Warren v Dickson [2011] NSWSC 79 (25 February 2011)

Last Updated: 14 April 2011

Supreme Court New South Wales

Case Title:	Warren v Dickson
Medium Neutral Citation:	[2011] NSWSC 79
Hearing Date(s):	7 February 2011, 8 February 2011, 9 February 2011
Decision Date:	25 February 2011
Jurisdiction:
Before:	Pembroke J
Decision:	See judgment paragraph 48
Catchwords:	ADMINISTRATION OF ESTATES - transmission of interest in joint property - proper characterisation CONTRACT - repudiation - conduct not repugnant or inconsistent - no repudiation EMPLOYMENT LAW - employee's duty of fidelity - characterisation of conduct - not employee - no duty - no breach
Legislation Cited:
Cases Cited:	Abebe v The Commonwealth [1999] HCA 14; (1999) 197 CLR 510 Bank of New South Wales v The Commonwealth [1948] HCA 7; (1948) 76 CLR 1 Blyth Chemicals v Bushnell [1933] HCA 8; (1933) 49 CLR 66 Byrne & Frew v Australian Airlines Ltd (1995) 185 CLR 410 Campbell v Backoffice Investments Pty Ltd [2008] NSWCA 95 Castlemaine Tooheys Ltd v Carlton & United Breweries Ltd (1987) 10 NSWLR 468 Concut Pty Ltd v Worrell [2004] HCA 64 DTR Nominees v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423 Heptonstall v Gaskin (No 2) [2005] NSWSC 30; (2005) 138 IR 103 Hollis v Vabu [2001] HCA 44; (2001) 207 CLR 21 Holt v Deputy Federal Commissioner of land Tax, New South Wales [1914] HCA 26; (1914) 17 CLR 720 Johnson (A P) v Unisys ltd [2003] 1 AC 518 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623 McCoy v Estate of Caelli [2008] NSWSC 986 Mahmud & Malik v Bank of Credit & Commerce International SA [1997] UKHL 23; [1998] AC 20 Re Robertson (1944) WN (NSW) 53 Russell v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (2008) 72 NSWLR 559 Sopov & Walker v Kane Constructions Pty Ltd [2007] VSCA 257 Trawl Industries v Effem Foods (1992) 27 NSWLR 326 Vodafone Pacific Ltd & Ors v Mobile Innovations Ltd [2004] NSWCA 15
Texts Cited:
Category:	Principal judgment
Parties:	Robert Hugh Warren - Plaintiff Gregory John Dickson - First defendant Kevin Bernard Dwyer - Second defendant Rebecca Anne Flynn - Third defendant Dean Barry Groundwater - Fourth defendant Craig Graham Pryor - Fifth defendant Warren McKeon Dickson Pty Limited - Sixth defendant
Representation
- Counsel:	Counsel: J J Garnsey QC with N W Hogan - for the Plaintiff M Orlov - for the Defendants
- Solicitors:	Solicitors: Access Law Group - for the Plaintiff Verekers Lawyers - for the Defendants
File number(s):	2010/00290498
Publication Restriction:

Judgment

Introduction

1. This is a dispute between solicitors. It concerns the affairs of a firm known as Warren McKeon Dickson. It raises a relatively straightforward question of construction concerning an agreement made on 16 February 2010 described by the parties as "Heads of Agreement". If the agreement is construed as the plaintiff contends, it follows that the defendants are in breach of it. There then arises a question as to whether the plaintiff is disentitled to relief because he allegedly repudiated the agreement on either of several bases. The defendants have purported to accept the alleged repudiation. One of those bases in turn throws up a further question as to the implication of a duty of fidelity. For the reasons that follow, I have concluded that the plaintiff should succeed on all issues, namely construction, breach and repudiation. In that event, the defendants made clear that they concede, indeed I think they embrace, the plaintiff's entitlement to specific performance of the agreement. Although I expressed some reservations, neither party submitted that I should refrain, for discretionary reasons, from ordering specific performance.
   

