Plaintiff v Defendant

Aitken Partners Pty Ltd (as agent for Ristevski & Associates)

1 The plaintiff company, DPN Solutions Pty Ltd, is wholly owned and controlled by Dannielle Nguyen. Ms Nguyen is an experienced and capable information technology (IT) consultant. In her own immodest words, she has 'a level of business acumen and sales expertise to enable [her] to be one of the most capable, adaptable and versatile business analytics operators in the Australian IT industry.'

2 The defendant company, Tridant Pty Ltd, is an IBM Business Partner which sells IBM software and provides IT consultancy services to clients in relation to the implementation and maintenance of IBM software systems.

3 By a 'contractor agreement' dated 8 August 2011, Tridant engaged DPN to provide it with IT consultancy services, through Ms Nguyen, for a period described in the schedule containing particulars of the engagement as: 'Ongoing subject [to] one month's notice from either party'.[1] Clause 7.2 of the agreement provided expressly that either Tridant or DPN could terminate the agreement 'by giving the other party one month's notice in writing'.

4 The agreement provided for DPN to be paid a 'Contractor's Fee', comprising a 'daily base component' and a ' variable component' (expressed as a percentage) in respect of 'software sales' (22 per cent) and 'services sales' (6 per cent).[2]

5 On 7 September 2012, Tridant notified DPN by email that it was terminating the agreement, with the effect that the agreement was terminated on 7 October 2012.[3]

6 As a result of the termination notice, and at the direction of Tridant, Ms Nguyen returned her computer and other property of Tridant and performed no further work for Tridant from about 9 September 2012. DPN was not required to work during the notice period.

7 In due course, Tridant paid DPN an amount which it contends represented the total of its accrued entitlements under the agreement when it terminated on 7 October 2012.

8 DPN's first claim is contractual. It contends that, on a proper interpretation of the agreement, it is entitled to the variable component for all software sales and services sales by Tridant after termination of the agreement 'arising from' the services provided to Tridant by DPN, through Ms Nguyen, prior to termination of the agreement. DPN claims this entitlement in perpetuity, for 12 months, or for a reasonable time after termination of the agreement. Further, although not strictly in accordance with its pleadings, DPN contends that it is entitled to unpaid variable component in respect of sales where:

(1) Ms Nguyen played a meaningful role in closing the sale;

(2) the sale was concluded before termination of the agreement; and

(3) Tridant received payment (on software sales) or rendered an invoice (for services sales) after termination of the agreement.

9 Although not stated in the agreement, industry practice and Tridant's internal communications disclose that the parties intended that DPN would be entitled to a variable component in respect of all sales that it 'originated and closed, or where [Ms Nguyen] played a meaningful role in closing the deal'. The parties accepted this position, and the trial proceeded on this basis. It does not matter whether this intention manifests itself as an implied term from industry practice or a collateral or supplementary contract made between the parties. In any event, there is no dispute as to the identity of the clients to whom relevant sales have been made, should DPN's contractual claim succeed.

10 As appears below, the key client in this proceeding is Lend Lease. At the time of service of the termination notice, a team led by Ms Nguyen was on the cusp of obtaining an initial services sale from Lend Lease - and Tridant has made 21 subsequent services sales to Lend Lease since termination of the agreement.

11 If the contractual claim fails, DPN's secondary claim is that it is entitled to some relief on a number of alternative grounds. In summary, the principal alternative claim is that Tridant's right to serve a termination notice was subject to the following limitations:

(a) an implied obligation that the notice would be served in good faith;

(b) an implied obligation that the notice would not be served if it would be unconscionable to do so in all the circumstances; and

(c) the prohibition in s 21 of the Australian Consumer Law (Cth) against unconscionable conduct.

12 DPN contends that Tridant breached these obligations and the prohibition because its sole or predominant motive for serving the termination notice was to deprive DPN of its variable component in respect of the large number of sales that were anticipated would flow from the establishment of a continuing relationship with Lend Lease. Moreover, DPN contends that Tridant did not act openly, but hid its motive by 'plotting' to persuade Ms Nguyen to cause DPN to terminate the agreement - under the pretext of a bona fide annual review of DPN's commission structure.

13 Should those claims fail, DPN contends that Tridant engaged in misleading conduct on which it relied to its detriment, and that it is accordingly entitled to relief on grounds of breach of s 18 of the Australian Consumer Law or principles of equitable estoppel.

14 In summary, the following issues arise for determination:

(1) Is DPN entitled to be paid any amount representing the variable component on services sales made after termination?

(2) Was the termination notice given unconscionably?

(4) Did Tridant engage in misleading or deceptive conduct?

(5) Is Tridant estopped from denying that DPN is entitled to be paid the variable component on services sales made after termination of the agreement?

Is DPN entitled to be paid any amount representing the variable component on services sales made after termination?

15 DPN contends that the agreement expressly provides that the variable component to which it is entitled must be paid notwithstanding the termination of the agreement. I accept that contention, as clause 4 of the agreement makes it plain that the variable component of DPN's fee is to be paid in arrears on a quarterly basis - following payment of software sales invoices and presentation of invoices for services sales. Accordingly, any accrued rights to payment of the variable component at termination remained due and payable by Tridant to DPN.[4] In my opinion, this general contractual position is not negated by clause 2.1 of the agreement, which provides that the agreement operates and remains in effect from commencement until termination.

16 The question remains, however: what, if any, amount of the variable component had accrued at termination of the agreement? As stated above, the trial proceeded on the agreed basis that DPN would be entitled to a variable component in respect of all sales that Ms Nguyen originated and closed, or where Ms Nguyen played a meaningful role in closing the sale. On this basis, Tridant contends that it has paid DPN all of the variable component to which it was entitled in respect of services sales to clients that were concluded prior to termination of the agreement on 7 October 2012.

17 The evidence as to clients other than Lend Lease is unsatisfactory. DPN's evidence does not allow any finding to be made due to its generality.[5] Tridant's contention that it paid all accrued entitlements is based on its interpretation of the agreement - that no entitlement arises until an invoice is rendered by Tridant to the client for services sales or payment is made in respect of software sales. As appears below, I do not accept that interpretation.

18 It is uncontroversial that DPN, through Ms Nguyen, played a meaningful role in winning the initial 'services order' from Lend Lease to Tridant dated 5 October 2012, two days prior to termination of the agreement.[6] Had the agreement not been terminated, DPN would have received the corresponding variable component on presentation of invoices to Lend Lease as and when they were issued in respect of that initial services order.

19 In its opening outline of argument, Trident accepted that, as no agreement was reached with DPN to vary the variable component as stated in the agreement, DPN's accrued variable component entitlements at termination should be calculated in accordance with the rates specified in the agreement. The trial was conducted on that basis. In my opinion, that position was correct, as clause 14.2 of the agreement required variations to be both in writing and signed by the parties.

20 DPN contends that, at the very least, it was therefore entitled to the variable component on all invoices subsequently presented by Tridant to Lend Lease in respect of the initial services order. The evidence establishes that invoices totalling $128,088.50 were presented. Six per cent of those invoices is $7,685.31.

21 Tridant disputes DPN's entitlement to that amount. It paid DPN only $55.50 in respect of the initial Lend Lease services order. This paltry amount was calculated on the basis that, by close of business on 7 October 2012 when the agreement terminated, Tridant had performed only $925 of un-invoiced work for Lend Lease in respect of that services order. Tridant contends that this payment was made ex gratia, because the event entitling DPN to the variable component is, on a proper interpretation of the agreement, the presentation of Tridant's invoices under the initial services order - and no invoices were presented to Lend Lease on or before termination of the agreement on 7 October 2012.

22 In support of this contention, Tridant relies upon clause 4.5 of the agreement, which provides that '[t]he variable component derived from services sales is paid on presentation of invoice'.

23 I do not accept Tridant's contention. When read in the context of the agreement as a whole, clauses 4.3, 4.4 and 4.5 are concerned with the time at which the variable component will be paid, not with the events giving rise to the entitlement to payment. The emphasised words in clauses 4.2 to 4.5 below make this intention plain:

4.2 The Contractor's Fee will comprise two components: a daily base component, and a variable component calculated on the successful sale of Tridant software and services.

4.3 Payments of the Contractor's daily base component by TRIDANT to the Contractor shall take place on a bi-monthly basis and shall be paid via electronic funds transfer to a bank account nominated by the Contractor.

4.4 Payments of the Contractor's variable component by TRIDANT to the Contractor shall take place on a quarterly basis and shall be paid via electronic funds transfer to a bank account nominated by the Contractor.

4.5 The variable component derived from software sales is paid on receipt of payment, while the variable component derived from services sales is paid on presentation of invoice.[7]

24 In my opinion, reasonable persons in the position of the parties would so understand clauses 4.3, 4.4 and 4.5.[8] Such an understanding is consistent with the agreed object of the agreement, to pay DPN a variable component of its fees to reward it for sales Ms Nguyen originated and closed, or where Ms Nguyen otherwise played a meaningful role in closing a sale.

25 Tridant contends that the initial services order from Lend Lease was not a guaranteed order for any particular work, as the initial services are described in the order as being required:

for a period of up to 4 weeks with the work accomplished and forward work planned being reviewed and re-estimated on a weekly basis by [Tridant] and [Lend Lease].

