Algons Engineering Pty Ltd v Abigroup Contractors Pty Ltd

[2000] QDC 40

DISTRICT COURT OF QUEENSLAND

REGISTRY: BRISBANE

NUMBER: 2111 of 1999

Plaintiff:

LYNNE BROOK

First Defendant:

JOAN McDERMOTT & ASSOCIATES PTY LTD

Second Defendant:

JOAN McDERMOTT

REASONS FOR JUDGEMENT

DELIVERED the fourteenth day of April, 2000.

This matter has had a long, somewhat convoluted, history. I shall refer to part of that

history later. The trial eventually came on before me for hearing on Monday, 20th September,

1999. Counsel concluded their final addresses at 4.20 pm on Friday, 1st October, 1999. The

pleadings, which have been much amended, are lengthy, and raise numerous issues for my

determination.

The story behind the litigation is, however, a fairly simple one. The second defendant

- whom I shall hereafter refer to as either the second defendant or as “McDermott” - has had

many years experience in the recruitment and management consultancy business. Prior to

1995 she had worked in this business as the Queensland managing partner of an organisation

referred to as the “Intek Group.” Following some differences with the other members of that

organisation she left the Intek Group, and established the first defendant (which I shall refer to as the first defendant or as “the defendant company”) to continue her work in Queensland.

As I understand it, she and the defendant company retained the Queensland clients of the Intek

Group. The defendant company operated from premises on the Gold Coast which were

referred to as “serviced offices,” leased - for six months - from a company referred to as

Servcorp. In November, 1995 the defendant company advertised in the Gold Coast Bulletin,

seeking two “professional recruitment consultants.”

The plaintiff - whom I shall hereafter refer to as either the plaintiff or Brook - was in

late 1995 employed as a an operations manager by Ashtons Removals. In November of that

year she saw the advertisement placed by the first defendant. She made application for the

position, and was, after a couple of interviews, appointed to a position with the second

defendant which was designated “senior recruitment consultant.” She resigned from her

employ with Ashtons Removals on 28th November, 1995, and commenced her new position

with the first defendant on Tuesday, 5th December, 1995. On that day she signed a document

headed “Offer of Appointment.” Notwithstanding the pleadings, the parties are now agreed

that that document (subject to the defendants’ application for rectification) sets out the basis

of the plaintiff’s employment by the first defendant.1

In June, 1996 the plaintiff was given the title “General Manager/Recruitment” by the

first defendant, and her base salary was increased.

The second defendant was a candidate for the office of Mayor of the Gold Coast in the

election of March, 1997. It is clear that her campaigning involved a considerable commitment

by her, at least so far as her time was concerned.

On 9th April, 1997 the plaintiff spoke with the second defendant, and her employment

was ended that day. The circumstances of her leaving are contentious.

The plaintiff then commenced working on her own behalf as a recruitment consultant

from her home. An issue in the proceedings is an allegation by the first defendant that the

plaintiff, whilst employed by it, worked on her own behalf, in competition with her employer.

Prior to leaving the first defendant’s employ the plaintiff had been consulting with her

solicitor. She commenced this action in the District Court held at Southport, and, as initially

formatted, her claims were for:

(1)	$2,648.30 being for unpaid salary, resulting from the wrongful deduction of
superannuation levy;
(2)	$32,445.29 being for unpaid commission; and
(3)	$651.25 being for holiday pay loading not paid.

The plaint also sought, pursuant to the provisions of s. 87 of the Trades Practices Act

1974, to vary the contract of employment to provide a further basis for the monetary claims

made.

On the weekend of 19th-20th April, 1997 the plaintiff published two advertisements

for her new business in the Gold Coast Bulletin. The plaintiff alleges, and the defendants

deny, that on the Friday before the weekend the plaintiff’s solicitors had caused a copy of the

plaint in this proceeding to be sent by facsimile transmission to the defendants.

On the same weekend the second defendant composed, printed, and posted out a letter

to numerous people (the extent of the publication is very much in issue.) The plaintiff claims

the letter defamed her. She claims that as well as personal hurt, the letter caused her fledgling

business to suffer loss.

The plaint was then amended to included a claim for damages for defamation, and

associated injunctive relief. On 2nd May, 1997 His Honour Judge Hall ordered that a

corrective statement be published by the first defendant. There was an appeal from that order

to the Court of Appeal, and after that appeal a corrective statement was sent by the first

defendant. During the proceedings before Judge Hall the plaintiff was said to have given an

undertaking not to approach the defendant company’s clientele. Whether such an

undertaking was given, and if it was, its terms, have been disputed in these proceedings. It

would seem that the defendants were not required to give any corresponding undertaking as to

damages.2

The defendants in their counter-claim assert a number of matters of complaint against

the plaintiff. It is alleged:

(1)

that the employment agreement was later varied, so that the costs of placing

temporary employees would be deducted from income earned in placing them

before calculating the commission to be paid;

(2)

that the plaintiff misrepresented to McDermott during the pre-employment

interviews the circumstances in which she had ended her employment with a

former employer, Sky Personnel; and also misrepresented a number of other

matters relating to her conduct as a recruitment officer whilst employed by Sky

Personnel;

(3)

that the plaintiff had breached the terms of a restraint of trade clause in the

contract of employment;

(4)

that the plaintiff had breached the terms of a confidentiality clause in the

contract of employment;

(5)

that the plaintiff had breached various implied terms of her contract of

employment (and had breached an alleged duty of care) in a number of ways,

including:

(1)	alienating and upsetting the defendant company’s staff;
(2)	alienating and upsetting the defendant company’s clientele;
(3)	breaching the code of ethics of the National Association of Personnel

Consultants;

(4)	soliciting the defendant company’s clients for her new business whilst
still employed by the defendant company;
(5)	placing inappropriate staff with client companies;
(6)	claiming bonuses not earned;
(7)	failing to meet the monthly fee target;
(8)	utilising the defendant company’s resources for her own benefit;
(9)	competing with the first defendant whilst still employed by it from
February, 1997;
(10)	failing to observe the requirements of the confidentiality clause;
(11)	making the placement of people in temporary positions a priority.

The defence also seeks rectification of the contract of employment.

I trust the above summary will serve to introduce the reader to the principal allegations

and claims made in this proceedings. In the history I have sought to set out the matters which

I believe to be largely uncontentious - and of course the summary of the issues is just that - a

summary of what appear to me to be the main issues.

Before embarking upon the course of making findings in respect of the factual matters

in dispute, and the legal consequences of the facts as I find them, I should make some

observations about the two principal witnesses in this case, the plaintiff, Lynne Brook, and the

second defendant, Joan McDermott. I should first observe, however, that this matter first

came before me in August, when it was set down for eight days. By the end of the second

day, when there were still arguments being maintained before me as to the sufficiency of the

pleadings, it became apparent to me that the matter could not conclude in the time allocated. I

therefore, of my own motion, adjourned the trial to September before me. I made a number

of directions. One of those was that there should be, as it were, a separate and preliminary

trial of the issue of the efficacy of the restraint of trade clause.

Unfortunately this attempt to reduce the time and costs of the trial proved abortive, as

on the day set down for hearing the preliminary issue the defendants sought, and I gave, leave

to amend the defence and counter-claim by including in it a claim for rectification of the

restraint clause. However, one saving was achieved by my making an order that the evidence

in chief of the witnesses for both sides be given by way of affidavit.

The plaintiff was the first principal witness called in the action. Her evidence in chief

was short - being, of course, largely set out in her affidavit. Her cross-examination was

lengthy and thorough.

Her curriculum vitae, which is exhibited to her affidavit, summarises, no doubt in a

positive way, her background and history. It suggests, and I am persuaded correctly so, that

she is an experienced and very efficient worker in her area of personnel recruitment and

placement.

At first the plaintiff seemed, to me, to be surprisingly quiet when being cross-

examined. She spoke with a somewhat flat effect, and was at times barely audible. However

as her evidence progressed she appeared more self-assured - her delivery became firmer and

her general approach seemed more positive. I continued to watch her throughout the trial -

and noticed that she was not above smiling or even laughing at answers given by the defendant

which were contrary to her evidence, and which presumably struck her as amusing or

incongruous.