The Facts

2. Until 1 July 2009 the plaintiff was a director of Warren McKeon Dickson Pty Ltd (the Company) and the oldest and longest serving member of the partnership associated with that company. The partnership carried on the practice of solicitors at Miranda and at other locations throughout New South Wales under the name Warren McKeon Dickson (WMD) and various other names. On and from 1 July 2009 the plaintiff retired as a director of the Company and as a member of the partnership. He chose to become a consultant. His right to do so was governed by a Shareholders Agreement to which was annexed a form of consultancy agreement described as the Warren Consultancy Agreement (WCA).
   
3. The Shareholders Agreement had been entered into on 2 July 2007. The Company and each of the partners at that time were parties to it Clause 10.1 provided that the shareholders (being the partners of the partnership) covenanted to take such steps as may be required to ensure that upon the plaintiff's retirement, the Company would offer to enter into the WCA with him.
   
4. The Shareholders Agreement defined the legal practice pursuant to which the Company and the partners carried on business by reference to a long list of business names. The legal practice was said to be carried on at Miranda and such other place or places as the directors may from time to time decide.
   

Warren Consultancy Agreement

5. The WCA does not appear to have been formally executed but it took effect from 1 July 2009. The Recitals repeated that the legal practice was carried on at Miranda and other places in New South Wales under various names. Recital D stated that the consultancy agreement set out the terms upon which "the Consultant is engaged as an employee by the Company ... to perform the Accepted Legal Work". With some minor qualifications, the Accepted Legal Work meant "Probate and Associated Legal Work". This was a key expression on which the first issue turns. It was defined as follows:
   

Probate and Associated Legal Work means all legal, para-legal and secretarial work arising from instructions given by clients of the Company's Legal Practice ... with respect to the grant of probate or letters of administration and the administration of estates without the need to obtain probate or letters of administration (Probate Work) including:

(i) all usual work associated with or arising out of the Probate Work;

6. By Clause 3.1 the Company was obliged to offer the plaintiff the first right of refusal to perform any legal work arising from instructions the Company received to perform Probate and Associated Legal Work. There are a number of other terms of the WCA which are relevant to its proper characterisation as a contract of service or a contract for services. This in turn is relevant to the defendants' claim that the plaintiff was subject to an implied duty of fidelity, that he breached that duty and that his breach amounted to a repudiation which the defendants accepted. I will turn to that issue and the terms of the WCA relevant to its resolution later in these reasons. At this stage, it is sufficient to say that, even if there were an implied duty of fidelity, I have concluded as a matter of fact that the plaintiff's conduct was not of such a character as to amount to a breach of it.
   

Heads of Agreement

7. Following the plaintiff's retirement, disputes soon arose. A central issue was the extent of the Probate and Associated Legal Work that was required to be offered to the plaintiff. The defendants apparently maintained that they were only obliged to offer the plaintiff Probate and Associated Legal Work arising from instructions received at the Miranda office, not from other emanations of the practice carried on under various names at other places throughout New South Wales. On 9 September 2009, in order to resolve this issue and certain other matters, the plaintiff commenced proceedings No 4495 of 2009 (the original proceedings). There was then a mediation at which a compromise was agreed. The terms and conditions of the compromise were set out in the Heads of Agreement.
8. One of the principal objects of the Heads of Agreement was to vary and clarify the WCA. It did so, among other things, by stating that the WCA applies to Probate and Associated Work in respect of the legal practice "under whatever name and wherever conducted in New South Wales or the ACT as at 1 July 2009". It then recorded certain variations to the plaintiff's remuneration entitlements in respect of Probate and Associated Work coming from different sources.
   
9. Clauses 7 and 8 then set out new obligations which the Company assumed:

7 The Company will forthwith provide in writing full disclosure and information concerning and an accounting for all adjustments made to commission in the monthly commission statements provided to the Plaintiff since 1 July 2009 subject to 2, 3, 4, 5 and 6 above and will forthwith pay any and all moneys found to be due by the Company to the Consultant pursuant to this clause.

8 The Company will forthwith provide in writing full disclosure of all Probate and Associated Work within the WCA received or accepted by the legal practice of Warren McKeon Dickson Pty Limited under whatever name and wherever conducted in New South Wales since 1 July 2009 and, subject to 2, 3, 4, 5 and 6 above, will forthwith refer to the Plaintiff any work not referred under the WCA.

