New South Wales Court of Appeal CITATION: Tasman Capital Pty Ltd v Sinclair & Anor [2008] NSWCA 248 HEARING DATE(S): 9 September 2008 JUDGMENT DATE: 10 October 2008 JUDGMENT OF: Giles JA at 1; McColl JA; Young CJ in Eq EX TEMPORE JUDGMENT DATE: 5 October 2008 DECISION: Appeal dismissed with costs. CATCHWORDS: CONTRACT - whether concluded agreement made - binding agreement although to be later supplemented by refinement or agreement on other matters - on facts, was concluded agreement - DAMAGES - wrongful dismissal - income earned during period for which was entitled to notice - whether onus on employee to prove income as part of proving loss - or on employer to prove - onus on employer. CATEGORY: Principal judgment Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd (2000) 22 WAR 101; Andros Springs (Owners) v World Beauty (Owners); The World Beauty (1970) P 144; Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540; Bagnall v National Tobacco Corporation of Australia Ltd (1934) 34 SR 421; Barrier Wharves Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647; Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622; B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9147; Board of Education of Alamogordo Public School District No 1 v Jennings 701 P (2d) 361 (1985) (NMSC); Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153; British Western House Electric & Manufacturing Company Ltd v Underground Electric Railways Company of London Ltd [1912] AC 673; CSR v Maddelana [2006] HCA 1; (2006) 224 ALR 1; Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471; Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 925; Fletcher Challenge Energy Ltd v Electricity Corporation of New Zealand Ltd (2002) 2 NZLR 433; Fox v Percy [2003] HCA 22; (2003) 214 CLR 118; Garnac Grain Company Incorporated v HMF Faure & Fairclough Ltd [1968] AC 1130; Goodman v Pocock (1850) 15 QB 576; 117 ER 577; G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 (McLelland J); G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 (CA); Goldburg v Shell Oil of Australia Ltd (1990) 95 ALR 711; CASES CITED: Harding v Harding (1929) 29 SR 96; Horn v Duke Homes 755 F (2d) 599 (1985); Hussey v Eels [1990] 2 QB 227; John R Keith Pty Ltd v Multiplex Constructions (NSW) Pty Ltd [2002] NSWSC 43; Jones v Dunkel (1959) 101 CLR 298; Lavarach v Woods of Colchester Ltd (1967) 1 QB 278; Masters v Cameron (1954) 91 CLR 353; Monroe Schneider Associates (Inc) v No 1 Raberem Pty Ltd (1991) FCR 1; People ex rel Bourne v Johnson 205 NE (2d) 470 (1965) (III); Pratt v Board of Education of the Uintah County School District 564 P (2d) 294 (1977) (Utah SC); Payzu Ltd v Saunders (1919) 2 KB 581; Raftland Pty Ltd v Commissioner of Taxation [2008] HCA 21; (2008) 246 ALR 406; Robinson v Harman (1848) 1 Ex 850; 154 ER 363; Roper v Johnson (1873) LR 8 CP 167; Ruthol Pty Ltd v Tricon (Australia) Pty Ltd [2005] NSWCA 443; Sagacious Procurement Pty Ltd v Symbion Health Ltd [2008] NSWCA 149; Simonius Vischer & Co v Holt & Thompson (1979) 2 NSWLR 322; Sinclair, Scott & Co v Naughton (1929) 43 CLR 310; Snook v London and West Riding Investments Ltd (1967) 2 QB 786; Taylor v Philips Industries Inc 593 F (2d) 786 (1979); TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130. Tasman Capital Pty Ltd - Appellant PARTIES: Jeanie Sinclair - First Respondent Roy Todarello - Second Respondent FILE NUMBER(S): CA 40933/27 COUNSEL: V R Gray - Appellant J J Garnsey QC & S Golledge - Respondents SOLICITORS: Moloney Lawyers, Potts Point - Appellant Bartier Perry - Respondents LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): DC 2957/06 LOWER COURT JUDICIAL OFFICER: Ashford DCJ LOWER COURT DATE OF DECISION: 19 December 2007 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40933/07 DC 2957/06 GILES JA McCOLL JA YOUNG CJ in EQ Friday 10 October 2008 TASMAN CAPITAL PTY LTD v SINCLAIR & ANOR Judgment 1 GILES JA: The appellant sued the respondents in the District Court claiming $268,000 and interest under a deed of loan dated 25 July 2001 ("the Deed"). The amount in the Deed was in fact $268,200. The respondents' defences included that the Deed was not intended to give rise to the rights and obligations stated in it, and that the $268,200 purportedly lent to them was in fact paid in satisfaction of the appellant's obligation to pay that amount under an agreement in a letter dated 28 May 2001 ("the Letter"). The trial judge upheld this defence and dismissed the appellant's claim. 2 The respondents' cross-claims in the District Court included a claim for damages for wrongful dismissal from their employment with the appellant. The trial judge held that the first respondent had been dismissed without the notice to which she was entitled and awarded her damages of $16,923. 3 In its appeal against the dismissal of its claim the appellant contended that the Letter was not a binding agreement under which the respondents were entitled to be paid the $268,200, and further that the trial judge should not have accepted the respondents' evidence as to the circumstances in which the Deed was executed and thereby held that it was not enforceable in accordance with its terms. In its appeal against the award of damages the appellant contended that the first respondent had not proved the loss suffered by her wrongful dismissal. 4 For the reasons which follow, in my opinion the appellant has not made good its contentions and the appeal in both respects should be dismissed. The Letter 5 The appellant was the holding company in a group carrying on the business of providing financial planning services. The respondents, who were wife and husband, were experienced financial planners. They were working in another financial planning business, and had about 40 clients whom they were able to take elsewhere. In April-May 2001 they discussed joining the appellant's business with Messrs Stephen Harrison and Colin Warne of the appellant, on the basis of taking the clients to that business and becoming employees in it. 6 On about 24 May 2001 Mr Harrison prepared and provided it to the respondents a draft letter headed "Letter of Understanding". In general terms, it set out arrangements for payment to the respondents for their client base and their employment in the appellant's business. 7 The draft letter was superseded by the Letter, and for present purposes it is sufficient that in dealing under the heading "Existing Clients" with payment by the appellant for the "recurring income (trail + annual review fees)" the respondents would bring to the appellant's business, being the income stream from the clients, it stated a formula for calculating the payment using theoretical figures. It is clear enough that theoretical figures were used because, although the respondents had initially told Mr Harrison that their annual recurring income was about or at least $230,000, they had not provided a schedule of clients from which the recurring income could be verified. The draft letter referred to undertaking due diligence, and in that connection included - "We in turn would get a copy of your client schedule as discussed. We would normally ask to sight commission statements etc, but understand the difficulty in providing them to us. However, we are sufficiently satisfied in our dealings with you that this should not be necessary." 