Peter Rochester Gow v Cronulla Sutherland Leagues Club Ltd

Peter Rochester Gow v Cronulla Sutherland Leagues Club Ltd - [2002] NSWIRComm 247 - NSWIRComm 2002 case summary — Zoe

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As to the applicant's claim for fees for the full thirty-nine month term of the alleged consultancy agreement, the respondents submitted that the applicant had failed to adduce any evidence to support his claim for damages exceeding the amount referred to in 8. above. Specifically, there was no evidence before the Court as to whether the applicant worked, wanted to work, or tried to obtain work during that period. 10. No relevant distinction was drawn by the respondents between the first and second respondents in these proceedings and accordingly the Court shall approach the determination of issues of fact, findings under s106 and questions of relief by reference to the collective entity, the Clubs. Discussion of Evidence and Findings of Fact Background to 25 April 1999 26 For decades, premiership rugby league was conducted by the New South Wales Rugby League Limited. This competition was expanded to include teams from other States and New Zealand and renamed the Australian Rugby League. In 1997 News Limited launched the rival Super League competition. 27 The Australian Rugby League and News Limited then negotiated to merge the two rival rugby league competitions to form the NRL competition which commenced in 1998. The NRL intended to reduce the number of teams from seventeen in the 1999 competition to fourteen, based on its admission criteria which primarily related to solvency, profitability (including sponsorship revenue) and crowd numbers. This consolidation was a matter of some considerable interest to the sports media. Thus, 1999 was an important year for the Clubs. 28 The applicant had been a keen supporter of the Cronulla league team since its entry to the first division rugby league competition in 1967. He was first elected to the common Board of the first and second respondents on 13 October 1992 and was subsequently elected President of that Board on 28 February 1993. In this role the applicant negotiated important deals on behalf of the Clubs including a sponsorship deal with Toyota and, by negotiation with News Limited, entry of the Clubs into the Super League competition (including a grant worth $30 million to the Clubs). The applicant then resigned as President at the Board meeting on 4 February 1999 to commence his new role as Group Chief Executive Officer pursuant to the Employment Contract of the same date. From this date, the applicant's attendance at Board meetings was by invitation. 29 In order to meet the NRL financial requirements over the coming years the Clubs had hoped to raise millions of dollars by rezoning and developing ten hectares of vacant land surrounding the Leagues Club. This project formed part of the applicant's duties under the Employment Contract. It should be noted that the applicant spent a considerable amount of time pursuing this project in its initial stages following his resignation as CEO on 27 April 1999. 30 The Employment Contract contained the following provisions: 1 . Definitions

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Gow will at all times work to further the interests and satisfy the aims of the Clubs having regard to their roles in the community, and Gow will discharge his responsibilities with the integrity and commitment expected of a person in his position. 31 The Employment Contract had been the subject of lengthy negotiations, particularly as to the right of the Clubs to terminate the contract for serious misconduct. To illustrate the significance of the clause ultimately agreed by the parties, I have extracted the corresponding clause from the applicant's initial draft (which was not agreed): 7.2 The Clubs may terminate this Agreement only if any of the following events occurs:- 7.2.1 Gow is convicted of fraud against the Clubs as CEO; 7.2.2 Gow is of unsound mind; or 7.2.3 Gow is guilty of grave and serious dereliction of his duties as determined by an arbitrator appointed under the terms of this Agreement provided that if Gow appeals against the decision of such arbitrator in accordance with the Terms of this Agreement then only if so determined by the Supreme Court. 32 The incident on 25 April 1999 is not without antecedents. In June 1998 the applicant was charged with assault following an altercation with a fan of a rival football club at a game at the Sydney Football Stadium. The applicant was discharged on a twelve-month good behaviour bond with a fine of $500. Although there was some conjecture that this influenced the Clubs in their negotiation of the termination provisions of the Employment Contract, that matter is, in my view, of no significance in the determination of this matter as it does not go to a fact in issue in the proceedings. 33 Finally, the applicant and the respondents were subject to the NRL code of conduct which applies to directors, employees, players, coaches and other officials associated with the NRL competition. The Code prohibits "any conduct that may be detrimental to, or bring into disrepute, the interests, welfare or image of NRL, a Club, the NRL Competition or the game of rugby league". A breach of the code risks fines, or, in the case of a Club, expulsion from the competition in extreme circumstances. Events of 25 April 1999 34 The uncontested facts have been given earlier in the judgment. To reiterate briefly, an incident involving the applicant took place at the crowded Chinese restaurant at the Club's premises after a football match between two rugby league teams, Cronulla and St George-Illawarra. The applicant obtained a St George jersey from a St George supporter, Mr Kelly, and proceeded to cut it up in a flamboyant manner. This provoked Mr Beath, to approach the applicant and recover the jersey. A physical altercation followed during which the applicant punched Mr Beath several times. Mr Beath was restrained by others at a point during the incident. Some time later the applicant departed, making a rude gesture. 35 The applicant tendered four affidavits in the proceedings, not one of which dealt with the events of 25 April 1999 in any detail, chronological or otherwise. 36 The applicant's first reference to the incident was in his affidavit of 2 September 1999 in the following perfunctory terms: The incident to which the president referred was an occasion where at the Club restaurant I had cut up the football jumper of an opposing club which I had purchased that evening and which I had light heartedly held up. Barry Beath, a person also in the restaurant saying in a loud voice "I'll kill the mongrel". 37 There was another passing reference to the incident in the applicant's second affidavit, filed 25 August 2000: On 25 April 1999, an incident occurred at the Clubs restaurant during which I cut up the football jumper of an opposing club that I had purchased that evening. 38 In the applicant's third affidavit (essentially an affidavit in reply) he reiterated his assertion that he had purchased the jumper from Mr Kelly, elaborating that one of the people at Mr Kelly's table had playfully held one sleeve of the jersey while he held the other. According to the applicant, Mr Kelly was not upset by the incident at the time. 39 In oral evidence in chief, over the objection of the respondents' counsel, the applicant stated: Q: You say at paragraph 8 you purchased a jumper of the opposing club. How was that transaction effected?

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At this point of time, Peter Gow had not offered me any conditions for the taking of my jersey, such as offering a price for it or when he would return it. 43 In cross-examination Mr Kelly agreed that press reports that the applicant had forcibly removed the jersey were incorrect and confirmed that the applicant had asked to "borrow" the jersey. He denied having embellished his story for journalists and disagreed with the applicant's statement that one of Mr Kelly's party had held the jersey whilst the applicant tore it. Mr Kelly was not cross-examined on the events following the jersey incident. 44 The applicant made much of the fact that Mr Kelly gave him the jersey voluntarily, both at the time and in these proceedings. A great deal of time was spent asserting different variations on the same theme: he paid $5 for it; he paid $250 for it; he paid the cost of a Chinese meal for it; by cheque; and so on. Mr Kelly gave evidence that, upon request, he had lent the jersey to the applicant: there had been no sale, but neither had the jersey been removed forcibly. 45 I do not consider it is necessary, in order to determine any relevant issue in these proceedings, to make a specific finding as to the manner in which the applicant came by the jersey on 25 April 1999 and concur with the submissions of counsel for the respondents that it is a matter of minor significance whether or not he purchased it. However, it must be said that the manner of the applicant's evidence on this topic, and its variability, impugn his credibility. I will return to the applicant's general credibility later. Whatever the exact circumstances, I am prepared to accept that the applicant obtained the jersey without force or false pretences. 46 As mentioned earlier, the evidence then established that the applicant cut the jersey in a flamboyant manner whereupon Mr Beath approached the applicant. 47 The applicant did not provide a comprehensive account of the physical altercation. In fact, his only evidence in chief on the subject was a short reference in his affidavit of reply filed 12 December 2000. In response to paragraph 18 of Mr Beath's affidavit (extracted below) the applicant elaborated the reference he made in his first affidavit to Mr Beath, this time asserting that Mr Beath ran towards him: I say that Beath ran towards me yelling the words "I'll kill the mongrel". I recall being shocked, afraid and intimidated by him.

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In his affidavit (referred to below) Mr Beath had already denied the applicant's original assertion that he said in a loud voice "I'll kill the mongrel". 48 The most detailed evidence as to the incident was given by Mr Beath in his affidavit filed 9 November 2000: 13. At about 7:00pm while waiting for our meal to be served my wife turned to me and said words to the effect: "Barry, look what Gow is doing." 14. I turned and saw a man who I knew to be Peter Gow removing a St George jersey from the chest of a young man who I now know to be named Jason Kelly. Jason Kelly was seated at a round table of 10 about 6 to 8 feet away from me. 15. After Peter Gow had lifted the jersey from Jason Kelly's body I saw Peter Gow walk towards the direction of the cash register with the jersey in his hands. The cash register was located on the entry side of the restaurant. 16. A couple of minutes later I saw Peter Gow coming through the restaurant from the direction of the cash register holding up the jersey about head height and displaying it to patrons who were seated at their tables. 17. I then noticed that the jersey had been defaced as it appeared to have been cut or ripped. I also noted that the red "V" had been removed and was missing. 18. My instant reaction was to go and retrieve the jersey from Peter Gow and hand it back to Jason Kelly. I stood up and began to follow Peter Gow who was continuing to display the jersey to the crowd. 19. By the time I reached Peter Gow, he had displayed the jersey to the crowd, waved it around and had the jersey down by his side. At this stage Peter Gow had his back to me. 20. I walked around past some round tables and down the opposite alleyway. When I reached Peter Gow he was walking past the table where I had been sitting with my wife and friends. 21. I reached down and grabbed the jersey from Peter Gow's hands. As I pulled the jersey away from Peter Gow I said words to the effect: "What the fucking hell do you think you are doing with that kid's jersey?" 22. Peter Gow turned around to face me. He said words to the effect: "I paid five dollars for it, who are you?" 23. I said words to the effect: "I'm no-one" 24. At this moment I felt someone behind me put their arm around my neck and tilt my head back whilst at the same time force my left arm up behind my back. 25. Also at the same moment someone grabbed the jersey from my right hand and pulled my right arm behind me. 26. At this moment Peter Gow punched me three times on the left side of my face, then stopped. 27. I said words to the effect: "Is that the best you can do?" 28. He then punched me another couple of times in the face. 29. I then saw a man who I knew to be John Lang, the Coach of the Cronulla football team, and another man pull Gow back away from me. 30. Then man behind me then released his grip on me. 49 Mr Beath later describes the manner in which Mr Gow left the restaurant: 40. About an hour after the incident I heard a crowd of patrons booing. I turned around and saw that the booing was directed at Peter Gow who was leaving the restaurant.

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Q. Making a rude gesture as you left was trying to leave without fuss and bother, was it - was it? A. No. 54 The altercation with Mr Beath was also described in evidence by Mr Kelly, Mr Lang, Mr Longmuir and Mr Gillard. Mr Kelly gave the following evidence by affidavit, which was not the subject of cross-examination: 9. With my jersey in his hand, Peter Gow then immediately walked towards the restaurant's cashiers desk. 10. At about this time I saw one of my friends immediately go over to Peter Gow, say something to him and return with my collarless shirt which I put back on my body. 11. Moments later I turned around and saw Peter Gow holding up my undamaged jersey to restaurant patrons. He walked for about 10 to 12 feet through the restaurant displaying the jersey. 12. I saw other diners in the restaurant near me turning to Peter Gow and observing what he was doing with the jersey. 13. I then saw Peter Gow hacking at my jersey with an instrument of some kind. I then noticed that he was causing my jersey to be ripped and torn. I felt shocked and in disbelief. 14. Before I had a chance to react I saw a man who I now know to be Barry Beath, a St George and Australian representative player, approach Peter Gow. 15. As Barry Beath attempted to take my jersey from Peter Gow I saw Peter Gow repeatedly punch Barry Beath in the face. 16. I also noticed that at no stage during the scuffle did Barry Beath attempt to retaliate or punch Peter Gow. 17. I then saw at least two adult males approach and attempt to take Peter Gow from the scene. A scuffle took place on the other side of the restaurant from where I was sitting, about three tables over. 55 Mr John Lang, the football coach of the Cronulla team, gave the following affidavit evidence: 4. I was sitting at a table at the back of the restaurant on the terrace when I heard loud voices in the middle of the restaurant. 5. I looked up and saw Peter Gow on his feet in the middle of the restaurant. It was obvious to me that he was involved in a heated discussion. I got out of my chair and walked to the direction of the noise. I walked within a metre of Barry Beath and Peter Gow who were exchanging heated words. 6. I saw Peter Gow and Barry Beath engage in a scuffle in which punches were thrown. 7. I immediately put my hands in the air and motioned to Peter Gow and Barry Beath to move apart. I saw five or six other men use their bodies to separate Barry Beath and Peter Gow. 56 In cross-examination by Mr Murphy, Mr Lang stated that he spoke to Mr Kelly after the incident with Mr Beath. Although he advised that his memory was not particularly clear, he gave evidence that Mr Kelly and his friends were "concerned" and that they had their meal paid for by the club in order to "placate" them after the incident. Apart from this conversation, Mr Lang's oral evidence did not add to his affidavit. 57 Mr Scott Longmuir, the Marketing Manager of the Club, was also present at the time of the events in the restaurant. He gave the following affidavit evidence of the incident: 14. My table was in the raised area furthest away from the entrance, overlooking the football field. Someone at the table said to me words to the effect: "Have a look at that"

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And: Q. What I am asking you is, did you say to Mr Beath on the night that you paid $5 for the jersey? A. It wasn't a stand-up conversation. Mr Beath came over behind me. I got a shock. He grabbed the jersey and tried to take it away from me and there was a bit of a ducking match and he was saying, "Give the kid back the jersey" and it became physical and there was stumbling over chairs. He actually said - I said, "I own it. I own the jersey". That's what happened. 63 The clear import of these passages is that Mr Beath approached the applicant from behind and the applicant, upon turning around, was shocked or surprised to see him. This concurs with the evidence of Messrs Beath and Longmuir. The shock described by the applicant upon turning around and seeing Mr Beath does not concur with the applicant's assertion that he was frightened by Mr Beath's approach, "at a million miles an hour", "yelling "I'll kill the mongrel"". If Mr Beath had made such an approach, and the applicant had been aware of it and was frightened, he is most unlikely to have (a) had his back to Mr Beath at the time Mr Beath reached him or (b) been shocked that Mr Beath confronted him. I do not accept the applicant's evidence, unsupported by any other evidence, contradicted by other aspects of his own evidence and denied by Mr Beath, that Mr Beath "ran towards" him yelling "I'll kill the mongrel". 64 The applicant corroborated the evidence of Mr Beath and Mr Longmuir that Mr Beath grabbed the jersey from the applicant and I accept that it was this action on the part of Mr Beath which caused the applicant to turn around and become aware of Mr Beath. 65 It is clear from the evidence of Mr Lang, Mr Beath and the applicant himself that there was a conversation (albeit heated) before the incident escalated to the point of becoming physical. The applicant conceded that he found it insulting that Mr Beath had demanded that the applicant return the jersey, which on his evidence he had purchased, and that he "probably" refused to comply with Mr Beath's request. I have already extracted the passages of cross-examination where the applicant conceded each aspect of the basic conversation described in Mr Beath's affidavit. I will not reprint them here. 66 It follows from the foregoing analysis of the evidence that the applicant had a very limited opportunity (if any) before punching Mr Beath to perceive a threat and become fearful. The first thing the applicant knew of Mr Beath was a tug on the jersey from behind. Mr Beath then demanded that the jersey be returned to Mr Kelly. The applicant immediately joined in debate with Mr Beath and refused to return the jersey. Again, these transactions are not consistent with a conclusion that the applicant's subsequent striking was driven by fear or the need to defend himself. Indeed, the applicant stated that the emotion that he perceived before striking Mr Beath was indignation: an emotion more consistent with aggression than with self-defence. 67 The only two witnesses to give evidence of the fact that Mr Beath was restrained were the applicant and Mr Beath. The applicant conceded that Mr Beath was a large and powerful man who probably could have "destroyed" the applicant had he chosen to. Mr Beath deposed that he was restrained at the moment his conversation with the applicant ended, immediately before being struck by the applicant. An arm was put around his neck and his head was tilted back. Both of his arms were locked behind his back. The applicant conceded several times that Mr Beath was restrained while the applicant punched him: Q. You now accept some third party has held at least one of his arms behind his back? A. I know that now.

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And: Q. You accept that you landed a number or punches on Mr Beath? A. I wasn't aware he was being held. Q. You now know he was being held when you did that? A. Yes. 68 I am satisfied that the applicant punched Mr Beath repeatedly in the face (at least five times) while he was restrained. It is clear from the extracts of cross-examination above that the applicant denied being aware of that fact. No concession was made by the applicant on this point. However, I have great difficulty accepting that it would not have been plainly obvious to the applicant (who was aiming punches to Mr Beath's face, directly above the restraining arm around Mr Beath's neck) that Mr Beath, clearly a very large, strong individual, was restrained in the manner described. 69 I come to examine Mr Beath's uncontested evidence that there was a pause in the assault: the applicant punched Mr Beath several times, stopped, received a taunt from Mr Beath ("Is that the best you can do?") and then continued to punch him repeatedly. When cross-examined on this aspect of Mr Beath's evidence, the applicant did not traverse the evidence but simply replied "it all happened very quickly". I am satisfied that at least the last series of blows by the applicant were made after this taunt, when Mr Beath was restrained, and when the applicant was well aware of those circumstances. 70 One final matter remains to be considered in relation to the applicant's assertion that his actions were driven by fear or the need to defend himself. That is whether Mr Beath punched or attempted to punch the applicant. Although Mr Beath does not directly state in his affidavit that he did not throw a punch at the applicant, it is clearly implied. Mr Beath described having both arms pinioned at the moment his conversation with the applicant ended, and stated that at the same moment the applicant punched him. He simply did not have the opportunity. Further, the applicant has never asserted either in evidence or submissions that Mr Beath punched him, although there was an off-handed reference in cross-examination to "a bit of a ducking match". In fact, the applicant was cross-examined extensively on this point, finally stating that "he was not aware whether [Mr Beath] did or didn't [throw a punch at him]". 71 It is plain that the applicant punched Mr Beath. This occurred, as I have discussed, in two bouts. Mr Gillard was the only witness to suggest that Mr Beath attempted to punch the applicant, and this evidence formed the basis of the applicant's submission that although Mr Beath did not hit the applicant, he threw a punch at the applicant. Mr Kelly stated that Mr Beath did not attempt to punch the Applicant and Mr Beath's unchallenged evidence was that he was immediately restrained at the point of a verbal exchange and being hit. The applicant's own evidence seemed to suggest, contrary to his submission, that Mr Beath did not attempt to punch him because Mr Beath was restrained. That Mr Beath did not attempt to punch the applicant may also be inferred from the following quotation from Mr Longmuir's affidavit: I watched as Barry Beath approached Peter Gow from behind and grab the jersey from him. I saw Peter Gow immediately begin to punch Barry Beath in the face. 72 Mr Lang's evidence that "punches were thrown" does not affect the preponderance of evidence that Mr Beath did not punch the applicant. 73 In cross-examination, Mr Gillard gave evidence of what he described as "a struggle" and "a bit of a tug of war" over the jersey before punches "were exchanged". According to his affidavit, Mr Gillard was seated at a table in the far corner of the restaurant, and he estimated that there were approximately four hundred people in the restaurant that night. Under cross-examination he stated that he was approximately 25 metres from the applicant, but asserted that he had a good view. He maintained his assertion that he saw both protagonists throwing punches, although he conceded that they were moving away from him at the time. 74 There was a conflict of evidence as to whether Mr Beath attempted to punch the applicant. In view of the clear evidence of Mr Beath himself, Mr Kelly, Mr Longmuir and the evidence of the applicant on this issue (despite his potential self-interest in corroborating the evidence of Mr Gillard) I find, on the balance of probabilities, that Mr Beath did not punch (or attempt to punch) the applicant (because of an act of his own volition or the restraint placed upon him) notwithstanding the conflict with Mr Gillard's evidence. I do not believe that this difference in evidence necessarily raises issues as to Mr Gillard's credibility, but rather infer that across a crowded restaurant, from some distance, in the context of two men moving away from him, both struggling for the jersey, Mr Gillard was mistaken as to whether, with others wrestling with Mr Beath, the scuffle involved both the applicant and Mr Beath throwing punches. 75 Before further assessing the incident, I am compelled to assess the applicant's credibility as a witness. I have already made some brief observations on the subject. The applicant's manner in the witness box was evasive, argumentative and often unresponsive. He adjusted his position on several occasions and his evidence indicated an arrogance in relation to the seriousness of circumstances giving rise to his removal as the CEO of the respondents. 76 Although the applicant accepted that his actions would be "coloured by the fact of the office" he held with Cronulla and that at the time of the events he was a "walking, talking face of the Club" he refused to accept that his conduct was unacceptable behaviour for the CEO. Despite headline coverage for some days across all sections of the media in lurid terms such as "Leagues Boss Disgraced", the applicant steadfastly denied that his actions could have brought disrepute to the Clubs or to the game of rugby league. This attitude is plainly unsustainable as a general proposition, having regard to the entirety of his conduct on the evening, particularly if, as I will later find, his actions in striking Mr Beath were not acts of self-defence. This example reinforces my view of the applicant's credibility.

