Network Ten Pty Ltd v Seven Network

Decision 15Ten is entitled to a declaration that the Ten Agreement remains on foot. Otherwise, it is not entitled to the relief it seeks. Its claim should otherwise be dismissed.

Background - Ten approaches Mr Stephens 16On 20 February, Mr McLennan telephoned Mr Stephens and asked whether he would be interested in joining Ten. 17On 25 February, Mr McLennan met with Mr Stephens at Mr Stephens' home and discussed the possibility of Mr Stephens joining Ten to oversee scheduling, programming and content acquisition. The following discussion occurred: Mr McLennan: "How's it going at Seven? Mr Stephens: In reality, I am only working one day a week. I am basically a part time consultant and advise on programming and scheduling and attend their acquisition meetings. I have trained Tim Worner [the Chief Executive Officer of Seven West Media Ltd]. I also trained Angus Ross [Director of Programming at Seven Network Ltd]. I have sold my winery but feel that I have one last run left in me. Mr McLennan: What are your thoughts about Ten? Mr Stephens: I have given Ten a lot of thought. Clearly there are issues from a scheduling point of view. I think there are some real opportunities to make inroads from a scheduling point of view." And later: Mr Stephens: "I am prepared to go back to work full time but only if I was to do it for two years. Mr McLennan: Great, that's good. We lack the full programming experience from a scheduling point of view. You could make a real impact. Mr Stephens: Why don't you put an offer to me for money. I will leave that to you to decide. However, I will need to oversee scheduling, programming and content acquisition. Beverly McGarvey [the then Director of Programming at Ten] will need to report to me. Mr McLennan: Can I ask what is your contract position is [sic] with Seven? Mr Stephens: My consulting contract finishes in December but it can be terminated on three months' notice both ways. Once that happens there are no conditions or restrictions on me. It's very straight forward. If I am going to do this I want to be well rewarded. Also can you think if there is an options or share scheme that I could participate in? Also can I have your email address so I can give you my thoughts. Mr McLennan: I will have a think about the salary and incentives and will give you my email address. Mr Stephens: I am having a hip operation tomorrow. Let me think about it. I will send you my thoughts over the next few days about what needs to happen and will have a think about joining the company." 18On 26 February, Mr Stephens underwent a hip replacement procedure and remained in hospital for three nights. Later communications between the parties make reference to the nature of Mr Stephens' recovery from this surgery and its impact on his decision to enter the Ten Agreement. I will include these communications in my recitation of the factual background, but, with one exception (see [23] below), defer commenting on their significance until later in these reasons. 19On that day Mr Stephens sent Mr McLennan an email: "A pleasure meeting with you at my home yesterday. Very interesting discussion and appears a most challenging time ahead for Network TEN. I think I may be up for the challenge but need to weigh up the pros and cons over the next 48 hours or so... Hip surgery went really well and feel pretty good some 4 hours after op...". 20On 1 March, Mr McLennan sent Mr Stephens an SMS message: "I hope you're feeling better today. Ideally I'd like to tie up a deal in the next week...". 21On the same day Mr Stephens replied: "Will try and email you something tomorrow. Had a bit of post anaesthetic reaction today that made me want to sleep all day. Starting to feel better." 22The following day, 2 March, Mr Stephens sent an email: "Apologies for taking longer to compose this email however as explained on Saturday [1 March] post anaesthetic low blood pressure kicked in making me extremely drowsy all day & in no frame of mind to compose this email!" 23The email continued with a detailed recitation by Mr Stephens of the "factors to take into account in the event I did accept this challenge". Despite his recent surgery, Mr Stephens' email makes quite clear that he had no trouble negotiating a package with Ten that was highly satisfactory to him. For example, he said: "Hamish, keep in mind that I haven't worked full time since I handed over to Angus Ross at Seven in Mid 2008. At my age and stage of life I had all intentions of totally retiring at the end of this year. If I was to accept this role it would be (A): I love a challenge and (B) would be handsomely rewarded for at least the next couple of years to make up for the loss of lifestyle over that period." 24Under the heading "What You Get from Me" he said: · 38 Years of Television Programming Experience/ 49 Years of Overall TV & Film Industry Experience. · A proven track record as a Senior Programmer at all Australian Commercial Networks including TASTV/SAS-10 Adelaide, TEN-10 Sydney, NEW-10 Perth, Nine Network Australia, Seven Network Operations/ TVNZ (Consultant). · Someone with the ability to mentor and motivate a team of people and install a "Win-at-All-Costs" attitude. · A wealth of experience when dealing with Overseas Distributors and Producers in addition to Australian Producers. · Worked hands-on in many areas of the Industry over those years including Production, News Editor, Presentation, Promo's, Traffic, Marketing, Publicity to name a few." 25Mr Stephens continued: "Providing we can put a deal together I envisage once this leaks out Tim [Worner] and possibly Kerry [Stokes; Executive Chairmen of Seven Group Holdings Ltd] could make it very difficult and will almost certainly hold me to the full three months notice... Hamish, I look forward to hearing back from you within the next few days re package and incentives amongst other things." 26Thereafter, Mr Stephens negotiated (by email, text message and meetings at his home) with Mr McLennan and Mr Kethel the terms on which Mr Stephens might move from Seven to Ten. 27On 3 March, Mr Kethel gave Mr Stephens a form of "Employment Agreement". Between 3 and 6 March, Mr Stephens and Mr Kethel exchanged a number of emails concerning the detail of that agreement. Mr Kethel sent Mr Stephens a second draft on 5 March and a final version on 6 March, which Mr Stephens signed at his home that afternoon. 28Until 4 March, the proposal discussed between Mr Stephens and Ten was for a full time position. By 4 March, Mr Stephens had had second thoughts about that and, sent an email to Mr McLennan: "Had a good meeting with [Mr Kethel] last night who has supplied a draft contract and details of the incentive share plan. In the meantime common sense has been suggesting to me that I may have bitten off a little more than I can chew regarding jumping ship into the senior full time role of Director of Programming and Production! At this stage of my life, family and lifestyle need to be number one priority and taking up 15 hours per day 5 days per week and say another 10-20 hours at weekends I reckon is too big a sacrifice for the next 2-2.5 years for a bloke my age! 10-15 years ago I would have probably jumped at the opportunity! Furthermore there are times where lifestyle outweighs the dough on offer... Now thinking that perhaps a part time role such as Director of Scheduling/Acquisitions...with maybe [Ms McGarvey] remaining in something like her current position and running everything else Programming... Could likely do it averaging 3 days per week over the 2-2.5 years with approximately say 2 days on site at Pyrmont and 1 day working online and screening material from home etc." 29At around that time Mr Stephens had a conversation with Mr McLennan: Mr Stephens: "...I have been thinking that full time might be a bit too much. Could I do 2 ½ days per week? Mr McLennan: Yes, that's fine, what I really need is your great experience to work with [Ms McGarvey]. Mr Stephens: Great. I appreciate your support. I'm happy to go full time for the first few months, provided I get paid accordingly and then after than I will revert back to the original pay...".

The Ten Agreement 30On 6 March, Mr Stephens and Ten executed the Ten Agreement. Under that agreement, Mr Stephens' employment with Ten was to commence on 9 June and to continue, subject to various exceptions, for a maximum term of two years. 31The Ten Agreement required Mr Stephens to work as "Director of Scheduling and Acquisitions" part time for three days a week. 32The agreement provided that: "This Agreement commences on and is effective from...the date of execution of this Agreement... TEN hereby appoints you as Director of Scheduling and Acquisitions." 33Clause 2 of the agreement was headed "Term" and provided: "a) Your employment under this Agreement commences on 9 June 2014 and continues subject to this Clause 2 ... for a maximum term of 2 years ("Initial Term"). b) Six months prior to the expiry of the Initial Term, TEN and you will commence discussions about the potential extension of the Initial Term of this Agreement for a further term ("Further Term"). 34Clause 5 of the agreement was headed "Employment Obligations" and was in the following terms: "a) You agree that, during your employment, you will devote the whole of your time, attention and ability during work hours, and at other times as reasonably necessary, to the faithful and diligent performance of the duties and responsibilities assigned to you by TEN. b) You agree that during the term of your employment, you will not solicit, encourage or accept any offers of employment from or offers to provide services to any other entity without TEN's prior written consent and if you receive such an offer, you will immediately communicate the existence of the offer and its terms to TEN. c) You agree that, except with the written consent of the Chief Executive Officer during the term of your employment (including any leave of absence under clause 13c), you will not: i. have any direct or indirect financial interest in any entity or body that would be in conflict with your employment duties and responsibilities other than a minority shareholding in publicly listed companies; ii. hold any directorship or other office or accept any appointment to any other entity or body; iii. undertake any other trade, business or profession; iv. become an employee, agent or contractor of another person; ...".