8 A schedule of clients was then provided. Mr Harrison then prepared the Letter, with some changes from the draft letter and in particular using as figures in the formula rounded-down figures from the schedule of clients. He signed the Letter as a letter from the appellant to the respondents and gave it to the respondents, and the respondents signed it. 9 The Letter read - "Dear Jeannie & Roy, Letter of Appointment and Employment Welcome to the Tasman Capital group, Colin and I are both excited about you joining us and we see your input as integral to our future. As you are aware our intention is to significantly increase the size of our practice over the next three years and it is important to us to ensure all our staff are adequately motivated and rewarded and receive part of that growth. We are currently implementing an employee incentive scheme with the help of Price Waterhouse Coopers and this will also form part of your remuneration. At that time we will ask that staff sign an employment contract and our lawyers will draft a new contract that all existing and future staff will be asked to sign. This employment contract will be based on standard industry practice and we expect that the only exceptions would be the incentive scheme introduced and some of the points listed below. Although we cannot specify those exact arrangements, we are able to outline the major points below. They are as follows: Existing Clients Tasman will pay you two times recurring income (trail + annual review fees) for that recurring income you initially bring to the company, less what you pay away of that amount as a referral fee. According to the client schedule provided by you this will be: $230,000-$6,500 = 223,500 * 2 = $447,000 Of this amount 60% ($268,200) will be paid in cash and 40% ($178,800) will be allocated as shares in Tasman Capital Pty Ltd. Payment will be made on 14 July 2001. From our position we would seek comfort for our shareholders that if the level of income stated above did not occur we would have a proportional claw-back of the initial payment in either cash or shares. We would also like to put in the contracts that should you choose to leave at a later date and take clients and service them, you will pay to Tasman the equivalent of two times the recurring trail received from those clients at that time. We would also need to consider the value of the shares initially issued to you and come to some arrangement. Salary Your total cost of employment salary to the company incorporating superannuation and FBT will be $100,000 for Roy and $110,000 for Jeanie and this can be structured at your discretion. In addition you will receive a bonus payable annually. The bonus will be 25% of the initial service fee charged on New Clients under Management. This incorporates existing client's new business inflows. We would be willing to review this arrangement as part of our new incentive package and in particular when Jeanie's role changes. Position Roy will join us as a Financial Planner and Jeanie will undertake both that role and undertake a Management position. We would like to offer Jeanie the position of General Manager of the Financial Planning Division, once Roland Paterson-Clarke moves to Newcastle. Legal Upon your acceptance of this offer, and in conjunction with our review of employment contracts, we will need to draw up both an employment contract and a shareholders agreement. We expect this should be completed within two months, however it will be written with the terms of this letter in mind. We genuinely look forward to our future relationship and believe that your joining us is a very important step forward for the group." 10 The rounded-down figures in the formula to which I have referred were the $230,000 and the $6,500. It will be noted that the paragraphs under the heading "Existing Clients" omitted the previous references to due diligence and obtaining a client schedule. The respondents joined the appellant's business 11 On about 4 June 2001 the respondents began working in the appellant's business in the positions of financial planner. Their client files were taken to the appellant's premises, and the client data was entered in the business' records. Arrangements were made for periodical payments by clients to be directed to the appellant. 12 From about 4 June 2001 the respondents were paid the salaries to which the Letter referred. This remained the position until May 2002 when, in circumstances which need not be recounted, a deteriorating working relationship between the first respondent and Mr Warne came to a head and the first respondent was dismissed from her employment. The second respondent considered that his position was untenable and also left the business. 13 Over this period there were no further negotiations towards employment contracts and a shareholders agreement, and no such agreements were drawn up. The Deed 14 After 14 July 2001 the first respondent asked Mr Harrison about payment for the client base the respondents had brought to the appellant's business. According to the first respondent she asked on many occasions and received different responses, such as that Mr Harrison was talking to Mr Warne about it, or to Mr Brian Johnson the appellant's accountant; that the outside accountants were still working on the shareholders agreement; or that the board was meeting soon and he would "come back to us on that". According to Mr Harrison, however, on a number of occasions he asked the first respondent for a schedule of when payments from clients were due, and said that the appellant would not finalise payment or issue the shareholding until it had had the opportunity to verify "what you have brought across with you", and the first respondent said that she understood. 15 On 16 July 2001 the first respondent provided to Mr Harrison a client list signed by the respondents. According to the first respondent it was provided by way of "updating" the earlier client schedule, it seems meaning confirming that schedule. According to Mr Harrison it was provided in response to his requests, and he told the first respondent that he still needed a schedule of clients showing when payments from clients were due and that the appellant "can't verify the recurring income figure and finalise our arrangement with you without this". 16 On about 20 July 2001 the first respondent became insistent in speaking to Mr Harrison about payment for the client base, saying that the respondents were purchasing a property in Queensland and did not want to have to take out a loan. In the circumstances to which I will next come, Mr Harrison arranged for the preparation of the Deed by the appellant's solicitor, and it was executed on 25 July 2001. 17 The Deed provided that the appellant would lend to the respondents $268,200, repayable 45 days thereafter but not bearing interest if duly repaid, but that if the "Transaction Documents" were executed within the 45 days the $268,200 - " … may at the option of the Lender form the cash consideration paid to the Borrower described in the Letter from the Lender to the Borrower dated 28 May 2001 in which case the repayment of the loan will be waived by the Lender." 18 "Transaction Documents" was defined to mean - "written agreements for the effective transfer of all of the clients and associated recurring income (being trail and annual review fees) of the Borrower to the Lender, the service agreements and shareholders agreement (described in the Letter to the Lender to the Borrower dated 28 May 2001) all in a form approved by the Lender". The circumstances of execution of the Deed 19 According to the first respondent, after she had become insistent in speaking to Mr Harrison he said he would see what he could do. He then said that he was getting a document drawn up and "we have to give you the cash by a loan agreement". The first respondent asked, "Why a loan agreement?", and Mr Harrison replied, "It has to be done this way. Brian [Mr Johnson] said that it has to be done by this as a temporary measure. The shareholder documents are almost ready so this won't be a problem." 