appellant's motion. By a judgment of 17 August 2016, his Honour determined that the interest on the judgment sum to which the respondent was entitled should only be calculated from the date it commenced proceedings, and not from the date its cause of action arose. On appeal, the appellant sought judgment in its favour on the respondent's fees claim, or alternatively, a new trial limited to determination of the appellant's conventional estoppel defence. On a cross-appeal, the respondent contended that the primary judge erred in not awarding interest on the judgment sum from the times at which the fees to which it was entitled became payable. Held, allowing the appeal and entering judgment in favour of the appellant, and dismissing the cross-appeal (per Macfarlan JA, with McColl JA and Sackville AJA agreeing): (1) As the appellant's conventional estoppel defence was pleaded but not dealt with by the primary judge in his first judgment, the appellant had a prima facie right to have the Court of Appeal order a new trial limited to the determination of that defence. In the present case however, determination of the merits of that defence could occur without the consideration of the demeanour of witnesses. Therefore it was appropriate for the Court to determine the issue: [34], [58]. Athval Management Pty Ltd v Doherty [2000] NSWCA 277; 20 NSWCCR 687; Hare v Harmer [2009] NSWCA 68 considered. (2) It is necessary for a person claiming the benefit of a conventional estoppel to demonstrate that he or she would have acted differently but for the common assumption: [49], [62]. Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 and other authorities referred to. (3) The common assumption contended for by the appellant was adopted by both parties. The appellant acted in reliance on it in the sense that, but for the respondent's adoption of the common assumption, the appellant would have acted differently. Any broader inquiry as to what the appellant would have done if the respondent had claimed the relevant fees from the outset was unnecessary: [59]-[61], [67], [71]. (4) If a judge has not dealt with a significant part of a party's case, and the integrity of the hearing is not put in question by allegations of fraud or the like, it is usually appropriate for that party to apply to the judge to set aside the judgment under r 36.16 of the Uniform Civil Procedure Rules 2005 (NSW). A failure to take this course does not however preclude a party appealing on the ground that a judge has failed to deal with a significant issue before him or her: [74], [77]. Consolidated Lawyers Ltd v Abu-Mahmoud [2016] NSWCA 4; Brown v Dean [1910] AC 373 followed. Nominal Defendant v Hook (1962) 113 CLR 641 considered. (5) Although the reasons that the primary judge gave for refusing the application for a new trial were erroneous, there was no good reason for him to order a new trial. The issue raised on the application related to the making of findings based on evidence that had already been adduced. A new trial would have given the parties the opportunity to lead further and different evidence, contrary to the principle of finality of litigation: [75], [82]. (6) If the respondent had been entitled to succeed on its fee claim, the cross-appeal would have been allowed. The usual practice is to award interest from the date at which the relevant cause of action arose. There was no reason to depart from this practice in the present case: [84], [86]-[87]. Haines v Bendall (1991) 172 CLR 60; [1991] HCA 15; Falkner v Bourke (1990) 19 NSWLR 574 considered.

Judgment

McCOLL JA: I agree with Macfarlan JA's reasons and the orders his Honour proposes.
MACFARLAN JA: In 2010 the appellant provided sales training programmes to client businesses and the respondent provided sales consulting services to entities including the appellant. In March 2010 they executed a Secondment Agreement under which Mr Michael Light, a director of the respondent, was appointed to the position of managing director of the appellant's business. The Agreement was expressed to be operative from 1 January 2010, from which date the parties had acted as if the Agreement was already in place. Under the Agreement, the appellant was to pay to the respondent a fee for Mr Light's services calculated by reference to revenue earned by the appellant.
On 4 March 2010 Mr Light and another representative of the appellant, Mr Rob Hartnett, visited the offices of National Australia Bank ("NAB") in Melbourne to set up its board room for a presentation to NAB the following day in relation to a tender by the appellant to become an external consultant to NAB.
To assist with the connection of electronic devices, a female NAB employee (who was experienced in audio visual matters) got on her hands and knees and crawled under the board room table to access cords. Whilst she was there, Mr Light said in the hearing of Mr Michael Sodaitis of NAB: "The things we have to do for our jobs these days on our hands and knees". There was no evidence at the hearing in the present proceedings that the female employee heard the remark.
Following the presentation the next day, a NAB representative told Mr Light that he had received a complaint from Mr Sodaitis concerning the remark and that he did not want Mr Light to be involved if the appellant succeeded in its tender for NAB work. Ms Leigh Hooker, an executive of the appellant based in the United States, also became aware of the complaint.
As a result of the complaint, Mr Light ceased to have any involvement with the appellant's tender for NAB work, or with its performance of the contract with NAB that was entered into on 30 September 2010. Mr Light otherwise continued to perform his role as the appellant's managing director.
On 10 June 2010 a telephone conversation took place between Mr Light on behalf of the respondent and Ms Hooker on behalf of the appellant. The appellant contended in the proceedings that the conversation and emails exchanged between the parties soon after led to the parties adopting, and thereafter conducting their affairs in conformity with, the common assumption that: 1. Mr Light would continue to have no involvement with the appellant's NAB tender or contract; 2. The appellant would not terminate the Secondment Agreement and Mr Light would therefore continue as managing director of the appellant; and 3. The respondent would receive no fee in respect of remuneration the appellant received from NAB.
The appellant further contended that departure by the respondent from this assumption (by claiming fees referable to the remuneration the appellant received from NAB) would cause it material detriment. It alleged that, by adhering to the assumption, the appellant forewent the opportunity to terminate the Secondment Agreement (either on notice or for cause), thereby avoiding liability to the respondent for any NAB-related fees earned thereafter.
The Secondment Agreement terminated by effluxion of time on 31 December 2010. Over four years later, on 16 April 2015, the respondent commenced proceedings against the appellant in the District Court claiming, for the first time, fees referable to the appellant's NAB revenue.
The appellant relied upon a number of defences, including a common law defence of conventional estoppel based upon the matters to which I have referred in [7] and [8] above. By judgment of 27 May 2016 Sorby ADCJ found in favour of the respondent and entered judgment for it for the relevant fees. The appellant then filed a notice of motion seeking an order under s 126 of the District Court Act 1973 (NSW) that a new trial take place on the ground that the primary judge had overlooked the pleaded defence of conventional estoppel. By a judgment delivered on 27 May 2016, his Honour dismissed the appellant's motion. By a judgment of 17 August 2016, his Honour determined that the interest on the judgment sum to which the respondent was entitled should only be calculated from the date it commenced proceedings, and not from the date its cause of action arose.
The appellant appealed against the judgment of 27 May 2016 (and the consequential orders made in the 17 August 2016 judgment) and sought leave to appeal against the interlocutory judgment of 17 August 2016. The respondent cross appealed against the judgment of 17 August 2016 insofar as it provided for only a limited award of interest.
Following a narrowing of issues, the principal issue for determination on appeal relates to the availability to the appellant of its defence of conventional estoppel. There are other related issues to which I refer below.
For the reasons that follow, I consider that the appeal should be allowed and judgment should be entered in favour of the appellant on the respondent's claim for fees. In these circumstances, leave to appeal against the interlocutory judgment should be refused and the cross-appeal should be dismissed. If the respondent had been entitled to succeed on its fee claim, the cross-appeal would have been allowed as it would have been entitled to a greater amount of interest than that which the primary judge awarded.