26 On this basis, Tridant contends that it was justified in not treating the initial services order as a services sale made prior to termination of the agreement. I reject that contention. If the services described in Lend Lease's initial service order had not, following review and re-estimation, been required in full, then the Tridant invoices under that order would have been less and DPN's variable component would have correspondingly decreased. But that is not what happened.

27 Finally on this issue, as appears below, in January 2012 Tridant circulated a written 'revenue retention policy'. That policy stated that the variable component would only be paid on invoices presented prior to termination of employment. That policy, which is inconsistent with clause 4, did not have contractual effect, because it was not signed by both parties as required by clause 14.2 of the agreement.

28 I conclude that DPN is entitled to succeed on its express term case for its unpaid variable commission in the sum of $7,629.81,[9] plus interest from the times the relevant invoices to Lend Lease in respect of the initial sale would have been included in the quarterly calculation or calculations of DPN's variable component under clause 4.4.

29 In the event that these are other like circumstances, where Ms Nguyen played a meaningful role in securing a particular and concluded software or services sale prior to termination of the agreement, but payment was not received (software sales) or invoices were not rendered (services sales) until after termination, DPN is also entitled to succeed in like manner for its unpaid variable component at the rates specified in the agreement. If there are any such circumstances, and the relevant amounts cannot be agreed as suggested in paragraph 19(b) of Tridant's outline of closing argument, the Court will direct an account be taken or refer the issue to a special referee or expert for report.

30 DPN's next contention is that it was an implied term of the agreement that it would be paid a variable component in respect of software and services sales:

in perpetuity for the duration of the relevant sales agreement, or, alternatively, for 12 months, or alternatively, for so long as was reasonable.

31 For the following reasons, I reject DPN's implied term case.

32 First, the contention equates the client relationship which is established by one or more sales as 'the relevant sales agreement'. The effect of this slide in language is that all sales to that client after termination attract an entitlement to a variable component in whatever circumstances the sales may occur. This is an uncommercial intention to attribute to the parties as to the meaning of 'sales' in the agreement. The evidence establishes, and it is a matter of common sense, that further sales to existing clients would involve further work and, after termination of the agreement, that work would be done by Tridant employees other than Ms Nguyen. Tridant would be liable for variable commissions to those employees for their efforts in bringing about the subsequent sales.

33 Second, the evidence established that such a term would be inconsistent with industry practice. There was evidence as to industry practice from Tridant's four directors and a senior employee, each of whom, in my opinion, has sufficient experience to give credible evidence on this issue:

(1) Nimrod Kuti (a Tridant director) gave evidence that he had 'never come across anyone being paid trailing commissions at any other company in our industry that I have been involved with throughout my career spanning 28 years'.

(2) Mr Terence Jeffery (another director) gave evidence that, in his experience in the software sales industry, he had 'never come across a sales person who was entitled to commission following the termination of their engagement'.

(3) Mr Robert McConnochie (another director) gave evidence that, in his time in the IT industry, he has 'never heard of the proposition that a sales person could continue to receive commission after they have departed or were dismissed'.

(4) Mr Willem Boschoff (another director) gave evidence that, in his experience working in the software industry, he had 'never come across a concept whereby a sales person is entitled to commission on software sales following the termination of their employment or engagement'.

(5) Michael Taylor (Tridant's Sydney manager, who worked closely with Ms Nguyen and was her friend) gave evidence that, in his experience in the software sales industry, he has 'not come across the idea of a [business development manager such as Ms Nguyen] being entitled to commission following the cessation of their employment or engagement'.

34 The weight to be attached to this evidence, notwithstanding that it is from a party, is strengthened by the fact that DPN called expert evidence from Michael Lynch as to industry practice concerning the remuneration of IT sales consultants such as Ms Nguyen. Mr Lynch gave no evidence to support an industry practice that is consistent with DPN's implied term claim. He was not cross-examined. Nor did Ms Nguyen, who also has many years of experience in the IT consulting industry, give evidence of such a practice.

35 Third, the test for implying a term in fact has not been satisfied. The test for implication of a term in a contract is not in doubt. In BP Refinery (Westernport) Pty Ltd v Shire of Hastings, the Privy Council said that the following conditions (which may overlap) must be satisfied before a term will be implied in a particular contract: '(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract'.[10]

36 In considering whether a term should be implied into an agreement, the Court should consider the terms of the agreement as a whole in the context of admissible evidence of background facts known to the parties at or before the date of the contract, including evidence of the genesis and object of the contract.[11]

37 In this case, the admissible evidence does not assist DPN and there is nothing in the object of the contract which makes the alleged term reasonable, equitable, necessary for business efficacy, or obvious.

Was the termination notice given unconscionably?

38 It is appropriate to deal first with the unconscionable conduct allegation, rather than the alleged breach of a good faith obligation, because the parties agree that s 21 of the Australian Consumer Law[12] applied to the agreement and its performance. As the statutory concept of unconscionable conduct is wider than the concept of unconscionable conduct under the common law or equitable principles, it is unnecessary to consider these general law concepts or, as they are called in s 20 of the Australian Consumer Law, 'the unwritten law'. Moreover, no special disadvantage or other equitable foundation for DPN's unconscionability case was pleaded or relied upon in argument.

39 DPN's unconscionable conduct case is both statutory and contractual. DPN pleaded an implied term of the agreement, that Tridant could not exercise its power under clause 7.2 to terminate the agreement on one month's notice 'if it would be unconscionable in the circumstances for it to do so'. I do not accept that the agreement contained an implied term to that effect. The test for implying a term is set out above. An implied term to the effect put forward was not necessary to give business efficacy to the agreement or so obvious that it goes without saying. Such an implied term would simply overlap with statutory and general law prohibitions and protections against unconscionable conduct.

40 In deciding whether Tridant acted unconscionably under s 21 of the Australian Consumer Law, the Court must consider 'all the circumstances'. In my opinion, the relevant circumstances include direct evidence and inference concerning the subjective intentions and motivations of Tridant's directors - who collectively made the decision to review DPN's variable component entitlements and, following Ms Nguyen's reaction to the proposed review, to terminate the agreement. Evidence of this kind is admissible because the law is clear: a finding of statutory unconscionable conduct requires the Court to be satisfied that the impugned conduct involves 'moral obloquy' or 'moral taint'[13] deserving the opprobrium of a finding of unconscionability.[14]

41 It is necessary to start with the terms of the casual arrangement which preceded the agreement. By letter dated 9 May 2011, Tridant offered Ms Nguyen casual employment as 'Business Development Manager' of its New South Wales operations. The letter offered remuneration in two components - (1) $400 (including superannuation) as a casual daily rate; and (2) a 5 per cent commission 'of gross fees for signed statements of work that are the result of your efforts'. The letter stated that Ms Nguyen 'must remain employed by Tridant to be paid these commissions'.

42 Ms Nguyen accepted the offer of casual employment for a three month period, but on the basis that Tridant would engage DPN to provide her services as a contractor. The parties proceeded on this basis without documenting the contractor arrangement. This casual arrangement was, in effect, a 'probation period'.

43 Things went well on both sides of the arrangement. The Tridant directors determined to engage Ms Nguyen's services on a permanent basis working four days per week. In an internal working paper, Mr Jeffery calculated the revised remuneration to be offered to DPN. The daily base component was increased from $400 to $580, and the variable component was also increased. By email from Mr Jeffery to Ms Nguyen on 10 August 2011, Tridant offered to contract with DPN for the provision of Ms Nguyen's services as 'a permanent arrangement with no end date in mind'. The email contained the basics of the formal offer, in accordance with Mr Jeffery's internal calculations: annual 'OTE including Super' of $215,000, comprising $129,000 for the daily base component and $86,000 for anticipated commission earnings. Mr Jeffery concluded his email with the statement that: 'This annualised commission plan will be pro-rated to a 6 month plan. The commission plan will be reviewed and possibly revised 6 monthly.'

44 'OTE' earnings is a term used in the IT industry to represent the 'on target earnings' of an employee who is remunerated wholly, or in substantial part, by commission on sales. The commission component of OTE is calculated by reference to the employee's annual sales target. Mr Jeffery's email, and the agreement, set an initial annual sales target for DPN of $1,500,000. At that time, Tridant's New South Wales operations had virtually no established business and Ms Nguyen's principal role was to assist in business development.

45 It was common ground at the trial, and established by the evidence, that commission rates and annual targets are regularly reviewed in the IT industry, having regard to sales experience in the preceding period, anticipated sales experience going forward and the need to ensure that the employee will receive a sensible and competitive salary which is sufficient to motivate the employee to make sales. As events transpired, the first six monthly review did not occur. DPN's commission plan was not reviewed by Tridant until August 2012, 12 months after the agreement was entered into.

46 Ms Nguyen accepted the offer of a permanent contracting arrangement between DPN and Tridant on the express basis that the variable component (commission) would be 'uncapped'. Although strictly unnecessary, as there was no cap mentioned in the offer, Tridant agreed and this is reflected in the agreement.

47 The agreement is dated 8 August 2011, two days before Mr Jeffery's email to Ms Nguyen. The evidence establishes that the agreement was not executed until after that date, but nothing turns on the precise date of execution.

