//
[2025] NSWDC 275
General information, not legal advice.
District Court of NSW
2025-06-16
Andronos SC DCJ
Original judgment source is linked above.
Zoe will write a short plain-English summary of this judgment and email it to you for free: what it was about, what the court decided and why. It can take up to a minute.
General information, not legal advice.
Or create a free account to save it and ask Zoe follow-up questions.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: W & K Consulting Pty Ltd v Leda Management Services as trustee for Leda (NSW) Finance Trust (No 2) [2025] NSWDC 275
Hearing dates: 13 and 14 November 2024
Date of orders: 16 June 2025
Decision date: 16 June 2025
Jurisdiction: Civil
Before: Andronos SC DCJ
Decision: See [123]-[127].
Catchwords: EMPLOYMENT AND INDUSTRIAL LAW — Contract — Termination — Termination on notice
ESTOPPEL — Anshun estoppel — Decisions to which applicable
ABUSE OF PROCESS – Settlement of proceedings
Legislation Cited: Civil Procedure Act 2005, s 100
Cases Cited: Brambles Ltd v Wail; Brambles Ltd v Andar Transport Pty Ltd (2002) 5 VR 169; [2002] VSCA 150
Bullock v Wimmera Fellmongery and Woolsourcing Co Ltd (1879) 5 VLR (L) 362
Cawsand Pty Ltd v Normans Wines (unreported, Brooking J, 21 June 1989)
Champerslife Pty Ltd v Manojlovski (2010) 75 NSWLR 245
Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337; [1982] HCA 24
Crawford Fitting Co v Sydney Valve & Fittings Pty Ltd (1988) 14 NSWLR 438
CSR Ltd v Adecco (Australia) Pty Ltd [2017] NSWCA 121
De L’Isle v Knight [2021] NSWSC 809
Energy World Corporation Ltd v Maurice Hayes and Associates Pty Ltd [2007] FCAFC 34; (2007) 239 ALR 457
Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692
New South Wales v Paige (2002) 60 NSWLR 371
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45
Re Dingjan; Ex parte Wagner (1995) 183 CLR 323; [1995] HCA 16
Rogan-Gardiner v Woolworths Ltd (2012) 218 IR 417
Tomlinson v Ramsey Foods (2015) 256 CLR 507; [2015] HCA 28
Category: Principal judgment
Parties: W & K Consulting Pty Ltd ACN 159 180 819 (plaintiff)
Leda Management Services Pty Limited as trustee for Leda (NSW) Finance Trust ACN 003 467 605 (defendant)
Representation: Counsel:
Mr J Darams SC with Mr J Martin (plaintiff)
Mr C N Bova SC with Mr J R Anderson (defendant)
Solicitors:
Boyd House & Partners (plaintiff)
Baker McKenzie (defendant)
File Number(s): 2023/00419442
Publication restriction: Nil
The plaintiff, W & K Consulting Pty Ltd, was a corporate vehicle through which Mr Wayne Holborow provided construction and project management consultant services. The defendant, Leda Management Services Pty Limited atf Leda (NSW) Finance Trust (“Leda”), is one of a group of companies associated with Mr Bob Ell and Mr Robert Ell, for which the plaintiff had performed work exclusively since 2012. The present dispute concerns the termination by the defendant of the plaintiff’s consultancy agreement in August 2020.
Although the plaintiff only commenced performing work for the defendant and its related entities (together the “Leda Group”) in 2012, Mr Holborow had performed the role of a senior executive within the Leda Group since 1992, with a brief hiatus between 2002 and 2005. He had done so pursuant to express written consultancy agreements between the defendant and corporate entities controlled by him. The last of such express agreements, entered in 2010 between Owframe Pty Ltd (“Owframe”) and the defendant, was novated to the plaintiff in 2012.
When that agreement expired in 2013, the parties continued to deal with each other pursuant to what is agreed to have been an implied agreement of indefinite duration.
The defendant purported to terminate the services of the plaintiff on 31 August 2020 by giving it 45 days’ written notice of termination (“the Notice”). There is no dispute that the agreement between the parties was brought to an end as a result of service of the Notice. The dispute between the parties concerns the adequacy of the 45-day Notice period. The plaintiff says that any termination ought to have been on reasonable notice which, in the circumstances, was a period of up to 12 months.
The defendant says, first, that it was a term of the implied agreement that it could terminate on 45 days’ notice. Alternatively, it says that if the implied agreement was only terminable on reasonable notice, a reasonable period would have been 45 days in any event. Finally, it points to the commencement and settlement of other proceedings, involving the same parties, and says that the present claim has either been released or the plaintiff is precluded from maintaining the present proceedings by reason of the principle in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45. It says that the present proceedings are, therefore, an abuse of process.
The parties agreed that the following issues, which I have slightly reworked, require determination:
Whether the defendant was required to:
(a) give 45 calendar days’ notice; or (b) provide a reasonable period of notice,
on the defendant’s termination of the agreement between the parties.
(a) what that applicable period of reasonable notice was; and (b) if reasonable notice was not provided, the amount of damages due by the defendant to the plaintiff, including whether damages ought be reduced for failure by the plaintiff to mitigate its loss.
The amount of long service leave entitlement due by the defendant to the plaintiff.
Whether the plaintiff is prohibited from bringing these proceedings by reason of Anshun estoppel or the agreement recorded in a notation to a consent judgment of this Court, dated 22 November 2022.
For the reasons set out below, I have found that termination by the defendant of the implied agreement was required to be on reasonable notice. In the circumstances as they existed at 31 August 2020, a period of reasonable notice was five months. I have rejected the defendant’s arguments as to the effect of the settlement of the previous proceedings and with respect to Anshun.
I will make directions requiring the parties to bring in short minutes giving effect to these reasons, calculating the amount due to the plaintiff less any amount received by it by way of JobKeeper payments or any other proper deduction. The plaintiff is entitled to interest at court rates. It is also prima facie entitled to costs assessed or agreed on the ordinary basis, although I will hear any application for a special costs order.
The plaintiff relied on an affidavit of Wayne Holborow, affirmed 30 August 2024. It also relied on an affidavit of its solicitor, Kevin Emanuel, dated 22 March 2024 in relation to the defences of release and Anshun estoppel. The defendant relied on some remittance advices and an affidavit of Paul Forbes, solicitor, affirmed 13 December 2023 in relation to the release and Anshun estoppel defences. The annexures and exhibits to the affidavits were substantial.
The facts are largely uncontroversial.
Mr Holborow (born 1955) has worked in the construction industry for over 50 years. He commenced his career as an apprentice carpenter, qualifying as a tradesman in 1974 and as a building foreman in 1976. He received a Building Certificate in 1977. He progressed in construction and project management, initially as an estimator with CH Webb Bros in 1979, where he remained employed until that firm folded in 1991.
Towards the end of his time at CH Webb Bros, Mr Holborow incorporated the first entity through which he provided construction and project management consultancy services in the building industry. That entity, Stone Date Pty Limited, since deregistered, provided project management consultant services, performed by Mr Holborow, to former clients of CH Webb Bros.
In April 1992, Mr Holborow started working as a construction manager and later project/design and development manager for the Leda Group of companies. The Leda Group is a large property, development and investment group, which operates in the retail, residential, industrial and commercial sectors. At all relevant times, it was associated with Mr Bob Ell, its Chairman, and Mr Robert Ell, its managing director.
Throughout the duration of his association with the Leda Group, Mr Holborow regularly took instructions from Mr Bob Ell and Mr Robert Ell. He personally performed the work and did so exclusively for the Leda Group.
The terms of engagement through which Mr Holborow’s services were provided to the Leda Group were governed by various consultancy agreements. Mr Holborow understood this to be similar to arrangements with a number of Leda Group personnel. The first such consultancy agreement was between Stone Date Pty Ltd and Leda Design and Construction Pty Ltd in April 1992.