At the end of the day the impression I formed of the plaintiff was that she was a highly

competent, well organised, careful, and determined woman. She is clearly an intelligent

person. I found no reason to doubt her honesty, although she might be guilty from time to

time of putting a bit of a gloss on the truth.3 She has clearly invested a lot of herself in this

litigation, but I do not find any reason to suppose that she would deliberately mislead the

Court in her evidence.

The second defendant is extremely confident and has good qualifications - she has read

psychology, and has a Masters degree in business administration. She impressed me as being

very knowledgeable about the personnel recruitment and placement industry and I have no

doubt that she has been very successful in her endeavours in that work. Unlike the plaintiff

she spoke firmly and authoritatively from the start of her evidence. I think she sets herself

high standards of competence.

I think the second defendant, like the plaintiff, has invested a great deal of herself in

this litigation. The impression I gained was that she harbours a great deal of anger, caused by

her perceptions of the plaintiff’s conduct and the continuation of this litigation. I think this

commitment and anger has at times caused the second defendant to lose a degree of

objectivity, and has influenced her recall of some of the events which were canvassed in

evidence. Her forthrightness in giving her account on some issues, sometimes in the face of

competing contemporaneous documents, has caused me to suspect that at times she has
reconstructed things the way she would have expected (with the benefit of a degree of

hindsight) them to have occurred.

Like the plaintiff I thought the second defendant capable of knowingly putting a

“gloss” on the truth. Examples are her maintaining (in correspondence or evidence) that the

restraint of trade provisions in the contract of employment were settled by “our barristers,”4

and that the superannuation payments made by the first defendant on the plaintiff’s behalf were

“slightly late.”

There are some allegations that the second defendant has made which I find

particularly concerning. That is because they are allegations maligning the character or ability

of the plaintiff, which one would expect to be corroborated, and of which almost invariably no

supporting evidence has been given. A good illustration of what I mean is the second

defendant’s evidence that at a Christmas function at Boccacini’s Restaurant in 1996 the

plaintiff said to Mr. Cos Sita, a client of the defendant company and a supporter of

McDermott’s political ambitions: “You don’t want to deal with Joan, Cos, you only want to

deal with me. You know you want me.”5 According to Miss McDermott Mr. Sita responded

that he was a married man, and “he certainly did not have any intentions other than

professional towards her and that he felt her behaviour was inappropriate.”6 Mr. Sita gave
evidence.7 He did not relate these matters.

Counsel for the plaintiff invited me to conclude that the second defendant was a liar. I

reject that submission. I do, however, find that parts of her evidence are not reliable,

principally because I think there has been this process of commitment and reconstruction.

I do not think it necessary, at this point, to discuss the other witnesses called by the

parties other than Mr. David John Van Homrigh. In so far as comment on the credibility of

other witnesses is necessary, I shall make that comment when dealing with the issues to which

their evidence relates.

Mr. Van Homrigh is a chartered accountant and a partner in the well known firm

KPMG. His experience and qualifications were not questioned. He prepared a report which is

dated 30th August, 1999, and which sets out the nature of the inquires made by him and his

conclusions.

In preparing the report Mr. Homrigh had resource to the books of account kept by the

defendant company. However, he also received information from the second defendant, and

accepted that information, for the purposes of his report, as being true.

In so far as Mr. Homrigh has taken into account so called “fall overs”8 I am not

prepared to accept that the information given to him was necessarily accurate. Even if the

information was accurate, I have further doubts about the accuracy and propriety of deducting

the specific amounts set out in Column C of Schedule A of his report.

Mr. Homrigh has concluded that the plaintiff was overpaid commission in the amount

of $6,422.00 - almost twice her “true” entitlement of $7,486.00. He says that the second

defendant explained that “commissions were paid to the plaintiff over and above the

commission structure as encouragement to the plaintiff.” I find this explanation implausible

and reject it.9 I think the documents relied upon by the plaintiff are much more likely to be

accurate so far as my present purposes are concerned.

It is perhaps worthy of note that in a case where the defendants’ pleader does not seem

to have allowed many constraints upon his or her imagination, there is no plea made on behalf

of the defendant that the plaintiff was overpaid.10

It seems to me that the starting point of a consideration of the multitude of issues

raised in this action is for me to examine the evidence relating to the “pre-contractual’

negotiations had between the plaintiff and the second defendant.

THE PRE-CONTRACTUAL NEGOTIATIONS

It is common ground that the defendants placed an advertisement in the Gold Coast

Bulletin in about November, 1995 which was seen by the plaintiff and lead her to apply for a

position with the defendant company. The advertisement read:

RECRUITMENT CONSULTANTS

We are a national recruitment consultancy firm committed to building business excellence through quality people. Rapid growth has created the ideal opportunity for two professional recruitment consultants to join our current Gold Coast team.

The people we seek must have had at least two years experience in either executive, multifunctional or a contract recruitment division within a recognised recruitment organisation. High ethics, an ability to develop solid business relationships and a quality service orientation are essential, as is superior communicative skills and the ability to liaise with management across a wide range of industries. We are seeking quality driven proven performers who want to become part of a dynamic growing team, therefore although a degree is preferred it isn’t essential.

Definitely a team player, the ideal person will have superb presentation, written and oral communicative skills and the personality necessary to help lead our company into the future. An excellent package (including base salary) will be offered according to previous experience.

At the foot of the advertisement was printed in prominent type, “GOLD COAST

BRISBANE CAIRNS SYDNEY MELBOURNE.”

It is common ground that the plaintiff was interviewed twice by the second defendant.
The second defendant’s case is that at the conclusion of the second interview she

indicated that she would “more than likely” be making the plaintiff an offer, and that it would

be forwarded to her by mail. She says that was done, and that the plaintiff then telephoned to

query some of the calculations set out in the written offer, and indicated that she would accept

the offer and indicated that she would commence work on 5th December, 1995.

The plaintiff’s evidence is that after the second interview the second defendant

telephoned her, and offered her the job. During that conversation she says that she was told

the salary structure, and she accepted the offer of employment. She said she made brief notes

during the discussion, and they are exhibited to her affidavit.11 She says that it was after this

that she received the first written offer of employment with the mistaken bonus calculations,

and that she phoned the second defendant about that. It is common ground that the corrected

written offer of employment was signed by her on her first day of employment, 5th December,

1995.

So far as the sequence of events is concerned, I accept that the plaintiff’s recollection

is probably the more reliable. Largely influencing me to this conclusion is the existence of the

notes taken by the plaintiff during the first material phone conversation12 with the second
defendant.

I find it more difficult to resolve the numerous conflicts between the plaintiff and the

second defendant as to what was said at the two interviews. It is common ground that the

plaintiff was shown the brochure13 which the second defendant had prepared. It seems to be

common ground that numerous matters were discussed, and as time has passed, and as this

litigation has wound its tortuous path, each principal witness, as it seems to me, appears to

have become firmer in her recollection as to what was said or not said at least in respect of

those matters which directly impinge upon their interests.

It is not possible for me to find the precise things which were discussed, or the order in

which they were discussed, during the two interviews. It seems to me all I can do is touch

upon the contentious matters, and make findings in respect of them. Even this has not proved

an easy task. The witnesses apart from the parties occasionally throw a little light on matters,

and help resolve conflicts, but as it turns out I have not gained much assistance in resolving

the principal conflicts as to what was said during the two interviews. At the end of the day, it

has seemed to me that some of these factual matters can be resolved only by considerations of

who bears the onus of proving the matter.

I turn now to deal in turn with the factual allegations that arise for determination out of

the first two interviews. I shall deal with them in the order in which they are raised in the

plaint, and then in the defence.

The first such allegation14 is that the second defendant represented to the plaintiff that:

JMA had ten offices and pointed to the back of a printed brochure with the get-up of “the JMA Group” printed on it showing that the first defendant had offices at Gold Coast, Brisbane, Cairns, Sydney, Melbourne, Auckland, Singapore, Kuala Lumpar, Jakarta and Tokyo;

The brochure sets out the addresses of the defendant company’s Gold Coast and

Brisbane offices. Below these addresses are listed the cities I have mentioned above and

which are referred to in the pleadings. In my view, without more, these might reasonably be

taken to be other cities in which the defendant company had offices, or at least in which it

conducted its operations. They seem to take the assertion in the advertisement that “We are a

national recruitment consultancy ....” further, and suggest that the defendant company is

international in its operations.

