New South Wales Supreme Court CITATION : S v FCB [2009] NSWSC 665 HEARING DATE(S) : 20 - 23 October 2008, 5 February 2009 JUDGMENT DATE : 16 July 2009 JUDGMENT OF : Smart AJ DECISION : Verdict for plaintiff CATCHWORDS : Solicitor retained to act for employee arising out of termination of contract of employment by constructive dismissal - solicitor does not pass on substantial offer of settlement to client within time open for acceptance - damages to be assessed on basis of loss of opportunity - solicitor not responsible for past loss of earnings of plaintiff when root cause of his inability to obtain employment due to his conduct and misconduct Anti-Discrimination Act 1977 (NSW) Fair Trading Act 1987 LEGISLATION CITED : Industrial Relations Act 1996 (NSW) Legal Profession Act 1987 Sex Discrimination Act 1984 (Cth) CATEGORY : Principal judgment PARTIES : S (Plaintiff) FCB (Defendant) FILE NUMBER(S) : SC 20058/06 COUNSEL : G Laughton SC / D Christofis (Plaintiff) G Curtin (Defendant) SOLICITORS : Employment Lawyers - Barwick Legal (Plaintiff) Middletons (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION PROFESSIONAL NEGLIGENCE LIST Smart AJ Thursday 16 July 2009 20058/06 S v FCB JUDGMENT 1 S sues two companies who carried on in partnership a law practice as a "multi-disciplinary partnership" as provided by section 48G, Legal Profession Act 1987 under a firm name which I have abbreviated to FCB. 2 It is primarily an action for damages for professional negligence pleaded in both contract and tort. There is also a count that FCB engaged in conduct that was misleading or deceptive, or likely to mislead or deceive the plaintiff, contravening s 42 of the Fair Trading Act 1987 and/or made false representations contravening s 44(j) and (k) of the Act and an allegation that, by reason of FCB's contraventions of ss 42 and 44 of the Act, the plaintiff has suffered loss and damage. There was a further count that the defendants breached their fiduciary duty to the plaintiff. Equitable compensation was claimed. In essence, the action centred upon the events of Friday 24 September 2004, although the background was important. The plaintiff complained that FCB failed to disclose/ communicate to him a counter offer of settlement received from Corrs, his previous employer's solicitors, during the period the counter offer of settlement remained open for acceptance or at any other time during the retainer between the plaintiff and the defendant. The plaintiff asserted that, had FCB disclosed/ communicated the counter offer to the plaintiff, properly advised the plaintiff and sought his instructions during the period the counter offer remained open for acceptance, he would have instructed FCB to accept the counter offer and that this would have resolved all disputation between the plaintiff and the previous employer. There was no dispute that the defendants owed a duty of care to the plaintiff, nor that the content of that duty included communicating to S any offers of settlement. The parties appeared to agree that the case turned on the resolution of factual questions. It was FCB's case that Corrs' offer had been communicated orally by C of FCB to the plaintiff about 12.35 pm on 24 September 2004. Background 3 About 17 September 2004 the plaintiff was constructively dismissed by his then employer, IM. S and GSG, the then Managing Director and CEO of IM, found that they could not work together. They had deep personal and business differences. 4 On 21 September 2004 the plaintiff met with SJB and C at FCB's offices. SJB was a non-legal partner of FCB carrying on in practice as an industrial consultant. C was an employed solicitor of FCB. On that day the plaintiff instructed FCB to act on his behalf. By letter of 22 September 2004 FCB wrote to the employer C/- GSG, the letter being marked "Without Prejudice Save as to Costs". The first five pages set out the plaintiff's history and the events which led to his forced resignation. It foreshadowed proceedings under s 106 of the Industrial Relations Act 1996 (NSW) and under either the Anti-Discrimination Act 1977 (NSW) or the Sex Discrimination Act 1984 (Cth). The letter in paragraphs 14 to 17 contained statements as to serious misconduct on the part of GSG in relation to sexual matters. 5 The letter concluded: "Notwithstanding the above, to avoid the time, cost and inconvenience of protracted litigation our client has instructed us to make the following offer: 1. IM to pay our client 4 month's pay in lieu of notice. This payment to be calculated on his base rate of pay of $140,000.00, guaranteed commission of $25,000.00 and superannuation component (a total of $59,200.00); and 2. IM to reimburse our client the amount of $13,625.20. This amount representing work related expenses incurred by our client that remain unpaid by IM; and 3. IM to reimburse our client the amount of $100,000.00 as compensation for loss of future income stream and the hurt, humiliation, distress and harassment he has been subjected to. This offer is open until 12:00 noon on Friday 24 September 2004, at which time and date it will be automatically withdrawn. If this offer is not accepted, we anticipate receiving instructions from our client to pursue legal proceedings against IM without further notice to you." 6 From 20 to 23 September the plaintiff spoke with representatives of In, a major competitor of his former employer. At 10.45 am on 23 September 2004 the plaintiff met with DP, Director of Business Development at In's office and reviewed a Service Agreement with In and a copy of the Master Consultancy Agreement. The plaintiff signed the Master Consultancy Agreement. 7 C agreed that, during a telephone discussion with the plaintiff on 23 September, he told her that he would rather take the settlement moneys (with IM) than do a deal with In, the company he wanted to go and work for (T 149). She said that she queried that because it was quite contrary to what he had previously told her. She said that when she did query that, S advised her that he was under a lot of stress and pressure and that he did not really know what he was doing because things were not particularly great at home and he was under a lot of pressure at the time. She said that the conversation concluded with him reverting back to wanting to go and work for In. She had recorded in a file note, "he said he would rather get settlement moneys than stop deals going through. I queried this as this is not what he had previously told us." 8 That was the end of her paragraph on that page. Her next paragraph reads, "I said I would call or write to Corrs advising them that he was", and it appears to continue. She said that the next page of the file note was missing. 9 In cross-examination S agreed that, during the telephone conversation on 23 September 2004, C said to him that if he worked for In and took all those deals off IM, it would not settle the matter with him. S agreed that C queried his statement that he would rather get the settlement money than stop the deals with IM going through. He agreed with C that this was the opposite of what he had said, that he said he did not know what he was doing, he was feeling very stressed and that he was under a lot of stress at home. He agreed that he said to her that he would love to take the deals off GSG and that he did not deserve them. C agreed that S did not say that he was going to take the deals off GSG. 10 C said that she was under the impression that S had not calmed down by 23 September 2004 and that it was not correct that by 23 September 2004 that S's instructions were that he would rather take the settlement moneys than stop the deal going through. She said that he still wanted to stop the deals going through. 11 It appears from the evidence of C and S that he was in a very stressed state, was expressing conflicting desires and was in turmoil. In such circumstances it was important that any settlement offer received from his erstwhile employer be put to him promptly for his consideration along with adequate advice so he could make a decision. 12 C agreed that before 24 September 2004 S told her he was unemployed as a consequence of his dismissal. He was concerned about no income coming into the house as he was the only bread-winner. She agreed that he remained concerned about the financial position of his family throughout her dealings with him (T 148). C agreed that at some point, which she could not recall, S told her that his wife was not working and that she had recently had a baby. I think that S told C of these matters at an early stage, that is, on or before 23 September 2004. 13 C said that during 23 September 2004 she had a number of telephone conversations with S. They were not put in chronological order. C said that during 23 September 2004 she received a telephone call and a letter from IM's solicitors. She spoke to S about their request for an extension of time to deal with his offer. There was mention of this being a delaying tactic. S told C he was not prepared to negotiate. He also told her of his discussions with DP of In and that he had a contract with In he was about to sign. She advised him to hold off signing it. 14 C said that in a conversation with MW of IM's solicitors MW told her that in principle IM would like to settle the matter but any settlement must be with an undertaking not to accept any offers of employment for three months. C said that when she told S of this he replied, "No. I am not prepared to negotiate any further. I want to go ahead and work for In. In won't want me in three months. I won't give an undertaking." 15 During one of the conversations S told C that he was thinking of going and seeing GSG and negotiating the settlement directly with him. He indicated what he proposed to say to GSG. She said she advised S very strongly not to do what he was contemplating and that any settlement discussions between the parties should be done through the lawyers whom they had engaged. S declined to accept C's advice. 16 About 4.30 pm on 23 September 2004 S telephoned GSG and they agreed to meet that evening at 6.00 pm at S's home and did so meet. The plaintiff said that he showed GSG the Service Agreement which he (S) had been offered by In. 17 The plaintiff agreed in cross-examination that he let GSG know that if he (the plaintiff) worked for In, the desire of IM to sign a contract with … was at risk. (The contract was a large and valuable one in an overseas country. Both In and IM had bid for the contract.) 18 The plaintiff agreed that he told GSG that if the plaintiff and IM went to court the plaintiff would expose everything about GSG's sexual misconduct. The plaintiff agreed that this was a threat and that he was threatening GSG personally in an effort to have him accept the plaintiff's settlement offer, namely: a) four months salary in lieu of notice, b) $100,000 commission for the … deal and all his work expenses reimbursed, c) the plaintiff to agree not to work for In for two months (to give IM time to secure the … order). 19 The plaintiff said that GSG replied that these sounded fair, but he would need to convene the Board and obtain Board approval and that the settlement contract would be with the plaintiff's lawyers "first thing tomorrow morning". S told GSG that the offer was open until 11.00 am on 24 September 2004. 