In January 2002, Owframe and Leda Holdings Pty Ltd (Leda Holdings) entered an agreement, pursuant to which Owframe provided Mr Holborow’s services and was paid a consultancy fee which was ultimately received by Mr Holborow. From April 2004, Mr Holborow and his wife were Owframe’s directors.
Owframe terminated its agreement with Leda Holdings in September 2002 by giving three months’ written notice. It did so, according to Mr Holborow’s uncontested evidence, because of conduct by the chairman, Mr Bob Ell, that Mr Holborow “did not like”.
Between January 2003 and July 2005, Mr Holborow was engaged by St Hilliers as a design and delivery manager, pursuant to an agreement between St Hilliers and Owframe.
In July 2005, Owframe entered a new consultancy agreement with the defendant, which set out the terms and conditions of its engagement by the defendant for a term of five years (the 2005 Agreement). Relevantly, the 2005 Agreement provided:
The agreement was between Owframe and the defendant, which was expressed to mean the defendant and all of its related entities.
“Your initial engagement is based on a five (5) year fixed term contract commencing 29th August 2005 and ceasing on the 29th August 2010. At the completion of this fixed term, your engagement with Leda may be extended, on the understanding that a [sic] if a new contract is entered into, it will be on no lesser terms than those provided at the expiry of this agreement.”
Superannuation for Owframe’s employees was solely its responsibility (cl 12).
The 2005 Agreement expressly provided that the relationship between the parties was one “of a contractual nature” and “not that of an employer/employee and accordingly [the Consultant] is responsible for any PAYG or other Income Tax obligations which arise” as a result of entering into the 2005 Agreement (cl 18). Nevertheless, Owframe was required to devote all of its attention and skills, during business hours, to the business of Leda and performance of its duties.
Clause 24 of the 2005 Agreement provided for the following in respect of termination:
“24. TERMINATION
(a) The Consultant may terminate its services prior to the expiry of the fixed term of this agreement, by providing a written notice of forty five (45) calendar days. All Entitlements accrued on a proportional basis pursuant to this agreement will be paid up to date of Termination.
(b) Should Leda wish to Terminate the services of the Consultant for any reason prior to the completion of the fixed term of this agreement, it is required to give the Consultant a period of at least forty five (45) calendar days’ notice. Where Leda terminates this Agreement it will pay the greater of forty five (45) calendar days entitlements or the unexpended balance of the Consultancy Agreement for the Contract Term.
(c) Leda will be under no obligation to pay the Consultant any Termination entitlement provided under this clause should the Consultant breach its obligations under this agreement, commits any criminal acts or an act of gross negligence.”
The 2005 Agreement was due to expire on 29 August 2010. In anticipation of its expiry, Mr Holborow had discussions with Mr Bob Ell and Mr Robert Ell in about May 2010 and Mr Holborow circulated a marked up version of the 2005 Agreement on 18 May 2010. In that marked up version, the dates were changed, the base rate remuneration increase percentage and incentive payment entitlement were amended, and a relocation incentive was deleted.
A new consultancy agreement, dated 6 July 2010, was circulated by the defendant on 6 October 2010 (the 2010 Agreement). It was common ground that that the parties were bound by this Agreement, although it does not appear ever to have been signed.
The 2010 Agreement provided for a different date of commencement (29 August 2010) to that of the 2005 Agreement and a three-year term was substituted in cl 8 for what had been a five-year term in the 2005 Agreement. There were no longer references and terms related to interstate work, which had formed part of the 2005 Agreement. There was no longer any entitlement to Base Consultancy Fee increases. Incentive entitlements were also varied.
The 2010 Agreement was otherwise relevantly identical to the 2005 Agreement. As cll 10 (base increases) and 11 (relocation incentives) were deleted, cl 18 (relationship) was now renumbered cl 16, and cl 24 (termination) was renumbered as cl 22.
From September 2010 to July 2012, Owframe provided services in accordance with the 2010 Agreement, for which it was paid on invoice.
In about July 2012, Owframe novated the 2010 Agreement to the plaintiff. It is worth noting, at this point, that the shares in the plaintiff are beneficially held, in equal shares, by Mr Holborow and his wife. Mr Holborow is its sole director and secretary.
From July 2012 until July 2020, the plaintiff invoiced the defendant for services in accordance with the regime in the 2010 Agreement and was paid on invoice.
The 2010 Agreement expired in August 2013. That date does not appear to have been marked by any observation by the parties as to its expiry. It appears the parties simply continued to deal with each other as they had since the 2010 Agreement was entered, or since 2012, in light of the novation of the 2010 Agreement from one entity controlled by Mr Holborow to another.
By November 2019, there was a high level of disputation between Mr Holborow and Mr Bob Ell. Mr Holborow’s unchallenged evidence, which there is no reason not to accept, was that Mr Bob Ell had been very abusive and that, from time to time, he threatened to terminate the engagement of the plaintiff and/or Mr Holborow. Mr Holborow was unhappy that certain incentive payments, comprised in direct payments to his children’s schools for school fees, had not been paid since August 2014.
Mr Holborow considered that Mr Bob Ell could not be relied upon to honour his agreements. This may go some way to explaining the structure of the agreement that was subsequently reached.
On 14 November 2019, a document described as a Deed of Agreement was executed. It was not executed as a deed. It provided:
“Deed of Agreement
Parties to this Deed are:
William Robert Ell Chairman of Leda Holdings Pty Ltd herein referred to WRE and;
Wayne James Holborow Managing Director of W&K Consulting Pty Ltd herein referred to WH;
This deed formalises discussions between WRE and WH culminating in the following:
- WRE agrees to pay WH the monies withheld totalling $250,000 on outstanding annual payment of School Fees which was to be paid in TAX effective basis to WH and can be either paid in CASH or equivalent Tax effective value on any agreed acquisition of property asset to WH or any related entity;
- WRE agrees to pay a Bonus of $40,000+gst to WH or W&K Consulting on Completion of the Cranbrook Residence and providing all As Built’s, Warranties and maintenance manuals;
- WRE agrees to review WH Salary and pay a minimum increase of $20,000 PA effective from last payment made.
Item 1 is to be paid or agreement entered into on or before the 29 December 2019;
WRE Obligations pursuant to this agreement are binding and be payable immediately should WRE or its related entity chose [sic] to terminate any agreement with WH or W&K Consulting Pty Ltd.
This Agreement dated 5 November 2019 signed by the parties”.
The Deed of Agreement was then signed by Mr Bob Ell and Mr Holborow and dated 14 November 2019.
Neither Mr Bob Ell nor the defendant honoured this agreement. The earlier proceedings, commenced in May 2021, were brought initially by Mr Holborow, in his personal capacity, to enforce its terms against Mr Bob Ell, who was sued in his personal capacity. The plaintiff and the defendant were subsequently joined. The relevant procedural history of the earlier proceedings is set out below.
In his affidavit, Mr Holborow places the events of August 2020 in their immediate factual context. Mr Bob Ell had been abusive towards him throughout their working relationship. On about 15 July 2020, there appears to have been a verbal altercation between Mr Holborow and Mr Bob Ell. Mr Holborow followed up with an email, later that day, to which Mr Bob Ell responded on 17 July 2020. Mr Holborow responded later that day by marking up Mr Bob Ell’s email with his own comments.
In early August 2020, Mr Holborow was suffering from a head cold, and in compliance with Leda’s Covid-19 policy at the time, he undertook a test for Covid-19 and did not physically attend work pending receipt of the results. On 4 August 2020, he notified Mr Robert Ell that he had tested negative for Covid-19 but was told by Mr Bob Ell to stay home until fully recovered.
On 7 August 2020, Mr Holborow notified Mr Robert Ell that he was able to return to work and provided a medical certificate to that effect. Mr Bob Ell responded by email, stating that Mr Holborow was not permitted to return to work physically until he was able to produce a doctor’s certificate stating that he was clear of “all residual systems [sic – symptoms] of your upper respiratory infection”.