On the other hand, I found my self persuaded by the second defendant’s evidence -

which is in part supported by the plaintiff’s evidence - that during the interviews the second

defendant told the plaintiff a lot of her own and the company’s history. I accept that the

plaintiff was told that the defendant company was operating out of serviced offices in both

Brisbane and the Gold Coast, and that the second defendant hoped to expand and in time to

acquire ordinary commercial premises for the company. I accept that the plaintiff was told of

the defendant company’s “derivation” from the early enterprise of the second defendant with

Intek, and of the second defendant’s hopes to build a strong base for the company on the Gold

Coast.15

Hence, whilst there is no disputing the language of the advertisement and brochure, I

am satisfied that by the end of the interviews the plaintiff would have been disabused of any

ideas that the defendant company was “national” in its operations, or that it used, in any

meaningful sense, offices listed in the cities in the brochure, other than in Brisbane and the

Gold Coast.

The next alleged representation is:16

The plaintiff would, if hired, recruit staff for other companies who were to pay the first defendant a fee for doing so.

This is not contentious, and I accept that this was in essence what it was intended the

plaintiff would do if employed by the defendant company.

The next allegation I should deal with is asserted in paragraphs 10(a) and 12.1 of the

defence. The material part of the allegation - for my present purposes - is:

During that second interview, the Second Defendant questioned the Plaintiff about her prior employment at Sky Personnel and, in particular, as to why she left the employ of Sky Personnel. The Plaintiff informed her that the reason why she left was that she had a very difficult employer and that she conflicted with other staff and that she was made redundant.

In her curriculum vitae the plaintiff states as her reason for leaving Sky Personnel that

she was “retrenched.” It is clear from the evidence of Annette Louise Hurley, the owner of

Sky Personnel, that she told the plaintiff that she was ending her employment “because of her lack of sales performance.”17 The plaintiff conceded as much.18

Miss Hurley’s evidence was that the plaintiff was employed from 16th November, 1992

to 28th April, 1993, a period of about five months. She said it was “standard within the

industry” to allow an employee between three and six months to achieve their “targets.” The

period of the plaintiff’s employment, of course, included the Christmas vacation, and also

coincided with a traumatic time in Miss Hurley’s life. I am prepared to accept that the plaintiff

probably did tell the second defendant that at Sky Personnel she had a difficult employer and

that there were conflicts with other staff. It seems to me, as I have indicated, that she told the

second defendant her reason for leaving was that she was retrenched.

The next material allegation I have to consider is alleged in sub-paragraph (f) of

paragraph 10 of the defence. That sub-paragraph reads:

During the second interview the Second Defendant had a discussion with the First Defendant (sic) regarding the non-compete clause. The Plaintiff explained to the Second Defendant that she had previously signed similar contracts when she was in the employ of Sky Personnel, Select Appointments and Chandler & McLeod, and that she was knowledgeable about those clauses and the restraint that they imposed upon her, and that she was happy to accept the job, notwithstanding the non-compete clause.

The plaintiff could not recall such a discussion. This was put to her:

Ms McDermott raised with you at the second interview that part of the position involved a restrain of trade clause? – I don’t recall that discussion.

You don’t recall, or it didn’t happen? – I am saying I don’t recall the discussion.

You don’t recall. I suggest to you that you told Ms McDermott that you were well familiar with the restraint of trade clauses? – No, I said I don’t recall having the discussion.

Did you have cause to look at the restraint of trade clause when you got the written offer? – Yes.

Were you shocked or dismayed that it was included? – Not shocked or dismayed that there was a restraint of trade clause.

The second defendant, on the other hand, was adamant that she had discussed the fact

that the employment would involve a restraint of trade provision. I accept her evidence to the

extent that I find that she did tell the plaintiff that there would be a restraint of trade clause

which would apply to any contract of employment offered by the defendant company. I think

it probable that the plaintiff indicated her understanding of the nature of such clauses.

The next allegation is in the following paragraph of the defence.19 It reads:

The Second Defendant also explained to the Plaintiff that her territory would be the Gold Coast and that that area would be the area that applied to the restraint of trade.

I accept that the plaintiff was told that “her territory” for the purposes of her work for

the defendant company would be the Gold Coast, and, I also accept that she was told that she

might work outside that area for the purpose of building up the Gold Coast side of the

defendant company’s operations.20 However, I do not accept the second defendant’s evidence
that she told the plaintiff directly, or even indirectly for that matter, that the restraint of trade

clause would be limited to the Gold Coast area.

In coming to the conclusion that I should reject the second defendant’s evidence in

respect of this last matter I have been influenced primarily by my impression of the second

defendant when she was taxed on these matters. It also has to be said that the allegation

seems to have surfaced, or at least attained some degree of prominence, only after the

question of rectification of the agreement was pleaded.

I now turn to the allegations made in paragraph 11 of the defence. I should say that

these allegations do not relate to the pre-contractual negotiations, but it seems to me to be

appropriate that they should be dealt with by me now. In that paragraph it is alleged:

An agreement was reached between the Second Defendant on behalf of the First Defendant and the Plaintiff during or about January 1996 for the establishment of a temporary placement service21 would be deducted prior to calculating the Plaintiff's bonus. It was a term of this agreement that permanent placement of staff would remain the Plaintiff's priority and principal focus and that the temporary placement service would be run at a profit and not to the disadvantage of the core (permanent placement service) business. The Employment Contract was thereby varied.

The brochure shown to the plaintiff at the first interview clearly indicates that the

business of the defendant company is “Contract and Temporary Staff.” It reads in part:

Whether you need an accountant, bank lending officer, computer programmer,
bookkeeper or secretary, JMA’s Temp & Contract Division will provide
quality staff at short notice to handle all your short, medium or long term
overload or contract requirements. ....

The second defendant said that the document was correct.

In my view it is clear that at the time the plaintiff commenced working for the second

defendant she anticipated that she would be working for a company which provided both

temporary and long term staff to its clients. This seems to have been of special interest to the

plaintiff, and I largely prefer her evidence to that of the second defendant so far as the initial

discussions are concerned. However, I also accept that during the pre-employment

interviews the second defendant emphasised her wish to build up the permanent side of the

business.

It is clear in my view that there was, during the course of the employment, discussion

about the plaintiff’s becoming more active in the field of temporary placements. The plaintiff

recalls that at that time the second defendant said words to the effect that she did not know

how to calculate commission in respect of such placements.22

It is equally clear that documents were prepared by the first defendant’s staff showing

the so called “costs of sale” (i.e., the payments made by the company to temporaries,) and that

the plaintiff was paid on the basis of those “costs” being deducted from the monies received

from the defendant company’s clients. The plaintiff does not seem to have demurred from this

during the time of her employment. Indeed, it is clear that she (understandably) paid a great

deal of attention to the calculation of her remuneration, and wrote a number of memoranda to

the second defendant on the subject. She does not seem to have objected to the taking into
account of the “costs of goods.”

Indeed, some statements made in some of her memoranda seem to be made on the

understanding that these costs were relevant to her salary. For example, her memorandum of

10th February, 199723 reads in part:

Please find attached a copy of what I believe the total billings should be for January. ... Could I please get a copy of the total billed for January, including the adjustments, and with Cost of Goods taken out, enabling me to see the amount the commission will be calculated on.

I find myself persuaded, on the balance of probabilities, that there was a variation of

the initial agreement largely as described by the second defendant. I accept that there were

discussions during which the second defendant agreed to the plaintiff’s devoting a significant

amount of her employed time on building up the temporary side of the business, on the

understanding that the costs of employing temporaries would be deducted from the monies

received from the defendant company’s clients when calculating the monthly sales made by the

plaintiff and the consequent level of bonus payments.

I turn now to consider the implications of the findings I have made thus far.

THE FIRST DEFENDANT’S CLAIM FOR RECTIFICATION

The claim for rectification of the contract of employment cannot be sustained. In my

view there was no common intention on the part of the plaintiff and the defendants that the

restraint of trade provisions of the agreement should be limited to the Gold Coast region. As I

have said, I am satisfied that the plaintiff was told there would be a restraint of trade clause in

the contract, and further that she was told that her primary area of responsibility would be the

Gold Coast area - although she might also operate (as in fact she did from time to time) in

Brisbane. But it seems to me that the evidence falls far short of establishing that there was

ever the common intent which is necessary to found a claim for rectification.