THE SECONDMENT AGREEMENT

The Secondment Agreement was executed by the parties on or about 25 March 2010 but, as I have noted, an informal arrangement to similar effect was operative from January 2010. The Agreement provided that the respondent was to second Mr Light to the appellant to act as its managing director. The appellant was to pay Mr Light's remuneration. In addition, it was to pay the respondent a fee calculated as a percentage of the appellant's revenue derived during the period of the Agreement. The fee was to be payable monthly in arrears, based on revenue derived during the previous month. By clause 6, it was payable within 14 days of the appellant's receipt of a tax invoice from the respondent. To facilitate the preparation of this invoice, the appellant was obliged to advise the respondent what fee was payable in relation to the previous month by the 20th day of the following month.
Clause 7 provided that the Agreement was to terminate on 31 December 2010 unless otherwise agreed by the parties in writing. Either party was entitled to terminate earlier on 30 days' notice, without cause. As well, the appellant was entitled to terminate the Agreement without notice in the event that the respondent engaged in serious and wilful misconduct.

RELEVANT COMMUNICATIONS BETWEEN THE PARTIES

Although their recollections differed, it is clear that between 20 March and 1 April 2010 Ms Hooker and Mr Light had at least one telephone conversation in which Ms Hooker expressed the view that the remark made by Mr Light prior to the NAB presentation in March was inappropriate and that Mr Light should not have any further involvement with the NAB tender or account. Ms Hooker confirmed this in an email to Mr Light of 1 April 2010 in which she said that "keeping [him] off the NAB account" would give him time "to focus on all the other deals" which the appellant had under consideration.
By email of 22 May 2010 Ms Hooker told Mr Light that she had informed NAB that he would not be involved in the appellant's dealings with it. Further emails were then exchanged.
Ms Hooker deposed that on 10 June 2010 she had a conversation with Mr Light in the following terms: "Me: 'Michael we are pulling you off the NAB account because of the sexual harassment comment that you made to the NAB employee and the feedback from NAB about you. We can't have you involved in the NAB deal going forward because there is [a] credibility issue with you. Your lack of leadership on NAB has caused a significantly higher cost of sale because me, Sam and others have had to come over from the US to service this account. You will not be enjoying any commission if the NAB deal goes ahead because you have added no value.' Mr Light: 'What you're doing is unfair and outside of the terms of our contract. It's not in good faith to do this to me.' Me: 'I appreciate your concerns but we feel that this [is] fair and in the terms of our contract. We are only having this discussion in relation to NAB.' Mr Light: 'Are you going to terminate our contract?' Me: 'We are entitled to terminate the contract because of your serious misconduct. You have breached the contract. However, instead of terminating your agreement as managing director at this time we're going to let you stay on but we won't pay you any commission on NAB. We are also going to keep your distribution agreement on foot.' Mr Light: 'I don't think this is fair. I disagree with your decision, but I will put it behind me and focus on the task ahead in Australia and India.'"
Mr Light gave the following evidence in relation to the conversation (he refers to it as being on or about 11 June 2010): "On or about 11 June 2010, I was in India, representing Miller Heiman and received a telephone call from Ms Hooker and we had conversation with words to the following effect: Hooker: 'Michael, I'm ringing to tell you we have decided you will not be receiving any commission on the NAB account. I thought I should let you know in case you start spending money before you get it.' Me: 'Leigh, that's against the terms of the contract.' Hooker: 'We have discussed it internally and we are entitled not to pay you.' Me: 'That's not fair. That doesn't seem right. I'll want to speak to Len Distaso about it.' At no time during the conversation did Ms Hooker mention: (a) I was in breach of the terms of the Secondment Agreement; or (b) that Miller Heiman were entitled to terminate the Secondment Agreement."
The primary judge did not make a finding as to which version of the conversation should be accepted but Ms Hooker's version derived support from the following email that she sent to Mr Sam Reese, Chief Executive Officer of the appellant's holding company, on 10 June 2010: "Subject: Michael Light I communicated with him about the NAB deal and [told him that] commissions would not be paid. The reason being he was pulled from the account due to inappropriate comments to the client and we will not be able to have him involved going forward due to a credibility issue. The lack of leadership has caused a significantly higher cost of sale and he would not be enjoying any commission. He was very upset, felt it was unfair and not in terms of the contract or in a good faith partnership. I told him I appreciate his concerns, but we feel it is fair and in terms of the contract. He will likely come back at us on this, wanted some time to think on it. He also asked if we were cancelling his agreement, I told him this discussion is based on the NAB account only. And that we did not intend to terminate his agreement as Managing director of AU or as DP at this time. He was upset he felt the client was OK with him and we weren't. I told him Paul is a gentleman and it was my decision not to have him representing us based on our best odds to win this account in light of the comment. I do expect him to come back on this when he returns from India. I will summarize an email reflecting the conversation and kick to the three of you for any edits and send to Michael later today."
