WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES GRAHAM SARGANT

APPELLANT

 -v-

 LOWNDES LAMBERT AUSTRALIA PTY LTD

RESPONDENT

CORAM FULL BENCH

  HIS HONOUR THE PRESIDENT P J SHARKEY

  CHIEF COMMISSIONER W S COLEMAN

  SENIOR COMMISSIONER G L FIELDING

DELIVERED MONDAY, 23 APRIL 2001

FILE NO/S FBA 1 OF 2001

CITATION NO. 2001 WAIRC 02603

_________________________________________________________________________­

Decision  Appeal dismissed.

Appearances

Appellant   Mr P P McCann (of Counsel), by leave

Respondent   Mr A D Lucev (of Counsel), by leave

_________________________________________________________________________

Reasons for Decision

THE PRESIDENT:

INTRODUCTION

1                 This is an appeal brought pursuant to s.49 of the Industrial Relations Act 1979 (as amended) (hereinafter referred to as “the Act”) by the abovenamed appellant employee, Mr Graham Marcus Sargant (inaccurately referred to as Graham Sargant in the Notice of Appeal), against the decision of Commission, constituted by a single Commissioner, in matter No 633 of 2000.  The appeal would appear to be against the whole of the decision.

2                 The decision is constituted by an order made on 29 December 2000 and perfected on the same day, whereby an application pursuant to s.29(1)(b)(ii) of the Act by  Mr Sargant was dismissed.

GROUNDS OF APPEAL

3                 It is against that decision that Mr Sargant now appeals on the following grounds:-

  “1.  The learned Commissioner erred in law in holding (Reasons for decision paragraph 57) that the redundancy agreement found to have been entered into on 24 March 2000 (Reasons paragraph 65) (“the redundancy agreement”) was conditional upon the consultancy agreement referred to in paragraph 40 of the Reasons (“the consultancy conditions”) when as a matter of construction the redundancy agreement was at all material times unconditional.

  2. In the alternative to Ground 1 of Appeal, if the redundancy agreement was conditional upon the consultancy conditions, then the learned Commissioner erred in law in holding that the Respondent was not obliged to perform the redundancy agreement for reasons set out in the following grounds of appeal.

  3. As a matter of law and on their true construction, the consultancy conditions were intended by the parties to be conditions subsequent to the performance of the following terms of the redundancy agreement:

   3.1 the termination of the Appellant’s employment would take place on 14 April 2000,

   3.2 the Respondent would pay to the Appellant the sum of $98,377.22 (“the redundancy payment”).

  4. Although the consultancy conditions were unenforceable on the grounds of incompleteness (Reasons paragraph 62), on the true interpretation of the redundancy agreement, the consultancy conditions were severable in so far as the Appellant and the Respondent did not intend that the redundancy agreement must fail if for any reason (including incompleteness) the consultancy conditions could not be complied with.

  5. Further or alternatively to Ground 4 of Appeal, by its conduct on 13 April 2000 and/or between 13 and 18 April 2000, the Respondent waived the consultancy conditions and/or released the Appellant from the performance of the same in that:

   5.1 On and after 13 April 2000 the Respondent had no grounds to unilaterally terminate the Appellant’s contract of employment, or the redundancy agreement, on the grounds of actual or anticipatory breach thereof by the Appellant (and the learned Commissioner erred in law in finding to the contrary at Reasons paragraph 81) having regard to the learned Commissioner’s findings and/or the uncontested evidence or inferences from such evidence that:

    5.1.1 The proposed consultancy agreement was not intended to be an exclusive consultancy.

    5.1.2 The Appellant informed the Respondent on 13 April 2000 (by Mr Neil Magee) that he had accepted employment with a competitor of the Respondent (Reasons paragraph 21).

    5.1.3 The Appellant had not as a matter of fact approached or canvassed any of the Respondent’s clients (Reasons paragraph 68).

    5.1.4 The Appellant informed the Respondent that he expected some of the Respondent’s clients would follow him to his new employment (Reasons paragraph 21), but did not state that he had, or would approach or canvass such clients.

    5.1.5 The Appellant did not state to the Respondent that he would refuse to act as a consultant to the Respondent.

    5.1.6 The Appellant’s employment contract and the redundancy agreement did not contain any covenant restraining the Appellant from obtaining employment with a competitor of the Respondent after the termination of his employment with the Respondent (Reasons paragraphs 63 to 65).

    the Respondent’s purported termination of the redundancy agreement was unlawful.

   5.2 On 13 April 2000, the Respondent (by Neil Magee) accepted the Appellant’s keys and asked the Appellant to leave the office upon the Appellant informing Magee that a number of the Respondent’s clients would follow him (Reasons paragraph 22)

   5.3 On 18 April 2000, the Respondent by letter from its solicitors Baker & McKenzie informed the Appellant, in effect, of a number of demands but made no demand in relation to the fulfilment of the consultancy conditions.

  6. Further, having found that:

   6.1 The Appellant’s conduct subsequent to 13 April 2000 was not in breach of any covenant or obligation restraining him from working for a competitor of the Respondent (Reasons paragraph 65) and did not involve any misuse of the Respondent’s confidential information (Reasons paragraph 75);

   6.2 The Appellant’s contract of employment and the redundancy agreement were terminated by the Respondent on 13 or 14 April 2000 (Reasons paragraph 44 and 81).

   the learned Commissioner erred in finding that the Appellant’s conduct in writing to Hammon Osborne Ltd and Athens and Taylor on 17 April 2000 was a breach of fiduciary duty on his part (Reasons paragraph 75), since at that time the Appellant owed no relevant fiduciary duties to the Respondent.

  7. Further, by reason of the matters referred to in Ground 5.1 of Appeal, the learned Commissioner erred in law in finding that the Appellant repudiated the terms of the redundancy agreement (Reasons paragraph 81).

  8. Further, the learned Commissioner erred in law in taking into account (Reasons paragraph 80) the fact that the Respondent relied upon the representation of the Appellant that he would enter into a consultancy agreement when that fact was irrelevant because, by reason of matters referred to in Ground 5 of Appeal, the Appellant was voluntarily released by the Respondent from any obligation to enter into a consultancy agreement.

  9. Further, the learned Commissioner erred in law in the application of section 26 (1)(a) of the Industrial Relations Act 1979 in that:

   9.1 Contrary to the learned Commissioner’s finding (Reasons paragraph 82), the order sought by the Appellant was not in the nature of specific performance.

   9.2 No breach of contract, equity of or fiduciary duty had been committed by the Appellant or, if such had occurred, it did not in law or equity or according to the substantial merits of the matter warrant the dismissal of the Appellant’s application.

   9.3 The Respondent voluntarily released the Appellant from entering into the consultancy agreement.

   9.4 The Respondent had failed to establish any grounds in law, equity or otherwise to support the dismissal of the Appellant’s application.

  10. In lieu of the order of the Commissioner dismissing the Appellant’s application, the Appellant seeks an order that:

   10.1 The Appellant’s Appeal be allowed.

   10.2 The Respondent pay the sum of $98,377.22 to the Appellant within 7 days.

   10.3 Alternatively to 10.1, the matter be remitted to the Commission to be dealt with in accordance with the law.”

BACKGROUND

4                 There was no appeal against the findings of fact in this matter.  I derive these background facts from facts found by the Commissioner at first instance, and facts which it was open to her to find.  I also draw some inferences (see Warren v Coombes and Another [1978-1979] 142 CLR 531) and make some observations as to the significance or otherwise of some facts.

5                 The evidence before the Commission at first instance consisted of documentary evidence, and Mr Sargant gave evidence on his own behalf.  Mr Richard Leo Tween was called on behalf of Mr Sargant.  Mr Tween had been employed by the Lowndes Lambert Group in Australia since 1974 and was Executive Chairman and Managing Director of Lowndes Lambert Australia Pty Ltd from 1 April 1997 to 31 March 2000.  Both Mr Robert Borsak and Mr Sargant had reported to him in that capacity.  Mr William Nathaniel Grierson, the Managing Director, Victorian Broking Operations, Mr Borsak, the Group Managing Director, and Mr Neil Thomas Magee, the Managing Director Western Australia gave evidence on behalf of the respondent.  There was also a quantity of documentary evidence.

6                 Also, the Commissioner found that, where there was a conflict between the evidence of Mr Sargant and that of Mr Grierson, Mr Borsak and Mr Magee, she preferred the evidence of the witnesses for the respondent.  That finding was not challenged on appeal.

7                 Mr Sargant brought an application pursuant to s.29(1)(b)(ii) of the Act, claiming that he was owed the sum of $98,377.22, being a benefit to which he was entitled under his contract of employment, not being a benefit under an award or order.

8                 The amount claimed was an amount of $17,209.84 for eight weeks’ pay in lieu of notice and $81,167.38 as a redundancy payment.