WHAT WAS THE AGREEMENT BETWEEN THE PARTIES

In the plaint it is alleged that the contract of employment between the plaintiff and the

defendant company was formed when the plaintiff accepted the second defendant’s oral offer

of employment made by telephone after the second interview. During submissions the

plaintiff’s counsel expressly said he no longer relied upon such a submission, and that the

plaintiff accepted that the contract of employment was constituted by the signed agreement.24

The parties were thus then ad idem on this issue, apart, of course, for the rectification claim.

It is common ground that during the course of the plaintiff’s employment the contract was

varied by increasing her base salary, and I have already indicated that I am persuaded that

there was a variation of the agreement in respect of placing temporaries, or the calculation of
bonuses in respect of the placement of temporaries.

THE PLAINTIFF’S CLAIMS UNDER THE TRADE PRACTICES ACT 1974

It is alleged in paragraph 16A of the plaint that the representations made by the “first

defendant in paragraphs 2, 4 and 5 herein were false and misleading in breach of Section 52 of

the Trade Practices Act 1974 (Cth) and/or constituted conduct that was liable to mislead and

did mislead persons seeking the employment to be offered by the first defendant as to the

nature, terms or conditions of, or any other matter relating to, the employment in breach of

Section 53B Trade practices Act 1974 (Cth).”

Section 52 of the Trade Practices Act 1974 (which I shall hereafter simply refer to as

“the Act”) is well known. It reads:

(1) A corporation shall not, in trade or commerce, engage in conduct that is

misleading or deceptive or is likely to mislead or deceive.

Section 53B reads:

A corporation shall not, in relation to employment that is to be, or may be, offered by the corporation or by another person, engage in conduct that is liable to mislead persons seeking the employment as to the availability, nature, terms or conditions of, or any other matter relating to, the employment.

Particulars were given in paragraph 16A of the plaint of four respects in which the

defendant company is said to have engaged in misleading conduct or conduct that was likely

to mislead. The particulars are:

(a)	The first defendant was not a national recruitment consultancy firm and did not have 10 offices;
(b)	The first defendant did not ever intend to pay and in any event did not pay the plaintiff the promised $35,000.00 base salary;
(c)	The first defendant did not pay nor did it ever intend to pay the commission on the terms set out in the Offer;
(d)	The first defendant was not licensed under the Private Employment Agencies Act 1983 (Qld) to operate as an employment agency in Queensland.

It is common ground that the defendant company is, within the meaning of the Act, a

trading corporation and that it was “acting in trade or commerce at all material times.”25 It is

equally clear that at all material times the second defendant was the agent of the defendant

company, and acting within the scope of her authority.26

I shall deal with the various matters particularised in turn.

The first defendant was not a national recruitment consultancy firm and did not have 10

offices.

My findings which I have set out above27 lead to the conclusion that the plaintiff has

not proved this particular allegation.

The first defendant did not ever intend to pay and in any event did not pay the plaintiff the

promised $35,000.00 base salary.

I have already indicated that I accept the plaintiff’s evidence that she was telephoned

by the second defendant and offered employment. I am satisfied that having accepted the offer

she then resigned from her then employment. I am satisfied that it was only after she had

given her employer notice that she first saw a copy of the written contract of employment.

The relevant evidence comes from the plaintiff’s affidavit. She says28 that during the

course of the offer of employment the second defendant said, “Your commencement salary

will be a base of $35,000 and commission will be payable over and above that.” Without

further qualification (and none was suggested)29 it seems to me that that would be understood

as implying that the compulsory payment which the employer must make to a superannuation

fund would not be deducted from the “base.”

On the other hand, it is clear that the defendants at all times in fact intended that the

superannuation payment would be deducted from that “base,” and that that is in fact what

happened throughout the period of the plaintiff’s employment with the defendant company.

In my view, the making of the statement quoted above was conduct by the defendant

company that was liable to mislead the plaintiff, and did mislead the plaintiff, as to the terms

or conditions of the employment within the meaning of section 53B of the Act.

Pursuant to section 82 of the Act the plaintiff is entitled to recover her loss or damage

suffered by her as a result of the contravention of section 53B. Clearly the second defendant

was a “person involved in the contravention,” and hence, pursuant again to section 82,

judgment may be given against her as well as the defendant company.

The plaintiff’s contract of employment was renegotiated in June, 1996 when she

accepted a new designation, and a higher base salary of $40,000. By this time she was well

aware of the defendants’ understanding and intentions and practice. When renegotiating the

salary increase she might have raised, but did not, the issue of the superannuation deductions.

In my view the misleading conduct was, so to speak, “spent” by the time she agreed to the

new position and increase.

In my view, therefore, her loss occasioned by the misleading conduct is the amount of

the deductions in fact made from her salary from the date of the commencement of her

employment to the date of the agreed variations of the contract.

In paragraph 9A of the plaint the plaintiff’s loss to 31st May, 1996 is calculated at

$847.79. That figure seems to me to be correct. I assess the plaintiff’s loss as a result of this

misleading conduct at $847.79.

The first defendant did not pay nor did it ever intend to pay the commission on the terms

set out in the Offer.

In my view there was no relevant inconsistency so far as payment of commission is

concerned between what was said by the second defendant during the phone call in which she

offered the plaintiff employment and the written agreement signed by the plaintiff. It seems to

me that the defendants intended that the plaintiff should be paid commission in accordance

with the provisions of the written agreement. I cannot find any evidence of misleading or
deceptive conduct on the part of the defendants so far as this issue is concerned. Of course,

the factual issue still remains as to whether in fact the plaintiff was paid in accordance with her

entitlements. I shall deal with that issue later.

The first defendant was not licensed under the Private Employment Agencies Act 1983

(Qld) to operate as an employment agency in Queensland.

The plaintiff discovered, shortly prior to the end of her employment with the second

defendant, that the second defendant did not hold the appropriate licence under the Private

Employment Agencies Act 1983.

I accept that the second defendant was not aware that a licence had not issued until

after the plaintiff made the discovery. It is probably not material, but I should put on record

that I accept that the failure to obtain such a licence was the result of mistakes made by others

outside the second defendant’s direct control, and I accept that at all relevant times the second

defendant believed that the company held all appropriate licences.

Assuming that the defendants did represent to the plaintiff during the employment

negotiations that they were licenced, clearly such a representation would have been misleading

and deceptive conduct. However, I am at a loss to understand how it can be said that the

plaintiff has suffered loss “by” such conduct.

The Plaintiff’s Claims for Breach of Contract

I have already indicated that the plaintiff is entitled to recover monies because the

defendant company wrongly deducted superannuation from her base pay.

Counsel for the plaintiff made it clear in his address that, so far as the other claims for

salary were concerned they were pressed only in respect of (1) underpayments arising because

of the taking into account of the “cost of goods” component, and (2) underpayments arising

from the employment of a Miss Kulak.

I have found that there was, as the second defendant urged, a variation of the

employment agreement - that the parties agreed that the “cost of goods” component should

be taken into account when calculating the plaintiff’s remuneration. As a result of this finding

the first claim made by the plaintiff must fail.

It is common ground that Miss Kulak was initially interviewed by the plaintiff with a

view to her being given employment by one of the defendant company’s clients. She did not

obtain that position, but information relating to her was kept in the defendant company’s

records. When McDermott commenced her mayoral campaign she needed a campaign

secretary. A friend and supporter of hers, Mr. Cos Sita, agreed to help her in that regard.

When asked by McDermott to suggest a person suitable to be her secretary, Brook mentioned

Miss Kulak, and she worked as McDermott’s campaign secretary until shortly after the

election.

Initially the plaintiff did not seek any payment in respect of this “placement.”

However, during the process of discovery in this action it was ascertained by the plaintiff or

her advisors that the defendants had billed, and been paid, by Mr. Sita’s company in respect of

Miss Kulak’s services. She claims to be entitled to have these payments taken into account in calculating the level of her monthly “sales” and to have her remuneration adjusted accordingly.

Miss Kulak gave evidence. I am entirely satisfied that as far as she was concerned she

was employed by McDermott. She took instructions from, and answered to, McDermott only.

I accept McDermott’s evidence that she (or perhaps the defendant company) paid Miss

Kulak. I find that Miss Kulak was employed by McDermott.