Mr Holborow continued to work from home. On 28 August 2020, he sent Mr Bob Ell an email attaching a doctor’s certificate advising that he was able to return to work physically.
On 30 August 2020, Mr Robert Ell sent an email to Mr Holborow advising him not to report to either the Leda office or the Cranbrook site until further notice. The following day, Mr Greg Miles, a corporate advisor to Leda Holdings, sent Mr Holborow a letter from Mr Robert Ell in the following terms:
“Dear Wayne,
With the completion of The Cranbrook Project and a decline in Projects for the foreseeable future, regrettably, the Leda Board has decided to terminate your retainer as a Consultant.
Your original Consultancy Agreement, with Leda Management Services was in the name of Owframe Pty Limited.
From July 2012 you began invoicing, for services under the Agreement, in the name of W & K Consulting Pty Limited (ABN 48 159 180 819). Leda accepted that change of entity.
Despite the original Agreement, expiring on 29/8/2010 and the change in the billing party in 2012, there does not appear to have been a new Consultancy Agreement entered into, in order to reflect the ongoing nature of the relationship. Notwithstanding that fact, Leda considers that 45 calendar days’ notice, as specified in the original Agreement, is fair and appropriate. Accordingly your services as a consultant will no longer be required on and from 16 October 2020.
Until that time, the nature of your services will continue to be advised, both verbally and in writing, by the Leda Board, including how and where, those services are to be performed. Compliance with those directions will ensure payment (on a pro rata basis) of your base consultancy fee.”
The plaintiff had submitted an invoice for the month of August 2020 in the sum of $34,499.99 (being $31,363.63 plus GST of $3,136.36).
On 9 September 2020, Brad Weston, the Chief Operating Officer of Leda Holdings, disputed that invoice on the basis that, he alleged, Mr Holborow was unable to attend work for 23 days, in respect of which he only had 8 days of annual sick leave available to him. Accordingly, Mr Weston required the plaintiff to resubmit its August invoice for the sum of $14,999.99 (plus GST). Mr Weston did not undertake to pay the invoice, only to put it to the Board for review. The plaintiff did not resubmit its invoice in the lesser sum as Mr Holborow continued to work from home and, in any event, was at all times ready, willing and able to physically attend work during the relevant period.
On 8 October 2020, Leda paid the plaintiff $16,499.99 in respect of the August invoice.
On 9 October 2020, Mr Holborow sent Mr Miles an email, denying that the defendant was entitled to terminate the plaintiff’s consultancy agreement. Later that day, Mr Miles responded by email adhering to the defendant’s notice of termination of 31 August 2020.
The plaintiff invoiced the defendant for work performed during September 2020 sometime in late September or early October 2020. The plaintiff subsequently sent an invoice in the sum of $17,249.34 ($15,681.17 + GST) in respect of October 2020.
Following the defendant’s termination of its contract with the plaintiff, the plaintiff applied for, and received, Federal Government JobKeeper payments. Over the period from November 2020 to April 2021, the plaintiff received $28,800 in such payments.
In his affidavit and in cross-examination, Mr Holborow detailed the steps he took to find alternative work following the defendant’s termination of the plaintiff’s contract. I accept that those steps were interrupted in late 2020 by a serious family issue, the details of which do not need to be recorded in these reasons.
There is no real dispute as to the veracity of Mr Holborow’s evidence concerning those steps, although, the defendant contends that those steps were not reasonable, in the circumstances, to discharge the plaintiff’s obligation to mitigate its loss. Mr Holborow was about 65 years old at the time. In summary, those steps were:
Mr Holborow reached out to some former colleagues from St Hilliers who, by that time, worked at Decode Group. He was interviewed by the managing director in respect of a potential hotel development, however, that project did not eventuate and his discussions with Decode ceased. I accept it as likely that Mr Holborow reached out to his former colleagues within the first few weeks of the defendant’s termination of its agreement with the plaintiff.
In or before January 2021, he unsuccessfully applied for a Pre-Contract Senior Project Manager position with Stockland.
In or before January 2021, he unsuccessfully applied for a senior construction manager position through Indeed Apply.
In or before early February 2021, he unsuccessfully applied for a senior construction project manager position through Redpath Partners.
In early February 2021, Mr Holborow’s resumé, which had been uploaded to seek.com, was downloaded by Design and Built in relation to a Site Manager – Luxury Homes position.
In or before early February 2021, Mr Holborow unsuccessfully applied for a position of State Manager – Project and Development Services with Jones Lang Lasalle. He was notified that his application was unsuccessful on 10 March 2021.
In or before mid-February 2021, Mr Holborow made enquiries with Up Search and Selection in relation to its recruitment services, spoke with a member of its staff and provided his resumé.
On or before 18 February 2021, Mr Holborow applied for a Senior Project Manager position through seek.com, which was submitted to Now Careers Pty Ltd.
In or before March 2021, Mr Holborow applied through seek.com for a Senior Project Manager position with Project Professional Services.
In or before mid to late March 2021, Mr Holborow applied unsuccessfully for a position through Gough Recruiting.
In 2021, Mr Holborow commenced proceedings (the earlier proceedings) in this Court against Mr Bob Ell, alleging breach of the Deed of Agreement.
By way of Defence to the Amended Statement of Claim in the earlier proceedings, Mr Bob Ell denied any liability to Mr Holborow, inter alia, on the basis that at the time of execution of the Deed of Agreement, there was no contractual, employment or other relationship between Mr Bob Ell and Mr Holborow and that the true parties to the deed were the corporate entities being W & K Consulting Pty Ltd (i.e. the plaintiff in these proceedings), Leda Management Services Pty Ltd (i.e. the defendant in these proceedings) and Leda Holdings.
In response to that pleading, on 26 July 2022, a Further Amended Statement of Claim was filed in the earlier proceedings on 27 October 2021, in which W & K Consulting Pty Ltd was joined as the second plaintiff. Mr Holborow personally remained a party. Similarly, in the Further Amended Statement of Claim, Leda Management Services Pty Ltd and Leda Holdings Pty Ltd were joined as defendants. Mr Bob Ell personally remained a defendant.
Relevantly, the Further Amended Statement of Claim in the earlier proceedings pleaded two alternative, and relevantly identical, claims: a claim to enforce the Deed of Agreement as between the personal parties and a claim to enforce it as between the corporate parties. The claim as between the corporate parties was in the alternative to what remained the primary claim against Mr Bob Ell personally. It was a liquidated claim in the sum of $294,000, together with interest and costs.
In their Defence to the Further Amended Statement of Claim, the Leda corporate parties admitted that they were party to an agreement to settle an existing dispute, partly recorded in the Deed of Agreement. The claim was, nevertheless, defended, inter alia, on the bases of want of consideration and failure of a condition in the Deed of Agreement that then ongoing work on the “Cranbrook residence”, which was Mr Bob Ell’s personal residence, reach a stage of completion and fitness for occupation by 25 December 2019.
In the earlier proceedings, Mr Holborow served an affidavit, sworn 4 February 2022, which addressed matters of background, including his role with the defendant and Leda Holdings, his relationship with Mr Bob Ell, the 2005 Agreement, the 2010 Agreement, and the discussions by which its terms were agreed. Mr Holborow addressed the plaintiff’s claimed entitlement to incentive payments by way of payment of school fees, which had only been paid up to July 2014, notwithstanding that the plaintiff continued to invoice for them.
Mr Holborow’s affidavit, in the earlier proceedings, dealt at length with the plaintiff’s performance of its obligations with respect to the Cranbrook residence. Evidence in the earlier proceedings also included the August and September 2020 invoices.
“THE COURT ORDERS:
1. Judgment for Wayne Holborow against LEDA Management Services Pty Ltd and LEDA Holdings Pty Ltd for the total sum of $340,000, inclusive of:
a. the principal sum of $294,000;
b. interest; and
c. costs.
- The proceedings be otherwise dismissed.
- All existing costs orders be vacated.
