Daynes v I-Med Central Queensland Pty Ltd; I-Med Central Queensland Pty Ltd v Daynes

[2025] NSWCA 150

Court of Appeal

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:

Daynes v I-MED Central Queensland Pty Ltd; I-MED Central Queensland Pty Ltd v Daynes [2025] NSWCA 150

Hearing dates:

14 May 2025

Date of orders:

11 July 2025

Decision date:

11 July 2025

Before:

Bell CJ at [1];
Leeming JA at [211];
Free JA at [215].

Decision:

(1)     Appeal dismissed with costs.

(2)     Cross appeal dismissed with costs.

(3)     Grant leave to Dr Daynes to appeal with respect to the costs judgment of the primary judge and allow the appeal with costs.

(4)     Set aside the following order of the primary judge, namely:

“(i)   Judgment for the plaintiff in the sum of $348,179.96.

(ii)   The defendant is to pay the plaintiff's costs as agreed or assessed up to and including 28 June 2024.

(iii)   The plaintiff is to pay the defendant's costs as agreed or assessed from 29 June 2024.”

and, in lieu thereof, order:

“(i)   Judgment for the plaintiff in the sum of $348,179.96.

(ii)   The defendant is to pay the plaintiff's costs as agreed or assessed.”

(5)     Cross Summons seeking leave to cross appeal with respect to costs dismissed with costs.

Catchwords:

CONTRACT – contract – summary dismissal – allegations of sexual harassment and workplace bullying – whether Appellant engaged in a “haka” or a pelvic thrust – where conduct relied upon to found summary dismissal held not be established

COSTS – Calderbank offer – where successful party did not “better” financial terms of offer by unsuccessful defendant made shortly prior to trial – relevance of issues going to public vindication in assessing reasonableness of rejection of offer – where argument going to this issue inadvertently overlooked – nature of judgment awarding of costs – even if matter dealt with summarily, key arguments need to be addressed

DAMAGES – contract of employment – where conduct relied upon to found summary dismissal held not to be established – whether employer would have terminated employment following expiry of fixed term of employment on three months’ notice under termination without cause provisions in circumstances where employee had elected to continue employment following expiry of fixed term – proper basis for assessment of damages in such circumstances – loss of a chance or balance of probabilities

EMPLOYMENT LAW – contract of employment – summary dismissal – allegations of sexual harassment and workplace bullying – whether Appellant engaged in a “haka” or a pelvic thrust – where conduct relied upon to found summary dismissal held not be established

Legislation Cited:

Civil Procedure Act 2005 (NSW) s 100(4)

Evidence Act 1995 (NSW) s 140

Trade Practices Act 1974 (Cth)

Uniform Civil Procedure Rules 2005 (NSW) rr 42.1, 42.34

Cases Cited:

Alexander v Railway Executive [1951] 2 KB 882

Bartlett v Australia & New Zealand Banking Group Ltd (2016) 92 NSWLR 639; [2016] NSWCA 30

Bartlett v Australia & New Zealand Banking Group Ltd (No 2) [2016] NSWCA 142

Berry v CCL Secure Pty Ltd (2020) 271 CLR 151; [2020] HCA 27

Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34

Calderbank v Calderbank [1976] Fam 93

Chandrasekaran v Western Sydney Local Health District [2023] NSWCA 288

Chandris v Isbrandtsen-Moller Co Inc [1951] 1 KB 240

Chaplin v Hicks [1911] 2 KB 786

Chappel v Hart (1998) 195 CLR 232; [1998] HCA 55

Crump v Equine Nutrition Systems Pty Ltd trading as Horsepower (No 2) [2007] NSWSC 25

Dovuro Pty Ltd v Wilkins (2000) 105 FCR 486; [2000] FCA 1902

Eldridge v Wagga Wagga City Council [2021] NSWSC 312

Fayad v B & G Properties Pty Ltd [2022] NSWCA 129

Fox v Percy (2003) 214 CLR 118; [2003] HCA 22

Guthrie v News Ltd (2010) 27 VR 196; [2010] VSC 196

Hunter v Roberts (No 2) [2019] NSWCA 235

Johnson v Perez (1998) 166 CLR 351; [1998] HCA 64

Jones v Bradley (No 2) [2003] NSWCA 258

Lee v Lee (2019) 266 CLR 129; [2019] HCA 28

Martinez as trustee for Martinez HWL Practice Trust as representative of the partners trading as HWL Ebsworth Lawyers v Griffiths as trustee for the Griffiths HWL Practice Trust [2019] NSWCA 310

McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; (1951) HCA 79

Milich v The Council of the City of Canterbury (No. 3) [2012] NSWSC 1280

Minister for Immigration, Local Government & Ethnic Affairs v Dela Cruz (1992) 34 FCR 348

New South Wales Cancer Council v Sarfaty (1992) 28 NSWLR 68

North v Marina [2003] NSWSC 64

Perisher Blue Pty Ltd v Nair-Smith (No 2) [2015] NSWCA 268

Rosenberg v Percival (2001) 205 CLR 434; [2001] HCA 18

Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4

Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 357

Smeaton Hanscomb & Co Ltd v Sassoon I Setty, Son & Co (No 1) [1953] 1 WLR 1468

SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323

State of New South Wales v Quirk [2012] NSWCA 216

Sydney City Council v West (1965) 114 CLR 481; [1965] HCA 68

TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130

The Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54

Thera Agri Capital No 2 Pty Ltd v BCC Trade Credit Pty Ltd t/as The Bond & Credit Co [2022] NSWSC 669

Valmont Interiors Pty Ltd v Giorgio Armani Australia Pty Ltd (No 3) [2021] NSWCA 160

Walker v Citigroup Global Markets Australia Pty Ltd [2006] FCAFC 101; (2006) 233 ALR 687

Willis Australia Group Services Pty Ltd v Mitchell-Innes [2015] NSWCA 381

Wilson v Arwon Finance Pty Ltd [2020] WASCA 137

XL Insurance Co SE v BNY Trust Company of Australia Limited [2019] NSWCA 215

Texts Cited:

JD Heydon, Heydon on Contract: The General Part (2019, Thomson Reuters)

Category:

Principal judgment

Parties:

Anthony Kevin Daynes (Appellant and Cross-Respondent)
I-MED Central Queensland Pty Ltd ACN 088 326 514 (Respondent and Cross-Appellant)

Representation:

Counsel:

A R Moses SC with J Bennett (Appellant and Cross-Respondent)
R Foreman SC with L Saunders (Respondent and Cross-Appellant)

Solicitors:

Gillis Delaney Lawyers (Appellant and Cross-Respondent)
Herbert Smith Freehills Kramer (Respondent and Cross-Appellant)

File Number(s):

2024/346223
2024/422225

Publication restriction:

n/a

 Decision under appeal 

Court or tribunal:

Supreme Court of New South Wales

Jurisdiction:

Common Law

Citation:

[2024] NSWSC 1064

[2024] NSWSC 1313

Date of Decision:

22 August 2024
21 October 2024

Before:

Cavanagh J

File Number(s):

2022/00213195
2022/00213195

HEADNOTE

[This headnote is not to be read as part of the judgment]

This appeal arose out of the decision of the Respondent/Cross Appellant, I-MED Central Queensland Pty Ltd (I-MED) summarily to dismiss the Appellant/Cross Respondent, Dr Anthony Kevin Daynes (Dr Daynes), from his position as senior radiologist at I-MED’s radiology clinic in Cairns (the Cairns clinic).

Dr Daynes is 73 years old and has worked as a radiologist in Cairns for 35 years. His summary dismissal followed allegations of sexual harassment by way of a pelvic thrust directed towards one co-worker, Ms Turner, at the 2021 I-MED staff Christmas party, and the bullying and victimisation of another, Ms Odgers. Both allegations were purportedly substantiated by the report of an independent consulting firm named Workdynamic Australia (Workdynamic).

Dr Daynes’ employment was terminated by an email on 11 May 2022 which alleged that Dr Daynes had breached the sexual harassment, bullying and victimisation policies in I-MED’s Workplace Policies Handbook (the Handbook). I-MED justified that termination on the basis that Dr Daynes had breached cll 7.3(a) and 7.3(c) of the “Radiologist & Nuclear Medicine Physician’s Terms and Conditions of Employment” (TCE) which justified his summary dismissal for “serious misconduct” and breach of a “material term” respectively. Dr Daynes treated this as a repudiatory breach of contract and himself purported to terminate the contract. He brought a claim for breach of contract and damages.

At trial, the primary judge was not satisfied that the alleged pelvic thrust occurred, nor that Dr Daynes had failed to comply with the victimisation and bullying policies in the Handbook. His Honour therefore found that the summary dismissal was unlawful and constituted a repudiatory breach of the employment contract, entitling Dr Daynes to terminate it and to an award of damages.

Dr Daynes sought damages in the sum of $4,308,164.38. However, the primary judge found that neither I-MED nor Dr Daynes would have extended the contract beyond the fixed term period, and thus Dr Daynes was entitled to recover only the last 11 weeks and 5 days of his fixed term contract, plus the three months’ notice period, which amounted to $348,179.96, including $45,410.73 in the way of interest.

The primary judge initially indicated that costs should follow the event, but later varied that following an application brought after the delivery of reasons which raised various offers of compromise, in particular I-MED’s Calderbank offer of 28 June 2024, which Dr Daynes rejected. The primary judge ordered that I-MED pay Dr Daynes’ costs up until and including 28 June 2024, and Dr Daynes pay I-MED’s costs from 29 June 2024.

Dr Daynes appealed from the primary judge’s damages assessment. I-MED cross-appealed from the finding that it was not entitled summarily to dismiss Dr Daynes. Both parties sought leave to appeal from the primary judge’s orders as to costs.

The Court (Bell CJ, Leeming JA and Free JA agreeing) held, dismissing the appeal and cross appeal but granting Dr Daynes’ application for leave to appeal against the costs decision, and upholding that appeal:

1. The primary judge did not err in finding both that: (i) he was not satisfied to the requisite standard that Dr Daynes engaged in “conduct of a sexual nature” at the 2021 I-MED staff Christmas party; and (ii) Dr Daynes’ conduct did not satisfy the definition of “workplace bullying” in the Handbook. I-MED was not entitled summarily to dismiss Dr Daynes under cl 7.3 because the acts said to engage that clause were not made out: [95]-[122] (Bell CJ); [211]-[212] (Leeming JA); [215] (Free JA).

Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34, applied.

Fox v Percy (2003) 214 CLR 118; [2003] HCA 22; Lee v Lee (2019) 266 CLR 129; [2019] HCA 28, cited.

2. Though not strictly necessary to decide, Bell CJ observed that: (i) an available interpretation of “material term” in cl 7.3(c) of the TCE was a term which, if breached, would have a serious effect on the benefit which the innocent party would otherwise derive from performance of the contract in accordance with its terms; and (ii) the primary judge erred in his construction of cl 7.3(a) of the TCE, since that subclause merely requires an underlying act or omission to have occurred which I-MED determines, in good faith, materially and detrimentally affected I-MED or the I-MED Network: [123]-[143] (Bell CJ), (Leeming and Free JJA not deciding).

Minister for Immigration, Local Government & Ethnic Affairs v Dela Cruz (1992) 34 FCR 348; Thera Agri Capital No 2 Pty Ltd v BCC Trade Credit Pty Ltd t/as The Bond & Credit Co [2022] NSWSC 669; Eldridge v Wagga Wagga City Council [2021] NSWSC 312, cited.

Fayad v B & G Properties Pty Ltd [2022] NSWCA 129; XL Insurance Co SE v BNY Trust Company of Australia Limited [2019] NSWCA 215; North v Marina [2003] NSWSC 64; Dovuro Pty Ltd v Wilkins (2000) 105 FCR 486; [2000] FCA 1902; Chandris v Isbrandtsen-Moller Co Inc [1951] 1 KB 240; Alexander v Railway Executive [1951] 2 KB 882; Smeaton Hanscomb & Co Ltd v Sassoon I Setty, Son & Co (No 1) [1953] 1 WLR 1468; Sydney City Council v West (1965) 114 CLR 481; [1965] HCA 68, referred to.