48 The agreement contained specific provision for the circumstances in which it could be terminated. Clause 7.1 gave Tridant the right to terminate for cause. Clause 7.2 gave both parties the right to terminate without cause 'by giving the other party one month's notice in writing'. The schedule to the agreement described the term of the agreement as: 'Ongoing subject [to] one month's notice in writing from either party'.

49 As noted above, the agreement does not specifically state the circumstances in which DPN will be entitled to the variable component of its fee in respect of software and services sales. In an internal email from Mr Jeffery to Tridant managers on 1 September 2011, Mr Jeffery expressed the view that DPN would be entitled to the variable component 'for all deals that [Ms Nguyen] has originated and closed, or where [Ms Nguyen] has played a meaningful role in closing the deal'. As appears above, I am satisfied that the agreement either contained an implied term to this effect or there was a collateral contract of that kind. Mr Jeffery said in his witness statement that, in 'catch-ups' with Ms Nguyen during the probation period, he used words to the following effect: 'If she played a meaningful role in closing a sale, that sale would most likely be placed in her sales territory so that she could earn commission on it'. Although Mr Jeffery was challenged about his recollection of other aspects of his conversations with Ms Nguyen during these catch-ups, this aspect of his evidence was not challenged and I accept it.

50 Next, there was a chain of emails on 31 January 2012 concerning a document prepared by Mr McConnochie titled: 'Revenue Recognition Policy for Tridant Sales Team'. The document includes a statement that 'Tridant Sales Persons' would receive revenue recognition (namely the variable component of their remuneration, or commission) for services sales:

• the work covered by the [statement of work/services order] is completed; or
• you leave the employ of Tridant, in which case you will be recognised for any revenue invoiced against that code to the date of your last active working day; or

51 In one of her emails that day, Ms Nguyen stated that, subject to a clarification she had received concerning another aspect of the revenue recognition plan, she had 'no issues' with the document. In cross-examination Ms Nguyen endeavoured to distance herself from this statement, stating that her comment should be understood as having no issues with the subject matter of the clarification only. Reading the emails as a whole, I do not accept that explanation. But that does not matter. In my opinion, the revenue recognition policy document is not contractual. The extract above is inconsistent with clause 4 of the agreement as I have interpreted it above, and thus would amount to a variation of the agreement. Clause 14.2 of the agreement required variations to be both in writing and signed by both parties. These requirements were not fulfilled in respect of the revenue recognition policy.

52 The next significant event was the commencement of the Lend Lease business opportunity for Tridant. There is some mention of the opportunity in emails in March and April 2012, but nothing turns on these. This is especially so in circumstances where there is no dispute that Ms Nguyen made a meaningful contribution to the first Lend Lease services sale.

53 On 19 June 2012, Mr McConnochie emailed Ms Nguyen and related some conversations he had had with IBM personnel concerning the Lend Lease opportunity, and the competition they faced from Lend Lease's existing software provider. On the same day, Mr McConnochie sent an email to Mr Nelson of Lend Lease expressing interest in Tridant being selected as its 'implementation services provider should IBM Cognos be selected as the technology for you[r] forthcoming project'. Mr McConnochie introduced Ms Nguyen and Mr Taylor as the 'key Tridant personnel for interaction' with Lend Lease.

54 Although the Lend Lease opportunity moved beyond a mere possibility at this time, Mr McConnochie was 'circumspect around the amount of effort' that Tridant should invest in it, because of the advantages enjoyed by competitors. Ms Nguyen had a similar view at the time. She emailed Mr Rosing of IBM on 27 June 2012 and stated that, even though Tridant had been invited to participate in the Lend Lease request for proposal (RFP), she was '[n]ot sure if it's a waste of our time or a legitimate opportunity'. In cross-examination, Ms Nguyen endeavoured to downplay this comment, labelling it 'sarcastic' and not representing her true views at the time. I do not accept that evidence.

55 On 29 June 2012, Tridant received the formal RFP from Lend Lease and an invitation to participate in the RFP process. Mr Nelson of Lend Lease described the RFP as 'relating to the selection of an SI [Systems Integrator] Partner'. Mr McConnochie assigned Ms Nguyen to 'lead the bid response'. From then on, Ms Nguyen did just that. There is no dispute that she worked hard and efficiently and played a meaningful role in Tridant being selected as one of the preferred systems integrators in respect of Lend Lease's RFP. Not unnaturally, from time to time, Ms Nguyen received praise for her efforts from Tridant directors. For example, on 8 July 2012, Mr McConnochie described Ms Nguyen's efforts as 'fantastic'.

56 By letter dated 24 July 2012, Lend Lease's project manager for the RFP, Harietta Abal, informed Ms Nguyen that Tridant had been selected 'to further participate as the preferred SI for "Round 2" of the [Lend Lease RFP] engagement'.

57 By this time, Mr McConnochie became more confident that Tridant may be able to win Lend Lease's business. He stated, however, that he still had more reservations than Ms Nguyen about the prospects of success. Mr Kuti also remained circumspect. In an email to Mr McConnochie, copied to Ms Nguyen and others, he saw Ms Abal's letter as 'a great step forward' and a 'fabulous development', but counselled Mr McConnochie and others to 'keep the champagne in the fridge for now'. On the same day, Ms Nguyen agreed with Mr Kuti's sentiments - 'at the very least we are progressing so that's good news ... We can't crack the champagne yet '.

58 In the meantime, the directors had commenced reviewing the commission plans for the Tridant sales team, including Ms Nguyen (DPN). On 19 July 2012, Mr McConnochie emailed the other directors and informed them that he was working on a new commission plan and targets to apply retrospectively from 1 July 2012 for the six month period ending 31 December 2012. On the same day, in the course of email exchanges with Ms Nguyen concerning her complaints as to the timing of her variable component payments, Mr McConnochie informed her that he would be setting 'new commission plans and targets effective 1 July'. On this basis, Ms Nguyen expected that Mr McConnochie would discuss her commission plan when he came to Sydney during the following week. The issue was not, however, raised by Mr McConnochie at this time and Ms Nguyen did not raise it with him.

59 Work on winning the Lend Lease business continued from this time until Ms Nguyen went overseas on leave on 24 August 2012. As I have said, Ms Nguyen was actively involved and made a meaningful contribution. In particular, Ms Nguyen relies upon her contribution to a PowerPoint presentation given by her and Mr Taylor to Lend Lease on 23 August 2012, the day before she left for leave. Ms Nguyen gave elaborate evidence about her role in the preparation of the PowerPoint slides and the delivery of the presentation. In one of the slides, she placed herself at the top of an organisational chart showing who would be working on the systems implementation if Tridant won the business from Lend Lease. She described herself as having a 'Quality Assurance Role'. In my opinion, none of this really matters. As I have said, there is no dispute that Ms Nguyen made a meaningful contribution towards winning the first Lend Lease services order. Further, for the reasons given above, had DPN continued to be engaged by Tridant when further services orders were placed by Lend Lease, she would have been entitled to be paid a variable component on those sales.

60 In any event, Ms Nguyen left for her holiday on the legitimate understanding that the PowerPoint presentation had gone well. Mr Turnbull from IBM thought so and emailed Mr McConnochie and Ms Nguyen that afternoon, stating that 'I think u [sic] guys have already impressed them'.

61 During this period, the directors finalised the revised commission plans for all Tridant sales staff, including Ms Nguyen. As appears below, this involved anxious consideration by Tridant's directors over about five weeks. With the exception of a couple of amendments to other employees' commission plans, the final form of the commission plans was agreed at a directors' meeting on Monday 20 August 2012.

62 In this context, on 24 July 2012, Mr Jeffery emailed Mr McConnochie concerning Ms Nguyen's commission earnings and proffered the following comments:

Her OTE was based on a target of $1,500k giving an OTE of $215k. One year later DN has sales of $2,521k aligned to her performance giving an OTE of $285k. At one level it's hard to argue against the fact she has performed well. What's clear to me is we need to be more critical on how/what we recognise for comm. calculation and what level of GP we are looking from sales effort - this applies to all sales people.

From these results DN's efforts gave Tridant a 62% GP contribution. While this might look reasonable it would be fair to say we have paid comm. where the influence/impact by DN on the deal was at times minimal - this is what we have to try and avoid going forward - again, for all sales people.

63 In my opinion, the concerns expressed by Mr Jeffery above typified the tone of the discussions amongst the directors as the review of the commission plans progressed. The directors wished to ensure that salespeople were earning commission at a rate that corresponded to the value of their work to Tridant. Plainly, such a desire is a reasonable and commercial basis for undertaking a review.

64 On 6 August 2012, Mr McConnochie emailed Ms Nguyen and the two other Tridant salespeople to confirm that he was working on a new commission plan and target for each member of the sales team, to take effect retrospectively from 1 July 2012.

65 Mr McConnochie's email to the salespeople was forwarded to the Tridant directors and generated discussion amongst them concerning their views on the factors that should be taken into account in the formulation of the revised commission plans and targets. Mr Kuti provoked a discussion concerning 'a mechanism protecting [Tridant] against windfall bonus payments' in order to limit the company's exposure to substantial commission payments in respect of 'big deals'. DPN places significant reliance on the fact that, in his email, Mr Kuti adverted to the potential Lend Lease deal as an example of one such 'big deal'.[15] Mr Kuti went on to explain his logic behind the suggested mechanism as owing to the fact that, in the context of a big deal, a salesperson's efforts constitute but one part of a larger team effort and significant investment by the company.

