Manson v Lybert

Case •

[2025] NSWSC 460

•

15 May 2025

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Manson v Lybert [2025] NSWSC 460
Hearing dates: 1 and 2 April 2025
Date of orders: 15 May 2025
Decision date: 15 May 2025
Jurisdiction:Common Law
Before: Basten AJ
Decision:

(1)   With respect to reimbursement of capital payments made by the plaintiff:

(a)   order that the first defendant pay the plaintiff $US52,150;

(b)   order that the second defendant pay the plaintiff $US230,000.

(2)   With respect to the claim for unpaid wages, order that the second defendant pay the plaintiff $US82,000.

(3)   Order that the first and second defendants pay the plaintiff’s costs of the proceedings.

Catchwords:

CIVIL PROCEDURE – parties – representation – solicitor seeking leave to file a notice of ceasing to act – leave required under Uniform Civil Procedure Rules 2005 (NSW), r 7.29(2) – application based on unpaid fees and money not paid into trust prior to trial – appropriate efforts by solicitor to obtain funds and brief counsel – need to advance just, quick and cheap disposal of proceeding – leave granted

CONTRACTS – breach of contract – repudiation – total failure of consideration – employment contract and shareholding agreement – claim for unpaid wages and capital payments part-paid in instalments for shares in prospective overseas holding company – plaintiff employed to develop business overseas – plaintiff’s right to shares in non-existent company never crystalised – plaintiff attempted to perform contract but was prevented by defendant – defendant repudiated contract – contract not frustrated by COVID-19 health orders – moneys paid into personal bank account recoverable

CONTRACTS – misleading or deceptive conduct – alleged representation that company was a going concern and would be able to pay plaintiff’s wages – contract included entire agreement clause – insufficient evidence of express or implied representation – insufficient evidence that employer unable to pay wages at time contract was executed – if there were an implied representation, it had no material effect on the plaintiff’s decision to accept employment

EMPLOYMENT AND INDUSTRIAL LAW – Superannuation – superannuation not provided for in contract – mandatory employer contribution not payable in respect of employee who is not Australian resident and is not working in Australia – Superannuation Guarantee (Administration) Act 1992 (Cth), s 27(1)(b)

JUDGMENTS AND ORDERS – calculation of prejudgment interest – discretion of court – judgment sums sought in foreign currency – judgment sum awarded in United States dollars – no evidence as to appropriate interest rate – application of local rates –avoiding over-compensating – Civil Procedure Act 2005 (NSW), s 100 – Uniform Civil Procedure Rules 2005 (NSW), r 6.12(8)(a)

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 100, Pt 6

Superannuation Guarantee (Administration) Act 1996 (Cth), s 27

Uniform Civil Procedure Rules 2005 (NSW), rr 6.12, 7.29

Cases Cited:

Brisbane City Council v Group Projects Pty Ltd (1979) 145 CLR 143; [1979] HCA 54

Cao v ISPT Pty Ltd [2024] NSWCA 188

Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337; [1982] HCA 24

Davis Constructors Ltd v Fareham Urban District Council [1956] AC 696

In the matter ofSM Project Developments Pty Ltd (in liq) [2017] NSWSC 1010

Koompahtoo Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61

Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 647; [1989] HCA 23

Super 1000 Pty Ltd v Pacific General Securities Ltd [2007] NSWSC 171

Category:Principal judgment
Parties: Malcolm Richard Manson (Plaintiff)
Andrew Patrick Lybert (First Defendant)
Picks Group Pty Ltd (Second Defendant)
Representation: Malcolm Richard Manson (unrepresented)
Andrew Patrick Lybert (for himself and second defendant)
File Number(s): 2023/260324
Publication restriction: N/A

JUDGMENT

  1. BASTEN AJ: On 27 November 2019, the plaintiff, Malcolm Richard Manson, entered into a contract (the Contract) with the second defendant, Picks Group Pty Ltd (Picks Group). The Contract involved both an employment agreement and a share purchase agreement.

