Curnow Consulting Pty Ltd v JPD Media and Design Pty Ltd t/as Durie Design

[2017] NSWSC 1171

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:	Curnow Consulting Pty Limited v JPD Media and Design Pty Ltd t/a Durie Design [2017] NSWSC 1171
Hearing dates:	1, 2, 3, 4, 9, 14 & 15 December 2015; 13 September 2016 & 4 November 2016
Date of orders:	01 September 2017
Decision date:	01 September 2017
Jurisdiction:	Equity
Before:	Slattery J
Decision:	See paragraph [438] – [444].
Catchwords:	CONTRACT – Construction of written agreement – dispute concerning the terms of an oral agreement – plaintiff company supplies consulting services to the first defendant company for consideration payable by the first defendant to the plaintiff – first defendant carries on business associated with the public profile of an Australian media celebrity – parties’ contractual arrangements reflected in two agreements – a written services agreement commences on 1 July 2008 for five years until 30 June 2013 – whether the services agreement was terminated on 28 March 2013 – parties also dispute the terms of an oral Management Agreement, including whether and when the payment of management fees under it terminated, the term of the Management Agreement and whether or not the Management Agreement was validly terminated at or about the same time as the services agreement – issues of quantum reserved by agreement for further consideration
Cases Cited:	Almond Investors Limited v Kualitree Nursery Pty Ltd [2011] NSWCA 198 Associated Newspapers Limited v Bancks (I951) 83 CLR 322 Australian Blue Metal Ltd v Hughes [1963] AC 74 Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 Bolwell Fibreglass Pty Ltd v Foley [1984] VR 97 Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 Commonwealth v Verwayen (1990) 170 CLR 394 County Securities Pty Limited v Challenger Group Holdings Pty Limited & Anor [2008] NSWCA 193 CSR Ltd v Della Maddalena [2006] HCA 1; 80 ALJR 458 Elder’s Trustee & Executor Co Ltd v Commonwealth Homes & Investment Co Ltd (1941) 65 CLR 603 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 97,326 Interstar Wholesale Finance Pty Ltd v Integral Home Loans Pty Ltd [2008] NSWCA 310 Lantry v Tomule Pty Ltd [2007] NSWSC 81 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 Myers v Ross (1935) 10 F Supp. 409 Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444 Sargent v ASL Developments Ltd (1974) 131 CLR 634 Sharjade Pty Ltd v Commonwealth [2009] NSWCA 373 Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359; [1931] HCA 21 Showcase Video Pty Ltd v Tambali (Court of Appeal - New South Wales, 28 April 1987 unreported) Smith v Butler (1901) QB 694 Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd [2016] HCA 52 State Trading Corporation of India Ltd v M Golodetz Ltd [1989] 2 Lloyd’s Rep. 277 Summers v The Commonwealth (1918) 25 CLR 144 Wendt v Bruce (1931) 45 CLR 245 White and Carter (Councils) Limited v McGregor [1962] AC 413 White Trucks Pty Ltd v Riley (1948) 66 WN NSW 103 Willmott Growers Group Inc v Willmott Forests Ltd (Receivers and Managers appointed) (in liq) (2013) 251 CLR 592
Category:	Principal judgment
Parties:	Plaintiff: Curnow Consulting Pty Limited ABN 76086618779 First Defendant: JPD Media & Design Pty Limited trading as Durie Design Second Defendant: Jamie Paul Durie
Representation:	Counsel: Plaintiff: L.S. Einstein, Mr L. Gor First and Second Defendants: B. McClintock SC, D. Neggo   Solicitors: Plaintiff: Alistair Woodward Little, TressCox Lawyers First and Second Defendants: Christopher Stephen Frawley, M & K Lawyers
File Number(s):	2013/141679
Publication restriction:	No

Judgment

1. The plaintiff, Curnow Consulting Pty Limited (“Curnow Consulting”) provided consulting services to the first defendant, JPD Media and Design Pty Limited (“JPD”) for a period of approximately nine years from July 2004 until March 2013. These two companies interacted through their principals. Curnow Consulting provided its consulting services through its sole director, Mr Michael Curnow. And JPD’s sole director and shareholder, Mr Jamie Durie, dealt on its behalf with Curnow Consulting.

2. JPD carries on businesses associated with the public profile and professional credentials of Mr Durie, who is a public figure both within Australian and international media. JPD’s business activities include landscape design, product design, sales and licensing, product endorsement, publishing and television appearances.

3. Between 2004 and 2008, Curnow Consulting’s arrangements for the provision of Mr Curnow’s services to JPD proceeded on a mutually satisfactory but informal basis. In 2008, Mr Durie and Mr Curnow sought greater formality in their joint affairs. On 1 November 2008 Curnow Consulting and JPD entered into a written contract described as a “Services Agreement”, by which Curnow Consulting would effect the licensing of JPD’s intellectual property rights in exchange for defined commission payments. The Services Agreement had a retrospective commencement date of 1 July 2008 and was expressed to run for a period of five years up to 30 June 2013, unless earlier terminated.

4. But the Services Agreement did not cover the whole of the services that Curnow Consulting could supply to JPD. In late 2010, acting for their respective companies, Mr Curnow and Mr Durie negotiated another agreement they called the “Management Agreement”, to cover the provision of additional services. The terms of the Management Agreement were left in entirely oral form. Under the Management Agreement Curnow Consulting agreed to provide, through Mr Curnow, management services as JPD’s general manager but was also authorised to procure business opportunities for JPD’s licensing business beyond those accounted for by the Services Agreement. Curnow was to provide these management and other services in exchange for a monthly fee of $8000 plus GST and commission payments in addition to those payable under the Services Agreement.

5. The plaintiff, Curnow Consulting now sues JPD, the first defendant, for fees allegedly due under both the Services Agreement and the Management Agreement and for the alleged wrongful termination of both agreements. The parties contest the proper interpretation of the written Services Agreement and dispute the oral terms of the Management Agreement. JPD contends that it owes no fees to Curnow Consulting under either agreement and that both agreements were validly terminated in accordance with their terms in March 2013.

6. Both parties accept that the Services Agreement and the Management Agreement were terminated in about March 2013. But beyond that, the parties are in contest about a range of matters relating to the terms of their performance and the validity of the termination of both agreements.

7. The disputes now dividing these parties emerged during a period of intense financial stress that JPD suffered in late 2011 – early 2012. JPD was then facing insolvency. It called in financial and management advice from external accountants, Hall Chadwick. The principal advisers at Hall Chadwick gave strong advice to Mr Durie that for JPD to survive, it had to reduce its costs including the management fees and commissions that it was then paying to Curnow Consulting.

8. JPD accepted Hall Chadwick’s advice. JPD stopped paying management fees to Curnow Consulting under the Management Agreement. But Curnow Consulting says that this cessation of payments was not consensual and that it continued to provide management services to JPD in accordance with the Management Agreement and should now be paid for the management services it provided.

9. In early 2012, also under Hall Chadwick’s influence, JPD began to insist that the Management Agreement obligations to pay commission to Curnow Consulting that it had agreed orally through Mr Durie in late 2010 to take on were less generous to Curnow Consulting than Curnow Consulting was then asserting as its entitlement. The need to control JPD’s costs in early 2012 had revealed a difference of view about what had been agreed orally in the Management Agreement.

10. These main disputes and a number of other lesser differences continued. Curnow Consulting kept providing Mr Curnow’s services to JPD. But from March 2012 through until March 2013 Mr Durie’s and Mr Curnow’s business interactions were accompanied by growing mutual animosity and misunderstanding. The two never talked out their differences to resolution. Finally, these differences spilled over. Mr Curnow absented himself from JPD’s offices for reasons that are contested. Shortly afterwards, on 28 March 2013, JPD served notices on Curnow Consulting purporting to terminate both the Services Agreement and the Management Agreement.

11. A more detailed overview of these issues is provided in the next section of these reasons, followed by a narrative of the Court’s detailed findings about disputed questions of fact.

12. Curnow Consulting has joined Mr Durie as the second defendant to the proceedings, claiming that by his conduct related to the making and performance of the two agreements, he aided and abetted misleading or deceptive conduct by JPD.

13. Mr L.S. Einstein and Mr L. Gor of counsel appeared for the plaintiff, instructed by TressCox Lawyers. Mr B. McClintock SC appeared with Mr D. Neggo for the first and second defendants, instructed by M & K Lawyers.

14. The Court heard the proceedings over a period of nine days. Seven of those days were in December 2015. The matter was adjourned part-heard until the proceedings returned for a further two days, concluding in November 2016.

The Issues for Trial

15. The parties agreed upon the issues for trial. The parties were ultimately only in contest at the present hearing in relation to questions of liability. The many liability issues implied a great number of possible combinations of liability outcomes. In these circumstances the parties agreed to defer all issues of the assessment of the quantum of damage, until the Court’s liability findings were known. The narrative of factual findings in the next section of these reasons is best approached after the brief overview of the issues for trial set out in this section.

16. The Services Agreement generated only one issue. That was: whether the Services Agreement was validly terminated by the notice of termination JPD served on Curnow Consulting on 28 March 2013 (the “Services Agreement Termination Issue”). The parties had formerly contested other issues in relation to the Services Agreement but they abandoned these before the hearing commenced.

17. The parties contest four central issues concerning the Management Agreement. These issues embrace a number of sub-issues and are conveniently described as “the Commission Issue”, the “Cessation of Management Fee Issue”, the “Term of the Management Agreement Issue”, and finally, “the Management Agreement Termination Issue”. These four Management Agreement issues are now briefly summarised.

18. (1) The Commission Issue. The first issue is whether the Management Agreement included a term: (a) as the plaintiff Curnow Consulting contends, that it would be paid five per cent (exclusive of GST) on any amount paid to two companies Mr Durie controlled (JPD in Australia, and JPD Design Inc. in the USA, henceforth called “the Durie companies”) for all revenue received by the Durie companies from any source other than Gross Income (as defined in the Services Agreement); or (b) as is contended by the defendants, that Curnow Consulting would be paid five per cent on income (exclusive of GST) received by JPD from new business introduced by the plaintiff or Mr Durie, but excluding what in the proceedings came to be referred to as “the carve outs”, which expression denoted any new business: (i) relating to JPD' s design businesses; or, (ii) which business brought with it a requirement for JPD to also pay commissions to any third parties.

19. (2) The Cessation of Management Fee Issue. The second issue is whether (a) as the JPD/Durie parties contend, (i) that the Management Agreement was varied orally on 23 February 2012 to the effect that JPD would no longer pay the plaintiff a monthly management fee as from March, 2012, or alternatively, (ii) that the Management Agreement was terminated and replaced by a new agreement containing no obligation to pay to Curnow Consulting a monthly management fee as from March 2012; or (b) as Curnow Consulting contends, there was no such variation or replacement.