66 Mr McConnochie responded to Mr Kuti's email positively, but observed that achieving the right balance in the structure of the commission plans was difficult. The discussions between the directors reflected cognisance of the tension between, on the one hand, a protective mechanism such as a cap on earnings, and, on the other hand, ensuring that the commission plans continued to incentivise salespeople.

67 In the course of the discussions around this time, an alternative floated by Mr McConnochie was that the commission rates on services could be reduced significantly, in contrast to a much higher rate for software sales. This suggestion drew some positive feedback from Mr Kuti. By 7 August 2012, Mr McConnochie had revised his thinking further and proposed a distinction between earnings on 'new' and 'mature' accounts, with the former earning commission at a higher rate than the latter.

68 On 17 August 2012, Mr McConnochie distributed to the directors by email draft revised commission plans for the sales team at Tridant. The commission figures in this iteration of Ms Nguyen's revised plan incorporated the new/mature and the services/sales approaches discussed over 6 and 7 August 2012. The dissemination of these plans generated further discussions amongst the directors that were focussed on ensuring the commission plans were appropriately calibrated.

69 On 21 August 2012, Mr McConnochie distributed further revised draft commission plans for the sales team. Mr McConnochie's email noted that the plans had been agreed at a meeting the previous evening and described the attached plans as for the directors' 'final scrutiny and approval'. The further revised draft plans omitted any distinction between new and mature accounts. It appears that no further changes were made prior to their distribution to sales staff.

70 On 23 August 2012, Mr McConnochie emailed Michael Taylor and informed him that the directors had finalised DPN's commission plan for the six months between 1 July and 31 December 2012. In his email, Mr McConnochie made the following comments concerning DPN's commission plan:

Like everyone else's it's a challenging one to match our ambitious growth plans, but using the rates set I have [calculated] that if her patch achieves 33% growth in services over [the services sales in the first half of the calendar year] and $100k in software margins, this will be a higher OTE (annualised) than that expected for her in her commplan a year ago.

71 Mr Taylor suggested that Mr McConnochie 'hold off sending' DPN's revised commission plan to Ms Nguyen until she returned from leave starting the following day, on the basis that Ms Nguyen 'deserves a break without too much thought on this stuff'. Mr McConnochie agreed.

72 On 24 August 2012, the day following the PowerPoint presentation, Ms Abal of Lend Lease emailed Ms Nguyen, Mr Taylor and Mr Nelson of IBM. She said that Lend Lease was 'very impressed' with the presentation but that it:

would like to explore the opportunity for Tridant to undertake a pre-consultancy engagement for 3-4 week[s] (prior to any confirmed commitment) to help scope the Tridant commitment/business engagement and team going forward.

This pre-consultancy engagement for 3-4 weeks would not be at a cost to Lend Lease and would require your team to work with our business.

73 By this time, Tridant's directors were becoming more confident about its prospects of success with Lend Lease. By email dated 27 August 2012, following discussions with the directors, Mr Taylor advised Ms Abal that the request for four weeks' full time work at no cost to Lend Lease was 'politely declined', and proposed Tridant participation in two or three high-level workshops spread across a period of one week, involving a team including Ms Nguyen, Mr Taylor and other senior Tridant employees. As appears below, as events transpired, Ms Nguyen was not involved in this process or in any further work on the Lend Lease bid. Within days of her return from holiday on 3 September 2012, Tridant gave notice terminating the agreement with DPN.

74 Ms Nguyen arrived back in Australia on 3 September 2012 and was due to return to work the following day. Mr McConnochie sent her two emails late that evening.

75 The first email was sent at 11:53 pm. Mr McConnochie welcomed Ms Nguyen back from her holiday, arranged a telephone 'chat' with her for 1:30 pm the next day, and addressed a number of work-related issues in the expectation that Ms Nguyen would continue to work for Tridant through DPN.

76 The second email, sent at 11:58 pm, was in the following terms:

Hi Dann,

Welcome back?

Please find attached your commission plan for the 6 months to 31 December 2012, and our updated Revenue Recognition Policy.

Please advise if you have any questions; alternatively, please sign, scan and email back to me.

The directors are very excited about your potential to achieve and we wish you a very successful 2H [a reference to the second half of the financial year to be covered by the attached commission plan].

Regards,

Rob

77 The attached commission plan retained the same amount for base salary and superannuation, but reduced the commission percentage on services sales from 6 per cent to 1.22 per cent, and reduced the commission percentage on software sales from 22 per cent to 20 per cent.

78 Ms Nguyen was awake when Mr McConnochie's two emails were sent. She read them at the time. She became upset and emailed Mr Taylor, noting that she had a sleepless night and setting out her proposal for a revised commission structure for DPN. She provided a copy of this to Mr McConnochie later in the day. As arranged, Mr McConnochie and Ms Nguyen held a telephone conference at 1:30 pm on 4 September 2012, during which they discussed the new commission plan. According to Ms Nguyen, Mr McConnochie refused to listen to her point of view as to how sales targets should be set, stating that 'sales targets are not things that a salesperson gets to negotiate on'. In his witness statement, Mr McConnochie recalled a fuller version of the telephone conference:

1. At around 1.30pm on 4 September 2012, I had a conversation with Ms Nguyen over the phone. During the conversation, Ms Nguyen made it clear that she was angry with the proposed amended commission plan. She said words to the effect that:
   1. she was deeply 'offended and insulted'; and
   2. she believed that the proposed amended commission plan reflected that:
      1. as she had been saying all along, the Directors had no understanding of how hard she has worked and how much she has contributed, and how little her efforts were appreciated;
      2. the proposed amended commission plan was 'disgusting', wrong and gave no appreciation for what she had done for Tridant;
      3. the Directors and I were disrespectful, and this had made her question whether she wanted to continue working at Tridant.

Her tone was very emotional, ranging from angry to abusive.

1. As I had generally attempted to do when attempting to work with Ms Nguyen, I let her first vent before trying to speak. I considered that Ms Nguyen's approach and attitude was highly inappropriate. Notwithstanding that, I allowed Ms Nguyen to continue before explaining that the Directors had spent a lot of time developing the proposed amended commission plan for DPN. I explained that for DPN to earn a good reward from Ms Nguyen's work at Tridant, Tridant would require growth in DPN's sales territory. The commission plan that Ms Nguyen had proposed provided for negative growth, which I had considered inappropriate.
2. Despite this, Ms Nguyen furiously denounced the proposed amended commission plan. Ms Nguyen informed me in the conversation that she was worth $250,000 to $300,000 per annum.
3. During the conversation, Ms Nguyen interrupted me on many occasions and did not let me finish my sentences. Ms Nguyen criticised my attempts at explaining the proposed amended commission plan as nonsense.
4. I ended the conversation after about an hour, as I had another meeting to attend.

79 For the reasons given below, I accept Mr McConnochie's account of the further aspects of this conversation. It accords with the contemporaneous documents and Ms Nguyen's own evidence that she was 'incredibly upset' by the proposed changes to the DPN commission plans. It is also consistent with Ms Nguyen's personality. She readily agreed in oral evidence that she is 'a prickly person or a difficult person', and that she believes these character traits have made her successful.

80 In my opinion, the best record of the conversation is contained in Mr McConnochie's email to Mr Taylor sent 5 September 2012. That email was in response to Mr Taylor's email sent at 3:36 pm on 4 September 2012, following conversations he had with Ms Nguyen that day. In his email, Mr Taylor reported to Mr McConnochie, Mr Boschoff and Mr Jeffery discussions with Ms Nguyen concerning her revised commission plan. In his email, he referred to 'noise emanating from this end regarding the comp plan', a reference to Ms Nguyen's complaints to him, and said that he was 'keen to understand the science behind the target-setting process'. As to that process, Ms Nguyen's complaint to Mr McConnochie and Mr Taylor was that the targets were too aggressive for the human resources available to complete the work required for services sales.

81 Mr McConnochie's response to Mr Taylor was copied to all other Tridant directors. He summarised Ms Nguyen's complaints during the telephone conference, and his responses, in the following way:

(1) Ms Nguyen considered that she should be paid between $250,000-$300,000 per year, on the basis that she had built the business and, accordingly, the earnings she had made in the last quarter (1 April - 30 June 2012) based on her current commission rate reflected appropriate earnings for 'her current contribution'. Mr McConnochie responded that the directors had 'set demanding growth targets for everyone in the company' in light of the company growing 'far more than 100% last year'. He informed Ms Nguyen that company policy was to 'grow business rapidly and find the resources we need as we go, which strategy [had] worked very well...[and] the directors have decided not to change'. Moreover, if Ms Nguyen met her revised targets, the new commission plan would result in her commission increasing by 26 per cent.

(2) Ms Nguyen was angry that she had not been consulted about Tridant's strategy for developing business in New South Wales, and felt that Tridant was 'getting it totally wrong'. In her opinion, Tridant should adopt a strategy like that she had developed for a previous employer, Focus, which was based around 'head count planning'. Mr McConnochie summarised his response to this complaint:

We don't do it like she did it for Focus - we have tried to sell strongly and then procure the resources to meet the requirement - this has worked for us...

