Patrick John Bredel v Moore Business Systems Australia Ltd

In October my salary was reduced by the commission component ($1,833 per month). As you know I have been on a flat or guaranteed salary for the past 5 years (or more) as my commission would have far exceeded any salary plan. The plan formulated by David Farrar had included a commission component for product. During the last six months opportunities have presented themselves which currently do not involve product but more to project development. For example, the Census will produce an income in excess of $4 million - but late in 1999/2000. Boral has been delayed by circumstances beyond my control but will now probably commence in April 1999 with the major cash flow to follow in six months when full implementation takes place. ANZ will be a huge project with a long gestation period prior to a very large financial opportunity. These three "special" projects will consume my time and I would ask that my salary be restored to its normal guaranteed $90,000 p.a . I am of course prepared to be measured, like any other employee, perhaps milestones or hurdles with a payback should they not be reached… Any success fee for contracts in excess of say $3 million to be negotiated. Ian as you know I am very anxious to preserve my level of salary for an average over my last 3 years. Should any of this prove too hard perhaps our original conversation of early retirement and consultancy fees could be examined - but I do prefer the salary adjustment back to what it has been for the past five years.

26 The plaintiff recommenced negotiations in late 1998 with Severino and his new assistant, Janet Pursehouse (Pursehouse). On 10, 11 and 12 November 1998 the plaintiff arranged for and accompanied Severino and Pursehouse to Ford, Shell and Drake Personnel premises in Melbourne for the purpose of observing print management systems installed by the defendant. Severino and Pursehouse had the opportunity to speak to senior executives of those companies in relation to the efficiency and cost savings of the defendant's systems. The members of the group then travelled to the defendant's major printing plant at Wodonga where they examined the technology and capacity of the factory. 27 In early 1999 the plaintiff telephoned Mackenzie and informed him that he "was financially embarrassed". The plaintiff said that he had purchased some shares and was unable to pay for them. He asked for "an advance against the Boral signing". It is apparent that he asked for a $7,500 advance. Mackenzie informed the plaintiff that he would take it up with McDonald. 28 On about 12 March 1999 Boral issued a formal request for the defendant's tender proposal. The plaintiff commenced preparing the proposal with the assistance of his personal assistant/typist Jenny Anderson. He claimed he worked intensively for approximately five weeks to prepare and author the proposal. 29 On about 14 May 1999 the plaintiff was contacted by telephone by an officer of Boral who requested him to arrange a formal presentation of the defendant's tender proposal at the Boral head office on 17 May 1999. The presentation was made at the Boral premises on 17 May 1999. Also present at the presentation were Mackenzie and a logistics director of the defendant, Tim Evans. On 21 May 1999 the plaintiff attended a social function held by the defendant at the Harold Park Raceway. On the way to the function the plaintiff had a telephone conversation with Severino. Severino informed the plaintiff that he could officially announce that the defendant had won the contract with Boral. Severino advised the plaintiff that he would send a letter of confirmation to him early the following week. 30 The plaintiff immediately telephoned Anthony Duncan (Duncan), the defendant's financial director in Melbourne. The plaintiff claims this was a lengthy conversation in which he informed Duncan that the defendant had won the Boral tender. Duncan informed the plaintiff that he did not want it to be less than 25% gross margin. The plaintiff claims the following conversation took place: Plaintiff: I have done the deal on an incentive basis where the gross profit reduces 1% each year for the first 3 years. Duncan: How much is the deal worth? Plaintiff: About $20 million for the first 3 years and about $48 million over 6 years, including options. Duncan: I still want 25% gross profits. Plaintiff: Are you mad? I have already done the deal. 25% reducing 1% each year over the first 3 years is 24% average on $20 million or $4.8 million profit. Don't fuck the deal by being greedy. 31 Sarah Kay Davis with whom the plaintiff attended the social function was present in the car while the telephone conversation took place on a speaker mobile phone. At the function a conversation took place between the plaintiff and Wells. The plaintiff informed Wells that Severino had rung him and told him that the defendant had won the contract. Wells then said "that's terrific who else have you told"? The plaintiff informed Wells that he had just informed Duncan and Wells invited him to tell "everybody the good news". The plaintiff then publicly announced "we have won the Boral contract". 32 During the weekend, 22-23 May, there were numerous telephone calls between the plaintiff and Mackenzie and the plaintiff and Duncan in relation to the pricing of the defendant's tender. It is apparent that there was a danger that the defendant might lose the bid to a competitor because of a particular pricing structure. After much discussion Duncan agreed that the basis upon which the plaintiff had negotiated with Boral could be confirmed. 33 On Monday 24 May 1999 Wells informed Mackenzie and other executives of the announcement made by the plaintiff at the social function on the previous Friday night with his permission. 34 The plaintiff gave evidence that on 24 May 1999 he received notification that the defendant had deposited $7,333 into his credit union account as "an advance on my expected bonus for my success in obtaining the Print Management deal". The plaintiff understood that such amount was the requested $7,500 less his superannuation contribution. 35 On 27 May 1999 the plaintiff had a conversation with Pursehouse in which she informed the plaintiff that Severino had authorized her to send a letter confirming that the defendant had been awarded the print management contract with Boral. Shortly after that conversation the plaintiff received the following fax from Pursehouse at Boral (Ex C2 p 117): Dear Mr Bredel, Re: Provision of Print Management Services to Boral I am pleased to advise that Boral has selected Moore Business Systems Australia Limited for the provision of Print Management Services, as described in your proposal of 12 March 1999 (RFI), tender response of 4 May 1999 and subsequent correspondence. It should be noted that this decision is subject to your signing a formal agreement with Boral, as per Clause 16 of the RFI document. Thankyou for your efforts throughout the tender process and I look forward to developing an effective business relationship. 36 The plaintiff immediately took the fax to Wells. He also made several photocopies and faxed one to Mackenzie in Melbourne and posted copies on several noticeboards around the office. 37 On Friday, 28 May 1999 the plaintiff received a document dated 15 May 1999 on the defendant's letterhead (Ex C2 p 112). It read as follows: I am pleased to advise you that, effective from 1 April, 1999, your salary will be $80,000 per annum. In addition, you will be paid commission on new business, copy of B3 plan is attached. Parameters of the commission structure will be discussed by your manager. As you know, ownership of the Company changed on 1 January, 1999, and it is our intention to continue the practice of "pay for performance" and be market competitive in our remuneration programs. During the balance of 1999 we will be reviewing our remuneration practices. It is our intention to administer the program to tie in with the company's financial year. Thank you for your efforts and contribution to Moore. 38 John Muir (Muir), the Human Resources Manager of the defendant, and Mackenzie's signatures were on the letter. The attachment to the letter was in the following terms (Ex C2 p 113): 1999 Sales and Sales Support Profit Participation Plans Plan B3- New Business Development Manager Plan Sales Role - Nil established business - Longer sell cycle New Signings Estimated Annual Shipments Payment 0-$0.5M $0 Commission and Bonus Plan Elements $0.501M - $1.0M $5,000 $1.001M - $2.0M $10,000 $2.001M + To Be Negotiated

This plan substitutes and supersedes any compensation arrangement which may have previously been applicable. This plan may be subject to modification at any time as deemed necessary to deal with unanticipated effects or to meet the changing needs of the business. This plan becomes part of the representatives employment agreement. 39 When the plaintiff received the 15 May 1999 letter he immediately rang Mackenzie and said, "I've just received your memo changing my pay scheme. This is a rort. What are you trying to do?" Mackenzie said, "Calm down, Rockie, just let the ball come onto the bat for a while." The plaintiff, in anger, apparently hung up on Mackenzie and stormed out of the office and drove home. Whilst he was in the car he received a telephone call from Wells, during which the following conversation took place: Wells: Mackenzie just phoned. He said you just hung up on him and walked out. What's wrong, Rockie? Plaintiff: I've just received a memo from Mackenzie and Muir changing my pay scheme and I'm furious. Wells: Bring it in on Monday and I will see what I can do. Just calm down. Don't have another heart attack. 40 A number of days later the plaintiff returned to the office and spoke to Wells and showed him the 15 May letter. The plaintiff claims the following conversation then took place: Plaintiff: Have a look at this Col, they are trying to fuck me out of my commission. You are my boss. Did they say anything to you about trying to change my commission? Wells: No. No one has said a word. Plaintiff: Not for the whole fucking year has anyone said anything about changing my commission deal and then I get this memorandum backdated to one day before the deal is done. They are trying to fuck me out of my commission. Wells: Calm down. I will ring Mackenzie and try to get it changed back. Plaintiff: Highly unlikely. He signed the fucking letter. 41 On 31 May 1999 Mackenzie as National Sales Director, issued a company announcement in the following terms (Ex C2 p 195): Company Announcement SUCCESS Boral Chooses Moore I am pleased to announce that Boral Limited Australia has chosen Moore for the provision of Print Management Services. The contract is for six (6) years (3+3) and is worth in excess of $40 million. The contract is the most comprehensive ever undertaken by Moore and covers the full spectrum of services including Electronic Forms, Security Printing, Customer Communication Services, Corporate Identity Re-branding, full Print Management and National Account Management. I would like to thank the Sydney and Wodonga teams, who put in over 12 months of hard work to win this huge account. Special thanks to John Bredel, Tracey Stuckey, Jenny Anderson, David Swan, Marlene Mills, Franca Panatteri, Mike Letch, Colin Utting, Peter ter Wee and Anthony Robinson. The effect will be felt Australia wide with special emphasis on Sydney and Adelaide. Implementation will start almost immediately. 42 On 25 June 1999 the plaintiff suffered his third heart attack and was admitted to St. Vincent's Hospital at Darlinghurst. He underwent surgery and remained in hospital for approximately six days. He returned to work on 10 July 1999 and over the next month had numerous conversations relating to his commission with Wells, Mackenzie and Simon Griffiths (Griffiths), the administrator of the pay scheme. 43 While the plaintiff was still in hospital he wrote a letter to Griffiths dated 28 June 1999, but which he apparently completed on 29 June 1999, when he was in hospital (Ex C2 p 133-138). It was a hand written letter in the following terms: As you can see the remuneration plan "changed" one week before Boral landed. Previously it was 4% of incremental sales. To put that into perspective over a six year contract of approx $40,000,000 the commission payable was - wait for it - $1,600,000 (over the period of the contract). Although this was for 1998 it rolled over to 1999 when the remainder of all sales personnel had their remuneration continued when the new company was formed. My "new" salary and commission was received on Friday 28 May (even though it was dated 15.5.99) the same day I announced the Boral win. Please have a close read of Plan B3 attached. Under Commission and Bonus Plan elements are the payment for "new signings ". I point out the words " estimated annual shipments " as opposed to actual invoiced sales. As agreed with Jim, Ant, and Ian Mackenzie during a meeting with the general manager of Boral and the procurement manager of Boral on 16.6.99 at Box Hill the " estimated annual shipments " are between $6 million and $8 million per annum on an initial 3 years contract with 1 x 1 x 1 options. Obviously the first year will not reach the full "estimated annual shipments" level, of 6-8 million and a compromise should be reached - say half that in year 1 ramping up to full $6 mill in year 2 and $8 mill in year 3. The option period payments would be negotiated either at a discount now or when the options are exercised at the end of the initial 3 years. At my age I probably do not have the next six years in my rangefinder so a negotiated settlement is preferable. As you can see the figures for estimated annual shipments are First million $5,000 Second million $10,000

