Morris v Corbett

Supreme Court of NSW|2003-04-07|Before: Austin J

CITATION : Morris v Corbett [2003] NSWSC 1121 HEARING DATE(S) : 11-14 March, 7 April 2003 JUDGMENT DATE : 1 December 2003 JURISDICTION: Equity JUDGMENT OF : Austin J DECISION : Proceeding dismissed

CATCHWORDS : CONTRACT - construction - restraint of trade clause - whether, properly construed, clause contained two separate exceptions to prohibition, or one composite exception LEGISLATION CITED : Restraint of Trade Act 1976 (NSW), s 4 CASES CITED : Australian Broadcasting Commission v Australian Performing Rights Association Ltd (1973) 129 CLR 99 Morgan Equipment Co v UMW Corporation Sdn Bhd [2002] NSWCA 193 Barry Morris (P1) PARTIES : Barry M Morris Holdings Pty Ltd (P2) Pinside Pty Ltd (P3) Paul Corbett (D) FILE NUMBER(S) : SC 3454/96 COUNSEL : M Galvin (Ps) T Alexis (D) SOLICITORS : Creagh & Creagh (Ps) Matthews Folbigg (D)

3454/96 BARRY MORRIS & ORS V PAUL CORBETT JUDGMENT 1 HIS HONOUR: The first plaintiff, Mr Morris, is a quantity surveyor by training, and the other two plaintiffs (Barry M Morris Holdings Pty Ltd and Pinside Pty Ltd) are companies controlled by him. The defendant, Mr Corbett, is an architect by profession. They formed and developed various businesses together over the period from 1978 to 1990, including building construction and fit-out services. The fit-out business was successful and established contacts with large companies and institutions for office and branch fit-outs. Mr Morris was principally involved in the construction of larger projects, and Mr Corbett was engaged in the marketing estimating area of the fit-out business. 2 In 1990 they negotiated arrangements under which Mr Corbett would sell to Mr Morris his shares in various business entities through which the businesses were conducted, and to give effect to their arrangements they entered into two agreements on 24 September 1990, referred to in the pleadings and at the hearing as the Deed and the Written Agreement. 3 Subsequently serious disputes arose between them, and the principal operating company, Renbay Systems Pty Ltd, failed. Mr Morris alleges that Mr Corbett breached provisions of the Deed and the Written Agreement by failing to perform his obligations and by diverting business from the plaintiffs to companies under his control. He says that Mr Corbett's breaches of contract sounded the death knell for Renbay Systems. 4 By a statement of claim filed on 23 September 1998 he and his companies alleged that, by virtue of specified breaches, each of them lost contracts with eight named entities including St George Building Society Limited and the Health Insurance Commission. They claimed damages and interest, and also an account of profits and a constructive trust for the profit derived from contracts with the precluded companies referred to in clause 15 of the Deed. Mr Corbett denied the allegations of breach. 5 At the hearing counsel for the plaintiffs informed the Court that his clients did not press their claims for an account of profits or relief by way of constructive trust, seeking only damages for breach of clause 15 of the Deed. He said that the plaintiffs' claims for lost contracts would be confined to contracts with St George Building Society Ltd and the Health Insurance Commission. The trial proceeded on that basis. The business relationship between Mr Morris and Mr Corbett 6 Mr Morris met Mr Corbett in 1977, when they were both working for Leighton Contractors. Mr Morris was employed as a project manager/quantity surveyor and Mr Corbett was employed as an architect/design coordinator. In 1978 they were both persuaded to leave Leighton Contractors to work for another firm. After about six months, they both decided to leave their new employer. They formed two companies, Corbett Morris & Associates Pty Ltd and Rowecon Building Services Pty Ltd, and commenced business, first in Eastwood and then at Girraween. At Girraween they obtained a lease of factory premises as well as offices, so that they could operate a joinery shop. 7 Corbett Morris & Associates was incorporated in May 1980. It was a building company, which was intended to obtain design and construction work but would also carry out work for clients who already had drawings prepared. It was successful at first but according to Mr Corbett, it ran into difficulties in early 1985 due to contracts for works associated with the health club industry. It entered into a scheme of arrangement with its creditors in July 1985. 8 Rowecon Building Services was incorporated in May 1981, and was formed to carry out joinery and shopfitting activities. After the demise of Corbett Morris & Associates it became the main company carrying out all of the contracting operations. 9 The business grew and Mr Corbett and Mr Morris decided to purchase industrial land and build a factory at Wetherill Park. The property was acquired in the name of another company, which does not otherwise figure in this proceeding. The property was sold later, subject to a lease-back arrangement. The proceeds of sale were used to buy a block of land at Greystanes, in the name of Pinside, a company owned by the wives of Mr Morris and Mr Corbett. It was intended, at first, that a factory would be built on the Greystanes land, but some development delays were experienced and eventually Mr Corbett decided against the development, although Mr Morris continued to support it. 10 Renbay Systems was incorporated in July 1982. It was formed to carry on business as a distributor of Dexion storage products. An extension was built to the rear of the factory at Wetherill Park to accommodate Renbay's operations in assembling office storage products for AHI-Precision. After AHI-Precision decided to assemble its own products, a substantial portion of the factory was empty. 11 At about the same time Rowecon Building Services was in financial difficulty, after it made a substantial loss on a large contract at Australia's Wonderland. Mr Morris and Mr Corbett decided to wind up the company. Thereafter they used Renbay as the vehicle for their main construction operation. 12 They developed their shopfitting and joinery business, working for major clients including St George Building Society. Over time, Mr Morris became principally involved in running the larger building projects, while Mr Corbett was more involved with shopfitting and joinery work. Consequently Mr Morris did not have much face-to-face contact with shopfitting clients such as St George Building Society and the Health Insurance Commission. Mr Corbett had contact with these clients as the manager of the shopfitting business, although the principal point of contact for the Health Insurance Commission at Renbay was Mr Alan Pearson, and Mr Paul Axiak carried out a lot of the St George fit-out work and had close relationships with several St George personnel. 13 In 1988/1990 St George Building Society became Renbay's principal client. At that time St George had an abnormally high demand for fit-out services. It had taken over the State Building Society in 1988. The State Building Society had approximately 60 branches in New South Wales. It was necessary to change the colour schemes and signage of the branches that St George would retain, and while some branches were closed, in other cases the St George branch was transported to the State Building Society location. The evidence given by Mr Corbett and by Mr Darrell Byrnes of St George Building Society was that the additional building and joinery work requirements created by the merger would last no more than 18 months to two years. Negotiations for Mr Corbett's withdrawal 14 According to Mr Morris, one day in July 1990 Mr Corbett said to him: "I want to take things easy. My main reason for this decision is as you are aware my daughter has contracted leukaemia. I am keen to do some architectural type projects working from home and some property management for Norman Ross as well as spending some time building a townhouse development on some land owned by my family." 15 Mr Morris' evidence is that he was also keen to downsize as he had a young family. According to Mr Morris, Mr Corbett said shortly afterwards: "I want to leave the company and to be 'bought out' as I want money to allow me to do my own developments. I do not want to do shopfitting nor have a joinery shop or employ people." 16 Mr Corbett gave a different account of his motivations for deciding to end his business relationship with Mr Morris. He said that he was expecting a downturn in business once the works associated with St George's integration of State Building Society came to an end. He did not want to go into debt to build a factory on the Greystanes land, but Mr Morris wished to do so. He denied that he said the words attributed to him by Mr Morris. He said that during the negotiations, various options were canvassed as alternatives to Mr Morris buying him out. He said he would have been happy with any of the alternative options but was not prepared to buy out Mr Morris. 17 I prefer the evidence of Mr Corbett to the evidence of Mr Morris on this point. Mr Morris said that Mr Corbett explained his decision by reference to his daughter's leukaemia, and yet (according to Mr Corbett's evidence) his daughter was diagnosed with leukaemia in October 1984, the treatment ended in 1986 and she had been healthy since that time. 18 According to Mr Morris, he had in mind during the negotiations that Mr Corbett had contacts and customer relationships with many of Renbay's large clients including the St George Building Society and the Health Insurance Commission. By reason of the agreements they negotiated, under which Mr Corbett would sell his interest and eventually retire from the business, and Mr Morris would come to run shopfitting projects, Mr Morris regarded it as important to have Mr Corbett assist and liaise with clients, and to introduce Mr Morris to them. Mr Morris was concerned to achieve a smooth transition, with no disruption of staff of the client base. Hence, he said, provision was made for Mr Corbett to remain with the firm for time, and for staged disclosure of the arrangements to staff. 19 Mr Corbett gave a somewhat different account of the negotiations. He said he clearly remembered saying to Mr Morris: "I might take a full-time job working for another organisation so I cannot promise to be available during business hours." 20 They entered into negotiations on 21 August 1990, that culminated in the Deed and Agreement dated 24 September 1990. It seems to me more likely than not that Mr Morris approached the negotiations with the objectives in mind that I have described, and that Mr Corbett was concerned to be free to take a full-time job as an employee. The agreements 21 The Deed recorded an agreement between Mr Morris and Mr Corbett and their respective companies, and Mrs Corbett, for Mr Corbett to retire from his business interests with Mr Morris. At the time of the Deed, there were five companies in the various states that I have described, namely Corbett Morris & Associates, Rowecon Developments, Stortec Systems Pty Ltd, Stortec Pty Ltd and Renbay Systems. Mrs Corbett was to retire from her role in the companies. 22 The Deed was made on 24 September 1990 between Valpar Pty Ltd, Mr and Mrs Corbett, Barry M Morris Holdings, Pinside and Mr Morris. Valpar was a company controlled by the Corbett interests. Barry M Morris Holdings was a company controlled by the Morris interests. who owned the shares in Pinside except for one share owned by Valpar. Mr Morris obtained legal assistance for preparation of the document, although the drafting is far from perfect. 23 By the Deed Mr Corbett agreed to sell to Mr Morris his shares in Corbett Morris & Associates for the sum of $255,000, and his shares in Rowecon Developments for nominal consideration, and Valpar agreed to sell to Barry M Morris Holdings its shares in Stortec Systems, Stortec, Renbay Systems and Pinside, in each case for nominal consideration. Mr Corbett agreed to lend Pinside $45,000 and Pinside agreed repay Mrs Corbett that amount, for which Pinside was indebted to her. There were consequential provisions including provisions for Mr and Mrs Corbett to resign as directors of various companies. 