  2. On 7 August 2023, the plaintiff commenced proceedings against both Picks Group and its principal, the first defendant, Andrew Patrick Lybert. At that stage, the plaintiff was unrepresented. On 16 May 2024, an amended statement of claim was filed by lawyers acting for the plaintiff. By the time, the matter came on for hearing on 1 April 2025, the plaintiff was again unrepresented and was living in Aberdeen, Scotland. He appeared by audio visual link, as did Mr Lybert who lives in Melbourne.

  3. On 19 June 2024, the defendants each filed a defence to the amended statement of claim, both then being represented by Nathan Nevell, NJN Lawyers. Mr Nevell continued to be the solicitor on the record until the morning before the hearing. At the hearing, the defendants were unrepresented, Mr Lybert appearing for himself, and by leave, for the second defendant, Picks Group. Before addressing the substance of the claim, it is necessary to explain how the defendants came to be unrepresented.

Application to cease to act

  1. On 28 March 2025, Mr Nevell filed an application on behalf of NJN Lawyers seeking leave to file a notice of ceasing to act and seeking to be removed as legal representative of the first and second defendants. Leave was required, pursuant to Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 7.29(2), because notice of the change was not filed and served more than 28 days before the date fixed for the trial. The application for leave was listed for hearing on Monday, 31 March 2025.

  2. At the hearing of the application, Mr Nevell read an affidavit dated 27 March 2025 which recounted the history of his instructions from 21 February 2024. Despite the numerous requests for the funds to be provided to cover the costs of the trial, between 21 January 2025 and 25 March 2025, funds had not been received, although Mr Lybert had been in touch with Mr Nevell on 24 March 2025.

  3. The basis of the application was that, for lack of funds, Mr Nevell had been unable to brief counsel who had initially agreed to appear in the matter. Mr Nevell relied on the judgment of Gzell J in Super 1000 Pty Ltd v Pacific General Securities Ltd,[1] for the proposition that where the solicitor has acted promptly in seeking to obtain funds, even though such requests were “not put into high gear until very late in the piece”, it might be appropriate to grant leave, as late as the day of the trial. Of course, that case provides no more than an example of circumstances where such leave is appropriate, as was noted by Black J in In the matter of SM Project Developments Pty Ltd (in liq) [2] .

    1. [2007] NSWSC 171.

    2. [2017] NSWSC 1010 at [3].

  4. In the circumstances explained by Mr Nevell, it was clear that appropriate efforts had been made to obtain funds and brief counsel. From those efforts, I inferred that the defendants were well aware of the need to provide funds in a timely manner in order to obtain legal representation at the trial. Only small amounts were provided, and no funds in the course of 2025.

  5. As it would have been largely futile to refuse leave and it would not have advanced the just, quick and cheap disposal of the matter in accordance with Pt 6 of the Civil Procedure Act 2005 (NSW), Mr Nevell was granted leave to file the notice of ceasing to act, and did so.

The Contract

  1. The Contract, titled “Contract of Employment”, identified Picks Group as the “employer” and Mr Manson as the “employee”. The plaintiff’s title was “Director-Business Development”. Mr Manson’s annual pay was $US180,000, to be paid monthly in arrears in amounts of $US15,000, to be “paid in full unless residing in Australia”: cl 20. The Contract further provided that the amount would be paid by direct debit into the employee’s account: cl 21. There was a provision for annual pay review: cl 22. Under the heading “Superannuation” there appeared, “N/A”.

  2. The shareholding agreement was in the following terms and appeared under the heading "Your bonus”:

“24   You will also be a shareholder in PicksGroup work Stream PGS. You will own 10%.

25   This means you are entitled to 10% of the total profit your work stream (PGS) makes ... This is paid every three months as required by you and PicksGroup’s current contract position in the work stream.

26   The costs to you for the purchase of 10% of PicksGroup PGS work stream is $200,000 USD.

•   This has already been arranged and can be processed on final payment. Currently that payment for shares is: $100,000 USD paid in full on or before 22st [sic [3] ] November 2019 ($50,000USD on Monday 25 November 2019 and $50,000 USD within 7 days of that is fine). Followed by two further payments on 28th March 2020 of $50,000 USD and a final installment of $50,000 USD on or before 30th June 2020. Shares will be transferred within 3 days of receiving final payment. Invoices will be issued by Westpac Bank.