20 The plaintiff said that they both agreed it would be best to resolve the matter. 21 About 8.14 pm on 23 September 2004 S sent this email to C: "GSG sighted my In engagement contracts this evening at 6:00 pm and was satisfied of their authenticity. He stated that he was going to convene a board meeting tomorrow to have the funds approved and will then advise his lawyer to correspond with you. I will not concede or negotiate on our requested settlement. I would like the funds to be placed in escrow with you. A deed of release preventing me from working for a named competitor for 2 months will be acceptable. (Beyond 2 months from my industry could make it difficult for me to re-enter). [C said that she regarded these as words of instruction but as inconsistent with the instructions she had received not to negotiate further.] Let's see how much we can achieve tomorrow." 22 S (T 52) said that his statement "I will not concede or negotiate on our requested settlement" was truthful at the time he sent the email. (He was referring to the settlement offer that he had made to GSG.) S agreed that his statement that beyond two months away from his industry could make it difficult to re-enter was truthful. That was his view at the time he sent the email. 23 S said that he felt differently the next day. He did not send an email to C or telephone her on 24 September 2004 that he had changed his mind about not conceding or negotiating on his requested settlement. Of course, the offer conveyed to GSG and as referred to in the email differed from that contained in the FCB letter of 22 September 2004. 24 S said that in the morning of 24 September 2004 he telephoned C and told her of his meeting with GSG and what had occurred. S thought that the conversation took place between 9.00 am and 10.30 am. S summarised the settlement on which they had agreed as "four months in lieu, $100,000 commission and all my expenses". He said that C strongly recommended that all future communications be through the lawyers and he agreed. 25 One of the difficulties with C's evidence was that she did not comply with the FCB policy of placing entries into the cost sheet or time recording sheet in the chronological order in which events or entries occurred and that she did not follow that policy on 24 September 2004. It also seems that she probably did not follow that policy on 23 September 2004. Her computer was at her desk and she had her own office. There was no reason for her to depart from the FCB policy on time recording. 26 C said that it did not enter her contemplation that when S wrote in his email "Let's see how much we can achieve tomorrow" this was a suggestion that S realised that he might not get everything that had been sought. 27 C agreed that on reading on the morning of 24 September 2004 the email sent by S the previous evening, he was stating that as part of settlement with IM he was prepared to agree not to work for a named competitor for two months. 28 C said in her affidavit that, although she could not now recall the exact time or details, she believed that she had a telephone conversation during the morning of 24 September 2004 in relation to S's email sent at about 8.14 pm on 23 September 2004. C said there was no record of when she opened S's email on the morning of 24 September 2004. 29 In cross-examination C maintained that she endeavoured to resolve what she saw as the inconsistency between S's assertion that he would not concede or negotiate on his requested settlement and his email instruction that a deed of release preventing him from working for a named competitor for two months would be acceptable. She did not know why there was no file note of the conversation in which she cleared up this "inconsistency" with S (T 160). When C first spoke to MW of IM's solicitors, C did not put to MW that S was prepared to accept a two-month restraint period. 30 C said that on 24 September 2004 she had a telephone conversation with MW of IM's solicitors in which she told MW that S was not prepared to negotiate further, that, as S's employment contract does not contain a restraint of trade clause, there was no legal basis for IM to prevent S working for another company and that he was not prepared to sign any undertaking. C sent a letter on that day in which she wrote: "As discussed, we confirm that our client is prepared to accept the following in settlement of this matter. 1. IM to pay our client 4 month's pay in lieu of notice. This payment to be calculated on his base rate of pay of $140,000.00, guaranteed commission of $25,000.00 and superannuation component ($59,200.00); and 2. IM to reimburse our client the amount of $13,625.00. This amount representing work related expenses incurred by our client that remain unpaid by IM; and 3. IM to pay our client the amount of $100,000.00 as compensation for loss of future income stream and the hurt, humiliation, distress and harassment he has been subjected to. We reiterate that we have been instructed that our client is not prepared to negotiate this matter further. As per our letter to your client dated 22 September 2004, this offer shall remain open until 12.00 noon today. In the event that it is not formally accepted by that time we are instructed that the offer is withdrawn and to commence legal proceedings without further notice to you. We are also instructed to advise that our client is not prepared to sign any undertaking. As our client's employment has been terminated by your client and as there is no restraint of trade clause in our client's contract of employment, there is no legal basis for your client to seek to prevent our client working for another company." 31 According to the imprint on the facsimile cover sheet this letter was sent about 11.20 am on 24 September 2004. Significantly, the letter in substance contains the same offer as to financial matters as in her earlier letter of 22 September 2004. It does not refer to S being prepared to enter into a deed of release preventing him from working for a named competitor for two months. It does refer to S not being prepared to sign any undertaking. 32 In speaking to MW and in writing the letter of 24 September 2004 just mentioned, C did not appreciate that by the morning of 24 September 2004 her instructions had been modified and S needed money for his family. C did not appreciate this sufficiently, nor did SJB. C had it fixed in her mind, albeit incorrectly, that S was not prepared to enter into any deed preventing him from working for a named competitor for two months (or having that effect). She attached too much weight to the absence of a restraint of trade clause in the original contract. C misunderstood her instructions. She was too rigid in her approach. I did not find her evidence on these matters convincing. 33 S said that at about 10.00 am on 24 September 2004 he received this SMS text message from GSG: "S, I have agreed letter and Deed with lawyers after visit to you. Was finalised this morning and was being sent to your lawyers this morning about 9.40. GSG" 34 On 24 September 2004, at 11.36 according to the fax imprint, IM's solicitors wrote to FCB: "In our view, any claim that your client may bring against our client will be without merit and unlikely to succeed. Nevertheless, on a commercial basis and to avoid incurring further costs and any expenses that may be associated with future litigation, our client is prepared to pay the following to your client to settle any prospective claims he may bring against it: 1 Commission on the … deal, in relation to which the Employee performed work between February 2004 and September 2004, (Contract), subject to the parties signing and completing the Contract. Payment will be made in Australian dollars within seven days of the Contract being signed and completed, provided that your client has already signed and returned the attached deed of release, and will be calculated as follows: (a) 100% of commission (gross, subject to tax) in accordance with the 2004 commission structure, which is attached to this letter at 'A'; or (b) $100,000.00 (gross, subject to tax) whichever is the greater. 2 AUD$13,625.20 (gross), being reimbursement for expenses. Payment will be made the day following your client signing and returning to us the attached deed of release; and 3 AUD$59,200.00 (gross, subject to tax) being a payment in lieu of four months' notice. Payment will be made within seven days of your client signing and returning to us the attached deed of release. These sums are inclusive of any goods and services tax payable (if any). This offer of settlement is conditional upon the parties signing the attached deed of release. The deed of release, amongst other things, releases our client from any present or future claims that our client may have against it. The deed of release also contains strict confidentiality and non-disparagement provisions and a three-month post-employment restraint. In addition, the deed of release describes your client's employment as terminating on 17 September 2004. This offer is made without admission of liability. The offer will remain open for acceptance until 4.00pm today, 24 September 2004, after which time it will automatically lapse if it has not been accepted or rejected." 35 The Deed repeats the sums payable, contains a release by S and a release by the Company, a prohibition on the use or disclosure by S of any confidential information, an obligation to take all action reasonably necessary to maintain the confidentiality of any such confidential information and an obligation by S not to disparage IM. The Deed also provided that S, during the three months after 17 September 2004, was not to be involved in or associated with any business or activity which is competitive with any business carried out by IM or the group at 17 September 2004, including, but not limited to, In and certain other named competitors. There were other covenants restricting S's activities. 36 It was the sort of Deed which could be expected in the circumstances, having regard to S's headstrong statements and actions. 37 C said that she believed she received the letter a little earlier than 11.36 am on the morning of 24 September 2004. She did not fax a copy of it to S. She said she discussed the terms of the letter from IM's solicitor with SJB. She said that she then prepared to telephone S. She said that she recalled writing on a piece of paper these options as available to S: "(1) take offer Deed – 3 mnth restraint named competitors - won't work for comp or (2) work for In – take deals - commence proceedings" 38 She said that after speaking to S she wrote on her file note: "Reject - can't wait 3 mnths" 39 C stated (paragraph 44) that after writing the first part of her file note she telephoned S and advised him that an offer of settlement had been received from IM's solicitors and that she would read out the offer of settlement from IM. C asserts that she then said: "1, Commission on the … Deal, provided the contract goes to IM and provided you sign a deed of release which is attached to the offer. I'll talk to you about the deed of release in a moment. The Commission will be paid within seven days of the contract being signed and will be equal to the commission you would have been entitled to on the deal of $100,000, whichever is the greater … This seems to the be same amount that we offered but it is conditional on IM securing the … deal." 40 On her version there was one significant matter that C did not mention. The offers of 100% commission or $100,000 (whichever is the greater) were both expressed to be "gross, subject to tax". 