He lays emphasis on the words "in exceptional circumstances".
14 Mr Wood also referred to the decision of the Privy Council in Francis v Municipal Councillors of Kuala Lumpur [1962] 1 WLR 1411. The general principle against specific performance of personal service contracts was there acknowledged but was said to be subject to an undefined form of "special circumstances" exception. In that respect, the comment is similar to that in Byrne v Australian Airlines.
15 The advice of their Lordships in Francis's case was delivered by Lord Morris of Borth-y-Gest who said at pp.1417 to 1418:
"In their Lordships' view, when there has been a purported termination of a contract of service a declaration to the effect that the contract of service still subsists will rarely be made. This is a consequence of the general principle of law that the courts will not grant specific performance of contracts of service. Special circumstances will be required before such a declaration is made and its making will normally be in the discretion of the court. In their Lordships' view there are no circumstances in the present case which would make it either just or proper to make such a declaration."
16 This statement was quoted with apparent approval by Kaye J of the Supreme Court of Victoria in Gordon v State of Victoria [1981] VR 235. His Honour said that there were no special circumstances in the case before him but referred to two cases in which special circumstances of the relevant kind had been found to exist. The first was Vine v National Dock Labour Board [1957] AC 488, but as was clearly stated by Lord Keith of Avonholm at p.507 of the report, that case did not involve "a straightforward relationship of master and servant". It involved the validity of certain administrative procedures. As Lord Keith also said, normally and apart from the intervention of statute, there would never be a nullity in terminating an ordinary employment contract. Dismissal might be a breach of contract and so unlawful, but could only sound in damages.
17 The second case referred to by Kaye J is Hill v C A Parsons & Co Ltd [1972] 1 Ch 305. In that case, the employer company had agreed with a trade union that after a period of 12 months it would employ only members of that union. The plaintiff, an employee of more than 30 years standing, was a member of a different union. He and others in the same position were given one month's notice of termination of employment following failure to act on the demand that they join the preferred union. The plaintiff was 63 years old with two years left to serve until retirement. He sought, as final relief, an injunction restraining the employer from implementing the notice of termination. An interlocutory injunction was refused and there was an appeal to the Court of Appeal where, among other things, the availability of the final relief was canvassed.
18 The Court of Appeal was satisfied that final relief by way of injunction might, in due course, be granted as an exception to the general rule. This was because of exceptional circumstances: essentially, that the personal relationship of trust and confidence between the employer and employee remained intact and the threatened dismissal was wholly the result of a threat of industrial action by the union concerned. Importantly, the injunctive relief there was directed towards nullifying the effect of the particular termination notice. This was therefore not a case of specific performance as such.
19 Mr Wood also relies on observations of the Full Federal Court (Jenkinson, Wilcox and Ryan JJ) in Gregory v Phillip Morris Ltd (1988) 80 ALR 455. The claim there was a claim by the employee that his employer honour the employment contract by allowing the employee to work under it. The order sought was accordingly described by the court as in the nature of an order for specific performance. The court was prepared to concede the theoretical possibility of such an order, but considered that the particular case was not of the relevant exceptional type. After referring to the general principle mentioned in Francis's case above, the court said (at p.482):
"We would not wish to give any endorsement to the view that there may never be an order in the nature of specific performance of a contract of employment. But the making of such an order is a matter within the discretion of the court. Where such an order is sought, careful consideration must always be given to the likely consequences of the order. The evidence in the present case suggests that industrial difficulties would occur if Gregory were now to be re-employed. Each of the traditional reasons for denial of specific performance - a loss of confidence between the parties and the problem of supervision of the relationship - applies in this case. In the exercise of the court's discretion, an order for specific performance ought to be refused."
20 Another relevant decision of the Full Federal Court (Northrop, Keely and Gray JJ) is Turner v Australian Coal and Shale Employees Federation (1984) 55 ALR 635 to which Mr Wood also referred. He emphasised a passage at p.649, where the court, after referring to Francis's case (above) and to Gordon v State of Victoria (above), said:
"What is clear is that the courts will no longer set their faces against granting the remedies of declaration and injunction with respect to contracts of employment."
21 This too was really an industrial law case. The employee or, more accurately, the would-be employee, sought relief following a union's refusal to admit him to membership and the employers' refusal to employ him because he was not a union member.
22 I should also refer to the decision of the New South Wales Court of Appeal in Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337, to which Mr Wood took me. There is brief discussion at pp.346 - 347 of some of the cases I have mentioned, but that was in the context of reference to a principle that a negative stipulation will not be enforced by injunction if that would have the practical effect of compelling specific performance. Because there is no negative stipulation in this case, I do not regard that discussion as pertinent.
