SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2017 0038
| CROWE HORWATH (AUST) PTY LTD | Applicant |
| v | |
| ANTHONY LOONE | Respondent |
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| JUDGES: | ASHLEY, PRIEST and BEACH JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 23 May 2017 |
| DATE OF JUDGMENT: | 7 July 2017 |
| MEDIUM NEUTRAL CITATION: | [2017] VSCA 181 |
| JUDGMENT APPEALED FROM: | Crowe Horwath (Aust) Pty Ltd v Loone [2017] VSC 163 (McDonald J) |
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CONTRACT – Application for leave to appeal – Employer and employee – Findings by judge that employer engaged in repudiatory conduct and that repudiation of contract accepted by employee – Whether judge erred by finding that particular conduct of employer breached terms of contract – Whether any ground had real prospect of success – Leave to appeal refused.
CONTRACT – Application for leave to appeal – Employer and employee – Restraint of trade clause – Termination of contract by employee’s acceptance of employer’s repudiatory conduct – Whether judge correct to find that employer not able to rely upon restraint clause in circumstances – Whether grounds had real prospect of success – Leave to appeal granted on all but one ground – Appeal dismissed.
PRACTICE AND PROCEDURE – Appeal – Whether applicant advanced arguments not raised at trial – Whether applicant should be allowed to raise new case on appeal – Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598 applied.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr A Moses SC with Mr N A T Harrington and Ms F Leoncio | Mills Oakley |
| For the Respondent | Mr J L Bourke QC with Mr A P Rodbard-Bean | Marsh & Maher Lawyers |
ASHLEY JA
PRIEST JA
BEACH JA:
Overview
On 4 April 2017, after a five day trial held some six weeks earlier in a proceeding brought by Crowe Horwath (Aust) Pty Ltd (‘CHA’ or ‘the applicant’) against Anthony Loone (‘Mr Loone’ or ‘the respondent’), a judge in the Trial Division found that —
(1)the respondent (as employee) had accepted the repudiatory conduct of the applicant (as employer) in respect of an employment contract executed under seal on 1 November 2012 (‘the 2012 contract’, or, simply ‘the contract’[1]), whereby the contract was brought to an end; and
(2)a restraint of trade covenant (for convenience, ‘the restraint clause’) in the contract,[2] though intrinsically unobjectionable, in the particular circumstances could not be availed of by the applicant. It is convenient to note, immediately, that the form of the clause which the judge found to be intrinsically unobjectionable, broadly described, precluded the respondent for a period of 12 months after termination of employment from engaging in competition with the applicant in a business situated within five kilometres of the location where the respondent had worked for the applicant, and from soliciting work from clients of the applicant with whom the respondent had had direct dealings.
[1]There were earlier contracts to which the respondent was a party. We will refer to them as ‘the 2000 contract’ and ‘the 2006 contract’.
[2]Clause 3.1 of sch 2.
The judge ordered, inter alia, that…
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- Case
- [2017] VSCA 181
- Decision Date
CaseChat Overview and Summary
The Court considered whether the grounds of appeal had a real prospect of success. The Court held that the judge had not erred in finding that Crowe Horwath's conduct constituted a repudiatory breach, and that the grounds relating to the restrictive covenants did not have a real prospect of success. The Court also considered whether Crowe Horwath had raised new arguments on appeal, and found that it had not. The Court held that leave to appeal should be granted on all but one ground, and dismissed the appeal.
The Court held that Crowe Horwath was not entitled to rely on the restrictive covenants in Mr Loone's contract, as it had repudiated the contract and Mr Loone had accepted the repudiation. The Court found that the restrictive covenants were not enforceable as they were unreasonable and would cause undue hardship to Mr Loone if enforced. The Court also held that Crowe Horwath's failure to pay bonuses and interference with Mr Loone's client relationships amounted to a repudiatory breach of contract. The Court dismissed Crowe Horwath's appeal and affirmed the decision of the Supreme Court of Tasmania.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
Second, as to remuneration: Third, as to termination: Fourth, as to restrictive covenants: A number of the words and terms used in sch 2 cl 3.1 were defined. Thus, for instance, ‘Restraint Period’, ‘Client’, ‘Group Member’, ‘Group Company’ and ‘Business’. Equally, however, a number of terms found in that clause were not defined.[10] Words that were not defined included ‘Principal’, ‘Associate Principal’, ‘Managing Principal’, ‘Chief Executive’, ‘Regional Chief Executive’ and ‘Executive’. As we have earlier noted, however, the applicant was provided with a written ‘job description’ of the term ‘Managing Principal’ before signing the contract. The judge at trial found that, prior to the acquisition of CHA by Findex in January 2015, Mr Loone exercised ‘full autonomy’ in the running of the Launceston office.[11] He performed his work consonantly with the role profile to which we have previously referred. He was the most senior employee in the Launceston office, and had very close personal relationships with his clients.[12][11]Reasons [89].[12]Reasons [11]. The respondent’s immediate superior was Bruce Roberts, CHA’s Regional Chief Executive. From the time when Findex acquired the CHA business, which was on 1 January 2015, a man named Michael Wilkins, Chief of Advisor Services with Findex, became involved. Of Mr Wilkins, more later. As will be seen, one of the serious breaches of contract complained of by the respondent related to bonus payments. There were two aspects to that complaint. One of them related to the acquisition of a Launceston accountancy practice, Davey Financial Group (‘DFG’), by CHA. In October 2014, the respondent entered into discussions with the principal of DFG with respect to the acquisition of DFG by CHA. The acquisition was finalised in August 2015. CHA purchased DFG for $2.2 million. DFG’s business was thereafter incorporated into the Launceston office. The respondent, as the judge found, spent hundreds of hours of work in the acquisition process. The acquisition of DFG was budgeted to generate $1.086 million in its first full year of operation. For the financial year ending 30 June 2016, the acquisition in fact contributed approximately $440,000 net profit to the CHA Launceston office. The respondent estimated that the acquisition was worth a minimum of $200,000 to the Launceston bonus pool, that pool being the source of distribution of bonuses to the respondent and other senior persons in CHA’s Launceston office. We will address, first, the matters raised by proposed grounds (for convenience, ‘grounds’) 1(a)–(g). They relate to the judge’s findings with respect to the conduct of CHA which the respondent claimed constituted its repudiation of the contract, repudiation which he accepted. Following the acquisition of CHA by Findex, a new Chief Executive Officer and Chief Operating Officer were appointed to CHA. Michael Wilkins, to whom we have previously referred, was appointed as Manager with overall responsibility for all of CHA’s offices throughout Australia and New Zealand. The respondent, however, continued to report to Bruce Roberts, CHA’s Regional Chief Executive.