20 Still according to the first respondent, Mr Harrison then provided the Deed to her. She asked, "What's this 45 days loan due date?", and Mr Harrison said, "You don't need to worry about that. It's not really a loan it has to be done like this for accounting purposes". The first respondent took the Deed to the second respondent. He asked why it was called a loan deed and what the 45 day due date was. The first respondent replied, "Don't worry about [that]. Stephen [Mr Harrison] said it had to be done as a loan agreement. It's not really a loan just sign it." 21 The second respondent in substance confirmed this last evidence. He said also that after he signed the Deed he approached Mr Harrison and asked about "the loan agreement I've signed and the 45 day clause", and Mr Harrison said, "Don't worry about the 45 day clause. We are paying for your client base and this really isn't a loan agreement. It's the only way we can do it at this stage." 22 Mr Harrison did not directly deny saying these things to the respondents, but denial was implicit in his evidence. His position was, in summary, that the money could not be paid until the income stream to be purchased from the respondents had been finally verified, and that the Deed was the way (suggested by the appellant's solicitor) by which money could be made available to the respondents for the Queensland property. According to Mr Harrison, he explained this to the first respondent, who agreed, and he then gave her the Deed and suggested that she and the second respondent might want to get legal advice. Subsequent matters 23 According to the first respondent, she thereafter asked Mr Harrison about the transfer of shares on a number of occasions. She said that she "never got a firm response", but referred to an occasion on which Mr Harrison told a third party that she and the second respondent were shareholders. 24 No shares were issued. But nor did the appellant demand payment of the $268,200 at the expiry of the 45 days, or at all while the respondents remained with the business. So far as the evidence showed, demand for the $268,200 was not made until about the time the proceedings were commenced in the District Court in 2006; indeed, in September 2002 the appellant through its solicitors was demanding adjustment of the $268,200 on the basis that the annual fees received had been much less than the figure in the client schedule. A binding agreement? 25 The trial judge held that there was "a binding agreement in respect of the major points in the letter" within the so-called fourth category in a Masters v Cameron situation, being that the parties intended to be bound immediately while expecting to make a further contract containing by agreement additional terms. Her Honour referred to Sinclair, Scott & Co v Naughton (1929) 43 CLR 310 at 317 and Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 at 628 (McLelland J); G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 635 (CA). 26 I do not enter into the debate over categories found in Peden, Carter and Tolhurst, "When Three Just Isn't Enough: the Fourth Category of the 'Subject to Contract' Cases", (2004) 20 JCL 156 and McLauchlan "In Defence of the Fourth Category of Preliminary Agreements: Or Are There Only Two", (2005) 21 JCL 286. The Masters v Cameron (1954) 91 CLR 353 categories, and a possible fourth category, are intellectual aids, but whether parties have come to a binding agreement is a matter of their objectively ascertained intention. Categorisation does not greatly contribute to the decision in the particular case, which is concerned with finding what agreement, if any, the parties came to. 27 A binding agreement can be reached with the contemplation, even intention, that what is agreed will later be recorded in a formal document; it can also be reached with the contemplation or intention that what is agreed will later be supplemented by refinement or by agreement on matters which have been left for future agreement. That lies behind the reference in Sinclair, Scott & Co v Naughton at 317 to a case where the parties "were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms", and the numerous cases which have recognised the so-called fourth category. If the parties have come to a binding agreement, it does not matter that there may be later refinement or additional agreement. Thus in John R Keith Pty Ltd v Multiplex Constructions (NSW) Pty Ltd [2002] NSWSC 43 Einstein J felicitously said at [224] that - " … regardless of classification, the principle that is now recognised is that there can be an informal contract with the expectation that other terms will be negotiated and by consent included in the formal document. That is, to say that such further negotiations and activity regarding other terms is still to take place does not mean the existing informal contract is not binding: Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd (2000) 22 WAR 101 (per Ipp J at 110-111)." 28 The passage from Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd to which his Honour referred included at [25] - "It is well recognised that parties may enter into a valid contract containing a limited number of terms comprising those terms essential to the bargain that they wish to conclude, in the expectation that at a later date a further contract will be arrived at containing additional terms that would facilitate and clarify the initial contract. That is to say, a binding contract may be arrived at even though it leaves unresolved many matters which might arise in future. As Kennedy J said in Terrex Resources NL v Magnet Petroleum Pty Ltd (1988) 1 WAR 144 at 159: 'An agreement does not have to be worked out in meticulous detail. A bargain can be made containing certain terms, regarded as essentials, whilst the parties recognise that a formal document will eventually be drawn up in the full expectation that a number of additional terms will, by consent, be included in that document'." 29 Whether a binding agreement has been reached, albeit subject to later refinement or additional agreement, must be decided on the facts of the particular case. Uncertainty and incompleteness in what has been agreed and the prospect of refinement and future agreement are material to whether the parties intended to make a concluded bargain, but once the intention be found the court will seek to uphold the bargain by resolving the uncertainty and fulfilling the incompleteness; although if that can not be done by accepted principles of construction and implication, the intention as found may fail. 30 There were matters for the future in the Letter. The employee incentive scheme was to be implemented, and all staff would be asked to sign a new employment contract. The employment contract to which the Letter referred under the heading "Legal" would be prepared in conjunction with the preparation of the new employment contract. A shareholders agreement was to be prepared. In the preparation of the agreements there remained to be framed a claw-back provision, and a provision concerning payment to the appellant and dealing with the respondents' shareholding if the respondents left and took their clients with them. 31 However, it is plain that the respondents were to be employed immediately, as they were, and that this involved their clients becoming clients of the appellant's business, as also occurred. It was unequivocally stated that payment for the client base "will be made on 14 July 2001", a date prior to the expiry of the two months anticipated for completion of drawing up employment contracts and a shareholders agreement. These were powerful indications of an immediately binding agreement upon payment for the client base and employment of the respondents, notwithstanding that more fully expressed and further agreed terms of the respondents' employment and of a shareholders agreement, which would include attending to the matters for the future, were anticipated. 32 Thus the Letter did not record a stage in negotiations only, with no immediate effect between the parties; it recorded a purchase of the client base and employment of the respondents intended to be immediately effective. In these respects terms regarded as essential were described – payment for the client base subject to claw-back if the stated level of income did not occur, and the salaries and bonus payable for employment in particular positions. 