20. (3) The Term of the Management Agreement Issue. The third issue is whether: (a) as the JPD/Durie parties contend, it was agreed that there would be a "trial period" for Curnow Consulting’s performance of the Management Agreement between 1 January 2011 and 31 December 2012, and in any event, whether it was a term that the Management Agreement was terminable by either party at will; or (b) as Curnow Consulting contends, the term of the Management Agreement was to coincide with the term of the Services Agreement.

21. (4) The Management Agreement Termination Issues. The fourth issue is: (a) whether the Management Agreement was validly terminated by the Termination Notice served on Curnow Consulting on 28 March 2013, a Notice which expressly set out a number of specified grounds for termination; or (b) whether the duration of the Management Agreement was to coincide with the duration of the Services Agreement (as Curnow Consulting contends in issue (3)(b)), or whether the Management Agreement was terminable by either party upon reasonable notice (as the JPD/Durie parties contend in issue (3)(a)); and (c), even if the duration of the Management and Services Agreement were to coincide, the JPD/Durie parties contend that the Management Agreement is no longer on foot, as Curnow Consulting has not provided, and JPD had not sought, any services pursuant to that agreement since 28 March 2013.

22. If the JPD/Durie parties’ contention on issue (4)(b) above were accepted, it would justify a conclusion of valid termination on the basis of the giving of reasonable notice even if the grounds for termination expressed in the Notice in issue (4) were not otherwise made good: Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359. Curnow Consulting’s contention on issue (4)(b) is that if the Services Agreement were not validly terminated on 28 March 2013, and if the duration of the Management Agreement coincided with the duration of the Services Agreement, then JPD’s termination notice of 28 March 2013 in relation to the Management Agreement was ineffective.

23. JPD claims a set-off based on various matters to be considered when the quantum of the claims is examined. But this liability judgment does not go into such matters. The parties have indicated that they would attempt to undertake quantum calculations based upon the Court’s findings on liability. But a further general issue will arise in the quantum hearing: were the Court to make findings in accordance with JPD’s contentions as to the content and termination of the two agreements, would JPD be entitled to any set-off against amounts otherwise found due to Curnow Consulting?

24. As earlier indicated, both parties acknowledged that the liability issues which the Court must resolve were sufficiently complex that a number of different permutations as to quantum are possible. So the parties agreed to wait and see how issues in relation to liability are resolved in these reasons. Thereafter, the parties will put submissions in relation to quantum. Both parties observed this division of function and did not put any detailed analysis at this stage in relation to the position of quantum.

25. The Court took this course as the parties did not anticipate that any issue of the credibility of witnesses called in the liability hearing would arise during the quantum hearing.

26. These reasons commence with a narrative of findings and then deal with the legal issues just defined. But first some general observations about the credibility of the principal witnesses are appropriate. Other observations about witnesses’ credibility are made during the Court’s narrative of findings.

Some Credit Issues

27. Mr Curnow gave evidence that was generally reliable. He was very bitter about the circumstances of his separation from JPD Media in March 2013 and the events that had led up to it. He could be stubborn in adhering to his own memory of his dealing with Mr Durie. But this real question is whether his memory of these dealings was accurate. He was able to add consistent detail to the many situations in which he was involved with Mr Durie. He did not deliberately conceal information or distort evidence. He genuinely attempted to answer questions. He did so at times even when the answers did not suit his self-interest.

28. Mr Durie had a tendency to distance himself from the financial affairs of JPD. He generally answered questions co-operatively. He listened closely and scrutinised questions put to him and answered them precisely. He was conscious of his self-interest, he was well aware of the implications for his and JPD’s case of the questions being put to him. He made concessions readily on matters that were not obviously (to him) damaging. But he had ample capacity to deflect questions skilfully, giving answers that were at times not direct. Yet he was also capable of great frankness. He was prepared not to answer questions directly that he thought would be uncomfortable for him. He prided himself on being able to turn assets to profitable account but claimed not to be across the detail of some of JPD’s financial affairs when knowledge of that detail did not suit him. With the benefit of advice from Hall Chadwick, by 2012 he thought Mr Curnow was overpaid. Throughout his evidence he spoke with confidence and was always articulate.

29. Curnow Consulting mounted a general challenge to Mr Durie’s credibility on the basis that he was a person “who was used to being in the public eye and playing to an audience”. The argument was that because over the course of his career he had developed a public profile in a wide variety of media and that because he was an accomplished performer, the Court should be cautious about assessing his evidence based upon his apparently controlled demeanour in the witness box.

30. Such arguments can be overstated. Notwithstanding his facility with broadcast media, Mr Durie’s responses to the challenges of the witness box, where a questioner can closely press for answers to questions, showed many of the same characteristics as other witnesses faced. Whilst it is true that Mr Durie seemed confident at times, given the firm questioning that he received under cross-examination in the witness box, he had no basis to mistake his circumstances for some kind of media event which he could dominate. He did not obviously demonstrate over-confidence. Moreover, the Court is cautious about over-reliance on the mere demeanour of witnesses and has sought in these reasons to place the desired emphasis upon reasoned conclusion based on contemporary materials, objectively established facts, and the apparent logic of events: Fox v Percy (2003) 214 CLR 188 at [30] – [31] and CSR Ltd v Della Maddalena [2006] HCA 1; (2006) 80 ALJR 458; at [23].

31. Mr Kenney the principal of Hall Chadwick, was a blunt and direct witness who said he understood numbers. He was sure of himself and of his recollections of events. His self-assurance was mostly justified. His account was little challenged; the proper interpretation of the conversations in which he was involved was the issue. His objective was to ensure that JPD was cash flow-positive. He accepted that this was his role and that his energies were directed to achieving it. He was not as close to Mr Durie as Mr Curnow, whose business relationship was more complex than the finances that were Mr Kenney’s concern. This meant, in my view, that Mr Kenney missed a few of the nuances in the Durie – Curnow communication.

27. Deanne Curry was an administration assistant and bookkeeper at JPD from September 2012 through until the termination of Curnow Consulting’s contracts with JPD. She gave brief evidence and was cross-examined. She was a witness of substantial truth who was doing her genuine best to recall events in which she was involved. In late 2012/early 2013, she was caught between Mr Curnow and Mr Durie and was uncomfortable Mr Curnow was requesting the payment of invoices which she thought would not be paid.

28. Mr Craig Miller was employed as the financial controller of JPD from October 2008 until May 2012. By the time of hearing he was operating an independent professional business as a chartered accountant. He was a careful witness who gave considered answers that the Court could mostly rely upon. He always attempted to tell the truth. Despite having great financial pressure placed upon him by Mr Durie, he was quite restrained in evidence about criticising Mr Durie. He was not as close to Mr Durie as Mr Curnow.

29. Mr David Knott is a Design Director of JPD. He gave brief evidence about collecting business cards and a laptop from Mr Curnow just before the termination of the Management and Services Agreements. He was a witness of substantial truth. Nothing he said damaged his credit in cross-examination.

30. Mr Nadine Bush is the Group Creative Director of JPD, where she has been employed since 2003. She and Mr Durie had worked together by the time of the hearing for some 17 years. Mr Durie saw her role at JPD as being “to oversee the creative input of the entire operation in a single bound”. JPD was sufficiently indebted to her creativity for Mr Durie to say in a document in June 2012 “we’d be lost without her”. She was a witness of substantial truth but her long-standing working relationship with Mr Durie meant that on some points of finer detail, her evidence was more favourable to Mr Durie than was probably accounted for by precise recollection. That being said, her evidence was sound and the product of a genuine attempt to tell the truth.

Mr Curnow consults for Mr Durie – 2004 to 2013

36. The following is the Court’s narrative of findings about the parties’ conduct. This narrative represents the Court’s findings on the matters covered, except to the extent that the context clearly indicates that only the parties’ allegations are being recorded in these reasons. For reasons of economy this narrative does not always include reference to versions of the facts that the Court has rejected in order to make the findings that are made.

37. This narrative is in two parts. This first part deals with the making and performance of the Management Agreement and the Services Agreement. The second part deals with the factual findings relating to the termination of the two agreements.

Mr Curnow’s Background up to the Services Agreement in 2008

38. Mr Curnow’s educational background is in engineering. Upon completing an engineering degree at the University of Western Australia, he worked from 1981 to 1983 in project management in the Middle East and in Perth. In 1984 he joined Marketforce Pty Limited (“Marketforce”), Perth’s largest advertising and marketing agency, where he initially worked as an account director. Taking advantage of his interest in sailing, Mr Curnow became Marketforce’s account director, responsible for the commercial marketing rights for the 1987 America’s Cup hosted and conducted by the Royal Perth Yacht Club (“RPYC”).

39. His national work for Marketforce for the 1987 America’s Cup led Mr Curnow into contact with the International Management Group (“IMG”), which the RPYC had appointed to manage the international television and sales for the 1987 America’s Cup. He was offered and took up a job with IMG first in Melbourne and then in San Diego, commercialising the marketing rights for the 1992 America’s Cup event in the coastal waters near that city.

40. After 1992 Mr Curnow returned to Sydney. There he helped establish a new division of IMG, dealing with product licensing across South East Asia and New Zealand, as well as working on client management, event sponsorship, the sale of television rights and event management. At IMG he worked with sports stars and prominent figures in the performing arts. His day-to-day client management role included the identification of commercial opportunities for personal and event sponsorships, endorsements, speaking engagements, public appearances, television appearances and publicity together with the negotiation and documentation of associated commercial arrangements. He then project managed the relationships with the commercial partners working with the IMG clients for whom he was responsible.

41. He resigned from IMG in 1999 and established Curnow Consulting. Curnow Consulting was initially focussed on event and personality marketing and product and intellectual property licensing. His work for a number of prominent sporting and entertainment personalities and groups continued to be of a similar character to the role he had played with IMG.

42. In 2003 a contact Mr Curnow maintained from his Marketforce days, Mr Stephen Wells, put Mr Curnow in touch with Mr Durie. Initially, Mr Durie appeared to need assistance to renegotiate Mr Durie’s existing management contract with IMG and with managing Mr Durie’s product and intellectual property and licensing business.

43. By 2003 Mr Durie was a well-established television personality and presenter. He hosted the Channel 9 television programmes “Backyard Blitz” and “The Block”. These were two of the domestic living renovation programs that were popular on Australian television at that time. Mr Durie’s principal focus for product and intellectual property licensing at that time was for the “Patio by Jamie Durie” (“Patio”) brand, which had been on sale through K-Mart Stores throughout Australia since August 2003. Marketed under the brand at that time were various gardening, outdoor furniture and barbeque items. JPD effected this licensing under a licence agreement it had made with K-Mart in March 2003.