Of course there may be a number of explanations as to why Mr. Sita and/or

McDermott might wish to arrange for Mr. Sita’s donation (for that, I am sure, it was) to be

made in the way it was. Some of the possible explanations may not, perhaps, reflect

creditably upon Mr. Sita or McDermott. I do not propose to explore those possible

explanations further because, as far as Mr. Sita is concerned, he is not a party to these

proceedings, and I would not regard it as proper to reflect adversely upon him unless he had

had a reasonable opportunity to be heard on the suggestions. I do not think it necessary, in

coming to my conclusions on this matter, to reflect upon McDermott’s possible motives.

The result is that the plaintiff has not shown that she is entitled to any further monies in

respect of Miss Kulak’s employment.

The Plaintiff’s Claim for payment of a “holiday loading.”

On 9th November, 1973 the Industrial and Arbitration Commission of Queensland30

made a decision31 which I will refer to as the “Annual Leave Loading. The notice of motion

leading to that decision sought a review of and alteration in “the Annual Leave standards

contained in Awards and Industrial Agreements .....” It is clear from the decision of the

members that their determination applied only to “Awards and Industrial Agreements.”

The agreement signed by the plaintiff, which counsel agree binds the parties (subject to

the later variations I have already discussed) provided:

Leave

All statutory requirements are paid by JMA including 4 weeks annual leave.

Counsel for the plaintiff submitted that the Commission’s decision requiring payment

of the holiday leave loading, being one it was authorised to make by a statute, can be properly

characterised as a “statutory requirement.”

In one sense it seems strange that anyone should insert in an agreement a provision

that “statutory requirements” will be met. If a statute requires something to be done, then it

must be done, and no other authority than the statute is needed.

In my view the decision of the Commission had no application to the agreement

reached between the parties in this case. Their agreement was not one, so far as I am aware,

which might be regulated by an award, nor can it be characterised as an “Industrial

Agreement.”

Whilst one might wish to give some meaning to the words used by the parties in their

agreement - it seems to me, at the end of the day, that the expression “all statutory

requirements are paid” is meaningless in the context of this document. The plaintiff’s claim for

payment now of the holiday pay loading fails.

I propose to leave the plaintiff’s claim to have been defamed to later. In the meantime,

I turn to the defendant’s claims against the plaintiff.

The Defendants’ Counterclaim

The defendants have made many assertions in the counterclaim. Many of them are

specious. In respect of some of them, it is difficult to understand what legal consequences are

thought to flow from the allegations.

I have already dealt with, and dismissed, the defendants’ claim for rectification of the

written agreement.

In paragraph 12 of the counterclaim the defendants assert that the plaintiff told

McDermott that her reason for leaving Sky Personnel was that her employer was difficult,

there had been conflict with staff, and she had been retrenched. It is then alleged that, by
omitting to state any other reason for her leaving Sky Personnel, she represented to

McDermott that there was no other reason.

In fact the principal of Sky Personnel accepted that at the time of the plaintiff’s

employment with that organisation that she may have been “difficult” - she was experiencing

problems with the break down of her marriage and a tripartite business arrangement which

included her husband.

An applicant for a position is not under a duty to volunteer to his potential employer

every fact detrimental to his application - even if he thinks the fact might be material to the

employer’s decision whether or not to employ him.32 He must not, however, consciously

mislead the potential employer if asked specific questions.

In fact the plaintiff was dismissed from her employment with Sky Personnel. I accept

that for her to say that she was “retrenched” was to say something potentially misleading. I do

not know whether the pleader intended to suggest that the plaintiff was being misleading when

she said that she had conflicts with other staff and difficulties with her employer.

In paragraph 17 it is alleged the “pre-contractual representations referred to in

paragraph 12 hereof were false, misleading and/or deceptive and thereby constituted pre-

contractual misrepresentations. Eight statements are made which I take to be particulars.

The first particular is proved. The second (failure to meet monthly budget

requirements) is proved to the extent that the plaintiff, in the five months she was with Sky

Personnel, did not attain the targets expected of her by her employer. However, as I have

already mentioned, the employer said, at the end of the day, that one would not normally

expect those targets to be reached until between three and six months had elapsed.

There is no evidence which I am prepared to accept which establishes the other

particulars.

In paragraphs 18 and 19 of the counterclaim further matters are alleged in relation to

the “pre-contractual misrepresentations.” Suffice it to say that I do not think the defendant

has proved the matters alleged in either.

In paragraph 14 of the counterclaim reference is made to the so called “confidentiality

clause” of the agreement, and it is alleged that the agreement required the plaintiff to attain “a

fee target of $10,000 per month.” In paragraph 15 it is alleged that six terms are to be implied

in the contract of employment. The pleader does not say whether these matters are to implied

as a matter of law, or from the conduct of the parties. In paragraph 16 it is alleged that the

plaintiff owed the defendants “a duty of care to discharge her duties in terms of the

Employment Contract competently and not negligently.”

In paragraph 20 it is alleged that, in breach of “one or more of the duties and/or terms

referred to in paragraphs 14, 15 and 16" the plaintiff did various things which are listed in

thirteen paragraphs. It is then alleged (paragraph 21) that the defendants have suffered
consequential damage (which is not quantified or otherwise particularised.)

Most of the allegations made in paragraph 20 are not worthy of being “legitimised” by

my embarking upon a detailed discussion of them.

There is no evidence which I am prepared to accept which proves the allegations made

in subparagraphs (1), (2), (5), (6), (12) and (13.)

The allegation in 20.3 alleges a failure to comply with the Code of Ethics of a

professional association. I am not prepared to find that there was an implied term of the

contract that the plaintiff would abide by such a code. I accept the plaintiff’s evidence as to

her dealings with respect to Miss Highfield.

The allegation in paragraph 20.4 is that the plaintiff solicited the first defendant’s

clients “for support in respect of an intended new business venture ... while still in the First

Defendant’s employ alternatively within the period of six months” after she ceased working

for the first defendant. This claim is probably based on the so called “Non Compete Clause”

and “Confidentiality Clause” of the written agreement. They provided:

Non Compete Clause

Given the nature of our business all staff must agree to abstain from the conducting of any business which may compete in any form with that conducted by the JMA Group during the time employed by JMA. All JMA employees must also agree to abstain from competing against JMA as a consultant or otherwise for a period of six months after terminating their employment. In addition all existing JMA clients and any clients established or developed during the period of employment are exclusive JMA Clients and consultants must agree not to approach these clients should they leave the employ of JMA Group.

Confidentiality Clause

Consultants are often privy to extremely confidential information or material, both within JAM Group and through our clients. All consultants must agree at all times to respect the confidentiality of our operations as well as those of our clients. This is essential to ensure our strategic growth and operational plans are not exposed to our competitors, as well as maintaining the professional confidentiality expected of us by our clients.

In my view the requirement that staff of the first defendant not compete with the first

defendant during their employment is unexceptional. However, there is no evidence which I

accept that suggests that the plaintiff was conducting a business prior to her leaving the first.

defendant’s employ. She was obviously contemplating setting up her own business as early as

January, 1997, and no doubt her resolve strengthened as time went by. But the evidence

shows no more, in my view, that prior to leaving the first defendant’s employ the plaintiff had

started to make some arrangements for conducting her own business at some future date. I

reject the suggestion that the plaintiff solicited the first defendant’s clients for the purposes of

her new business whilst still employed by the first defendant.

The requirement that employees of the first defendant not compete with it for six

months after ending employment cannot stand. The principles relating to clauses which

purport to restrain employees from competing against their former employers are too well

known to require any detailed exposition by me here. I will simply say that I act on the basis

that such clauses will prima facie be deemed to be contrary to public policy, unless it can be

shown (the onus being on the employer) that the particular restraint sought to be imposed in a

particular case is reasonable - reasonable, that is, in respect of the parties’ interests and in the public’s interest.33 One must examine the particular needs that an employer may assert to see

whether the parties’ and the public’s interests require that those needs be protected by a

restraint clause.

The clause relied upon here is in no way limited in the geographical area to which it

applies. (It should not be forgotten that the first defendant claims to have a “National”

operation - although it is clear that the vast majority of its clientele resides in the south east

corner of Queensland.) In my view the defendants have not shown that this clause is in any

way reasonable, and hence it must be held to be void.