Events thereafter - Thursday 6 March 35Within half an hour of sending the Ten Agreement to Ten by courier, Mr Stephens sent an email to Mr McLennan and Mr Kethel: "Tim Worner frantically calling me. Suspect something has leaked back! Need to chat urgently!" 36Shortly thereafter Mr McLennan sent Mr Stephens an SMS message: "Stevo, would prefer you don't call back tonight. I will call you in 1hr. Maybe say you are not well!" 37In cross-examination, Mr McLennan said that he wrote the latter comment "tongue in cheek" because he thought Mr Stephens "might be bullied" by Seven. He said he was trying to help Mr Stephens deal with "the situation". 38Mr Stephens replied: "Will do my best but if it's out there now [Ms McGarvey] sure to hear about it!" 39At around that time, Mr McLennan had a telephone conversation with Mr Stephens in which Mr Stephens said: "I have told Tim [Worner]. He had already heard from Gyngell [Mr David Gyngell, the CEO of Nine Entertainment Co.]. He was disappointed but accepted the decision." 40At 7.51pm, Mr Stephens sent Mr McLennan an SMS message: "Oh dear shit has hit fan. Gyngell had already told him [Mr Worner] and he replied 'Stevo would never do that'. Chance legal action could follow but my contract is pretty clear!" 41At 7.46pm on 6 March, Mr Stephens sent an email to Mr Worner and Mr Ross: "Ango [Mr Ross]..Attempted to call you and explain after I spoke with Tim [Worner] however went to voice mail so apologies for email but you need to know before it goes wide. Soooo sorry guys and will always love you like brothers!!" 42Mr Stephens attached to that email a message he had drafted earlier in the day (at around 10.30am) which read: "Greetings from the recovery room! Guys for the last 3 weeks Hamish McLennan has been hounding me to come [out] of semi retirement and jump ship to TEN. Initially I told him that I had no interest however in the week before I entered hospital he was relentless calling twice a day and even coming around to my home. I was in no condition or frame of mind to take it any further but the offer did start ticking over in my mind for the 3 days I spent in hospital having the hip done. On Monday [3 March] he offered me the full time role of Director of Programming and Production for TEN. The incentive money was huge but after seriously taking into account my age and the fact that I have no desire to return to work full time for a minimum 2 year commitment knocked it back. He then came back to me with another hugely incentivised offer for the part time position of DIRECTOR OF SCHEDULING and ACQUISITIONS. The gig would involve just 2 days per week in the office and a further day working from home and fully flexible. After giving this offer serious thought and some to and fro on a very generous remuneration package have decided to accept as figured TEN just can't get any worse than what they are doing at the moment and the only way is up! My loyalty to you guys and Seven has always been indisputable however feel that in popping in once per week for the Development Meeting and screening and noting numerous hours of Docos and other product that is usually a 90% pass chance is not really achieving all that much plus I'm getting bored!" Clause 1.1 [sic "10.1"] of my existing contract allows termination of the current consultancy arrangement with three months notice which I hereby submit... I could take gardening leave for three months before commencing with TEN in three months time" 43Mr Ross replied at 8.08pm: "I am shattered Stevo - particularly you didn't come to us first ..." 44Mr Stephens responded at 8.29pm: "Yep feel pretty bad and as mentioned this just came out of the blue and I had rejected on several occasions but in the end the challenge and incentive inducements got me at a weak moment". 45At 8.40pm Mr Bruce McWilliam (Group Chief Legal & Commercial Director at Seven West Media Ltd) sent an email to Mr Worner and Mr Ross: "Don't accept". 46At 9.07pm Mr Worner wrote to Mr Stephens: "I am not accepting this. This is not what brothers do to one another. I refuse to believe you would have done it." 47At 9.26pm Mr Nick Chan (Chief Operating Officer of Seven West Media Ltd) sent an email to Mr Worner: "Why don't we offer Stevo the same money for 2 days work on Streamco [a new venture owned by the Nine Network]? Nine have as much vested interest in him not going as we do. He won't be the first to walk away from a contract." 48Mr Worner replied at 9.29pm: "Great idea. He was wavering on the phone tonight and a few of us have let him know how disappointed we are."

Friday 7 March 49At 10.14am the next day, 7 March, Mr Stephens replied to Mr Worner's 9.07pm 6 March email: "Mate appreciate you not accepting but maybe too late. I still feel bad. In retrospect should have put a call in to you last week but was drugged up to eyeballs with painkillers and not thinking as normal self." 50At around that time Ten published a media release headed "John Stephens Joins Network Ten" (which Mr Stephens had said "looked ok" to him) and which included: "Network Ten today announced the appointment of John Stephens as Director of Scheduling and Acquisitions. Mr Stephens will work closely with Network Ten Chief Programming Officer, Beverly McGarvey, both of whom will report to Chief Executive Officer, Hamish McLennan. In a television career that spans more then 40 years, Mr Stephens has led both the Nine and Seven networks to the top of the ratings and has been the driving force behind some of the most successful programs ever seen on Australian television." 51At about the time that media release was published, Mr Stephens sent an email to Mr Neil Shoebridge, the Director of Corporate and Public Communications at Ten: "Yep Seven not at all happy...Threatening all sorts of things legal so doubt whether they will allow early release!" 52At around lunch time, Mr Stephens spoke to Mr McLennan and asked him for Ms McGarvey's contact details because he wanted to "reach out" to her. Mr McLennan provided those details at around 1.16pm. 53In the meantime, at 12.51pm on 7 March, Mr Worner sent Mr Stephens an email: "If you feel as though you have made a wrong call under duress you can address that and we will assist you in doing so." 54At 1.16pm, Mr Stephens sent an email to Ms Monica Vagg (Human Resources Operations Manager - Remunerations & Corporate at Seven West Media Ltd): "I have officially offered my resignation as Consultant to the Seven Network to Tim Worner and Angus Ross to take up another appointment. Whilst I do this with much regret, I hereby advise that I will be exercising Clause 10.1 of my current employment contract offering 3 months notice effective from today, Friday March 7th 2014. I will discuss with Angus [Ross] shortly whether he wishes me to continue screening product for Seven for the next three months or take gardening leave for that period. Either way my final day of employment with Seven will be June 7th 2014." 55At 1.26pm, Mr McWilliam sent an email to Mr Stephens: "...so there's no misunderstanding, we certainly don't agree to you going to Ten early. If it is necessary to exclude you from stuff then it will be handled on a case by case basis and thank you for recognising that, but you have to serve out the full notice. [Seven's solicitor] will write about your ongoing confidentially undertakings and responsibilities... I remember when you left Nine you were caught copying documents etc, and we really don't want a repeat of that. Seven's copyright and other property including scheduling plans etc is [sic] very valuable and market sensitive and we operate in a competitive industry. Please don't take that the wrong way - you are a lot older now and will understand that your obligations have to be honoured totally. On a personal level I am very sad you are leaving too and you have left a lot of very sad colleagues who will miss you... PS if you feel you were taken advantage of when you were under medication then make that clear!" 56At 2.05pm, Mr Stephens replied to Mr McWilliam including: "Thanks for the note mate, particularly the nice comment at the bottom. Fully realise my obligations and you know I have a reputation as being probably the most honest man in the business ... Would never do anything untoward to hurt Seven and take this opportunity to correct the misconception that I was caught copying stuff when I left Nine to come to Seven 11 years ago ... Angus [Ross] is now on his way over to try and talk me out of the deal but possibly to no avail. I was under the influence of painkillers while in hospital but not yesterday when I signed with TEN but will keep in mind." 57At 2.51pm, Mr Stokes sent an email to Mr McWilliam, referring to Mr McWilliam's email to Mr Stephens of 1.26pm: "Great letter Bruce. Also let him know I'm pissed with him - it was a great day when he joined us as the first to come over! I'll miss that he is not with us I'm really fond of him." 58At 3.14pm, Seven's solicitors wrote to Mr Stephens confirming that "your employment with Seven will terminate effective on and from 5:00pm on 7 June 2014" and that in the meantime "you are required to attend work at Seven's offices and perform your duties to the best of your abilities and in accordance with the Contract." 59At 4.28pm, Mr McWilliam sent an email to Mr Stephens headed "Pls send to Hamish [McLennan] urgently" which read: "And I confirm we will handle all the legals!" 60Evidently, Mr McWilliam attached to that email a document he wanted Mr Stephens to send to Mr McLennan (hence the heading on the email). That attachment was not in evidence before me because, I infer, it was the subject of client legal privilege. 61At 4.32pm, Mr Stephens replied: "Can't do it yet as need time to clear head and think some more. Also waiting for counter proposal of sorts from Tim [Worner]." 62I read Mr Stephens' statement that he "can't do it yet" as a statement that he did not then feel able to send Mr McWilliam's attachment to Mr McLennan, because he needed to give the matter further thought and because he was expecting a "counter proposal" from Mr Worner. 63At around this time, Mr Worner and Mr Ross called on Mr Stephens at his home. 64At 5.10pm Mr Worner sent an email to Mr Stephens entitled "new role" which read: "Good to see you this arvo. I can understand that you're torn but after 11 years together I am torn apart. I have always tried to set things up to suit you which is why I was so shocked last night. The new role is something we can make work. TITLE: Head of International Development ... TERM: 2 years starting March 5 2014 (or to the end of 2016 should you wish) CONDITIONS: As desired by you and to be worked out but you have indicated your preference for a part time role so I would say 2 days per week with a further day at home if required. We can work out a daily rate if you want to do more or less SALARY: [The figure is the subject of a confidentiality order] Stevo write yes back, withdraw your resignation and we can start working on the first projects as soon as you like. It can be very exciting and the challenge is essentially pretty much a blank canvas. Its up to you to colour it in and I know you can do it and have some fun along the way." 65Mr Stephens replied at 5.45pm: "Thanks for this mate and also popping around with Ango [Mr Ross] this afternoon for the gee-up chat. I didn't realise at the time but TEN's CFO [Mr Paul Anderson] had already signed the contract prior to me signing and returning to them yesterday. Still doesn't mean I can't pass on their offer though but I don't want to be rushed and need at least the weekend to think everything through. Have read the details below on the newly created role and apart from being very generous and something I could do well and would probably enjoy taking on board as long as there is a challenge there! I'm leaning towards withdrawing my resignation but need a [sic] some think time over the weekend. Assume if I tell TEN that I am no longer jumping ship Bruce [McWilliam] and his team will offer the legal support required?" 66At 5.46pm Mr Worner sent an email to Mr Stokes: "I've just spent time at Stevo's home where he is recovering from his hip operation. I have created a new role for him (Head of International Development) which he is seriously thinking about. This would mean he would withdraw his resignation from Seven and contact Ten to let them know he cannot accept their offer. I sense he is wavering between the two roles. It would be perfect if you were able to give him a call and let him know how much we value him etc. Any chance?" 67Mr Stokes subsequently called Mr Stephens, although what was said was not in evidence. 68At 6.13pm on 7 March, Mr Worner sent Mr Stephens an email headed "New Role" and attaching a document entitled "Your Continuing Employment With [Seven]" ("the Seven Offer") which Mr Worner had signed. 69The attached document reflected the matters in Mr Worner's email of 5.10pm and read: "We refer to your discussions with me earlier today. We confirm that you have informed Seven that you withdraw your resignation from your employment with Seven and you agree to continue your employment with Seven on the following terms:

