Henshall Developments Pty Ltd v Brumett Pty Ltd - [2012] WADC 69

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: HENSHALL DEVELOPMENTS PTY LTD -v- BRUMETT PTY LTD [2012] WADC 69

CORAM: STAUDE DCJ

HEARD: 26-27 OCTOBER 2011 & 17 FEBRUARY 2012

DELIVERED : 16 MAY 2012

FILE NO/S: CIV 3251 of 2009

BETWEEN: HENSHALL DEVELOPMENTS PTY LTD
Plaintiff
AND
BRUMETT PTY LTD
Defendant

Catchwords:

Contract - Agreement to provide building supervisory services - Claim for payment of agreed bonus - Whether agreement to pay discretionary bonus enforceable

Legislation:

Nil

Result:

Plaintiff's claim allowed

Representation:

Counsel:

Plaintiff: Mr B Nugawela & Mr H Chew
Defendant: Mr C P Stokes

Solicitors:

Plaintiff: Success Legal
Defendant: Chris Stokes & Associates

Case(s) referred to in judgment(s):

Australian Woollen Mills Pty Ltd v Commonwealth [1954] HCA 20; (1954) 92 CLR 424
Bryant v Flight (1839) 5 M & W 114; (1839) 151 ER 49
Ermogenous v Greek Orthodox Community of South Australia Inc [2002] HCA 8; (2002) 209 CLR 95
Godecke v Kirwan [1973] HCA 38; (1973) 129 CLR 629
Greenburg v Meffert (1985) 30 DLR (4th) 768
Gregory & Bradshaw v MAB Pty Ltd (1989) 1 WAR 1
Ikin v Cox Bros (Aust) Ltd (1929) 25 Tas LR 1
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Kofi Sunkersette Obu v A. Strauss & Co Ltd [1951] AC 234
Loftus v Roberts (1902) 18 TLR 532
Meehan v Jones [1982] HCA 52; (1982) 149 CLR 571
Placer Development Ltd v Commonwealth [1969] HCA 29; (1969) 121 CLR 353
Powell v Braun [1954] 1 All ER 484
Roberts v Smith (1859) 4 H & N 315; (1859) 157 ER 861
Roufous v Brewster & Brewster (1971) 2 SASR 218
Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 357
South Australia v Commonwealth [1962] HCA 10; (1962) 108 CLR 130
Taylor v Brewer (1813) 1 M & S 290; (1813) 105 ER 108
Thorby v Goldberg [1964] HCA 41; (1964) 112 CLR 597
Wakeling v Ripley (1951) 51 SR (NSW) 183
Walker & Sherman v Andrew [2002] NSWCA 214
Way v Latilla [1937] 3 All ER 759

STAUDE DCJ:

Introduction

At issue in this matter is whether the plaintiff can enforce a contractual promise made by the defendant to pay a discretionary bonus (in addition to other agreed remuneration) for the completion of building supervisory work on a residential construction project, and, if not, whether the plaintiff is entitled to a quantum meruit.
The dispute arises out of an arrangement made between Giuseppe (Joe) Brunetto, a director of the defendant, and Joseph Henshall, his son‑in‑law, the sole director of the plaintiff.
The defendant carried on business as a property developer. Mr Brunetto ran the business of the defendant on a day‑to‑day basis. He is married to Mrs Giuseppina Brunetto from whom he separated on 22 April 2009. Mrs Brunetto is also a director of the defendant. I am informed that as a result of Family Court proceedings between Mr and Mrs Brunetto the assets of the defendant have been frozen and that by order of the Supreme Court Mrs Brunetto is authorised to instruct the defendant's legal representative with respect to these proceedings.
Regrettably, the litigation has arisen from the breakdown of Mr and Mrs Brunetto's marriage. Mr Brunetto is on the plaintiff's side and gave evidence in support of the claim. The closeness of the relationship between the parties is demonstrated by the fact that until 2009 Mr Henshall's wife, Annette, the only child of Mr and Mrs Brunetto, was the bookkeeper for both companies. Mr Joe Rapattoni, who also gave evidence for the plaintiff, was at all material times and remains the accountant for both companies.
By not admitting any of the material facts the defendant has put the plaintiff to proof of all elements of its cause of action.
In broad outline the facts are these. In 2002 Mr Brunetto, in order to assist Mr Henshall to become a registered builder, agreed to engage him in a general capacity to work on a series of residential development projects to be undertaken by the defendant. The defendant engaged a registered builder, Gavin Ingram on these projects, but it appears that Mr Ingram's role was nominal and that most of the building works were, in all practical respects, arranged and supervised by Mr Brunetto and Mr Henshall.
It was agreed that in consideration of the provision of Mr Henshall's services, which ranged from organising trades and materials to labouring, the plaintiff would be paid $3,000 per month, plus GST, and reimbursed for fuel and telephone expenses. It was further agreed that at the end of a project the defendant would pay the plaintiff a discretionary bonus. It was the plaintiff's pleaded case that the bonus would be a proportion of the profit, or expected profit, from each development, to be fixed in the discretion of Mr Brunetto: statement of claim, par 7(d).
The first project undertaken was at Ayer Road, Queens Park (mistakenly referred to in the evidence as Ayer Street), a development of 12 units which commenced in December 2002 and was completed in September 2003. In October 2003 the plaintiff received a bonus of $33,000.
The second project was at King George Street, Victoria Park, a development of 10 townhouses which commenced in April 2003 and was completed in May 2004. The plaintiff received three bonus payments: $20,000 in January 2005; $22,000 in July 2005; and $22,000 in September 2005. The reason given for the staggered payments was slow sales.
The third project was at Great Northern Highway, Midland, referred to as stage 1, a development of 22 units. Work commenced in September 2003 and was finished in August 2005. The plaintiff was paid a bonus of $66,000 in September 2005.
The fourth project was stage 2 of the development at Great Northern Highway, consisting of 35 units constructed between November 2005 and January 2007. Two bonus payments were made, one of $30,000 in January 2007 and the other of $110,000 in March 2007.
The fifth project, in respect of which the claim arises, was at Spring Street, Midland, a development of 21 units. The construction period was March 2007 to April 2008, although demolition had occurred in 2005 and siteworks were done in 2006.
The parties were also involved in a joint venture at Fawell Street, Midland from January 2006 to June 2007. Each company owned a property which adjoined that of the other. The two properties were developed at the same time and the profits were shared.
At some point towards the end of the Spring Street project Mr Brunetto fixed upon a bonus amount of $150,000. There is a dispute as to when and how that occurred. As with the other bonuses, it was totally discretionary. On Mr Brunetto's evidence, it was not calculated according to any agreed or otherwise identifiable formula and it bore no direct relationship to any profit made by the defendant. Although, on the plaintiff's case, the amount of the bonus was fixed in early 2008, no payment was made at that time.
When Mr and Mrs Brunetto separated in April 2009, Mr Brunetto suggested to Mr Henshall that the money should be paid. An invoice was raised by Mrs Henshall on behalf of the plaintiff and a cheque drawn by Mr Brunetto on behalf of the defendant, but, as events transpired, the defendant's bank would not transfer funds to the plaintiff without the authority of Mrs Brunetto. Mrs Brunetto objected to the payment, thus precipitating the present dispute.
The claim, therefore, is for $150,000, being damages for breach of contract. In the alternative, the plaintiff claims on the grounds of unjust enrichment a quantum meruit. The defendant neither admits the agreement, nor the notification by Mr Brunetto in 2008 of the amount of the bonus. The defendant otherwise denies the claim.
By reason of the operation of s 128 and s 129 of the Corporations Act 2001 (Cth) the plaintiff was entitled to assume that Mr Brunetto had authority to contract on behalf of the defendant. No issue arose in this respect.

