Westpath Services Pty Ltd and ors v Johnson Joseph

CATCHWORDS: Appeal - unfair contract - Industrial Relations Act 1996 - s 106(5) - s 106(6) - appeal substantially seeks to argue matters not put at first instance - parties bound by their conduct of the proceedings below - leave to appeal refused in relation to new grounds - application of the equitable principle of "clean hands" considered - narrow basis of "clean hands" principle - limited use of principle in s 106 proceedings - primacy to be given to statutory scheme in exercise of broad discretion - clarification of first instance orders by consent - leave to appeal granted in order to clarify orders below and to consider the role of the equitable principle of "clean hands" in s 106 proceedings - leave refused in all other respects - costs

Annual Holidays Act LEGISLATION CITED: Civil Procedures Act 2005 Industrial Relations Act 1991 Industrial Relations Act 1996

A & M Thompson Pty Ltd v Total Australia Ltd (1980) 2 NSWLR 1 Baker v National Distribution Services (1993) 50 IR 254 Banque Comerciale S.O., En liqudiation v Akhil Holdings Ltd (1990) 169 CLR 279 Coulton v Holcombe (1986) 162 CLR 1 Davies v General Transport Development Pty Ltd (1967) AR NSW 37 FAI Insurances Ltd v Pioneer Concrete Services Ltd (1987) 15 NSWLR 553 at 561 Herman v McIlwraith McEachern Ltd (1931) 31 SR 454 Howitt v Retec Limited (No 2) (1995) 60 IR 93 CASES CITED: Johnson Joseph v Westpath Services Pty Ltd & ors [2006] NSWIRComm 393 Joseph v Westpath Services Pty Ltd (IRC 1517 of 2000, 5 April 2002, Cambridge C) Knowles v Anglican Church Property Trust (No 2) (1999) IR 380 at 381 Oraka Pty Ltd v Wendy's Supa Sundaes, Pilgrim and ors [2004] NSWIRComm 39 Port Macquarie Golf Club v Stead (1996) 64 IR 53 Real Estate Industry (Clerical and Administrative Employees ) (State) Award [2003] NSWIRComm 149) Roberts v GMH Employees' Canteen Society, Inc (1976) 25 FLR 415 Subway Developments of NSW/ACT v Costin [2007] NSWIRComm 95 Westfield Holdings v Adams (2001) 114 IR 241

APPELLANTS: Mr A Singh of counsel SOLICITORS: Quy Lawyers LEGAL REPRESENTATIVES:

RESPONDENT: Mr A Britt of counsel SOLICITORS: Harish Prasad & Associates

CORAM: Wright J, President Haylen J Staff J 21 August 2007

Matter No IRC 16 of 2007 WESTPATH SERVICES PTY LTD AND OTHERS v JOHNSON JOSEPH Application by Westpath Services Pty Ltd and others for leave to appeal and appeal against a judgment of Justice Kavanagh given on 15 December 2006 in Matter No IRC 1612 of 2002 JUDGMENT OF THE COURT [2007] NSWIRComm 211

1 In 1998, Mr Johnson Joseph together with Mr Karl Zhang, Mr Ram Singh and Mr Nadeem Khaliq agreed to establish a private pathology company which, by mid-July, was operating as Westpath Services Pty Ltd (Westpath). In order to perform the work necessary to establish the company and undertake its business in these early stages, Mr Joseph was employed and provided with a motor vehicle and a mobile telephone. The business began to grow but, by mid-1999, tensions were evident amongst the four members who had become directors of Westpath. At an emergency meeting of directors held on 28 November 1999 and after Mr Joseph left the meeting, the remaining directors voted to remove him as a director and company secretary. At that meeting, no decision was made as to Mr Joseph's employment but he did not work again for Westpath, although offering his services, and was not again paid salary by the company. By April 2000, solicitors for Westpath advised Mr Joseph's legal representatives that he was considered to have abandoned his employment. No money was paid to Mr Joseph in relation to his termination either by way of notice or by reference to other entitlements, such as annual leave. 2 Arising from these circumstances and arrangements, Mr Joseph ultimately commenced two proceedings: (a) On 6 April 2000, solicitors acting for Mr Joseph filed an application seeking relief from alleged unfair dismissal by Westpath pursuant to the provisions of s 84 of the Industrial Relations Act 1996 (the Act); (b) On 20 March 2002, Mr Joseph commenced proceedings under s 106 of the Act against Westpath, Mr Zhang and Mr Khaliq alleging that his contract and arrangements with the respondents were unfair and seeking a number of payments by way of relief including one year's salary in lieu of notice, annual leave, unpaid remuneration, unpaid business expenses, the payment of bonus and overtime, compensation for stress and an amount equalling one-quarter of a share of the business amounting to something in the order of $615,000.

3 The s 84 proceedings were determined by Cambridge C who found that the dismissal of Mr Joseph was harsh, unreasonable and unjust and ordered that Westpath pay compensation to Mr Joseph in the sum of $7,800 being approximately 13 weeks of Mr Joseph's pre-dismissal remuneration: Joseph v Westpath Services Pty Ltd (IRC 1517 of 2000, 5 April 2002, Cambridge C). No appeal was pursued against that determination.

4 In relation to the s 106 proceedings, an amended Summons for Relief joined a fourth respondent, KSPC Pty Ltd, which was alleged to have been established by Mr Zhang and Mr Khaliq and to have continued the business of Westpath at least in part with money drawn from the business of Westpath of which Mr Joseph was a significant shareholder. Kavanagh J found the contract of employment whereby Mr Joseph performed work in the industry of providing pathology services was unfair, harsh or unconscionable pursuant to s 106 of the Act and made orders requiring all respondents (including KSPC Pty Ltd jointly and severally with the other respondents) to pay Mr Joseph a total weekly payment of $600 for the period 1 April 1998 to 28 November 1999 (giving credit for payments already made of approximately $460 per week), interest on that amount, an amount of $35,000 as a distribution of the bonus/profit made by Westpath in the financial year 1999-2000 plus interest on that amount from 1 July 2002 to the date of judgment, the repayment of $41,000 invested by Mr Joseph in Westpath and the payment of compound interest from 1 April 1998 until the date of judgment and annual leave covering the 20 months of his employment and costs.

5 The respondents to the s 106 application have sought leave to appeal against the judgment and orders of Kavanagh J except for the repayment of $41,000 for the shares in Westpath and, if leave be granted, seek the setting aside of the remaining orders made by her Honour: see Johnson Joseph v Westpath Services Pty Ltd & ors [2006] NSWIRComm 393.

THE PROCEEDINGS BEFORE CAMBRIDGE C 6 Before her Honour, the parties accepted the relevance of the facts found by Cambridge C in the s 84 proceedings with the appellants (as respondents in the s 106 proceedings) also accepting all adverse findings made by the Commissioner regarding the credit of the witnesses who had appeared before him including the parties to the s 106 application, Mr Zhang, Mr Khaliq and the applicant Mr Joseph. The transcript of proceedings and the exhibits before Cambridge C were tendered in the s 106 proceedings. Mr Zhang, Mr Khaliq and Mr Joseph all gave evidence before the Commissioner; the Commissioner found that not one of them, or six other witnesses called in the proceedings, provided completely truthful evidence. The Commissioner noted that the matter before him involved serious allegations regarding secret commissions paid to medical practitioners in return for referring pathology sampling and testing work to Westpath which was paid by way of Medicare rebate. In the s 84 proceedings, Mr Joseph not only alleged that the directors of Westpath (including Mr Zhang and Mr Khaliq) participated in the secret commissions scheme but also admitted to personally participating in the scheme. His evidence was that each of the directors took turns to make the payments and that they were careful when so acting in order to avoid detection.

7 The Commissioner found that, in early 1998, Mr Joseph, Mr Zhang, Mr Singh and Mr Khaliq had decided to establish a private pathology company which was registered in mid-July 1998. That company, Westpath, started to process specimens for pathological analysis in about October 1998. Mr Joseph was involved in marketing the services of Westpath, he was provided with a company motor vehicle and was said to be largely responsible for recruiting work for Westpath from various medical practitioners. The other directors performed different roles related to laboratory operations and support services necessary for the pathology analysis work.

8 Reference was made to evidence suggesting that tension developed between the directors regarding Mr Joseph's role which was reflected in Minutes of directors' meetings held during the last half of 1999. The directors had been allocated shares, although they had not all been fully paid for, which appeared to add to the tension between them. An emergency meeting of directors was called on Sunday, 28 November 1999, although the nature of that meeting "... was the subject of strangely conflicting evidence". It was clear to the Commissioner that the meeting was called by directors opposed to and in conflict with Mr Joseph and that it proceeded in a heated fashion for 35 minutes before Mr Joseph walked out of the meeting. The meeting continued: the remaining directors voted to remove Mr Joseph as director and company secretary. 9 Mr Joseph was thereafter absent from work on sick leave for a short period and was paid some sick leave in December 1999. During January 2000, Mr Joseph appeared at the respondents' premises but only attended work briefly. Correspondence was exchanged between legal representatives acting for Mr Joseph and for Westpath. Mr Joseph no longer presented for work from about late January 2000. On 5 April 2000, solicitors acting for Westpath advised that the company had determined that Mr Joseph had abandoned his employment. Westpath made no calculation or payment for any accumulated leave entitlements owed to Mr Joseph and it "... seemed to be uncontested that some entitlement existed". However, at the time of completion of the hearing before Cambridge C, no amount for accumulated entitlements had been paid.