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77 Thus, I do not consider the applicant to be a witness of credit. I do not consider that his evidence as to the altercation with Mr Beath on the event of 25 April is reliable. I would not be inclined to make findings in his favour on the balance of his evidence as to the Meeting and the aftermath of that meeting except where (as I will find in due course) that evidence is corroborated by reliable witnesses, objective facts and circumstances or the evidence of witnesses which, when taken together, is acceptable. 78 I have reviewed in detail the evidence relating to each facet of the altercation with particular focus on the applicant's actions. These are not, in my view, the actions of a man acting in self-defence or substantially through fear or intimidation. Punching an opponent may, in some circumstances, be consistent with explanations of self-defence, fear or panic, but not in circumstances such as these, where the applicant (a) was surprised by Mr Beath from behind, demanding that he return the jersey; (b) had the opportunity in conversation to placate or pacify Mr Beath and chose not to, instead electing to escalate matters; (c) was the only party punching; (d) punched Mr Beath after a taunt; (e) punched Mr Beath when he was restrained; and (f) when he was known to be restrained. Further, the applicant admitted that at the time of the conversation, the emotion he actually experienced was indignation: he was insulted. 79 Having considered the evidence and noting my earlier credit findings, it is my view that the applicant had the option of returning the jersey to Mr Kelly or attempting to placate Mr Beath. Instead, he chose to assault the powerful ex-footballer. I do not accept that the applicant's actions were those of a man acting in self-defence. Whilst the applicant may well have felt fear or intimidation at some level, for some little time, I do not accept that either fear or intimidation was the motive or driving force behind the applicant's actions. Even if, contrary to my earlier conclusion, Mr Beath did throw a punch unsuccessfully at the outset (and, assuming in favour of the applicant that this did create a sense of fear or the need to defend himself) I do not consider that such a sense of fear or intimidation was present for the full course of the assault. The evidence that the applicant punched Mr Beath after a pause (during which Mr Beath taunted him) and when Mr Beath was restrained and known to be restrained, demonstrates that any element of fear or panic which may have been present initially had clearly evaporated by the second stage of the assault, following the pause. I do not consider that the Applicant's conduct during the second stage was a reasonable response, even in the circumstances as he alleged he perceived them, in a climate of fear or panic. In fact, I do not consider that notions of self-defence, fear, or intimidation sufficiently explain or justify (in an employment sense) the conduct of the applicant in striking Mr Beath or engaging in a public display of fisticuffs at his place of employment as the CEO of the Clubs. Evening of 25 April 1999 80 Mr Gillard, the only Board member present at the Club on the night of 25 April 1999, telephoned the third respondent to advise him of the incident. Mr Gillard also advised that the applicant had requested a meeting at his house the following morning. The applicant wanted to give a joint press conference from his house the next day. Instead, without speaking to the applicant, the third respondent called each Board member to convene a meeting at the Club at 10am the next day. Events of 26 April 1999 81 In the Board meeting at 10am: · The Board noted the keen media interest in the story; · The third respondent appointed himself as sole spokesman to the media; · The third respondent volunteered to interview Mr Beath and Mr Kelly; and · The Board agreed to consider the matter further at the Board meeting scheduled for the following evening, following enquiries to be conducted by the third respondent. 82 During cross-examination the third respondent stated that the meeting lasted all day. The third respondent telephoned the applicant from the meeting at approximately 5pm to suspend him from duties pending investigation of the incident and to invite him to address the Board meeting on 27 April 1999 with a representative. The applicant conceded that he was contacted by the third respondent and invited to address the Board meeting the following day, but denied that he was suspended from duty. There was no evidence as to whether the Board (or indeed the third respondent) was actually empowered to suspend the applicant. No such power appears on the face of the Employment Contract. 83 According to Mr Douglas, chartered accountant, the applicant said in a telephone conversation that morning: I had a bit of trouble in the Chinese restaurant. They are out to get me. I want the Club to deal with the issue today. I would like to call a press conference today so that it becomes fish and chip paper. I don't want it dragging on. If the Club responds publicly on the matter, decisiveness will carry the day. It will all blow over. This was not challenged by the applicant. 84 The applicant consistently maintained that the third respondent directed him not to talk to the media pending the Meeting. This was not denied by the third respondent, and is consistent with his self-appointment as sole media spokesman. 85 The Clubs' solicitor, Mr Gorry, gave evidence that on 26 April 1999 he advised the third respondent by telephone that if the allegations reported in the Daily Telegraph were substantially correct it was likely that the applicant's actions constituted serious misconduct entitling the Clubs to terminate the Employment Contract immediately. I would observe that the Daily Telegraph report was contentious in these proceedings as to its description of the manner in which the applicant obtained the jersey. 86 Independently, according to his evidence under cross-examination, the applicant had obtained legal advice to the effect that he could not be dismissed at the Meeting for serious misconduct: the Clubs would not be able to dismiss him for "a couple of weeks". 87 Throughout the day the third respondent and the Clubs' media officer, Mr Lane, fielded press queries from and gave interviews to the print, radio and television media including the Daily Telegraph, the Sydney Morning Herald, The Sun-Herald, 2BL, 2KY, 2GB, Channel 10, Channel 9 and Channel 2. Mr Kelly was interviewed at home by the press, including Channel 7, the Daily Telegraph, the Sydney Morning Herald, 2MMM and I98FM. 88 In the afternoon Mr Annesley, the operations manager, NRL, contacted the third respondent to advise that he would interview the applicant (which he then proceeded to do) and that the Club may be fined. Preliminary Events of 27 April 1999 89 The media inquiries continued. The third respondent interviewed Mr Kelly in person and Mr Beath by telephone. He also interviewed the three witnesses who later attended the Meeting: Mr John Lang, Mr Steve Rogers, and Mr Scott Longmuir. 90 Sponsors contacted the Club to express concern: according to Mr Longmuir, Thrakral wanted its name removed from the corporate box and Toyota considered that the applicant should resign. According to a memorandum from the Operations Manager to the third respondent, the games company Aristocrat considered reviewing its relationship and agreement with the Club, depending upon the outcome of the scheduled Meeting. The nature of that relationship was not elaborated in evidence. 91 Before the Meeting, both Mr Gillard and Mr Douglas advised the applicant to resign in separate telephone conversations. Mr Gillard suggested a consultancy relating to the land development project and Mr Douglas advised that the applicant "would not survive this". 92 According to the applicant's evidence, following advice from Mr Terry Preece and Mr Harvey, he attended the Meeting with the firm intention not to resign. Immediately before entering the Meeting he wrote out and copied notes which formed the basis of his address to the Board. The Meeting 93 The evidence concerning the Meeting was voluminous, contradictory and at times confused. This is not surprising, given the emotional state of the participants and the pressure of scrutiny by the media, Club members and the NRL. At the risk of giving an undue appearance of order to what was, by all accounts, an unusual and disjointed meeting, I will deal with this evidence in distinct sub-topics. 94 Broadly speaking, the Meeting took the following course: preliminaries and housekeeping; listening to witness accounts and reviewing other material; the applicant's address to the Board; discussions about the incident and appropriate action; discussions about the applicant's proposed consultancy; drafting press releases; and finally, statements to the media. I shall discuss each stage of the Meeting below. It should be noted that Mr Gorry left the Meeting in the later stages while the Board discussed details of the applicant's consultancy. I will deal with the timing and length of this absence later. 95 The Board comprised nine directors, and the Court had the benefit of evidence from all but one, Mr McLean. Mr Gorry also gave evidence. In addition to affidavit and oral testimony, the following documents were admitted into evidence: · The formal minutes which are incomplete if not spartan; · A four-page handwritten, photocopied discourse on the incident and aftermath created by the applicant before the Meeting ("the applicant's Notes"); · A photocopy of handwritten notes taken by one of the directors, Mr Quinn, of the descriptions of the incident made by Mr Longmuir, Mr Lang, Mr Rogers and the applicant; · A photocopy of handwritten notes taken by the Clubs' solicitor, Mr Gorry, during the first part of the Meeting; and · A one-page handwritten, photocopied short-hand list of terms created by the applicant ("the Terms Sheet"). There are several different versions of this document, one sporting a single word in blue ink. The original was not produced in Court and the existence of different versions was not explained. Stage One: Preliminaries and Witnesses 96 Before the Meeting, the third respondent had directed the club secretary to compile a folder for each director of complaints received by the Clubs, including letters, faxes, emails and printouts of comments posted on the Clubs' website. The authors of many of the complaints were not present during the incident. The folder (which ran to 60 pages) also contained a bullet point summary of the import of telephone complaints received at the Clubs' reception. Three individuals expressed support for the applicant in these communications. Messrs Gorry, Pierce, Quinn, Clarkson and Peak read this folder before the Meeting. The other directors did not give evidence on this point, although they were provided with a copy. 97 With each of the eight directors (the absent applicant being the ninth) and Mr Gorry present, the third respondent opened the Meeting and the directors resolved that it would be a meeting of the Board of both Clubs. 98 The third respondent gave evidence that he then: · distributed the complaints folder; · showed the meeting a petition signed by 36 club staff containing the following preamble: "We the undersigned support Barry Pierce in any decision made with respect to Peter Gow"; · received a telephone call from Mr Whittaker, Chief Executive, NRL who advised "the whole of the western world is watching your Board's decision tonight. As soon as the Board makes its decision I would like to know"; · The third respondent replied "I will let you know before I go to the media" and relayed this conversation to the Meeting; · Circulated an interim NRL Incident Report based on a personal interview with Mr Beath; · Circulated two memoranda from the Club's Operations Manager. The first concerned a telephone call from a police duty officer on 26 April 1999 to the effect that if the Board did not nominate a liquor licensee shortly, Miranda Police would seriously consider closing the Club's bars; · The second recorded a telephone conversation with someone from Aristocrat Leisure Industries to advise that, given the publicity surrounding the incident, Aristocrat may have to review their relationship with the Club pending the outcome of the Board meeting. 99 The third respondent did not circulate a letter from solicitors dated 20 April 1999 enclosing a notice from Sergeant Devenish advising that, although the police had objected to the applicant's application for a liquor licence, this would not affect his status as licensee pending a determination by the Licensing Court. The matter was listed in that Court for mention on 10 May 1999. In fact, the third respondent's machinations go further than neglecting to circulate this letter. Under cross-examination, Mr Quinn gave evidence that the third respondent had stated that the Licensing Approval's Board had in fact rejected the applicant's application: Q. Anything else? A. The refusal of the LAB to allow Mr Gow a liquor licence when we appoint him in February.

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Q. The information given was as I have just said. He was not able to hold a liquor licence at the club. You were told that by the-- A. Yes. 100 The third respondent had received the solicitor's letter under cover of a memorandum dated 27 April 1999 from Ms Mott, Secretary of the Leagues Club, noting the following points: · She had spoken with the author of the letter to clarify the points below; · While suspended from duty, the applicant would still hold the liquor licence; · However, the applicant's responsibilities (such as building problems, internal problems, cheque signatories, football marketing) should be delegated and this delegation should be clearly minuted; · If the applicant were to be dismissed the Board would have to pass a resolution to nominate a new licensee, and would have seven days to submit the paperwork to the Liquor Administration Board . 101 The third respondent's censorship of the solicitor's letter, together with his circulation of the memorandum concerning Miranda Police, clearly evinces an intention to mislead the Board. It also provides a useful introduction to my assessment of the third respondent's evidence in general. 102 I do not consider the third respondent to be a witness of credit. In the absence of corroboration or objective evidence, I am disinclined to accept the third respondent's evidence where it conflicts with other evidence, particularly in relation to his account of the Meeting unless substantiated by some other means. In this respect, I adopt the same approach to his evidence as that of the applicant where conflicts of evidence arise. His position was plainly partisan and his evidence was given with the aim of advocating a particular case. This aim was pursued with such determination that plain inconsistencies were never rectified, and concessions were not made even when the most obtuse observer could see that they were required. I will refer to some such instances during this judgment in the context of particular further findings, but I have extracted a passage of cross-examination concerning the solicitor's letter referred to above as an illustration of this conclusion: Q. Would you look at paragraph 91. You record a conversation you had there with Ms Mott, do you see that? A. Yes.

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John Lang then approached and calmed the situation down. Barry Beath seemed to calm down immediately. From that situation, Peter went and sat down on John Lang's table. He was there for some time with a group which included Harry Eden. 107 At this point, the applicant was invited to tell the Board what had happened. He gave copies of his notes to the Board and then expounded. I have taken the following relevant points from the notes and from those parts of the contemporaneous notes of Messrs Quinn and Gorry which corroborate each other: · He was disappointed that he had not had the opportunity to state his side of the story until now; · His doctor said it was in his best interest to have a break for two weeks; · He did not steal, take, or forcibly remove the jumper; · He had a conversation with Kelly, proposing dinner for everyone at the table in exchange for the jersey; · Kelly took the jumper off; · He had purchased the jumper; · It was a joke that went horribly wrong; · Beath came from somewhere and then the blue started; · The fight was in self defence - Beath a big guy, came at him 100 miles an hour; · He gave a rude finger gesture in response to being booed; · He had considered resignation, but he was not guilty, not a quitter. 108 Cross-examination of the applicant relating to his address to the Board centred on his acquisition of the jersey (and varying explanations), whether he raised the issue of self-defence and issues relating to procedural fairness. Although the applicant conceded in cross-examination that he had not told the Board he had been acting in self-defence, I accept Mr Gorry's notes on this point, which are supported by the cross-examination of Messrs Quinn, Peak and Shrubsole. 109 At this point, according to Mr Gorry's notes, the third respondent asked if he would consider another role. Mr Gorry's notes then record that he was asked by Mr Gillard to stop writing. The applicant gave evidence that the third respondent proposed a consultancy working from home. The third respondent gave evidence that a Board member had proposed a consultancy at this stage, but he did not. I accept that a member of the Board, probably the third respondent, proposed that the applicant consider a consultancy at about this juncture of the Meeting. 110 It is informative to consider the background to the consultancy proposal given by Mr Gillard in cross-examination, which was not disputed or contradicted, and which I accept. According to Mr Gillard, a consultancy was being discussed because it was the fall-back position to the applicant's status as CEO, should there be any difficulties in relation to the liquor licence. Mr Shrubsole also referred in cross-examination to the nexus between the liquor licence and the applicant's employment status. According to Mr Shrubsole, the Board did not want the applicant to hold the liquor licence, which necessitated a consultancy rather than an employment relationship because the most senior employee of the first respondent has to hold the liquor licence. On the Board's concern about the liquor licence, I note the following two points:

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Advising the Leagues Club General Manager on operational marketing of the Leagues Club. 114 It is arguable that this provision for a Strategic Manager (in identical terms to the relinquished role of CEO) does not change the relationship from one of employment to a consultancy. However, it does indicate the parties' intention to preserve the working relationship in the event that the applicant failed to obtain the certificate of registration of the Leagues Club. Stage Two: Board discussions 115 There were discrepancies between the witnesses concerning the next critical stage of the Meeting. Accounts vary as to who left the room when and for what length of time, telephone conversations conducted outside the room, what was discussed and between whom, whether the Meeting changed from a formal Board meeting to an informal one and, if so, at what time. It is not necessary to resolve these discrepancies any more than I have in the balance of this judgment. The real issue arising from the Board discussions was whether it was agreed that the applicant would resign in return for a consultancy. 116 Some things, however, are comparatively clear and it is constructive to focus on these points at the outset. The Board was under pressure to make a decision that night. Although denied by Mr Shrubsole, every other director gave evidence to this effect. The full Board did discuss the applicant's future at the Clubs and this discussion centred on a consultancy role based on special projects, as distinct from operational matters. It was common ground that there was no motion to dismiss the applicant. Mr Peak asserted in cross-examination that the third respondent called for an informal vote and each director agreed that they had sufficient grounds to dismiss the applicant. No other witness referred to this informal vote (not even the third respondent) and Mr Shrubsole directly contradicted Mr Peak by stating under cross-examination: It would not have been fair, for goodness sake, two days after the event to dismiss somebody when we didn't have all the information available to us. 117 On the balance of the evidence, I do not accept Mr Peak's assertion. 118 It is useful to review the witnesses' perceptions of the immediate issue to be resolved. A good starting point is the evidence of Mr Gillard, called by the respondents, not only because I found him generally to be a credible witness, but also because several witnesses referred to a comment made by him which appeared to have been a turning point in the Board discussions. 119 Mr Gillard gave evidence that he had decided, before the Meeting, that the applicant had two alternatives: to resign and accept a consultancy or face dismissal. In fact, he counselled the applicant accordingly by telephone just hours before the Meeting. Mr Gillard maintained this view during the Board discussions which followed the applicant's address. When it appeared to Mr Gillard that general discussions were not making any progress, he started the following exchange (extracted from his affidavit), the content of which was not denied by the applicant: Gillard: "This is going around in circles, Peter. When push comes to shove you have done everything wrong. If you had been a Club member you would have been barred for life. There is no alternative here other than to resign and take up some form of consultancy because otherwise you will be dismissed."

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All of the directors said words to the following effect: "Yes". 120 According to Mr Gillard, Mr Shrubsole then proposed the general scope of duties, with which the applicant agreed. Mr Gillard stated under cross-examination that he understood that the applicant was being offered a consultancy in exchange for his resignation and, in his view, this was a good idea. Although they did not refer to the exchange quoted above, Messrs Sorenson and Shrubsole gave convincing evidence that the applicant agreed to resign on condition that the Clubs entered into a consultancy with him. Needless to say, this has always been the applicant's case. 121 Messrs Pierce, Gorry and Quinn also gave evidence of Mr Gillard's statement, but with a pointed difference. On their version Mr Gillard said "If you don't resign, the Board will have to make the decision for you", or words to that effect, without linking the proposed consultancy to resignation. I am persuaded by Mr Gillard's description of his proposal, supported as it was by two other directors, particularly as it was one that he made convincingly more than once. I also note that: · The third respondent conceded under cross-examination that the applicant was offered a consultancy in exchange for resigning; · Mr Gorry gave affidavit evidence that before the applicant had resigned, the Board generally agreed to the proposal that the applicant remain as a consultant to deal with major developments; · Mr Quinn gave affidavit evidence that there was a general discussion about retaining the applicant as a consultant, and that Mr Shrubsole reassured the applicant that "the consultancy role will be there …."; and · In submissions, the respondents conceded that they agreed at the Meeting to negotiate the consultancy (albeit not then and there). 122 Under cross-examination, Mr Peak conceded that there was a general acceptance by the Board of the proposition that if the applicant resigned, he would be made a consultant. Mr Clarkson echoed the third respondent and Mr Gorry by giving evidence of the truncated version of Mr Gillard's statement, and contended that it was not until after the applicant had resigned that there was any discussion about a future role for the applicant. I have already recorded my general conclusion that the third respondent was not a witness of credit, and foreshadow a similar finding in relation to Mr Gorry. At this point I will say that based on his performance in the witness box, I found Mr Clarkson a partisan and unbelievable witness and I do not propose to deal with his evidence in detail. 123 On the balance of probabilities, I consider that the following transpired at the Meeting:

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Given the applicant's determination both before the Meeting and during its initial stages not to resign, I accept on the balance of probability that the applicant relied upon this agreement in resigning. Stage Three - Discussion of Terms 124 From this point, the issues become more contentious and centre around the Terms Sheet. The actual discussion of the terms (and whether any were agreed) is in dispute, as is the context of that discussion - how informal it was, how long it took and whether it took place before, during or after the press releases. I intend to review the evidence relating to the actual discussion before reviewing the context, which may well be irrelevant. It was accepted by both parties that Mr Gorry was not present for this stage of the Meeting, although there is a dispute concerning the length of his absence. 125 According to the applicant, once the general proposal of a consultancy had been agreed, he asked Mr Gorry to leave the room and wrote out the key terms he would require. He then ran through each item orally, obtained the consent of each director to each item, ticked it and moved on to the next item, creating a document which (as tendered annexed to various affidavits) looked like this (including the underlining): · Term same · Money same · Car same v (if any car at all are available I get first priority) · Mobile phone same · Genuine expenses same · All financial issues same $ · Dismissal clause ? same · Job parameter special projects · Press statements to be approved and mutually constructed · 2 x boxes / to remain (top deck Peter Burns) 126 Again, according to the applicant, he then left the boardroom, photocopied the Terms Sheet, gave a copy to each director and asked each of them whether he agreed, confirming the agreement with a handshake. Each director complied and shook hands, saying "I agree" or "I commit". Mr Gorry then re-entered the boardroom and the applicant proceeded to Mr Lane's office to draft his resignation press statement. 127 The provenance of the various forms of the Terms Sheet was somewhat unclear. The variety centred around the handwriting of the word "same" next to the "dismissal clause" bullet point - in total, there were four different versions of this word. One version, annexed to the affidavits of Mr Gillard and Mr Clarkson, included notes at the bottom in different handwriting concerning the applicant's press release and the initials "PG" at the top. Another version, annexed to the affidavit of Mr Peak, had the word "same" written in blue. The original document has not been produced in Court. None of the witnesses offered an explanation for these variations, or claimed authorship of the additional notes. The applicant suggested that, given the blue ink, Mr Peak's copy was the one he had been working from. However, this does not explain the fact that one word only was in blue. 128 Before assessing the ambiguities of the document itself, there are several points to observe about the applicant's evidence on this stage of the Meeting. Firstly, despite filing and serving four affidavits, including one lengthy one, the applicant did not give a detailed chronological description of these events until the first day of the hearing when he tendered a seven page table describing the course of the Meeting. This document was prepared by the applicant almost two years after the event, with the benefit of the respondents' affidavit evidence and should be viewed cautiously, having regard to the applicant's other evidence in this context. It could be described as a compilation of parts of the evidence which suit the applicant's case. 129 Secondly, the existence of different versions of the Terms Sheet contradicted his description of photocopying one completed document and distributing it. Thirdly, the applicant was cross-examined to the effect that a conversation deposed to in his first affidavit (and apparently contradicted in his second affidavit) suggested that the media were advised of his resignation before consultancy terms had been agreed. These are the relevant paragraphs from the affidavit: 7. The following conversation occurred at the meeting at which I was persuaded to resign: Me: There has not been proper and due process. I will resign only if a consultancy agreement is settled. Barry Pierce: Hurry up, hurry up, the media are waiting. Me: No, I want to get a joint statement right first and the consultancy settled properly. Barry Pierce: The Board are happy with this statement. Are we going to do this or not?