1. Position: you will be employed by Seven in a position of Head of International Development (Position);
2. Activity: charged with the ongoing expansion of Seven's television business and program interests in international territories and also on occasion in Australia;
3. Duties: your duties in the Position include responsibility for but not limited to [the details are the subject of a confidentially order];
4. Term: your employment in the Position will be 2 years commencing from 5 March 2014 and continuing until [the details are the subject of a confidentially order] unless termination earlier by Seven in accordance with clause 10.2 of your previous contract of employment with Seven dated 29 January 2013...
5. Remuneration: your remuneration will be [the details are the subject of a confidentially order], less applicable taxation, inclusive of superannuation;
6. Incentive scheme: you will also be entitled to participate in an incentive scheme. The details of the incentive scheme will be provided to you shortly;
7. Condition/Hours of work: as desired by you and to be worked out but you have indicated your preference for a part time role so I would say 2 days per week with a further day at home if required. We can work out a daily rate if you want to do more or less... Please sign the attached copy of this letter to indicate your acceptance of employment with Seven on the terms of this letter." 70Mr Worner's covering email read: "I know you want the weekend to think but here is something you can sign. If you have any questions or want to discuss things further please call me. You have been such a key part of our success and I think you can be again in our next phase."

Saturday 8 March 71At around 2.00pm the following day, Saturday 8 March, Mr McLennan telephoned Mr Stephens and the following conversation took place: Mr McLennan: "Hi John, how are you going? I hear that they have been leaning on you. Mr Stephens: Yeah, it's been a bit rough. I had a visit from McWilliam and Worner and a call from Kerry Stokes and Leckie [Mr David Leckie, the Director of Seven Group Holdings Ltd], and I am getting a call back tonight from Stokes and from Leckie again tomorrow." Mr McLennan: What did they say? Mr Stephens: They didn't take it well. They asked me if I signed. I said yes and they said 'Oh no, why did you do that? Don't you realise that Ten is going to be bought by News Corporation and there will be a change of ownership. Are you insane?' Mr McLennan: There is no indication that they will do that. There has just been a lot of speculation in the market. In any case it's up to the government to change the laws. Mr Stephens: They also said 'they're going to have to spend a couple of hundred million on Ten'. Mr McLennan: Even if that's right, that's not a bad thing. You get to spend it. Anyway, I rang to let you know that Lachlan [Murdoch, a former director and Non-Executive Chairman of Ten Network Holdings Ltd] will call to welcome you to the company. Mr Stephens: That's great." 72At 2.42pm Mr McLennan sent Mr Stephens an SMS message: "Stevo, don't worry about them hassling you. Very exciting times ahead. Everyone including our staff, CBS and Fox etc are all thrilled and you'll have a lot of fun along the way." 73At 5.00pm, Mr Stuart Thomas, General Counsel at Ten, wrote to Mr McWilliam: "[Ten] understands that numerous officers, representatives and associates of [Seven] and its associated entities have initiated discussions with John Stephens with a view to securing the continuing services of John Stephens beyond the conclusion of his current agreement with Seven notwithstanding and subsequent to Ten's public announcement on 7 March 2014 that Ten has appointed John Stephens to the role of Director of Scheduling and Acquisitions. Ten formally puts Seven and related bodies corporate and their respective officers, representatives and associates on notice that Ten has concluded an agreement with John Stephens on 6 March 2014 with terms to the following effect.

1. Employment commences on 9 June 2014.
2. During the term of employment, Mr Stephens must not be an employee, agent or contractor of any another [sic] person." 74Mr McWilliam responded to this email the next day at 9.18am and said: "I am sure you will understand that Seven can't provide any undertakings about a contract we have not seen, based on your summary of the terms e.g., in case you have left something out ... Please send us a copy of the contract you say [Mr Stephens] had signed with Ten". 75Mr McWilliam also said "I am in London this week". 76There is in evidence what appears to be a chain of emails passing between Mr Stephens, Mr Worner and Mr McWilliam, each of which have the heading "Ten Appointment Draft". 77The first in time appears to be an email from Mr Worner to Mr Stephens and Mr McWilliam at 5.55pm on 8 March. In his opening, Mr Studdy suggested that the time and date appearing on this email may be wrong, and that the email was more likely sent on Sunday 9 March. That suggestion was born, as I understood it, from an assumption that Mr McWilliam was at this time in London. However, an SMS from Mr McWilliam to Mr Stephens reveals that he left Sydney during the afternoon on Sunday, 9 March. Thus, it is clear Mr Worner's email was sent at the date and time it bears. 78Mr Worner's 5.55pm email read: "I think it is very honest and back to the Stevo I know. I was just thinking about you when this arrived and how I want to make the right decision for yourself but I don't want to stress you out anymore than you obviously have been this week or so. Try and get some rest and I will speak to you soon." 79For the reasons that follow, my conclusion is that Mr Worner was commenting on an early draft of an email that Mr Stephens proposed to send Mr McLennan (the "Ten Appointment Draft" referred to in the heading of the email) informing Mr McLennan that he had changed his mind and was not moving to Ten. Ultimately, Mr Stephens sent that email to Mr McLennan at noon on Monday 10 March. 80At 7.57pm, Mr McWilliam sent Mr Stephens an email with the same heading, "Ten Appointment Draft". The content of the email is not in evidence. However, it is revealed in Seven's List of Documents as a document in respect of which client legal privilege was claimed. I infer that Mr McWilliam's email contained commentary or advice on the current draft of Mr Stephens' proposed email.

Sunday 9 March 81At 4.16am the following morning, Mr Stephens sent an email to himself with the current iteration of the "Ten Appointment Draft". That is the earliest draft of the email in evidence. 82That draft read: "Dear Hamish, I have now had an entire sleepless weekend to reflect on what may lie ahead in the role of Director of Scheduling and Acquisitions Network TEN. Maybe it was the post operative drugs I was on at the time I signed, however now I have stopped the pain killers and other drugs & with a clear mind, feel that I can no longer accept the appointment and as a result have decided to withdraw my resignation from Seven! What overwhelmingly worries me is the fact we did initially agree that the role would be part time for three days per week, 2 days in the office and one working from home. I feel there is no way a role such as this would work successfully being part time, taking into account the enormous amount of effort that needs to be placed into re-building your Network's Programme Schedule. At my stage of life I just don't have the time or desire to dedicate to a full time position and believe you would be better served seeking out a candidate who could take on this role on a full-time basis. My sincere apologies for this about face but believe it better to be resolved now than further on down-the-track where it could be even more difficult. Considering the announcement only went out on Friday it may not be a good look to announce my withdrawal from the role immediately! If so desired I have spoken with Tim Worner and a couple of other senior colleagues at Seven who would confidentially agree not to divulge or announce anything regarding me passing over the position until you could recruit another candidate within an agreed period of time. As far as everyone else is concerned I am still working out the 3 month exit clause of my existing contract with Seven. This would give you time to recruit another candidate and announce the change at an appropriate time. Once again Hamish, I sincerely apologise to both yourself and Lachlan for this inconvenience and disappointment but am now certain I wasn't thinking clearly at the time I accepted due to the medication I was taking." 83At 4.41am Mr Stephens sent Mr McWilliam and Mr Worner an email with the same subject heading. Again that email is not in evidence but is revealed in Seven's List of Documents as privileged. 84Seven's List of Documents also referred to a further email, with the same heading, sent by Mr Worner to Mr Stephens and Mr McWilliam at 4.55am. Ms Mirzabegian called for that document. In response, Mr Thomas stated that, otherwise than as I have set out above, that email had been redacted for privilege and that Hammerschlag J had upheld that claim. 85Absent evidence from Mr Stephens, Mr McWilliam and Mr Worner about these matters, the inference I draw from these communications is that the draft email to Mr McLennan was first prepared some time on Saturday 8 March (probably by Mr Stephens) and was circulated to Mr McWilliam and Mr Worner for comment. I infer from the fact that privilege has been claimed, and upheld, in relation to the emails, that some advice (I would infer by Mr McWilliam) was given to Mr Stephens.

