Bowker & Anor v Software Engineers Australia (NSW) Pty Limited & Ors [2004] NSWIRComm 104 (23 April 2004)

Last Updated: 27 April 2004

NEW SOUTH WALES INDUSTRIAL RELATIONS COMMISSION

CITATION : Bowker & Anor v Software Engineers Australia (NSW) Pty Limited & Ors [2004] NSWIRComm 104

FILE NUMBER(S): IRC 291

HEARING DATE(S): 04/12/2000, 05/12/2000, 06/12/2000, 13/08/2001, 14/08/2001, 15/08/2001, 16/08/2001, 04/03/2002, 11/03/2002, 15/03/2002, 02/04/2002, 11/06/2002, 24/04/2003, 29/04/2003, 23/06/2003, 13/10/2003, 14/10/2003, 15/10/2003, 16/10/2003, 19/12/2003, 04/02/2004, 08/03/2004

DECISION DATE: 23/04/2004

PARTIES:

APPLICANT:

Geoffrey Bowker

SECOND APPLICANT:

Bonket Pty Limited

(ACN 069 224 764)

FIRST RESPONDENT:

Software Engineers Australia (NSW) Pty Limited

(ACN 006 513 499)

SECOND RESPONDENT:

Timothy Arundell

THIRD RESPONDENT:

Prophecy Technologies (Southern Region) Australia (NSW) Pty Ltd

(ACN 087 222 419)

FOURTH RESPONDENT:

ACN 087 222 357 Pty Ltd

FIFTH RESPONDENT:

Prophecy People Pty Ltd

(ACN 007 248 286)

JUDGMENT OF: Schmidt J

LEGAL REPRESENTATIVES

APPLICANTS:

Mr D Knoll of counsel

SOLICITORS:

Haywards

RESPONDENTS:

Mr J Phillips SC

SOLICITORS:

Bolden Lawyers

CASES CITED: Addis v Gramophone Company Limited (1909) AC 488

Brown v Rezitis (1970) 127 CLR 157

Bowker & Anor v Software Engineers Australia (NSW) Pty Limited & Ors [2003] NSWIRComm 343

Cassell & Co Ltd v Broome [1972] AC 1027

Crampton v Nugawela (1996) 41 NSWLR 176

DarvalI v NZI Securities Australia Ltd & Ors (1991) 39 IR 215

Dodds v Premier Sports Australia Pty Ltd & Ors [2003] NSWSC 948

Gambotto v John Fairfax Publications Pty Ltd (2001) 104 IR 303

Geoffrey Bowker & anor v Prophecy Technologies Pty Ltd (unreported, Marks J, 26 May 1999)

Hairman v FileNET Corporation Pty Limited [2001] NSWIRComm 318

Heath Group Australasia Pty Limited v Hanning [1999] NSWSC 719

Lumby v Yorkshire General Life Assurance Co Ltd [1978] 1 NSWLR 626

Malik v Bank of Credit and Commerce International SA (1998) AC 20

Minister for Youth & Community Services v Health & Research Employees' Association of Australia, New South Wales Branch (1987) 10 NSWLR 543

Mitchforce v Industrial Relations Commission of New South Wales & Ors (2003) 124 IR 79

Mitchforce v Starkey (No 2) [2003] NSWIRComm 458

National Parks & Wildlife Service v Stables Perisher Pty Limited (1990) 20 NSWLR 573

Nixon v Slater & Gordon (2000) 175 ALR 15

Origin Energy Limited v Smith (2001) 111 IR 476

Perrott v Xcellenet Australia Ltd (1998) 84 IR 255

Reich v Client Service Professionals of Australia Pty Ltd (2000) 49 NSWLR 551

Resarta Pty Ltd v Finemore (2002) 118 IR 377

Spring v Guardian Assurance Plc (1995) 2 AC 296

Stevenson v Barham (1977) 136 CLR 190

Svecova v Industrial Commission of New South Wales (1991) 39 IR 328

Walker v Full Court of the Industrial Court of New South Wales (1994) 53 IR 121

Westfield Holdings v Adams (2002) 114 IR 241

LEGISLATION CITED: Evidence Act 1995

Industrial Relations Act 1996

Trade Practices Act 1974

JUDGMENT:

- 67 -

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

IN COURT SESSION

CORAM: Schmidt J

DATE: 23 April 2004

Matter Number IRC 291 of 1999

GEOFFREY BOWKER & ANOR v SOFTWARE ENGINEERS AUSTRALIA (NSW) PTY LIMITED & ORS

Application under s106 of the Industrial Relations Act 1996

JUDGMENT

1 These proceedings were brought by the applicants under s106 of the Industrial Relations Act 1996 ('the Act'). The claims made went both to the contract of employment between Mr Geoffrey Bowker and the first respondent, initially called Prophecy Technology Pty Limited, but later renamed Software Engineers Australia (NSW) Pty Limited and certain other agreements entered into between the applicants and the first respondent at various times during the course of their relationship. The claims advanced raised for consideration the fairness of various commission arrangements and confidentiality and restraint of trade agreements. New contractual provisions in relation to disparagement were pursued, as well as money orders flowing from such disparagement.

2 In May 1999, Marks J gave an interlocutory judgment (Geoffrey Bowker & Anor v Prophecy Technologies Pty Ltd (unreported, 26 May 1999)), dealing with notices of motion filed by both the applicants and various of the respondents. His Honour, following the Full Court in Perrott v Xcellenet Australia Ltd (1998) 84 IR 255, declined to dismiss the application on the ground that it was beyond jurisdiction, having regard to a provision of one of the contracts in question, that it would be governed by the laws of the State of Victoria. His Honour also ordered the joinder of the second respondent, Mr Arundell and permitted the amendments of the summons, as sought by the applicants.

3 Marks J also made an interim order, restraining the first respondent from publishing statements about the applicants, in the following terms:

3. That upon the applicants by their counsel having given the usual undertaking as to damages until further order the respondent whether by itself or its officers, employees or agents be restrained from publishing or further publishing in any manner to any person, firm or corporation (including, but not limited to any person, firm or corporation to whom or which any of annexures B to D to the affidavit made by the first applicant on 7 May 1999 have been published) any statement in or to the effect that either of the applicants has or might have misconducted themselves or otherwise have conducted themselves:

(i) by breaching, contravening or failing to observe any professional or other ethical obligation or requirement,

(ii) in a conflict of interest,

(iii) by breaching or otherwise failing to observe any confidence,

(iv) by breaching, contravening or failing to observe any fiduciary duty,

(v) by breaching, contravening or failing to observe any trust,

(vi) by misusing the facilities and assets of any person, firm or corporation, and

(vii) otherwise than in accordance with the law

unless such statement be made:

(a) in the course of, and for the purposes of, these proceedings,

(b) with the prior written consent of the applicants,

(c) by leave of the Commission, or

(d) otherwise as may be required by law.

4 In making those orders, his Honour noted that no evidence had been led from Mr Arundell in relation to the matters relied upon in the evidence led at the interlocutory hearing by the applicants.

5 In coming to the conclusion that those orders should be made, his Honour accepted that implied duties owed by employers to employees arose for consideration in this case. His Honour accepted, on the basis of the authorities in Malik v Bank of Credit and Commerce International SA (1998) AC 20 at 34, 37-8 and 49 per Nicholls and Steyn LJJ and Spring v Guardian Assurance Plc (1995) 2 AC 296 at 320, that ‘an employer should not unreasonably injure an employee with respect to that employees’ future employment prospects and that the provision of such a term would not merge on the termination of the employment relationship, or indeed the termination of the underlying contract of employment.’ (at pp20-21). That submission had been advanced for the applicant and, his Honour noted, the respondent had not dissented from the existence of such implied duties. There was no appeal from his Honour’s judgment.

6 Marks J also permitted the joinder of the third respondent. This occurred in circumstances where the applicants had sought relief in the nature of mareva orders against the first respondent, which were settled upon the basis of certain undertakings given to the Court by the respondents. The application was made in circumstances where there was a concern by the applicants that the business and assets of the first respondent had been transferred to the third respondent.

7 During the hearing before me, after Mr Arundell had concluded his cross examination, the applicant filed a notice of motion seeking the joinder of two further respondents. The application was later granted. Mr Arundell was a director of each of the four corporate respondents at various times and had given evidence that the first and third respondents had ceased to trade and that the proposed respondents were, in part, engaging in the businesses in which the applicants had formerly been employed. Additionally, the website upon which the information dealt with by Marks J in the interlocutory judgment earlier mentioned had been published, was then being operated by the proposed new respondents.

8 The joinder application was resisted, but joinder was ordered in an interlocutory judgment of 11 June 2002. A further conciliation of the proceedings later conducted by Marks J failed to resolve the applicants' claims. There were then further disputes between the parties and in a further interlocutory judgment of 10 July 2003, the applicants' amended summons, which the respondents argued did not give effect to the joinder judgment, was dealt with. The respondents later filed another motion, complaining that the applicants had still failed to comply with the earlier judgments. This was dealt with in a further interlocutory judgment of 19 September and the hearing later proceeded in accordance with a summons filed on 23 September 2003.

9 There were, however, still further developments. A further interlocutory judgment of 21 October 2003 dealt with an adjournment application successfully made by the fourth and fifth respondents. In December 2003, I also declined a further application brought by the applicants in relation to the production of certain documents. At that point, the solicitors for the first, second and third respondents had filed a notice that they had ceased to act and those respondents were unrepresented and did not appear when the further application was listed.

10 When the hearing recommenced in February 2004, the third, fourth and fifth respondents had been placed into liquidation, they were not represented in the proceedings and orders were no longer pressed against them. The first and second respondents were represented by the solicitors who had formerly appeared for the fourth and fifth respondents and the counsel who had earlier appeared in the proceedings for the first and second respondents, Mr Phillips SC, was again briefed to appear.

11 During the course of these protracted proceedings, it also became apparent that the first respondent had initiated proceedings in the Federal Court against the applicants and others, in relation to claims flowing from various of the contracts here in question. Those proceedings have apparently been stayed, pending the determination of these proceedings. (See interlocutory judgment Bowker & Anor v Software Engineers Australia (NSW) Pty Limited and Ors [2003] NSWIRComm 343.)

The claim

12 The orders sought in the amended summons were:

1. An order declaring that the Contracts whereby the First Applicant performs work for the First Respondent ("the Contract") is unfair.

Employment Contract dated 31 March, 1998 ("First Employment Contract")

2. An order declaring void ab initio the Contract of Employment dated 31 March, 1998 so far as it allows on the resignation of the First and Second Applicants, the First Respondent not to pay any bonuses or any remuneration which was due and payable up to the termination of the First Employment contract.

3. An order varying the Contract so as to provide that the First and Second Applicants, upon the termination of their employment, are paid all accrued holiday leave, long service leave, outstanding expenses, and bonuses that were due and payable as at the date of the termination of employment.

3A. An order varying the Contract so as to prohibit the Respondents (but not including the Fourth and Fifth Respondents) from engaging in conduct, whether during or at any time after the term of the Contract, the damages, or is calculated or likely, to damage, the personal business and professional reputation of either of the Applicants and their prospects of further employment, and that cause (sic) them anxiety, distress and embarrassment.

4. An order declaring the Contract void ab initio in so far as it provides for the Applicant to be restrained upon the termination of his employment for a period of six (6) months in respect of product or services similar to those of the First Respondent.

5. An order declaring the Contract void in so far as it provides that the governing law is the State of Victoria, and that the dispute should be dealt with at arbitration in Victoria.

6. An order varying the Contract ab initio so as to provide that the Applicant may bring proceedings against the First Respondent in New South Wales.

Employment Variation dated 3 June, 1998

7. An order declaring the Contract of 3 June, 1998 void ab initio or at some other time in so far as it is required the Applicant to sign Consulting & Confidentiality/Agreement without having sighted the Consulting & Confidentiality Agreements.

Individual Employment Agreement dated 24 December, 1998 ("Second Employment Contract")

8. An order declaring the Second Employment Contract void ab initio or from some other time.

9. An order varying the Second Employment Contract ab initio or at some other time so as to provide that the First and Second Applicants may terminate their employment with the First Respondent by giving seven (7) days notice in writing.

10. An order varying the Second Employment Contract ab initio so as to prevent the Respondents (but not including the Fourth and Fifth Respondents) from continually harassing the First and Second Applicants so as to hinder the First and Second Applicants from carrying out their employment duties.

11. An order declaring the Second Employment Contract void in so far as it allows the Respondents (but not including the Fourth and Fifth Respondents) to unilaterally vary company procedures in a manner which is unreasonable, and requires a significant expense on the First and Second Applicants' behalf.

12. An order declaring the Second Employment Contract void in so far as it provides for the Applicant to be restrained for a period of six (6) months from contacting any employee, officer, associate, customer or current prospect of the First Respondent or related corporation as specified in Schedule 5.