27   More information about the scheme is available from the Chief Executive Officer.”

3. The date in parenthesis makes better sense if this date were the 31st.

  1. The only other term of present significance in the Contract was the statement that the Contract had commenced on 22 November 2019. There was an initial dispute as to when the first payment of wages was due, but the plaintiff accepted that the first payment was due in February 2020.

  2. The agreement to issue shares was the subject of disagreement and subsequent variation. As to the disagreement, Mr Lybert’s position was that there was never any intention to issue shares in Picks Group; rather, the intention was that Mr Manson would have a 10% holding in a yet to be incorporated company, which was proposed to be a holding company for Picks Group, with assets to include intellectual property presently owned by Picks Group, which would be transferred to the holding company and then licensed to Picks Group. The proposed holding company was not incorporated during 2020, in circumstances to which further reference will be made below.

  3. As to the variation, on 23 February 2020 Mr Lybert wrote to Mr Manson stating that it would be “a pleasure to have you on board in the capacity of COO, we believe you would be a perfect fit in to the role of Chief operations [sic]; and with you as an extended shareholder to 25%”. The cost of the extra 15% shareholding was to be $US33,000, “to be paid on signing of agreement into an account in Australia on Monday 23th [sic] February 2020”. [4] The speed with which the proposal was to be accepted and executed was identified in the following passage:

“February is vital month for us to complete the company formation in Cyprus (already well advanced). This means we need to complete and execute our agreement before COB Monday, 23th February. With the view of Andrew attending Pande Business Services (Lawyers), Paphos, Cyprus before February 26th.”

4. 23 February 2020 was in fact the Sunday and the date of the email.

  1. A second email on the same day changed the cost to $US15,000 and the date for payment to the Monday, 24 February. Mr Manson gave evidence that the cost had not changed, but that his February salary of $US15,000 was to be credited as a part payment and $US3,000 deferred to be added to the next instalment.

  2. At that time, Mr Manson was in hospital in Bali with dengue fever. However, he responded the same day by email stating that “the terms are accepted” and by arranging a transfer of $US15,000 to a personal account of Mr Lybert with HSBC Bank Australia Ltd in Sydney, the details having been provided by Mr Lybert. (Mr Lybert was then in Bali and visited Mr Manson in hospital).

  3. Picks Group issued three tax invoices in respect of the capital payments for shares in PGS, on 24 November 2019, 2 December 2019 and 15 April 2020. Those invoices totalled $US150,000, which, together with the additional February payment of $US33,000 gave a total of $US183,000. That amount was paid in full by Mr Manson, but in respect of $US15,000, by way of offsetting his salary due on 22 March 2020, and in respect of $US11,500 by setting off $US10,000 of his April salary and $US1,500 due for expenses. On 22 April 2020 he paid the balance, being $US26,500, to Mr Lybert’s bank account.

  4. The total payment for shares made to Mr Lybert therefore totalled $US41,500. The total payment for shares made to Picks Group, including the salary off-sets, totalled $US141,500.

  5. The monthly wage payment to be made in January was made, but late. The payment due on 22 February was off-set by agreement against the amount due for the share payments, as was the salary due on 22 March and $US10,000 due on 22 April. The further $US5,000 due in April and half the salary payments for May and June ($US20,000) was deferred until the end of June. Neither that amount, nor the balance of the salary payments for May and June ($US15,000), nor the payments for July and August ($US30,000) were made. Accordingly, by late August 2020 an amount of $US65,000 was outstanding for wages due and payable by Picks Group.

  6. Mr Manson gave evidence as to the work he continued to undertake in those months on-line, despite the inability to travel. He referred to Picks Group continuing to conduct training on-line. He tendered copies of contemporaneous reports and other documents created during that period. His work depended on access to email and the company’s Linked-In account.