(3) Ms Nguyen felt it was inappropriate for her to be given a sales target without negotiation, particularly because she believed the directors in Melbourne did not have sufficient appreciation of the Sydney business. She was also annoyed that the new arrangement was to apply retrospectively from 1 July without her being notified. Mr McConnochie replied that the commission plans had been 'set in sync with the growth objectives of the company' and that she was advised in writing some weeks ago that the new commission plans were being developed and would apply from 1 July 2012. As appears above, Ms Nguyen had been so advised on 19 July and 6 August 2012. Mr McConnochie explained to Ms Nguyen that it was normal practice for a company to finalise figures for the previous period before setting targets for the new period, and that this meant there will always be some form of retrospectivity. He informed Ms Nguyen that he had 'never had the experience that the sales resource negotiates new period objectives - those are set by company management'.

(4) Ms Nguyen complained that the proposed commission plan proved 'her theory' that the directors of Tridant were 'totally out of touch' with how difficult it had been to build the business in Sydney, and reminded Mr McConnochie of what she perceived were good reasons for 'not focusing on new business prospecting and finding new accounts'. In her opinion, it was 'totally inappropriate for Tridant to want her to focus on developing new business when the existing projects would fall down without her'. Mr McConnochie replied that the directors did not agree with Ms Nguyen's belief as to how she should spend her time.

82 In his 5 September email, Mr McConnochie added some comments to assist Mr Taylor to understand the situation concerning the directors' expectations of Ms Nguyen and her resistance to company policy:

... As Dann has said, she has told me and again that we have it all wrong, and the requirement for her to put much lighter touch on existing projects and focus on business development is wrong because the projects would struggle without the attention she gives them because of inexperience in our team, conflict in the accounts etc. However, I have told her on every one of those occasions that we DO NOT want her to focus her attention the way she wants to, we want her to focus the majority of her time on developing new accounts. ... These requests have not been accepted by Dann (as you saw yourself Michael when we had a recent conf-call re the weekly reporting) - she remains adamant that 90% of her time must be spent on managing/growing existing business.

• Tridant's standpoint (and mine as the person charged with the job of getting a functioning sales team going) is that:
  • She has been hired for business development - nothing else. And she has never been told anything to the contrary and I have impressed upon her consistently that increasing the volume of the business is her job - the quality of delivery is not her job.
  • We don't want to pay her for coaching you and Andrew and adding value to delivery capability and whatever else she thinks is necessary - we want to pay her for finding new business in existing accounts and new accounts - whilst clearly she we want to reward her for SoW's sold by her, she has to pay less attention to those, because like every sales person in a company growing fast she gets paid on growth and volume and she has to bring in new accounts to succeed (and because we have pretty effective account development through our delivery/engagement approach.

• We don't want Dann to set strategy, advise us on strategy or impose the Focus methodology - we have a management team to make those decisions.[16]

83 Mr McConnochie added that he did not wish Mr Taylor to become involved in discussions with Ms Nguyen about company policy:

This becomes a pretty complex situation MT. I am most unwilling for you to be drawn into this discussion, for risk that you will be involved in endless cycles of debate and argument about how the company should be run. I strongly feel that Dann has been offered a fair package and that she must accept it and direct her activity towards its best achievement.

84 Mr McConnochie and Ms Nguyen spoke on the telephone at 2:00 pm on Wednesday 5 September 2012. Ms Nguyen endeavoured to explain to Mr McConnochie her view about realistic sales targets. Mr McConnochie disagreed. He said that the directors wanted Ms Nguyen to have a 'light touch' on account management. Ms Nguyen disagreed. According to Ms Nguyen, 'the discussion came to a head when Mr McConnochie refused to discuss the targets or commissions the directors had set for me'. He said, 'Targets and Com Plans are not for the sales person to negotiate'. Ms Nguyen said she was not prepared to work under the new commission plan, Mr McConnochie said that was 'the only role I have to offer you' and Ms Nguyen asked him to 'put that in writing so I can formally reject the offer'.

85 Mr McConnochie's version of the conversation was not materially different. According to Mr McConnochie, however, Ms Nguyen commenced the 5 September conversation by stating again that she thought the proposed commission plan was 'disgusting' and made similar comments to those she had made during their conversation the previous day. From his account also, it was clear that there was a fundamental disagreement between Ms Nguyen and the directors as to her role going forward. In his witness statement, he said that the conversation concluded in the following manner:

I proposed to Ms Nguyen to the effect that, since Ms Nguyen and I could not agree to the work that we wanted her to do, and since we could not agree on the targets involved anyway, the logical thing would be for us to part ways. Ms Nguyen agreed with my comments that we could not agree on the work she was going to do or on her targets, and said that she would await my proposal on how Tridant and DPN should terminate their arrangement.

86 Following the 5 September conversation, the relationship between the directors and Ms Nguyen unravelled quickly. First, later that day Ms Nguyen sent an email to Mr McConnochie and copied it to the other directors. Ms Nguyen continued to disagree with Tridant company policy that her role was to focus on sales and take a 'light touch' on account management. In her words, this was a 'fundamental difference' between the her and the directors. As to the revised commission plan, Ms Nguyen used inflammatory language to express her dissatisfaction. She said that she viewed the sales targets in her revised commission plan as 'unrealistic', and viewed the overall plan as 'nothing short of ridiculous'. She continued the rhetoric, stating she was 'extremely disappointed and disgusted' as to how the directors had handled the revised commission plan, that she found it 'insulting', and that she was not prepared to accept it. She asked for 'confirmation in writing' (presumably that the directors would not alter the revised commission plan in accordance with her wishes) and asked if the directors wanted her 'to remain on Tridant premise[s]'.

87 Second, notwithstanding Mr Taylor seeking to support some of Ms Nguyen's complaints - principally concerning the delivery of the revised commission plan to Ms Nguyen just before midnight on her return from leave - which Mr McConnochie acknowledged had some force, the directors had had enough. Ms Nguyen's intemperate email was the final straw:

(1) Mr Kuti emailed the directors at 6:05 pm that day, stating '[w]e may need to consider letting her go at this point, before she goes rogue'.

(2) Mr Jeffery emailed the directors at 6:16 pm that day, stating that the relationship with Ms Nguyen had reached a 'point of no return'. He was unimpressed by the tone of her email and its 'obnoxious comments'.

(3) Mr Kuti emailed directors at 6:41 pm and agreed that the time had come to end the relationship with DPN and Ms Nguyen: 'Had the response been diplomatic and open to negotiation, despite the surprise and disappointment, we might have had something to work with.'

(4) Mr McConnochie emailed the directors at 8:09 pm that day, with a first draft of an email terminating the DPN agreement. Later that evening, at 9:00 pm, Mr McConnochie sent a holding email to Ms Nguyen, stating that the directors were disappointed that agreement could not be reached, acknowledging that there were 'fundamental differences' and noting that he would reply to Ms Nguyen's email on the following day. He concluded by suggesting that, while her 'personal integrity' was beyond question, she not attend Tridant's premises for work on the following day, 6 September 2012, while the directors considered the matters raised in her email.

88 Mr Taylor was speaking with Ms Nguyen during this period. At 10:41 am on the next day, 6 September 2012, he sent an email to the directors in which he supported Ms Nguyen's continued engagement, at least on a trial basis following 'a heart to heart discussion' designed to persuade her to 'show a more collaborative rather than combative approach'. The directors were not convinced. Mr McConnochie sent a detailed email to the directors, and also to Mr Taylor, at 1:47pm that day. He thanked Mr Taylor for his efforts at mediation, and noted the difficult position he was in given his friendship with Ms Nguyen. Taking the circumstances as a whole, he did not agree that Ms Nguyen should continue to be engaged through DPN as a Tridant contractor. He set out his detailed thoughts in writing for the other directors, and Mr Taylor, to consider. Given the unconscionable conduct allegation, it is appropriate and necessary to set out Mr McConnochie's reasoning in full:

However, even with MT's very logical thoughts, I have come to different conclusions, and believe me I have sat down and deliberated over this very calmly over the past few days.

To my mind the position summarises as follows:

• Dann earned $240k in her first three full quarters with this company - that is $319k per annum annualised.
• In the past two quarters she earned $195k - that is $391k annualised.[17]
• That is quite a lot of "appreciation" for a professional, contracted services provider working 4 days per week for much of that time. She has not been the "third best paid person" in the company as mentioned by Alec yesterday - she has been the very best paid by a vast distance.
• She continues to insist that she gets "no thanks" (as repeated to MT last night)... The perception that her work has received zero appreciation has to some extent been well affected by my expressing the importance of prospecting in new territories as well - which on every occasion she has argued against vigorously. My conclusion is that these perceptions are deep-set in Dann's head - I have concluded many weeks ago that, regardless of by what proportion who is right and who is wrong, we will not change that perception (even if all the directors fly to Sydney by magic carpet and bow down before her).
• Dann's angle is that her services clip should be reduced from 6% when she started a year ago to 5%. Her rationale to this is that she is worth a minimum of $250k-$300k automatically. So say we only did $4m in the next year - that's $240 for her commission on services alone. Now clearly we could choose to haggle and that number would not doubt improve - but we are too many miles apart and I would never advocate us haggling targets with a salesperson anyway - if you do it with one you are obliged to do it with all. The bottom line of this is that we cannot afford the cost of an account manager of this calibre (or even at much lower cost) in a small practice such as ours. In addition to this we would have to fund the cost of going out to proactively prospect in new territory and Dann has made it very directly clear that she will not be doing this - she says it is not what she was hired for and she is not interested. Simply, Dann wants much more money that Tridant can afford.[18] Her perception is that she can command massive amounts in the market place (including from Tom Reich who is very disappointed that she chose to go to Tridant instead of Focus) and she may well be right.
• Many of us are constantly at odds of opinion with Dann, on so many matters - she simply can't see it our way. All the directors have multiple experiences on this. Unfortunately her personality is not a fit with our culture.
• My final point is that the aggressive emails and the "your behaviour is disgusting and your commplan is pathetic and I keep telling you that you have no appreciation of anything that is happening and the damage is done" type rhetoric continues unabated, both in Dann's interactions with the directors and on multiple occasions with other staff members. Nobody has been responding to her in this crass and disrespectful style, but this still does not change her behaviour. It's clear that we have lost control of this person - we will not get her respect back...