44. On 1 June 2004, Curnow Consulting was first appointed the exclusive world-wide licensing agent for JPD for four years, expiring on 31 May 2008. This arrangement was formalised in a written contract dated 5 July 2004 (“the 2004 Services Agreement”), which provided for a commission rate of 15%. Mr Curnow had undercut Mr Durie’s existing agent, IMG, who were then stipulating for a commission rate “of 20% on earnings”. Mr Curnow says that in 2004 it was common industry practise for a licensing agent like Curnow Consulting to charge a commission rate of between 25% and 35% of all amounts generated through the activities of the licensing agent. Whether or not this is precisely accurate, the Court accepts that this is what Mr Curnow believed the commission agent market rate to have been at that time.

45. This first arrangement between Curnow Consulting and JPD, the 2004 Services Agreement, has some relevance to assessing the probability of Mr Curnow entering some of the later disputed arrangements between these parties.

46. The 2004 Services Agreement was structured with terms that were similar, and often identical, to those in the Services Agreement that operated between JPD and Curnow Consulting between 2008 and 2013. The terms of the Services Agreement made in 2008 are set out later in these reasons. One difference between the two agreements was that the 2004 Services Agreement did not include the automatic renewal clause at the expiry of the agreement that became Clause 14 of the Services Agreement made in 2008 and was the subject of some submissions in these proceedings.

47. Like the 2008 agreement, the 2004 Services Agreement appointed Curnow Consulting as an exclusive agent. Whereas the 2004 Services Agreement appointed Curnow Consulting as a worldwide agent subject to JPD’s existing agreements with IMG, the Services Agreement in 2008 appointed Curnow Consulting as an agent for Australia.

48. The 2004 Services Agreement set a commission rate of 15% on gross revenue earned on licensing arrangements procured by JPD or Curnow Consulting. The existing arrangements with K-Mart, which had been made before Mr Curnow’s involvement with JPD, were temporarily made subject to a lower commission rate of 10% until August 2006, and thereafter 15%. But Curnow Consulting was guaranteed a monthly fee of $6,000 per month, which was deductible from the percentage commission earned each month. If commission in any month were less than the monthly fee, then the deduction of the shortfall was carried forward to future months, where commission earned exceeded the monthly fee.

49. Mr Curnow’s initial work for JPD involved expanding the Patio range. Mr Curnow proposed additional products such as an extended range of plant pots, additional styles of barbeques, a wider range of outdoor decorative items, a full range of plant seeds, additional outdoor furniture items, and a wider selection of gardening tools for each retailer offering the brand.

50. Once items were proposed for addition to the product range, Curnow Consulting was involved in negotiations with the suppliers of the specific products to be produced and the commercial terms of a trademark licence agreement, including the minimum guaranteed royalty to be paid to JPD. It then had to assist in managing the store-end placement of the various products with the supermarket chains through which they were sold, such as K-Mart and Big W.

51. Mr Curnow claims to have been successful in the licensing agent role. There was expansion in the range of products included in the Patio range and the gross earnings for that range after 2004, leading to the signing of the Services Agreement in 2008.

Mr Durie’s Background up to the Services Agreement in 2008

52. Mr Durie has an associate diploma in horticulture and design from Ryde College, New South Wales. In February 1998 he began a landscape and product design business by opening a retail outlet and design office called “Patio Landscape Design & Collectables”.

53. By 2001 Mr Durie was operating a number of businesses which will be detailed below. In November of that year he incorporated JPD, which since then he has used as the vehicle for the carrying on of his various businesses. These various businesses have grown successfully and commensurately with the growth of Mr Durie’s public profile.

54. Mr Durie’s businesses have expanded beyond Australian shores. Before Mr Curnow became involved with Mr Durie and JPD, Mr Durie conducted businesses in the USA through a company JPD Media and Design Inc. (“JPD Inc.”). Both JPD and JPD Inc. conduct much the same business operations but in different geographical areas. JPD’s businesses are diverse, as the brief survey below shows.

55. Landscape and Product Design. JPD operates both a landscape and a product design business and has done so since its incorporation. JPD constantly has landscape design projects underway. Mr Durie himself is directly involved in product and landscape design. JPD contracts and employs a number of people in its landscape design and product design businesses. But Mr Durie remains a hands-on figure in this part of the business. There are many recognised “products” in this design side of JPD’s business. They include such things as outdoor and indoor furniture, decor and garden care products.

56. Mr Durie and his team have been involved in design projects in 17 countries throughout the world from London to New Zealand to Japan and to the United States. He has received many awards in these countries and has been honoured with a Medal in the Order of Australia for services to numerous charities in Australia, the environment and design.

57. Mr Durie says, and the Court accepts, that JPD’s landscape design business is largely self-sufficient. This is perhaps, in part, a product of its long-standing nature. But many landscape design clients approach JPD without the need for any ongoing marketing. Mr Durie says that as a result JPD has never needed to advertise the landscape design business which essentially operates by word of mouth. JPD did not until 2010 use an agent to identify landscape design deals. But as will be seen, the Court does not accept that Mr Curnow’s role as an agent was irrelevant to the design business.

58. Television and Endorsement. Mr Durie’s more widely recognised television career commenced with his involvement in a program called “Backyard Blitz”, a spinoff of the then successful television series “Burke’s Backyard”. The show was launched in 2000 and became a very successful lifestyle format program on Australian television. Mr Durie won Logie awards for his involvement in the Backyard Blitz program and appeared regularly on Australian television. He also appeared on networks in the United States and Asia.

59. Mr Durie had an exclusive television content deal with the Nine Network between 2000 and 2006, and an exclusive deal with the Seven Network between 2007 and 2010. He returned to the Nine Network between 2011 and 2013. Since 2014 he has been freelancing, without an exclusive arrangement with any particular network. He now appears in programs on a number of different Australian television networks, and he appears on a number of different programs on US television.

60. Mr Durie sources his television work through talent agents. He says that because of these talent agents he has not needed assistance from Curnow Consulting to source television appearances in Australia. Mr Durie says, and the Court accepts, that Australian-based talent agents source work for him in this country, and US-based talent agents source work for him in the United States. Between 1996 and 2001 Mr Durie’s Australian talent agent was a Mr Mark Morrissey. Between 2001 and 2009 his Australian talent agent was IMG. From 2009 he appointed Mr Sean Anderson from 22 Management Pty Limited to act as his talent agent, a relationship which continued until July 2013. Now acting as a former employee of IMG, and working through a company known as Bravo Management, Mr Anderson conducts Mr Durie’s Australian talent agency class of work.

61. These talent agency relationships are constructed around commercial arrangements by which JPD variously made and makes commission payments to Morrisey Management, IMG, 22 Management and Bravo Management respectively. Mr Durie says, and the Court accepts, that he has not been involved in any television work in Australia which has not required the payment of commission to one or other of these agents. Mr Durie says that he has never needed additional representation beyond these talent agents to source his Australian television contracts.

62. Mr Durie has similar talent agency relationships in the United States. JPD’s US agents included a Mr Lance Reynolds in 2006 - 2007, the Endeavour Talent Agency from 2007, the William Morris Endeavour (WME) from 2009 and from 2012 Mr Bill Reishstein in relation to horticulture deals, and Paradigm as a general talent agent from 2013. JPD was required to pay commissions to these agents for the services they provided to JPD’s US business. A feature of JPD’s Australian and US talent agency arrangements is that they have been continuous. JPD has always had a talent agent for television deals in both these principal jurisdictions in which it operates.

63. Publishing. Mr Durie published his first book titled “Patio” in 2002. Since then he has published widely in the field of gardening and landscape design through publishers such as Allen & Unwin, Harper Collins and Penguin. His publishing deals have mainly been obtained through his talent agents or have been joint ventures with the publishers.

64. Licensing. As earlier indicated, the Patio product range was first licensed to K-Mart in 2003, through IMG-brokered arrangements. Mr Durie says, and the Court accepts, that he anticipated that the licensing business would be a significant source of future revenue for JPD. Acting on that business intuition, in 2003 he began looking for an independent licensing agent who could focus on this aspect of the business. During this search, Mr Curnow was suggested to Mr Durie by an ex-IMG licensing agent, Mr Stephen Wells.

65. After discussions with Mr Curnow and Mr Wells in the first half of 2004, JPD entered the 2004 Services Agreement in July 2004. JPD’s licensing arrangement for the Patio product line marketed through K-Mart expired in 2007, and with Mr Curnow’s assistance, JPD entered into a new licence agreement with Big W in relation to that product range over the following financial years FY08-FY09, FY10-FY12 and FY13-FY15.

The Services Agreement – November 2008

66. The parties signed the Services Agreement on 6 November 2008. Mr Paul Gregory signed on behalf of JPD and Mr Curnow on behalf of Curnow Consulting. The Services Agreement defined “Applicable Licence Agreement”, “Commission Fee”, “Commission Rate”, “Existing Licence Agreements”, “Expiry Date”, “Gross Income”, “Monthly Fee”, “Services”, “Term” and “Territory” in the following terms:

"Commission Fee" means the fee calculated by multiplying the Commission

Rate by the Gross Income;

“Applicable Licence Agreement” means any agreement between the Licensor and a Licensee in respect of a Licence:

(a)   entered into after the Commencement Date and which:

(i)   has been procured by the Agent; or

(ii)   is part of a Licensor’s Arrangement; and

(b)   that is an Existing Licence Agreement

"Commission Rate" means 15%;

“Existing Licence Agreements” means the existing Licence Agreements entered into by the Licensor and/or Durie as at the Commencement Date, described in item 3 of Schedule 1;

“Expiry Date” means 30 June 2013;

"Gross Income" means all gross income payable by Licensees under all

Applicable Licence Agreements, including licence fees, royalties and the value of goods or services payable or provided under all Applicable Licence Agreements and any interest payable on such unpaid amounts (but excluding any freight, insurance charges, duties, excises and Taxes payable by Licensees under Applicable Licence Agreements) that is received by the Licensor during a Month and less any advertising or like contribution the Licensor is required to make pursuant to a license agreement;

“Monthly fee” means $10,000 per Month;

“Services” are described in item 2 of Schedule 1;

“Term” means 5 years commencing on the Commencement Date and, subject to Clauses 13 and 14 expiring on the Expiry Date.

“Territory” means Australia.

67. Throughout the Agreement, JPD is described as the “Licensor” and Curnow Consulting as the “Agent”. The “Services” the agent was to provide were defined in Schedule 1 as follows:

Item 2: The Agent shall:

(a)   act as the Licensor’s sole and exclusive marketing representative and licensing agent throughout the Territory;

(b)   procure third parties to enter into License Agreements with the Licensor;

(c)   manage, for and on behalf of the Licensor, all Applicable Licence Agreements;

(d)   explore and develop new and existing opportunities for the commercial exploration of the Intellectual Property Rights and the promotion and sale of the Licensed Products; and

(e)   provided the Licensor so requests, and the term of the retainer is at least 6 months to provide such other services to the Licensor in the areas of publishing, product endorsement, sponsorship, recruitment and servicing as may be agreed with the Licensor. The Agent shall be entitled to receive a commission of 3.75% of any such product endorsement or sponsorship except that in the event and [sic] agreement is reached with the Harvey Norman Group then the Agent’s entitlement to remuneration shall be limited to licensing income generated through the Jamie Durie Signature stores.

68. The Services Agreement provided for the appointment of Curnow Consulting as JPD’s agent, in accordance with Clause 3, which provided for Curnow to perform the “Services” as defined, and for JPD to enter its own licensing arrangements independent of the agent’s actions:

3. APPOINTMENT OF AGENT

3.1 Appointment

The Licensor appoints the Agent for the Term, and the Agent hereby accepts that appointment, to perform the Services in accordance with the terms and conditions of this Agreement.

3.2 Exclusive Agency

(a) The Agent's appointment is exclusive.

(b) The Licensor agrees not to appoint any other person to act as the

Licensor's marketing representative and licensing agent to licence and commercially exploit the Intellectual Property Rights and to promote and sell the Licensed Products in the Territory, or any part thereof.

3.3 Licensor's Arrangements

(a) The Licensor may procure and enter into agreements by which third parties are licensed to commercially exploit the Intellectual Property Rights and promote and sell the Licensed Products ("Licensor's Arrangements").

(b) The Licensor shall provide the Agent with copies of all executed agreements relating to the Licensor's Arrangements

(c) The Agent shall manage all Licensor's Arrangements and shall be entitled to commission at the Commission Rate on the Gross Income from all such Licensor's Arrangements in accordance with this Agreement.

69. The Services Agreement also provided for a monthly fee, a commission fee of 15%, licensor’s reporting obligations and agent’s obligations in accordance with clauses 5, 6 and 8. The licensor’s corresponding obligations under clause 4 were essentially to provide information and documents to the agent:

5. FEES

5.1 Monthly Fee

The Licensor shall pay to the Agent during the Term the Monthly Fee on or about the 20th day of each Month.

5.2 Commission Fee

(a) The Licensor shall pay to the Agent during the Term the Commission Fee.

(b) The Commission Fee shall be paid in accordance with clause 6.2.

(c) The Monthly Fees shall be deducted from, or set off against, the Commission Fees.

(d) If the Monthly Fee for a Month exceeds the Commission Fees payable for that same Month, the excess shall not be repaid by the Agent but shall be carried forward to the next Month and applied as described in clause 5.2(c).

5.3 Post-Termination or Fees

(a) After the end of the Term the Parties agree that the Commission Fee shall continue to be earned by the Agent for all Applicable Licence Agreements which are then in force and current for the period until the Applicable Licence Agreement is terminated either by expiration of time or otherwise.

(b) The Agent agrees that it will not be entitled to earn any Commission Fee for any extension or renewal of an Applicable Licence Agreement after the Expiry Date, unless the Licensor has expressly agreed in writing.

(c) The rights and obligations of the Parties in this clause shall survive expiration or termination of this Agreement.

(d) This clause 5.3 does not apply if this Agreement is terminated under clause 13.1.

6. LICENSOR'S REPORTING OBLIGATIONS

6.1 Licensing Revenue Reports

The Licensor shall provide the Agent, within fourteen (14) days of the end of each Month, with a written report ("Revenue Report") which accurately and fully states for that Month:

(a) the Gross Income earned under all Applicable Licence Agreements (even if nil); and

(b) the Commission Fee earned by the Agent (after setting off the Monthly

Fee for that Month against the Commission Fee); and

(c) in respect of each Applicable Licence Agreement, the amount of Gross Income received and Commission Fee earned by the Agent:

(i) during the Month; and

(ii) accrued (in aggregate) to the end of that Month.

6.2 Payment of Commission Fee

With the Revenue Report the Licensor shall pay the Commission Fee for that Month to the Agent net of the Monthly Fee for that Month and any amount carried forward as described in clause 5.2(d). All payments of Commission Fee shall be made by way of cheque or as the Agent may direct the Licensor.

8. OBLIGATIONS OF THE AGENT

During the Term, the Agent agrees to:

(a) perform the Services to the standard of a professional, competent and experienced licensing agent;

(b) pay all costs and expenses incurred in providing the Services and to keep the Licensor indemnified in respect thereof;

(c) work in continuing communication and consultation with the Licensor to identify persons and products for the commercial exploitation of the Intellectual Property Rights and the promotion and sale of the Licensed

Products throughout the Territory;

(d) conduct itself in accordance with all international, national, federal, state and local laws, treaties and regulations and generally in a manner which will not in any way adversely affect or impair the value of the goodwill in the Intellectual Property Rights;

(e) not intentionally do or suffer to be done any act or thing which may in any way impair or adversely affect the Intellectual Property Rights and the right, title and interests of the Licensor therein;

(f) if it becomes aware of any fact, circumstance, event or report which does or may adversely affect or damage the Licensor's or Durie's reputation or value of the goodwill in the Intellectual Property Rights, notify the Licensor in writing of the fact, circumstance, event or report Licensor; and

(g) not make any representation or give any warranty on behalf of the Licensor or Durie unless specifically authorised in writing by the Licensor.

70. The parties are at issue about the termination of the Services Agreement. Contractual termination is provided for in Clause 13 of the Agreement. But Clause 14 also provides for automatic renewal upon the failure to give notice of termination before reaching the Expiry Date. Both these clauses are set out below.

13. TERMINATION

13.1 By Licensor

The Licensor may terminate this Agreement if:

(a) the Agent at any time:

(i) in the reasonable opinion of the Licensor, ceases to be actively engaged in the commercial exploitation and licensing of the

Intellectual Property Rights;

(ii) is in breach or default of this Agreement and if the breach or default is one which is capable of remedy, fails to remedy such breach or default within 28 days after being requested to do so by written notice from the Licensor; or

(iii) suffers an Insolvency Event;

(b) Michael James Curnow dies or suffers any total or permanent incapacity or ceases to control the conduct of the affairs of the Agent.

(c) The Licensor may terminate this Agreement on the 30 June 2010 if no Agreements are in place for the commercial use of the Trademark Jamie Durie Signature by authorised third parties.

13.2 By Agent

The Agent may terminate this Agreement if the Licensor at any time:

(a) is in breach or default of any of this Agreement (including failure to pay any monies due and payable to the Agent pursuant to this Agreement on the due date of payment) and if the breach or default is one which is capable of remedy fails to remedy such breach or default within 28 days after being requested to do so by written notice from the Agent; or

(b) suffers an Insolvency Event;

14. RENEWAL

This Agreement shall be automatically renewed at the Expiry Date for further terms of five (5) years on a rolling basis unless either party has given to the other a notice of termination ninety (90) days prior to the Expiry Date or prior to the end of each five (5) year period. If a notice of termination is given by one party to the other then this Agreement shall expire on the Expiry Date or at the end of the relevant five (5) year period, whichever the case may be.

71. In its general provisions (clause 18), the Services Agreement contains a further assurances clause (Clause 18.2), and a non-waiver clause (Clause 18.3). It also includes a clause defining the relationship of the parties (Clause 18.4) as follows:

18.4 Relationship of Parties

Nothing in this Agreement constitutes:

(a) a joint venture between the Parties;

(b) a partnership between the Parties; or

(c) the relationship of employer and employee between the Parties;

and this Agreement is not to be construed as creating any such relationship.

72. By clause 19, the Agent acknowledges that Mr Durie individually has rights and remedies under the Services Agreement. Nine existing licensing arrangements, carried over from the 2004 Services Agreement, are listed in item 3 of Schedule 1 of the Services Agreement.

73. The Services Agreement was negotiated on behalf of JPD by its then general manager, Mr Paul Gregory. He retired from this position in November 2008 after appointing Mr Craig Miller as JPD’s financial controller.

74. Both parties entered upon performance of the Services Agreement. JPD held out Mr Curnow as its licensing agent. Mr Curnow began to source licensing deals for JPD. Mr Durie formed a high opinion of Mr Curnow as a negotiator. He even encouraged him to negotiate and document a one-off endorsement deal, outside the pure licensing arrangement of the Services Agreement, with Boral in 2009. In July 2010 the parties agreed that the monthly licensing fee of $10,000 per month payable under clause 5.1 would be increased to $13,000 as this higher amount was more than covered under the minimum royalty guarantee provisions of the licence agreement which had by then been negotiated through Mr Curnow’s efforts with Big W. He was seen to be paying for himself through the revenue being earned on this deal.

75. JPD’s in house lawyer resigned in December 2009. Shortly thereafter, in March 2010, with Mr Durie’s concurrence Mr Curnow engaged Mr Chris Frawley of M&K Lawyers to provide general legal services to JPD as required.

76. Mr Durie’s judgment of Mr Curnow’s capability as a negotiator led him to consider a wider role for Mr Curnow within JPD beyond the pure licensing work of the Services Agreement. This was partly driven by necessity and was partly the product of Mr Curnow’s willingness to step up to other duties to increase his family’s income. Mr Durie was becoming increasingly busy with his work commitments both in the USA and in Australia. He was working closely with his talent agents in Australia and the US to secure new television and endorsement deals. He was working with Mr Curnow to build the Big W licensing business in Australia and to investigate other potential new licensing deals. He realised that he needed to appoint a new general manager to manage JPD’s day-to-day business including the management of JPD’s agents. JPD had not had a general manager since Mr Gregory departed late in 2008.

77. At that stage JPD had four separate agents, all working on a commission basis. Mr Durie says, and the Court accepts, that he did not particularly want to add a manager on yet another commission. He was more interested in engaging Mr Curnow on a flat rate. Moreover, much of the additional work he wanted Mr Curnow to do was not at the coalface cutting new deals with third parties, but higher level co-ordination of the work of JPD’s other agents. I accept Mr Durie’s evidence that this is generally what he had in mind when he approached Mr Curnow, who became Mr Durie’s obvious first choice, because of Mr Curnow’s familiarity with the business and his sound performance as a negotiator.

78. After Mr Durie raised the issue of Mr Curnow becoming general manager, Mr Curnow said to him, “I’m looking for more money and some more regular income. Ange [Mr Curnow’s wife] wants me to bring in more money”. The practical backdrop to the negotiation in late 2010 was: Mr Curnow wanted financial stability with increased reliable family income. Mr Durie wanted a general manager who already well understood the business.

Management Agreement Negotiations – September/October 2010

79. The parties agree that the terms of the Management Agreement were negotiated in at least one meeting between Mr Durie and Mr Curnow in about September or October 2010. But Mr Durie alleges, and Mr Curnow denies, that there was a second meeting on or around 14 December 2010 devoted to the same subject. Resolution of the issue of the terms of the Management Agreement indirectly involves a decision about whether Mr Durie or Mr Curnow is correct about the occurrence of the second meeting. The alleged second conversation more assists Mr Durie’s version of the terms of the Management Agreement.

80. The issue of the number of meetings does not just depend on Mr Curnow and Mr Durie. Mr Miller gave evidence in JPD’s case. He says that he was present at a meeting with Mr Curnow and Mr Durie on 14 December 2010. Mr Miller was an employee of JPD in December 2010. His employment ceased in about March/April 2012.

81. There is some common ground about the Management Agreement. Both parties accept that they orally finalised a Management Agreement in about November or December 2010. But they disagree about its terms. Neither party contends that there was no consensus ad idem. The proceedings were conducted on the basis that the Management Agreement was concluded. But the parties asked the Court to determine its terms.

82. But the parties agreed about a number of the Management Agreement essentials: Curnow Consulting’s title, the nature of the services it was expected to provide, and the payment of monthly management fees.

83. Upon the provision of his services through Curnow Consulting, Mr Durie and Mr Curnow described in their various exchanges commencing in September 2010 that the role Mr Curnow was to assume at JPD was as a “a full time manager” or “a general manager”.

84. The second half of 2010 was close to the high point of Mr Durie’s and Mr Curnow’s relationship. Mr Curnow was by then a highly trusted confidante of Mr Durie. He had until then, in Mr Durie’s perception, proven himself in assisting Mr Durie in the growth of Mr Durie’s business. The role that Mr Durie intended to confer on Curnow Consulting covered a broad spectrum of administrative and supervisory services in relation to both Mr Durie’s business interests in JPD in Australia and in JPD Media Inc. in the United States.

85. The agreed management services were broadly defined. I accept Mr Curnow’s evidence that Mr Durie said to him, “I want you to come on board as a full-time manager to run the whole show for me”. And I accept Mr Durie’s evidence that he said, “I need someone to help me run the business while I’m away, and make it more profitable…I need an office manager to look after the running of the business and the staff. Call it the general manager…I’m also keen to have you source new deals to grow the rest of the business”. Mr Durie said, and I accept, “[you will] pay the staff, hire and fire the staff as needed, deal with the accountant, tax payments and so forth, and reduce overheads where possible”.

86. Nor is it in contest that Curnow Consulting was entitled to a monthly management fee from JPD for the provision of these management services. The fee was agreed at an initial $7,000 plus GST per month for the months of November and December 2010 and at $8,000 plus GST per month thereafter.

87. Nor is the payment of management fees of $8,000 plus GST per month for at least 12 months from early 2011 in issue. But one question is whether or not the monthly fee of $8,000 plus GST ceased in March 2012 either after the expiry of an initially agreed trial period, or because on 23 February 2012 the parties agreed the $8,000 monthly management fee would no longer be paid. The JPD/Durie parties contend that JPD’s obligation to pay management fees ceased at that time, either on the basis of a variation of the Management Agreement or upon its termination and replacement by a new Management Agreement. Findings about this issue appear later in these reasons.

88. Apart from the issue of whether or not the monthly management fee ceased in March 2012, the parties disagree about the precise basis of the payment to Curnow Consulting of an additional commission fee of five per cent. The contest about these different terms of the Management Agreement reflects differences about what was said in the conversations in relation to the negotiation of the Management Agreement, which are dealt with now in this section.

89. Mr Curnow’s version. Mr Curnow says that he met Mr Durie to negotiate the Management Agreement at JPD’s Waratah Street, Mona Vale offices. Mr Curnow initially put their meeting date as “in or about September 2010” but later amended his time estimate for the meeting to “the end of October 2010”. Nothing in my view turns on this change, although Mr Curnow was cross examined about his reasons for it. Mr Curnow says he had the following conversations with Mr Durie:

Mr Durie:    I want you to come on board as full time business manager to run the whole show for me. You can still work on your other clients like ET. You can have my office as I'm always away. You can have a monthly fee plus 10% of profit.

Mr Curnow:   That's great Jamie, but I have been involved in profit share deals in the past and they have never worked out. I would prefer a percentage of revenue as this is easily calculated and it avoids any arguments.

Mr Durie:    What sort of percentage?

Mr Curnow:    5%. Let me think about what's reasonable for the monthly fee and I'll get back to you. Also, I'm not working with ET any more, just Luna Park, which takes about an hour each week.

Mr Durie:    No problem, let's agree at 5%. Just let me know on the monthly fee.

Mr Curnow: It's a big job mate, so I'll let you know once I've given it some thought.

90. At the time of this conversation Mr Curnow was working from an office in Newport Beach. In November 2010 he moved out of this Newport office and into JPD’s Mona Vale offices. This move was reflective of the change in Mr Curnow’s duties that took place with entry into the Management Agreement. He could not readily manage JPD’s business from an external office.

91. This move approximately coincided with Mr Curnow sending Mr Durie an email on 17 November 2010, outlining what he saw as his managerial functions and putting an offer as to the monthly fees that he proposed be payable to Curnow Consulting for this additional role. Mr Curnow’s email does not enter upon the issue of commission arrangements but is solely devoted to the monthly fee and the role. It was as follows:

Hi Jamie,

You asked me to suggest some figures that are commensurate with the role we have been discussing.

The role as I see it (pretty much summarized in the chart I gave to you at the restaurant last week) includes:

Being across all current relationship [sic] for JPD Media Pty Ltd & JPD Media Inc.

Developing a major long term strategic plan

Putting the plan into action once signed off

Spear-heading the TV push in Australia (eg; today’s discussion with Jim Sample etc.)

Supervising and pushing the agenda with WME and ACI in the US on all fronts

Development of new business as opportunities arise

etc.

etc.

This will be a huge task and plenty of hard work which I am up for!

I suggest the following (trying to tie in with what I know of the cash flow whist [sic] at the same time being realistic in terms of what this is worth to you and considering my current arrangements with you!)

November & December 2010 - $7K per month

January 2011 onwards - $9K per month

I really want to get this done ASAP so we can settle the team and push ahead.

Let me know your thoughts.

Cheers,

Mike

92. Mr Curnow’s offer evoked a counter offer. Mr Curnow says he had another conversation with Mr Durie after his 17 November email:

Mr Durie:    I got your email Mike and it's all good. Let's do $7K in November & December and then $8K each month from next year.

Mr Curnow:    Great, I can live with that. I think it should run in line with the Licensing Agent deal.

Mr Durie:    Sure, it should line up with that. I'll have Chris [Frawley] do a short letter that we can sign.

93. In circumstances that remain elusive, if Mr Curnow’s version is to be accepted it seems that Mr Frawley was never asked to draft that “short letter that we can sign”. No such letter is in evidence. But the focus of the 17 November 2010 email, that was undoubtedly sent, is significant: apart from the monthly management fee: what stands out is Mr Curnow’s enthusiasm for the quite expansive management role that he was proposing to play: “being across all relationships”, “developing a major long term strategic plan”, “pushing the agenda …in the US on all fronts”, in summary “a huge task” and “plenty of hard work”. The email does not mention or acknowledge a trial period for Mr Curnow’s management role.

93. Mr Curnow sent invoices for the $7,000 November and December 2010 management fees on 17 December 2010. He sent his first invoice for his 5% commission under the Management Agreement on 6 January 2011, being an amount of $750 plus GST, for part of a commencement fee from the Oakstand Property Group for something known as “the Setai project”

94. Mr Durie’s version. Mr Durie had quite a different version. He said that his and Mr Curnow’s conversations proceeded thus:

Durie:    "Mike, I need someone to help me run the business while I am away, and make it more profitable. I basically need an office manager to look after day-to-day running of the business and the staff. Call it a General Manager. For that, I am happy to pay you a monthly retainer.

I am also keen to have you source new deals to grow the rest of the business. I am happy to pay some sort of incentive to grow new business. This will help give you some additional cash flow and it will help me run the business while I am away working in the US.

Obviously, the TV deals and endorsements, Sean Anderson and our US agents handle, but I would like you to look at new deals that you bring into the business and we can look at paying a percentage.

The design business looks after itself in terms of bringing in new work. The margins in the design business are not high enough to pay commissions, so you just need to manage that part of the business as part of the General Manager role.

You can still work on the licencing business and you already make a substantial amount from me with the licensing agreement, so look at this as a top-up retainer to manage the day-to-day business and an opportunity to make a few more dollars to help me grow the business. How does 10% of any of net profit of new business sound?"

Mr Curnow:    “I am not interested in net profits. I have been in that situation before."

Mr Durie:    "Well, I need someone who is focused on the costs of the business as well as the revenue. That's why I am happy to pay a net profit of new business."

Mr Curnow:    I am happy to look at reducing overheads as part of a role as General Manager, but what I want is a number that deals with gross revenue, not profits. It sounds like a lot of work."

Mr Durie:    "You are looking for extra work, you are not doing many deals out of your existing business these days, how about you wind that up and work full time for me? I can give you a guaranteed monthly package and you can look at putting all your efforts into finding new business for my company, and wind down your own. I would prefer you to focus on new business here in my office rather than business in your office, which distracts you from my business. If I'm going to pay a retainer, I want some commitment. I want you to physically be in the office. I will be happy for you to continue to work for your remaining clients out of my office."

Mr Curnow:    “What kind of role do you envisage?”

Mr Durie:    "Pay the staff, hire and fire the staff as needed, deal with the accountants, tax payments and so on, and reduce overheads where possible. I would also like you to be the point person to direct traffic for my television agents in America and Australia and filter through the deals that are worth presenting to me. Television and endorsement deals are Sean Anderson's gig, or Endeavour's [WME's] in the US, but I will need you to liaise with them because I can’t be in ten places at once.”

Mr Curnow:    "It sounds like a lot of work"

Mr Durie:    "Well, it's regular money. Have a think about it. I know regular income is something that Ange has been nagging you about so this deal could kill two birds with one stone for us."

Mr Curnow:    "Let me give it some thought and I will come back to you."

Mr Durie:    "In terms of a retainer, I am thinking something like $5,000 or $6,000 per month."

Mr Curnow:    "It will have to be more than that. Something more like $10,000 a month."

Mr Durie:    "That is way too much. You are already making almost $300,000 a year for yourself out of the licensing business. This is just a top-up, with an incentive that could earn you a lot more.

I would be happy to pay 5% on new deals, outside existing contractual arrangements and deals. I am not interested in paying double commissions. Any deal that comes in which already requires a commission payment to someone else, I can't pay you a commission on. Also, since the design business doesn't have huge profit margins, I am not interested in paying any commissions on that business, but what I do need is for someone to help run it. That would be part of your role as General Manager.

Why don't you think about the right number for the monthly retainer, and let's come back to it."

Mr Curnow:    "Okay.”

96. Mr Durie’s version is far more detailed than Mr Curnow’s version. He was criticised for being over-detailed; it was said that the longer version was the product of his acting skills. But on testing, he could reproduce his account of his meeting. But including my preference for Mr Curnow as a witness on these issues, a number of considerations help choose between these two competing versions.

97. First, Mr Durie’s version seeks to limit the availability of the 5% commission in a number of ways through the carve outs that invite further discussion or negotiation by Mr Curnow. But Mr Curnow’s email of 17 November 2010 does not mention the commission issue at all. It had been discussed by 17 November. But it does seem to have been sufficiently well agreed that it did not warrant further written mention.

98. Secondly, if these carve outs were discussed then, they are just the kind of thing that would need further teasing out with lawyers to get right. Mr Durie was sufficiently sophisticated to see that. Yet the agreement is not documented. It is easier to understand why Mr Curnow’s less complex terms of the Management Agreement were not documented.

99. Thirdly, Mr Durie wanted Mr Curnow on board as general manager. Mr Durie raised the idea because he thought he was not coping with managing JPD himself and he needed a quick-fix solution. Much is evident from what did not happen in late 2010. JPD did not advertise for a general manager. Mr Durie went straight for an in-house solution for his need for someone to oversee JPD’s management whilst he was away. Mr Curnow was an obvious candidate for a short-cut approach: he was already doing somewhat parallel work with the licencing agreement; he knew JPD’s business well; it would not take him long to get up-to-speed; and Mr Durie already judged his skills to be generally suitable to JPD’s needs. His approach indicates he was essentially trying to solve a short term problem, which may or may not become a long term solution, if the problem continued. A more structured and well thought out approach to finding a general manager solution might indicate that Mr Durie was thinking long term. But in my view he was not.

100. This feature of the moment indicates that Mr Durie (and for that matter Mr Curnow) were not thinking long term, when discussing the Management Agreement. It is therefore inherently unlikely in my view that they discussed anything to do with the termination of their arrangements. Neither of them was thinking that far ahead. Had they engaged lawyers to negotiate a written Management Agreement they might have thought about the theoretical end of their relationship. But no lawyers were retained on either side in late 2010.

101. This had two incidental results. First, they did not discuss linking and making the Management Agreement and Services Agreement of the same duration and therefore coterminous. Secondly, nor did they discuss a trial period of 12 months for the Management Agreement. In my view, they approached the whole discussion of the Management Agreement with a ‘see how it goes’ approach and without thinking through the long term consequences of what they were doing.

102. Fourthly, paying of double commission is not inconsistent with the role that Mr Durie was expecting Mr Curnow to play. Mr Curnow was managing the work brought in by others but he still had the capacity to lose it through his own poor co-ordinating management. A commission on the revenue streams he was managing was a strong incentive for him to manage the existing relationships well so that they were not lost. And Mr Durie refers to this wide managerial role in later emails.

103. Fifthly, Mr Durie’s later conduct in not confronting Mr Curnow is consistent with a view that Mr Durie believed that Mr Curnow’s contentions about the terms of the agreement were right.

104. But I do accept part of what Mr Durie says. He seemed quite firm that he would not pay double commissions on business brought in by Mr Sean Anderson. And in my view at least something like that was said and agreed. It is also probable by reference to the parties’ later conduct.

A Second Management Agreement Meeting? – 14 December 2010

105. Mr Miller claims he attended a three way meeting with Mr Curnow and Mr Durie on the Management Agreement on about 14 December 2010. Mr Miller’s account was that he could be precise about the date of the meeting he attended, and that it had actually been on 14 December 2010. The basis of his certitude was that he had drafted an email relating to the contents of the meeting, at a time that he describes in his affidavit as “immediately afterwards”. The JPD/Durie parties asked the Court to accept Mr Miller’s account of this claimed second meeting based in part upon this email.

106. The Court generally accepts Mr Miller’s account of this conversation. That acceptance is based in part upon the quality of Mr Miller’s evidence and in part upon the contemporaneous documents that support his version.

107. Mr Miller recalls, and I accept, that around 14 December 2010 he was working in JPD’s offices. On about that day, Mr Durie approached him and asked whether he could come into Mr Durie’s office and “speak to me and Mike”. Upon being called into the office, he says that he was involved in a conversation with Mr Curnow and Mr Durie. He says that the conversation between the three of them was in words to the following effect:

Mr Durie:    “As you know, I want Mike to take a bigger role in the business. He is going to be the General Manager of the business. And for that he will be paid a monthly management fee of $7,000. He is going to manage the business interests in Australia and the US.”

Mr Miller:    “How long is this going to go for?”

Mr Durie: “There will be a trial period of 12 months. Also, anything Mike brings to the table, he gets 5 per cent.”

Mr Miller: “Jamie, what about the deals that you bring in? Does Mike get commission on those?”

Mr Durie: “Yes, five per cent.”

Mr Miller: “Really, are you sure?”

Mr Durie: “Yes.”

108. I accept that Mr Miller had a conversation with Mr Durie and Mr Curnow that day. But I only accept part of what he says as to its content, for the reasons that follow. Mr Miller says he has no recollection of the issue about commissions on JPD’s design business being discussed. It apparently occurred to Mr Miller to raise the issue about JPD’s design business, but he says, and I accept, that he dismissed the idea because he regarded JPD’s design business as self-supporting and it did not rely upon anyone to bring in new deals. He assumed that no commission would be payable to Mr Curnow referable to that business. Mr Miller says, and I accept, that he does not recall the issue of commissions on deals introduced by agents being discussed at this meeting. He says he did not raise the issue because he assumed that any deals brought in by JPD’s agents would logically not have been brought in either by Mr Curnow or Mr Durie. So he surmised that no commission would be payable to Mr Curnow referable to work brought in by other agents and he did not seek to raise the matter.

109. But all this really does is to confirm that JPD’s claimed carve outs from Curnow Consulting’s commission entitlement for the design business and for deals brought in by other agents were not discussed in those terms in front of Mr Miller on 14 December.

110. Why should Mr Miller remember this meeting? He says, and I accept, that he was “surprised and somewhat displeased that Mr Durie has agreed to pay Mr Curnow another $84,000 over the next 12 months, whilst at the same time JPD’s cash flow was tight, and I was working in the business trying to save as much money as possible”. Mr Miller was mildly resentful about the situation that this meeting revealed to him.

111. Mr Miller went back to his desk after the meeting. He says, and I accept, that he then drafted an email which he sent to Mr Durie. He thought it would be important to, “document what was discussed for the purposes of drafting an agreement at a later time”. Mr Miller’s evidence has been challenged, in part because he did not send a copy of this email to Mr Curnow. But I accept Mr Miller’s explanation that he only sent it to Mr Durie because his simple objective was to confirm with Mr Durie that his understanding of the discussion was correct.

112. The email was sent on Tuesday 14 December 2010 at 15:46:43. The addressees were Mr Durie and a tax adviser. The email itself contains a number of internal signposts suggesting that it followed fairly shortly after a conversation. The email title lines contain the following words, “conversation: Mike’s proposal” and “Subject: re: Mike’s Proposal” and internally, it uses the words “as discussed”. The email deals both with the existing Services Agreement and the new Management Agreement. Excluding subject headings, the email was as follows:

Good Afternoon Jamie & John

As discussed, in point form: -

EXISTING

$13,000 + GST monthly Retainer - payable on Friday following receipt of Channel 9 monies / Big W monies

Contra'ed [sic] against Big W Commission each quarter

15% on EXISTING deals %

2% Commission on NEW US Licensing Deals

NEW

Term: 1 January 2011- 31 December 2011 (1 year)

$7,000 + GST monthly Management Fee – (total $84k for Term – payable on Friday following receipt of Channel 9 monies

No Commission on deals brought to table by Sean Anderson

5% Commission on NEW deals introduced by Jamie.

5% Commission on NEW deals introduced by Mike

Quarterly business trips to the US, flying Premium Economy

Manage all business interests of JPD Media Pty Ltd, JPD Media Inc.

113. Mr Miller says, and I accept, that what he calls “existing” in the email means “pre-existing” arrangements between Mr Durie and Mr Curnow, as he then understood them. His words “15%” on existing deals referred to commission payable to Mr Curnow from revenue received through the endorsement deal between JPD and Boral.

114. Consistent with the 14 December conversation Mr Miller said he had just witnessed, on 17 December 2010 he received the two invoices from Curnow Consulting, each for $7,000 (plus GST of $700) and respectively for “management fee for December 2010”, and “management fee for November 2010”. He caused JPD to pay each of these invoices. The timing of receipt of these invoices and his authorisation of the payment is further confirmation of Mr Miller’s involvement in this three-way conversation.

115. How is Mr Miller’s evidence to be assessed? The starting point is Mr Miller’s perspective. As financial controller he certainly wanted to limit the amount that Mr Curnow would be paid under the Management Agreement. And I accept he asked questions on 14 December to achieve this. But on his version of the conversation he did not get any indication from Mr Durie of the carve-outs from the commission payable under the Management Agreement. Yet he does record in the email a carve-out in respect of deals brought to the table by Sean Anderson. This tends to indicate that deals brought in by that particular agent were probably mentioned in the conversation and were excluded by mutual agreement. But no other agents were expressly mentioned in the email, or on Mr Miller’s version, were any agents mentioned in the December 2010 conversation as candidates for exclusion from the commission entitlement. It is difficult to comprehend how one agent, Mr Sean Anderson, could have been be mentioned, as the court finds that he was, without triggering a discussion between these parties that deals brought to the table by all other agents were also to be excluded if that indeed was what was agreed. The best inference to be drawn from this is that, although Mr Miller does not seem to remember it, it is probable that at this 14 December meeting that a carve out in respect of deals generated through Mr Sean Anderson was discussed. And I infer this probably was also mentioned in the earlier discussion between Mr Durie and Mr Curnow. This much of what Mr Durie says of the earlier October 2010 conversation - the exclusion of Mr Anderson’s deal from double commission can be accepted.

116. Neither Mr Durie nor Mr Miller sent this email to Mr Curnow. There is nothing improper in Mr Miller sending it to Mr Durie for his information without copying it to Mr Curnow. But the email did not so strongly represent Mr Durie’s views of what had passed between him and Mr Curnow that he, Mr Durie, was prepared to send it on to Mr Curnow himself for confirmation of its contents, or to give instructions to Mr Frawley to draft an agreement based upon it. The latter was the very thing that Mr Miller had in mind as one of the collateral purposes of his email.

117. Despite the fact the Court accepts that there was a meeting on 14 December, caution is appropriate in assessing Mr Miller’s account that Mr Durie used the words “trial period” in the conversation. The words do not appear in Mr Miller’s email of the same date. Mr Miller probably wished to be satisfied that the arrangement with Mr Durie would not automatically become permanent. I accept, consistently with the email, that an initial period of 12 months was discussed and that there would be some kind of review at the end of 2011. But I do not accept that Mr Durie said it was a “trial period of 12 months” or anything in the nature of a test period which would not bring the obligation to pay management fees to an end and would thereafter be extended other than by a further agreement. Mr Durie needed Mr Curnow and did not place this kind of restriction on him when seeking to attract him into this new role.

118. There is another odd feature of the email. It does not refer to the step up of the management fee from $7,000 a month to $8,000 a month. The 17 November email from Mr Curnow makes clear that that negotiation about a step up had started by mid-November. In my view it was concluded, as Mr Curnow says, by about the time he moved into JPD’s premises. All Mr Miller’s reference to the $7,000 a month indicates is that he had only by then been given limited information about what had been agreed between Mr Curnow and Mr Durie. He did not have a full briefing from either of them at that point.

119. What do the words “5% Commission on NEW deals introduced by Jamie” and the words “5% Commission on NEW deals introduced by Mike” mean? Consistent with the lack of a full briefing on the issue, Mr Miller’s email does not make clear that the 5% is only on new deals.

The Finance Broker Letter – 26 July 2011

120. A letter that Mr Curnow asked Mr Miller to prepare in July 2011 for a third party generated its own debate about the terms of the Management Agreement. Shortly before 26 July 2011, Mr Curnow said to Mr Miller, “Craig, I need an income confirmation for my financial broker for refinancing purposes. Can you put this in a letter for me?”

121. Mr Curnow gave Mr Miller a draft letter with the words that he, Mr Curnow, wanted Mr Miller to put onto JPD letterhead and address to Curnow Consulting. The idea was that Curnow Consulting could use the letter to give it to a finance broker. The letter provided as follows:

RE: TO WHOM IT MAY CONCERN

INCOME CONFIRMATION FOR MIKE CURNOW

Mike Curnow, through Curnow Consulting Pty Ltd has been providing personal services to JPD Media Pty Ltd and its related entities since 2002.

377. Mr Durie reacted badly to this. He characterised it as "a deliberate act to destroy company property and it was very clear to me at that point that he was our enemy". In my view that accurately reflected Mr Durie's attitude to Mr Curnow at that point. But it was an overreaction and a misconstruction of Mr Curnow's intent in reformatting the computer.

378. To the extent that Mr Curnow's reformatting of the computer hard drive and its return showed he was no longer actively engaged in the commercial exploitation and licensing of the Intellectual Property Rights, that was solely because JPD had asked for the return of the computer.

379. (f) Service of the Statutory Demand. The Statutory Demand was served at approximately 5.00pm on 22 March at the end of a day of drama. The Cook's Larder meeting had failed. JPD was persisting with its demand to return the laptop and other business equipment. Mr Durie was persisting in allegations of theft and not apologising for the failed meeting that morning. In the circumstances, Mr Curnow was not prepared as yet to meet again.

380. JPD's case colourfully labelled the Statutory Demand as a "stab in the back". But the present question is whether it gave JPD a basis to form a reasonable opinion that Curnow Consulting had ceased to be actively engaged in the commercial exploitation and licensing of JPD's intellectual property.

381. It does not provide such a basis. The Statutory Demand should be taken for just what it is: a demand for monies due upon invoices rendered on account of the provision of past services to JPD. Mr Curnow had tried to initiate discussions about unpaid invoices on several occasions in the previous 12 months but Mr Durie had not directly engaged. Mr Curnow could not get Mr Durie's attention by any other reasonable method. Mr Durie had just treated him brusquely by failing without warning to attend a meeting on time that morning. Mr Curnow genuinely believed that he had a contractual entitlement to be paid the outstanding invoices. Moreover, this judgment finds that he did have such an entitlement. JPD's failure to pay any part of the invoices is not justifiable. JPD's characterisation of the Statutory Demand as Curnow Consulting declaring an intransigent refusal to cooperate with JPD or to be actively involved in JPD's licensing business only makes sense if the Statutory Demand is wholly unjustified, which it was not. These reasons find, there was a sound basis behind it, at least to the extent of non-payment for a year of a monthly fee of $8.000 under the Management Agreement which would alone account for about half the value of the demand.

382. Finally, additional steps needed to be taken before the company, JPD, could be wound up if there were no response to the Statutory Demand. Indeed the Demand was withdrawn as soon as JPD's solicitors notified Curnow Consulting's solicitors on 5 April that the debt was disputed.

383. (g) The Retainer of TressCox. JPD submits that a combination of the service of the Statutory Demand and Curnow Consulting's retainer of TressCox Lawyers to represent the company and Mr Curnow was sufficient for Mr Durie and JPD reasonably to conclude that Curnow Consulting had ceased to be actively involved in the commercial exploitation and licensing of JPD's intellectual property within Services Agreement clause 13.1(a)(i). JPD submits that "it beggars belief" that Curnow Consulting could contend that "it would continue to be actively engaged in JPD's product licensing business" whilst issuing a Statutory Demand through lawyers.

384. In my view, JPD is not in any position to complain about the engagement of TressCox Lawyers. Any party to an agreement is entitled to engage lawyers and take advice about legal rights without that, on its own, grounding an inference that the contracting party had somehow ceased to be engaged in the performance of the contract. Indeed if anything, the engaging of lawyers tends to base the opposite inference: adherence to the terms of a contract sufficiently seriously that, the party was not prepared to take action that may be a breach without legal advice. And JPD engaged lawyers at this time without breaching either agreement.

385. When one analyses JPD's submissions under this heading it is not complaining about the engagement of TressCox lawyers but about the service of the Statutory Demand, which has been dealt with under the previous heading.

Curnow Consulting Breaches Services Agreement Clause 8 Obligation -Clause 13.1(a)(ii)

417. By paragraph (b) of its notice of termination, JPD seeks also to justify the immediate termination of the Services Agreement under Clause 13.1(a)(ii). It claims Curnow Consulting was "in breach or default" of the Services Agreement, where such breach or default was not one that "is capable of remedy" and therefore it was not required to serve a 28-day written notice requesting a remedy of the breach. JPD contends that at least some of the allegations that would otherwise found "the reasonable opinion" under Clause 13.1(a)(i) also found a conclusion of breach under Clause 13.1(a)(ii). And in addition to the matters relied upon under Clause 13.1(a)(i) JPD brings other miscellaneous allegations of irremediable breach, which are dealt with in section.

418. JPD repeats three of the Clause 13.1(a)(i) grounds, as irremediable breaches of Clause 8: (a) diminishment in JPD's licensing deals, (b) Mr Curnow's absence from JPD's office; and (e) Mr Curnow wiping his work laptop.

419. JPD's contentions on this ground fail. Not only are the actions identified not irremediable breaches, the Court's analysis does not justify a conclusion of any relevant breach of the Services Agreement.

420. The Services Agreement Clause 8 obligations are generally directed towards the licensing agent delivering quality services to a professional competent and experienced standard (a), not to intentionally do or suffer an act which may impair or adversely effect the Intellectual Property Rights (e), and to report adverse circumstances and events to JPD, (f).

421. There is no basis to conclude that any performance of the Services Agreement by Curnow Consulting which was less than professional or competent, or which had permitted any impairment or adverse effect on JPD's Intellectual Property Rights, led to diminishment in JPD's licensing deals. And even if it had, the diminishment of licensing deals over time, amounting to a contractual breach, is a classic candidate for remedy by notice. If JPD had observed any falling away of Curnow Consulting's standards or Curnow Consulting allowing any intentional impairment of the Intellectual Property Rights, notice identifying the conduct or the acts should not have been difficult to formulate and could readily have identified for Curnow Consulting the matters to be remedied. And one would expect, once identified, that a professional and competent agent would remedy them and perform its duties under Services Agreement, Clause 8(a) and (e).

422. As to Mr Curnow's absence from JPD's office, nothing in the Services Agreement required Mr Curnow to be present in the office. This is one of the key distinctions between the two agreements. The Management Agreement did require Mr Curnow to be based out of JPD's Mona Vale offices. But Curnow Consulting had performed the Services Agreement out of an office in Newport for many years before the Management Agreement accounted for Mr Curnow's move to JPD's offices. Moreover, if absence from JPD's office had become a breach of Services Agreement, Clause 8 due to some changed circumstances, such absence was by its nature readily remediable by simple notice and does not found a basis for the immediate termination of the Services Agreement without prior notice.

423. The Court's previous analysis of Mr Curnow's conduct in reformatting JPD's laptop was not a breach of the Services Agreement. It is difficult to see how it could be a breach of Clause 8(e) or (f). Moreover, without intent to deprive JPD of its electronic data (Mr Curnow had no such intent), and in performance of a request to return the JPD laptop (as Mr Curnow judged, in the form in which he had received it), it is difficult to see that that his conduct falls short in any way of the standard of "a professional, competent and experienced licensing agent".

424. Nor has JPD established that if this was a Clause 8 breach, that it was irremediable. To establish that it was irremediable, JPD would have to have proved that it irretrievably lost data by reason of the reformatting of the laptop. As the Court's earlier analysis shows, JPD has conspicuously failed to do this.

425. Finally, JPD relies upon other alleged breaches of Services Agreement, Clause 8. Mr Curnow accepted in cross-examination that part of his role was to protect the integrity of Mr Durie's public image. This admission went further than the precise form of his obligations in the Services Agreement, Clause 8(f), which was that if he became aware of "any fact, circumstance, event or report", "which does or may adversely affect or damage" JPD's or "Durie's reputation", or the "value of the goodwill in the Intellectual Property Rights", then he had obligation to notify JPD in writing of that fact, circumstance, event or report. His obligation was to draw to JPD's attention matters within his knowledge that may adversely affect Mr Durie's reputation. But he did not have an obligation to ensure the integrity of Durie's reputation or to take steps to ensure that there were no attacks on Durie's reputation. For obvious reasons, Clause 8(f) does not make Curnow Consulting's obligations as onerous as this. Similarly, Curnow Consulting's obligations under Clause 8(e) are "not intentionally to do or suffer to be done" anything which may in any way impair or adversely affect the Intellectual Property Rights. This involves a degree of conscious act or neglect, leading to damage.

426. Curnow Consulting involved JPD in a deal with a company, LM Investments, which led to major reputational damage for Mr Durie. Mr Durie did suffer significant negative coverage on Four Corners and Twitter through JPD's licencing agreement with LM Investments. In cross-examination Mr McClintock, counsel for JPD effectively highlighted the extent of that damage. In a report in early March 2013 in a Four Corners program broadcast under the heading "A Betrayal of Trust" presented by Mr Kerry O'Brien, LM Investments is profiled as a company accepting investors' funds and "promising competitive returns in a business that seemed like a winner", before Four Corners alleged that what its investors did not know was that the company's "founder was removing millions of dollars from the company in fees that he had paid to himself". Four Corners offered the opinion that "to many of the investors this looked like fraud but to their dismay no criminal charges have been pursued." Four Corners offered the final view that "the company [LM Investments] went into liquidation leaving them with nothing".

427. But I accept Mr Curnow's evidence that at the time the LM Investments contract was made he did not believe or expect it may affect Mr Durie's reputation. Moreover, the contract that he negotiated with LM investments was of a limited kind and one which he subjected to an appropriate degree of due diligence. Mr Curnow's evidence, which the court accepts, was that the licensing agreement in question was not to commit generally to the reputation of LM investments but simply for Mr Durie to promote an LM Investments property development called "Maddison Estate", which Mr Durie and Mr Curnow had visited. As part of their due diligence, Mr Curnow and Mr Durie had done site visits together and Mr Curnow had checked the LM Investments balance sheet and some of the characters involved within that company.