9                 There was an application at the commencement of Mr Sargant’s case to claim, in the alternative, a denied contractual benefit in the sum of $111,863.96, being a payment for reasonable notice calculated at 52 weeks’ salary at $2,151.23 per week.  That application to amend was opposed and the application to amend was refused.  That decision is not appealed against.

10              It is necessary to consider the facts in this matter and the inferences which it was open to the Commissioner to draw from the primary facts, and to do so in some detail in order to consider the submissions as to the legal consequences, which Counsel made upon this appeal.

11              Mr Sargant, who was an insurance broker by occupation at the time of the hearing, was employed in the insurance industry for 47 years and was very experienced.  At the time of the termination of his contract of employment, he was 63 years of age.

12              In 1974, he was appointed State Manager of H G Poland Australia Pty Ltd.  At about the same time, that company, which subsequently became Wigham Poland WA Pty Ltd, was appointed to represent the Lowndes Lambert Group in Western Australia.  In early 1985, Mr Sargant, through a company, Texion Pty Ltd, purchased the Western Australian portfolio of clients from Wigham Poland WA Pty Ltd and thereafter traded on a franchisee basis as “Lowndes Lambert Western Australia”.

13              On 1 October 1986, Texion Pty Ltd sold its insurance broking book to a company constituted for this purpose, namely Lowndes Lambert (WA) Pty Ltd.  Mr Sargant was employed by that company from 1 October 1986 under a comprehensive service agreement for two years until 30 September 1988.  At the expiration of the two year period, the service agreement was not extended however Mr Sargant continued to be employed by Lowndes Lambert (WA) Pty Ltd until that company was facing voluntary liquidation in or about 1991.  Thereafter, Mr Sargant was employed by Lowndes Lambert Australia Pty Ltd, the abovenamed respondent, as the Western Australian State Manager.  It was quite clear that no written contract of service bound Mr Sargant after 1988, there being uncontroverted evidence to that effect.

14              In November 1999, the respondent announced a proposed merger between Lowndes Lambert Australia Pty Ltd and the Heath Group.  That merger was effected in December 1999, but did not physically take place until on or about 1 April 2000.  Before the merger, Mr Grierson was the Western Australian State Manager of the Heath Group.

15              It should be said that the events recounted here occurred, too, against the background of a long standing and close working relationship between Mr Borsak and Mr Sargant, and of the fact that Mr Sargant was the respondent’s manager in this State and had been for some years.  On the evidence, and understandably, the respondent placed a great deal of trust in its senior managers, as Mr Borsak said in evidence.  As the State Manager, Mr Sargant was such a senior manager.  Mr Sargant had also had a long standing relationship with the respondent’s clients, and some of those had originally been his clients.

16              On 24 March 2000, Mr Sargant spoke to Mr Borsak, who was then the Chief Operations Officer of the respondent, about the merger. (Mr Borsak, at the time when he gave evidence, was the Managing Director of Lowndes Lambert Australia.) Mr Borsak was visiting Perth from New South Wales.  He was met at the airport by Mr Sargant who drove him to the Sheraton Perth Hotel.  During that journey, a discussion about the proposed merger occurred.  Mr Sargant commented that Mr Grierson was very much younger than he was and that he anticipated that Mr Grierson would want the top job in Perth in the merged agency.

17              Mr Sargant gave evidence that Mr Borsak had informed him that Mr Grierson had stated that he wanted the position as number one in Perth in a merged group and he, Mr Sargant, replied that, if that was to be the case, he would prefer to take redundancy.  Mr Borsak agreed that Mr Sargant would be made redundant.  (It should be observed that, after the merger occurred, Mr Grierson was not appointed as State Manager of the merged group.  Mr Magee was appointed to the position on 3 April 2000.)

18              The reasons why Mr Sargant wished to be made redundant and some of the terms of the redundancy agreement were in dispute.  However, Mr Sargant told Mr Borsak that he wished to retire and Mr Borsak told him that he, Mr Borsak, was prepared to offer Mr Sargant a generous redundancy package on the basis that he stay on as a consultant and assist in the transfer and smooth transition of the respondent’s business and clients to the merged entity.  Mr Sargant agreed to do that, as the following evidence reveals.  I would observe that that evidence clearly reveals that, not only was a redundancy package to be paid then because Mr Sargant agreed to “stay on” as a consultant, but that it was to be a generous package.  It was clear and understood, too, that Mr Sargant said that he wished to retire.

19              It was common ground that an agreement was reached on 24 March 2000 that Mr Sargant’s employment would terminate on 14 April 2000 and that he would receive eight weeks’ pay in lieu of notice, together with a redundancy payment equivalent to three weeks’ pay for each completed year of service, to be calculated at the rate of his total salary package (“the redundancy package”) and Mr Borsak said “We will need to sort out your consultancy fees later”.

20              Mr Borsak’s evidence was that Mr Sargant agreed to those terms and informed him that he, Mr Sargant, intended to take a break at Margaret River and, when he returned, he would talk to Mr Grierson to reach an arrangement to guarantee continuity of business.

21              Later that morning (24 March 2000), Mr Borsak and Mr Sargant went to see Mr Grierson at the Heath Group’s offices in Perth and their evidence, accepted by the Commissioner, was to the effect that Mr Borsak said as follows:-

 “Graham, I would like to introduce you to Bill Grierson.  Graham has decided to accept a redundancy payment but will be continuing on as a consultant to help you with our business.  I need Graham to introduce you to your clients and assist with the handover to Bill.  I don’t care how long this takes.  I want to ensure that there is a smooth transition.  I will leave it with you to come up with the terms of the consultancy arrangement.  I will arbitrate it.”

22              It is quite clear that there was, on that evidence, an agreement by Mr Sargant and Mr Borsak that Mr Sargant would perform duties as a consultant to help with the employer’s business “and to introduce your clients and assist with the handover to Bill” - a clear reference to the function which he was expected to perform as consultant.  It was, inter alia, an agreement to become a consultant and perform consultant’s duties.

23              On 29 March 2000, Mr Sargant was shown the office which he would occupy.  On the same day, as the Commissioner found, Mr Grierson and Mr Sargant went to lunch at a restaurant at the Novotel Hotel.  There, Mr Grierson gave Mr Sargant a copy draft consultancy agreement for his perusal, as had been discussed.  It was given to him on the basis that he would come back to them and let them know about its terms.  It should be observed as noteworthy that the draft agreement contained an express restraint of trade.  (There was no evidence that, after 1988, any express restraint of trade formed part of his existing employment agreement.)

24              Mr Grierson said:-

 “He hadn’t, I don’t believe fixed in his mind whether he wanted to work two days or four days, whether he wanted to only have relationships with the clients that he was handling at Lowndes or do something broadly...”

25              Mr Grierson observed that the document was to start the process of documenting the understanding which they, that is the respondent and Mr Sargant, had.  Mr Grierson said:-

 “The understanding was that Graham would continue with the company post merger in a consultancy type role, and the instructions to me from Robert were to come to an arrangement that he was happy with, and there were no defined parameters on that; it was really “do something that works”.  But there was always a very clear understanding that he would remain aligned to us.”

26              Mr Borsak’s clear evidence was, too, that he would not have agreed to Mr Sargant’s departure without his serving out a period of notice, if Mr Sargant had not agreed to a period of consultancy within which to perform the functions he would have performed as manager during the period of notice.  These functions included effecting the proper and smooth transition of the respondent into the merged entity and, most importantly, the smooth transition of the respondent’s clients to the merged entity.

27              If this had not been agreed, Mr Borsak said, he would have required Mr Sargant to work out a period of notice to effect those results; such a period would, to effect the transition, be about a month.  He also referred to the vulnerability of the respondent to the loss of clients during such a period of transition.

28              It is, I think, obvious that Mr Sargant’s assistance, not only as manager, but as manager with a long standing relationship with many clients was required, very understandably, by the respondent and ensured by this agreement.  The knowledge of the clients to which he had access, which would assist in such a transition, included the following commercially sensitive and confidential information:-

(a) The identity of the clients of Lowndes Lambert Australia Pty Ltd and the identity of the contact persons within those clients’ organisations with whom Lowndes dealt.

(b) The terms and conditions upon which Lowndes was engaged by these clients, including brokerage charges and consultancy fees.

(c) The volume of business conducted by these clients through Lowndes and the relative value of these clients to Lowndes.

(d) The insurance programmes of these clients, including the perceived risks of these clients, the insurance coverage required by them, details of underwriters and a history of premiums.

29              This was all information described by Mr Borsak as not publicly known by competitors and constituting sensitive commercial information which might be used by a competitor to attract or poach the respondent’s clients. (It is obviously that sort of information.) The transfer and use of that information would, it is axiomatic, form part of the transition process which Mr Sargant had agreed to assist as a consultant.

30              What was required of Mr Sargant, who reported directly to Mr Borsak, as a manager, was consistent with the duties which he had performed as manager.  These included his managing the day to day business of the Western Australian Division of the respondent.  He also “sourced” and bid for new business, worked on existing client relationships, maintained contact and liaised with national clients of the respondent and worked at generating a profitable operation in this State.