The next restraint sought to be imposed asserts that the defendants’ clients “are

exclusive JMA Clients and consultants must agree not to approach these clients” on leaving

the defendants.

In fact the evidence suggests that some of the first defendant’s clients used the services

of more than one company such as the first defendant - but that is perhaps not relevant.

This restraint seems to be distinct from the one discussed immediately above. It is not

limited in time or locality. It purports to apply as much to those of the defendants’ clients as
had dealings with the plaintiff as it does to those who have never met her.

No evidence has been lead before me to show that there is some special character

about the first defendants’ clientele, or its business operations which might suggest that there

is some special need to protect the defendant company’s interests.

In my view this requirement also is void.

Returning to the counterclaim, the next paragraph I should deal with is 20.7.

This paragraph alleges that the plaintiff used the first defendant’s equipment for her

private use. As McDermott, perhaps somewhat grudgingly admitted, within certain

parameters complaint could not be made of such conduct. However, her belief is, that the

plaintiff abused her position and utilised the first defendant’s resources to a considerable

extent. Notwithstanding the second defendant’s belief, the evidence which I am prepared to

accept does not disclose anything other than the plaintiff’s making occasional use of the first

defendant’s resources. I do not accept that all the telephone calls listed by the second

defendant as having been made by the plaintiff for “non-company” business were in fact so

made.

Paragraph 20.8 has been largely dealt with by me above. The plaintiff did seek and

obtain registration of the business name which she subsequently used before leaving the first

defendant’s employ, but I cannot find that amounted to a breach of any term of her contract of

employment. As I have said, there is no evidence which I am prepared to accept that she
actually started trading whilst employed by the first defendant.

We closely monitor both our consultants and the quality of the high candidates they professionalism aren’t maintained a mentality can result where either agencies or consultants adopt a ‘get rich quick mentality’ by pushing unsuitable candidates into the wrong roles. Strategic selection involves not only assessing skill levels, it is a complicated process which must involve assessing ability, past performance, potential and even more important ATTITUDE.

Paragraph 20.9 clearly relies upon the restraint clauses being held to be binding. I have

already given my reasons for holding that the relevant restraint clause relied on here is void.

The same observations apply to 20.10 and 20.11.

To summarise, none of the matters alleged in paragraph 20 has been proved.

I turn now to consider the one remaining matter - namely that plaintiff’s allegation that

she was defamed by the defendants.

DEFAMATION

It is common ground that on 21st April, 1997 the second defendant prepared, printed

and posted to a number of people a letter in the following terms:

NOTICE OF IMPENDING LEGAL ACTION

We wish to advise Ms Lynne Brook is no longer employed by JMA Group as a
recruitment consultant and that legal action has been taken by this company against
Lynne for breach of Contract.

At JMA Group we strive to ensure we continually deliver quality service to our clients, in the past this has been reflected by the extremely high retention rate of candidates we place staying in the same organisation (98%).

Our one year guarantee on all permanent placements, which compares with other agencies 3-6 month guarantees and advanced technology is designed to ensure our consultants select the candidate which is the perfect match to suit your recruitment needs.

select to ensure they meet both our high expectations and those of our clients.

When a consultant concentrates on dollars instead of quality, the result is always the same, high staff turnover, or in the case of recruitment agencies, a high candidate replacement rate.

Unfortunately in Lynne’s case we have recently discovered several problems, one of which was an extraordinarily high replacement rate on positions which she filled. Professionalism, loyalty, honesty, a commitment to customer service excellence and high ethics are the foundations on which we have built our reputation. In order to maintain the level of service we offer, and in order to build upon our current position within the marketplace, we have recently terminated Lynne’s employment.

Lynne signed a pre-employment agreement with JMA Group agreeing she would not work in any organisation which directly competed with JMA Group or solicit any JMA Group clients within a 6 month period of termination of employment. This type of agreement is commonplace within the recruitment industry and was drafted by our Barristers. Despite JMA Group fulfilling their contractual obligations to Lynne, she has now chosen to break that contract by establishing her own personnel firm which she operates from home.

As a management consultant specialising in performance, best practice culture and change management I would like to warn our clients and business associates on the Gold Coast, that the selection of quality personnel is the most important decision you

will make within your business. It will either make or break your organisation.

Within the recruitment industry qualifications, industry body affiliations, expertise
and the necessary accreditation or qualifications to use the recruitment tools
(psychological, behavioural and ability testing technology) are crucial.

Employing a recruitment consultant is well worth the price, providing they have the expertise and ability to perform the role. Prior to selecting a recruitment consultancy ask the following questions:

*	Does the consultant have the qualifications necessary to perform the role?
*	What staff and testing resources does the consultant have?
*	Does the company you are dealing with have an established office on the Gold Coast or operate from home?
*	What industry bodies are they registered with?
*	Does the consultant concerned have a successful track record and high standing within the recruitment industry, as well as with the wider business community?

JMA Group isn’t just a recruitment agency, we are performance specialists who have both the academic qualifications, expertise and experience necessary to ensure we help you make the RIGHT decisions, that is why we can successfully guarantee the services we offer.

We are long term players in this market who form strong relationships with our clients. We don’t believe in putting square pegs into round holes, purely for monetary gain. We are here for the long term, therefore we hope you will continue to use JMA Group for your recruitment, best practice and performance management and training needs.

Please don’t hesitate to contact me personally if you have any needs or require further assistance. I am contactable on 5574 2665 (w) or 0411 100729.

Kind regards,

JOAN McDERMOTT
Managing Partner

BA (Psych) NSW, MBA (Bond) AFAIM

The plaintiff alleges that she has been defamed by the above letter. This involves an

allegation that the letter contains imputations concerning her “by which [her] reputation ... is

likely to be injured, or by which [she] is likely to be injured in [her] profession or trade, or by

which other persons are likely to be induced to shun or avoid or ridicule or despise [her.]”34

The plaintiff pleads the following imputations are contained in the letter:35

(a)	legal action had been commenced against the plaintiff for breach of contract;
(b)	the plaintiff had breached a contract with the first defendant;
(c)	the plaintiff did not respect its (sic) contractual obligations;
(d)	the plaintiff had not provided nor was capable of providing a quality service to customers;
(e)	the plaintiff was more focussed upon earning commissions for herself than serving the customers’ needs;
(f)	there was an extraordinarily high replacement rate on positions filled by the plaintiff;
(g)	the plaintiff was therefore not capable of matching employees with the requirements of customers;
(h)	the plaintiff’s employment needed to be terminated to maintain a standard of professionalism, loyalty, honesty, a commitment to customer service excellence and high ethics within the first defendant’s agency;

(i)         the plaintiff was unprofessional, disloyal, dishonest, uncommitted to customer service excellence and unethical;

(j)	the plaintiff did not do her job well nor was she competent in her job;
(k)	the plaintiff’s employment was terminated by the first defendant against the plaintiff’s wishes;
(l)	the plaintiff was acting contrary to a lawful restraint of trade covenant imposed upon her;
(m)	the plaintiff was not qualified, did not have industry body affiliations, expertise and the necessary accreditation of qualifications;
(n)	the plaintiff was not a person with whom an employer would wish to do business.

In deciding what imputations, if any, are conveyed about the plaintiff in the letter of

21st April, 1997 I must examine the words actually used by the second defendant and try to

understand what ordinary reasonable people would understand by the words used. In
conducting this exercise it is irrelevant what McDermott may in fact have intended to be

conveyed by her words.

Using that approach, it seems to me that the letter did contain all the imputations

pleaded by the plaintiff. In my view the imputations set out in paragraphs (c), (d), (e), (g), (h),

(i), (j), (k), (l), (m), and (n) above are defamatory of the plaintiff. It seems to me this is

particularly so of those statements which suggest, directly or indirectly, that the plaintiff

adopted a “get rich quick mentality;” that she would “push unsuitable candidates into the

wrong rôles;” and that she lacked the qualities of professionalism, loyalty, and honesty; and

that she lacked commitment to “customer service excellence” and “high ethics.”

By virtue of sections 6 and 7 of the Defamation Act 1889 the unlawful publication of

defamatory matter is an actionable wrong. Publication of defamatory matter is unlawful unless

the publication is protected, justified, or excused by law.

Before turning to the matters raised by the defendants by way of defence, I should deal

with a factual matter, namely the extent of the publication.