13. An order varying the place of the Second Employment Contract so that the Contract will be governed by the Laws of the State of New South Wales.

Deed of Release dated 24 December, 1998 ("Deed of Release")

14. An order declaring the Deed of Release as void ab initio or from some other time.

15. An order varying the Deed of Release in so far as it indemnifies the First Respondent from all claims, actions, suite demands, damages, charge, costs and expenses which the First and Second Applicants have against the First Respondent, and to keep the First Respondent indemnified.

16. An order declaring the Deed of Release void in so far as it requires the First Applicant to comply with his obligations pursuant to the first Employment Agreement and the second Employment Agreement.

17. An order declaring the Contract ab initio or from some other time so far as it indemnifies against all loss arising out of or relating to the Consultancy Agreement, the Employment Agreement, and the Deed.

18. An order varying the governing law to the Law of New South Wales.

19. An order varying the First and Second Applicants' ability to terminate the Contract to that of being able to terminate the Contract within (7) days notice.

20. An order declaring the Deed ab initio or from some other time in so far as it provides that a dispute to be arbitrated.

Deed of Consultancy

21. An order varying the Deed of Consultancy ab initio or at some other time so far as it requires the Second Applicant to adhere to policies, procedures, and guidelines of the First Respondent, including future revisions or extensions thereof.

22. An order varying the Contract in so far as it provides for the Applicant to be restrained from contact of the First Respondent's employees, agents, contractors, suppliers, customers, or current prospects as specified in Schedule 2.

23. An order varying the Contract so that it allows the Second Applicant to terminate the Contract by the giving of seven (7) days notice in writing.

24. An order varying the (sic) void ab initio to exclude the disputes clause.

25. An order that the Respondents pay to the Applicant such sum of money in connection with the contracts or arrangements as aforesaid as the Commission considers just in the circumstances of the case.

26. An order that the Respondents pay to the Applicant bonuses which are due and payable under the First and Second Employment contract.

27. An order that the Respondents pay to the First and Second Applicants interest on the money as ordered at rates in accordance with section 94 of the Supreme Court Act, from the dates those monies should have been paid.

28. An order that the Respondents (but not including the Fourth and Fifth Respondents) pay the First and Second Applicant's costs for the proceedings herein.

29. Such other rules that the Court may see fit to provide relief to the Applicant.

13 The money claim advanced was:

$25,417.64 being Remuneration, accrued holiday leave, long service leave, and bonuses and reimbursement of reasonable expenses unfairly withheld from the Applicants including:

(a) unpaid expenses for November/December 1998 of $2,046.07;

(b) Unpaid rent to 31 January 1999 of $1,100.00;

(c) Unpaid consulting fees, November/December 1998 of $2,400.00;

(d) Calendar year 1998, Unpaid commissions estimated as $13,001.00;

(e) Unpaid salary, January/February 1999 of $4,760.00;

(f) Unpaid superannuation, January/February 1999 of $311.67;

(g) Unpaid expenses, January/February 1999 of $166.90;

and

(h) Variation to Group Certificate for financial year ending 30 June 1999 of $1,632.00;

The evidence

14 Evidence was called from Mr Bowker and Mr Arundell. While the proceedings were adjourned in order that evidence could be called from Mr Dua, general manager for the fourth and fifth respondents, he was finally not called, given the liquidation of the various corporate respondents. Numerous documents were also tendered.

The summons for production

15 It is convenient to deal at this point with an evidentiary difficulty which arose during the course of the hearing, prior to the joinder of the fourth and fifth respondents. After the first applicant had filed his affidavit evidence in February 1999, the first and third respondents were each served with a summons which required the production of various information. That matter came before Marks J on 5 November 1999. The respondents had by then already produced one folder of material to the Court. Another folder was produced at the hearing and Mr Arundell was cross examined as to the production given. The position was that not all that had been sought was produced. Mr Arundell’s evidence was that during a recent move, certain records had been lost.

16 It is not possible to establish from the transcript of the proceedings or the Court file, what was then produced to the Court in answer to the summons. Those documents were given into the custody of the then respondents’ legal representatives, with both parties being granted photocopy access to them. This was because it was accepted that it was necessary for the respondents to have access to the documents, in order for their evidence to be put on.

17 On 20 December 1999, the substantial affidavit sworn by Mr Arundell in the proceedings was filed. It had attached to it numerous documents referred to in the affidavit, including the profit and loss statement of the first respondent for the 1997/98 and 1998/99 financial years.

18 The matter was heard in December 2000 and adjourned until August 2001, after Mr Bowker had concluded his evidence on 13 August 2001. During the course of those proceedings, especially the cross examination of Mr Bowker, it became apparent that there remained an issue between the parties as to whether the respondents had properly answered the 1999 summonses. The documents the respondents were obliged to produce, included the respondents' financial records, which were relevant to several of the issues between the parties, including commission payments which the applicants claimed were outstanding for the last quarter of 1998 and the first quarter of 1999.

19 This led me to say to the parties in December 2000:

"I would encourage counsel to sort out the position in relation to what commission, if any, there is outstanding well in advance of the resumption of the hearing and, of course, the parties have an opportunity to approach in the event that there is any difficulty which needs the Court's assistance. I think it is not necessary to tell you that."

20 The parties communicated with each other during the adjournment, but were unable to resolve this matter between themselves. The respondents' solicitors advised in July 2001 that they had 'made available to your client all documents and source records that it believes are relevant to resolving the money components of the Applicant's claim.'

21 At the resumed hearing in August, after the applicants had closed their case, when Mr Arundell was called to give evidence, five volumes of documents were shown to him, which he identified as comprising financial records of the first respondent. When those documents were sought to be tendered, there was an objection on a number of grounds going both to relevance and prejudice. Those objections included that the documents would not be received, in circumstances where the respondents had failed to answer the 1999 summonses; had failed to comply with the basis upon which documents produced to the Court had been released to their solicitors, having denied the applicants access to the documents produced; where the financial records then sought to be relied upon were incomplete and hence would not assist in a proper resolution of the issues between the parties and where the documents were in such a state, that unexplained by the person who had put them together, they were incapable of being understood.

22 The respondents sought and were granted leave to ask questions of Mr Arundell, as to whether or not the 1999 summonses had been answered. While it was impossible to understand from the Court file what exactly had been produced in 1999, Mr Arundell's evidence strongly suggested both that the summons had not been fully answered and that the folders contained material not earlier produced to the Court. The applicants had not been given prior access to all of that material.

23 Mr Arundell's evidence was that apart from a period of some months in 1998, when the first respondent unsuccessfully tried to keep computer accounting records, the first respondent kept its books of account in two files, each divided into two sections. The first was a file containing all receipts. In one section, were kept all those receipts which were unpaid and once paid, this was noted in hand on the receipt which was then transferred into the second section, where paid receipts were kept. In the second file, all invoices were kept and were transferred between the two sections there also maintained, on the same basis. It was from those files that the first respondent's accountant had prepared its profit and loss and balance sheet.

24 The only available inference from Mr Arundell's evidence was that those files had never been produced to the Court in answer to the summons. These were the primary records from which the first applicant’s claim that all that was owing to him had not been paid, could have been tested.

25 In February 2001, the applicants' solicitors had approached the respondents' solicitors about the calculation of the commission payments claimed to be owing. Despite the Court's earlier orders, it was not until July that they were informed that some access would be given, but only to material Mr Arundell had determined was relevant. The material provided did not go beyond February 1999, despite the claim made by the applicants and what the respondents had been required to produce in response to the 1999 summons. Despite this and despite the fact that the documents produced to the Court in November 1999 had been given into the custody of the respondents' solicitors by Marks J, on the basis that both parties had been granted photocopy access, the respondents' solicitors were not given instructions to provide to the applicants with copies of the documents which they sought for a very considerable period. It was impossible to conclude that they were ever given complete access to what had earlier been produced to the Court, or that the summons had ever been properly answered.

26 While the respondents had the material, which had been produced so that it was available to them for the purpose of the preparation of their evidence, Mr Arundell did not annex to his affidavit all of the material which even he regarded as relevant. Nor was it otherwise produced. It became clear that the material sought later to be introduced by the respondents, after the applicants' case had closed, included material to which they had never previously been given access.

27 Despite the seeming failure of the respondents to comply with the 1999 summons, I might have been inclined to receive the documents sought to be tendered in Mr Arundell's evidence, but for a number of significant problems, which were revealed in the evidence which he then gave. The first was the state of the documents sought to be relied upon. Mr Arundell's evidence was that the first respondent kept its accounts in a particular fashion, as earlier outlined. Those files were not produced. Rather, some of the documents kept in those files, sorted in a particular way, having regard to assertions made by the respondents as to how the commission arrangement between the parties operated, were sought to be tendered. There was no common ground between the parties as to those assertions.

28 The second problem was that the documents, so arranged, had then been summarised in a number of spreadsheets. Those spreadsheets had various handwritten notations, deletions and corrections made upon them. There was no explanation advanced as to how the folders had been arranged, who had done that work, who had prepared the spreadsheets and who had written upon them. Some parts of the material also contained unexplained and seemingly unrelated documents. These documents had never been provided to the applicants prior to the resumed hearing, although the earlier mentioned inspection had been granted. This created a real, practical difficulty for the applicants coming to grips with the material, even for the purpose of making the objection to its tender.

29 The third problem was that on the face of the material sought to be tendered, there were documents missing, including the documents for the latter part of the period in question. Finally, Mr Arundell's evidence also suggested that quite another set of records had been operated in his management of the business. They were never produced in answer to the summons and did not appear to be included in the five volumes sought to be tendered.

30 There were various submissions advanced for the first to third respondents as to how these difficulties could be overcome in a practical way. The respondents then also sought to tender an expert’s report in relation to the material, which it was said would help to overcome the difficulties in understanding what the five volumes of documents contained. There was also an objection to the tender of this report, which had also not been prepared and served, either in accordance with the Court’s directions as to the preparation of the case for hearing or the Rules governing the calling of expert evidence. The expert’s report was only served on the applicants after they had closed their case.

31 The prejudice to the applicants from the approach which the respondents had adopted to these matters was patent. At that point, the case was in its seventh day of hearing. Mr Arundell's evidence had also shown that the documents produced to the Court and released into custody of the respondents' solicitors on the basis that they would not leave their control, had not been so retained. The respondents could not identify what those documents were. This, too, confirmed that the 1999 summonses had not been complied with by the respondents. I accepted the applicants' objections to this material in all those circumstances and also declined to receive the expert's report about that material. I was satisfied that justice could not properly permit any other course, in the circumstances.

32 It was further suggested for the respondents that the problems identified in the material could be rectified by further material being produced by the respondents. That course was also objected to by the applicants, given the prejudice which they would suffer as a result, which in their submission would not be rectified by any costs order in their favour. I accepted those submissions and declined to receive such material, indicating that I would give my reasons for the course adopted in this judgment.

33 The reasons were simple. The Court's Rules and practices require that applications for relief under this section to be supported by affidavit evidence and that those seeking to defend such claims do likewise. Orders are made as to the filing and serving of those affidavits, so that the litigation is conducted in an orderly and fair fashion and not by ambush and surprise. In this way, settlements are encouraged by parties clearly understanding the evidence to be led against them and hearing time is minimised.

34 Summonses such as those here issued in 1999 by the applicants assist not only in the preparation of the case, but also in parties being put in a position where they can make a realistic assessment of their prospects of success and whether offers of settlement should be made, or accepted.

35 Here, the claim, in part, depended upon the income and outgoings of the respondents, information peculiarly within the knowledge of the respondents, which they were required to make known to the applicants in 1999. I have no doubt that this obligation was not met. Mr Arundell's evidence left no doubt that in August 1999, at the time the subpoena was answered, the respondents did not provide to the Court all of the subpoenaed documents which they had in their possessions and/or control. There was an ongoing obligation to produce such material, which was also not observed. The Court's orders in relation to the documents released in to the custody of the respondents' solicitors, were also plainly not complied with thereafter.

36 The documents upon which the respondents later, belatedly, sought to rely, when the evidence in their case was called in August 2001 also did not comprise the documents subpoenaed and it seems, may not even have been the documents used in the administration of the business at the relevant time. Nor was that material provided when the respondents put on their affidavit evidence. Had the respondents wished to rely upon such material, that was the time when it should have come forward, explained in a proper way by affidavit.

37 To permit the material to come forward at the time it was sought to be tendered by the respondents and given the manner in which it was sought to be provided, would not only have permitted litigation by ambush and surprise, but would have allowed that to occur in circumstances where the material was always in the respondents' control and where they had, seemingly deliberately, denied the applicants the opportunity of access to the actual records of the business, which they were under an ongoing obligation to supply to the Court and to which the applicants had long been granted access. This would have properly enabled the applicants to consider the material before they closed their case, or perhaps even more importantly, earlier, when deciding whether to press that case at all.