4. There be no order as to costs of the proceedings, to the intent that each party pay their own costs.
5. The Judgment amount of $340,000 be paid by LEDA Management Services Pty Ltd and/or LEDA Holdings Pty Ltd no later than 14 days after the date of entry of Judgment.
THE COURT NOTES:
1. The agreement of the parties to this proceeding that W&K Consulting Pty Ltd does not intend to, and cannot, bring fresh proceedings relating to the subject matter of this dispute against any of the defendants to these proceedings and does not intend to, and cannot, rely on s 91 of the Civil Procedure Act 2005 (NSW) following the making of Order 2 that the proceedings be otherwise dismissed.”
As indicated above, there was no dispute that the parties were bound by the unsigned 2010 Agreement.
Similarly, there was no dispute that, on expiry in August 2013 of the unsigned 2010 Agreement, an implied agreement between the plaintiff and the defendant came into existence. The present dispute concerns the terms of that implied agreement.
The plaintiff contended that the implied agreement was for an indefinite period and that it could only be terminated by the provision of reasonable notice. The defendant contended that, while the term of the implied agreement was indeterminate, the termination on notice provision, as it had existed in the 2010 Agreement, was incorporated as a term of the implied agreement, subject to some necessary modification to take account of the absence of any fixed term. Accordingly, there was no room to imply a reasonable notice period and the implied agreement was terminable on 45 days’ notice.
An implied contract may be inferred following expiration of a fixed term contract: CSR Ltd v Adecco *(*Australia) Pty Ltd [2017] NSWCA 121 at [100]. However, the identification of the terms on which the parties can be taken to have renewed or extended their contractual relationship is a question of fact.
In Brambles Ltd v Wail; Brambles Ltd v Andar Transport Pty Ltd (2002) 5 VR 169; [2002] VSCA 150, the Victorian Court of Appeal stated at [61]:
“…The question whether an implied or tacit agreement to continue dealing on the same terms save that the agreement should be terminable on reasonable notice is to be inferred is, as Desmond CJ stated and as the other cases and the treatises make abundantly clear, an evidentiary or factual question. On the facts we have set out earlier we consider such an inference should be drawn here. The evidence, fairly sparse though it is, warrants the finding that after 3 April 1993 the parties proceeded as though still governed by the terms of the original agreement (save that, since it had already expired, either could terminate the substitute arrangement on reasonable notice), rather than a finding that they impliedly agreed merely that Andar should collect and deliver the laundry and that Brambles should pay it a reasonable sum for that or a finding that the parties made a series of individual implied agreements, six days a week, for that work to be done for a reasonable sum. In other words, after 3 April 1993 the parties operated under a standing agreement under which all the procedures and, importantly, the remuneration were exactly the same as they had been under the written agreement. The parties intended that that should be so. The contract thus made was not a mere variation of the original agreement, for it was not made until after the latter had expired. Accordingly clause 15.1, requiring signed written agreement for a variation, did not apply to it. Nor did clause 14.5, the ‘whole agreement’ clause, since it was not apt to apply to a subsequent and separate agreement. Clauses 6.1 and cl 8.2, for instance, contemplate ‘renewal’ and ‘extension’. … Whether the implied or tacit contract made after 3 April 1993, which cannot be an extension, is called a renewal is really a matter of definition. The important point is that it was a new and separate contract.” [footnotes omitted].
In Brambles, the issue was whether an indemnity provision was incorporated into the implied agreement, which arose on expiry of the fixed term agreement. As the parties continued to deal with each other as before, the Court found that the indemnity provision was so incorporated. The indemnity provision went to the basis on which the parties continued to deal with each other. It was not connected to the duration of the agreement or the circumstances in which that term could be determined.
Adecco was also an indemnity case. The Court of Appeal, applying Brambles, found that the conduct of the parties provided a basis to infer that the expired agreement continued according to its terms, save as to duration and term.
In Brambles, the Court referred to Bullock v Wimmera Fellmongery and Woolsourcing Co Ltd (1879) 5 VLR (L) 362 and Cawsand Pty Ltd v Normans Wines (unreported, Brooking J, 21 June 1989), both of which were termination cases which turned on their own facts: one was a case where there had been no provision for early termination on notice in the original fixed term contract; the other was a case where a short written agreement for a fixed three-year term had contained a provision for termination on three months’ written notice. In both cases, it was held that the implied agreement that arose on expiry of the fixed term agreement was only terminable on reasonable notice. This was a question of fact in each case, having regard to the evidence as a whole.
In the present case, the question of what terms formed part of the implied agreement falls to be determined in the circumstances as they were known to have existed in August 2013, when the 2010 Agreement expired. There was little evidence of these circumstances, other than the fact of the expiry of the 2010 Agreement and the continuation by the parties of their relationship as it had existed immediately prior to the expiry.
It was submitted for the defendant that the absence of any early termination provision in either Brambles or Adecco was an important factor in the court finding an implied obligation that termination be on reasonable notice. Even accepting this to be so, it does not appear to me to be decisive. The question remains whether an implied agreement to continue the parties’ relationship as before can be found in the circumstances of August 2013 and, if so, what existing terms were included in the continuing relationship.
The defendant says the 45-day notice period in the 2010 Agreement was incorporated into the implied agreement because, even though no further written agreement was entered after the expiry of the 2010 Agreement, the parties continued to deal with each other. It points out that by then two fixed term agreements had come and gone and there was no evidence that any steps were taken to extend the agreement for a further fixed term. The inference is available, it is contended, that in failing to address the question of termination, the existing contractual provision with respect to termination ought be inferred as having been agreed, in accordance with the following analysis of McColl JA in at [120]:
“As is apparent from the authorities to which I have referred, and as both parties accepted, the question whether an implied contract following upon the expiry of an express fixed term contract may be inferred turns on an objective inquiry. This was the approach the Court of Appeal took in Brambles where their Honours clearly adopted the objective formulation of the test from Steed v Busby to which they referred. Adapting the language of McHugh JA in Empirnall, the ultimate issue is whether a reasonable bystander would regard the conduct of the parties, including their silence, as signalling to the other party that their relationship continued on the terms of the expired contract. What was ‘required [was] conduct by the parties as if the contract remained on foot’. Whether the inference will be drawn is ‘an evidentiary or factual question.’” [Footnotes omitted].
Only a few facts are known with respect to the continuation by the parties of their relationship from August 2013. There is no evidence as to any discussion as to terms that may have occurred. All that is known is the terms of the 2010 Agreement, which the parties had abided by, and the fact that the parties continued to deal with each other as before – the plaintiff continued to perform its obligations and the defendant continued to pay the plaintiff.
In my view, this is sufficient to bring the present case within the principle in Brambles. In other words, I am satisfied that the existing terms continued to apply other than those going to the term of the implied agreement, which would be terminable on reasonable notice. This is for three principal reasons.
First, in my view, a clause which goes to termination (including early termination) of the agreement is not, in the circumstances, properly characterised as a term on which the parties continued to deal with each other. It is, in the documentary context of the 2010 Agreement, a clause which only addresses the circumstances in which the agreement is brought to an early end. In other words, it goes to the duration of the contract. It does not affect how the parties dealt with each other in performance of the contract. This is illustrated by the manner in which it was submitted by the defendant that cl 22 should be read. The defendant submitted that part of cl 22 would effectively be varied by striking out words as follows:
“(b) Should Leda wish to Terminate the services of the Consultant for any reason prior to the completion of the fixed term of this agreement, it is required to give the Consultant a period of at least forty five (45) calendar days’ notice. Where Leda terminates this agreement it will pay the greater of 45 calendar days entitlements or the unexpended balance of the Consultancy Agreement for the Contract Term.”
I do not agree that the parties can be taken to have agreed to modify their respective rights and entitlements in this way in the absence of some contemporaneous evidence that would support such a finding.