41 In FCB's letters of 22 and 24 September 2004 the $100,000 was said to be to "reimburse S as compensation for loss of future income stream and the hurt, humiliation, distress and harassment he has been subjected to". That had possible tax ramifications. C's statement "This seems to be the same amount we offered" makes no reference to the taxation position. 42 C said that S responded: "I won't agree to that. As I am no longer at IM, IM won't get the deal and I won't get the commission." 43 C said that she continued: "I understand … I will just go through the rest of the offer. Secondly, the offer provides for a reimbursement of $13,625.20 … gross … for expenses … which is what we asked for … Thirdly, payment of $59,200 for 4 months in lieu of notice. We also asked for this. And the offer is open until 4 pm today. As I said, the offer is subject to entering into a Deed of Release. If you enter into the Deed you will be unable to work in any capacity for a competitor of IM for 3 months. The Deed specifically refers to … or any of their related entities." 44 C said that S responded: "I can't wait 3 months to start working for In. They won't want me in 3 months' time. The … deals will be over by then and it will be too late. IM will already have the deals. In wants me to work for them because they think that I can get those deals for them. If I accept the offer, I won't be able to get the … Deal for In and they won't want me. I won't accept that. Tell them no." 45 C agreed that it was an omission on her part not to have sent by facsimile a copy of IM's offer of settlement to S and that offer was an important document. She made no record in her electronic cost record of having perused the offer of settlement. 46 SJB gave evidence (paragraph 16 of his affidavit of 20 December 2007) that he spoke with C on 24 September 2004 and that she told him that she had received an offer from Corrs, that the offer was similar in quantum, but was subject to IM securing the … deal and S signing a deed of release which included a restraint of three months. SJB stated that he told her to convey the offer to S. Their evidence is that both held and expressed the view that S would not accept the offer. SJB had not been brought up to date on the plaintiff's latest instructions. 47 SJB said that C told him that she had told S about the offer, that he would not agree to the $100,000 being conditional on IM securing the … deal because, as he was no longer at IM, it would not get the deal, that he could not wait three months to start working for In, that In would not want him in three months' time and that the … deals would be over by then and it would be too late. 48 SJB said that he then had a conversation with C in which she advised having received another fax from Corrs. He reviewed that fax and gave C some instructions. SJB said that C's day to day conduct of the legal services was supervised by two other partners of FCB. 49 C agreed that at some point she must have intended to send a copy of IM's solicitors' first letter of 24 September 2004 to S. At some point she thought she had sent it to him. 50 S stated that he was neither sent a copy of the letter of IM's solicitors of 24 September 2004 containing the settlement offer (the first letter) nor told about its contents on or about 24 September 2004. S stated that he did not become aware of it until about 24 June 2005 at a conference with Mr N Dawson, then of counsel, in relation to a Conciliation Conference listed in the Industrial Relations Commission. 51 Mr Dawson has deposed to a conference taking place on 24 June 2005. He said that one of the first questions he asked S was why he did not accept the offer (that is, the offer of settlement made by IM in its solicitors' first letter of 24 September 2004). Mr Dawson noticed that S appeared surprised at his (Dawson's) question and said words to the effect, "What offer?" Mr Dawson said that he found the document (the first letter of 24 September 2004 from IM's solicitors) in his brief, told him of its contents and handed it to him. Both the plaintiff and his wife seemed to be very attentive to that document and the plaintiff said words to Mr Dawson to the following effect: "I didn't know there was an offer. If I had known there was this offer I would have taken it. I have not seen this document." Mr Dawson said that S repeated those words and said words to the effect: "This is a lot of money." 52 Mr Dawson noted that the plaintiff's wife also appeared surprised to learn that there had been an offer. After using a calculator the plaintiff told Mr Dawson his estimate of the total value of the offer. Mr Dawson was not required for cross-examination. 53 During his cross-examination (T 57), S agreed that in the offer he put to GSG on 23 September 2004 the payment of $100,000 commission was not said to be contingent on anything. S said IM could pay the $100,000 up front or when the … deal was realised. S said he was comfortable either way as he knew that deal was to be placed with IM, that is, that the order was going to be placed with IM in the next couple of weeks. I accept the cross examiner's point that the offer as put to GSG on 23 September 2004 involved S getting his commission irrespective of whether or not IM secured the … deal. Commission is not usually payable until a deal is made, that is, the written order was placed with IM. S appreciated that the contract or contracts had to be signed and completed. He would have accepted the commission being payable when the order for the … deal was placed with IM. That would have provided a strong incentive to S not to interfere and to ensure that IM secured that deal as it subsequently did. 54 S said that within half an hour before receiving the fax bearing an imprint of 1.35 pm on 24 September 2004, C telephoned him and advised him that FCB had received more correspondence from IM's solicitors (Corrs), that they were asking him to sign an undertaking, that if he didn't sign it they would seek an injunction against him, that the undertaking sought went much further than his employment contract. She said that he responded that they were trying to stop him taking the deals from them and that he would not accept them trying to stop him working. She stated that she said she would fax a copy of the letter. The file note of 24 September 2004 which she produced is to the same general effect. 55 C faxed to S a copy of this second letter of 24 September 2004 from Corrs to FCB. After referring to IM employing S as a Business Development Manager from 5 February 2004 – 17 September 2004, the second letter of Corrs continued: "Your client owes extensive confidentiality obligations to our client. In terms of express obligations, these are contained in an Employment Confidentiality Agreement, signed by your client on 23 January 2004 and in the Terms and Conditions of Employment, which were annexed to his letter of employment dated 15 January 2004." (A copy of the agreement was enclosed.) "We are instructed that your client has recently engaged in negotiations with In, our client's largest and most direct competitor, for a position with it. Further, we are instructed that during the course of these negotiations your client has divulged our client's confidential information about a contract our client is negotiating with … and/or our client's dealings with those companies more generally (…). Notwithstanding the cessation of your client's employment with our client, he continues to owe a duty of good faith, a duty of confidence and fiduciary duties to it. Use of our client's confidential information is in breach of these duties and in breach of contract. Further, we can only anticipate that your client intends to use the confidential information of our client about the … Deal in breach of the above duties and in breach of contract for the purpose of seeking the custom of … for In. We put your client on notice that such conduct will constitute a breach of the above duties and a breach of contract for which our client will be entitled to seek compensation from your client. We also put your client on notice that any direct or indirect attempt by him or In or related parties to solicit or interfere with or endeavour to entice away from our client any of its present clients or companies with whom it is dealing presently or negotiating a contract will represent an interference with our client's contractual relations, as well as a breach of confidence for which our client will be entitled to seek compensation from your client and In. Your client's breach of his duties to our client will potentially cause it significant loss and damage." 56 The letter stated, inter alia, that unless S provided the enclosed undertaking by 4.00 pm on 24 September 2004 Corrs were instructed to seek injunctive relief and damages. The undertaking sought covered a number of matters. These clauses were of primary importance: "… 4 I will not breach the Employment Confidentiality Agreement, signed by me on dated (sic) 23 January 2004, which is Attachment B to this undertaking. 5 I will not use any confidential information belonging to IM including but not limited to the confidential information referred to in the documents labelled Attachments A and B to this undertaking. 6 I will not communicate, divulge or disclose any confidential information belonging to IM including but not limited to the confidential information referred to in the documents labelled Attachments A and B to this undertaking. … 8 I will not as a principal or for any person, do work to induce, solicit, or entice or attempt to induce, solicit or entice any client or customer with a contract presently on foot with IM or who is presently dealing or negotiating a contract with IM away from IM." 57 Clause 8 was widely expressed and unlimited as to time. 58 S has stated that at no time on 24 September 2004 or subsequently did he have any communication with FCB informing him that an offer of settlement had been conveyed by Corrs to FCB by letter dated 24 September 2004 (the first letter of Corrs with the fax imprint of 11.36 am). 59 S said that after receiving and reading the faxed copy of Corrs' second letter of 24 September 2004 he telephoned C and had a conversation to the following effect with C: "S: I cannot believe that there are no monetary considerations for me to sign their undertakings. C: Yes, it is very unusual as I thought that they were going to settle with you as agreed. S: It appears that GSG has gone back on his word and is out to screw me. What do you think of the undertakings? C: Perhaps you should have a look through them and let me know what your thoughts are. S: OK and then I'll call you back." 60 S said that later in the afternoon of 24 September 2004 he again telephoned C and had a conversation to the following effect: "S: They claim I have broken the NDA (Non Disclosure Agreement) which is rubbish. C: Yes, but as you can appreciate it's the only thing that they can hold you on contractually without any restraint clause S: I really can't believe this. GSG is trying to screw me. C: So what about the undertaking? S: I am happy with all of them with the exception of number 8. C: Yes, I believe that one is overly restrictive given that they have not offered you anything to sign it. S: The telco market for this software is tiny and they are essentially trying to restrict me from working on every opportunity that is out there. IN are in direct competition with IM and their many customers that are using IM's software are now looking for an alternative. How can I tell IN that I can work for them but not on any of IM's new or existing customers? C: I certainly agree, we won't agree to that undertaking." 