Dann has been a great asset and is a formidable competitor for Tridant we all have no doubt, but as far as I am concerned we have been trying to get oil and water to mix for too long and the above matters on the "liability side" of her balance sheet create not only too many problems for us right now, but create too much risk for us going forward.

My preference is that:

• We terminate immediately with Dann which is what she is expecting (and now wants she tells me), and of course pay her the full months' notice and her commissions. I appreciate this will create a lot of continuity challenges for us some time (not least at L L) but I think the principle that you don't continue with someone who is not a fit, for both parties' sake, is the over-riding factor here.
• We communicate both internally and externally only that we have failed to reach commercial terms for a contract extension with Dann, which is the essential fact, and ask her to do the same...
• We take every reasonable step from our side to part friends.
• In the future if the delivery guys a role which we can afford for Dann to manage Lend Lease is we are successful there (maybe even a temporary or part-time one) we consider approaching her for that, with reporting lines to MT, NK and WB. This would not be my advice and there is no circumstance in which I would want to be Dann's manager again, but that would be a decision for the delivery guys.

So that is my view of what is best for Tridant. I would like to ask all of you for your consideration of the above, and if you are in agreement that this has gone beyond the possibility of recovery, your support for my recommendation, so that I can action this today.[19]

89 In summary, Mr McConnochie's email demonstrates a logical process of reasoning leading to a recommendation that it would be 'best for Tridant' if the DPN agreement was terminated forthwith. The reasoning was both commercial and personality based. It includes both praise of Ms Nguyen's performance and criticism of her confrontational approach towards directors. In short, there is no suggestion of anything other than a rational commercial decision to exercise the mutual termination power under clause 7.2 of the agreement.

90 The other directors supported Mr McConnochie's recommendation:

(1) By email sent at 3:29 pm on the same day, Mr Kuti noted the:

utter failure on Dannielle's part to approach to the topic with any diplomacy or negotiation. Quite the opposite, her emails have been inflammatory, disrespectful and threatening, showing a lack of good judgement.

I am also of the view, that unfortunately she must be asked to leave immediately.

(2) At 4:10 pm that day, Mr Jeffery agreed, stating that this was 'a disappointing outcome' but that he had nothing further to add.

(3) At 4:21 pm that day, Mr Boschoff accepted the recommendation in these terms:

All issues aside, Dan made it clear that her role doesn't fit her and it is not what she signed up for. Reason enough that she doesn't belong in the sales team as there is no short-term plan to walk away from software distribution.

A real [pity] that it had to come to this, in the way it has.

91 By this time also, there were other concerns which the directors had with Ms Nguyen's personality and performance, which also played a role in their decision to terminate the DPN agreement. For example, the directors were concerned about the following matters:

(1) Apart from disagreeing with company policy on her role, Ms Nguyen refused to follow the directors' repeated instructions to devote more time to prospecting for new work, and take only a 'light touch' approach to managing existing accounts.

(2) Ms Nguyen was at times rude and aggressive to key IBM contacts, sometimes resulting in conflict. For example:

(a) In January 2012, Ms Nguyen took an uncompromising stance at a lunch attended by Michael Taylor, Ms Nguyen and Mr Ganesh Luharuka (the NSW Consulting Sales Leader Business Analytics at IBM) regarding a potential opportunity with Westpac. The lunch became 'very confrontational', following which Mr Luharuka noted to Mr Taylor by email that he was 'deeply concerned' by some of Ms Nguyen's comments and that IBM's personality clash with Ms Nguyen meant that they were forced to reconsider their strategy going forward. Mr Taylor informed the directors of the situation, who noted that there was a 'real problem' with her people skills, and discussed giving her further feedback in light of concerns that they would lose clients and employees as a result.

(b) On several occasions between April and July 2012, Mr Chris Turnbull (Regional Sales Manager, Business Analytics at IBM) indicated to Mr McConnochie that, despite his respect for other Tridant representatives, he did not want to work with Ms Nguyen because he considered her rude, incompetent and unpleasant to deal with.

(c) In around May 2012, Campbell Travis, an IBM Partner Manager, informed Mr McConnochie that all IBM sales people had issues with Ms Nguyen and did not want to work with her. In June 2012, Christopher Wilkins, an IBM Business Analytics Sales Representative told Mr McConnochie that he did not wish to meet with Ms Nguyen.

(3) Ms Nguyen was also aggressive and confrontational in her dealings with Tridant personnel. For example:

(a) Throughout her time with Tridant, Ms Nguyen had a number of disputes with various Tridant personnel. This was, in part, due to her abrasive character and her tendency to become upset and behave rudely and aggressively if she did not get her way.

(b) At times, Ms Nguyen was rude and aggressive to the directors, describing them as not knowing what they were doing. For example, her email to Mr Kuti on 10 August 2012 regarding his approach to the Lend Lease deal (and copied to the management team) was considered by Mr Boschoff to be unnecessarily rude and critical of a legitimate approach taken by a director.

(c) Ms Nguyen was also rude and aggressive in her dealings with Andrew Stephens, often resulting in heated arguments. In large part, their conflict arose because of her attempts to encroach on Mr Stephens's responsibility to manage project delivery. Her email correspondence to Mr Stephens, and to the directors regarding Mr Stephens, was considered by the directors to be unnecessarily aggressive, and overstepped the boundaries of her role. The disputes between Ms Nguyen and Mr Stephens ultimately required directors' intervention.

92 The above evidence was not challenged by Ms Nguyen. As appears above, Ms Nguyen acknowledged that she has always been a 'prickly' or 'difficult' person, and occasionally 'butts heads' with others.

93 Later in the evening on 6 September, at 8:44 pm, Mr McConnochie sent an email to Ms Nguyen and copied it to the other directors. The subject of the email was: 'Termination of our contracting arrangement'. A copy of the agreement was attached. In summary, by this email, Mr McConnochie endeavoured to achieve a consensual termination of the agreement. He set out the proposed steps of the termination arrangement, including that Ms Nguyen would cease working for Tridant with immediate effect and return her computer equipment and other Tridant materials, that DPN would invoice Tridant for four weeks (four days per week) at the base daily rate and that amount would be paid 'immediately and in full', that expense claims would be paid immediately upon receipt, and that commission entitlements arising from 'a schedule of all amounts invoiced as per your existing commission arrangement' would be settled immediately upon receipt of DPN's invoice.

94 Ms Nguyen replied the next day, 7 September 2012. She adopted the position that Mr McConnochie's 6 September email was not a valid notice of termination under the agreement, but was 'no more than [an] offer to pay DPN Solutions its actual entitlements under the Contractor Agreement'. She said that, until Tridant followed 'proper processes set out in the Agreement', including by giving one month's notice in writing, DPN would continue to comply with its obligations under the agreement.

95 This response by Ms Nguyen involved a literal interpretation of Mr McConnochie's 6 September email, but there was room for doubt as to whether Mr McConnochie's email constituted a notice of termination under clause 7.2 of the agreement. Accordingly, Mr McConnochie sent a further email later that day at 6:22 pm. During the course of openings in the case, DPN's counsel acknowledged that this email, read in context, constituted a notice of termination under clause 7.2. That concession was properly made.

96 In summary, the subsequent email dated 7 September from Mr McConnochie to Ms Nguyen summarised the 'irreconcilable issues' between the parties, stated that the intent of the 6 September email was to terminate the relationship and, for the avoidance of doubt, provided notice of termination in that email. Mr McConnochie pointed out that the intent of his 6 September email was to: 'Propose what we felt was a generous arrangement to avoid any dispute about commissions and consulting fees, and thus allow both parties to part immediately and without rancour'. Moreover, he stated that, in addition to DPN being paid during the notice period without Ms Nguyen being required to perform any services, she and DPN were 'immediately released to direct [their] business energies towards new or other clients'. The offer made in the 6 September email was repeated and extended until close of business on the following Monday, 10 September. Ms Nguyen did not accept it, but in my opinion nothing turns on that. A valid notice of termination had been given under clause 7.2, and the agreement was accordingly terminated on 7 October 2012. DPN was therefore entitled to payment of the daily base component and variable component accruing during the one month period between 7 September and 7 October.