33 So regarded, acceptance of the offer as referred to in the first paragraph under the heading "Legal" gave rise to an immediately binding agreement, but with contemplation of the preparation of employment contracts and a shareholders agreement in which there would be refinement and further agreement. By the phrase "written with the terms of this Letter in mind", these documents were to be consistent with and supplementary to the terms of the Letter: I do not think it correct that, as the appellant submitted, the phrase meant that the terms of the letter were only a step in the negotiations towards a binding agreement to come only with the documents. 34 The appellant submitted to the effect that a binding obligation to pay for the client base was unlikely when the recurring income was unverified. However, following the draft letter the client list from which the recurring income came had been provided by the respondents, and the omission in the Letter of the draft letter's reference to verification and the inclusion in it of claw-back are against the submission. In this respect, regard can be had to the draft letter in determining the parties' contractual intention, see Fletcher Challenge Energy Ltd v Electricity Corporation of New Zealand Ltd (2002) 2 NZLR 433 at [55] and Sagacious Procurement Pty Ltd v Symbion Health Ltd [2008] NSWCA 149 at [68]-[70] and cases cited. While not a matter of determinative significance, the development from the draft "Letter of Understanding" with hypothetical figures to the "Letter of Appointment and Employment" with the figures from the client list, and the inclusion in the Letter (absent from the draft letter) of the reference to offer and acceptance in the paragraph under the heading "Legal", also provides some support for an intention to come to an immediately binding agreement, albeit subject to future amplification. 35 Further, the recurring income was annualised, and the actual recurring income brought to the appellant would not be known for a year: hence the claw-back if the stated level of income "did not occur". Contrary to the appellant's submission, the Letter eschewed verification prior to payment and instead provided for adjustment after payment. The provision for adjustment supported that payment was to be made immediately on the basis of the recurring income in the client schedule provided by the respondents. 36 The appellant also drew attention to a letter from its solicitor dated 18 July 2001 advising that there should be prepared a formal sale agreement transferring to the appellant the goodwill and other assets of the respondents' business, service agreements with the respondents, a shareholders deed between the respondents and other shareholders in the appellant, and a "deed of confidentiality and restraint" with the respondents. The letter set out a number of matters on which instructions were sought. It seems that, in circumstances which did not clearly appear, the solicitor was told not to give further attention to these documents. The letter was not made known to the respondents. The appellant referred to it in order to illustrate matters on which further agreement was thought necessary. Matters of the kind indicated would need consideration, but for the reasons I have given there could be immediately binding agreement on the matters thought essential. I do not think regard to what the solicitor foreshadowed precludes such an agreement. 37 The parties' objectively ascertained intention is found in the Letter understood not only with regard to the circumstances in which it was signed and the nature of its subject-matter (see for example Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 548 per Gleeson CJ), but also to the conduct between the parties after the signature of the Letter (Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647; B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9147; Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 925; Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd. In Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 at [25] Heydon JA said succinctly, referring to these cases, that "post-contractual conduct is admissible on the question of whether a contract is formed". 38 In the present case the respondents' clients became clients of the appellant's business and the respondents were employed in the business and paid the stated salaries, all in accordance with the Letter. The respondents were referred to as shareholders. Underlining that the client base had been acquired by the appellant, when in May 2002 separation between the appellant and the first respondent was imminent the appellant proposed (in purported acceptance of an offer the respondents had not made) that the respondents "repurchase the clients you sold to Tasman in July 2001". This post-contractual conduct supports that a binding agreement was made. 39 The appellant placed some reliance on the Deed, in that through the references to the Transaction Documents it was recognised that written agreements including "for the effective transfer of all the clients and associated recurring income" remained to be executed and the $268,200 was to be a loan only unless and until they were executed. However, that reliance is untenable if, as the trial judge concluded, the Deed was not intended to operate according to its terms but was merely for accounting purposes. In that event, the Deed did not convey any recognition between the parties that they had not made a concluded bargain or that the $268,200 was not payable on 14 July 2001. As next appears, I consider that the trial judge's conclusion should be upheld. 40 Understanding the Letter in the circumstances in which it was signed and in the light of the parties' conduct, in my opinion the appellant and the respondents came to a binding agreement whereunder, relevantly to the appellant's claim in the District Court, the appellant was obliged to pay $268,200 to the respondents on 14 July 2001. Was the Deed enforceable in accordance with its terms? 41 The trial judge preferred the evidence of the respondents to that of Mr Harrison in relation to the circumstances in which the Deed was executed. Her Honour carefully considered the evidence, including noting that no claim for repayment of the money had been made at the end of the 45 day period in the Deed or until the statement of claim was filed, and saying that although Mr Harrison had said that the primary reason for the Deed was to enable verification of the recurring income that was "not reflected in any way in the terms of the Deed". 42 The appellant submitted that her Honour's acceptance of the respondents' evidence was undermined by the first respondent's agreement that telling Mr Harrison that the $268,200 was needed for the Queensland properly was untrue. The trial judge referred to this, and took it into account. 43 The appellant submitted that the respondents' evidence was glaringly improbable and contrary to compelling inferences. I intend no disrespect to the detailed submissions in saying globally that the matters to which reference was made do not make that good. The thrust of the submissions was that Mr Harrison's evidence that he wanted verification of the represented recurring income before paying the $268,200, but did not have it and so proposed an interim loan arrangement, was compelling in its rationality; and so the first respondent's evidence to the effect that Mr Harrison did not continue to insist on verification after the signed client list was provided on 16 July 2001, and did not say that the Deed was necessary because there had not been verification, could not be accepted. Mr Harrison's evidence, however, was difficult to accept in the light of the provision in the Letter for adjustment after payment and his receipt of the signed client list on 16 July 2001, and as the trial judge observed the Deed did not make verification the occasion for waiver of repayment. Indeed, although the trial judge did not refer to it, in this connection, in cross-examination Mr Harrison at one point agreed that the only reason he insisted on the Deed was "so the transaction documents could be finalised", although he later said that "it was just a straight out loan because we didn't have any verification of income or completion of these documents". 