61 C gave a different version of the conversation she had with S after she had caused a copy of the second letter of 24 September 2004 from Corrs to FCB to be sent by fax to S. She said that part of the conversation was to the following effect: "C: Have you got the fax? S: Yes. I've read it. Can you write to Corrs and tell them that I don't agree to what they are asking. Are you sure that taking the deals is OK? C: Well, your contract does not contain a post re-employment restraint. I can obtain Counsel's view on this if you would like me to. S: The restraint in the undertaking will prevent me from working. I won't agree as it will prevent me form going to work for In. The reason they want me is that I can get them the … deals. As I've told you, I don't intend breaching my contract of employment. I have not and will not breach my contract. I have not divulged any information about the … deal. IM know that In has also been negotiating for the … deal for the last 12 months. This is the same issue for the Deed of Release. It will stop me from working for In. I am not staying out of the market. I am not prepared to sign any undertaking or have any restraint. The restraint is for 3 months. In 3 months the … deal will be over. In won't want me in 3 months and I will have lost the important relationships that I have. I can't wait 3 months. C: S, even if you don't enter into a deed or sign an undertaking, you have to make sure that you do not breach the confidentiality provisions in the Confidentiality Agreement that you've signed. The letter from IM's solicitors states that if you don't sign the undertaking they will commence proceedings against you and seek an injunction. Whilst you have no post employment restraint in your employment contract you do have an obligation not to disclose any confidential information. If you do help In, you may be in breach of the agreement and there is likely to be scope for IM to be successful in a claim against you. S: I understand that. I won't breach my obligations under the agreement but I'm also not prepared to negotiate further on this. I think we should get Counsel's view on this if necessary." 62 C's file note of this conversation refers to many of the matters to which C has deposed to. She does not refer to expressing any view as to the undertakings sought nor anything being said about monetary compensation or payment. 63 C said that, after speaking with S, she had a telephone conversation with MW of Corrs in which she (C) stated that she had obtained instructions to reject the offer of settlement faxed to FCB that morning and that S was not prepared to negotiate his settlement offer further. C said to MW that S advised that he has not and will not breach the confidentiality provisions in his contract and that the post employment restraints go well outside S's obligations under his contract and that he was not prepared to sign the undertaking. 64 FCB (per C) wrote to Corrs on 24 September 2004 advising that S did not agree to sign the undertaking as drafted, that he had not and did not intend to break any of his obligations under the Confidentiality Agreement. It was pointed out that paragraph 8 of the undertaking far exceeds any contractual or other obligation placed on S. The fax imprint suggests that the letter was sent about 15.48 hours. 65 The telephone records of FCB and S were obtained and revealed these telephone calls on 24 September 2004: Time Parties Duration Min/Sec 1034 S to FCB 13.30 1049 FCB to Corrs 3.08 1121 FCB to S 8.15 1235 FCB to S 4.05 1355 FCB to S 5.44 1421 S to FCB 0.36 1535 S to FCB 9.43 1711 FCB to S 0.15 There is also a record of a telephone call from S to DP at 1111 hours for 26 seconds. There is an email from S to DP at about 1514 hours on 24 September 2004. 66 The telephone call at 1034 hours was probably when S telephoned C and there was a discussion as to the terms of the email S had sent the previous evening. This was followed by C's telephone call to MW of Corrs. 67 During the hearing counsel for the defendants suggested that either the telephone call recorded in the Telstra records as having been made from FCB's office and to the plaintiff at 11.21 am on 24 September 2004 as well as that made at 12.35 pm on that day may have been the occasion for communicating the settlement offer. However, counsel for the defendants advised the Court that other records received after the hearing (in October 2008) indicate that the clock on FCB's facsimile machine, and not the Corrs' facsimile machine, was approximately 30 minutes out of the correct time. Counsel also stated that these records indicate that the Corrs' settlement letter was received after the 11.21 am telephone call from FCB to S. 68 Counsel for the defendant sought to narrow the central factual issue to whether or not the Corrs' offer was communicated by C to S orally at 12.35 pm for four minutes and five seconds. 69 Assuming that C is correct when she says she was handed the letter, read it and spoke to SJB about it, a telephone call of four minutes and five seconds would not have been sufficient time to deal with it, given the issues and people involved. There were many issues to canvass and neither S, in particular, nor C would have dealt with it briefly from my observations of them. Some of the issues were contentious. The Deed of Release required careful explanation and S would have insisted on this. In FCB's time (and costs) records it is stated that 30 minutes was spent by C attending on her client regarding an offer of settlement. 70 a) At T 69 the plaintiff said that he may have had a telephone conversation with C between his initial conversation with C, which he thought took place between 9 am and 10.30 am, and when she telephoned shortly before he received the fax at 1.37 pm. S was assuming the fax imprint was correct. He said he could not recall. It was then put to him that he had a conversation with her about 12.30 pm and he agreed. This evidence followed: "Q; You recall that, do you? A: Well, I'm just saying I remember I made a call to her because we needed to get a letter to In. Q: When was that conversation you've just mentioned? A: I have no idea. (The conversation about the letter to In took place later that day and it was a call from the plaintiff to C.) b) In his evidence (T 73) the plaintiff said he did not recall having a conversation with C on 24 September 2004 at 11.21 am. Nor did he remember the fact of a conversation with C about 12.30 pm on that day. The facsimile transmission confirmation report attached to the fax cover sheet to S shows, according to the fax imprint, that the fax enclosing Corrs' second letter started at 13.34 pm and apparently concluded about 13.40 pm, assuming the times stated are accurate. Some of the pages bear the fax imprint of 13.37 pm. The material sent by fax extended over 15 pages (16 pages if the cover sheet was included). The Telstra records suggest that the fax was sent about 2.06 pm and it was contended that this was correct. I will assume that. c) In paragraph 46 of her affidavit of 12 December 2007 C refers to receipt of the second letter of 24 September 2004 from Corrs but does not state when it was received. In paragraph 47 she details a conversation which she said she had with S following receipt of that letter and in which she said she would fax him a copy of Corrs' letter. 71 At SJB's later request, C caused a typed version of her file note of 24 September 2004 to be prepared and placed in the file. It was more expansive than her handwritten and skeleton file note and supported FCB's case. It read: "- S advised that he had received our facsimile. - S instructed us to advise Corrs Chambers Westgarth Solicitors that the offer was rejected. - I said perhaps we could ask Counsel's view- (explanation: this being in relation to whether the restraint was a potential interference with contractual relations). - S advised me that the restraint would prevent him from working – won't agree. - S advised me that he would not breach the obligations specified in his contract of employment. - S advised me that if he entered into the Deed it would stop him becoming employed by In. - S advised me that he could not be restrained for 3 months. He said that to be out of the industry for that long would cause him to lose contacts and that In would no longer be interested in employing him." 72 C said that when SJB asked her to provide a transcription she believed that the present proceedings had been commenced. He said that he could not understand her writing. I did not experience that difficulty. This reconstructed and expanded file note has some unsatisfactory features. The facsimile referred to in the first line of the file note could not refer to the first letter of 24 September 2004 from Corrs as that was never sent by fax from FCB to S. Some of the subsequent entries appear to relate to matters arising from the first letter of Corrs of 24 September 2004. 73 C agreed that there was no reference in her file note to her reading the offer of settlement and that there was no reference in any of her file notes of 24 September 2004 to monetary compensation. C said that the file note partially records the basis on which S rejected the offer. 74 In the letter of FCB of 16 November 2005, in response to a detailed letter of demand from S's new solicitors, FCB wrote: "1. The offer of settlement appended to your letter was received by facsimile by our firm at 11.36 am on 24 September 2004. At 1.34 pm on 24 September 2004 this 15 page facsimile and 1 page coversheet were sent by facsimile to S … … 3. After receiving the facsimile, C and S had a 30 minute telephone conversation in relation to the facsimiled offer of settlement. A contemporaneous file note by C recording S's instructions in relation to the offer of settlement as specified in the above telephone discussion was made (to ensure that you are able to understand the content of the file note, we also attach a typewritten version). C would of course attest to the telephone conversation with S in relation to the offer of 24 September 2004 and S's rejection thereof and the sending of the facsimile transmission that contained the offer of 24 September 2004." 