Evidence

A number of witnesses were called by the plaintiff to prove the agreement, the actual work done by Mr Henshall on the Spring Street project, the determination of the bonus amount by Mr Brunetto and his communication of it to Mr and Mrs Henshall, the treatment of the bonus for accounting purposes, and the remunerative value of the work of Mr Henshall, the last matter being relevant to the alternative claim. By consent, the documents to which reference was made during the trial were tendered as a bundle: exhibit 1. No evidence was adduced on behalf of the defendant.
Mr Henshall gave evidence that he is the sole director of the plaintiff. His wife was a director from 1999 to 2008. He and Mr Brunetto discussed his coming on board as a supervisor in late 2002. An oral contract was made between their companies in the terms mentioned. There was no agreement as to how the bonus would be calculated. According to Mr Henshall, Mr Brunetto told him that he would make a decision based on the profit at the end of each job. The decision would be a unilateral one on Mr Brunetto's part and that he would accept whatever decision he made.
In respect of the Spring Street project he said that he worked six days a week. He did scheduling, quantities, liaising with trades, supervision and checking claims for payment. He also did labouring, including landscaping and reticulation, the construction of retaining walls and the erection of temporary fencing. He would normally work from 6.00 am to 5.00 pm.
In the course of his evidence Mr Henshall identified Builders' Registration Board certificates of registration in respect of himself and the plaintiff, each dated 21 February 2007. He explained that he obtained his builder's registration by working as a supervisor for five years and satisfying other requirements.
Mr Henshall said that Mr and Mrs Brunetto came for dinner at his home in January 2008. Although at that time the development had not been completed, Mr Brunetto told him and his wife that the plaintiff would get $150,000. He said that this amount was discussed on numerous other occasions, including an occasion in late January when Mr Rapattoni was present at Mr Henshall's home.
Mr Henshall said that the payment was deferred for two reasons, namely, that the units were not selling, and that the plaintiff did not have a tax bill due until 2009, so the money was not needed. At the same time he and his wife were aware that the defendant was in debt. He was agreeable to not being paid until the money was needed.
In April 2009 Mr Brunetto came to him and said that Mrs Brunetto had left him. He said he did not know what was going to happen with the payment of $150,000 and suggested that the money be paid. Mr Henshall said that the plaintiff needed the money then to pay a big tax bill in May. An invoice was raised by the plaintiff and a cheque for $150,000 received from Mr Brunetto. Mr Henshall identified the invoice at p 41 of exhibit 1.
In cross‑examination, the credibility of Mr Henshall was challenged. It was put to him, and he accepted, that par 7 of the statement of claim was incorrect inasmuch as it alleged an agreement in relation to the Spring Street project being made in 2002. The property had not been purchased at that time.
The obvious anomaly which Mr Henshall's cross‑examination exposed was later corrected by amendments to the statement of claim made with leave. The plaintiff's case was that the agreement applied to all development projects carried out by the defendant after the date of the agreement and was not specific to Spring Street.
Mr Henshall accepted that the determination of the bonus was a matter for Mr Brunetto and that he accepted his decision. He also accepted that part of the reason for working for the defendant was to obtain his builder's registration.
Mr Henshall was taken to a statutory declaration made in support of the lodgement of a caveat over the Spring Street property which he accepted was wrong in a number of respects. Paragraph 2 stated that in late 2008 Brumett agreed to a joint development of the land at Spring Street. Mr Henshall accepted that there was no agreement made in late 2008 and that there was no joint development with respect to Spring Street. The only agreement made in relation to remuneration was in 2002. The declaration was also wrong in par 3 where he stated that the plaintiff had raised invoices for fees for project management services for $88,000, $30,000 and $110,000, none of which related to Spring Street. Paragraph 4 of the declaration stated that an invoice dated 30 April 2009 for $150,000 was unpaid, but omitted to state the basis of the charge. The attitude of Mr Henshall towards the inaccuracies in the declaration was rather flippant. For example:
Do you generally read documents before declaring them to be true? – I should do, shouldn't I?
But you don't appear to have on this occasion? – Yeah, it looks like I've ballsed up.
…
You didn't read the document before you signed it? – I may have read it, may not have understood or noted down the dates of individual items.
Mr Henshall accepted that for some of the time he was working on Great Northern Highway stage 1 he was also working on the King George Street project. The Fawell Street project was done as a joint venture between the two companies. During the time when the Fawell Street project overlapped with Great Northern Highway stage 1 Mr Henshall worked on both. Similarly, during the period in which the Fawell Street project overlapped with the Spring Street project Mr Henshall worked on both.
Mr Henshall admitted that the plaintiff was involved in its own development at Epsom Avenue, Belmont, but said that work on this project did not start until towards the end of or after the Spring Street project. In relation to the time spent by him working at Spring Street, Mr Henshall said that the only period in which he was solely working on that project was from June 2007 until February or March 2008. During this period he worked six days a week for at least half to three‑quarters of the time, otherwise five days per week. Not all of his work was done on site.
On the issue of when the sum of $150,000 was first mentioned, Mr Henshall was cross‑examined as to credit in relation to an affidavit he made in connection with an application for summary judgment by the plaintiff in March 2010. In that affidavit he said that when the Spring Street project was completed Mr and Mrs Brunetto on behalf of Brumett agreed to pay a bonus of $150,000. No reference was made to this sum being mentioned at a dinner prior to the completion of the Spring Street project. Mr Henshall could not think of any reason why he did not refer to the earlier occasion. His evidence was that the amount of the bonus was mentioned at the earlier dinner and that deferral of payment of the bonus was discussed later, about April, probably at dinner. There were numerous occasions when the bonus was discussed.
Mr Henshall said that he did not raise an invoice when the amount of the bonus was decided because the project had not been completed. After the project was completed in April 2008 he did not raise an invoice because payment of the bonus was to be deferred, the units not having been sold. There were tax implications if the invoice was raised in that financial period.
It was put to Mr Henshall that there was never a meeting at which Mrs Brunetto was present and at which she agreed to defer payment of a bonus of $150,000. He did not agree. Mr Henshall accepted that he had not previously asserted that there was a meeting in January 2008 at which the amount of the bonus was discussed. He made no reference to such a meeting in response to correspondence from Mrs Brunetto's solicitors in July 2009 or in an affidavit he swore on 13 May 2010 in answer to an affidavit by Mrs Brunetto in opposition to an application for summary judgment.
Mr Henshall rejected the suggestion that the bonus was made up after the separation and had never been discussed previously. He said that the bonus amount was offered by Mr Brunetto on a number of occasions. Each time payment was deferred on the basis that the money was not required by the plaintiff until May 2009 when a tax payment was due.
Although Mr Henshall obtained his builder's licence in February 2007, Mr Ingram was the registered builder with respect to the Spring Street project which started in March 2007.
Mr Brunetto gave evidence that he and his wife had been the directors of the defendant since August 1989. Mr Brunetto ran the defendant's property development business. Mrs Brunetto had very little involvement. The defendant's BankWest account required only his signature.
Mr Brunetto recalled making an agreement with Mr Henshall in December 2002. Mr Henshall wanted his help in becoming a registered builder. He said:
While that was just an oral agreement that he will learn the trade and also he will order material and look after the men and the trade and also his role was to keep the place clean and so … he work all day [sic].
Mr Brunetto said that he had never employed a cleaner so nearly all site cleaning was done by Mr Henshall. Mr Brunetto said that sometimes developments overlapped. As one finished he would move onto the next and Mr Henshall would look after the existing one. Mr Henshall would report to him. He said there was an agreement that he would be paid $3,300 per month and be reimbursed for fuel and telephone and that he would be paid a bonus at the end of a development project. Mr Brunetto said that he would decide the bonus after discussion with Mrs Brunetto. Mrs Brunetto would always say, 'I leave it up to you, you know what you're doing'.
In relation to the Spring Street project, Mr Brunetto said that when the job was nearly completed, he told Mrs Brunetto that he had decided to give Mr Henshall $150,000. She responded in the same manner as before. He recalled having dinner one evening with his wife and Mr and Mrs Henshall when he informed them of the amount of the bonus. He thought this was in early 2008. He said that he received an invoice for this amount, but that Mr Henshall said that he did not need the money at that time. Mr Henshall said he had a tax liability in May that year and would need the money then. He said, 'Well, the money's there - I'd rather square up the debt and pay'. He said that the Henshalls insisted, so he said that he would pay when they were ready.
Mr Brunetto's evidence about when the invoice was received was unclear. He said that an invoice was received a couple of months later. He did not remember exactly because Mrs Henshall did the accounts, but he said that on 22 April 2009 he and his wife separated and the account was never paid. He agreed, however, that his recollection was that the dinner at which the bonus was mentioned was in early 2008 and that the separation occurred in April 2009. Asked why the invoice was not paid in this time, he said that the plaintiff did not require the money.
Asked whether he based the bonus amount on any criteria, Mr Brunetto said:
Well, I just – you see them work through the year and – obviously he was getting better and better and he was helping me a lot because I used to work very, very, very hard and when Joe came along and sort of relieved me a little bit, or a lot and I just feel that I worked it out on his performance and I was happy to give what I felt that I should give him. There is no – any percentage or whatever it is, I just felt that's what he's worth.
There was no discussion about the amount. Mr Brunetto said he instructed BankWest to transfer $150,000 into the account of the plaintiff, but the bank required his wife's signature. He identified at p 112 of exhibit 1 a copy of a cheque from the defendant to the plaintiff dated 10 June 2009 and at p 42 a request by BankWest to Mrs Brunetto's solicitor for her authority to pay.
In cross‑examination, Mr Brunetto described Mr Henshall's role as one that required him to do whatever needed to be done. He thought Mr Henshall had a good knowledge of the building industry.