10 Cambridge C was critical of the evidence given by all witnesses and opened his Decision with the statement that the matter could be aptly subtitled "A Rogue's Gallery". The Commissioner noted that the most striking feature of the evidence involved the unreliability of all witnesses: none of the nine witnesses who gave evidence could be described as witnesses of truth in all respects. There was a "remarkably consistent level of poor performance displayed by all of the witnesses" and it was ... unusual to find that not one of the witnesses was prepared to answer questions in cross-examination in an open, concise and deliberate manner". All witnesses, in the Commissioner's view, "... presented as individuals who seemed to have something to hide" and, in many instances, "... a simple question was greeted with a convoluted, loquacious and sometimes irrelevant response". Other questions "... were met with limited and guarded responses which often sought to deflect from the obvious issue ...".

11 In relation to Mr Joseph, the Commissioner noted that, although many of the unfortunate aspects to which he had referred applied to his evidence, in general, however, Mr Joseph did not display the loquaciousness or unresponsiveness that many of the other witnesses adopted during cross-examination. He admitted being involved in the illegal activity of the kick-back scheme and it seemed that scheme had been operating possibly prior to, but by, September 1999. While there was some confusion about how long the scheme had been in operation, it appeared that, in late August 1999, Mr Joseph had called a directors' meeting for 1 September 1999 to deal with, amongst other things, his desire to withdraw from the kick-back scheme. The Commissioner found there were inconsistencies as to when this action was taken by Mr Joseph who sought to portray himself as a "whistleblower" in seeking to stop the scheme, although he also appeared to have been actively involved in that scheme. 12 There was an allegation that a document relied on by Mr Joseph was fraudulent and had been concocted by him to support his case, although the Commissioner was unable to accept the likelihood of that event. The Commissioner concluded that, when the totality of the evidence was carefully analysed, "... the applicant's testimony is the more believable, but by no means could it be described as reliable". It was to be remembered that, although the applicant endeavoured to portray himself as a whistleblower, on his own evidence, he firstly attempted to expose the kick-back scheme only after he had been caught by his fellow directors "siphoning off some of the proceeds" from the kick-back scheme for himself. The Commissioner then made the following finding at [42]: The Commission has considerable difficulty in accepting evidence from an individual who admits to participation in what he believes to be an illegal activity, and, also acknowledges further dishonest conduct involving the redirecting of some of the proceeds from such alleged illegal activity to himself; and then endeavours to portray himself as a person who attempted to dissuade his fellow directors from conducting such a scheme. Despite having regard for and cognisance of the caution that would obviously apply to the evidence of any person who came before the Commission in such circumstances, the testimony of the applicant was remarkably more sound than the evidence that was presented by the respondents ' witnesses.

13 The evidence provided by Mr Zhang was found by the Commissioner to be "unconvincing" and that his answers in cross-examination were "very evasive". Of particular significance was the reason for the emergency meeting of directors held on Sunday, 28 November 1999. Mr Joseph's evidence was that that meeting arose directly from the discovery that he had been dishonest in pocketing certain amounts of money obtained under the kick-back scheme: the other directors denied the existence of the scheme but were unable to provide any consistent or convincing explanation for the emergency that acted as the catalyst for that meeting. Mr Zhang said that the purpose of the meeting was to discuss the appointment of another pathologist because it was important for the operation of the company's business and for liaison with the doctors and the company's quality system. He suggested that they did not want to lose the opportunity of making such an appointment.

14 That evidence of Mr Zhang was compared with the evidence of Mr Singh - that the emergency meeting was mostly concerned with the marketing and departmental performance of Mr Joseph. In relation to this evidence, the Commissioner noted: Inconsistencies in important aspects of evidence such as the reason for the calling of the emergency meeting on 28 November 1999, coupled with the absence of other plausible explanation for apparent misunderstandings about why the meeting may have been called, impeaches the evidentiary case for the respondent. 15 Mr Singh's evidence was found by the Commissioner to be generally more believable than the evidence given by other respondent director witnesses. The Commissioner formed the impression that Mr Singh was more concerned than other respondent witnesses to attempt to provide truthful answers to questions but was, nevertheless, very hesitant in his answers and was very careful in the way in which he answered seemingly simple questions. The Commissioner found that, at times, the answers provided by Mr Khaliq during cross-examination "... were almost incomprehensible and seemed to be deliberately so". Mr Khaliq could not provide any plausible reason for the acrimonious argument between the directors at the emergency meeting of 28 November 1999.

16 Having regard to the totality of the evidence, the Commissioner concluded at [68]: When the evidence about an issue like a reason for the argument on the evening of 28 November is considered in totality, it became obvious that the various directors of the respondent deliberately attempted to conceal or avoid the actual reason for the tumultuous events of 28 November 1999. Of course it does not necessarily follow that such concealment establishes that the uproar of that occasion arose from the discoveries regarding the "doctors' kick-backs" schemes and, in particular, the applicant's conduct which represented what might be described as "cheating on the cheats". Consequently the evidence remained inconclusive but the only plausible explanation for the dramatic events of 28 November was the discoveries made in connection with the "doctors' kick-backs" schemes. 17 It is of some interest that counsel for Westpath in the s 84 proceedings submitted that, having regard to the severity of the issue, there should be a finding on the balance of probabilities that the doctors' kick-back scheme did not exist. Ultimately, Cambridge C formed the view that there was insufficient evidence to make proper findings regarding the existence of the kick-back scheme, although there was much supportive evidence strongly suggesting that the scheme did operate. Nevertheless, the nature of the evidence led the Commissioner to refer his Decision and the file to the Registrar to bring to the attention of the appropriate authorities, including the New South Wales Attorney General, the Office of the Director of Public Prosecutions and the Health Insurance Commission. In reaching his conclusion, the Commissioner stated that, although the applicant had attempted to confess or plead guilty to what he understood to be illegal, possibly criminal activity, his approach to the disclosure of that activity was "very guarded and selective". There were aspects of the applicant's evidence which the Commissioner simply did not believe - such as how he had sought to portray himself as a person who was reluctantly participating in an illegal activity in accordance with the wishes of fellow company directors. If that kick-back scheme did exist, then Mr Joseph, in his role as marketing services of the company, would have been one of the most active participants in the scheme. 18 Ultimately, the Commissioner formed the view that the amount of relief should be limited, particularly because Mr Joseph's admissions had been less than open, frank and complete: instead, it had appeared that he had attempted to misrepresent his active and wilful involvement in the conduct which he understood to be illegal and, possibly, criminal. Cambridge C found that the alternative theory, that Mr Joseph had concocted an elaborate story which implicated himself in potential criminal activity, defied logic and much of the evidence. Ultimately, the Commissioner found Mr Joseph's dismissal to be unfair and awarded $7,800 in compensation representing 13 weeks of his "pre-dismissal remuneration". THE PROCEEDINGS BEFORE KAVANAGH J 19 In the s 106 proceedings, the respondents initially filed a Reply to the Summons for Relief alleging abuse of process giving rise to issue estoppel because of the s 84 proceedings. In the Reply to the Amended Summons for Relief, the respondents contended that the applicant's conduct disentitled him to the money amounts sought in the Summons for Relief. The particulars of that case were: (i) The applicant's "contract" was a bargain entered into on even terms. (ii) The applicant's evidence that the employment contract required the parties to engage in criminal conduct or to aid and abet the commission of criminal offences was to require a court to enforce a contract tainted by illegality. (iii) The applicant's fraud in retaining monies due to his partners and applying such monies to his personal use. (e) (sic) The applicant's cumulative conduct traverses the expectation that he comes to the jurisdiction "with clean hands". (l) (sic) The applicant's willing participation in criminal conduct, his fraud in the giving of false evidence in proceedings Matter No. IRC 1517 of 2000 materially taints his application in the current proceedings.