Later that day Ms Hooker emailed Mr Light in the following terms: "Per our conversation today, this note serves to confirm that you will not receive commission for any revenue generated by the NAB account. Based on the conversation you and I had around the inappropriate comment made to an [sic] NAB team member and the feedback from the lead ISC on the account, I made the decision to stop your involvement with this account as it put the opportunity at risk. In addition, we do not see any opportunity for you to have any future involvement with NAB. The lack of local leadership has significantly driven up our cost of sales by having to manage this account with resources out of the market. Should you have any questions around this decision, please direct them to me."
On 15 June 2010, Mr Light emailed Mr Reese (copied to Ms Hooker) in the following terms: "NAB: As you know I have not been involved with NAB for 2 months. This recent round of communications has been conducted out of hours, and is not affecting anything else I am doing. I am not going to bug Rob [Hartnett of the appellant] about this, and I am not discussing this with anyone else. I don't happen to agree with the way that things have been handled with me over this, but I'm moving on. I also recognise that my duty is to work with Martin to ensure that our staffing and support of Rob and the NAB team is of the highest standard."
Mr Light responded to Ms Hooker by an email also of 15 June 2010 in which he vigorously rejected the proposition that he had made an inappropriate comment on 4 March 2010. He also objected to being kept away from the NAB account. Mr Light did not however suggest that he would not be "moving on" as he told Mr Reese. In the context of his email to Mr Reese, this was clearly an indication that although Mr Light remained unhappy with what had happened he would accept the respondent's decision as to what was to occur.
Thereafter: 1. Mr Light continued to act as the appellant's managing director (save in relation to its dealings with NAB); 2. the appellant did not provide the respondent with NAB remuneration information to facilitate its preparation of invoices for fees referable to work for NAB; 3. the respondent did not submit invoices relating to such fees; 4. the appellant did not terminate the Secondment Agreement on notice, nor purport to do so for cause; and 5. the Agreement expired by effluxion of time on 31 December 2010.
The respondent did not make any claim for fees referable to the appellant's NAB remuneration until it commenced the present court proceedings over four years later.

THE PRIMARY JUDGMENT

After examining differing evidence on the topic, the primary judge concluded that the remark made by Mr Light on 4 March 2010 prior to the NAB presentation was, as I have recorded above: "The things we have to do for our jobs these days on our hands and knees". In a finding that is not relevant to the present appeal, his Honour concluded that the remark did not amount to sexual harassment for the purposes of s 28A of the Sex Discrimination Act 1984 (Cth). As a consequence, his Honour rejected the appellant's defence that it was not obliged to pay the fees that the respondent claimed because Mr Light's remark constituted unlawful conduct and therefore breached the Secondment Agreement. His Honour found that the fees to which the respondent was entitled amounted to $395,415.74.
His Honour appears to have overlooked the appellant's pleaded conventional estoppel defence, which was not considered or determined in his judgment of 27 May 2016.
In an attempt to have this deficiency remedied, the appellant applied to his Honour by notice of motion seeking an order under s 126 of the District Court Act 1973 (NSW) for a new trial of the action. By his interlocutory judgment of 17 August 2016 his Honour rejected the application, stating: "It is clear from my judgment that I did not consider the Defendant's estoppel point and give reasons one way or the other, because I considered the whole claim rose and fell on the sexual harassment issue. If Mr Light had not engaged in sexual harassment or sexual misconduct (which I found that he had not), Ms Hooker would not have terminated the agreement to pay commission on the NAB account."
His Honour then concluded that, because he had found that Mr Light's comment on 4 March 2010 did not amount to sexual harassment, "Ms Hooker's decision to refuse to pay Mr Light on 10 June 2010 [that is, to assert that the respondent was not entitled to fees relating to remuneration derived from NAB] was without proper foundation or justification" ([10]).
In a further judgment of 17 August 2016, the primary judge determined that interest should run on the judgment sum of $395,415.74 from the date the Statement of Claim was filed (16 April 2015). He stated that this was in accordance with the "usual practice" and that: "The Statement of Claim commencing proceedings was not issued until nearly five years after the Plaintiff was first informed that he would not be receiving any commission from the NAB account. No submissions have been advanced to explain this delay. To award the Plaintiff interest over this period would bestow a windfall upon the Plaintiff, to which in the absence of any explanation he is not entitled to."