38 What was more, even when the material was finally revealed, it was put forward in such a fashion that it could only be concluded that the material had been disassembled and rearranged in an entirely unintelligible fashion, so that it could not properly assist in resolving the issues which lay between the parties, in any event. Even at that point, the respondents required further indulgences to address the obvious deficiencies in the production of the material on which they had embarked. Justice could not properly permit such a course. Section 135 of the Evidence Act 1995 reinforced that conclusion.

39 It can only be said that the course adopted by the respondents was extraordinary, obviously in breach of the obligations which the respondents had, arising from the summons to produce and so prejudicial to the applicants, that any costs order made in their favour could not have fairly redressed the difficulties which had arisen. For those reasons, I concluded that justice between the parties required that the respondents not be so permitted to conduct themselves and hence the tender was declined. What lay between the parties as to this issue and other evidence as to how Mr Arundell dealt with this matter prior to and after the termination of the first applicant's employment, which I will deal with later, but reinforced these conclusions.

The position of the fourth and fifth respondents

40 It is convenient to then turn to another difficulty dealt with at the resumed hearing, after the joinder of the fourth and fifth respondents. That application was heard and determined after the cross examination of Mr Arundell had been completed and before his re-examination had concluded. The rejection of the material I have just dealt with, had also occurred. When the hearing resumed, the re-examination of Mr Arundell was due to begin.

41 An issue then arose between the applicants and the fourth and fifth respondents, as to whether their role in the case was confined to the tracing exercise, dealt with in the joinder judgment, or whether they should rather be heard in relation to the fairness of the contracts between the applicants and the first respondent, which the first to third respondents had already substantially litigated. This was relevant to the type of questions which the fourth and fifth respondents were then entitled to ask Mr Arundell. It must also be noted that, at various times, he was the sole director of all four corporate respondents. Some, if not all of them, were co-located and used the same website, at various times.

42 I concluded that the fourth and fifth respondents' role in the proceedings was confined to the basis upon which their joinder had been ordered. The applicants complained that the first to third respondents, through the fourth and fifth respondents, were seeking to relitigate what had already been dealt with in the hearing to date between the applicants and the first to third respondents. The evidence showed that at the relevant times, Mr Arundell was the controlling mind of all four respondents. The interest of the fourth and fifth respondents in the proceedings was not whether the contracts in question had been unfair, but rather whether any money orders should be made against them, having regard to the evidence that the first to third respondents may well have breached their undertakings to the Court, given when the application for mareva orders was dealt with and that it was then the fourth and fifth respondents, who were operating the first respondent's business, in which the applicants had been engaged under the contracts here in question.

43 The position of the fourth and fifth respondents was that they had a legitimate interest in minimising any money orders which might be made in these proceedings, in the event that the contracts were found unfair and hence should be heard on all matters.

44 I could not accept that submission and ruled that the fourth and fifth respondents' interests in the proceedings had to be confined on the basis that the applicants had argued. I did so, being satisfied that this was what the interests of justice demanded. It appeared, by that stage, that the litigation had been conducted in a fashion where there was a significant and growing disjunction between what was at issue between the parties, particularly in relation to the liquidated money claim and what they had expended in costs and Court time, in pursuit of their differences.

45 In those circumstances, to permit the case to be effectively re-argued afresh, including by reference to an extensive affidavit filed and served by the fourth and fifth respondents on the Friday before the resumption of the hearing on the Monday, despite having been sworn several days earlier, which included some of the other respondents' financial material which had already been rejected in the other respondents' case, would have involved an obvious miscarriage of justice. That was even more so, when regard was had to the public interest, as expressly required by s146(2) of the Act.

46 I was well satisfied in this case that the time and effort spent by the parties in pursing this aspect of the determination of the issues which they were disputing with each other, no longer bore any sensible relationship to what was involved in the proceedings. The public interest could not permit further of the Court's resources being made available to them, as they sought. Justice was best served by the confinement of the case, on the basis determined.

47 As it eventually transpired, the third, fourth and fifth respondents were all placed in liquidation during the course of the protracted hearing. The fourth and fifth respondents never eventually went into their evidentiary case.

The circumstances

48 The first applicant is an engineer with various qualifications and experience in software engineering and management. Mr Arundell and Mr Bowker met while Mr Bowker was lecturing at the University of Technology and working for Honeywell. In 1994, Mr Bowker did some consulting work for the first respondent through the second applicant.

49 The first respondent employed Mr Bowker in 1995 to establish a Sydney office. He had earlier also worked as a consultant for Insearch, one of the University's arms. During his employment, the first applicant also continued teaching at the University and to work as a consultant for Insearch. There was an issue as to whether this work was known to Mr Arundell and through him to the respondents. This was one of a number of factual issues which arose for resolution on the evidence led. It is convenient to deal with the resulting issue of credit at this point.

50 Mr Arundell's evidence and his conduct and approach in the witness box, inevitably led me to the conclusion that his evidence was not entirely reliable and was not given in a way which strict adherence to the truth required. This included an apparent inability to understand questions about, or to remember the detail of, even matters with which he had dealt with extensively in his own affidavit evidence, or about which he had given evidence on earlier occasions, including during the interlocutory proceedings before Marks J. As a result, I was well satisfied that in cases of conflict, his evidence could not be preferred over that given by Mr Bowker.

51 This conclusion was reinforced by Mr Arundell's evidence in relation to the keeping of the accounting records the subject of the summonses earlier referred to. That evidence inevitably led me to the conclusion that the obligation to respond to the summons had not been properly met. At the times in question it was undoubtedly Mr Arundell's obligation to ensure that they were. He was the company secretary and sole director. When being cross examined about the documents to which he had access in swearing his affidavits, amongst other explanations for an inability to remember what documents he had resort to, Mr Arundell's explanation of his 'confusion', given the 'number of documents filed, not filed, presented, uplifted and God knows what else' and an explanation that he believed 'that we had what we had when we did the affidavits, the information we are relying on', was entirely unconvincing.

52 This evidence was given in a context where the applicants were long denied access to the documents released by the Court into the custody of the respondents' then solicitors. Mr Arundell eventually instructed the respondents' solicitors to advise the applicants that they had made available to the applicants 'all documents and source records that it believes are relevant to resolving the monetary components of the applicants' claim.' That inspection proceeded. Mr Arundell confirmed that he was the person who decided which documents would be so provided. On Mr Arundell's evidence, this exercise was not conducted by him having regard to the terms of the summons, although he had read it at various times. His explanation for the approach which he adopted was that he had perhaps misunderstood legal advice which he had received.

53 These difficulties perhaps help to explain why it was that after the hearing had commenced, the respondents offered to pay certain of the sums claimed by the applicants, but without admitting their liability to do so. This was explained to reflect an endeavour to 'reduce the scope of the trial.' The applicants did not, however, accept this as either settling their claims, or reducing the scope of the claims, given what remained at issue between the parties, including the tax treatment of various payments.

54 Returning then to the parties' relationship, the evidence showed that before Mr Bowker intimated his intention to seek other employment, in order to increase his earnings, the respondents had accommodated various personal problems which Mr Bowker encountered, advancing funds to him, agreeing to changes to his remuneration package and engaging him to perform extra work as a consultant, through the second applicant, when it suited him. The first respondent later rented office space from his trust. The problem which emerged in 1998, however, was that the first respondent was plainly unable to offer Mr Bowker income of the kind he was able to command elsewhere.

55 In March 1998, Mr Arundell, then managing director of the first respondent, sought to introduce a written employment agreement for Mr Bowker. On Mr Bowker's evidence, this arose in a context where he was told by Mr Arundell that payment of his bonus for the first quarter of 1998 was conditional on him signing such a contract. Mr Arundell denied this. I am unable to accept this denial. That approach to negotiation was entirely consistent with the approach adopted by Mr Arundell later in 1998, to the parties' contractual arrangements. I accept Mr Bowker’s evidence about the circumstances in which this agreement came to be made.

56 There were negotiations about the terms of the agreement, which had a term of January to June 1998, with an option to continue the employment thereafter by agreement. The applicants executed the agreement on 31 March. It included various provisions as to bonus payments, calculated as a percentage of sales and a restraint provision for a period of six months. Mr Bowker was not provided with a copy of the agreement and did not keep one. The agreement was said to be governed by the State of Victoria. It also dealt expressly with notice.

57 The commission arrangement under this contract was of a most complex kind, involving not only the hitting of various targets, but also those targets comprising income of the Sydney office where the first applicant worked, reduced by outgoings, which included certain ‘administration’ expenses and ‘head office’ expense. The evidence suggested that what was comprised in those expenses and the income and outgoings upon which it was based, was information only ever in the knowledge and control of the respondents, not documented in such a way that it could readily be produced in these proceedings, or ever made transparent to the applicants, during or after the employment.

58 In May 1998, Mr Bowker was faced with financial problems and discussions with Mr Arundell led to an agreement whereby the first applicant would be engaged to perform additional work for the first respondent, as a consultant provided by the second applicant, on weekends at a daily rate of $800. A document recording this agreement was executed in June. The first applicant’s then ordinary salary arrangement was for a lower base salary and a more significant 'at risk' component. On Mr Bowker's evidence, at this time he was seeking to increase his regular income, so as to ensure that he was able to cover his expenses. It was at this time that he first raised with Mr Arundell that he might need to look for other work, in order to address his financial problems.

59 Mr Arundell confirmed that he became aware of this in May 1998. On his evidence, it was at that time that he raised with Mr Bowker the question of whether he had been performing similar work for others, during the course of his employment and that Mr Bowker denied having done so.

60 Mr Arundell's evidence was that Mr Bowker had raised outside work with him and that he had always told him:

"You're free to pursue any activity where Software Engineers has no involvement so that there is no possibility of a conflict of interest with Software Engineer's business and you must make sure in undertaking outside contract work that it doesn't undermine your relations with Software Engineers. You’ve still got to be able to work directly with existing clients, prospects, suppliers, associates, partners of Software Engineers."

61 It was also Mr Arundell's evidence that at the time, it was but standard consulting and confidentiality agreements which were entered by the parties. Again, I am unable to accept Mr Arundell's version of these events, which were denied by Mr Bowker.

62 One of the problems then facing Mr Bowker was that incorrect tax deductions had been withdrawn from payments made to him by the first respondent and he had to make up the shortfall. On the evidence this problem arose out of circumstances partly of the first applicant’s own making. He had had an authority from the tax authorities for lower tax deductions to be withdrawn from his salary and when the authority expired, his accountant had died. While he had assured the respondents that he would take steps to have the authority renewed, this did not occur, leading to the necessity later, for the shortfall to be made up. It is unnecessary to outline various unflattering evidence Mr Arundell gave about these matters.

63 In October further negotiations about Mr Bowker's salary took place between he and Mr Arundell, with an agreement as to an increase reached, which was only due to take effect in January 1999.

64 Up to this time there had been various discussions between Mr Bowker and Mr Arundell as to Mr Bowker taking annual leave, which was refused for July, August and October, but approved for the shutdown in December/January. On Mr Bowker's evidence, Mr Arundell was aware that he needed to take leave during school holidays, in order to have access visits with his children. He was then engaged in working on a project at Optus for the first respondent. Despite making arrangements with Optus for the taking of such leave at various times, it was not approved by the respondents. On Mr Bowker's evidence, there were also discussions around this time about his discontent with various aspects of management of the business.

65 I note at this point, that much of the detail of Mr Bowker's evidence about these developments were disputed by Mr Arundell in his affidavit evidence. It was his evidence that the first respondent's leave policies were well known to Mr Bowker and that he had failed to adhere to them. He also refused Mr Bowker's leave applications for legitimate business reasons.

66 Given concessions made in Mr Arundell's cross examination and indeed, his approach to that examination, I again came to the conclusion that Mr Bowker's version of these events had to be preferred.

67 It seems hardly surprising on the evidence, that Mr Bowker looked around for other employment opportunities. In November 1998, Mr Bowker accepted an offer of employment from Software Engineering Australia (NSW) (‘SEA’), a Commonwealth Government sponsored industry body. SEA was a not for profit organisation, involved in the promotion of excellence in software engineering. SEA was then in the process of becoming a corporation and Mr Bowker was sitting on the Board, as a representative of the first respondent, a founding member of SEA. There was an arrangement in place between the first respondent and SEA, as to payments for Mr Bowker's involvement in SEA. This led to a payment of some $2,200 to the first respondent by SEA. On Mr Bowker’s evidence, both the first respondent and he personally, donated time to the establishment of SEA. SEA and the first respondent were not otherwise involved in a commercial relationship with each other.

68 Mr Arundell's evidence was that the first respondent regarded SEA to be a client. It had approved Mr Bowker's involvement in March 1998. There was an issue as to whether or not the first respondent and SEA were competitors. On the whole of the evidence, including correspondence from Mr Arundell himself to SEA, I am inclined to the view that they were not.