Secondly, the particular term that the defendant says was incorporated into the implied agreement was not, in the circumstance of termination by the defendant, in substance a 45-day termination clause in any event. While, in circumstances where the defendant terminated the agreement, the plaintiff would no longer be required to perform its obligations 45 days after receiving notice, the defendant would, nevertheless, be obliged to pay out the balance of the plaintiff’s entitlements for the unexpired portion of the term. Where there can be no such unexpired balance of the term because the fixed term expired, it would fundamentally alter the meaning and effect of cl 22 to simply excise those parts which refer to the balance of the contractual term.
Thirdly, the termination clauses in the 2010 Agreement were asymmetrical. While the defendant is correct in its submission that the agreement must be construed so as to serve the joint purpose of the parties, it is plain that termination on notice was always intended to operate differentially. The joint purpose of the parties was to confer certain protections against early termination on the plaintiff and not the defendant. This is clear in the language of cl 22. It also reflects the obvious commercial differentiation in the parties’ positions: the plaintiff, while not an employee, bore obligations and commercial risks most commonly borne by employees. It was paid long service leave, sick leave and its fees were calculated according to an 11-month working year. Its obligation was to provide the exclusive services of Mr Holborow, who reported to the defendant’s executives.
In these circumstances, I do not consider that the implied agreement included a term permitting termination by the defendant on 45 days’ notice.
I conclude, therefore, that the implied agreement that arose from August 2013 was, relevantly, on the same terms as 2010 Agreement except as to the term of the agreement, which included the provision for early termination. In my view, that excludes the whole of cl 22 from the new implied agreement.
Accordingly, the relevant question for the determination of the defendant’s liability to the plaintiff (if any) requires a consideration of what period of notice would have been reasonable in the circumstances of the defendant’s determination of the plaintiff’s contract in August 2020.
The parties agreed that the assessment of what would have been reasonable notice in August 2020 is an evaluative exercise. The plaintiff contended that reasonable notice would have been up to 12 months. The defendant contended that it would have been 45 days, while accepting, as a fallback submission, that it may have been up to 2 to 3 months at most (Tcpt, 13 November 2024, p 63(24)-(27)).
Although the determination by other courts of similar questions may have some limited instructive value, the question of how much notice would have been reasonable turns on the facts of each case.
The relevant principle was stated in Crawford Fitting C**o v Sydney Valve & Fittings Pty Ltd (1988) 14 NSWLR 438 at 444:
“Whether a contract is terminable on reasonable notice instead of at will also depends upon the existence of an implied term: Winter Garden Theatre (London) Ltd v Millenium Productions Ltd (at 206); Martin-Baker Aircraft Co Ltd v Canadian Flight Equipment Ltd (at 581); Australian Blue Metal Ltd v Hughes (at 99). That question is determined by the circumstances existing at the date of the contract: Australian Blue Metal Ltd v Hughes (at 99). However, the reasonableness of the period of notice depends upon the circumstances existing when the notice is given: Winter Garden Theatre (London) Ltd v Millenium Productions Ltd (at 199-200); Australian Blue Metal Ltd v Hughes (at 99); W K Witt (WA) Pty Ltd v Metters Ltd and General Industries Ltd [1967] WAR 15 at 23-24; Decro-Wall International SA v Practitioners in Marketing Ltd (at 370; 224; 376-377; 229; 381; 234).
When a contract is terminable on reasonable notice, the period of notice must be sufficiently long to enable the recipient to deploy his labour and equipment in alternative employment, to carry out his commitments, to bring current negotiations to fruition and to wind up the association in a businesslike manner: Winter Garden Theatre (London) Ltd v Millenium Productions Ltd (at 200-201); Australian Blue Metal Ltd v Hughes (at 99) and W K Witt (W A) Pty Ltd v Metters Ltd (at 24-25). But in the latter case Hale J denied (at 23) that it is relevant to the reasonableness of the period of notice that the recipient needs time to recoup any expenditure incurred.”
Where notice of termination is given by an employer to an employee, reasonable notice is generally determined with reference to how long it might be expected to take for the employee to find alternative employment. Rogan-Gardiner v Woolworths Ltd (2012) 218 IR 417 at [46]-[51]; New South Wales v Paige (2002) 60 NSWLR 371 at [283].
An express provision in the 2010 Agreement, which I have taken to be incorporated into the implied agreement, was cl 16, which stipulated that the relationship between the parties was not that of employer and employee. Accordingly, the question arises whether the employment law principles for the assessment of what is reasonable notice ought be applied by way of analogy.
The defendant says they should not be applied, on the basis that the parties elected to conduct their relationship as a contract between two corporate entities and, as such, they should be taken to have done so for all purposes: Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 at 695. This was reinforced by the fact that the plaintiff had two directors, Mr Holborow and his wife, so that it could not simply be characterised as the alter ego of Mr Holborow. For the plaintiff, it was contended that the nature of the relationship was such that the analogy is appropriate.
I accept the plaintiff’s submissions in this regard. As a matter of substance, the 2010 Agreement and the implied agreement that succeeded it provided for the exclusive provision of the services of Mr Holborow (and only Mr Holborow) to the defendant and the Leda Group. Mr Holborow was subject to the direction of Mr Bob Ell and, more immediately, Mr Robert Ell. The agreement provided entitlements to sick leave and long service leave, specified working hours and was based on an 11-month working year. In the circumstances, each of these factors is properly characterised as an incident of an employment relationship, not a contractual relationship between two corporate entities.
Accordingly, I consider the employment analogy is apt and I will consider the reasonableness of the notice period in this context.
I consider the following facts and matters to be relevant in conducting the evaluative analysis of what would have been a reasonable period of notice for the termination of the implied agreement by the defendant in August 2020:
Mr Holborow, through the plaintiff and, before it, through other corporate vehicles, had been providing his personal services to the defendant, and its related entities, exclusively for approximately 25 out of the previous 28 years.
This approach was challenged by the defendant, who submitted that only the preceding seven years of service ought be taken into account. In this respect, it relied on Energy World Corporation Ltd v Maurice Hayes and Associates Pty Ltd [2007] FCAFC 34; (2007) 239 ALR 457 as an analogous example where the court disregarded the period of service under an expired consulting agreement, including because that agreement had provided for a termination payment of six months. The analogy was not apposite. On the facts of Energy World, there were a number of factors which were not replicated in the present case:
(a) First, the applicant in that case was only relevantly employed to assist in an asset realisation program, which was necessarily of finite duration. He was not employed in a senior executive position. (b) Secondly, his length of service (nine years) had already been taken into account in providing an express termination payment of six months’ fee in the consultancy agreement. The relevant period of the employment was, therefore, 1 year and 10 months, as opposed to 7 years in the present case, even on the defendant’s submission that the earlier period of employment be disregarded. (c) Thirdly, in Energy World, the age of the applicant had been addressed by the six-month period of notice in circumstances where the applicant was 58, when the contract was entered, and 60, when notice was given. It was not the mere fact that the contract had come to an end, but the terms of the contract had taken account of the period of service. (d) Fourthly, in assessing whether the applicant had sufficient time to make alternative arrangements, the Court considered the writing was on the wall from early in the term that his employment would come to an end when the asset realisation program came to an end. He was in a position to assess how much work was left in that task. (e) In my view, Energy World does not really assist the defendant. Mr Holborow was closer to retirement age than the applicant in that case. The seniority and nature of the respective roles of the applicant, in Energy World, and the plaintiff/Mr Holborow, in this case, were substantially different. Mr Holborow performed a senior executive role. There was no “writing on the wall” unless one were to infer that a senior employee should consider it likely that his or her employment would be terminated because of an abusive employer.
Mr Holborow was, as at August 2020, 65 years old.
Mr Holborow, through the plaintiff, worked as a senior executive of Leda, reporting to the managing director and chairman of the Leda Group of companies.
As a matter of inference, given the seniority of his position and the size of his remuneration package, the time that could be expected to be taken for the plaintiff to find an alternative position, would be substantial. This is corroborated by the length of time it, in fact, took for the plaintiff/Mr Holborow to find an alternative position.