31              On 7 April 2000, while still in the employ of the respondent, Mr Sargant contacted one of his employer’s clients, Broad Constructions, and informed it that he was leaving the employ of the respondent and “taking redundancy”.  He did not inform Broad Constructions that he was remaining as a consultant or express any desire to assist them in any transition as clients to the merged entity, which one might have expected in view of his agreement of 24 March 2000 with Mr Borsak.  It might properly be inferred, as Mr Lucev, Counsel for the respondent, submitted, from what was said in that contact that Mr Sargant had no intention of carrying out his part of the agreement. (It should be noted that part of the evidence of Mr Sargant, which was not accepted, was his evidence that there was no condition agreed by him to enter into and/or perform a consultancy agreement.)

32              On 8 April 2000, on Mr Sargant’s evidence, he decided to seek other employment, having decided that it would be very difficult to obtain fresh employment at age 63, and even though he had told Mr Borsak that he would retire.  At no time did he advise his supervisor that that is what he intended to do.  He then approached Mr Kim Hanson of West Coast Risk Management (hereinafter referred to as “WCRM”) on 10 April 2000 to ascertain whether there was an opportunity for employment by that firm.  (This was four days before he was due to retire.)  That firm, it was made clear, is and was a direct competitor of the respondent, in the insurance broking business.

33              Mr Hanson and Mr Sargant had another meeting after work on 12 April 2000 and, on 13 April 2000, Mr Sargant accepted employment with WCRM as an Account Director.  He commenced employment there on 17 April 2000, four days after he left the respondent’s employ and remained so employed as at the date of the hearing at first instance.

34              In the meantime, notwithstanding his approaching Mr Hanson on 10 April 2000 and his contact of 7 April 2000 with Broad Constructions, Mr Sargant had a meeting on 11 April 2000 with the State Manager of the merged entity, Mr Magee.

35              Mr Grierson’s evidence, which it was open to accept, is significant.  It was corroborated by Mr Magee, who was present with him and Mr Sargant, and was as follows:-

  “BG: Graham, I would like to introduce you to Neil Magee who has been appointed to the position of General Manager.

  GS: Nice to meet you.

  BG: I have told Neil that you are taking a redundancy but will be staying on as a consultant to assist us with the merger and the handover of business.

  NM: I will need to sit down with you over the next few weeks to deal with several issues.  We need to work out who the clients of the business are, what activity is going on, what resources we have, what staffing we wish to have in place once the merger occurs, and who will be responsible for the allocation of files.

  BG: We will be relocating to the Heath offices shortly and we will also need to work out how this transfer will proceed.

  GS: I will be taking a short break up to Margaret River but we can deal with some of these matters on my return.”

36              Again, Mr Grierson gave evidence that on that day, at the respondent’s office, he again spoke to Mr Sargant and asked how he was going with the consultancy agreement.  Mr Grierson said that Mr Sargant said:-

 “Don’t pressure me about that just yet, Bill.  Right now, I just want to go down the Margaret River and forget about insurance broking for three weeks.  I’m not taking my mobile phone.  I don’t want to talk to anyone.  I just want to relax for a few weeks.”

37              It was found that these conversations occurred as recounted by Mr Grierson.  They were significant.  Mr Sargant made it clear that he proposed to perform the consultancy agreement, notwithstanding that, unbeknown to his employer, he was actively seeking other employment.  He also made it clear that, after he came back from Margaret River, he would deal with a number of matters relating to his consultancy duties, with which Mr Magee wished to deal.

38              It was implicit, too, from the conversation that Mr Sargant would deal with the consultancy agreement when he returned from Margaret River.  At no time did Mr Sargant say that he would not sign the agreement or that he would not perform his agreement to act as a consultant.  Understandably, when Mr Sargant left the office that day, Mr Magee was under the impression that he would be continuing with the respondent as a consultant to assist with the handover of clients.

39              On 13 April 2000, his second last day as Manager, Mr Sargant received a letter from the Company Secretary of the respondent, Ms Vivien McEwen, with a cheque from the respondent being the sum of the agreed pay in lieu of notice and the severance or redundancy payment.  He deposited the moneys in his bank account.  Then, because, as I have said, he had already accepted employment with WCRM, he went to inform Mr Magee that he had done so.

40              On 13 April 2000 at about 10.30 am, Mr Sargant visited the Heath Group’s office where he spoke to Mr Magee.  Mr Magee gave evidence that Mr Sargant offered his keys to the Lowndes Lambert office and informed Mr Magee that he had accepted employment with WCRM and would commence employment there on 17 April 2000, which was four days later.  The conversation was as follows:-

“GS: Hello Neil.  I thought I should come and tell you that I intend to work for another broking company.  Lowndes Lambert have forwarded me the cheque for the redundancy.

NM: What are you going to be doing?  Which broking house?

GS: West Coast Risk Management Services.  I start on Monday 17th April 2000.  Should I go now?

NM: This is all a bit of a surprise.

GS: I think that might be appropriate.  I will come back with you to the Lowndes Lambert office.”

41              Irrespective of matters of legal obligation, the practical effect of the decision was that Mr Sargant, the Manager in Western Australia of the respondent and its public face, would not be available to do what he would have done had he served out notice or if he had performed the consultancy agreement, the latter being for the same purpose.  There was no senior management person there, as one would expect there to be, to aid the transition managerially and, most particularly, of clients to the merged body.

42              As a result, the respondent was disadvantaged in the transition process and left entirely vulnerable to what occurred, namely the poaching of its clients.

43              Mr Sargant and Mr Magee then went back to the respondent’s office where they obtained a printout of a list of the respondent’s clients and details of the revenue of each client.  Then there was another important exchange.

44              Mr Magee said “Are there any other conditions which apply to you?”

45              Mr Sargant replied “No, there are no conditions attached.  There are a number of clients that I have been dealing with for a number of years who will follow me.”

46              It was open to find that that was a clear statement that clients of the respondent, his employer, would follow him to become the clients of his new employer. (Mr Sargant did not use the words “might” or “could”, but the word “will”, a word of certainty and, indeed, in the context of all of the evidence, a correct prediction.)

47              Next, there was further discussion about administrative matters.  Then, Mr Sargant offered to assist in making telephone calls to a number of clients to advise them of the fact that he was leaving and of Mr Magee’s appointment, on Mr Magee’s evidence which was accepted as against Mr Sargant’s.  Apart from the reference to Mr Magee’s appointment, this was an offer to communicate in the same terms as the communication on 7 April 2000 to Broad Constructions.  This was merely an offer to inform clients of Mr Sargant’s departure.  There was, during this conversation, no intention expressed by Mr Sargant to sign a consultancy agreement or to perform one, not surprisingly.

48              Not surprisingly, Mr Magee refused this offer, which was no more than what I have just expressed it to be, because, quite rightly, Mr Magee deemed it to be inappropriate to let Mr Sargant make the calls to clients when he was leaving to join a competitor.

49              Mr Magee then had discussions with two employees, Ms Pamela Hunt and Ms Carmen Valetta.  He then considered that it was appropriate that Mr Sargant leave and informed Mr Sargant that this was his view.  Mr Sargant handed him his keys and left.  Ms Hunt subsequently joined Mr Sargant as an employee of WCRM.

50              The next day, Mr Magee and Ms Hunt telephoned a number of the respondent’s clients to make appointments.  Of the fourteen whom or which he telephoned, most did not wish to attend the appointment.  He achieved five appointments, and two of those five clients told him that they would be transferring their business to WCRM.  Mr Sargant, of course, was not available to assist him to prevent this occurring.

51              The cheque which Mr Sargant had received on 13 April 2000 was later cancelled by Mr Borsak.  Mr Grierson informed Mr Borsak on 13 April 2000 of the fact that Mr Sargant had that day told Mr Magee that he was leaving the respondent to join a competitor and that some of his clients were going to follow him.  Mr Borsak’s evidence was that he was shocked because, at no time, did Mr Sargant inform him that he would considering working with a competitor or having discussions with a competitor; nor that he, Mr Sargant, was not going to enter into and perform a consultancy agreement to assist with the handover of clients; nor that he did not intend to retire as he represented on 24 March 2000.

52              Mr Borsak said the following in evidence:-

“In my view, Mr Sargant’s actions were contrary to the basis upon which I had agreed to pay him a redundancy package.  I would not have entered into this agreement if Mr Sargant had appropriately informed me that he intended to work with a competitor upon the cessation of his employment.  Had I known that Mr Sargant was going to work with a competitor I would have taken immediate steps to protect the Lowndes Lambert client base.  Based upon my belief that he had breached our agreement I issued a stop payment instruction on his redundancy cheque.”

 (See page 299 of the appeal book (hereinafter referred to as “AB”).)

53              That evidence expresses clearly the basis of the agreement, and the fact that Mr Sargant’s action left the respondent, to a large extent, unprotected.