69 Mr Arundell later authorised the recovery of emails sent by Mr Bowker to SEA on the first respondent's equipment, which showed emails passing between them as to his possible employment from 1 October. The second applicant made a proposal to SEA about the provision of Mr Bowker's services later in October. Mr Arundell took the view that Mr Bowker had been using the first respondent's equipment and facilities to conduct negotiations about these matters. On his evidence, however, he did not become aware of these negotiations until early November. He then became concerned to ensure that such a move would not cause harm to the first respondent.

70 Mr Bowker was attracted to employment with SEA, because while it did not involve a significant increase in his overall remuneration, it did significantly increase his base salary and reduced the at risk component of his income, a matter of real concern to him at the time. Mr Arundell understood at the time that Mr Bowker was trying to increase his remuneration, but the respondents' cash flow did not permit it to do so.

71 When Mr Bowker informed Mr Arundell of his decision to take up employment with SEA, Mr Arundell discussed with him a basis upon which he would remain in the first respondent's employment until December 1998. He was keen to retain Mr Bowker's services because of a job which had been obtained by the first respondent for Vodafone, which it needed Mr Bowker to service. Mr Bowker was content to accommodate this and discussions ensued.

72 Despite this, Mr Arundell, then complained to the acting executive director of SEA, about its poaching of Mr Bowker and wrote to it, threatening legal proceedings against SEA. Similar threats were made to the applicants. Mr Arundell explained that he did so because he was concerned that the first respondent was a founding member of SEA, which had made an offer to one of its key employees, without any consultation and had acted against the first respondent's interests. He informed Mr Bowker that he might seek an injunction to stop SEA employing him. The first respondent had not accepted the resignation and had not approved Mr Bowker's ongoing involvement with SEA and was seeking legal advice.

73 As a result, Mr Bowker informed Mr Arundell that he too proposed to seek legal advice. His evidence was that Mr Arundell told him that instructions had been issued for injunctive relief to be sought against him and that Mr Arundell had reached an agreement with SEA about the matter. On Mr Bowker's evidence, in further discussions, he having received legal advice that he was entitled to resign from his employment with the first respondent, as he undoubtedly was, given the terms of the agreement then in place, an agreement was reached between he, Mr Arundell and SEA, whereby Mr Bowker was to act as SEA’s Executive director (designate), until the termination of his employment with the first respondent became effective. Mr Bowker then continued in his endeavours to negotiate a sensible basis for his departure.

74 Again, Mr Arundell denied much of Mr Bowker's evidence about what transpired. Mr Arundell's evidence was, for example, that Mr Bowker's resignation was given on 9 December and accepted on the 24th, effective on 31st. I am unable to accept Mr Arundell's evidence about these matters, in preference to that of Mr Bowker. The evidence clearly showed that Mr Bowker had earlier resigned in writing in November.

75 On 27 November, Mr Bowker was due to attend the official launch of SEA by the Executive Director of the NSW Office of Information Technology. He was due to chair the launch and make a presentation. His evidence was that this had been approved by Mr Arundell previously, but on the morning of the launch, he was informed that the approval was suspended. He was distressed by this change and in discussions later in the day, was informed by Mr Arundell that this position could change, if he executed a written agreement for himself and the second applicant in terms which Mr Arundell emailed to him.

76 Again, Mr Arundell's evidence differed. On his version, on 20 November he spoke to Mr Bowker and instructed him to have no involvement with SEA. He confirmed this in an email on 26 November, referring to legal advice that such involvement be 'suspended'. He therefore regarded attendance at the launch on 27 November as a clear breach of Mr Bowker's employment contract. He first learnt of the launch on 25 November and wanted to ensure that Mr Bowker did not attend, so as to cause any conflict between SEA's position and that of the first respondent. He had never approved Mr Bowker's attendance.

77 Again, I am unable to prefer Mr Arundell's version of events. They constituted a reconstruction which I am satisfied did not properly reflect all that had occurred.

78 The first applicant initially refused to sign the document which Mr Arundell, required him to execute on 27 November. On his evidence, it contained references to material which he had never seen. This was not really disputed. Mr Bowker and Mr Arundell discussed the wording of what was proposed and eventually, later on that day, Mr Bowker signed it, understanding that it committed him to confidentiality and restraint clauses in standard terms, which would involve him not getting into business for himself with the first respondent's clients; that he should not deal with its suppliers and should not poach its staff. While at that time the applicants had sought legal advice, given the timing of the requirement made by Mr Arundell, Mr Bowker's evidence was that he had no opportunity to seek advice on the document before he executed it. He was then permitted to attend the SEA launch.

79 Mr Arundell's evidence was that this document was merely the culmination of negotiations ongoing since July, not an employment agreement, but merely confirming 'our intentions'. This evidence, again, was simply not credible. Indeed, it was inconsistent with Mr Arundell's evidence that he did tell Mr Bowker that he had obtained legal advice and would allow Mr Bowker to attend the launch, so long as he executed the agreement.

80 In cross examination, Mr Bowker's evidence was that he was pressured into signing the agreement and that he did so because of the importance which he placed upon attending the SEA launch. He denied that it was his intention to later ‘wriggle out of’ the agreement he had signed. He signed it because in his view, the agreement accorded with the tenor of the discussions, which he had been having with Mr Arundell.

81 On 7 December, the first applicant was provided with three further documents, a deed of consultancy, an individual employment agreement and a deed of release. The first applicant took legal advice about them. His view was that they were unreasonable and not consistent with his earlier discussions with Mr Arundell. He declined to execute them. Discussions continued. They included the first applicant's existing rights to payment of bonuses, in respect of which there was a disagreement as to what right Mr Bowker had to any such payments upon termination of employment.

82 Mr Arundell's evidence was that he had instructed the first applicant not to have any further contact with SEA during business hours, but discovered in December that his instruction was not being adhered to. I am unable to accept this evidence.

83 Various drafts of the agreements proposed emerged from Mr Arundell during the course of the discussions, but significant differences continued between Mr Bowker and Mr Arundell as to the terms proposed in relation to bonus and commission payments, annual leave and expenses and the need for the first applicant to execute a deed of release, when no legal proceedings were on foot. On 16 December, when agreement could not be reached, Mr Arundell took the position that unless Mr Bowker signed the documents by 18 December, he would take legal action, including injunctive proceedings against Mr Bowker and possibly SEA. Mr Bowker was also told that no payments would be made to him as at 31 December 1999.

84 Mr Bowker was in a continuingly difficult financial position at this time, as Mr Arundell was aware. He was reliant on the payment of the bonus payments he was anticipating, in order to service his commitments and could not afford to engage in an ongoing legal dispute. He returned to the negotiations on 18 December and Mr Arundell promised to provide revised documents on 20 December. They were not provided until 5pm on 23 December and he was then told by Mr Arundell that if he did not execute the documents by 5pm on 24 December, legal proceedings would be commenced against him.

85 Again, Mr Arundell's evidence was to a much different effect. It was his evidence however, that he told Mr Bowker that if he executed the agreements his breaches of their existing agreements and use of the respondents' facilities for the applicants' personal gain would be ignored. On his evidence, Mr Arundell also discovered that Mr Bowker had put in time sheets suggesting he had been at work for the respondents while meeting with SEA representatives.

86 On 24 December, Mr Arundell served the applicants with two notices of breach of contract and the discussions continued. On his evidence, Mr Arundell also had the telephone service to the Sydney office disconnected and closed the office that day.

87 Mr Bowker executed the employment agreement at the offices of the first respondent's then Sydney solicitor, that afternoon He also provided a letter committing him to having the second applicant execute the deed of consultancy and the deed of release by 8 January 1999. The applicants did not have the benefit of legal advice at this stage. In cross examination, Mr Bowker's evidence was that the time constraints imposed did not permit him to obtain such advice at that time and that there were financial imperatives in him signing the agreements that Mr Arundell required. He had been informed that if they were not signed, he would not be paid the commissions and bonuses due to him, which had been estimated by the respondents to amount to some $12,000 to $15,000.

88 Mr Arundell's evidence was that he instructed Mr Bowker about a range of tasks which he required him to complete on 24 December. He did not regard them to have been satisfactorily undertaken and so cancelled Mr Bowker's leave, given the effective date of his resignation 31 December. On 25 December, Mr Bowker received a message from Mr Arundell requiring him to check his email. On 26 December, on checking, he was informed that his annual leave had been cancelled and instructions as to work to be performed over the next days was provided. On his evidence, Mr Arundell knew that during this time Mr Bowker had organised an access visit with his children, which then had to be cancelled. Mr Arundell denied this.

89 On 31 December, Mr Bowker was instructed by Mr Arundell to meet him at the first respondent's solicitors office, where he was required to return his computer and other equipment, was provided with a termination payment and required to sign a return of confidential information statement. Mr Bowker also provided an expenses claim for December, as well as his timesheets.

90 The agreement which had been reached involved Mr Bowker continuing as a part-time employee for the first respondent from January to April 1998. Despite having closed down the first respondent's Sydney office and having removed from Mr Bowker all of the first respondent's computer equipment, Mr Arundell then complained about Mr Bowker's tardiness in communicating with the first respondent, taking the view that it was paying him to himself provide a suitably configured notebook computer for the work to be undertaken. He denied that thereafter there were problems in Mr Bowker accessing the first respondent's systems, or any lack of co-operation given to him.

91 Mr Bowker did not take up employment with SEA until mid-January. Before he did so, SEA had wanted to be assured that there was no legal impediment to him taking up employment with it. Mr Arundell had been in communication with SEA about Mr Bowker. On Mr Bowker's evidence, before he was able to take up employment with SEA, it required him to provide written advice from his solicitors that there was no legal impediment to that employment. SEA accepted the advice and that Mr Bowker had ongoing commitments to the first respondent until April, for up to two days per week.

92 The effective upshot was that in January and February 1998, Mr Bowker worked full-time for SEA and part-time for the first respondent, juggling his working hours to meet both commitments and discounting any hours worked for the first respondent from payments made by SEA. In terms of remuneration, he was paid less by the first respondent than by SEA.

93 On 5 January, Mr Bowker executed the deed of consultancy and the deed of release in the offices of Mr Arundell's solicitors. Correspondence between the parties’ legal representatives later ensued, with complaints made by the first respondent about alleged unauthorised private use of the first applicant’s mobile phone during his prior employment and queries raised regarding Mr Bowker's expenses claims. In cross examination, Mr Bowker's evidence was that when he was first employed, Mr Arundell had told him he could use the mobile phone provided for personal calls, the cost of which the first respondent would bear. He accepted, in cross examination, that he had also used the phone in connection with the second applicant's business and that he did not have explicit permission to use the phone for that purpose.

94 Mr Arundell dealt with this matter by making a unilateral calculation that $1,770.97 reflecting private use of the phone and deducted this from payments due to Mr Bowker. On Mr Arundell's evidence, he then also became aware of and raised with the applicants' solicitors, inaccurate motor vehicle claims 'when correlated with Mr Bowker's motor vehicle logs and mobile phone records'. This caused him 'great anxiety' in relation to the outcome of a tax audit revealing that the first respondent had kept inaccurate records.

95 Discussions as to work to be performed for the first respondent under the consultancy arrangement also proceeded.

96 Mr Bowker was then inundated with a series of letters, faxes and emails from Mr Arundell, complaining about his alleged failures. He had agreed to work for the first respondent part-time, for two days per week. On Mr Bowker's evidence, these arrangements were unilaterally altered by Mr Arundell, who also made changes in the first respondent's policies and requirements, which impacted upon the work to be performed, without his prior consent or discussion with him. Some of this material was not even supplied to him. Mr Bowker described Mr Arundell's approach as harassment and ‘micro management’, to such a degree that a continued working relationship eventually became untenable. Mr Bowker eventually terminated the arrangement with the first respondent on 8 February. Neither he nor the second applicant received any payment for the work performed during that period.

97 Mr Arundell denied that there had been excessive managerial oversight of Mr Bowker's work during that time. On his evidence, throughout 1998, Mr Bowker had resisted the provision of proper timesheets, as the first respondent required. During this final period, Mr Bowker had also failed to observe the applicable policies, which were always available to him. He had also not worked the hours due under the agreement. Mr Arundell was also of the view that Mr Bowker's mismanagement of his work had resulted in losses, for which the first respondent had not been reimbursed. Again, I cannot accept Mr Arundell's evidence. His evidence, for example, that there was at the time no absence of trust in Mr Bowker, was entirely inconsistent with his evidence of his views about Mr Bowker's conduct; his management of him and his correspondence to him and his solicitors.

98 In cross examination, Mr Bowker explained that to that point, the first respondent had unilaterally changed the scope of the work which he was required to perform under the new arrangement. As a result, his workload had become significantly higher and that the correspondence from Mr Arundell and the issues he was raising had increased dramatically, to the point where the constant harassment had become untenable.