3. The primary judge did not err in his damages assessment. Dr Daynes had a contractual right to elect to continue working for I-MED for an indefinite period which was subject to I-MED’s contractual right to terminate his employment without cause with three months’ notice. The loss of chance or opportunity principles contended for by Dr Daynes did not apply. The primary judge applied the correct test and had regard to all the relevant circumstances in finding on the balance of probabilities that I-MED would have exercised their right to terminate the contract at the earliest available date following the expiry of the fixed term: [144]-[170] (Bell CJ); [211], [213] (Leeming JA); [215] (Free JA).

Martinez as trustee for Martinez HWL Practice Trust as representative of the partners trading as HWL Ebsworth Lawyers v Griffiths as trustee for the Griffiths HWL Practice Trust [2019] NSWCA 310; Berry v CCL Secure Pty Ltd (2020) 271 CLR 151; [2020] HCA 27; Chandrasekaran v Western Sydney Local Health District [2023] NSWCA 288; The Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54; TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130, applied.

Fox v Percy (2003) 214 CLR 118; [2003] HCA 22; Lee v Lee (2019) 266 CLR 129; [2019] HCA 28; Bartlett v Australia & New Zealand Banking Group Ltd (2016) 92 NSWLR 639; [2016] NSWCA 30; Chappel v Hart (1998) 195 CLR 232; [1998] HCA 55; Rosenberg v Percival (2001) 205 CLR 434; [2001] HCA 18; Wilson v Arwon Finance Pty Ltd [2020] WASCA 137, cited.

Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adeliade Petroleum NL (1994) 179 CLR 332; [1994] HCA 4; Chaplin v Hicks [1911] 2 KB 786; McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; (1951) HCA 79; Walker v Citigroup Global Markets Australia Pty Ltd [2006] FCAFC 101; (2006) 233 ALR 687; Guthrie v News Ltd (2010) 27 VR 196; [2010] VSC 196; Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 357, distinguished.

4. In relation to I-MED’s application for leave to appeal from the decision as to costs, the primary judge was best placed to assess whether the commencement and continuation of the proceedings in the District Court was warranted and no error of principle in his reasoning has been identified: [171]-[176] (Bell CJ); [210], [214] (Leeming JA); [215] (Free JA).

State of New South Wales v Quirk [2012] NSWCA 2; Milich v The Council of the City of Canterbury (No. 3) [2012] NSWSC 1280, cited.

5. In relation to Dr Daynes’ application for leave to appeal from the decision as to costs, it was reasonable for Dr Daynes to have rejected the 28 June 2024 Calderbank offer. Courts should ordinarily address any substantial, clearly articulated submissions of parties arguing in favour of or against a departure from the general rule that costs should follow the event, and the primary judge erred in failing to do so. His discretion miscarried and in the re-exercise it was reasonable for Dr Daynes to have rejected the 28 June 2024 Calderbank offer given that it did not take into account the damage to public reputation consequent on the summary dismissal of Dr Daynes: [177]-[209] (Bell CJ); [210], [214] (Leeming JA); [215] (Free JA).

Valmont Interiors Pty Ltd v Giorgio Armani Australia Pty Ltd (No 3) [2021] NSWCA 160; Jones v Bradley (No 2) [2003] NSWCA 258; SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323; Hunter v Roberts (No 2) [2019] NSWCA 235; Crump v Equine Nutrition Systems Pty Ltd trading as Horsepower (No 2) [2007] NSWSC 25; Bartlett v Australia & New Zealand Banking Group Ltd (No 2) [2016] NSWCA 142, cited.

Perisher Blue Pty Ltd v Nair-Smith (No 2) [2015] NSWCA 268, distinguished.

JUDGMENT

1. BELL CJ: This matter involved an appeal and cross-appeal from a decision of Cavanagh J (the primary judge) in Daynes v I-MED Central Queensland Pty Ltd [2024] NSWSC 1064 (PJ or primary judgment). The appeal was heard concurrently with applications for leave to appeal and cross appeal from the primary judge’s decision in respect of costs: Daynes v I-Med Central Queensland Pty Ltd (No 2) [2024] NSWSC 1313 (CJ or costs judgment).

2. The proceedings arose out of the decision of the Respondent and Cross Appellant, I-MED Central Queensland Pty Ltd (I-MED), summarily to dismiss the Appellant and Cross Respondent, Dr Anthony Kevin Daynes (Dr Daynes), from his position as a senior radiologist at I-MED’s radiology clinic in Cairns (the Cairns Clinic).

3. The summary dismissal of Dr Daynes followed allegations of bullying and victimisation of one co-worker, Ms Odgers, and the alleged sexual harassment of another, Ms Turner. Both allegations were the subject of a report by an independent consulting firm named Workdynamic Australia (Workdynamic), commissioned by I-MED: PJ [4], [26]. The report was adverse to Dr Daynes and he was summarily dismissed on 11 May 2022, having been suspended during the pendency of an inquiry leading to the report.

4. The primary judge held that I-MED was not entitled summarily to dismiss Dr Daynes and that his dismissal entailed a repudiatory breach of his contract of employment which justified Dr Daynes in terminating that contract, and entitled him to an award of damages. Dr Daynes sought damages in the sum of $4,308,164.38 but was held to be only entitled to recover the last 11 weeks and 5 days of his fixed term employment contract in addition to an amount representing the three months’ notice period under his contract of employment: PJ [263]. That amounted to $302,769.23, plus interest of $45,410.73 (PJ [267]), totalling $348,179.96.

5. The following two key findings of the primary judge were subject to challenge by I-MED and Dr Daynes respectively:

1. that I-MED’s summary dismissal of Dr Daynes was unlawful (PJ [6], [221]);

2. that Dr Daynes’ damages were $348,179.96 (PJ [268]).

6. In holding that the summary dismissal was unlawful, the primary judge was not satisfied that Dr Daynes performed a pelvic thrust towards Ms Turner at a staff Christmas party on 11 December 2021 and thereby had engaged in conduct of a sexual nature. His Honour was also not satisfied that Dr Daynes had failed to comply, in breach of contract, with certain policies in I-MED’s Workplace Policies Handbook (the Handbook) relating to victimisation and bullying.

7. The primary judge initially indicated that I-MED should pay Dr Daynes’ costs but varied this following an application made after the delivery of reasons which drew the Court’s attention to the fact that certain offers of compromise had been made. While his Honour rejected an argument that the proceedings should have been commenced in the District Court with costs consequences under the Uniform Civil Procedure Rules 2005 NSW (UCPR) because Dr Daynes was awarded less than $500,000, the primary judge held that the rejection by Dr Daynes of a Calderbank offer of 28 June 2024 made by I-MED, was unreasonable. This led his Honour to ordering that:

1. I-MED pay Dr Daynes’ costs as agreed or assessed up to and including 28 June 2024; and

2. Dr Daynes pay I-MED’s costs as agreed or assessed from 29 June 2024.

8. Both parties seek leave to appeal from the costs judgment. These applications are dealt with at [171]-[209] below.

Brief Background

9. It is convenient to summarise the background facts in relation to Dr Daynes’ professional history and the Cairns clinic. The two overlap.

10. Dr Daynes is 73 years old and worked as a radiologist in Cairns for 35 years between 1987, when he obtained his specialist registration, and May 2022, when he was summarily dismissed from his position as senior radiologist at I-MED where he had been employed since 2019: PJ [7]-[8].

11. Dr Daynes originally worked in the only radiology practice in Cairns, where he quickly became partner and then stayed on as an employee for three years after he and his fellow partners sold the business: PJ [8].

12. In 2010, Dr Daynes established a radiology practice in Cairns with his wife, Ms Gordon-Daynes: PJ [9]. Between 2010-2019, that business developed into a very successful practice, employing approximately 25 to 30 people, including two other radiologists: PJ [9], [14]. Ms Gordon-Daynes worked as the practice manager, doing “everything other than the actual radiology work” at the clinic: PJ [13], [16].

13. Once the two other radiologists joined the practice, Dr Daynes focused on the “women’s imaging side of the practice” which included “obstetrics, bone density, and breast imaging”: PJ [15]. Dr Daynes gave evidence that his practice was the “leading site in Cairns for breast investigation work”: PJ [16]. The primary judge accepted Dr Daynes was an experienced radiologist with an excellent reputation: PJ [17], [7].

9. In 2019, Dr Daynes and Ms Gordon-Daynes sold the business to I-MED: PJ [9]. There was some dispute at trial as to how much they received from the sale, but the Sale and Purchase Deed (the Deed) records the completion payment as $15,000,087.00, “as adjusted in accordance with clause 7” of the Deed, which dealt with advance payments and apportionment of outgoings: PJ [10]. In cross examination Dr Daynes suggested “the final number was $21 million”. Suffice to say, the business was sold for a very substantial sum: PJ [11].

10. A condition precedent of the Deed was Dr Daynes entering into an employment agreement with I-MED: PJ [12]. The precise terms of that employment are outlined below: see [19]-[28].

11. The completion date in the Deed was 1 August 2019, and Dr Daynes commenced his employment as the senior radiologist with I-MED on 2 August 2019: PJ [21]. He remained in that position until 11 May 2022, when his employment was terminated without notice by way of an email from Ms Nicholson, the general manager of I-MED for Queensland and the Northern Territory (the termination letter): PJ [28]. The key terms of that letter are reproduced at [33] below.

12. Some nine days prior to his termination, Dr Daynes sent the following email to Ms Nicholson:

“Dear I-MED Central Queensland Pty Ltd / Bronwyn

Pursuant to the Schedule of the Commercial Terms of my contract of employment with I-MED Central Queensland Pty Ltd, I hereby provide notice of my intention to continue employment after the Initial Fixed Term.

Kindly acknowledge receipt of this correspondence.

Sincerely,

Kevin Daynes”

18. Dr Daynes and Ms Gordon-Daynes’ intentions in selling the business, and whether it was part of a process of “winding back from their work”, or, alternatively, whether Dr Daynes intended to continue to work at I-MED until retiring at the age of at least 77, as he maintained in his evidence, were hotly contested at trial and will be considered later in these reasons in the context of considering his Appeal in relation to the quantum of damages.

Terms of Employment

19. Annexed to the Deed was a document dated 31 May 2019 and headed “Schedule of Commercial Terms – employee” (Schedule of Commercial Terms) and another document dated 1 May 2016 headed “Radiologist & Nuclear Medicine Physician’s Terms and Conditions of Employment” (TCE): PJ [82].

20. Under the heading “Term”, the Schedule of Commercial Terms provided that the employment would run for an “Initial Fixed Term of 3 years” (the Initial Fixed Term), “then conversion to an Indefinite Term with a Notice Period”.

21. Under the heading “Expiry Date”, the Schedule of Commercial Terms provided that:

“The Initial Fixed Term of 3 years will have an Expiry Date of 3 years from the Start Date. After 2 years and 9 months the Employee should provide notice to the Employer of their intention to continue employment after the Initial Fixed Term.”

22. “Start Date” was defined as “the day after the Completion Date” (as that term was defined in the Deed). As already noted, the Completion Date was 1 August 2019.

23. Under the heading “Notice Period”, the Schedule of Commercial Terms provided:

“After 3 years from the Start Date your employment will convert to an Indefinite Term and a Notice Period of 3 months will apply to the Employee from that date onwards.”

24. “Indefinite Term” is defined in the TCE as:

“Indefinite Term means that the term of your employment commences on the Start Date and continues for an indefinite period, with the parties to provide the Notice Period for termination without cause as per clause 7.4 (unless the employment is terminated earlier in accordance with clause 7.2 or 7.3).”

25. As for the terms and conditions of employment, cl 1.9 of the TCE provided:

“You must at all times perform your work and conduct yourself:

(a)   promptly, faithfully and diligently;

(b)   in a professional and commercial manner;

(c)   with care, diligence and skill having regard to your status as a professionally competent Radiologist or Nuclear Medicine Physician;

(d)   in accordance with reasonable directions given by us, the Business Unit Management Committee and the Clinical Management Committee;

(e)   in accordance with our values and ethics;

(f)   in accordance with minimum performance requirements as agreed between I-MED, the Business Unit Management Committee and the Clinical Management Committee from time to time; and

(g)   in accordance with the Medical Board, RANZCR and ANZAPNM approved quality standards and appropriate managerial standards, including the standards set out from time to time in Clinical Protocols and Practice Guidelines.”