428. But I accept that without Mr Curnow's knowledge, that Mr Durie did "a piece to camera for LM investments without showing [Mr Curnow] the script or potential storyline". Much of the consequent reputational damage that followed came from Mr Durie's decision to go beyond the requirements of a conventional licensing deal and to associate his image with LM Investments general reputation. In my view Mr Curnow did enough due diligence on the Maddison Estate project consistent with the professionalism to be expected of him.

429. This is also to be inferred from his past conduct. When the nature of the high-pressure sales being pushed by one JPD client, PMA, came to Mr Curnow's attention, Mr Curnow said, and the Court accepts: "the minute I got a sniff of any problem I alerted the guys and said we've got a get out of this deal". Mr Curnow's attitude to looking after Mr Durie's reputation was pro-active and generally effective.

430. Also Mr Curnow's years of experience before his full-time commitment to managing JPD well prepared him to be alert to risks to his clients' reputations. It would have been foolhardy for him consciously to take a risk with a company such as LM Investments, if he knew it might impair Mr Durie's reputation. He certainly did not intentionally permit the deal to go ahead in mid-2012 in a way that he anticipated might impair Mr Durie's reputation. JPD has not established that a competent agent would have made more inquiries than Mr Curnow did before committing JPD to the LM Investments deal. And any damage that followed was thoroughly mixed with the effects of Mr Durie's own conduct.

431. In my view, no lack of professionalism or competence has been demonstrated on Curnow Consulting's part in perfecting the LM Investments contract with JPD.

432. Finally, the use of an invalid Clause 13.1 termination notice to attempt to bring the Services Agreement to an end was a repudiation of the Services Agreement, which had now been accepted by Curnow Consulting. But the Services Agreement would have expired on 30 June 2013. But one consequence of the invalidity of the Clause 13.1 notice is that Clause 5.3 of the Services Agreement, allowing trailing commissions, continues to apply. Those commissions will need to be calculated in the quantum hearing.

The Quantum Hearing and Mr Durie’s liability

433. The principal purpose of the quantum hearing will be to calculate, on the basis of the findings in these reasons, what fees have accrued as payable to Curnow Consulting under the Management Agreement and the Services Agreement up to the dates on which the Court now has found that those agreements were terminated, and deducting therefrom any amounts overpaid by JPD to Curnow Consulting.

434. Curnow Consulting is entitled to remuneration in respect of amounts accrued and owing to it up to the moment of termination of each of the agreements: McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 476-477 per Dixon J, considered with approval by Keane J in Willmott Growers Group Inc v Willmott Forests Ltd (Receivers and Managers appointed) (in liq) (2013) 251 CLR 592 at 637 and referred to in Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd [2016] HCA 52 at [79] in the joint judgment of their Honours Kiefel, Bell, Gageler, Keane, and Gordon JJ.

435. The findings set out earlier in these reasons should be sufficient to enable that calculation to be made. But if any gap appears in the Court’s findings, which inhibits completion of this calculation, the parties will be granted liberty to apply to re-list the matter to request the Court to make necessary supplementary findings to facilitate a final calculation.

436. The parties did not focus sufficiently in their final submissions on the issue of Mr Durie’s liability, if any, separately from that of JPD. This issue is reserved for further consideration. If it is necessary to determine that question before the quantum hearing then the parties may approach the Court for further directions.

Conclusions and Orders

437. The effect of these reasons may be briefly summarised.

438. The terms of the written Services Agreement are not in dispute. But there are substantial disputes about the terms of the oral Management Agreement. Except in a number of limited respects which will be identified briefly here, in these reasons the Court prefers Curnow Consulting’s contentions as to the content of the Management Agreement. Curnow Consulting was entitled to 5% commission on amounts paid to JPD and JPD Design Inc. for all revenue received from any source other than pursuant to the Services Agreement, but no commission was payable upon revenue derived from sources introduced to JPD by Mr Sean Anderson or entities through which he provided services. There were no other “carve outs” from Curnow Consulting’s entitlement to commission under the Management Agreement so as to prevent either the charging of double commissions, or in respect of JPD’s design business.

439. JPD and Curnow Consulting did not agree on or about 23 February 2012 either to vary their existing Management Agreement or to make a new Management Agreement upon terms for the provision of the same or similar services by Curnow Consulting to JPD but without the payment of an $8,000 monthly management fee to Curnow Consulting. At best, the parties were in February 2012 in a position of negotiating stand-off about the terms of a new Management Agreement. But in the meantime and after 23 February 2012, Curnow Consulting continued to provide, and JPD continued to accept, the same services as had been provided under the Management Agreement.

440. There was no trial period for Curnow Consulting to perform the Management Agreement between 1 January 2011 and 31 December 2012. Nor was it a term of the Management Agreement that it was terminable by either party at will; rather it was terminable on reasonable notice, which at the time of attempts at termination in March 2013 was 60 days. The duration of the Management Agreement was not agreed between the parties to coincide with the duration of the Services Agreement, such that they were coterminous.

441. The issue of termination of both agreements is also in contest. That contest is resolved as follows. The factual basis for the termination notices served by JPD on 28 March 2013 is not made out and the serving of the notices of termination was a repudiation of both agreements. Curnow Consulting accepted that repudiation and is entitled to damages for JPD’s wrongful termination. But those damages so far as the Management Agreement is concerned are limited by the right that JPD otherwise had to terminate that agreement on 60 days’ notice. And the Services Agreement would otherwise have expired by effluxion of time on 30 June 2013, because although the notice of termination of the Services Agreement was invalid to effect a termination for breach, its intent was nevertheless quite sufficient as a “notice of termination” within the meaning Clause 14 of the Services Agreement, as was the intent of a back-up notice JPD served the same day.

442. The issue of costs cannot be determined in this case in the absence of a result from the quantum hearing and any surviving issues about Mr Durie’s liability. Subject to hearing from the parties, the Court does not propose to deal with issues of costs before then.

443. The parties will need a mutually convenient date to consider the further course of these proceedings in the light of the Court’s published reasons. The parties should contact my Associate to set a date for directions in relation to the quantum hearing. But the parties are encouraged to attempt to agree upon the substance of those directions.

444. The Court therefore orders:

1. Direct the parties to bring in short minutes of order to give effect to these reasons.

2. Grant leave to the parties to approach my Associate to find a date for a further directions hearing to meet the mutual convenience of the parties.

3. Grant liberty to apply.

**********

Amendments

12 December 2017 - throughout- Mr Kenney has been misspelt as Mr Kenny.

[29], line 1- missing 'to' between the words 'challenge' and 'Mr Durie's credibility'.

[105], line 4 - date should be 14 December 2010, not 14 December 2014

[117], last - 'Restrictions' should be 'restriction'

[149], first line of quoted paragraph - should read 'repaying' rather than 'replaying'

[171], line 2 - should read 'Mr Durie' not 'Mr Curnow'

[171] line 3 - should read 'by Mr Miller" not 'to Mr Miller'

[175], 1, 3, 5- references to 'to Mr Sean Anderson' should read 'to Mr Curnow in relation to deals introduced by Mr Sean Anderson'

[186], line 1-should read 'Mr Curnow stay away from the office' not 'Mr Durie stay away from the office'

[195], line 6 - should read 'management fee' not management fees'

[214], line 4 - should read 'in the January 2011 - March 2013 period which JPD paid that were...' not 'in the January 2011- March 2013 period in which JPD paid invoices that were...'

[219], line 2 - should read 'attachment 'A'' not 'attachment, A'

[241], line 2- should read '31 December 2011' not '31 December 2012'

[246], line 4 - should read 'of a 90 day period' not 'of 90 a day period'

[279], line 2 - should read 'Mike has come into the office and taken everything' not Mike has come into the office had taken everything'

04 September 2017 - Coversheet
Decision: See paragraph [441], changed to [438] – [444].

[93] fifth line, “management fee,” changed to “management fee:”

[104] first line, add “part of” after “do accept”

Last line, “probably” to “probable”

[117] second last line, “place these kind” to “place this kind of”

[129] second line, “learned of JPD’s” to “learned JPD was having” and “problems in February 2012,”

[130] second line, “JPD quickly” to “soon”

[143] second line, add “this aspect of” after “which”

[156] first line, “Curnow” to “Durie”

[159] second last line, “than existing deals” to than on existing”

Above para [183] deletion of heading

[185] second line, “March 2013” to “2012”

[187] fourth line, “March” to “February”

[190] third last line, “essentials but” to essentials. But” and “resisted any” to “resisted agreement to any”

[195] second line, “these does” to “these events”, third last line, “knew in my view” to “knew, in my view,”, last line “he” to “Mr Miller”

[206] fourth line, Durie to Curnow, ninth line, “persuaded that” to “persuaded of”

[212] fifth line, “unable” to “able”

[218] fourth line, “of” to “in”

[229] eleventh line, aware “of Mr Curnow’s claims”, last line, of “unjustified invoices”

[232] fifth line, “but” to “which” and delete “them”

[236] second line, delete “other”

[242] third line, “creates”

[243] sixth line, delete “agent ceasing due to”, ninth line, “may, but not necessarily,”

[246] second line, “The contrary notice”

[314] first line, “28” to “26”

[328] seventh line, “Curnow consulting” to “Curnow Consulting” and “mobile” to “Mona Vale”

[330] fifth line, “indicating in”

[336] first line, “were” to “was”

[345] third and seventh line, italicise “White and Carter”

[349] third line “2013”, “Curnow Consulting”, second last line “not” to “now”

[356] fourth last line, “Curnow Consulting’s”

[382] seventh line, move “from about 2007” after the word “negotiated” in sixth line, eighth line lower case of Intellectual Property”, eleventh line, “for the selling”

[383] second line, after 2006”,leading to”

[384] second line, delete “this”

[388], third line, lower case of intellectual property rights

[389] fourth line, delete “had” before “informed”

[390] third last line, after “email” add to Mr Durie

[391] lower case of intellectual property

[401] third last line, before 22 March delete words “the information of”

[404] fourth line, lower case of intellectual property

[406] sixth line, “Durie’s” to Curnow’s”, third last line, “admitted. On this”

[411] last line, lower case of “intellectual property”

[412] tenth line, “pay any part”

[413] first line, “company, JPD, could”

[414] sixth line, lower case of intellectual property

[421] tenth line, delete “whether” after Rights

[424] first line, delete “But”, last line change “had” to “has”

[429] second line, “a” to “one JPD” client

[430] fourth line, “LM Investments”

[441] third line, delete “20 and” to “28” and “notice” to “notices”, sixth line “Agreement is”