24 By clause 8 of the Deed, Renbay Systems agreed that it would continue to engage Valpar as a consultant until 31 December 1990 for a consultancy fee and payment of motor vehicle running expenses and telephone accounts. By clause 9 Renbay Systems agreed that it would continue to employ Mr and Mrs Corbett until 31 December 1990 at stated salaries. 25 Clause 15 of the Deed is central to the dispute between the parties. It is in the following terms: "15. Mr Corbett shall not for a period of 5 years from the date of this agreement either directly or indirectly, whether solely or jointly with or as director, manager, agent or servant of any person or corporation carrying on [sic] or be engaged or interested in any business which does any business with any of the following corporations which business is of a nature similar to that conducted by any of the [sic] Renbay Systems Pty Ltd, Stortec Systems Pty Ltd, Stortec Pty Ltd, Pinside Pty Ltd, Rowecon Developments Pty Ltd and Corbett Morris & Associates Pty Ltd or any significant component of those businesses:- St George Building Society Limited National Australia Bank ANZ Banking Group Health Insurance Commission Illawarra Credit Union BMW Delany Hall Nursing Home Gavagna Bros - Glebe Project only Simons Carpets McDonalds Testoni Burbery Nothing in this clause shall prevent Mr Corbett from providing his professional services as an architect to any of the corporations listed above or any corporation providing services to those corporations and nothing in this clause shall prevent Mr Corbett from working as an employee on wages for any person firm or corporation whatsoever. Mr Corbett acknowledges that the period of five years is no greater than reasonably required to protect the goodwill of Corbett Morris & Associates Pty Ltd and interests of the other companies shares in which are sold pursuant to this agreement." 26 For convenience, I shall refer to the 12 corporations identified in the clause as "the Specified Corporations". The Deed related to the sale of shares by Mr Corbett and Valpar in Corbett Morris & Associates, Renbay Systems, Stortec Systems, Stortec, Pinside and Rowecon Developments. I shall refer to those six companies as "the Morris/Corbett companies". 27 The proper approach to the construction of a contract of this kind was explained by the High Court in Australian Broadcasting Commission v Australian Performing Rights Association Ltd (1973) 129 CLR 99. In that case Barwick CJ said (at 105-6) that "it is no part of the function of a court by some process of divination as distinct from construction of the language employed to attribute to parties an intention to do something for which their express words do not provide", and he observed (at 107) that "the respondent's submission would require a radical change to be made in the language chosen by the parties to express their intention". 28 In a passage recently applied in the Court of Appeal of New South Wales (Morgan Equipment Co v UMW Corporation Sdn Bhd [2002] NSWCA 193 (27 June 2002), at [21] per Powell JA), Gibbs J said (at 109 to 110): "It is trite law that the primary duty of the court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend the contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, 'even though the construction adopted is not the most obvious, or the most grammatically accurate', to use the words from earlier authority cited in Locke v Dunlop ((1888) 39 Ch D 387 at p 393) which, although spoken in relation to a will, are applicable to the construction of written instruments generally; see also Bottomley's case ((1880) 16 Ch D 681, at p 686). Further, it will be permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid inconsistency between that provision and the rest of the instrument. Finally, the statement of Lord Wright in Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503, at 514, that the court should construe commercial contracts 'fairly and broadly, without being too astute or subtle in finding defects', should not, in my opinion, be understood as limited to documents drawn by businessman for themselves and without legal assistance ( Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1967) 118 CLR 429 at 437) [per Barwick CJ])." 29 The following points should be made about this clause, as a matter of construction of its plain words and in light of the principles stated by the High Court: (1) The first sentence of the clause, down to and including the list of the Specified Corporations, prohibits certain conduct, but the second sentence (beginning "Nothing in this clause …") takes certain identified conduct out of the prohibition. In other words, if conduct falls within the description in the second sentence, it is not prohibited, regardless of whether it falls within the description in the first sentence. (2) The conduct prohibited by the first sentence is conduct of Mr Corbett, not conduct of any other person or entity, whether or not controlled by Mr Corbett. (3) Mr Corbett is prohibited by the first sentence from carrying on or being engaged or interested in any business of an identified kind. The identified kind of business is a business which does any business with any of the Specified Corporations, if the business done with a specified corporation is of a nature similar to the business conducted by any of the Morris/Corbett companies, or any significant component of the business conducted by any of the Morris/Corbett companies. (4) Mr Corbett is prohibited from carrying on, or being engaged or interested in any such business: · directly or indirectly; · solely; · jointly with any person or corporation; or · as a director, manager, agent or servant of any person or corporation. (5) The second sentence of the clause releases the following conduct from the prohibition in the first sentence: · Mr Corbett providing his professional services as an architect to any of the Specified Corporations; · Mr Corbett providing his professional services as an architect to any corporation that provides services to any of the Specified Corporations; and · Mr Corbett working as an employee on wages for any person firm or corporation whatsoever. These three forms of conduct by Mr Corbett are "safe harbours"; that is, they are permitted by the second sentence even if they amount to carrying on or being engaged or interested in the business which does business with a specified corporation of a nature similar to the business of a Morris/Corbett company. (6) Since the second sentence permits Mr Corbett to work as an employee on wages for any entity, the prohibition in the first sentence on his carrying on, being engaged or interested in a business as a servant of an entity will only ever apply where Mr Corbett is employed by an entity under some arrangements which are not merely employment on wages. 30 Counsel for the plaintiffs contended that the second sentence of clause 15 was confined to work as an employee in the provision of architectural services. I reject that construction of clause 15. Literally, it creates two "safe harbours", neither of which is limited by the other. It permits Mr Corbett to provide architectural services in any fashion, whether as an employee or otherwise, and it permits him to do anything so long as it is work as an employee on wages, whether in the field of architectural services or otherwise. I see no commercial or other reason for implying a restriction upon the plain words of the clause. 31 Counsel for the plaintiffs also submitted that the reference to "working as an employee on wages", when read together with the words "director, manager, agent or servant" in the first sentence of the clause, should be limited so as not to include work at an executive or management level. Again, there is no such restriction in the wording of the second sentence, and I see no commercial or other reason for implying it. Possibly, the correct construction of the clause would have been otherwise if the first sentence had identified only work as a director or manager. Then one might be able to argue that the effect of the clause, considered as a whole, was that engagement at a managerial level was to be prohibited but engagement as and employee on a non-managerial level was to be permitted. Reasoning of that sort is excluded by the presence, in the first sentence, of the word "servant". The effect of the two sentences, read together, is to permit any form of employment on wages, whether at a managerial level or otherwise, but to prevent engagement as a director, manager or agent, or engagement as a servant otherwise than as an employee on wages. For example, engagement as an employee on commission would be prohibited. 32 By clause 17 of the Deed, Mr Corbett and Mr Morris warrant to one another that they have disclosed all matters affecting the business capital or affairs of the Morris/Corbett companies, and Mr Corbett covenants that he will inform Mr Morris of any such matters which come to his attention during the period of five years after completion of the agreement. 33 The Agreement is also dated 24 September 1990. It is drafted in a style different from the drafting style of the Deed, suggesting that it was probably prepared without legal assistance. Only Mr Morris and Mr Corbett are parties to it. It records a series of supplementary agreements as to the ownership of various assets and the discharge of certain payment obligations, and it deals with profit-sharing on new projects and HCF projects. Clause 8 provides that work on HCF projects is to be retained by Renbay Systems with the net profit being split 90% to Renbay Systems and 10% to Mr Corbett. Clause 3 provides that the sum of $10,000 will pass from Renbay Systems to Valpar by way of fee paid on the date of the Agreement. 34 Clause 9 says that any information given by Mr Corbett to staff or clients or any other party must first be discussed and agreed with Mr Morris. Clause 9 records that initially Mr Corbett will say that he is taking some time off until Christmas and concentrating more time on marketing and estimating, and less on running jobs. The clause says that the day-to-day running of the company is to become Mr Morris's area of responsibility. It says that in the new year (1991) when it is agreed that the time is right with staff and clients, Mr Morris and Mr Corbett will announce that Mr Corbett has decided to sell his interest in Renbay to Mr Morris. In this way, clause 9 contemplates that staff and clients are to be misled as to the ongoing business relationship of Mr Morris and Mr Corbett, by agreement between them. 35 Clauses 5 and 6 of the Agreement have some importance in the dispute between the parties. They are as follows: "5. It is agreed that Paul W Corbett will work for Renbay Systems Pty Ltd/Barry M Morris at times suitable to both parties carry out Project Management/Marketing/Estimations type works commencing January 1991 at the rate of $50 per hour including normal expenses. In addition Paul W Corbett will continue to work for Renbay Systems Pty Ltd in a marketing role with St George Building Society for a suitable introductory period to enable Barry M Morris to continue the relationship between Renbay Systems and St George Building Society. 6. Should any member of staff elect to leave or be discharged and approach Paul W Corbett for employment, then Paul W Corbett shall immediately contact Barry M Morris informing him of this. Clause 18 of the agreement applies. Permission will not be withheld by Barry M Morris subject to a suitable agreement regarding workload commitments by existing employees. Refer clause 15 of the agreement." [The references to clauses 18 and 15 of the Agreement seem to be intended to refer to clauses of the Deed, but there is no clause 18 in the Deed.] The pleadings and the plaintiffs' modification at the hearing 36 By their statement of claim, the plaintiffs make three claims against Mr Corbett.