Mr Brunetto confirmed that there was no calculation involved in arriving at any of the bonuses paid to the plaintiff. He said the bonuses were not calculated according to profit, but later commented that the more money was made the more bonus would be paid. He said the Spring Street project had made a lot of money.
Mr Brunetto said, in relation to stage 1 and stage 2 of the Great Northern Highway project and the Spring Street project, that he approved payments after he had personally checked the work done and materials supplied. Stage 2 started in October 2005 and finished in January 2007. During that time, in June 2006, work commenced on the joint venture project at Fawell Street. This was seven months before stage 2 finished. In that period, Mr Henshall worked on both projects. Mr Brunetto said that during that time Mr Henshall was getting less than the full $3,300 per month. He did not get a bonus on Fawell Street because it was a joint venture.
He was asked about the determination of the bonus for stage 2. He said he remembered discussing the amount of the bonus with Mrs Brunetto. He did not recall specifically a conversation with her about the bonus on the way to their farm at Muchea. He did not recall being told of any conversation between Mrs Brunetto and Mrs Henshall about the amount of the bonus. Nor did he recall there were two payments made in respect of stage 2, one of $30,000 and the other of $110,000. He was not aware of any complaint about the bonus and thought that the reason for two payments was that the company was short of money.
When the Spring Street project started, Mr Brunetto and Mr Henshall were still working on the Fawell Street project. Mr Brunetto said it was nearly finished and agreed that it was completed in June 2007, five months after Spring Street started. During this time Mr Henshall worked on both sites.
In relation to the Spring Street project bonus, Mr Brunetto said:
Because I know before I started development, always do homework. What's going to cost to build, how much we're going to sell them for. And that determines what sort of money there is to be made. So if there is good money to be made, or I, well then he gets more bonus. There's nothing wrong with that. My ex‑wife agree with that, so we were happy to pay it.
As to when he told Mr and Mrs Henshall of the bonus, Mr Brunetto said that he went with his wife to their home for dinner and he told them how much would be paid. This occurred after the job was finished. He agreed that if the project was finished in April 2008, it must have been after that.
He was taken to his affidavit of 13 May 2010 in which he stated that he determined the amount of the bonus at the completion of the Spring Street project and discussed it with his wife who agreed with the amount. He confirmed that the statement was true. He accepted that in his affidavit he did not mention making the offer to pay the bonus at a dinner, but maintained that that was what occurred. He denied the suggestion that the bonus was not discussed with Mrs Brunetto.
He was taken to Mr Henshall's evidence that the dinner at which the bonus was discussed was in January 2008 prior to the completion of the project. Mr Brunetto said he could not say whose recollection was correct. He did, however, recall discussing the bonus on another occasion when the accountant was present. Mr Brunetto said that the defendant was always in a position to pay the bonus.
Mr Brunetto recalled being upset by an allegation made by his wife a couple of days before their separation which shocked and upset him. It was suggested to him that it was in fact after his wife left and when he subsequently spoke to his daughter and son‑in‑law that the amount of the bonus was first discussed. Mr Brunetto said that it had been discussed a long time before that. He recalled receiving two invoices from the plaintiff delivered by his daughter. Mr Brunetto said that his daughter had a PIN for access to the defendant's bank account which he withdrew after the separation.
Re‑examined with respect to the meetings with the accountant, Mr Brunetto said that he was present when Mr Rapattoni came to Mr and Mr Henshall's home to inspect the company books. The bonus was discussed. This was in 2009, two to three months before the separation.
Mrs Henshall gave evidence. Mrs Henshall had not been named as a witness for the plaintiff. Counsel for the plaintiff sought leave to call her on the basis that she would give evidence of the production of invoices by the plaintiff relating to the bonus in question. As there had been an order made for witnesses to remain out of court, counsel considered it was appropriate to obtain leave. After hearing submissions, I allowed Mrs Henshall to be called.
Mrs Henshall was the bookkeeper for the plaintiff and prior to her parents' separation had also been the bookkeeper for the defendant. She was taken to copies of the invoice dated 30 April 2009 at p 41 and p 301 of exhibit 1. These invoices were identical except for a footnote on p 301 which is irrelevant for present purposes. The description given in the invoice was 'supervisory fees in relation to 21 Spring Street, Midland'. Mrs Henshall said that the invoice was not for supervisory fees as such, but for the bonus. It was not the first invoice generated for the bonus.
She said that in April 2008 she received a call from her father who was driving with her mother to their farm in Muchea. Her father told her that they had determined a bonus figure of $150,000. Subsequently, they came for dinner. On that occasion her husband was informed of the bonus. Mrs Henshall said she raised an invoice after that meeting expecting it to be paid. She entered the invoice into the MYOB accounts of the plaintiff, printed an invoice and then entered it into the defendant's accounts. This was in April 2008. She gave her father a copy.
Some time later, she told Mr Brunetto that she and Mr Henshall were happy to wait until the following April to get paid because he would have to use his overdraft to pay the money and there would be GST and PAYG liabilities to deal with. She said she was advised by Mr Rapattoni to delete the invoice and re‑enter it when payment was to be made. She did this, amending the plaintiff's and defendant's accounts to delete the invoice. The court was told that the MYOB software used by Mrs Henshall allowed deletions of transactions to be made without trace.
The invoice dated 30 April 2009 was generated because the plaintiff needed to pay a tax bill in May. The creation of the invoice coincided with her parents' separation. Mr Brunetto said to her 'there's going to be issues … in the Family Court, I suggest you raise an invoice immediately'. The invoice was stated to be for 'supervisory fees related to 21 Spring Street, Midland'. It was for $136,363,64, plus GST of $13,636.36, total $150,000.
In relation to the copy invoices at p 112 and p 273 of exhibit 1, dated 7 May 2009, Mrs Henshall said that she printed another invoice on that date but was told by her father that it would not be paid, so she deleted it from the accounting system. Then she instructed solicitors Stables Scott who requested a copy of the invoice which she then made by re‑issuing it. This invoice was attached to a letter from Stables Scott to Mr Papamihail dated 8 May 2009 (exhibit 1, p 271). In preparing that invoice she neglected to insert the description of the charge.
When cross‑examined, Mrs Henshall remembered the meeting in late 2002 at which her husband indicated to her father that he would like to get into the building industry and obtain his builder's licence. He had to do a TAFE course as well as obtain supervisory experience. An agreement was made whereby Mr Henshall would work for the defendant and be paid $3,000 plus GST monthly as a retainer, plus fuel and telephone expenses, and also be paid a bonus based on profit.
She recalled her father mentioning a 5 ‑ 10% bonus, but she said it was never paid on that basis. She did not know how Mr Brunetto calculated the bonus. As the bookkeeper for the defendant, she had access to the company's account to make money transfers using a token and a PIN. Mr Brunetto checked and authorised all payments.
In relation to the two‑part bonus paid for stage 2 of Great Northern Highway, Mrs Henshall rejected the suggestion that the second payment of $110,000 was made after a complaint by her to her mother that the first payment of $30,000 was inadequate. She said that the reason for two payments related to the defendant's cash flow. In relation to her evidence that she had a conversation with her father whilst he and Mrs Brunetto were driving to Muchea, it was suggested to Mrs Henshall that she was mistakenly referring to a conversation in early 2007 regarding the bonus for stage 2. Mrs Henshall denied this suggestion.
In relation to the deferral of payment of the bonus, Mrs Henshall said that Mr Rapattoni had done a tax schedule which indicated that they would have a tax payment due in May 2009. Mrs Henshall thought it related to the profits from the Fawell Street project. She understood that the defendant had the capacity to pay the bonus, but would have to do so from its overdraft. As the plaintiff did not need money at that time, Mrs Henshall informed her father that it could be paid in May 2009.
Mrs Henshall gave evidence of circumstances surrounding her parents' separation in April 2009. She said that following the separation, Mr Brunetto asked her for the bank account access token as he was downsizing his business and did not require her to do the defendant's accounts. Her father also asked her to write an invoice for the bonus. This was at least five days after the separation. Mrs Henshall denied that this was the first time the figure of $150,000 was mentioned. After she was informed by her father that the money could not be paid because the account was frozen, she did not speak with her mother. When she next saw her mother, she was told 'speak to me through my lawyers'.
Mr Joseph Rapattoni, certified practising accountant, gave evidence that he had been the accountant for the defendant since 1994 and for the plaintiff since 1998. Mr Rapattoni attended a meeting at which he was informed of a bonus payment of $150,000 from the defendant to the plaintiff. Mr Brunetto said that the bonus was for Spring Street. Mr and Mrs Henshall were present as was Mrs Brunetto. There was an issue about the timing of the invoice. He recalled that the meeting was in January 2008. Mrs Henshall raised the question about payment. Mr Rapattoni recalled that the invoice was to be due in April or May 2008. He was aware that an invoice had been issued having viewed the MYOB data files of each company. There was discussion about the GST ramifications of issuing the invoice. Mrs Henshall said that there was no cash to pay the GST on the invoice. Options were discussed, including the reversal of the transaction in order not to have to pay GST on the invoice for which the plaintiff had not been paid. Mr Rapattoni said he gave advice that the defendant's accounts would also need to be amended. To his knowledge the invoice was entered again in April 2009. Mr Rapattoni said that there was no audit trail of the earlier invoice. MYOB allowed the deletion of a transaction without having to enter a reversal.
In cross‑examination it was put to Mr Rapattoni that he had a conflict of interest due to his continuing to act as accountant for each of the parties. He accepted that he would have a conflict if there were a dispute between the parties in which he was involved, but was unwilling to accept that that was the position in this case. Ultimately, he had to accept that it was in the interest of the plaintiff and to the detriment of the defendant that the agreement to pay the bonus be upheld.
He said that he would regularly go to Mr and Mrs Henshall's home on a quarterly basis to do the BAS statement of the parties, but this ceased in July or August 2009 after Mr and Mrs Brunetto separated. He would go through the MYOB entries with Mrs Henshall and check the BAS returns before lodgement. Often while he was at the Henshall's home, Mr and Mrs Brunetto were present.
Mr Rapattoni accepted that the financial statements of the plaintiff for the period ending 30 June 2009 did not include as income the $150,000 bonus, notwithstanding that the plaintiff was registered under the accrual system for income tax and GST. This indicated that the 2009 invoice had been deleted, a fact which Mrs Henshall confirmed when she was recalled to give that evidence. The deletion of the 2009 invoice for the bonus meant that the plaintiff did not pay GST or income tax on that amount.
Mr Joseph Clink is a plumbing consultant who was contracted to the defendant on the Spring Street project where he supervised the plumbing trades on site. He worked between one and six hours per day on site as required. Occasionally, he would work six days a week and sometimes on a Sunday when required. He gave evidence that he observed Mr Henshall to organise trades on site. He observed him to be there on most occasions when he was on site. Normally, Mr Henshall opened the site and locked up.
In cross‑examination he acknowledged that he had a number of contracts and was supervising 25 or 30 projects at the time of the Spring Street development. He would travel between sites.
The plaintiff called Mr Neville Harrison as an expert witness. Mr Harrison's report was objected to and certain parts were ruled inadmissible. Mr Henshall's position could expect to be paid $60 per hour plus GST. In his report he said that this was based on a tradesman hourly rate of $50 in 2010 with a loading of 20% for the supervisory aspect. He considered that the rate would probably not have been less in 2007/2008 because the building industry was very busy at that time. If the rate were less, it would only be by $5 or so. Mr Harrison otherwise gave evidence that in his opinion the cost of a salaried construction manager based on his experience of reviewing building tenders would be about 5% of the total construction cost.
In cross‑examination Mr Harrison said that he would expect that a construction manager would come to that position through the construction industry with a background in one of the trades. His work as a builder was currently the construction of single dwellings and he did not have recent experience of constructing group dwellings. He did not consider that a group dwelling development would require a project manager as such.
In his experience of accrediting builders for registration, he was exposed to information regarding salaries. In his work as a consultant reviewing building tenders, he was informed of allowances made for construction managers' remuneration. As to the difference between a construction manager and a project manager, he said that a project manager was a more senior and more responsible position at the top of the hierarchy of a project. The project manager would control all the consultants, call tenders and manage the project during construction. It was a much more detailed job than that of a construction manager.
Mr Harrison said that if Mr Henshall had four to five years experience as a construction manager and had done subjects towards builder's registration, his remuneration would be as he had advised in his report.
Professor Charles Mulvey gave evidence based on his research as a labourer market consultant. He used the Hays salary survey of the construction engineering industry for 2010 ‑ 2011 as a source of information as to salary ranges for construction and project managers. According to the Australian & New Zealand Standard Classification of Occupations, there was no difference between a construction manager and a construction project manager and no definition was set out in his report.
Professor Mulvey's report indicated that according to the Hays survey, construction project managers in Perth earned salaries of $150,000 ‑ $200,000 in 2010. As the building industry had been in recession for the last three years, he considered that the salaries in 2007 ‑ 2008, which was a period of boom, were unlikely to have been lower. With reference to advertised vacancies on seek.com employment website on 8 July 2011, there were 133 vacancies for construction project managers, half of which were over $150,000 per annum. There were only three positions for construction project managers to work on residential or commercial building projects in Perth, each of which specified that experience in major construction projects was a pre‑requisite. These positions offered $200,000 per annum or more. In the range of $150,000 or $200,00, there were 24 positions advertised for senior and experienced project managers for a variety of large commercial and residential projects. Of 38 positions offered in the salary range of $120,000 to $150,000, 11 were for engineers and the remainder for conventional, commercial and residential construction projects. Of the positions offering less than $120,000, most were for conventional, commercial and residential construction sites and appeared to be for positions described as junior project manager, assistant project manager and trainee project co‑ordinator.
Professor Mulvey's research of advertised vacancies took in July 2009 and July 2010. He said that in July 2009 salaries were in the range of $80,000 to $240,000. He felt it was unlikely that salaries in 2007 ‑ 2008 would have been lower.
The positions which were identified as junior assistant or trainee positions described inexperienced persons working under supervision of an experienced project manager. He did not have an opinion on how long the person would need to be in the industry before they would no longer be considered a junior assistant or trainee manager.
He said most of the advertisements he looked at indicated that experience was essential, commonly five years minimum. He said that in a number of advertisements, engineering qualifications were required but otherwise the essential requirement appeared to be experience and particular technical expertise was not specified.
Harrison was a member of the Builders Registration Board for some time until it was abolished last year and has since 1992 been a member of the Building Disputes Tribunal. He gave evidence of having been a registered builder since 1960 and of extensive industry experience.
In his opinion, based on what he was told as to what Mr Henshall did, the role performed by him was that of a construction manager. In his experience a person in that role in 2009/2010 would, as a subcontractor, be paid in the order of $60 per hour plus GST. His opinion was based on his knowledge that tradespersons in 2009/2010 would be remunerated at $50 per hour plus GST. He did not consider that the rate would have been different in 2007/2008.
When cross‑examined in relation to this evidence he said he estimated that a construction manager would be paid at a rate about 20% above that of a tradesman because of the control exercised by the manager over the job at hand. More experience and responsibility were involved. He did not think that a person would necessarily be paid less than the rate he estimated if that person was training to be a registered builder and had four to five years experience. Otherwise, he would expect a construction manager's remuneration to be approximately 5% of the construction cost of a project, based on his knowledge of tenders for such projects in which supervision was allowed at close to that rate.
Professor Charles Mulvey is the principal of LabourNet, a firm which specialises in labour market research. He is an economist. I disallowed the defendant's objection to his reports. Professor Mulvey gave evidence that according to the Australian & New Zealand Standard Classification of Occupations, a standard work of reference, the role of Mr Henshall, as it was explained to him, fell into the category of 'construction project manager', an alternative description of which was 'building and construction manager'. For the purposes of his report he had reference to the Hays Salary Survey of the Construction and Engineering Industry for 2010 and 2011. The survey is carried out annually by a large recruitment company and he considered it to be a useful, but general, guide to salary ranges. According to the Hays Salary Survey, construction project managers in Perth in 2010 earned salaries in the range of $150,000 ‑ $200,000.