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Barry Pierce then walked out but did not make a joint statement, instead making his own written statement to the media. 130 The applicant's second affidavit described his second response as "No, I want to get this joint statement right now that the consultancy is fully and properly settled". Under cross-examination the applicant denied that his evidence had been corrected, and asserted that paragraph 7 of the first affidavit referred to two separate conversations. 131 This discrepancy between the applicant's two affidavits as to whether the consultancy was "settled", suggestive of tailoring evidence to suit his case, does not reflect well on the applicant's credit. However, it does not affect the conclusions I reach in relation to what was agreed at the Meeting because I do not find that the parties agreed a "fully and properly settled" consultancy. In fact, important terms were unresolved. I do not consider that a contract for services or employment was then entered into by the parties. I shall discuss this matter later in the judgment. 132 Counsel for the respondents submitted that on the applicant's case, the Clubs immediately breached one of his key agreed terms by issuing a unilateral press release. Under cross-examination, the applicant declared that although he was disappointed, he did not believe it was worth making an issue about it. I do not believe that the separate press releases are significant, given that the Terms Sheet, in fact, referred to approval and mutual construction, rather than to a joint press release. 133 The applicant was cross-examined about the different versions of the Terms Sheet, and the fact that the differences related to the word "same" after "dismissal clause", suggesting that it had not, in fact, been agreed. Although denying this implication, the applicant did concede that the word "same" was added to Mr Peak's copy after it had been photocopied. The applicant believed that this was because the Meeting had not resolved how the dismissal clause would work with the consultancy. 134 I think the only reasonable inference that can be drawn from the different versions of the Terms Sheet is one suggested by Counsel for the respondents - there must have been more than one photocopying session. The evidence is unanimous that a copy was given (or made available) to each Board member and I am satisfied that at that time each copy contained the word "same" (albeit in different handwriting) next to the "dismissal clause" bullet point. No-one suggested that it was added after the Meeting. 135 Although their evidence was not as detailed as the evidence of other witnesses, both Mr Sorenson and Mr Shrubsole gave evidence which supported the applicant's version of events. Mr Sorenson was impressive in his insistence under cross-examination that (a) upon receiving the Terms Sheet, the applicant asked him whether he agreed, he assented, and they shook hands and (b) each member of the Board agreed in the same manner. Mr Sorenson did not remember running through each individual item, nor was he certain about whether the ticks and the word "same" next to the dismissal clause were there when he shook the applicant's hand. 136 Mr Shrubsole was also an impressive witness. According to his evidence, towards the end of the Meeting the applicant asked each director to shake hands individually in acknowledgement that they had agreed with the terms of his consultancy specified in the Terms Sheet. Each director shook hands and answered "yes" whereupon the applicant resigned. Under cross-examination Mr Shrubsole conceded that the dismissal clause had not been agreed. He believed this was because of uncertainty as to whether the dismissal clause in the Employment Contract would be effective in a consultancy agreement without implying an employment relationship, which the Board wanted to avoid. 137 In his affidavit evidence, Mr Gillard stated that the applicant read the Terms Sheet to the Board, there was some discussion concerning the dismissal clause (particularly the circumstances in which the Board could dismiss a consultant), and someone said "now is not the time to be talking about terms." According to Mr Gillard, Mr Shrubsole directed the applicant to "go away and draw up a draft" to be looked at later. This was denied by Mr Shrubsole, who asserted that at the end of the Meeting the Board intended its solicitors to create the first draft. 138 Mr Gillard's affidavit then contained paragraph 46 in the following form: "Peter Gow left the boardroom. He returned with copies of the piece of paper. He handed me a copy of the piece of paper, a copy of which is annexed and marked "A". When he approached me to hand me the piece of paper he said words to the effect:

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I shook hands with him and said words to the effect: "Yes, it's a deal". In saying this I meant that I was prepared to negotiate the terms of the proposed consultancy with Peter Gow. In my mind, Peter Gow would come back to the Board with a draft contract based on what was contained in the piece of paper in respect of which the Board would then have the opportunity to consider and seek legal advice." 139 It is plain that the narration of the exchange in the Meeting (up to "Yes, it's a deal") accords with the evidence of other witnesses. The balance of the paragraph appears in the form of the deponent's state of mind. 140 The state of mind evidence comprised two parts, the second of which is uncontroversial. There was a general expectation that a draft contract would be produced and settled with the benefit of legal expertise. It is the first part which raises some ambiguity and a degree of inconsistency. The reference to being prepared to negotiate "the terms of a consultancy" does not sit well with the last words spoken (i.e. that the consultancy was a deal) or with Mr Gillard's oral evidence. 141 In cross-examination Mr Gillard recalled that the applicant had asked each member of the Board individually whether they agreed to each of the items he had written on the Terms Sheet. Each Board member agreed to each item except for the car, which could not mirror the Employment Contract because the applicant would no longer be an employee. The Clubs did not have the right to allow non-employees to drive sponsors' cars. Mr Gillard could not recall whether each Board member agreed to the dismissal clause being the same but conceded that he personally had agreed to this point. 142 The following section of cross-examination of Mr Gillard is important: Q. I will be coming to those matters in due course. So then he left the room and came back with a copy for each Board member. Do you recall that? A. Yes. Q. And he went around, physically walked around to each Board member and handed them a copy? A. Correct.

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Mr Gillard's oral evidence of the Meeting is corroborated by the evidence of witnesses I otherwise believe, namely Messrs Sorenson and Shrubsole. 144 According to Mr Quinn's affidavit, the applicant read the Term Sheet to a silent Board, left, returned with copies, and handed them out. As Mr Quinn took his copy, the applicant shook his hand and said "thanks, mate". Under cross-examination Mr Quinn conceded that the applicant went through each item on the Terms Sheet, looked at each Board member individually and said "do you agree?" and then made some ticks. Mr Quinn read the document, knew that the applicant was proposing that the relevant terms would be the same as the terms in the consultancy agreement and recalled that the applicant sought the Board's agreement to those terms. 145 Mr Quinn recalled that there was a disagreement on the car, for the same reasons advanced by Mr Gillard - the applicant would no longer be entitled to the use of a sponsors' car once he relinquished his status as an employee. Mr Quinn denied that the other items on the Terms Sheet were discussed, a proposition I find difficult to accept in view of his evidence that the applicant took the directors through each item, and one item, the car, was discussed. 146 In support of his contention that an agreement was not concluded at the Meeting, Mr Quinn elaborated other issues to be resolved. However, it appears on perusal of Mr Quinn's evidence that although things had to be done, additional parameters were in fact agreed. He stated: Mr Shrubsole pointed out to Mr Gow he was to take a month's leave, that he was to obtain his own vehicle, that he was to seek an office off-site, to arrange secretarial duties of his own that the club would pay, he would prepare a list of working processes, if we can call it that, capital items, operational items as the proposed agreement discussion said Mr Gow was not to be involved in the day to day activity of the club, he was purely there for the capital, i.e., the development work. 147 The detail of this evidence also makes it difficult for me to accept Mr Quinn's evidence that there was no discussion concerning the other terms contained in the Terms Sheet. Indeed, to make a general comment, the process of cross-examination had a deleterious effect on Mr Quinn's credibility. Evidence which seemed reliable at first became unconvincing, and then somewhat partisan, with the result that Mr Quinn's evidence in its entirety would best be described as fragile. 148 Mr Peak conceded under cross-examination that, working from the Terms Sheet, the applicant addressed the Board on the essential elements of the consultancy, putting to each member of the Board the items in turn. Although he was unsure of the response of other Board members, Mr Peak conceded that he agreed that the following terms would be the same: term, money, mobile phone and genuine expenses. He remembered the discussion concerning access to the sponsors' cars and thought that there may have been a sticking point on "financial issues" but could not recall why. Mr Peak asserted that he did not agree to the same dismissal clause, but did not advance his preferred option - he viewed this as something to negotiate later. 149 Mr Clarkson's evidence was an emphatic rejection that anything was agreed between anyone at the Meeting. Mr Clarkson did concede that the applicant gave each director a copy of the Terms Sheet, that he read it, and that he shook the applicant's hand, simply as a matter of courtesy, accompanied by the words "good-bye". I have already commented on Mr Clarkson's evidence and his lack of credibility. I simply do not accept it and provide one striking example by way of illustration: under cross-examination Mr Clarkson insisted that he did not understand, by the word "same" and a tick, that the applicant was proposing that those terms would be the same as the terms in the Employment Contract. This evidence could most charitably be described as disingenuous. 150 This brings me to the only remaining witness to this part of the Meeting, the third respondent. In an advance upon Mr Clarkson, the third respondent stated that he did not even read the Terms Sheet, nor did he take it out of the room. Like Mr Clarkson, the third respondent accepted the applicant's handshake but accompanied it with the innocuous words: "I'm glad it's over, it's been a stressful night". The applicant (according to the third respondent) did not say anything. 151 Under cross-examination, the third respondent agreed that when the applicant entered the boardroom with the Terms Sheet, Mr Gorry had been asked to leave and all directors were present. He denied that the applicant went through each item individually before the Board and denied that the applicant handed him a copy of the Terms Sheet and asked him if it was a deal. 152 The third respondent did, however, concede that the full Board agreed that the applicant was to have a consultancy in exchange for resigning and that the Clubs' solicitors would draw up the legal document. The third respondent was unbelievable when he insisted that he had no view as to term, remuneration, or termination: he thought that the solicitors would "do the negotiations to come up with a new consultancy agreement". 153 This would be a completely different approach to negotiations for the Employment Contract where the Board appointed a sub-committee to negotiate the commercial terms with external financial and legal advice. It is also a proposal I find difficult to accept. Subsequent cross-examination concerning post-Meeting correspondence revealed a firm view on the part of the third respondent, derived from the Meeting, of what activities were inside (and outside) the scope of the applicant's consultancy. It would appear that, contrary to the third respondent's evidence referred to above, some aspects, at least, of the applicant's consultancy, were discussed at the Meeting and understood by him. I have already commented at length on the third respondent's lack of credibility and note in passing this additional example. 154 Although Mr Gorry was not present for these key discussions, there were some aspects of the Meeting which he alone referred to in his evidence. Specifically, Mr Gorry swore in his affidavit that both the applicant and the applicant's solicitor, Ms Glass, (by telephone) wanted some form of agreement in writing then and there - even a Heads of Agreement. Mr Gorry refused each request, insisting that the applicant was not going to get "anything in writing tonight" and that "the Board won't be signing any document this evening". Under cross-examination Mr Gorry conceded that he had no authority from the Board to make those refusals. It is noteworthy that (on the evidence of Mr Gorry) both the applicant and his solicitor evidently believed that there was sufficient agreement between the parties to substantiate a Heads of Agreement. 155 Mr Gorry further stated that when he returned to the Meeting, he asked the Board to clarify whether they had an agreement or an agreement to agree. According to Mr Gorry, Mr Quinn advised that although important terms had been discussed, the Board did not have an agreement with the applicant. Neither Mr Quinn, nor any other witness referred to this comment which in any event strikes me as somewhat artificial and convenient, given the course of subsequent negotiations and these proceedings. 156 The applicant, the third respondent and Mr Shrubsole agreed that at the conclusion of the Meeting it was resolved that Henry Davis York (Mr Gorry's firm of solicitors) would draft a consultancy agreement. The applicant instructed his solicitor to this effect. Although keen to ascertain his action points, Mr Gorry did not advert to any such instructions. On Mr Gorry's version of events, contrary to all of the other evidence except that of Mr Clarkson, the Board had not agreed to give the applicant a consultancy - if the applicant wanted to broach the subject he could put a proposal to the Board, which would then be considered in due course. A third variant was put forward by Mr Gillard - that it was up to the applicant to go away and arrange a draft. Again, this is consistent with the notion of some form of agreement having been reached. 157 I accept the evidence of the applicant, third respondent and Mr Shrubsole that at the conclusion of the Meeting it was resolved that Henry Davis York would draft a consultancy agreement. Although Mr Gillard's evidence differs somewhat, the difference is not substantial: it still proceeds from the same basis that the next stage was to produce a draft agreement. It may be that, in the aftermath of an emotional meeting, these instructions were not communicated to Mr Gorry. To this extent, I am prepared to give Mr Gorry the benefit of the doubt. 158 However, I do not believe Mr Gorry's evidence that he sought clarification from the Board on the distinction between an agreement and an agreement to agree. I will not go so far as to say that it was fabricated: a more innocent explanation would be to ascribe this evidence to a desire on the part of Mr Gorry for the Meeting to have concluded in that manner. 159 Mr Gorry's account of the Meeting did not match the evidence of any other witness (with the exception, perhaps, of the third respondent) and seemed to be tailored to give the impression that there was insufficient time for the discussions described by applicant to have taken place. Mr Gorry suggested the Meeting concluded to approximately 8:30pm, placing Mr Lane in the boardroom shortly afterwards, drafting the press release. This is directly contradicted by the minutes, and by Mr Lane. According to Mr Gorry's notes, the applicant did not enter the boardroom until 7:41pm, leaving precious little time after his initial address (if any) for discussions about the consultancy before attention was focussed on press releases. This is clearly inconsistent with the evidence of the applicant and Messrs Shrubsole, Quinn and Gillard to the effect that discussions were lengthy. 160 Mr Gorry's evidence relating to the negotiations between the parties following the Meeting was more questionable. I will review that evidence in the appropriate factual section of the judgment but record here that it appears that he acted in a contentious manner, sometimes without instructions, and descended to become effectively a protagonist, which was also reflected in his evidence before the Court. Stage Four - Press Releases 161 The witnesses agreed that the third respondent issued a press release unilaterally some time before the applicant issued his press release. There was a dispute as to the stage the Meeting had reached when the third respondent invited the Clubs' media officer, Mr Lane, into the boardroom to assist drafting the press release. Ms Mott also entered the boardroom at this point. 162 Both Mr Lane and Ms Mott deposed that they were invited into the boardroom by the third respondent who advised that the applicant had resigned, and that those assembled would need a press release. Mr Lang thought that this happened at 10:00pm; Ms Mott at 10:30pm. 163 Mr Gorry gave evidence that he re-entered the boardroom before 9:30pm and saw the applicant, the third respondent and Mr Lane conferring about the press release. 164 According to the third respondent, he invited Mr Lane into the boardroom after a short discussion on the possibility of the applicant becoming a consultant. The Meeting became informal, due to the presence of non-Board members. The process of drafting the press release then took more than about two hours, culminating in the third respondent's media address at about 10:30pm. The implication that Mr Lane arrived before 8:30pm clearly conflicts with Mr Lane's evidence that he was not involved until approximately 10pm. It also conflicts with concessions made by the third respondent under cross-examination that when the applicant entered the boardroom with the Terms Sheet all Board members, and only Board members, were present. 165 I do not accept the earlier time estimates of Mr Gorry and the third respondent mentioned above, and am inclined to accept Mr Lane's estimate of 10:00pm, if not Ms Mott's of 10:30pm. Not only are these witnesses comparatively disinterested, the later time estimate accords with the evidence of other witnesses as to the general course of the Meeting, and that discussions were, in fact, lengthy. 166 Ms Mott and Mr Quinn estimate that the applicant gave his press release at about midnight. Further Findings of Fact 167 Having reviewed the evidence, I make the following findings of fact. In doing so I refer to some particular reasons, but these conclusions proceed from my earlier findings as to an agreement having been reached that the applicant would resign in exchange for a consultancy.

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167.2. Each such item was discussed. This evidence was specifically given by the applicant and Messrs Sorenson, Shrubsole, Gillard and Peak. Although Mr Quinn stated that he did not recall any discussion, he subsequently conceded under cross-examination that the car had been discussed. 167.3. The following points were agreed by reference to the Employment Contract: term, money, mobile phone, genuine expenses and all financial issues. Again, this evidence was specifically given by the applicant and Messrs Sorenson, Shrubsole, Gillard and Peak with the caveat that Mr Peak was unsure whether "all financial issues" had been agreed. No-one else raised this particular uncertainty and I accept on the balance of probability that it was agreed. 167.4. There was a discussion concerning the car, particularly the proposal that the arrangement could not stay the same because the applicant would no longer be an employee (see below). 167.5. There was a discussion concerning the dismissal clause although the evidence does not support any agreement on this issue (see below). 167.6. It was agreed that the scope of the consultancy would encompass special projects, as distinct from operational matters. In particular, the applicant was to focus on the land development project. In addition to the evidence of the applicant, Messrs Sorenson, Shrubsole, Quinn, and Gillard this conclusion is supported by the cross-examination of the third respondent. 167.7. The applicant gave each member of the Board a copy of the Terms Sheet and in doing so, he shook each member's hand. The only Board member whose evidence did not support this proposition was the third respondent, who nonetheless conceded that a copy of the Terms Sheet was made available to him and that he accepted the applicant's handshake (albeit without any comment about "a deal"). 167.8. Upon shaking hands, the applicant asked whether it was "a deal", or words to that effect, and each director replied "yes" or gave an intonation to that effect. Again, this evidence was specifically given by the applicant and Messrs Sorenson, Shrubsole, and Gillard. Mr Peak agreed that he had such an exchange with the applicant but disputed the extrapolation to every director. When pressed, he could not name any director who had not had such an exchange, but conceded that he did not hear anyone disagree or say "no". Mr Quinn's affidavit evidence asserts that he said "thanks mate". He was not cross-examined on this exchange, other than to establish that he had shaken the applicant's hand upon receiving the Terms Sheet. I do not accept the evidence of the third respondent and Mr Clarkson which contradicts this finding and do not consider that Mr Quinn's evidence upsets that of the other four on the balance of probability. 167.9. It was agreed by the Clubs that the applicant would be granted a consultancy which would be formalised by a written contract, incorporating the terms already agreed (referred to above). Other terms (primarily the car and the dismissal clause) would have to be resolved, but this arose from a desire to protect the distinction between a consultancy and an employment relationship. The remaining issues would be negotiated in good faith. This much seems to have been accepted by all witnesses albeit that they differed as to the starting point for negotiations.