THE ISSUES ON APPEAL

By its Amended Notice of Appeal the appellant alleged that the primary judge erred in failing to determine its conventional estoppel defence and by declining to order a new trial under s 126 of the District Court Act. It sought judgment in its favour on the respondent's fees claim, or alternatively a new trial limited to determination of its conventional estoppel defence.
By its Notice of Contention, the respondent sought dismissal of the appeal on the basis that the conventional estoppel was not established on the evidence. It also contended that the appellant was precluded from complaining of the absence of a finding relating to the conventional estoppel defence because the appellant had made a deliberate decision not to seek a variation of the primary judge's 27 May 2016 judgment under r 36.16 of the Uniform Civil Procedure Rules 2005 (NSW) (the "UCPR").
By its cross-appeal, the respondent claimed that the primary judge erred in not awarding interest on the judgment sum from the times at which the fees to which it was entitled became payable, presumably July 2010 to January 2011.

Conventional estoppel

As the appellant's conventional estoppel defence was pleaded but not dealt with by the primary judge in his judgment of 17 August 2016, the appellant has a prima facie right to have this Court order a new trial of the action, limited, as the appellant accepts, to determination of that defence. However if this Court were satisfied that the defence was bound to fail, or alternatively that it was established, it would not make that order (Athval Management Pty Ltd v Doherty [2000] NSWCA 277; 20 NSWCCR 687 at [31]). In the former case, it would dismiss the appeal and in the latter it would allow the appeal and enter judgment for the appellant.
The constraint on this Court adopting either of these alternatives, rather than ordering a new trial, is its inability to determine issues of credit due to it not having seen and heard the witnesses giving their evidence (see Hare v Harmer [2009] NSWCA 68 at [47]). It is accordingly important to consider whether determination of the merits of the conventional estoppel defence would involve the resolution of any questions of credit.
Before turning to this and other factual questions, I make the following observations concerning the principles of conventional estoppel.

The principles of conventional estoppel

An early but authoritative statement of the principles of conventional estoppel is contained in Thompson v Palmer (1933) 49 CLR 507; [1933] HCA 61 where Dixon J said that such an estoppel prevents "an unjust departure by one person from an assumption adopted by another as the basis of some act or omission which, unless the assumption be adhered to, would operate to that other's detriment. Whether a departure by a party from the assumption should be considered unjust and inadmissible depends on the part taken by him in occasioning its adoption by the other party" (at 547). His Honour said that the estoppel will operate if the other party has "placed himself in a position of material disadvantage if departure from the assumption be permitted" (ibid).
In Grundt v Great Boulder Proprietary Gold Mines Ltd (1937) 59 CLR 641; [1937] HCA 58, Dixon J spoke to the same effect and reiterated two points of present relevance. First, in considering detriment, the action or inaction of the party seeking the benefit of the estoppel "must be such that, if the assumption upon which he proceeded was shown to be wrong and an inconsistent state of affairs were accepted as the foundation of the rights and duties of himself and the opposite party, the consequence would be to make his original act or failure to act a source of prejudice" (at 674-5). Secondly, he emphasised that "[b]efore anyone can be estopped, he must have played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it" (at 675).
The same principles were applied in the United Kingdom in Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84 where, in finding that the plaintiffs were estopped, Brandon LJ stated that the parties' conduct was influenced by the assumption agreed between them "in the sense that, if the assumption had not been made, the course of the transactions would without doubt have been different" (at 131).
The authority of Thompson v Palmer and Grundt v Great Boulder was recognised by Mason and Deane JJ in Legione v Hateley (1983) 152 CLR 406; [1983] HCA 11 at 430-2 and in the joint judgment of the High Court in Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226; [1986] HCA 14 at 244. In Legione their Honours emphasised that Dixon J's reference in Grundt v Great Boulder to an "unjust" departure was not seen by him "as a charter for idiosyncratic concepts of justice and fairness" (at 431).
In Queensland Independent Wholesalers Ltd v Coutts Townsville Pty Ltd [1989] 2 Qd R 40, a defence of conventional estoppel failed because the parties' conduct was equally consistent with them acting on their written contracts as with the informal agreed assumption alleged. McPherson J (with the concurrence of Andrews CJ and Demack J) said at 46: "Acts done privately by one party without coming to the knowledge of the other can scarcely be capable of affecting their mutual relations or of raising assumptions capable of forming a conventional or accepted basis governing their relations. To produce that consequence the acts or conduct relied upon must point plainly, if not unequivocally, to the assumption put forward as the conventional basis of relations. A course of dealing that is explicable by reference to some other equally plausible assumption inevitably falls short of establishing that the parties accept as the basis of their relations the particular assumption contended for."
In Commonwealth v Verwayen (1990) 170 CLR 394; [1990] HCA 39 at 445, Deane J stated that the doctrine of estoppel should be seen as "a unified one which operates consistently in both law and equity" (and see Mason J to similar effect at 41). Whilst the law has not, at least thus far, progressed to this point (see for example M K & J A Roach Pty Ltd v Metro Edgley Pty Ltd [2005] NSWCA 39; 6 App Cas 251 at [71] per Hodgson J; Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 90 ALJR 770; [2016] HCA 26 at [37]-[38] and Meagher Gummow & Lehane's Equity Doctrines & Remedies, (5th ed 2015, LexisNexis Butterworths) at [17-050 to 17-060]), the principles of equitable and common law estoppel are undoubtedly closely related. Thus the following statement by Brereton J in Moratic Pty Ltd v Gordon (2007) 13 BPR 24,713; [2007] NSWSC 5 at [32] of the elements of conventional estoppel bears a close, although not complete, analogy to Brennan J's statement in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7 at 428-9 of the elements of equitable estoppel: "In common law conventional estoppel, it is necessary for a plaintiff to establish (1) that it has adopted an assumption as to the terms of its legal relationship with the defendant; (2) that the defendant has adopted the same assumption; (3) that both parties have conducted their relationship on the basis of that mutual assumption; (4) that each party knew or intended that the other act on that basis; and (5) that departure from the assumption will occasion detriment to the plaintiff ..."
This statement of principles was approved by this Court in Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603; [2007] NSWCA 65 at [200] and Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407 at [573].
It was again approved by this Court in TMA Australia Pty Ltd v Indect Electronics [2015] NSWCA 343 at [115]. In that case, a conventional estoppel defence failed because the parties' conduct did not, as required by the approach of McPherson J in Queensland Independent, "point plainly, if not unequivocally to the assumption put forward as the conventional basis" of the parties' relationship (at [123]).
To establish relevant detriment, it is not necessary for the party claiming the benefit of an estoppel to demonstrate that the conduct of the other party was the sole inducement operating on its mind (Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 at [71]). However there is a question whether it is necessary for that party (in this case the appellant) to establish that, but for the representation (in the case of equitable estoppel) or assumption (in the case of conventional estoppel) it would not have acted as it did.
The authors of Spencer Bower Estoppel by Representation, (4th ed 2004, LexisNexis UK) at [V2.10] suggest that it is not. In Sidhu, Gageler J concluded otherwise. His Honour took the view that to make good the estoppel that the respondent in that case relied upon, she needed to establish that "having the belief and taking the belief into account made a difference to her taking the course of action or inaction: that she would not have so acted or refrained from acting if she did not have the belief" (at [91]). His Honour said that "[t]here can be no real detriment if the party asserting the estoppel would have been in the same position in any event" (at [92]). His Honour distinguished the earlier High Court decision in Lynch v Stiff (1943) 68 CLR 428; [1943] HCA 38 on the basis that, although the court in that case appeared to suggest that such proof was unnecessary, it did so in the context of an assumption by it that the party in question had nevertheless acted to his prejudice because he believed in the representation made to him (at [94]).
The plurality in Sidhu seems to have taken the same view, although less explicitly. In that case the appellant submitted that the respondent "had not discharged the onus of proving that she would not have 'remained on the property and … done what she had done in any event'" (at [67]). Their Honours rejected that submission on a number of bases, none of which included the proposition that the respondent bore no such onus of proof. Rather, for a number of identified reasons relating to the evidence in the case, their Honours found that "the respondent was induced to remain at the property and to continue to work for the appellant and his wife by the assurances which he made" (at [78]).
Gageler J's approach is consistent with the statement in Amalgamated Investment to which I have referred in [39] above and with Dixon J's emphasis on the need for proof of detriment, prejudice or disadvantage (see [37] and [38] above).
In light of these authorities, I conclude that it is necessary for a person claiming the benefit of a conventional estoppel to demonstrate that he or she would have acted differently but for the agreed assumption.