Monday 10 March 86At noon on 10 March, Mr Stephens wrote to Mr McLennan to say that he would not be commencing at Ten. His email read: "I have now had the entire weekend to reflect on what may lie ahead in the role of Director of Scheduling and Acquisitions Network TEN. Maybe it was the post operative drugs I was on at the time I signed, however now I have stopped the pain-killers and other drugs & with a clear mind, feel that I can no longer accept the appointment and as a result have decided to withdraw my resignation from Seven, hence I will not be commencing employment with TEN! What overwhelmingly worries me is the fact we did initially agree that the role would be part time for three days per week, 2 days in the office and one working from home. I feel there is no way a role such as this would work successfully being part time, taking into account the enormous amount of effort that needs to be placed into re-building your Network's Programme Schedule. This opinion was further re-enforced in my mind when I read an article by David Dale in yesterdays Sun Herald quoting Beverley. 'This sort of work that we programmers do tends to be all week, all day and every evening', and I know she is correct in what she says! At my stage of life I just don't have the time or desire to dedicate to a full time position and believe you would be better served seeking out a candidate who could take on this role on a full-time basis. Hamish, my sincere apologies for this about face but believe it better to be resolved now than further on down-the-track where it could be even more difficult. Considering the announcement only went out on Friday it may not be a good look to announce my withdrawal from the role immediately! If so desired I have spoken with Tim Worner and other senior colleagues at Seven who would confidentially agree not to divulge or announce anything regarding me passing over the position until you could recruit another candidate within an agreed period of time. As far as everyone else is concerned I am still working out the 3 month notice in my existing contract with Seven. This would give you time to recruit another candidate and announce the change at an appropriate time. Once again Hamish, I sincerely apologise for this inconvenience and disappointment but am certain I wasn't thinking clearly at the time I accepted due to the medication I was taking." 87There are a number of differences between the email, as sent by Mr Stephens to Mr McLennan on 10 March, and the draft attached to Mr Stephens' email to himself of 4.16am on 9 March. 88In particular, the fifth paragraph was added (commencing "[t]his opinion was further re-enforced") referring to the article written by Mr David Dale which appeared in the Sun Herald on Sunday 9 March. The article was about Mr Stephens' proposed move from Seven to Ten. The article included a quotation attributed to Ms McGarvey as follows: "She is not necessarily looking to Stephens as a saviour but she says his arrival will add 'depth of experience' to her team. When Stephens shifted from Nine to Seven, he declared he only wanted to work part time. But at Ten, McGarvey says: 'He'll be here a lot. The sort of work that we [programmers] do tends to be all week, all day, and every evening. It requires real commitment. You can't do this without being really engaged. Given his success elsewhere, I'm sure he knows what's involved.'" 89At 12.15pm, Mr Stephens emailed Mr Worner and Mr Ross: "Resignation Withdrawn email sent. Tin hat about to go on head!" 90At 12.26pm, Mr Stephens sent an email to Ms Vagg: "I hereby withdraw my resignation effective immediately." 91At 12.38pm, Mr Worner replied: "We will be there next to you." 92At 1.29pm, Mr McLennan replied to Mr Stephens: "Recalling our discussions with you last week, Lachlan [Murdoch], Graeme [Kethel] and I share the firm recollection that you were clear-headed and resolute in your decision to join Ten. After many discussions, both before and after your operation, it was clear that you had consciously and carefully considered the role and committed yourself to it. We do understand that Seven has brought pressure to bear to dissuade you from your agreement to join us. ... You will understand that, in the circumstances, we are not in a position to accept your withdrawal of acceptance of the appointment." 93Mr Stephens replied at 3:32pm: "Once again I am sorry that I have decided to no longer proceed with my decision to join TEN. Whether or not you accept that position, I will not be commencing employment with TEN on June 9th 2014 and intend to continue with my employment at Seven. I was still on prescribed pain killers, anti inflammatory and blood thinning drugs when I signed the contract last Thursday afternoon [6 March] following hip replacement surgery which you knew about therefore I was not capable a [sic; of] making a carefully considered decision." 94Later on 10 March, Mr Stephens signed the Seven Offer, thus creating the 2014 Seven Agreement. 95Mr Stephens made a manuscript note: "Tim [Worner] date probably needs to be revised to a little later - can discuss once all the legal stuff is through! Maybe July 1st 2014." 96Seven received the 2014 Seven Agreement, signed by Mr Stephens, in the mail the following day, 11 March.

Events thereafter 97On 13 March, Seven's solicitors, Johnson Winter & Slattery, wrote to Ten's solicitors, Baker & McKenzie, asserting, inter alia: "Mr Stephens did not have the requisite legal capacity to enter into any binding legal contract on 6 March 2014 as he was under the influence of serious medication and recovering from significant surgery." 98On 14 March, Ten commenced these proceedings. 99On 17 March, Brereton J dismissed an application by Ten for interlocutory relief (Network Ten Pty Limited v Seven Network (Operations) Limited [2014] NSWSC 274). 100On 20 March, the solicitors for Mr Stephens wrote to the solicitors for Ten: "We are instructed by Mr Stephens to notify your client that...Mr Stephens will not be commencing employment with Ten on 9 June 2014 and to the extent that any binding contract between Mr Stephens and Ten exists, the contract is terminated by the giving of notice of termination by Mr Stephens to Ten." 101On 24 March, Ten wrote to Mr Stephens purporting to give Ten's consent pursuant to cll 5(b) and 5(c) of the Ten Agreement for Mr Stephens to: (a)solicit, encourage or accept offers of employment from or offers to provide services to any entity other than Seven or Nine Network Australia Pty Ltd (or their related bodies corporate); and (b)becoming an employee, agent or contractor of any person other than Seven or Nine Network Australia Pty Ltd.

Post-operational symptoms 102As I have set out above, there is reference in the communications between the parties to the effects on Mr Stephens of the hip surgery performed on 26 February 2014. 103In his cross-examination of Mr McLennan, and in his oral submissions, Dr Bell was careful not to overplay this card. Dr Bell went no further than to put to Mr McLennan, and to submit that following the procedure on 26 February there were times when Mr Stephens was able to apply his mind appropriately his negotiations with Ten, and times when he was not. 104However, earlier, Mr Stephens and his legal representatives went further. Thus, Mr Stephens stated: (a)in his email to Mr Ross at 8.29pm on 6 March that Ten had "got me at a weak moment" (see [44] above); (b)in his email to Mr Worner at 10.14am on 7 March that "in retrospect should have put a call into you last week but was drugged up to the eyeballs with painkillers and not thinking as normal self" (see [49] above); (c)in his midday email to Mr McLennan on 10 March that "maybe it was the post operative drugs I was on at the time I signed, however now I have stopped the painkillers and other drugs and with a clear mind, feel that I can no longer accept the appointment" (see [86] above); and (d)in his further email to Mr McLennan at 3.32pm on 10 March that when he signed the Ten Agreement he was "on prescribed pain killers, anti-inflammatories and blood thinning drugs" and "was not capable of making a carefully considered decision" (see [93] above). 105On 13 March, Mr Stephens' solicitors went even further and the asserted that Mr Stephens lacked "requisite legal capacity" when he signed the Ten Agreement (see [97] above). 106However, I am satisfied that, despite these statements made by and on behalf of Mr Stephens, he was labouring under no relevant disability when he signed the Ten Agreement. 107So much is made clear by his email exchange with Mr McWilliam on 7 March to which I have referred at [55] and [56]. 108In the absence of any evidence from Mr Stephens, my conclusion is that his statement to Mr McWilliam that he was not "under the influence of painkillers" when he "signed with Ten" (see [56] above) represents the true position. He was, of course, receiving medication following major surgery undertaken on 26 February. But that did not affect his capacity to enter the Ten Agreement. Mr Stephens overreached when he directly, and through his lawyers, made assertions inconsistent with what he admitted to Mr McWilliam to be the true position. 109In my opinion, such post operational symptoms as Mr Stephens suffered are irrelevant to the issues before me.