10. Clause 13 provided that, subject to receipt of all moneys owing by the Company to the plaintiff pursuant to the agreement, the original proceedings shall be dismissed with no order as to costs. Clause 14 then provided for mutual releases, subject to the performance of Clause 13. And Clause 15 provided that the parties will co-operate in good faith to carry into effect the Heads of Agreement and the WCA.
    

Further Disputes

11. The Heads of Agreement itself gave rise to further disputes. The plaintiff complained that there had not been full disclosure and information in accordance with Clause 7 and 8. This was primarily because the defendants now maintained that "Probate and Associated Work" did not include instructions arising merely as a consequence of notices of death where all that was required was the transmission of an interest in jointly owned property to the surviving owner.
    
12. The plaintiff became understandably exasperated with the conduct of the defendants. His email communications with Mr Dickson, the first defendant, soon reflected his state of mind. He was forthright and robust in his complaints. His language became increasingly accusatory and acrimonious. However he had cause for complaint, for reasons that I will explain.
    
13. The disputation rose to a crescendo in March and April 2010 and came to a head in May. On 22 April 2010, the original proceedings were listed for mention before the Registrar in Equity. The parties were represented by their solicitors. The position of the defendants' solicitor was that, by reason of the Heads of Agreement, the original proceedings had settled and should be dismissed. The plaintiff's solicitor contended that, because the defendants had not complied with all of the terms of the Heads of Agreement, it was not appropriate to dismiss the original proceedings. The defendants' solicitor made clear in his evidence that that was the only sense in which it was conveyed to him, if at all, that the Heads of Agreement were not binding.
    
14. The defendants sought to engage me in the minutiae of the conversations between the solicitors within and without the Registrar's court. There was even evidence of a tape recording of what transpired before the Registrar. All of this seemed to me to be unnecessary, perhaps even blinkered. The indubitable fact was that the Clause 13 of the Heads of Agreement provided that, subject to the receipt of all moneys owing by the Company to the plaintiff, the original proceedings shall be dismissed. The plaintiff contended, on reasonable grounds, that he had not received all moneys to which he was entitled under the agreement. It was therefore not only appropriate, but requisite, that the original proceedings not be dismissed.
    
15. Despite the contentions advanced by the defendants at the hearing, this appears to have been accepted at the time. On 22 April 2010 consent orders were agreed and made providing for the continuation of the original proceedings and the filing of a cross claim by the defendants, if so advised. It was perceived that a cross claim by the defendants might be a convenient vehicle for the resolution of the further issue for which they now contended as to the limitations in meaning and scope of the expression "Probate and Associated Work". This regime was however short lived.
    

The Alleged Repudiation

16. On 5 May 2010, without any prior warning, and despite the consent orders, the defendants' solicitors wrote to the plaintiff's solicitor contending that the plaintiff had repudiated the Heads of Agreement. The letter stated that the defendants accepted the repudiation. They contended that the WCA and the Heads of Agreement were accordingly terminated with immediate effect. It will be apparent from these reasons that I have concluded that there was no repudiation by the plaintiff, and that the defendants' purported termination was itself unfounded and a serious breach of the Heads of Agreement.
    
17. The grounds on which the defendants relied were twofold. First they alleged that the plaintiff's decision on 22 April 2010 to continue the original proceedings was fatal. This was said to be because the continuation of the original proceedings by the plaintiff was inconsistent or repugnant with the maintenance of any relationship of trust and confidence between the parties. The letter stated:
    

On 22 April 2010 your client elected to treat the Heads of Agreement as no longer binding upon him and, instead, to continue the proceedings commenced by statement of claim. Directions for the continuation of the proceedings were made on that date by consent ... your client's decision to continue the proceedings [is] repugnant to the continuation of any relationship of trust and confidence between the parties.

18. Second, the letter stated that the plaintiff's complaints and acrimonious email communications about the failure of the defendants to comply with the Heads of Agreement amounted to "unfounded allegations of dishonesty, bad faith, misleading and deceptive conduct, bullying and harassment". Those complaints and allegations were also said to be repugnant to the continuation of the parties' relationship and a breach of the plaintiff's implied duty of fidelity.
    