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Circumstances following the Meeting 168 The performance of work by the applicant was not in dispute. The respondents admitted that the applicant performed work for them as a consultant under an arrangement (which they conceded was an arrangement for the purposes of s105 of the Act) for three months until negotiations ceased and offered to pay him $55,000 representing one quarter of his annual salary as Chief Executive Officer plus a bonus of $5,000 for the introduction of developers. In his affidavit filed 27 August 2001 the applicant stated that he performed consultancy work for the period 27 April 1999 to 29 July 1999, when he received two letters from Mr Gorry on behalf of the Clubs, the first advising that the Board would not continue with negotiations and the second offering the $55,000 in exchange for an appropriate release. Under cross-examination he agreed that his relationship with the Clubs did not continue after the Board meeting of 27 July 1999. 169 There were veiled references to difficulties in the performance of the consultancy arrangement in the evidence of both the applicant and the third respondent. The applicant indicated that the respondents made it difficult for him to perform his work by excluding him from relevant meetings and failing to communicate; the third respondent indicated that the applicant failed to keep the Board fully informed of his activities, and that some of his reports concerned matters outside the scope of his consultancy. However, neither party made submissions on these points and I do not consider that it is necessary for me to assess them, other than to observe the strained nature of the relationship between the parties at the time. I would also note that Mr Durbidge's uncontradicted evidence (referred to below) tends to support the applicant's version and contradict that of the third respondent. I do not intend to review the numerous reports submitted by the applicant to the Board during this period, or any response to them, but simply note that they constituted a component of the applicant's work under the consultancy arrangement. 170 Concurrently with the applicant's performance, the parties attempted to negotiate a written consultancy agreement. The evidence relating to this negotiation is largely to be found in correspondence from the applicant, the applicant's solicitors and Mr Gorry. Despite ten formal Board meetings during this period, the minutes scarcely refer to the negotiations. 171 The applicant sent six letters concerning the consultancy negotiations, including two drafts of a consultancy agreement, to each member of the Board between 4 May 1999 and 16 June 1999. Five of the six letters expressed the applicant's understanding that key terms had been agreed at the Meeting, and confirmed that the agreement would proceed on that basis. There were specific references to the term, remuneration, expenses and termination clause being the same. In his letter dated 31 May 1999 enclosing the first draft, the applicant specifically requested a speedy resolution on the basis that he was about to incur costs. The substantive issues raised in the applicant's correspondence related to the car and to office and secretarial expenses. 172 The third respondent's evidence in relation to Mr Gow's correspondence after the Meeting was clear, emphatic, and as unbelievable as it was replete with non-sequiturs. The third respondent agreed that he received all of the applicant's letters, and stated that he read them and passed them directly to Mr Gorry, who had a general authority from the Board to "negotiate the consultancy agreement". Mr Gorry's evidence was equally emphatic and directly contradicted the evidence of the third respondent in the following manner: according to Mr Gorry, he did not receive any instructions, and was not sent any correspondence until 18 June 1999. 173 Although it may seem a surprising undertaking to persuade a Court that a lawyer was expected to undertake and conclude contractual negotiations (subject to final Board approval) without instructions, this is precisely the position adopted by the third respondent. Unconcerned at the circularity of his evidence, the third respondent reiterated: neither he nor the Board communicated with the applicant at all, that was left to Mr Gorry; nor did he give instructions to Mr Gorry on things like scope, term, remuneration or expenses, it was all to be "mapped out in the consultancy agreement". Mr Gorry had a broad authority to "negotiate the consultancy agreement" and, once this was done, was expected to report back to the Board. The following cross-examination of the third respondent is illustrative: Q. Did you give any instructions to your lawyers as to what you saw as an appropriate term of the agreement? A. Well, Mr Gow had asked for the same period of time. It was left to the lawyers to discuss that.

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Q. And during the negotiations he was having with the solicitors, you gave him no instructions at all as to how long the consultancy should run. Is that what you are saying? A. We didn't know how long it will run, we had no idea, the development. Even today we have no idea how long it is going on. 174 There is a similar passage of cross-examination in relation to remuneration. It is ironic that such evidence may have been more credible if the key commercial terms had in fact been agreed at the Meeting contrary to the respondents' submissions. It is even more ironic that, when pushed on this paradox, the third respondent advised that Mr Gorry "was there on the night [at the Meeting] and knows what the Board directed him to do", suggesting that the substance of the Clubs' draft agreement could be gleaned from discussions at the Meeting (contrary to the evidence of the third respondent on that matter). 175 Although the third respondent disagreed with the applicant's continued assertion that key terms had been agreed at the Meeting, and felt that several reports produced by the applicant were outside the scope of his consultancy, he did not communicate with the applicant to disabuse him of those facts. Nor did the Board. Upon being advised that the applicant was about to incur expenses relating to the consultancy he did not even feel compelled to tell the applicant that (according to the third respondent) there were still substantive issues to be negotiated. 176 When questioned at length under cross-examination about this intractable silence, the third respondent explained that the applicant "would have got the message when negotiations were started in the [legal] correspondence". The evidence revealed two considerable problems with this explanation: first, (according to him) the third respondent did not give any substantive instructions to Mr Gorry, and secondly, the legal correspondence did not commence until Mr Gorry's letter to the applicant of 24 June 1999 (referred to below). 177 Returning to the applicant's unanswered correspondence of May and June, the two draft agreements require some comment. The first draft was presented by the applicant as incorporating the terms agreed upon at the Meeting. According to the applicant, the terms were the same as those of the Employment Contract, except that the car had been replaced by a car allowance and the Clubs were now to provide secretarial services as expenses. 178 In fact, there were differences in favour of the applicant which were not drawn to the Board's attention. There was no evidence to suggest that they were ever discussed (apart from the termination provision). Specifically: · The mobile phone allowance was more broadly drafted; · His entitlement to expenses was expanded to include entertainment expenses, and there was no longer a requirement for them to be reasonable or to be substantiated by receipts; · The applicant was no longer required to abide by the Clubs' general policies or to act with integrity; and · There was no longer a requirement for the applicant to perform his work to the best of his ability. In fact, there was no real performance obligation. 179 These features were not the subject of any specific attention during the proceedings. 180 Most importantly, the draft incorporated a different termination provision which was the subject of considerable debate. In the Employment Contract (as earlier set out), the Clubs could terminate the agreement without penalty only if the applicant committed an act of serious misconduct. In all other circumstances the contract provided that the Clubs would be liable to pay the applicant remuneration for the balance of the term of the contract from the date of termination. In the applicant's first consultancy draft, the Clubs' rights to terminate without penalty were similarly restricted to circumstances of misconduct, but that aspect of the provision had been redrafted more narrowly: the conduct now had to be "grave and serious misconduct". 181 Although it is arguable that the addition of the word "grave" may make the provision more strenuous, the legal or practical difference was never explained by the respondents. The Australian Concise Oxford Dictionary defines grave as "serious, weighty, important" and serious as "important, demanding consideration". The Macquarie Dictionary similarly defines the two: a grave situation is "important or critical, involving serious issues" and a serious matter is "weighty or important". Further, the Butterworths Employment Law Dictionary has the following definition of serious or wilful misconduct: "misconduct which would be regarded seriously by the wider community, irrespective of the state of mind of the actor." In view of these definitions it is unlikely that the difference, if any, would be significant. 182 It is ambiguous whether the new provision excusing the Clubs from payment is more or less favourable to them than the original. In the Employment Contract, payment stopped from the date of termination. In the applicant's draft consultancy agreement the Clubs were excused from payment from the time the act was "found to have occurred". Depending upon construction as to how such a finding was to be made, and by whom (although it seems likely that it would be the Board) this could be earlier than termination. Under cross-examination the applicant advised that his solicitor, Ms Glass, had produced the first draft and he had understood that the terms were the same. He did not believe that they had discussed the termination provision. Ms Glass was not called to give evidence. 183 The applicant's second draft circulated to the Board by letter dated 16 June 1999 was a reproduction of the first with handwritten changes deleting the costs to the Clubs of the car allowance and secretarial support and providing that "direct" out of pocket expenses would be supported by receipts. Under cross-examination the applicant advised that he made these concessions in an effort to remove what he perceived to be the obstacles to execution of the agreement. In his affidavit filed 27 August 2001, he further stated that he was motivated to compromise in order to finalise negotiations because he was concerned that Mr Anderson, who firmly opposed any consultancy agreement with the applicant (regardless of what had been agreed), had been appointed to the Board on 12 May 1999. I observe that Mr Anderson's opposition to the applicant's consultancy is stated in precisely those terms in the minutes of two Board meetings. 184 The third respondent was cross-examined about his response to the applicant's first draft consultancy agreement, sent to all Board members by letter dated 31 May 1999. Although he stated broadly that there were objectionable elements, and that it was passed to the lawyers, he was unable to explain what, precisely, was objectionable. He felt the term was objectionable, but then advised that his objection was that the applicant had actually suggested a term: according to the third respondent, the term had to be discussed. Similarly, his response to the remuneration and motor vehicle allowance provisions was that they should not have been submitted in draft because they had to be discussed at Board level. It appeared from the cross-examination of the third respondent that the draft was objectionable only in the sense that it contained elements which required discussion (a discussion he refused to have with the Board until Mr Gorry had settled a draft with the applicant.) 185 When cross-examined as to the second draft the third respondent had this to say: Q. Further down he offers a compromise in relation to motor vehicle and office expenses. Do you see that? A. Yes.

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Q. You think you would have been interfering had you given them instructions in relation to this matter? A. The board were unanimous as I said on the night that Mr Gorry go away and start negotiations for the new consultancy. It was the whole board. I am the chairman but the board make the decision. 186 After the luncheon adjournment following this cross-examination, the third respondent gave additional evidence about the objectionable nature of the applicant's draft contract. There were three problems: the scope was too broad, and should not include strategic planning or marketing; the consultancy fee was objectionable (because the scope had not been agreed, and therefore an appropriate fee could not be assessed) and he would have required legal advice before accepting the termination clause. Despite this assessment of the applicant's draft, the third respondent did not give Mr Gorry any instructions in relation to the scope or the fee, or in fact, in relation to the applicant's conciliatory amendments. In a familiar refrain, the third respondent advised that Mr Gorry was to determine these issues with the applicant's solicitor. When cross-examined as to whether he obtained legal advice about the termination clause, he stated that he could not recall. 187 There was no evidence (other than that of Mr Clarkson referred to below) that the Board discussed any of the applicant's correspondence, including his two drafts, either with each other or with the applicant at any time before the Board meeting of 22 June 1999 (which was attended by Mr Gorry and Mr Anderson). Mr Clarkson asserted under cross-examination that he advised the Board at the meeting following the applicant's letter of 4 May 1999, that the applicant was wrong to assert that the parties had reached an agreement at the Meeting. I have commented on Mr Clarkson's lack of credibility earlier in the judgment and do not accept this evidence. I note that this advice was not recorded in the minutes of any Board meeting. 188 Mr Durbidge, a principal of the development consultant FIDES retained by the applicant in May 1999 in relation to the proposed development of the Clubs' land, gave evidence which may influence an assessment as to whether the respondents were negotiating in good faith. Before meeting the applicant, Mr Durbidge had had no involvement with either of the Clubs. Mr Durbidge's affidavit filed in Court on 14 August 2001 contained the following two paragraphs: 41. After the formal part of the meeting had concluded [FIDES' initial presentation to the Clubs on 7 June 1999], Stephen Gorry said to me words to the effect: "Will you send a formal fee proposal to Barry as Peter Gow is not authorised by the Club to reach an agreement with you?"

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"We have received your request for information from Peter. I need to point out that Peter Gow is not authorised to act for the Club. In the future can you deal directly with myself or Diane Mott?" 189 In cross-examination, Mr Durbidge confirmed that from early June his organisation, FIDES, was advised to deal with either the third respondent or Ms Mott. According to Mr Durbidge, from then on, his day-to-day management of dealings with developers was not with the applicant. This evidence was not contradicted. It is important to note that Mr Durbidge's role, as it related to the Clubs, fell squarely within the ambit of the applicant's consultancy (even as understood by the third respondent) and that he received these instructions well before the Clubs responded to any of the applicant's preliminary post-Meeting correspondence concerning the consultancy negotiations. 190 According to the minutes, following lengthy discussion, the Board made the following resolutions at the meeting on 22 June 1999: · Rejected the consultancy agreement submitted by the applicant; · Retained Mr Gorry to meet the applicant and the applicant's solicitor to discuss the proposed consultancy; and · The third respondent and Mr Gorry were to meet the LAB the following day to discuss in principle a consultancy agreement with the applicant 191 The minutes also recorded Mr Anderson's view: "Mr Anderson stated that he completely rejects any proposed consultancy with Mr Gow". 192 There was no evidence of the nature of the "lengthy" discussion preceding the rejection of the draft, nor, indeed, any evidence as to why the Board took issue with it, other than the assertion in Mr Gorry's affidavit sworn 8 August 2001 that the draft contained "a number of items which were unacceptable"; Mr Gorry's oral evidence that the termination clause was more favourable to the applicant and the third respondent's evidence under cross-examination, referred to above, describing the three "problems" he had with the draft. 193 The first resolution was conveyed to the applicant by a facsimile from Mr Gorry dated 24 June 1999. Bluntly, the letter stated: As has been noted, the Board is interested in progressing discussions with Mr Gow that may result in the Clubs entering into a consultancy agreement with Mr Gow. The Clubs are not obliged to provide Mr Gow with a consultancy agreement, nor are they bound to do so, as Mr Gow appears to suggest. If the parties cannot agree on a consultancy agreement, then the matter will end there.

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194 Mr Gorry concluded his letter by suggesting a meeting between the lawyers, with the applicant, the following day. 195 There was no reference in the letter to which terms, if any, were problematic. There was no mention of the termination provision. In fact, under cross-examination, Mr Gorry advised that he did not obtain any specific instructions in relation to the applicant's second draft, although he stated that there were some discussions in relation to the termination provision. 196 This letter, sent two months into the consultancy arrangement, was the applicant's first notification by the respondents after the Meeting that the Board was not "committed" to a new consultancy and disputed his general position that the terms of the consultancy (as noted on the Terms Sheet) had been agreed at the Meeting and were to be equivalent to the Employment Contract. As I will discuss below, that same day the applicant was told that the Board was now considering a term of six months, rather than the balance of the term of the Employment Contract (thirty-nine months) the applicant believed had been agreed at the Meeting. 197 Mr Gorry stated in his affidavit sworn 8 August 2001 that he discussed his letter of 24 June 1999 with the third respondent and "a number of other directors". He reiterated this under cross-examination, specifying that he had had such discussions with Messrs Clarkson, Gillard and Shrubsole. It should be noted that Mr Gorry's denial that the Board had committed to a consultancy was unsupported by Board resolution, and Mr Shrubsole, who was present at the meeting of 22 June 1999, gave evidence that he did not give any such instructions. Mr Sorenson, also present at the meeting, stated that he did recall any Board discussions to send a letter in those terms to the applicant. No other director gave evidence on this point. 198 Although Mr Gillard did not give specific evidence on the terms of this letter, he did state under cross-examination that he had many discussions with the applicant in this period and he made it clear to the applicant that, as far as he was concerned, the deal had been done. According to Mr Gillard's evidence, all that remained was for the parties to convert the arrangement into a contract. In the light of this evidence it would appear unlikely that, had the matter been discussed at the Board meeting, Mr Gillard would have agreed with Mr Gorry's letter denying the Clubs' commitment to a consultancy. The assertion by Mr Gorry also stands in the face of the Court's earlier findings as to the outcome of the Meeting (and the Court's conclusions as to the credit of this witness). 199 According to Mr Durbidge's affidavit, he and two other representatives of FIDES attended a meeting with what he termed the "Property Task Force" at the boardroom of the Clubs on the evening of 24 June 1999. The Property Task Force consisted of the third respondent, Messrs Shrubsole, Peak, and Anderson and Ms Mott. Mr Durbidge stated in his affidavit that the purpose of the meeting was for FIDES to assess the needs and expectations of the Clubs in relation to the proposed development. 200 On 24 June 1999, Ms Mott sent the applicant a facsimile at approximately 12pm stating that she and the third respondent did not want the applicant to attend the meeting that night "until the current negotiations are finalised". According to the third respondent, this decision, although not minuted, would have been taken by the full Board. There is no corroborative evidence to support this assertion. 201 By facsimile dated 24 June 1999 to the third respondent, copied to all Board members, the applicant complained about this exclusion. He also stated that he had been advised by Mr Gorry that the Board had drastically reduced its offer and wished the consultancy to conclude on 31 December 1999. The applicant stated that he would consider the financial deal the next day. He also attached a copy of Mr Gorry's earlier facsimile and asked whether each Board member genuinely agreed with it. 202 The next event in these negotiations was the meeting attended by the applicant, Ms Glass, Mr Gorry, and a solicitor from Mr Gorry's office, Ms Davies, on Friday 25 June 1999 at the offices of Ms Glass. Ms Davies recorded a detailed four page file note of this meeting which was admitted into evidence and annexed to Mr Gorry's first affidavit. The applicant, the only other person to give evidence who had attended the meeting, did not dispute the contents of the file note. The following summary is based on the file note, which provided the most comprehensive evidence of the meeting. 203 According to the file note, Mr Gorry began the meeting by putting the following new consultancy proposal to the applicant on behalf of the Clubs: · The title of the applicant's consultancy would be "special projects" and it would include the redevelopment of the car-park, redevelopment of Endeavour 2 and 3 and the northern extension of the licensed club; · The term would be six months' probation with the ultimate term to be decided; · The termination clause would not include a misconduct provision. Rather, "there would need to be a question of conduct, and, if so, PG could be terminated without recourse"; · There would be a monthly retainer; · There would be an incentive on success component; and · The applicant would report regularly (daily or weekly) to a subcommittee, which would be notified of major meetings PG attended or planned to attend. 204 As noted above, the applicant stated that Mr Gorry had advised him (before the meeting) that the Board wished the consultancy to end on 31 December 1999. It was not clear whether the proposition that the six-month term be probationary, with a longer term to be discussed, had in fact been put to the applicant in the earlier conversation, or the manner in which it was put to him in the meeting. Real questions may have arisen in the applicant's mind as to the genuine nature of such a proposition or the likelihood of a term ever being agreed, once the Clubs had resiled from the arrangement reached at the Meeting for the consultancy to operate for the balance of the term of the Employment Contract. 205 Again, according to the file note, after privately consulting with Ms Glass, the applicant made the following response to the proposal: · The special projects concept and six month term were acceptable, but the six months would have to be a fixed period, not probationary; · The proposed termination provision was unacceptable; · The applicant agreed to a monthly retainer and success fee, the latter of which he regarded as the consideration for shortening the term from over three years to six months; · In relation to the success fee, the Clubs must, in good faith, allow him to perform his work, and not exclude him from meetings; and · The incentive was to be payable even if the development agreement was signed after the term of consultancy. 206 Mr Gorry agreed that it could be worded so that the success fee would still be payable if the introduction had been made by the applicant, but stated that there would have to be an end date. The applicant also required back pay from 27 April 1999 at the rate specified in his Employment Contract to which Mr Gorry agreed. When asked by Mr Gorry about remuneration, the applicant advised that he would "speak to some people directly about the dollars". 207 The meeting then concluded with Mr Gorry proposing to issue a draft. The file note recorded the following exchange: SMG … We'll start drafting the agreement while PG considers the dollars. To make matters clear, the document will be forwarded in draft to the Board and then, once they have had the opportunity to consider our advice, onto DG. I would like to get it wrapped up by next week.

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Ms Glass: That is okay. 210 In order to assess the applicant's response to the draft finally sent by Mr Gorry, and its effect on the negotiations, it is important to review communications between the parties about expected timescales following the meeting of 25 June 1999 and Mr Gorry's evidence in relation to the termination provision. 211 There was a Board meeting on Tuesday, 29 June 1999. At this meeting, Mr Barnett was appointed to the Board in Mr McLean's stead. According to the minutes, the third respondent was to arrange with Mr Gorry for a draft to be drawn up without financial arrangements "ASAP". On 30 June 1999, the applicant wrote to the Board to advise that following the meeting on 25 June, he had expected Mr Gorry to send a draft to Ms Glass, which had not happened. The applicant extended his deadline (raised in the meeting) of 30 June 1999 to "early next week" at the latest (i.e. the week beginning 5 July). 212 On Friday, 2 July 1999, Ms Glass wrote to Mr Gorry by facsimile, noting that a week had passed since the meeting, yet Mr Gorry had not forwarded a draft. The letter contained the following paragraph: 2. You have since advised us that you are attending to preparation of the document but that you did not consider that the matter needed to be dealt with expeditiously as the "numbers" had not been agreed directly between our respective clients. 213 The paragraph is interesting for two reasons: firstly, the comment attributed to Mr Gorry directly contradicts the file note annexed to his affidavit of his comment at the meeting that he would "start drafting the agreement while PG considers the dollars" and secondly, it implied that Ms Glass had chased the draft by telephone earlier in the week to no avail. 214 Despite the correspondence referred to above, Mr Gorry's unsolicited comments recorded in Ms Davies' file note of 25 June that he would: · start drafting; · like to get the agreement finalised by "next week" (i.e., 2 July 1999); and · forward a draft once it had been reviewed by the Board,

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and his evidence that he obtained instructions from the third respondent "on or about 25 June", Mr Gorry did not send a first draft to the applicant until the following week, on 5 July 1999. The covering letter contained the following opening paragraph: We refer to our recent telephone discussions and attach a draft consultancy agreement. The draft consultancy agreement has not been approved by the Board. It is provided to you for use by your client in discussions that are presently being undertaken by your client and the Board. 215 Curiously, subsequent Board minutes of 6 July 1999 refer to this draft as having been approved by the Board and the LAB. The third respondent was cross-examined as to the inconsistency between Mr Gorry's letter and the minutes but could not say which was correct. If nothing else, this further illustrates the unusual state of instructions being given to Mr Gorry. 216 The actual draft itself bears some comment. According to Mr Gorry's second affidavit, the draft reflected the discussions between the parties at the meeting on 25 June 1999 and his instructions detailed above. Reviewing the draft, it appeared to be something in the nature of a standard form, rather than a draft addressing issues raised in the negotiations. One may wonder, given its insubstantial nature, why it took so long to issue, and why Mr Gorry considered that it required further review by the Board. 217 Specifically, there was no reference in the draft to the following points: · title of "special projects" which would include redevelopment of car-park, redevelopment of Endeavour 2 and 3 and northern extension of licensed club; · monthly retainer; · incentive on success component; · incentive to be payable if development agreement signed after the six month term of the consultancy; · reporting regularly (daily or weekly) to a subcommittee, which would be notified of major meetings the applicant attended or planned to attend; · applicant to attend only major meetings of relevant subcommittee; or · mutual releases (incorporated or in a separate document), or a provision that this agreement was to supersede all previous relevant agreements between the parties. 218 Mr Gorry did, however, include the agreed term of six months without the probation period which, on his own evidence, he was instructed to include. The two other provisions which were substantive are set out below in full. They were a new termination provision more favourable to the Clubs than any which had been proposed in the negotiations preceding the Employment Contract and a recital denying the applicant's assertion of an existing binding agreement. It was not clear what this recital was intended to achieve, given the applicant's acceptance of a mutual release provision, other than to provoke the applicant. C. Gow alleges that he resigned as CEO of the Leagues Club and the Football Club after the Board agreed to retain him as a consultant to the Clubs on certain "agreed" terms and conditions. This allegation is denied by the Board.