23 For the same reason I do not think that one of the more recent cases referred to by Mr Wood is helpful. That case is Capgemini US LLC v Case [2004] NSWSC 674, a decision of Campbell J. That too was a case of negative stipulation in the form of a restraint upon activities after termination of an agreement related to employment.
24 The most recent case to which I was referred is also a decision of
Campbell J, Corporate Transport Services v Toll [2005] NSWSC 166. But this was not a personal services case (or what would once have been called a master and servant case) and I do not think it is of assistance.
25 I would make several observations about the authorities relied upon in this part of the plaintiff's case. First and as I have said already, some of the cases involved no more than a denial of a right to rely upon a particular purported termination of the employment. Such an order would not have touched upon any subsequent action to terminate and hence would not have compelled the parties to co-exist under their contract. Second, several of the cases arose in an industrial law context and really involved individuals caught up in industrial disputes bigger than themselves.
26 The third and most important point is that all but one of the cases in which the possibility of specific performance in respect of an employment contract was entertained in a theoretical way were cases where it was the employer who would have been compelled to have a relationship with the employee. The exception is a case I have not so far mentioned, but will come to presently, namely, Evening Standard Co Ltd v Henderson [1987] FSR 165. That was an appeal by an employer from a refusal to grant an interlocutory injunction and there is no indication that specific performance was ultimately ordered against the employee. There is, in any event, a point of distinction to which I shall come.
27 None of the features I have just summarised is present in the case before me. Rather, this is a case in which the final order sought would, if granted, compel an employee to provide his labour and skill to a corporate employer for the balance of the three year term - in each case, a period of more than one year; and this would be in circumstances where there was no third party industrial influence bearing upon the parties' relationship; where failure of the employee to perform according to the letter of his contract at any time during the residue of the term would expose him to the possibility of punishment for contempt of court; and where, as the evidence seems to me to show quite clearly, there has been a complete break-down in the trust and confidence that previously existed between the employer and each employee. I refer, in this last connection, to the correspondence between the first, second and third defendants and Mr Bell of the plaintiff in late March 2006, which contains words such as "dishonourable", "liar, "shock", "disappointment", "unreasonable threats", "unsavoury accusations", "serious threats" and "very angry".
28 It is this break-down that distinguishes this case from Evening Standard v Henderson (above). That, as I have said, was a case in which the possibility of an order for specific performance against an employee was at least entertained. But in that instance there had been no break-down in trust and confidence. I quote from the judgment of Lawton LJ at p.169:
"Another aspect of this matter which was offered by the plaintiffs, to my personal surprise, was that they would be willing to have the defendant working for them as their Production Manager in their production room. When Mr Boswood said that, I felt it was an unrealistic offer because it seemed to me that the probabilities were that the relationship between the higher management of the plaintiffs and defendant and the defendant would be so bad that working together would be virtually impossible. To my surprise, I was told that the defendant has in fact been working as Production Manager, in some degree at any rate, ever since he sent in his letter of resignation until today. So it is not altogether impossible that if the defendant, if he wanted job satisfaction, could go back to the Evening Standard tomorrow and do the job which he has been doing for the last seven years."
29 That is not the position here.
30 In De Francesco v Barnum (1890) 45 ChD 430 at p.438, Fry LJ said that the courts "are bound to be jealous, lest they should turn contracts of service into contracts of slavery". The grant of an order for specific performance against each of the first, second and third defendants in this case would be tantamount to making the contracts of service into contracts of slavery. This is a powerful indicator that the final relief sought would not be granted.
31 Mr Wood submitted, however, that this case is special because damages would not be an adequate remedy. More particularly, he submitted that damages could not be quantified. I do not accept these submissions. The evidence is to the effect that operatives of the particular kind have a personal following, in that clients or customers seek out and relate to the individuals rather than the organisation employing them. As was pointed out by Mr Parker (and his submissions were adopted by Mr G.C. Lindsay SC on behalf of the fourth defendant), it should therefore be easy to discover what revenues the persons concerned would have brought home to the plaintiff over the balance of the respective contract periods. It will simply be a matter of seeing what they in fact bring home to the fourth defendant as their new employer, or to whichever other company employs them over the balance of the period. To the extent that this methodology may leave gaps, there will always be the historical data regarding their past performance with the plaintiff from which extrapolations may be made.
32 The approach I have just outlined overlooks, in Mr Wood's submission, the value that the services may have by way of introducing other employees of the plaintiff into the relevant client connections, to the benefit of the plaintiff, as the three year terms draw towards their conclusion - in other words, the value of a means of transition. There is some validity in this, but the emphasis in the evidence upon the importance in the market of personal following makes the matter of limited significance.