  7. Mr Manson gave evidence that in late August 2020, without notice, his access to his work email and to Picks Group’s LinkedIn page were removed. He was then no longer able to continue working for Picks Group. The pleading alleged that this constituted a wrongful repudiation of the Contract by Picks Group. [5]

    5. Amended statement of claim, par 20.

  8. The plaintiff also pleaded that he had not been issued with an invoice for the last instalment for the share purchase of $50,000. [6] Picks Group denied the claim, stating that an invoice was provided to the plaintiff but that the plaintiff refused to pay the final amount and terminated the employment agreement “shortly thereafter”. [7] However, no evidence was provided to support those claims, nor was there any response to Mr Manson’s affidavit asserting that he was not provided with the final invoice.

    6. Amended statement of claim, par 25.

    7. Second defendant’s defence, 19 June 2024, par 25.

Plaintiff’s claims

  1. The plaintiff claimed payment of unpaid wages in accordance with the contract in amount of $US80,000, plus interest. [8] Although in this claim the second defendant denied that it had failed to pay his wages for the months of January, April, May, June, July and August 2020 in the amount of $US80,000, in addressing par 18, it admitted that it had failed to pay his salary for January, April and May. Its defence was that “it was agreed that once Covid-19 restrictions had eased, the Plaintiff would resume his position of setting up PGS in Cypress [sic] and be a shareholder of PGS”. [9] That was not, in terms, a response to the contractual entitlement to be paid wages up until August 2020. Nor was there evidence that those amounts had been paid, beyond the matters noted above. However, on the plaintiff’s evidence as to the setting off of parts of his salary entitlement against capital due for shares, I have calculated that the outstanding amount on account of salary was $US65,000.

    8. Amended statement of claim, par 21(a).

    9. Second defendant’s defence, par 18.

  2. Mr Lybert read his affidavit of 4 December 2024. [10] His evidence in relation to the Contract was that the true agreement was to embark upon a “joint venture” and that the employment agreement that he had utilised was “the wrong document to have Malcolm sign”; he further stated that “[i]t was not my intention for Malcolm to ever become an employee of Picks Group”. [11] Mr Lybert’s evidence as to his subjective intentions was irrelevant: the written Contract executed by the parties is the true record of their agreement. Mr Lybert’s retrospective assessment of the appropriateness of those terms must be disregarded. I accept that the evidence establishes the debt of $65,000 for unpaid wages owed by the second defendant, Picks Group, to Mr Manson.

    10. Tcpt, 1 April 2025, p 16(11)-(27).

    11. Affidavit, Andrew Patrick Lybert, 4 December 2024, pars 12 and 18

  3. It is necessary to calculate interest on that amount.

  4. There is a question as to the date from which interest should run. The documents reveal that there was an agreement that payment of $US20,000 would be deferred until 30 June 2020. An exchange of emails in mid-July 2020 involved a formal demand by Mr Manson for return of the payments for the shareholding and payment of the outstanding balance of salary due to him at the end of June 2020. As to that amount of $US35,000, interest should run from the proposed date for payment, namely Monday, 20 July 2020. For the balance of $US30,000, being wages due on 22 July and 22 August, interest should run from 30 August 2020.

Superannuation

  1. The plaintiff also claimed superannuation of 9.5% of his salary “since beginning of employment”, calculated as $US12,825.

  2. As noted above, the Contract expressly did not provide for payment of superannuation and the claim is therefore not based on the Contract. The reference to 9.5% may be understood as a reference to the employer’s contribution required to be provided to a superannuation fund pursuant to the Superannuation Guarantee (Administration) Act 1992 (Cth). The legal basis of this entitlement was not addressed in submissions by either party. However, I construe s 27(1)(b) of that Act as not making the mandatory employer contribution payable in respect of an employee who is not an Australian resident and is not working in Australia. Accordingly, I disallow the claim.

Annual leave entitlement

  1. Thirdly, the respondent claimed an accrued annual leave entitlement of 18.75 days, which he calculated as an amount of a little under $US13,000. The Contract provided for “25 days’ paid annual leave on a pro rata basis” for each year: cl 30. It also provided that an unused entitlement would carry forward from one year to the next (cl 31), and would result in an entitlement to payment of leave “accrued but not yet taken” at the end of the employment: cl 32.

  2. However, the evidence did not disclose what days Mr Manson worked, nor whether he took any leave during the period of his employment. In the absence of such evidence, I am not persuaded that there was any calculable amount with respect to accrued annual leave which had not been taken. No allowance should be made for that amount.

Alternative claim – the “wage representation”

Pleading of claim

  1. In the alternative to a contractual entitlement to wages, the plaintiff pleaded misleading and deceptive conduct on the part of both defendants, by reference to what was described as the “wage representation”. That was pleaded in the following terms: [12]

“During the course of negotiations of the Employment Agreement, the second defendant represented to the plaintiff that the second defendant was capable of paying the plaintiff his monthly salary of USD 15,000 and entitlements under the Employment Agreement.”

The pleading asserted that the representation was as to a future matter and that the second defendant did not have reasonable grounds for making the representation: par 31. It was then pleaded at par 32:

“The conduct of the second defendant was misleading or deceptive because the first defendant as the sole financial backer behind and the CEO of the second defendant, was aware, or ought to have been aware, that the second defendant would be unable to meet its wage obligations to the plaintiff as and when they fell due at the end of each month.”

12. Amended statement of claim, par 30.

  1. The pleading then alleged that, on 21 April 2020, both defendants represented to the plaintiff that the second defendant “was a going concern and would be able to pay the plaintiff his monthly wages as and when they fell due”: par 33.

  1. For present purposes, the representation made on 21 April 2020, and allegedly repeated on 22 April 2020, may be identified as the “second wage representation”. The second wage representation can have had no effect on preceding conduct, which included the plaintiff entering into the Contract and paying the first and second tax invoices. It is convenient to deal with the two representations separately and chronologically.

First wage representation claim

  1. The evidence of the first wage representation was scant. In his affidavit of 5 August 2024, the plaintiff stated:

“7   In or around October 2019, the First Defendant approached me and offered me a role in sales or business development in his company at the Second Defendant, on a commission basis plus travel expenses. However, I declined the offer.

8   The First Defendant continued to pursue me to join his company at the Second Defendant after I initially declined his offer. We had further discussions over the phone and by email regarding the role, salary and the financial success of the Second Defendant.

9   On 21 November 2019, the First Defendant, in his capacity as the Chief Executive Officer for the Second Defendant, emailed me the proposed offer of the employment and acquisition of the shares in the Second Defendant (“Offers”). We had further discussions about the Offers by way of email on the same date...

…

11   I asked the First Defendant for a copy of the draft employment agreement, the shareholders’ agreement, and the financial statements for the Second Defendant for review before I could make any commitments.

12   On 21 November 2019, at my request, the First Defendant sent me a copy of the draft employment and share agreement with the Second Defendant…

13   On 24 November 2019, before I entered into the employment and share agreement with the Second Defendant, I received a tax invoice… in the amount of USD $50,000 ….

14   On the same date above, I paid the First Tax Invoice to the Second Defendant ….

…

16   On 27 November 2019, … I signed and entered into the employment and share agreement with the Second Defendant, with my employment commenced on 22 November 2019.”

  1. The statement at par 8, that there were discussions as to “the financial success” of the second defendant, is unsurprising and is accepted. It is also accepted that the plaintiff asked Mr Lybert for a copy of the financial statements for the company. However, two problems arise. First, there is no evidence of any representation having been made in relation to the financial affairs of the second defendant; nor is there any evidence as to financial statements being provided or not being provided. It is clear that by 24 November 2019, when the plaintiff paid the first invoice, he had already determined to join the company on the basis proposed and ultimately recorded in the Contract.

  2. There were no relevant representations contained in the Contract, beyond an implied representation that, as employer, the second defendant was able to pay, or reasonably expected to be able to pay, the employee’s salary as and when it fell due. However, such a representation is implicit in every contract requiring payment at a future date. There was no evidence that Mr Manson acted on the basis of such an implicit representation. Nor was it suggested that the second defendant was insolvent when the Contract was signed.

  3. In the absence of any evidence of an express representation identified in the affidavit or in the Contract, it is necessary to refer to the exchange of emails preceding Mr Manson’s decision to sign the Contract. That exercise has its difficulties, because the Contract included the following provision:

“94   Any previous negotiations, understandings, representations, warranties and commitments relating to or affecting your employment are of no effect, because this Contract replaces them.”