$6 million to be negotiated $8 million Just extending the figures at the $10,000 per million rate for the first 3 years would be: Year 1 = $3 million (est) = $5,000 + $10,000 + $10,000= $25,000 Year 2 = $6 million (est) = x 10,000 = $60,000 Year 3 = $8 million (est) = x 10,000 = $80,000 Total: $165,000 This is of course appreciably less than the original 4% incremental which for the same figures over the same time frame would amount to $680,000 to say nothing for the 3 years options. I would also point out that 17% S G & A (apart from 8% nett profit) leaves a pool of $2,720,000 for these figures to be drawn from. As you can see there are some interesting points to discuss, as well as some legal positions to be clarified. Such as 1. Which remuneration plan is operative? 2. Is the contract for 3x1x1x1 as defined in new signings? 3. Does the remuneration plan call for lump sum settlement? 4. Is there room for negotiation? 5. Have you run this past Mallesons? 6. Has anyone else, other than me, given the ramification of this any thought? I will speak to you to-day, Tuesday 29.6.99. 44 On 2 July 1999 the plaintiff wrote to Muir and Mackenzie in the following terms (Ex C2 p 141): Gentlemen, Thank you for your letter dated 15th May 1999, which was actually received on the 28th of May 1999, setting out your change to my salary conditions for the remainder of 1999. I appreciate the rise in basic salary from $68,000 per annum to $80,000 and realize that a great deal of effort went into achieving this adjustment. However the attached B3 commission adjustment from my previous 4% on incremental sales (see attached letter from David Farrar, Human Resources Director, 1998) reduces my earning potential enormously and would place me in a much inferior position to that which I am currently employed. An adjustment I am unable to accept and consequently must reject the offer. I note that the new arrangements were made unilaterally and I was not advised of the new commission arrangements until your letter arrived coincidentally on the same day a letter arrived informing me of my success in obtaining the $40 million Print Management of Boral Ltd (see attached letter). As the amount of money involved is quite large I have appointed a Financial Adviser, Mr. Ronald S. Czinner of 1 Jordan Street, Gladesville, Sydney, NSW (tel: 02 9816 2133) who, in all future negotiations will act on my behalf. I have been instructed to return all increase in salary paid on the 15th of June, 1999 and would appreciate a figure being advised to enable me to do so in the near future. I thank you for your congratulations on winning the Boral contract and I look forward to many more successes in the future. 45 One conversation between Mackenzie and the plaintiff, which the plaintiff claims occurred in early July 1999 (the July '99 assurance) included the plaintiff informing Mackenzie that he would have "them in court for this". The plaintiff claims the following conversation then took place: Mackenzie: It will sort itself out. In the meantime, don't let me down on the Census, you are the only one that can do it. Plaintiff: How can I be sure that I'll get my 4% after this rort? Mackenzie: I will make sure you are covered. 46 On 26 July 1999 Muir telephoned the plaintiff and said, "Can you state your position as to the commission payable for the Boral contract?" As a result of this conversation the plaintiff wrote a memo to Muir and Mackenzie dated 6 August 1999 making a claim which he described as "based on conservative projection estimates" and "pursuant to the memorandum dated 25 March 1998". That claim was for 4% commission on the incremental estimated sales to Boral over the following three years totalling $676,600. 47 On 18 August 1999 the plaintiff received a memorandum from Muir which was copied to Mackenzie and the Managing Director, Jim MacDonald (MacDonald) in the following terms (Ex C2 p 178): Thank you for your memo of 6 August 1999 referring to the issue of your remuneration. At our last phone discussion I asked you to put in writing to the Company your understanding of the commissions owing to you for the Boral contract. As you are aware Jim MacDonald is overseas at present and not expected to return until 7 September. I am sure you understand that a decision on this issue cannot be made without his input and authorisation. I therefore am asking for your patience until he returns. If in the meantime Ian and I can keep the ball rolling we will do so. 48 In about August 1999 Nelson Siva (Siva) was appointed Sales Director in place of Mackenzie. The plaintiff had several conversations with Siva concerning the topic of commission and claims he informed Siva that he had rejected the defendant's attempt to limit his earnings and that he still considered himself on 4% commission. Siva informed the plaintiff that he knew nothing about it and that it was before he was employed. 49 In about August or September 1999 the plaintiff was contacted by John Perkins (Perkins), the defendant's State Manager in Queensland, Perkins enquired of the plaintiff whether he was still friendly with a senior manager of the Bank of Queensland as the tender for that contract was coming up. The plaintiff informed Perkins that he was still friendly with the senior manager and Perkins said to the plaintiff, "John, don't retire on me. I want you to do the tender again. It'll be worth plenty to you and you're the only one that can do it". The plaintiff suggested to Perkins that he have Siva appoint the plaintiff as Project Manager. Shortly after this conversation Siva appointed the plaintiff as Project Manager with responsibility for researching, planning and negotiating a Print Management Contract between the defendant and the Bank of Queensland. The plaintiff subsequently worked on the tender proposal and finalized it for delivery to the Bank of Queensland. He personally delivered the tender proposal to the Bank of Queensland and gave an explanatory presentation. 50 On 9 September 1999 the plaintiff forwarded a memorandum to Siva in the following terms (Ex C2 p 182): Following our recent conversation regarding my commission position post Boral, I would ask for clarification of my current commission structure. I refer to the attached letter dated 15.05.99, but received on 28.05.99. The conditions of remuneration appear to be ambiguous in so far as suggesting the same amount, $5,000, being payable for new signings of $0.501 million up to and including $1.0 million dollars. Similarly the same amount, $10,000 being payable between $1.01 million and $2.0 million dollars. The letter remains silent on compensation for signings over $2.01 million except for the cliché "By Negotiation". Having in mind the possibility of success, with the Bank of Queensland ($15 million), the Census ($4.7 million) and Queensland Health ($60 million), I seek clarification by Monday 13.09.99 of the commission structures for these and other major projects. 51 The plaintiff received a letter from Mallesons Stephen Jaques (Mallesons) dated 14 September 1999 in early October advising him that they acted for the defendant who had referred the plaintiff's memorandum of 2 July 1999 to Muir to them (Ex C2 p 188). That letter then stated: We are instructed to advise that consistent with our client's past practice, the commission/ bonus arrangements provide for a period of one year only. The arrangements for 1998 that were advised to you by Memorandum dated 25 March 1998 (and subsequently amended by Memoranda dated 22 September and 2 October 1998) applied only for the calendar year 1998. Accordingly, the 1998 remuneration plan no longer applies. We are also instructed to advise that the commission arrangements to apply to you for the 1999 period is as set out in our client's letter dated 15 May 1999. 52 On 20 October 1999 the plaintiff's solicitor Ronald Czinner (Czinner) wrote to Mallesons in terms which included the following (Ex C2 p 189)

Our client has been advised that a decision on the monetary value of his commission on the Boral contract was being deferred pending receipt of your firm's opinion and the formulation of a package more acceptable to our client and to your client. We are instructed that a copy of your letter dated 14 September 1999 was tendered as your opinion at the scheduled meeting of the 15th instant and once again your client did not discuss commissions both past and future. As it is apparent from the tone of your letter that your client proposes to conduct future negotiations through your office we have been instructed to insist that all future correspondence pertaining to commissions be forwarded to our office. 53 Czinner enclosed a number of documents with his letter including the plaintiff's memo of 6 August 1999 and requested Mallesons to seek instructions and provide an early reply to the plaintiff's memoranda. Mallesons responded to Czinner on 24 November 1999 apologizing for the delay and advising that Ron Wadey (Wadey), Secretary of the defendant, would be forwarding a memorandum to the plaintiff addressing matters that the plaintiff had raised with the defendant. Mallesons advised that it was the defendant's desire to try and resolve the matter directly with the plaintiff and Mallesons further participation would be the subject of further instructions. 54 On about 26 November 1999 the plaintiff received a memorandum from Wadey in the following terms (Ex C2 p 206): I refer to the numerous conversations and exchanges of documentation between you and Moore and our various representatives. In an attempt to clearly establish just what are the issues and try and reach a satisfactory resolution I have reviewed all the relevant information and would comment as follows: (a) Prior to March 1998 you had been employed in various senior sales positions on the basis of a fixed base salary plus bonus/ commission the latter of which tended to be of a guaranteed rather than an earned basis (for reasons I haven't ascertained) (b) You returned to work in March 1998 after extended absence following heart surgery. (c) Upon your return your duties were directed towards negotiating a contract with Boral Limited and your remuneration scheme for 1998 was amended to provide a real incentive to conclude the deal. The basis of this incentive as advised in the memo from David Farrar dated 25 March 1998 was 4% commission on the incremental business sold in 1998 over 1997 with once again a guaranteed commission for six months until August 1998 to cover any loss of earnings during the negotiation stage. Negotiations on the Boral account extended longer than anticipated and the guaranteed commission provisions expired prompting further depositions from you resulting in an extension of the bonus guarantee until year end applicable however only if the contract with Boral was executed before 31 December 1998. Sales to Boral in 1998 were $41,000 down from 1997 sales of $129,000 with negotiations continuing and no contract signed. Consequently no commission at the 4% rate was paid or payable as the incremental business was negative and the revised bonus guarantee was not activated as there was no signed contract. (d) So to 1999 - your remuneration continued, however, only at the base salary rate of $68,000 pending finalisation of the 1999 pay scheme. This understandably caused you some cash flow problems and after representations to management it was agreed to make you a further $7,500 advance commission on the still yet to be gained Boral contract. (e) In a letter dated 15 May 1999 you were advised of your remuneration scheme for 1999. This included an increase in base salary of $12,000 and scope for significant bonus/ commission earnings given the still imminent conclusion of the Boral contract and several other identified new signings. (f) Notwithstanding this scenario you have made certain claims regarding your remuneration which the Company does not support however your solicitor has requested specific responses to each of your three memos submitted recently. Your memo dated 2 July to John Muir/ Ian Mackenzie The issues raised in this memo are predicated on the premise that the 1998 remuneration scheme continued into 1999 - This is obviously quite incorrect and unsubstantiated by any documentation or verbal undertaking. Given this fact a direct response to the matters raised in your memo would appear unnecessary. Your memo dated 6 August 1999 to John Muir/ Ian Mackenzie I understand that whilst disagreeing with the matters raised by you previously John Muir agreed that you be given the opportunity to expand on claims made in your earlier memo. Unfortunately the demonstrated position appears to lack substance in almost every aspect. Eg * The base year (1997) sales to Boral were $129,000 not $250,000 * Sales in 1998 were $41,000 not $350,000 ie an incremental negative $88,000 - consequently no commission is/was payable for 1998 (1st year) * The scheme was only ever intended (and promulgated) for one year (1998) - even assuming the scheme ran post 1998 (which it didn't) incremental sales for 1999 would represent the increase 1999 over 1998 not the increase over 1997 - similar comments apply to the subsequent calculations. (It should also be noted that Sep. 1998 YTD sales to Boral were only $147,000 i.e. would attract a hypothetical commission of approx. $4,000) · There is absolutely nothing to support a commission being payable past the initial year (1998), certainly not for the term of the contract and or extended contract and accordingly the content of this memo is refuted completely as being non compliant with the terms of your remuneration scheme. · The Boral contract remains unsigned! Your memo dated 9 September 1999 to Nelson Siva To clarify any possible ambiguity the following clarification is submitted: (i) Each potential New Signing is allocated an Estimated Annual Shipment (EAS) $ figure for the initial year of the potential contract. (ii) Upon the execution of a formal binding contract with each New Signing, commission/ bonus is payable at the $ rate applicable to the pre-determined EAS as per the given matrix. By way of example, say during 1999 you negotiate and conclude the following signed contracts:- (possibly exaggerated to demonstrate the spread) CUSTOMER EAS BONUS $'000 ABC for 450 Nil DEF for 750 5,000 GHI for 1300 10,000 JKL for 1800 10,000 MNO for 2500 12,500(as negotiated)