97 On 12 September 2012, five days after the termination notice was given, Tridant was notified by Ms Abal of Lend Lease that it had been successful 'in being selected as one of the preferred [systems providers] for [the Lend Lease RFP]'. Ms Abal said that she would 'shortly be in contact' to discuss the next steps towards the placing of a services order by Lend Lease. The first services order placed by Lend Lease with Tridant was on 5 October 2012, two days before the expiry of the DPN agreement. This order triggered DPN's entitlement to payment of its variable component in respect of that services order, as I have found above.

98 DPN's principal case is that Tridant engaged in unconscionable conduct by deliberately seeking to deprive DPN of its variable component entitlement in relation to the ongoing Lend Lease relationship. It submitted that Tridant set out to achieve this purpose by proposing a revised commission plan that it knew DPN would not accept, with the intention of relying on DPN's refusal as evidence of irreconcilable differences between the parties that would justify it in terminating the agreement. Particular reliance was placed upon the short timeframe between the provision of the revised commission plan to Ms Nguyen on 3 September 2012 and the termination of the agreement on 6 and 7 September 2012.

99 DPN also argued that Tridant deliberately concealed its intentions to significantly reduce the commission rates payable to DPN while Ms Nguyen worked long hours to win the Lend Lease business. DPN submitted that the revised commission plan was not put forward for Ms Nguyen's consideration until the Lend Lease business had, in effect if not formally, been secured following the 23 August 2012 presentation, in which she played a significant role.

100 Tridant contends that the prospective Lend Lease deal was not the motivating factor behind the review of the commission plans of all salespersons. It argues that the performance of the New South Wales office had improved significantly over the previous 12-18 months, a fact which demanded a revision of all commission plans, including DPN's. Tridant supported this argument by highlighting that DPN's earnings had far exceeded the OTE amount contemplated by the parties when the agreement was negotiated. Tridant's directors gave evidence to support these submissions, and denied any deliberate design to offer DPN a revised commission plan which would doubtless be rejected by Ms Nguyen and thus provide a reason to terminate the agreement.

101 For the following reasons, I generally accept Tridant's submissions. In summary, Tridant acted in its own legitimate commercial interests in terminating the DPN agreement. No level of moral obloquy or taint has been demonstrated. Moreover, even if moral taint were not a requisite element of unconscionable conduct, DPN has not established that Tridant's conduct in terminating the DPN agreement was unfair, unreasonable, unjust or 'irreconcilable with what is right or reasonable'.[20] Taking the circumstances as a whole, Tridant's conduct falls well short of conduct deserving of the opprobrium of a finding of unconscionability.[21]

102 First, it was accepted by the parties that commission plans in the IT industry are commonly subject to regular reviews. Indeed, this was expressly stated in Mr Jeffery's email of 10 August 2011 to Ms Nguyen, offering her a permanent position at Tridant.

103 Second, while I accept that Tridant's directors, in fixing DPN's revised commission plan, were conscious of the possibility that success on the Lend Lease bid could expose Tridant to paying a very high variable component to DPN if the existing rates were maintained, I see nothing sinister, immoral or unreasonable about the directors having regard to that possibility in fixing DPN's revised commission rates. In doing so, the directors were doing no more than recognising the growth in sales since the agreement was negotiated, considering the fact that DPN had already earned and been paid base and variable remuneration which far exceeded the OTE figure which was contemplated when the agreement was entered into, and their own forecasts for future earnings, including from Lend Lease. In my opinion, the directors' consideration of these matters was legitimate commercial conduct.

104 Third, although the directors anticipated a 'harsh reaction' to the revised commission plan when it was put to Ms Nguyen, that does not support DPN's contention that the directors intended to put forward a revised commission plan which would be so unacceptable to Ms Nguyen that it would trigger her angry rejection of it and lead to irreconcilable differences justifying termination of the agreement. The quoted comment is consistent with the directors having a full understanding of Ms Nguyen's difficult personality. Moreover, DPN's conspiracy theory, that the directors deliberately set out to make a revised commission offer which DPN could not accept, is implausible. There was no evidence to support it and a conspiracy of the kind alleged was unnecessary. Clause 7.2 did not require any reason to be given for serving a termination notice.

105 Fourth, as appears above, there were ongoing concerns by directors about Ms Nguyen's failure to focus on business development, her rude and aggressive dealings with key IBM contacts, her aggressive and confrontational behaviour towards Tridant personnel and, in particular, towards directors - including by questioning company policies and forcefully criticising the directors for adopting them.

106 Fifth, Ms Nguyen's email sent on 5 September 2012 was legitimately interpreted by the directors as calling an end to the business relationship between the parties. Even following that confrontational email, however, the directors gave mature consideration to the contrary views expressed by Mr Taylor and, with some reluctance given Ms Nguyen's obvious competence, determined that the agreement should be terminated in all the circumstances. That was a reasonable commercial decision for the directors to make. The evidence shows that they did so carefully, after weighing up all the circumstances.

107 Taking the evidence as a whole, I find that the directors acted for the legitimate commercial purpose of protecting Tridant's interests, both commercial and interpersonal, when they decided to terminate the agreement. While the directors might have handled the matter with more tact, by meeting with Ms Nguyen to explain the reasons for the revised commission plan rather than sending her midnight emails on the subject on the day she was due to return from holiday, the evidence falls well short of establishing unconscionable conduct or a want of good faith on Tridant's part.

108 DPN raised an alternative case based upon breach of an alleged good faith obligation implied in the agreement. Counsel for DPN referred to authorities in New South Wales to the effect that an obligation of good faith should be implied routinely in contracts.[22] As counsel acknowledged, however, the approach of the Victorian Court of Appeal is different. In this State, an obligation of good faith is not implied as a legal incident of all contracts; in particular, it is not an implied fetter in all contracts on the exercise of express contractual rights and powers.[23]

109 In Victoria, implied good faith obligations must satisfy the test for implication of an implied term in fact, as stated in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council.[24] The relevant five point test is set out above.

110 In this case, it is not necessary to determine whether an obligation of good faith was implied in the agreement because, for the reasons given above, even if it was so implied it was not breached. There was no want of good faith in Tridant's exercise of its contractual power under clause 7.2 of the agreement to terminate it.

111 In my view, however, the agreement did not contain an implied good faith obligation. Such an obligation was not necessary in the circumstances of this case to give business efficacy to the agreement and was not so obvious that it 'goes without saying'. In particular, such an obligation should not fetter the mutual right to terminate on one month's notice in clause 7.2 of the agreement. As Buchanan JA stated in Esso Australia Resources Pty Ltd v Southern Pacific Petroleum NL (Receivers and Managers Appointed) (Administrators Appointed):

It is difficult to discern a want of good faith in the exercise of the power which can serve only the interests of the party upon whom the power is conferred ...

If a contractual right or power, which is intended to advance only the interests of the party on whom it is conferred, is fettered by an implied obligation of good faith, resort to the duty may become an obstacle to the promotion of that party's legitimate interests.[25]

112 In certain situations, the admissible surrounding circumstances in which a contract was made may demonstrate that an implied good faith obligation is necessary, for example to protect a vulnerable party from exploitative conduct by the stronger party, especially where that conduct may subvert the original purpose for which the contract was made.[26] In the present case, however, DPN could not be said to have been more vulnerable than Tridant. Ms Nguyen's own evidence was that she had 'a level of business acumen and sales expertise' that made her 'one of the most capable, adaptable and versatile Business Analytics ... operators in the Australian IT industry'. Instead of accepting an offer of employment as an individual, she elected to negotiate a contractor agreement between Tridant and her company, DPN, to suit her tax affairs. Further, she insisted upon express wording in the agreement to ensure that the variable component of her fee was 'uncapped'. Viewing the agreement as a whole, in the circumstances in which it was made, it is clear that clause 7.2 was for the benefit of each party, and could be exercised to serve the interests of each party's legitimate commercial interests. Accordingly, if the terms of the agreement were not working out commercially for one of the parties, that party could terminate it by giving one month's notice. So, Tridant could terminate the agreement if it was becoming too expensive for it to perform according to its financial position and objectives, and Ms Nguyen could cause DPN to terminate if she secured alternative employment or contracting arrangements which suited her interests better. Under clause 7.2, Ms Nguyen could cause DPN to terminate at an inopportune time for Tridant and vice versa - for example, Ms Nguyen could serve a termination notice during the course of an important bid for new business where she had established important connections with the proposed client.

113 As to the content of the suggested good faith term, DPN contended that it created a fetter on Tridant's exercise of its right to terminate under clause 7.2. It contended that good faith obliged Tridant to only terminate on reasonable notice, so as to give DPN a reasonable opportunity to receive the commission it earned by Ms Nguyen's contribution to securing the initial services order from Lend Lease. Any such fetter would be directly inconsistent with clause 7.2. I reject this suggested means of extending the one month notice period by reference to an implied term of good faith.

114 As to breach of the suggested good faith term, DPN relied upon the same conduct by Tridant which it contended was unconscionable. For the reasons given above in rejecting the unconscionable conduct claim, there was no want of good faith on Tridant's part by that conduct.