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Termination of the Consultancy. 2.5 Gow may terminate his consultancy at any time during the Term. 2.6 The Clubs may terminate Gow's consultancy if Gow, to the reasonable satisfaction of the Board, has: 2.6.1 held himself out as being able to bind the Clubs or either of them; 2.6.2 disobeyed an order or directive of the Board or a member of the Board or any subcommittee appointed to deal with the implementation of major projects; 2.6.3 failed to give reasonable notice to the Board or to any subcommittee of Gow's attendance at or scheduling of meetings of an important nature to the Clubs; 2.6.4 brings the Clubs into disrepute, either in the carrying out of his consultancy or generally. 219 The third respondent was cross-examined as to who instructed Mr Gorry to propose the six month term, or to include the new termination provision clause 7.2. The third respondent initially indicated that there were no specific instructions in relation to the six month term - rather, the proposal would have emanated from Mr Gorry who had full authority from the Board to negotiate the consultancy. Subsequently, the third respondent advised that he could not recall if either he or the Board gave Mr Gorry instructions on these two contentious issues. 220 It is interesting to contrast this draft termination clause in the context of a six month agreement with the "serious misconduct" provision in the forty-two month Employment Contract. It was not clear why it was so important to the Clubs to insist on broader grounds to terminate, when the existing provision in the Employment Contract was amply broad enough to dismiss the applicant following the events of 25 April 1999 but was not, in fact, used. 221 Under cross-examination, Mr Gorry stressed that, as far as he understood his instructions at the time, it would have been acceptable to the Clubs to have a termination provision with the same effective operation as the Employment Contract. Indeed, Mr Gorry advised the Court that this was his intention in drafting the new provision. His particular concern was not to make it more difficult or onerous for the Clubs to terminate the applicant. This evidence may account for his objection to the termination provision in the applicant's first two drafts but is not consistent, in my view, with the clause proposed by him. 222 The following three passages of Mr Gorry's cross-examination elucidate his view as to this term: Q. Would you look at clause 7.2? A. Yes.

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Q. You do not agree with that? A. I do not agree with that at all. 223 This evidence, at times obfuscatory and disingenuous, together with other aspects of Mr Corry's evidence (which I shall refer to elsewhere in this judgment) reflects poorly on his credit as a witness. 224 The proposed termination clause provided that the Clubs could terminate the consultancy, if, to the reasonable satisfaction of the Board, the applicant had: · held himself out as able to bind the Clubs; · disobeyed a directive of any member of the Board or relevant subcommittee of the Board; · failed to give reasonable notice of meetings (attended or scheduled); or · brought the Clubs into disrepute (either in carrying out the consultancy or generally) 225 There is no mention of a notice period for any such termination by the Clubs. Two examples will illustrate how this provision is significantly broader than the common law relating to serious misconduct, if, indeed, such a proposition needs illustration at all. If Mr Durbidge, as a member of the development subcommittee, directed the applicant not to approach any developer before he, Mr Durbidge, had spoken to them, contrary action would expose the applicant to termination (even if the applicant was first approached by a developer) but would not be described as serious misconduct. Similarly, it is difficult to envisage circumstances in which failure to give notice of scheduled meetings would be described as serious misconduct, and yet under this provision the applicant would be liable to termination. Mr Gorry's repetition that "it had to be to the reasonable satisfaction of the Board" does not offer the applicant any real protection, because the Board, by the legal operation of the proposed contract, only had to be reasonably satisfied that such a breach has occurred - not of the seriousness of the breach. In both of my examples, it is plain that the Board could be reasonably satisfied on that count. 226 It is not surprising that the applicant was unimpressed to receive this draft and wrote to the Board the next day to this effect. In particular, he took issue with the termination clause, which he described as "draconian" for a six month agreement and reiterated his suggestion (in handwritten comments upon the draft) for the original "serious misconduct" termination provision. His letter included the following financial proposals with a deadline of the Board meeting which was to be held that evening: · First option: o Six month term with a success fee of $337,000 for signing heads of agreement at any time o Non-terminable o Monthly retainer at Employment Contract rate ($16,666) o Fixed expenses of $15,769 to be paid by Clubs o Clubs to pay business related phone expenses · Second option: o Same as first option with a three month extension from January 2000 at a reduced monthly fee of $15,769 for that period and with a reduced success fee of $297,000 227 I note that at this stage, had the Employment Contract continued, the applicant would have expected to receive a further $650,000 from the Clubs over the term of that agreement. 228 It was not clear how the applicant intended to reconcile the seemingly inconsistent proposals of the original termination clause for serious misconduct and the bullet-point that the six month term would be "non-terminable". 229 Under cross-examination, the applicant elaborated that he felt very exposed under a termination provision which enabled the Clubs to terminate for bringing them into disrepute generally, or for disobeying a directive of a member of a sub-committee. In addition to his concerns about the changing political make-up of the Board, the applicant explained that the Clubs' subcommittees were not restricted to Board members, and in all likelihood would have included Mr Durbidge. At that stage there was some tension between Mr Durbidge and the applicant as to who would recoup the "finding fee" once a developer signed a Heads of Agreement. 230 At about the same time, Ms Glass wrote to Mr Gorry noting the fact that the draft failed to address substantive issues raised at the meeting and proposing three changes only: · the consultant would be the applicant's company PRG Investments Pty Limited; · The last sentence of Recital C "This allegation is denied by the Board" was to be deleted; and · The termination provision was to be deleted, with the following new clause, mirroring the language of Mr Gorry's clause (with the exception of the last two words "or generally"), inserted as an obligation: 2.5 Gow agrees to ensure that: 2.5.1 he will not hold himself out as being able to bind the Clubs or either of them; and 2.5.2 he will not disobey an order or directive of the Board or a member of the board or any sub-committee appointed to deal with the implementation of major projects; and 2.5.3 he will give reasonable notice to the Board or any sub-committee of his attendance at or scheduling of meetings of an important nature to the Clubs; and 2.5.4 he will not bring the Clubs into disrepute in carrying out his consultancy. 231 Ms Glass further advised that the applicant was discussing remuneration, including the incentive fee (and whether the term was to be six or nine months), directly with the Board. Again, it was unclear whether the amendments of this letter were to be in addition to the applicant's proposal to revert to the original misconduct provision. 232 The minutes of the Board meeting on 6 July 1999 recorded that the Board had received the applicant's letter and financial proposal earlier that afternoon. Ms Glass's response to Mr Gorry's draft was also circulated. Despite Mr Gorry's insistence under cross-examination and in affidavit evidence that clause 7.2 was merely a draft, upon which he would be open to negotiation and clarification, the Board resolved that the termination clause 7.2 must remain, and to seek advice from Mr Gorry on the measurement of the success rate upon which the success fee was to be paid. The Board agreed that the matter had to be resolved as quickly as possible. 233 Mr Gorry's second affidavit contained the following paragraph indicating that the parties were not far apart at this stage: 29. The day after the facsimile and second draft consultancy agreement was sent to the solicitors for Mr Gow, I received a letter dated 6 July 1999, which letter is exhibit SMG22 to my November 2000 affidavit. After receipt of this letter I forwarded it by facsimile to Mr Pierce for instructions. In a conversation I had with Mr Pierce on or around 6 July 1999, probably in the few days thereafter, I recall saying to him words to the following effect:

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Pierce: "I will talk to the Board and get back to you." 234 Despite Mr Gorry's evidence of this conversation with the third respondent, there was no evidence of any discussion amongst directors in relation to the new termination provision, or why the Board regarded it as critical, particularly in relation to a six month term, rather than simply reverting to the original "serious misconduct" provision or accepting the applicant's reversal, which would presumably allow termination for fundamental breach. (Although the applicant marked his proposal as "non-terminable", he concurrently proposed a termination provision (as noted above) and there was nothing in Ms Glass's amendments to suggest that termination for fundamental breach was precluded). 235 Under cross-examination, the third respondent denied that clause 7.2.2 would have been unacceptable to the applicant, or that it would be unworkable and denied that it was left as a trigger to terminate negotiations. He also told the Court that (contrary to Mr Gorry's evidence above) he had declined to instruct Mr Gorry on either of the applicant's two new proposals: according to the third respondent, the lawyers were handling it, together with the Clubs' financial people. 236 By facsimile dated 8 July 1999, Mr Gorry wrote to Ms Glass refusing to delete the last sentence of Recital C or clause 7.2, advising that the Board must have the power to terminate the consultancy in "defined circumstances". Mr Gorry concluded by advising that the Board was keen to discuss the applicant's two proposals. Finally, Mr Gorry advised that: … it is intended if and when a settled consultancy agreement is ready to be signed by all parties that the LAB is invited to give its comments on the agreement. 237 Ms Glass's reply by facsimile dated Friday 9 July 1999 made the following points: · The applicant had not received a formal response to his proposals; · If any variation to the draft was to be agreed, it must provide that the applicant be paid the entirety of his remuneration whether or not the Clubs terminated; · Noting that the applicant was going to make a development presentation to the Board on Tuesday 13 July 1999 and · Suggesting a meeting at her offices the following Wednesday 14 July to finalise the agreement. The meeting should be attended by representatives authorised to negotiate, finalise and sign the agreement, and their legal advisors. 238 Mr Gorry replied with a largely unresponsive facsimile of the same day, stating simply that there was no Board meeting scheduled for 13 July 1999 and that if the applicant wished to make a presentation he should contact the third respondent. Mr Gorry did not reply to the balance of Ms Glass's letter. 239 By letter dated 14 July 1999, the applicant submitted a third financial proposal to the Board, included as additional text in Mr Gorry's draft. The following changes were made to the draft: · 12 month term; · monthly retainer of $16,667 to 31 December 1999 and thereafter $12,666; · fixed expenses of $15,769 to 31 December 1999 and thereafter Clubs to pay only business related telephone costs; · success fee of $145,000; · back pay from 27 April 1999 to 30 June 1999; · the sentence "This allegation is denied by the Boards" was deleted from Recital C; and · Clause 7.2 was left untouched, but the draft provided that any termination by the Clubs would not affect its obligation to pay full remuneration to the applicant. 240 The applicant issued a new deadline of 20 July 1999 for execution of a consultancy agreement. The only response the applicant received to this offer (having received no response to his earlier alternative financial proposals of 6 July) were Mr Gorry's letters dated 29 July 1999 referred to below. 241 The Board held a special meeting on 14 July 1999 for the development presentation. Despite the applicant's deadline, the Board resolved to defer a decision on the consultancy agreement until a special Board meeting scheduled for 20 July 1999. There was no evidence of any Board meeting on 20 July 1999. According to the collated Board minutes submitted by the respondents, the next meeting took place on 27 July 1999. 242 Two developers involved in talks with the applicant and a rezoning specialist made presentations at that meeting on 27 July 1999. The applicant attended the development stage of the meeting only. Mr Gorry also attended the meeting. The minutes recorded the following final agenda item before the meeting was closed: AGENDA ITEM 16: PETER GOW CONSULTANCY AGREEMENT

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The Chairman instructed the Board's solicitor (Mr Gorry) to take up the matter with Peter Gow's solicitors to seek to put that agreement into place. 243 By letter dated 29 July 1999, Mr Gorry advised the applicant's solicitors that the applicant had submitted a consultancy agreement which was "simply untenable" and that, "for many of the reasons set out in our letter to you of 8 July 1999", the draft could not be accepted by the Board. By that correspondence the applicant was advised that all previous offers were withdrawn and that the Board would not continue negotiations. By a separate "without prejudice" letter Mr Gorry conveyed the Board's offer of $55,000, subject to a suitable release. The applicant concluded on the strength of these two letters that negotiations were over. 244 At the time these letters were sent, there was no evidence that the Board had considered, assessed, or discussed either between themselves or with the applicant the three fresh financial proposals the applicant had by this stage sent to them in response to their unheralded contraction of the term from thirty-nine months to six. 245 I intend to comment on Mr Gorry's open letter of 29 July 1999. It is by no means clear how the last draft sent by the applicant was "untenable". In essence, it was Mr Gorry's draft, including the disputed termination clause, with only two provisions changed (apart from the variations to the commercial terms which would obviously invite comment or response but could hardly be described as untenable). The first change was to remove the words "This allegation is denied by the Board" from Recital C. As mentioned earlier, it is extremely difficult to see how the removal of these words could prejudice the Clubs' legal position in the context of mutual releases, which were accepted by both parties as appropriate. Furthermore, the recital opens with the words "Gow alleges that ..." thereby implying, by use of the word "alleges", that the allegation is not agreed. Mr Gorry's obstinacy on this point appears to have been unnecessarily belligerent. 246 The second change, in the face of the applicant's acceptance of a dramatically reduced term and a termination clause he found highly objectionable, but which did not appear to be negotiable by the respondents (despite his request for a reversion to the Employment Contract provision), was to require payment of full remuneration even if the Clubs terminated the agreement. It is an extreme position in all the circumstances to say such a response by the applicant was untenable when the issue of reverting to the original provision, which allowed termination without payment for serious misconduct (but required payment of full remuneration for any other termination), had not been discussed with him. 247 Finally, the Clubs' communication through Mr Gorry that the applicant's draft could not be accepted by the Board "for many of the reasons set out in our letter to you of 8 July 1999" is unconvincing. The letter of 8 July 1999 contains the following objections only: · No member of the Board made a binding agreement on 27 April 1999 and therefore Recital C must contain the words "This allegation is denied by the Board". I have commented on this above. · Clause 7.2 could not be deleted because the Board must have the power to terminate any consultancy it entered into. As noted above, the applicant retained clause 7.2, subject to full payment. If nothing else, this raised a new issue to be canvassed between the parties. Furthermore, as at 8 July, the evidence suggests that the applicant would have accepted the inclusion of the original "serious misconduct" termination clause which could be exercised without penalty. 248 The evidence explaining the Board's resolution was fragmented and unpersuasive. The following directors gave evidence to explain it: Messrs Quinn, Gillard, Peak, and Clarkson and the third respondent. For the reasons described earlier in the judgment, I do not accept Mr Clarkson's evidence. 249 Mr Quinn stated that he felt that by late July negotiations had reached a stalemate, and were no longer worth pursuing. The Board intended to finalise the matter by making its offer of $55,000. Mr Gillard gave evidence that he did not read the dismissal clause but understood that the applicant wanted the same dismissal clause as the one in the Employment Contract. According to Mr Gillard he supported the Board's resolution because he understood that on three previous occasions the parties could not resolve the dismissal clause (therefore presumably coming to the view that it could not be resolved.) Mr Peak stated in his affidavit that he agreed to stop negotiations because the applicant had indicated the matter was no longer negotiable. Under cross-examination Mr Peak advised that the Board's intention to end negotiations and finalise the matter by payment of $55,000 was accurately depicted in Mr Gorry's letter of 29 July 1999. 250 The only evidence given by the third respondent as to why negotiations were terminated appears in two paragraphs of his affidavit filed 15 November 2000: 164. In about early July 1999 I telephoned Peter Gow and said to him words to the effect: "The board needs to know exactly where you are up to. We have heard the developers are getting nervous. Are you going to advise us more thoroughly as to what stage you are up to?" He said words to the effect: "No, you'll use my information to play one developer against the other". I said words to the effect: "Alright, I'll tell the Board you won't tell me what stage you're up to." He said words to the effect: "You do that and I'll sue you personally".

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After that conversation I formed the view that it was impossible to proceed with a serious commercial negotiation with Peter Gow concerning the proposed consultancy. I was concerned that Peter Gow would damage the relationship between the Clubs and potential developers if he continued to have discussions without my knowledge. 251 The applicant disputed this version of the conversation, and gave evidence that he in fact said: "I want to tell the whole Board what's going on to avoid misrepresentation." 252 The applicant's statement is consistent with Ms Glass's letter to Mr Gorry of 9 July 1999 that the applicant intended to make a development presentation to the Board on Tuesday, 13 July 1999. Indeed the correspondence showed that it was the third respondent who excluded the applicant from at least one development meeting, on 24 June 1999. Given the longstanding animosity between the applicant and the third respondent, and the Clubs' conduct of the consultancy negotiations to that point, the applicant's desire to communicate with the Board directly could not be described as unexpected. Even if I were to accept the third respondent's version of this conversation, his reliance upon it to end negotiations is spurious: I fail to see why an unfriendly exchange between two long-standing rivals should make it "impossible to proceed with a serious commercial negotiation". 253 I have described this evidence in detail, particularly the directors' understanding of what they were communicating to the applicant following their resolution of 27 July 1999, because Mr Gorry further strained his credibility by insisting that his letters of 29 July 1999 were not intended to sever negotiations (despite their plain words) but that his response was a negotiating tactic which regrettably had to be employed from time to time by practitioners. 254 There was no evidence (other than his own assertion) to support this proposition which I simply do not accept. The letter is plain in its terms and Mr Gorry's denials are unbelievable ex post facto rationalisations designed to avoid anticipated consequences of appearing to end negotiations unilaterally at that point. However, I note as a matter of interest that if one accepted that Mr Gorry was not trying to cease negotiations with these letters then it appears from the evidence above that he was acting contrary to the Board's intention. 255 Following Mr Gorry's letters of 29 July 1999, Ms Glass issued a letter dated 9 August 1999 enclosing the applicant's first draft consultancy agreement and demanding it be signed within seven days, failing which she was instructed to commence proceedings seeking the recovery of $705,131.00. Ms Glass concluded by requesting Mr Gorry to obtain instructions to accept service of initiating process. There was a suggestion raised in the proceedings that the actual draft attached to Ms Glass's letter was not identical to the first draft sent by the applicant but given the clear import of the letters, that is neither here nor there. Under cross-examination, Mr Gorry denied that any litigation practitioner of his experience would understand Ms Glass's letter to be a letter of demand. Again, I find such evidence extraordinary, not only in its content, but in the fact that an experienced litigation practitioner should attempt to persuade a Court that a plainly stated demand was not such. Mr Gorry's evidence was unqualified that no part of Ms Glass's letter constituted a demand, or should have been understood by him to present a demand. 256 A final comment must be made on Mr Gorry's evidence in relation to the final stages of negotiation. His insistence that he did not intend, by the text of his letters of 29 June 1999, to convey to the applicant that negotiations were over (despite instructions from the Board to do so), and that Ms Glass's letter of 9 August 1999 was not a letter of demand, provide striking examples, in my view, of the extent to which he had taken on the role of disputant. Of course, they also provide examples of the questionability of his evidence. 257 Finally, the applicant issued a press-release on 12 August 1999, before the expiry of his deadline, advising that he would commence proceedings against the Clubs on 16 August 1999. Findings of Fact 258 As mentioned earlier, there is no real dispute that the applicant performed work for the Clubs as a consultant under an arrangement (for the purposes of s105 of the Act) for three months from 27 April 1999 to 27 July 1999, and, in their offer of $55,000, the Clubs not only explicitly accepted that non-payment for that work was unfair (for the purposes of s106 of the Act) but implicitly accepted that the former rate of remuneration from the Employment Contract was appropriate. Nor is there any dispute that the applicant was not, in fact, paid. 259 Reviewing the entire communications between the parties up to Mr Gorry's letters of 29 July 1999, I believe the following provides a useful summary:

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259.9 The applicant's solicitor rejected the Clubs' offer by issuing a demand that the Clubs execute the applicant's first draft consultancy agreement within seven days, failing which proceedings would be commenced. 260 There was an issue between the parties as to responsibility for the termination of negotiations. Having reviewed the evidence and, in particular, the correspondence between the parties, it is clear to me that the Clubs must accept this responsibility. In the context of the final letters, the applicant was waiting for a response to his three commercial proposals when, in fact, he received a curt pair of letters advising that negotiations were over, and that he would be paid by the Clubs for his three months' of work in exchange for signing an appropriate release. As mentioned earlier, these letters were premature and a disproportionate response considering the stage negotiations had then reached. Apart from the primary effect (of abruptly ending negotiations) it should be noted that the offer of $55,000 was little more (and may in fact have been less, because it makes no allowance for properly incurred expenses) than the applicant was already entitled to for work performed. In the context of the applicant's expectation that an arrangement worth approximately $330,000 (on his final, lowest commercial proposal) would be realised, the figure of $55,000 as a reasonable settlement offer may be questioned. 261 Finally, I should comment on the applicant's assertion that the respondents deliberately waited until the applicant had divulged his developer contacts before immediately severing ties, the applicant being of no further use to them. I do not consider the respondents' actions as a deliberate plot planned and executed over time (as suggested by Counsel for the applicant, referring to a "trap-door theory"), but do consider that the third respondent's instructions to FIDES to deal directly with him undermined the applicant's performance of the arrangement. CONSIDERATIONS The Employment Contract 262 According to the Statement of Issues, the first issue to be resolved in these proceedings is: Whether the contract entered into between the applicant and the first and second respondents on 4 February 1999 ("the employment contract") was or became an unfair contract as a result of the conduct of the respondents. 263 It is well settled that, in determining whether a contract (as defined in s105 of the Act) is unfair for the purpose of s106, regard may be had to both the terms of the contract itself and the manner in which the contract was performed or operated between the parties. 264 In Beahan v Bush Boake Allen Australia Ltd (1999) 47 NSWLR 648 at 685 a Full Bench of this Court concluded: What emerges from the above authorities, we think, is the now settled view that s 106 (as with the previous s 88F of the 1940 Act and s 275 of the 1991 Act) is directed to an impugned contract of employment, whether existing or terminated, as to the fairness of its express or implied terms. Such unfairness will depend upon the facts of each particular case by focusing attention on the contractual relationship between a particular employer and employee and where the unfairness may arise from the terms of the contract itself, the surrounding circumstances and/or the manner of performance or operation of the contract. The section, we emphasise, is not concerned with re-establishing an employment relationship which has ended nor with compensating an employee for the loss of his employment contract. In other words, the section is properly concerned with the fairness of the terms of a contract of employment in its various respects and, if relevantly found to be unfair, to provide remedial relief by avoiding or varying the terms of that contract and to order the payment of money in connection with any contract so avoided or varied as is considered just in the circumstances of the case.