TOTAL BONUS PAYABLE 37,500 (less any advance commission)

There would appear to be two aspects of this scheme which remain uncertain and require further clarification :- -What is the mechanism and who determines the EAS for potential New Signings? - What is the criteria for and who determines the appropriate payment for New Signings with an EAS in excess of $2,000? In summary, unless I have missed or misunderstood some of the issues, then based upon the information I have been provided, I do not believe that your claims can be substantiated in any way. I would be pleased to receive your comments or request for further information or action. I believe that the company has previously been very supportive to you by way of guaranteed and/ or advance commission and there is considerable incentive and rewards available under your 1999 remuneration plan. John, I look forward to your response and trust that we can quickly and amicably address any unresolved issues. 55 After receipt of this memorandum the plaintiff had a telephone conversation with Wadey in which the plaintiff claims the following was said:

Wadey: I've examined the sales statistics and you have really sold nothing. Also, as far as I can see, any arrangement with you finished in 1998. Plaintiff: What salary then was I employed on in January, February, March, April, May 1999? Wadey: I don't know. I am just going on the letter. I was not involved but we have been fair with you in the past. Plaintiff: I can't believe this. It looks as though I will have to take this matter to court. Wadey: Go ahead. I haven't lost one yet. 56 On 2 December 1999 the defendant was advised by letter from the Bank of Queensland that it was the successful tenderer for the Bank's Print Management Contract. On 2 December 1999 the plaintiff received a memorandum from Wadey in the following terms: I refer to my memo to you dated 26 November 1999 and our subsequent discussions. Upon reflection you have not introduced any additional information sufficient to vary Moore's position in relation to the incentive basis of your remuneration. This may be briefly summarised as follows:- 1998 - no incentive paid or payable. 1999 -advance of $7,500 against the signing of the Boral contract. - signed contracts for Boral and/ or BoQ before 31/12/99 will attract incentives as per Moore's letter dated 15 May 1999. 2000 - a new remuneration scheme will be introduced effective from 1/1/00. We believe this matter should now be closed. 57 The plaintiff responded to Wadey's memorandum of 26 November 1999 on 20 December 1999, in which he also referred to Wadey's memorandum of 2 December 1999. He concluded that letter after discussion of each of the matters raised in Wadey's memorandum by saying, "I do hope the door, closed in the 2-12-99 memo, will open again and we can look to further successes in the year 2000". In December the defendant also announced that the Bank of Queensland had chosen the defendant for a two year print contract of approximately $1.5 million per annum. 58 On 27 January the plaintiff was handed a letter from the defendant dated 19 January 2000 in the following terms (Ex C2 p 233):

The review of remuneration arrangements for this year has been completed, and I am pleased to announce that the company's policy of 'pay for performance' has been extended to include all staff within the Sales and Marketing group. Your base salary is confirmed as $80,000 per annum. In lieu of my earlier advice, your gross profit budget has been revised downwards. Details of your incentive plan are now as follows: Plan: Business Development Based on: Personal Assignment 2000 Budget: $1,000,000 gross profit Please note that while any allowances you may receive will remain unaltered, the above replaces all previous commission, bonus and similar incentive schemes or arrangements. The enclosed information sheet gives you further details on the incentive plan including how it is calculated, multipliers for over-achievement and rules in general. If you have any queries please contact your immediate manager. 1999 was a difficult year, however the company has made significant strides during recent months and I know you will join me in looking forward to this continuing into 2000 and beyond. Thank you for your efforts and contribution to the company and wishing you a happy and prosperous new year. 59 The business development plan attached to the letter provided for a "sign-on bonus" of $1,000 up to $0.1m estimated annual gross profit (EAGP), $5,000 for $0.1 to $0.2m EAGP, $10,000 for $0.2 to $0.5m EAGP and $20,000 for above $1.0m EAGP. EAGP was defined as "the company's last reported actual total GP% times the customer's estimated annual purchases as evidenced by a sales contract signed by both the customer and the company." It also advised that payments would only be made against written application, made within four weeks of the sales contract date and authorised by the Sales Director. 60 On 28 January 2000 the plaintiff wrote to Siva rejecting what he described as "the retrospective alteration of my remuneration downwards on such a massive scale". On 21 February 2000 the plaintiff's cardiologist, Dr Cameron, wrote a report in which he advised that he believed the plaintiff should be considered for permanent disablement in view of his previous cardiac history and ongoing symptoms. He recommended the plaintiff be considered for retirement on medical grounds. On 16 March 2000 the plaintiff notified the defendant of the necessity of his early retirement on medical grounds and that his last day of employment would be 22 March 2000. 61 The defendant won the Census contract and the plaintiff attended the signing of that contract on the last day of his employment with the defendant. On 5 April 2000 the defendant, in purported compliance with the business development plan attached to the letter of 19 January 2000 paid the plaintiff a bonus of $20,000 for "bringing in the Census contract" which had an EAGP in excess of $1m. After tax the plaintiff received $10,600.

The Defendant's Remuneration Plans 62 The Human Resources Manager, Northern Region, of the defendant for the period August 1996 to April 1999, Louise Birnie (Birnie), reported directly to Farrar. Birnie gave evidence that during her employment with the defendant the employee remuneration plans were revised at the beginning of each year. Birnie said that the 1997 Plans for Sales and Support Staff included a Plan B for employees in business development. 63 The 1997 Plan B (Ex.14) was entitled "Plan B - Business Development Plan". In the description of the sales role the plan referred to two types of assignments, Plan B-1 and B-2. B-1 was an assignment of less than $200,000 base business with the entire assignment consisting of unsold accounts. B-2 was an assignment between $200,000 and $400,000 base of established business plus several unsold or undersold accounts. At least 40% of the assignments were required to be "new business". 64 The structure of the employee's remuneration on Plan B was 60% base salary, 20% commissions and 20% APEX bonus with (1) an additional bonus opportunity referred to as a Super Achievement Bonus and (2) a further bonus opportunity for specified assignments. 65 The base salary was "individual" and was determined by sales management based on the characteristics of the sales assignment as well as the previous performance level and experience of the representative. The commission and bonus elements were separately described. The stated goal of the APEX (Account Plan Execution) Bonus was to drive future business through a "unique commitment and award process". The process for earning the bonus included an "account planning" in which the sales manager described whether a specific revenue or profit amount was required to measure success and also fixed a specific time table for completing the event or objective. These were respectively known as account objectives and milestone events. 66 The APEX bonus was described as a flat dollar payout for successful achievement of the "pre-established milestone events and/or account objectives" in the formal account plans. These had to be agreed with the director and General Manager Corporate or Sales Development Manager by the 31 January 1997. 67 The 1998 plans are not in evidence. The 1999 plans were admitted into evidence towards the end of the trial with leave granted to the plaintiff to call any further evidence if he wished to do so or apply to further cross examine previous witnesses in relation to the late tender of this material. The plaintiff did not avail himself of this opportunity. There are eleven plans in evidence for the 1999 year. 68 Plan B2 provides for commission or bonus in two instances (1) new signings and (2) incremental business. On new signings the employee was not paid for "shipments" under $0.5 million but was paid $5,000 for annual shipments of $0.501 million to $1.0 million, $10,000 for annual shipments of $1.001 million to $2.0 million and for annual shipments of $2.001 million and above, the payment was to "be negotiated". This provision was also in Plan B3. 69 What was in Plan B2 and not in Plan B3 was the provision for commission on incremental business and a super achievement bonus. The employee on Plan B2 was entitled to 4% commission on gross profit of annual shipments of less then 100% of total budget, 6% on annual shipments of between 100% and 120% of the total budget and 8% commission on shipments above 120% of total budget. Additionally the employee on Plan B2 was entitled to a $20,000 bonus for exceeding the budget by $1 million and a $5,000 bonus if the budget was exceeded by $500,000, regardless of the current base.

Pinnacle Valley Conversations 70 The plaintiff relied upon the conversations at the Pinnacle Valley Conference (the Conference) as the basis for his entitlement to the declarations he seeks. His case is that he was "lured" away from his plan to retire medically unfit to resume full time employment by the offer of 4% commission on incremental sales over 1997 sales for the life of the named contracts, Boral, Bank of Queensland and the Census. It is therefore necessary to deal in more detail with both the plaintiff's evidence and the evidence of Hughes and Mackenzie in relation to these conversations. 71 The plaintiff's versions of the conversations have already been referred to, but to assist this analysis I will repeat them here. The plaintiff claims that there were a number of conversations at the conference, the relevant ones of which were with Mackenzie and Hughes. The plaintiff claimed that the conversation with Mackenzie was in the following terms: Plaintiff: I feel, if I come back, I will change their purchasing methods and will land the deal with Boral and the dollar volumes would be huge. Mackenzie: How much is the whole deal likely to be worth? Plaintiff: I've been told by my contact that it would generate sales between $30 million and $40 million at about $6 million to $8 million per year for 5 years. Mackenzie: Jesus Rockie, that would be the biggest sale in history. Can you really do it? Plaintiff: I think so. Mackenzie: How long do you think it would take for you to sign them? The company is in trouble and that sort of money could turn it around. Plaintiff: About 6 months maybe longer depending on whether or not we have to go to tender. 72 In his affidavit of 26 March 2001 Mackenzie gave evidence that he did not recall the plaintiff telling him that he had been negotiating with Boral to have it change its procurement methods. He stated that he did not recall saying "Jesus Rocky, that would be the biggest sale in history. Can you really do it?' and expressed the belief that he would remember saying such words if he had said them. He accepted that he did say "How long do you think it would take for you to sign them?" but gave evidence that rather than saying "the company is in trouble and that sort of money could turn it around", he said "we are not travelling that well at present, the contract could turn it around". 73 In his oral evidence Mackenzie said that he was not certain whether he was referring to the Boral deal or "some other deal" when he said to the plaintiff that "the contract could turn it around". He said that "there were that many things going on, whether it was about the Boral deal or about the Census deal, I'm not certain". However he did agree that the Boral contract was a "large contract" and that it could turn the company around (tr.339). He agreed that when he referred to turning "it" around he was referring to the profitability of the defendant (tr. 336) and that when he said "we" are not travelling that well at present he was referring to the defendant (tr.338). Mackenzie gave evidence that he did not have any conversation with the plaintiff at the Conference about his remuneration and indeed the plaintiff does not allege that Mackenzie was a party to the conversation with Hughes. 74 The plaintiff claimed the conversation with Hughes was in the following terms: Hughes: This is the deal Rockie. One, if you return to work you will target securing a print contract with Boral. Two, you will target contracts with other prospective clients as agreed between us. There are plenty more opportunities out there. Three, you will report directly to me through the Company's NSW manager. Four, for 6 months after your return to the company we will pay you a salary based on $90,000 plus 4% commission on incremental sales over the 1997 purchases by the targeted clients. Five, after that 6 month period your base salary will revert to $67,000 per annum plus a bonus component of $23,000 if you can do the Boral deal before Christmas, plus 4% commission on incremental sales over the 1997 purchases by the targeted clients. Plaintiff: Ok. I accept all of that but I will want to concentrate for a few months at least on Boral. Hughes: I will get David Farrar to send something through to you setting the substance of our deal. 75 Hughes commenced employment with the defendant in 1995 as Manager, Strategic Customer Services, and from January 1996 until he left in September 1998 to take up the position of Finance Director with Drake International, he was the Director, Sales and Marketing. He later changed employment and at the time of the trial was employed as an accountant with an accountancy firm in Wonthaggi, Victoria. 76 There is a further feature to the evidence in relation to the alleged conversation with Hughes that arose after the commencement of these proceedings. The plaintiff was at Czinner's office in Gladesville, on 21 February 2001 in relation to the preparation of this matter for hearing. The plaintiff's first affidavit in the proceedings was sworn on 23 February 2001. At about 4.50pm on 21 February 2001 the plaintiff telephoned Hughes at his office in Wonthaggi and after exchanging pleasantries the plaintiff said "Barry I'm going to read a paragraph to you of my recollection of our conversation at Pinnacle Valley where you set out the conditions for my return to work". The plaintiff then read the terms of the conversation set out in paragraph 74 above and said "is that how you remember it Barry?" to which the plaintiff claims Hughes replied "yes that is an accurate account of what was said as I remember it". The plaintiff then said "I am at my solicitor's office in Sydney at the moment, would you repeat that to my solicitor Ron Czinner" to which Hughes replied "okay put him on". 77 Czinner, who also gave evidence in these proceedings, then spoke to Hughes. Czinner's evidence was that he was present in the room with the plaintiff when the plaintiff was speaking to Hughes on the phone. When Czinner then spoke to Hughes, Czinner's evidence was that Hughes said, inter alia, "that was an accurate account". Czinner's evidence was that the following conversation then took place: Czinner: Would you be prepared to give me a written statement confirming what you have said? Hughes: I have given a statement to Moore's solicitors. Czinner: Could we have a copy of it? Hughes: They faxed me a draft but it was completely wrong and has to be fixed. I'm told problems arose with John after I left the company. Czinner: Would you be prepared to give me a statement? Hughes: I would have to talk to Moore's solicitors first, but John's account is right. Czinner: Do you remember seeing the letter dated 25 March 1998 from David Farrar appointing John? Hughes: No, could you fax me a copy on (number provided). I will think about the matter and contact you if I am prepared to make a statement.