44 The appellant relied on cross-examination of the first respondent in which she agreed that Mr Harrison referred to the Deed being an interim measure, understood by her to be something that would hold the status quo until the completion and signing of the Transaction Documents; however, the first respondent did not agree that Mr Harrison said that the Transaction Documents would be drawn up and signed "when the income from your client base had been confirmed". Read as a whole, in the cross-examination the first respondent maintained that she thought the respondents were entitled to the $268,200, and so far as the cross-examination took it Mr Harrison's reference to an interim measure was consistent with him saying that what was being done was only for accounting purposes. The trial judge was entitled to accept the first respondent's evidence to the effect that Mr Harrison told her that. 45 The trial judge considered both respondents to be "credible and competent witnesses who did not seek to evade questions", and within the principles of appellate restraint found in cases such as Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 and CSR Ltd v Maddelana [2006] HCA 1; (2006) 224 ALR 1 I do not think that her Honour's credibility based finding should be disturbed. Conclusion as to the appellant's claim 46 It is not necessary to label the Deed as a sham. It is sufficient to conclude that the parties intended that it was not to create the legal rights and obligations which it appeared to create, see Snook v London and West Riding Investments Ltd (1967) 2 QB 786 at 802 per Diplock LJ; Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471 at [46]. In Raftland Pty Ltd v Commissioner of Taxation [2008] HCA 21; (2008) 246 ALR 406 Kirby J said at [134] that in the last-mentioned case the High Court "expressly accepted that sham has a well-understood legal meaning, and that whether a sham is established or not depends on whether the parties intend their respective rights and obligations to derive from what appears to be a legal instrument". 47 The trial judge accepted the respondents' evidence that they were told by Mr Harrison that it was not really a loan, or a loan agreement, and was being done that way only for accounting purposes. Her Honour did not accept Mr Harrison's evidence that he explained the Deed as a (genuine) loan pending verification of the recurring income. She was satisfied from the evidence of the respondents that the Deed was not intended by the parties to operate as a binding loan agreement, and that the $268,200 was in fact paid as the cash component of the payment for purchasing the respondents' client base under the Letter. I do not think error has been shown in that conclusion. 48 As an observation, and not a matter which I think necessary to take into account (and the trial judge did not refer to it), when in September 2002 the appellant's solicitors demanded adjustment of the $268,200 on the basis that the annual fees received had been much less than the figure in the client schedule, they set out as of one of "a number of key assumptions which we consider are now beyond doubt" that - "First, as accepted by you as at the 26 August 2002 meeting the contract between our respective clients as set out in the letter from Tasman Capital dated 28 May 2001 incorporated the sale by your clients to Tasman of their client base for the agreed sum of $447,000.00 of which $268,200.00 was to be paid in cash. Your clients received the cash component." 49 The appellant was correctly held to have failed in its claim to recover $268,000 under the Deed. The damages for wrongful dismissal 50 The first respondent was dismissed from her employment on 13 May 2002, without notice. The trial judge held that the reasonable notice to which she was entitled was eight weeks, and the damages awarded represented eight weeks of the salary of $110,000 in the Letter. 51 From 14 May 2002 the respondents established and conducted a financial planning business through a company Platinum Financial Planning Pty Ltd ("Platinum"). Many of their former clients returned to that business. Neither the appellant nor the respondents led evidence as to the income or other benefits derived by the respondents through Platinum from 14 May 2002. 52 The appellant submitted at trial that the respondents had therefore failed to establish the loss suffered by wrongful dismissal, and that on Jones v Dunkel (1959) 101 CLR 298 reasoning it should be taken that evidence of earnings through Platinum would not have assisted their case. (Indeed, it was submitted that it should be inferred that the evidence would have shown that their loss was nil, although this went beyond permissible Jones v Dunkel reasoning.) The trial judge was not assisted by elaboration of the submission. Her Honour said simply that she did not accept the appellant's submission as correct. 53 On appeal only the first respondent's loss was in question. The appellant again submitted that the first respondent had failed to prove her loss, but with some elaboration and without reliance on Jones v Dunkel reasoning. In its submission, in the assessment of her loss the first respondent was obliged to bring to account income received from alternative employment or other financial benefit from use of her earning capacity during the period of reasonable notice, including in the present case the increased value of her interest in Platinum attributable to her involvement in its business during that period. It was submitted that the first respondent bore the onus of establishing those benefits as part of proving her loss, that failure to do so left her loss unproved, and that she was entitled only to nominal damages. The appellant referred to Bagnall v National Tobacco Corporation of Australia Ltd (1934) 34 SR 421; Lavarach v Woods of Colchester Ltd (1967) 1 QB 278; and Goldburg v Shell Oil of Australia Ltd (1990) 95 ALR 711. 54 The first respondent submitted to the effect that any financial benefit referable to use of her earning capacity during the period of notice was brought to account in consequence of her "duty" to mitigate the loss suffered by the wrongful dismissal, and that according to principles of mitigation of loss the appellant bore the onus of establishing not only the benefits which should have been received in mitigation of loss but also the benefits which had been received in mitigation of loss. It submitted that the absence of evidence worked against the appellant, leaving the loss quantified as the eight weeks unpaid salary. The first respondent also referred to Goldburg v Shell Oil of Australia Ltd and Bagnall v National Tobacco Corporation of Australia Ltd, and to TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130. 