20 At the hearing before Kavanagh J, the respondents relied on the Amended Reply and a bundle of financial documents from the records of the fourth respondent, KSPC Pty Ltd trading as Westpath Services. No affidavit evidence was read on behalf of the respondents to the application. The parties also tendered a list of matters that were agreed, including the following matters: · the Court had jurisdiction to grant the relief sought in relation to the first contract; · Mr Joseph paid $41,000 for his share in Westpath and Mr Khaliq paid $50,000 for his share; · Mr Joseph started work on setting up Westpath in April 1998; · Westpath started to process specimens for pathological analysis in about October 1998; · Mr Joseph had been provided with a company motor vehicle and was largely responsible for recruiting work for Westpath from various medical practitioners; · Westpath's business developed slowly but steadily from about October 1998 until May-June 1999; · Mr Joseph deposited a cheque from Ultrasound services made out to cash in his own account; · Mr Joseph received an agenda letter from Westpath dated 15 February 2000 notifying him of a meeting on 11 March 2000 and the agenda included the removal of Mr Joseph as director of Westpath; · On 8 March 2000, Mr Joseph's then solicitor wrote to Westpath's solicitor in relation to Westpath's allegation that Mr Joseph had abandoned his employment; · The issue of Mr Joseph's employment status was the subject of correspondence between solicitors representing Mr Joseph and those representing Westpath and ultimately in correspondence dated 5 April 2000 from Westpath's solicitors, Westpath advised that it had determined that Mr Joseph had abandoned his employment; · Westpath made no calculation or payment for any accumulated leave entitlements owed to Mr Joseph either then or subsequently; · The respondents never refunded the applicant's investment of $41,000; · In October 2002, Westpath sought to introduce a share buy back scheme without informing Mr Joseph; · Mr Zhang borrowed $25,000 from Westpath; · Mr Khaliq borrowed $25,000 from Westpath; · In November 2002, Westpath agreed to a proposal from Mr Joseph to have an independent valuation of its business; · In November 2002, Mr Zhang and Mr Khaliq registered KSPC Pty Ltd; · In December 2002, Mr Joseph's solicitor and the respondents' solicitor discussed the issue of appointment of an independent valuer; · The respondents' solicitor advised Mr Joseph's solicitor to go ahead with the job of finding an independent valuer. The respondents' solicitor also advised that the respondents would not object to the selection of the independent valuer; · On 12 March 2003, Mr Joseph's solicitor wrote to the respondents' solicitor providing him the name of the proposed independent valuer; · On 24 March 2003, the respondents' solicitor informed Mr Joseph's solicitor as follows: I have had a conference with my clients who have informed me that the business had not traded since 5 January 2003. I am informed that the final accounts are currently being prepared by the accountant, and I will ensure that you are provided with a copy of those accounts as it come to hand. · On 13 May 2003, the respondents advised that Westpath had ceased trading and a new company had been formed in the name of Westpath Pty Ltd; · On 5 August 2003, the respondents' solicitor advised that the name of the new company was KSPC Pty Ltd and not Westpath Pty Ltd. · KSPC Pty Ltd trades as "Westpath Services" and operates out of the premises formerly occupied by Westpath. 21 In her judgment, Kavanagh J noted that Mr Joseph had started full-time work in April 1998 in establishing the pathology business and that his first day of employment with the company Westpath was 3 August 1998. Her Honour immediately drew attention to the difference between the proceedings under s 84 and s 106 of the Act. The s 84 proceedings provided a statutory remedy in respect of a claim brought by Mr Joseph for his unfair dismissal, whereas the Court's jurisdiction under s 106 of the Act required Mr Joseph to establish unfairness in the terms and/or conduct of the employment contract, possibly requiring the Court to have regard not merely to the terms of the contract or arrangement but to the manner in which the contract or arrangement was conducted between the parties, citing as authorities: Port Macquarie Golf Club v Stead (1996) 64 IR 53, Oraka Pty Ltd v Wendy's Supa Sundaes, Pilgrim and ors [2004] NSWIRComm 39, Davies v General Transport Development Pty Ltd (1967) AR NSW 37 and A & M Thompson Pty Ltd v Total Australia Ltd (1980) 2 NSWLR 1. The application brought under s 106 pleaded unfairness against Westpath, Mr Zhang and Mr Khaliq asserting that the contract and the associated arrangements were unfair because of the way the contract was conducted during the time of the employment relationship; the termination of the employment relationship; the unfair distribution of monies to other employees through Westpath which had been established to conduct the business; and in the transfer of and the continued use of Mr Joseph's monies in the formation of a new company operating the same business or a similar business, being KSPC Pty Ltd. 22 Although the appellants acknowledged the findings of the Commissioner and accepted his findings as to the credit of Mr Zhang and Mr Khaliq, they challenged a number of facts asserted by Mr Joseph: her Honour acknowledged the necessity of establishing the facts in the s 106 proceedings. Her Honour also noted that the facts asserted by Mr Joseph were neither raised nor argued before the Commissioner and were identified as: the shareholding held by Mr Joseph in Westpath; Mr Joseph's salary/remuneration package as agreed during the employment relationship; the full financial dealings of Westpath: and the shareholding in Westpath. The appellants conceded that Mr Joseph was a founding director of Westpath but challenged his assertion that he was a shareholder in the company, although they, somewhat curiously, argued in the alternative that Mr Joseph had failed to meet a call for the unpaid portion of the shares and had therefore forfeited them. The failure to pay $9,000 owed on the shares was said to entitle the appellants to remove Mr Joseph from the company register. 23 Her Honour rejected the proposition that there had been a proper call for the payment of $9,000 and rejected the assertion that Mr Joseph had used his position of advantage and trust as a director and company secretary to issue himself with the share certificate. Her Honour looked at the records of the company and concluded that Mr Joseph had contributed $41,000 of $50,000 for 50,000 $1 shares in Westpath, while Mr Zhang did not appear to have paid anything for his shares although he was recognised as the holder another 50,000 shares. The evidence was silent as to other shareholders but the company records were "of concern". Importantly, her Honour noted that a certificate specifying shares held by a member was prima facie evidence of the title held by the member in those shares, citing s 1087 of the Corporations Law. Also of significance was the fact that Mr Joseph was formally removed as a director of the first respondent on 11 March 2000 with the Minutes of Westpath not only recording his removal as a director and company secretary but also acknowledging him as being the former holder of 50,000 ordinary shares. The company records showed that Mr Joseph ceased being a shareholder on 30 January 2001. Her Honour expressed the view that, between 1998 and November 1999, Mr Joseph, Mr Zhang and Mr Khaliq "seemed to have conducted themselves as though they were equal shareholders". 24 Having regard to that material, her Honour accepted that Mr Joseph held an interest in Westpath as a result of his financial contribution and held an allocation of 50,000 shares in the first respondent. Her Honour was satisfied that this was an associated arrangement to the employment contract, with Westpath receiving the monies as an establishment contribution. While the respondents challenged Mr Joseph's assertion that his contribution gave him a quarter share in the business of Westpath, the respondents accepted that, if he was found to be a shareholder, then he held a quarter share in the business at the time of the formation of Westpath. 25 Her Honour also noted other changes in relation to the operation and shareholding in Westpath. It was agreed between the parties that, in October 2002, Westpath sought to introduce a share buy-back scheme without informing the applicant. Both Mr Zhang and Mr Khaliq borrowed $25,000 from Westpath and, in November 2002, Westpath agreed to Mr Joseph's proposal to have an independent valuation of the business. Also in November 2002, Mr Zhang and Mr Khaliq registered KSPC Pty Ltd. In December 2002, solicitors for the parties discussed the appointment of an independent valuer. On 13 May 2003, the respondents advised that Westpath had ceased trading and that a new company had been formed in the name of Westpath Pty Ltd. On 5 August 2003, the respondents' solicitors advised that the name of the new company was KSPC Pty Ltd not Westpath Pty Ltd, although it traded as "Westpath Services" and operated out of the premises formerly occupied by Westpath. 26 In relation to salary, Mr Joseph stated that Mr Zhang and Mr Khaliq on behalf of Westpath agreed to pay him $700 per week, while the maximum he was actually paid during his employment was $460 per week. Mr Joseph said that he agreed to receive $460 per week until Westpath reached a profit, and then his salary would be $700 per week plus a car and a mobile telephone. Mr Joseph relied on the fact that there was no other evidence before the Court in relation to salary but her Honour expressed concern, in view of Cambridge C's findings as to credit, about acting on evidence of the parties alone and so sought other sources including bank records to determine the issues in contest. 27 The duties of Mr Joseph were then considered and an assessment made by her Honour that the value of those duties would be fairly covered by a payment of $600 per week. Her Honour took into account Cambridge C's order that appeared to proceed on the basis of pre-termination remuneration of $600 per week, although the Commissioner's intention to limit the compensation was unclear as to whether it was a reference to the period over which the payments should be made or as to the rate at which it was to be made. Her Honour rejected $460 per week as constituting a fair payment for Mr Joseph's labour. 28 The financial records of Westpath were then examined by her Honour. They revealed that the directors of Westpath, including Mr Zhang and Mr Khaliq, received other payments in addition to their salary from the Westpath account each financial year until Westpath ceased trading on 5 May 2003. No such payments were made to Mr Joseph after he was terminated: in the first year of the operation of Westpath 1989/1999, there was only a distribution to Dr Singh of $1,216 and $110,000 to Mr Zhang. In the financial year 1999/2000 (when Mr Joseph was dismissed), monies were paid to each director or to a company in which each director declared an interest as follows: $28,865 to Mr Singh; $29,480 to Mr Prasad; $41,206 to Mr Zhang and $46,610 to Mr Khaliq. Her Honour concluded that there was a distribution of monies accumulated by Westpath "be it a profit distribution or bonus payment", yet Mr Joseph worked for Westpath for six months of the financial year 1999/2000, was a shareholder and received no distribution of monies. The evidence further revealed that each of the four directors took out of the account of Westpath after salary on average in the stated financial years the following: in 2000/2001, $68,477; in 2001/1002, $88,291; in 2002/2003 (for the nine months until it ceased trading in March 2003) $19,908. 29 The financial records revealed that, on 2 June 2005, in two separate movements of money, a total of $175,588 was transferred from Westpath to the account of KSPC Pty Ltd. KSPC Pty Ltd in the financial year ending 30 June 2006 had an income in excess of $4.5 million. KSPC Pty Ltd was a company established by Mr Zhang and Mr Khaliq and conducted a similar business to that of Westpath. KSPC Pty Ltd employed Mr Zhang and Mr Khaliq to provide the same service they had provided to Westpath. KSPC Pty Ltd originally traded under the name of Westpath Services and operated out of the same building. While this business was now conducted through KSPC Pty Ltd, its trading name was still Westpath Services. 30 Although Mr Joseph alleged a contract initially with Mr Zhang and Mr Khaliq, then a subsequent contract of employment with Westpath when it was registered, her Honour found that there was an employment contract with Westpath and that Mr Zhang and Mr Khaliq had a direct connection with the making and avoidance of that contract: on the evidence, they were the controlling minds of Westpath. Her Honour then made the following findings: the applicant held a financial interest in Westpath; he held the position of marketing director/scientific officer; the Minutes of the Westpath directors' meeting of 28 November 1999 did not reveal that there was agreement that Mr Joseph be dismissed and that much of the meeting was concerned with the kick-back scheme. Her Honour found that, in the financial dealings of Westpath, there was unacceptable corporate behaviour and that Mr Joseph, Mr Zhang and Mr Khaliq were parties to that unacceptable conduct. While the terms of the employment contract were originally fair and the contract was entered into on even terms, by the conduct of Westpath and the conduct of its directors Mr Zhang and Mr Khaliq, the contract in its performance became unfair. The contract was unfair in the way its financial dealings were conducted to the detriment of Mr Joseph's financial interest, both as to distribution of profit/bonus and in the financial dealings within the associated arrangement, and there was unfairness in Mr Joseph's termination and in the operation of Westpath's share register so that he was removed as a shareholder (as part of the unfair employment termination). 31 Having reached these conclusions, her Honour then considered whether the unfairness found should lead to a variation of the contract and the making of compensation orders as sought by Mr Joseph. Her Honour addressed the role of the Court under s 106 in making orders that were "just in the circumstances" of the case; she considered well known authorities such as Baker v National Distribution Services (1993) 50 IR 254 and Westfield Holdings v Adams (2001) 114 IR 241 and the principle that money orders needed to be connected to the variation of the contract and, where appropriate, were to restore a party to the circumstances that existed before the making of the contract. In that context, her Honour then considered the respondents' submission that Mr Joseph did not come to the Court with "clean hands" and should therefore not have the benefit of the Court's discretion and orders by way of compensation. 32 Her Honour described the business dealings of the parties as "unethical" and that Mr Joseph, Mr Zhang and Mr Khaliq had behaved "inappropriately, if not fraudulently" in the conduct of the pathology business and that there was an unacceptable corporate culture and behaviour in the operation of Westpath. It was noted that the respondents said that the applicant was a thief "who was culpable and recalcitrant" and that therefore no order should be made which would "punish" the respondents. The respondents further submitted that Mr Joseph was disentitled to orders because the contract was a bargain entered into on even terms; his employment contract required the parties to engage in criminal conduct or to aid and abet the commission of criminal offences and the Court was being asked to enforce a contract tainted by illegality; and the applicant lacked clean hands because of fraud and that, although he took an oath to tell the truth, he gave false evidence in the proceedings before Cambridge C and because he participated in criminal proceedings. The allegation of theft was, of course, a reference to the fact that Mr Joseph had placed into his own bank account a $300 cheque made out to "cash" which was said to be part of the kick-back system and which prompted the 28 November 1999 meeting. The respondents further argued that it would be contrary to public policy for the Court to order the distribution of the "proceeds of crime". 33 In dealing with the lack of "clean hands" submission, her Honour considered the unethical nature of the business operated by all parties and, in particular, the treatment of Mr Joseph by the respondents in isolating him from the distribution of profit or bonus, removing him from the share register without returning his $41,000 establishment money and ignoring his initial quarter share in the business. In those circumstances, her Honour was persuaded that it was proper, given the unfairness in the conduct of the contract, to vary the contract of employment. Because of the credit issues arising in relation to all the parties, her Honour proposed to make money orders by following the "money trail" in determining what was just in the circumstances of the case. 34 Given Cambridge C's order for the payment of 13 weeks' salary in the s 84 proceedings, her Honour rejected Mr Joseph's claim for an additional period of notice in the s 106 proceedings. Working on the basis that the applicant was entitled to payment of $600 per week but had only been paid at the rate of $460 per week, the agreement was that the higher amount would be paid once the company was in profit. In those circumstances, her Honour determined that Mr Joseph be paid $600 per week from 1 April 1998 until 28 November 1999 with credit to be given for payments already made. Interest was to be paid on that amount in accordance with s 100 of the Civil Procedures Act 2005 from 1 April 1998 to the date of judgment. In view of the respondents' concession that, if Mr Joseph was not fairly terminated for theft, he should receive his accrued benefits, her Honour found that it was just in the circumstances to order that Mr Joseph be paid the benefits of his accrued leave entitlements for the 20 months he worked for Westpath calculated on his base rate of $600 per week. Interest was to be paid on that sum in accordance with the Civil Procedures Act. 35 Mr Joseph contributed $41,000 as establishment money to Westpath and held 50,000 shares in that company representing originally one-quarter of the shareholding. Her Honour found that the respondents had the benefit of Mr Joseph's capital in order to both establish and build the business of Westpath and noted that there was considerable growth in the revenue of Westpath during the period of Mr Joseph's employment. For the financial year ending 30 June 1999, Westpath's revenue was over $367,000; for the financial year ending 30 June 2000 the revenue exceeded $1.72 million; and for the financial year ending 30 June 2001, the revenue exceeded $1.55 million. Her Honour noted that the applicant ceased working on 28 November 1999 and that he had contributed to Westpath up until that period. These facts persuaded her Honour that Mr Joseph had a legitimate claim for a return on his capital investment, being an investment that was an arrangement closely associated with the employment contract. Her Honour dealt with this claim by determining that Mr Joseph should share in the distribution of money, whether described as profit, bonus or overtime payments that were paid to the other respondent directors. 36 During the relevant period, Mr Zhang and Mr Khaliq took approximately $40,000 (a figure rounded down from $47,000) from Westpath in 1999/2000 while holding a similar number of shares in that company. Mr Joseph had been removed unfairly as a shareholder, given his contribution to the company made in support of his employment contract. Having contributed to the success of the company, it was just in the circumstances that Mr Joseph share in a similar way in the payments made to the directors Mr Zhang and Mr Khaliq, although her Honour reduced the relevant sum from $40,000 to $35,000 in recognition of the fact that the applicant worked for only part of the financial year. Interest was to be paid on that amount in accordance with the provisions of s 100 of the Civil Procedures Act from 1 July 2002 until the date of judgment. 37 Mr Joseph made a significant claim for the loss of his business interest arising from the fact that the respondents continued to operate the business without either refunding his shareholding of $41,000 and by not extending to Mr Joseph payments made to the other directors. No recognition had been given to Mr Joseph for his quarter share in the business of Westpath nor was there any recognition of the use of Westpath's resources in establishing KSPC Pty Ltd which had income of over $4 million in 2005. Her Honour found this the most difficult of the claims pursued by Mr Joseph. Account had to be taken of the payment of $35,000 already made as, at least, reflecting part of a return on Mr Joseph's investment of $41,000. In the circumstances, her Honour thought that the appropriate course was to order that Mr Joseph be reimbursed the sum of $41,000 but that there should be compound interest calculated on this sum from 1 July 2000 to the date of judgment. The interest compounded in this way was considered just given the continued use of Mr Joseph's monies in the successful pathology business. Her Honour rejected the other claims that Mr Joseph should receive a payment reflecting the earnings of Westpath after his termination and rejected the other claims grouped under this heading. 38 By reason of both Mr Joseph's conduct and the lack of medical evidence, his claim for the payment of money on account of stress and psychological injuries suffered during his employment was rejected. The conduct of Mr Zhang and Mr Khaliq and the evidence as to the origins of KSPC Pty Ltd led her Honour to form the view that all were involved in a culpable way in the unfairness suffered by Mr Joseph. That unfairness was addressed by the Court's orders and all the respondents should therefore be jointly and severally liable in relation to those orders. THE APPEAL 39 The Amended Application for Leave to Appeal and Appeal sought to appeal against the following matters: (a) the order that Mr Joseph be paid $600 per week from 1 April 1998 to 28 November 19998 and that interest be paid on that sum from 1 April 1998; (b) the order that Mr Joseph be paid $35,000 as a distribution of bonus/profit made by Westpath Services Pty Ltd in the financial year 1999/2000; (c) the order that Mr Joseph be repaid the sum of $41,000 with compound interest (but as to interest only); (d) the order that the appellants pay Mr Joseph's costs; (e) the order requiring Mr Joseph to be paid accrued annual leave entitlements for 20 months at $600 per week. 40 The appellants nominated 19 grounds of appeal. The grounds of appeal may be grouped as follows: firstly, it was not reasonably open on the evidence that there was a profit distribution or bonus payment made to other directors of Westpath and that the finding that such payments were made was based on a misrepresentation of the relevant evidence by Mr Joseph; secondly, in ordering the payment of extra salary to an employee engaged in misconduct directly related to the contract of employment was contrary to principle, Mr Joseph had not come to the Court with "clean hands" and that there was error in finding there was collective misconduct on behalf of the appellants; thirdly, that there were internal inconsistencies in the orders for monetary payments; fourthly, that her Honour had wrongly found there was a transfer of $175,580 from Westpath to KSPC Pty Ltd in 2005; fifthly, that the orders made were not "just in the circumstances of the case" in that there was an error in ordering additional payments for a period during which the contract was fair and entered into on equal terms, there was error in awarding additional payments for a period during which the contract was fair, there was error in ordering extra salary payments and compensation in addition to the return of capital plus compound interest for concurrent periods, there was error in awarding extra salary payments and compensation in addition to the return on capital plus compound interest for concurrent periods where other directors did not receive such payments, there was error in ordering payment of extra salary between October 1998 and November 1999 when other directors did not receive such payments; sixthly, there was error in awarding annual leave entitlements and there was further error in awarding annual leave to a partner; seventhly, there was error in making orders against Westpath in relation to a period when it did not exist; eighthly, there was error in ordering payment of interest on amounts not due and error in ordering interest on sums of money not paid; ninthly, the finding that Mr Joseph was employed full-time by Westpath from April 1998 was not reasonably open on the evidence and the finding that there was an agreement to reimburse Mr Joseph further for his labour was not reasonably open on the evidence; and tenthly, there was error in considering the gross revenue of Westpath only. 41 In relation to leave to appeal, it was stated that there were matters of significant principle raised by the proceedings that ought to be the subject of an authoritative ruling by a Full Bench of the Court. It was submitted that there had been a misrepresentation of the evidence as to the sums paid to other directors that had led Kavanagh J into error by treating what were recorded in Westpath's cheque books as day-to-day outgoings that could not reasonably be held out as a distribution of profits or as bonus or overtime payments made only to the other directors and not to Mr Joseph. The evidence and submissions for Mr Joseph in support of that proposition were made in breach of counsel's duty under the Barristers' Rules requiring counsel to refrain from alleging any matter of fact unless they believed on reasonable grounds that the factual material already available provided a proper basis to do so. 42 In relation to the "clean hands" argument, it was submitted there was little previous guidance as to the application of the maxim in the exercise of the Court's jurisdiction under s 106 and it was appropriate for the Full Court to determine the extent to which the maxim applied in the jurisdiction, the circumstances in which it would apply and to enunciate whether there were exceptions or limitations on the application of the maxim and how the maxim might be applied when all parties to a transaction were alleged to have acted improperly. 43 In relation to her Honour's consideration of what orders were "just in the circumstances of the case", it was appropriate for a Full Bench to lay down principles on the approach to be taken where there was an interplay of considerations to take into account before exercising a discretion to award compensation under s 106(5) of the Act. It was submitted that the approach should constitute the following steps: firstly, the Court would identify the period during which the impugned contract was unfair; secondly, the Court would consider what other periods (if any) were relevant in assessing compensation; thirdly, the Court would consider each of the heads under which compensation might be available and the weight that should be given to each of them; fourthly, the Court would identify any other payments already received by an applicant (eg unfair dismissal payments) and give them appropriate weight; fifthly, a Court would consider whether any compensation payments should be made concurrently; and sixthly, the Court would consider whether any discretionary factors should be taken into account so as to vary the amount of any compensation ordered. 44 It was also submitted by the appellants that, in relation to the orders encompassing payments of annual leave, the liability of Westpath and the timing of interest payments, the Court had exceeded its jurisdiction and it was appropriate that the Full Court should consider whether the decision on these issues was inconsistent with established law and principle and for the Full Court to lay down appropriate principles. 45 In relation to leave to appeal, the appellants accepted that the principles applicable were those laid down in Knowles v Anglican Church Property Trust (No 2) (1999) IR 380 at 381. While it was accepted that leave would not be lightly or automatically granted, the statutory scheme made it clear that the legislature intended to restrict access to appeals to appropriate cases meeting the public interest test stated in s 188(2). Questions of jurisdiction by themselves would not establish a basis for the grant of leave and each case would have to be judged against the statutory criteria. It was also relevant to the grant of leave to consider amongst other factors whether the appellants had brought a substantially different case on the appeal. It would also be necessary to consider whether an appeal raised substantial and important considerations and questions of public interest. 46 At the forefront of Mr Joseph's case on the appeal was the submission that substantially the issues sought to be raised on appeal constituted a different case to the one put before Kavanagh J and ignored clear concessions made in the proceedings at first instance which were relied upon by both Mr Joseph and the Court. In this context, it is to be noted that, in the proceedings before Kavanagh J, the appellants were represented by Mr Levingston, solicitor, but the written submissions in support of the granting of leave to appeal and on the appeal if leave be granted were drawn by Mr A K Singh of counsel who appeared in the Appeal but did not appear in the substantive proceedings before Cambridge C or Kavanagh J. 47 In view of the importance of these contentions as to the nature of the case at first instance and the case sought to be argued on appeal, it is appropriate at this stage to refer to the relevant principles, noting that s 191(1) of the Industrial Relations Act 1996 provides that an appeal to a Full Bench is not by way of a new hearing and is to be determined on the evidence and material adduced in relation to the decision appealed against. 48 In Coulton v Holcombe (1986) 162 CLR 1, the joint judgment (Gibbs CJ, Wilson, Brennan and Dawson JJ) dealt with the nature of an appeal by way of re-hearing and stated at p.7: To say that an appeal is by way of rehearing does not mean that the issues and the evidence to be considered are at large. It is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. If it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish. The powers of an appellate court with respect to amendment are ordinarily to be exercised within the general framework of the issues so determined and not otherwise. In a case where, had the issue been raised in the court below, evidence could have been given which by any possibility could have prevented the point from succeeding, this court has firmly maintained the principle that the point cannot be taken afterwards: see Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438; Bloemen v The Commonwealth (1975) 49 ALJR 219. In O'Brien v Komesaroff (1982) 150 CLR 310 at 319, Mason J in a judgment in which the other members of the court concurred, said: In some cases when a question of law is raised for the first time in an ultimate court of appeal, as for example, upon the construction of a document, or upon facts either admitted or proved beyond controversy, it is expedient in the interests of justice that the question should be argued and decided (Connecticut Fire Insurance Co v Kavanagh [1892] AC 473 at 480; Suttor v Gundowda Pty Ltd at (1950) 81 CLR 4187 at 438; Green v Sommerville (1979)141 CLR 594 at 607-8. However, this is not such a case. The facts are not admitted nor are they beyond controversy. The consequence is that the appellant's case fails at the threshhold. They cannot argue this point on appeal; it was not pleaded by them nor was it made an issue by the conduct of the parties at the trial. In our opinion, no distinction is to be drawn in the application of these principles between an intermediate court of appeal and an ultimate court of appeal. Finally, in a recent decision of six justices of this court (Unversity of Wollongong v Metwally [2] (1985) 59 ALJR 481 at 483 the court said: It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so. The Court of Appeal recognised the great importance, in the public interest, of these principles. Their Honours summarised them in the following terms: The finality of litigation; the difficultly of inducing an appeal court to consider new facts; the undesirability of encouraging tactical decisions not to present an issue at first instance; keeping it in reserve for appeal; and the need for vigilance to avoid injustice to a party having to meet new facts and new issues of law for the first time at the appeal court. 49 The High Court revisited this area in another context in Banque Commerciale S.A., En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279. Mason CJ and Gaudron J at 284 looked at the policy behind the rules cited in Coulton v Holcombe and stated: It is necessary to note the decision of Water Board v Moustakas (1988) 62 ALJR 209. In that case the appellant was precluded from making a case that had not been made at trial, although the elements of that case had been pleaded and particularised. The decision in that case was rested on the rule that, unless all facts have been determined beyond controversy or the question is one of construction or law and it is expedient and in the interests of justice to entertain the point, a party may not take a point for the first time on appeal. See, generally, Suttor v Gundowda Pty Ltd ... , University of Wollongong v Metwally (No 2) ... , Coulton v Holcombe ... , O'Brien v Komesaroff ... . Some aspects of that rule appears to derive from public policy considerations directed to ensuring the finality of litigation. On the other hand, some aspects of the rule may have their genesis in estoppel by election in the conduct of litigation, although, if so, the relevant consideration is not that the other party is put in a worse position but that he or she may have been so placed. See, for example, Moustakas at 212, where the refusal to allow the appellant to raise a new case was rested on 'the possibility that the [other party] may, if it had been raised below, have wished to call evidence in response to it'. So far as the rule may derive from public policy, the relevant consideration is that the case sought to be made on appeal is a new or different case from that which emerged at the trial. See Browne v Dunn (1893) 6R 67 at 75,76, cited with approval in Rowe v Australian United Steam Navigation Co Ltd (1909) 9 CLR 1 at 24,25; Moustakas (1988) 62 ALJR at 210-211.