19. This then was the scene that led to a second set of proceedings being commenced by the plaintiff on 12 May 2010. He immediately obtained interlocutory relief restraining the defendants from acting on the purported termination. These second proceedings, as well as the original proceedings, are now before me for final determination. Central to the second proceedings is a claim by the plaintiff that the WCA, as varied by the Heads of Agreement, be specifically performed. Underlying this are contentions that the defendants have not offered to the plaintiff all of the Probate and Associated Work that they were required to offer and that the defendants are in breach of Clauses 7 and 8 of the Heads of Agreement. For their part, the defendants filed a cross claim seeking a declaration that their purported termination on 5 May 2010 was valid. I will in due course make orders for the dismissal of the cross claim with costs. The original proceedings have effectively been superseded and I need grant no relief pursuant to them.
    

Probate and Associated Work

20. The first step in the unravelling of this tangled web is the proper construction of the words "Probate and Associated Legal Work" as it appears in the WCA and as it became clarified in the Heads of Agreement where it is described as "Probate and Associated Work". It is not limited to legal work but includes "all legal, para-legal and secretarial work arising from instructions given by clients." The instructions must be "with respect to", among other things, "the administration of estates without the need to obtain probate and letters of administration" including all usual work associated with or arising out of that work. The phrase "with respect to" is, of course, a phrase of the widest input. In fact, Sir John Latham once said that a power to make laws "with respect to" a specific subject is as wide a legislative power as can be created: Bank of New South Wales v The Commonwealth [1948] HCA 7; (1948) 76 CLR 1 at 186; see also Abebe v Commonwealth (1999) 197 CLR 510 at 526 (Gleeson CJ and McHugh J).
    
21. As I have mentioned, the defendants contended that instructions arising as a consequence of a notice of death and requiring the transmission of an interest in jointly owned property to the survivor, were not instructions within the definition of Probate and Associated Work. Their fundamental proposition was that, because the interest of a joint tenant is extinguished on death, and the interest of the survivor correspondingly increased, no question of the administration of the estate of the deceased arises. Unassisted by any evidence of the practice of the firm and the context in which the relevant words must necessarily be construed, I would have had little hesitation in reaching the view that the narrow construction for which the defendants contend is not appropriate. It does not seem to reflect the ordinary meaning of the words chosen by the parties, let alone the reasonable and commonsense approach - to which I am naturally inclined.
    
22. However, when these words are considered in the context of the practice of the firm, against the background of which the parties reached their agreement and chose their contractual language, the matter is put beyond reasonable doubt. There was abundant and uncontroverted evidence that the taking of instructions consequent upon death in relation to joint property of a deceased and the surviving owner or owners, were matters which were, in fact, treated by the parties as probate and associated work. The evidence included not only the uncontradicted and unchallenged evidence of the plaintiff himself, but also the primary documents. Those documents contained serial examples of the practice of the firm by which instructions in relation to such matters were treated and described as coming within the rubric "administration of estates". It matters not that in late 2010 the defendants adopted a practice of opening a new and separate file for the preparation of a notice of death where the deceased was a joint owner of property at the time of death. Given the previous long-standing practice, this was transparently cosmetic.
    
23. Additionally, I have found helpful the analysis of the effect of a notice of death and the associated process of transmission of an interest in jointly owned property, at least in relation to Torrens Title land, that was explained by Brereton J in McCoy v Estate of Caelli [2008] NSWSC 986 at [14] and [15]. I should also observe that it is commonplace for lawyers to refer to the "transmission of an estate" when an interest in property passes by operation of law upon the death of a joint tenant. See for example Holt v Deputy Federal Commissioner of Land Tax, New South Wales [1914] HCA 26; (1914) 17 CLR 720 at 725 (Isaacs J) and Re Robertson (1944) WN (NSW) 53 (Roper J). It is therefore a small, but entirely logical, step to treat instructions in relation to such matters as instructions with respect to the administration of estates without the need to obtain probate or letters of administration, including all usual work associated with or arising out of such work.
    
24. For those reasons, it follows that the defendants have not offered to the plaintiff all of the work to which he is entitled. Nor have they complied with their obligations under Clause 8 of the Heads of Agreement. The plaintiff is therefore entitled to specific performance of the defendants' obligations in that regard - subject to other defences.
    