The defendant paid the plaintiff a significant sum – $345,000 p.a. (+GST) for 11 months’ work p.a. The defendant says that there was no evidence of comparable consultancy fees paid by Leda as at the date of the notice. Therefore, the quantum of the fee should be given little weight. There is no reason, however, not to give weight to the quantum of fees for which the plaintiff contracted with EQ Constructions the following year, which was for a project manager role and was substantially less than the rate of payment by the defendant. Further, as a matter of common experience, $345,000 p.a. (+GST) is a significant sum today and was a significant sum in 2020.
It was suggested, on behalf of the defendant in argument, that it was widely known that construction boomed during the COVID-19 lockdowns and shortly thereafter. I do not accept that submission. First, the length of time that it actually took the plaintiff/Mr Holborow to find an alternative position and the number of applications he made before finding an alternative position contradicts it. Secondly, in the letter of termination itself, the author specifically referred to “a decline in projects for the foreseeable future” as a factor in the termination of the agreement. Thirdly, I do not accept that such a proposition is generally known to have been true, in any event.
The defendant conceded that, subject to questions of mitigation, the length of time actually taken by the plaintiff/Mr Holborow to find an alternative position was a factor that may be relevant (Tcpt, 13 November 2024, p 66(41)-(43)). In the present case, the evidence suggests that Mr Holborow commenced seeking an alternative position in earnest in about January 2021 and found a position in mid-June 2021. This was about five months.
Taking the above matters into account, I consider that 45 days’ notice was inadequate notice to the plaintiff in August 2020. Similarly, I do not accept that two to three months would have been adequate. Neither do I accept that a period of 12 months would have been appropriate. In my view, the circumstances simply do not establish that the operation of the principles in Sydney Valve*,* Rogan-Gardiner or Paige would warrant such an extensive period.
Doing the best I can, considering each of the factors, I consider that, in the circumstances, a reasonable period of notice by the defendant in August 2020 would have been five months.
The defendant has pleaded that the plaintiff failed to mitigate its loss by failing to take reasonable steps to find alternative employment. This appears to have two main dimensions: first, that the plaintiff ought to have commenced looking for an alternative position prior to termination of the implied agreement; and secondly, that if it had taken reasonable steps to find alternative employment sooner, it could be expected to have found such employment. In support of this last proposition, it cites the speed with which the role with EQ Constructions was secured once the application and interview process commenced.
I do not accept this submission. There was no reason for the plaintiff to have commenced seeking an alternative position prior to termination. The circumstances are distinguishable from Energy World, where the plaintiff had a limited role connected to a finite task which was coming to its conclusion. The fact that there had been conflict between Mr Holborow and Mr Bob Ell is not a basis for the plaintiff to have commenced seeking out alternative opportunities prior to termination. I do not see that an employer, by behaving abusively, can create a circumstance where it is a failure to mitigate for an employee (or analogue) not to predict that the employer will terminate the contract without providing reasonable notice and act on that prediction. Similarly, I do not consider Mr Holborow attending to a family emergency to have demonstrated an unreasonable failure to mitigate. Finally, I consider the evidence of the steps taken by the plaintiff to find an alternative position demonstrates that its conduct was more than reasonable.
As I have found that the defendant has breached its implied obligation to provide the plaintiff with reasonable notice of termination of the implied agreement, which I have assessed at five months, the defendant’s further defences of Anshun estoppel and abuse of process fall to be determined.
The applicable principles in respect of Anshun estoppel were described by a plurality of the High Court in Tomlinson v Ramsey Foods (2015) 256 CLR 507; [2015] HCA 28 as follows (citations omitted):
“[22] Three forms of estoppel have now been recognised by the common law of Australia as having the potential to result from the rendering of a final judgment in an adversarial proceeding. The first is sometimes referred to as ‘cause of action estoppel’. …. The second form of estoppel is almost always now referred to as ‘issue estoppel’. … The third form of estoppel is now most often referred to as ‘Anshun estoppel’, although it is still sometimes referred to as the ‘extended principle’ in Henderson v Henderson. That third form of estoppel is an extension of the first and of the second. Estoppel in that extended form operates to preclude the assertion of a claim, or the raising of an issue of fact or law, if that claim or issue was so connected with the subject matter of the first proceeding as to have made it unreasonable in the context of that first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding. The extended form has been treated in Australia as a ‘true estoppel’ and not as a form of res judicata in the strict sense. Considerations similar to those which underpin this form of estoppel may support a preclusive abuse of process argument.”
The relevant question is not whether it would have been reasonable to have made the subject claim in the first proceeding; rather, the question is whether the failure to do so was unreasonable in the context of the first proceeding: Champerslife Pty Ltd v Manojlovski (2010) 75 NSWLR 245 at [2]-[3].
The onus is on the party asserting the estoppel to show how the other party’s choice to refrain from asserting the claim in the earlier proceedings was unreasonable. This requires such a “close connection” that it is unreasonable not to have agitated the issue in the first proceeding.
What is “reasonable” requires a value judgement referable to the proper conduct of litigation. In reaching its conclusion, the court may take into account any factor relevant to the proper conduct of the earlier litigation.
The defendant submits that the plaintiff’s failure to bring a claim based on the termination of the implied agreement in the earlier proceedings was unreasonable. In this regard, it relies on the following matters:
Both the plaintiff and defendant were party to the earlier proceedings.
In the affidavit evidence served in the earlier proceedings, both Mr Holborow and Mr Robert Ell addressed the history of the contractual relationship between the parties. It might be noted, however, that no evidence was read as the proceedings were discontinued.
Immediately prior to the Deed of Agreement, there had been a dispute in relation to payments not made under the implied agreement. The Deed of Agreement resolved a dispute as to payments asserted to be due and owing under that implied agreement.
The present proceedings arise out of circumstances which existed and were available to be sued upon when the earlier proceedings were originally commenced on 25 May 2021, when the plaintiff was joined as the second plaintiff in the earlier proceedings on 26 July 2022, and when the consent judgement was executed and entered on or about 22 November 2022.
The letter of termination, dated 31 August 2020, was exhibited to the affidavit of Mr Holborow served in the earlier proceedings and was particularised at paragraph 4 of the Further Amended Statement of Claim in those proceedings.
The plaintiff pleads in these proceedings the Deed of Agreement as a material fact in calculating the sum for which it sues the defendant.
I do not accept the defendant’s submissions. In my view, there was not a sufficiently “close connection” between the subject matter of the earlier proceedings and these proceedings to enliven the principle. An estoppel only lies if the:
“claim or issue was so connected with the subject matter of the first proceeding as to have made it unreasonable in the context of that first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding”.
The claim brought in the earlier proceedings concerned the failure of Mr Bob Ell and/or the defendant and/or Leda Holdings to perform obligations under the Deed of Agreement or under the implied agreement. The claim in these proceedings concerns a failure to give reasonable notice of termination of the implied agreement. While there is some small overlap of background facts, the claims are different and, to the extent there are any facts in contest, they are also different.
I do not consider that the claim or any issue in the present proceedings is so connected with the subject matter of the earlier proceedings to have made it unreasonable, in the context of the earlier proceeding, for the present claim not to have been made or the issues not to have been raised in the earlier proceeding. They are, in my view, sufficiently distinct for no estoppel to arise.
I, therefore, reject the Anshun estoppel defence.
An abuse of process arises, relevantly, whether use of the court’s process occasions unjustifiable oppression to a party or where its use serves to bring the administration of justice into disrepute: Tomlinson at [25].
In the present case, the defendant says that the notation to the consent orders, in the earlier proceedings, ought be construed as precluding the present claim because it falls within the language of the notation. The notation, set out at [57] above, is repeated for convenience below:
“THE COURT NOTES:
1. The agreement of the parties to this proceeding that W&K Consulting Pty Ltd does not intend to, and cannot, bring fresh proceedings relating to the subject matter of this dispute against any of the defendants to these proceedings and does not intend to, and cannot, rely on s 91 of the Civil Procedure Act 2005 (NSW) following the making of Order 2 that the proceedings be otherwise dismissed.”