78 After the telephone conversation Czinner faxed to Hughes a copy of the memo of 25 March 1998 (the 25 March memo) from Farrar to the plaintiff. The following day Czinner spoke to Hughes again. Hughes advised Czinner that he had received the fax and said "I remember it now". Czinner claimed that Hughes said he would not provide a statement because he had been "advised" against it. 79 Hughes swore two affidavits in the proceedings, the first on 27 March 2001 and the second on 10 September 2001. In the first affidavit Hughes dealt with the conversation the plaintiff had alleged occurred at the Conference. He stated: To the extent that it is accurate, this paragraph condenses the effect of my statements in several conversations with the plaintiff. I did not have a single conversation with the plaintiff in which all of the words attributed to me in this paragraph were said. The paragraph is inaccurate in that I did not say the words in the passage commencing with the words "Four, for 6 months…" and ending with the words where they appear a second time "the 1997 purchases by the targeted clients". I said words to the following effect during the Pinnacle Valley conference: "Until the end of this year we'll pay you your old salary of $67,000 and a commission of 4% on incremental sales to the targeted clients. We'll guarantee your earnings at the 1997 level for 6 months after your return". I had no discussions with the plaintiff about his remuneration beyond 31 December 1998. 80 Hughes stated that he informed Farrar of his conversation with the plaintiff and that Farrar subsequently sent him a copy of the 25 March memo which, he stated in his affidavit, "accurately set out" the remuneration terms he had agreed with the plaintiff. After this affidavit was served the plaintiff and his solicitor swore their affidavits setting out the conversations of 21 and 22 February 2001 referred to above. In his second affidavit of 10 September 2001 Hughes denied that he told Czinner that he had been to see Moore's solicitors and that he had been advised not to give him a statement. He stated that he had not been to see the solicitors until 5 March 2001. He recollected informing Czinner that he had been to see Moore. Hughes stated that in the conversation with Czinner after he received the 25 March memo he said "it seems clear and confirms the agreement made with John in respect of his remuneration for 1998". 81 In his oral evidence Hughes said that the plaintiff was "guaranteed" his old salary of $90,000 for the first six months after his return as "in effect a guaranteed commission" so that he had "the opportunity to put himself in a position to earn a commission" (tr. 403 & 405). Hughes said that "after six months the guarantee would end and from that point John would get paid 4 per cent of incremental business sold on incremental sales". In his cross examination Hughes gave the following evidence:

Q. Did you ever tell Mr Bredel personally that his compensation promise of 4 percent commission would end on 31/12/98? A. The 1998 plan was for 1998, yes.

Q. You told him that did you? A. It was written to him as well. (tr.426)

The 25 March Memo 82 The 25 March memo is headed "1998 Remuneration Plan". It commences "as discussed, this memo is to confirm for you your remuneration plan for 1998". The memo was written within a couple of weeks of the Conference. The plaintiff received it. If it contained an error so obvious that it was restricted to 1998 when it was not supposed to be so restricted, it is not unreasonable to expect that the plaintiff, who appears to have always been willing to speak his mind, would have complained about the error and requested that the memo be amended. Indeed this is just what he did in respect of the memo from Farrar on 22 September 1998. He discussed it with Mackenzie and Farrar issued an amended memo on 2 October 1998. 83 It is common ground that the defendant does not hold a copy of the 25 March memo signed by the plaintiff. The plaintiff gave evidence that he did not sign the memo. The plaintiff's evidence in relation to the 25 March memo included the following: Q. Following that conference you received a memo dated 25 March 1998 from the company, didn't you. A. Yes, I did. Q. And that set out the terms of your employment? A. No, it didn't. Q. In relation to commission? A. No, it didn't - yes, I'm sorry, in relation to commission only; it didn't set out the terms at all. Q. And that document was an important document to you at the time? A. Not at all, I threw it in the garbage. It was in the top draw actually not the garbage. Q. That document was an important document at that time? A. Not to me. Q. You wanted that document? A. No, I didn't. Q. And that document you understood, was to set out the conditions of your employment? A. No, it didn't. Q. In relation to commission? A. Commission only, Sir. Q. And that document recorded the agreement in relation to commission? A. Yes, but it had no effect whatsoever. It was inconsequential and not operational. Q. You understand that in these proceedings Moore is relying upon that written document as a record of your terms of employment so far as they are relevant to these proceedings? A. It's a bed of quicksand. The document is inconsequential and does not have any effect. (tr.66) 84 The plaintiff was taken to correspondence that he had written to the defendant referring to the 25 March memo and he gave the following evidence: Q. You regarded that letter of 25 March as the basis of the claims you are making; correct? A. Absolutely not. My basis, sir, is the oral agreement on 3 March 1998 with Mr Hughes. Q. I want to suggest to you that you are either confused or that is a deliberate lie, Mr Bredel? A. It's not. Q. You are looking at the letter, aren't you? A. Yes. Q. If you look at that letter, 141, you made no mention of the conversation at the Pinnacle Valley Conference, did you? A. No. Q. And in fact what you pointed out through your letter was that "the attached B3 commission adjustment from my previous 4% on incremental sales, see attached letter from David Farrar". A. That's where it is mentioned. It is the only written mention of it. Q. The basis of your claim is this letter which you regarded as to be thrown in the garbage or inconsequential? A. It is the only written confirmation of 4% so I quoted it. (tr. 114) 85 The plaintiff was taken to a further letter that he had written to Wadey on 20 December 1999 in which he stated (Ex C2 p 211-214): The conditions of my remuneration, set out in David Farrar's letter of 28-3-98, were well known to and widely discussed with various senior managers, none of whom raised the spectre of changed remuneration until after the account was won. A perusal of my pay notification slips for January, February, March, April, May 1999 show a continuation of my 1998 remuneration. Not a word, hint, or suggestion was made that I was not on the same package as in 1998. In fact over the past 7 years no change, other than that imposed by David Farrar on 28-3-99, was made nor notified. 86 The plaintiff was asked whether he understood that the conditions of remuneration were to be found in Farrar's 25 March 1998 memo (although the plaintiff's letter had wrongly referred to it as 28 March). He once again answered "only the 4% commission he mentioned" (tr.115). The plaintiff was taken to a number of other letters he had written to the defendant after March 1998 and conceded that none of them contained any mention of the conversations at the Conference (tr.144-145). 87 After the 25 March memo was sent to the plaintiff, Birnie wrote an email to Farrar dated 1 April 1998 in which she advised she was in receipt of a copy of the memo and that she had a couple of "queries on the compensation plans". She asked whether the plaintiff was on "an Account Director plan" as the memo did not make it clear. She asked whether he was only paid "on SOE" (sales order entry) (Ex C1 p 199). Birnie asked:

2. Am I correct in saying that these people only get paid commission on sales that they put through the system and there is no double dipping with the sales rep who has the account they are working on? Colin thinks the rep is also getting the commission.

3. Is there a need to give to these Account Directors in writing which accounts they are assigned to or will the commission only be paid on SOE to resolve this? 88 Farrar wrote in reply by email dated 2 April 1998 in terms which included the following (Ex C1 p 199): John Bredel is only to be paid on the sales he is personally accountable for. This does not necessarily mean the sales he puts through SOE. These people are paid on the incremental sales into their accounts, i.e. the sales over and above the level of sales achieved in 1997. Their focus is developing new business for the company. For example if their account wrote $1m in 1997, they will be paid commission on every dollar shipped beyond $1,000,001. This is irrespective of whether or not the order was processed through SOE by themselves or another person. They are being paid to increase sales. 89 At the conclusion of the email Farrar informed Birnie that the plaintiff and the defendant had a list of the accounts they were responsible for. It is apparent from the evidence that such a list was not attached to the 25 March memo and Birnie's request for a copy of such a list brought a letter from the plaintiff to Mackenzie in the following terms: Herewith the list of clients assigned to me (by Colin Wells). A letter is required - URGENTLY - signed by yourself and/or David Farrar naming these accounts and the six months guarantee with a copy to Barbara Bellair at Wodonga pay office. It has already missed the March pay period. Please advise!! 90 There were thirty entities on the list including Boral. The pay period for March expired on 15 April and there is no mention in the list of the ABS or the Census which did not eventuate until October 1998. Although the plaintiff's evidence in relation to when he wrote that letter was unhelpful I am satisfied that it was written in about April 1998.

The Albury discussion 91 In his affidavit Mackenzie denied this conversation took place. In his cross examination he resisted the suggestion that it did take place on the basis that at the time of the Albury discussion the pricing and various specifications had not been fixed and thus it would be unlikely that the "profit" could or would have been discussed (tr.356). However he was pressed further and agreed that the plaintiff could have said that he would get "another $1.5 million profit" (tr. 357). He then gave the following evidence: Q. And I suggest to you, you said you will see to it that you get at least 50,000 commission, dollars? A. No.