54              As was the fact, on the following Monday, 17 April 2000, four days later, Mr Sargant commenced employment with WCRM.  Commencing on that day and continuing for some weeks, he solicited and attracted over the next several weeks about 50 of the respondent’s clients to cancel their arrangements with the respondent and to become clients of WCRM.

55              The consequent loss to the respondent was substantial.  It was approximately 50% of its Perth budget.  He also enlarged his new employer’s clientele.  Most of the clients who “followed” Mr Sargant were long standing clients of the respondent, and some were clients who had been acquired by the respondent when it purchased a broking book of clients from Mr Sargant’s own company in 1986.  The evidence was, and it is quite clear that an, if not the major, asset of an insurance broker is his/her/its book of clients, that is those persons who sign up insurance policies through them and do business through them.  A substantial portion of that asset was lost to the respondent.

56              A particularly unsatisfactory piece of soliciting by Mr Sargant was contained in a letter written by him on 17 April 2000, the day he started work with WCRM, on WCRM letterhead, to clients of the respondent.  By that letter, Mr Sargant offered himself as a broker acting for that company.  Somewhat pointedly, he said:-

  “The merger may bring some change in the future to that focus, but locally, the merged company is not in any way structured to the servicing of small business.”

 (See page 216(AB).)

57              This was a direct denigration of his former employer’s competence.

58              On 18 April 2000, on the instructions of the respondent, Messrs Baker & McKenzie, Solicitors, wrote to Mr Sargant alleging that he had committed a breach of a covenant in restraint of trade which was contained in his 1986 service agreement.  It was, of course, the clear evidence, as I have observed, that that agreement had expired some years before and to allege that there was an agreed express restraint of trade upon Mr Sargant was wrong.  However, relevantly to these proceedings, the letter alleged a breach of his fiduciary obligation “not to act contrary to the best interests of our client, which included a duty not to seek to entice any employee or client away from LLA WA” (see page 203 (AB)).

59              Relevantly, too, the letter also alleges serious misconduct justifying summary dismissal.

60              Thus, the letter set out to assert a position which was relied upon by the respondent in the proceedings at first instance.

FINDINGS

61              The Commissioner found as follows:-

 1. That, although Mr Borsak gave evidence that he had been informed that Mr Sargant had resigned on 13 April 2000, the evidence given by Mr Sargant and Mr Magee was inconsistent with that conclusion.

 2. The evidence of Mr Borsak, Mr Grierson and Mr Magee was more plausible than the evidence given by Mr Sargant and, therefore, where Mr Sargant’s evidence differed from the evidence given by the respondent’s witnesses, the Commissioner accepted that evidence.

 3. In making that finding, the Commissioner had regard to all of the evidence and, in particular, to the following matters:-

  “(a)  The Applicant’s evidence that he did not know why Mr Grierson gave him a copy of consultancy agreement, or that at no time prior to the termination of his employment was there any discussion with Mr Borsak, Mr Grierson or Mr Magee about him working as consultant, is not plausible given the fact that he was given a consultancy agreement to consider, and the short time that elapsed between when it was agreed he would become redundant and the agreed date of his departure.

  (b) Further the Applicant’s evidence that he did not read the consulting document is inconsistent with a man who has considerable business experience.

  (c) I accept that the actions of Mr Borsak in agreeing to the termination of the Applicant’s employment in a period of three weeks would not have been taken unless the Applicant had led Mr Borsak to understand he would enter into a consultancy agreement and as a consultant assist in the handover with clients.  Clearly the Respondent did not take any steps to effect a handover or to protect its business prior to 13 April 2000.

  (d) Further the Applicant’s evidence in respect of the following matters was unsatisfactory:

    • When cross-examined about having lunch with Mr Grierson on 29 March 2000, until confronted with documentary evidence, the Applicant denied having lunch with Mr Grierson on that day.

    • The Applicant wrote a letter to one of the Respondent’s clients, Hammon Osborne Ltd, on 17 April 2000 and stated in that letter that he had not made any contact with Mr Craig Roddy, Huntleigh’s Financial Controller in Perth.  When cross-examined he conceded that statement was wrong, as he had telephoned Mr Roddy prior to sending the letter.”

  (See pages 26-27 (AB).)

 4. Accordingly, the Commissioner found that the terms of the redundancy package agreed to by Mr Sargant were as set out in paragraph 40 of those reasons.  That means that the Commissioner found that Mr Sargant was offered and accepted a redundancy package on the following conditions:-

 “(a) following termination, the Applicant would provide services to the Respondent as a consultant;

 (b) as a consultant, the Applicant would assist in the handover of clients and business to the incoming management of the Respondent’s Western Australian division;

 (c) the Applicant would not use or disclose information of a confidential nature, including details of specific clients of the Respondent and their insurance requirements.”

 5. Mr Sargant contended that, if the Commission found that the parties agreed that it was a term of the redundancy package that Mr Sargant enter into a consultancy agreement, then such a term was unenforceable as there was no more than “an agreement to agree”.  The Commissioner found that no agreement was reached about the terms of the draft consultancy agreement which Mr Grierson provided to Mr Sargant.  In particular, the Commissioner found that the terms in respect to minimum hours, rate of payment for services or duration of the contract were not discussed.

  The Commissioner therefore found that the present case was one in which no binding and enforceable obligation had been created as the essential or critical terms of the bargain had not been agreed upon.  In particular, terms such as fees, hours and term of the agreement were not ones which the Commission can appeal to objective standards to in order to fill in the blanks.  Accordingly, the term of the redundancy package to enter into a consultancy agreement was unenforceable.

 6. The respondent contended in the amended Notice of Answer and Counter Proposal that it was a term of Mr Sargant’s employment contract with the respondent that, during and after his employment with the respondent, he would not divulge or use the confidential information of the respondent or any information concerning the business or finances of the respondent or any of its dealings, transactions or affairs other than for the benefit of the respondent and in the proper course of his employment.

 Mr Sargant’s terms and conditions of employment were not subject to the terms of a written agreement, as the only written contract, “Terms of Service Agreement”, expired in October 1988.  Therefore, there were no post-employment constraints.

 7. The Commissioner found that, unlike the duty of fidelity, the duty of confidentiality applies after the employment relationship has ended, but that the duty is only breached by the disclosure of secret information.

 8. The Commissioner held that canvassing the respondent’s clients came within Goulding J’s second class of confidential information, as he referred to it in Faccenda Chicken Ltd v Fowler [1985] 1 All ER 724 at 731.  Accordingly, it was not protected by the legal duty of confidentiality after the employment relationship ended.  Further, the Commissioner found that, in the absence of any evidence that, in making the comments to Hammon Osborne Ltd and Athans & Taylor (the respondent’s clients) about his opinion of the structure of the merged company, was based on confidential information, the Commissioner found that the statement of that opinion did not breach the duty of confidentiality.  In any event, the respondent contended that Mr Sargant’s opinion was wrong.

  However, the Commissioner found that the making of these statements to the two clients of the respondent formed part of a course of conduct which breached Mr Sargant’s fiduciary obligations to the respondent.

 9. The relationship of employer and employee is ordinarily recognised as fiduciary.  The Commissioner found that the fiduciary duty of a manager contemplating the end of an employment relationship was governed by what Mason J said in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 96.

 10. The Commissioner found that Mr Sargant had, in her view, breached his fiduciary duty to the respondent.  Mr Sargant held a high level position with the respondent’s organisation and, whilst employed as State Manager, was entrusted with the promotion and preservation of the respondent's business.

 11. Further, a number of the respondent’s clients were clients purchased from Mr Sargant’s company when he sold his business to a predecessor of the respondent in 1986.  The respondent relied upon Mr Sargant’s representation that he would enter into a consultancy agreement and effect a handover of clients to the merged agency.  The respondent, in relying upon Mr Sargant’s representations, was put in a position where it had insufficient time to take steps to protect its business.  Accordingly, the Commissioner found that Mr Sargant had repudiated the terms of his employment and, in particular, repudiated the terms of the redundancy package, which repudiation the respondent accepted.

 12. The Commissioner found that the relief sought by Mr Sargant should be refused on the grounds that, although the terms of the redundancy package relied upon by the respondent were unenforceable, the order sought was in the nature of specific performance and, when regard is had to s.26(1)(a) of the Act, she was of the view that an order should not be made, since a breach of fiduciary duty had been committed.

ISSUES AND CONCLUSIONS

62              This appeal, as Mr McCann, Counsel for the appellant correctly submitted, was an appeal on issues of law and the correct application of s.26 of the Act, and not against any findings of fact.  As was correctly submitted, too, it was common ground that a “redundancy agreement” was reached on 24 March 2000 and that the agreement included in it conditions in relation to the consultancy agreement and, I should add, an undertaking to perform such an agreement.

63              It was also conceded by Counsel to be common ground that, on 13 April 2000, the respondent terminated the “redundancy agreement” on the basis that it had been repudiated by Mr Sargant.  As the Commissioner found, too, Mr Sargant clearly did not resign.