26. The clause governing termination without notice is cl 7.3 of the TCE:

“7.3   Immediate termination by us

We may terminate this agreement immediately and without providing notice to you if:

(a)    Serious misconduct: you:

(1)   commit any dishonest, fraudulent, reckless or criminal act or omission in connection with the Business, as determined by I-MED and/or the I-MED Network Pty Limited Board or the Business Unit Management Committee; or

(2)   commit any other act or omission, that we consider materially and detrimentally affects us or the I-MED Network including deliberate or serious misconduct, serious professional misconduct or serious breach of duty;

(b)   Repudiation: you repudiate these terms and conditions, cease or suspend performing your obligations under them, or inform or indicate to us or I-MED that you intend to cease or suspend performing your obligations;

(c)   Breach: you breach a material term of these terms and conditions;

(d)   Repeated breaches: you repeatedly or persistently breach these terms and conditions;

(e)   Failure to follow lawful and reasonable directions: you refuse to comply with any lawful and reasonable direction given to you in the course of your employment;

(f)    Bankruptcy: you become bankrupt, commit an act of bankruptcy, enter into any arrangement or assignment for the benefit of your creditors, or admit in writing to being insolvent or unable to pay your debts when they fall due;

(g)   Deregistration: you cease to be eligible to practise as a Radiologist or Nuclear Medicine Physician; or

(h)   Engage in any conduct for which the Employer may terminate your employment at law.”

27. As will become clear, I-MED placed significant weight on the Handbook, which provided definitions and examples of workplace bullying, victimisation and sexual harassment.

28. Clause 12 of the TCE provided:

“You must at all times comply with the policies and procedures outlined in the I-MED Workplace Policies Handbook as amended from time to time. A copy of the I-MED Workplace Policies Handbook will be issued to you together with these terms and conditions. The I-MED Workplace Policies Handbook does not form a part of this agreement.”

The Schedule of Commercial Terms similarly provided that:

“The employee also acknowledges and agrees that the Employee has been provided with a copy of the I-MED Workplace Policies Handbook, that the Employee has read and understands each of the policies contained in the Handbook and that the Employee will comply with the policies in the Handbook, as amended from time to time. The I-MED Workplace Policies Handbook does not form part of this employment agreement”.

29. The Handbook dealt with Sexual Harassment as follows:

“Sexual harassment means any unwelcome conduct of a sexual nature that a reasonable person would find offensive, humiliating or intimidating having regard to all of the circumstances.

A person sexually harasses another person if they:

-    make an unwelcome sexual advance;

-    make an unwelcome request for sexual favours; or

-    engage in other unwelcome conduct of a sexual nature in relation to the person harassed,

in circumstances in which a reasonable person, in the circumstances, would have anticipated that the person harassed would be offended, humiliated or intimidated.

Sexual harassment:

-    can involve any physical, visual, verbal or non-verbal conduct of a sexual nature;

-    can be experienced by both women and men;

-    can be experienced where the person harassed is the same sex as the alleged harasser;

-    may include conduct which occurs in the workplace or in connection with work, for example, at a work Christmas party or at a work function outside of work hours; and

-    can involve a series of incidents or it can be a one-off occurrence. While single or isolated occurrences of some behaviour may appear relatively minor, when continued over an extended period they can become very wearing and stressful.

Conduct can amount to sexual harassment even if the offender did not intend to sexually harass anyone. It is the viewpoint of the person harassed that is relevant – not the intention of the offender. Further, sexual harassment does not have to be directed at a particular individual to be unlawful. Your conduct may breach this policy even if no person raises a complaint. For example, telling a joke with sexual content at work may constitute sexual harassment under this policy even if there is no complaint made against you.”

30. Other examples of sexual harassment were then given, all of which were qualified by the phrase “[d]epending on the circumstances”. One of these was “[d]eliberate and unnecessary physical contact, such as patting, pinching, fondling or deliberately brushing against another body, attempts at kissing.”

31. Workplace bullying was defined in the Handbook as follows:

“Workplace bullying means repeated, unreasonable behaviour directed towards a worker or a group of workers, that creates a risk to their health and safety. Workplace bullying includes behaviours that intimidate, offend, degrade or humiliate others.

Bullying can be:

-    intentional - where conduct is intended to humiliate, offend, intimidate or distress, (whether or not the behaviour did have that effect); or

-    unintentional - where conduct is not intended to humiliate, offend, intimidate or distress another person but can reasonably be expected to have that effect.

A broad range of behaviour can be viewed as bullying behaviour and includes both physical and psychological behaviours. Bullying may involve humiliation, sabotage, spreading gossip, overwork, unnecessary pressure, delaying tactics and physical or verbal assault.”

The Alleged Workplace Misconduct

32. The termination letter was sent to Dr Daynes by Ms Nicholson. The letter purported to justify the termination of Dr Daynes’ employment by reference to alleged breaches of cl 7.3 of the TCE: PJ [54].

33. The termination letter relevantly provided as follows: PJ [56]

“The investigators also found that you breached several I-MED policies, specifically:

•   you engaged in bullying conduct towards Ms Odgers in breach of I-MED’s Workplace Behaviours and Equal Opportunity Policy;

•   you engaged in victimisation towards Ms Odgers in breach of I-MED’s Workplace Behaviours and Equal Opportunity Policy;

•   you engaged in sexual harassment towards Ms Turner in breach of I-MED’s Workplace Behaviours and Equal Opportunity Policy; and

•   you breached I-MED’s Code of Conduct and the I-MED Radiology Network Values.

I have considered the findings of the investigation. I consider that the process conducted was fair and have accepted the findings in their entirety.”

Termination of employment

I have concluded that your conduct above, and in particular the sexual harassment, amounted to serious misconduct in direct breach of your duties and responsibilities as an I-MED employee.”

34. Two kinds of alleged misconduct were thus relied on: PJ [58]

• The sexual harassment of Ms Turner at the 2021 Christmas party; and

• The bullying and victimisation of Ms Odgers.

35. I-MED particularised that alleged misconduct as occurring in the period between September 2020 and the termination of Dr Daynes’ employment on 11 May 2022 (the particularised period): PJ [18].

36. Both allegations were purportedly substantiated by an independent report requested by I-MED and prepared by “the investigators” at Workdynamic, which was dated 1 April 2022: PJ [62]. Workdynamic understood its role in the investigation as: PJ [62]

“to make findings of fact in relation to:

(1)   complaints made by Ms Odgers and Ms Turner about the plaintiff; and

(2)   whether any of the substantiated allegations constituted misconduct or breach of any relevant I-MED policies or codes”.

37. The evidence at trial in respect of the two complaints is summarised below. The summary draws on that given by the primary judge.

Alleged Sexual Harassment of Ms Turner

38. I-MED relied on a single incident to substantiate the allegation of sexual harassment, which was said to have occurred at the I-MED office Christmas party on 11 December 2021: PJ [105]. The party was fancy dress, the theme was to come as something relating to your first initial or name, and so Ms (Holly) Turner wore “a large foam costume over her clothes in the shape of a holly leaf”: PJ [106].

39. The function was held on the veranda of the Edge Hills Bowls Club and there were roughly 20 to 30 people in attendance: PJ [107]. Dr Daynes gave evidence that he arrived at the event between 5:05 pm and 5:10 pm and stayed “for about an hour”, during which period he consumed only one glass of wine: PJ [108].

40. At some point in the evening, Ms Turner was standing in a circle of a group of people which included Dr Daynes: PJ [108].

41. On Dr Daynes’ recollection of the evening, provided by way of an affidavit filed 29 September 2023, the following conversation took place between him and Ms Turner: PJ [109]

“Dr Daynes:   Did you come as a Christmas tree?

Ms Turner:     I’m Holly. Obviously, it’s holly.

Dr Daynes:    So are these prickly holly things?

Ms Turner:     What are you dressed as?

Dr Daynes:    Well, I tried to work out what to come as. I could either come as an angel or an arsehole.”

42. Dr Daynes also provided the following recollection of a later conversation between him and Ms Turner: [PJ 111]

“Approximately 15 minutes later, she returned to the same position to my left, wearing regular clothes. Someone – I cannot remember if it was me or another member of the group – said words to the effect, ‘You’ve removed your costume.’ Ms Turner re[p]lied with words to the effect [of]:

Yeah. Well it’s pretty hot. I made the costume myself. I’m pretty proud of it. It’s made of plastic. I took it off because it was hot.”

(Emphasis in original.)

43. Those interactions were not the subject of the allegations. The alleged impugned conduct occurred later in the night when Dr Daynes made some kind of physical gesture whilst standing with a group of work colleagues. According to Dr Daynes, that gesture was a “haka”, a well-known Maori tradition regularly performed by the New Zealand All Black rugby team and in other sporting and cultural contexts. Dr Daynes said that:

“During the time that I was at the Christmas party, I stayed standing in the same spot, and did not move from that spot. The only time I moved was when Mr Mohan, made a comment about Kiwis and hakas. I responded by moving a little on the spot and raising my hands to approximately face level, as a humorous demonstration of a haka, to which the group responded with a little laughter. At that time, I was facing the circle of people I was standing with. I cannot recall if Ms Turner was standing nearby during that part of the conversation, but to the best of my recollection it was before Ms Turner arrived.”

44. In cross examination, Dr Daynes provided the following account of the “haka” movement:

“Q.   Instead, at some point, you did a humorous imitation of a Haka.

A.    Yes.

Q.   At this point, you were stone-cold sober?

A.   Absolutely, yes.

Q.   You describe it in your affidavit as raising your arms up and down.

A.   Yes.

Q.   And moving on the spot a little.

A.   Yes.

Q.   A Haka involves a sharp explosive movement. You’d accept that?

A.   Yes.

Q.   Involves moving your knees and hips.

A.   I - I can’t recall if I moved my knees and hips, but I may have, yes.

…

Q.   So a movement of your hips and knees, that could be perceived as thrusting movement by someone watching it.

A.   Yes, yes.

Q.   So is it possible that what you’re saying is that Ms Turner has simply misunderstood the gesture?

A.   Ms Turner was not, to the best of my knowledge, Ms Turner was not in the group when that happened.

Q.   To the best of your knowledge, you’re not entirely sure.

A.   I’m over 99% certain, yes.

Q.   You can see, Dr Daynes, that a pelvic thrust could be considered by another person to be sexual.

A.   No, sir, this - this was a haka-type movement.”

45. Dr Daynes denied ever making a pelvic thrust towards Ms Turner: PJ [114].

46. In support of Dr Daynes’ recollection was the evidence of Ms Couch, a medical receptionist at the Cairns clinic, who was present at the Christmas Party. Ms Couch had formerly worked for Dr Daynes prior to I-MED purchasing the Cairns clinic: PJ [125]. Ms Couch did not observe any interactions between Dr Daynes and Ms Turner that evening, and told the Court that it would have surprised her to hear that Dr Daynes had performed a pelvic thrust “as that is inconsistent with [her] observation of his character and behaviour”: PJ [126].

47. Ms Della Bella, a medical receptionist and later the practice manager at the Cairns clinic, gave evidence that she did not observe any physical contact between Ms Turner and Dr Daynes: PJ [128]. Neither Ms Couch nor Ms Della Bella were cross-examined on their evidence dealing with the Christmas Party (and Ms Della Bella was not cross-examined at all): PJ [127].

48. Ms Turner did not give evidence: PJ [115]. Ms Nicholson could only give evidence of Ms Turner’s complaint: PJ [121]. I-MED thus relied on the evidence of Ms Bailey, a supervisor employed by I-MED, who claimed to have observed Dr Daynes make a pelvic thrust towards Ms Turner: PJ [121].

49. In cross examination, Ms Bailey provided the following recollection of the pelvic thrust:

“MR MOSES:  Would you like then to just explain what you say you observed?

MS BAILEY:    We were chatting about costumes because it was a dress-up party. I don’t know if Holly and Dr Daynes actually discussed that in private, but it was just a general conversation. And Dr Daynes then turned towards Holly’s side, and pelvic thrusted the side of her costume.”