99 When the relationship ceased, various payments were outstanding between the parties, including disputed expense claims, bonus and commission payments, superannuation, payments for work performed by Mr Bowker and the second applicant in January 1998 and rent due for the Sydney office.

100 Undoubtedly, Mr Bowker had incurred considerable legal expenses as a result of Mr Arundell's approach. He rejected Mr Arundell's further proposals and the relationship came to an end. Mr Arundell's pursuit of the applicants, however, continued.

101 In April 1999, Mr Arundell embarked upon a series of communications with the Chairman of SEA and various other people, alleging misconduct and indeed, criminal conduct, by the applicants He also wrote to the first applicant’s aged parents, (former directors of the second applicant) and the Commissioner for Taxation, as well as putting highly critical material about the applicants on the first respondent's Prophecy website. Mr Arundell declined to withdraw his comments about the first applicant, when requested to do so. These communications were the subject of the interlocutory proceedings before Marks J, where his Honour found that Mr Arundell had set out to damage the first applicant’s reputation.

102 Mr Bowker's evidence in cross examination was that he could appreciate that Mr Arundell was concerned at losing him as an employee, especially to SEA, which the first respondent had been supporting in its establishment. He also accepted that Mr Arundell was entitled to put forward proposals to him, which sought to accommodate his desire to leave the first respondent's employment, but which would also protect its own position. He said that he had entertained these proposals, because he took the view that he had an ethical or moral obligation to assist the first respondent in the transitional period when it had to replace him.

103 Mr Arundell's evidence as to the financial position of the first respondent was that for some time it had been operating at a loss, while still solvent. A return to a break even position was expected in December 1998. It was Mr Bowker's actions which resulted in further losses and in May 1999, the shareholders decided to sell the first respondent's business assets, which were purchased by the third respondent, for $108,000 in June 1999, after a due diligence exercise. Mr Arundell asserted that they did not include 'any materials related to these proceedings'. This transaction successfully restored the first respondent to solvency, but it had ceased trading nevertheless.

104 Mr Arundell also gave evidence that he resigned as a director of the third respondent on 17 July 1999, so that there could be an independent due diligence exercise conducted, he also being a director of the first respondent. He did not give advice to the new director of the third respondent about this litigation, as he did not believe that it was relevant, other than as described in the sale of business agreement. On 31 July, the third respondent decided to dispose of various surplus assets. An issue arose as to whether the materials then offered for sale and advertised on the website apparently then operated by the third respondent and previously operated by the first respondent, under the Prophecy logo, related to these proceedings. Mr Arundell later advised the third respondent to modify what was being offered for sale and understood that this had occurred.

105 It should be observed that these events all occurred after the order made by Marks J in May 1999, which permitted the joinder of Mr Arundell and which restrained the first respondent from publishing various statements dealt with in the judgment. The applicants' position was that the steps taken by the respondents in relation to the disposal of these assets, on the website, were inconsistent with the orders.

The parties’ respective cases

For the applicants

106 The case advanced for the applicants by Mr Knoll of counsel was that Mr Arundell's unfair conduct towards the applicants commenced in November 1998, when he began writing to and about Mr Bowker in threatening and disparaging terms, threatening to sue he and others, including SEA as the result of his decision to terminate his employment. This conduct was designed to prevent Mr Bowker exercising his rights to resign from his employment, upon giving reasonable notice.

107 Mr Arundell then required the applicants to enter into new arrangements with the first respondent, threatening to withhold money due to them. This was entirely unfair and was compounded by the terms of the agreements then imposed and the fact that Mr Bowker was not given access to the records from which he could have ascertained what was in fact owed to him at the time.

108 The money then outstanding was significant to Mr Bowker, as Mr Arundell well knew, given his personal circumstances. The new agreements imposed by the respondents altered the parties' previous formula based commission arrangement, to one which was entirely discretionary. The new arrangements were also unfair in other respects. The applicants were required to work part-time for four months, but with the ordinary work facilities for the performance of such work, such as computers and phone lines, being removed by the respondents, they taking the view that they should not be provided for part-time work. Even though the work was then performed, the respondents did not pay for it.

109 Mr Arundell denied Mr Bowker the annual leave which he knew he required for family reasons. He also further abused Mr Bowker through an unfair approach of micro managing his duties, to the point where the relationship could not continue. Instead of contacting Mr Bowker directly about work matters, he directed his communications to the applicants' lawyers, thereby involving the applicants in unnecessary legal expenses. Mr Arundell also unilaterally altered work requirements, without prior discussion or agreement and in some cases, without even providing the applicants with the altered requirements. The respondents then unfairly purported to measure the applicants' performance against such altered requirements.

110 In discussions in December 1998, Mr Arundell estimated that $12,000 to $15,000 commission was owed to Mr Bowker. The new agreements were premised on the understanding that this sum would be paid. Mr Arundell later quantified this as $13,001. Nothing was, in fact, paid and Mr Arundell's evidence at the hearing was that there was nothing owed. This resulted from the application of sums for 'inter branch transfers', suspense items and other matters not referable to the contractual commission formula. Given the respondents' failure to comply with the summons and the Court's orders, these matters could not be tested. Had the records been produced, as and when required, a simple accounting exercise could have been conducted. This the applicants had been denied. The applicants had, however, produced the evidence, as to the work performed and the commission owing thereupon, to the extent that they were able.

111 It was argued that in considering the claims advanced, account would be taken of the approach which the respondents had to their obligations to answer summonses served upon them. Similarly, account would be taken of Mr Arundell's unreliable and inconsistent evidence, both in affidavits and orally. His evidence could not, as a result be preferred to that of Mr Bowker, in the case of conflict.

112 It was also submitted that regard would be paid to the evidence that the first respondent had transferred virtually all of its assets to the third respondent in August 1999, with Mr Arundell signing the contractual documents for both companies. Despite the undertaking given to the Court, that the third respondent's assets would be preserved, Mr Arundell then caused the third respondent to cease operating the business. Within a month, the Prophecy domain name had moved to the fifth respondent. The evidence showed that the business originally operated by the first respondent had been operated by the fourth and fifth respondents. Mr Arundell was the controlling mind of these corporations at relevant times. If followed that orders should now be made against him, together with the first respondent, in order to redress the unfairness revealed.

113 The evidence had also disclosed a campaign of disparagement conducted against the applicants, both during and after the parties' relationship. The communications to the second applicant's business contacts, Mr Bowker's employer, his parents, the Australian Taxation Office and others all showed vindictive intentional conduct, worse than that dealt with in Spring. It was submitted that the conclusions reached by Marks J in the interlocutory judgment about these matters should be confirmed and final relief granted.

114 Even though interlocutory orders had been granted, the evidence showed that these unfair communications had taken on a life of their own, to the applicants' detriment. Mr Arundell's evidence in cross examination showed that these communications had originated from the respondents' file server. His denial of authorship of the communications would be rejected. His actions after the orders made by Marks J, further required such relief being granted, evidencing as they did, his continued unfair treatment of the applicants, which the impugned contracts unfairly failed to preclude.

115 Clear vindication of the applicants' reputations was sought in the Court's judgment. It was submitted that this also required money compensation to be granted for an extreme form of unfair, vindictive disparagement. The mutual duties of trust and confidence which had existed between the parties had been breached by the dissemination of baseless allegations of the most serious kinds. Money orders in the range of $100,000 to $200,000 were sought, in order that the Court do what is just in the circumstances revealed. Only such an order could vindicate the applicants and provide a deterrent for similar conduct in future.

For the respondents

116 The case advanced for the first and second respondents by Mr Phillips SC, was that the summons on which the applicants moved revealed serious errors of a jurisdictional nature, as well as errors of law. This followed, because s106 was concerned with unfair contracts under which work was performed, and how they might be declared void or varied. The claim advanced by the applicants sought to enforce the contract; sought damages for its breach, as well as injunctive relief of a permanent nature and damages on account of tortious behaviour. There was no jurisdiction to grant such delict.

117 It followed from the judgment of McHugh J in Minister for Youth & Community Services v Health & Research Employees' Association of Australia, New South Wales Branch (1987) 10 NSWLR 543, that s106 did not relate to any action brought in tort, but only to claims for avoidance or variation of a contract. A substantial part of the damages here sought were related to damages for tortious conduct, as the applicants' submissions made clear. A claim for damages for breach of reputation, was a tort.

118 The claims made in respect of disparagement of the applicants were couched in the language of tortious duty of care, relying upon authorities relating to defamation. The authorities relied upon in this jurisdiction were not of assistance. The case of Gambotto v John Fairfax Publications Pty Ltd (2001) 104 IR 303 was but an interlocutory judgment, dismissing a motion, with the point considered not finally determined.

119 Section 106 was submitted to be neither ambulatory, nor a form of palm tree justice. Nor was it a pendent or accrued jurisdiction (see Resarta v Finemore (2002) 118 IR 373; Heath Group Australasia Pty Limited v Hanning [1999] NSWSC 719 at [49] and National Parks & Wildlife Service v Stables Perisher Pty Limited (1990) 20 NSWLR 573.)

120 It was also clear from Mitchforce v Industrial Relations Commission of New South Wales & Ors (2003) 124 IR 79 per Handley J, that the Court that no power to grant the permanent injunction effectively sought by the summons. The order sought was effectively, a mandatory injunction in disguise.

121 It was also relevant that in December 2000, Mr Knoll had described 'the core of the case' to be the disparagement, the distress it caused and the consequential damage to reputation. It was relevant that he also submitted that the key protection sought was the variation to the contract and not money.

122 As to the liquidated aspect of the claim, it was submitted to be relevant that the full amount was pursued by the applicants, even though some sums were paid during the course of the proceedings. All that was, in reality, was in issue related to rent, unpaid consulting fees and unpaid commission. In Mitchforce, Spigelman J had 'left open' the question of the Court's jurisprudence that a contract could be found unfair because of conduct which was in breach of the contract. While obiter, it was relevant that the majority in Mitchforce v Starkey (No 2) [2003] NSWIRComm 458 had subsequently dealt with the concept of judicial commity at [17] to [21]. This was submitted to be relevant to a consideration of the binding authority of Reich v Client Service Professionals of Australia Pty Ltd (2000) 49 NSWLR 551.

123 The correctness of the decision of the majority in Reich, at 556-7 was submitted to be in doubt. The reliance there placed upon the judgment of Barwick CJ in Brown v Rezitis (1970) 127 CLR 157 at 164-5 was submitted to have been misplaced. His Honour was not dealing with the question of a breach of contract, but rather the question of the person against whom money orders might be made. A variation to a contract to ensure that it was 'strictly complied with' was submitted to be but an excuse to obtain jurisdiction and not a variation which the Court would make as a matter of discretion, even if it were within jurisdiction. Such an approach was submitted also to be at odds with the common law and that of equity. Reference was made to the judgments of Palmer J in Dodds v Premier Sports Australia Pty Ltd & Ors [2003] NSWSC 948, where it was found at [14] and [15] that the Court had no power to enforce a contractual benefit according to its terms.

124 As to the liquidated claim, it was submitted that the applicants had failed to make out their case. The claim for bonus related to the last quarter of 1998. It depended upon receipts in the relevant period. If clients did not pay, the applicants were not entitled to a bonus, as Mr Bowker acknowledged. He had a responsibility to expedite payment. There was no evidence as to what was paid for the period and no evidence as to the deduction which needed to be made from gross earnings, in order that the commission could be calculated.

125 The figure relied upon, $13,001, was a reconciliation faxed to the applicants' solicitor by the respondents and not otherwise proven.

126 As to the rent claim, it was not one which either applicant was entitled to pursue under s108 of the Act. The lease was made with a separate legal entity, the Bowker Unit trust. Nor had account been taken of other relevant payments, which showed that rent had, in fact, been overpaid. It was also submitted that it was relevant that it was only Mr Bowker who was seeking relief in the summons brought and that he had no standing to make many of the claims brought, which related to the position of the second applicant.

127 As to the claim for consultancy fees, relevant documents had not been produced by the applicants and the evidence was that the work in question had not been approved. Furthermore, the evidence showed that overall, the applicants had been overpaid and that at various times the applicants had been shown considerable fairness by the respondents. Consideration had to be given to the overall fairness of the parties' arrangements, in considering whether any relief would be granted to the applicants, as a matter of discretion.

128 It was also submitted to be relevant that when he wished to leave the employment, in order to take up more lucrative employment, Mr Bowker gave the respondents inadequate notice. Obligations to give reasonable notice were mutual. Mr Bowker occupied a senior position and was seeking to leave at a busy time. He had been in receipt of legal advice since mid November 1998 and had agreed to continue working till April. Mr Bowker understood what he had agreed. His explanation for his departure, that he had been 'micro managed' was submitted to be pure sophistry. He was totally motivated by the possibility of earning more money in his new employment. He gave seven days' notice, after commencing these proceedings. All of these circumstances cast doubt on whether he had ever intended to honour the agreements he had entered in December. It followed that no discretion would be exercised in his favour by the Court.