64              The crux of the appeal was whether the respondent was justified in denying Mr Sargant an entitlement under a contract of service to which he was entitled, namely a redundancy or severance payment and eight weeks’ pay in lieu of notice.

65              One should observe that there is no jurisdiction in the Commission pursuant to s.29(1)(b)(ii) of the Act, unless the claim is for an entitlement claimed as a benefit by an employee to which he/she is entitled under his/her contract of service which has been denied to the claimant employee by an employer.  The benefit claimed can only be a benefit, the entitlement of which is established to be under a contract of service and not any other type of contract.

66              Mr Sargant contends that the respondent was not entitled to terminate the contract because he did not repudiate terms of the contract of employment and, therefore, he had an entitlement to the agreed payment for redundancy and notice.

The Contracts

67              It is always necessary, if a contract is relied upon, to determine the terms of a contract (whether it is an employment contract or any other contract) (see Re Transport Workers Union of Australia (1993) 50 IR 171 at 196 per Munro J).  A contract may be oral or in writing, partly oral and partly in writing, the contractual terms may be express or implied, there may be a series of contracts, and indeed the written terms of the contract may not reflect the substance of the agreement between the parties.  There may be terms of the contract derived from custom and usage too (see Macken, McCarry & Sappideen “The Law of Employment”, 4th edition, at page 94).

68              In this case, there was a long term contract of employment which had ceased to be reduced to writing or substantially reduced to writing since 1988.  In particular, there was no express restraint of trade as a term of the contract of employment.  The contract of employment, as was common ground, was terminated by the respondent employer on 13 April 2000.

69              On 24 March 2000, Mr Sargant and the respondent entered into an oral agreement to terminate expressly the employment agreement or contract of service.  On one view, this was not the situation where the existing employment agreement was sought to be varied, but one where it was agreed to terminate that agreement on certain terms and substitute for it a contract of consultancy (see the discussion of variation and abrogation of contracts in Concut Pty Ltd v Worrell (2000) 75 ALJR 312 at 316 per Gleeson CJ, Gaudron and Gummow JJ).  On another view, the contract of employment was varied for the purposes of termination on 24 March 2000.

70              It was not contended that such a contract, that is the contract entered into on 24 March 2000, discharged rights and duties under the existing contract of employment.  From the evidence and by implication of law and fact it was open to find that:-

 1. The agreement of 24 March 2000 would not come into operation and was not required to be performed until the termination of the contract of employment on 14 April 2000.

 2. That the parties agreed expressly and by necessary implication from the express terms on 24 March 2000 as follows:-

  (a) That Mr Sargant would cease employment as the respondent’s Manager in Western Australia on 14 April 2000.

  (b) That Mr Sargant would be paid an amount equal to eight weeks’ salary in lieu of notice and a redundancy payment of an amount calculated at the equivalent of three weeks’ salary for every year of service on the termination of the agreement.

  (c) That Mr Sargant would be absolved from working out a month’s notice or other notice as Manager, discharging the particular duties of effecting the transition in an administrative sense from the respondent to the merged body and also effecting the smooth transition of the respondent’s clientele to the merged body.

(d) In consideration of these benefits, Mr Sargant, on the termination of the existing contract of employment on 14 April 2000, would enter into a consultancy agreement and provide services to the respondent on and/or after 17 April 2000 as a consultant.  That agreement has not been specifically categorised as a contract of employment and it may have been intended as such.

(e) As a consultant, Mr Sargant would assist in the handover of clients and business to the incoming management of the merged body.

(f) Mr Sargant would not use or disclose information of a confidential nature, including details of specific clients of the respondent and their insurance requirements.

71              There appears to be no real controversy about the matter, insofar as the question of the claim being for alleged entitlements to be due under a contract of service.

72              It is necessary to be clear that there was before the Commission two contracts.  One was the contract of employment and the other was a contract to terminate the contract of employment upon certain conditions including the entering into and performance of the “consultancy agreement”.  I should observe that the payment of a redundancy payment was already an implied obligation under the contract of employment (see Coles Myer Ltd t/as Coles Supermarkets v Copping and Others 73 WAIG 1754 (IAC)).

73              However, there was no obligation to pay the payment when it was paid, nor might there have been an implied obligation to pay the amount which in fact was expressly agreed upon to be paid.  That is what the agreement expressly provided for.

Repudiation and Summary Dismissal

74              There were, as I understood it, two contentions of repudiation.  Primarily, as I understand it, it was alleged that the agreement to pay a redundancy payment and an amount in lieu of notice and to enter into and/or perform a consultancy agreement was repudiated by Mr Sargant’s action in advising that he was commencing employment with a direct competitor and that he would take with him clients of the respondent; and indeed by so doing.  The other such contention was that there was serious misconduct on the part of Mr Sargant, warranting summary dismissal which was effected by Mr Magee on 13 April 2000.

75              Repudiation occurs in relation to an employment contract when there is a breach of a condition going to the essence of the contract or when one of the parties has evinced an intention, through her or his conduct, either expressly or by implication, no longer to be bound by the contract.  Put another way:-

  “A repudiation of a contract occurs when a party to a contract clearly indicates an absence of readiness or willingness to perform his contractual obligations if the absence of readiness or willingness satisfies the requirement of seriousness”

 (See J W Carter “Breach of Contract” (1984) pages 222-223.)

76              The test for intention is not a subjective one depending on actual intention.  Intention is to be judged from what the innocent party reasonably infers from the acts or words of the party who repudiates (see Loughbridge v Lowery [1969] VR 912 at 923).  Whether there has been a repudiation of the contract in the individual case is not a question of law but a question of fact (see Woods v WM Car Services (Peterborough) Ltd [1982] ICR 693 at 698, 699-700, 701-702).

77              Quite clearly, a refusal to perform contractual obligations, if sufficiently serious, will suffice (see Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 1 WLR 698).  Sometimes, there is a confusion between discharge for breach of condition and discharge resulting from repudiation (see generally the discussion in Macken, McCarry & Sappideen “The Law of Employment” (4th edition) at pages 215-223).

78              As to the question of summary dismissal, the Commission, constituted by Full Benches, has applied the well known principles expressed in North v Television Corporation Ltd (1976) 11 ALR 599 at 609 (FCFC) per Smithers and Evatt JJ, as follows:-

“For purposes of the application of the common law principles to the facts of this case, the remarks of the Master of the Rolls in Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 2 All ER 285 at 287 and 289 are in point.  He said:

 ‘... since a contract of service is but an example of contracts in general, so that the general law of contract will be applicable, it follows that, if summary dismissal is claimed to be justifiable, the question must be whether the conduct complained of is such as to show the servant to have disregarded the essential conditions of the contract of service ... I ... think ... that one act of disobedience or misconduct can justify dismissal only if it is of a nature which goes to show (in effect) that the servant is repudiating the contract, or one of its essential conditions; and ... therefore ... the disobedience must at least have the quality that it is “wilful”; it does (in other words) connote a deliberate flouting of the essential contractual conditions.’

... Until the terms of the contract are known and identified it is impossible to say whether or not any particular conduct is in breach thereof or is a breach of such gravity or importance as to indicate a rejection or repudiation of the contract.

One cannot begin the inquiry without ascertaining what work ... the employee was employed and had undertaken to perform.  It is also necessary to ascertain what particular obligations the parties had agreed upon as important or even vital.”

79              This approach is also expressed by Dixon and McTiernan JJ in the well known passage from their joint judgment in Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 at 81-82.

80              It is, in the context of a summary dismissal, open to an employer to justify a dismissal by reference to facts not known to the employer at the time of the dismissal, but subsequently discovered so long as those facts concern circumstances in existence when the decision was made (see RRIA v CMEWU (1995) 75 WAIG 818; and Concut Pty Ltd v Worrell (HC)(op cit)).

81              The Commissioner found (see pages 31-32(AB)), and found correctly, that the relationship of employer and employee is ordinarily recognised as fiduciary (see Hospital Products Ltd v United States Surgical Corporation (HC)(op cit) per Gibbs CJ at 68, per Mason J at 96 and per Dawson J at 141).  In Concut Pty Ltd v Worrell (HC)(op cit) at page 315, per Gleeson CJ, Gaudron and Gummow JJ, it was said to be one of the accepted fiduciary relationships.  Their Honours observed, too, at pages 315-316, as follows:-

“Their critical feature is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion that will affect the interests of that other person in a legal or practical sense”

82              Their Honours went on to cite an example in the following terms:-

  “An illustration respecting employer and employee is provided by the decision of Kearney J in Timber Engineering Co Pty Ltd v Anderson.  In that case, the defendant employees, in breach of their fiduciary duties, diverted the business and profits of their employer to themselves and to their companies; the equitable remedies awarded included an account of profits and a constructive trust as to the business of the employees’ companies.”