Breach of clause 15 37 First, they allege that Mr Corbett has been or is engaged or interested in Valpar and five other businesses, namely Beckton Joinery Pty Ltd, Beckton Constructions Pty Ltd, Beckton Project Management Pty Ltd, Renlim Court Pty Ltd and Benian Pty Ltd. They say that these six companies operated businesses of a similar nature to the businesses conducted by the Morris/Corbett companies, and that they did business with one or more of the Specified Corporations. Therefore, according to the plaintiffs, Mr Corbett breached clause 15. 38 At the hearing, counsel for the plaintiffs limited his clients' claim to doing business with only two of the Specified Corporations, namely the St George Building Society and the Health Insurance Commission. 39 In his defence, Mr Corbett denies any breach of clause 15 of the Deed and says that: · he was not engaged by and did not have any interest in Beckton Joinery during the five-year period from 24 September 1990 ("the restraint period"), and to the best of his knowledge Beckton Joinery did not carry on business with any of the Specified Corporations; · he was a director and shareholder of Valpar, Beckton Project Management, Renlim Court and Benian during the restraint period, but none of those companies carried on business with any of the Morris/Corbett companies during the restraint period; · he did not have an interest in Beckton Constructions during the restraint period, but he was employed by the company, as clause 15 of the Deed permitted; · clause 15 of the Deed permitted him to provide professional architectural services to any of the Morris/Corbett companies during the restraint period. 40 Mr Corbett also contends in his defence that the restraint provided for in clause 15 of the Deed was unreasonable in terms of time and geographic effect, and therefore against public policy and invalid under s 4 of the Restraint of Trade Act 1976 (NSW). However, in final submissions counsel for Mr Corbett withdrew that claim, saying that upon the proper construction of clause 15 (a construction with which I agree) the restraint is quite narrow, and its application to the facts of this case could not be said to be against public policy and therefore invalid under the Restraint of Trade Act. It is therefore unnecessary for me to deal with this issue.