This line of authority had previously been applied in the Commission and in Court of Appeal proceedings (see eg Knowles v Anglican Church Property Trust (No 2) (1999) 95 IR 380; Real Estate Industry (Clerical and Administrative Employees ) (State) Award [2003] NSWIRComm 149). 50 Before dealing with the first ground of appeal, it is useful to briefly record how the matter proceeded before her Honour. On the first day of hearing the Court was informed that the appellants would not be calling evidence and that they accepted the credit findings of Cambridge C in the s 84 proceedings in relation to the appellants' evidence in those proceedings. Mr Joseph's affidavit evidence was read and he was not cross-examined by the solicitor appearing for the appellants, Mr Levingston. Her Honour raised a number of questions in relation to the claim at the outset of the proceedings and urged the parties to undertake further conciliation to which they agreed. Despite the best part of the first day of hearing being spent in conciliation, the matter was not able to be settled and the hearing proceeded by way of written submissions and oral submissions in support of them. In the course of that approach and following the lengthy discussions between the parties, a number of concessions were made on behalf of the appellants. The whole approach of the parties appeared to be predicated on the basis that a number of the relevant issues had already been the subject of evidence before Cambridge C and that material was before Kavanagh J. Some of the technical issues were discarded by the appellants, such as the submission that there was an issue estoppel arising from the s 84 proceedings that prevented further proceedings under s 106 of the Act. In a variety of ways, the parties took an approach designed to avoid a further lengthy hearing in light of the extensive evidence before Cambridge C and, essentially, set about arguing the issues of principle before Kavanagh J. 51 Without diminishing the appellants' case before Kavanagh J, it might appropriately be summarised as relying on Mr Joseph's evidence that he had participated in an illegal and/or inappropriate kick-back scheme, that he had placed in his own account a cash cheque that was not his property and which belonged to Westpath and that, considering the relief he had received in the s 84 proceedings, no further order of compensation was justified. The essence of this case was that, although not cross-examined on his affidavit evidence, his credit had been so reduced in the proceedings before Cambridge C that the Court could not place any reliance upon his evidence in the absence of independent evidentiary support. Because of his conduct, it was alleged that Mr Joseph came before the Court in the s 106 proceedings without clean hands: the operation of that maxim meant that he had disentitled himself to relief and the Court should decline to exercise its discretion in Mr Joseph's favour. 52 During the course of the appeal, the following matters became evident: (a) there was a discrepancy between the judgment and the orders made concerning the date from which interest was payable on the reimbursement of $41,000 to Mr Joseph for his purchase of shares in Westpath; (b) that it was possible to construe the orders concerning underpayment of $35,000 so that interest was payable on that entire amount from 1 April 1998 although that amount represented underpayment over a substantial period.