83              Further, the Commissioner properly applied the dicta of Mason J in Hospital Products Ltd v United States Surgical Corporation (HC)(op cit), which is reported at page 104, as follows:-

“In Blyth Chemicals Ltd v Bushnell, Dixon and McTiernan JJ observed that it would be misconduct amounting to a ground justifying dismissal for a manager to take steps during his employment to prepare a position to which he could retreat with a large part of his employer’s business in the event that it should become necessary or desirable to vacate the managership.  And in Maryland Metals Inc v Metzner, the Court of Appeals of Maryland, referring to competition by an employee after termination of his employment, observed:

 ‘The right to make arrangements to compete is by no means absolute and the exercise of the privilege may, in appropriate circumstances, rise to the level of a breach of an employee’s fiduciary duty of loyalty.  Thus, the privilege has not been applied to immunize employees from liability where the employee has committed some fraudulent, unfair or wrongful act in the course of preparing to compete in the future. ...’

Of course the fiduciary duty of a distributor is not necessarily to be equated with that of an employee.  The employee’s duty of loyalty may involve him in a breach of duty if he secretly makes arrangements during his employment to compete with his employer after termination of the employment. ...”

84              As the Commissioner correctly observed, too, citing Bray v Ford [1896] AC 44 per Lord Herschell at pages 51-52, it is an inflexible rule of a Court of Equity that a person in a fiduciary position is not, unless otherwise expressly provided, entitled to make a profit or not allowed to put himself in a position where his interest and duty conflict.

85              As Mr McCann conceded, too, the Commissioner properly stated the law as it was expressed by Laskin J (as he then was) in Canadian Aero Service Ltd v O’Malley [1974] SCR 592, which was as follows:-

  “The general standards of loyalty, good faith and avoidance of a conflict of duty and self-interest to which the conduct of a director or senior officer must conform, must be tested in each case by many factors which it would be reckless to attempt to enumerate exhaustively.  Among them are the factor of position or office held, the nature of the corporate opportunity, its ripeness, its specificness and the director’s or managerial officer’s relation to it, the amount of knowledge possessed, the circumstances in which it was obtained and whether it was special or, indeed, even private, the factor of time in the continuation of fiduciary duty where the alleged breach occurs after termination of the relationship with the company, and the circumstances under which the relationship was terminated, that is whether by retirement or by resignation or discharge.”

 (applied by Kennedy J in Green and Clara Pty Ltd v Bestobell Industries Pty Ltd [1982] WAR 1 at 17 (FB)).

86              The Commissioner, as I have observed, went on to find that Mr Sargant held a high level position with the respondent’s organisation and, whilst employed as State Manager, was entrusted with the promotion and preservation of the respondent’s business.  Further, a number of the respondent’s clients were clients purchased from Mr Sargant’s company when he sold the business to a predecessor of the respondent in 1986.  The Commissioner was entitled to so find.  These were facts as I have outlined them above.

87              Further, the respondent relied upon Mr Sargant’s representation that he would enter into a consultancy agreement and effect a handover of clients to the merged agency.  The respondent, in relying upon Mr Sargant’s representations, was put in a position where it had insufficient time to take steps to protect its business, and it was left open to the poaching of clients or their loss, which it was relying on Mr Sargant to protect it from.

88              Accordingly, the Commissioner found that Mr Sargant repudiated the terms of his employment and, in particular, the terms of the redundancy package which repudiation he accepted.

89              The fundamental question was, therefore, whether Mr Sargant had breached the redundancy agreement or his fiduciary duty, or his duty in any sense as an employee.

90              First, let me observe that there was an agreement, as I have observed above, made on 24 March 2000, whereby Mr Sargant undertook, inter alia, to enter into and perform a consultancy agreement.  Further and conditional upon that occurring, the respondent undertook to enable him to leave without serving the requisite notice and agreed to pay to him an agreed redundancy payment.  The respondent set out to perform the agreement, relying on Mr Sargant to perform his part of the agreement as it believed and as he led it to believe he would.

91              First, that the agreement was not enforceable does not mean that there was not an agreement entered into, where those two conditions were established.  Second, it is, in my opinion, strongly arguable that the agreement was one to enter into and/or perform a consultancy agreement, neither of which conditions was complied with and, indeed, both of which were breached.  Indeed, the Commissioner correctly held that there was an agreement to act as a consultant, as I have observed above.  That condition was to be performed and it was not.

(a) It was strongly arguable, further and alternatively, that the parties were bound by a duty to co-operate in the doing of acts necessary for the performance by the parties of their fundamental obligations under the contract and that, in failing to attend to and enter the written agreement, there was a breach committed by Mr Sargant (see Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd (2000) 74 ALJR 1094 at 1105 per Callinan J).

(b) Further, it was arguable, within the principle in Masters v Cameron (1954) 91 CLR 353, that there was a binding and enforceable contract which required Mr Sargant, inter alia, to perform his duties as orally agreed as a consultant, because there was a binding contract and the execution of a formal agreement was not a condition precedent to it.  Indeed, the first step in any specific performance, if such a remedy were available, would be the ordering of the drafting and execution of a formal contract.

(c) It should also be observed that a promise to negotiate in good faith may, in particular circumstances, be enforced; such enforceability will depend on the precise terms as construed from the particular contract (see Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd [1991-1992] 24 NSWLR 1 (CA) per Kirby P and Waddell A-JA).

92              However, those submissions were not made to the Commissioner and the Full Bench and I do not decide those questions in these reasons.

93              It is necessary now, therefore, to determine whether a repudiation of the contract of employment and/or the redundancy agreement occurred.  If it did, it was certainly accepted and a dismissal occurred.  The course of conduct of Mr Sargant, whilst he was an employee was as follows:-

 (a) He sought to retire and informed Mr Borsak that he would.

 (b) He sought a redundancy payment and payment in lieu of notice and reached agreement with his employer to do so.

 (c) He was not required to work out notice or to do what is was clearly his duty, as a manager, to do, namely to ensure a smooth transition from the respondent’s sole business to the merged business and, particularly, to ensure that the clients made the transition.

 (d) He knew that this had to occur and agreed, on 24 March 2000, to effect this important process as a consultant and not as a manager.

 (e) He was being trusted in this regard as a senior manager.

 (f) He discussed the implementation of the consultancy agreement and its practical objects.

 (g) On 7 April 2000, he advised Broad Constructions that he was being made redundant and ceasing his employ with the respondent. He made no mention of the fact that he was remaining as a consultant (which is what he would have been required to do had he remained as manager or had he served out notice as manager).

 (h) On 8 April 2000, he decided to seek employment elsewhere. He did not tell his employer that he had made this decision.

 (i) On 11 April 2000, he discussed with Mr Magee the carrying out of his work as a consultant. (It would seem axiomatic that the respondent would need its long standing manager to assist such a transition.  If he were remaining in employment, one would rightly infer that much of his time would be required in assisting the transition and, indeed, the evidence was that he would be engaged in this for a month.)

 (j) Whilst these discussions were occurring and Mr Sargant was given a draft agreement, which he said that he would deal with after he came back from Margaret River, he was, from 10 to 13 April 2000, soliciting employment and negotiating to obtain employment with a direct competitor of the respondent.

 (k) At no time did he say that he would not sign the consultancy agreement or perform it.

 (l) He agreed to enter the employment of WCRM on 13 April 2000, the same day as the respondent, in the performance of the agreement, paid to him the amount of the redundancy payment and monies in lieu of notice, a very substantial sum.

 (m) Mr Sargant banked the payment, even though he had accepted other employment and went on to advise Mr Magee that he had undertaken employment elsewhere with a direct competitor, and predicted that his employer’s clients would follow him. Given the uncontradicted evidence that, from the time when he started work four days later with WCRM, he commenced to solicit and sign up as clients 50% of the respondent’s value, and it is a fair inference that poaching the respondent’s clients was, and had been, his intention and he set out to do it.

 (n) Such an inference is supported by the fact that the consultancy agreement, which he declined to sign, contained at Clause 10.1 (see pages 373-374(AB)), a clear restraint of trade, including a prohibition upon soliciting the respondent’s clients or employees.

 (o) On that day, he was dismissed. He did not resign. Significantly, his repudiation of his contract of employment and the redundancy agreement is evidenced by the fact that he did not, that day, offer to sign the consultancy agreement and/or perform it.

 (p) His offer to assist Mr Magee to telephone clients was not an offer to perform the contract which, in any event, he denied ever contained a term requiring him to be a consultant. He denied that such a matter was ever discussed and the Commissioner disbelieved him.

 (q)  That the clients canvassed were long standing clients, some of whom had in the past been his own clients.  All he really did was to offer to advise the clients that he was leaving.

94              It was open to the Commissioner to find that, following termination, Mr Sargant had agreed to and, indeed, had said to Mr Grierson on 29 March 2000 that he would, provide services to the respondent as a consultant and those services included ensuring that clients made a smooth transition to the merged body, which was a major function of the consultant and manager.  That agreed function was to assist in the handover of clients from the respondent to the merged body and, as the Commissioner found, it was a term of the agreement that Mr Sargent would not use or disclose information of a confidential nature, including details of specific clients of the respondent and their insurance requirements.