55 In assessing the damages of a wrongfully dismissed employee there must be brought to account the financial benefit which the employee received, or acting reasonably should have received, from the exercise of earning capacity freed up by the dismissal. Bagnall v National Tobacco Corporation of Australia Ltd and Lavarach v Woods of Colchester Ltd are amongst the many cases which could be cited. In the latter case the employee immediately took other employment and bought a half interest in the new employer. He had to bring to account his salary earned in the relevant period and a sum representing the discounted value of the increase from his endeavours in the value of the half interest in the employer. In Bagnall v National Tobacco Corporation of Australia Ltd Jordan CJ said at 429 that in the case of wrongful dismissal the measure of damages is the salary or wages the employee has been prevented from earning and the value of any other benefits under the contract of employment of which the employee has been deprived - " … with a deduction of the value to him of the time placed at his disposal by his dismissal – ie, what he has earned, or might have earned if he could by due diligence have obtained similar suitable employment elsewhere during the period:" 56 However, there can be a question of onus. Must the employee prove the financial benefit received (avoided loss) or which should have been received (avoidable loss), including that no benefit was or should have been received, as part of establishing loss? Or can the employee prove only the salary or wages and other benefits lost for the period of notice to which the employee was entitled, or for the balance of a fixed period of employment, with the employer having the burden of cutting down or negating the loss by proving any avoided loss or any avoidable loss? 57 In the case of avoidable loss, the answer is clear. Under accepted principles of mitigation of loss, the onus of proof of failure to take reasonable steps by which financial benefit should have been received is on the employer: see generally Roper v Johnson (1873) LR 8 CP 167 at 181-2; TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd at 158; Garnac Grain Company Incorporated v HMF Faure & Fairclough Ltd [1968] AC 1130 at 1140, and for wrongful dismissal, Harding v Harding (1929) 29 SR 96 at 106 and Bagnall v National Tobacco Corporation of Australia Ltd at 430. 58 It does not follow that the onus of proof of avoided loss is also on the employer. Failure to mitigate loss is one thing; suffering no loss or less loss because loss has been avoided, even by taking steps beyond the reasonable steps of the "duty" to mitigate loss, is another thing. Damages are compensatory, and on general principles a plaintiff must prove the loss suffered by the breach of contract and the damages awarded should be no more than the loss suffered. The appellant said that no loss or less loss is suffered where the employee receives income from alternative employment or other benefit from use of the employee's earning capacity during the relevant period, and that the receipt of the benefit is therefore part of proving loss and (at least where it is shown that some benefit was received) it falls to the employee to quantify it. 59 The appellant relied on Goldburg v Shell Oil of Australia Ltd, in which Shell repudiated a contract under which Mr Goldburg and another person were to conduct a petroleum distributorship. 60 The trial judge in that case declined to award damages assessed as "the difference between the profit he would have gained by performing the contract and the profit he could gain in the same field of activity during the period of the contract by the use of the resources which would have been committed to the performance of the contract" (at 714), saying that Mr Goldburg bore the onus of proving "both elements of the measure" and had not proved the second element. His Honour said in this regard that the contract should be regarded "not as analogous to a contract of employment, but as analogous to a contract for the provision of services by means of capital, or capital equipment and labour" (at 713), and so considered inapplicable a passage extracted from Greig and Davis, The Law of Contract - "Upon breach by an employer of a contract of service the plaintiff employee bears the onus of proving only the remuneration lost which he would have earned if there had not been that breach, the onus lies upon the employer of proving what substitute employment the plaintiff employee ought reasonably to have obtained and what remuneration he would thereby have earned in mitigation of his loss." 61 On appeal Sweeney and Ryan JJ endorsed "the correctness of the approach to the general measure of damages which was taken at first instance" (at 717). They said that they doubted the correctness of the passage in Greig and Davis, discussing at some length the cases cited by the learned authors and other cases and, on the basis of the view at one point expressed "that proof of loss according to the proper measure of damages is an integral part of the cause of action for wrongful dismissal" (at 715), saying that their consideration of the passage in Greig and Davis "reinforced" (at 717) the correctness of the trial judge's approach. 62 The passage in Greig and Davis did not expressly refer to onus in relation to avoided loss. Their Honours' discussion was not directed to onus in relation to avoidable loss, and they appear to have taken the proposition that the employee bears the onus of proving only the remuneration lost which he would have earned but for the breach as implicitly including that the employee did not have to prove avoided loss, and to have questioned that inclusion. I doubt, with respect, that the learned authors had avoided loss in mind. They had said in the preceding paragraph that in assessing the damages flowing from a breach of contract the onus lies on the plaintiff to show the extent of the loss he has suffered, and the passage was in a paragraph then dealing with mitigation in relation to avoidable loss. The cases to which their Honours referred were generally concerned with avoidable loss, and so far as saying that the measure of damages is the remuneration lost less what was earned and what might acting reasonably have been earned (as in Bagnall v National Tobacco Corporation of Australia Ltd, one of the cases) were not concerned with the onus of proof of what was earned. 63 Be that as it may, in saying that their discussion reinforced the trial judge's approach their Honours must have meant that the employee bore the onus of proving the equivalent of the second element to which the trial judge had referred. That element was what Mr Goldburg could gain during the period of the contract during by the use of the resources which would have been committed to the performance of the contract, the equivalent being what the employee could have received from the exercise of the employee's earning capacity freed up by the dismissal. However, what the employee could have received is not what he did receive, nor is it what he should acting reasonably have received; so far as it encompassed what he should acting reasonably have received, it is not correct that the onus of proof is on the employee. Conceptual correspondence is wanting, and I respectfully do not think Goldburg v Shell Oil of Australia Ltd provides clear guidance on the present question. 64 The learned author of McGregor on Damages, 17th ed, states at para 28-002 in his chapter dealing with contracts of employment - "The measure of damages for wrongful dismissal is prima facie the amount that the claimant would have earned had the employment continued according to contract subject to a deduction in respect of any amount accruing from any other employment which the claimant, in minimising damages, either had obtained or should reasonably have obtained. The rule has crystallised anomalously in this form. It is not the general rule of the contract price less the market value of the claimant's services that applies; instead the prima facie measure of damages is the contract price, which is all the claimant need show. This is then subject to mitigation by the claimant who is obliged to place his services on the market, but the onus here is on the defendant to show that the claimant has or should have obtained an alternative employment." 