The parties were able to reach agreement that these issues, in substance, were the result of a slip in the process of finalising orders and that, by consent, the orders made by Kavanagh J should be varied to clarify their operation. As a result of the agreement of the parties, the orders will be varied on appeal so that interest paid on the $41,000 reimbursement shall run from 1 July 2000; and, interest payable on the underpayment of salary is to be calculated on simple interest on a week-by-week basis as the amounts become due . 53 A further matter became clear during the course of the appeal. Counsel for the applicants ultimately accepted that there were numerous points raised on appeal that were not taken in the proceedings below and that there were also concessions made before Kavanagh J in favour of Mr Joseph's case. For instance, it was accepted that no point was taken below to justify the payments to other directors of Westpath of up to $47,000 in which Mr Joseph sought to participate. Although the cheque butt description of these various payments appeared in an exhibit, no submission was made on behalf of the appellants that these were legitimate payments made by way of reimbursement for expenditure made on behalf of Westpath. It was suggested that the appellants' legal representative below simply "did not pick it up". It seems extraordinary that the exhibits tendered in support of a significant monetary claim were not closely examined by the appellants or that it did not occur to them that all these payments were legitimate reimbursements for expenditure made on behalf of Westpath. The appellants had chosen not to give evidence and thus they avoided cross-examination by counsel for Mr Joseph, a cross-examination that could have investigated the basis for each of these payments. 54 Instead, the appellants chose not to given evidence and their legal representative conceded that the payments appeared to be a distribution of profits. This is precisely the area addressed by the authorities such as Coulton v Holcombe. By adopting the course they did below, the appellants made crucial concessions, avoided cross-examination and now, on appeal seek to make a difference case. This is a matter where estoppel by election in the conduct of the litigation is applicable as discussed by Mason CJ and Gaudron J in Banque Comerciale SA. The new case sought to be argued by the appellants does not rest on admitted facts or issues which are beyond controversy in a relevant sense. The appellants are not entitled to adopt this course: each group of appeal points therefore is to be considered against this principle. Unfortunately, because of the numerous grounds of appeal this exercise regarding leave to appeal is itself lengthy. 55 Against that background, the first group of grounds of appeal challenged her Honour's order that Mr Joseph be paid $35,000 as "a distribution of the bonus/profit" made by Westpath in the financial year 1999/2000. The evidence of these payments was constituted by two exhibits tendered before Kavanagh J without objection. Their source was cheque butts from the Westpath accounts and documents which were a compilation of the original source material: the cheque butts themselves were not put into evidence nor did the appellants require or seek that the cheque butts be placed in evidence. In their written submissions on appeal, the appellants said that resort to the cheque butts demonstrated that many of the payments were made for identified reasons including motor vehicle insurance, reimbursement of credit cards, overtime, gifts for customers and consultation fees, etc. It was then submitted that, having regard to the obligations of counsel under the Bar Rules, there was no reasonable basis for the submission that these payments represented a distribution of profit or bonus to directors other than Mr Joseph. 56 Mr Joseph's case on appeal was that the Amended Summons for Relief sought orders varying the contract to include a provision that Westpath pay to Mr Joseph all bonuses, overtime, expenses and allowances already paid to Mr Zhang and Mr Khaliq during the period Mr Joseph was employed by Westpath and for a year following his termination. It was implied in that claim that the payments made above salary resulted in other directors taking a further return from the company to the exclusion of Mr Joseph. Mr Joseph's evidence was that, in that period of 12 months following his termination, Mr Zhang and Mr Khaliq received from Westpath $12,739 and $12,000 respectively over and above their wages. He was not cross-examined on this evidence. A list of cheque entry amounts in schedule form was then tendered without objection and the claim was explained to Kavanagh J as it related to the issue of bonuses, overtime etc. The appellants conceded that they were operating multiple accounts. 57 Later in the proceedings, the second exhibit was tendered, at least in part, based on the contents of the earlier exhibit tendered without objection in relation to this part of the claim. The appellants' outline of submissions before Kavanagh J did not challenge or scrutinise the two exhibits. The appellants' written submission approached this part of the claim on the basis that it had been formulated so as to require parity between the parties in the operation of the business and that general principle was "conceded". The relationship had ended because of the "theft" in November 1999. Rather than arguing that there was no evidence that these were in fact bonus or overtime payments, the written submission proceeded on the basis that, if the payment to directors was capable of being linked to the "investment" of capital, then the risks of the undertaking and the risk of the capital was in play. The submission went on to say that, if Mr Joseph had a prima facie entitlement on that basis, then he would only have a pro rata claim up to the end of November 1999 and that his conduct was the disqualifying feature. Further, if Mr Joseph's version of events was to be believed, the conduct of the business was tainted by illegality "and the bonus payments were in fact profits from the proceeds of crime". At this point, the written submission appears to accept the amount claimed might properly be regarded as "bonus payments". 58 Any doubt about the nature of the written concession being made by the appellants was eliminated in oral addresses before Kavanagh J. Her Honour had asked how, as a quarter shareholder, a comparison was to be made with what the others took out of the company when it began being successful, as distinct from wages or salary. Counsel for Mr Joseph stated that that task had been performed by reference to the two exhibits dealing with the cheque entries and payments made over and above wages or salary to Mr Zhang and Mr Khaliq. It was again submitted that they were payments from which Mr Joseph had been excluded. Mr Levingston, appearing for the appellants, was then asked to respond to that proposition. He stated that the payments would either have to be returns on the investment, which was how he understood them to be categorised, or they were to be paid in furtherance of something which he had assumed was "a return on the investment". Mr Joseph was not entitled to that return on investment because of his conduct and, other than his conduct, "he would have been" entitled to participate and be paid approximately $40,000 up to June 2000. Mr Levingston then said there were two issues that arose: if the monies claimed constituted profits which were available for distribution as Mr Joseph submitted, they would have to be "the proceeds of a crime" and therefore any orders would be contrary to public policy. The payments were not related to the employment but to the shareholding. Mr Levingston then made the following submission: As an owner and operator of my own small business, I can say that money is not available to shareholders unless it is funds which are profit and can be taken out without destroying the business, it is obvious .