The plaintiff alleges that the letter was sent to 1,500 people or businesses. She alleges

that the letter was sent to all the people and businesses included in the defendant company’s

mailing list.

The second defendant denies that the letter was sent to 1,500 people and businesses,

and she denies that it was sent to all the entities named on the mailing list.

I am satisfied that the letter was sent to most, if not all, of the people on the mailing

list, and that that list contained the names of over a thousand individuals or businesses. Not all

were clients of the defendant company. Miss Hetherington, for example, states in her affidavit

that the names of guests of the second defendant who had attended a breakfast attended by the

present Leader of the Opposition, and who had left their business cards in a container, were

later added to the mailing list. She was not challenged on this.36 I accept the evidence of

Emma Norris and Shelley Hetherington generally in respect of the list. I am assisted to the

conclusion that the mail out must have been of the order of 1,500 copies of the letter by the

evidence that a cheque was drawn for “postage” at the time of the mail out for $675.00, which

is, of course, 1,500 times 45 cents. Strength is added to this conclusion when it is

remembered that when the defendants were ordered, after the Court of Appeal proceedings, to

publish a letter correcting some of the matters raised in the first letter, a cheque for a like

amount was drawn.

The first matter of defence that is raised by the defendants with respect to the

publication is in sub-paragraph (A) of sub-paragraph 3.6 of paragraph 3 of the defence. It is

pleaded that the publication is excused because:

(A) the publication was made for the protection of the Defendants’

financial interests and standing with its clients and former clients the

recipients of the letter.

Particulars

(i)         The Plaintiff was soliciting the clients of the First Defendant as further particularised in paragraph 1 the Defendants’ Amended Supplementary Further & Better Particulars and paragraph 20.7 of the Entry of Appearance, Defence and Counter-claim filed on the 6th March 1998.

(ii)        Several of the First Defendant’s clients had prior to publication of the letter expressed dissatisfaction with performance and/or conduct of the Plaintiff while she was in the employ of the First Defendant;

(iii) The First Defendant believed that there were significantly more clients contacted the First Defendant;

(iv)       The Plaintiff was known to and had been introduced to the recipients as an employee of the First Defendant and as such the First Defendant was responsible and accountable to these persons for the Plaintiff’s performance and/or conduct;

(v)        In the premises the First Defendant had an interest in advising the recipients as to the Plaintiffs termination of employment and the circumstances surrounding it for the purposes of maintaining or restoring good relations, trust and the confidence of those dissatisfied or potentially dissatisfied clients and/or former clients.

(vi)       the First Defendant was aware of instances where the Plaintiff after leaving the employ of the First Defendant the Plaintiff had purported to comment about the First Defendant’s business affairs, financial stability and viability;

(vii)      In the premises the First Defendant had an interest ensuring that the recipients were under no misapprehension as to the Plaintiff ability to speak on behalf of the First Defendant Company.

I reject any suggestion that the plaintiff, whilst working for the first defendant, was

anything other than competent in her work. The second defendant’s own actions and

contemporaneous words demonstrate this. The plaintiff’s salary was increased, and her

responsibilities increased somewhat during the course of the employment. The defendant

company expended monies in ensuring that its clientele knew of her new position and

responsibilities. As McDermott wrote on 12th December, 1996:

I understand your frustration and am deeply concerned that you don’t feel appreciated. I believe I have done nothing but SING your praises. You are doing incredibly well and I understand that at the moment things are pretty stressful for all concerned.

Of course, the findings I have just made should not be understood as meaning that the

plaintiff did not, on some occasions, make mistakes, or even act in a way ill befitting her

position as a senior and responsible employee of the first defendant. Clearly there were

occasions (in December, 1996 particularly) when emotions and tempers were running high so

far as the plaintiff and McDermott were concerned - and the letter, from which the quote

above is extracted - was no doubt intended by McDermott as a conciliatory gesture.

In my view the defendants’ did have an interest in ensuring that the clients of the

second defendant knew that the plaintiff was no longer working for it. They had expended

monies in promoting her as a part of their “team” - and in my view it would not be

unreasonable for them to seek to ensure that their clients knew that the plaintiff was no longer

part of that team, but a competitor.37

I do not propose to dwell upon these matters because, whilst I am persuaded that the

occasion of qualified protection arose, I am also satisfied that at the time of publication

McDermott was not acting in good faith.

The onus of proving the absence of good faith in this case is upon the plaintiff.38
By “good faith” the parliament has stated that it means that -

... the matter published is relevant to the matters the existence of which may excuse the publication in good faith of defamatory matter; if the manner and extent of the publication does not exceed what is reasonably sufficient for the occasion; and if the person by whom it is made is not actuated by ill will to the

person defamed, or by any other improper motive, and does not believe the

defamatory matter to be untrue.

In my view the evidence here shows that the extent of the publication was far greater

than was “reasonably sufficient” for the occasion. I have already made a finding that at least

one thousand copies of the letter were posted - and that copies were sent to most, if not all,

the people and businesses on the first defendant’s mailing list. As I have already observed, not

all the names on that list were of actual clients of the first defendant. Some were potential

clients, others were friends or acquaintances of the second defendant, others were her political

friends and associates.

Further, the matter published went well beyond what was relevant to protect the

defendants’ interests. I cannot see how it would be material for the defendants’ clients to be

told that “legal action has been taken by this company against Lynne for breach of contract” -

especially when that was not, at the time of publication, true. The imputations that the

plaintiff had a “get rich quick mentality,” that she was not capable of providing a quality

service, and that her “employment needed to be terminated to maintain a standard of

professionalism, loyalty, honesty, a commitment to customer service excellence and high ethics

within the first defendant’s agency” are but some of those which, in my view, go well beyond

what was relevant to protect the defendants’ interests.

Indeed, I am satisfied that at the time of publication McDermott was actuated by

feelings of ill will towards the plaintiff. The intemperate language in parts of the document

suggests this. I am satisfied that she had received the facsimile copy of the original plaint in

this action on the previous Friday. To head a document “Notice of impending legal action”

and to suggest that it is the first defendant that is initiating the action was, in my view,

disingenuous. It is clear that McDermott declined to accept Roberts’ advice that she seek

legal advice before sending the letter, but yet she told (as I find to be the case) Norris that she

had obtained legal advice. No doubt she was angry when she saw the plaintiff’s advertisement

for her new business in the paper. To assert in the letter that the contract of employment had

been settled by the first defendant’s barristers was, as McDermott must have known, wrong.

There are other indicia, but I shall not list them all. They persuade me, on the balance

of probabilities, that at the time of publication of the letter complained of, the second

defendant was actuated by ill will towards the plaintiff.

I should at this point also add that I accept the plaintiff’s evidence, which is

corroborated to a large extent by the documents produced at the time, that her leaving the

employ of the first defendant came about as a result of the second defendant accepting her

resignation, rather than as a result of her being dismissed against her will. The suggestions to

the contrary in the letter complained of are further evidence of the second defendant’s ill will

towards the plaintiff.

My finding on the issue of absence of good faith also disposes of the other matters of

qualified protection raised in sub-paragraphs (B) and (C) of sub-paragraph 3.6 of paragraph 3 of the defence. In my opinion the assertions in sub-paragraphs (B) and (C) are more tenuous

than those in sub-paragraph (A), but in both cases, assuming the occasion of qualified privilege

to have been shown to have arisen, in my view many of the imputations go well beyond what

was relevant, the extent of the publication was greater than necessary, and, as I have held, the

second defendant was actuated by ill will towards the plaintiff.

Hence the plaintiff is entitled to recover such damages as I may assess are proved to

have been occasioned by the publication of the defamatory letter.

In this case the plaintiff has suffered damage both to her business and personal

reputation. She is entitled to recover such damages as I may assess have been proved to flow

from that damage - subject to the usual tests of remoteness. It is clear that, with the exception

of claims for punitive or exemplary damages, the award made is to be compensatory in

character.

In my view an award of exemplary damages should not be made in this case. However

critical one may reasonably be of the second defendant’s conduct, I do not think it was of such

a character as to call for an addition to the compensatory damages of an amount to punish her.

In short, I am satisfied that the amount I propose to award by way of compensatory damages

is, in all the circumstances, sufficient to fully compensate the plaintiff, and need not be

increased purely to punish the defendant.