Breach of clauses 5, 6, 8 and 9 of the Agreement 41 The statement of claim alleges that Mr Corbett: · failed to perform marketing duties, or to attend meetings with clients, and generally made himself unavailable to Renbay Systems, in breach of clause 5 of the Agreement; · failed to contact Mr Morris when staff approached him for employment, or alternatively when staff informed him they were leaving (the statement of claim identifies 13 employees, including Alan Pearson, Paul Axiak and John Mitchell); · failed to divide work from HCF, and indeed failed to divide any proceeds with Renbay Systems, in breach of clause 8 of the Agreement; · informed some or all of the 13 employees, and clients of Renbay Systems, of the contents of the Agreement without prior discussion with or agreement by Mr Morris. 42 All of these allegations are denied by Mr Corbett in his defence.

Breach of clause 17 of the Deed 43 In their statement of claim the plaintiffs allege that Mr Corbett failed to make proper disclosure under clause 17, even though he was contracting on his own behalf or in behalf of the six companies identified in the statement of claim, with clients of Renbay Systems and with businesses similar to the clients of Renbay Systems. Mr Corbett denies these allegations in his defence.

The plaintiffs' loss and claims for relief 44 In their statement claim, the plaintiffs allege that each of them lost contracts with the eight Specified Corporations as well as the opportunity to make further contracts and derive profits thereby. In his defence, Mr Corbett says that neither Renbay Systems nor any of the plaintiffs had contracted with the Specified Corporations prior to 24 September 1990. He says that if contracts were lost with the Specified Corporations by reason of the conduct alleged against him (conduct which he denies), they were contracts lost by Renbay Systems, which is not a plaintiff. He says that none of the plaintiffs has suffered any loss or damage. 45 In the statement of claim, the plaintiffs seek damages, and an account of profits and a constructive trust for profit derived from contracts with the Specified Corporations. At the opening of the hearing, counsel for the plaintiffs informed the court that his clients did not press the claims for relief by way of constructive trust or an account of profits. 46 In his outline submissions prepared just before the hearing, counsel for the plaintiffs contended, in the alternative, that there had been a total failure of consideration and that Mr Morris should receive damages to the extent of the consideration paid by him under the Deed, plus interest. At the hearing, however, counsel for the plaintiffs withdrew this claim. In the result, the only remedy sought by the plaintiffs was damages for loss of business and loss of business opportunities. 47 Essentially the case raises three issues of fact: (a) Did Mr Corbett breach any of the provisions of the Deed or the Agreement? (b) If so, did the breach or breaches cause contracts to be lost with St George Building Society for the Health Insurance Commission? (c) If so, did any of the plaintiffs, as opposed to Renbay Systems, suffer that loss? 48 For the reason that I shall explain, I have decided that Mr Corbett did not breach any of the provisions of the Deed or the Agreement; in any case, the evidence does not show that Mr Corbett's conduct caused St George Building Society or the Health Insurance Commission not to accept tenders from any Morris/Corbett company; and if there had been any such loss, it would have been suffered by Renbay Systems, and not by any of the plaintiffs. Facts after the agreements 49 In this part of the evidence, the witnesses for the plaintiffs and the defendant disagree about certain conversations and events. I found the evidence of Mr Morris to be unsatisfactory as to specific and detailed facts. His affidavit was unorganised and rather vague, characteristics not improved by his oral evidence. I have decided that, on matters of significance, I should not accept Mr Morris's evidence unless it is externally corroborated. I had less difficulty with Mr Corbett's evidence, which was clear and quite specific, but I found that from time to time he saw himself in the role of an advocate, in the course of giving evidence. For example, he said the Beckton Constructions tendered for work with the Health Insurance Commission, sometimes successfully. The evidence of Mr Anic and even Mr Pearson was that the success was very substantial. I have therefore accepted Mr Corbett's account of controversial matters only if there is some external corroboration. The other witnesses for both parties struck me as witnesses of truth, but sometimes their recollection of events and conversations was affected by the passage of time. I think that was particularly so in the case of Mr Anic.