Mr Levingston said that Mr Joseph would certainly have a claim as a shareholder in the Equity Division of the Supreme Court. 59 In a later exchange, Kavanagh J raised the issue of Mr Joseph's investment in the company and how that investment had been put into the second business. Mr Levingston then stated: I think that is an equitable interest. He makes a de facto contribution. Her Honour: I think they honestly had distributed the wealth out of the first company. Mr Levingston : There is no doubt about that, your Honour. 60 It is clear from these exchanges that no challenge was ever made to the two exhibits that calculated the payments made to the other directors and not made to Mr Joseph. There was no attempt by the appellants to introduce the original cheque butts or to argue that they were bona fide payments as described on the cheque butts - indeed, the appellants called no evidence. Mr Levingston proceeded on the basis that the exhibits reflected a distribution from the takings of Westpath and that, apart from his misconduct, Mr Joseph would otherwise have been entitled to participate equally in that distribution. His argument was not whether such distribution had taken place - he was prepared to proceed on the basis that it had, and confined his case to the disqualifying features preventing Mr Joseph from participating in that distribution in the same way that Mr Zhang and Mr Khaliq had participated to their financial advantage. It is quite contrary to the well established principles referred to earlier at paragraphs [48] and [49] for the appellants now to attempt to make out a new case on appeal, particularly as it leaves the respondent, Mr Joseph, in a position where he did not call any other evidence as to this part of the case following the concessions made by the appellants. The appellants are bound by their conduct of the case below: for all the reasons expressed by the High Court in Coulton v Holcombe, this ground of appeal is untenable and leave to appeal should be refused. 61 The next group of appeal points raised Mr Joseph's lack of "clean hands" and the alleged error in finding that there was collective misconduct on the part of the appellants. The essence of the appellants' argument was that, by his misconduct, Mr Joseph had excluded himself from any discretionary relief that might be available in his s 106 proceedings. The appellants further submitted that the necessity for "clean hands" had received little attention and that the application of the maxim in s 106 proceedings warranted the laying down of relevant principles by the Full Court. The suggested lack of relevant authority in this Court ignored the recent Full Bench judgment in Subway Developments of NSW/ACT v Costin [2007] NSWIRComm 95. In that case, the Full Bench noted that the primary challenge in the appeal before it turned essentially upon an issue of principle being the equitable principle described as the "clean hands" principle which had not in substance been raised at first instance. In dealing with this matter, the Full Bench stated at [4]: Further, there must be real doubt about the application of the principle simpliciter in the exercise of the Court's discretion under s 106 in any event: cf Howitt v Retec Limited (No 2) (1995) 60 IR 93. There is no warrant for the erection of such a formula in substitution for the proper exercise of the discretion residing in the Court under s 106(5). There may be factors which may disentitle an applicant to discretionary relief, but these are factors which will arise in the circumstances of the particular case. We note in passing that the principle seems to have been in any event overstated in argument in this matter: see, for example, FAI Insurances Ltd v Pioneer Concrete Services Ltd (1987) 15 NSWLR 553 at 561. 62 In Howitt v Retec Ltd, Marks J expressed the opinion that the equitable doctrine of laches did not form part of the substantive law to be considered in dealing with claims brought under what was then s 275 of the Industrial Relations Act 1991. In reaching that conclusion, his Honour noted the statutory nature of the cause of action and contrasted it with relief available at common law and in equity and the particular rules surrounding those remedies. 63 The headnote in FAI Insurances Ltd v Pioneer Concrete Services (1987) 15 NSWLR 553 at 561 states that, where a person has a right enforceable in equity: (a) in balancing any equities 'general naughtiness', outside the traditional equitable defences, is not a defence. ... (c) the discretionary defence of want of clean hands is available only where the right is one which, if protected, would mean the plaintiff was taking advantage of his own wrong. 64 In dealing with these issues in FAI Insurance v Pioneer Concrete, Young J referred to a number of authorities and the commentary in Snell, Principles of Equity 28th ed (1982). At page 561, his Honour then stated: Although Snell, op cit, says that American authorities have not always appreciated the limitations of the clean hands doctrine and this is borne out by Professor Chafee's article, modern American authority appears to say exactly the same as the authorities in England and Australia. In Republic Molding Corporation v BW Photo Utilities 319 F (2d) 347 (1963), the United States Court of Appeals 9th Circuit said (at 349): ... misconduct in the abstract, unrelated to the claim to which it is asserted as a defence, does not constitute unclean hands. The concept invoking the denial of relief is not intended to serve as punishment for extraneous transgressions, but instead is based upon 'considerations that make for the advancement of right and justice'. Keystone Driller Co v General Excavator Co (1933) 290 US 240, 245.