75 The suggestion that there was a 30-minute telephone conversation underlines the point that if there had been a telephone conversation about the offer of settlement it would not have concluded in four minutes and five seconds. The telephone records do not support the contention that there was a 30-minute telephone conversation. FCB relied on an entry in FCB's time records of C, namely, "Telephone attendance on client regarding offer of settlement 0.30 (minutes) $160.00". There is a further entry in the time (and costs) records on 24 September 2004 which does not seem to be supported by the telephone records, namely "Telephone attendance on client regarding discussion with MW and importance on time frames 0.30 (minutes) $160.00". I have noted various other entries in the time (and costs) records on 24 September 2004. 76 In paragraph 7 of their letter of 16 November 2005, FCB refers to the draft affidavit in the Equity proceedings forwarded to S. They stated that, despite other amendments, paragraph 53 was unamended and read: "On 24 September 2004, my solicitors, FCB received a letter from the plaintiff's solicitors seeking that I enter into an undertaking that included a three-month post employment restraint." 77 FCB asserted in their letter of 16 November 2005 that the only document received by them on 24 September 2004 that referred to a three-month post employment restraint was the offer of settlement referred to in Corrs' first letter of that date. That point loses a lot of its force when it is recalled that on 23 September 2004 C had told S that IM's solicitors had stated that IM wanted an undertaking that he would not work for one of IM's competitors for three months (see paragraph 34 of C's affidavit) and the draft affidavit had been prepared by FCB on behalf of S. The paragraph drafted by the solicitors was speaking of the letter the solicitors had received. S was entitled to proceed on the basis that the solicitors would state matters correctly as to the documents in their possession. 78 SJB, then a principal of FCB, said that, on receipt of the letter of 3 November 2005 from S's new solicitors (Employment Lawyers), he discussed that letter with C and that she became involved in drafting a response to it. SJB was directing the drafting of the letter. He said that he largely drafted the response from the file and that he would have run the contents of the response past C. He did not recall showing a final draft or any drafts of the response to C. SJB said that he would have checked certain events. SJB said that he did not recollect discussing with her the contents of paragraph number 2 on the first page of the response. He spoke to C in the early stages of drafting the response. 79 SJB said that he made an assumption, in drafting the paragraph numbered 1 in the response, that the offer of settlement appended to the first letter of 24 September 2004 from Corrs was sent at 1.34 pm by FCB to S. He said that he had discussions with C that led him to understand that the documents sent to S at about 1.30 pm on 24 September 2004 was the offer of settlement received from Corrs. Both letters of 24 September 2004 (including annexures) received from Corrs were about the same length. SJB said that at the time he was drafting FCB's response he spoke to, amongst other people, C, and that she thought that the offer of settlement timed at 11.36 was the document which had been sent to S. SJB said that when he was drafting the response C accepted that it was the offer of settlement which she thought had been sent to S. SJB said that when the reply of 2 December 2005 was received from Employment Lawyers pointing out that the offer of settlement was not the document which had been sent, but another document, he spoke to C about that. FCB and C accepted that this was so. It was not until that point that the error was identified. 80 FCB submitted that the Court should find that C spoke to the plaintiff about the offer of settlement about 12.35 pm. No question was raised about the accuracy of the Telstra record that a conversation took place about 12.35 pm and that C telephoned S. The conversation is said to have lasted 4 minutes 5 seconds. FCB's time and costs record alludes to an attendance of 30 minutes. FCB accepted that there was a substantial question whether the clock on FCB's facsimile machine was recording the correct time. It was suggested by FCB that it was approximately 30 minutes out of the correct time. 81 FCB submitted that the Telstra records showed a 5 minutes 44 seconds telephone conversation from FCB's office at 1.55 pm (Ex 3, p. 53) and that this was 11 minutes before the undertaking (or second) letter was faxed to S. FCB further submitted that the strong probability is that the 1.55 pm telephone call was one in which C told S that she had received the (undertaking) fax (the second letter of 24 September 2004) from Corrs. 82 Both the calls shown on the Telstra records reveal calls emanating from C. S's version of what occurred has him originating two telephone calls. After this lapse of time S could readily be mistaken as to the origin of the calls. I do not regard this as a critical mistake. 83 The time (and costs) records of FCB state: Date Activity Consultant Time Hourly Amount 24/09/2004 Perusal of fax from Corrs re: undertaking C 0:20 320.00 106.67 24/09/2004 Telephone attendance on client regarding offer of settlement C 0:30 320.00 160.00 24/09/2004 Telephone attendance on MW regarding fact client not being prepared to negotiate further C 0:20 320.00 106.67 24/09/2004 Telephone attendance on client regarding discussion with MW and importance on time frames C 0:30 320.00 160.00 24/09/2004 Drafting of fax to Corrs regarding rejection of offer, undertaking etc C 0:30 320.00 160.00 24/09/2004 Telephone attendance on client regarding response from Corrs C 0:20 320.00 106.67 24/09/2004 Telephone attendance on client regarding implications of confidentiality agreement and the obligations it imposes and the intention of IM to seek injunctive relief C 0:30 320.00 160.00 24/09/2004 Drafting of letter to In regarding employment having ceased and free to accept offer of employment C 0:20 320.00 106.67 24/09/2004 Meetings with C: review correspondence from Corrs; review and amend our correspondence; instructions to C SJB 0:40 400.00 266.67 24/09/2004 Discussion with SJB in relation to matter, injunction, undertaking etc. C 0:20 320.00 106.67 84 The Telstra records do not appear to match the time (and costs) records of FCB as to the time spent on various activities. 85 C thought that she received the faxed first letter of Corrs of 24 September 2004 prior to 11.36 am being the time shown on the fax imprint. In her expanded file note as to 24 September 2004 C recorded that S advised that he had received her facsimile. That could only refer to the transmission of the second letter of 24 September 2004 from Corrs. 86 The imprints as to the times shown on the various faxes should not be regarded as reliable. It is a mistake to rely on the times given by the various witnesses and their estimates of time as I thought that they were probably unreliable and, at best, only an approximation. C did not tell S of the offer of settlement in Corrs' first letter of 24 September 2004. In response to FCB's submission, I find that in the 12.35 pm telephone call C did not discuss the offer of settlement in the first letter of 24 September 2004 received by FCB from Corrs. I think that C intended to both telephone S about the offer of settlement in Corrs' first letter and send a copy of that letter to him by fax and did neither. She later convinced herself that she had spoken to him. She could not believe that she had failed to do so. She believed that she knew what his reaction would be and this was fixed in her mind. She has substituted her expectation for reality. That was the impression she left with me. 87 The conversation shown in the Telstra records as starting at 1.55 pm may well have been the one in which C told S that she had received the (undertaking) fax (the second letter of 24 September 2004) and would send him a copy. She may well have mentioned briefly the effect of the second letter and warned him of FCB's statement of intention to seek an injunction if he did not sign the undertaking sought. 88 In the absence of the undertaking required of S, in the second letter of Corrs of 24 September 2004, IM instituted proceedings against S and In later that day in this Court. Those proceedings came before this Court on 29 September 2004, when S and his company …, without any admissions of liability pending the hearing, undertook not to interfere with IM's negotiations for the … deal and not to divulge or use confidential information. There were other related undertakings. On 30 September 2004, Hamilton J delivered a judgment in which he indicated he was prepared to grant injunctive relief to protect IM's equity. It would seem that the undertakings were given after Hamilton J foreshadowed his views but before he delivered his judgment. 89 On 7 February 2005 the proceedings were settled on the basis of S and his company giving undertakings (without admissions) not to canvas, solicit or endeavour to entice away from the plaintiff two major companies, negotiations as to the sale of interconnect settlement, content settlement and specified software in relation to the execution of the … deal. IM agreed to pay certain moneys (about $21,000) due to S. Each party was to bear his or its own costs. The proceedings were otherwise dismissed. 90 In the meantime, during October 2004, there were further settlement negotiations between S and IM. By letter of 13 October 2004, Corrs wrote: "… on a commercial basis and to avoid incurring further costs and any expenses that may be associated with future litigation, our client is prepared to discontinue the proceedings against your clients and pay to S the following sums to settle any prospective claims your clients may bring against our client: 1. Spotter's fee on the … deal (Contract), subject to the parties to the Contract signing and completing the Contract. Payment will be made in Australian dollars, provided that your clients have already signed and returned the attached deed of release. The payment will be equal to the commission liable to be earned in accordance with the 2004 commission structure, which is attached to this letter at 'A'. Payment will be in stages, that is, within seven days of receipt of each tranche of payments under the Contract by IM, provided that IM has already received an invoice from [the plaintiff's company] for the same. 2. AUD$13,625.20 (gross), being reimbursement for expenses. Payment will be made the day following your clients signing and returning to us the attached deed of release; and 3. AUD $17,656.00 being a spotter's fee to be paid on receipt of an invoice from [the plaintiff's company] in the same amount. Payment will be made within seven days of your clients signing and returning to us the attached deed of release. These sums are inclusive of any goods and services tax payable (if any). Please note that any payment made under item 1 above will be reduced by the amounts already paid to your clients by way of an advance in accordance with annexure A to this letter in relation to the Contract. This offer of settlement is conditional upon the parties signing the attached deed of release. The deed of release, amongst other things, releases our client from any present or future claims that your clients may have against it and provides for the discontinuance of the above proceedings against your clients. The deed of release also contains strict confidentiality and non-disparagement provisions and post-employment restraints. In addition, the deed of release describes S's employment as terminating on 17 September 2004 on the basis that he resigned. This offer is made without admission of liability. The offer will remain open for acceptance until 4.00 pm tomorrow, 15 October 2004, after which time it will automatically lapse if it has not been accepted or rejected." 