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(See also Reich v Client Server Professionals of Australia Pty Ltd (2000) 49 NSWLR 551 at [31] and [32].) 265 Further, in Reich, the Court found (at [24]): In other words, it seems to us, in finding a contract (contract or arrangement, or any related condition or collateral arrangement) to be unfair, that may be supported because it became an unfair contract due to the conduct of a party at the time of the termination of the contract which enabled a finding that a contract which could or did so operate was relevantly unfair. It would then be open to declare the contract void or to make an order varying its terms in an appropriate way, with as to either form of relief a consequential order for the payment of money considered to be just in the circumstances. We have to say we find nothing surprising in that reasoning in terms of the operation of s 106 and, indeed, if it were otherwise then the whole jurisprudence developed in relation to the unfair contracts provisions in the industrial legislation over more than three decades would be effectively negated. Indeed, as to the conduct of parties, s 106(2) not only recognises such development in the cases but emphasises it by express statutory provision. 266 When considering whether the conduct of an employer in terminating an employee is sufficient to warrant a finding of unfairness, it is important to reinforce the notion that what is being challenged in an application under s106 is the fairness of a contract (as defined in s105), be it due to its terms on their face or by omission, or as performed either in breach or pursuant to its terms. As the Full Bench of the Court stated in Origin Energy Ltd v Smith [2001] NSWIRComm 308 (at [19]): 19 We would add one final observation. It was undoubtedly open to her Honour to deal with the matter in the way she did; that is as a "conduct" case. It may be that she had little alternative to doing so in view of the way in which the respondent framed his case. Nevertheless applicants, in framing their proceedings, and judges in hearing and deciding them, should not overlook the consideration that s 106 is directed to the fairness, etc of contracts and arrangements and with the fairness, etc of their terms, either in themselves as to what they actually provide or fail to provide. There is nothing in the Full Bench judgment in Reich that should lead to any different approach. It would have been preferable for the case before her Honour to have been framed and dealt with in that way. 267 I note before turning to resolve the first issue that neither party raised any issue under s109A of the Act. Following Beahan v Bush Boake Allen, I do not consider that the section precludes the applicant's claim for relief in these proceedings under s106. 268 The applicant did not make any submission that the Employment Contract, in its terms (and at the time of its making), was unfair. In my view, this approach was correct. A provision of the contract which enabled the Clubs to terminate without notice for serious misconduct is not unfair on its face. 269 The common law relating to summary dismissal for misconduct is summarised in The Law of Employment, Macken, O'Grady, Sappideen and Warburton, 5th Ed: Invariably the starting point for discussion of misconduct has been the statement by Lord James of Hereford in Clouston & Co v Corry [1906] AC 122 at 129 that "there is no fixed rule of law defining the degree of misconduct which will justify dismissal". Nor is there any rule of law defining what constitutes misconduct for this purpose. As mentioned earlier the cases indicate a tendency to combine two tests for determining whether the misconduct is such as to warrant summary dismissal, that is, that there be a breach of contract by the employee and that the breach be sufficiently serious to warrant the employer dismissing the employee or the conduct of the employee demonstrates an intention no longer to be bound by the contract. 270 It is clear from that summary that the applicant's position under the Employment Contract was as favourable to him as the common law, the inclusion of the word "serious" merely restating the common law in a short-hand manner. It could not be said, without more, that a mere term reflecting the common law was unfair. 271 Nor was the contract unfair in requiring the payment of the balance of the contract entitlement where termination was for reasons other than serious misconduct (see clause 13.2). This is plainly a generous provision. 272 However, the second aspect of the first issue raises the question whether the contract became unfair in its operation or by the conduct of the respondents. The Statement of Issues broke this question down into a number of subsidiary issues, in this respect, enumerated at paragraphs 2 - 7. In view of the applicant's submissions, those subsidiary issues may be broadly described in the following terms:

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In order to undertake the necessary analysis it is necessary to look carefully at all the relevant facts. It is necessary to determine whether the actual determination was effectively initiated by the employer or by the employee particularly where the dynamics within a factual situation may change. For example, an employer may demand a resignation with a threat of dismissal, negotiations may then ensue and the employee may ultimately be genuinely pleased with the outcome of those negotiations to the extent that any resultant resignation may be said to be given freely and without any undue influence being brought to bear by the employer. 276 There were undoubtedly aspects of the respondents' conduct both before the Meeting and in its initial stages which suggested that the employer initiated the resignation announced by the applicant. However, the Meeting developed in such a manner that other factors emerged giving grounds for a conclusion that the resignation was given freely. For example, the applicant maintained throughout these proceedings his insistence that whatever else happened at the Meeting, he would not have been dismissed - he "had the numbers" to defeat any such motion. Further, it is fundamental to the applicant's case that before resigning he secured a consultancy agreement on equivalent terms to his Employment Contract - on any assessment a satisfactory conclusion from his point of view. He also insisted that the parties come to some resolution that night, and made his own press statement following his resignation in exchange for a consultancy. 277 Needless to say, if there was a voluntary resignation the issue as to whether the applicant's actions constituted serious misconduct would be irrelevant, as there would have been no dismissal at law and no basis has been suggested in the proceedings as to how that outcome would constitute unfairness for the purposes of s106 of the Act. However, proceeding on the basis of joint submissions as to constructive dismissal, I am required to assess serious misconduct. 278 Having reached this point it must be said that the basis upon which the applicant contends that the "constructive dismissal" (an expression I shall use for convenience given the formulation by the parties) was unfair for the purposes of s106 of the Act is quite unclear. 279 Referring to the Statement of Issues, and noting that the applicant's Summons was not entirely clear on this point, the contention appears to be that the contract operated unfairly because the applicant was forced to resign (or was "constructively dismissed") in circumstances where his actions did not constitute any basis for his summary termination for misconduct (whether under the contract or otherwise). 280 Putting aside for one moment the procedural fairness questions raised by the applicant, the applicant's case fails in this aspect of his application simply because his conduct on 25 April 1999 did, in my view, constitute serious misconduct both for the purposes of his Employment Contract and at common law. 281 Before giving my reasons for this conclusion (having regard to the earlier findings of fact) I would observe that the applicant did not contend that the fact of a constructive dismissal per se (as defined in Allison) established a basis for a finding of unfairness. Had he done so I would have rejected the contention. The fact that either the first or second respondents may have initiated the departure of the applicant does not constitute an unfairness in the light of a finding that such initiation was based upon the serious misconduct of the applicant. I note here that the case was argued by both parties on the basis that the respondents' obligations and responsibilities were common. Although no distinction was drawn between the employer respondents (the Clubs) and the individual third respondent (Mr Pierce), I have already commented briefly on the viability of proceedings against an individual, although (as earlier noted) no such specific case was in fact advanced by the applicant. 282 In any event, such a contention would be weak in the light of my earlier expressed reservations about a finding of "constructive dismissal" and the conclusions I will reach below as to the applicant's contention regarding procedural fairness. Finally, the seventh issue under the heading "Employment Contract" in the Statement of Issues does not seem to have been pursued in that context. As earlier noted, that issue was subsumed into issues concerning the "consultancy agreement" and I shall deal with it below. Serious Misconduct 283 Pursuant to clause 13, the Clubs were entitled to terminate the Employment Contract without notice if the applicant committed an act of serious misconduct. 284 The appropriate test for misconduct justifying instant dismissal is well settled: is the act complained of deliberate, wilful, or of such a nature as to strike at an essential element of the contract of service? Re Dispute - Dismissal of Union Delegates at Homebush Abattoir [1966] 66 AR 371 (at 374). This formulation was recently cited with approval by the Full Bench in Burge v NSW BHP Steel Pty Ltd (2001) 105 IR 325 at 344. 285 It is equally well settled that when considering whether an employee is guilty of serious misconduct warranting dismissal, all circumstances surrounding the dismissal are relevant, including the relevant position or status of the employee. In MacLeay Valley Health Service v Jeffree (1994) 58 IR 187, the Full Bench considered an appeal against an order re-employing a senior employee of a community health centre. The senior employee had been charged with offences relating to the possession and use of an illegal drug (indian hemp), pleaded guilty and was subsequently dismissed. 286 The Full Bench considered that, in ordering the re-employment of the employee, the Commissioner had "failed to have proper and sufficient regard to the interest and needs of the Service in the context of its role and functions in the local community, the nature of the offences committed, the very senior position involved, its nature and high profile, and the duties, responsibilities and standards of conduct of a person occupying that position". Their Honours continued (at 192): The question of whether a dismissal is harsh, unreasonable or unjust in a case such as the present must be tested on the basis of the nature of the offences considered in the context of the position held, the duties and responsibilities of that position and all other relevant circumstances. Each case, of course, must depend upon its own facts and circumstances. 287 Clearly, the responsibility and status of a senior position can exacerbate the seriousness of certain misconduct. 288 This Court recently considered serious misconduct in the context of a workplace fight in detail in Burge. The Full Bench held that it was overly simplistic to regard involvement in a fight per se as misconduct: it was necessary to examine the circumstances of the fight, to consider who was the aggressor and to consider the actions of the accused employee in the actual fight. 289 In that case, there had been a long history of animosity between Mr Burge and Mr Usher, both employees of the respondent company. The appellant's supervisors, aware of the difficulty between the two men, usually rostered them on different shifts. However, one night, due to work requirements, the men were required to work on the same shift. Following some difficulties between the two men on that shift their supervisors directed them to work in different parts of the respondent's premises. Mr Usher, intentionally disobeying the respondent's direction, sought out Mr Burge and an altercation between the two men ensued. Both men were dismissed in accordance with the respondent's policy which applied to any person fighting on company premises. 290 On appeal, the Court did not find any fault on the part of Mr Burge in the altercation itself (despite his equal contribution to the preceding tension between the two men) and considered that Mr Burge's involvement in the fight was defensive. Having identified failings in the findings of fact at first instance, the Full Bench considered the significance of the company's uniform application of its policy, citing with approval the comments of Sheppard and Heerey JJ, with whom Gray J agreed, of the Federal Court in Bostik (Australia) Pty Ltd v Gorgevski (No 1) [1992] 41 IR 452 that (at 460) "employers can promulgate policies and give directions to employees as they see fit, but they cannot exclude the possibility that instant dismissal of an individual employee for non-compliance may, in the particular circumstances of an individual case, be harsh, unjust and unreasonable". 291 The Court found that the respondent had made a determination to apply its no fighting policy regardless of the circumstances revealed by its investigation and continued: Of particular relevance in that respect was the respondent's failure to consider who was the aggressor, the history of the relationship between the two employees, whether Mr Usher was aggressive and provocative towards the appellant, the confrontation by Mr Usher of the appellant, the level of anger of Mr Usher at the time and Mr Usher's departure from the scene after the fight and then his initial denial of any involvement in it. Those matters which the respondent did not take into account were, in our view, proper and necessary to be so considered rather than, as it would seem, the respondent applying its no-fighting policy without regard to the particular circumstances as they existed. It follows, we are satisfied, that the respondent's dismissal of the appellant in this case was harsh, unreasonable and unjust in that the policy was applied without relevant regard to all the circumstances; its investigation of the incident was merely incidental to its application of the no-fighting policy contrary to the approach, with which we agree, stated in Bostik v Gorgevski . We are reminded in expressing this view of the following comments by Wilcox CJ in Yew v ACI Glass Packaging Pty Ltd (1996) 71 IR 201 at p 205 : ... it is too simplistic an approach to say that any employee involved in a fight is guilty of serious misconduct and, therefore, there is a valid reason for that employee's dismissal. The employee may have been the victim of an unprovoked attack and have acted in self-defence. If a "no fighting" policy is to be enforced fairly, the employer must look behind the fight itself and examine its causes. It is also essential, I think to ensure there is nothing in the work environment, or the conduct of other employees, that might incite an employee to resort to violence.

[307]

We respectively agree with his Honour's comments and which are apt to apply in the present case. That the commissioner here endorsed the respondent's approach in dismissing the appellant as a result of its investigation necessarily meant that the commissioner also erred. 292 The appeal was upheld and the appellant was reinstated. I shall, with respect, apply the decision in Burge in this matter. Thus, in determining whether an employee's involvement in a fight at work constituted serious misconduct or whether a dismissal of the employee was harsh, unjust or unreasonable, in such a case it is necessary to consider fully the circumstances under which the employee became and was involved in the fight including, for present purposes, a consideration as to what extent the employee's actions were compelled by a need to defend himself, or by fear or intimidation. Clearly, it will also be necessary to consider the extent to which the employee was the aggressor. 293 I also concur with the judgment of Moore J in AWU-FIME Amalgamated Union v Qld Alumina Limited (1995) 62 IR 385 (at 393): … whether a dismissal or termination arising from a fight in the workplace is harsh, unjust or unreasonable will depend very much on the circumstances. However, generally the attitude of industrial tribunals tends to be that in the absence of extenuating circumstances, a dismissal for fighting will not be viewed as harsh, unjust or unreasonable. The extenuating circumstances may, and often do, concern the circumstances in which the fight occurred as well as other considerations such as the length of service of the employee, including their work record, and whether he or she was in a supervisory position. As to the circumstances of the fight, relevant considerations include whether the dismissed employee was provoked and whether he or she was acting in self-defence. 294 Further, I agree with the observations of the Full Court of the South Australian Industrial Relations Commission in Foster v. BHP Steel Long Products Division (1997) 64 SAIR 217: It is no less the right of an employee than any one else to defend his or her person from assault and the method of defence can vary from retreat to reasonable or appropriate resistance, depending on the circumstances. The moderate action taken in this case by the worker could properly be categorised as acting in a way consistent with self preservation and in the heat of that moment and should not be too finely weighed.

[308]

(See also Tenix Defence Systems Pty Ltd v Fearnley ( Ross VP, Polites SDP and Smith C, unreported Print S6238, 22/5/2000), Samaha v The Maronite Sisters of the Holy Family [2000] NSWIRComm 183 per Sams DP, Hutchinson & BHP Steelworks, Port Kembla [2001] NSWIRComm 1025 per Connor C and McKell v J. Inverarity Pty Ltd (2001) 105 IR 115 (at 120)). 295 In this case, the fault pertaining to the altercation rests squarely with the applicant. My earlier detailed findings of fact in relation to self-defence make it clear that in the actual fight, the applicant, far from being provoked or the victim of an attack, was the aggressor. It is clear that he had an alternative open to him (to hand over the jersey) which he rejected. To reiterate my earlier findings: I have reviewed in detail the evidence relating to each facet of the altercation with particular focus on the applicant's actions. These are not, in my view, the actions of a man acting in self-defence or substantially through fear or intimidation. Punching an opponent may, in some circumstances, be consistent with explanations of self-defence, fear or panic, but not in circumstances such as these, where the applicant (a) was surprised by Mr Beath from behind, demanding that he return the jersey; (b) had the opportunity in conversation to placate or pacify Mr Beath and chose not to, instead electing to escalate matters; (c) was the only party punching; (d) punched Mr Beath after a taunt; (e) punched Mr Beath when he was restrained; and (f) when he was known to be restrained. Further, the applicant admitted that at the time of the conversation, the emotion he actually experienced was indignation: he was insulted. 296 I further noted in my findings of fact that, even if, contrary to my conclusion, Mr Beath did throw a punch unsuccessfully at the outset and (assuming in favour of the applicant) this did create a sense of fear or the need to defend himself, that such a sense of fear or intimidation was not present for the full course of the assault. The evidence that the applicant punched Mr Beath several times after a pause (during which Mr Beath taunted him) and when Mr Beath was restrained and known to be restrained, demonstrates that any element of fear or panic which may have been present initially had clearly evaporated by the second stage of the assault, following the pause. Thus, the applicant's actions in repeatedly punching Mr Beath in the face, pausing in response to the taunt "Is that the best you can do?" and then repeatedly punching Mr Beath in the face again could not, even taking into account the heat of the moment, and assuming in favour of the applicant some element of fear for some earlier period, be considered as a reasonable or proportional response in all of the circumstances. I agree with the observations of the South Australian Commission in Foster v BHP Long Products that it would be inappropriate to "finely weigh" the conduct of parties in such a heated situation, but the applicant's actions could not, on any view, be described as other than inappropriate, unreasonable and disproportionate given that the applicant was not punched once by Mr Beath. 297 Finally, I note that no extenuating circumstances were put forward by the applicant. In fact, he denied that he was drunk at the time, or affected by any other condition which may have blurred his judgement. 298 A senior office-holder and public representative such as the Chief Executive Officer of the Clubs should have attempted to pacify Mr Beath or withdrawn from the heated conversation rather than escalate it to a physical altercation. Such an aggressive escalation could only be publicly embarrassing for him and for the Clubs, and attract the censure of the NRL. It is conduct which struck at an essential element of the applicant's contract of service both generally and particularly as the Chief Executive Officer. This conclusion is buttressed by the applicant's obligations under clause 18 of the Employment Contract. In my view, the applicant's role in the fight constituted serious misconduct. As such it gave rise to a right on the part of the Clubs to terminate the Employment Contract in accordance with clause 13. There is no basis, in my view, for finding that a dismissal of the applicant by the first or second respondents where he is guilty of serious misconduct constitutes unfairness in the operation of the contract or in the conduct of the first and second respondents in relation to it. Procedural Fairness 299 It is well settled that a termination of a contract of employment may occur in circumstances which warrant a remedy under s106 of the Act. By way of illustration in relation to the procedure adopted by an employer in terminating a contract, the section may be attracted because the terms of the contract permitted the termination to occur in a manner that was unfair, or more generally, because the contract was unfair in its operation: Abboud v The State of New South Wales (Department of School Education) (1999) 92 IR 32 at 50. 300 The Full Bench in Abboud examined the manner in which procedural issues could found an action under s106 and the relevance of authorities relating to the unfair dismissal jurisdiction of the Commission in that context. The Full Bench stated (at 49 - 50): The issue of whether considerations of a procedural nature are pertinent to a determination of whether the dismissal of an employee was unfair has, of course, regularly been visited in the context of claims for unfair dismissal. In our opinion, and in the particular circumstances of this case having regard to the nature and duration of the contract, the arrangements between the parties and the terms of the contract, these cases provide guidance when dealing with a claim under s106 that the contract has become unfair primarily as a result of the actions of the respondent in terminating it. The adoption of, or application of, an unfair procedure may, of itself, result in a dismissal or termination being harsh, unreasonable or unjust, or may be a significant consideration warranting the exercise of the Court's discretion in determining whether a dismissal is harsh, unreasonable or unjust: see Antonakopoulos v State Bank of New South Wales (1999) 91 IR 385.