95              In any event, it was open to find that it was inherently part of the duty of a consultant who was engaged, inter alia, but expressly, to deal with the task in confidence and in such a manner that clients would not be lost, to ensure the transition of a major asset, the clients, from the respondent to a merged body.

96              From that course of conduct, it was open to find that Mr Sargant, whilst seeking to enter and entering into a redundancy agreement which would gain him a substantial sum, set out on a calculated course of deception and duplicity, contrary to the agreement which he had entered into and all the while whilst remaining a trusted employee.  His intention was clear from his discussion with Broad Constructions on 7 April 2000 and his attempts, commencing a few days later, to obtain employment with a competitor.  All the time, he acted to leave his employer and left his employer with the impression that he would carry out the agreement which they had reached.

97              Mr Sargant laid down a basis to enable him to divert the clients to himself as an employee of his new employer in the same manner as funds are diverted from a disloyal or dishonest employee to an employer during his employment.  Building on that basis, he applied himself to completing this task from the beginning of his employment with WCRM and engaged himself solely in this for a month or more with great success, occasioning great detriment to his former employer, the respondent.

98              It was open to find, on the above facts, that this was a calculated, dishonest, duplicitous and grave course of conduct, committed in bad faith and which was manifestly contrary to Mr Sargant’s fiduciary duty as described in Blyth Chemicals Ltd v Bushnell (HC)(op cit) and by Mason J in Hospital Products Ltd v United States Surgical Corporation (HC)(op cit).  He secretly made arrangements to enable his new employer to compete successfully with his old employer after the termination of his employment and to enable him to play a major part in that process as the employee of a direct competitor.  That was effected by the course of conduct which I have outlined above.  Not only was that course of conduct a breach of his duty of the implied duties of an employee (and/or employer) of loyalty, honesty, confidentiality and mutual trust (see in Concut Pty Ltd v Worrell (HC)(op cit) at 321 per Kirby J), it was clear that his acts during his employment, in their seriousness within the category of those acts of dishonesty or similar conduct, were destructive of mutual trust between the employer and employee once discovered, which ordinarily fall within the class of conduct which, without more, authorises summary dismissal.

99              I mention, too, that the Commissioner correctly found that the course of conduct included the statements made to Hammon Osborne and Athans & Taylor by Mr Sargant.  It is clear that he was bound, after the termination of the contract of employment, as the Commissioner found (see Hospital Products Ltd v United States Surgical Corporation (HC)(op cit) at 104 per Mason J).

100           The termination of his employment was clearly brought about by his refusal to perform a serious contractual obligation under either his contract of employment or the agreement at the same time as he proclaimed that he would be in breach of his fiduciary duty by procuring the respondent’s clients, as he clearly planned to do.

101           It was open to find that, during his employment, Mr Sargant failed to comply with general standards of loyalty, good faith, avoidance of conflict of duty and self interest to which he was required to conform, given in particular his seniority, his senior position, his long connection with the clients and the trust reposed in him, his unique relationship with many clients, his close relationship with Mr Borsak, and the generosity afforded him (see Canadian Aero Service Ltd v O’Malley (op cit) at 592 per Laskin J).  It was open to find that that course of conduct constituted a serious repudiation of the contract of service. In addition, the agreement to act as a consultant was also unilaterally and unequivocally repudiated, on the tests which I have set out above.

102           It was submitted that the consultancy agreement contemplated was not exclusive. I have already canvassed that contention in my discussion of the inherent nature of that agreement above. In the sense that it prohibited Mr Sargant from attempting to regard it as his duty to take clients from the respondent and give them to another employer, clearly what he did was contrary to the major condition which he agreed to perform, namely to assist the transition of clients to the merged body.  His refusal to perform his agreement to act as a consultant struck at an essential condition of the agreement. In any event, what he did was to commit a serious breach of his contract of employment within the tests laid down in Blyth Chemicals Ltd v Bushnell (HC)(op cit) and North v Television Corporation Ltd (op cit).

103           It is also not to the point that Baker and McKenzie’s letter of 18 April 2000 purported to rely on an express restraint of trade which did not exist. The letter makes it clear that there was a breach of fiduciary duty and a valid summary dismissal. It follows that the repudiation of both contracts was accepted and validly accepted. A repudiation of a fundamental condition occurred here because a party to the contract of employment and to the redundancy agreement of it were separate and clearly indicated an absence of readiness or willingness to perform his contractual obligations and the absence of readiness or willingness and, indeed, the actual breach of his obligations was very serious.

104           Further, in relation to both contracts, the innocent party, the respondent, could reasonably understand or infer and could reasonably not understand or infer otherwise, from the acts and the words of Mr Sargant, that he was repudiating both contracts, if two there were, or one contract of employment, if one there was.  Further, the breach of fiduciary duty was such a serious breach and his dishonesty so great (see Concut Pty Ltd v Worrell (HC)(op cit) and North v Television Corporation Ltd (op cit)) and he manifested such an intention not to be bound by the contract of employment, that summary dismissal was justified.  Therefore, too, there was no release of Mr Sargant from his obligations, as submitted (see Loughbridge v Lowery (op cit)).

Severance

105           The Commissioner correctly found that the obligation to become a consultant to effect the transition arising from the merger was not severable.  The obligations were clearly dependent on their performance, one upon the other, and agreed to be so. In any event, the clear intention of the parties was that there was to be dependence of performance.  The condition that Mr Sargant enter into and perform a consultancy agreement was agreed to be dependent on the other terms of the contract.

106           Put another way, in this case, the ability of one party to perform the contract depended on the co-operation of the other (see Insurance Co of Africa v Scor (UK) Reinsurance Co Ltd [1985] 1 Lloyd’s Rep 312 and Trans-Pacific Insurance Co (Australia) ltd v Grand Union Insurance Co Ltd (1989) 18 NSWLR 675).

107           If there is no such term, the duty may be inferred from the nature of the parties’ performance obligations as where the contract requires concurrent performance (see Mackay v Dick (1881) 6 App Cas 251 at 263 where Lord Blackburn said:-

“[Where] it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect.  What is the part of each must depend on [the] circumstances.”

108           That was overtly the case here.

109           In this case, too, the requirement of co-operation may be established by the implication of the terms (see Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596; Beaton v McDivitt (1987) 13 NSWLR 162 AT 185.  Such terms may require active co-operation or create an obligation not to prevent the other party performing the contract (see prevention of performance, e.g. Bolwell Fibreglass Pty Ltd v Foley [1984] VR 97; and see Luxor (Eastbourne) Ltd v Cooper [1941] AC 108 at 148-149).

110           It is clear that, where co-operation is essential to a performance, a promisor who does not perform because of the other party’s failure to co-operate will have a valid excuse for not performing the contract (see Sprague v Booth [1909] AC 576 at 580).  That would be based on estoppel.  In any event, it might be said that one party’s ability to perform the contract depended on the other party’s not preventing that performance (see, generally Carter and Harland “Contract Law in Australia”, 3rd edition, at pages 608-611).

111           The parties did not intend to contract otherwise than by reference to the terms identified above (see Fitzgerald v Masters (1956) 95 CLR 420).

112           A term of a contract is severable if what remains of the contract is within the contemplation of the parties.  A condition, by its very nature, cannot be severed from a contract because the intention of the party is that the contract can only proceed if the condition is fulfilled.  If it is not fulfilled for any reason, then the entire contract falls away (see Brew v Whitlock (1968) 18 CLR 445).  That principle clearly applied to the facts in this case.

113           If this agreement had not been reached, then the respondent would have required Mr Sargant to work through the notice and properly conduct the handover as an employee.  No redundancy could therefore have occurred on 14 April 2000 as no steps had been taken in relation to the handover.  Mr Borsak said that he thought to himself that this was not going according to his understanding of the agreement and that he should make the payment now (see page 129(AB)).  For those reasons, the contract was simply not severable and the Commissioner was correct in so finding.

APPELLANT BOUND BY ITS CASE

114           In any event, following the principle in Metwally v University of Wollongong (1985) 60 ALR 68 (HC), because Mr Sargant’s case at first instance, on his evidence, was based so clearly on the ground that there was no agreement to enter into and/or perform a consultancy agreement and that that matter was not discussed, Mr Sargant should not now be permitted to mount an argument and an appeal based on a finding that there was such an agreement. 

S.26 of the Act

115           It is unnecessary for me, in the light of the above observations and findings, to consider whether, in her application of s.26 of the Act, the Commissioner erred.

FINALLY

116           It was open to the Commissioner to dismiss the claim for contractual benefits and she did not err in so doing.  It was open to find that, if any benefit was payable under the contract of service, then there was a justified summary dismissal for misconduct and no redundancy and no entitlement to a redundancy payment or payment in lieu of notice.