91 After much consultation with the plaintiff, FCB, by letter of 1 November 2004, rejected the offer and put two alternative counter offers of the plaintiff, both of which contained unrealistic elements. The monetary offer appears less attractive than that in Corrs' first letter of 24 September 2004. No communication of offer of settlement 92 In my opinion C never communicated in any way to S the terms of the first letter of 24 September 2004 from Corrs containing the offer of settlement. She did not send a copy of the first letter of Corrs of 24 September 2004 to S by fax although she intended to do so and thought that she had done so. She has convinced herself that she spoke to S about that letter. She intended to do so. She told SJB that she had done so. She thought she knew what S wanted. She anticipated his response which she believed she knew. She had not appreciated that his instructions had modified and his pressing need for money. From what he had told her she should have appreciated these matters. I think that the matter "got away" from her. Before she received the first letter of 24 September 2004 from Corrs C had sent her letter of 24 September 2004 which virtually re-iterated the terms of settlement in her letter of 22 September 2004. By 6.00 pm on 23 September 2004 S had realised that if there was going to be a settlement he had to give some ground. By that stage he wanted and needed a substantial sum of money fairly quickly and was prepared to agree to a limited restraint for two months. C retained very fixed views as to what the plaintiff wanted even after she spoke to him on the morning of 24 September 2004. She was unable to explain why there was no file note of her early conversation with S. In my opinion she misunderstood the position of S. 93 C said that the statement in FCB's letter of 16 November 2005 that the offer of settlement received about 11.36 am was sent to S about 1.34 pm was wrong. She said that she had never seen FCB's letter of 16 November 2005. However, SJB said that C became involved in drafting a response to the letter of demand, there was discussion in the firm about preparing the response involving C and that he ran the contents of the response past C. At T 213 – 214 SJB said that he had discussions with C that led him to understand that it was the first letter of 24 September 2004 from Corrs containing the offer of settlement which had been sent to S about 1.34 pm by FCB. He partly relied on what C told him. I found it hard to accept that C had never been shown the letter of demand of 3 November 2005 which stated: "In essence, the gravamen of our client's complaint arises out of the failure of FCB to disclose to our client an offer of settlement conveyed by Messrs Corrs Chambers Westgarth ('Corrs') on behalf of IM dated 24 September 2004 (the 'Offer'), copy enclosed." It is hard to understand or accept that careful checks would not have been made as to a matter expressed to be the gravamen of S's complaint. This is followed by an assertion in the letter of demand that if S had known of the offer he would have instructed FCB to convey his acceptance. A claim for substantial damages is foreshadowed. 94 In his affidavit of 24 January 2008 (paragraph 13) GSG states that MW told him that S had rejected IM's offer. FCB pointed out that this could only have happened if C had so informed MW. The defendant relied on these further matters, excluding my comments in brackets. a) The rejection of the offer was consistent with S's feelings of bitterness and hatred towards GSG. b) The difference, in purely monetary terms, between the IM commission and the In commission (assuming those companies secured the … deal) was $50,000. (That is a considerable sum.) c) S told GSG, DP, SJB and C that he could take the deals away from IM and secure them for In. (S over-estimated his position and influence but he knew that this would be difficult. There was a measure of bravado in his statement and his approach.) d) S faced a contest between the relative certainty of an IM commission payment (but having to stay out of the industry with attendant consequences for future employment) or the certainty of In commission together with having the best chance at securing longer-term employment and pursuing IM for compensation arising from his dismissal. (There was no certainty of an In commission payment unless it obtained the deal or deals. S's future prospects with In depended upon whether he was able to secure the … deal for In and S realised this. S was hopeful rather than certain of a future with In.) e) For a man with a young family who worked in a small market with limited opportunities, the inherent probabilities are that maximising his chances of obtaining secure long-term employment (in In) in a role where overseas travel requirements would be less than he had previously experienced and where sitting out of that industry would create difficulties with re-entry were of greater benefit than $50,000 of further taxable income. (The chances of obtaining secure long-term employment in In were problematic, at least.) f) At the relevant time (17 – 24 September 2004) In was the only potential source of long term employment. g) S's financial future was brighter by rejecting the settlement offer, commencing with In, securing the … deal for In and thereby maximising his chances of full-time employment with In than by taking the settlement, sitting out of the industry for three months and then having difficulties re-entering that industry. 95 I do not agree with FCB's submissions. S did not lack self confidence and had a high view of his negotiating skills, persuasive powers and influence. He possessed a considerable amount of bravado. Nevertheless, he realised that the participants in the … deal were about to place an order with IM and that it would be difficult to change that. He realised that his prospects of future employment with In were far from assured. Whether his future lay with In was a gamble. In the circumstances which prevailed it is highly probable that the plaintiff would have taken the money on offer from IM and accepted IM's terms of settlement. His wife's influence and her and the family's need of support would have been very important. I do not resile from my view that the plaintiff would have attempted to reduce the length of the restraint, that his attempt would have been rejected and that the initial offer would have been renewed and accepted. 96 FCB submitted that if C had not informed S of the offer of settlement contained in Corrs' first letter of 24 September 2004 then she would have known so on 28 September 2004. It was submitted that it was inherently improbable that she would not have raised Corrs' first letter of 24 September 2004 with S and attempted to resuscitate the settlement negotiations. There are two problems. C mistakenly believed that she had told S of the offer. She also believed she knew his answer. Her early discussions with S were in the forefront of her mind. Secondly, the Equity proceedings centred upon probable future breaches of confidentiality with reference being made to S's dealings with In and DP of that organisation. 97 I have not overlooked that S's credit was poor and that he had engaged in much dishonourable conduct, including telling lies and blackmail. I have approached his evidence with much caution. I thought that C became confused on 24 September 2004 and that she did not truly know what she had done and not done on 24 September 2004. She treated what should have been done as done. I did not regard her recollection as accurate. She had a fixed view of her instructions and S's wishes. She left me with the impression that she was unable to adjust to the changing wishes and instructions of S and his need for money and the factors which drove that need. Acceptance of offer 98 S claimed that had he been told of the offer he would have accepted it. I attach little weight to such a statement. It is what he would be expected to say. I prefer to focus on the known facts. 99 Initially S preferred to prevent IM closing the deal or deals with the overseas companies. He was very angry with IM and GSG and the way he had been treated. S allowed his distaste of GSG's alleged activities to dominate his initial assessment of the position. S was keen to obtain a suitable high paying position with In and was meeting with DP. S realised that he needed substantial sums of money and gradually this came to the forefront of his consideration of his position. His wife was not working, she had a baby to look after and his family needed to be supported. He needed to resolve the matter with IM quickly. Hence the meeting at 6.00 pm on 23 September 2004 and the concession made as to the deed of release preventing him from working for a named competitor for two months. The concluding words of S in his email of "Let's see how much we can achieve tomorrow" hint that the plaintiff may have been prepared to accept less than he sought. The plaintiff needed to be kept apprised of developments as the day progressed. 100 I do not think that S woud have accepted the offer of settlement outright. He probably would have sought to reduce the period of restraint from three months to two months in clause 7 of the Deed of Release and limit the companies with which he could not be associated in various capacities to In. That would have amounted to a counter offer. I do not think that GSG would have accepted such amendments but neither would he have refused to negotiate further. His instructions and those of IM would have been that S either accepted the terms of the offer as made or there was no settlement. Because of S's threats to interfere with IM's commercial negotiations, his attempts at blackmail and S's negotiations with In and the documents he (S) had procured from In and shown GSG, GSG would have been advised that neither he nor IM were in a weak position and that injunctions could be obtained to prevent S attempting to hinder IM obtaining the … deals. S's dishonourable conduct meant that the gloves were off. These negotiations would have had to take place quickly and S would have to be advised firmly of the risks he ran, including how he would be situated if he refused. 101 Correctly advised, it is probable that S would have accepted the offer as initially formulated, adhered to and renewed after his counter offers were rejected. 102 Ultimately what would have inclined S to have accepted the offer as renewed and to have signed the Deed of Release was the amount of money being offered and his poor cash position. He needed money to support his family. His wife would have reinforced his financial responsibilities. Neither he nor his wife would have been happy to realise their investments. 