65 At this point authority is not cited for the defendant's onus, but the learned author's earlier discussion in his chapter dealing with mitigation of loss is relevant. He there first discusses avoidable loss and the onus on the defendant, including at footnote 48 to para 7-019 saying that "[t]he onus is the same for avoidable loss; see para 7-096". He then discusses avoided loss, and says at para 7-096 - "Where it appears that steps have been taken by the claimant to avoid loss which are to be taken into account in assessing the damages, the onus is on the defendant to prove that, and also how far, loss has thereby been avoided. Thus in The World Beauty, where the claimants' ship had been damaged in a collision while engaged on a charter and the claimants had attempted to mitigate their loss by advancing the commencement of a later charter, it was held in their claim for loss of profits that it was for the defendant to prove the value of the advancement." 66 In Andros Springs (Owners) v World Beauty (Owners); The World Beauty (1970) P 144 it was accepted that the gain from advancement of commencement of the later charter had to be brought to account when calculating damages. The calculation of the gain was disputed. Lord Denning MR regarded the suggested calculations, involving putting the profit from the later charter out at interest, as speculative, saying that a businessman would not do that but would use the money in his business and might make a profit or a loss. In that connection his Lordship said at 154 - "It must be remembered too, that it is for the defendant to prove the value of the advancement. It is he who prays it in aid in mitigation of damage. He must prove, therefore, the value of it." 67 Fenton Atkinson LJ also considered that the trial judge's calculation was "not realistic from a commercial point of view", and said at 158 - "The onus was on the respondents, as it seems to me, to prove the value of that advancement of the Mobil charter to the appellants, and I think they left it wholly uncertain that there was any greater benefit to the appellants than the market rate of the Andros Springs as a free ship from June 7 until she would have been required for the Mobil charter." 68 Halsbury's Laws of England vol 12(1) at para 1152 states that the plaintiff has the burden of proving that he has suffered loss and its extent or amount, but "[w]here … the defendant alleges that the plaintiff should have mitigated his loss or that his loss has in fact been diminished or avoided, the burden of proving such matters rests upon the defendant". The citation in relation to avoided loss is The World Beauty. The proposition is repeated in para 1044. 69 To the same effect, in Simonius Vischer & Co v Holt & Thompson (1979) 2 NSWLR 322 Samuels JA, with whom Moffitt P and Reynolds JA relevantly agreed, said at 361 (with citation of The World Beauty and other cases) that the defendant bore the onus of establishing that receipt of a particular sum had to that extent "satisfied, mitigated or avoided" the plaintiff's loss. In Monroe Schneider Associates (Inc) v No 1 Raberem Pty Ltd (1991) FCR 1 at 17 Burchett J, with whom O'Loughlin J agreed, held (with citation of The World Beauty, Simonius Vischer & Co v Holt & Thompson and a number of other cases) that the defendant bore the onus of proving that the plaintiff's loss had been diminished by receipt of a particular sum of money. His Honour said that there is no doubt that the onus in respect of mitigation of loss is on a defendant and "it would be extraordinary if the rule were the other way in respect of an elaboration of it", as I understand it meaning in respect of avoided loss as an elaboration of mitigation in relation to avoidable loss. The World Beauty and these cases were cited in Ruthol Pty Ltd v Tricon (Australia) Pty Ltd [2005] NSWCA 443 at [44] (Giles JA, Santow JA and Hunt AJA agreeing), where the benefit in question was delay in payment of a sum of money, for the proposition that "[t]he guilty party bears the onus of proving that loss has been avoided and the extent to which it has been avoided". 70 The measure of damages can differ according to the wrong, and the basic principle that damages for breach of contract are to put the wronged party in the same situation, as far as money can do it, as if the contract had been performed (Robinson v Harman (1848) 1 Ex 850 at 855; 154 ER 363 at 365), qualified by a complex of questions of causation, remoteness and mitigation, readily permits what McGregor on Damages calls an anomalous rule. I respectfully question whether it should be seen as anomalous. The comparison is with a measure of damages according to the contract price less the market value of the employee's services. Contract price less the value of the commodity the subject of the contract is typically the measure of damages where the purchaser of goods fails to accept them, and the vendor's damages are not the contract price but the difference between the contract price and the price at which the goods could be sold at the date of breach (see for example Roper v Johnson at 181-2; the question of mitigation came after the plaintiff's proof of those values.) That may be appropriate where ordinarily there is a market for the goods, but the market for personal services is different in kind; earning capacity and the time available to exercise earning capacity might in economic terms be property, but they are not saleable commodities in all respects to be equated with goods. That can be seen in, for example, Payzu Ltd v Saunders (1919) 2 KB 581 in the recognition of the personal considerations going to reasonableness. 71 In The World Beauty there may have been a market value for the ship's freed-up time, but the gain was said to be greater; in the other cases to which I have referred the avoided loss in question was not simply the market value of a commodity. Avoided loss in some circumstances, including in the case of wrongful dismissal, can be regarded as what is referred to by, amongst others, Professor Burrows in Remedies for Tort and Breach of Contract, 3rd ed, Ch 7, as a compensating advantage, a distinct element in arriving at a wronged party's loss in relation to which it is appropriate to place the onus of proof on the other party: compare Ruthol Pty Ltd v Tricon (Australia) Pty Ltd at [44], [53]. 72 There is thus justifiable support for placing the onus of proof of avoided loss also on the employer. The wrongfully dismissed employee's loss is measured by the salary and wages and other contractual benefits of which he has been deprived less the salary or wages and other financial benefits which he received or acting reasonably should have received from the exercise of earning capacity freed up by the dismissal. But it is not correct that the employee has the onus of proving his loss so measured. In relation to avoidable loss, the employer has an onus. In my opinion, it should be accepted that the employer has an onus also in relation to avoided loss, and it was for the appellant to prove the financial benefit received by the first respondent referable to the eight weeks use of her earning capacity. 73 The appellant submitted that it would often be difficult for an employer to prove the financial benefit received by the employee, particularly where it involved the conduct of a business rather than receipt of salary or wages. Any difficulty would also fall upon the employee, and I do not think the submission provides a sound reason for a different conclusion. 74 I add that the appellant submitted on appeal, in the alternative, that the evidence established receipt of financial benefit referable to the eight weeks which extinguished the $16,923. No such submission had been made at the trial, and it may be doubted that it was open to the appellant to make it on appeal. The calculation it proffered was wildly speculative. The correct approach may have been that the benefit was no more than receipt eight weeks earlier than would otherwise have occurred of the rewards of Platinum's business, and that the value of the earlier receipt was unlikely to have been significant. It is not necessary to come to a conclusion. Orders 75 I propose that the appeal be dismissed with costs. 