Repudiation - First Ground

25. I have already indicated that I do not think that the plaintiff could be taken as repudiating the Heads of Agreement by his solicitor's decision on 22 April 2010 not to have the original proceedings dismissed. For one thing, the decision on 22 April 2010 could hardly be described as unilateral. The parties agreed by consent orders that the proceedings should continue. They expressly provided in their consent orders for a cross claim by the defendants, if so advised. The contemplated purpose of any such cross claim was to ventilate the further issue as to the scope and meaning of "Probate and Associated Work". Further, almost six weeks earlier on 12 March 2010, the defendants' solicitors themselves acknowledged the appropriateness of maintaining the original proceedings. In their letter dated 12 March they said, quite reasonably, that "it may be necessary to continue the proceedings in order to have the court determine that issue of construction or that the WCA should be rectified." Further still, there was nothing intrinsically inconsistent or repugnant about the continuation of the original proceedings. Among other things, this was for the very good reason that the plaintiff contended that he had not received all moneys due to him pursuant to the agreement. Clause 13 effectively acknowledged that until receipt of all moneys owing to the plaintiff, there was no requirement for the original proceedings to be dismissed.
    
26. The defendants' submissions as to why the continuation of the original proceedings constituted a repudiation, were perplexing. The premise of the contention was never satisfactorily articulated and the reasoning remained opaque. The defendants used the language of "election" in written submissions but during addresses disavowed any reliance on the legal doctrine of election. The fact that the statement of claim in the original proceedings contained allegations about something which the parties called the "Whiteboard matter" is beside the point. The continuation of the original proceedings was primarily for the purpose of resolving the question of construction that the defendants introduced after the mediation. In fact, events overtook the course which the parties contemplated on 22 April 2010. The defendants did not file a cross claim. Instead they contended that there had been a repudiation and purported to act as if they were no longer bound by the WCA and the Heads of Agreement. The plaintiff was compelled to commence fresh proceedings and seek injunctive relief. The new proceedings then became the vehicle for the resolution of the question of construction that emerged after the mediation.
    
27. I have concluded that there is really no factual basis for the first limb of the defendants' repudiation case. In the events that occurred, it could not have been inferred reasonably that, by continuing the original proceedings, the plaintiff was evincing an intention no longer to be bound by the Heads of Agreement: cf Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623 at 647-8 (Brennan J). That is because, as the defendants well understood, the plaintiff was motivated by a desire to enforce the agreement. He wished to uphold it and to obtain what was due to him pursuant to it. His decision to continue the original proceedings, in which the defendants must be taken to have concurred - because of the consent orders - was sanctioned by Clause 13. His objective was to bring about performance of the agreement rather than repudiate it. His conduct was the antithesis of someone who exhibits by his conduct an absence of the requisite readiness and willingness to perform his contractual obligations. The first ground of repudiation must fail.
    
28. I should add that, as well as disavowing reliance on the doctrine of election, the defendants also disavowed reliance on the principle that a party may be taken to have repudiated an agreement by insisting unreasonably on an erroneous and obviously untenable construction of its terms: DTR Nominees v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423 at 431-2; Trawl Industries v Effem Foods (1992) 27 NSWLR 326 at 354-5. See also the helpful elucidation of the principle in Sopov & Walker v Kane Constructions Pty Ltd [2007] VSCA 257.
    

Repudiation - Second Ground

29. The second ground on which the defendants relied in support of their contention that the plaintiff had repudiated the WCA and the Heads of Agreement, depended on the proper characterisation, as a matter of fact, of the communications between the parties prior to 5 May 2010. It was said that the plaintiff's robust complaints, accusations, demands and threats were inimical to the continuation of the agreement. They were, it was said, repugnant to the maintenance of the relationship of trust and confidence contemplated by the agreement. In support of this contention, the defendants relied on an alleged implied duty of good faith which they said formed part of the agreement. Whether or not there was such a duty, as to which I will come, the underlying issue is one of factual characterisation. For the reasons that follow, I do not think that the plaintiff's conduct can be characterised fairly as calculated to destroy or seriously damage the relationship. The language used was certainly direct and forceful. But the plaintiff had a reasonable and proper cause for complaint.
    