Decline in Renbay's work 50 Anthony Reitano, who gave evidence for the plaintiffs, was employed as financial controller of Renbay Systems from April 1990 until October 1991. He said that when he began with the company it was in healthy financial state, with positive cash flow. He became aware of the negotiations between Mr Morris and Mr Corbett in September 1990, and at one stage Mr Corbett told him he did not want to lead as busy a life and wanted to do his own thing, but not in a business competing with Mr Morris. That conversation is denied by Mr Corbett. I think unlikely that Mr Corbett would have said such a thing, given his plausible evidence that the termination of his business relationship with Mr Morris had to do with their disagreement over development of the Greystanes land. Mr Reitano's memory may be faulty. In any event, nothing really turns on this matter. 51 Mr Reitano said that after September 1990 the business of Renbay Systems started to decline rapidly. The company did not receive any further work from St George Building Society, their major client, and other clients such as the Health Insurance Commission also stopped sending them work. He said that shortly after September 1990 the company's cash flow position deteriorated and it was unable to pay its accounts on time. I accept this evidence. 52 Spyros Marcantonatos, an architect, said he commenced work for Renbay Systems shortly before September 1990. He gave evidence for the plaintiffs. He said that when he commenced with Renbay, the company was extremely busy. It had a number of fit-outs being undertaken for clients including the Health Insurance Commission and St George Building Society. Most of the work was being undertaken for St George. 53 Mr Marcantonatos said that at a staff meeting in September it was announced that an agreement had been entered into between Mr Corbett and Mr Morris, which involved continued involvement of Mr Corbett in Renbay's business. He said that after that meeting he observed Mr Corbett on one or two occasions in attendance at Renbay's offices and that Mr Corbett did not attend Renbay's offices apart from those occasions. Evidence to the same effect was given by Mr Reitano, the financial controller at Renbay Systems. 54 Mr Corbett gave evidence challenging Mr Marcantonatos' evidence in various ways. He said that Mr Marcantonatos did not come to work for Renbay until well after September 1990, and was not present at the staff meeting in September when the arrangements between Mr Morris and Mr Corbett were announced. There is a minute of that meeting, which does not mention Mr Marcantonatos as a person present at the meeting. Given the evidence contained in the minute, I prefer Mr Corbett's evidence to the evidence of Mr Marcantonatos on this point. 55 I also prefer Mr Corbett's evidence as to when Mr Marcantonatos commenced to work for Renbay. It is supported by the evidence of Mr Axiak. That suggests that the observations by Mr Marcantonatos as to Mr Corbett's infrequent attendance are directed towards a later period, probably early 1991. His evidence is then consistent with Mr Corbett's evidence as to his attendance in 1991, which I summarise below. 56 Mr Marcantonatos said that from the beginning of 1991 Renbay was not getting the work it had when he first started there prior to September 1990. He said no work was coming in from St George Building Society. I accept that there was a decline in workflow and that eventually no more work came from St George. I shall explain the evidence on that subject below.

The establishment of Beckton Constructions, Beckton Joinery and the Beckton Project Management 57 According to Mr Corbett, Mr Axiak had been informed by Mr Morris that Mr Corbett was not permitted to employ him, so Mr Axiak conceived the idea of Mr Corbett working for Mr Axiak. Mr Axiak and Mr Pearson gave evidence to similar effect. Mr Corbett gave evidence that, early in October 1990, Mr Axiak approached him and asked if he was interested in working for Mr Axiak to set up a new company. It appears, according to Mr Pearson's evidence, which I accept, that the formal approach to Mr Corbett was made by Mr Pearson rather than Mr Axiak. Mr Corbett explained that he could not work for the clients referred to in his agreement with Mr Morris, and Mr Pearson said that would be "okay" because he (Mr Pearson) and Mr Axiak could still work with those clients, since they had not signed any agreement. 58 Mr Corbett said that Mr Axiak and Mr Pearson formed Beckton Constructions Pty Ltd in late 1990. Mr Corbett said he was never a shareholder or director of Beckton Constructions, but only an employee, although his family company leased a motor vehicle from Beckton Constructions. Mr Pearson started work at his home, and was employed by Beckton Constructions as General Manager and architect. Mr Corbett said that his own roles at Beckton Constructions were as financial controller and cheque signatory, opening trading accounts with suppliers. He said that initially bank documents were mailed to his house as there was no office. Mr Corbett's evidence on these matters is supported by Mr Axiak and Mr Pearson and I accept it. 59 Mr Axiak's evidence was that Mr Corbett's role included client liaison and assisting in project management. Mr Axiak said that Mr Corbett had his own company, a company that became Beckton Project Management, which operated from shared premises with Beckton Constructions. Mr Pearson's evidence was that Mr Corbett worked for Beckton Constructions, as an employee, in the position of general manager, with duties in marketing, public relations, design and construction work. He said Mr Corbett was employed, part-time, to assist in running the business and as an architect. He was employed to have contact with clients who required clarification of issues that might arise in the course of projects, such as construction issues. I accept the evidence of Mr Axiak and Mr Pearson on these matters. 60 The clients of Beckton Constructions included St George and the Health Insurance Commission. The business of those clients was obtained in the circumstances described below. 61 The evidence shows that Beckton Joinery Pty Ltd was formed by John and Mary Mitchell. Mr Corbett said that he assisted by guaranteeing leases for vehicles and premises, programming workload and giving general management advice. He said that the financial management of Beckton Joinery was carried out by Mr Mitchell's daughter, a chartered accountant. Beckton Joinery did not trade directly with any of the Specified Corporations. It manufactured joinery for builders as a sub-contractor, sometimes for Beckton Construction. Mr Corbett said he was never a shareholder or director of Beckton Joinery. 62 Mr Corbett said he was a director of Beckton Project Management Pty Ltd, although he was not a shareholder. Beginning in 1991 Beckton Project Management carried on a construction business with clients including some large corporations, but according to Mr Corbett, it did not do any work for any of the Specified Corporations. No contrary evidence has been adduced. I accept Mr Corbett's evidence on this point.

Mr Corbett's activities for Renbay after 24 September 1990 63 Mr Corbett gave evidence that he worked at Renbay until 7 December 1990. He said that he ceased to have any management or financial control of the business after 24 September 1990, but he remained in charge of certain set out projects. He said that Mr Morris made no attempt to have any contact with St George Building Society up to Christmas 1990, and that he reminded Mr Morris on several occasions, "Barry you only have me until early December, we should be talking to St George". 64 Mr Morris gave detailed oral evidence of requests he said he made to Mr Corbett assistance in marketing to St George, and said he made arrangements for them to meet Mr Byrne of St George, which (he said) Mr Corbett did not honour. Mr Corbett denied this evidence. He said that he went to St George at the request of Mr Morris to meet him and Mr Byrne, but it was Mr Morris who did not turn up. I have decided it would be unsafe to accept Mr Morris's evidence, in light of the evidence of Mr Byrne (an impressive witness) who said that he had no recollection of any meeting ever being arranged with him, which Mr Corbett was due to attend and failed to attend. He added, perhaps undermining Mr Corbett's evidence, that he could not recall any meeting which Mr Morris failed to attend. My conclusion is that the plaintiffs' case on this point has not been proven. 65 Mr Corbett said that between 7 December 1990 and 21 January 1991 he did not receive any work requests from Mr Morris. Mr Corbett said that he telephoned Mr Morris on 21 January 1991 to see if there was anything that he required, as Mr Corbett was starting to get very busy. Mr Morris asked Mr Corbett to give him a day, which he did on 1 February 1991. He said he went through some financial accounts and discussed problems that Mr Morris was having a client. This took only about 2.5 hours and nothing more was required. Mr Morris asked that they have lunch to go over some other issues and this was arranged for 8 February 1991. Mr Corbett said he attended a Renbay job at St George Building Society Hurstville on 8 February 1991 at the request of Mr Reitano, to deal with some problems. Mr Corbett said he had lunch with Mr Morris on 8 February 1991 where they discussed several issues, and he gave Mr Morris information on problems Mr Morris had created with several clients. 66 Mr Morris disagreed with Mr Corbett's evidence about these matters, but faced with conflicting assertions of principal protagonists, my view is that the plaintiffs have not made out their case. 67 On 11 March 1991, according to Mr Corbett, he had lunch with Mr Morris at Mr Morris' request. Mr Morris said he had seen Mr Byrne at St George and had shown Mr Byrne the agreement, and threatened to involve St George in legal action if St George gave Beckton Constructions any more work. Mr Corbett gave evidence that this latter threat had been subsequently confirmed to him by Mr Byrne, who told him that he had decided to ban both Renbay and Beckton from working for St George as a result of the threat. It seems to me that the truth on these matters is found in Mr Byrne's evidence, discussed below. Mr Morris did threatened to sue St George, but it was about contract variations. 68 Mr Morris said that prior to 24 September 1990 Renbay Systems had entered into a contract with St George for the construction of the new branch at Gosford. Mr Morris said in evidence that following completion of the Gosford project, Renbay Systems was never asked to tender for another St George project. Mr Corbett's evidence was that the Gosford contract was secured after 24 September 1990. Mr Corbett's recollection of the timing is supported by Mr Byrne's evidence, and I accept it.