50. Ms Bailey did not, however, confirm that Dr Daynes actually made contact with Ms Turner: PJ [121], [123]. That concession emerged under cross examination: PJ [123]

“HIS HONOUR: What part of his body came into contact with her costume?

MS BAILEY:     I guess leg, pelvis.

MR MOSES:    When you say you guess, ma’am--

MS BAILEY:     I couldn’t confirm that it contacted the costume. It was quite large. Just foam.

MR MOSES:    I apologise. I interrupted you.

MS BAILEY:     That’s okay.

MR MOSES:    You just told the Court that he did come into contact with the costume. Did he or did he not?

MS BAILEY:     I can’t confirm that it did come into contact.”

51. Ms Bailey went on to say that she did not recall Dr Daynes having a conversation about “kiwis” or a haka, and did not agree that she could have confused a haka movement for a pelvic thrust: PJ [124].

52. Ms Nicholson gave evidence that, in the week commencing 13 December 2021, she was informed by Ms Murphy, a member of the Human Resources team, that Dr Daynes “had acted inappropriately towards Ms Turner at a Christmas party function by thrusting into her and that this occurred in front of other colleagues”: PJ [117].

53. Other evidence was referred to in the Workdynamic report regarding Dr Daynes’ comments or behaviour which was “of a sexualised nature” at times other than the 2021 Christmas party, but I-MED did not rely on that behaviour “as providing any part of the foundation for its termination”: PJ [120].

Bullying and Victimisation of Ms Odgers

54. I-MED alleged that Dr Daynes engaged in the bullying and victimisation of Ms Odgers in the particularised period: PJ [139]. In support of these allegations, I-MED called evidence from:

• Ms Odgers, a radiographer at I-MED; (PJ [140]-[163])

• Ms Nicholson (PJ [164]);

• Ms Wilson, a senior radiographer at I-MED (PJ [165]-[166]);

• Mr Kamau, I-MED’s Operations Manager (PJ [167]-[169]); and

• Mr Paul Wellby, Chief Radiographer at I-MED (PJ [170]-[174]).

55. Ms Odgers moved to Cairns in September 2019, and worked at the Cairns clinic from October that year as a radiographer specialising in mammography: PJ [140]. Ms Odgers worked part time, originally four days a week, then, after COVID-19, two days a week, and finally she settled on three days a week: PJ [140].

56. Ms Odgers gave evidence that she reported directly to Mr Wellby but regularly interacted with Dr Daynes as the senior radiologist: PJ [141]. She recalled that she initially “got along really well” with Dr Daynes until their relationship changed around late 2019.

57. Ms Odgers made three complaints about Dr Daynes’ behaviour, only the latter two of which fell within the particularised period: PJ [152].

58. The first complaint concerned Dr Daynes’ behaviour in late 2019. At that time, Ms Odgers began to perceive Dr Daynes to be treating her rudely particularly by blaming her for technology problems: PJ [141]-[142]. That behaviour coincided with a change in the software used by the clinic to view patients’ images: PJ [142]. Ms Odgers raised this complaint with the Chief Radiographer, Mr Wellby, and Mr Wellby raised the issue with Dr Daynes: PJ [143]. She also sent an email to Mr Wellby outlining these concerns in late January 2020: PJ [144].

59. The second complaint emerged in August 2020 (PJ 154) by way of a Microsoft Teams message from Mr Wellby to the Queensland Regional Manager, Mr Keri Kamau, who then conveyed the complaint by email to Ms Nicholson: PJ [154]. That complaint included allegations of Dr Daynes ignoring Ms Odgers, swearing at her, and throwing paperwork around: PJ [154]. The primary judge pointed out not that all of that alleged behaviour was the subject of evidence at trial (PJ [155]), although Ms Odgers did give evidence that around this period Dr Daynes: PJ [146]-[147]

• spoke “less and less to her”, ignoring and avoiding her;

• communicated with her via sticky “post-it” notes containing messages she considered rude and abrupt; and

• spoke to her “in a short and sharp tone” and would “scowl or look at her with disdain”.

60. Ms Odgers did not observe Dr Daynes treat other staff in that way, and felt she was being intentionally humiliated: PJ [147].

61. Ms Nicholson followed this complaint up with Dr Daynes, who responded by suggesting Ms Odgers “talks too much”, admitted to ignoring her, and claimed “what do you want me to do, she’s hopeless”: PJ [156]. Ms Nicholson also followed up with Ms Odgers, and I-MED’s human resources department: PJ [157].

62. The third complaint arose in December 2021, by way of an email dated 8 December 2021 from Ms Odgers to Ms Nicholson: PJ [157]. That complaint primarily concerned a particular incident which occurred on 6 December 2021 between Ms Odgers and Dr Daynes. The primary judge summarised the alleged incident as follows: PJ [148]

“On 6 December 2021, she was leaving the staffroom when she heard the plaintiff coming towards her. She heard him say in a raised and angry tone “[t]he request said follow up. If it’s a follow-up, it’s old images. But oh no you can't get the old images for me”. She started to ask the plaintiff for a name of the patient. The plaintiff responded, “[d]on't you dare argue with me!”

63. Following that encounter, when Ms Odgers went to find the paperwork, she found a sticky note in heavy capital letters asking for old images: PJ [160]. Following that incident, Ms Odgers made a formal complaint to I-MED and applied for workers compensation: PJ [149]. The application was accepted.

64. Dr Daynes denied bullying Ms Odgers at any time: PJ [175]. He also denied not speaking to or failing to acknowledge Ms Odgers (“at least generally”), or swearing or yelling at her: PJ [184]. He also denied throwing paperwork around and “saying that he didn’t want to talk to her”: PJ [184].

65. Dr Daynes did, however, give evidence of having concerns in relation to Ms Odgers’ performance, including that “he did not consider [Ms Odgers] to have the experience necessary to be hired for the job”: PJ [177]. He told the Court that it was not his practice to engage in small talk in the tearoom or hallways, and that communicating with post-it notes was “a general practice of staff” which he regularly engaged in with all radiographers, between 20 to 30 times a day: PJ [180], [184]. As the primary judge concluded: PJ [186]

“As I understand his evidence, except for issues which he related to Ms Odger[s’] performance or lack of performance, he does not consider that he treated her differently from other staff.”

66. Dr Daynes also gave evidence that he was under significant stress whilst working at I-MED, owing to an audit from Medicare of over 4000 of I-MED’s billings using Dr Daynes’ provider number (the Medicare audit), and concerns about the spread of COVID-19, and the way I-MED was operating the practice, particularly in relation to the distribution of patients’ radiography images: PJ [175]-[178].

67. Dr Daynes’ response to the incident of 6 December 2021 was summarised by the primary judge as follows: PJ [183]

“He acknowledged that a conversation took place when he asked Ms Odgers to send through old images for a patient. When Ms Odgers asked the patient’s name, he said “it’s at your workstation”. When she started to say something in response he said “don't argue with me. Just send the films through”. He acknowledged that he became aware that the patient was not Ms Odgers’ patient and there were no old films. He agreed that Mr Wellby approached him about the situation and he said he would go and apologise, but recalled that Mr Wellby said that was not necessary. He said he did not apologise to Ms Odgers on the basis of that comment from Mr Wellby. I have difficulty accepting that particular aspect of the plaintiff's evidence.”

68. In support of Dr Daynes’ case was the evidence of Mr Elston, Ms Crew, Ms Della Bella and Dr Robson, all of whom had known Dr Daynes for some time and had not heard negative rumours about his interactions with Ms Odgers, with one exception (in the case of Dr Robson) in relation to a complaint which the primary judge described as “unsubstantiated”: PJ [187]-[190].

Primary Judgment

Issue 1: Summary Dismissal

69. Dr Daynes’ position at trial was that, by terminating his employment without notice, I-MED either breached the employment contract, or evinced an intention not to be bound by it: PJ [32]. Either, it was argued, constituted a repudiation of the employment contract, entitling Dr Daynes to terminate it and seek damages for breach of contract: PJ [32].

70. Dr Daynes also argued that I-MED breached an implied term of the employment contract to act in good faith by the way in which it formed the opinion that Dr Daynes had engaged in serious misconduct: PJ [33], [225]-[230]. That alternative case was not determinatively considered by the primary judge: PJ [222]-[234].

71. I-MED relied on the allegations of sexual harassment and bullying and victimisation, the evidence of which has been summarised at [38]-[68] above, as entitling it to terminate Dr Daynes’ employment: PJ [100]. The primary judge thus had to consider two questions: PJ [64]

1. what conduct Dr Daynes’ engaged in; and

2. whether that conduct entitled I-MED to terminate his employment without notice.

Factual Findings

72. The primary judge concluded that the alleged sexual harassment of Ms Turner at the 2021 Christmas Party was not established, at least to the degree of satisfaction required for such a serious allegation, citing s 140 Evidence Act 1995 (NSW) and Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 (Briginshaw): PJ [131]-138].

73. That finding was reached in light of the conflicting evidence of the witnesses as to the occurrence of the alleged pelvic thrust (PJ [133]), and the lack of explanation as to why Dr Daynes would perform such an act: PJ [134]. On that latter point, the primary judge reasoned: PJ [135]

“There is no suggestion that the plaintiff had consumed excess alcohol. There is no suggestion that the conversation between anyone in the group was of a sexual nature. There is no suggestion of the plaintiff making any sexualised comment to Ms Turner. Ms Turner did not generally work with the plaintiff. There is no evidence of any relationship between them. Except for the suggestions that the plaintiff may have been “slimy” or behaved inappropriately towards women at other times (which are only referred to in the investigators’ report and are somewhat vague and non-specific), there is really no explanation as to why the plaintiff would have done what he is alleged to have done.”

74. Regarding the alleged bullying and victimisation of Ms Odgers, the primary judge made detailed findings of fact at PJ [196]-[197]:

“[196]   In this regard, I accept that the following.

(1)   The plaintiff experienced performance related issues with Ms Odgers within weeks of her commencing work. Those issues may not have been Ms Odger[s’] fault as she came into the job with a significant gap between her last experience in undertaking breast intervention work and there were problems with the defendant’s systems. However, I accept that the plaintiff was at least on occasions directing his frustrations at Ms Odgers.

(2)   Further, I accept that the primary origin of the conflict between Ms Odgers and the plaintiff, such as it was, was performance related. The plaintiff became frustrated with the work, the defendant’s computer system and the technology difficulties which were arising which he believed were hampering him in his work.

(3)   I accept that over time the plaintiff perceived that some of these difficulties might also have been caused by Ms Odger[s’] lack of experience or shortcomings, albeit it is also the position that specific instances have been referred to in which no blame should have been attributed to Ms Odgers. I am not attributing any blame or criticism to Ms Odgers but merely identifying the context in which there appears to have been a deterioration in the relationship.

(4)   I accept that the plaintiff took to communicating with Ms Odgers by means of post-it notes, but also accept that this was a practice which he used for some other staff, albeit he might not have always done so.

(5)   I accept that the plaintiff capitalised some of the notes so as to import some urgency or dissatisfaction.

(6)    I accept the plaintiff decided it was best that he not be social with Ms Odgers. He wasn't interested in talking with her in the tearoom and decided not to engage if they happened to pass in the corridors.

(7)   I accept that on one occasion, in December 2021, he raised his voice with her again complaining of an issue with the imaging or reporting.

(8)   I accept that Ms Odgers felt stressed and anxious and even belittled by the plaintiff's conduct towards her. She ended up stopping work and receiving workers compensation.

(9)   I accept that there were times when the plaintiff was rude to Ms Odgers. He seemed to Ms Odgers to be going out of his way not to talk to her (which is so). He kept her waiting by refusing to acknowledge her presence whilst he was working in the imaging room.

(10)   I accept that he made adverse comments about her performance, both directly to her and to others, albeit he was the senior skilled employee and was responsible for ensuring that the work was done properly. His view of her performance may have been mistaken at times but it was a view he had. There is no evidence that he imagined some false narrative for some devious purpose. He may have been wrong, but his complaints were based on his perception of her performance.

(11)   He presented to Ms Odgers as being frustrated and exasperated by his difficulties with her.

(12)   His method of communication with her was abrupt and might have seemed to her to be rude.

[197]   Having said that, I do not accept the following.