30. I should make two preliminary observations. The very fact that the defendants concede that, if the plaintiff is successful in the proceedings, there should be an order for specific performance of the WCA and the Heads of Agreement works against them. It is indicative of a degree of a preciousness in their submission that the plaintiff's conduct is antithetical to the continuation of the relationship. It makes it difficult to see how the plaintiff's robust language prior to 5 May 2010 could have been regarded reasonably as calculated to destroy and undermine the parties' relationship. If an order for specific performance is made, the relationship will continue into the future. If the plaintiff succeeds, the defendants accept that outcome and embrace the remedy of specific performance rather than suffer an award of damages. There is a tension in the defendants' position on this limb of the repudiation case that detracts from both the force, and the commercial reality, of their submissions. The tension is brought into sharper relief when it is recognised that, since interlocutory restraining orders were made by Windeyer AJ in May 2010, the parties have been satisfactorily performing their respective contractual obligations without disagreement or apparent difficulty.
    
31. The second observation is that issues of this nature usually arise in employment contracts. For the reasons that I will explain, the WCA is a consultancy agreement and bears a different character. But even in employment contracts where, in a given case, there may be an express or implied obligation not "to destroy or seriously damage the relationship of trust and confidence" between the parties, there are qualifications. There will usually only be a breach of the obligation where there was "no reasonable and proper cause" for the conduct. And then only if the conduct is "calculated to destroy or seriously damage the relationship of trust and confidence". These are appropriate and reasonable limitations. See for example Mahmud & Malik v Bank of Credit & Commerce International SA [1997] UKHL 23; [1998] AC 20 at 53 (Lord Steyn).
    

The Communications

32. I do not think it is necessary to set out at length the email correspondence between the plaintiff and the defendants. I am quite satisfied that, taken as a whole, the language that erupted from the plaintiff never rose high enough to constitute a repudiation in the sense relied upon by the defendants. True it is that the plaintiff said that Mr Dickson had failed to act reasonably and in good faith and that he was dissembling (18 March 2010); that the Company had engaged in bullying and harassing behaviour in the operation of the WCA since the date of the mediation (23 March 2010); that remuneration had not been paid when due (23 March 2010); that a new dispute as to the extent of matters covered by "Probate and Associated Work" had been introduced when it was not an issue at the mediation (23 March 2010); that a policy of "cost stripping" had been adopted by the defendants since the mediation by taking instructions and acting in a manner which was in breach of the term of the WCA (23 March 2010); that Mr Dickson personally entered time in the Bell Estate matter in a misleading and deceptive manner (23 March 2010); and that there was a move to make the plaintiff's employment in the operation of the WCA both unpleasant and difficult in an endeavour to force him out of the WCA (23 March 2010).
    
33. Similar communications continued throughout April. On 27 April 2010 the plaintiff sent a memorandum to Mr Dickson to which the latter responded on 29 April. He said that the plaintiff's language and accusations were inappropriate and disrespectful. He characterised the plaintiff's language as aggressive and accusatory. I have not doubt that it was. But that is insufficient by itself to make good the defendants' allegation that the plaintiff's conduct amounted to a repudiation of the WCA.
    
34. The plaintiff was endeavouring to secure performance of the WCA and the Heads of Agreement. He made that plain in his communications. He liberally sprinkled these communications with statements such as "If you would just act reasonably we could all get on with doing our work for an effective bottom line"; "This is such a waste of time"; "I would work effectively and efficiently with you given the chance"; and "I want to work effectively and harmoniously with the Company and all directors for our mutual benefit".
    
35. Throughout all of these communications, the plaintiff was asserting his rights under the WCA and the Heads of Agreement and complaining of breaches by the defendants. His frame of reference was the respective legal rights and entitlements of the parties pursuant to the agreement that bound them. His complaints were not irrational. Whether or not he was correct in every position he took, each had a logical factual basis. His language was not so intemperate as to be devoid of any reasonable justification. His manifest objective was fulfilment of the agreement, not its destruction.
    