Dealings with St George Building Society 69 Darrell Byrne, who gave evidence on behalf of Mr Corbett, was the manager of the Property Department of St George Building Society from 1974 to 1994. He said that when St George took over the State Building Society in 1988, an employee of State Building Society who came to work in the Property Department at St George had been using Renbay for fit-out work. Mr Byrne said he thought it prudent to consider contractors used by the State Building Society for future building and joinery work required by St George. 70 St George operated a tender process but it was within Mr Byrne's discretion to commission a job on a "do and charge" basis without tender. He said St George did not have a list of preferred tenderers, and specifically, Renbay was never a preferred tenderer. He specifically refuted a claim, in a letter written to St George by Mr Corbett on 8 May 1991, that Renbay had been a preferred builder for St George and should be reinstated. 71 Mr Byrne said he was reasonably satisfied with Renbay's standard of work while Mr Corbett was there. He gave evidence that after Mr Corbett left Renbay, he gave Renbay the opportunity to quote for a job in Gosford, and Renbay succeeded because it was the lowest tenderer. Mr Byrne then gave evidence of his belief that there were great difficulties with this job because Mr Morris was not paying subcontractors, who refused to deliver to the site. He said he could vividly recall Mr Morris making spurious claims against George for variations and threatening to sue. Although Renbay did not sue St George, Mr Byrne informed Mr Morris at a meeting that he would never do any more work for St George while Mr Byrne was in charge of the Property Department. 72 Mr Morris said that he and Mr Corbett met with Mr Darrell Byrne, the Property Manager of St George, shortly after they had completed a shopfitting project at St George's Fairfield branch. They told Mr Byrne about their arrangements and according to Mr Morris, Mr Byrne said he would be pleased to continue to give work to Renbay under the control of Mr Morris, as long as the high standard and quality of workmanship was maintained. Mr Morris said that they both assured Mr Byrne that Mr Corbett would stay on as a consultant to ensure a smooth handover. Mr Corbett denied that this meeting took place. Mr Byrne said he recollected a meeting where he was told that the partnership between Mr Corbett and Mr Morris was being dissolved, and that he said it was of little difference to St George what they did between themselves. 73 Mr Morris gave evidence that, shortly after 24 September 1990, he approached Mr Byrne of St George at his office. He asked Mr Byrne to stop giving work to Mr Corbett and Mr Byrne replied: "Until I can sort this out neither of you will get any work, I don't want to put St George in the middle of a legal battle." 74 Mr Byrne did not deny the Morris' evidence of this conversation, but he said he recalled telling Mr Morris and Mr Corbett that no further work would be given to either Renbay or Beckton Constructions until they sort out their differences. He added, however, that since he had made up his mind that Mr Morris would receive no further work, this was another way of separating St George from both Renbay and Beckton. 75 As I have said, I prefer the evidence of Mr Byrne to the evidence of Mr Morris where there is a conflict.