76 McCOLL JA: I agree with Giles JA. 77 YOUNG CJ in EQ: I have read the judgment of Giles JA in draft and I agree with his Honour's reasoning and conclusions. I should, however, add a few comments of my own because his Honour's conclusion on the onus of proof on offsets against the award of damages for wrongful dismissal initially caused me some questioning and I considered that I should pursue independent research. 78 There is no need for me to set out the facts and circumstances which are so thoroughly and well digested by the presiding judge. 79 The basal facts are that the female respondent was wrongfully dismissed. Had she been given the proper notice she would have received $16,923 in salary. It appears that during the period of notice she received earnings from her own business which she may not have earned had she been in full time employment with the appellant. 80 The matter was not raised at trial and the question is whether there was any onus on the defendants to prove this off-setting amount. 81 The rule very plainly is that where the allegation is that the plaintiff should have taken reasonable steps to mitigate her loss, the onus is on the defendant; see Giles JA's judgment in this case at [57]. The question is whether that same principle applies where part of the loss has actually been avoided. 82 The most thorough treatment of the question appears to be in Dobbs, Law of Remedies 2nd ed (West Publishing Co, St Paul Minnesota, 1993), vol 3 under sections 12.6 and 12.21. Although the authorities to which the learned author refers are almost entirely United States of America decisions, they seem to me to be completely in accord with the local law. 83 Dobbs splits up what he calls the avoidable consequence rules into three, viz: (1) the rule of avoided consequences which allows the defendant to claim a credit for any actual gains the plaintiff receives in transactions that are substituted for the contract breached by the defendant (p 128); (2) a plaintiff's recovery is reduced to the extent that he unreasonably fails to minimise his damages (p 131); (3) if the plaintiff in fact reasonably expends sums to minimise damages, those sums are recoverable as additional damages (p 138). 84 I mention this to show that the learned author clearly distinguishes between avoided losses and avoidable losses. He then says at p 483 that: "Most courts treat the deduction as a function of the avoidable consequences rules, which is to say that it is a partial affirmative defense with the burden of proof upon the employer to show both actual earnings and that comparable employment was available to reduce damages." 85 Two of the more recent cases relied on Pratt v Board of Education of the Uintah County School District 564 P (2d) 294 (1977) (Utah SC) and Board of Education of Alamogordo Public School District No 1 v Jennings 701 P (2d) 361 (1985) (NMSC). In both of these, the court simply said: "Mitigation of damages is affirmative defense and its burden of proof is entirely on the contract breaker" 86 The second case was one where the evidence showed that the dismissed school teacher in fact earned money as a helicopter pilot during the time he would otherwise have been teaching school and the court held that the defendant had proved that this should be offset against his damages for wrongful dismissal. Although neither court is what might be called a top United States court, they reinforce the view taken in the present case and also by Dobbs. Indeed, Dobbs at 484 acknowledges that this burden may seem inappropriate in many cases and there might be room for "mild judicial activism in some of these cases". In many cases it is commonsense to leave the burden on the defendant who may well be in a far better position to see what the job market is in the particular industry. 87 Again in Chapter 3 of Dobbs at Vol 1 p 381, the learned author says "The plaintiff has the burden of proving damages in the first place, but the defendant usually has the burden of proving that the plaintiff did in fact minimize or should have minimised damages." 88 However, Dobbs points out that there are cases where courts have held that the plaintiff must prove at least the actual earnings she has received in substitute employment and cites the decision of the 7th Circuit Court of the US Court of Appeals in Horn v Duke Homes 755 F (2d) 599 (1985). 607-8. 89 In that case, the Court followed its own previous decision in Taylor v Philips Industries Inc 593 F (2d) 786 (1979) and said at 606-8 that the plaintiff had to present sufficient evidence of her actual earnings after dismissal to enable the court to make a reasonable estimate of her damages and then the onus shifted to the defendant to show that she could have mitigated her damages still further by finding additional employment. 90 Although Taylor and Horn are decisions of high courts in the United States Court system, I consider that Dobb's view that they do not represent the majority view in the USA is correct. 91 Indeed, what authorities there are on this point do seem to take the distinction between the compensation for pecuniary loss naturally flowing from the breach (that which the plaintiff must prove) and offsetting advantages which have flowed or should have flowed to the plaintiff which offsets must be proved by the defendant. 92 Thus, as Cripps KC put to the House of Lords in The British Western House Electric & Manufacturing Company Ltd v Underground Electric Railways Company of London Ltd [1912] AC 673, 679 (an argument which seems to have been accepted by the House at 679) that in these sort of cases, it is first necessary to work out whether the original loss is X or X minus A) (see also the judgment at p 689). The plaintiff must establish this original loss: thereafter the onus is on the defendant. 93 It is necessary to assess the damages as at the date of the breach of the contract. The plaintiff's loss can be calculated at that date. Between that date and the trial there may be actual earnings of the plaintiff which should be offset against those damages and there may also be potential earnings. However, at the date of breach, all the possible offset will be in the class of potential earnings. Logically the same rule as to onus should apply to both. As Erle J said in Goodman v Pocock (1850) 15 QB 576, 583; 117 ER 577, 580: "I think the true measure of damages is the loss sustained at the time of the dismissal. The servant, after dismissal, may and ought to make the best of his time; and he may have an opportunity of turning it to advantage." 94 In the instant case the damages as at the date of dismissal are the wages that would have been earned for the period for which notice was to be given. That is what the plaintiff has to show. Any offset as a result of what happened afterwards is for the defendant. 95 Another reason why the onus should be on the defendant is that it does not follow merely because during the period when the plaintiff was entitled to notice of dismissal the plaintiff earned money, that that money should be offset. The defendant has to prove that the money was received and that: : (a) the gain could not have been made had the plaintiff still been in employment; (b) the gain was made as a result of the plaintiff's labour and not merely as a result of her capital invested in the business; and (c) that the gain related to the contract breached. 96 Thus, if the employee is merely a part-time employee and could have earned the money from his or her second job while still employed in the job from which he or she was dismissed, there will be no offset; see eg People ex rel Bourne v Johnson 205 NE (2d) 470 (1965) (Ill). As to (b) see Hussey v Eels [1990] 2 QB 227. 97 My own consideration thus reinforces the view taken on the point by the presiding judge. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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