The defendant’s submission is that the “subject matter of [the] dispute” in the earlier proceedings embraced the present claim.
Key to this submission is the expansive understanding of the words “relating to” as used in the notation. The defendant submits that the words “relating to”, being a connective phrase, well-established to be of wide import, are sufficient to connect the earlier proceedings, concerning enforcement of the Deed of Agreement entered in November 2019, with the current proceedings, concerning the circumstances and obligations of the defendant on termination of the implied agreement in August 2020.
As is well known, “relating to” and its analogues require no more than “a relationship, whether direct or indirect, between two subject matters”: Re Dingjan*; Ex parte Wagner* (1995) 183 CLR 323; [1995] HCA 16 at [91]. However, that general proposition yields to any contrary indication derived from its context.
I do not accept the defendant’s construction of the notation as a matter of textual analysis. In my view, the language of the notation, in its immediate documentary context and the context of the substance of the claim in the earlier proceedings, makes plain that the notation referred to a further claim brought by the plaintiff that repeated the substance of the just settled claim in the earlier proceedings. It strains the language to extract from that notation any wider settlement of other matters in dispute.
Both the principal claim and the alternative claim in the earlier proceedings were for damages for breach of the Deed of Agreement. The claim was in respect of $250,000 due under the Deed of Agreement on 29 December 2019 and $44,000 (including GST) on completion of construction of the Cranbrook residence on 30 July 2020. The subject matter of the dispute was that breach. A subsequent breach of a different obligation is not related to the subject matter of the dispute that had been settled, properly understood.
To the extent that the defendant relies on the factual context of the settlement of the earlier proceedings to support its contention that “relating to” embraces the present claim, I am also not satisfied that it has that effect. There is nothing in the extrinsic circumstances known to both parties at the time, other than the existence of the claim brought in the present proceedings, which I consider affects the construction of the notation.
To the extent that the defendant relies on the history of settlement negotiations in this respect, I have considered separately whether, in the context of the other evidence, they affect the construction of the notation.
Negotiations, or discussions between the parties leading up to the execution of a written agreement generally cannot be taken into account as an aid to construction of that agreement. That is not to say that they are necessarily and wholly inadmissible. If they form part of the background context, known to both parties, they may be relied on for the purpose of construction: (1982) 149 CLR 337 at 352; [1982] HCA 24.
“Regard can be had to the surrounding circumstances objectively known to the parties: Codelfa at 352 (Mason J). However, care must be exercised in considering evidence of negotiations between the parties. Evidence of negotiations is inadmissible for the purpose of construction insofar as it is no more than evidence of what the individual parties were subjectively trying to do when they negotiated the language of their agreement. Negotiations may be considered only to the extent that they identify mutually known facts which form part of the background to the transaction: Codelfa at 354. As Heydon and Crennan JJ said in Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26 at [98]:
… evidence of pre-contractual negotiations between the parties is inadmissible for the purpose of drawing inferences about what the contract meant unless it demonstrates knowledge of ‘surrounding circumstances’. (Citation omitted.)”
I do not consider that the negotiations assist on the construction question and I have based my conclusion on the language of the notation and its documentary and factual context as known to the parties. Nevertheless, against that conclusion, I set out the history of the settlement negotiations:
The earlier proceedings were set down for hearing on 22 November 2022. The negotiations leading up to the settlement of the earlier proceedings occurred between 19 August 2021 and 21 November 2022:
(a) On 19 August 2021, Mr Bob Ell and Leda Design and Construction Pty Ltd (LDC) proffered a deed of release pursuant to which all claims relating in any way to the previous business dealings between the parties were to be released. The release was to extend to claims by the present plaintiff against Mr Bob Ell and LDC in relation to or in connection with the Dispute. Neither the plaintiff nor the defendant was a proposed party. (b) That offer was rejected on 2 September 2021. Mr Holborow and the plaintiff counter-offered to settle all claims including “other claims previously made by [Mr Holborow] and/or [the plaintiff]”. That offer expressly referred to the substance of the present claim in respect of which the plaintiff and Mr Holborow offered to accept $228,200, by way of damages, for the failure “to provide reasonable notice of the cessation of employment” (calculated on a period of six months) and incentive entitlements, in addition to $320,000 (inclusive of interest and costs) in relation to the claim in the earlier proceedings and $31,800 for “[o]utstanding entitlements for short-payment of wages and long service leave”. This offer embraced all claims in addition to those in the earlier proceedings. (c) There is no evidence of any further negotiations until 30 March 2022. On that date, the solicitors for the defendant offered to resolve “the whole of the dispute between our respective clients, and any residual issues between their associated bodies corporate”. Again, a draft deed of settlement and release was attached in which Mr Holborow and the plaintiff would settle all claims against Mr Bob Ell and LDC, in consideration of a settlement payment of $175,000. The defendant was not a proposed party. (d) Also on 30 March 2022, the solicitors for the defendants in the earlier proceedings served an offer of compromise, offering judgement for the plaintiff in the sum of $100,000. (e) On 14 June 2022, Mr Holborow offered to settle the earlier proceedings by way of judgment for the plaintiff in the sum of $275,000. (f) On 16 August 2022, the defendants in the earlier proceedings (which by now included the defendant and Leda Holdings) offered to settle those proceedings on the basis of payment by the corporate defendants to the plaintiff of the sum of $294,000 within 14 days of the exchange of a deed of settlement and release, full mutual releases as between all parties to the litigation and their related bodies corporate, no order as to costs between the corporate parties and Mr Holborow to pay Mr Bob Ell’s costs. (g) That offer was rejected. On 26 August 2022, the solicitors for the plaintiffs in the earlier proceedings responded with a counter-offer. That counter-offer was prefaced with a statement that they did not regard the defendants’ defences as having disclosed an arguable defence. The counter-offer was payment to the plaintiffs by the defendants, or any one or more of them, of the sum of $294,000, the defendants, or any one or more of them, pay the plaintiffs’ costs and the proceedings be discontinued on receipt of the settlement sum. The compromise lay in the plaintiffs being willing to forgo their claim for interest. The defendants were to bear their own costs. (h) On 3 November 2022, the defendants made a further counter-offer. They did not proffer a deed of settlement and release. They did, however, indicate, in their covering letter, that the defendants desired to resolve any and all controversies between each of the parties. The attached consent judgment provided for judgment in favour of the plaintiff against the defendant and Leda Holdings in the sum of $294,000 plus interest. Leda Holdings was to pay the plaintiff’s costs, however, Mr Holborow was to pay Mr Bob Ell’s costs up to 27 July 2022. The proceedings would be dismissed. (i) On 10 November 2022, the plaintiffs rejected that counter-offer. They made “the following further offer of settlement of the District Court proceedings”: payment to the plaintiffs by the defendants, or any one or more of them, of the sum of $375,000 inclusive of costs and interest and each defendant to pay their own costs. It might be noted that the purpose of the offer was expressed to be for settlement of those proceedings, and was further expressed to be made “on the basis of the evidence served on behalf of the plaintiffs in the District Court proceedings and that the first defendant has advised that he will not give evidence”. In other words, only the merits of the claim in the earlier proceedings were referred to. (j) On 14 November 2022, the defendants rejected that counter-offer and put a further counter-offer of their own. As a offer, it is difficult to see how it could have had any effect with respect to costs if it embraced claims not brought in the earlier proceedings. The offer was judgment for the plaintiffs against the defendant and Leda Holdings for $294,000, interest to be paid, different components of which were calculated to commence on differential dates that aligned with the plaintiffs’ allegations of breach of the Deed of Agreement, and proceedings dismissed with no order as to costs. (k) On 16 November 2022, that counter-offer was rejected and the plaintiffs offered settlement on the basis of judgment for Mr Holborow against the defendants, or any one or more of them, in the sum of $365,000 inclusive of costs and interest, all costs orders vacated and no order as to costs. (l) By email on 21 November 2022, the defendants’ solicitors rejected that counter-offer and offered settlement in the sum of $340,000, inclusive of the principal sum of $294,000, interest and costs, proceedings or otherwise to be dismissed and all costs orders vacated. (m) That offer was accepted, subject to the proviso that judgment be entered for Mr Holborow against both corporate defendants. (n) There then followed a discussion between counsel concerning the terms of the consent judgement, the terms of which were not in evidence. Those discussions concerned a notation to the consent judgement. The first draft, circulated by the solicitor for the plaintiffs, was in the following terms:
“the Court notes that W&K Consulting Pty Ltd does not intend to, and cannot, bring fresh proceedings relating solely to the subject matter of this dispute against any of the defendants to these proceedings and does not intend to rely on s 91 of the Civil Procedure Act 2005 (NSW) following the making of Order 2 that the proceedings be otherwise dismissed.”