Dealings with the Health Insurance Commission 76 Anthony Anic was the Property manager at the Health Insurance Commission from about 1986 until his retirement in 2002. In 1986 Renbay was carrying out the majority of fit-outs for the Commission, in a variety of suburban locations. Most of his day-to-day dealings with Renbay were with Mr Pearson. His evidence was that the Commission was pleased with the quality and standard of Renbay's work, and in particular, the fact that it had its own joinery shop and was competitive on price as well as quality. 77 Mr Anic said that in September or October 1990 he had a conversation with Mr Pearson, who told him that he and Mr Corbett were going to commence their own business, and asked whether Mr Anic would consider them for tenders. Mr Anic said he would. Mr Pearson asked that the conversation be kept confidential. He gave evidence that a later conversation, in which Mr Corbett participated, Mr Pearson said that he would be running the jobs as before, with Mr Corbett's involvement and also with the involvement of Mr Axiak. Mr Anic said that if they were competitive, he would be pleased to give them some work. 78 In his oral evidence, Mr Anic did not adhere to the proposition that Mr Pearson told him that Mr Corbett was going to commence business with Mr Pearson. He said only that Mr Pearson told him that Mr Corbett would be involved. 79 Mr Corbett gave evidence denying this conversation. Mr Pearson gave evidence denying that he said that Mr Corbett and he were going to commence their own business, because that was never intended and did not occur. All things considered, I find that Mr Anic's oral evidence is to be preferred. 80 Mr Anic said that shortly afterwards, he instructed his staff to forward tenders to Beckton Constructions. He said that until that time, Renbay Systems had been successful in approximately 8 out of 10 of the tenders which were sent to them for consideration. (That estimate is disputed by Mr Pearson, who said that the correct percentage was about 47%, based on records that he checked. I prefer Mr Pearson's evidence.) 81 Mr Anic said that the tenders by Beckton Constructions were price competitive and accordingly Beckton was successful in obtaining some work. The Commission was pleased with the work and thereafter Beckton was successful in the majority of cases. Mr Anic said they were more price competitive than Renbay, and their work was of a high standard. He said that thereafter, he did not recall Renbay being successful in tenders for the Health Insurance Commission, apart from perhaps a job or two, and Beckton became the most successful preferred tenderer, winning perhaps 8 out of 10 of the tenders from about 1991 onwards. 82 Mr Anic said he based his initial decision to invite Beckton to tender on the basis of the relationship he had with Mr Pearson and Mr Corbett while they were at Renbay. However, it was Mr Pearson whom he regarded as "the face" of Renbay. He had more contact with Mr Corbett only after Beckton Constructions began doing work for the Commission. He had various discussions with Mr Corbett and regarded him as the person who was marketing to the Commission as a potential client. 83 Mr Corbett gave evidence saying he had no more to do with Mr Anic when he was working for Beckton Constructions than when he was with Renbay. That seems to be correct. Did Mr Corbett breach any of the provisions of the Deed or the Agreement? 84 I shall consider, first, clause 15 of the Deed, and then I shall turn to the other provisions breach of which is alleged in the statement of claim. 85 Beckton Project Management, the company, which Mr Corbett was a director of, carried on a construction business but according to Mr Corbett's evidence, which is not contradicted by any other evidence before me, it did not do any work for the Specified Corporations. Beckton Joinery was according to the evidence a company established by Mr Mitchell, of which Mr Corbett was neither a shareholder or a director, manager, agent or servant; further, Beckton Joinery did not trade directly with any of the Specified Corporations, acting only as a subcontractor. There is no evidence that Valpar, or two other companies associated with Mr Corbett and mentioned in the statement of claim, namely Renlim Court and Benian, had any dealings with any of the Specified Corporations. The only company that did was Beckton Constructions. 86 The evidence shows that Beckton Constructions did business with the Health Insurance Commission, and to a lesser extent with St George Building Society, of a nature similar to the business conducted by Renbay Systems. To that extent, the wording of clause 15 was attracted. But in my opinion, the evidence does not show that Mr Corbett either directly or indirectly, solely or jointly with or as director, manager, agent or servant of any person or corporation, carried on or was engaged or interested in the business of Beckton Constructions, otherwise than by providing professional services as an architect or by working as an employee on wages. Therefore he did not contravene clause 15. 87 The evidence demonstrates that it was Mr Pearson and Mr Axiak, senior employees of Renbay, who established a business competing with Renbay, namely Beckton Constructions. There was no contractual constraint upon Mr Pearson and Mr Axiak leaving Renbay and setting up a competing business. So much was conceded by Mr Morris in cross-examination. 88 Mr Corbett was an employee of Beckton Constructions from 12 January 1991 to 30 June 1991, according to the group certificate which is in evidence. Although there is evidence that his functions as an employee of Beckton Constructions included financial and managerial responsibilities going beyond professional services as an architect, they were services rendered by him as an employee. For reasons I have given, the second sentence of clause 15, upon its proper construction, contains two separate limbs, the second of which (working as an employee on wages) is not to be confined to work as an architect. In fact, however, a part of Mr Corbett's work for Beckton Constructions was work as an architect (for example, the preparation of the budget and review of the drawings for the St George Corrimal job). 89 Beckton Constructions paid fees to Beckton Project Management, after 1 July 1991. But according to Mr Pearson's evidence, the fees were paid for architectural services and design. If, by earning those fees for Beckton Project Management, Mr Corbett could be regarded as indirectly interested in a business competing with Renbay, he was nevertheless entitled to do so because they were fees from providing his professional services as an architect to a corporation (Beckton Constructions) providing services to some of the Specified Corporations. 90 The fact that Valpar are leased a motor vehicle to Beckton Constructions, used by Mr Pearson, is not inconsistent with this analysis. The leasing of the vehicle did not amount, directly or indirectly, to carrying on or being engaged or interested in the business of Beckton Constructions. 91 Nor is the analysis affected by the fact that Mr Corbett was a signatory to Beckton Construction's cheque account. Having authority to sign checks was consistent with Mr Corbett acting as an employee of the company. The same point applies to his allowing his home address to be used as the address for bank documents during the start-up phase. 92 Mr Corbett was engaged to approach prospective clients, according to Mr Axiak's evidence. Mr Axiak said that he and Mr Corbett approach St George for work late in January 1991. That is consistent with the view that Mr Corbett's activity was as an employee. Mr Axiak said as much in his evidence. 93 There is no credible evidence that Mr Corbett failed to make proper disclosure under clause 17, because he was acting only as an employee and not in breach of clause 15. As far as clauses 5, 6, 8 and 9 of the Agreement are concerned, the following evidence is relevant. 94 First, Mr Corbett denied that he employed Mr Mitchell or 10 of Renbay's best carpenters at Beckton. That appears to be supported by the evidence of Mr Corbett's witnesses. 95 Mr Morris gave evidence that in about January 1991, he received an anonymous telephone call, in which Mr Corbett told him that a new company called Beckton was being run by Mr Corbett, Mr Pearson, Mr Mitchell and Mr Axiak. The caller gave him the name the address of their factory. He went there at about 7pm on the day he received the call, and entered the building by an open door. He found various indications that the premises were being used for St George touts. At another time he observed a brochure which was very similar to a Renbay brochure. But he was not able to say that Mr Corbett was implicated in these matters otherwise as an employee. 96 Mr Marcantonatos gave evidence that in early 1991 he had a conversation with Mr Axiak, who said to him: "If you wanted job go and see Paul Corbett at Beckton. I can talk to Paul and get your job if you want to come and join us. Beckton is being run by Corbett and he has tons of jobs on." 97 Mr Axiak denied that this conversation ever took place. It is not otherwise supported by the plaintiffs' external evidence and in my view, it would be unsafe to accept the account of Mr Marcantonatos. 98 Mr Reitano gave evidence that he was present at a meeting at some time after September 1990 where Mr Morris, Mr Axiak and other employees were present. Mr Axiak said, "the agreement you have signed cannot stop me from working for Paul or anybody else". Mr Morris replied, "it does not stop you from working for anybody, but it is agreed that Mr Corbett will not employ certain people from Renbay". 