Introduction 110Dr Bell and Mr Thomas submitted: "Logically, this issue arises first. If Ten is unable to establish a breach by Mr Stephens of the Ten Agreement, then its declaratory relief against Mr Stephens and its intentional interference claim against Seven fall away. A 'breach of contract' is the 'essence' of the cause of action: Allen v Flood [1898] AC 1 at 121". 111I agree. 112Ten does not bring a case against Seven of causing loss by unlawful means (assuming any such tort exists in Australia: cf Rajlaw NSW Pty Ltd v Rajlaw Pty Ltd [2013] NSWSC 1621 per Windeyer AJ at [10] and [11]). 113Such suggestion as may have previously existed in United Kingdom authority that the tort of interfering with contractual relations could be made out without showing a breach of contract (for example DC Thomson & Co Ltd v Deakin [1952] Ch 646 per Jenkins LJ at 693; Torquay Hotel Co Limited v Cousins [1969] 2 Ch 106 per Lord Denning MR at 137-138 and Merkur Island Shipping Corporation v Laughton (1983) 2 AC 570 per Lord Diplock at 607-8) has now decisively been rejected by the House of Lords in OBG Limited v Allan; Douglas v Hello! Ltd; Mainstream Properties v Young [2008] 1 AC 1 by Lord Hoffman at [44] and Lord Nicholls at [189]. 114Lord Hoffman's approach to inducing breach of contract has been cited with approval in Wilson HTM Investment Group Ltd v Pagliaro [2012] NSWSC 4068; 226 IR 75 per Bergin CJ in Eq at [77], Cleary v Kocatekin [2012] NSWSC 692 at [18] per Bergin CJ in Eq; LED Technologies Pty Ltd v Roadvision Pty Ltd (2012) 199 FCR 204 at 215-216 per Besanko J. It follows that for Ten's claim against Seven of 'intentional interference' to be established (see [164] to [229] below), Ten must first establish a breach by Mr Stephens of the Ten Agreement.

The breach alleged by Ten and the proper construction of the Ten Agreement 115By its Amended Statement of Claim, Ten claims that Mr Stephens acted in breach of cll 5(b) and 5(c)(iv) of the Ten Agreement. Ten makes no other claim of breach of contract. 116As I have set out above, by cl 5(b) of the Ten Agreement, Mr Stephens agreed that during the term of his employment, he would not solicit, encourage or accept any offers of employment from or offers to provide services to any other entity without Ten's prior written consent. 117By its Amended Statement of Claim, Ten alleges that Mr Stephens acted in breach of that clause in that he had solicited and accepted an offer of employment from Seven and that, in particular: (a)between 6 and 10 March he engaged in discussions with representatives of Seven to the effect that he should not commence employment with Ten, that he should work for Seven, that Seven would make an new offer of employment to him and that Seven would provide legal assistance to him to defend any claim by Ten; and (b)he received the Seven Offer (see [68] above) and entered the 2014 Seven Agreement (see [94] above). 118By cl 5(c)(iv) of the Ten Agreement, Mr Stephens agreed that, except with Mr McLennan's written consent, he would not, during the term of his employment, become an employee, agent or contractor of another person. 119Ten alleges that Mr Stephens breached that clause by purportedly becoming an employee of Seven under the 2014 Seven Agreement and that, in particular, Mr Stephens had engaged in the conduct referred to at [117] above. 120Before me, it was common ground that resolution of Ten's contentions required consideration of the proper construction of the Ten Agreement. There was no dispute as to the principles to which I must have regard in construing a commercial contract such as the Ten Agreement. Indeed, neither counsel took me to any authority on that question. 121The relevant principles were recently restated by the High Court in Electricity Generation Corporation (t/as Verve Energy) v Woodside Energy Ltd [2014] HCA 7; 88 ALJR 447 at [35]: "The meaning of the terms of a commercial contract is to be determined by what a reasonable business person would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'. As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption 'that the parties... intended to produce a commercial result'. A commercial contract is to be construed so as to avoid it 'making commercial nonsense or working commercial inconvenience'." (citations omitted) 122As to the language used by the parties, the difficulty I see with Ten's contentions is that the proscription in each of cll 5(b) and 5(c)(iv) is against conduct occurring "during the term of your employment". However, for the reasons that follow, the conduct of Mr Stephens complained of did not occur during the term of his employment. 123Although the Ten Agreement states that it "commences on and is effective from the date of execution" (6 March) it also provides (under the heading "Term") that: "Your employment under this Agreement commences on 9 June 2014 and continues...for a maximum term of 2 years ('Initial Term')." (see cl 2(a)) 124The Agreement also makes provision for a "Further Term" which might occur after expiry of the "Initial Term". 125The language of the parties indicates that, although the Ten Agreement was to commence on and be effective from 6 March, the term of Mr Stephens' employment was not to commence until 9 June. 126That is not surprising, as Ten always understood and accepted that Mr Stephens would have to work out his three month notice period with Seven. 127Clause 5 is headed "Employment Obligations". 128By cl 5(a) Mr Stephens agreed: "...that, during your employment, you will devote that whole of your time, attention and ability during work hours, and other times as reasonably necessary, to the faithful and diligent performance of the duties and responsibilities assigned to you by TEN." 129It is obvious Mr Stephens' obligations under cl 5(a) did not arise prior to 9 June 2014 (as prior to then, as Ten knew, Mr Stephens was working at Seven). 130I cannot accept that reasonable business people in the position of Mr Stephens and Ten understood the expression "during your employment" in cl 5(a) to have a different meaning than the expression "the term of your employment" in cll 5(b) and 5(c). The "term" of Mr Stephens' "employment" is as provided in cl 2 of the agreement: two years from 9 June. The proscriptions in cll 5(b) and 5(c) are expressed in terms of conduct "during the term of your employment", not "during this agreement". 131It follows, in my opinion, that Mr Stephens could not engage in conduct contrary to the proscription in either of cl 5(b) or 5(c)(iv) of the Ten Agreement until the "term of his employment" commenced on 9 June, and that nothing Mr Stephens did, or omitted to do, in March constituted a breach of those provisions. 132The conclusion does not render otiose the provision in the Ten Agreement that it "commences on and is effective from" 6 March. There are a number of clauses in the Ten Agreement which it is obvious the parties intended would be effective from 6 March (for example the obligation in cl 4 for Mr Stephens to conduct himself "with due regard to social conventions, good morals and decency" and to not engage in conduct which would create notoriety or adversely affect Ten, and the obligation in cl 10 for Mr Stephens to "keep in confidence" all "Confidential Information" as defined in cl 10(b)). 133Mr Studdy submitted that it would be absurd to think that the parties intended that, notwithstanding Mr Stephens' promise to work at Ten for two years from 9 June 2014, he could with impunity accept a position with a rival network (including Seven) inconsistently with that promise. 134So much may be accepted. 135But it does not, in my opinion, follow that in the events that have happened, Mr Stephens was in breach of cll 5(b) or 5(c)(iv), those being the only breaches alleged by Ten. 136On one view of the matter, although not one advanced by Ten, by reneging on his agreement with Ten, Mr Stephens repudiated his obligations under the Ten Agreement. Ten could have accepted that repudiation, rescinded the Ten Agreement and looked to Mr Stephens for damages, or such other relief as might then have been available. 137But Ten did not accept that repudiation. Mr McLennan made that clear in his 1.29pm email of 10 March to Mr Stephens (see [92] above). As Mr Studdy and Ms Mirzabegian said in their closing submissions, on 10 March Ten "rejected Mr Stephens' purported termination of the Ten Agreement and affirmed the agreement". That was no doubt because Ten wanted to hold Mr Stephens to his agreement. Absent acceptance by Ten of any repudiation by Mr Stephens of the Ten Agreement, it remained on foot and no actionable breach of contract arose. An unaccepted repudiation is a "thing writ in water and of no value to anybody; it confers no legal rights of any sort or kind" (per Asquith LJ in Howard v Pickford Tool Co Ltd [1951] 1 KB 417 at 421.) As stated in J W Carter, Carter's Breach of Contract, (2011, Lexis Nexis Butterworths) at [7-51] " a repudiation cannot be regarded as a 'wrongful' act - a breach of contract - in the absence of acceptance". 138In its Reply, Ten pleaded anticipatory breach by Mr Stephens of cl 5(a) (although Ten did not seek any relief against Mr Stephens in respect of that anticipatory breach). Again, had Ten treated that alleged anticipatory breach as a repudiation by Mr Stephens of the Ten Agreement, and rescinded, an actionable breach may have arisen. It did not do so. The so-called anticipatory breach did not, itself, give rise to a cause of action (per Taylor J in Huppert v Stock Options of Australia Pty Limited (1965) 112 CLR 414 at 431, and see Kitto J at 426). 139For those reasons, I reject Ten's submission that Mr Stephens acted in breach of cll 5(b) or 5(c)(iv) of the Ten Agreement. 140That finding is sufficient to dispose of Ten's claims against Mr Stephens and Seven (apart from its claim for declaratory relief as to the current status of the Ten Agreement and the 2013 Seven Agreement, to which I will return). Ten has not established the breach of the Ten Agreement for which it contends. Its case against both Mr Stephens and Seven must therefore fail. 141However, in deference to the detailed submissions of counsel, and lest my conclusion in respect of breach of contract is wrong, I will consider the remaining issues in the case. What follows is written on the assumption that, contrary to my conclusions above, Ten has established that Mr Stephens acted in breach of the Ten Agreement.