36. The defendants could not have failed to appreciate this. The plaintiff was not excluding the possibility of the re-establishment of the relationship on a sound footing. He was seeking it. Looked at objectively, the plaintiff's conduct cannot be characterised reasonably as having the quality of repugnance that is necessary to constitute a repudiation. Nor do I regard it as likely to have caused serious damage, especially when the agreement made express provision for a process of dispute resolution. Disagreement and difference were always contemplated. And the parties well knew that any unresolved differences were capable of ultimate resolution by this court. The plaintiff and the first five defendants are all intelligent and experienced officers of the court. I am confident that they are capable of conducting, and will indeed conduct, their ongoing relationship in accordance with the terms of the WCA and the Heads of Agreement.
    

Duty of Fidelity

37. Because I have concluded that, when properly characterised, the plaintiff's conduct could not amount to a breach of any implied duty of fidelity, it is strictly unnecessary for me to determine whether any such duty should be implied as a matter of law within the contractual framework to which the parties had expressly agreed. Nonetheless, as I have reached a clear view that there was no such implied term, I will explain my reasons.
    
38. I should make three preliminary observations. First, the parties were already bound by an express obligation in Clause 15 of the Heads of Agreement to co-operate in good faith to carry into effect the Heads of Agreement and the WCA. Second, the WCA contained an express term to the effect that "this consultancy agreement represents the parties' entire agreement". In those circumstances the implication of any term is problematic: Castlemaine Tooheys Ltd v Carlton & United Breweries Ltd (1987) 10 NSWLR 468 at 490E-403F; Byrne & Frew v Australian Airlines Ltd (1995) 185 CLR 410 at 448-452; [1995] HCA 24; (1995) 131 ALR 422; Vodafone Pacific Ltd & Ors v Mobile Innovations Ltd [2004] NSWCA 15 at [183ff]: Campbell v Backoffice Investments Pty Ltd [2008] NSWCA 95 at [557].
    
39. Third, the content of the implied term was never pleaded or elaborated. It was described merely as "an implied duty of fidelity and good faith". But its precise scope, and the particular conduct of the employee proscribed by the alleged duty, were never explained. In any given case, there will inevitably be a practical difficulty in identifying the scope and reach of the proscription. The extent of the duty and the proscribed conduct will necessarily vary depending on the nature of the employee's responsibilities and the express terms of the contract of employment.
40. In the United Kingdom, it would appear to be now accepted that a term to the following effect is implied as an incident of all contracts of employment:
    

The employer shall not without reasonable and proper cause, conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.

See Mahmud & Malik v BCCI (supra) at 45-46 (Lord Steyn); Johnson (A P) v Unisys Ltd [2003] 1 AC 518.

41. But it is not at all clear, even in an orthodox employment contract, (which this is not), that this statement represents the position in New South Wales. Nor is it clear that in New South Wales the employee has, or should have, a correlative duty in identical terms to that which is imposed on the employer. The authoritative Australian statement of an employee's duty of fidelity and good faith is still that of Dixon and McTiernan JJ in Blyth Chemicals v Bushnell [1933] HCA 8; (1933) 49 CLR 66 at 81-82:
    

Conduct which in respect of important matters is incompatible with the fulfilment of an employee's duty, or involves an opposition, or conflict between his interest and his duty to his employer, or impedes the faithful performance of his obligations, or is destructive of the necessary confidence between employer and employee, is a ground of dismissal... But the conduct of the employee must itself involve the incompatibility, conflict, or impediment, or be destructive of confidence. An actual repugnance between his acts and his relationship must be found. It is not enough that ground for uneasiness as to future conduct arises.

See also Concut Pty Ltd v Worrell [2000] HCA 64 at [25] (Gleeson CJ, Gaudron and Gummow JJ).

42. Care should be taken when referring to United Kingdom authorities in this area of the law. The modern English formulation of the implied obligation of trust and confidence has evolved against a different statutory background and as a consequence of the legal recognition in the United Kingdom of arguably higher expectations on an employer. It reflects a contemporary attempt to strike a balance in the United Kingdom 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: Mahmud v BCCI (supra) at 46 (Lord Steyn). It has particular relevance to cases of constructive dismissal. The differences in origin and approach that lie behind the current state of the law in the United Kingdom were explained in Heptonstall v Gaskin (No 2) [2005] NSWSC 30; (2005) 138 IR 103 [17]-[23]. In that case Hoeben J observed with some justification that the "implication of such a term in employment contracts in Australia remains controversial and awaits clarification by an appellate court" (at 114). Subsequently, in Russell v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (2008) 72 NSWLR 449 (CA), Basten J A observed that implied duties of good faith in employment contracts have enjoyed more limited recognition in Australia than in the United Kingdom (at 567).
    