(1)   He swore at Ms Odgers.

(2)   He raised his voice with her on a regular basis or even on more than one occasion (he did so only once).

(3)   He threw any paperwork at her.

(4)   He did not speak to her at all from August 2020 to December 2021 (as there is evidence from other persons of observing the plaintiff engaging with Ms Odgers in a professional way during that period).

(5)   He engaged in any conduct which tended to isolate her from other staff or in any way prevented her from working with other staff (other than the conduct that I have referred) or prevented her from doing her job.

(6)   He sought to have her removed or her employment terminated.

(7)   He spoke about her behind her back in respect of any personal issues or in respect of matters other than her work performance. He did however raise issues with her performance.”

75. After observing at PJ [208] that:

“The plaintiff was in a position of authority to Ms Odgers. He ought to have been conscious as to how his behaviour might impact upon her. It can be said that there should be no place for rudeness and discourtesy at the workplace but the workplace remains a melting pot of persons with different personalities, different levels of experience, different levels of competence and is often mixed with high levels of stress and anxiety. Again, none of that justifies rudeness or discourtesy, but there is a line to be drawn between what might be described as bullying an employee at the workplace and being rude, discourteous and uncooperative”

his Honour concluded that Dr Daynes’ conduct did not amount to workplace bullying within the definition of that concept in the Handbook: at PJ [209]. He further elaborated on his findings set out at [74] above as follows:

“[210]  The issues between the plaintiff and Ms Odgers appear to have arisen as a result of a loss of confidence on the part of the plaintiff in relation to Ms Odgers, perhaps more arising out of some deficiencies in the defendant’s systems rather than Ms Odgers’ own competence levels, but nevertheless were still perceived by the plaintiff to be arising as a result of lack of training or experience in the particular task.

[211]    As established by other evidence, there was a practice of using post-it notes to communicate, particularly instructions about imaging. The fact that the plaintiff used capital letters might have been a sign of his frustration but I do not accept that Ms Odgers was ever being singled out or in some way humiliated because the plaintiff sent her post-it notes using capital letters.

[212]   The plaintiff’s decision not to go into the tearoom with Ms Odgers or speak to her as they passed in the hallway might be described as rude and was perceived by Ms Odgers as being so but I do not consider that such conduct could fall within the definition of bullying a fellow employee. Not speaking to a more junior employee working side by side on a continuous basis may be different but that is not case. Again, each case is fact specific. There is evidence from one witness that the plaintiff did engage with Ms Odgers in a professional manner, such that this is not a case of a senior employee not speaking to a junior person over a continuous and lengthy period.

[213]   There is only one complaint of the plaintiff raising his voice at Ms Odgers and there is no evidence that he swore at her or abused her in anyway.

[214]   There is no evidence of the plaintiff holding Ms Odgers up to ridicule amongst a group of her peers or her being taunted or teased in anyway.

[215]   The evidence does not rise to the level of constant belittling. There are some isolated examples of the plaintiff making adverse comments about Ms Odgers’ ability to do the work to which she objects and says were unfair but, in my opinion, the evidence does not rise to the level of constant belittling of Ms Odgers by the plaintiff. On the evidence, the language used by the plaintiff is not indicative of him directing constant vitriol at Ms Odgers.

[216]   It is clear that the plaintiff wrongly blamed her for workplace performance and for errors on occasions but the examples given are again limited. The termination letter refers to the plaintiff repeatedly belittling the plaintiff in relation to the work she has performed, but the actual evidence does not support the suggestion of repeated belittling or berating.”

The lawfulness of the summary dismissal

76. In light of his findings, the primary judge was not satisfied that Dr Daynes’ conduct entitled I-MED summarily to dismiss him: PJ [221].

77. His Honour emphasised that employment contracts should not be construed such that any trivial breach of policy gives rise to a right to dismiss employees without notice: PJ [199], [202], [219]. His Honour held that the requirement for a “material” breach in cl 7.3(c) of the TCE was a reference to “something so significant such that the conduct might constitute serious misconduct as referred to in 7.3(a)”: PJ [203].

78. As to whether the requirement for “serious misconduct” in cl 7.3(a) of the TCE was made out, the primary judge acknowledged that cl 7.3(a)(2) imported a subjective element, but found that the threshold was not met due to a lack of “deliberate or serious misconduct or serious professional misconduct or serious breach of duty”: PJ [217]. Nor were breaches of cll 7.3(b) or (e) made out: PJ [218]-[220].

79. In any event, and even if a mere breach of policy in the Handbook were sufficient, the primary judge was not satisfied that Dr Daynes engaged in sexual harassment at the Christmas party towards Ms Turner and found that such of Dr Daynes’ conduct towards Ms Odgers as he held was established on the evidence fell below the standard of “workplace bullying” as defined in the Handbook: PJ [204]-[216]. In reaching that conclusion, the primary judge accepted that Dr Daynes had (wrongly) blamed Ms Odgers for aspects of her workplace performance, but held that he had not repeatedly belittled or berated her: PJ [216].

Issue 2: Damages

80. The task of the primary judge was to identify “the value of the loss of entitlements” which Dr Daynes would have achieved but for the wrongful termination (citing Johnson v Perez (1998) 166 CLR 351 at 355; [1998] HCA 64): PJ [235]-[239]. His Honour proceeded on the basis that he was required to engage in an assessment, as a matter of probability, of what would have occurred but for the wrongful summary dismissal, applying this Court’s decision in Willis Australia Group Services Pty Ltd v Mitchell-Innes [2015] NSWCA 381at [122] per Macfarlan JA (Willis).

81. Both parties agreed damages would be assessed by reference to Dr Daynes’ base salary, regional salary, and clinic director allowance: PJ [243], [245]. The difference between the parties, and the critical question at trial, was for how long Dr Daynes would have continued to be employed at I-MED but for the wrongful termination of his employment contract: PJ [250].

82. Dr Daynes contended that, but for the wrongful termination of his employment, he would have worked at I-MED for 6 years and 8 months from the date of his termination, until he was 77 years of age: PJ [243]. Damages for that period calculated by reference to his base salary, regional salary, and clinic director allowance would have amounted to $4,308,164.38: PJ [243].

83. I-MED, on the other hand, submitted that Dr Daynes’ damages should be calculated on the basis of an additional 11 weeks and five days from the date of his termination until the expiration of the initial fixed term of his contract, plus three months of notice to which he would have been entitled if terminated without cause on the expiry of the fixed term of the contract: PJ [244]. This was because it was said that neither Dr Daynes nor I-MED would have extended his employment following the three-year fixed period and that he would have ceased to work following the giving of a three month notice period at the end of the fixed term, it being recalled that I-MED could terminate the employment agreement without cause upon the giving of three months’ notice following expiry of the fixed term.

80. His Honour did not resolve the damages issue by resort to any presumption or common law rule that I-MED would have adopted the most
    advantageous approach available to it regarding Dr Daynes’ continued employment (meaning that it would have terminated his employment at the earliest stage permitted by law) and noted the disapproval by Macfarlan JA (with whom Ward JA agreed) in Willis of what had been said by this Court in New South Wales Cancer Council v Sarfaty (1992) 28 NSWLR 68 (Sarfaty). Rather, his Honour proceeded to consider the evidence bearing on the probabilities of what would have happened. This entailed consideration both as to:

1. what Dr Daynes would have done i.e. would he have continued to work for an indefinite period, as the contract contemplated, or at least up to the age of 77, as he contended, or would in fact he have chosen to retire at or shortly after the expiry of the fixed term of the contract, and

2. what I-MED would have done, and, in particular, whether it would have brought the employment relationship to an end by giving 3 months’ notice under the contract immediately following the expiry of the fixed term. As noted above, this was the basis on which it contended for an award of damages representing the balance of the fixed term and the notice period.

85. The primary judge held that:

“[253]  Firstly, I have a considerable doubt that the plaintiff would have wanted to remain in employment with the defendant in any event despite his suggestion to the contrary in the witness box.

[254]   Secondly, I do not accept that the defendant would have continued to employ the plaintiff, even if the plaintiff wanted to continue his employment after his fixed term.”

86. The primary judge’s reasoning in support of these conclusions was typically thorough and, given the numerous grounds of appeal raised by Dr Daynes attacking it, that reasoning needs to be set out in full. His Honour noted at PJ [255] that:

“(1)  The fixed term was coming to an end in less than 3 months. If the defendant had not summarily dismissed the plaintiff, his contract would have come to an end in any event subject to the giving of the extra 3 months’ notice.

(2)   The defendant's concerns about the plaintiff’s behaviour at the workplace would have remained. The defendant had received complaints about the plaintiff’s conduct of the type which I have accepted and about which it was concerned. It seems somewhat wishful thinking on the part of the plaintiff that, if the defendant had not summarily dismissed him, it would have continued to employ him beyond the fixed term, even despite its concerns about his conduct.

(3)   The defendant had hired a replacement for the plaintiff and the plaintiff had been involved in training that replacement.

(4)   On the plaintiff’s own case, the quantity or level of imaging being undertaken was not as high as he wanted or might have been expected. He blames the defendant for that, thus resulting in less of an earnout payment than he had hoped for. Whatever the cause, the fact is that the level of imaging was not as high as might have been hoped for by both the plaintiff and the defendant. This tends to detract from the idea that the defendant might have been in a position to continue to employ both the plaintiff and his replacement.

(5)   The plaintiff was in dispute with the defendant about its lack of support and problems with its systems. He admits to being frustrated. He was plainly disgruntled. The level of dispute was such that the plaintiff is taking action in a different court to recover damages from the defendant in respect of his earnout payments.

(6)   The defendant and the plaintiff had been required to respond to an audit of the billings using the plaintiff’s provider number, albeit that audit was discontinued following correspondence from the plaintiff. As part of the process of bringing the audit to an end his solicitors wrote to the Department of Health informing it that he intended to retire:

‘Dr Daynes turns 70 years of age in January 2022 and is preparing to wind down his practice to retirement in July 2022. The administrative processing required by the remaining portion of the audit would effectively remove Dr Daynes from clinical practice.’

(7)   Again, he seeks to overcome the statement in that letter by suggesting that he needed the money. I do not accept that.

(8)   The defendant points to the evidence of Ms Nicholson, the relevant manager, to the effect that it would not have continued to employ the plaintiff in any event, albeit the plaintiff says that that statement was not admitted to prove that fact. I accept that. However, there is ample other evidence to support the defendant's case that it would not have continued to employ the plaintiff.

(9)   The idea that he wanted to continue to work because he needed the money seems absurd. No other evidence was adduced such as financial records, details of debts or outstanding loans or any other evidence suggesting that the plaintiff was in financial difficulty. No evidence was adduced which would suggest that he made use of that very significant sum he received for the sale of business for some other purpose. Ms Gordon-Daynes was not called.”

87. His Honour continued his reasoning as follows:

“[256]  As demonstrated through cross-examination, he had both sold the business with the intention to retire and made it plain during the course of his work as an employee of the defendant that he was going to retire. By his own admission, he was frustrated working for the defendant. He was unhappy with their systems, and as is evident by his relationship with Ms Odgers, he was experiencing difficulties with other employees at the workplace.

[257]   I accept that despite indicating an intention to retire he might have wanted to undertake some part-time work going forward after the fixed term contract expired.

[258]   However, he could not initially obtain any other part-time work from any other radiology practice in Cairns because of the restraint arising under the deed. There is no evidence that would permit a finding that but for the wrongful dismissal he would now be working at some other clinic on a part-time basis.

[259]   That would have left him only seeking part-time work from the defendant.

[260]   For the reasons I have already set out, I do not accept that the defendant would have offered him part-time work.

[261]   The reality is the plaintiff was summarily dismissed less than 3 months before the expiry of the fixed term contract, in circumstances in which the plaintiff was required to work for the defendant for that three-year period, as part of the payment of a significant sum to the plaintiff for the sale of his business to the defendant.

[262]   All indications by the plaintiff prior to him being dismissed were to the effect that he would be ceasing work at the end of his fixed term contract. In any event, the relationship between the plaintiff and the defendant was deteriorating for the various reasons referred to in this judgment. I do not accept that the defendant would have continued to offer the plaintiff employment even if as he says he had a change of heart and wanted to remain employed.