(o) A revised draft of the notation was circulated by the solicitors for the defendants shortly thereafter in the terms ultimately agreed. (p) The consent orders, including the notation, were made the next day.
To the extent that I am permitted to take into account the negotiations leading up to the agreement recorded in the notation on the question of construction of the notation, I do not consider that they assist the defendant in any event. There was only one express reference to the plaintiff’s claim for damages for termination without reasonable notice and that was made in support of a settlement offer of $580,000, made some 14 months before the notation was first circulated and the earlier proceedings settled. It was not referred to in correspondence again and, while there was, from time to time, debate as to the merits of the plaintiffs’ claims in the earlier proceedings, there was never any engagement on the merits of the plaintiff’s claim with respect to notice.
Further, while the defendants’ solicitors, from time to time, expressed a desire to settle all outstanding matters as between the parties and their related parties, this was not reflected in any correspondence from the plaintiffs in the period immediately leading up to the settlement and any proposed deed fell off the defendants’ agenda by 3 November 2022. By this stage, it would have been clear that the only dispute being settled was that which was pressed in the earlier proceedings.
In my view, the defendant’s construction asks too much of the words “in relation to”. It is plain from the factual context of the earlier proceedings and the textual context of the notation that what was being settled was the Deed of Agreement claim only. The joinder of the corporate entities in the earlier proceedings resulted from the plea by Mr Bob Ell that it was not him personally, but the corporate entity, that contracted in the Deed of Agreement. The notation makes sense in that context because the cases of the two plaintiffs in the earlier proceedings (Mr Holborow and the plaintiff) were pleaded in the alternative, on the basis that each was the contracting party entitled to relief under the contractual cause of action.
Given the language of the notation and the documentary and factual context, whether or not that context includes the negotiations, I do not accept that the notation can be construed as contended by the defendant.
Accordingly, this defence also fails.
The defendant admits liability in respect of long service leave in the sum of $11,580, which the plaintiff accepts will satisfy its claim in this regard.
I also note that the defendant has admitted that it has not paid the balance of the August 2020 invoice in the sum of $18,000. It says that this was due to oversight or error, although there is no admissible evidence before me to verify that assertion. Mr Weston, in his correspondence of 9 September 2020, for example, did not undertake to pay it and there is no evidence that prior to commencement of these proceedings, the defendant ever intended to do so. Although it has offered to pay that sum into Court, this was not really a satisfactory solution. The debt was admitted to be due, it should have been paid to the plaintiff.
Interest at court rates ordinarily accrues on the judgment sum. In the present case, the defendant says that pre-judgment interest should not accrue, at least in respect of those parts of the judgment debt that are admitted, given the delay in seeking payment and the refusal to engage with the defendant in respect of it.
While interest is discretionary, the plaintiff has been deprived of the benefit of the monies which I consider to be due to it since August 2020 (although the sums later invoiced in respect of October 2020 would only have become due on invoice) and as a corollary, the defendant has had the benefit of those monies in that period. In my view, there are no discretionary factors which would mitigate against an order for interest. Given that the plaintiff has been deprived of the use of those monies and the defendant has had a corresponding benefit, in the exercise of my discretion, I will order the defendant to pay interest to the plaintiff at court rates under s 100 of the Civil Procedure Act 2005 from the date on which the entitlement under the cause of action accrued.
The plaintiff has been successful to the extent that I have found that the defendant breached an obligation to give five months’ notice of termination of the implied agreement.
I will direct the parties to bring in short minutes giving effect to that finding, also addressing whether the damages are to be inclusive or exclusive of GST.
The defendant is also admittedly liable in respect of the unpaid balance of its August 2020 invoice and in respect of untaken long service leave in the sum of $11,580. The plaintiff must bring to account JobKeeper payments that accrued to it in the period from November 2020 to the end of January 2021 and the sums already received by way of payment of its September 2020 invoice.
The defendant is also liable in respect of interest accruing at court rates from the dates of accrual of the plaintiff’s causes of action.
The orders of the Court are:
(1) Direct the parties to liaise as to agreed Short Minutes of Order required to give effect to these reasons and on costs and either notify my Associate by 5pm on 23 June 2025:
(a) of agreement, by providing short minutes; or (b) of disagreement, whereby the proceedings will be listed for further directions on Friday, 27 June 2025 at 10am before Andronos SC DCJ.
**********
W & K Consulting Pty Ltd
Leda Management Services as trustee for Leda
(2002) 5 VR 169
(2010) 75 NSWLR 245
(1982) 149 CLR 337
(1988) 14 NSWLR 438
(2007) 239 ALR 457
(2002) 60 NSWLR 371
(1981) 147 CLR 589
(1995) 183 CLR 323
(2012) 218 IR 417
(2015) 256 CLR 507
(2011) 243 CLR 253
Owframe’s position was Consultant Design and Development Manager; it was responsible to Mr Bob Ell and was to report to Mr Robert Ell or as directed.
The Services were initially to oversee delivery operations of Leda Design & Construction projects, including design management and supervision of Leda’s external consultants, budgeting and financial management, negotiation with statutory bodies, programming and co-ordination of works, employment and supervision of Leda’s staff, calling and letting of contracts, implementation of OH & S policies and build ability input. They also included development management duties including site acquisitions, feasibility analysis, due diligence and market research and analysis. Additional duties could be assigned from time to time.
Hours of service were specified as 8:30 am to 5:30pm Monday to Friday or as otherwise required to complete the services. Full time attendance was required and limits were placed on interstate work. The 2005 Agreement also provided for reimbursement for disbursements (phone, tolls, car parking, hotels and airfares), public holidays, long service leave and eight days of sick leave per year.
The Contract term was set out in cl 8:
In or before late March 2021, Mr Holborow applied unsuccessfully for a position through Recruit and Consult for a position as a senior development manager.
In late March 2021, Mr Holborow applied unsuccessfully for a position with New Hope Group.
Mr Holborow even explored the option of returning to work for the defendant. He had discussions with Mr Bob Ell and travelled to Queensland to inspect various Leda building sites. On hearing in May 2021 that Leda was recruiting for his former role, he texted Mr Robert Ell, who responded that Leda did not have anything for Mr Holborow in Sydney.
Ultimately, the plaintiff was successful in entering into a consultancy agreement with EQ Constructions on 15 June 2021. The consultancy fee was $250,000 per annum. The plaintiff remained engaged by EQ Constructions until it eventually went into administration in February 2023.
The earlier proceedings were not, however, heard. Between August 2021 and 22 November 2022, the parties, by their solicitors, engaged in extensive negotiations to resolve them. The negotiations are addressed below in connection with the defences of Anshun estoppel and abuse of process.
On 22 November 2022, the earlier proceedings were resolved by the filing of a consent judgment on the following terms:
In D**e L*’*Isle v Knight [2021] NSWSC 809, Gleeson J summarised the position at [75]: