Anthony v Morton

[2018] NSWSC 1884

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:

Anthony v Morton [2018] NSWSC 1884

Hearing dates:

10, 13-15, 20-21 August 2018

Date of orders:

10 December 2018

Decision date:

10 December 2018

Jurisdiction:

Equity

Before:

Ward CJ in Eq

Decision:

1.   Dismiss the plaintiff’s claim.
2.   Enter judgment for the cross-claimant against the first cross-defendant in the sum of $514,558.19 plus interest.
3.   Reserve the question of costs to be dealt with, if possible, on the papers after the filing of written submissions in relation thereto.

Catchwords:

CONTRACTS – Alleged oral contract formed in telephone conversation between plaintiff and defendant in March 2002 – Held the formation of an express agreement not established on the evidence –Claim for relief founded on the existence of such an agreement dismissed

 

EVIDENCE – Business practice evidence – Evidence relevant as establishing a business practice which it is likely was put into practice in the particular case in the formation of an oral agreement – Evidence alternatively advanced as tendency or coincidence evidence – Relevant principles

 

ESTOPPEL – Conventional estoppel – Whether a common assumption existed as to the entitlement of the agent to an ongoing commission – Held no such assumption was shared by the plaintiff and the defendant – Claim for relief based on conventional estoppel dismissed

 

TORTS – Negligence – Whether literary agent breached duty of care and skill owed to client – Held there was a breach of the duty of care by failing to advise client as to the advantages and disadvantages of world rights deals

  LIMITATION OF ACTIONS – Claim in contract and tort – Whether bar postponed by fraudulent concealment – Held there was no fraudulent concealment

Legislation Cited:

Civil Liability Act 2002 (NSW), ss 5, 5A, 5B, 5D; Pt 1A
Civil Procedure Act 2005 (NSW), ss 21, 56
Evidence Act 1995 (NSW), ss 97, 98
Limitation Act 1969 (NSW), ss 14, 52, 55, 74
Supreme Court Act 1970 (NSW), s 68
Uniform Civil Procedure Rules 2005 (NSW), r 21.10

Cases Cited:

Aberdeen Railway Co v Blaikie Bros (1854) 1 Macq. 461 (149 R.R. 32)
Adeels Palace Pty Ltd v Moubarak (2009) 239 CLR 420; [2009] HCA 48
Amalgamated Investment & Property Co Ltd (in liq) v Texas Commerce International Bank Ltd [1982] QB 84
Angove’s Pty Ltd v Bailey [2016] UKSC 47
Applegate v Moss [1971] 1 QB 406
Artistic Builders Pty Ltd v Nash [2010] NSWSC 1442
Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99; [1973] HCA 3
Ballard v Multiplex [2012] NSWSC 426
Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452
Barescape Pty Ltd v Bacchus Holdings (No. 9) [2012] NSWSC 984
Barker v Duke Group Ltd (in Liq) (2005) 91 SASR 167
BP Refinery (Westport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266; 16 ALR 363 (Privy Council)
Bray v Ford [1896] AC 44
Brickenden v London Loan & Savings Co [1934] 3 DLR 465
Bristol & West Building Society v Mothew [1998] Ch 1
British Westinghouse Co v Underground Railway [1912] AC 673
Brogden v Metropolitan Railway Co (1877) 2 App Cas 666
Byrne v Australian Airlines Ltd (1995) 185 CLR 410; [1995] HCA 24
Cantarella Bros Pty Ltd v Andreasen [2005] NSWSC 579
Chand v Commonwealth Bank of Australia [2015] NSWCA 181
Commonwealth Bank of Australia v Barker (2014) 253 CLR 169; [2014] HCA 32
Commonwealth Bank of Australia v Smith (1991) 42 FCR 390; 102 ALR 453
Commonwealth of Australia v Cornwell (2007) 229 CLR 519; [2007] HCA 16
Comptroller of Stamps (Vic) v Howard-Smith (1936) 54 CLR 614; [1936] HCA 12
Connor v Blacktown District Hospital [1971] 1 NSWLR 713
Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226; [1986] HCA 14
Curnow Consulting Pty Ltd v JPD Media and Design Pty Ltd [2017] NSWSC 1171
De Bussche v Alt (1878) 8 Ch D 286
Ell v Ell [2015] NSWCA 38
Empirnall Holdings Pty Ltd v Machon Paull (1988) 14 NSWLR 523
Faraday v Rappaport [2007] NSWSC 34
Freeman and Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480
GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1; [2008] FCA 50
Georgieff v Athans (1981) 26 SASR 412
Gerace v Auzhair Supplies Pty Ltd (in liq) (2014) 87 NSWLR 435; [2014] NSWCA 181
Grundt v The Great Boulder Proprietary Coal Mines Ltd (1937) 59 CLR 641; [1937] HCA 58
Hamilton v Kaljo (1989) 17 NSWLR 381
Harris v Digital Pulse Pty Limited (2003) 56 NSWLR 298; [2003] NSWCA 10
Havas v Cornish & Co Pty Ltd [1985] 2 Qd R 353
Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298
Hawkins v Clayton (1988) 164 CLR 539; [1988] HCA 15
HP Mercantile Pty Limited v Dierickx [2013] NSWCA 479; (2013) 97 ACSR 318
Hughes v The Queen [2017] HCA 20; 92 ALJR 52
Inca Ltd v Autoscript (New Zealand) Ltd [1979] 2 NZLR 700
Industrial Development Consultants Ltd v Cooley [1972] 1 WLR 443
Jacara Pty Ltd v Perpetual Trustees WA Ltd (2000) 106 FCR 51; [2000] FCA 1886
John Holland Pty Limited v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451
Jones v Dunkel (1959) 101 CLR 598; [1959] HCA 8
Keppel v Wheeler [1927] 1 KB 577
Knott Investments Pty Ltd v Fulcher [2013] QCA 67; [2014] 1 Qd R 21
Knox v Gye (1872) LR 5 HL 656
Laidlaw v Hillier Hewitt Elsley Pty Ltd [2009] NSWCA 44
Legione v Hateley (1983) 152 CLR 406; [1983] HCA 11
Levy v Watt [2012] VSC 539
Levy v Watt [2014] VSCA 60
Lindsay Petroleum Co v Hurd (1873-4) L.R. 5 P.C. 221
Macnamara v Martin (1908) 7 CLR 699; [1908] HCA 86
Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23
Majeau Carrying Co Pty Ltd v Coastal Rutile Ltd (1973) 129 CLR 48; [1973] HCA 22
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305
Mann v Commonwealth [2000] NSWSC 353
Markson v Cutler [2007] NSWSC 1515
McKenzie v McDonald [1927] VLR 134
Medlin v State Government Insurance Commission (1995) 182 CLR 1; [1995] HCA 5
Moratic Pty Ltd v Gordon [2007] NSWSC 5
NMFM Property Pty Ltd v Citibank Ltd (No 10) [2000] FCA 1558; 186 ALR 442
Nupponen v Hymix Quarries Pty Ltd (Supreme Court (NSW), Foster J, 24 October 1986, unrep)
O’Neill v Foster (2004) 61 NSWLR 499; [2004] NSWSC 906
Orica Investments Pty Ltd v McCartney [2010] NSWSC 488
Orr v Ford (1989) 167 CLR 316; [1989] HCA 4
P.W. & Co v Milton Gate Investments Ltd [2004] Ch 142
Paragon Finance plc v DB Thakerar & Co [1999] 1 All ER 400
Pioneer Mortgage Services Pty Ltd v Australia and New Zealand Banking Group [2013] NSWSC 1107
Re Pauling’s Settlement Trusts [1962] 1 WLR 86
Rest-Ezi Furniture Pty Ltd v Ace Shohin (Australia) Pty Ltd (1987) 5 ACLC 10
RHG Mortgage Corporation Ltd v Iannis [2016] NSWCA 270
Robinson v Mollett (1875) LR 7 HL 802
Rosenberg v Percival (2001) 205 CLR 434; [2001] HCA 18
Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603; [2007] NSWCA 65
SAMM Property Holdings Pty Ltd v Shaye Properties Pty Ltd [2017] NSWCA 132
Seymour v Seymour (1996) 40 NSWLR 358
Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) (1981) 150 CLR 225; [1981] HCA 59
Sheldon v R.H.M. Outhwaite (Underwriting Agencies) Ltd [1995] 2 WLR 570
Shire of Toodyay v Merrick [2016] WASC 29
Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19
Sotiros Shipping Inc. and Aeco Maritime S.A. v Sameiet Solholt (The “Solholt”) [1983] Lloyd’s Rep 605
St Vincent’s Hospital (Melbourne) Inc v University of Adelaide [2002] VSC 297
Stag Line Ltd v Board of Trade [1949] 83 LIoyd’s Law Rep 356
State of New South Wales v Mulcahy [2006] NSWCA 303
Sullivan v Moody (2001) 207 CLR 562; [2001] HCA 59
The August Leonhardt [1985] 2 Lloyds Rep 28
The Crown v McNeil (1922) 31 CLR 76; [1922] HCA 33
The Moorcock (1889) 14 PD 64
The Mortgage Corporation v Halifax (SW) Limited [1999] Lloyd’s Rep P.N. 159
The Salvation Army (South Australia Property Trust) v Rundle [2008] NSWCA 347
Thompson v Palmer (1933) 49 CLR 507; [1933] HCA 61
Thornley v Tilley (1925) 36 CLR 1; [1925] HCA 13
Tinnock v Murrumbidgee Local Health District (No 2) [2016] NSWSC 87
Tito v Waddell [No 2] [1977] Ch 106
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107; [1988] HCA 44
Trylow v Commissioner of Taxation [2004] FCA 446
Twynam Pastoral Co Pty Limited v AWB (Australia) Ltd [2008] FCA 1922
Unique International College Pty Ltd v Australian Competition and Consumer Commission [2018] FCAFC 155
United States Surgical Corp v Hospital Products International Pty Ltd [1982] 2 NSWLR 766
Verschures Creameries v Hull and Netherlands Steamship Co [1921] 2 KB 608
Visscher v Giudice (2009) 239 CLR 361; [2009] HCA 34
Watson v Foxman (1995) 49 NSWLR 315
Weston v Publishing & Broadcasting Ltd [2011] NSWSC 433; 83 ACSR 206
Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd (1936) 54 CLR 361; [1936] HCA 6
Williams v Marine Ministerial Holding Corporation [1999] NSWCA 302
Woodhouse A.C. Israel Cocoa Ltd S.A. v Nigerian Produce Marketing Co Ltd (1971) 2 QB 23
Yulema Pty Limited v Simmons [2015] NSWSC 640
Zaknic Pty Ltd v Svelte Corporation Pty Ltd (1995) 61 FCR 171

Texts Cited:

A McGee, “Subsequent Concealment of Material Facts” (1995) 111 Law Quarterly Review 580
G E Dal Pont, Law of Agency (2nd ed, 2008, LexisNexis)
G H Treitel, Remedies for Breach of Contract (1988, Oxford University Press)
H McGregor, McGregor on Damages (19th ed, 2014, Sweet & Maxwell)
J D Heydon, M J Leeming and P J Turner, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (5th ed, 2015, LexisNexis)
John Cartwright, Formation and Variation of Contracts (2014, Sweet & Maxwell)
M Conaglen, Fiduciary Loyalty (2010, Hart Publishing)
McGhee (ed), Snell’s Equity (32nd ed, 2010, Sweet & Maxwell)
P Feltham et al, Spencer Bower: Reliance-Based Estoppel (5th ed, 2017, Bloomsbury)
Peter Handford, Limitation of Actions: The Laws of Australia (3rd ed, 2012, Thomson Reuters)
Peter Watts and FMB Reynolds, Bowstead & Reynolds on Agency (21st ed, 2018, Sweet & Maxwell)

Category:

Principal judgment

Parties:

Selwa Muna Anthony (Plaintiff/First Cross-Defendant)
Kate Morton (Defendant/Cross-Claimant)
Selwa Anthony Pty Ltd (Second Cross-Defendant)

Representation:

Counsel:
C O’Donnell SC with L Clarke (Plaintiff/Cross-Defendants)
IM Jackman SC with J Steele and L Robb-Vujcic (Defendant/Cross-Claimant)

  Solicitors:
Maxwell, Meredith & Co (Plaintiff/Cross-Defendants)
Frankel Lawyers (Defendant/Cross-Claimant)

File Number(s):

2016/90015

Publication restriction:

Nil

INDEX

JUDGMENT – WARD CJ in Eq			[1]
Summary			[3]
Background			[11]
Timing of Ms Morton’s introduction to Ms Anthony		[14]
First submission of manuscripts to Ms Anthony		[20]
Alleged March 2002 telephone conversation		[23]
Book 1 – “The Shifting Fog” (outside Australia and New Zealand title “The House at Riverton”)		[28]
Book 2 – ‘The Forgotten Garden”		[59]
Books 3 and 4 – “The Distant Hours” and “The Secret Keeper”		[65]
Books 5 and 6 – “The Lake House” and Book 6		[80]
Payment of royalties/deduction of commission 2006-2015		[91]
Ms Morton’s query in 2010 as to the commission payable on world rights deals		[95]
November 2015 – multiple commission issue raised again with Ms Anthony		[105]
Termination of the agency relationship		[112]
Offer by Ms Morton’s new agent		[114]
Notification to A&U and Bolinda of termination of agency relationship		[120]
First letter from Ms Anthony’s solicitor to A&U		[123]
Response from Ms Morton’s solicitor to the communications from Ms Anthony’s solicitor		[126]
Further communications between Ms Anthony’s solicitor and A&U		[128]
Issue of notice of breach to Bolinda		[135]
Yet further communications between Ms Anthony’s solicitor and A&U		[136]
Commencement of proceedings		[143]
Further correspondence as to basis of Ms Anthony’s claim		[146]
Changes in publishing arrangements		[148]
Pleadings			[153]
Statement of Claim filed 20 May 2016		[153]
Request for copies of emails referred to in initial statement of claim		[157]
Amended statement of claim		[162]
Further amended statement of claim		[163]
Amended defence to the further amended statement of claim		[178]
Amended statement of cross-claim		[182]
Defence to amended cross-claim		[189]
Reply to defence to cross-claim		[193]
Issues			[195]
Evidence			[198]
Submissions as to credibility of principal witnesses (Ms Anthony and Ms Morton)			[205]
Ms Anthony’s evidence		[205]
Ms Morton’s evidence		[212]
Conclusion as to credibility of principal witnesses		[215]
Determination of issues on Ms Anthony’s claim			[226]
Issue 1 – was there a binding oral agreement entered into in or about March 2002 between Ms Anthony and Ms Morton			[226]
Ms Anthony’s evidence as to the critical (March 2002) conversation		[227]
Evidence of Ms Anthony’s business practice		[246]
Evidence of Ms Anthony’s assistants		[250]
Ms Linda Anthony	[251]
Ms Selena Hanet-Hutchins	[255]
Evidence of client authors pre 2002		[262]
Mr James Thompson (1990)	[262]
Ms Sue Williams (1990)	[265]
Ms Diane Armstrong (1996)	[267]
Ms Kim Wilkins (1997)	[268]
Ms Margaret Groff (1998)	[278]
Ms Gail Bell (2001)	[282]
Ms Anna Romer (2002)	[284]
Evidence of the client authors post-2002		[285]
Dr Karen Brooks (2006)	[285]
Ms Karen Davis (2007)	[288]
Ms Juanita Phillips (2008)	[290]
Ms Kristen Brooks (2012)	[292]
Objections to evidence sought to be adduced as business practice evidence or tendency evidence		[294]
Determination as to admissibility of evidence sought to be adduced as business practice evidence or as tendency or coincidence evidence		[301]
Evidence of industry practice		[339]
Literary agents		[340]
Ms Tranter	[340]
Ms Darling	[348]
Publishers		[357]
Ms Martyn	[357]
Ms Maria Rejt	[378]
Publishing Law (4th ed)		[385]
Jones v Dunkel inferences ((1959) 101 CLR 298; [1959] HCA 8)		[386]
Relevant principles		[398]
Submissions		[400]
Determination as to Issue 1 on Ms Anthony’s claim		[423]
Issue 2 – if there was an oral agreement in or about March 2002, what were its terms?		[435]
Submissions as to Issue 2	[436]
Determination as to Issue 2		[460]
Issue 3 – Were the publishing agreements validly terminated?		[473]
Determination as to Issue 3		[479]
Issue 4		[485]
Conventional estoppel		[485]
Determination as to Issue 4		[490]
Issue 5 – Loss and Damages claimed by Ms Anthony		[522]
Determination as to Issue 5		[532]
Determination of issues on Ms Morton’s Cross claim			[543]
Introduction	[543]
Ms Morton’s submissions on the cross-claim			[548]
Breach of Contract and Negligence		[548]
Breach of Fiduciary Duty		[569]
Loss claimed		[577]
Ms Anthony’s submissions on cross-claim			[580]
Limitations and failure to mitigate loss or establish loss		[598]
Ms Morton’s response on limitations argument			[601]
Determination on cross-claim			[611]
Issue 1 – Was there a breach of fiduciary duty?		[611]
Issue 2 – Was there a breach of contractual or tortious duty of skill and care?		[636]
Issue 3 – Is Ms Morton’s claim statute-barred or otherwise defeated by laches, acquiescence or delay		[665]
Issue 4 – Failure to mitigate		[713]
Issue 5 - Relief		[721]
Issue 6 – Set-off		[727]
Conclusion			[730]

Judgment

1. HER HONOUR: The present proceedings involve a dispute between an internationally best-selling Australian author (the defendant/cross-claimant, Ms Kate Morton) and her former literary agent (the plaintiff/cross-defendant, Ms Selwa Anthony).

2. Broadly speaking, Ms Anthony claims that she is entitled to be paid 15% commission on all royalties earned from Ms Morton’s first six published books for the life of each work (by which, as I understand it, she means the period in which copyright subsists in the works or the works remain in publication), notwithstanding the termination in December 2015 of their agency relationship and notwithstanding the termination of the publishing agreements negotiated in respect of those works when she was Ms Morton’s agent. Ms Morton denies any such entitlement and has cross-claimed against Ms Anthony (and a company with which Ms Anthony is associated – see below at [13]), alleging breach of fiduciary duty, breach of contract and negligence in relation to Ms Anthony’s conduct in advising Ms Morton to grant world rights under the publishing agreements entered into for the last four of Ms Morton’s books and failing to advise Ms Morton as to the financial implications of such a course of action.

Summary

3. At the time of the hearing, five of Ms Morton’s books had been published, to local and international acclaim, from the sale of which substantial sums (in the order of some $17 million) by way of royalty had been earned. In September 2018, after the hearing, Ms Morton’s sixth novel was published. It is not disputed that Ms Anthony, a literary agent who has represented and managed various Australian authors over a period of some 30 years, represented Ms Morton and acted as Ms Morton’s agent in relation to the publishing agreements for those six books and, until January 2016, in the collection of income payable to Ms Morton under those agreements.

4. There was, therefore, clearly an agency relationship between the parties and Ms Morton does not dispute this. However, there was never any written agency agreement between them. Ms Anthony’s usual practice was not to enter into written agreements with the authors she represented.

5. Ms Anthony contends that (in accordance with her usual practice) there was an oral agency agreement between her and Ms Morton. That oral agreement is pleaded (see [8] of the further amended statement of claim filed 7 September 2016) as having been entered into in or about March 2002. The time at which Ms Anthony says the oral agreement was entered into is of some significance, as I will explain in due course. The terms of that oral agreement are alleged, in the alternative, either to have been orally agreed (see [9]-[12] of the further amended statement of claim) or to be implied (alternatively, implied by custom and usage in the book publishing industry; or implied in fact; or implied by conduct) (see [13]-[15] of the further amended statement of claim).

6. Ms Anthony also invokes the doctrine of conventional estoppel and alleges that Ms Morton is estopped from resiling from an assumption (the Royalties Assumption) to similar effect as the alleged oral agreement (see [175] below), on the basis of which it is claimed that both parties conducted their relationship from in or about March 2002 until in or about 10 December 2015 (see [27]-[34] of the further amended statement of claim).

7. Ms Anthony seeks a variety of relief consequent upon Ms Morton’s alleged breach of the oral agency agreement (or her resiling from the conventional basis on which it is alleged they conducted their relationship) including damages referable to the loss of the 15% commission to which Ms Anthony claims she is entitled for the life of Ms Morton’s first six published books.

8. Ms Morton denies liability. Ms Morton accepts that there was an agency agreement between the two but contends that the agency agreement was formed by reference to their course of dealings from 2005 and was, in effect, limited to payment of 15% commission on advances and royalties earned during the course of their agency relationship.

9. As adverted to above, Ms Morton’s cross-claim arises out of Ms Anthony’s conduct in relation to the negotiation of world rights publishing agreements with Ms Morton’s first Australian publisher, Allen & Unwin Australia Pty Ltd (A&U), for Books 3 to 6. Ms Morton complains that Ms Anthony failed to advise her how world rights deals operate and failed to advise her that she could instead have entered into direct agreements with foreign publishers, territory by territory. The significance of the difference between granting A&U worldwide publishing rights rather than Ms Morton entering (through Ms Anthony as agent) into direct publishing agreements with overseas publishers on a territorial basis is, in essence, that significantly more commission is paid by the author under arrangements of the former kind than under the latter because there is at least one additional layer of commission payable out of the gross revenues earned from the sale of the books (in the present case this is referred to as, and Ms Morton claims, the “A&U share” of commission, which varied from around 20-25% for Books 3 to 4 to 10% for Books 5 to 6).

3. For the reasons that follow, I have concluded that Ms Anthony’s claim should be dismissed and that Ms Morton’s cross-claim upheld in part – namely, as to her allegation of negligence in relation to the advice at least implicitly given by Ms Anthony (by presenting her with the publishing agreements containing those terms) for Ms Morton to enter into “world rights” deals for Books 5 to 6 without explaining adequately to Ms Morton (or at all) the alternative options available to her and the respective advantages and disadvantages of such a course. Although I consider that there was also negligence in relation to the entry into world rights publishing agreements for Books 3 and 4, I find that the claims in relation to Books 3 to 4 are statute barred and that the fraud exception to the otherwise applicable statutory limitation period does not arise. I am satisfied on the balance of probabilities that Ms Morton has suffered the loss claimed and accordingly I will make orders in that regard and I will make directions for submissions to be filed on the question of costs.

Background

11. As noted earlier, Ms Anthony has been a literary agent for over 30 years.

12. For part of the time in which she represented Ms Morton, Ms Anthony did so trading under a registered business name (Selwa Anthony Author Management Agency) of which she was then a registered proprietor (see for example Exhibit 8, CB 6/2098; 6/2101).

13. On 24 August 2005, a company was incorporated (Selwa Anthony Pty Ltd, to which I will refer as SAPL), which became the holder of the registered business name and thereafter operated the agency under that name (and issued tax invoices and payment advices in relation to Ms Morton’s books in the company name) (see Ms Anthony’s affidavit of 22 December 2016 (Ms Anthony’s first affidavit) at [74]). Ms Anthony does not assert that there was any agency agreement between SAPL and Ms Morton (and the company is not a plaintiff in the proceedings; nor is it named as agent in the relevant publishing agreements). SAPL has, however, been joined to the cross-claim as a second cross-defendant in the event (which Ms Morton disputes) that it is found that there was ever an agency agreement with SAPL.

Timing of Ms Morton’s introduction to Ms Anthony

14. One of the authors Ms Anthony has represented for some time is Ms Kim Wilkins, an academic and author who was for some years (but is no longer) a close friend of Ms Morton and who has signed a number of affidavits in these proceedings (an affidavit sworn 15 December 2016, an affidavit affirmed 27 September 2017 and an affidavit affirmed on an unspecified date in August 2018). It is not disputed that Ms Anthony and Ms Morton first met or became acquainted through Ms Wilkins.

15. Ms Anthony initially seems to have placed her first meeting with Ms Morton as being in around 2002. In her first affidavit, Ms Anthony deposes (at [19]) to meeting Ms Morton briefly at an event Ms Anthony had organised and later to meeting Ms Morton when she visited Sydney with Ms Wilkins (to the best of her recollection that being in 2002). Although Ms Anthony in that first affidavit also notes that Ms Morton had said publicly that she, Ms Anthony, had been her agent since 1999 (see [19], in a sentence only read by me as a submission), Ms Anthony does not herself depose to any meeting as far back as 1999; nor does she contend that there was any agency relationship as far back as 1999.

16. Ms Morton, in her affidavit affirmed 22 March 2017 (Ms Morton’s first affidavit), places her introduction to Ms Anthony as having occurred earlier than 2002. She has deposed that she attended one of Ms Anthony’s annual “Sassy” seminars in or about 2000 as Ms Wilkins’ guest and that she was introduced briefly to Ms Anthony by Ms Wilkins ([12]) but that they did not then discuss writing or publishing. (It may be that this is the “event” to which Ms Anthony refers at [19] of her first affidavit, in which case their accounts to this point are broadly consistent.)

17. This was clarified in both Ms Anthony’s affidavit sworn 27 April 2017 (Ms Anthony’s second affidavit) (in reply to Ms Morton’s first affidavit), and in her affidavit sworn 28 September 2017 (Ms Anthony’s third affidavit) (also in reply to Ms Morton’s first affidavit). In those affidavits, Ms Anthony deposes that Ms Morton had attended her “annual day seminar and evening Sassy Awards” in November 2000 (see [2](9)-(26) of Ms Anthony’s second affidavit; [9] of her third affidavit). She deposes that on 31 January 2001 Ms Wilkins had introduced Ms Morton to an online authors’ forum set up in 1999 by Ms Wilkins for Ms Anthony’s science fiction, fantasy and horror writers (see [2](9)-(26); [7], [10]-[11] of the respective affidavits). Ms Anthony also there refers to Ms Morton’s attendance at the first Popular Reader’s and Writer’s Festival she (Ms Anthony) had organised on 7-8 July 2001 and to Ms Morton’s attendance at the seminar and awards evening again that year in November 2001 ([2](9)-(26); [13]-[14] of the respective affidavits).

18. This last evidence is consistent with Ms Morton’s recollection (see [20] of her first affidavit) that in or around late November 2001 she attended a “Sassy” event with Ms Wilkins and stayed with Ms Wilkins at Ms Anthony’s house the following night. Consistently with Ms Morton’s evidence, Ms Wilkins (in her affidavit sworn 15 December 2016 at [5]) places her visit with Ms Morton to Ms Anthony’s home as having occurred in the summer of 2001/2002.

19. Ms Anthony says that during Ms Morton’s visit (which, as noted, she places in 2002) she told Ms Morton that she was happy to look at anything Ms Morton had written (Ms Anthony’s first affidavit at [19]). (I note that, by then, Ms Morton’s evidence is that she had already sent two manuscripts to Ms Anthony: see below at [20]-[21].) Ms Anthony does not suggest that she informed Ms Morton during that visit of the terms on which she would be prepared to act as Ms Morton’s agent; and Ms Morton’s evidence is that, at the time when Ms Morton visited Ms Anthony’s home (which she says was in November 2001), she and Ms Anthony did not speak about the manuscript she had (by then) recently written and posted to Ms Anthony (see [21] below).

First submission of manuscripts to Ms Anthony

20. At [9] of Ms Morton’s first affidavit, she deposes that in or about 2000, when an Honours student in English Literature, she wrote her first manuscript; that Ms Wilkins offered to send it to her literary agent (Ms Anthony) and did so; and (at [11]) that about six weeks later Ms Wilkins told her that Ms Anthony said that the manuscript was not publishable but that if she wrote another one Ms Anthony would look at it.

21. Ms Morton has also deposed in her first affidavit (at [14]-[16]) that after attending the annual “Sassy” event in 2000 she started writing again and that in or around August 2001 she posted Ms Anthony a completed second manuscript, which was returned by Ms Anthony in late September 2001 with a rejection letter from a publisher at HarperCollins (see letter dated 28 September 2001 at p 2091 of Exhibit 8) and a note inviting Ms Morton to call Ms Anthony if she wished. Ms Anthony in her second and third affidavits appears to accept that this occurred (although she cavils with Ms Morton’s description of the HarperCollins letter as a “single rejection letter”, deposing that it was a very detailed reader’s report that she had requested for Ms Morton, and she also cavils at the implicit criticism that the manuscript had only been sent to HarperCollins – see [2](16)-(17); [18]-[19] of her respective affidavits).

22. Ms Morton deposes that she had a telephone conversation with Ms Anthony in or about late September 2001 in which she says she asked Ms Anthony whether she thought she (Ms Morton) should work on the manuscript (i.e., the one that Harper Collins had rejected) and re-submit it and Ms Anthony said she could do so if she wished or otherwise write something else and send it to her (see at [18]). As events transpired, Ms Morton chose the latter course. She deposes that in this (September 2001) conversation there was no discussion of any “terms” of Ms Anthony’s engagement; nor had this previously been discussed (see [18]). (I note in this regard that up until Ms Anthony’s third affidavit the accounts of Ms Anthony and Ms Morton on this point seems to be consistent; but in Ms Anthony’s third affidavit (at [20]) there appears for the first time the assertion, in general terms, that there was a “series of conversations” from time to time “around September 2001” in which there was a discussion in terms to the effect there set out as to the terms of their agency relationship – see [236] below.)

Alleged March 2002 telephone conversation

23. This brings me to the critical conversation on which Ms Anthony’s pleaded oral agency agreement (defined as the Agency Agreement) rests (see [8] of the further amended statement of claim). I say “pleaded” agreement because although Ms Anthony’s pleaded case puts the making of the alleged oral agreement as occurring in or about March 2002, in closing submissions, Senior Counsel for Ms Anthony appeared to contemplate the possibility that the agreement may have been concluded at a later date (see T 415.11, where it was submitted that certainly “by 2005” there was an agency agreement with clearly articulated terms agreed to by Ms Morton); and treated the March 2002 date as the first time when, on Ms Anthony’s case, the terms were clearly articulated and agreed by Ms Morton (see T 414.45).

24. Ms Anthony has deposed that in or about March 2002 she and Ms Morton had a telephone conversation during which she agreed to act as Ms Morton’s literary agent and negotiate publishing agreements on her behalf “on certain terms” (see her first affidavit at [20]). I will consider in due course the various versions put by Ms Anthony as to what is said to have been said in that conversation (see [227]ff below). Cross-examined as to the basis on which she had attributed a March 2002 date to that conversation, Ms Anthony was vague, to say the least. At one stage, Ms Anthony suggested this was by reference to an unidentified document (see T 140.35-40; T 142.31) but I was taken to no such document.

25. Ms Morton denies the alleged March 2002 telephone conversation (see for example at [176] of her first affidavit), whether occurring at that time or at any time. Ms Morton’s evidence in this regard is that: by late 2001 she was soon due to submit her Masters’ thesis in English literature ([22]); she submitted her thesis in or around mid-March 2002 and the following week started a PhD in English Literature on a scholarship from the University of Queensland; she taught casually at the university throughout 2002 and also worked as a research assistant; and she wrote a “few synopses for possible novels” in that period but was busy in other areas “and didn’t get much further than jottings in a notebook” ([23]).

26. Ms Morton’s evidence is that she started writing what would become her first published book (“The Shifting Fog”) in or around summer 2003/2004 ([25]) and that her next contact with Ms Anthony (after late 2001) with respect to her publishing prospects was when she sent a partial manuscript of that book to Ms Anthony in the second half of 2004 (see [26]).

27. Ms Anthony’s account of the timing of those events varies from that of Ms Morton (as I explain below – see [28]). As adverted to above, Ms Anthony says that she received two manuscripts from Ms Morton in 2002 (see her first affidavit at [21]), one of which she offered around to publishers but without being successful in finding a publisher to “take it on”; but that she encouraged Ms Morton to keep writing. Ms Anthony’s recollection (in her first affidavit) of the year in which she received the first two manuscripts is obviously incorrect (as Ms Anthony seemed at first to accept in cross-examination – see T 139.1, saying that “the years are a bit shaky” but then maintaining that “if I’ve said 2001 that would be right”), having regard to the date of the rejection letter from HarperCollins in relation to the second of those two manuscripts (28 September 2001; Exhibit 8, CB 6/2091).

Book 1 – “The Shifting Fog” (outside Australia and New Zealand titled “The House at Riverton”)

28. Ms Anthony deposes (cf. Ms Morton’s account noted at [26] above) that Ms Morton started writing the novel which would become “The Shifting Fog” in late 2002 (see her first affidavit at [22]). She deposes that Ms Morton sent her extracts of the work in progress; that she mentored Ms Morton throughout the writing of this book; and that Ms Morton’s pregnancy delayed the finishing of the manuscript ([22]).

29. Ms Anthony points, in support of that account of events, to a Sydney Morning Herald article dated 20 October 2012 in which Ms Morton was quoted as saying that, after reaching the halfway point on her third book (which became “The Shifting Fog”), she had her first baby and put the manuscript aside; and, to an article dated 26 December 2006 in which Ms Morton was quoted as saying that “By this time I had a small child....I sent this new manuscript to Selwa in sections and then I stalled and hadn’t written for a few months, I had it plotted out but I just slipped out of it. Then Selwa rang and said ‘when can you finish it? A publisher is interested’”.

30. Ms Morton’s evidence, to the contrary, is that she started writing this novel later than that. Her first child was born in July 2003 and she has deposed that it was while she was at home on maternity leave that she had an idea for a story ([24]). She deposes that, in or around summer 2003/2004, when her child was about six months old, she started writing what would become her third completed manuscript (and first published novel) ([25]); and (as noted above) that it was in the second half of 2004 that she sent a partial manuscript to Ms Anthony ([26]).

31. Ms Wilkins’ recollection (see her affidavit of 27 September 2017 at [34]) is that Ms Morton started the manuscript for the book that became “The Shifting Fog” when she was pregnant (she recalled sitting by the fireplace in winter in the living room of Ms Morton’s house “talking about her ideas”).

32. Leaving aside, for the moment, the varying accounts as to when Ms Morton commenced writing what became her first published novel, Ms Morton’s evidence that she sent a partial manuscript of “The Shifting Fog” to Ms Anthony in the second half of 2004 is not inconsistent with Ms Anthony’s evidence that, by March 2005, she had a 100,000 word unfinished manuscript of the book which she sent to A&U (see [23] of Ms Anthony’s first affidavit), though on Ms Morton’s own account the manuscript must have been sent to A&U earlier than March 2005, since she says that she received a call from a publisher in around January 2005 in relation to the manuscript (see [33] below).

33. Ms Morton’s evidence is that in or around January 2005 she received an unexpected telephone call from Ms Anthony who said words to the effect that Annette Barlow from A&U (who in due course became and has remained Ms Morton’s Australian editor) had read the partial manuscript and wanted to see the rest (see Ms Morton’s first affidavit at [27]). It is not disputed that Ms Morton was not aware at the time that the partial manuscript was being forwarded to a publisher. Ms Anthony’s evidence is that she does not as a rule tell authors when or to whom she is submitting their partial manuscripts (see [2](28) of her second affidavit) and she deposes that “it is very unusual to submit a partial manuscript by an unpublished and unknown author”. (In submissions it was argued that the fact that Ms Anthony felt comfortable sending a partial manuscript to a publisher is consistent with her account that she had been reviewing extracts of the manuscript and mentoring Ms Morton in relation thereto for a period of time before sending the manuscript to A&U.) (I note that there is no evidence that the manuscript was sent to anyone other than A&U at the time.)

34. Ms Anthony has deposed that Ms Barlow (of A&U) was very excited with what she had read and asked when the final quarter would be finished; and that she (Ms Anthony) asked Ms Morton “to put everything else on hold, get a babysitter and finish the manuscript in a month”, which Ms Morton did (see Ms Anthony’s first affidavit at [23]). Ms Anthony says Ms Morton first said it would take her eight weeks to finish and that she, Ms Anthony, urged Ms Morton to finish it sooner than that. Ms Morton, on the other hand, says that Ms Anthony asked her how long it would take to finish the manuscript; that she told Ms Anthony she could finish it in a month; and that she then mapped out 28 days of babysitting for her child and completed the manuscript within a month (Ms Morton’s first affidavit at [29]).

35. Ms Morton says that she posted the completed manuscript to Ms Anthony in around early March 2005 ([29]). Ms Anthony says that the manuscript was completed in or about early April 2005 (Ms Anthony’s first affidavit at [23]).

36. Nothing turns on the difference in the witnesses’ recollections of these events (i.e., the events referred to at [34] and [35]), other than it points to the difficulty in plotting an accurate timeline of events that long ago and shows that there is some unreliability in the recollection of events on the part of both of the principal witnesses. What is clear on the documentary evidence is that, in May 2005, A&U made an offer to publish the book, of which offer Ms Anthony informed Ms Morton by email on 2 May 2005. (I pause here to note the evidence of Ms Hanet-Hutchins, Ms Anthony’s assistant, that Ms Anthony does not usually type her own emails and that they are typed, by Ms Anthony’s assistants, based on handwritten notes or dictation.)

37. There is a reference in that A&U email to the sale of the manuscript in a “World Rights Deal”. Ms Morton’s evidence (at [30] of her first affidavit) is that Ms Anthony explained to her that this meant that A&U “might even be able to get you a nice little overseas deal”. (The casual reference to such a deal is consistent with the informal, conversational tone of many of the emails between the two, even at the time of termination by Ms Morton of the agency relationship.)

38. Ms Morton’s evidence is that she did not know at the time (i.e., around May 2005) that there was any other way to sell rights and that Ms Anthony did not explain to her that there were any alternatives (see [31]). Ms Anthony disputes this, although she does not give any clear account of a conversation or conversations in which this was explained. I consider this issue in more detail when I come to deal with Ms Morton’s cross-claim.

39. Ms Anthony’s response to that evidence from Ms Morton (see [28] of her third affidavit) is that by April 2005 “Ms Morton was an unknown author with an unfinished manuscript”; that even when it was complete it still needed a “tremendous amount of editing”; and that the circumstances at the time were “fortuitously unique in that Allen & Unwin took interest in the manuscript and made an offer that was very generous for a first time author”. It is to be noted Ms Anthony does not there suggest that she gave any advice to Ms Morton at the time as to the additional commission(s) that would be payable under a world rights deal as compared to a territory by territory deal.

40. In both her second and third affidavits (see at [2](30); [29] of the respective affidavits), Ms Anthony deposes to a conversation with Ms Morton (the date of which is not identified, but by reference to the context is seemingly at the time of the offer for Book 1 in May 2005) in which she says she told Ms Morton words to the effect:

Allen & Unwin is a large and very successful Australian publishing house. It has the resources necessary to negotiate any overseas deals for you in the best terms. Because they have world rights, they will work very hard and do their best to generate and capture overseas interest.

41. Again, no account is there given of the additional layer(s) of commission for a world rights arrangement.

42. In her third affidavit (at [29]), Ms Anthony adds to her account of the above conversation the following:

Their reputation with publishers and overseas agents was second to none.

This is a fantastic offer. It’s great that Allen & Unwin are offering world rights. As they are very active publishers in the overseas markets. The advance they are offering is a very good one. But it would be much less if we only gave the rights in Australia and New Zealand. [my emphasis]

43. Pausing here, the account given in the third affidavit (at [29]) is the first (and, so far as I can see, only) account by Ms Anthony of any conversation in which there is any reference to the financial implications of a world rights deal compared to a territory by territory deal; and even on this account it was only by reference to the amount of the advance (which the evidence elsewhere makes clear was $15,000), i.e., Ms Anthony says that she said the advance would be “much less” if limited to Australia and New Zealand (implicitly, without world rights).

44. It is also relevant to note (having regard to the allegations made as to breach of fiduciary duty, to which I will turn in due course) the references in the above passage to A&U’s resources to negotiate overseas deals and its reputation with overseas publishers and agents, which suggest that Ms Anthony saw a benefit (to Ms Morton and/or herself) in A&U performing what would otherwise have been Ms Anthony’s role, as agent, had the publishing rights been dealt with on a territory by territory basis. In the witness box Ms Anthony was firm in her evidence that she was competent to carry out such a role but (see T 182.45) that she could not have done the work herself as efficiently or as professionally (as A&U). Ms Anthony’s evidence is that it was not beyond her ability but that Ms Morton was exceptional (T 182) and that it was best that A&U protected and looked after Ms Morton (see T 183.15).

45. As to Ms Morton’s evidence (at [32] of her first affidavit) (that, as far as she was aware, Ms Anthony did not show the manuscript of “The Shifting Fog” to any other publishers) and her understanding that Ms Anthony did not offer her print book publishing rights to any publishers other than A&U ever, Ms Anthony’s response in her second affidavit at [2](32) (which I take as tacit acceptance that she did not approach other publishers at the time) was that she had identified A&U as being the publisher for Ms Morton’s works.

46. Acceptance of the A&U offer led to the first publishing agreement (dated 4 May 2005) between Ms Morton and A&U (The Shifting Fog Agreement) (Exhibit 8, CB 6/2108). The advance payable was $15,000 on account, and in anticipation, of royalties due under the agreement. The agreement permitted A&U to sub-license the rights of publication in English language territories (amongst other rights) subject to payment to Ms Morton of 80% of the net amount paid to A&U (this being the world rights aspect of the deal to which I have referred above).

47. Ms Morton was described on the first page of the agreement as “Kate Morton of Selwa Anthony Author Management Agency”. Clause 24 of the agreement (the Agency Clause) (on which Ms Anthony has clearly placed great weight over her years as a literary agent, as I will explain in due course) was in the following terms:

24    AGENCY CLAUSE

The Author authorises Selwa Anthony of xxx to act as the Author’s agent in connection with this Agreement, including but not limited to any and all rights in the Work. The Agent is fully empowered by the Author to act on behalf of the Author, to collect and receive all sums of money payable to the Author, and to receive any and all statements, notices or other communications to the Author in connection with the Agreement. Receipt by the Agent of any such payments, statements, notices and other matter shall be a valid discharge of Allen & Unwin’s obligations to the Author for such matters under this Agreement.

48. In substance an identical clause was contained in each of the six A&U publishing agreements, the only difference being as to whether the authorisation was given in terms to Ms Anthony or to “Selwa Anthony Author Management Agency”.

49. Ms Morton’s evidence is that around this time, as the first publishing agreement was being prepared, Ms Anthony asked her whether she knew that her fee was 15% and that Ms Anthony said to her words to the effect “Did Kim tell you that I take 15%?” (see Ms Morton’s first affidavit at [33]; cf.,  Anthony’s evidence at [2](33) of her second affidavit; [30] of her third affidavit; and her account in her second affidavit where she reiterates part of the alleged mid-March 2002 conversation in this context).

50. Ms Morton’s evidence is that she told Ms Anthony that she did know this. She says that she had gained this knowledge during the years of her friendship with Ms Wilkins before she (Ms Morton) was published but that “[t]his knowledge was not imparted in relation to my own prospects”(see [33] of Ms Morton’s first affidavit). In cross-examination, she said that this knowledge was acquired “osmotically” (evidence that Ms Anthony characterises as disingenuous – see [213] below). Relevantly, Ms Morton’s understanding, as gleaned from her conversation(s) with Ms Wilkins, was that Ms Anthony would take 15% of the advance ([33] of Ms Morton’s first affidavit).

51. In the witness box, Ms Morton was adamant that her understanding was that the 15% commission related to advances not royalties (though as will be seen, there was no demur from Ms Morton when Ms Anthony started deducting her 15% commission from royalties paid after the advance was earned out). Ms Morton’s evidence (which Ms Anthony disputes) is that she was not aware in May 2005 of the way royalties, beyond the advance, were earned and paid to authors ([34]; cf. Ms Anthony’s second affidavit at [2](34); third affidavit at [35]).

52. Ms Morton does, however, say that Ms Anthony gave her two pieces of information about the terms in her first publishing agreement (see at [37] of Ms Morton’s first affidavit): first, that Ms Anthony had excluded audio and film/TV rights – because she had a contact in audio (which accords with what in fact transpired in relation to those rights) and that cl 24 “just gives the publisher permission to send me [Ms Anthony] your money so that I can send it to you” (which, in my opinion, all that the Agency Clause effectively does by including the Agency Clause (apart from evidencing that there is an agency relationship in existence); i.e., it is a direction by the author to the publisher as to how payment is to be made of sums due to the author – authorising the payment of royalties to the named agent such that the publisher’s obligation in relation to the payment of royalties is discharged by payment to the named agent).

53. Ms Anthony, to the contrary of Ms Morton’s evidence, deposes that she explained to Ms Morton the way royalties worked and that she explained to Ms Morton “that there is an agency clause in every Publishing contract because it is evidence that I did the deal, acknowledging me as the agent and ensuring the publisher pays all monies due under the contract to me” (a part of her second affidavit that I provisionally read, with leave to adduce the contents of the conversation orally – [2](37)). Again, such an explanation of the Agency Clause is not inconsistent with the way that I read cl 24. However, it is not consistent with the understanding that Ms Anthony adamantly expressed in the witness box as to the clause being her protection in the absence of a written agreement.

54. Ms Anthony says that Ms Morton delivered the manuscript for Book 1 in September 2005 (see Ms Anthony’s first affidavit at [29]). It is not disputed that “The Shifting Fog” was published in Australia and New Zealand on or about 1 July 2006. (It was published in the United Kingdom and Ireland on or about 15 June 2007 and in the United States and Canada on or about 22 April 2008 – in countries other than Australia and New Zealand under the title “The House at Riverton”.)

55. The book was promoted (prior to its publication in Australia and New Zealand) at a book fair in Frankfurt in or around October 2005. Ms Morton’s evidence is that A&U took the unpublished manuscript to the Frankfurt Book Fair (see [41] of her first affidavit); and that, following that, Ms Barlow sent her an email on 1 November 2005 advising that there had been a lot of interest in “The Shifting Fog” at the book fair and asking whether she had a synopsis for a second novel (see [42] of that affidavit). Ms Morton deposes that Ms Anthony, who had been copied in on the 1 November 2005 email, stated that all contact except editorial must go through her (Ms Anthony) and that she would advise Ms Barlow of this (see [43]). That Ms Anthony did so is evident from subsequent correspondence from Ms Barlow to Ms Anthony in January 2006 (see [59] below).

56. In February 2006, Ms Anthony negotiated an audio book publishing agreement in relation to “The Shifting Fog”, with an audio book publisher (Bolinda Publishing Pty Ltd) (Bolinda) (see her first affidavit at [58]ff). That agreement was entered into by Ms Morton on 21 March 2006 (Exhibit 8, CB 2171) and provided for an advance of $2,500 on signature on royalties of between 8 and 12.5%. The agreement authorised Bolinda to make payments in respect of the works to “Selwa Anthony Author Management” (by then, the owner of this registered business name was SAPL).

57. Also in 2006, shortly before the July 2006 publication in Australia and New Zealand of “The Shifting Fog”, the book was promoted at the 2006 London Book Fair. It was then that Ms Maria Rejt (a publisher from Pan Macmillan in the United Kingdom, who in due course became and remains Ms Morton’s London editor) first became aware of Ms Morton’s work (see [3] of Ms Rejt’s affidavit affirmed 14 December 2017). This led to the acquisition by Pan Macmillan (through A&U, which, as already noted, held the world rights) of publishing rights for Ms Morton’s first two books in the United Kingdom and Ireland. As adverted to above, the first book was re-edited and re-titled “The House at Riverton” before its publication in the United Kingdom and Ireland. Ms Rejt explained in the witness box that by the time Pan Macmillan acquired the publishing rights it was too late to change the title in advance of the publication of the book in Australia and New Zealand (hence the dual titles for the first book). It was also published in the United Kingdom and Ireland with a different dust jacket design (see T 343.46-344.14).

58. In 2008, Ms Anthony also negotiated a large print book publishing agreement in respect of “The Shifting Fog”, with Center Point Inc, a large print publisher in the United States (see her first affidavit at [63]ff; CB 2305). That agreement was entered into on 24 January 2008 and authorised all moneys to be paid to SAPL.

Book 2 – “The Forgotten Garden”

59. Meanwhile, before the publication in any territory of Ms Morton’s first novel (that being in Australia and New Zealand on 1 July 2006), and consistent with the interest expressed by Ms Barlow to Ms Morton in November 2005, A&U contacted Ms Anthony in January 2006 to express interest in making an offer for Ms Morton’s next novel (see email dated 23 January 2006 from A&U to Ms Anthony – Exhibit 8, CB 2130). Ms Morton had by then written a synopsis for that novel (then titled “The Authoress”) following Ms Barlow’s November 2005 request (see at [45] of Ms Morton’s first affidavit).

60. A&U’s offer for the second novel was on the same terms as the first except that the advance was $25,000. Ms Anthony describes that advance as “a healthy increase from Book 1 … as there were no sales records yet to support it and [it] would easily be earned out by the author to receive ongoing royalties” (see her first affidavit at [31]). Ms Anthony deposes that she negotiated an arrangement whereby, once advances had been “earned back” for the first two novels, any royalty amounts over $200 would be paid within six weeks of receipt (as opposed to six monthly payments) (see her first affidavit at [32]).

61. The Forgotten Garden Publishing Agreement, though dated 4 May 2005, was executed on 15 February 2006 (see Exhibit 8, CB 6/2115). The agreement again noted Ms Morton’s address on the first page as “of Selwa Anthony Author Management Agency” and contained the same cl 24, naming Ms Anthony as authorised to act as Ms Morton’s agent in connection with the agreement. As with the first agreement, the second publishing agreement was a “world rights” deal.

62. Soon after signing the second publishing agreement, Ms Morton became aware that A&U had sold her first two books to a number of international territories, including Italy, Germany and France (see her first affidavit at [48]).

63. The manuscript for Book 2 was delivered in November 2007. “The Forgotten Garden” was published in Australia and New Zealand on or about 1 July 2008; in the United States and Canada on or about 7 April 2009; and in the United Kingdom and Ireland on or about 15 June 2009.

64. An audio book publishing agreement dated 14 December 2007 was entered into with Bolinda, again authorising Bolinda to make payments in respect of the work to “Selwa Anthony Author Management Agency”. Similarly, a large print book publishing agreement in respect of “The Forgotten Garden” was entered into with Center Point Inc on 3 February 2009. As with the first large print contract, this again authorised all moneys to be paid to SAPL.

Books 3 and 4 – “The Distant Hours” and “The Secret Keeper”

65. On 4 June 2007 (i.e., before publication in any territory of Ms Morton’s second book and shortly before the publication in the United Kingdom and Ireland on 15 June 2007 of Ms Morton’s first book), A&U made an offer to publish Ms Morton’s third and fourth books (see Exhibit 8, CB 2232; Ms Anthony’s first affidavit at [36]).

66. Ms Anthony accepts that by this time “The Shifting Fog” had been “very successful”. Ms Anthony has also deposed to the negotiation in which she engaged with A&U in respect of the size of the advance to be payable per title for the third and fourth books (see her first affidavit at [37]-[39]).

67. Under the 2007 agreements, A&U again acquired the world rights. In her third affidavit (at [41], Ms Anthony deposes as follows in relation to this issue (in the course of responding to [49]-[50] of Ms Morton’s first affidavit):

A publisher can contract for world rights or an agent can sell foreign rights directly or work collaboratively with other agents engaging subagents to sell foreign rights. The Shifting Fog was published in Australia in July 2006 and in the United Kingdom in June 2007. It was my professional view that for an unknown unpublished Australian author, her most advantageous course of action was to allow the local publisher exclusive world rights on the basis that although commissions would be paid to sub agents, the increased sales would ultimately maximise the income flowing to the author, I explained this to Ms Morton on several occasions, including in June 2007 when I was in negotiations with Allen & Unwin. [my emphasis] During those conversations we said words to the following effect:

Me:   Are you happy with Allen & Unwin as your publisher as they are now offering you a two-book deal? They want world rights again.

Morton:   Yes, I am very happy with them.

68. Ms Anthony asserts (at [42] of her third affidavit) that she explained the content of the agreements for Books 3 and 4 to Ms Morton over the telephone. She says that at that stage there was no guarantee at all “when Ms Morton contracted for and received her further advances that any subsequent books would enjoy the same success as the first”. Relevantly, although Ms Anthony asserts that it was her practice to inform Ms Morton and her husband “of every step from the time of the offer to when the contracts were signed” (her first affidavit at [37]), it proved difficult for Ms Anthony in the witness box to articulate the detail of what she says was said to Ms Morton (or to Ms Morton’s husband) in relation to the offers.

69. Pausing here, a number of observations may be made about Ms Anthony’s account given at [41]-[42] of her third affidavit.

70. First, it is abundantly clear that, as at 9 July 2007 (the date on which the publishing agreements for Books 3 and 4 were signed), it would not have been correct to describe Ms Morton as an “unpublished” author: her first novel had been published in Australia and New Zealand in July 2006 and in the UK and Ireland on 15 June 2007 (as Ms Anthony’s affidavit recognises). Nor could it have been correct at that stage to describe Ms Morton as an “unknown” author – at least in publishing circles – given the level of pre-sales and interest in her first book and the then imminent publication in the United Kingdom and Ireland of that book (see below at [71]; Ms Rejt’s evidence referred to at [378] below). Indeed, at [39] of her third affidavit, Ms Anthony describes Ms Morton as being “an international bestseller” after she published her first book (ascribing this to several reasons including “steps taken by Allen & Unwin to market, publicise and sell the book in Australia and New Zealand and to make sure the same care and attention was provided by her publishers in the overseas markets”).

71. By email on 30 June 2007, Ms Anthony had been advised (by Ms Rejt) that, by the next week, there would be 205,000 copies in print of the UK edition of Book 1, that total orders to that date were 170,000, and that Book 1 was at number 8 on Amazon (see Exhibit 8, CB 6/2260). By 4 July 2007, another 25,000 copy reprint had been ordered and sales were just over 18,000 per week (Exhibit 8, CB 6/2261). As at 5 July 2007, an Italian book club deal was about to be signed for Book 1 with a guaranteed first print of 4,000 copies (Exhibit 8, CB 6/2263) and by 5 July 2007 Book 1 was number 4 at Amazon (Exhibit 8, CB 6/2264). On 6 July 2007, Ms Rejt advised that another reprint of 55,000 had been ordered, taking the total reprint to 300,000 (Exhibit 8, CB 6/2265).

72. Therefore, while it may readily be accepted (as a matter of common sense if nothing else) that there would have been no guarantee, at the time the publishing agreements for Books 3 and 4 were signed, that those yet to be written books (or Book 2 for that matter) would prove as successful as the first by that stage had proved to be, it could not possibly be said that Ms Morton was an unpublished and unknown author in June/July 2007 (as Ms Anthony in the witness box accepted).

73. Thus, on any objective view, if Ms Anthony’s professional opinion of what was the most advantageous course for Ms Morton as at June/July 2007 (when the A&U publishing agreements for Books 3 and 4 were negotiated and signed) was based on Ms Morton being an “unknown unpublished Australian author” (which seems to be the thrust of [41] of Ms Anthony’s third affidavit), then the premise for that opinion was clearly unfounded. Ms Anthony was well aware at that stage of the interest that Ms Morton’s first book had generated. More likely, it seems to me, is that Ms Anthony’s assertion (at [41] of her third affidavit) that she “explained” to Ms Morton in June 2007 her professional view as to world rights deals as there set out is a reconstruction or mis-recollection.

74. Second, although Ms Anthony deposes to it being her professional view that, although commission would be paid to sub-agents, the increased sales “would ultimately maximise the income flowing to the author” and that says she explained this to Ms Morton on several occasions, she gives no account of any conversation where she did so. The only exchange in any conversation to which Ms Anthony deposes (see her third affidavit at [41]) in which the effect on income of a world rights deal is discussed, is that to which I have referred above at [43]. The conversation set out in Ms Anthony’s third affidavit (at [41]) goes no further than Ms Anthony asking Ms Morton if she is happy to have A&U as her publisher again, informing Ms Morton that A&U wanted world rights again (to which Ms Morton responded in the affirmative that she was very happy with A&U). The assertion that Ms Anthony explained the world rights deal with reference to additional commissions to sub-agents (see at [49]-[50] of Ms Anthony’s third affidavit) is not supported by any account given by Ms Anthony in her affidavit evidence or in her evidence in the witness box of a conversation in words to that effect.

68. The Distant Hours Publishing Agreement and The Secret Keeper Publishing Agreements were both dated 9 July 2007 and are relevantly identical (Exhibit 8, CB 6/2266; 6/2274). For each book, Ms Morton was to be paid an advance of $150,000 on account, and in anticipation, of royalties under the agreement. Both agreements contained the same Agency Clause (cl 24), though now naming “Selwa Anthony Author Management Agency” as the entity to act as Ms Morton’s agent (though, of course, there was no such legal entity, it merely being a registered business name).

69. In around June 2007, at around the time of publication in the United Kingdom of Book 1, “The House at Riverton” was featured on a British television show called “Richard and Judy’s Summer Picks” (see CB 2255B) (referred to during the hearing as the United Kingdom equivalent of the US “Oprah” show’s Book Club). Ms Anthony deposes that this strengthened the marketability of the book and enhanced Ms Morton’s success. It certainly seems to have precipitated (or coincided with) a high level of pre-sales (see [71] above).

70. The manuscript for “The Distant Hours” was delivered in July 2010. The book was published in the United Kingdom and Ireland on or about 15 October 2010; in Australia and New Zealand on or about 1 November 2010; and in the United States and Canada on or about 9 November 2010 (Ms Anthony’s first affidavit at [43]).

71. The manuscript for “The Secret Keeper” was delivered in April 2012. The book was published in the United Kingdom and Ireland on or about 11 October 2012; in the United States and Canada on or about 16 October 2012; and in Australia and New Zealand on or about 1 November 2012 (Ms Anthony’s first affidavit at [44]).

72. Audio book publishing agreements and large print publishing agreements were entered into with Bolinda and Center Point, respectively, on the following dates: with Bolinda there was one agreement for both books dated 18 August 2009 authorising payments to Selwa Anthony Author Management Agency; with Center Point, there were agreements dated 23 November 2009 and 29 March 2012 respectively, authorising payments to SAPL.

Books 5 and 6 – “The Lake House” and Book 6

80. The publishing agreements with A&U for Ms Morton’s fifth and sixth published books (as had been the case with Books 3 and 4) were negotiated and executed at the same time; this being in mid-2010.

81. Ms Anthony has deposed to the negotiation process in relation to those publishing agreements (see her first affidavit at [45]-[47]). At [46] of her first affidavit, Ms Anthony deposes that she emailed to Ms Morton a letter dated 13 April 2010 from A&U (Exhibit 8, CB 6/2380) containing its offer (which was for a two book deal with an advance of $600,000 for world rights against a royalty rate of 10% for the recommended retail price rising to 12.5% after sales of 15,000 copies of each book) (see email at Exhibit 8, CB 6/2379) and that she spoke with Ms Morton over the telephone. Ms Anthony deposes at [46] of her first affidavit that “I advised [Ms Morton] that I was going to ask for half the total advance, being $300,000, to be paid on signature”. Ms Anthony asserts that she explained that A&U’s offer included an increase in the percentage of royalties Ms Morton received from the subsidiary rights (from 80% to 90% for the English language rights and from 75% to 90% for the translation rights) and a “bestseller bonus” for each book, which meant an acceleration of royalties payable to Ms Morton (see her first affidavit at [45]).

82. Ms Anthony’s response, by email on 14 April 2010 (Exhibit 8, CB 6/2383) to Ms Barlow, in respect of the A&U proposal was that:

… I think both you and Robert have presented a very positive and generous proposal. I will wait for you to send the document and get it of [sic] to Kate immediately and get back to you hopefully this week. I will say to Kate that we should move with this immediately and not waste anymore [sic] time. [my emphasis]

Very grateful to the both of you.

83. It is not clear to me to what the reference to “not wast[ing] anymore time” relates. There does not seem to be any suggestion that negotiations to that point had been protracted, nor is it clear what the apparent urgency of moving with the offer “immediately” was perceived by Ms Anthony to have been.

84. The email forwarding the offer to Ms Morton read (Exhibit 8, CB 6/2379):

Here is the final proposal and offer from A&U which I feel very comfortable for you to read through and us to discuss.

I know both Robert [Gorman, the CEO of A&U] and Annette [Ms Barlow] would love for us to accept this offer and I know both of them would sleep well at night knowing they have achieved this.

85. It seems apparent that Ms Anthony considered that she had (at least to some extent) rushed Ms Morton to confirm acceptance of the A&U offer because, after Ms Morton had confirmed that she would write the email accepting the offer “now”, Ms Anthony emailed:

Thanks Kate. It’s probably for Annette & Roberts [sic] peace of mind. Otherwise I wouldn’t have rushed you.

[Exhibit 8, CB 6/2384]

86. Ms Morton’s email accepting the offer (Exhibit 8, CB 6/2385; 6/2387) stated that she was thrilled to accept the offer and to think that the relationship could continue over Books 5 and 6, stating that she was very confident with Annette’s and Robert’s commitment. There is nothing in the email communication between Ms Anthony and Ms Morton to suggest that Ms Anthony had explained to Ms Morton the financial consequences of the world rights deal (or the alternatives thereto) at this time.

87. The Lake House Publishing Agreement and the Book 6 (then untitled) Publishing Agreement were both dated 3 May 2010 and again are relevantly identical (Exhibit 8, CB 6/2389; CB 6/2397). For each book, Ms Morton was to be paid an advance of $300,000 on account, and in anticipation, of royalties under the agreement. Both agreements contained the same Agency Clause (cl 24) as the original publishing agreement, though, as for Books 3 and 4, naming “Selwa Anthony Author Management Agency” to act as Ms Morton’s agent.

88. The manuscript for “The Lake House” was delivered in January 2015. (Ms Anthony points out in her second affidavit that the delivery date was delayed, it being due “as per signed contract” no later than December 2013 but nothing here turns on that.) The book was published in the United States and Canada on or about 20 October 2015; in Australia and New Zealand on or about 21 October 2015; and in the United Kingdom and Ireland on or about 22 October 2015.

89. The manuscript for Book 6 was due to be delivered in December 2015. It was published in Australia and New Zealand in September 2018 under the title “The Clockmaker’s Daughter” (after judgment in these proceedings was reserved).

90. Again, audio book publishing agreements and large print publishing agreements were entered into with Bolinda and Center Point, respectively, on the following dates: with Bolinda there was one agreement for both books dated 20 May 2013 authorising payments to SAPL; with Center Point, an agreement dated 27 August 2014, but no agreement in relation to the sixth book. (Ms Anthony has explained that Center Point makes an offer when it knows there is a finished manuscript – hence there was no contract negotiated by Ms Anthony that was entered into with Center Point in relation to the sixth book; Ms Anthony’s agency having been terminated by then (see her first affidavit at [63]).)

Payment of royalties/deduction of commission 2006-2015

91. It is not disputed that between 2006 and 2015 advances and royalties earned on the sale of Ms Morton’s books (after deduction of sub-licence commissions in respect of the world rights) were paid to Ms Anthony (in accordance with the respective A&U and other publishing agreements) and that, after deduction of 15% commission, Ms Anthony remitted to Ms Morton (or as she directed) the balance. Ms Anthony’s husband (Mr Brian Dennis) has deposed to Ms Anthony’s receipt of royalties for Ms Morton and to the deduction of 15% agent’s commission in that period (see his affidavit sworn 28 September 2017 at [4]).

92. Although there was a dispute between the parties, during 2015 and at around the time of termination of the agency relationship in December 2015, as to whether there had been a proper accounting for those payments, and Ms Morton’s cross-claim also raised allegations in that regard, ultimately that was not in issue at the hearing. Instead, Ms Morton simply presses for relief in relation to the alleged breaches of fiduciary duty and duty of care owed in contract and in tort, by reason of Ms Anthony’s advice that she enter into “world rights” deals for Books 3 to 6 and corresponding failure to advise as to the alternatives to this or the consequences thereof.

93. Between 2005 and 2015, A&U negotiated a large number (according to Ms Morton, around 175 or so after the initial agreements in relation to her first two books) of print publishing agreements for Ms Morton’s novels with publishers in over forty territories (see [60] of Ms Morton’s first affidavit).

94. Ms Anthony has deposed that the moneys remitted to Ms Morton (or associated entities) after commission totalled approximately $14,350,000 and that the total commission retained by her, or SAPL, was approximately $2,800,000 (see her first affidavit at [72]). At the hearing, the amount earned as royalties on the sales of the books was estimated as being in the order of some $17 million.

Ms Morton’s query in 2010 as to the commission payable on world rights deals

95. Ms Morton has deposed that in around May 2010 (noting she had entered into the publishing agreements for Books 5 to 6 on 3 May 2010) she became aware for the first time that it was usual for a literary agent to sell foreign rights directly or work collaboratively with other agents, rather than through a world rights deal with a local publisher (see [65] of her first affidavit). Ms Morton also there deposes that:

For the first time, I became aware that with my agent representing my work around the world, the commission I paid would be significantly lower. I also learned that where an agent engaged subagents to sell rights directly, they would share a commission capped at 20%.

96. The circumstances in which Ms Morton says she first learnt of this were in a communication from a US literary agent, Ms Theresa Park, who wrote in an email to Ms Morton on 14 May 2010 (see Exhibit 8, CB 6/2408):

In any case, your question is a good one, as the way in which rights are handled can be complicating in a global publishing situation like yours. Generally speaking, authors benefit enormously from controlling ALL of their foreign rights themselves – i.e., having their agent license and oversee publication of their works in each country, rather than turning over those rights wholesale to a publisher. … in a worlds [sic] rights license scenario, the publisher will always keep a significant portion of the licensing income for itself (after commissions and taxes) … and the net sum that you receive from the publisher in the form of foreign licensing income is then in turn commissioned by your agent. So you’re basically losing 20-25% (depending on your contract) of all foreign income to the primary publisher, and then paying another 15% commission on top of that. … If you had an agent representing you directly in a given territory – say, the U.S. – you would not share any of the income generated by sales of your books in the US with your UK publisher, and would only pay the US agent’s 15% commission on such sums.

97. Ms Morton’s evidence is that she rang Ms Anthony, who told her that she had “fixed things” so that Ms Morton was now paying 25% in total. The conversation between Ms Morton and Ms Anthony, as recounted in Ms Morton’s first affidavit (at [67]) which Ms Anthony denies, was to the following effect:

Ms Morton:   Selwa, I’m worried because I’ve learned that it’s usual to pay 20% commission in total when agents sell foreign rights directly using a subagent. But I’m paying Allen & Unwin 25% and then 15% to you on all my translation books and that’s a lot higher.

Ms Anthony:   Yes, but you don’t need to worry about that. I’ve fixed things so that now you’re only paying 10% to Allen and Unwin. That’s only 25% in total. And we all work very well together, you, Annette and I.

…

The other benefit of selling your rights through Allen & Unwin is that there’s a single place for all the overseas deals and publisher requests to go through.

98. I interpose to note that the suggestion that it was of benefit for there to be a single place for all overseas deals and publisher requests to go through is relevant to the complaint by Ms Morton that Ms Anthony had a conflict of interest, in that such an arrangement relieved Ms Anthony of work that would otherwise fall to her to perform as agent and hence she had a personal interest which conflicted with her duty to act in Ms Morton’s best interests.

99. Ms Morton deposes that, based on the above conversation, she understood that she was paying a total of 25% commission on all foreign sales across all of her books ([68]), higher than what she had been told was the standard capped 20% commission but which she was prepared to accept. Ms Morton’s evidence is that she believed that the existing contracts for Books 1 to 4 had been renegotiated to reflect the reduced commission rate and that A&U had absorbed the sub-agents’ fees in its own commission. (She does not, however, suggest that there was any signed agreement with A&U to that effect; so how she thought this had been effected contractually is left unexplained.) Ms Morton’s evidence is that her concerns were allayed by the above conversation; and that she gave the issue no further thought until November 2015 (see [69]).

100. Ms Morton’s complaint in this regard is that Ms Anthony failed to advise her: that there had been no change to the commission structure; that A&U would not absorb the sub-agents’ fees; and that Ms Morton would continue to pay full commission of up to 50% (for Books 1 to 4).

101. Ms Anthony’s response to this evidence is: to deny that she did not go over deals or publishing agreements with Ms Morton or that she did not discuss the offers in respect of international deals and publishing agreements ([48] of her third affidavit); to deny that there is a usual practice for a literary agent in Australia to sell foreign rights directly or work collaboratively with other agents instead of a world rights deal with a local publisher, saying that a literary agent works on an individual basis in accordance with the terms of the agent’s contractual arrangements and instructions received from the authors ([52] of that affidavit); to assert that she recalls explaining to Ms Morton that in her experience an agent often does not negotiate the sale of world rights as part of publishing agreements ([53] of that affidavit); and to deny that Ms Morton would pay lower commissions to subagents if “we” approached them directly ([56] of that affidavit). Ms Anthony gives no account in her affidavit of any conversations with Ms Morton in which words to the effect of that which it is asserted (at [48], [49], [52] of her affidavit) were said.

102. At [57] of her third affidavit, Ms Anthony deposes that:

Before Ms Morton signed the publishing agreements for Books 5 and 6 I recall I clearly explaining [sic] to Ms Morton that the international sub-agent would receive the gross local royalties, deduct 10% or the best rate of commission negotiated on behalf of the author, attend to payment of gross local tax and then remit nett royalties to Allen & Unwin, dealing direct with withholding tax to reimburse the author with tax.

[my emphasis – I read this as placing the conversation as occurring before 3 May 2010 but at somewhere around that time]

103. In response to [67] of Ms Morton’s first affidavit (the conversation extracted at [97] above), Ms Anthony has deposed (at [58]-[59] of her third affidavit) that:

I deny the telephone conversation in May 2010, or having the discussion at all. I deny I negotiated the sale of rights to Allen & Unwin below their proper value or that I allowed Allen & Unwin to take an unusually large commission. On Ms Morton’s instructions, I negotiated the strongest possible publishing agreements for Ms Morton, which she signed.

There is no standard in terms of commission payable on local and foreign sales. However payment of a total of twenty five per cent commission between publisher and agent falls within ordinary industry practice, especially where books were not just selling well, but were selling extraordinarily well.

104. Ms Anthony’s denial that there is a usual practice for a literary agent to sell foreign rights directly is in general terms inconsistent with the evidence of other literary agents and publishers in this case (see below); and her assertion that a literary agent works on an individual basis in accordance with the terms of the agent’s contractual arrangements begs the question in this case as to what were those arrangements.

November 2015 – multiple commission issue raised again with Ms Anthony

105. From [86] of her first affidavit, Ms Morton deposes to the circumstances in which she says she came to realise that she had been paying “three full commissions for a decade”. In summary, those circumstances were as follows. Ms Morton and her family had moved to London in July 2015 ([86]). Ms Morton deposes that once in London she interacted more with her international publishers, asked them questions and spoke with other authors; and says she came to understand better how international publishing worked and how foreign sales were made ([87]). This led to her raising with Ms Anthony questions about the commissions she was paying ([90]).

106. Ms Morton deposes to a telephone conversation with Ms Anthony on 11 November 2015 in which she says Ms Anthony told her that she had not retroactively amended the contracts for Books 1 to 4 and that only the contracts made in 2010 for Books 5 and 6 reflected a 10% commission to A&U ([91]). Ms Morton deposes that during the time (from 2010) that she believed A&U were only taking 10% commission A&U had actually been taking a full commission of 20% or 25% across international sales (before Ms Anthony took her 15% commission); and that Ms Anthony later verified that the subagents were taking an additional 10% income from Ms Morton’s gross income before forwarding the balance to A&U (see [93]), about which Ms Morton was very upset (see [98]; and see her evidence as to then being in a state of alarm). Ms Morton’s complaint in this regard is that she had been paying three full commissions amounting to almost 50% for a decade ([95]). (Ultimately, her claim for damages relates only to the A&U share of the commission in relation to the foreign territory publishing deals for Books 3 to 6.)

107. Ms Morton deposes that, in the telephone conversation with Ms Anthony on 11 November 2015, Ms Anthony offered to lower her commission to 10% ([98]), an offer that Ms Morton says she accepted; but that, after this, Ms Anthony continued to take 15% commission ([100]). While Ms Anthony denies this conversation, she does confirm that, in a telephone conversation with Ms Morton (at an unidentified time but in context it must have been around the time of termination of the agency relationship or agreement), she had offered to lower the rate of her commission to 10% “for the publishing agreements upon renegotiating the backlist for books 1-4” but that this “never took place as she terminated not long after” (see [2](98); (99) of her second affidavit; and see (100)).

108. It was against the above background (and the concerns to which Ms Morton deposed as to whether there had been proper accounting for her advances – see [71]-[84] of her first affidavit) that Ms Morton decided that she wished (amicably) to end her business relationship with Ms Anthony (see [106]-[107]; [111]; and [205] of her first affidavit).

684. In Hamilton v Kaljo, McLelland J referred to Inca Ltd v Autoscript (New Zealand) Ltd [1979] 2 NZLR 700 (at 711) where Mahon J said:

[T]he limitation defence will be barred for the appropriate period either where there is dishonest concealment of the cause of action, equivalent to common law fraud, or where there is non-disclosure occurring in such circumstances as to amount to equitable fraud. In either case the concealment must be wilful.

686. In Seymour v Seymour, Mr Lewis, a solicitor, was the nephew of Mrs Seymour, who had an ownership interest in some realty. Mr Lewis acted in relation to the realty, but made a mistake as to the nature of the ownership interest of Mrs Seymour, which had the result that Mrs Seymour maladministered the property; part of the property was transferred to the third respondent; and part of the property was sold. Mrs Seymour in fact had had only had a life interest in the property.

687. The plaintiffs, who were various relatives of Mrs Seymour who suffered loss as a result of these dealings, sued Mrs Seymour and also sought damages in negligence against the solicitor. The primary judge held that there was no duty of care owed to the plaintiffs but, if there had been, any action in negligence was time-barred and there had been no fraudulent concealment. Mahoney ACJ (with whom Meagher JA and Abadee AJA agreed) held that there was a duty of care owed and that damage accrued, and the cause of action was completed, when the solicitor caused the contract with Mr and Mrs Walker to be completed by transfer (which had the effect of destroying the parties’ equitable interest in remainder) which occurred in 1980.

688. As to whether there had been fraudulent concealment, such as to postpone the running of the limitation period, the submission was that, after receipt of a letter from Mrs Field’s solicitors in April 1986, Mr Lewis became aware that he had been negligent and, at that point, honesty required that he bring this to the notice of the plaintiffs so that they could, before the expiry of the limitation period, commence proceedings against him. The submission made was that “he did not notify them in order to protect himself” (see at 372).

689. Mahoney ACJ said that nothing had been put to Mr Lewis to suggest “the kind of dishonesty” involved in that allegation. His Honour held that no finding of dishonesty was available and accordingly s 55(1) was not engaged.

690. His Honour also said (at 372) that, for the purpose of the phrase “fraudulently concealed”:

In my opinion, there must be in what is involved a consciousness that what is being done is wrong or that to take advantage of the relevant situation involves wrongdoing. At least, this is so in the generality of cases.

691. Lastly, to conclude my review in relation to the “dishonesty” requirement, in Nupponen v Hymix Quarries Pty Ltd (Supreme Court (NSW), Foster J, 24 October 1986, unrep), the plaintiff had received injuries in an accident at his workplace. Approximately two years later, the plaintiff was dismissed on the basis that there was no longer any light work available for him. At that time, the plaintiff asked the manager to tell him “what will happen if I can’t work because of my injuries, can I apply for compensation?” to which the manager responded, “Yes, even after ten years because this accident has been registered”. It was argued by the plaintiff that this conversation had the effect of fraudulently concealing the cause of action which he now advanced (which, although it does not appear from the judgment, seems likely to have been a claim for damages in tort).

692. Foster J observed (at 4) that “some form of deliberate or reckless concealment of the cause of action is required before the conscience of the defendant or his appropriate servant or agent has been relevantly tainted”. His Honour rejected the argument that there was any such deliberate concealment, placing weight on the fact that the manager was only asked for advice in relation to workers’ compensation and not in relation to possible causes of action against the employer.

693. Foster J’s decision, in my view, indicates that there must be concealment together with recklessness or some other form of wrongful misconduct as to the concealment. It is not enough that the individual concerned was proceeding in a general state of negligence or indifference as to the advice being given or the action being taken. (I also note in that regard what was said in Hamilton at 388B.)

694. I turn now to some cases which I do not find sufficiently analogous to the present case to be of assistance, but which should be mentioned for completeness. Levy v Watt [2012] VSC 539 (affirmed on appeal in Levy v Watt [2014] VSCA 60) is a recent Victorian authority on the equivalent of s 55(1)(b). There, Habersberger J concluded (at [82]) that time did not begin to run on the date of the theft of a painting because the thief had fraudulently concealed the deprived owner’s right of action (in conversion) by concealing his identity; therefore, s 27(b) was applicable and the conversion action was not barred by the statute (subject to a finding that the present holder of the painting was a bona fide purchaser for value). Levy v Watt concerns substantially different circumstances to the present case and I do not think it assists here, but it is appropriate to note it as one of the most recent authorities on the topic, which was affirmed by an intermediate appellate court.

695. In Mann v Commonwealth [2000] NSWSC 353, the plaintiff brought a range of claims for breach of confidence, breach of contract, negligence and misrepresentation, relating to the act of individuals within certain government departments in disclosing documents to the defendant to proceedings in defamation which the plaintiff was pursuing in the United Kingdom. The claims were well out of time unless an exception to the limitation period could be established. The submission as to fraudulent concealment was that the various individuals concerned failed to disclose what they had done to the plaintiff (at [73]); that whether this arose from a misconception of the existence or scope of their obligation of confidentiality to the plaintiff made no difference (at [74]); and that had the government had a proper understanding of its obligations, they would have known that they had breached them and at least disclosed that breach to the plaintiff (at [75]). Newman J rejected the fraudulent concealment argument, concluding that there was nothing in the evidence pointing to dishonesty on the part of the Commonwealth officer who dealt with the disclosure of the documents (at [79]). In relation to the conduct of officers of the New South Wales executive, similarly, there was no evidence of dishonesty: at [81]. Accordingly, the claim was statute barred.

696. I interpose here that the “fraudulent concealment” relied on by Ms Morton is not any omission or failure to advise on the part of Ms Anthony but, rather, the making of an express representation which was misleading. (Ms Anthony denies the making of that representation, saying the conversation as alleged never occurred: see [58]-[59] of her third affidavit. However, on the balance of probabilities I am persuaded that a conversation to the effect deposed to by Ms Anthony must have occurred, since otherwise Ms Morton’s conduct in not pressing the issue at that stage is not explicable and because Ms Anthony’s justification or explanation of having fixed things by renegotiating the commission rates for Books 5 and 6 – but not retroactively – is logically premised on an understanding that Ms Morton had raised an issue that required fixing in some sense.)

697. I also note, for completeness, that a strikingly different interpretation has been placed upon the equivalent of s 55(1)(b) in at least England. In one relatively early case, Lord Denning MR said that the provision used the word “fraud” “in the equitable sense to denote conduct by the defendant or his agent such that it would be ‘against conscience’ for him to avail himself of the lapse of time” (Applegate v Moss [1971] 1 QB 406 at 413). It appears that that is still the view taken in England, but the difference in Australia is clear, as the High Court noted in Commonwealth of Australia v Cornwell (2007) 229 CLR 519; [2007] HCA 16 at [41].

698. I conclude, on the application of the above authorities, that the conduct of Ms Anthony did not amount to fraudulent concealment within the particular meaning in s 55(1)(b). The representation made by Ms Anthony that “I’ve fixed things” falls within the category contemplated by Hamilton and Seymour, which were both cases where something was done in the context of a relationship of trust and confidence which was wrong, misleading or negligent, but which lacked actual moral turpitude or wilful or reckless wrongdoing. The authorities reviewed above clearly indicate that dishonesty is crucial. I am not satisfied to the necessary standard which would apply to such a finding that Ms Anthony was set on a course of actual or deliberate wrongdoing when she made the relevant misrepresentation to Ms Morton. I am not satisfied that she set her mind to concealment during the May 2010 conversation. I think it far more likely that this is another instance of Ms Anthony being (not intentionally) imprecise in her expression (and/or “woolly” in her thinking). Therefore, even if this is a case where there was concealment (in contrast to the first category of cases which I have described above), I conclude that it was not dishonest and the authorities are therefore clear that s 55(1)(b) does not apply.

699. The other difficulty with Ms Morton’s submissions as to fraudulent concealment (but not one which was addressed in argument) is that the authorities and commentary indicate that “[f]raud after the period has begun does not suspend the running of time” (see Peter Handford, Limitation of Actions: The Laws of Australia (3rd ed, 2012, Thomson Reuters), [5.10.480]; citing Tito v Waddell [No 2] [1977] Ch 106, at 245-246).

700. This issue arises because, by the time of the May 2010 conversation, the time limit imposed by s 14(1) of the Limitation Act in respect of Ms Anthony’s breaches of contract and tortious duty of care in relation to Books 3 and 4 had been running since (probably) 9 July 2007 (when the A&U publishing agreement for those books was signed).

701. In Tito v Waddell (No 2), Megarry V-C noted the “general principle” that “once time begins to run, it runs continuously”, and went on to say (at 246):

[T]his principle can be ousted only by a statutory provision. Where the construction of a statutory provision is doubtful, I think the tendency should be towards construing it as conforming with the principle rather than as providing an exception from it. Accordingly I would hold that once time has begun to run, a subsequent fraudulent concealment would not start it running afresh.

702. In a 1995 article (A McGee, “Subsequent Concealment of Material Facts” (1995) 111 Law Quarterly Review 580), Andrew McGee explained:

The problem is that, on the face of it, time will have started to run as soon as the cause of action accrues, which makes it somewhat difficult to apply to the case a rule that time does not begin to run until the relevant fact is discoverable. There would appear to be three possible solutions to the problem. First, time continues to run despite the subsequent concealment. Second, the running of time is suspended while the fact is concealed and resumes when the fact becomes discoverable. Third, time does not run at all until the fact becomes discoverable. From the point of view of fairness the second solution appears the most attractive…

703. McGee then notes that the conclusion that time is merely “suspended”, though attractive in its simplicity, is simply not open from the words of the section. (I note in passing that the argument for Ms Morton proceeded on the basis that the suspensory effect was the right one. It was not suggested that the time would be reset to zero as at May 2010.) McGee points out that other provisions in the Limitation Act provide expressly for the suspension of the running of the limitation period, such as the provision for the period to be suspended during a person’s disability (in New South Wales, see Limitation Act s 52). On one view, there is a serious possibility that the gap is deliberate (that being the view expressed by Lord Lloyd in Sheldon v R.H.M. Outhwaite (Underwriting Agencies) Ltd [1995] 2 WLR 570), which could be taken to indicate that the gap is one which should be left alone rather than filled by the courts.

704. Tito v Waddell (No 2) concerned dealings between the Banabans, the occupants of Ocean Island, a small island in the Pacific, on the one hand, and successive British companies and commissioners which held licences to mine the phosphate on the island, on the other. Relevantly, in 1947, the commissioners negotiated with the Banabans for the acquisition of most of the remaining phosphate land on Ocean Island, with an area of 671 acres. A writ was issued in 1971 by the Banabans against the commissioners, claiming, amongst other things, that the rates of royalty payable under the 1947 transaction were inadequate.

705. On September 21, 1948 (18 months after the entry into the 1947 transaction), Sir Albert Ellis, who had known the Banabans since 1900, and had been the New Zealand British Phosphate Commissioner since 1920, made a presentation to a group of the Banabans during which a Mr Rotan wrote on a blackboard some figures showing under the heading “Royalties” the rates of royalty payable to the Banabans and the rates payable to the government. Those figures were incorrect: they stated that the government royalty had remained at an unchanged 6d (when in fact it had increased). That was not known to the Banabans. In the pleadings, the defendants raised the statute of limitations as a defence. The plaintiffs contended that the blackboard exercise amounted to fraudulent concealment. Megarry V-C rejected that argument, saying at 245:

… I am not satisfied, on the civil standard of proof, that the plaintiffs have made out a case of fraudulent concealment. I was troubled by the failure of anybody to correct Mr Rotan’s unwitting mistake when he performed the blackboard exercise on September 21, 1948, and displayed his belief that the government royalty had remained at an unchanged 6d. But this was nearly 18 months after the 1947 agreement had been made. … If time has already begun to run, I do not think that a supervening fraudulent concealment will start time running again.