[263]   In the circumstances, the damages the plaintiff is entitled to recover are limited to the last 11 weeks and 5 days of his fixed term period and the additional three months’ notice which the defendant accepts it would have been required to provide to the plaintiff.”

Notices of Appeal and Cross Appeal

88. Dr Daynes challenged the primary judge’s damages assessment in some 11 grounds of appeal.

89. I-MED opposed the orders sought by Dr Daynes and relied on a Notice of Contention, identifying two additional grounds on which it was contended the assessment of damages in the primary judgment ought to have been affirmed.

90. By way of an Amended Notice of Cross Appeal, I-MED cross-appealed from the finding that I-MED was not entitled to dismiss Dr Daynes summarily and that I-MED’s termination of Dr Daynes’ employment constituted a repudiatory breach of the employment contract, justifying Dr Daynes’ termination of it.

91. These grounds of appeal and cross appeal will be dealt with thematically, dealing with the lawfulness of the summary dismissal, then the damages assessment, and finally the costs appeals.

Summary Dismissal

92. The primary judge’s findings relevant to his decision that I-MED unlawfully terminated Dr Daynes’ employment without notice have been summarised above at [72]-[79].

93. By its Amended Cross-Appeal, I-MED contended that the primary judge erred in:

“1A       a.    finding at [202]-[203] that cl 7.3(c) of the contract required serious misconduct within the meaning of cl 7.3(a) of the contract;

b.   therefore concluding that the Cross-Appellant did not have a contractual right to terminate the Cross-Respondent’s employment without notice.

1.         a.    finding at [138] that the Cross-Respondent did not engage ‘in conduct of a sexual nature’ towards a staff member, i.e. making a pelvic thrust toward another staff member; and

b.   therefore concluding that the Cross-Appellant did not have a contractual right to terminate the Cross-Respondent’s employment without notice.

2.         a.   finding at [209] that the Cross-Respondent’s conduct toward Ms Nina Odgers did not constitute workplace bullying or otherwise a breach of his obligations under his contract of employment; and

b.   therefore concluding that the Cross -Appellant did not have a contractual right to terminate the Cross-Respondent’s employment without notice.

3.         a.   construing cl.7.3(a)(2) of the contract as requiring ‘deliberate or serious misconduct or serious professional misconduct or serious breach of duty’ to have occurred at [217] , rather than construing cl 7.3(a)(2) as applying where the Cross-Appellant considered that any act or omission materially and detrimentally affected it or the I-MED Network; and

b.   therefore concluding that the Cross-Appellant did not have a contractual right to terminate the Cross-Respondent’s employment without notice.”

94. Grounds 1A and 3 both depended upon grounds 1 and 2 succeeding, and accordingly it is to those two grounds that attention is first turned.

Ground 1: The Sexual Harassment Allegation

95. The primary judge was not satisfied to the requisite standard that Dr Daynes engaged in “conduct of a sexual nature towards Ms Turner at the Christmas Party”: PJ [138].

96. It will be recalled that Dr Daynes’ evidence was that he had sought to imitate the Maori “haka” after another member of the group in which he was standing at the staff Christmas party made a comment about “Kiwis and hakas”. He was adamant, however, that in making a haka movement at a particular point in a conversation at the Christmas party, he did not make a “pelvic thrust”: see [45] above. Dr Daynes’ relevant evidence about the alleged incident has been set out earlier in these reasons.

97. The expression “pelvic thrust” carries a strong sexual connotation. Dr Daynes candidly accepted that a pelvic thrust could be considered by some people to be sexual in nature, could offend and could humiliate.

98. The person to whom it was said that the pelvic thrust was directed, Ms Turner, did not give evidence either as to the physical conduct as she observed it, or her reaction to it, or at all. This last point, in particular, is of significance as, to constitute sexual harassment within the terms of the Handbook, the conduct in question was required not only to be “of a sexual nature” but “unwelcome” and the Handbook stated that “[i]t is the viewpoint of the person harassed that is relevant.”

99. Ms Couch who gave evidence that she was in the group with Dr Daynes and Ms Turner said that she did not observe Dr Daynes make a pelvic thrust towards Ms Turner and that it would have surprised her if he had as that would have been inconsistent with her observation of his character and behaviour: see [47] above. Ms Della Bella gave evidence that she did not see any contact between Dr Daynes and Ms Turner: see [47] above. It was not suggested to either of them in cross examination that he made any movement towards her of any kind. Ms Couch was not cross examined to suggest that the alleged conduct was not out of character for Dr Daynes.

100. The only witness who gave evidence of observing the alleged conduct was Ms Bailey whose evidence has been set out at [48]-[51] above. Although she had initially said that there was physical contact between Dr Daynes and Ms Turner, she was effectively cross examined and was not confident in her evidence that there had in fact been physical conduct.

101. No evidence was given by Ms Bailey or any other witness as to how Ms Turner reacted to the alleged pelvic thrust.

102. This is not a case where there is a dispute as to whether Dr Daynes made any movement at all. It is a dispute, at best, about the characterisation of a brief movement, whether it amounted to conduct “of a sexual nature” and whether it was unwelcome. Putting aside this last matter, both a pelvic thrust and a haka involve a movement of the body and a certain thrusting motion. The latter is not of a sexual nature whereas the former may be, as Dr Daynes accepted under cross examination.

103. The primary judge did not have to make a binary decision as to whether the movement in question was one or the other; rather, he needed to be satisfied that Dr Daynes engaged in “conduct of a sexual nature”. He expressed himself in classical terms of not being satisfied to the requisite standard of proof. He made reference to Briginshaw in a manner that did not attract criticism from I-MED.

104. The primary judge, having cited Briginshaw, expressed himself as follows:

“[132]  In the circumstances, I must be comfortably satisfied to a high degree that the matters relied upon by the defendant actually occurred.

[133]   In a case in which there is conflicting evidence as to the occurrence of the event but there is no reason to doubt that the beliefs held by the witnesses are honestly held, I must have regard not just to the statements of the witnesses as to what they saw and did not see, but also consider the probability or likelihood of the event occurring, the context in which the event is said to have occurred and whether there might be any explanation or reasons why such conduct occurred.

[134]   The difficulty for the defendant is that there is nothing in the context or circumstances or even surrounding conversation which provides any real explanation as to why the plaintiff would have done a pelvic thrust towards Ms Turner.

His Honour then made the observations set out at [73] above before continuing:

[136]   Two witnesses speak of subsequent interactions with Ms Turner at the Christmas party and refer to some issue between her and another employee (I emphasise that I am not in any way suggesting that occurred or being critical of Ms Turner).

[137]   Ms Bailey struck me as a genuine person. I have no reason to doubt that she believes what she said she saw. However, it is at least possible that she saw what the plaintiff says he was doing, that is attempting to imitate a haka. He was standing next to Ms Turner at the time and did not actually come into contact with her or her costume in any way (as Ms Bailey ultimately accepted). The plaintiff denies making a pelvic thrust and one other person in the group (Ms Couch) did not see any such thing. I am unable to compare and assess what Ms Turner says she saw as she did not give evidence.

[138]   In the circumstances, I am unable to be satisfied to the required standard that the plaintiff engaged in conduct of a sexual nature towards Ms Turner at the Christmas party. The allegation of sexual harassment (however it may be defined) is not made out.”

105. This reasoning is, in my view, not only sound but unimpeachable.

106. I-MED’s position on appeal was that none of the evidence presented by Dr Daynes, Ms Della Bella or Ms Couch was materially inconsistent with Ms Bailey’s evidence that Dr Daynes “made a physical gesture capable of description as a pelvic thrust”, and thus the primary judge’s contrary conclusion was in error.

107. The primary judge had to be satisfied that Dr Daynes “engaged in conduct of a sexual nature”, not that he “made a physical gesture capable of description as a pelvic thrust”. While this may have been Ms Bailey’s perception of what she saw, as reflected in her evidence, the two movements were, on Dr Daynes’ evidence, quite distinct and he was adamant that what he did was not a pelvic thrust, still less was it conduct of a sexual nature.

108. It is far from surprising, based upon the competing perceptions and the primary judge’s acceptance of the honesty and genuine beliefs of all relevant witnesses that he was unable to reach the “actual persuasion” referred to by Sir Owen Dixon in Briginshaw at 361. In that famous decision at 362, his Honour went on to observe that:

“The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding, are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal.”

109. The primary judge, especially at PJ [134]-[135], tested the probabilities of whether the disputed movement was of a sexual nature by reference to context, circumstances and the surrounding conversation in a manner entirely consistent with these observations. Dr Daynes’ evidence of Mr Mohan having made a reference to “Kiwis and hakas” was a matter which supported Dr Daynes’ explanation of what he did and negated any characterisation of his conduct as being of a sexual nature. His Honour also had the benefit of Ms Couch’s evidence that any such conduct would have been inconsistent with her perception of Dr Daynes. It was to Ms Couch and not Ms Della Bella that the primary judge referred in PJ [137] as not having seen “any such thing”, referring to the pelvic thrust. To the extent that the primary judge referred in PJ [129] to Ms Della Bella also not observing “anything like that happening” – a matter complained about by I-MED in its submissions – this was a slight overstatement by the primary judge of her evidence but was not repeated in the essential part of his reasoning in PJ [137].

110. I-MED’s submissions in effect invite this Court to prefer Ms Bailey’s evidence over that of Dr Daynes in circumstances where it did not have the benefit of observing either witness. While his Honour did not make a finding of fact, per se, which could be described as “glaringly” mistaken (cf. Fox v Percy (2003) 214 CLR 118; [2003] HCA 22; Lee v Lee (2019) 266 CLR 129; [2019] HCA 28), rather relevantly expressing himself in terms of not reaching the requisite state of satisfaction, his Honour was undoubtedly in a superior position to this Court to assess all of the evidence.

111. For the above reasons, I-MED’s challenge to an essential part of the primary judge’s reasoning must be rejected.

Ground 2: The Bullying and Victimisation Allegations

112. The evidence before the primary judge as to the alleged bullying and victimisation of Ms Odgers has been summarised above at [54]-[68], and the primary judge’s factual findings and reasoning has been reproduced at [74]-[75] above.

113. His Honour’s findings of fact were not challenged per se. Rather, what is challenged by ground 2 was the primary judge’s failure to characterise what he did find to be Dr Daynes’ conduct as meeting the definition of workplace bullying in the Handbook. His Honour’s task was an evaluative one based upon his underlying findings of fact in light of the definition of workplace bullying in the Handbook.

114. No detailed criticism was advanced in relation to his Honour’s extended reasoning process as set out at [75] above and very little was advanced orally by Mr Foreman SC in support of ground 2 of the Amended Cross Appeal.

115. In terms of written submissions, I-MED submitted that:

“(1) firstly, no costs ought to be awarded to the plaintiff, having regard to the amount of the judgment and having regard to r 42.34 UCPR; and

(2)   secondly, even if the plaintiff is entitled to costs until 8 December 2023, on that date the defendant made offers which should result in the defendant not being liable to pay the plaintiff's costs; and

(3)   even if that not be so, the defendant made a further offer on 28 June 2024, which it has beaten.”

173. Rule 42.34 of the UCPR is in the following terms:

“42.34   Costs order not to be made in proceedings in Supreme Court unless Court satisfied proceedings in appropriate court

(1)   This rule applies if--

(a)   in proceedings in the Supreme Court, other than defamation proceedings, a plaintiff has obtained a judgment against the defendant or, if more than one defendant, against all the defendants, in an amount of less than $500,000, and

(b)   the plaintiff would, apart from this rule, be entitled to an order for costs against the defendant or defendants.

(2)   If the proceedings could have been commenced in the District Court, an order for costs must not be made unless the Supreme Court is satisfied that the commencement and continuation of the proceedings in the Supreme Court was warranted.”

174. There was no question as to whether the proceedings could have been commenced in the District Court although the relevant monetary limit to that Court’s jurisdiction absent consent was $1,250,000. The sole question before the primary judge was whether he was satisfied that “the commencement and continuation of the proceedings in the Supreme Court was warranted”. The primary judge held that it was. After making reference to referring to State of New South Wales v Quirk [2012] NSWCA 216 and Milich v The Council of the City of Canterbury (No. 3) [2012] NSWSC 1280, his Honour said at CJ [31]:

“It is only necessary to say that the plaintiff was seeking a significantly higher sum than he obtained (in excess of $5 million). Whilst the factual issues were not that complex, they involved a consideration of different types of evidence. Further, the plaintiff raised as an alternative to his primary case, an argument that had some legal complexity. If I had made different findings and if the plaintiff had pursued the proceedings in the District Court, there would have been a risk of the plaintiff recovering more than the jurisdictional limit of the District Court. In those circumstances, I am satisfied that the commencement and continuation of the proceedings in this Court was warranted. I would not vary the costs orders because of r 42.34.”

175. I-MED maintained that leave to appeal was not required from this decision in circumstances where there was an underlying challenge to the primary judgment. Had I-MED succeeded in its cross-appeal, there would been obvious strength to that position as the underlying costs discretion would fall to be re-exercised in view of the success on the cross appeal. But it has not succeeded and the costs judgment involved discrete questions of a kind ordinarily requiring a grant of leave to appeal.

176. I-MED made an application for leave to appeal from this aspect of the primary judge’s decision, notwithstanding its position that leave was not strictly necessary. I would refuse I-MED any grant of leave to appeal, and even if no grant of leave were required, I would have dismissed any appeal on this aspect of the case. The primary judge was best placed to make the assessment he did as to whether commencement in the Supreme Court was warranted and no error of principle in his reasoning has been identified which would warrant a grant of leave to appeal. In any event, having considered all aspects of the proceedings at first instance in the course of dealing with both the appeal and cross appeal, I agree with his Honour’s conclusion that commencement of the proceedings in the Supreme Court was warranted.

177. Moving to I-MED’s alternative arguments on costs at first instance, noted at [172] above, a number of relevant offers were considered by the primary judge:

• I-MED’s Offer of Compromise of 8 December 2023 of $307, 728.23 plus costs as agreed or assessed (the Offer of Compromise);

• I-MED’s offer in the same terms in accordance with the principles in Calderbank v Calderbank [1976] Fam 93 (a Calderbank offer) also on 8 December 2023; and

• I-MED’s Calderbank offer of 28 June 2024 of $435,000 plus costs as agreed or assessed.

178. The offers of 8 December 2023 were not replied to and in any event were bettered by the judgment Dr Daynes secured. The primary judge correctly declined to vary his costs order by reference to this offer, since it was less than the total damages Dr Daynes received, when interest was included: CJ [34].

179. Prior to considering I-MED’s later Calderbank offer of 28 June 2024, a Calderbank offer made by Dr Daynes on 26 June 2024, following a mediation the previous day, should be noted. The terms of that offer were relevantly as follows:

“… in order to avoid time consuming and costly litigation, our client has instructed us to make an offer of compromise on the following basis:

a.   Judgment for the Plaintiff in the amount of $740,000;

b.   The Defendant pays the Plaintiffs costs as agreed or assessed.

This offer is equivalent to an amount of twelve months' base salary of $500,000.00, plus bonuses in the amount of $100,000.00, a regional allowance of $100,000.00 and a clinic director allowance of $40,000.00. However, in light of the pain, suffering and reputational damage suffered by Dr Daynes, it is proposed that the judgment amount consist of $500,000.00 for twelve months' base salary and $240,000.00 general damages.

In the alternative to the [above] offer […], our client is also willing to resolve the matter on the basis set out in the attached Heads of Agreement which would not involve Judgment for the Plaintiff, but rather a Notice of Discontinuance with other components of the settlement to be dealt with in a Deed of Release.”

180. The Heads of Agreement attached to this Calderbank offer included the following two proposed clauses:

“Kerryn Dillon [or other mutually agreeable person to be nominated by I-MED] (Designated Contact Person) will be the designated contact person if anyone (within or external to I-Med Central Queensland Pty Ltd) makes inquiries regarding Dr Daynes. If the Designated Contact Person is asked about Dr Daynes and the circumstances surrounding his departure from the I-Med Central Queensland Pty Ltd, he/she will say that:

‘Dr Daynes worked for I-MED Central Queensland Ply Ltd from 2 August 2019 to 11 May 2022, performing the following duties:

• General radiology specialising in breast imaging.

I-MED acknowledges Dr Daynes ' excellence as a clinician.’

I-Med Central Queensland Pty Ltd will issue the following statement to Directors and employees of I-Med Central Queensland Pty Ltd within 3 business days of making the payment in paragraph 2 in the following terms:

‘Dr Daynes commenced legal proceedings against I-Med Central Queensland Pty Ltd in relation to his employment coming to an end on 11 May 2022. The legal proceedings have been settled on the basis that I-Med Central Queensland Pty Ltd withdrew its notice to terminate of 11 May 2022 and on other terms which are confidential between the parties. I-Med Central Queensland Pty Ltd acknowledges the dedicated service of Dr Anthony Kevin Daynes during the period 2 August 2019 to 11 May 2022 in which he provided with distinction radiology services to the Cairns community.

I-MED Central Queensland Pty Ltd wishes Dr Daynes well in his future endeavours.’”

181. These clauses reflected the reputational impact Dr Daynes evidently considered his summary dismissal had had on him, which concern was wholly unsurprising.

182. This offer was not accepted and two days after it was made (on 28 June 2024), I-MED countered with the following Calderbank offer:

“(a)  the Defendant make a payment to the Plaintiff in the gross sum, less applicable taxation, of $435,000 which is broadly equivalent to the balance of the Initial Fixed Term, plus an additional 6 months;

(b)   the Defendant to pay your client's legal costs to be agreed or assessed;

(c)   the Plaintiff to discontinue the proceedings with no order as to costs;

(d)   the parties entered into a deed of release, under which the Plaintiff releases the Defendant in relation to all claims in the proceedings, and which includes the usual provisions in relation to confidentiality and non-disparagement.”

183. There was no suggestion in this letter of any of the proposed agreed statements that had been set out in the draft Heads of Agreement that had been proffered on behalf of Dr Daynes two days earlier.

184. I-MED’s Calderbank offer of 28 June 2024 was issued 10 days prior to the commencement of the hearing.

185. The primary judge’s reasoning which led to his varying the previously pronounced costs order in favour of Dr Daynes was set out in the following three paragraphs of the costs judgment:

“[35]   The defendant then made a further offer on 28 June 2024 in accordance with Calderbank v Calderbank in the sum of $435,000 plus costs as agreed or assessed. The offer included other terms which might be considered usual terms such as the plaintiff discontinuing the proceedings and entering into a deed of release, again, on standard terms. The offer was made at a time approaching the hearing date when the parties must have been aware of all the issues in the case and the evidence to be relied upon. It was made following the mediation. The plaintiff must have been in a position to accept it if he wished to do so.

[36]   The plaintiff recovered less than that offer and substantially so. The principles in Calderbank v Calderbank apply. The Court has a broad discretion as to costs.

[37]   It is notable that the defendant has been ordered to pay substantially less than the offer of 28 June 2024. Further, the offers made by the plaintiff were all well above what he actually received. Having said that, the defendant’s offer was made very close to the hearing and only open for a very short time. In my view, the appropriate orders with respect to costs are:

1.   The defendant pay the plaintiff’s costs as agreed or assessed up to and including 28 June 2024.

2.   The plaintiff pay the defendant’s costs as agreed or assessed from 29 June 2024.”

It was from these orders, varying the original costs orders made in Dr Daynes’ favour, that he now seeks leave to appeal.

186. In Valmont Interiors Pty Ltd v Giorgio Armani Australia Pty Ltd (No 3) [2021] NSWCA 160 at [26] (Valmont), this Court said:

“Where an unaccepted Calderbank offer has been made by a party which, although ultimately unsuccessful, nevertheless made an offer which bettered the successful party’s final position, there is a wide range of possible orders that may be made in the Court’s discretion. These include that:

(i)   the offeror pay the offeree’s costs before the date of the offer on the ordinary basis, and the offeree pay the offeror’s costs after the date of expiry of the offer on either:

(a)   an ordinary basis, or

(b)   an indemnity basis;

(ii)   the offeree pay the offeror’s costs before the date of the offer on the ordinary basis, and after the date of expiry of the offer on either:

(a)   an ordinary basis, or

(b)   an indemnity basis: see, for example, Hunter and Squire at [8];

(iii) the offeree only be awarded its costs up to the date of expiry of the offer: see, for example, Tambree v Travel Compensation Fund (No 2) [2004] NSWCA 147 at [14], and that there be no order as to costs thereafter;

(iv) there be no order as to costs of the proceedings at first instance: see, for example, Gilberg v Maritime Super Pty Ltd (No. 2) [2009] NSWCA 394; or

(v) ordinary rule as to costs applies, namely that costs follow the event, because of the unaccepted offer: see, for example, Commonwealth of Australia v Gretton [2008] NSWCA 117.”

187. Failure to accept a Calderbank offer does not create a presumption in favour of the offeror as to costs or indemnity costs, even where the party making the offer receives a result more favourable than that offered: Jones v Bradley (No 2) [2003] NSWCA 258 at [9].

188. It is clear that the primary judge’s decision in light of the Calderbank offer of 28 June 2024 was a discretionary decision, and his Honour’s reasons plainly disclose that he took into account and weighed a number of matters, including the differential between the monetary value of the offer and what Dr Daynes obtained as well as the proximity of the offer to the commencement of the proceedings.

189. In his submissions in support of a grant of leave to appeal, Dr Daynes complains that his Honour did not have regard to an important argument raised in writing by him going directly to the question of whether the rejection of I-MED’s offer of 28 June 2024 was reasonable.

190. That the reasonableness of any rejection of a Calderbank offer is a centrally important question going to the exercise of the costs discretion is well established: SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37] (SMEC). In Hunter v Roberts (No 2) [2019] NSWCA 235 at [6] (Hunter), quoted in Valmont at [21], it was observed that:

“The making of an offer of compromise in the form of a Calderbank letter may justify a departure from the ordinary basis on which costs are awarded and assessed and, as Giles JA observed in SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37], the ultimate ‘question is whether the offeree’s failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule’.” (emphasis added)

191. The question of the reasonableness or otherwise of the rejection of a Calderbank offer falls to be considered by reference to “the situation at the time when the offer was made and not solely by reference to the ultimate outcome of the proceedings”: Crump v Equine Nutrition Systems Pty Ltd trading as Horsepower (No 2) [2007] NSWSC 25 at [41] (Crump). The inquiry should not be undertaken with the benefit of hindsight: Crump at [41]; SMEC at [41], [93], [101].

192. Dr Daynes’ complaint is that his Honour did not appear to take into account in considering the Calderbank offer of 28 June 2024 the fact that it did not contemplate or accommodate in its terms the consequence of public aspects of his summary dismissal by I-MED.

193. That this was the central aspect of Dr Daynes’ submissions may be seen in the following extracts of those submissions before the primary judge on this question (the matter having been determined wholly on the papers):

“None of the offers advanced (and particularly the Calderbank offers) by the Defendant accommodated (or even contemplated) what was a most significant aspect of these proceedings: reputation and vindication that the Plaintiff had not engaged in sexual harassment or misconduct. There was no offer ever made that encompassed a form of public statement or judgment in favour of the Plaintiff.

It is axiomatic, in a case where a breast radiologist has been terminated for purported sexual misconduct, inter alia, that:

a.   vindication through facts found in his favour that there was no such conduct;

b.   judgment entered in his favour in the proceedings; and

c.   public acknowledgement of wrongful termination by the Defendant (in a would-be settlement),

would be a significant and central aspect to his consideration of offers, and inform whether his response to those offers is reasonable.

The significance of this is told, inter alia, in:

a.   the letter of Gillis Delaney of 26 June 2024, where it is noted “…our client has been unable to work since his termination – not only as a result of the challenges in finding alternative work in his specialist field of breast radiology following allegations of sexual harassment” in an offer that included a judgment entered, which would be a public instrument;17

b.   in the Heads of Agreement proposed,18 which would not involve judgment, but would per clause 3 and 4 of that instrument provide for publication terms and a statement to directors and employees of the defendant, which would in effect undo the harm of the termination on sexual harassment /misconduct grounds;

c.   the letter of 28 June 2024 from Gillis Delaney, again which proposed terms contemplating a judgment for the plaintiff, being a communication of a vindication to the world at large.