Whether conventional estoppel established

The first and second elements of estoppel by convention stated in Moratic (see [42] above) concern the parties' adoption of an assumption relating to their legal relationship. The assumption alleged to have been adopted in this case had the three facets listed in [7] above. The appellant contended that it was adopted in the course of the communications between the parties on 10 June 2010 and shortly thereafter, as described in [18] to [23] above.
According to Ms Hooker's version of her 10 June 2010 conversation with Mr Light, she told him that he was not to be involved in work on the NAB account, that he would not be paid fees referable to the appellant's remuneration on the NAB account, and that the appellant would not terminate the Secondment Agreement.
Mr Light's version of the conversation acknowledges that Ms Hooker conveyed the first two of these matters. As to the third, Mr Light denies that there was any discussion in the conversation about termination. As I noted earlier, Ms Hooker's version is supported by the email she sent to Mr Reese on the same day, although the email she sent to Mr Light also on that day makes no reference to a discussion of termination (see [20] and [21] above).
In her oral evidence Ms Hooker acknowledged that her conversation with Mr Light did not result in agreement. This reflects the observation in her email to Mr Reese sent later on 10 June 2010 that Mr Light would "likely come back at us on this, wanted some time to think on it".
Mr Light's subsequent email of 15 June 2010 to Mr Reese (see [22] above) however constituted an acceptance, albeit reluctant, of the position that had been put to him. As he said, "I don't happen to agree with the way that things have been handled with me over this, but I'm moving on". He then made it clear that he would not seek involvement in the appellant's "NAB team". His silence on the appellant's stated position on fees, and (if it had in fact also been raised with him) on the question of termination, amounted to acquiescence in, and implicit acceptance of the assumption upon which the appellant relies.
It is not disputed that thereafter Mr Light had no involvement with the NAB account, that the appellant did not purport to terminate the Secondment Agreement and that (at least for a period of over four years) the respondent did not claim any fees referable to the NAB account. If the common assumption extended to these three matters, the parties thus acted in conformity with the assumption. On Ms Hooker's evidence, by not terminating the Secondment Agreement the appellant acted in reliance on the respondent's adoption of the assumption.
To complete the conventional estoppel (see the elements identified in [42] above), the appellant alleges that if the respondent is permitted to depart from the common assumption (by claiming fees referable to the NAB account), the appellant will suffer material detriment. The appellant contends that, in reliance on the parties' adoption of the assumption, it forewent the opportunity to terminate the Secondment Agreement and thereby to avoid legal liability for most, if not all, of the fees referable to the NAB account.
Whether it did suffer this detriment because, but for the common assumption, it would have exercised a right of termination will need to be examined. The anterior question is however whether the common assumption extended to the non-termination by the appellant of the Secondment Agreement. The answer to this critical question depends upon the terms of the 10 June 2010 telephone conversation between Ms Hooker and Mr Light, as that was the only communication between the parties in which the question of termination by the appellant arguably arose. Ms Hooker gave evidence that it did arise and Mr Light deposed that it did not.
Generally this Court is not in a position to determine an issue which depends upon the credibility of witnesses in the Court below as it has not seen and heard the witnesses give their evidence and thus cannot form views about their demeanour. What I have described in the last paragraph as the "critical question" was not answered by the primary judge but it is relevant to consider whether if the question were returned for determination to the primary judge, or another judge of the District Court, the demeanour of the witnesses would likely be of importance. In my view, it would not.
As Ms Hooker and Mr Light gave evidence more than five years after the relevant conversation, the contemporaneous correspondence would be of overwhelming importance to the Court in deciding what was said. The email that Ms Hooker sent to Mr Reese on the day of the conversation (see [20] above) clearly stated that termination of the Agreement was discussed during the conversation. There being no suggestion in the evidence or arguments of any motive for Ms Hooker to misstate the position in her internal communication with Mr Reese, the email provides powerful support for Ms Hooker's evidence that termination of the Secondment Agreement was expressly discussed during the conversation with Mr Light. The proximity of the time at which Ms Hooker sent the email to the time of her conversation with Mr Light precludes any possibility that she made an error of recollection. Ms Hooker's email to Mr Light of the same day (see [21] above), which did not mention any discussion of termination in the conversation, does not assist the respondent as it did not purport to be a complete record of what was said.
Mr Light's email to Mr Reese of 15 June 2010, in particular the reference to "moving on" (see [22] above), is consistent with Ms Hooker's account of the 10 June 2010 conversation. Mr Light did not agree with the refusal to pay the NAB fees, but his acceptance of the decision reflected an appreciation that his position was vulnerable. The obvious source of vulnerability was the risk that the Secondment Agreement might be terminated.
In these circumstances it is appropriate for this Court to conclude on the balance of probabilities, as I do, that termination was discussed in the conversation of 10 June 2010 as recounted in Ms Hooker's evidence.
Turning then to the question of detriment, it must first be considered whether the appellant acted in reliance on the assumption in the sense that, but for the respondent's adoption through Mr Light of the common assumption, the appellant would have acted differently. As Gageler J stated in Sidhu v Van Dyke (see [46] above), "[t]here can be no real detriment if the party asserting the estoppel would have been in the same position in any event".
As to this issue, Ms Hooker deposed in [51] of her affidavit that if the respondent had "ever sought to obtain any commission payment from Miller Heiman or stated that it would seek payment in the future, I would have terminated the Secondment Agreement immediately" (see also [48]). This constituted evidence that the appellant would have purported to terminate the agreement immediately if Mr Light, on behalf of the respondent, had not adopted the assumption (as Ms Hooker's evidence indicated he did) that the respondent would not claim the relevant fees and the appellant would not terminate the Secondment Agreement. Thus, if the respondent had claimed these fees, the appellant would have purported to terminate the Agreement immediately. The appellant could only have done so with immediate effect if the respondent, through Mr Light, had been guilty of "serious and wilful misconduct" (allegedly constituted by sexual harassment at the NAB premises on 4 March 2010). Otherwise the appellant could have terminated, without cause, on 30 days' notice (see [15] above). This would have put an end to the respondent's rights to fees based on remuneration derived thereafter by the appellant on the NAB account. As most, if not all, of that remuneration was received more than 30 days after the communications of 10 June 2010, the appellant would have avoided a substantial liability by terminating the Secondment Agreement on notice.