Damages in these types of cases are often said to include components for consolation

for the distress caused by the publication; reparation for the harm done by the publication to
reputation; and vindication of the plaintiff’s reputation.

I accept that the plaintiff was shocked and distressed when she found out that the letter

had been published. She described her reaction in her evidence, and it is also touched upon at

paragraphs 44ff of her affidavit. In my view her reaction to the published imputations was

reasonable.

The imputations in the letter impugn the plaintiff’s qualities as a person and as a

business woman. The imputations made against her are, in my view, serious, and would have

repercussions in both her private and business lives.

The letter sent by the defendants after the Court of Appeal proceedings did correct

some matters, but it seems to me it would have had little significant impact upon those who

had read the first letter. It certainly asserts (contrary to McDermott’s testimony before me)

that the plaintiff’s employment was ended “by mutual agreement.” It contains the statement

that the Plaintiff “denies any wrong doing.”

I take into account what appears to me to have been the very wide circulation of the

offending letter.

In my view the conduct of the defence by the defendants in this matter further

increases the damage done to the plaintiff.

The plaintiff has had it asserted against her during this trial that she was dismissed -

notwithstanding, as I have just pointed out, the statement to the contrary in the later letter sent

by the defendants. Lest there be any doubt about it, I accept the plaintiff’s evidence as to

what occurred at the time she and the first defendant parted company - her evidence being

largely corroborated by documents produced at about that time.

The plaintiff has had to defend allegations of a conversation with a client, Mr. Cos

Sita, at a Christmas function in 1996, which, if true, would suggest that she was acting most

improperly. I reject those allegations which were denied by the Plaintiff, and not supported

by Mr. Sita in his evidence.

The general tenor of McDermott’s evidence was that the plaintiff was not in fact good

at her work, and that she was unreliable. Again, contemporaneous documents seem to

suggest that that was not the view then held of the plaintiff - and I reject that view.

The second defendant’s affidavit contained many passages which were condemnatory

of the plaintiff and which were clearly inadmissible. Indeed almost two days were spent in

argument about the admissibility of matters contained in the affidavits, and most of that time

was devoted to largely justifiable criticisms of the defendants’ material.

The defendants’ pleadings contained matters which, in my view, were never likely to

result in an award to the defendant, or to diminish an award to the plaintiff. For example, it is

alleged in paragraph 12 of the Counter-claim that the first defendant was induced to employ

the plaintiff on the basis of representations made to the second defendant about her previous

employment. Even if proved, it is difficult to see what practical benefit could have resulted to

the defendants by the making of the allegation. Similar observations might be made about the
allegations in paragraphs 15, 16, 17, 18, 19, and 20.

I find that the defendants have, by the conduct of their defence, aggravated the

damages suffered by the plaintiff.

On the other hand, my impression of the plaintiff is that she is a resilient woman, with

the capacity to conquer adversity. I think her personality to be such that she would in many

cases have allayed the concerns in others aroused by the letter.

Of course, at the time of publication her business was very new - and it is always

difficult to assess damages when confronted with a business which might be thought to have a

lot of potential, but which does not have a proven track record of performance. However, it

does seem that in fact the plaintiff’s business has been remarkably successful, and that it was

demonstrating its success within a few months of the publication of the offending letter.

In making my assessment of damages I must try to find a figure which I think will

properly compensate the plaintiff for the losses she has suffered. I have tried to mention above

the principal matters which I have taken into account in making my assessment.

I assess the plaintiff’s damages at $40,000.00.

The findings I have made with respect to the defamation claim means that it is not

necessary for me to consider the plaintiff’s alternative claims for malicious falsehood and for
misleading conduct arising from the publication of the letter.39

So far as the award for loss occasioned by misleading conduct is concerned, it should

bear interest which should run from 31st May, 1996. I intend to allow $330.0040

So far as interest on the damages assessed as flowing from the publication of the

defamatory letter is concerned it should be payable, in my view, from the date of publication.

Of course, the damages have been assessed in terms of today’s dollar values. Furthermore, my

assessment is solely in respect of damage and loss sustained up to judgement - there is no

future component in it.

I propose to allow $2,400.00 by way of interest on the award of damages for

defamation.41

To summarise, there will be judgement for the plaintiff against both defendants for

$43,577.79, which is comprised as follows:

Damages for misleading conduct	$ 847.79
Interest on the above	$ 330.00
Damages for defamation	$40,000.00
Interest on the above	$ 2,400.00
TOTAL AWARD	$43,577.79

I will hear counsel as to the most appropriate order which should be made on the issue

of costs.

H. W. H. Botting, D.C.J.

1.          See the concession by counsel for the plaintiff at page 527 of the transcript.

2.          See pages 233 and 234 of the transcript.

3.          An example which comes to mind to illustrate the point I am trying to make is her use of the euphemism “retrenched” to describe a situation in which she was, in most people’s parlance, “sacked.”

4.          The truth is that the contract was the result of a “cut and paste” exercise involving a number of documents, the second defendant being responsible for the final product. At best it would seem that the restraint of trade provisions may have had their origins

in a contract prepared for Intek by its legal advisers.

5.          See paragraph 198 of the second defendant’s affidavit.

1. Ibid., paragraph 199.

7.          Transcript, commencing at page 400.

8.          That is, people placed by the plaintiff with an employer but who, for one reason or another, left that employer within twelve months of commencing. The defendant company offered a “guarantee” that people placed by it would remain in their client’s employ for twelve months. My understanding of the second defendant’s policy is that, if a person placed by it left within twelve months, then its fee for placing the first employee’s successor would be reduced, the amount of the reduction depending upon the length of time the first employee had remained with the client.

9.          I accept that there were times when, in order to quell the plaintiff’s concerns and perhaps anger, commissions were paid prior to the defendant company’s receiving payment from its client.

10.        Perhaps the pleading in paragraph 11(a) is the closest to such an assertion. See also the second sentence of the particulars to paragraph 19 and paragraph 20.6.

11.        Exhibit 1.7

12.

I accept that there were probably other phone calls arranging interviews etc. I find that she was offered the position (and of which she took some notes.) The second conversation was the one in which the plaintiff contacted the second defendant about the errors in the written contract.

13.        Exhibit 1.6 to her affidavit.

14.        Sub-paragraph (a) of paragraph 4 of the plaint.

15.        In essence, I accept that defendants have proved the matters set out in paragraph 8 and 9(a) of the defence.

16.        Sub-paragraph (b) of paragraph 4 of the plaint. It is admitted in paragraph 2 of the defence.

17.        Transcript, page 473.

18.        Transcript, page 252.

19.        Paragraph 10(ff). There are like allegations in paragraph 14C.

20.        See the second defendant’s evidence at page 330 of the transcript.

21.        Clearly some words have been omitted here. Probably words such as “and that the first defendant’s costs incurred in making any temporary placements” should be inserted at this point.

22.        See the plaintiff’s evidence at page 144 of the transcript.

23.        See Exhibit 3.8 to the plaintiff’s trial affidavit.

24.        Transcript, page 527.

25.        See paragraph 1(b) of the plaint, and paragraph 3.1(a) of the defence.

26.        See paragraph 1(bb) of the plaint which is admitted in paragraph 2 of the defence.

27.        See page 13.

28.        Paragraph 11.

29.        The second defendant, of course, denied that this conversation took place.

30.        Commissioners G. W. Pont, P. J. Self, and A. Gibson.

31.        The decision was published in The Queensland Government Industrial Gazette, 28th November, 1973, Vol. 84, p. 1217.

32.        See the recent decision of the New South Welsh Court of Appeal in Hollingsworth v. Commissioner of Police (1998) 47 NSWLR 151.

33.        The locus classicus is, no doubt, the decision of the House of Lords in Nordenfelt v. Maxim Nordenfelt Guns & Ammunition Company (1894) AC 535.

34. See the definition of “defamatory matter” in section 4 of the Defamation Act 1889.

35.        Paragraph 19B of the Further Amended Statement of Claim.

36.        See her evidence at page 243.

37.        This finding does not mean that I find to be proved all the matters pleaded as particulars in paragraph 3(3.6(A)).

38. See section 17 of the Defamation Act 1889.

39.        See paragraph 19C of the plaint.

40.        This is a rounded off figure, arrived at by applying a rate of ten per centum per annum to $847.79.

41.        Again this is a rounded up sum, arrived at by applying a rate of two per centum per annum.