He also searched positions for construction project managers advertised on the seek.com employment website on 8 July 2011. According to the website there were 39 positions offering salaries in excess of $200,000, 49 offering salaries in the range of $150,000 ‑ $200,000, 38 offering salaries in the range of $120,000 ‑ $150,000, 25 offering salaries in the range of $100,000 ‑ $120,000 and 29 offering salaries of under $100,000 per annum. Half of the positions advertised were offered at over $150,000 per annum.
The positions advertised at the upper end of the salary range were generally fly‑in/fly‑out positions in the mining industry. Others were positions for professional civil engineers. Of the 49 positions in the salary range $150,000 ‑ $200,000, six were fly‑in/fly‑out positions in the mining industry, 19 were positions for professional civil engineers or design engineers to work on civil construction projects, and the remaining 24 positions were for senior and experienced project managers in a variety of large commercial and residential construction projects. Of the 38 positions offered in the salary range of $120,000 ‑ $150,000, 11 were for civil engineers or other professional engineers and the remainder were mainly for conventional commercial and residential construction projects. Of the positions offering less than $120,000 per annum, several were for civil engineering professionals, but most were for conventional commercial and residential construction projects. Most of these appeared to be for persons in the early stages of their careers, with some described as 'junior project manager', 'assistant project manager' and 'trainee project coordinator'.
Professor Mulvey gave evidence that his search of the seek.com employment website on 30 July 2009 in relation to another matter found 61 advertised vacancies for construction project managers in Perth and 34 advertised vacancies in the remainder of Western Australia. Salaries ranged from $80,000 to $240,000 per annum. In his experience 2009 was the year of depressed activity in the local construction industry. 2007/2008 was a period of buoyant activity. He thought that the salaries offered in 2009 were unlikely to have been lower than those offered in 2007/2008.
Professor Mulvey's opinion was that an experienced construction project manager in Perth in 2007/2008 would be:
(1)unlikely to have earned in excess of $200,000 per annum as there were relatively few opportunities available in Perth at such a salary;
(2)capable of securing work at a salary in the range of $150,000 ‑ $200,000 when employed on large commercial, residential or industrial projects; and
(3)well able to secure a position paying up to $150,000 since there was a good number of such positions available at that time.
Professor Mulvey was unable to say for what period of time a person would need to work in construction project management before they would no longer be considered a junior, an assistant, or a trainee. From the advertisements he looked at, experience was essential. He understood the normal requirement to be a minimum of five years experience in that context. He said that some advertisements were for professional civil engineers and some for design engineers, but for the rest, experience, rather than technical expertise, was the essential requirement.
Mrs Brunetto did not give evidence. As Mr Brunetto had effective control of the defendant at the material time, Mrs Brunetto is unable to contradict evidence given by him as to the agreement between the parties. With respect to the fixing of the amount of the bonus in question, the evidence of Mr Brunetto, Mr Henshall and Mrs Henshall was that Mrs Brunetto was present at a dinner at which the bonus was announced. It may be inferred, applying the rule in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298, from the failure of the defendant to call Mrs Brunetto that her evidence would not have assisted the defendant on this issue.

Credibility issues

The defendant, whilst not adducing evidence to contradict any of the plaintiff's witnesses, nevertheless sought to discredit them.
As I have noted above, the cross‑examination of Mr Henshall exposed inconsistencies between evidence and prior statements by him of a solemn nature. Although those inconsistencies do not reflect well on his character, I am of the view, having heard him give evidence that he was careless on those prior occasions as to detail. I do not consider that it can be inferred from the inconsistencies that were put to him that he has concocted his evidence in this case or otherwise been untruthful. The essential parts of Mr Henshall's evidence relevant to the material facts are that an agreement was made, which is corroborated by Mr Brunetto, and that in 2008 Mr Brunetto fixed a bonus for Spring Street of $150,000 which is corroborated by Mr Brunetto, Mr Rapattoni and Mrs Henshall.
Mrs Henshall's evidence as to the invoicing of the bonus payment in 2008 and again in 2009 was submitted to be unacceptable. Her credibility was sought to be impugned on the basis that she was in court when her husband gave evidence, that she could not produce a copy of an invoice created in 2008, and that her evidence about the reasons for the plaintiff deferring payment of the bonus from 2008 to 2009 was inconsistent with other evidence, including that of Mr Brunetto, and implausible. I do not consider that Mrs Henshall's evidence was coloured at all by her having heard other witnesses give evidence. In some respects her evidence differs from that of her husband and her father. Her evidence, I find, was based on her own independent recollection of relevant events. It is sufficiently different from the evidence of other witnesses in a number of respects to be worthy of credit when it comes to the factual issues on which it bears, but I would observe that her evidence, which mainly went to the circumstances in which the bonus was invoiced on different occasions, was not in my opinion critical to any issue.
Mr Rapattoni was criticised for not recognising a conflict of interest with respect to his roles as accountant for both companies. Whilst there is some force in that criticism, I have come to the view that his evidence, which is corroborative of the notification by Mr Brunetto of the bonus amount and the deferral of payment for fiscal reasons, was truthfully given.
The facts upon which the plaintiff's claim is based are in all material respects corroborated by Mr Brunetto who effectively controlled the defendant at the material time. It was not put to Mr Brunetto that he had an interest in supporting, with false evidence, the plaintiff's claim to the detriment of the defendant. While it is understandable that the defendant, under the control of Mrs Brunetto, should put the plaintiff to proof of its claim, that is all it can do. The facts on which the claim is based, the evidence of which is uncontradicted, have not been shown to be inherently improbable. Nor have the witnesses called by the plaintiff been shown to have conspired to give false evidence.
The evidence as a whole is consistent with objectively proven facts as to the parties' financial dealings, in accordance with the terms of the agreement from 2002 to 2009. Mr Henshall worked for and with Mr Brunetto over that time. Through the plaintiff he was paid the agreed retainer and periodic discretionary bonuses. Against that history, it is highly improbable that a bonus would not have been fixed before the separation of Mr and Mrs Brunetto in April 2009. No reason was suggested why a bonus for Spring Street should not have been paid.

Findings

On the evidence I find that in 2002 the defendant by Mr Brunetto and the plaintiff by Mr Henshall agreed to engage Mr Henshall's services as a construction manager for the purposes of a series of residential development projects as described earlier in these reasons. In consideration of the provision of Mr Henshall's services the defendant agreed to pay the plaintiff $3,000 (plus GST) per month and expenses and, upon completion of each construction project, a bonus to be determined at the discretion of the defendant.
In January 2008, towards the end of the Spring Street project which involved construction of 21 residential units, Mr Brunetto on behalf of the defendant informed Mr Henshall that the defendant would pay the plaintiff a bonus of $150,000. Although there was some variation between the plaintiff’s witnesses as to whether the bonus was notified in January or April 2008, I am satisfied that at some time in that period as Spring Street was coming to completion, and on more than one occasion, there was discussion about the amount of the bonus to be paid for that development.
I find that payment of this amount was not made at that time, but deferred by agreement for the reasons given by the plaintiff's witnesses. In April 2009 payment of the bonus was prevented by action taken by Mrs Brunetto, following her separation from Mr Brunetto, effectively to freeze the assets of the defendant.
Despite the challenges made to the evidence of the plaintiff's witnesses, by which it was suggested that the bonus was not in fact fixed in January 2008, or indeed at any time prior to the separation of Mr and Mrs Brunetto, I am satisfied that the bonus was determined by Mr Brunetto in 2008.
I am satisfied that the notification of the bonus by Mr Brunetto in 2008 was consistent with the fixing of bonuses for previous projects and did not reflect any sinister intention to favour Mr and Mrs Henshall over Mrs Brunetto. The steps taken to arrange for payment of the bonus after the separation in April 2009 were, I accept, taken in the interests of the Henshalls in anticipation of likely disputation in connection with the marriage breakdown, but they did not alter the character of the proposed payment, no bonus at all having been paid up to that time with respect to Spring Street, such as there had been after completion of every other development on which Mr Henshall had been engaged since 2002.
The facts being so, the issue to be determined is whether the plaintiff can enforce payment of the bonus which was wholly discretionary. It is conceded by the plaintiff that the agreement did not, as it was pleaded, provide for the payment of a bonus based on a proportion of future expected profit from a development, and that indeed none of the bonuses paid to the plaintiff by the defendant in respect of other developments to which the agreement applied were based on the defendant's expected profits from the development. All that can be said is that the defendant agreed to pay a bonus at its complete discretion upon the completion of a profitable development.
The defendant submits that the agreement with respect to payment of the bonus is incomplete, and therefore unenforceable, as it leaves the determination of whether a bonus should be paid and, if so, how much, to the defendant in its sole discretion. Incidental to that contention, I take it to be the defendant's position that if a promise to pay a bonus were made, it was not made with any contractual intent.