129 It was also submitted to be relevant that all of the evidence showed that Mr Bowker had suffered no damage to his reputation. His career had flourished since he had left the first respondent's employment. He had been approached for other work and in cross examination, could not say whether what Mr Arundell had said about him had, in fact, damaged him. He explained that his claim for loss of income depended on income which he might have derived from clients for whom he no longer worked. This flowed, even though overall his income had increased. He had called no other evidence as to his loss of reputation.

130 It was also relevant that there had been no complaint made that the orders made by Marks J had been breached. It was the respondents' case that those orders were made without jurisdiction. There were no cases decided under the section in which damages had been awarded for loss of, or damage to, reputation. While in King v State Bank of New South Wales (No 2) [2002] NSWIRComm 353 the Full Court had, on medical evidence, awarded compensation for distress, it was relevant that this involved a significant departure from the law flowing from Addis v Gramophone Company Limited (1909) AC 488. The decision in Malik was also relevant.

131 In any event, even if there were jurisdiction or power, to make such an order, there was no evidence of loss or damage to reputation and given Mr Bowker's flourishing career, it followed that no orders would be made.

Reply

132 In reply, it was submitted by Mr Knoll that a proper consideration of the speeches in Malik readily demonstrated that the orders sought here were a variation to the contract, not merely damages for breach of an implied term. It was also relevant that the respondents had not sought to justify Mr Arundell's vindictive treatment of the applicants.

133 The submissions as to a failure to give reasonable notice were argued to be ill founded on the evidence and having regard to the contractual requirement as to notice. So were the submissions that Mr Bowker had never intended to honour the December contracts. It was Mr Arundell's conduct which was repudiatory and contrary to the duty of mutual trust and confidence. It was also further argued that relevant unfairness could emerge from breaches of that duty.

134 It was also argued that unfairness could flow from an unconscionable interpretation of a contract. Regard would also be paid to the approach of Macken J, that deferred commissions could be inherently unfair (see Lumby v Yorkshire General Life Assurance Co Ltd [1978] 1 NSWLR 626 at 629).

135 Further submissions were advanced as to the various components of the liquidated money claims, which I do not outline. It was submitted that the first applicant had earned more than in his former employment after its termination, did not demonstrate that his earnings had not been diminished, as the result of the respondents' conduct. It was in the interests of justice that the principles in Spring be accepted into law in New South Wales, as an incident of an employer's duty to deal fairly with employees. Marks J had already concluded that money compensation could never satisfactorily recompense persons and business organisations for damage to their reputations. It was argued that few cases would reflect the vindictiveness present in this one. This was a gross form of unfairness, which should be reflected in a money order.

136 It was argued that all the claims advanced were squarely within jurisdiction. Orders of avoidance and variation of existing contracts and arrangements were sought, not the creation of new contracts. No injunctive relief was sought.

Consideration

Jurisdiction and Power

137 It is convenient to deal at the outset with various arguments raised by the respondents. Firstly, that the summons was deficient and brought contrary to the provisions of s108 of the Act, because it was only the first applicant who was seeking relief in the proceedings. Secondly, that the Court has no jurisdiction to entertain the claims made, either in respect of any breach of contract or alleged damage to reputation.

138 It was undoubtedly the case that the summons could have been better drafted. This, however, as has oft been said, is not a Court of strict pleading. While the provisions of s108 cannot be ignored, I am satisfied that the summons in this case made sufficiently clear that it was both applicants who were seeking relief as to various aspects of the contracts and arrangements which the parties had entered with each other, over the course of their relationship. These contracts and arrangements were intimately connected with each other. The parties clearly joined issue with each other over the applicants' various claims. It followed that this aspect of the respondents' case must be rejected, but as to one aspect.

139 The evidence showed that apart from the employment of Mr Bowker and the independent contractual arrangement with the second applicant, the first respondent also entered into a lease with the Bowker Unit trust, for premises which the first respondent occupied in Sydney. The second applicant was the trustee of the trust. The summons seeks payment for unpaid rent in respect of those premises. While I do not doubt that it is entirely possible that a claim might be advanced under s106 in relation to this contract, given the wide definition of the word in s105 of the Act, I am also satisfied that the summons makes no such claim. The only reference to the lease is in the money orders sought, in the claim for payment of rent. Neither the trust, the status of the second applicant as its trustee, or the lease are referred to in the summons and no orders of avoidance or variation are claimed in respect of that lease. It is not alleged that it comprised a part of any arrangement between the parties. Despite the approach of the majority in Reich, I am satisfied that a bare claim for recovery of money due under a lease, is not within jurisdiction. Money orders under s106 are, after all, consequential, following upon relief granted in relation to a contract found unfair. (See Origin Energy Limited v Smith (2001) 111 IR 476 at [19] - [20])

140 The respondents' other arguments going to the Court's jurisdiction and powers under s106 of the Act, are not so readily disposed of. When considered logically, however, and in accordance with binding authority, I am satisfied that the applicants' claims cannot be dismissed on this basis.

141 Firstly, despite the observations falling from the various members of the Court of Appeal in Mitchforce, I am satisfied that I am bound by the majority in Reich. It is not the task of the Court as presently constituted to revisit the correctness of that judgment.

142 Secondly, I am not persuaded that the summons in this case merely seeks to clothe the Court with jurisdiction to deal with a claim which, properly considered, is not one which the Court has jurisdiction to deal with under s106. This case involved not just a claim for failure to pay sums due under the employment contracts and the consultancy agreements, but also the fairness of various aspects of those contracts. Orders of avoidance and variation were sought as to those matters. I am satisfied those claims and the consequential money orders sought, are within jurisdiction.

143 As to the unliquidated money claim, the starting point is the general duty of confidence and trust implied by the common law, which imposes reciprocal obligations upon employers and employees. I am satisfied that there is such a duty, as discussed in Malik by Lord Steyn at p45 and as earlier found by Marks J in his Honour's judgment in these proceedings. Peterson J came to a similar view in Gambotto. Indeed, the respondents' submissions did not seek to throw doubt on the existence of that duty. Rather, they sought to argue that properly understood, the applicants in reality sought damages for an alleged breach of that obligation, a claim beyond jurisdiction.

144 From the point of view of the employer, the common law obligation 'is apt to cover the great diversity of situations in which a balance has to be struck between an employer's interest in managing his business as he sees fit and the employee's interest in not being unfairly and improperly exploited' (Malik at p46). I am satisfied that it was well arguable that the respondents' disparagement of the applicants, both before and after the termination of the parties' relationship was inconsistent with that duty.

145 I am also satisfied that just as employers and employees are free to exclude or modify such an implied term in the agreements which they reach with each other, (see Malik at p45), this Court is empowered to vary an unfair contract, to incorporate an express term in relation to matters which fall within the compass of the common law duty, if a case be made out by an applicant for such relief pursuant to s106 of the Act.

146 Again, the existence of such a power was not seriously argued against, in the respondents' case. This is entirely understandable, given the wide powers granted to the Court under s106 of the Act. That an employee might have other rights to pursue such disparagement, either at common law for breach of the implied duty or in defamation, cannot detract from that view. It is not for this Court to refuse to exercise the statutory power granted by the legislature, because other relief might be available to an applicant at common law.

147 The question is thus not one of jurisdiction or power, but rather whether the applicants have made out a case for relief, given the evidence brought. It is pertinent at this point to repeat the claim for variation of the employment contract made in the summons. Clause 3A of the summons sought:

3A. An order varying the Contract so as to prohibit the Respondents (but not including the Fourth and Fifth Respondents) from engaging in conduct, whether during or at any time after the term of the Contract, the (sic) damages, or is calculated or likely, to damage, the personal business and professional reputation of either of the Applicants and their prospects of further employment, and that cause (sic) them anxiety, distress and embarrassment.

Merits

148 I turn then to consider whether a case for such relief has been made out. There can be no doubt that the respondents' treatment of the applicants was unfair, both before and after the termination of the parties' relationship. Undoubtedly, it was important to them to retain Mr Bowker's services, at a time when a new Vodafone account had been acquired, which the respondents hoped would return the first respondent to a state of profitable operation. The manipulation of their understanding of Mr Bowker's personal position, to extract his agreement to various contractual arrangements beneficial to the respondents and then to hold onto his services by the unfair conduct revealed on the evidence, at a time when he had been able to obtain more lucrative employment elsewhere, cannot be countenanced by this Court. That conclusion was unavoidable, when consideration was given to the terms of the agreement governing the parties' relationship at various times, together with the respondents' disparagement of the applicants.

149 It was argued for the respondents to be relevant to the claims advanced that when first advising of his resignation, Mr Bowker had not given the respondents reasonable notice of his departure. The argument must be rejected. It pays no proper regard to the fact that Mr Bowker was then bound by a written contract which expressly obliged him to give the first respondent one month's notice. That term was imposed upon him by the first respondent in the March agreement, which was then also undoubtedly unfairly extracted from him. Prior to that point it would seem that his obligation had been to give reasonable notice. It was the respondents who imposed the new term. The reality was that he, in fact, gave more notice than he was contractually required to give and also sought to accommodate the respondents' business needs, in the approach he adopted to the time of the termination of his employment.

150 The importance of the respondents not losing Mr Bowker's services may have been entirely understandable. What was not, was the means adopted to achieve that end. Both employers and employees are entitled to terminate their contractual arrangements on the giving of notice, either as agreed, or in the absence of agreement, upon the giving of notice reasonable in the circumstances. Agreements to remain in employment, extracted as the result of threats to withhold payments due and further threats, that the employer will seek injunctive relief restraining new employment, when there can be no fair or proper foundation for such threats, in order to ensure that an employee's services are thereby retained are, by way of contrast, entirely deplorable. The campaign of disparagement also embarked upon leaves no room for doubt that the respondents' conduct and the contract which permitted it, were unfair as that term is defined in the Act.

151 Here, Mr Bowker was involved in SEA as the result of an arrangement in which the respondents had fully participated and agreed. I utterly reject the suggestion that SEA, a fledgling industry body, receiving Federal Government support, some of which funding flowed to the first respondent for the provision of Mr Bowker's services, was in competition with the first respondent. This idea, like much of Mr Arundell's other explanations for his otherwise inexplicable conduct, was undoubtedly an attempt to paint a gloss on his conduct, inconsistent with what he did and what motivated him at the time.

152 The evidence showed that the way in which Mr Arundell dealt with his concerns was entirely improper. Mr Arundell may well have thought the SEA offering Mr Bowker employment, in the circumstances in which the respondent had supported SEA by the provision of his services, was improper. He may have had good reasons for such a view. He did not, however, have a proper basis for his subsequent conduct. So enraged was Mr Arundell by the idea of Mr Bowker's departure, with whom he appears formerly to have had a relatively unremarkable working relationship and whom he had supported, through various personal traumas, that not only did he seek to bind him to the first respondent's continued employment by pursuit of various strategies, but he also set out to vilify him in the most extraordinary way.

153 Numerous wild accusations and extravagant threats, were made by Mr Arundell to the applicants and others who had any contact or dealing with them. I have not found it necessary to further publicise them here. They are set out in the judgment of Marks J. Those communications were directed to SEA, which it must be remembered was an industry body of which the first respondent remained a founding and continuing member; certain of its members; certain of the respondents' clients; others who had been clients of the second applicant; government bodies, including the Tax Office and even Mr Bowker's elderly parents, who had at one time been directors of the second applicant. They were variously told of Mr Bowker's alleged breach of his contractual obligations to the first respondent, his unprofessional and even allegedly criminal conduct. Extravagant demands were made against some of these people and entities. Threats of litigation and other serious repercussions were made against others.

154 Mr Arundell proffered, in his affidavit evidence, no real or convincing explanation for this extraordinary conduct. What came forth in his cross examination was both feeble and implausible. No proper foundation was established for what, in reality, was an unusual and extraordinary attack on an employee and consulting company of which the employee was a principal. That this occurred in the particular industry here concerned, cannot be overlooked.

155 Concerns which allegedly later emerged that Mr Bowker may have improperly used the respondents' facilities to contact and discuss with other potential employers, the possibility of other employment, can certainly have provided no proper foundation for Mr Arundell's attack. Indeed, such concerns need to be seen in their proper context. They certainly did not motivate the respondents to seek to terminate Mr Bowker's services or to bring the consultancy with the second respondent to an end. To the contrary, they were rather utilised in an endeavour to ensure that no one else would employ or deal with Mr Bowker. Mr Arundell's evidence could only leave open the conclusion that there was a calculated and vicious endeavour to bind to the respondents a valuable employee whom they were unwilling to lose, by damaging his prospects of work elsewhere.