Should Mr Stephens be restrained from working for Seven? 142Ten does not seek damages against Mr Stephens. It abandoned its claim for damages during the hearing. 143Ten did not seek, and acknowledged it could not seek, an order that Mr Stephens specifically perform the Ten Agreement. It was common ground that a Court of Equity will not order that a contract of employment be specifically performed (for example, Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337 at 346 and Tullett Prebon (Australia) Pty Ltd v Purcell [2008] NSWSC 852 at [73] per Brereton J). 144Ten sought a series of negative injunctions, the effect of which would be to restrain Mr Stephens from working for Seven between 9 June 2014 and 8 June 2016, unless Ten consented. 145Thus Ten sought an injunction of the kind granted in Lumley v Wagner (1852) 1 De GM & G 604; 42 ER 687. 146Equity will normally enforce an express negative contractual stipulation, but not: "...where to grant such relief would have the effect, directly or indirectly, of enforcing a contractual obligation to perform personal services. A court of equity will not permit an injunction to be used as an instrument of achieving indirectly what it would not enforce directly by a decree of specific performance". (per Brereton J in Tullett at [74], citations omitted) 147An injunction of this type will indirectly require an employee to perform a contract for personal services where the practical choice open to the employee is to either work under contract or remain idle. 148As Brereton J observed in the course of refusing to grant an interlocutory injunction in this case, "many cases in this field emphasise one must take a practical approach to the effect of the contract and the injunction sought" (Network Ten Pty Limited v Seven Network (Operations) Limited [2014] NSWSC 274 at [18]). 149In my opinion, Ten, as the applicant for relief, has the onus of showing that the grant of injunction would neither compel Mr Stephens to work for Ten nor leave him idle. I understood Mr Studdy to have accepted that this was the position. 150Mr Studdy did not suggest that there was any sensible prospect that, were an injunction to be granted, Mr Stephens would go to work at Ten. 151The real question is whether the granting of the injunction sought would render Mr Stephens idle. 152In that regard, Ten points to two matters. 153First, Ten has consented to Mr Stephens working for any entity in Australia or overseas other than Seven or the Nine Network (see [101] above). 154There is, however, no evidence before me as to whether Mr Stephens, at this stage in his career, and in the events that have happened, has any prospect of obtaining such employment. 155In his affidavit evidence, Mr McLennan made a number of assertions as to the "opportunities" available to Mr Stephens. I admitted that material as evidence only of Mr McLennan's contentions. Dr Bell's cross-examination of Mr McLennan revealed that, in truth, Mr McLennan has no actual knowledge of Mr Stephens' prospects of employment. 156It is true that Mr Stephens did not give evidence about this, or any other matter. However, as I have said, the onus is on Ten to show that the grant of an injunction would not leave Mr Stephens idle. 157I am left in the position where I simply cannot say what effect the grant of an injunction against Mr Stephens would be, save that he would probably not start at Ten. For that reason alone, I would not grant Ten the injunction it seeks. 158Second, Ten points to the fact that on 13 May (the day before the hearing commenced) Ten made the following offer to Mr Stephens: "In the event that the Court [grants the injunctions sought by Ten] in relation: (a) [Seven] or its related bodies corporate; and (b) [Nine Network] or its related bodies corporate TEN offers to pay Mr Stephens his contractual remuneration in accordance with the TEN Agreement...irrespective of whether he performs his duties under the TEN Agreement, until the earlier of: (a) the expiry or earlier vacation of such an order by the Court; and (b) the conclusion of the Employment Agreement." 159Thus Ten's proposal was that if Ten obtained injunctive relief (indeed, relief wider than that claimed in the proceedings, so that Mr Stephens was not only restrained from working Seven but was also restrained from working for the Nine Network) then it would pay him the remuneration to which he would otherwise be entitled under the Ten Agreement, whether or not he did a jot of work for Ten. 160In my opinion that extraordinary offer is not something that I should take into account in exercising my discretion as to whether to grant Ten the injunction it seeks. Its seems to me that, in effect, Ten is seeking to purchase an injunction. 161As Brereton J said, in a slightly different context, in Tullett at [87]: "Compensation for remaining out of the market, however generous, does not create a legitimate protectable interest where none otherwise exists...I therefore do not accept that the circumstances that the employer is willing to continue to remunerate the employee during the period of the restraint can justify a restraint which exceeds what is reasonably required for the protection of a legitimate interest." 162By parity of reasoning I do not consider that Ten's 13 May offer is a reason for granting an injunction which would not otherwise be granted. 163For those reasons, even if, contrary to my finding, I was satisfied that Mr Stephens has acted in breach of the Ten Agreement, I would not have granted an injunction of the kind sought by Ten.

Did Seven knowingly procure a breach by Mr Stephens of the Ten Agreement? 164In view of my conclusions thus far, this issue does not arise. However, I will consider it on the assumption stated at [141] above. 165Ten's case is that by: (a)by engaging in discussions with Mr Stephens to the effect that it could assist Mr Stephens walk away from the Ten Agreement, and that Mr Stephens should work for Seven, both before and after the issue of the Seven Offer; (b)issuing the Seven offer; and (c)entering into to the 2014 Seven Agreement with Mr Stephens, Seven has interfered with the Ten Agreement.

Is the pleaded case defective? 166Ten seeks declarations that by engaging in the conduct referred to in [165] Seven "intentionally interfered" with the Ten Agreement. 167In opening submissions, Mr Studdy confirmed that in referring to "intentional inference" Ten was intending to invoke the tort of knowingly procuring or inducing a breach of contract. 168Ten pleaded that Seven was "on notice" that Mr Stephens had signed an employment contract with Ten, that the term of that employment started on 9 June and that the agreement with Ten did not allow Mr Stephens to be employed by Seven at the same time as he was employed by Ten. Ten pleads that, by reason of those matters and in the events that have happened, Seven "intentionally interfered" with the Ten Agreement. 169Seven submits that the pleading is defective in that it does not contain an allegation that Seven subjectively knew or intended that its conduct would involve a breach by Mr Stephens of the Ten Agreement. 170Seven submits that Ten's pleading suffers from the same defect as identified by the Full Court of the Federal Court in Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (1995) 58 FCR 26; 130 ALR 469. 171I do not accept that submission. In my opinion, Ten's plea that Seven was "on notice" (which I read to mean "subjectively knew") of the matters at [168] and "intentionally interfered" with the Ten Agreement is a sufficient articulation of the essential elements of the cause of action.