Q. And Mr Bredel said, "Ian on my commission I will earn over 200,000"? A. No.

Q. That wasn't said? A. I can not remember that.

Q. Could it have been said? A. It could have been said but I just can't remember it.

Q. You replied, "at 1.5 million profit it will be worth it". Could that have been said? A. Well, it could have been said but I do not remember saying those words. (tr. 357) 92 Letch gave evidence that in the discussion between the plaintiff and Mackenzie after the dinner, the plaintiff said that if Moore was successful in obtaining the contract "the subject of commission cropped up" but he could not remember "how much it was for". He said Mackenzie "agreed, he said yes" but once again Letch said "I am not sure how much it was for" (tr.216-217). His recollection was that the plaintiff had brought the topic up in the conversation. In cross-examination Letch said that the plaintiff had approached him in 2001 to ask him to give evidence about the Albury discussion. He said that the plaintiff "told me what he thought and I told him what I thought had happened" (tr. 225). That was the extent of Letch's memory of the Albury discussion. 93 The Albury discussion occurred during 1998 when on both parties' cases the 4% commission was operative. The plaintiff originally relied on this conversation to support his submission that the defendant knew that the 4% commission continued into the year 1999 and/or alternatively led him to believe that the 4% commission would be paid on the ABS contract if he secured it for the defendant. However during the plaintiff's cross-examination the plaintiff seemed to abandon reliance upon this discussion as an "assurance". 94 He started from the position that this conversation "was not the only one he relied upon" (tr.137. 35) and moved to the position that it was not "the one he was relying on" (tr. 138.4) and finally stated that this was not relied upon and was "conversational" (tr. 143.15). Prima facie this was a remarkable abandonment, however when it is seen in the context of Mr Holmes QC's cross-examination it is understandable that the plaintiff moved away from reliance upon the alleged conversation. This was of course prior to Mackenzie giving his evidence. 95 Mr Holmes questions were focused upon the letter that the plaintiff had written to Mackenzie on 9 November 1998 in relation to his "remuneration adjustment". This was a letter written only four days after the alleged conversation and yet there was nothing in that letter mentioning the so-called "assurance" in respect of the plaintiff's commission, nor was there any mention of the Conference conversations. It was after this letter was drawn to the plaintiff's attention that the plaintiff gave evidence that it was the July '99 conversation with Mackenzie that he was relying upon and not the Albury discussion (tr.143) because it was only "conversational".

1999 Remuneration Review 96 The usual time for reviewing plans and packages for employees at the beginning of the year was delayed in 1999 until April/May of 1999. Griffiths was employed with the defendant between 1990 and November 1999. For the majority of that time, excluding 1998, he was the National Sales Administrator with responsibility for the administration of the sales remuneration scheme of the defendant. In 1998 he was the Financial Systems Manager and did not have a role in the fixing of employee remuneration. 97 In April 1998 Griffiths was aware that the plaintiff had suffered a heart attack and was convalescing after surgery. He was also aware that the plaintiff had contemplated retirement on medical grounds. He was informed by Hughes that the plaintiff would be returning to work and would be working at Rhodes with responsibility for Special Projects, Business Development reporting directly to Mackenzie. 98 Griffiths returned to his role as National Sales Administrator on 1 January 1999. He received from his predecessor a spreadsheet containing all the information necessary to enable the pay person to pay the employee at the end of the pay period. That information included salary, commissions, revenue budgets and gross profit budgets. 99 Griffiths gave evidence that "in about mid April 1999" the plaintiff telephoned him and informed him that he was "going to sign the Boral contract very shortly" and he would be entitled to a very large commission payout. Griffiths recollection was that the plaintiff said that the commission payout was to the value of $1.6 million. Griffiths asked the plaintiff whether he had anything to substantiate this claim to which the plaintiff responded that there was a memo from Farrar that "has 4% commission against my sales". The plaintiff informed Griffiths that he wanted to be sure that the defendant was aware of the magnitude of the payout and that they had in fact discussed it with their solicitors, Mallesons. 100 Soon after this conversation Griffiths went to Muir and obtained access to the plaintiff's file. He obtained a photocopy of the memorandum from Farrar to the plaintiff dated 25 March 1998. Griffiths took this memorandum to Mackenzie and informed Mackenzie that he had been talking to the plaintiff. Griffiths informed Mackenzie that the plaintiff had claimed he was going to "get the Boral contract" and that he was entitled to a large commission. Mackenzie informed Griffiths that he wished to speak to McDonald about the plaintiff's request for an advance of $7,500 and that they could go and see him together. 101 Griffiths took with him to the meeting with Mackenzie and McDonald one of the defendant's documents entitled "Advice of Employee Status" (Ex.6) (the Advice). That document included the plaintiff's title as "New Business Development Manager" with an old pay rate at $70,000 and a new pay rate of $80,000. The stated profit participation program plan number was identified as "B2". Griffiths wrote the plaintiff's name and position and the words B2 and the "70,000". Although the numerals 80,000 looked like his writing he was not sure that he had written it on the document (Ex. C 109; Ex 6). 102 Griffiths attended with Mackenzie upon McDonald. Griffiths gave evidence that during that meeting the following conversation took place. Mackenzie: Bredel has again asked me for $7,500. McDonald: We're not paying it. Boral hasn't been signed up as yet. Mackenzie: John will get Boral. If Severino had not taken leave the Boral contract would have been signed last December. Griffiths: We don't have a new compensation plan for John this year. He's still working on last years plan. McDonald: What is his compensation plan at the moment? Griffiths: 4% on incremental business. Which based on $40 million dollar contract with Boral alone that's $1.6 million. McDonald: There's no way I'll pay him that much. I want you to prepare a compensation plan for Bredel, zero commission for annual sales less than half a million, then $5,000 up to $1 million. $10,000 between a million and $2 million and anything over $2 million to be negotiated with me.

103 After this meeting Griffiths prepared the plan B3. Until that time the company did not have a plan B3 and I am satisfied on the evidence that it was specifically tailored for the plaintiff. B3 did not include any commission on incremental business as was provided for in B2 and did not include any super achievement bonus as provided for in plan B2. Griffiths was not aware of the letter that had been sent to the plaintiff dated 15 May 1999 enclosing the plan B3 until 2001 when preparing to give evidence in these proceedings. 104 McDonald took over as interim Managing Director of the defendant on 5 May 1998 and for the balance of the year worked on three due diligence processes in relation to the sale of the defendant to three potential purchasers. The sale apparently fell through in mid December 1998 and it was then, as McDonald put it, that the "venture capitalists asked me to step up to the plate" and to make an investment and become the CEO of the defendant. He obliged and became the CEO on 1 January 1999. 105 McDonald said that there were a number of reasons for the delay in the review of the "compensation" for sales employees from its usual time at the beginning of the year to April/May 1999. Those reasons included that most of the sales force including the sales manager were on vacation in January, that there was "paperwork" to "tidy up" associated with the "buy-out", that there was a "road-show" to deliver to all the employees around the country in the first couple of weeks in February, that towards the end of February he was relocating his home from Canada to Australia and he "stopped in New Zealand on the way back" arriving in Australia towards the end of March. He said "we then spent April dealing with sales compensation issues and preparing our strategic plan presentation for the Board"(tr. 443). 106 McDonald's evidence was quite at odds with Griffiths' evidence. In his affidavit evidence he denied that Griffiths mentioned $1.6 million and denied that he, McDonald, said "there's no way I'll pay him that much" or that he requested Griffiths to prepare the compensation plan as stated by Griffiths in his evidence. He stated that there were two meetings with Griffiths and Mackenzie and that at the first meeting he asked "what type of compensation package does the organisation have in place for business development managers?" to which he stated Griffiths responded "we have a plan. It is known as plan B3". 107 McDonald stated that he then informed Mackenzie and Griffiths that they needed to come to him with a "compensation package that fits within plan B3". McDonald's affidavit evidence was that a short time after the first meeting there was a second meeting with Mackenzie and Griffiths in which Mackenzie said "I'm recommending an increase in his base from $68,000 to $80,000 and using the plan B3 which Simon has here". McDonald stated that Griffiths then said "Here it is Jim. It is consistent with other business development plans we have used in the past. It has zero commission for annual sales less than half a million, then $5,000 for up to $1 million, $10,000 for sales between $1 million and $2 million and anything over $2 million to be negotiated". 108 In his oral evidence McDonald put the two meetings with Griffiths and Mackenzie "up to a week" apart. The best he could do with the date of the first meeting was that it "was in or about April" (tr.450). McDonald did not recall Griffiths saying "we don't have a new compensation plan for John this year, he's still working under last year's plan" (tr. 448). He also gave evidence that the plaintiff's plan "would have expired December 31st" and that it was "generally understood by all sales management and executive management that the sales compensation plans expire December 31st each year" (tr. 439). 109 Mackenzie described the role of a New Business Development Manager as "obtaining contracts for the defendant's services from new clients, or from clients on whose business the defendant only had a toehold". Mackenzie said that when a New Business Development Manager had obtained a new client the ongoing servicing of the client and the development of the account was in most cases handed over to Business Services and Sales representatives. The number of new Business Development Managers employed by the defendant varied from time to time. Mackenzie gave evidence that the defendant usually employed one new Business Development Manager in Victoria and one in New South Wales whilst in the other states a Senior Sales Representative with a reduced sales assignment often performed that role. In his affidavit Mackenzie said, "In the period 1998 to 2000 the plaintiff was the New Business Development Manager in New South Wales." However it appears that at least Bradley Wilson was also a New Business Development Manager during part of this period (tr.472; Ex C1 p 199-200). 110 In his affidavit Mackenzie recalled the conversation of "the kind" that Griffiths described. However he denied that Griffiths mentioned either to him, or to McDonald in his presence, the possibility of the plaintiff earning $1.6 million in commission for obtaining the Boral contract. He also denied that McDonald said that there was no way that he would pay the plaintiff that much. Mackenzie also said in his affidavit: Plan B3 was a standard commission plan for the defendant's new business development managers at that time. The standard plan for sales representatives was similar, but provided for commission on the defendant's gross profit rather than estimated annual shipments.

The defendant usually advised employees of changes in their remuneration at some time in the February to April each year, not December/January. If there was no change to the remuneration of a particular package, the defendant's practice was to send that employee a letter to that effect. Every employee got a letter which they had to sign and return to the human resources manager. 111 Mackenzie referred to the letter of 15 May 1999 signed by himself and Muir. This was his affidavit evidence: The memo to the plaintiff dated 15 May 1999 was one of many to the defendant's sales staff at that time. The annual review of remuneration for the defendant's sales staff was later than usual in 1999. To the best of my recollection the memo to the plaintiff dated 15 May 1999 was sent to him on that date. I did not cause its sending to be delayed. I did not prepare it later and backdate it.

112 In cross-examination Mackenzie accepted that 15 May 1999 was a Saturday and that it was "highly unlikely" that he would have signed it on that day. He said he recalled signing the letter in the Head Office premises of the defendant in Melbourne. He could not recall whether Muir's signature was on it when he signed it and he understood it was sent by internal mail to the plaintiff. In the normal course of events mail sent by internal method was delivered the following day. 113 Mackenzie was present with the plaintiff at the Boral presentation on Monday 17 May 1999. Mackenzie then returned to Melbourne later that afternoon. Mackenzie was telephoned by the plaintiff on Friday 21 May and had a number of discussions with the plaintiff during the weekend 22/23 May 1999. Those discussions related to the adjustment of pricing on the Boral tender to ensure that the defendant secured the contract. Mackenzie agreed that there was "great jubilation" within the company when Boral announced that it had agreed to enter into a print management agreement with the defendant.