Ms Hooker's evidence as to change of position was not challenged in cross-examination. She was pressed strongly in cross-examination about her reasons for taking the view that the respondent should not be paid fees referable to the appellant's NAB remuneration (see for example transcript pp 128-131). It was not put to her however that if, after the communications of 10 June 2010, the respondent had claimed fees based on the appellant's NAB remuneration she would not have had the appellant terminate the Secondment Agreement (a proposition that would have been contrary to her evidence).
It was put to her that a decision had earlier been made not to terminate the Secondment Agreement and that as at 10 June 2010 she therefore had no intention to cause termination to occur (transcript pp 117 and 123). She rejected that proposition. However, even if she had accepted it, that acceptance would not have been inconsistent with her evidence that if Mr Light had claimed the relevant fees post 10 June 2010 she would have caused termination to occur.
Evidence, such as this, of a counter-factual is not decisive as to what would have occurred in the hypothetical circumstance postulated. Indeed it will often be of limited weight (see for example Chappel v Hart (1998) 195 CLR 232; [1998] HCA 55 at footnote 64). Nevertheless, Ms Hooker's evidence on this point is of some significance as it appears to accord with the objective circumstances that prevailed. The appellant had been critical of Mr Light's conduct at the NAB offices and had removed him from involvement with the NAB account. As the appellant's remuneration on that account would thereafter have had little, if anything, to do with Mr Light's services, it is unsurprising that the appellant would take the view that it did concerning fees referable to the account, and stand firm if Mr Light took the contrary, seemingly unreasonable, view.
In these circumstances, this Court should conclude that if Mr Light had indicated in the conversation of 10 June 2010, or shortly thereafter, that the respondent would claim NAB related fees, the appellant would have terminated the Agreement. As I have noted, Ms Hooker's evidence to this effect was not challenged in cross-examination and the evidence accorded with the objective circumstances.
The respondent submitted that, to establish relevant detriment, it was insufficient for the appellant to prove that it changed its position in reliance upon the assumption, even (it would follow from the submission) if the effect of the change of position was that the appellant avoided a substantial liability to pay fees to the respondent. The respondent submitted that, for the appellant to succeed, there would have to have been a consideration by the Court of the advantages and disadvantages to the appellant of the Secondment Agreement remaining on foot and Mr Light therefore continuing in his position as managing director. It submitted that the evidence disclosed that the appellant generated far greater revenue during the remaining period of the Secondment Agreement (10 June 2010 to 31 December 2010) than it paid Mr Light. It contended that this indicated that the result of any such enquiry would likely have been that the appellant would in fact have been disadvantaged by terminating the Secondment Agreement, although the respondent recognised that other matters would have been relevant to that enquiry, for example, the identity of any replacement for Mr Light.
In response, the appellant relied upon the statement in Handley, Estoppel by Conduct and Election, (2016, Sweet & Maxwell) that a conventional estoppel "prevents a return to the previous relationship and there is no need to evaluate the detriment that a return to the previous relationship would cause to the party enforcing the estoppel" (at [8-009]).
Whether this statement of principle should be accepted without qualification need not be determined, as in my view an enquiry of the type for which the respondent contended is, at least in the present situation, unnecessary and inappropriate. There may be some situations in which a change in position in reliance on an assumption could not be regarded as itself sufficient to establish relevant material detriment, but the present is not one. As I have indicated, the changed position here was that the contract between the parties remained on foot, rather than being terminated. If there is no estoppel the respondent will be entitled to the fees it claims. Otherwise, it will not.
To require a broader enquiry as to what would have occurred in the hypothetical situation that Mr Light claimed the relevant fees from the outset would be impractical as it would not only be time consuming and expensive but without obvious boundaries. For example, on the respondent's approach it is not obvious why, once a likely replacement for Mr Light as managing director was identified, there should not have been an examination of the particular contracts from which the appellant derived revenue and an examination of whether the replacement managing director would have been more or less persuasive than Mr Light in obtaining that business, and more or less successful than him in servicing the accounts. In my view the loss of the opportunity to avoid payment of the NAB based fees was sufficient to constitute detriment in the circumstances of this case.
In conclusion on this topic, I note that the respondent submitted that the appellant's conventional estoppel defence was bound to fail because well prior to 10 June 2010 the appellant had decided not to terminate the Secondment Agreement as a result of Mr Light's conduct at the NAB offices and that it had communicated that decision to Mr Light. It submitted that the appellant was precluded by the doctrine of election from later taking an inconsistent course (see Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26; [1993] HCA 27 at 40-43). However, even if a relevant election occurred, it could only have operated to preclude the appellant terminating the Secondment Agreement for "serious and wilful misconduct" (see [15] above). Any such election did not relate to the appellant's right under the Secondment Agreement to terminate it on notice and without cause.
For these reasons, the appellant's conventional estoppel defence succeeds. The respondent's fee claim accordingly fails and the appellant is entitled to judgment in its favour on the respondent's claim. In these circumstances, the appellant's application for leave to appeal against the primary judge's denial of its motion for a new trial and the cross-appeal do not arise. Nevertheless I express the following views on these matters.