Legal principles

This case turns on the resolution of two interrelated issues. The first is whether the parties intended that the defendant's promise to pay a bonus would be subject to adjudication by the court as a contractual obligation, and the second is whether, if that were the case, the term providing for the payment of the bonus at the discretion of the defendant is enforceable. In resolving both issues the nature and subject matter of the agreement must be considered: Placer Development Ltd v Commonwealth [1969] HCA 29; (1969) 121 CLR 353, 367 (Windeyer J).
The fundamental principle which determines whether a contract exists is that there must be a voluntary assumption of a legally enforceable duty: Australian Woollen Mills Pty Ltd v Commonwealth [1954] HCA 20; (1954) 92 CLR 424, 457. There must be identifiable parties, the terms must be certain, there must be (unless the contract is by deed) real consideration, and there must be an intention to subject the agreement to the adjudication of the courts: Ermogenous v Greek Orthodox Community of South Australia Inc [2002] HCA 8; (2002) 209 CLR 95 [24] – [25]; South Australia v Commonwealth [1962] HCA 10; (1962) 108 CLR 130, 154.
With respect to contractual intention, Windeyer J observed in PlacerDevelopment (367):
Social and domestic arrangements are outside the realms of contract law simply because the parties to them must be regarded as intending that the mutual promises whether kept or broken are not to land them in court.
But, in a domestic arrangement, the value of the consideration to be given by the parties may be relevant to whether they intended to establish a legal relationship: Roufous v Brewster & Brewster (1971) 2 SASR 218; Wakeling v Ripley (1951) 51 SR (NSW) 183.
From the defendant's point of view, the promise to pay a bonus is seen as being binding in honour only, a promise made without any intention of it being legally enforceable. This view is supported by the fact that the principals of the parties were related by marriage, the purpose was to help Mr Henshall and the plaintiff get their builder's registration, the promised bonus was payable in the absolute discretion of the defendant, and no agreement at all was made as to the measure of the bonus, or any formula or criteria according to which it would be determined.
Where an agreement is made whereby one party has a choice whether to perform its part, it may be inferred that no legal obligation was intended, or that the consideration is illusory, or that the terms are uncertain. In that event there is no contract capable of being enforced. There is a distinction to be drawn, however, between an agreement by which a party reserves a discretion to perform or not, and an agreement in which there is an obligation to perform, though the manner or extent of performance is discretionary, as the following authorities show, not always consistently.
In Placer Development Ltd v The Commonwealth of Australia, Kitto J held (356):
Cases in which a party's liability to make a payment is expressed as depending upon an exercise of discretion by that party have most often been cases of service agreements. The question there is usually whether the intention of the agreement is that the employer shall be entitled to decide whether any remuneration at all shall be paid and if so how much, or is that he shall be bound to pay at all events a reasonable remuneration. In other words, it is whether, on the one hand, the service is intended to be honorary unless the employer otherwise decides, or, on the other hand, a promise to pay a reasonable amount is to be implied. As may be seen from the case of Bryant v Flight, in which Parke B dissented from the decision of the court, it is not always an easy question to decide; but the general principle is established which Vaughan Williams LJ in Loftus v Roberts (1902) 18 TLR 532 expressed in words that were subsequently adopted by Lord Wrenbury, as Buckley J, in Broome v Speak (1903) 31 CH 586, 599. It is that wherever words which by themselves constitute a promise are accompanied by words showing that the promisor is to have a discretion or option as to whether he will carry out that which purports to be the promise, the result is that there is no contract on which an action can be brought at all. The succinct statement of the principle in Leake on Contracts, 3^rd ed, p 3, 'Promissory exceptions reserving an option as to the performance do not create a contract', was approved by the Lord Justice, as it was later by Lord Wright in Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503 at 517.
In some cases, even of employment agreements, though it is clear that the employee is not intended to render his services gratuitously, the conclusion that 'an option as to the performance' is reserved to the employer in respect of remuneration is inevitable because the employer's promise is limited to paying remuneration of such a kind that the concept of reasonableness cannot be applied because of the absence of any agreed basis of calculation. Such a case came before the Privy Council in Kofi Sunkersette Obu v A. Strauss & Co Ltd [1951] AC 243, where the terms of the agreement showed plainly enough that the services of the employee were intended to be remunerated, but stipulated that the remuneration was to consist in part of a monthly allowance of fixed amount and in part of a commission which was left to the discretion of the employer without any indication of either basis or rate. The judicial committee held that a court could not award more than the fixed allowance without transferring to itself the exercise of the discretion as to commission which the agreement had vested in the employer.
In Kofi Sunkersette Obu v A. Strauss & Co Ltd [1951] AC 234, the appellant was the agent of the respondent. An agreement provided that the respondent remunerate the appellant by a fixed monthly amount to cover personal and travelling expenses and a commission 'to be paid to me by the company which I have agreed to leave to the discretion of the company'. Following the termination of the appellant's employment the respondent claimed money alleged to be due from him as their agent. The appellant entered a counterclaim which included a claim for commission. The counterclaim was dismissed on the basis that the court could not determine the basis and rate of commission. The Privy Council held that to do so would involve not only making a new agreement for the parties, but varying the existing agreement by transferring to the court the exercise of the discretion vested in the respondent.
The Privy Council distinguished Bryant v Flight (1839) 5 M & W 114; (1839) 151 ER 49 and Way v Latilla [1937] 3 All ER 759 on the basis that as the agreement between the parties provided for remuneration of £50 per month, there was no question of the services of the appellant being rendered gratuitously such that a quantum meruit should be awarded.
In Bryant v Flight the facts were that the plaintiff had entered into a contract with the defendant to serve him as a manager. The agreement was contained in a letter from the plaintiff to the defendant which stated:
I hereby agree to enter your service as a weekly manager, commencing next Monday, and the amount of payment I am to receive I leave entirely for you to determine.
The plaintiff served the defendant for six weeks, but was not paid, and so sued for reasonable remuneration. The decision of a jury awarding him £20 was upheld, as the contract implied, or it could be inferred from its terms, that some amount was to be paid.
In Way v Latilla, the appellant acted on the respondent's behalf to obtain mining concessions in Africa in the expectation of remuneration. The appellant claimed a share in respect of concessions obtained by him, and in the alternative upon a quantum meruit. The respondent contended that there was no enforceable contract. The House of Lords held that there was no concluded contract between the parties as to the amount of the share or interest that the appellant was to receive and that it was impossible for the court to complete the contract for them. It was held further, however, that there was an implied contract of employment between the parties from which it could be inferred that the work was not to be done gratuitously. Accordingly, the appellant was entitled to reasonable remuneration upon an implied term to pay a quantum meruit.
Similarly, in Ikin v Cox Bros (Aust) Ltd (1929) 25 Tas LR 1, the court upheld the decision of a jury to award a plaintiff £100 for an unpaid bonus which had been promised, albeit unquantified, in consideration of the plaintiff continuing to work as a manager for the defendant. The court cited Bryant v Flight in support of its conclusion that the agreement could be construed as an agreement to pay something in any event, a jury being capable of ascertaining how much the promisor, acting in good faith, would or ought to have paid.