99 Mr Reitano gave evidence of a telephone conversation he had with Mr Rod McKinnon of B & R Interiors. Mr McKinnon said, "I have heard that Renbay is going broke and has some serious financial problems". Mr McKinnon was not prepared to say who had given him this information, but he said he was aware that Mr Pearson and Mr Axiak were working together. 100 I have no reason to reject Mr Reitano's evidence on these points, but it does not go to establish any contravention by Mr Corbett. My conclusion on the evidence as a whole is that it does not support the contention that Mr Corbett failed to perform his duties under the Agreement, or failed to contact Mr Morris when staff approached him for employment (since, apart from evidence as to specific facts, he was himself an employee in of Beckton Constructions not offering to employ anyone), or failed to divide work from HCF, or wrongly gave information to employees without the agreement of Mr Morris. Did the breach or breaches cause contracts to be lost with St George Building Society for the Health Insurance Commission? 101 My conclusion that Mr Corbett did not breach any contractual obligations under the Deed or the Agreement is sufficient to dispose of the case. However, since I have reached the conclusion on the evidence that the plaintiffs would fail even if a breach had been established, and the matter was fully argued, I shall deal with this question as an alternative ground for my decision. 102 As far as St George Building Society is concerned, I accept the evidence of Mr Byrne without qualification. It was his belief, after completion of the Gosford job, that Renbay Systems would not be engaged again so long as he was manager of the Property Department of St George. The reason had nothing to do with preferring Beckton Constructions, but was based on Mr Byrne's belief that Mr Morris had mishandled the job and could not be trusted. That alone is sufficient to dispose of the argument that any breach by Mr Corbett caused Renbay to lose contracts with St George and the opportunity to make further contracts. 103 The first job done by Beckton Constructions for St George was at Corrimal, and it was the last for the 1991 year. According to Mr Axiak's evidence, it arose when he made an approach to a contact at St George early in 1991. That contact gave Mr Axiak the opportunity of providing a budget for the job. Mr Axiak project managed the job through to its conclusion. Beckton Joinery did the joinery work as a sub-contractor. Mr Corbett's role in relation to this job was limited to preparing the budget and reviewing the drawings. That was work undertaken by him as an employee of Beckton Constructions, and was also, according to Mr Axiak's evidence, routine work for an architect. In my opinion it was the activity of Mr Axiak that procured the Corrimal job for Beckton Constructions, rather than any conduct by Mr Corbett. 104 As regards the Health Insurance Commission, the evidence is that Beckton Constructions started submitting tenders from 22 October 1990, the day when Mr Pearson started work for the company. He gave evidence that he received a parcel of documents comprising plans and specifications from the Commission, and he prepared and submitted a tender. Mr Pearson said that the only tender for the Commission on which Mr Corbett gave him any assistance was for the Berrima District Credit Union where Mr Corbett gave him architectural advice. 105 As I have said, Mr Anic's oral evidence departed from his affidavit, as regards the extent of Mr Corbett's involvement in seeking out Health Insurance Commission work. In the end, his evidence was only that Mr Pearson told him that Mr Corbett would be involved, not that Mr Corbett would be a partner in the business. There is conflicting evidence as to whether the conversations deposed to by Mr Anic occurred. If they did occur, according to Mr Anic they occurred in 1991, well after Mr Pearson had commenced the business of Beckton Constructions and submitted its first tender. This suggests to me that any role Mr Corbett may have had in securing the Health Insurance Commission work for Beckton Constructions was merely one of several factors. Further, the fact that, according to Mr Anic, it was Mr Pearson to whom he looked when dealing with Renbay, rather than Mr Corbett, suggests that any contact by Mr Corbett did not cause Renbay to lose the Health Insurance Commission contracts that were procured by a Becton Constructions. 106 My conclusion is that the evidence does not show that the conduct of Mr Corbett (assuming, contrary to my finding, that it was in breach of contract) caused Renbay Systems to lose contracts or the opportunity to make profits by tendering for contracts. The cause of Renbay's declining fortune with St George had to do with Mr Morris' relationship with Mr Byrne, and with the Health Insurance Commission, Mr Pearson's good relationship with Mr Anic. 107 In this respect, it should be noted that the plaintiffs do not claim that Mr Corbett caused or contributed to the exit of Renbay staff after September 1990. The exodus of staff may generally have had an effect on Renbay's prospects of tendering successfully to St George and the Health Insurance Commission, quite apart from the specific loss of Mr Pearson, Mr Axiak and Mr Mitchell. Did any of the plaintiffs, as opposed to Renbay Systems, suffer that loss? 108 This question does not arise unless I am wrong in my answers to the last two questions. Since, however, the issue was fully argued and I have formed a firm view on it, it is appropriate to express my conclusion and reasons as an alternative ground for my decision. 109 Renbay Systems was placed into administration in December 1994. If there were any lost contracts or lost opportunities they were losses to Renbay rather than to any of the plaintiffs. Accordingly the plaintiffs' claims must fail. 110 The plaintiff tended a report by Furzer Crestani Services, chartered accountants, dealing with the assessment of economic loss by the plaintiffs. The report shows that Mr Morris received wages from the second plaintiff, Barry M Morris Holdings Pty Ltd, until year ended 30 June 1989, and from Renbay for the years ended 30 June 1987 to 1994. He received an eligible termination payment of $47,469 from Renbay during the year ended 30 June 1994, prior to the appointment of the administrator. 111 I agree with the submission by counsel for Mr Corbett that in these circumstances, there is no demonstrable loss of wages income from Renbay prior to the appointment of the administrator. There were workers compensation payments in the sum of $20,546, which should be accounted for in the year ended 30 June 1993, according to Mr Morris' evidence. But there is nothing to show that Mr Morris suffered loss of wages, or any other loss, by virtue of any damage suffered by Renbay. 112 The second plaintiff, Barry M Morris Holdings, charged Renbay a fee for its services, usually on a monthly basis. The fee did not relate to the profit of Renbay, and was usually a set amount. According to Furzer Crestani, the second plaintiff derived revenue from Renbay and related entities within the group, after consideration of cash flow and taxation implications. This seems to imply that any lost contracts that may have affected the profitability of Renbay had no impact on the second plaintiff's management fee income from Renbay. There is a summary of management fees in the Furzer Crestani report, and no demonstrable loss of management fees prior to the appointment of the administrator. 113 The third plaintiff, Pinside, was the holding company for the property at Greystanes. It appears from the Furzer Crestani report that the property was sold on 1 July 1994 for $710,000. It appears that the property was sold as a result of action by the ANZ Bank and the proceeds were applied against the overdraft and fully drawn advance, going to the Bank. There is no evidence that the property was sold for anything less than its market value. 114 A report from GG McLeay, chartered accountant, dated 6 November 1996 assesses the financial effect upon Renbay of non-payment of a final progress claim due from Simoon Pty Ltd. The report records that Mr Morris informed Mr McLeay that in his opinion, had Simoon paid its final progress claim the Pinside property would not have been required to be sold. 115 In these circumstances, there is no ground for concluding that any loss of contracts or opportunities to contract on the part of Renbay contributed to the sale of the Greystanes property. 116 My conclusion is that each of the plaintiffs has failed to demonstrate any loss that arises in any way in connection with contracts lost by Renbay with St George or the Health Insurance Commission, or the opportunity to make such contracts. Conclusion 117 The plaintiffs have failed to make out their claim for damages against Mr Corbett. I have found that Mr Corbett did not breach his contractual obligations as alleged; and if he had done so, his conduct would not have caused the plaintiffs or Renbay Systems to lose contracts with St George Building Society or the Health Insurance Commission; and in any event, the plaintiffs have failed to show that any of them, as opposed to Renbay, suffered the loss that they allege. 118 The proceeding should be dismissed. I shall hear the parties on the question of costs. **********

Last Modified: 12/02/2003 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.

Restraint of Trade Act 1976(NSW)

At a glance

Court

Decision date

Before

Source

Judgment (14 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (3)