103 I do not think that S would have been troubled by the payments being gross and subject to tax. He would also have accepted the terms as to payment of the commission. The terms as to payment of the various amounts would also have been accepted. 104 It would be incorrect to approach S's claim on the basis that he has lost the amounts offered. There is always an element of risk in making counter offers. S regarded himself as a highly skilled and effective negotiator. He would not have been able to resist the temptation to try and improve his position and this would have led to him making counter offers. 105 On receipt of the second letter of 24 September 2004 from Corrs it was apparent that the plaintiff faced serious proceedings in relation to the matters raised in that letter. He had been dealing with In. The terms of that second letter had to be considered in conjunction with the terms of the first letter of 24 September 2004 from Corrs. The plaintiff was at a considerable disadvantage in not having been sent a copy of Corrs' first letter of 24 September 2004. In any event, I am satisfied that C did not tell him of the substance of the first letter of 24 September of Corrs. Mistakenly, she believed that she had. 106 Despite C's evidence to the contrary, it is probable that, when the plaintiff spoke to her after receipt of the fax conveying the second letter of 24 September 2004 of Corrs, he did mention the absence of any monetary compensation in that letter and the attached undertaking. On 24 September 2004 S was primarily interested in the amount of money he was to be paid by IM. 107 In the letter of 24 September 2004 sent on the afternoon of that day, FCB, while stating that S "does not agree to sign the undertakings in the form that it is currently drafted" and referring to the width of item 8 of that undertaking, does not indicate what undertaking S was prepared to give. The letter purports to negative the necessity for, or usefulness of, some of the undertakings sought. There was room for negotiation as to the terms of item 8 of the undertaking. In view of S's conduct as to In and his conduct towards and statements to GSG, it was not unreasonable for IM to seek formal written undertakings from S. 108 It remains to assess the value of the opportunity lost by S as a result of FCB's conduct to settle his dispute with IM. 109 It is probable that, fully and correctly advised, S and IM would have reached a settlement of their disputes on the afternoon or evening of 24 September 2004. S would have accepted the monetary offers contained in Corrs' first letter of 24 September 2004 and given an undertaking not to work for any of the nominated competitors for three months. GSG wanted S out of the way and probably would not have settled for less. GSG wanted to ensure that S could cause no difficulties. 110 The plaintiff has sought to include in his damages $67,288 for a net commission offer. That was calculated on the offer of $100,000 gross for commission and on the basis that the first $70,000 would have incurred $18,612 tax and the balance of $30,000 would have been taxed at 47% incurring tax of $14,100. 111 Because what has to be valued is a loss of a chance, and that is subject to a number of problematic factors as mentioned, I would value that loss by taking a figure of $60,000 gross for commission. Tax on that figure would be $13,572 on $58,001 and 42 cents for each $1 over $58,000, that is $840, making a total tax bill of $14,412. That leaves a net figure of $45,588. The plaintiff seeks interest on that amount. The date from which interest is payable may be a matter of debate depending perhaps on the date on which IM received a signed order or contract committing the parties to the … deal. 112 The plaintiff also claimed solicitor costs and disbursements of the Supreme Court and Industrial Relations proceedings. SJB said that in total FCB's fees, including fees and other disbursements, amounted to $114,710, that because of S's stated financial circumstances FCB accepted a payment of $49,000 from him in full and final satisfaction of FCB's accounts. Out of this sum FCB paid barrister's fees and other disbursements of $24,801.70 (including GST) of which over 90% was expended on barrister's fees. The plaintiff claimed both $49,000 and interest on $49,000 from 1 February 2005. A considerable amount of the work done related to the plaintiff's claims against IM and not to the Supreme Court proceedings. 113 The Supreme Court proceedings were necessitated by the plaintiff's conduct and his threatened breaches of confidentiality. Hamilton J thought that interlocutory relief should be granted. This is not a final determination. 114 The plaintiff contended that if FCB had told him of the offer and given him a copy of the offer received from Corrs he would have accepted it and there would have been no need for any Equity proceedings. As already stated, the plaintiff would have attempted to modify the terms of clause 7 of the Deed of Release but GSG and IM would have insisted on that clause and the plaintiff would have accepted it, ultimately. Item 8 of the undertaking needed modification and it went further than the entitlement of IM. The remainder of the undertakings sought were acceptable to S. It did not help that the plaintiff did not indicate what undertakings he was prepared to give. The Equity proceedings centred upon alleged and threatened breaches of confidentiality. They arose out of the post termination conduct including statements of S. The necessary causative link between the acts and omissions of FCB and the institution, prosecution and eventual settlement of the Equity proceedings does not exist. There has been no taxation of cost and there is unlikely to be one. Counsel's fees probably relate to the Equity proceedings. The costs and fees of the plaintiff in relation to the Equity proceedings would have exceeded $49,000. 115 The plaintiff's claim of $49,000 and interest against FCB is rejected. 116 About late January 2005 the plaintiff changed solicitors from FCB to Employment Lawyers. The plaintiff claimed the sum of $8,314.48 he paid to them on 7 March 2005. The costs (or rather, the disbursements) appear to relate to the Supreme Court proceedings. (See paragraph 59 of affidavit of S of 8 August 2007 and exhibit 13 to that affidavit.) 117 I reject this claim and the associated claim for interest. There is no sufficiently causative link. Reference should be made to Hanville v Walker (2001) 206 CLR 459 per McHugh J at [100] – [103], with whom Gummow J agreed. The plaintiff has claimed the sum of $1,000 paid to Mr Dawson of counsel and interest on that sum. It appears that, on 25 June 2005, the plaintiff and his wife attended a conference with Mr Dawson and thereafter a mediation designed to settle the proceedings that the plaintiff had instituted against IM in the Industrial Relations Commission. These were described as the Unfair Contract Proceedings. They were not resolved at the conciliation conference. After 24 June 2005 further settlement negotiations continued leading to a confidential settlement between S and IM on 23 May 2006. S paid the account of Employment Lawyers of $21,200 (including GST). S has stated that the total costs he paid to Employment Lawyers and counsel in the Unfair Contract Proceedings was $22,300. He also paid at that time the balance of the tax invoice to Employment Lawyers dated 28 February 2005 of $8,800 which was outstanding from the IM court proceedings. The ultimate settlement reached resulted in each party meeting their own costs. 118 In my opinion no sufficient basis has been shown to render FCB liable to meet the fees of Mr Dawson in relation to him conferring with Mr and Mrs S prior to the mediation and attending the mediation. Past loss of earnings 119 The plaintiff has claimed $521,621.33 for the past loss of earnings. 120 He contends that his actual earnings were: Income Loss (from 22/9.04 to 28/3/08) Actual Earnings Period Gross income Total tax Net earnings 22/9/04-30/6/05 $21,301.00 $2,601.17 $18,699.83 1/7/05-30/6/06 $34,100.00 $8,790.00 $25,310.00 1/7/06-30/6/07 $62,153.41 $13,996.02 $48,157.39 1/7/07-30/6/08 $79,982.29 $19,092.92 $60,889.37 Total $197,536.70 $44,480.11 $153,056.59 His claim for Past Loss of Earnings was particularised thus: Past Loss of Earnings Period Gross income Total tax Net Loss 5/1/05-30/6/05 $125,000.00 $44,462.00 $80,538.00 1/7/05-30/6/06 $250,000.00 $101,050.00 $148,950.00 1/7/06-30/6/07 $250,000.00 $92,850.00 $157,150.00 1/7/07-30/6/08 $208,333.33 $73,350.00 $134,983.33 Total $833,333.33 $311,712.00 $521,621.33 121 These claims for past loss of earnings were based on the evidence of DP, Business Development Director (Asia Pacific) for the Sydney office of In. He said that to have employed someone of the plaintiff's experience his base rate of pay would have been in the region of $100,000 to $125,00 Australian based with a commission on sales. There was no guaranteed commission. With the sales opportunities that In had in late September 2004 it would have been reasonable for S to have expected to earn somewhere in the order of $200,000 plus, in total. It would have been unlikely for him to earn in total (pay and commissions) $300,000, but his total earnings could possibly be closer to $250,000. 122 DP confirmed that S would have become less attractive if the … deal had gone away. He would have stayed as attractive if that deal had still been available to In. S would have remained attractive for [another] Deal if that deal was still on foot. If he could not work for In for three months he would have remained attractive if the [other] deal was still on foot. DP said that in about late September 2004 In was fairly sure that it was not going to get the … deal. 123 DP pointed out that in the sales cycles there was a long way between a handshake or a nod and a signed contract. 124 Using a base figure of $250,000 was taking DP's evidence at its highest point. A more conservative base should be used, that is, $220,000. 125 In IM's letter of employment of 15 January 2004 the plaintiff was offered a position as a Business Development Manager. His commencing salary package was $130,519.20 per annum (including a cash component of $120,000 and superannuation of $10,519.20). The Commission payable was to be advised. The plaintiff accepted the offer of employment and the associated terms and conditions of employment on 22 January 2004. The latter provided that the term of employment will continue until S or IM, in accordance with the terms and conditions in the Agreement, terminate it and either IM or S may terminate the agreement at any time on the provision in writing of one month's notice. The Agreement continued: "The amount of compensation will equal the total of all amounts that, if this agreement had continued until the end of the notice period, the company would be liable to pay you because of the employment continuing during that period …" 126 These provisions limit the amount payable to S by IM but the plaintiff was at liberty to commence "unfair contract" proceedings in the Industrial Relations Commission. They were ultimately resolved. 