Similarly, in Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 357, it was held that the discretion to pay an annual performance bonus (in that case of a fixed amount) should be 'understood against the proper scope and content of the contract' and exercised honestly and conformably with the purpose of the contract. The words 'entirely within the discretion of' should not be construed so as to permit the promisor to withhold the bonus capriciously or arbitrarily or unreasonably, that is, so as to give the promisor a free choice as to whether to perform or not (Allsop P [5], [6]).
Payment of an unspecified bonus was enforced in Walker & Sherman v Andrew & Ors [2002] NSWCA 214 which arose from a dispute between the receiver of Galaxy Media Pty Ltd and the liquidator of that company in respect of the payment of bonuses to former senior employees who had made priority claims for wages which included bonus payments. In that case the receiver disputed the liquidator's determination in favour of the employees on the basis that there was no contractual entitlement to bonuses in the absence of agreement as to performance criteria, there being no more than an unenforceable agreement to agree such criteria.
The Court of Appeal upheld the trial judge's decision that the employees had a contractual entitlement to bonuses in the context of a partly performed effective contract. Brownlie AJA (Spigelman CJ & Handley JA) held in [41]:
I agree with the conclusion reached by Santow J, that in the case of Mr Maguire, the effect of the deed was that Galaxy was bound to pay him, not just a base salary, but also a sum of money called a 'bonus'. It is clear that the parties intended to enter into a binding agreement which was actually executed over a period of more than two years, and clear that they intended that Galaxy pay Mr Maguire (subject to satisfactory performance) something by way of 'bonus', as a matter of right, and not discretion. …
The amount of the bonus was not fixed at the time of the execution of the deed, so that the law imposed an obligation to pay a sum that was reasonable in the circumstances, to be assessed having regard to the evidence showing what value the parties themselves put on Mr Maguire's services: Way v Latilla (1937) 3 All ER 759; Powell v Braun (1954) 1 WLR 401; Woodhouse v ADA Manufacturing Co Ltd (1954) SASR 263.
In Placer Development the clause by which the Commonwealth promised to pay a subsidy was found not to impose an obligation upon the Commonwealth to consider and fix an amount or rate from time to time and carried no implication that at least a reasonable subsidy would be paid. Rather, a promise to pay an unspecified amount of money was not enforceable where it was discretionary. Kitto J held that it could not be implied that at least a reasonable subsidy be paid as there was no general standard of reasonableness with respect to the quantum of a subsidy. Taylor and Owen JJ (360) gave as illustrations of such an illusory promise the decisions in Taylor v Brewer (1813) 1 M & S 290; (1813) 105 ER 108 and Roberts v Smith (1859) 4 H & N 315; (1859) 157 ER 861. Their Honours concluded (361):
Obviously there is a complete absence from the clause, and from the agreement as a whole, of any identifiable criteria by which it can be said the parties intended the amounts or rates to be determined; this is left solely to the discretion of the Commonwealth. This being so the clause amounts to no more than a promise to pay what, in all the circumstances, the Commonwealth in its discretion thinks fit, and, as such, is wholly unenforceable.
It is worth observing that both Menzies J and Windeyer J dissented. Menzies J held that the contractual term imposed an obligation on the Commonwealth to determine what the subsidy was to be and to pay it. His Honour distinguished Taylor v Brewer and Roberts v Smith (364) and cited Bryant v Flight. In his Honour's opinion, however, the issue was not to be decided by those authorities, but according to the meaning of the relevant clause in the context of the whole agreement. His Honour found that the clause imposed a contractual duty upon the Commonwealth to fix a subsidy not exceeding a specified amount. The clause was, therefore, not illusory.
Similarly, Windeyer J concluded that the parties intended to create enforceable obligations. His Honour held that whether there was a voluntary assumption of a legally enforceable duty depended upon an inference to be drawn from the subject matter and the nature of their agreement. His Honour found that the clause embodied a positive promise by the Commonwealth to pay to the plaintiff a subsidy upon the importation of timber products where Customs duty was paid and not remitted. In his Honour's view the principle in Loftus v Roberts (1902) 18 TLR 532 was not apposite. The clause did not reserve the Commonwealth any option as to whether it would perform the promise made. The Commonwealth had no discretion not to determine the subsidy, although it did have a discretion as to the amount to be paid. Referring to the employment cases, his Honour observed (370):
The question, which is one of construction and intention in each case, is whether the employer is to decide whether any remuneration at all should be paid, in which case his decision is a condition precedent to any claim by the employee: or whether, on the other hand, he has merely a right to decide the amount of the remuneration to be paid, in which case the employee is entitled to be paid a reasonable sum.
His Honour referred to Powell v Braun [1954] 1 All ER 484 where bonuses calculated by reference to net trading profit of a business were promised to an employee and paid for some six years. When the defendant refused to pay on the grounds that the promise was not enforceable it was held that the employer had bound himself to pay something provided there were profits. According to Lord Evershed (Romer LJ), the amount would be 'a reasonable sum, that is, a sum arrived at so as to bear a reasonable relationship to the trading profit' or as Denning LJ held, 'an amount within [the defendant's] reasonable discretion, that is, … the amount which a fair and just man would pay in the exercise of a reasonable discretion'.
Windeyer J also cited Way v Latilla and Ikin v Cox Bros. His Honour held (371):
When an agreement produces a liability to pay some sum of money, and the amount is not determined by the agreement, there is ordinarily no obstacle to saying that a reasonable sum was intended: and, if what is a reasonable sum can be determined by a court, a judgment for that amount can be given. If what has to be determined is a reasonable price for a thing sold or a quantum meruit for services rendered a jury can determine it. It is not in such cases a precise sum, but any sum which lies within what a court considers the limits of reason.
His Honour acknowledged that where there was no trade or business, market or experience to which to refer in determining what should be paid, i.e. no objective criterion of reasonableness, a court could not say on what basis or with what considerations in mind the Commonwealth should determine the subsidy, for that would be to make a contract for the parties different from that which they made and would mean 'transferring to the Court the exercise of a discretion vested in the respondents', using the words of the Privy Council in the Kofi Sunkersette decision. However, his Honour stated that it did not follow that because the court could not take over the discretion which the Commonwealth agreed to exercise, the Commonwealth was released from its undertaking. The amount to be paid under the clause was an amount which the Commonwealth considered in all the circumstances to be reasonable. Its discretion in that regard was absolute, unfettered and not questionable in legal proceedings.
Thorbyv Goldberg [1964] HCA 41; (1964) 112 CLR 597 concerned an agreement by a group of investors with the shareholders of a company for the re‑development of a property owned by the company which required the shareholder group to cause the company to pass resolutions, alter the articles of association, prepare contracts and file notices, in order to give effect to the agreement. The argument that such terms were too uncertain for there to be a contract was rejected by the High Court. Kitto J distinguished Loftus v Roberts on the basis that it involved a discretion whether to perform a purported contractual promise. His Honour held (605):
[A]n agreement is not void for uncertainty because it leaves one party … a latitude of choice as to the manner in which agreed stipulations shall be carried into effect and does not for that reason fall short of a concluded contract.
As to the manner in which an unfettered discretion should be exercised, the Ontario Court of Appeal in Greenburg v Meffert (1985) 30 DLR (4^th) 768 held that the words 'at the sole discretion of the company' in a term which provided for the payment of a commission to a sales agent no longer employed, held that the defendant must act reasonably, honestly and in good faith.
As well as in employment agreement cases, the issue of enforceability of a term conferring a discretion as to performance or manner of performance has often arisen with respect to contracts for the sale of land.
In Meehan v Jones [1982] HCA 52; (1982) 149 CLR 571, a contract for the sale of land contained a special condition which made the contract subject to the purchaser receiving approval for finance on satisfactory terms. The High Court held that this did not afford the purchaser an absolute or unfettered right to decide what finance was satisfactory, but rather the contract relieved the purchaser from performance only in the event that, acting honestly, or honestly and reasonably, he was unable to obtain suitable finance. Mason J held at (589) that to find such clauses void for uncertainty is to ignore the doctrine that courts should try to construe a contract so as to preserve its validity. His Honour held that the courts were capable of deciding whether the purchaser had acted reasonably and honestly.
Similarly, in Godecke v Kirwan [1973] HCA 38; (1973) 129 CLR 629, a requirement in a contract that the parties execute a further agreement containing 'such other covenants and conditions' as the solicitors for one party might 'reasonably require', did not render the contract unenforceable.
In Gregory & Bradshaw v MAB Pty Ltd (1989) 1 WAR 1, Malcolm CJ, dealing with the validity of a contract for sale of land by offer and acceptance containing conditions which included the obtaining of 'necessary approvals', applied Meehan v Jones in holding that the conditions in question did not render the consideration illusory. The respondents did not have a complete discretion whether to perform or not, but were under a contractual obligation to do all that was reasonably necessary to perform the contract.

Conclusions

I have concluded that the agreement of which uncontradicted evidence was given, and which I have found to have been made, constituted an enforceable contract. This conclusion is inferred from my findings as to the nature and subject matter of the agreement.
Mr Brunetto and Mr Henshall, though related by marriage, came to the agreement on behalf of their respective companies through which they operated their respective businesses. The arrangement was not merely between family members. The monthly retainer payable by the defendant to the plaintiff was charged with GST. The development projects in the contemplation of the parties, and actually carried out, were substantial commercial enterprises. The plaintiff's provision of Henshall's services, although otherwise beneficial to Mr Henshall in terms of aiding him to obtain his builder's registration, were intended to be, and were in fact, of real and substantial value to the defendant.
It may be seen, therefore, that although the agreement was not reduced to writing, it was attended by a degree of commercial formality indicative of an intention to establish a legal relationship, albeit between entities controlled by family‑related individuals.
The promise to pay an unspecified bonus, although potentially problematic in terms of enforceability, is of a kind which the cases to which reference has been made, and many others, demonstrate are not uncommonly made in service contracts.
On the evidence, and as I have found, the defendant's promise was to pay a bonus, the amount of which was to be determined in the discretion of the defendant. There was no option or discretion not to pay a bonus. Implicit in the promise was an obligation to fix an amount. That obligation had to be performed honestly, reasonably and in good faith. This in fact is what occurred. An amount was fixed by the defendant and notified to the plaintiff. Subsequently, a tax invoice was created and a cheque delivered. But for the actions of Mrs Brunetto in the aftermath of the separation, the cheque would have been negotiated.
Thus, it can be seen that the defendant did, in fact, partly perform its contractual obligation to pay a bonus. It did so by determining the amount to be paid. That being so, the defendant, by failing to honour the cheque, breached the contract. In the circumstances, as the determination of the bonus was made by the defendant in accordance with the contract, no issue arises as to the assessment of damages. The plaintiff should recover the sum of $150,000, as fixed by the defendant. That sum is inclusive of GST. I would allow statutory interest at 6% per annum for three years, being $27,000.
There is no need to address the alternative claim for a quantum meruit. That claim, as pleaded, is based on restitutionary principles. A quantum meruit in that context is different from an assessment by the court of what is a reasonable sum for an unquantified contractual bonus. The alternative claim is said to arise in the event that no contractual obligation is proved, on the basis that the defendant would have been unjustly enriched by the plaintiff's services. Had the contract claim failed, I doubt that a restitutionary remedy would have been open. However, in my view, it would not be reasonable, having regard to the findings and conclusions I have reached, to hypothesise further.