114 Mackenzie said that if he had seen the 15 May letter with the B3 Plan attached to it before 17 May 1999 he would have "most certainly" taken it up with the plaintiff face-to-face. He did not do that. In explanation as to why the plaintiff's letter was dated 15 May when all other review letters appeared to be dated around 1 May 1999, Mackenzie said that the plaintiff was in an almost unique position at that stage and "it sort of slipped through the net". Mackenzie did not know why the letter was counter-signed by himself and Muir. He believed it would have come through the mail system to him and he would have signed it, alternatively Muir may have attended upon him with the letter. 115 In cross-examination Mackenzie was not able to give any detailed understanding of Plan B1 or B2. Of Plan B3, he said that he had never seen it before and it was one that was "made up" by Griffiths after he went away and "made up the pay scheme after looking at the gross profits and everything else" after the conversation with McDonald. This evidence is at odds with Mackenzie's affidavit evidence that it was a "standard commission plan for the defendant's new development managers at that time". It was not "standard" at all and it was not in place "at that time". It was created by Griffiths after the meeting with Mackenzie and McDonald. 116 Mackenzie's evidence was that in any of the conversations that he had with the plaintiff in May 1999 he certainly would have informed him about the contents of the letter of 15 May 1999 if he had known about them. He said, "I certainly wouldn't have hidden it". Accepting that to be the position it seems to me that Mackenzie had not signed that letter until at least Monday 24 May 1999. There is no doubt that Mackenzie did not discuss this letter with the plaintiff until the plaintiff telephoned on 28 May 1999 in what Mackenzie described as a "furious" state. I am of the view that more probably than not, the letter was signed by Mackenzie sometime between 24 May and 27 May 1999. I accept the plaintiff did not receive the letter until 28 May 1999. There was no explanation proffered by Mackenzie as to why he did not discuss the contents of this letter with the plaintiff prior to it being sent to the plaintiff. 117 There is a further aspect to the 1999 review of the plaintiff's remuneration which is curious. This was drawn to my attention in final address by junior counsel for the defendant, Mr Crow. Mr Crow submitted that the plaintiff's salary had been increased twice in 1999, the first time to $70,000 and the second time to $80,000 as referred to in the letter of 15 May 1999. 118 In respect of the first increase Mr Crow referred me to a document in evidence entitled "1999 Salary Review Worksheet" (Ex C2 p 13) and to a document dated 7 May 1999 with a fax header dated 10 May 1999 with a note to "Barb", Bellairs more probably than not, that stated "all increases effective 1/4/99" (Ex.C p 100-106). The Worksheet contained the names of seven current employees including the plaintiff. The plaintiff's salary was noted at $68,000, with "$0" leave loading, "$0" site allowance or bonus, $14,000 car allowance with total remuneration noted at $82,000. The "proposed salary" was listed as $70,000. There is in evidence a copy of an unsigned letter dated 1 May 1999 to each of the other persons on the Worksheet from Muir advising them of the increase in the "salary" component of their remuneration package reflecting what is written on the Worksheet (Ex. C p 14,15,16,18,89&97). There is no such letter in evidence in relation to the plaintiff. However the faxed document addressed to "Barb" includes the plaintiff's name with the salary at $70,000. 119 There was no evidence given in relation to the Worksheet. It was raised for the first time in final address. However whenever Griffiths prepared the Advice, he wrote on it that the "old salary" was $70,000 and that the plaintiff was on Plan B2. 120 The Advice (Ex C 109 & Ex 6) also has a number of features to it that suggest that the decision to create the B3 plan was made after 14 May 1999. It contains Muir's signature as the "Regional HR Manager" without any date underneath it in the space provided. It contains Mackenzie's signature as the "Member Manager" with the date 14/5/99 in the space provided. It contains handwritten notes "(1) Effective April 1/99" and "(2) OK to advance $7,500" with McDonald's initials next to note (2), underneath which there is a further note "Barb, this is an advance against the Boral contract. Please pay & fax ASAP" with Muir's initials and the date 14/5/99. McDonald has signed the foot of the Advice in the space provided as "Regional President" but has not placed any date underneath his signature in the space provided. There is provision in the Advice for the date to be inserted in the box which reads "Employee Advised of Change of Status in writing by HR". This remains blank. There is also provision for the date to be inserted in the box which reads "Employee Advised of Profit Participation Program in Writing by Finance". This also remains blank. The "old pay rate" is stated to be "70,000" and the "Pay rate" is stated to be "80,000". The "Profit Participation Program" is stated to be "B2". 121 From the contents of this document alone it would appear the decision was made no earlier than 14 May 1999 that "effective April 1/99" the plaintiff was to be paid $80,000 and that he was to be on "Profit Participation Program B2" also effective April 1/99. There is no note on the Advice in relation to Plan B3. 122 I do not know how the increase of $10,000, if from a base of $70,000 or $12,000 if from a base of $68,000, to a total salary of $80,000 was reached. Griffiths thought that Mackenzie may have mentioned the plaintiff's salary level but was firm in his recollection that he did not become aware of the plaintiff's salary at $80,000 until he saw the letter of 15 May 1999 in 2001 when preparing to give evidence in this case. McDonald gave evidence that in the second meeting Mackenzie informed him that he had decided to increase the plaintiff's salary, not from $70,000 to $80,000, but from $68,000 to $80,000. When the plaintiff responded to Muir and Mackenzie's letter of 15 May 1999 in his letter of 2 July 1999 he referred to an increase from $68,000 not $70,000.

The July '99 assurance 123 Mackenzie described the first three months of 1999 after the sale of the defendant in December 1998 as a "very confused" period. Mackenzie was cross-examined about the July '99 conversation. He was asked whether he could recall the plaintiff saying, "I will have them in court for this," and he responding to the plaintiff, "It will sort itself out. In the meantime, don't let me down on the Census. You're the only one that can do it" then the plaintiff saying "How can I be sure that I will get my 4% after this rort?" and he responding "I will make sure that you are covered." He was cross-examined as follows: Q. Can you recall that conversation? A. I tend to say yes, but I really can't be certain about that. A conversation took place, I do know that, but what was actually said in that conversation, I'm really not honestly certain. Q. What you are really saying is that it could have been said? A. Yes, it could have been said. Q. Now is this phrase an expression you commonly use or often use, "Let the ball come onto the bat"? A. Yes. Q. Now do you recall using that expression after 10 July 99 in relation to Mr. Bredel's continuing with the Census negotiations? A. I - the context, I don't know, but I most probably would have certainly used that during discussions on the Census. (tr. 380-381) The plaintiff's credibility 124 The defendant submitted that I would prefer the witnesses called by it and their versions of what occurred in the various conversations to that of the plaintiff. The relevant conversations are those at the Conference between the plaintiff and Mackenzie and the plaintiff and Hughes, the Albury discussion between the plaintiff and Mackenzie in the presence of Letch and the July '99 conversation between the plaintiff and Mackenzie. It is those three conversations that the plaintiff relies upon as assurances to him that he would be paid 4% commission on the amount of the difference between the yearly total purchases of print product and the purchases in subsequent years for the life of the contract. 125 The defendant made a strong attack on the plaintiff's credibility during his cross-examination. The plaintiff agreed that he made a number of deliberate false statements in his employment application (tr.67). He stated that his date of birth was 1 April 1945 when his date of birth was in fact 17 May 1937. His career history commences in 1968. No mention is made that in 1953 he left school and joined the police force in which he remained until about 1966. In 1967 he was arrested in the United States on a charge of conspiracy to import a controlled substance. He absconded whilst on bail and lived and worked in the United Kingdom under a false name. The plaintiff admitted that he used thirty false names and that in the United Kingdom he was convicted of making a false statement to procure a passport (tr.73-74). 126 The plaintiff also admitted in his cross examination that he was arrested in Paris in August 1970 and was extradited to the United States in 1971 and imprisoned after a finding of guilty on a charge of conspiracy to import a controlled substance (tr.74). The plaintiff gave evidence that the conviction for which he was sentenced to eight years imprisonment was set aside by the Sixth Circuit Court of New Orleans in 1974 and the plaintiff returned to Australia in 1975 (tr.70). 127 The plaintiff also admitted that between 1978 and 1982 he had a number of convictions in Australia in relation to SP Bookmaking and that he had a "lot of convictions for making false statements in relation to passports over a number of years" and that the most recent was on 6 May 1996 (tr. 75). 128 In re-examination the plaintiff admitted that his birth name was John Wesley Egan and that he adopted his present name in 1982 when he "rehabilitated himself". The plaintiff sought to explain the falsification of his date of birth on his passport for which he suffered a conviction in 1996 as follows:

I had been granted an overseas study tour by Moore and I had to hand a passport in with my birth date. And I had already given the company - I'd taken many years off my birth date in 1987, I think. And I had to hand one in while they obtained my ticket. And I wished my birth date to be as stated in my company application for employment. (Tr.148) 129 The plaintiff also gave evidence that he had received five Bronze Star medals for bravery and two certificates whilst he was in the police force. He was a founding member of the Diving Squad and a member of Police Rescue stationed at the Gap. The plaintiff's counsel then tendered, without objection, pages 301 to 316 of the book The Prince and the Premier written by David Hickie. The plaintiff described this as a "version of his life" that was written without any consultation with him. That exhibit (Ex.B) referred to the plaintiff as John Wesley Egan. It describes the plaintiff as first becoming involved in criminal activity as a member of the Police Underwater Diving Squad. It gives a history of the plaintiff's involvement in the smuggling of heroin from South East Asia to the USA in specially made corsets that the couriers wore under their clothing, which apparently gave them the name the "Corset Gang". 130 The book claims that the plaintiff made a profit of $80,000 a week after expenses and by late 1966 after barely 6 months in the "business" he had $250,000 stored in Sydney in safe deposit boxes and was owed several hundred thousand dollars more on sales of heroin already made in New York. The description of the plaintiff's life in those years, if even half true, is a description of a very dishonest person indeed. However, the plaintiff claims that these years have been put behind him and he has operated honestly since he rehabilitated himself in 1982. 131 It is apparent that the defendant became aware of some of the plaintiff's past in about 1996. It is clear from a letter from Mallesons Stephen Jaques to Farrar dated 19 September 1996 (Ex. F) that it was aware of the false statements in relation to the plaintiff's birth date, his conviction on 6 May 1996 for making a false statement in writing for the purposes of obtaining an Australian passport and allegations that between 1967 and 1980 he had suffered a "number of convictions" in the USA, UK and France relating to a number of "serious offences, including importation of drugs, theft, fraud, making false statements to procure passports and handling stolen property"(Ex.F). It is also clear from this letter that the defendant was aware that the plaintiff's "birth name" was John Wesley Egan.

132 In response to this attack on his credibility some of the witnesses were asked about their observations of the plaintiff during the years they had worked with him. Letch gave evidence that he had not known the plaintiff to tell him a lie in any dealings regarding the defendant's business. Wells gave evidence that in the years he had known the plaintiff, 1987 to date, he had always found him honest in any business dealings he had with him. 133 The plaintiff submitted that I should accept that he has put what he described as his "turbulent" years behind him and that he is a man whose word can now be accepted. In cross examination he was asked "you are a person who frequently makes false statements if you believe it to be to your advantage?" to which he responded "not for 20 years" (tr. 85.23). The defendant submitted that even that statement was false because the defendant had suffered a conviction in 1996 for making a false statement in relation to a passport. The plaintiff's evidence in re-examination explaining the facts leading to his 1996 conviction for making a false statement demonstrates that as recently as 1996 he was willing to continue representing that his age was that stated in his passport when he knew it was not. He did so in circumstances that he thought were to his advantage. 134 The approach that I intend to adopt is to review all the evidence relevant to the issues before me. In deciding the probabilities where there is conflict between the plaintiff and the witnesses for the defendant, on matters pivotal to any of those issues, I intend to take into account the plaintiff's previous tendency to make false statements if he believed it to be to his advantage.