THE MOTION BELOW FOR A NEW TRIAL

As I said (with the concurrence of Bathurst CJ and Tobias AJA) in Consolidated Lawyers Ltd v Abu-Mahmoud [2016] NSWCA 4 at [39]-[40] it is usually appropriate for a party to apply to a judge to set aside his or her judgment under r 36.16 of the UCPR if the judge has not dealt with a significant part of the party's case. As I also said, the primary judge "is almost always in a better position than an appellate court to decide an overlooked point and appellate courts are entitled to have the benefit of a primary judge's views about matters in issue on appeal. The requirement in s 56 of the Civil Procedure Act 2005 (NSW) to have regard to the 'just, quick and cheap resolution of the real issues in the proceedings' strongly supports the adoption of this course in the absence of particular reasons for the point being taken directly on appeal" (at [40]).
Instead of applying under r 36.16, the appellant in this case applied under s 126 of the District Court Act for a new trial. There was however no proper basis for an order to be made under this section as the integrity of the hearing was not put in question by allegations of fraud or the like (see for example Brown v Dean [1910] AC 373 at 375). Rather, the issue related to the making of findings on the basis of evidence already adduced. It would have been inappropriate in these circumstances to order a new trial as this would have given the parties the opportunity to lead further and different evidence. In the absence of a good reason for a new trial, this would have offended against the principle of finality of litigation. The issue that had arisen could and should have been corrected by asking the primary judge to deal with the point he had seemingly overlooked.
The origins of provisions such as s 126 are in court legislation which conferred rights of appeal, if at all, only in respect of points of law (see Nominal Defendant v Hook (1962) 113 CLR 641; [1962] HCA 50 at 656-7). In light of the existence of a general right of appeal now conferred by s 127 of the District Court Act, the occasions for use of s 126 will be rare.
Although a r 36.16 application is usually the appropriate course to take, a failure to take it does not preclude a party appealing on the ground that a judge has failed to deal with a significant issue before him or her. Contrary to the respondent's contention, there is no basis for concluding, at least on the facts of the present case, that the party is estopped from exercising its rights of appeal.