Employee or Consultant

43. I need not reach a final conclusion on the precise scope of any implied duty of good faith in employment contracts. Nor should I do so in the abstract. The determinative question in this case is more prosaic. I have concluded that it is not reasonably open to construe the WCA and the Heads of Agreement as if they constituted a contract of employment. The occasion for the implication, as a matter of law, of a term that is said to be an incident of contracts of employment, does not therefore arise. I have reached the view that the Heads of Agreement and the WCA amounted collectively to a consultancy agreement and that the relationship between the parties was not one of employer and employee.
    
44. I have arrived at this conclusion having regard to both the form of the agreement and the substance of the relationship. As to form, the WCA was called a consultancy agreement. The plaintiff was defined and described as the "Consultant". The seven year term of the agreement was called the "Consultancy Period". Clause 4 specified the duties, restrictions and rights of "the Consultant". Clause 6 specified the remuneration for the "services" provided by the Consultant. The attestation clause stated that the agreement was "executed as a consultancy agreement".
    
45. Insofar as the WCA also contained references to the Consultant being engaged as an "employee" by the Company, this was transparently for fiscal, taxation and insurance reasons that were designed to enhance the economic benefits of the arrangement to both the plaintiff and the defendants. This was exemplified by Clause 6.3, which provided that no GST was payable in respect of the payments made to the Consultant. This was because it was stated that the Consultant's remuneration was to be paid to him as "an employee". It was also exemplified by Clause 6.5, which provided that the remuneration payable to the Consultant included any superannuation payments imposed by law on an employer. Similarly, as one might expect, one of the obligations of the Company was to ensure that the Consultant received the same level of professional indemnity insurance cover as "any other solicitor employee" of the legal practice. None of these usages of the term "employee", alone or collectively, is indicative that the relationship was one of employer and employee. They carry little weight against the form and structure of the agreement taken as a whole, let alone against the substance of the relationship to which I will now turn.
    
46. The primary elements of the relationship were clear. The plaintiff was entitled to accept whatever work he wished, to perform it without direction or input from the defendants and to carry out the work wherever and whenever he wished. He was of course subject to an overriding requirement to perform the work in a professional, responsible and diligent manner. But this says nothing about the extent of control to which he was subject. The plaintiff was providing services that required special qualifications. He had a virtually unfettered discretion in the manner in which he performed the work. The arrangement was one by which a former senior partner of the firm who was not subject to control in any material sense, provided his professional services in a limited area for a limited time to his former partners. Nor would one have expected him to be subject to control in the sense explained in Hollis v Vabu [2001] HCA 44; (2001) 207 CLR 21 at [43] and [45]. The plaintiff was not a courier boy. Of course, control is not the sole discrimen between an employee on the one hand and a consultant or independent contractor on the other hand. But the plaintiff was a senior solicitor, with considerable experience and expertise, who chose voluntarily to serve as a consultant, to accept as much or as little work as he wished, and to perform that work in the manner that he chose.
    
47. For those reasons, I am unable to conclude that the plaintiff was subject to some implied duty of fidelity of a sort that might arguably apply to an employee. Even if he was, I have already explained that his conduct could not have been a breach of any such duty.
    

Conclusion

48. The plaintiff has established his entitlement to the relief sought in Prayers 1, 2, 4 and 5(1) and (2) of the Amended Statement of Claim. I am not satisfied that the subsidiary claims for breach of fiduciary duty, procuring breach of contract and unconscionability are appropriate or necessary. I made no orders in relation to them. The cross claim should be dismissed. If necessary, there should be an enquiry as to damages before an Associate Justice. The original proceedings have fallen by the wayside and they should now be dismissed. The defendants should pay the plaintiff's costs of both proceedings. I will entertain submissions on appropriate orders and costs if the parties wish me to do so. Otherwise, agreed short minutes should be delivered to my Associate within 10 days.
    

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