What is material is not that the plaintiff's hands are dirty, but that he dirtied them in acquiring the right he now asserts, or that the manner of dirtying renders inequitable the assertion of such rights against the defendant. As Professor Chafee suggests (page 1072) we should not by this doctrine create a rule comparable to that by which a careless motorist would be 'able to defend the subsequent personal injury suit by proving that the pedestrian had beaten his wife before leaving his home'. ... I have gone through such a lengthy history and examination of the rule because, it seems to me, with great respect, that the submissions of the defendants are too shallow, but yet have the temptation to induce a judge (who has, after all, some characteristics common with jurors), by appeal to the emotions, to think that these matters should be left to the trial to be ventilated. However, the more one examines the rule in its application in the cases, the more one can see that it is only if the right being sought to be vindicated by the plaintiff in a court of equity, is one which if protected, would mean the plaintiff was taking advantage of his own wrong, that the court will either debar him from relief or perhaps say he is not a proper plaintiff in a representative suit. 65 In the present case to establish the absence of "clean hands", the appellants rely upon Mr Joseph's admitted participation in the kick-back scheme and the placing of the cash cheque in his own account. The issue relating to the cheque falls into the "general naughtiness" category and is not relevant to a clean hands argument in any event, having regard to what was said by the Full Bench in Subway Developments ACT/NSW v Costin. The appellants called no evidence in relation to the "misappropriation" of this cash cheque, nor did they establish to whom it belonged or for what reason - a mere assumption was made. The appellants' primary position was that Mr Joseph abandoned his employment: his employment was not the subject of the November 1999 meeting and there was no documentary evidence of Mr Joseph being dismissed for theft or misappropriation. 66 The order that Mr Joseph be paid $35,000 as part of the distribution of profits or bonuses in which he had not shared equally with other directors might raise some issues of discretion, but all those issues were squarely before her Honour and appeared to have been dealt with on the basis that there was misbehaviour and bad conduct on all sides and that Mr Joseph had been unfairly treated overall and was entitled to a certain level of relief against the appellants. 67 The appellants' approach to this aspect of Mr Joseph's claim both before her Honour and in their submissions on appeal placed the appellants somewhat on the horns of a dilemma. The appellants argued that there was no acceptable evidence of an illegal/improper kick-back scheme operated by Westpath and the other directors and denied that any such scheme was undertaken. The only evidence of the existence of such scheme was the evidence of Mr Joseph which could not be accepted. Extraordinarily, the appellants then relied on the evidence of Mr Joseph as to the existence of the kick-back scheme to argue that he should not be able to participate in the profits from that scheme and that it would be against principle for the Court to assist in the distribution of proceeds so obtained to make an order requiring the appellants to permit him to participate equally in those ill-gotten gains. The appellants are not permitted to approbate and reprobate (see Herman v McIlwraith McEachern Ltd (1931) 31 SR 454; Roberts v General Motors-Holdens Employees' Canteen Society, Inc (1976) 25 FLR 415). 68 An additional problem for the appellants is that there was nothing in the evidence breaking down the financial returns to Westpath by reference to monies received in the normal course of business and monies received under the alleged kick-back scheme and there was no evidence as to how long the scheme operated: there is no way, therefore, of establishing how much of the additional money paid to other directors above salary and wages and paid as a distribution of profits or as bonuses was in fact drawn from tainted money to the extent that there was such a pool of money. The appellants, having conducted the case on that basis, face the consequence that there was no substance in this ground of appeal and leave to appeal should be refused. 69 It is of some interest that the appellants' written submissions before Kavanagh J accepted that there was evidence before Cambridge C of the existence of a kick-back scheme constituted by the photocopy of the cheque. The appellants submitted to her Honour that they did not "seek to traverse that finding". A further difficulty was the appellants' submission that there was no evidence that the cheque belonged to Westpath, although the circumstances surrounding the cheque finding its way into Mr Joseph's possession might suggest Westpath was the intended recipient. These points serve to demonstrate the imprecision of the approach to the appeal adopted by the appellants: the scatter-gun has replaced a concentration on arguable error. 70 The issue of the application of the clean hands principle in s 106 proceedings has been raised from time-to-time but apart from the strong, yet tentative views expressed by the Full Bench in Subway Development v Costin the principle has not been the subject of concluded Full Bench authority. It is now appropriate to do so. 71 The point in Howitt v Retec is well taken. It is contrary to the statutory scheme relating to unfair contracts to subject them to the full force of the equity principle of "clean hands". As FAI Insurances v Pioneer Concrete Services makes clear, the principle operates within a narrow sphere and does not result in any wrongful conduct (especially if not connected to the relief claimed) becoming a bar to the granting of orders if unfairness is otherwise established. The statement of the Full Bench in Subway v Costin (made tentatively because it was not fully argued) is now to be regarded as an authoritative statement of the law in relation to s 106 applications. There is no warrant for the elevation of the clean hands principles as a substitute for the proper exercise of the discretion residing in the Court under s 106(5): while there may be factors which may disentitle an applicant to discretionary relief, these are factors which will arise in the circumstances of the particular case. 72 The next ground of appeal is described as the "internal inconsistency" in her Honour's judgment arising from the fact that the stress claim was rejected because of the behaviour of Mr Joseph acting either unethically or illegally and thus not being entitled to any monetary order to compensate for any stress he may have suffered in those circumstances. The appellants' complaint is that the same approach was not taken to the other monetary orders made by her Honour. In framing this submission, the appellants left out only one sentence of her Honour's judgment - a vital sentence, revealing the substance of how she dealt with this claim. Her Honour stated at [106]: "No medical evidence has been presented in support of the claim". That finding by her Honour was clearly central to her reasoning to reject the claim and could not be conveniently ignored by the appellants. Counsel for Mr Joseph further pointed out that, in the written submissions before her Honour, the claim for stress was not pressed and her Honour's views on that matter were therefore strictly obiter. This ground also suffered from the difficulty of relying on Mr Joseph's evidence of the existence of the scheme, yet argued that his evidence was unreliable and that the scheme did not exist. There is no substance in this ground of appeal and leave to appeal should be refused. 73 The next ground of appeal dealt with the transfer of $175,588 into the account of KSPC Pty Ltd, which Mr Joseph alleged had been transferred from Westpath. Her Honour accepted that transfer had occurred: the appellants for the first time argued that consideration of the account numbers on the transfer documents did not identify a Westpath account, that her Honour had made an error in finding that this transfer of money had taken place, and that finding had a strong influence in forming her Honour's view that the corporate conduct of Westpath by the appellants was unethical or inappropriate. In written submissions before her Honour, Mr Joseph alleged, as part of a claim for the loss of his share of the business, that a total of $175,000 had been transferred from Westpath to KSPC Pty Ltd - that allegation was not contested in the written submissions for the appellants although the claim under this heading was generally resisted. Further, during oral submissions, Mr Levingston for the appellants, in responding to her Honour's suggestion that the appellants had distributed the wealth out of the first company, stated: "There is no doubt about that, your Honour". There was also a concession that Westpath operated a number of accounts. Importantly, this finding made by her Honour did not lead to any order of repayment or reimbursement against the appellants and in substance this part of Mr Joseph's claim was unsuccessful. Bearing all of these matters in mind and the fact that the appellants were bound by their conduct of the proceedings below, there was no substance in this ground of appeal and leave to appeal should be refused. 74 The next matter raised by the appellants groups the grounds of appeal set out in 6 paragraphs of the Grounds of Appeal specified in the Further Amended Notice of Appeal. These grounds essentially argued that, in all the circumstances, the Court should not make orders for payment of extra salary and distribution of bonus or profits. It is firstly submitted by the appellants that, by reference to the exhibits before Kavanagh J, it could be inferred that the directors were paid the same wage each week. Secondly, her Honour had found that, initially the terms of the contract were fair and entered into on even terms and became unfair because of the distribution of bonus/profits to the other directors and in the termination of Mr Joseph and his removal from the share register. It is then argued that there could not be any unfairness under the contract until late November 1999 when Mr Joseph stopped working full-time for Westpath. Any unfairness arising out of that termination was remedied by the compensation awarded in the s 84 proceedings by Cambridge C. The appellants then argued that the effect of her Honour's orders was that Mr Joseph, "without contributing his labour to Westpath after approximately November 1999", was to receive for overlapping periods the following: (i) the return of his $41,000 capital investment; (ii) compound interest on his capital investment for a period of more than eight years; (iii) $35,000 with interest referrable to the "bonus/profit" distribution; (iv) the use of Westpath's motor vehicle including for a period of five months after Mr Joseph stopped working for Westpath; (v) extra salary of $23,732 with interest for more than 8 years; (vi) $7,800 pursuant to his unfair dismissal claim.