Intention and knowledge of the Ten Agreement 172As Seven submits, the gravamen of the tort is intention. Thus in Allstate Life Insurance Co Lindgren J (with whom Lockhart and Tamberlin JJ agreed) said at 43: "In my opinion, the authorities establish conclusively that the gravamen of the tort is intention. Although the requirement of knowledge of the contract is sometimes discussed as if it was a separate ingredient of the tort, it is in fact an aspect of intention. The requirement that the alleged tortfeasor have 'sufficient knowledge of the contract' is a requirement he have sufficient knowledge to ground an intention to interfere with contractual rights. Both this intention to interfere with contractual rights and the necessary supporting knowledge of the contract refer to the 'actual' or 'subjective' state of mind of the alleged tortfeasor... Although an alleged tortfeasor must have 'a fairly good idea' that the contract benefits another in the relevant respect, knowledge of the contract may be sufficient for the purpose of grounding the necessary intention to interfere with contractual rights although the precise term breached is not known". (emphasis in original; citations omitted) 173Similarly, in Fightvision Pty Ltd v Onisforou; Tszyu v Fightvision Pty Ltd [1999] NSWCA 323; 47 NSWLR 473, Sheller, Stein and Giles JJA said at [160]: "In summary, the defendant must know of the contract and sufficient of its terms to know that what the defendant induced or procured the party to the contract to do would be in breach of the contract. If the defendant knew of the existence of the contract but believed reasonably that what the defendant induced or procured the party to do was not a breach...the defendant [has] not knowingly induced or procured the breach." And at [171]: "The position may be stated, we think, as follows. The plaintiff must prove that the defendant intentionally procured the breach. The requirement that the defendant have sufficient knowledge of the contract is a requirement that he have sufficient knowledge to ground an intention to interfere with contractual rights. Ignorance of the existence of the contract or of its terms born of inadvertence or negligence is not enough. On the other hand, reckless indifference or wilful blindness to the truth may lead to a finding of the necessary intention." 174Ten's case is that Seven "was on notice" (that is, knew) of the matters set out at [168]. 175I am satisfied that Seven knew each of these matters. 176Seven admits that it knew Mr Stephens had signed a binding agreement with Ten. 177Further, Seven knew that Mr Stephens' position at Ten was to be a part time position as Director of Scheduling and Acquisitions, involving three days per week, and that Mr Stephens was "on a very generous remuneration package" (see Mr Stephens' 6 March email at [42] above). 178Seven denies that it knew that Mr Stephens' term of employment would start on or about 9 June. However, I find that Seven did know this. 179In his 6 March email Mr Stephens said that he could "take gardening leave for 3 months before commencing at Ten in 3 months time". That made it clear that his employment with Ten was to start "in 3 months time". 180Further, in his email of resignation to Ms Vagg (see [54] above) he said that his final day of employment with Seven would be 7 June. Finally, Mr Thomas's email to Mr McWilliam sent at 5:00pm on 8 March (see [73] above) stated that Mr Stephens' employment with Ten was to commence on 9 June. 181Seven also denied that it knew that the Ten Agreement did not allow for him to be employed by Seven at the same time as his employment with Ten. 182However, Mr Thomas's email stated that: "During the term of employment, Mr Stephens must not be an employee, agent or contractor of any other person". 183Dr Bell submitted that this revelation did not show a necessary inconsistency between the Ten Agreement and the 2014 Seven Agreement because it did not exclude the possibility that the Ten Agreement was terminable on reasonable notice. 184Dr Bell pointed out that the 2013 Seven Agreement permitted Mr Stephens to terminate on three months' notice as did, evidently, Mr Stephens' previous contract with Seven. Further, Dr Bell submitted, the general law commonly implies a right of termination on reasonable notice (for example, Ansett Transport Industries (Operations) Pty Ltd v Wardley (1980) 142 CLR 237 at 254 per Stephen J). 185Thus, Dr Bell and Mr Thomas stated in their written submissions: "There is no evidence that Seven knew that Mr Stephens' Ten Agreement was for a fixed and/or (if it be the case) that it was not terminable on reasonable notice. It was also reasonable for Seven to assume that the Ten Agreement could be terminated prior to 9 June 2014 as Mr Stephens had insisted on a three month notice period in negotiating his two most recent contracts with Seven." 186However, no witness from Seven was called to say that he or she assumed that the Ten Agreement could be terminated prior to 9 June or that Seven believed that the Ten Agreement was terminable on reasonable notice. 187What Seven did know was that Mr Stephens had agreed to start at Ten on 9 June and that his last day of employment at Seven would be 7 June. In those circumstances, it would have been unreasonable in my opinion for Seven to assume that the Ten Agreement contained the provision enabling Mr Stephens to terminate it before he stepped in the door at Ten. In the absence of any evidence from any witness from Seven deposing to having such a belief, I am not prepared to assume that anyone at Seven had that state of mind. 188In my opinion, it must have been obvious to the relevant decision makers at Seven that if Mr Stephens withdrew his notice of resignation to Seven and did not commence work at Ten on 9 June, he would be in breach of the Ten Agreement. In the absence of any evidence from any of those decision makers denying that this is precisely what they knew and intended to occur, my conclusion is that it was. 189In those circumstances my conclusion is that Seven had sufficient knowledge of the Ten Agreement to ground an intention to interfere with Ten's contractual rights (assuming the other elements of the tort are established).

Causative pressure, persuasion or procuration 190Mr Studdy accepted that, in order for Ten to make out its case against Seven, it would have to show that a breach of the Ten Agreement was more than a natural and probable consequence of Seven's conduct (for example, Oren v Red Box Toy Factory Ltd [1999] FSR 785 at [35]-[41]; cited with approval in Qantas Airways v Transport Workers Union of Australia (2011) 211 IR 1; FCA 470 at [445]) or that Seven had provided Mr Stephens with information or advice knowing that certain consequences might follow and desiring that they would (for example, Camellia Tanker Ltd SA v International Transport Workers' Federation [1976] ICR 274 at 295-7). 191Mr Studdy accepted that what Ten had to show was Seven had applied "pressure, persuasion or procuration" (per Evershed MR in DC Thomson & Co Ltd v Deakin [1952] Ch 646 at 686) to Mr Stephens. 192What must be also shown is that such "pressure, persuasion or procuration" is "aimed at" the contract such that there is a "clear causal link" between the defendants' conduct and the breach (Qantas Airways at [445] per Moore J). 193The High Court has considered the question of causation very recently (albeit in the context of estoppel) in Sidhu v Van Dyke [2014] HCA 19. 194In that case the plurality (French CJ, Keifel, Bell and Keane JJ) said at [73]: "...in Steria Ltd v Hutchison, Neuberger LJ said that it is sufficient for the representee to show that 'the representation was a significant factor which he took into account when deciding whether to [act as he did].' This approach conforms to that taken by the High Court as long ago as Newbon v City Mutual Life Assurance Society Ltd, where it was said that the 'supposed belief' of the representee as 'a contributing cause' of the representee's conduct was a 'sufficient connection between the assumption and the position of detriment'. It is the view which continued to prevail in Gould v Vaggelas." (citations omitted) 195Similarly, Gageler J said at [90] and [91]: "Paraphrasing Dixon J in Thompson v Palmer, the respondent bore the onus of establishing that she believed the appellant's representations and that, on the faith of that belief, she took a course of action or inaction which would turn out to be to her detriment were the appellant to be permitted to depart from those representations. The respondent did not need to establish that the belief to which she was induced by the appellant's representations was the sole or predominant cause of the course of action or inaction she took but, in the language of Rich, Dixon and Evatt JJ in Newbon v City Mutual Life Assurance Society Ltd, she did need to establish that the belief was a 'contributing cause'. To establish that the belief to which she was induced by the appellant's representations was a contributing cause to the course of action or inaction which she took, the respondent needed to establish more than that she had the belief and took the belief into account when she acted or refrained from acting. 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." (citations omitted) 196Accepting that these observations were made in the context of estoppel, my opinion is that they provide guidance as to the approach I should adopt in this case. 197It is not, in my opinion, necessary, for Ten to establish that Seven's interference with the Ten Agreement was the "sole or predominant cause" of Mr Stephens' actions. But what must be shown is that Seven's conduct was a "contributing cause" to Mr Stephens' conduct and that Mr Stephens would not have acted as he did but for Seven's conduct.