115 Finally, DPN relies upon the implied duty to co-operate which is, as a general rule, implicit in every contract.[27] This admitted term cannot assist DPN. Tridant's exercise of its contractual right of termination did not deprive DPN of the benefit of the contract. It cannot be a breach of the agreement to rely upon its express terms. In other words, whatever benefits DPN had under the agreement were subject to its express terms and, accordingly, were subject to the risk that Tridant might, for commercial reasons, decide to exercise its right under clause 7.2.

Did Tridant engage in misleading or deceptive conduct?

116 DPN claims that Tridant engaged in misleading and deceptive conduct in contravention of s 18 of the Australian Consumer Law. The essence of its claim is that, from late June to 3 September 2012, Tridant represented to Ms Nguyen that DPN would be entitled to a variable component on services sales to Lend Lease in accordance with the commission rate specified in the agreement, while failing to disclose to Ms Nguyen 'that it was minded to reduce' the commission rate payable to DPN in the context of a review of DPN's commission plan for the period commencing 1 July 2012.[28] In submissions, DPN contended that Tridant deliberately concealed the fact that it was minded to reduce DPN's commission rate in respect of services sales until 3 September 2012, after the initial Lend Lease services sale had become a 'real prospect', following receipt of Ms Abal's 24 July 2012 email.

117 The first aspect of the misleading and deceptive conduct claim constitutes no more than a reference to the variable component terms of the agreement. At their highest, those terms could involve a promise as to a future matter, but no suggestion was made that there were no reasonable grounds for that promise at the time it was made.[29] Further, the promise was made in the context of an understanding between the parties that the commission rates would be reviewed on a regular basis.

118 The real substance of the false and misleading conduct case is its second aspect, namely, Tridant's alleged failure to disclose to DPN that it was minded to reduce the rate at which it earned the variable component of its fee, as was in fact done in the new commission plan proposed to Ms Nguyen on 3 September 2012. I do not accept that this conduct was misleading. As appears above, the parties contracted on the express basis that 'the commission plan would be reviewed and possibly revised 6 monthly', and in the mutual knowledge that this is commonplace for salespersons in the IT industry. On 19 July 2012, before any positive signs were received from Lend Lease as to Tridant's bid, Mr McConnochie advised Ms Nguyen by email that he would 'set the new commission plans and targets effective 1 July', and repeated that advice in an email to her and other sales staff on 6 August 2012. The 6 August email noted expressly that 'a new commission plan and target for each of you for the half year ended 31.12.2012 ... will apply retrospectively from 01.07.12'.

119 Further, as an experienced IT consultant, Ms Nguyen must have known that the increasing sales made by Tridant's New South Wales office since she began working there would result in revised targets and lower commission rates. In these circumstances, I am not satisfied that the failure to advise Ms Nguyen that DPN's commission rate was likely to be reduced constituted misleading or deceptive conduct.

120 In any event, had a false or misleading conduct case been made out, the only damage claimed was the fact that Ms Nguyen undertook additional responsibilities and worked longer hours than expressly required of her under the agreement. In evidence, she made no endeavour to particularise this claim.

121 In a supplementary outline of submissions concerning remedies, DPN contended that '[i]f Tridant had informed DPN shortly after 24 July, 2012 that it was minded to decrease its rate of variable component, it is submitted DPN could have negotiated a more favourable package as Tridant still needed DPN and its principal (Dannielle Nguyen) to lead the Lend Lease bid'. This unpleaded case was not established by evidence. Ms Nguyen gave no evidence about what she would have done if she had been expressly told at that time that Tridant was considering a significant decrease in DPN's commission rate on services sales.

Is Tridant estopped from denying that DPN is entitled to be paid the variable component on services sales made after termination of the agreement?

122 DPN's estoppel claim is difficult to follow. In its outline of opening submissions, the bare assertion was made that Tridant is estopped from denying that DPN is entitled to be paid the variable component of its fees in perpetuity, alternatively for 12 months, or alternatively for a reasonable period. The issue was not referred to in DPN's written outline of final submissions. In oral submissions, DPN's counsel rolled up the estoppel claim with the unconscionable conduct, breach of good faith and misleading or deceptive conduct claims, without analysing the elements of the estoppel claim. DPN made supplementary submissions concerning relief on the assumption that an estoppel claim had been established. The Court is left to do the best it can on the allegations contained in DPN's pleadings.

123 In the amended statement of claim, DPN alleges that Tridant's actions were contrary to DPN's assumption or expectation that DPN would continue to be engaged by Tridant on a permanent basis and remunerated in accordance with the agreement, that any change to rates of remuneration would be negotiated in good faith and would only be subject to minor variation, and that, on the basis of these assumptions or expectations, DPN provided Ms Nguyen's services to Tridant and did not make attempts to obtain employment or engagement elsewhere.

124 DPN then alleges that, by acting in the manner referred to in paragraphs 21(a) to 21(l) and 24A to 24M of the amended statement of claim, Tridant has acted in a manner contrary to the assumptions or expectations and, in the premises, it is unconscionable for it to do so. The paragraphs referred to allege breach of the contractor agreement, which has only succeeded to the limited extent determined above, the allegation of permanent employment or engagement, which was abandoned during evidence and submissions, and the circumstances giving rise to the unconscionable conduct case.

125 In some unspecified way, DPN alleges that these matters estop Tridant from denying that DPN is entitled to be paid a variable component in respect of all software sales and/or services sales after termination of the agreement 'in perpetuity for the duration of the relevant sales agreement or, alternatively, for 12 months, or alternatively, for a reasonable period'. In circumstances where DPN has not articulated a coherent basis for such an estoppel, I will not consider that estoppel case further. It is rejected.

126 Similarly, the estoppel case raised in DPN's reply was not the subject of any submissions at trial. The Court received no assistance on the issue. In these circumstances, I will not consider it further. DPN's entitlement is contractual, as determined above.

127 For the reasons given above, DPN has established an entitlement to damages in the sum of $7,629.81 for the unpaid variable component of its fees in respect of the initial Lend Lease services sale. It has also established an entitlement to variable component on any software or services sales concluded, but not paid or invoiced, prior to 7 October 2012 and in respect of which Ms Nguyen played a meaningful role. If that amount cannot be agreed, there will be an order for the taking of accounts or referral to a special referee or expert for report. It has not established an entitlement to relief on any other basis.

128 I will hear the parties as to the form of orders, interest and costs.

[2] Item 6 of the schedule and the definition of 'Contractor's Fee'.

[3] There was a pleaded issue as to the sufficiency of this notice, but the issue was abandoned during the trial.

[4] McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457, 476-7.

[5] Ms Nguyen's evidence of loss related to the whole of the period of DPN's engagement. That case was not pleaded. In discussion with counsel, the Court clarified the position - that DPN's claim was limited to payments made on software sales and invoices rendered on services sales after termination of the agreement.

[6] This is despite significant amounts of work having been undertaken by Tridant staff after Ms Nguyen effectively ceased work for Tridant when she went on leave on 24 August 2012 and before Lend Lease placed the first services order, including the negotiation of a Master Services Agreement.

[8] Electricity Generation Corporation v Woodside Energy Ltd & Ors [2014] HCA 7; (2014) 88 ALJR 447, 454-5 [35].

[11] Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337, 348, 353.

[12] The Australian Consumer Law is Schedule 2 to the Competition and Consumer Act 2010 (Cth).

[13] Violet Home Loans Pty Ltd v Schmidt [2013] VSCA 56, [58]; Director of Consumer Affairs Victoria v Scully & Anor [2013] VSCA 292, [58].

[14] Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389, [293].

[15] Mr Jeffery also referred explicitly to Lend Lease in his email.

[17] I interpolate that, on these figures, Ms Nguyen earned $435,000 in five quarters, which annualises at $348,000. This compares very favourably with the OTE of $215,000 given by Mr Jeffery to Ms Nguyen in his email sent 10 August 2011, which Ms Nguyen described in her witness statement as a 'surprise' which she 'welcomed' and saw as 'a goodwill gesture on Tridant's part'.

[20] Cf ACCC v Dukemaster Pty Ltd [2009] FCA 682.

[21] Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389, [293].

[22] For example, Burger King Corporation v Hungry Jacks Pty Ltd [2001] NSWCA 187; (2001) 69 NSWLR 558, 566-9 [146]-[164].

[23] Esso Australia Resources Pty Ltd v Southern Pacific Petroleum NL (Receivers and Managers Appointed) (Administrators Appointed) [2005] VSCA 228, [3], [25]; Bytan Pty Ltd & Ors v BB Australia Pty Ltd [2012] VSCA 233, [45]; Specialist Diagnostic Services Pty Ltd (formerly Symbion Pathology Pty Ltd) v Healthscope Pty Ltd & Ors [2012] VSCA 175, [86].

[25] [2005] VSCA 228, [23]-[24] (Warren CJ and Osborn AJA agreeing).

[26] Specialist Diagnostic Services Pty Ltd (formerly Symbion Pathology Pty Ltd) v Healthscope Pty Ltd & Ors [2012] VSCA 175, [88]-[89].

[27] Secured Income Real Estate (Aust) Ltd v St Martin's Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596, 607-8.

[28] DPN also pleaded a further ground concerning the permanency of the engagement. At trial, however, Ms Nguyen gave evidence that she understood that the engagement was only permanent in the sense that it would be ongoing until such time as the agreement was terminated.

[29] Cf s 4 Australian Consumer Law.