1998 Plan 135 Both parties relied upon conduct prior to and after the plaintiff returned to work in 1998 in support of their competing submissions as to the terms of the contract between the plaintiff and the defendant during the period 1998 to 2000 when the plaintiff retired. Reliance has been placed on Brambles Holdings Limited v Bathurst City Council [2001] NSWCA 61. The relevant principles from Brambles applicable to this case are (1) that pre-contractual conduct may be considered on questions of construction, if the contract is ambiguous and the pre-contractual conduct casts light on the genesis of the contract, its objective aim, or the meaning of any descriptive term, (2) that post-contractual conduct may be considered on the question of whether a contract was formed, (3) that post-contractual conduct may not be considered on the question of what a contract means as distinct from the question of whether it was formed and (4) that the construction of a contract is an objective question for the court and the subjective beliefs of the parties may be considered in determining the estoppel claim but not in relation to deciding the terms of the contract (per Heydon J pars [24]-[27]). 136 The plaintiff claimed in his evidence and final submissions that the 25 March memo was "rejected" and was "inconsequential" and/or "inoperative". He referred to it as a "bed of quicksand" and a "magnet for error". His suggestion that he "threw it in the draw" was a correction to his evidence that he threw it in "the garbage". The plaintiff claims the terms of the conversations at the Conference, with Hughes in particular, were the terms of his compensation plan that entitle him to the declarations he seeks. 137 It is difficult to reconcile the plaintiff's claim that the 25 March memo was inoperative and rejected, with the plaintiff's own correspondence both in 1998 and 1999. In his letter to Mackenzie on 21 August 1998 (Ex. C1 p 265) he wrote "I have a letter from David Farrar (attached) dated 25.3.98 setting out a shipments budget of $2,000,000 and guaranteeing a salary to be no less than my earnings in 1997". There was no mention of the Conference conversations nor was there any suggestion that the "attached" memo was inoperative or rejected. 138 In his letter to Mackenzie of 9 November 1998 (Ex. C p 292-295) the plaintiff referred to the "plan formulated by David Farrar". Once again there was no suggestion that it was inoperative or rejected. In fact the contents of that letter lead to the irresistible conclusion that the plaintiff regarded the "plan formulated by David Farrar" as operative and was seeking to change the "plan". There is also no mention of any conversations at the Conference. 139 In his letter of 2 July 1999 to Muir and Mackenzie the plaintiff referred to his "previous" arrangement and attached the 25 March memo stating "see attached letter from David Farrar, Human Resources Director, 1998". Far from suggesting the 25 March memo was inoperative, the plaintiff was seeking to have it continue instead of the Plan B3 which he stated had been unilaterally imposed on him. 140 In his letter to Muir on 6 August 1999 (Ex. C p 175) the plaintiff made a claim for commission "pursuant to Memorandum dated 25 March 1998". There was no mention of the Conference conversations. In his letter to Wadey dated 20 December 1999 the plaintiff once again referred to "conditions of my remuneration set out in David Farrar's letter of 28-3-98". Although the date was incorrect there is no doubt that the plaintiff was referring to the 25 March memo. In none of these letters was there ever any suggestion that the contents of the 25 March memo did not reflect the basis upon which he agreed to return to full time employment. 141 I reject the plaintiff's evidence that he regarded the 25 March memo as "inoperative" and I do not accept the submission that it was "rejected" by the plaintiff. The evidence is in my view overwhelmingly against such a position. 142 There are few facts in issue about the conversation with Hughes at the Pinnacle Valley conference. The pivotal issue is whether Hughes said the words "until the end of this year". Much time at the trial was spent dealing with this issue. Both the plaintiff and his solicitor, Czinner, swore affidavits about the telephone conversation with Hughes, and Hughes was cross-examined upon it. Hughes maintained that he said those words. If Hughes had not said those words and the plaintiff understood that the "plan" was to be indefinite it is most unlikely that the plaintiff would have relied on the 25 March Memo in his correspondence in the manner I have described. 143 There is a curious aspect to the plaintiff's evidence. The plaintiff claimed in his affidavit that the conversation with Hughes at the Conference included the statement "after that 6 month period your base salary will revert to $67,000 per annum plus a bonus component of $23,000, if you can do the deal before Christmas". When the plaintiff received the memo from Farrar dated 22 September 1998 he wrote to Mackenzie on 23 September 1998 and subsequently met with him. The plaintiff complained that the "controllers" of his salary had imposed unacceptable conditions one of which was that the contract had to be signed by 31 December 1998. It is curious that such a complaint was made if, as the plaintiff says, Hughes had told him at the Conference that the bonus of $23,000 would be paid if the Boral "deal" could be done by Christmas. This supports the evidence of Hughes that he did not say those words to the plaintiff at the Conference. 144 Perhaps even more importantly on this aspect of the evidence is the plaintiff's letter to Griffiths dated 28 June 1999 complaining about the "change" to his remuneration plan one week before "Boral landed". He stated that "previously it was 4% on incremental sales" followed by the statement "although this was for 1998 it rolled over to 1999". This in my view is a clear acknowledgement by the plaintiff that he understood that the plan was "for 1998". Having regard to this evidence I am of the view that the suggestions that Hughes did not tell the plaintiff the plan was "until the end of the year" and that the 25 March memo was not operative is entirely disingenuous. I reject both propositions. 145 I am satisfied that the plaintiff's compensation plan for 1998 was as stated in the 25 March memo and the memo from Farrar to the plaintiff dated 2 October 1998 and the letter containing the list of accounts (Ex. 1). That plan relevantly entitled the plaintiff "for 1998" to 4% commission on the incremental business sold beyond the amounts sold in 1997 to the accounts contained in the list ultimately agreed. There is nothing in this memo and I am satisfied nothing in the conversations at the Conference that would entitle the plaintiff to the declaration that he is entitled to 4% commission on incremental sales over 1997 for the life of each of the contracts.

1999 and 2000 Plans 146 The plaintiff claimed in his letter of 28 June 1999 to Griffiths that the 1998 plan "rolled over" into 1999. However in his final submission (at par 10.7 page 39) the plaintiff stated: "there is no dispute that the bonus component expired on 31 December 1998 and no claim is made for that bonus". The plaintiff therefore would have it that only parts of the plan "rolled over".

147 The defendant claims that the plan finished at 31 December 1998 and all that the plaintiff was entitled to was a base salary of $68,000. The plaintiff's pay slips demonstrate that he was paid a salary at the rate of $90,000 up to the end of August 1998 and at the rate of $68,000 from September 1998 to the end of May 1999. 148 What occurred on or after 14 May 1999 was that the plaintiff's compensation package was structured in the manner for which the plaintiff himself had advocated in his letter to Mackenzie on 9 November 1998. That is an important letter. Its stated purpose was "discussing my remuneration adjustment". This was an acknowledgment by the plaintiff that he knew there was to be an "adjustment" to his remuneration. In my view it can also be viewed as an acknowledgment that the 25 March memo was for the 1998 year. The adjustment happened each year that the plaintiff worked with the defendant and it is probable that the expectation was that the "adjustment" would happen at the usual time rather than at the delayed time in April/May 1999. 149 The plaintiff stated that he had been on the flat or "guaranteed" salary for the last five years because the commission he would otherwise have been entitled to would have, as he put it, "far exceeded any salary plan". The letter then stated that "the plan formulated by David Farrar had included a commission component for product" (emphasis added). The use of the past tense is important. It is used in the context of the explanation that followed that in the previous 6 months there had been no opportunities that involved product, but there had been opportunities that involved "project development". This is evidence that the plaintiff understood that the commission component was for 1998 and that there was nothing that had presented itself that would allow him to qualify for that commission. 150 It was after reference to the three "special Projects", the Census, Boral and ANZ, as "project developments" which the plaintiff claimed would consume his time, that the plaintiff asked that his salary "be restored to its normal guaranteed $90,000p.a ". This letter demonstrates that in any "adjustment" to be made to his remuneration the plaintiff did not want the "commission component for product" that "had" been included in the plan formulated by David Farrar. Rather he was advocating a salary which was "guaranteed" irrespective of product or project development. This was consistent with the position that had previously pertained when the plaintiff was on a "guaranteed" salary and no commission was payable to him. 151 The plaintiff then added what might be seen as two sweeteners to his proposal. The first was that he was willing to have "milestones or hurdles" applied with a provision that if they were not reached there could be a "payback" that would presumably come out of that part of the guaranteed bonus component of the salary. The second was that "any success fee for contracts in excess of say $3 million to be negotiated". This was an invitation to the defendant to firstly allow for a success fee but not for any contracts under $3 million or perhaps some other figure the defendant may suggest as appropriate. Any contracts under that figure or such other figure the defendant suggested as appropriate would be catered for by the "guaranteed salary". He wanted the defendant to include a term within the adjusted arrangement that any payment of a success fee for contracts over $3 million was "to be negotiated". 152 The guaranteed salary was important to the plaintiff because he was, as he stated in the letter, "anxious to preserve my level of salary for an average over the last three years". This related to a calculation of payments that might be made to the plaintiff should he retire on the basis of "permanent disablement". The plaintiff understood that such payments would be made monthly and involved a calculation, a factor of which involved averaging the salary for the last three years of employment prior to retirement. The plan "formulated by David Farrar" which "had included a commission component for product" was not allowing a preservation of the plaintiff's level of salary as he had wanted. It was so important to the plaintiff to have these suggested adjustments made to his remuneration that if the defendant found it "too hard" the plaintiff advised that perhaps "retirement and consultancy fees could be examined". However he concluded by saying that he did "prefer the salary adjustment back to what it has been for the past five years".

153 The plan B3 provided for a payment to the plaintiff on "new signings". The advance of $7,500 was "against the Boral contract" which it was anticipated would be "signed" soon. The "estimated annual shipments" achieved would govern the amount the plaintiff had to pay back or the further amount to which the plaintiff might be entitled. 154 Mr Holmes QC relied upon the terms of the plaintiff's letter of 28 June 1999 to Griffiths to submit that it is more probable than not that the version of the conversation given by McDonald and Mackenzie is what occurred at the time the plaintiff's compensation was reviewed in 1999. It was submitted that the plaintiff's statement in his letter of 28 June to Griffiths "over a six year contract of approx $40,000,000 the commission payable was - wait for it $1,600,000" is evidence that this was the first time that the plaintiff had informed Griffiths that the commission would be $1.6 million. Mr Holmes submitted that if the plaintiff had already informed Griffiths that he would earn $1.6 million commission he would hardly be asking Griffiths to "wait for" the news of the figure in that letter. Griffiths did not accept this proposition and suggested that even if the plaintiff had already informed him of the suggested $1.6 million expectation he would still have used the term "wait for it". I find this difficult to accept in the context of the evidence given by Griffiths. 155 It was submitted that on this evidence it is highly improbable that Griffiths knew of the $1.6 million figure until late June 1999 and that it is highly improbable that he would have said to McDonald and Mackenzie, as he claimed he did, that the plaintiff was on a compensation plan which provided him with "4% on incremental business which based on a $40 million dollar contract with Boral alone, that's 1.6 million". It was submitted that it is equally highly improbable that McDonald would have said "there's no way I'll pay him that much". 156 Griffiths gave evidence that the plaintiff informed him about the $1.6 million in a telephone conversation in April with the suggestion that the plaintiff wanted to ensure that the defendant was aware of such a large possible payment to the plaintiff if the Boral contract was signed. The plaintiff does not refer to such a communication in his 28 June letter. This seems odd if the plaintiff had specifically telephoned Griffiths to ensure that the defendant and its solicitors were aware of the $1.6 million possibility. When this is added to the use of the term "wait for it" in the context of the whole letter I am satisfied that more probably than not Griffiths was not aware of the $1.6 million claim until late June 1999 and that Griffiths did not mention such a figure to McDonald or Mackenzie at the meetings at which the plaintiff's compensation plan was reviewed.