33 I do not accept that any impossibility of assessment of damages is indicated here or that damages would not be an adequate remedy in this case. The specific performance claim could easily be countered by the proposition that damages will be an adequate remedy.
34 The next issue to be considered is whether the particular order for specific performance would require an unacceptable degree of supervision and superintendence by the court, a matter that was the subject of valuable discussion and analysis by Hamilton J in Liristis Holdings Pty Ltd v Q-Corp Marine Pty Ltd [2001] NSWSC 418.
35 Each contract in respect of which the specific performance claim is made each contains a stipulation that the employee will "faithfully and diligently perform the duties and responsibilities consistent with the position of senior Australian dealer interest rate swap broker and otherwise assigned to him by the Board"; also, that he will "promote the interests of the company and all group companies at all times". Those aspects of each contract seem to me to raise quite awkward problems of supervision. The court would potentially be required to decide on a potentially continuing basis what the duties and responsibilities of an Australian dollar interest rate swap broker required him to be doing day by day, hour by hour or minute by minute.
36 Mr Wood, in his careful and comprehensive submissions, has said all that could properly be said in support of the proposition that there is a serious question to be tried as to the availability of an order for specific performance against the first, second and third defendants at trial. My overall conclusion, however, is that the plaintiff's prospects of obtaining an order for specific performance compelling each employee to perform his employment contract by providing skill and labour under it for the unexpired balance of the three year term, so that the individuals are compelled to work for the employer for more than a year upon pain of punishment for contempt of court, are so weak as to be practically non-existent. In other words, I am not satisfied that there is a serious question to be tried on that issue.
37 I nevertheless proceed to a brief consideration of the balance of convenience and the question of the burdens that would be imposed by the interlocutory orders, if they were made. The plaintiff has made it clear in that connection that it will continue to pay the employees' salaries at the contracted rates pending final determination of the proceedings, whether or not they actually work. A similar assurance has been given with respect to bonuses, but not in such a way as to remove the personal performance condition in clause 7.3(d).
38 The position I have described is taken by the plaintiff having regard to the decision in the Evening Standard case to which I have referred, where the employer's like undertaking was seen as highly relevant to the balance of convenience, removing, as it did, any suggestion that the employee would be prejudiced by the lack of a means of livelihood pending trial or by being forced to work for the plaintiff. An undertaking of the kind I have before me here was seen in the Evening Standard case as alleviating hardship upon the employee that would otherwise have been counted against the plaintiff/employer upon the balance of convenience.
39 The assurances the plaintiff has given, as to payment of the salary component, do count in its favour as regards the balance of convenience, although they do not put the first, second and third defendants on precisely the same footing as if they were functioning in a way that saw them exposed to clients and enabled them to earn, as it were, credit towards bonuses. There is some element of hardship to them in that respect.
40 More significant in relation to the balance of convenience is the position of the fourth defendant who is currently in receipt of the services of the first, second and third defendants on a contracted basis which it is not possible to define with any certainty. The plaintiff suggests that the fourth defendant may have induced the first, second and third defendants to breach their contracts with the plaintiff. There is before me at this point evidence that the fourth defendant knew enough about the contracts with the plaintiff to tailor the form of a contract that took account of the expiry of the three year terms of service with the plaintiff, but I accept the submission from Mr Lindsay that, as the evidence now stands, the fourth defendant cannot be seen to have induced any breach of contract.
41 I should also mention in this connection that there is evidence in the correspondence to the effect that, as the first, second and third defendants see matters, the plaintiff repudiated its contracts with them and they, for their part, accepted the repudiation and terminated the contract in each case. Whether that is a correct characterisation of events it is, of course, too early to say. But what can be said is that, if the first, second and third defendants are of that view, it is a view likely to have been communicated to the fourth defendant, so that the fourth defendant may, rightly or wrongly, consider that the first, second and third defendants are no longer bound by contract to the plaintiff and therefore free to work for it. It is significant that the correspondence about the plaintiff's alleged repudiation and the employees' purported acceptance of it occurred after the date appearing on the forms of contract involving the fourth defendant, which I have described as tailored to take account of the expiry of the three year terms of employment with the plaintiff. It may therefore be the case that the alleged repudiation and the alleged acceptance of it were not matters of which the fourth defendant was aware when those tailored contracts were drawn up, although it later became aware of them.
42 I am of the view that the grant of the interlocutory relief sought would work a relevant hardship upon the fourth defendant and for that reason, coupled with the relatively minor elements of hardship to the first, second and third defendants, the balance of convenience is marginally against the plaintiff.
43 Mainly on the ground of lack of serious question to be tried, however, I decline to grant the interlocutory relief sought in paragraphs 1 and 2 of the summons