117           Further and alternatively, that agreement was repudiated by Mr Sargant and the respondent validly and justifiably accepted the repudiation as a result of which the contract was terminated and there was no entitlement to a redundancy payment.

118           Further and alternatively, since the agreement to pay redundancy and act as a consultant might be treated as a variation of the employment agreement, that, too, was repudiated.  The repudiation was justifiably accepted and there was no entitlement to the contractual benefit claimed under the contract of service.

119           In any event, Mr Sargant did not establish that there was any contractual benefit due to him.

120           The Commissioner was quite correct in finding as she did.  For those reasons, the appeal is not made out and I would dismiss it.

CHIEF COMMISSIONER W S COLEMAN:

121           I have had the advantage of reading the reasons for decision of His Honour the President.  I agree with those reasons and have nothing to add.

SENIOR COMMISSIONER G L FIELDING:

122           I have had the advantage of reading, in draft form, the reasons for decision prepared by the President.  The facts are sufficiently set out in those reasons and is it is unnecessary for me to repeat them.

123           The Appellant does not, and in reality cannot in the circumstances, challenge the findings of fact made by the learned Commissioner.  Clearly the findings made by the learned Commissioner were open on the evidence.  Indeed, having read the transcript of the proceedings, I would have been surprised if she had come to any other conclusion.  Notably, despite the assertion to the contrary in Ground 1 of the Grounds of Appeal the Appellant does not now challenge the finding that it was a term of the redundancy package that the Appellant would provide services as a consultant to the merged entity and in that capacity assist in transferring the customers and business of the Respondent to the incoming management of the newly merged entity.  The Appellant also accepts the finding that it was also a term of the package that he would not use or disclose information of a confidential nature including the details of specific customers of the Respondent and their insurance requirements.  Furthermore, the Appellant does not challenge the finding that the Respondent terminated his employment on 13 April, one day before his employment was otherwise to have come to an end, allegedly because he repudiated the contract of employment particularly the redundancy arrangements.

124           The appeal was prosecuted primarily on the basis that the learned Commissioner erred in finding that the Appellant repudiated the agreement in respect of redundancy and in finding that the Appellant was in breach of his fiduciary duty to the Respondent as its manager.  The Appellant asserts that at no time did he refuse to act as a consultant.  Indeed he offered to contact the Respondent's customers.  It is submitted that he simply applied for another job which in the absence of post employment restraint was not impermissible.  The Appellant refers to and relies upon the finding that there was no agreement restraining post employment.  Also the Appellant refers to and relies upon the finding that he did not misuse any confidential information, either whilst he was in employment or subsequently.  Consequently the Appellant contends that it cannot be said that the Appellant was in breach of his fiduciary relationship with the Respondent.  The Appellant argues that it was the Respondent rather than he which acted in breach of the contract.  The Appellant asserts that in terminating his employment on 13 April, the Respondent wrongly assumed that there was a post employment embargo in existence and that the Appellant had contacted its customers whilst in employment.  Accordingly, the Appellant argues that by sending him away one day earlier without making arrangements for him to act as a consultant, the Respondent waived or released the Appellant from further performing his obligations under the redundancy package.

125           As a supplementary argument the Appellant contends that the consultancy arrangements did not comprise part of the redundancy package because those arrangements were incomplete.  Alternatively, the Appellant argues that the consultancy arrangements were severable and that the parties did not intend that the redundancy payment would not fall due if for any reasons the consultancy arrangements were not satisfied.

126           In my view the appeal is fundamentally flawed.  The case argued on appeal was very different to that argued before the learned Commissioner.  The case for the Appellant before the learned Commissioner was that the question of consultancy was never discussed, at least in the context of a redundancy payment, and thus consultancy was never a condition of the redundancy package.  Indeed, the case for the Appellant as the Applicant in the originating proceedings was properly summarised by his counsel as essentially turning "on what the terms of the so‑called redundancy package were".  Once the learned Commissioner found, as she did, that the terms of the redundancy package included consultancy, the Applicant's case essentially fell away.  It therefore now ill behoves the Appellant to argue that the agreement with respect to consultancy was severable or that the Respondent waived its right to insist upon the Appellant complying with that agreement.  The arguments advanced on this occasion could have been, but were not,  raised in the alternative before the learned Commissioner. In the circumstances the Appellant ought not now be allowed to re‑litigate the matter in this way but should be bound by the case advanced before the learned Commissioner.  (see:  Coulton v Holcombe (1986) 162 CLR 1, 7;  and see too:  Paltara Pty Ltd v Dempster (1991) 6 WAR 85,99.   Pollock Nominees Pty Ltd v Butterfield [2001] WAIRC 01973).

127           The appeal otherwise lacks merit.

128           The Grounds of Appeal, based on the construction of the terms of the redundancy package as found by the learned Commissioner are without sound foundation.  Counsel for the Appellant conceded that the package included an obligation to act as a consultant.  Hence the Appellant cannot be heard to say that the consultancy arrangements did not comprise part of the package.  Further, the proposition that the consultancy arrangements were severable is wholly inconsistent with the credible evidence accepted by the learned Commissioner.  It is quite clear from the credible evidence that the consultancy arrangements were an integral part of the redundancy package and that one did not stand without the other.  Indeed, to suggest otherwise is inconsistent with the position taken by counsel for the Appellant, that the Appellant did not challenge the findings of fact made by the learned Commissioner.

129           Equally the remaining Grounds for Appeal have no substance.  They rest on the proposition that the Appellant did nothing wrong to justify being sent from the workplace and so be deprived of the opportunity to act as a consultant for the Respondent.  There is ample evidence to support the finding made by the learned Commissioner that the Appellant represented to the Respondent that when he returned from his holiday he would enter into a consultancy agreement to effect a transfer of the Respondent's customers to the merged corporation.  In breach of that representation he arranged to work full‑time for a competitor of the Respondent.  It may be, as counsel for the Appellant suggests is the case, that the Appellant's contract of employment with the Respondent did not contain a term constraining his post employment activities.  Nonetheless, a term of the redundancy package as found by the learned Commissioner was that he was not only to act as a consultant but that he would return to the Respondent's premises and assist with the handover of customers to the new merged entity.  How he could do that effectively when he was to be engaged full‑time as an accounts director for one of the Respondent's competitors is, as the learned Commissioner at least inferred, difficult to comprehend.  It may also be, as counsel for the Appellant suggests, that the Appellant at no stage told the Respondent that he would refuse to act as a consultant but it does not follow from that that he stood ready and willing to act as such a consultant.  Indeed, such evidence as there is suggests that he was not prepared to do so.  As previously mentioned, his case was that there was never any discussion about a consultancy and hence there was no liability on his part to act as such.  In addition, his conduct suggests that he would not have been in a position to act effectively as such a consultant.  Furthermore, it is quite clear from the dealings the Appellant had with the competitor during the course of his employment with the Respondent that he put into place arrangements, not only to compete with the Respondent but also to make the most of his belief that some of the Respondent's customers might not transfer to the merged entity.  There was, as the learned Commissioner inferred, clearly a conflict of interest in that regard.  In all the circumstances, the learned Commissioner was entitled to conclude, as she did, that the Appellant repudiated the terms of the redundancy package and hence was not entitled to be paid the benefits of that package. 

130           Even if, on the basis of the arguments advanced by the Appellant on this occasion, it could be said that the Appellant had an entitlement in contract to the money he now seeks, there is every justification for the conclusion reached by the learned Commissioner that having regard to the provisions of 26(1)(a) of the Industrial Relations Act 1979 an order should not be made enforcing that entitlement.  The jurisdiction of the Commission in matters of this nature is not the same as that which applies in the traditional courts with respect to the enforcement of contracts.  Section 26(1)(a) obliges the Commission not only to have regard to the substantial merits of the matter but also to have regard to the equity of the matter.  (see:  Belo Fisheries v Froggett (1983) 63 WAIG 2394;  and see too:  Gandy Timbers Pty Ltd v Gresty (1986) 66 WAIG 1591 at 1593.)  It is abundantly clear on the credible evidence accepted by the learned Commissioner that payment of the monies was conditional upon the Appellant carrying out consultancy work for the merged entity in the manner previously indicated.  Whatever else can be said of the Appellant's conduct on and before 13 April 2000, on the facts as found by the learned Commissioner the Respondent could not be blamed for concluding that the consultancy arrangement would be unworkable.  The Appellant's conduct was such that the Respondent was entitled to conclude that the confidence it had in the Appellant's capacity to assist with the transfer of business to the merged entity had been destroyed.  Whether or not the post employment arrangements made by the Appellant with the competitors constituted a breach of contract, in practice those arrangements made the consultancy arrangement unworkable.  That in turn occurred solely because of the Appellant's conduct.  In those circumstances, given that the consultancy was an integral part of the redundancy package, for him to be awarded the money component of that package, although he is no longer in a position to preform the consultancy, would clearly be inequitable.

131           The appeal should be dismissed.

THE PRESIDENT:

132           For those reasons, the appeal is dismissed.

Order accordingly