157 There are some peculiarities to the way in which the plaintiff's salary was reviewed in 1999. The suggestion by Mr Crow in final address that the plaintiff's salary was increased twice is one that I cannot accept on the evidence. It is probable that there was an intention to increase his salary to $70,000 and place him on plan B2. However, that salary of $70,000 and plan B2 was never notified to the plaintiff. 158 The delay in the plaintiff receiving the letter of 15 May 1999 is also peculiar. As I have said I am satisfied that Mackenzie probably did not sign the letter until about 24 May 1999. Although Mackenzie did not explain why he did not discuss the contents of the plaintiff's package with him prior to the letter being sent, the package was not a great deal different from that for which the plaintiff had advocated in November 1998. Certainly he had wanted a guaranteed salary of $90,000 and this was a guaranteed salary of $80,000. He had suggested that he would not have a success fee for any contracts under $3 million. The Plan provided for a payment to the plaintiff on new signings of $5,000 for estimated annual shipments between $0.5 million and $1 million and $10,000 for estimated annual shipments between $1.001 million and $2 million with a requirement that estimated annual shipments over $2 million were "to be negotiated". 159 The fact that the letter to the plaintiff of 15 May 1999 was countersigned when the letters to the other employees were not was raised with Mackenzie in his cross-examination He said that in 1998 all the letters were countersigned and that in 1999 Muir had probably taken it upon himself to sign the other letters that had been decided by 1 May 1999 because he, Mackenzie, was travelling a lot at that stage and was probably not available to countersign the letters. There was also the delay in the reviews and he thought that Muir signed the letters so that the reviews could be implemented. Muir was not cross-examined as to why the letter was countersigned. 160 Griffiths was asked whether or not the "incentive or bonus" part of a remuneration package was capable of "rolling over" to the next year. He said it was a matter for the sales directors and that it also related to the nature of the business. He said it depended on "how the patch and territories were changed". He expressed the view that if an employee had started the work on a particular account but that person's "patch or territory" had changed he/she may still receive the incentive or bonus even though another employee was then in charge of that territory. He said it was "quite possible" it would be "rolled over" but there was not "any firm fast rule that said at this point we cut off and start again at the discretion of the organisation". 161 There is no issue that McDonald said in response to Mackenzie's request for approval to "advance" $7,500 to the plaintiff that the Boral contract had not been signed. It was Mackenzie who then went into "bat" for the plaintiff, as McDonald put it in his evidence, to persuade McDonald to approve the payment. He said it would have been "signed" last December if Severino had not gone on leave. He said "John will get Boral". 162 This discussion proceeded from the premise that there was to be some payment made to the plaintiff on the signing of the Boral contract. If the provision for the payment on the Boral contract terminated on 31 December 1998, it is prima facie strange that McDonald was resisting a payment on the basis that the Boral contract had not been signed. One would have expected the resistance to be on the basis that the plaintiff was not entitled to a payment for Boral because the provision within his remuneration package entitling him to such a payment had terminated on 31 December 1998. However McDonald's evidence was that he was willing to advance the $7,500 to the plaintiff on the basis of the new remuneration package, that is $80,000 and Plan B3, notified in the letter of 15 May 1999. 163 The plaintiff's submission is that the defendant scurried around after the announcement of the successful Boral bid informally on 21 May 1999 at the social function at Harold Park to create a plan that would do him out of an entitlement of 4% commission on the incremental sales to Boral over the 1997 sales. One thing that is very clear in this case is that the review of the plaintiff's compensation plan for 1999 was handled very poorly. There was no discussion with the plaintiff prior to him receiving the news of the change in the letter of 15 May 1999. His reaction was immediate and "furious". He claims in this case that he had been assured that he would be paid the 4% commission on the named contracts for "the life of the contract". 164 There is no doubt that the defendant was entitled to review the plaintiff's remuneration for 1999. I am also satisfied that the plaintiff understood that is just what was to be done as evidenced by his 9 November 1998 letter to Mackenzie. Even if the peculiarities of the way in which the plaintiff's salary was reviewed lead to a conclusion that the defendant was motivated to remove the 4% commission, it must be remembered that it was the plaintiff who asked for the change. In his letter in relation to his "remuneration adjustment" on 9 November 1998 he requested restoration of a "guaranteed salary" which I am satisfied was intended to be in exchange for removal of the bonus and commission. His review was consistent with what he had asked for except that the difference between $80,000 and $90,000 was not guaranteed, it had to be earned by new signings with a bonus for contracts over $2 million to be negotiated. 165 It is difficult to understand how the 1998 remuneration plan could "roll over" and entitle the plaintiff to 4% commission on the Boral deal. The bonus potential was the amount of the balance between $68,000 and $90,000 being $22,000 to which the plaintiff would become entitled on the signing of the Boral contract. The 4% commission was something extra to the bonus but it is important to look to the terms of the 25 March memo. The memo provided that the plaintiff was entitled to 4% commission on the incremental business sold to the accounts "in 1998" beyond the amount sold in 1997. If it was to "roll over" one unanswered question is, against which year's sales were the incremental sales of 1999 to be measured. Was it 1998 or 1997? Another unanswered question is, to which accounts would such an arrangement relate? Would it be all, or some, or different accounts to those listed in Ex 1? These questions cannot be answered on the evidence in this case.

166 The plaintiff was paid at the rate of $80,000 and on Plan B3 until the end of 1999 when his remuneration was again adjusted by letter of 27 January 2000 which confirmed his salary at $80,000 and a new incentive plan pursuant to which he was paid until his retirement on 22 March 2000. The plaintiff submitted that the evidence demonstrates that such acceptance of salary was under protest. In his letter of 2 July 1999 the plaintiff advised Muir and Mackenzie that he had been instructed to return "all increase in salary" and requested that a figure be given to him so that he could return the increase. The defendant submitted that such a protest was hollow. The plaintiff knew the amount of the increase and did not return any "increase" to the defendant and accepted the $20,000 bonus paid to him for the signing of the Census contract, pursuant to the 2000 compensation plan notified in January 2000. The plaintiff has not made any offer in these proceedings to pay back to the defendant the amount of the increase. 167 Although the plaintiff was originally "furious" when he received the 15 May letter he continued working and accepting the increased salary. He retains those payments until today. I agree with the defendant's submission that the protest is hollow. No real effort was ever made to pay back the increases.

168 The plaintiff also submitted that the term "to be negotiated" in Plan B3 for shipments over $2 million is so vague as to be uncertain such that the letter of 15 May 1999 was not enforceable: Courtney & Fairbairn Ltd v Tolaini Brothers (Hotels) Ltd (1975) 1 WLR 297 at 301; Placer Developments Ltd v The Commonwealth (1969) 121 CLR 353 at 359/360. The defendant submitted that this was the very term the plaintiff had suggested in his 9 November 1998 letter to Mackenzie requesting the adjustment. It was a term that required the parties to negotiate on the amount of the payment to be made if and only if new business of estimated annual shipments above $2 million was achieved. The implication from the terms of Plan B3 is that whatever amount was negotiated it would not be less than $10,000. 169 Whether or not the plaintiff's submissions have some force in respect of the 15 May letter, or that part of plan B3 referring to the term "to be negotiated", ultimately has no impact on the outcome of these proceedings. That is so because, even if some terms are to be implied into the contractual relationship between the plaintiff and the defendant for the year 1999, there is nothing in the evidence that could establish that the plaintiff is entitled to 4% commission on incremental sales "for the life of" the named contracts. In the year 2000 the plaintiff's compensation was adjusted again. The salary payments based on $80,000 were made and the bonus of $20,000 was also paid. These payments are retained by the plaintiff to this day. Estoppel 170 The plaintiff relied upon the July '99 assurance he claimed Mackenzie gave him that he "would be covered" in relation to the 4% commission. He said that he stayed on with the defendant and worked on obtaining the Census contract in reliance on the assurance to his detriment. There are three issues in respect of this alleged assurance. They are firstly whether it was given, secondly whether it amounts to a contractual term between the plaintiff and the defendant and thirdly whether the defendant is estopped from denying that the plaintiff is entitled to 4% commission on the claimed contracts "for the life of" the contracts. 171 The plaintiff ties his estoppel case to what is described as the "original contract" (par 38 Amended Summons). This is a reference to the 25 March memo and/or the Conference conversations. I have already found that there is nothing in either the Memo or the Conference conversations that would entitle the plaintiff to 4% commission "for the life of" the named contracts. That in my view puts an end to the estoppel claim. However I will consider the plaintiff's claim in respect of the alleged July '99 assurance. 172 The defendant highlights the fact that the post July 1999 correspondence does not refer to the conversation alleged in the July '99 assurance. It was submitted that even assuming such a statement was made by Mackenzie it was immediately overtaken by events and the continual assertion made by the defendant of its position that the Plan contained in the 15 May 1999 letter operated for 1999. 173 The defendant submitted that it was most unlikely that Mackenzie would have said that the plaintiff would be covered for 4% when he was well aware of plan B3 that he had provided to McDonald after Griffiths had prepared it. It is inconsistent with what he had advised the plaintiff on 15 May 1999 in the letter countersigned by Muir. The defendant also relies upon the pay slips delivered to the plaintiff from 15 May 1999 for the balance of that year. 174 In his affidavit Mackenzie stated that he had a conversation with the plaintiff in the "middle of 1999" in which the plaintiff claimed "I am going to be rich from the Boral contract. I've got 4% on incremental sales". Mackenzie responded "John, you know that's rubbish". That statement in his affidavit is inconsistent with the alleged July '99 assurance. However, in cross examination as to whether he did say he would make sure the plaintiff was covered he said "I tend to say yes but I really can't be certain about that". His evidence was that a conversation took place but he wasn't certain of what was actually said in the conversation. He said that it "could have been said". 175 The defendant submitted that even if Mackenzie said the words "I'll make sure you are covered" the statement is so imprecise that the court would be satisfied that it did not form part of a contractual term between the plaintiff and the defendant. Alternatively if it was a term it was so vague and uncertain as to content as to be unenforceable. Was the plaintiff informed that he would be "covered" for just the Census contract or was it the Boral contract and the Census contract or was it for all contracts? Was the 4% commission to be paid on incremental sales over 1997 or incremental sales over 1998? None of these questions can be answered on the evidence in this case.

176 If the assurance was given I am satisfied that it is so imprecise that it would not have formed a contractual term between the plaintiff and the defendant. Even if that is wrong and the statement "I am sure you are covered" were to be a contractual term it could only have entitled the plaintiff to 4% commission on incremental sales sold in 1999 over sales in 1998 or 1997 and certainly not for the life of the contract as claimed by the plaintiff. There is nothing that suggests any entitlement to 4% commission for the life of the contract. 177 The plaintiff claimed that the detriment he suffered by staying on with the defendant from July 1999 was that he lost the benefit of a medical retirement. It is submitted that such a retirement at 75% of the average salary earned in the last three years would have meant the plaintiff was entitled to an amount of $69,750 per annum, which he claims was more then the amount he received from the defendant. From March to September 1998 the plaintiff was paid at the base rate of $90,000 per annum and then from September 1998 to 1 April 1999 at the base rate of $68,000 per annum. From 1 April 1999 to 22 March 2000 he was paid at the base rate of $80,000 per annum together with the $7,500 advance and the $20,000 bonus. I am satisfied there was no financial detriment suffered by the plaintiff in staying in employment with the defendant. I am also satisfied that the plaintiff did not lose any entitlement to retire on medically unfit grounds. That remained available to him so long as he could qualify for such a retirement. The continuation of his employment did not remove that entitlement. 178 On all the evidence before me I am satisfied that the plaintiff is not entitled to the declarations that he seeks. The Summons is dismissed. I will hear argument on costs on a date to be fixed if the parties are unable to agree on a costs order.

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