156 How Mr Arundell could have hoped to succeed, given his treatment of Mr Bowker escapes me. The conduct appeared quite irrational, including as it did, the peremptory cancellation of Mr Bowker's leave over Christmas, shortly after the December agreements had been extracted from him, when Mr Bowker had allegedly failed to complete tasks assigned to him on 24 December. This occurred at a time when Mr Arundell was well aware that Mr Bowker was due to take long delayed annual leave, to enable him to obtain access to his children and when he knew the respondents had secured his ongoing work, albeit on a part-time basis, upon the conclusion of his leave on 31 December.

157 Having succeeded in extracting from Mr Bowker a commitment to part-time work for a further period after he commenced his employment with SEA, on a basis financially disadvantageous to the applicants and advantageous to the first respondent, Mr Arundell, by then undoubtedly seeing that he could not succeed in retaining Mr Bowker's services in the long term, also embarked on a further extraordinary course of behaviour. He treated Mr Bowker as if he had no confidence at all in his work, unilaterally altered various of his obligations, in some cases even refusing to inform him of what his new requirements were and then continued with his public vilification of the applicants, for their alleged failures to meet their obligations to the respondents and others.

158 There can be no doubt whatsoever of the unfairness of what occurred. The suggestion that by this stage the applicants were in receipt of legal advice, were engaged in the commencement of these proceedings, and under no unequal bargaining position, failed to pay regard either to the respondents' extraordinary conduct, what was imposed and contractually required of the applicants and how it was extracted from them, given Mr Bowker's personal circumstances and the nature of the employment at SEA, to which Mr Bowker was seeking to depart. This made him peculiarly vulnerable to the unfair conduct to which he was subjected and placed the respondents in a significantly superior position to that of the applicants, which they unconscionably exploited.

159 Marks J dealt extensively with these matters in his judgment, recording at p17 that Mr Arundell had given no evidence to explain his communications in the interlocutory proceedings. Marks J found that the communications were in breach of the first respondent's ongoing obligation to protect Mr Bowker's personal, professional and business reputation and must have been designed to injure his reputation. He also noted the evidence that the communications had led SEA to seek Mr Bowker's resignation.

160 At p19, Marks J found that the respondents were in prima facie breach of their obligations to Mr Bowker. While his Honour accepted that there might be explanations as to why the publications in question should not be characterised as unfair, in the absence of any proper explanation, that conclusion was not available. There has been no adequate explanation for what occurred in the proceedings before me. It follows that there can be no basis for anything other than a confirmation of the conclusion that the conduct was unfair.

161 That leaves the question of whether the unfair conduct was such that the contract should be varied to deal expressly with the matter. In Gambotto, Peterson J observed at [33] and [34]:

33 It would seem that, should the applicant succeed on this aspect of her claim, it would be necessary for the contract or arrangement with the respondent to be held to be unfair in that it failed to make provision of a kind which accords with principles inherent in the applicant’s claim for what I might call an ethical approach. Presumably, it would be for want of that provision in her contract that the applicant might be held to be entitled to monetary compensation for such damage or loss as may have resulted from the absence of it. This would seem to me to distinguish this case from defamation proceedings simpliciter. As in Wade v State of Victoria, where the right of action in negligence was held to exist concurrently with any right under the law of defamation, here, whether there be a right of action in defamation or not, the right to proceed under s.106 arises from the terms and scope of the statute. The development of the law under s.106 and, importantly, the legislative intention with respect thereto, has led to the position where contracts, apparently fair during their operation, but found unfair as the result of their termination are now routinely the subject, perhaps now the staple diet, of s.106 proceedings. The Court has become, it appears, the first port of call for many higher-income executives whose employment has been terminated. Why, then, should not the section be able to extend to a case which affects a working journalist who seeks to rely on an alleged breach by the employer of an obligation which the common law now recognises as applicable? I cannot, for myself, see any basis upon which such a proposition could be distinguished as a matter of jurisdiction from that routine position which now arises with respect to unfairness found on the issue of notice of termination of a contract in respect of which the common law would infer an entitlement to reasonable notice.

34 There does not appear to be any reason why the fact that, as alleged here, the conduct complained of occurred after the contract had ended, should alter that position. Just as the termination of a contract can cause it to be found unfair because of its deficiencies, so here the post-employment conduct, arguably amounting to a breach of the trust and confidence implication in the contract itself, may make the contract unfair in the statutory sense. The conduct arises out of and is directly referable to the contract itself.

162 The applicants have invited final conclusions in this case, consistent with these views, as well as those reached by Marks J in the interlocutory proceedings. The respondents argued that the orders sought were in reality in the nature of final injunctions, beyond jurisdiction and orders which would not be granted as a matter of discretion. Having in mind the time which had elapsed since the vilification, the termination of the employment and the interlocutory relief, this was submitted to be unarguable.

163 I am unable to accept those submissions. That there are no authorities to which the parties could point in which a situation like this has arisen before for consideration, reflects the undoubted fact that the vilification was of the most serious and unusual kind. Mr Arundell apparently could see nothing wrong with it. I was left with no doubt that had the orders made by Marks J on an interlocutory basis not been forthcoming, there would have been nothing which would have precluded its repetition. Indeed, the evidence left me with the distinct impression that some manoeuvres had been undertaken in order to get around the effect of those orders, unchallenged by the respondents by way of appeal.

164 It is unnecessary to come to a firm conclusion about this. Nevertheless, the evidence satisfied me that this was a case where the unfair conduct was of such a nature that the variation sought to the contract must, as a matter of fairness be made.

165 I am also satisfied that the effect of this conclusion and the relief which it must lead to, is not to erect an injunction which the Court has no power to grant. Rather, it will address an unfairness in the contract, which the evidence has amply revealed. This was undoubtedly a case where the implied term was inadequate and where an express contractual provision is necessary, as a matter of justice between the parties in order to address the unfairness which the evidence has revealed. As Kirby P (as he then was) observed in Walker v Full Court of the Industrial Court of New South Wales (1994) 53 IR 121 at 133-134, unfairness can flow not only from the positive provisions of a contract, but also from a failure to make provision which fairness requires.

166 This is such a case. The contractual term which will be imposed involves relevant and positive obligations which survive the termination of the contract, a blatant deficiency in the contract, which the evidence amply revealed. A term containing post contract obligations is unremarkable. The evidence well demonstrated the necessity for the variation sought by the applicants, given the respondents' ongoing unfair post contractual conduct.

167 Indeed, I take the view that there is a considerable public interest in that result being achieved in the circumstances here before the Court. That the tortured course which this litigation has taken since those orders were made, has resulted in the Court only being in a position to finally determine what orders are just in the circumstances which the evidence has revealed, some long period after the relationship came to an end, is not a proper basis for refusing to grant the relief so plainly warranted on the evidence.

168 I am satisfied that relief in relation to the December agreements extracted by the respondents as I earlier outlined, must also follow. In submissions reference was made to conduct allegedly in breach of the applicants' obligations to the respondents under those contracts. It was submitted that no discretion would be exercised in favour of the applicants, in those circumstances, as they did not have clean hands. I am satisfied that the respondents did not make out their case on these matters. In reality, the submission depended upon an acceptance of Mr Arundell's asserted understanding of various matters, unsupported by documentary or other evidence. There was, for example, no evidence called from the employees, consultants and clients allegedly involved in any breach by the applicants' obligations. I am well satisfied that this was not a basis upon which such conclusions could be reached.

Money orders

169 I am satisfied that the suggestion that there should be no payment for consulting and other work performed after December 1998, in the case of the consulting work because it had not been authorised, cannot be accepted. Unpaid expenses must also be met, as must the claim in relation to the variation to the Group Certificate. I am unable to prefer Mr Arundell's evidence about these matters. It did not appear to be in issue that the work had been performed and that the respondents had the benefit of it. The only real issue was whether in fact the consulting work was 'authorised'.

170 I also do not accept the analogy sought to be drawn by the respondents with unauthorised overtime. Such overtime, after all, involves a consideration of the time at which work is performed by an employee and the rate for which it is paid, when the employee elects to perform it outside of ordinary working hours, without an employer's direction or prior approval. The situations are not properly comparable. Indeed, given the approach of the respondents to the applicants in late December, when Mr Bowker's annual leave was cancelled, so that he could attend to work required to be performed before the termination of the arrangements in place to 31 December, and thereafter, given the difficulties created by the respondents for the applicants in the performance of the work required, the idea that the first respondent should be sheltered from paying for work cannot be accepted, if justice is to be achieved between these parties.

171 As to the claim for commission, I am well satisfied that the orders sought must be made. Not only was the commission arrangement imposed by the respondents in December an obviously unfair one, given the timing of payments due and the way in which they were calculated under the formula, the respondents' conduct towards the applicants, in relation to the provision of the information upon which the formula was based, also amply revealed the unfairness of the contract.

172 Contrary to the submissions of the respondents, the commission arrangement which here arose for consideration was entirely unlike that considered in Hairman v FileNET Corporation Pty Limited [2001] NSWIRComm 318. That arrangement was clear, well known to the applicant and not one which had led to any dispute during the employment. It was also found to be a fair one. Nor was there evidence that the employer had unfairly set out to avoid payment of commission for which it had received payment. Here, the formula imposed by the respondents in December was less than transparent, permitted obvious manipulation of internal expenses and did not require that necessary information be provided, in the event of any disagreement as to the calculation of the applicant's entitlement under the formula. The evidence also showed that unfair aspects of the earlier arrangement were utilised in order to pressure the applicants into continuing employment, in order to ensure that commission for payments already received by the respondents, would be paid to the applicants, if the relationship came to an end in December.

173 The respondents' failure to comply with the summons to produce the relevant material upon which the calculation of the commission formula depended, which I have earlier outlined, left the matter in a position where the proper inference to be drawn was that Mr Arundell's assessment of what was due, as advised to the applicants' solicitors prior to the termination of the parties' relationship, should be accepted and his later recalculations should be rejected. No proper basis for the latter was provided in his evidence. The respondents failed to produce to the Court the documents which would have enabled it to be demonstrated that his earlier assessment was in fact incorrect and his later calculation correct. I observe that the earlier calculation was also consistent with the discussions between the parties, which had been conducted in the expectation that the payments would be forthcoming, provided the applicants entered the December agreements. The obvious inference to be drawn from all of these circumstances is that there was no proper basis for Mr Arundell's later calculations. In the circumstances, I am well satisfied that justice requires the making of money orders in favour of the applicants for the earlier commission figures provided by Mr Arundell.

174 I turn then to the question of whether any money orders should flow to the applicants in respect of the unliquidated claim for the consequences of the disparagement. The fact that the money orders sought are unliquidated is not a bar to jurisdiction. (See the discussion of McHugh JA (as he then was) in Minister for Youth and Community Services at p561). The statutory direction in s106(5) is that the money order be 'just in the circumstances of the case'.

175 I am satisfied in the circumstances that justice requires that discretion be exercised in favour of the applicants in respect of this claim.

176 The fact that an applicant might have a cause of action for injury to reputation under the tort of defamation, or for recovery of financial loss at common law, in a breach of contract case, is also not a basis for concluding that no money order should be made, in exercising the statutory discretion. The discussion of Kirby P, as he then was, in Walker is apt to recollect. His Honour observed at pp134-135:

It is by no means unusual in our legal system for the one set of circumstances to give rise to a number of remedies which the person affected may pursue, sometimes in the one court, sometimes in differing courts, to the full extent of that person's entitlement. The commonest example is the entitlement of an injured worker to bring proceedings for benefits under the Workers Compensation Act, and to maintain a claim for damages at common law. The ingredients of the various entitlements may be different. But the existence of alternatives has never excluded a person from pursuing rights expressly conferred by statute. Unless those rights are expressly, or by necessary implication, excluded by the alternative claim, or controlled an obligation to elect or by time limits, the beneficiary of the statutory right can pursue any, or all, or no entitlement.

The High Court of Australia, and this Court, have repeatedly stressed the very wide discretion conferred by s 88F upon the former Industrial Commission (and now the Court). Once s 88F(1) attaches, the remedies which are then at the disposal of the Commission (now the Court) are also extremely wide. There is no warrant for confining this very large power, or for narrowing the circumstances of its exercise, except as the statute provides. See Stevenson v Barham (1977) 136 CLR 190 at 195,199, 201.

177 I am satisfied that this conclusion also does not involve, as the Chief Justice discussed in Mitchforce at [126], the exercise of 'matters at the heart of the exercise of the judicial power, such as the law of torts or of contracts or of criminal law'. Rather, it involves the exercise of the statutory power given the Court by s106, to deal with an employment contract established to have been relevantly unfair and to order its variation in order to address the unfairness found and to make consequential money orders. A failure to deal with the situation demonstrated on the evidence would undoubtedly involve a refusal to exercise jurisdiction. (See the discussion in Svecova v Industrial Commission of New South Wales (1991) 39 IR 328 at 342 per Meagher JA, with whom Samuels JA agreed.)