[309]

Where a procedure for dealing with the termination of a contract is specified in an instrument governing the relationship, a failure to properly follow that procedure may (particularly where a large organisation is involved) result in the dismissal being harsh, unreasonable or unjust. In Antonakopoulos the Full Bench stated (at 390): While the findings of the Commission in Buckman focus on the issue of warnings, the observations apply also to broader tenets of procedural fairness contemplated in s88 and to matters such as those raised in these proceedings. We agree that there is no obligation in the Act to follow any particular procedure when effecting a dismissal. However, a failure by an employer to adopt appropriate procedures when effecting a dismissal, or a failure to follow procedures prescribed in an industrial instrument, or in procedures laid down administratively by an employer, may be properly taken into account by the Commission as part of the consideration of an application brought under s84. Further, as we have noted, where procedures are specified in an industrial instrument or by administrative action, a failure by an employer to apply, or to properly apply, those procedures may in appropriate cases, of itself, support a finding that the dismissal was harsh, unreasonable or unjust. In relation to contracts of employment there are many examples of cases before this Court where the termination of employment arose in circumstances held to warrant a remedy under s106: see Westfield Limited v Helprin (1998) 82 IR 411 at 438-439 and Harcourt Brace & Company (Australia) Pty Limited v Cory (1998) 81 IR 321. That a particular contract, including a contract of employment, permits a situation to occur in which the contract is terminated unfairly may render the contract itself unfair: see, for example, Day v Lumley Life Limited (1990) 90 IR 70 at 93 and Paviour-Smith and PFS-Premium Financial Group Pty Limited v The National Mutual Life Association of Australasia Limited (1999) 91 IR 8 at 56 at 68. The initial question must be whether the contract permitted the termination of the contract in a manner which was unfair. 301 Thus, decisions in the unfair dismissal jurisdiction of the Commission may offer guidance for determining applications under s106 where it is contended that the contract became unfair because of the actions of an employer in terminating it. Those authorities are, in my view, apposite in this case. An examination of these cases, including the discussion of the Full Bench in Abboud itself, demonstrates that not every failure of a procedural kind will warrant the intervention of the Court. 302 In Starr v Commissioner of Police [2001] NSWIRComm 226, the Commission considered this issue extensively. That case concerned the review of an order by the Commissioner of Police removing the applicant from the Police Service of New South Wales. The applicant contended that his removal was harsh, unreasonable or unjust in that there was a denial of both procedural and substantive fairness, raising issues similar to those requiring resolution in unfair dismissal cases. The Commission found that the Commissioner failed to take into account relevant information (in that case the transcript of related Local Court proceedings) which denied the applicant procedural fairness. The transcript revealed deficiencies in some of the evidence relied upon by the Commissioner in making his decision. It was necessary to determine whether that procedural fault warranted a conclusion that the applicant's removal was harsh, unreasonable or unjust. 303 The Commission held that it was not, and contrasted that matter with Van Huisstede v Commissioner of Police (2000) 98 IR 57 at 107 as follows (at [141] - [143]): 141. The faults identified in the process adopted by the Commissioner in this case are, in my view, less comprehensive than those present in Van Huisstede . In Van Huisstede , the Commissioner made a finding that he believed certain allegations made against the applicant without having before him any direct evidence of the nature of those allegations. In addition, it was conceded that the Commissioner in that case took into account irrelevant considerations that were never raised with the applicant. In this case, the failure of the Commissioner to obtain the transcript of the Local Court proceedings was unfortunate and resulted in misconceptions about the strength of certain evidence. This is a serious matter and will be taken into account in the final determination of the ultimate question before the Commission. However, this is not a case in which the Commissioner had no evidence before him relating to the alleged conduct of the applicant. There were some considerations in favour of the applicant arising from some aspects of the material before the Commissioner (including those aspects attacked by the applicant as being 'procedurally unfair'). The deficiencies in the approach of the Commissioner were not such as to warrant, as such, a conclusion that the applicant's removal was harsh, unreasonable or unjust.

[313]

It was not, therefore, a permissible approach for the Full Court to reach a conclusion adverse to the respondent based upon the procedure employed in dismissing the appellants without considering whether the trial judge was correct in reaching the conclusion that there was sufficient evidence to establish that the appellants were involved in the misconduct alleged against them. 306 Hill J in Mason v Electricity Commission of NSW t/a Pacific Power (1995) 62 IR 436 at 441 - 442 examined the consequences of a denial of procedural fairness, after referring to provisions in the Industrial Relations Act 1991 (NSW) which listed matters the Court could take into account in determining whether a dismissal was harsh, unreasonable or unjust. His Honour continued: Those provisions import into the issues for determination some of the requirements of the rules of natural justice. Very obviously the rules of natural justice cannot be imported without substantial qualifications, having regard to the circumstances in which the rules are to be applied, namely, the dismissal of an employee by an employer. Clearly the employer must be the judge in its own cause, may be biased and indeed may have prejudged the matter. But these considerations will not affect a dismissal which is otherwise justified on the merits. Furthermore, the statute provides only that the Commission may, where appropriate, take into account the specific considerations there set out and , finally, any other matters it considers relevant. It may well be in some circumstances for example where the failure to afford procedural fairness causes substantial and irrevocable prejudice to the employee, that such failure will result in the dismissal being harsh, unreasonable or unjust. However, at the end of the day, the ultimate disposition of the claim for reinstatement, remains within the discretion of the Commission; that discretion must, of course, be properly exercised. 307 I also refer to Wang v Crestell Industries Pty Ltd (1997) 73 IR 454. In that matter the Full Bench of the Commission referred to Byrne and observed at 467: … we consider nevertheless that that case provides strong support for the commissioner's conclusions that, on the basis of the seriousness of the misconduct established to his satisfaction in this case, the lack of procedural fairness which may have been involved did not render the dismissals harsh, unreasonable or unjust. 308 It should be noted that in Wang, the lack of procedural fairness was significantly more serious than that alleged in this case. The employees were summarily dismissed for stealing from the employer, but were not even informed of this termination: the first they knew of it was the initial approach by the police investigating larceny. 309 In this case, the applicant contended that he was denied procedural fairness in a number of ways: (i) By the failure of the respondents to call a press conference on 26 April 1999 to allow him to stem the media's circulation of inaccurate reports;

[315]

(iii) Certain members of the Board had determined, before hearing him on 27 April 1999, that the applicant should resign as Chief Executive Officer. 310 Further, the applicant submitted that the third respondent's distribution of critical material at the Meeting unduly influenced the Board in its determinations that night and accordingly rendered the Employment Contract unfair. In this respect, I simply note that my earlier finding of fact in the context of the first two stages of the Meeting that the Board was not, in fact, unduly influenced in its determinations nullifies this submission. 311 As to the first submission, I do not believe that any failure on the part of the respondents to accede to the applicant's request for an immediate press conference to counter inaccurate reports in the media could be described as denying the applicant procedural fairness. Indeed, on one view, it was unreasonable for the applicant to demand that the parties give a unified press conference before the respondents had had the opportunity to consider the matter (including the applicant's version of events) and make a determination: such conduct itself could raise serious issues relating to procedural fairness. Procedural fairness requires a fair determination of the matter as between employer and employee. Inaccurate newspaper reporting may give rise to a procedural fairness question if the employer relied upon that reporting to make its determination. However, the evidence does not support a conclusion that there was procedural unfairness in this matter on that basis. Although the applicant suggested in written submissions that Mr Gillard had been unduly influenced by inaccurate media reports, this was not put to Mr Gillard in cross-examination and the paragraphs of his affidavit referred to by the applicant do not support such a contention. Further, as I will discuss below, the applicant had the opportunity to correct any such inaccuracies in his address to the Board, before the Board considered its course of action. Whether or not an accurate version had been given to the media, it had certainly been given to the Board (having regard to my earlier findings of fact). 312 Given that the Meeting was not delayed despite the applicant's request, and the evidence of Messrs Gillard and Quinn that they had determined before the Meeting that the applicant should resign, the second and third submissions do raise more substantial issues of procedural fairness which require consideration. It should be noted that the Employment Contract did not specify any procedure in relation to termination by the Clubs. Before returning to the particular aspects of those contentions it is important to examine some more general considerations bearing upon the question of procedural fairness in this matter. 313 As a general riposte to the applicant's allegations that he was denied procedural fairness, the respondents contended that the applicant's complaint was disingenuous: his case rested on the assertion that he procured an equivalent (if not better) consultancy agreement, notwithstanding any alleged denial of procedural fairness. In any event, in answer to the applicant's second submission, there had been no denial of procedural fairness; the applicant had been given every opportunity to present his side of the story and he well understood the precise allegations that he was to meet. It was conceded that the applicant had sought more time to "present his case", but it was submitted that the applicant had not demonstrated any material that he would have brought to the Board's attention had he been granted this extra time. At no stage did the applicant describe how he would have benefited from any additional time or how he would have conducted himself differently at the Meeting. There was no evidence that the 'media frenzy' influenced the Board; each and every member of the Board was prepared to hear the applicant. The respondents did not, however, make any submissions in answer to the applicant's complaint that certain members of the Board had pre-determined the matter except for their general rebuttal that the applicant claimed that a consultancy agreement had been secured. 314 Furthermore, if there were some shortcomings in the process adopted by the respondents, it was submitted, on their behalf, that these shortcomings were not enough to warrant a finding of unfairness. The seriousness of the applicant's conduct was such "that dismissal was an inevitability". 315 The example given in Byrne of an employee denied the opportunity to explain apparent misconduct when there was an innocent explanation available clearly does not apply here. The respondents were correct in their submission that the applicant did not, at any stage, describe how he would have benefited from any additional time, nor how he would have conducted himself differently at the Meeting had he had more time. Further, there was evidence that the applicant adopted conflicting positions at the Meeting: on the one hand, requesting more time, and on the other, insisting that the Board come to a resolution that night. The applicant conceded under cross-examination that, at the Meeting, he understood each aspect of the allegations against him and had the opportunity to address them. An additional passage of cross-examination of the applicant is worth quoting on this point: Q. I am just trying to see what it was about the board meeting that didn't give you a fair opportunity to put your side of the story, that is apparently part of your case? A. I am not saying I didn't get a fair opportunity, I'm saying there was very little in depth investigation by the board into the incident, that's what I'm saying. Q. How do you know that? A. Because it was conducted by one person. Q. This is Mr Pierce - your conspiracy theory-- A. No, not conspiracy theory, I'm just making a statement of fact.

[316]

316 No submissions were made by the applicant as to the quality of the respondents' investigations before the Meeting. 317 This is not a case where the Board took into account irrelevant considerations or matters that were never raised with the applicant. Nor is it a case where the Board had little or no evidence before it relating to the alleged conduct of the applicant. Although it is true that the third respondent distributed a complaints folder which was intended to be detrimental, only three other directors read the folder before the Meeting and I have already found, on the balance of probabilities, that this material did not unduly influence the determinations of the Board. Indeed, following the comprehensive examination of the incident in these proceedings, it was clear that the Board had consulted the key witnesses: the applicant, Mr Beath, Mr Lang and Mr Longmuir. Mr Gillard was also present at the Meeting. The only witness to give evidence in these proceedings relating to the fight, which was not considered by the Board, was Mr Kelly, and that evidence (although generally not a feature of my findings on misconduct) was unfavourable to the applicant. (The only aspect of Mr Kelly's evidence considered by the Board related to the applicant's acquisition of the jersey). 318 I have already concluded that in this case the applicant's conduct at the incident did constitute serious misconduct and it was, therefore, open to the Clubs to dismiss the applicant summarily in accordance with the Employment Contract. No unfairness was found on the terms of the contract, nor in its operation, although procedural fairness questions, as I have earlier noted, may, in some (albeit limited) cases arising in such circumstances, give rise to such a finding. However, I do not consider that the circumstances of this case warrant a conclusion that the contract was unfair in its operation (for the purposes of s106 of the Act), having regard to the nature and extent of any procedural defects (which I will now discuss) when balanced against my findings as to the misconduct engaged in by the applicant. I shall turn then to discuss the relative weakness of the procedural fairness issues raised by the applicant. 319 In addition to the aforementioned discussion of the limits of the applicant's procedural unfairness case, I note that procedural defects did not derive from a breach of an instrument (including the Employment Contract) or from any other obligation in law. The faults identified in the process were not comprehensive, and the applicant was unable to point to any particular detriment suffered as a result of them. Although it is true that two members of the Board had already determined that the applicant should resign before hearing his version of events, one of them (Mr Gillard) made this determination on the basis that the applicant should be given a consultancy in exchange, and it cannot be said that in this case the failure to afford procedural fairness (such as it was) caused any (let alone substantial or irrevocable) prejudice to the applicant. Indeed, as the respondents pointed out, on the applicant's case he procured an equivalent (if not better) consultancy agreement as a result of the Meeting. The observations of Hill J in Mason should also be borne in mind: the rules of natural justice must be imported into the employment relationship with some qualification. His Honour's example that, even if an employer has prejudged a matter, a dismissal will not be harsh, unjust or unreasonable due to that procedural fault if it is otherwise justified on the merits, applies even more forcefully in this case where, rather than the employer, it could only be said that one of the eight Board members (Mr Quinn) had prejudged the matter in a manner which may have been detrimental to the applicant. 320 In view of the applicant's entire case, it is worthwhile examining more closely the effect of the procedural faults established: first, the failure to delay the Meeting (it must be said, in the face of conflicting demands by the applicant); and secondly, the fact that two of eight directors had already determined that the applicant should resign (one believing that it should be in exchange for a consultancy). The applicant's conduct of his case presents real difficulties in establishing that procedural faults tainted the stages of the Meeting following his address on the incident of 25 April, which were concerned with the consultancy. (On his case, this comprised most of the Meeting). There can only be two (albeit related) "determinations" of the Board which could be questioned: the so-called "constructive dismissal" and the consultancy arrangement. 321 Even if I am bound by the parties' joint submissions that there was a "constructive dismissal" (a matter on which I have expressed real reservations), no-one suggested that the Board reached a decision to dismiss the applicant per se. There was no resolution of the Board, nor a de facto decision to dismiss (a) of which it could be said more time was necessary in order for it to be informed or (b) which could be said to be tainted or nullified by bias. The concession of constructive dismissal presumably brings with it the notions that the collective mind of the Board initiated the applicant's decision to resign and that the applicant was not given time to reflect before being forced to resign. However, as to that aspect, the applicant's resignation (even if described as a "constructive dismissal) must be seen in the context of a meeting in which the applicant played a significant role in the course of events, amplifying the discussion in relation to a consultancy as a condition of resigning, distributing a short form terms sheet, discussing those terms with each director and, as I will find, securing an arrangement as a result of those discussions. In those circumstances, any weight given to procedural faults must be diminished. 322 Counsel for the applicant referred the Court to three cases to support his submission that it is only necessary to demonstrate that one member of the Board was "invincibly" biased against the applicant to demonstrate that the Meeting, to the extent that it purported to be a meeting called to investigate the applicant's conduct, miscarried. Those cases were: Australian Workers Union v Bowen (No. 2) [1948] 77 CLR 601 at 631; Dickason v Edwards [1910] 10 CLR 243 and Adlam v Bauer [1999] 93 IR 114. Both Dickason v Edwards and Australian Workers Union were applied by Marshall J in Adlam v Bauer. 323 Adlam v Bauer concerned a dispute between a divisional secretary of a union, Ms Adlam, and the State and National council of that union in relation to an application to dismiss the branch secretary, Mr Noack. Such a dismissal could only be effected, according to the union rules, by a two-thirds majority of votes taken at a meeting of the National Conference. Insufficient votes were obtained and Mr Noack was not dismissed. Ms Adlam commenced proceedings alleging that some members of the council who voted against Mr Noack's dismissal were invincibly biased in favour of him. The Court endorsed the principle espoused by both parties, following Australian Workers Union and Dickason v Edwards, that if any one member of a disciplinary tribunal was invincibly biased and should not have sat to hear and determine the charges against Mr Noack, the decision of that tribunal would be vitiated. 324 The Court found that one member, Mr McMahon, was invincibly biased and incapable of being persuaded that Mr Noack may have been guilty of the charges alleged. In separate District Court proceedings one of the charges against Mr Noack (a criminal charge of indecent assault) had been upheld. Notwithstanding this judicial finding, Mr McMahon gave evidence that he still could not believe that Mr Noack was capable of that type of conduct, and that there was only a "one per cent chance" that the findings of the District Court judge were correct. Further, Mr McMahon had been a good friend, strong supporter and political ally of Mr Noack for more than ten years. 325 Australian Workers Union concerned a concerted attack over a period of time by the secretary of a union's executive council against the respondents who were subsequently expelled. Indeed, the secretary initiated the idea of expulsion, "engaged in bitter public attacks upon the respondents and exhibited the most intense and extreme opinion about the respondents' conduct concerning the matters in question". Further, in the executive council's expulsion hearing, the secretary assumed the role of "prosecutor". It was contended, in that case, that he was animated by such an animosity of feeling that he should have been disqualified for bias. Similarly, Dickason v Edwards concerned a determination by a "judicial tribunal" of a Friendly Society resulting in the expulsion of a member. The tribunal was presided over by the District Chief Ranger, in a case in which the offence complained of was one against him personally. 326 As a preliminary matter, I would observe that cross-examination of Mr Quinn did not disclose bias to the same level indicated in the decided cases, leading to the adjective "invincible", unlike the secretary in Australian Workers' Union, or Mr McMahon in Adlam v Bauer. There was no evidence of a long-standing personal bias of Mr Quinn against the applicant, nor of any concerted attacks, public or otherwise. Nor did he take an integral and leading role in the events leading up to the applicant's resignation. The role of Mr Quinn at the Meeting in no way resembled that of a person presiding over a tribunal and the applicant did not suggest at any stage that he was animated by personal slight. Neither was there any evidence that Mr Quinn was incapable of being persuaded, one way or the other. In written submissions, the applicant further suggested bias on the part of Mr Gillard, but it is clear from my previous analysis of Mr Gillard's evidence that, far from being invincibly biased against the applicant, Mr Gillard gave cogent evidence in support of the applicant's case as to what agreement was reached in the Meeting concerning the consultancy. 327 However, those observations are preliminary to the fundamental distinction between these proceedings and the authorities referred to above which relate to the nature of the Meeting, discussed above at [321]. The applicant himself insisted that this was not a meeting to determine whether or not the Board should dismiss him. It was clear that no such motion was put before the Board or voted on. There was no decision of the Board (formal or otherwise) to dismiss the applicant capable of being vitiated by the invincible bias of one member. 328 As to the Board's second "determination" at the Meeting, which I will find constituted an arrangement, the applicant's case was entirely inconsistent with the allegation of any taint arising from a denial of procedural fairness. That arrangement represented a fresh step taken in the light of the first stages of the Meeting and, on the applicant's case, that process was one in which each director voluntarily agreed to a consultancy in terms equivalent to the previous Employment Contract and in a manner favourable to him in that context. 329 Finally, it must be said that in the light of the seriousness of the misconduct, the procedural faults (bearing in mind the circumstances of this case, their significance, such as it was, and the context in which they took place, as discussed above) did not render the Employment Contract or its termination unfair.