… offers made by the Defendant in this case, would have taken away an outcome that was emphatically achieved by the Plaintiff with a positive judgment (the public aspect), and could only otherwise be answered with settlement terms similar to those proposed in the heads of agreement offered by the Plaintiff (with a public statement to be made by the Defendant).

None of the Defendant’s Calderbank offers adequately addressed the public aspect. The Defendant cannot sensibly contend that it was unreasonable for the Plaintiff, in the circumstances, to have rejected those offers.”

194. There is no indication in the primary judge’s very brief reasons in respect of the Calderbank offer of 28 June 2024 that his Honour considered these submissions: see [185] above. The failure to do so would vitiate any exercise of his discretion because, contrary to SMEC, the question of the reasonableness of the rejection of the Calderbank offer would not have been undertaken by reference to “all the circumstances”. All the circumstances in the present case included Dr Daynes’ concern for his personal and professional reputation. That this concern was a real one was plain from the fact that his attempts to secure a settlement of the dispute required either entry of a public judgment in his favour or a series of agreed statements going to his departure from I-MED and his reputation, coupled with a non-disparagement clause: see [179]-[180] above.

195. If, contrary to the above, his Honour did in fact take these submissions into account, no reasons are apparent in the costs judgment for any rejection of them. These complaints are both taken up in Dr Daynes’ draft Notice of Appeal. Whether the primary judge failed to take these submissions into account or, if he did so, failed relevantly to give reasons, are matters which, notwithstanding the discretionary nature of his Honour’s decision, merit the grant of leave to appeal and, for reasons explained below, the upholding of Dr Daynes’ appeal in relation to costs.

196. In reaching these conclusions I note the following arguments advanced by I-MED. First, I-MED submitted that:

“The obligation to give reasons does not extend to an obligation to address every submission that has been made: Mifsud v Campbell (1991) 21 NSWLR 725 at 728. The scope of the obligation – i.e. the level of detail required to achieve adequacy – depends on the nature of the case and the particular questions: Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 281. The fact that reasons are not lengthy or elaborate does not itself indicate error; the question is instead whether the reasoning leading to the order is demonstrated: Ex parte Powter; Re Powter (1945) 46 SR (NSW) 1 at 5; 63 WN (NSW) 34 at 36.

It needs to be demonstrated that there was a failure to grapple with a ‘substantial, clearly articulated argument’: Ming v Director of Public Prosecutions [2022] NSWCA 209; (2022) 109 NSWLR 604 at [15], citing SZMTA Minister for Immigration and Border Protection v SZMTA (2019) 264 CLR 421; [2019] HCA 3 at [13] and [105] and Plaintiff M1/2021 v Minister for Home Affairs (2022) 96 ALJR 497; [2022] HCA 17 at [27].”

197. There is no issue with the accuracy of these statements of principle. The difficulty for I-MED arises from the fact that there was, as the extract from Dr Daynes’ costs submissions reproduced at [193] above demonstrates, a ‘substantial, clearly articulated argument’ with which his Honour did not grapple or engage. True it is that shorter reasons will frequently be more likely to be appropriate in determining a question of costs and that an assessment of the reasonableness of a party’s conduct in not accepting an offer may be made on a summary basis: see e.g. Perisher Blue Pty Ltd v Nair-Smith (No 2) [2015] NSWCA 268 at [16]. Costs decisions may, however, have significant financial consequences for parties especially when there has been a multi-day proceeding and where the outcome of a costs decision is to reverse, or partially reverse, the usual rule, as stated in UCPR r 42.1, namely that costs follow the event.

197. Where a detailed argument is put in favour of or against a departure from this rule, it should ordinarily be addressed, even if only briefly. For whatever reason, that did not occur in the present case. The fact that, as I-MED submitted, the primary judge’s process of reasoning in relation to the significance of Dr Daynes’ Calderbank offer was “explicit and explicable”, and that “[r]ead fairly, the Costs Judgment makes it clear that the primary judge’s principal reason for ordering that Dr Daynes pay I-Med’s costs on and from 29 June 2024 was the significance of the monetary difference between the offer and the outcome Dr Daynes achieved”, is no answer to the failure to engage with what was Dr Daynes’ central argument on the question of costs and the particular question of the reasonableness of I-MED’s rejection of Dr Daynes’ offer.

198. I-MED drew attention to the fact that in another part of his Honour’s costs judgment dealing with the question of interest, the primary judge noted the following matters:

“[46]  The plaintiff submits that the special circumstances of the case warrant the making of an order for interest up to the time of judgment. The plaintiff submits that special circumstances exist because this was a case in which he, as a specialist in breast work, was dismissed in part for sexual harassment of a woman. He submits that he was entitled to pursue public vindication by obtaining a judgment in his favour and, of course, the effect of the judgment was a finding that he did not engage in sexual harassment such as to entitle the defendant to terminate him summarily.

[47]   The defendant responds by submitting that the plaintiff in fact did not obtain vindication because he did not establish otherwise unreasonable behaviour on the part of the defendant and that his claim of reputational damage and being unable to find work could not be accepted on the evidence presented in the proceedings. I find it difficult to accept that a radiologist accused of sexual harassment would not suffer reputational damage but it is unnecessary for me to make any further finding about that. I accept that, having regard to the plaintiff’s submissions, special circumstances existed such that he should be entitled to interest up to the date of the judgment.” (emphasis added)

200. These paragraphs do not assist I-MED. On their face, they make it clear in the passages to which emphasis has been added, that the primary judge was dealing with the question of vindication to reputation in the specific context of the availability of interest from the commencement of proceedings. This required the demonstration of special circumstances: Civil Procedure Act 2005 (NSW) s 100(4). His Honour had already dealt with the question of costs by this stage of his reasons, and it would not have been correct to deal with questions of vindication to reputation in the context of a question of interest rather than costs (and I do not suggest that his Honour did so). If such questions were relevant to both the question of costs and interest, they had to be dealt with in both, quite distinct, contexts.

201. What is, perhaps, significant about these paragraphs is his Honour’s statement at [47] that “I find it difficult to accept that a radiologist accused of sexual harassment would not suffer reputational damage.” This observation tends to confirm that his Honour must have inadvertently overlooked this aspect of the argument advanced in the context of the 28 June 2024 Calderbank offer, dealt with earlier in the costs judgment.

202. That a concern to vindicate his personal and professional reputation through the Court proceedings by establishing that his summary dismissal was unlawful was a relevant matter for Dr Daynes to raise in the context of an assessment of the reasonableness or otherwise of a rejection of a Calderbank offer is supported, if authority were required, by this Court’s decision in Bartlett v Australia & New Zealand Banking Group Ltd (No 2) [2016] NSWCA 142 at [25].

203. Having found error in the manner in which the primary judge reached his ultimate order as to costs, that discretion falls to be re-exercised.

204. In my opinion, notwithstanding that Dr Daynes did not better I-MED’s Calderbank offer of 28 June 2024, it was reasonable for him, in all the circumstances, to have rejected it, with the consequence that there should not have been a departure from the usual rule that costs follow the event.

205. Dr Daynes’ summary dismissal had obvious ramifications for him of a reputational kind, especially given the “particulars”, as it were, which underpinned that dismissal, namely alleged sexual harassment of one co-worker and the bullying and victimisation of another. Dr Daynes was a senior radiologist who had been working in Cairns for more than 35 years.

206. That Dr Daynes was concerned about his reputation must have been obvious to I-MED but, even if that were not the case, his concern was manifested in the terms of his own Calderbank offer made two days prior to I-MED’s offer and which has been produced at [179]-[180] above.

207. I-MED’s Calderbank offer contained no functionally equivalent terms that would have permitted at least some salvaging of, or amelioration of any harm to, Dr Daynes’ reputation as a consequence of his summary dismissal. Indeed, the confidentiality and non-disparagement terms in I-MED’s offer would have operated to constrain any attempts by him to defend himself vis-a-vis I-MED. While such a clause may have foreclosed any further reputational damage to Dr Daynes by publication or disclosure of allegations of misconduct by I-MED, the fact was that he had been peremptorily suspended during the Workdynamic Inquiry and then summarily dismissed. It is entirely understandable that leaving these matters unexplained in the context of a senior medical practitioner with a large roster of patients was unsatisfactory to the doctor.

208. Absent I-MED proposing a mechanism to accommodate these reputational concerns or incorporating those that had been reasonably proposed in Dr Daynes’ own Calderbank offer of 26 June 2024, he had only one available course if he was to have any chance of reputational repair. He achieved that to a large degree by his success in the proceedings, albeit that he did not secure as large an award of damages as he had hoped.

209. It was not unreasonable for him to have rejected I-MED’s Calderbank offer. In reaching that conclusion, I have, of course, taken into account the financial differential between what was offered and what was ultimately awarded, as well as the proximity of the offer to the commencement of the trial. Taking all matters into account, notwithstanding the Calderbank offer of 28 June 2024, the costs of the trial should follow the event.

Conclusion and orders

210. For the foregoing reasons, I propose the following orders:

1. Appeal dismissed with costs.

2. Cross appeal dismissed with costs.

3. Grant leave to Dr Daynes to appeal with respect to the costs judgment of the primary judge and allow the appeal with costs.

4. Set aside the following order of the primary judge, namely:

“(i)   Judgment for the plaintiff in the sum of $348,179.96.

(ii)   The defendant is to pay the plaintiff's costs as agreed or assessed up to and including 28 June 2024.

(iii)   The plaintiff is to pay the defendant's costs as agreed or assessed from 29 June 2024.”

and, in lieu thereof, order:

“(i)   Judgment for the plaintiff in the sum of $348,179.96.

(ii)   The defendant is to pay the plaintiff's costs as agreed or assessed.”

5. Cross Summons seeking leave to cross appeal with respect to costs dismissed with costs.

211. LEEMING JA: I agree with the orders proposed by the Chief Justice, and with his Honour’s reasons, subject to the following, which is mostly added by way of emphasis rather than qualification.

212. Logically, the cross-appeal (which sought to set aside the judgment in Dr Daynes’ favour) should be addressed first. The challenge to the factual findings made by grounds 1 and 2 of the cross-appeal should fail for the reasons given by the Chief Justice: I agree with him that no basis for setting aside the finding by the primary judge, on evidence adduced at trial which was different from and in significant respects more limited than, the material supplied to the investigator, that a basis of bullying or sexual harassment sufficient to summarily terminate Dr Daynes’ employment pursuant to cl 7.3(a)(2) had not been made out. Ground 3 does not strictly arise, and accordingly I see no reason to express a conclusion on the proper construction of the contract. However, I would say that more light is apt to be shed upon the legal meaning of a clause that uses “material” to qualify “term” as opposed to “breach”, and also uses “materially” in a related context, by reading the clause as a whole in its context, rather than by relying on dictionary definitions and constructions of the same word in different contexts.

213. On the question of damages, in addition to what the Chief Justice has said, the primary judge made a finding of fact as to when Dr Daynes would leave his employment. On the view I take, that finding was favourable to Dr Daynes. It was inconsistent with what he had advised during a Medicare audit, on the basis of which Medicare appears to have abandoned the audit. His solicitor told Medicare’s investigator that he “turns 70 years of age in January 2022 and is preparing to wind down his practice to retirement in July 2022”, in support of a submission that the audit contemplated would “effectively remove Dr Daynes from clinical practice”. The judge awarded damages for a longer period. There was ample evidence of his dissatisfaction with I-MED aside from the investigation. Further, the primary judge rejected Dr Daynes’ evidence that he intended to continue to work because he needed to raise the money. That rejection was a finding based on what had been squarely put to Dr Daynes in cross-examination. No proper basis was put forward to interfere with the findings made by the primary judge.

214. Finally, I agree with the Chief Justice that Dr Daynes should succeed, and I-MED should fail, on their separate summonses seeking leave to appeal from the costs orders.

215. FREE JA: I agree with Bell CJ, subject to the qualification that, in light of the failure of the cross-appeal based on the determination of grounds 1 and 2, I prefer not to express a view about the construction of cl 7.3 of the agreement.

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Decision last updated: 11 July 2025