The reasons given on the s 126 application

The primary judge's reasons for rejecting the new trial application cannot be regarded as a proper supplement to his reasons for judgment in the proceedings as the application for a new trial was separate from and subsequent to his Honour's determination of the proceedings. Rule 36.2 of the UCPR permits reasons for judgment to be delivered in writing but the rule contains a temporal element which requires the reasons to be published at or about the time that judgment is pronounced (Palmer v Clarke (1989) 19 NSWLR 158). At least in respect of District Court proceedings (the Court not being a superior court of record), reasons not so published must be disregarded. Minor revisions, not changing the substance of the reasons published, are nevertheless permissible (Spencer v Bamber [2012] NSWCA 274 at [169] and Tre Cavalli Pty Ltd v Berry Rural Co Operative Society Ltd [2013] NSWCA 235 at [54]-[58]). The primary judge's reasons for rejecting the s 126 application did not fall into this category.
The position would arguably have been otherwise if his Honour had given reasons on an application to him under r 36.16 because such an application and its outcome, being concerned with the question of correcting the judgment, would have been an integral part of the determination of the proceedings. Rule 36.16 creates a specific, but limited, qualification to the finality of judgments. Applications under that rule, and their determination, can truly be regarded as part of the final disposition of the proceedings, rendering reasons given on such applications part of the reasons for the disposition of the proceedings as a whole.
These matters do not however assume significance in the present case because the reasons that his Honour gave for rejecting the new trial application are not of present assistance to either party. His Honour did not conclude that the conventional estoppel defence should have succeeded, nor did he give a supportable reason for its failure. His Honour said that Ms Hooker would not have had the appellant terminate the Secondment Agreement if Mr Light's 4 March 2010 comment did not amount to sexual harassment (which his Honour held it did not). However, Ms Hooker's decision as to what to do could not logically have been based on the outcome of any judicial determination of whether the conduct amounted to sexual harassment when there was no suggestion that the appellant contemplated making an application to a court for determination of that question. Rather, if characterisation of the comment as sexual harassment was relevant in Ms Hooker's mind, it would have been her perception of its characterisation or of the advice she received about it that would have been important.
I add that, contrary to the respondent's submissions in this Court, the appellant's conventional estoppel defence was not pleaded as dependent upon a finding that the 4 March 2010 remark constituted sexual harassment.
It follows from what I have said that the primary judge did not err in failing to order a new trial, although the reasons that he gave were erroneous. He should have rejected the application upon the basis that it was an inappropriate procedure, there being no good reason demonstrated for ordering a new trial (as distinct from an application to set aside or vary the judgment under r 36.16).

CROSS-APPEAL - INTEREST ON THE JUDGMENT SUM

As noted earlier, the primary judge awarded interest on the judgment sum only from the date of the filing of the Statement of Claim (16 April 2015). He did this for three reasons: first, the respondent did not explain why it delayed over four years before commencing proceedings; secondly, to give the respondent interest for this period would bestow a windfall upon it; and, thirdly, that restriction of interest to that period was in accordance with "the usual practice".
Pre-judgment interest awarded pursuant to s 100 of the Civil Procedure Act 2005 (NSW) and similar statutory provisions is compensatory in character (Haines v Bendall (1991) 172 CLR 60; [1991] HCA 15 at 66-7). Although such provisions confer a discretion to award interest, it is "almost invariably to be allowed when claimed" (Falkner v Bourke (1990) 19 NSWLR 574 at 576). Contrary to the view expressed by the primary judge, the usual practice is to award interest not simply from the date of commencement of proceedings, but from the date identified in s 100 and its statutory predecessors, being the date upon which the relevant cause of action arose.
Further, the purpose of an award of interest being to compensate a plaintiff for being out of his or her money contradicts the primary judge's proposition that an award of interest to the respondent for the complete period would have conferred a windfall on it.
Whilst there may be some cases in which it is appropriate to deny interest to a plaintiff by reason of its conduct, whether that be delay or otherwise, they are exceptional cases. The present was not such a case as there was simple delay which resulted (assuming the respondent's entitlement to the principal judgment sum) in the respondent being kept out of its money and the appellant having the benefit of it. In these circumstances, there was no proper reason not to award interest from the date the cause of action arose.
For these reasons, it would have been appropriate to allow the cross-appeal if the respondent had been found entitled to retain the judgment for fees entered at first instance. However, as that judgment should be set aside, the cross-appeal should be dismissed.

ORDERS

I propose the following orders: 1. Dismiss, with costs, the appellant's application for leave to appeal from the interlocutory judgment of Sorby ADCJ of 17 August 2016 dismissing the appellant's motion for a new trial. 2. Allow the appeal from the judgments of Sorby ADCJ of 27 May 2016 and 17 August 2016. 3. Dismiss the cross-appeal from the judgment of Sorby ADCJ of 17 August 2016. 4. Set aside orders (1) and (3) made by Sorby ADCJ on 27 May 2016, save insofar as the latter ordered the defendant to pay the plaintiff's costs of the cross-claim as agreed or taxed. 5. Set aside orders (1) and (3) made by Sorby ADCJ by his judgment of 17 August 2016. 6. Judgment for the appellant in the proceedings commenced by the respondent in the District Court. 7. Order the respondent to pay the appellant's costs of the appeal, the cross-appeal and the proceedings at first instance.
SACKVILLE AJA: I agree with Macfarlan JA.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 23 May 2017

Uniform Civil Procedure Rules 2015(NSW)

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