The other directors, despite continually contributing their labour to the company, did not receive equivalent payments or benefits. It was therefore submitted that it was not reasonably open to Kavanagh J nor was it just in the circumstances of the case to order this combination of compensation. 75 Kavanagh J approached Mr Joseph's case on the basis that there was a group of people who intended to create a pathology service business and had agreed that Mr Joseph would commence work to establish that business and undertake that business when it was established. It was conceded before her Honour that Mr Joseph commenced that task in April 1998 even though Westpath was not registered until 14 July 1998. Her Honour also accepted the evidence that the terms of the agreement were that Mr Joseph was to be paid for all his work at the rate, as she found, of $600 per week although in the early period he would only be paid $480 per week and that there would be reimbursement when the company was profitable. The whole arrangement therefore proceeded on the basis that from 1 April 1998 provided that the business was profitable (as it was), Mr Joseph would be paid full salary being either $700 per week or $600 per week. In the way the matter was approached by her Honour, there was nothing inconsistent about making orders jointly and severally against all appellants in relation to an arrangement whereby this salary package would be implemented. Significantly, her Honour held that Mr Zhang and Mr Khaliq were the "operative minds" of Westpath, a finding not called into question on appeal. 76 Mr Joseph submitted that the basis for all these claims was set out in the Amended Summons for Relief but they were not dealt with in the appellants' Reply, nor were they addressed in written on oral submissions before Kavanagh J. There was no submission or evidence pressed before her Honour that the five directors were paid the same wages nor was there any argument directed to any document to support that suggestion. A consideration of the relevant documents and the transcript confirms the accuracy of those submissions made on behalf of Mr Joseph. Further, the fact that the contract was fair at inception does not mean, as the facts in this case disclose, that the unfairness does not reach back to that time - that is the consequence of the failure to honour the representations to provide particular salary levels payable once Westpath was up and running. No basis has therefore been established to grant leave to appeal on this group of grounds 77 Two grounds of appeal dealt with her Honour's order that Mr Joseph be paid annual leave for the 20 months of his employment. The 20 month period ran from 1 April 1998 although the appellants point out that Westpath was not registered until 14 July 1998 and therefore could not have been liable to pay annual leave prior to that time. It was further argued that there was no jurisdiction to award annual holidays to a partner. Mr Joseph pointed out that, before Kavanagh J, the appellants accepted that Mr Joseph as an employee was entitled to annual leave and that, if he was entitled to such payment (apparently having regard to their more general arguments about his misconduct), then it was agreed that his leave entitlement would amount to $6,771. Liability for annual leave was also conceded before Cambridge C. Consideration of the Court documents confirms the accuracy of that submission. 78 The appellants then submitted that there was no jurisdiction under s 106 to order the payment of money under the provisions of the Annual Holidays Act, although conceding before her Honour that there was no jurisdictional impediment to the orders sought. Kavanagh J did not, however, purport to make an order under the Annual Holidays Act but dealt with the contractual relationship between the parties and the concession that Mr Joseph was employed and employed for a total of 20 months, with the only issue being whether he was by his conduct disentitled to the payment of annual leave. In the circumstances, there was no relevant jurisdictional issue arising: the points were not taken below, even though they related to jurisdiction, and there was no relevant error or issue of principle that requires the granting of leave to appeal. The application for leave to appeal in relation to this matter should be rejected. 79 The appellants' further argument that Mr Joseph was not entitled to annual leave because he was a partner, was a ground not found in the Reply filed in the proceedings, nor was it a submission made before Kavanagh J. Indeed, before her Honour, there was no challenge to the evidence that Mr Joseph was an employee: it was specifically conceded that he was entitled to annual leave if he was otherwise not disentitled by his conduct. The allegation of "partnership" was not the subject of any evidence: the only evidence was that the directors were equal shareholders. For those reasons, it was not open to the appellants to pursue this ground on appeal. 80 A further Ground of Appeal alleged that her Honour was in error in making orders against Westpath over a period it had not existed, namely, between April 1998 and the date of Westpath's registration on 14 July 1998. This ground was earlier referred to in other grounds, where it was noted that her Honour had taken an overall view of the arrangements to the extent that Mr Zhang and Mr Khaliq had made representations to Mr Joseph that he would be paid by the company for all work performed in establishing the company and also in the early days of working for the company once it became profitable. It was in that way that Westpath became responsible, along with Mr Zhang and Mr Khaliq, for the orders made by her Honour. In addition, Mr Joseph noted that this point was not taken in the proceedings before Kavanagh J and, in fact, there was a concession made that Mr Joseph's remuneration was just under $50,000 and that he had not been paid just over $39,000 of that salary. As with the similar Grounds of Appeal, leave should not be granted in relation to this ground. 81 The appellants then essentially argued that her Honour was in error in ordering the payment of compound interest on Mr Joseph's $41,000 investment with interest running from 1 April 1998. It was submitted that Mr Joseph did not provide the $41,000 to Westpath on 1 April 1998 and that it was likely to have been paid sometime in the second half of 1998, but there was no precision about that submission. It was further argued that there was no unfairness during this period of his employment, therefore, there was no valid reason why Mr Joseph should receive interest on the $41,000 during the period. It was submitted that the unfairness only arose in late November 1999 which was the proper date from which interest on the $41,000 should run. 82 One aspect of unfairness found by Kavanagh J was the linkage of the investment with the employment contract, the representations made to Mr Joseph and the conduct of the appellants in failing to return his investment. Mr Joseph pointed out that the claim for compound interest on the $41,000 was articulated before Kavanagh J and that the appellants' then legal representative apparently made a decision to make no submission on the matter of interest. The appellants were content to rest their argument, as they did on numerous other grounds they now raise on appeal, on the general submission that Mr Joseph was disqualified from any relief by his conduct and his failure to come to the proceedings with clean hands, arguments that have already been dealt with in relation to other grounds of appeal. The lack of any precision about the date on which this investment was made left her Honour in the position of making an assessment: it was common ground that Mr Joseph commenced full-time in the task of establishing the Westpath business in April 1998 and, in those circumstances, absent some precise evidence and submission from the appellants, she was entitled to come to the view that the investment of $41,000 was made at about the same time as the parties agreed to establish the company. It is likely that in those early days, without generating income through Westpath, any monies paid by way of salary to Mr Joseph were drawn from the investment monies provided by the shareholders. Further, the unfairness of Mr Joseph's $41,000 contribution to the business was the use made of it over the years by the appellants without providing appropriate benefits to Mr Joseph. This is another matter where it is not appropriate to grant leave to appeal. 83 The appellants' alleged that there was an error in her Honour ordering interest on sums of money not paid. This ground repeated some of the earlier grounds in part and suggested that it was not open on the evidence for her Honour to find that Mr Joseph was employed on 1 April 1998 by Westpath. The fact that in April 1998 Mr Joseph started work on setting up Westpath was agreed to by the appellants and was recorded in a document handed to the Court and reproduced in her Honour's judgment: it was the representations of Mr Zhang and Mr Khaliq and the arrangement entered into that resulted in Mr Joseph being paid fully from April 1998. The point raised by the appellants was therefore without substance. It was further argued that Cambridge C was correct in proceeding on the basis that Mr Joseph's pre-termination salary was $600 because that was the gross payment per week, and that Kavanagh J had fallen into error by not realising that the $460 actually paid was net wage. Mr Joseph submitted that the starting date and level of remuneration at $700 per week was not denied by the appellants in their Reply and, in written submissions before Kavanagh J, and no submission was made to suggest that the start date was not April 1998 but it was accepted that Mr Joseph commenced work in April 1998. The submissions further put by the appellants in support of this ground of appeal have been dealt with in other grounds of appeal: nothing was added by this refinement of those previous submissions. Her Honour proceeded on the basis that she would look to some documentary source when there were challenged facts, and so did not rely on Mr Joseph's evidence that he was promised $700 per week, but she made a valuation of the work at $600 per week, a valuation that was undoubtedly influenced by the determination of Cambridge C in the s 84 proceedings that Mr Joseph's salary was $600 per week. Nothing turns on whether the $600 per week was gross or net and that argument was not raised in the proceedings below and is therefore incapable of raising an issue on appeal. 84 A further appeal ground is pressed on the basis that Kavanagh J accepted that the revenues flowing to Westpath continued to grow and were over $1 million from 1999/2000 and in excess of $1.6 million in 2002/2003. It was argued that these figures were used to support a submission that Mr Joseph was entitled to further compensation and that Kavanagh J had taken this submission into account. It was then asserted that the vast majority of the growth of revenue in Westpath "was eaten up in expenses". Because of this fact, her Honour had therefore erred in not taking this aspect into account before assessing compensation payments to Mr Joseph. There is substance in the response from Mr Joseph that there is an absence of evidence to support the allegation by the appellants that the gross revenue of Westpath was substantially eaten up by expenses. Importantly, the submission for Mr Joseph was made about the nature of the growth of "gross revenue" - expenses were a matter that could have been raised by the appellants before her Honour but, again, they chose not to do so. This is another ground on which the appellants are bound by their conduct below and leave should not be granted on this issue, which is, in any event, wholly speculative 85 In light of the above considerations, it is clear that the great bulk of the appellants' case revolves around issues not raised below and where, on the application of the principle in Coulton v Holcombe, it would be inappropriate to permit these matters to be raised for the first time on appeal. Although a clarification of her Honour's orders has been made on appeal and the principle of "clean hands" settled by the Full Court, the appellants have brought a largely unmeritorious appeal and the respondent has, in substance, been successful. In those circumstances, it is appropriate for the appellants to pay the respondent's costs of the appeal. ORDERS 86 1. That leave to appeal be granted to the extent necessary to allow consent variations to the orders concerning the payment of interest and in relation to the application of the "clean hands" principle in applications brought under s 106 of the Industrial Relations Act 1996. 2. That the orders made by Kavanagh J be varied as follows: (a) compound interest to be paid on the $41,000 reimbursement of shares brought by Mr Joseph to run from 1 July 2000; (b) interest on the underpayment of salary to be calculated on simple interest on a week-by-week basis as the amounts become due.

3. In all other respects leave to appeal is refused and the appeal is dismissed. The orders made by Kavanagh J except as varied on appeal, are confirmed. 4. The appellants shall pay the costs of the respondent on appeal in a sum agreed or as assessed.

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