706. Were I persuaded that Ms Anthony’s concealment was fraudulent, I would need to consider this issue further (and I would have sought further submissions since the issue was not addressed in the course of argument at the hearing). However, given the conclusions I have reached above, it is not necessary to do so.

707. Accordingly, I find that the claims made in relation to Books 3 to 4 are statute-barred.

708. The defences based on laches, acquiescence and delay can be briefly addressed in light of the conclusion that the claims made in relation to Books 3 to 4 are statute-barred.

709. Mere delay is not sufficient to engage the doctrine of laches: there must be something more to engage the equitable defence: for example, the causing of practical injustice to another party. In Lindsay Petroleum Co v Hurd (1873-4) L.R. 5 P.C. 221 at 239, Lord Selborne said:

Now the doctrine of laches in Courts of Equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, the delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable.

710. In any event, laches is an equitable defence and not available in answer to a legal claim: Orr v Ford (1989) 167 CLR 316 at 340; [1989] HCA 4 (Deane J). Therefore it is not necessary to consider the application of the doctrine of laches to the claim based on the breach of the contractual or tortious duty of care.

711. As to the claim for breach of fiduciary duty, a principal may be barred from bringing a claim for breach of fiduciary duty by the doctrine of laches, although not where the limitations legislation expressly provides a limitation period (such as if the claim involves a breach of trust): see Snell’s Equity, [5-019], [7-063]. However it is not necessary further to consider this where I have not concluded that there was a breach of fiduciary duty.

712. To the extent that they go beyond the laches defence, I would dismiss the delay and acquiescence defences. I accept that Ms Morton, having raised the issue in May 2010, was satisfied by Ms Anthony’s response in the sense that she considered her concerns had been allayed. Although I am not persuaded that Ms Anthony fraudulently concealed the true position in that regard, I do not accept that Ms Morton’s conduct in not raising the issue again until late 2015 amounts to acquiescence in a position about which she had clearly complained (and thought had been “fixed”) and I do not accept that there has been sufficient delay in raising the issue to amount to laches or otherwise to preclude the claims now made in relation to Books 5 to 6.

Issue 4 – Failure to mitigate

713. The allegation of failure to mitigate (at [59](a) of the defence to cross-claim) is an allegation that if Ms Morton did suffer any loss or damage (which is denied), the loss or damage was: (i) caused or contributed to by her own conduct or (ii) caused wholly or in part by her failure to take any or any reasonable or effective steps to mitigate her loss or damage. No particulars of this allegation are provided in the pleading.

714. As I have noted elsewhere (see Chand v Commonwealth Bank of Australia [2015] NSWCA 181 at [180]), although often expressed as a “duty” to mitigate loss (see, for example, British Westinghouse Co v Underground Railway [1912] AC 673 at 689; The Mortgage Corporation v Halifax (SW) Limited [1999] Lloyd’s Rep P.N. 159 at 182), there is no “duty” owed to the party in breach in the sense of an independent obligation owed by the innocent party (as recognised in The Mortgage Corporation v Halifax (SW) Limited at 183). Rather, the principle is that the plaintiff (or in this case Ms Morton as cross-claimant) can only recover for loss caused by the wrongdoer’s breach and cannot recover for what McGregor on Damages terms “avoidable loss” (H McGregor, McGregor on Damages (19th ed, 2014, Sweet & Maxwell)), i.e., loss consequent upon the defendant’s breach that could by reasonable action have been avoided (see from [9-014]; see also Sotiros Shipping Inc. and Aeco Maritime S.A. v Sameiet Solholt (The “Solholt”) [1983] Lloyd’s Rep 605 per Sir John Donaldson MR at 608).

715. The question here, therefore, is whether Ms Morton acted unreasonably in not taking positive steps to reduce the loss suffered as a result of entry into the world rights deals put forward by her agent. It is by no means clear what Ms Anthony suggests that Ms Morton should, acting reasonably to avoid such loss, have done. By the time Ms Morton had become aware of what Ms Park advised her was the common practice in relation to the licensing of foreign publishing rights she was already a party to publishing agreements in which the right to sub-license those rights in other territories had been given to A&U.

716. The party raising a failure to mitigate defence bears the onus of proving that the innocent party did not act reasonably to mitigate his or her loss caused by the wrongdoer’s breach (see Medlin v State Government Insurance Commission (1995) 182 CLR 1 at 22; [1995] HCA 5; St Vincent’s Hospital (Melbourne) Inc v University of Adelaide [2002] VSC 297 at [36]; Knott Investments Pty Ltd v Fulcher [2013] QCA 67; [2014] 1 Qd R 21 at [26], [43]-[46]).

713. In Medlinv State Government Insurance Commission (a case of negligence) the plurality (Deane, Dawson, Toohey and Gaudron JJ) emphasised (at 13) that any question of reasonableness should be framed in terms of what is reasonable in terms of the context of assessing damages for negligence. In The Mortgage Corporation v Halifax (SW) Limited (at 182), it was said that the plaintiff’s conduct in not taking positive steps to reduce his or her loss will not be weighed in nice scales at the instance of the party who has occasioned the loss (see Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452; and see Orica Investments Pty Ltd v McCartney [2010] NSWSC 488 per Ball J at [56]).

714. Here, while there was a suggestion that it was open to Ms Morton to have sought legal or other advice as to the publishing agreements into which she entered, or to have sought to re-negotiate the world rights deals (and to have consulted with Ms Anthony in that regard), this was not suggested to be in any way causative of her loss (nor could it be suggested that she had some duty to second-guess her own agent’s advice as to the publishing agreements being put before her).

715. In my opinion the claim of failure to mitigate must fail: Ms Morton raised the issue as to multiple commissions with Ms Anthony in 2010; I accept that she trusted in Ms Anthony’s explanation at that stage that Ms Anthony had “fixed” things (even though I accept that there was room for debate as to what that meant); and I find that when Ms Morton learnt that Ms Anthony had not in fact “fixed things” in relation to Books 1 to 4 (and had only partially rectified the position in relation to Books 5 to 6), Ms Morton did what it would have been equally open to Ms Anthony in 2010 to do – she (through her new agent) negotiated the termination of the world rights publishing deals and the entry by Nightofficer into new publishing agreement with A&U which did not include such a term.

716. The defence based on failure to mitigate does not succeed.

Issue 5 - Relief

721. The loss claimed by Ms Morton in effect is the amount of commission paid to A&U for (relevantly in light of my above findings) its sub-licensing of Books 5 to 6 (which Ms Morton says would not have been paid had Ms Anthony negotiated direct with the sub-agents).

722. For Ms Anthony it was submitted that a fundamental defect in the cross-claim is that there is an unproven assumption at its heart because it is premised on there being a disparity between volume of sales potentially, as between a situation where the world rights went to A&U, compared with disposition of them separately by territories. It is submitted that is purely speculative that Ms Morton would have ended up in a position of financial advantage. In other words it is submitted that there is no evidence as to what the sales of books might have been had world rights not been granted to A&U but had they been granted separately by territory; so as to enable a conclusion as to whether there might have been a better position financially for Ms Morton in the latter event. The unproven assumption is said to be that the volume of sales would have been the same on the scenario that underpins the cross-claim. Senior Counsel for Ms Anthony submitted that one could not assume that publishers with deals on a territory by territory basis would have been able to have done as good a job for Ms Morton as A&U (see T 437).

723. In that regard, it was submitted (see T 436.7-436.13) that:

… What I am putting to your Honour is a straightforward proposition that there's no evidence before the Court as to what the sales of books might have been had world rights not be [sic] granted to Allen & Unwin. If the contracts had been done separately by territory there's no evidence about what volume of books would have been sold, and whether when everything was added up at the end of the day there might have been a better position financially for Ms Morton.

724. In other words, it was submitted that it could not be assumed that if the rights had been sold territory by territory the overall book sales would be the same as those sold by reason of the worldwide rights (see T 437).

725. In my opinion it is difficult to see any reason for the level of book sales to have been materially impacted (in terms of giving rise to lesser royalties) had the publishing rights for Books 5 and 6 (or for that matter Books 3 and 4) been dealt with on a territory by territory basis rather than on a world rights deal. There is nothing, for example, to suggest that Pan Macmillan would have promoted the books differently (or achieved a different level of sales) had its publishing rights been licensed directly through Ms Anthony rather than as a sub-agent of A&U. I can understand an argument that there might have been different royalty arrangements had the world rights not been granted (although with Book 7 it appears those royalty arrangements were more advantageous to Ms Morton than not) but not that book sales (and royalty generated therefrom) would have been materially different.

726. I have concluded that in all probability the level of royalties would have been of the same order on either basis, particularly given the high demand for Ms Morton’s books by the time of the 2010 publishing deals and hence that the loss suffered as a consequence of the breach of duty was the additional commission actually paid to A&U (as set out in the schedule referred to above).

Issue 6 – Set-off

727. Finally, as to the claimed set-off, this does not arise in relation to the conclusions I have reached in relation to Ms Anthony’s claim. Had it arisen, I would have concluded that any amounts payable by Ms Morton should be set-off against the amounts payable by Ms Anthony to her on the basis that (as argued by Ms Morton) Ms Morton’s cross-claim satisfies the requirement for an equitable set-off (being one that is essentially bound up with, goes to the root of, challenges, calls into question, or impeaches the title of Ms Anthony in the requisite sense – her claim being for commission as agent and Ms Morton’s cross-claim alleging breach of fiduciary duty, breach of contract and negligence in the way that Ms Anthony performed her role as a literary agent for which that commission was payable) (see HP Mercantile Pty Limited v Dierickx [2013] NSWCA 479 at [136]; 97 ACSR 318).

728. Insofar as the set off alternatively claimed under s 21 of the Civil Procedure Act is narrower, the argument for Ms Morton is that here the claim and cross-claim are for amounts that can readily be calculated as a matter of simple arithmetic and hence (were Ms Anthony’s claim to have succeeded) there are “mutual debts” which may be set-off against each other. It is noted that the calculation of Ms Anthony’s claim up to the date that the publishing agreements were terminated is in the amount of $211,770 (see Mr Mullins’ calculation in his report at p 6) and that the amount of the cross-claim has been calculated by taking the total figure for the “A&U share” for Books 3 to 6 ($1,913,136.312) (or, alternatively, the “A&U share” for Books 5 and 6, being $514,558.19).

729. Thus it is submitted that even if Ms Anthony were to succeed in the claim for loss up to the date of the termination of the publishing agreements, no amount would be payable by Ms Morton. However, as already noted, the set-off issue does not arise in light of my conclusions on Ms Anthony’s claim.

Conclusion

730. I will make orders consistent with the findings I have made above. I note that a declaration was sought in the cross-claim as to the valid termination of the contract of agency. I do not see the utility of such a declaration. It is apparent from my reasons that I consider that the agency agreement has been validly terminated as from the email communication to Ms Anthony on 11 December 2015 and by the conduct of Ms Morton at or around that time of appointing a new agent and directing her publishers accordingly.

731. For the reasons set out above, I make the following orders:

1. Dismiss the plaintiff’s claim.

2. Enter judgment on the cross-claim for the cross-claimant against the first cross-defendant in the sum of $514,558.19 plus interest.

732. Ms Morton sought an opportunity to address on the question of costs after judgment had been delivered. Accordingly, I will make no orders as to costs at this stage. I will simply reserve the question of costs and make directions for written submissions on that issue with a view, if appropriate, to determining the question of costs on the papers.

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Amendments

11 December 2018 - Addition of index

Typographical errors

12 December 2018 - [650] 'Ms Morton' in the first line amended to 'Ms Anthony'

[664] the insertion of the words '(in that context)' after the word 'agent' in second sentence

Decision last updated: 12 December 2018