The facts 198Seven first heard of Mr Stephens' decision to resign and move to Ten very shortly after Mr Stephens signed the Ten Agreement. By 4:00pm on 6 March Mr Worner was "frantically" calling Mr Stephens, having evidently heard about Mr Stephens' decision from Mr Gyngell at Nine Network (see [35] to [40] above). 199It is clear that the senior executives at Seven were dismayed to hear of Mr Stephens' defection (eg [43] above). 200In closing written submissions, Mr Studdy and Ms Mirzabegian submitted: "Almost from the moment Seven became aware of Mr Stephens' decision to join Ten, Seven had hatched a plan to disrupt the Ten Agreement." 201Support for that submission comes from Mr Chan's email sent at 9.26pm on 6 March, suggesting that Seven offer Mr Stephens "the same money for two days' work on Streamco" and commenting that "he won't be the first to walk away from a contract" (see [47] above). 202Mr Chan's email suggests that there was already discussion at Seven about persuading Mr Stephens to "walk away" from his contract with Ten. Seven did not adduce any evidence to contradict such an inference. Later evidence points to the conclusion that such an inference should be drawn. 203On the morning of 7 March, Mr Stephens told Mr Shoebridge at Ten that Seven was "threatening all sorts of legal things" (see [51] above). Nonetheless, until early in the afternoon of 7 March Mr Stephens seemed committed to the move to Ten. The Ten Media Release had been published by then with Mr Stephens' approval (see [50] above). Mr Stephens had sought Ms McGarvey's contact details so he could "reach out" to her (see [52] above) and at 1.16pm Mr Stephens submitted his formal resignation from Seven to Ms Vagg (see [54] above). 204Mr Worner told Mr Stephens that if he felt he had made the "wrong call under duress" he could "address that" and Seven would "assist" him so doing (see [53] above). 205As I have mentioned, early in the afternoon Mr McWilliam asserted that "when you left Nine you were caught copying documents" (see [55] above). Mr Studdy relied on that statement as a "threat" to Mr Stephens. It did not, however, seem to disturb Mr Stephens who immediately and politely wrote to "correct the misconception" (see [56] above). 206In the same email Mr Stephens told Mr McWilliam that Mr Ross "is on his way over to try and talk me out of the deal". I read Mr Stephens' comment that Mr Ross was "on his way over" as meaning that he expected Mr Ross to visit him at his home. At that stage, however, Mr Stephens seemed resolute about going to Ten as he added that Mr Ross's visit would "possibly" be "to no avail". 207In fact both Mr Worner and Mr Ross visited Mr Stephens at his home. It is not clear precisely when in the afternoon this visit took place. 208As I have mentioned, at 4.28pm on 7 March, Mr McWilliam provided Mr Stephens with a document that he asked Mr Stephens to send to Mr McLennan "urgently". In the absence of evidence from Mr Stephens or Mr McWilliam about the matter, I infer that the document that Mr McWilliam was urging Mr Stephens to send to Mr McLennan was notification of Mr Stephens' change of heart and of a decision to "walk away" from the Ten Agreement (to use Mr Chan's words from his email of 9.26pm the previous night). 209Mr McWilliam concluded by saying that he confirmed "we will handle all the legals". I infer from that comment that Mr McWilliam had assured Mr Stephens that if he "walked away" from the Ten Agreement and if (as has happened) Ten commenced proceedings, Seven would indemnify Mr Stephens for his legal costs. 210Mr Stephens' immediate reply was that he was not in a position to "do it yet" (that is, I infer, send Mr McLennan the document provided by Mr McWilliam) because he wanted "to think some more" and was "waiting for a counter proposal" from Mr Worner (see [61] above). 211That suggests that, by then, Mr Worner and Mr Ross had visited Mr Stephens at home and foreshadowed a proposal. 212Later in the afternoon, Mr Worner reported to Mr Stokes that he had "just spent time at Stevo's house", that he had "created a new role for him" and that Mr Stephens was "seriously thinking about" that proposal (see [66] above). Mr Worner told Mr Stokes that acceptance of the proposal "would mean" that Mr Stephens would withdraw his resignation from Seven "and contact Ten to let them know he cannot accept their offer". Mr Worner told Mr Stokes that he sensed that Mr Stephens was "wavering between the two roles". 213This account by Mr Worner is the only evidence casting light on what occurred during his visit to Mr Stephens' home. As I have said, no one from Seven gave evidence. I infer from Mr Worner's statement to Mr Stokes as to what the proposed new role "would mean" that not only did Mr Worner tell Mr Stephens of his "new role" but that he urged Mr Stephens to accept that "new role", to withdraw his resignation from Seven and "walk away" from his contract with Ten. 214I do not accept Dr Bell's submission that Mr Worner's reference to Mr Stephens telling Ten he could not accept "their offer" showed that Mr Worner, and thus Seven, thought that matters between Ten and Mr Stephens had gone no further than Ten making Mr Stephens an offer. Mr Stephens had told Mr Worner, in terms, that he had accepted Ten's offer. So much had been publicly announced earlier in the day. And Mr Stephens had submitted his resignation from Seven to Mr Worner and, as Mr Worner must have known, again to Ms Vagg. 215Mr Worner followed up his home visit (which Mr Stephens described as a "gee-up chat") with an outline of the Seven Offer (see [64] above) which concluded with Mr Worner's exhortation to Mr Stephens to "write yes back" and "withdraw your resignation". Mr Worner must have known, and intended, that withdrawal by Mr Stephens of his resignation from Seven would necessarily have as its corollary "walking away from" the Ten Agreement. 216At this point, Mr Stephens was wavering and said he was "leaning towards" staying with Seven. He was anxious to know that if he was "no longer jumping ship" that Mr McWilliam "and his team will offer the legal support required" (see [65], as Mr McWilliam had promised: see [59]). 217It is obvious that the "new role" was created to persuade Mr Stephens to stay at Seven. There is no suggestion that the role was created at any time before Mr Stephens told Mr Worner he was going to Ten, even though Mr Stephens had been employed by Seven since 2003. 218The amounts payable to Mr Stephens under the 2013 Seven Agreement, the Ten Agreement, the Seven Offer and the 2014 Seven Agreement are confidential. However, what can be said is that in the Seven Offer, Seven proposed to pay Mr Stephens four times the money he was earning under the 2013 Seven Agreement. What can also be said is that because of the differences between the fixed component of Mr Stephens' remuneration under the Ten Agreement and the Seven Offer, Mr Stephens was, as Mr Studdy and Ms Mirzabegian submitted, "guaranteed to earn substantially more at Seven under the new deal than he would have earned at Ten". 219It is improbable in the extreme that Mr Worner did not ask Mr Stephens what Ten proposed to pay him or that he made the Seven Offer without knowing the answer to that question. As Seven called no one to rebut an inference to that effect, I am prepared to draw it and find that Seven knew the financial details of the Ten Agreement and pitched their offer to Mr Stephens accordingly. 220I accept Ten's submission that Seven's offer was structured as it was to induce Mr Stephens to not "jump ship" - i.e. to "walk away" from the Ten Agreement. My finding is that Seven made its extraordinarily generous offer to Mr Stephens in the hope, and with the intention that he could accept it and stay with Seven. 221At 6.13pm, Mr Worner sent Mr Stephens the Seven Offer that corresponded to, and elaborated on, the proposal sent earlier in the afternoon in a form that Mr Stephens could sign (it was already signed by Mr Worner on behalf of Seven). Thus Mr Worner's covering email acknowledged that "you want the weekend to think" adding "but here is something you can sign" 222Over the weekend of 8 and 9 March Mr Stephens had email communications from Mr Worner and Mr McWilliam as well as telephone calls from Mr Stokes and Mr Leckie. Mr Stephens said to Mr McLennan, "it's been a bit rough". 223Mr Stephens' also had email exchanges with Mr Worner and Mr McWilliam concerning his proposed email to Mr McLennan (see [76] to [85] above]. 224In these circumstances, I am persuaded that Seven applied "pressure, procuration, and persuasion" to Mr Stephens to "walk away" from the Ten Agreement. 225Seven did mot merely have "discussions" with Mr Stephens about the situation which confronted it. It did not simply make an offer for continued employment with Seven. 226Through its senior executives, Seven set out to persuade Mr Stephens to change his mind and stay with Seven. Those senior executives made an extraordinarily generous financial offer to Mr Stephens which, I have found, they knew would more than match what Ten had offered (and Mr Stephens had accepted) and which they intended would cause Mr Stephens to rethink his position. They assisted Mr Stephens with the preparation of Mr Stephens' draft email to Ten announcing his decision to renege on his agreement with Ten. Although at times they acknowledged the stressful situation Mr Stephens found himself in and his need to take the weekend of 8 and 9 March to think through his position, they urged him to stay at Seven, knowing that would involve breaching his agreement with Ten. 227It is clear enough that, by the end of the weekend of 8 and 9 March, Mr Stephens had changed his mind. I see no reason to doubt that the explanation he gave Mr McLennan in the email ultimately sent at midday on 10 March (see [86] above) was, as far as it went, an accurate account by Mr Stephens of his reasons for his change of heart. I accept that Mr Stephens came to the conclusion, perhaps influenced by the comments attributed by the Sun-Herald to Ms McGarvey, that it would not be possible for him to perform his obligations under the Ten Agreement on a part time basis, and that at his "stage of life" he had neither the "time or desire to dedicate to a full time position". 228But, as Mr Studdy submitted, that conclusion begs the question of what it was that caused Mr Stephens to come to that point of view. It seems obvious to me that weighing heavily in the balance in Mr Stephens' decision making process was the Seven Offer and the exhortations from his colleagues at Seven. Those matters were not the only matters at work in Mr Stephens' decision. But, in my opinion, they did not need to be. Those matters were, in my opinion, a "contributing cause" leading to Mr Stephens' decision or a "significant factor" in the making of that decision. In my opinion, Mr Stephens would not have acted as he did, absent Seven's conduct.

Conclusion on Inducement 229For those reasons, had I been satisfied that Mr Stephens acted in breach of the Ten Agreement, I would have concluded that Seven intentionally and knowingly induced that breach.

Injunctive relief against Seven 230However, as I would not have granted an injunction against Mr Stephens of the kind sought by Ten (assuming, contrary to my findings, that I found that Mr Stephens was in breach of the Ten Agreement as contended by Ten), I would not have granted injunctive relief against Seven.

The declaratory relief sought as to the current status of the Ten Agreement and the 2013 Seven Agreement 231Ten sought the following declaratory relief as to the status of the Ten Agreement and the 2013 Seven Agreement: "1. A declaration that the [Ten Agreement] remains on foot and is valid and enforceable. 2. A declaration that [the 2013 Seven Agreement] terminates on or about 6 June 2014, pursuant to a notice of termination by [Mr Stephens] to [Seven] on or about 6 March 2014." 232I am prepared to make a declaration that the Ten Agreement remains on foot. As I have said, although Mr Stephens may have repudiated his obligations under the Ten Agreement, Ten has not accepted any such repudiation and has informed Mr Stephens that it requires him to perform his obligations under it. I have rejected any such suggestion that Mr Stephens was labouring under any relevant incapacity when he signed the agreement. 233However, the question of whether the Ten Agreement is "enforceable" is one which, in the events that have now happened, will be best considered if and when Ten seeks to take further action under it. 234As to the declaration sought in respect of the 2013 Seven Agreement, Ten is, as Dr Bell submitted, a stranger to that agreement and I see no reason why in those circumstances I should make any declaration in respect of it.

Conclusion 235I am prepared to make a declaration to the effect set out at [232] if Ten wishes. Otherwise, Ten's case has failed. Subject to making the declaration, the Amended Statement of Claim should be dismissed. 236I will hear the parties as to costs.

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: 29 May 2014