[317]

330 I, therefore, find that there was no unfairness for the purposes of s106 of the Act in or in relation to the Employment Contract, either in its terms or operation, or more generally by the conduct of the respondents. Specifically, I answer the issues raised as follows: 1. No. 2. This was not advanced directly in submissions but, in any event, would be more difficult to sustain than the submissions advanced by the applicant in relation to procedural fairness which I have rejected. 3. No. 4. This was not advanced directly in submissions and appeared to be subsumed in the submission that the applicant was constructively dismissed. 5. No. 6. The Court proceeded on the basis of the common ground reached by the parties as to constructive dismissal. 7. No. I have found that it was agreed as between the Board and the applicant that the applicant would resign in exchange for a consultancy and that, on the balance of probabilities, the applicant relied upon this agreement in resigning. A number of the terms of the arrangement were agreed. That is not to say that the applicant was induced to resign on the basis of representations that a consultancy agreement had actually been concluded. 331 Having determined that the applicant has no cause of action pursuant to s106 of the Act against the respondents in relation to the Employment Contract, it is necessary to consider the transactions between the parties concerning the consultancy. The Arrangement 332 My determination that the Employment Contract was not unfair (in its terms, performance or termination) does not conclude the dispute between the parties. It is clear on the evidence and the findings of fact relating to the Meeting that transactions occurred between the Board and the applicant at the Meeting which are significant for the purposes of s106 of the Act. 333 Paragraphs 7, 8 and 9 of the Statement of Issues (the latter two of which fall under the heading "Consultancy Agreement") pertain to this part of the proceedings and essentially, in conjunction with the applicant's submissions (including the alternative submissions pressed by the applicant), involve the following questions:

[319]

333.2 Alternatively, should the transaction between the parties be described as an arrangement? 334 As to 333.1, in view of my earlier findings of fact, it cannot be said that the agreement reached at the Meeting gave rise to a binding consultancy agreement between the parties. The parties had decided that the applicant would perform a consultancy governed by terms which had already been agreed (such as term, money, mobile phone, genuine expenses and all financial issues) but which remained to be resolved in several respects: firstly, in relation to the specific terms concerning the car and dismissal; and secondly, the manner in which this arrangement would be converted into a written agreement. The applicant resigned on the basis of this agreement. 335 Two important decisions of the High Court which have been consistently applied (most recently in this jurisdiction in Diver v Object Oriented Pty Ltd and Anor [2002] NSWIRComm 138) make my conclusion in the preceding paragraph clear. 336 In Sinclair, Scott & Co Ltd v Naughton (1929) 43 CLR 310, the High Court considered a preliminary agreement of various terms between two parties for the sale of a country station in anticipation of a formal contract. The majority of Knox CJ, Rich and Dixon JJ held that the preliminary agreement could not constitute a binding contract. The parties did not regard the agreed terms (and there were a number) as a complete and exhaustive statement of their rights and liabilities, and must have known that many subsidiary questions would require agreement before a sale of that magnitude could proceed. Naturally enough, the parties had agreed upon matters of financial importance and one or two obvious practical questions, but they had not agreed that no new term or variation could be introduced in the formal document to be prepared. 337 Similarly, in Summergreene v Parker (1950) 80 CLR 304, a case concerning the sale of a business, the High Court was unanimous in finding that an initial agreement of various important commercial terms, including an agreement to enter into "the usual Agreement for sale and purchase ... containing the usual terms of sale and these terms to be in a satisfactory form to you and to the Company" was not a binding contract. At 316 Latham CJ explained: The reason why the necessity for further agreement between the parties prevents the formation of a contract is that where this is the case the position is that all the terms of the transaction have not been agreed and that therefore the alleged contract is uncertain in its content. There is no consensus ad idem : Scammel and Nephew Ltd v Ouston (1941) AC at 255. The parties to a contract may bind themselves under a contract which is complete in itself to leave specified matters to be determined by a third party, e.g. by an architect or surveyor or arbitrator, but it is quite a different thing to provide that the actual terms of the contract shall depend upon what some two persons shall agree. There is no legal means of compelling any persons to agree upon anything. 338 Finally, in Diver v Object Oriented Pty Ltd and Anor, Peterson J (in following the two cases mentioned above) held that a settlement agreement between two parties to conciliation proceedings was not enforceable as a binding contract because the precise extent of a non-solicitation clause (whether it would include contractors as well as employees) had not been agreed. Accordingly, there was a real aspect of uncertainty between the parties which meant that there was no complete agreement. The unresolved term was an essential term of the proposed agreement and a term which had not been formulated. 339 In the present case, not only were fundamental terms unresolved (the car allowance and termination provisions), but, as in Sinclair, Scott & Co Ltd v Naughton, subsidiary questions (such as precise scope of the consultancy, authority to deal with third parties, and secretarial and home office allowances) would require agreement before the consultancy was finalised. 340 The applicant made several submissions in relation to the unfairness of the alleged consultancy agreement (for example, that the respondents repudiated it by denying it) which need not be evaluated in the light of my finding that there was no such binding agreement. These submissions are reflected at paragraphs 9, 10, 11, 12, 13 and 14 of the Statement of Issues (which thereby do not require further answer although some of them may be relevant to the second question as to an arrangement, such as issues 10, 11, 12 and 13) and the sixth submission of the applicant listed in paragraph [23] of this judgment. Paragraph 8 of the Statement of Issues is, in accordance with my finding in this respect, answered in the negative. (I do not consider that the use of the word "essential" allows this conclusion as the question asked, as I understand it, is whether a contract was reached between the parties in the form of a consultancy agreement). 341 In the absence of a binding contract, I must consider the question posed at 333.2: whether there was an arrangement? 342 The concept of an arrangement was recently considered by a Full Bench of this Court in Reich. In that case, the Court applied Legal & General Assurance Society Ltd v Stock (1993) 49 IR 464 in the following terms at [17]: 17 The extension of the section to cover an "arrangement" and the consequent effect on transactions within its scope have been referred to on many occasions in the cases, as illustrated by what was said by a Full Court ( Hill, Maidment and Peterson JJ) of the former Industrial Court in Legal & General Assurance Society Limited v Stock [1993] 49 IR 464. It is instructive to recall what their Honours there observed (49 IR at pp 480-481): The authorities make clear that the term "arrangement" where used in the section is a wide one and encompasses transactions or plans which are not legally enforceable agreements. The following principles may be drawn from decided cases in the matter in relation to the ambit and reach of the term "arrangement" where used in the section ( Unconscionable Contracts and Economic Duress - Peter M Hall, at 55-56). "(1) The word 'arrangement' in its ordinary meaning and particular statutory context is a word of much wider import than the word 'contract'. (2) An 'arrangement' will be found to exist where there is a bilateral or multilateral plan or concerted action to bring about a particular result. (3) An 'arrangement' may envisage a transaction in the nature of a bargain which may not be legally binding or enforceable, something in the nature of an understanding between two or more persons. (4) The section speaks of an arrangement of a particular kind, namely, an arrangement whereby a person performs work in an industry, that is, a transaction which directly leads to the performance of work in an industry. (5) The term 'arrangement' possessing a broad and extensive meaning may be found disclosed in a document comprising or specifying its terms, or there may be no document specifying the arrangement in which event resort will be had to oral evidence of discussions whilst in other cases an arrangement may be implied or inferred from the circumstances or the conduct of the parties. An arrangement may be discovered in a combination of documentary or verbal communications and the conduct of the parties. The relationship between the parties may itself manifest an arrangement. (6) There may exist two separate contracts each forming part of a specific arrangement and together constituting the means by which it is effectuated so as to produce particular results and whereby a person performs work in an industry.

[325]

348 This concession concerned the "arrangement" (that is, the reference to the third alternative of the applicant's case), albeit the concession reflects the respondents' contentions (which I have earlier rejected) as to the limited nature of the arrangement. The respondents, in replying to the applicant's formulation of the second half of his case as to a consultancy agreement (as distinct from an arrangement), also conceded that, if the Court found such an agreement came into force, their denial of it would be unfair. There was no contention advanced in the proceedings that this concession would apply differently in the case of an arrangement and none is apparent on the respective cases put by the parties. These concessions, in my view, were entirely appropriate in the context of these proceedings brought as they are under s106 of the Act. 349 The language of s105 defines a contract or arrangement which is unfair, harsh or unconscionable as unfair. As earlier mentioned, it is well settled that in determining whether a contract or arrangement is unfair, regard may be had to the terms of the contract or arrangement (including the omission of terms) and the performance or operation of the contract or arrangement. This may involve an assessment of the conduct of a party to the contract or arrangement, including a party's conduct at the time of termination. It follows that the conduct of a party (in relation to an arrangement) which involves unfair dealings with the other party (including acts of bad faith) may result in a contract or arrangement being unfair for the purposes of s106 of the Act. Thus, a course of deceptive conduct during the operation of a contract or arrangement may render the "transaction unfair": Stone Microsystems (Aust) Pty Ltd and Stone Group Asia Pacific Investments Ltd v Kwong and Datamax Pty Ltd (1997) 42 NSWLR 160 at 199. If any further elaboration of this point is needed, it may be found by reference to equivalent notions in the context of contract law (noting the narrower range of matters that may arise for consideration in that context).

[326]

350 In Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234, which concerned a building and engineering contract, Priestley JA found "There is nothing in the slightest novel in the implication of terms requiring reasonableness by parties to a contract in implementing terms of the contract" (at 260). The implication was supported by common law principles of implication at law, statutory analogy (where the legislature implies terms into classes of contract to make the contracts work more fairly between the parties) and a growing openness in Australia to United States contractual doctrines of good faith and fair dealing. His Honour stated (at 265): Similarly, there is a close association of ideas between the terms unreasonableness, lack of good faith, and unconscionability. Although they may not be always co-extensive in their connotations, partly as a result of the varying senses in which each expression is used in different contexts, there can be no doubt that in many of their uses there is a great deal of overlap in their content, particularly in the kind of situation being discussed in the present case. 351 (This judgment has been applied by Finn J of the Federal Court in Hughes Aircraft Systems International v Airservices Australia (1997) 146 ALR 1 and referred to by the High Court in Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5). 352 An application of the discussion in Renard as to the interplay between notions of "reasonableness", "conscionability" and "good faith bargaining" leads readily to the conclusion that unfair dealings by a party to an arrangement during its operation or a failure to bargain in good faith, either in the course of reaching an arrangement or subsequent to the making of an arrangement (where the arrangement, for example, requires further negotiation), may result in the arrangement being an unfair contract for the purposes of s106 of the Act. This is so, as the concept of reasonableness is inherent in the notion of fairness (see, Outboard World Pty Limited T/as Budget Waste Control (Sydney) v Muir (1993) 51 IR 167 at 183, although the Commission was careful to ensure cautious attention to the actual tests applicable in s246 of the Industrial Relations Act 1991 rather than the general notion of "unfairness") and conscionability is expressly referred to in the definition in s105. Further, it is unavoidable that the denial of an arrangement, once entered into, would constitute an act of unfairness both in terms of "fair dealing" and having regard to the legitimate expectations of the party subjected to such conduct (this aspect is discussed further below). 353 In my view, an assessment of whether the arrangement was unfair for the purposes of s106 of the Act in this matter requires examination of four distinct aspects of the Clubs' conduct. The four distinct aspects are:

[330]

356 Even on the respondents' case, it will be seen that their conduct was manifestly unfair. The respondents contended in these proceedings that, following the Meeting, the applicant had nothing more than "an agreement to agree" which they conceded was an arrangement for the purposes of s105, incorporating an obligation to negotiate in good faith. Even without my findings as to additional terms which were agreed, I consider that a blanket denial during the course of negotiations of that prior agreement was plainly unfair. How could the Clubs purport to negotiate in good faith when they denied the very starting point for negotiations? The unfairness is even more emphatic if one substitutes the respondents' version of events for my actual findings that most of the terms had been agreed between the parties and a proportion only remained to be negotiated. 357 As a further general comment on unfairness in the context of the respondents' denial, I refer to the formulation in Day by Hungerford J: whether the respondents acted in a "one-sided manner contrary to the legitimate expectations and understandings of the other party". This principle was recently approved in Reich at [18]: We are well satisfied that the word "arrangement", including if necessary the extended words in the definition as covering "any related condition or collateral arrangement", is sufficiently wide to encompass aspects of the employment relationship which are said to offend the concept of fairness, including as alleged here the conduct of the respondent in repudiating the contract of employment. In Day v Lumley Life Ltd (1999) 90 IR 70, Hungerford J had occasion to consider in a s 106 case the conduct of the respondent employer in making unilateral decisions affecting the reasonable employment expectations of an employee. In finding (90 IR at p 72) that "the very nature of the employment relationship (contract) impliedly requires an employer in so doing to act with propriety according to the particular circumstances existing", his Honour held that "Section 106 not only recognises that but reinforces it by enabling an aggrieved employee to obtain relief to remedy any unfairness". Those findings were based on the following proposition as to the employment relationship stated by his Honour (90 IR at p 71):

[338]

361 The respondents would have me draw various adverse conclusions from the applicant's conduct during the consultancy negotiations. Specifically, the respondents contended that, if anyone conducted negotiations in bad faith, it was the applicant, in continually asserting an agreement which had not, in fact, been reached. In support of their contention that there was no agreement between the parties at the Meeting the respondents cited the applicant's continually changing position during negotiations. I reiterate that the conduct of both parties to the negotiations must be viewed as a whole in making any assessment of unfairness or lack of good faith. 362 I do not accept the respondents' contentions as outlined above. I have already found that an arrangement was reached at the Meeting and there can be no adverse reflection upon the applicant for simply asserting this to be the case. I have also already rejected the respondents' proposition that the applicant's changing position indirectly represented an acceptance by the applicant that no agreement had been reached at the Meeting. My earlier findings accept that the applicant (taking a practical, commercial approach) began making concessions in the face of immutable silence from a Board whose members were changing to his detriment or, later, in response to demands which made it appear as though negotiations may fall apart. However, the applicant's continued insistence in correspondence that all matters had been agreed upon, including the dismissal clause and car benefits, does suggest that the applicant was acting with something less than full candour in his negotiations with the respondents following the Meeting. However, I would not go so far as to find that it warrants the charge of bad faith as there was plainly a joint intention to reach agreement on those remaining matters and the applicant, in the course of the negotiations, indicated that he would accept terms similar to the termination provisions of the Employment Contract (the car provisions not being the subject of particular contention by the respondents). 363 A more pointed charge may be levelled at the applicant in relation to the first draft he submitted to the Board as equivalent to the Employment Contract when, in fact, it was more favourable to him. However, I do not consider this event, in the context of the entire negotiations, to be sufficient to impugn the applicant's conduct of those negotiations in good faith. This is particularly so, given that the dismissal clause (the most contentious change) was the subject of some discussion at the Meeting and the inclusion of the word "grave" is not a significant departure from the dismissal clause in the Employment Contract. In fact, given the clear evidence of Mr Gorry that he (Mr Gorry) did not discuss the removal of the word "grave" with Ms Glass, and that he (Mr Gorry) intended to replicate the effect of the Employment Contract provision in his first draft of 5 July (although his actual draft went a great deal further), it can be said that as soon as the applicant received the draft and perceived this clause to be a problem he adjusted his position to the Employment Contract provision. This is clearly demonstrated by his handwritten comments on Mr Gorry's draft.

[357]

385 Secondly, the applicant claimed that he should be awarded an introduction fee. This was referred to in oblique terms, in the Statement of Issues, although the language is ambiguous and may simply refer to an entitlement to remuneration for work performed. Quite simply, there is no proper basis (evidentiary or otherwise) for such an order. The most that could be said about such a fee, on the evidence, was that it was contemplated by the parties during negotiations after the Meeting as consideration for the Clubs' reduction of the term of the arrangement, but the details (the actual amount, or precise circumstances in which it would become payable) were not agreed and such an agreement was never finally reached. Further, the notion of an introduction fee did not form any part of the arrangement or matters remaining to be negotiated under the arrangement. Nor was there any agreed variation to the arrangement in this respect. Having regard to my findings as to the unfairness of the arrangement, I do not consider that there is a proper basis for varying the arrangement with respect to this matter. The highest that the applicant's case may be put in this respect was the "trap-door theory" which has been rejected. Even on that basis, however, it does not follow (and I would not conclude) that a variation to the arrangement to provide an 'introduction fee' would be appropriate in consequence of a finding of unfairness in that respect (if found), having regard to the circumstances of this matter, the arrangement between the parties and the above discussion as to the limits of the applicant's case as to the introduction fee. Further, the fact of an offer in settlement of this matter of a small introduction fee does not alter this view - it is simply a reflection of the state of the negotiations (albeit incomplete ones) at the point of the termination of the arrangement. Finally, in this respect, I also do not consider that a case has been made out which would establish a proper evidentiary foundation for making a money order in or in relation to an introduction fee.

[364]

392 I consider that an order for the payment of money should be made which is commensurate with those proposed variations and which is just in the circumstances of this case. I have already assessed an appropriate amount as payment for work performed and related matters at paragraph 389. As to the duration of the arrangement for the purposes of paragraph 391.4, I consider that a minimum period of six months would be a reasonable length of time to allow bona fide negotiations to run their course and work to be performed, bearing in mind the nature of the arrangement and the parties thereto, the course of the negotiations and the applicant's legitimate expectations as negotiations proceeded. The calculation of money orders by reference to this varied term should, again, be pro-rata by reference to the Employment Contract. On this formulation the applicant should be paid for three months in lieu of notice (additional to the compensation for the three months' work performed) bringing the money order resulting from the operation of this provision to $105,000. 393 Money orders may also be assessed in consequence of the variation to the arrangement to require the giving of reasonable notice to the applicant in the circumstances specified in the variation. It is appropriate to consider, in this respect, having regard to the principles in Lavings v Barclay Mowlem Construction (NSW) Pty Ltd (1994) 99 IR 247 at 253 (as endorsed in Stead at 65), the nature and status of the applicant's position under the arrangement and his seniority within the Clubs' organisation, the entire length of his service (both under the Employment Contract and the arrangement: in this respect the Court has applied the approach in Ross v GN Comtext (2000) 107 IR 1 at [30] and [31]), the degree of responsibility involved in relation to the development project, the amount and form of his remuneration and his age. In view of these circumstances, and notwithstanding the comparatively short term of the arrangement, but having regard to the nature and circumstances of the arrangement and the manner in which it was brought to an end, I consider that three months would be an appropriate notice period. When combined with the money order relating to work performed, this would result in the same money order as the money order arising from the variation referred to in paragraph 391.4, namely $105,000.

Parties

Applicant/Plaintiff:

Peter Rochester Gow

Respondent/Defendant:

Cronulla Sutherland Leagues Club Ltd

Legislation Cited (2)

Trade Practices Act 1974(Cth)

Industrial Relations Act 1991(NSW)

Cases Cited (45)

PARTIES : RESPONDENTS: Cronulla Sutherland Leagues Club Limited Cronulla Sutherland District Rugby League Football Club Limited Barry Michael Pierce FILE NUMBER: IRC 4711 of 1999 CORAM: Walton J Vice-President CATCHWORDS : Unfair contract - Applicant former CEO - First and second respondents professional rugby league clubs - Third respondent President of first and second respondents - Statement of issues for proceedings - Findings of fact - Employment contract - Incident involving applicant in fight - Nature and circumstances of altercation - Self-defence, fear or intimidation not available as explanation or justification - Not reasonable response in circumstances - No issue under s109A - Employment contract not unfair on its terms in providing for summary dismissal for misconduct - Contract not unfair in terms as to conditions applying on termination - Constructive dismissal common ground - Reservations re constructive dismissal finding - Serious misconduct - Relevant principle re serious misconduct - Procedural fairness - Nature of defects - Adjournment refused - Bias of director - Nature and conduct of meeting of Board - No dismissal per se - Meeting in two parts - Applicant's conduct at meeting - Consulting arrangement inconsistent with procedural unfairness - Weighed with finding serious misconduct - Employment contract not unfair - Arrangement - Principles for - Nature and terms of arrangement - Unfairness - Good faith bargaining - Unfair dealings - Unjust enrichment - Failure to pay for work performed - Unequal bargaining positions - Arrangement unfair - Remedies - Discretion - Principles re discretion - Variation of arrangement not appropriate re introduction fee expenses and distress claims - Application re third respondent dismissed - Variation appropriate re non-payment for work and termination of arrangement - Variations to unfair contract (as defined) and money orders identified - Parties to bring in short minutes of order - Mitigation not issue - Costs reserved Industrial Relations Act 1996 s105 s106 s109A LEGISLATION CITED : Industrial Relations Act 1991 s246 Trade Practices Act 1974 (Cth) A&M Thompson Pty Ltd and others v Total Australia Ltd (1980) 2 NSWLR 1 Abboud v The State of New South Wales (Department of School Education) (1999) 92 IR 32 Adlam v Bauer [1999] 93 IR 114 Allison v Bega Valley Council (1995) 63 IR 68 Antonakopoulos v State Bank of New South Wales (1999) 91 IR 385 Australian Workers Union v Bowen (No. 2) [1948] 77 CLR 601 AWU-FIME Amalgamated Union v Qld Alumina Limited (1995) 62 IR 385 Beahan v Bush Boake Allen Australia Ltd (1999) 47 NSWLR 648 Bostik (Australia) Pty Ltd v Gorgevski (No 1) [1992] 41 IR 452 Burge v NSW BHP Steel Pty Ltd (2001) 105 IR 325 Byrne v Australian Airlines Limited (1995) 185 CLR 410 Day v Lumley Life Ltd (1999) 90 IR 70 Dickason v Edwards [1910] 10 CLR 243 Diver v Object Oriented Pty Ltd and Anor [2002] NSWIRComm 138 Foster v BHP Steel Long Products Division (1997) 64 SAIR 217 Hughes Aircraft Systems International v Airservices Australia (1997) 146 ALR 1 Hutchinson & BHP Steelworks, Port Kembla [2001] NSWIRComm 1025 Jones v Dunkel (1959) 101 CLR 298 Lavings v Barclay Mowlem Construction (NSW) Pty Ltd (1994) 99 IR 247 Legal & General Assurance Society Ltd v Stock (1993) 49 IR 464 MacLeay Valley Health Service v Jeffree (1994) 58 IR 187 CASES CITED : Mason v Electricity Commission of NSW t/a Pacific Power (1995) 62 IR 436 McKell v J. Inverarity Pty Ltd (2001) 105 IR 115 Origin Energy Ltd v Smith [2001] NSWIRComm 308 Outboard World Pty Limited T/as Budget Waste Control (Sydney) v Muir (1993) 51 IR 167 Port Macquarie Golf Club Limited v Stead and Anor (1996) 64 IR 53 Re Dispute - Dismissal of Union Delegates at Homebush Abattoir [1966] 66 AR 371 Reich v Client Server Professionals of Australia Pty Ltd (2000) 49 NSWLR 551 Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 Ross v GN Comtext (2000) 107 IR 1 Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5 Samaha v The Maronite Sisters of the Holy Family [2000] NSWIRComm 183 Sinclair, Scott & Co Ltd v Naughton (1929) 43 CLR 310 Starr v Commissioner of Police [2001] NSWIRComm 226 State Bank of New South Wales Ltd v Chia and Another (2000) 50 NSWLR 587

[2001] NSWIRComm 1025

(1980) 2 NSWLR 1

(1999) 92 IR 32

(1995) 63 IR 68

(1999) 91 IR 385

(1995) 62 IR 385

(1999) 47 NSWLR 648

(2001) 105 IR 325

(1995) 185 CLR 410

(1999) 90 IR 70

(1997) 146 ALR 1

(1959) 101 CLR 298