178 The making of a money order under the section is, of course, a matter of discretion. How and whether the discretion should be exercised are other considerations. The respondents also argued that no relief should be granted, given the applicants' own breach of contract in bringing the employment to an end, without giving the requisite notice. The argument must be rejected, given the unfair contractual term as to notice extracted by the respondents in the December contract, (namely four months' notice or to the balance of the term, which in any event expired in April as opposed to the respondents' right to terminate on one month's notice) and the respondents' unfair conduct towards the applicants thereafter. I am not only satisfied that the notice provision was relevantly unfair, I am also satisfied that the respondents' conduct was repudiatory, entitling the applicants to bring the contract to an end without giving any notice. The evidence showed an extraordinary course of conduct by the respondents, which I am satisfied this Court could neither countenance, nor find fair.

179 As to the quantification of the money orders, the applicants argued that the proper approach in a case such as this, is by way of analogy, like the approach which would be adopted to a claim brought in defamation or for misleading and deceptive conduct under the Trade Practices Act 1974. Particular reliance was placed upon the money orders in Nixon v Slater & Gordon (2000) 175 ALR 15.

180 In Westfield Holdings v Adams (2002) 114 IR 241, the Full Court discussed the exercise of the discretion given by s106(5), albeit not in connection with a claim for damages such as is pursued here. Nevertheless, that discussion is helpful to a consideration of the proper approach to be adopted in this case. At [129] to [130] the Full Court emphasised that while analogies were useful, the power given by s106(5) was not limited thereby. It was also observed in principle (3) at [161] that in appropriate cases the Court 'may make remedial provision for what has taken place or been done under the contract or arrangement that has been varied or avoided'. Principles (4) (8) and (10) are also relevant. They provide:

(4) Any order shall be what the Commission considers just in the circumstances of the case. Whilst such orders should not be limited by drawing some analogy with contractual, tort or equitable remedies it is proper to have regard to the common law or equitable principles, but recognising that in particular cases those principles may be inappropriate. That is not to say that the discretion under s 106(5) is at large. As with any judicial discretion it must be exercised judicially having regard to the accepted jurisprudence which enables, and requires, limits on what orders may or should be made.

(8) It is neither logical nor appropriate when assessing compensation under s 106(5) of the Industrial Relations Act to follow the approach adopted by other courts to the assessment of compensation under the Trade Practices Act. Nevertheless, it may be helpful to have regard to approaches taken to the assessment of damages in decisions under ss 82 and 87 of the Trade Practices Act, especially where the common law principles may have been a consideration. However, given the different statutory requirements of ss 82 and 87 of the Trade Practices Act as opposed to s 106(5) of the Industrial Relations Act, particular caution needs to be exercised. Ultimately, the relevant guiding principle for the Commission in Court Session under s 106(5) is not confined to a question of what loss or damage an aggrieved party has suffered but rather a wider test, namely, what is just in the circumstances of the case.

(10) If the overall amount proposed to be ordered under s 106(5) was considered to be excessive, it would be consistent with an appropriately cautionary approach for the trial judge to review his or her approach to each of the elements in respect of which money orders were proposed, eg, bonus, superannuation, payment in lieu of notice, redundancy, share options, etc, and to determine whether he or she may have fallen into error. In correcting any error it would not be appropriate to “set off” a proposed money amount in respect of one head of claim against the money amount proposed to be ordered in respect of another head of claim where the heads of claim are entirely unrelated and serve different purposes.

181 The Full Court's emphasis on a need for caution in making money orders under the section, reflects what was said by Barwick CJ in Stevenson v Barham (1977) 136 CLR 190 at 192, as to how this Court would properly exercise the wide jurisdiction it has been given. I accept the respondents' submission that this is a novel claim and should thus be approached with caution. Undoubtedly, claims such as this will be rare. I also accept that account should be taken of the approach long followed since the decision in Addis, which limits the kind of damages which can flow from a wrongful dismissal, excluding entirely damages for injured feelings. I am satisfied, however, that this is not such a case. After all, here it was the applicants who were seeking to leave the relationship and the respondents who conducted themselves unfairly, in actively and deliberately seeking to damage the applicants in the marketplace, in order to retain their services while the relationship persisted and simply to inflict further damage, after it came to an end.

182 In King the Full Court considered the Court's jurisdiction to make money orders under s106(5), in the nature of compensation for distress caused upon termination of employment. A concession had there been made by the respondent as to the existence of such a discretion, which the Court found to have been properly made (at [102]). The position at common law, that damages are generally not recoverable for distress as the result of wrongful termination, flowing from the judgment in Addis was regarded as providing no more than a useful guide to the Court (at [103]).

183 The Full Court accepted at [105] that there would be 'very rare cases' where 'an award of compensation reflecting 'distress' upon termination will fall within the statutory criteria'. The amount fixed was $5,000. Regard was paid to the undoubted fact that some degree of stress and financial hardship is likely to be suffered by any employee upon termination. It was the particular unfair treatment of the applicant and its consequences for the applicant on the evidence, which took this beyond the usual case.

184 The type of vilification to which the applicants were here subjected, both during and after the termination of the relationship, is far from what might ordinarily be expected. Indeed, to the contrary, it is entirely unexpected, unacceptable and contrary to the implied duty earlier discussed. The conduct and the contract which permitted it have been found unfair. I am satisfied that in the circumstances, not only does justice require that the contract be varied to insert an express term dealing with these matters, I am also of the view that a money order would be just in these circumstances, both to compel attention to the nature of the unfairness and to reflect the consequences for the applicants.

185 The applicants were unable to point to evidence of any direct adverse consequences flowing from what occurred in the context of lost income. In this respect, I agree with the observations of Marks J in the interlocutory judgment at pp35-36 as to the problems which flow from disparagement of the kind here in question and an identification of the damage it may have caused.

186 That there were adverse consequences for the applicants cannot be doubted. Mr Bowker was, after all, asked to resign from his new employment by SEA and his services at UTS were no longer required. The conduct undoubtedly led to much trouble and resulting legal expense for the applicants, who successfully pursued the interlocutory relief granted by Marks J, when the respondents refused to retract the disparagement. This well put the circumstances into a class where, harking back to the words of Lord Hailsham in Cassell & Co Ltd v Broome [1972] AC 1027 at 1071 and of Mahoney ACJ in Crampton v Nugawela (1996) 41 NSWLR 176 at 194-5 the money orders made must ensure that the disparagement, 'having spread along the grapevine ... and being apt to merge from its lurking place at some future date' it was sufficient to convince a bystander of the baselessness of the charge'. While this approach was taken in defamation proceedings, I am satisfied that it is one appropriate to have regard to in proceedings such as this.

187 On the other hand, in my view, account must also be taken of the fact that the applicants were still able to prosper after the termination of the parties' relationship. Whether they could have done better, in the absence of this treatment cannot be known. Nor can the impact of the decision made by Marks J, which may well have had an ameliorating effect on what flowed from the respondents' unfair conduct, as well as preventing to a large degree, at the least, its repetition.

188 His Honour granted interlocutory relief, being satisfied that the evidence before him showed a breach of the first respondent's implied contractual obligations to the applicants and having regard to the provisions of s163 of the Act, which amongst other things, requires the Court to 'act according to equity good conscience and the substantial merits of the case without regard to technicalities or legal forms'. While his Honour did not regard the section as enhancing jurisdiction, he felt bound to abide by its provisions in the exercise of the jurisdiction. His Honour took the view that the Court was empowered to grant the interlocutory injunction, in the protection of its process to ensure that any final orders may not be frustrated or put at naught, adopting the approach of Hungerford J in Darvall v NZI Securities Australia Ltd (1991) 39 IR 215.

189 The respondents argued before me that the Court was without jurisdiction to make such an order. It is unnecessary to come to a view about this. Having heard the evidence, I entirely understand why it was that his Honour concluded that the orders were necessary to protect the Court's processes; that there was a serious issue to be tried; that the applicants would suffer irreparable harm if the orders were not made, for which damages would be no adequate recompense and that the balance of convenience lay with the applicants. Indeed, his Honour concluded that the material published went to the applicants' very ability to earn a livelihood. I agree. As I noted earlier, the Court is not however, now asked to grant any injunctive relief and so no further consideration of these matters is called for.

190 Having weighed all of the considerations I have mentioned, the fact remains that a cautious approach must of necessity be adopted to the imposition of any money orders. The applicants submitted that a sum reflecting a year's income would be an appropriate basis for such an order. I am unable to agree. While an award in a defamation action or in proceedings under the Trade Practices Act 1974 might bring much more, I am satisfied that an order of $22,000 is a just sum in the circumstances.

191 The sum represents about two month's pay, at the applicants' target package rate. The conduct in question occurred both during the relationship and persisted, some two and a half months after its termination. What its ongoing consequence for the applicants will be, cannot be known. Had there been evidence of actual losses, a higher amount would have had to have been entertained. Nevertheless, on the evidence, I am satisfied that this is a rare case and that the money order assessed, reflects both a cautious approach to the assessment of what justice here requires, as well as paying regard to the seriousness of the conduct in question. That conduct, on the evidence was both deliberate and calculated to inflict damage of a serious kind on the applicants' ability to work. It was most unusual and deliberate conduct. The amount fixed also pays regard to the sum fixed in King and seeks to take account of the deliberate and unusual nature of this conduct, by way of comparison to that there considered.

192 In coming to these conclusions, I have had regard to the submissions urged for the applicants. I take note of the approach of Merkel J in Nixon, where two medical practitioners successfully pursued claims in both defamation and pursuant to the Trade Practices Act 1974 for misleading or deceptive conduct. General damages of $200,000 and $100,000 were awarded. At [84] the approach to calculating damages for defamation was held to be applicable to the calculation of damages under s82 of the Trade Practices Act 1974, in the circumstances there under consideration.

193 While I was satisfied that justice required the making of money orders in favour of the applicants, I was unable to conclude that the approach to calculating damages for defamation could properly be adopted, as was urged for the applicants. Firstly, there was no claim here advanced in defamation. Secondly, I am bound to follow the authorities earlier referred to in approaching the question of money orders. I was satisfied that there was both jurisdiction and power to make a money order and that the discretion should be exercised. I was not convinced that a higher money sum could properly be ordered under s106.

194 I am also satisfied that the money orders should be directed against the two remaining respondents, on a joint and several basis. There can be no doubt that Mr Arundell was the controlling mind of the first respondent and causally connected with the unfairness I have dealt with.

195 There was also a disagreement between the parties as to what account should be taken of the money paid to the applicants by the respondents, without admission, during the course of the proceedings. Those moneys have been held in the applicants' solicitor's trust account, pending determination of the proceedings. I am satisfied that account must be taken of those sums and that the order for interest should also have regard to the date of their payment. It is relevant that since then, the money has not been that of the respondents, to do with as they wished. I also take the view that the money orders which reflect the disparagement, should have no interest component prior to the date of judgment, given that this aspect of the money order is made in the context of the entirely new contractual right in relation to disparagement, created by this judgment.

Orders

196 It is finally necessary to say something about the form of the orders to be made. The applicants sought orders that the various agreements entered between the parties in 1998 be declared void. Alternative orders were also pressed. Given the evidence which I have dealt with as to the circumstances in which those various agreements were entered, their unfair terms and the respondent's unfair conduct, I am entirely satisfied that justice requires that they must be declared void, so that the unfairness identified can adequately be remedied. The contract of employment between Mr Bowker and the first respondent must also be varied to deal expressly with disparagement, as I have earlier noted.

197 For all of the reasons given, I find the parties' contracts and arrangements relevantly unfair and make the following consequential orders:

1. The March 1998, June 1998 and December 1998 employment agreements and the December 1998 Deed of Release and the Deed of Consultancy are declared void, ab initio, except as to money sums paid thereunder:

2. The first applicant's contract of employment is varied ab initio, by prohibiting the first and second respondents from engaging in conduct, whether during or at any time after the term of the contract, that damages, or is calculated, or likely, to damage the personal, business and professional reputation of either of the applicants and their prospects of further employment, and that causes them anxiety, distress and embarrassment.

3. The respondents are to pay to the applicants a sum calculated as:

(i) The money sums claimed, apart from unpaid rent, plus

(ii) Interest on that amount, calculated from the date of termination of the parties' relationship, to the date of payment of the sums paid by the respondents to the applicants in these proceedings without admission; less

(iii) The sum paid without admission to the applicants by the respondents in these proceedings, plus

(iv) Interest on that amount from the date of payment of those moneys by the respondents, to the date of judgment; plus

(v) $22,000.

198 The usual order as to costs would be that the respondents bear the applicants' costs, as agreed or assessed. There are also questions of costs outstanding in relation to various interlocutory judgments. The usual order would be that costs would follow the event. In the absence of agreement on the terms of the order as to costs, the parties have liberty to approach. That liberty should be exercised within 28 days of the date of this judgment.

------------------------

LAST UPDATED: 23/04/2004