127 On 17 February 2004 S signed acceptance of a Commission Structure document with IM. This provided for commissions to be paid on new projects and account management on the bases specified. It was provided: "Commissions will be paid in the payroll period immediately following the quarter in which the commission falls due, based on the following criteria: New Projects 40% in the quarter in which the order is received; 40% in the next quarter, following receipt of the order; and 20% in the quarter in which the final contractual payment is received by IM. Account Management 100% in the quarter in which IM receives the funds for the volume upgrade, support and maintenance fees and change requests. IM will pay S guaranteed commissions of $25,000, inclusive of superannuation, during the first year of employment. The guaranteed commissions will be paid in twelve equal instalments (monthly). Any commission paid under this arrangement will be offset against any commissions earned and payable in relation to New Projects and Account Management activities …" 128 The commissions specified were substantial. Neither the Employment Agreement nor the Commission Structure specified expressly what was to happen where the employee did most of the work in securing an order for a contract or was the person who effectively secured the order or contract for IM but it was not formally placed until after the employee's services were terminated. 129 The plaintiff does not seek to recover as against FCB the damages he could have recovered against IM. His claim is put on a wider basis, namely, that as a consequence of FCB's conduct, IM instituted proceedings in Equity, Hamilton J entered orders restraining the plaintiff and his company, Carondon Pty Ltd, from interfering with negotiations for the … contract and that, by reason of the judgment being publicly available to all prospective employers of the plaintiff (or via his company) (and the pending IRC proceedings), the plaintiff was severely restricted in his ability to obtain employment with comparable opportunities. 130 On 27 September 2004 DP advised the plaintiff that it had been served with a Summons for hiring him. In withdrew the offer of its contract to his company for him to undertake sales work for In. S said that from early October 2004 onwards he made a number of attempts to find alternative employment. 131 He failed to obtain employment with a company in his field, the recruitment firm who handled the available vacancy advising in November 2004 that a major factor in its client deciding not to consider him further was the outstanding industrial dispute with a prior employer. 132 In March 2005 another company offered him employment, which he accepted. He commenced employment on 29 March 2005. On 10 May 2005 that company terminated his employment for the stated reasons of being involved in Supreme Court proceedings with his former employer and the judgment reflecting poorly on him. They were worried that he may lose focus on his job. His employment ceased on 12 May 2005. 133 In August – September 2005 another company offered him a position, but on 23 September 2005 he was advised its offer was withdrawn as a result of a probity report on the proceedings involving IM and the company of S. 134 S said that since losing his employment position in May 2005 he had only performed short-term contracts. Since 2 April 2007 he has been performing work as a contract sales person for a company. It is a mid-level sales role. 135 In about 2001 the Independent Commission Against Corruption ("ICAC") made a finding on the basis of a one-off transaction in 1998 that S engaged in conduct which came within the definition of "corrupt conduct" as set out in ss 8 and 9 of its 1989 Act. ICAC was not of the opinion that consideration should be given to the prosecution of S for any criminal offence. ICAC's report stated at p 6: "The ICAC is satisfied that S was genuinely troubled by his action. He was cooperative and forthcoming as a witness and impressed as being truthful. He clearly appreciated the foolhardiness of his actions." 136 The letter of 2 June 2005 of ICAC sets out the facts giving rise to the findings. S said that when the ICAC report has been raised at any interview and hiring process since September 2004 he has told the truth. 137 It was apparent that the publicity of the Equity proceedings gained the attention of those who compose probity reports. The action taken by S's former employer and the details of the Equity proceedings were making potential employers and recruitment agencies very wary, especially after the ICAC finding some years earlier. Someone without these handicaps was preferred. The positions being sought by the plaintiff carried a substantial income and employers were likely to be selective. 138 The plaintiff contended that if he had been told of IM's offer he would have accepted it and that this would have led to him signing the release and also the undertaking sought after mutually agreed modification of item 8. I think that IM would have accepted a reasonable modification bearing in mind the width of item 8. This would have obviated the need for any proceedings. That may well be so. The Equity proceedings centred upon the conduct of S and threatened breaches of his confidentiality obligations. The plaintiff cannot hold FCB responsible for the details of his behaviour becoming known to the public. The root cause of the problem was his behaviour. This, coupled with the previous finding by ICAC, was likely to make any potential employer and a well-informed recruitment agency very wary of employing S or recommending his employment, despite his other qualities which made him very suitable for appointment to the vacant position. 139 The necessary causative link between the failure of FCB to tell S of the offer of IM and send him a copy by fax of the first letter of 24 September 2004 of Corrs on the one hand and his loss of earnings on the other has not been established. I reject the claim of the plaintiff for lost earnings against FCB. It follows that the claim for interest on loss of earnings also fails. S has detailed the hardships he and his wife suffered as a result of his not being able to obtain suitable employment and the stresses he has suffered. I do not think that FCB can be held responsible for either of these. 140 There are a number of other matters with which I should deal. Exhibits D, E and G 141 Initially I admitted these on a limited basis, namely that they were evidence of letters written in the terms stated. The plaintiff submitted that they should be admitted for all purposes. 142 Exhibit D was the letter of demand of 3 November 2005 from Employment Lawyers to FCB. This letter, which refers to some of the history of the relationship between the plaintiff and FCB, states the gravamen of the plaintiff's complaint (as previously mentioned). It encloses copies of correspondence including the first letter of 24 September 2004 from Corrs to FCB and states that they are instructed that if the plaintiff had known of the offer he would have instructed FCB to convey his acceptance. The letter contains a number of assertions and formulates the components of the plaintiff's claim for damages against FCB. 143 I do not think that this letter of demand should be admitted on any wider basis. It should not be admitted as evidence of the truth of the assertions made in that letter. 144 Exhibit E was the response of 16 November 2005 of FCB to the letter of demand. This letter rejects the plaintiff's claim and, in the course of doing so, makes a number of factual assertions. The plaintiff wishes to rely on some of these and is entitled to do so. I admit this letter for all purposes. 145 Exhibit G is a letter of 2 December 2005 from Employment Lawyers to FCB. Amongst other matters, the letter points out the error as to the particular letter of 24 September 2004 from Corrs sent by fax to the plaintiff by FCB on that day. It traverses a number of factual assertions in the response of 16 November 2005 of FCB and advances arguments in support of the plaintiff's case. The terms of that letter are in evidence, but it should not be admitted as evidence of the truth of the matters it asserts. Demeanour 146 Counsel for FCB urged the Court not to decide the issues in this case based upon the demeanour of the principal witnesses. I have had regard to all the evidence and paid much attention to the probabilities. In considering the probabilities I have been assisted by the characteristics, personalities and qualities of both S and C which emerged as they gave evidence. This assisted me to determine how they behaved. 147 S was a headstrong and difficult client. Some of his methods were, to put it politely, distasteful. C did not appreciate that, as the days passed, S's focus shifted from wanting to prevent IM securing the … deal to obtaining substantial monetary compensation from IM so he could support himself and his family. She should have appreciated this shift. She was too rigid in her approach. She did not give him full and correct advice. While she recognised that FCB had made some mistakes she had a keen eye for what would neutralise these and advance FCB's interests. Fair Trading Act Claim 148 While C did not tell S of the offer of settlement contained in Corrs' first letter of 24 September 2004 and did not send him a copy of that letter, she mistakenly believed that she had told him of that offer and that a copy had been sent to him. C did not deliberately conceal the offer from him. Nevertheless, he was not aware of the offer and that was important. 149 The plaintiff submitted that the failure by C to inform S of the monetary offer of settlement in Corrs' first letter of 24 September 2004 constituted a representation that no offer of settlement containing monetary sums had been made by IM. I think that that is so. It was submitted in the alternative that the representation was that the only basis upon which IM was prepared to settle the matter was upon the terms contained in the second fax from Corrs that IM required S to sign the undertakings. This is arguable as the second fax from Corrs was primarily directed to alleged or threatened breaches of confidentiality. It is unnecessary to resolve the argument. 150 The first alleged representation was misleading and deceptive. If the alternative alleged representation was held to have been made that was also misleading and deceptive. 151 I reiterate my earlier expressed view that if S had been aware of the offer he would probably have made a counter offer, that IM would probably have rejected his counter offer but renewed its offer by insisting that it be accepted in its entirely and that S would probably have done so. That sequence of events and his ultimate acceptance of that offer is by no means certain. 152 The plaintiff would not have achieved an award of greater damages under his Fair Trading Act claim. The matter is best dealt with as a breach of the contractual obligations of FCB. Doubling up is impermissible. The plaintiff's claims, other than for damages for the lost opportunity, are, for the reasons earlier given, not sufficiently causatively linked to the breach or misrepresentation. Conclusion 153 I would enter a verdict for the plaintiff for $45,588. I stand over to a date to be arranged with my Associate the questions of interest and costs to give the parties an opportunity to argue these if so advised. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.