  1. The documentation relating to the precontractual negotiations included an exchange of emails commencing on 21 November 2019, between Mr Manson and Mr Lybert. The only variation from the proposal which in fact eventuated concerned the commencement date for the payment of wages and the dates for payment for the shareholding in the new company. The Contract provided no commencement date for payment, although it did envisage that the commencement date of the employment was 22 November 2019. Mr Manson sought to have the date for the first salary payment in effect backdated to that time, but Mr Lybert insisted on the first payment being in January 2020. On the other hand, whereas the Contract envisaged that the share purchase instalments should commence with the payment of $US100,000 “on or before” 22 November 2019, with a second payment in March 2020 and the third in June 2020, each of $US50,000, the Contract also reflected the exchange of emails on 21 November 2019, namely that the first payment would be $US100,000 on signing the contract, with further $US50,000 payments at the end of February and at the end of May. Mr Lybert agreed to vary the latter two payments to the end of March and June 2020.

  2. There were no express representations as to the ability to pay in these records of precontractual negotiations. Although, it is true that Mr Manson asked for financial records for Picks Group, there is no evidence that any were supplied, nor that he withheld his agreement until relevant information was supplied. Accordingly, whatever implied representations there might have been in relation to the solvency of the company and its ability to pay, I am not persuaded that it affected Mr Manson’s decision.

  3. Furthermore, there was no evidence that Picks Group lacked the capacity to pay the plaintiff’s wages in January and February 2020. The statement of claim alleged that Mr Lybert was the sole financial backer behind Picks Group and, which may be accepted, would have been aware of the ability of Picks Group to meet its wages obligations to the plaintiff; but there was no evidence that Mr Lybert was unable to supply the necessary funds.

  4. For these reasons, I reject the proposition that the first wage representation was made, either expressly or impliedly; I also conclude that if there had been some implied representation, it did not have any material effect on the plaintiff’s decision to enter into the employment contract on 27 November 2019.

Second wage representation claim

  1. By 23 February 2020, the contract had been varied to provide that the plaintiff would acquire 25% of the shares in the new company and pay a further $US33,000. Part of the February salary payment was offset against that arrangement for the plaintiff to inject further funds into the business.

  2. Although no precise dates were given, it is common knowledge, reflected in the email exchanges between the parties, that the Covid-19 lockdowns and constraints on travel commenced in March 2020. On 24 March 2020, Mr Lybert sent an email to Mr Manson and Craig Miller which commenced:

“What a week! The world is going to shit! However, the[re] has never been more opportunity for us …”

The email noted a number of tenders available in Australia and the UK, but stated that “training face to face is none existent [sic]. However, online web ex is. We now have the capability to provide this through ‘hangouts’ and ‘google schools’”.

  1. Two days later, Mr Manson responded, having spoken to Mr Miller, seeking further information “so we can lighten your load and support getting us moving forward and some wins and cash in the door”. The email covered a number of administrative issues.

  2. By 30 March 2020, Mr Manson was expressing frustration that (i) he had no access to the company’s accounts or an accountant, (ii) had not received receipts for his $145,000 investment and (iii) wanted a credit card, as promised, in order to cover the expenses. He also stated:

“Salary should not be [with]held arbitrarily without discussion, I understand why you’re doing it because of the exchange rate, I don’t like it and as you said about me asking to defer this should have been discussed a couple of weeks ago but the market only turned 2/3 weeks ago.”

The thrust of the email was that Mr Manson was being asked to make a further payment of his shareholding instalments but was not being paid his salary. Further, it evidenced frustration that, whilst he was being paid by Picks Group, his work was being done for a prospective company which did not yet exist, nor had an accountant, a business plan and an expense arrangement.

  1. Mr Manson’s email of 30 March 2020 also raised questions as to when dividends would become available after revenue commenced, and how much of the $US900,000 which Mr Lybert claimed he had injected into the business would be repaid before a profit was declared.

  2. On 15 April 2020 Picks Group issued a tax invoice to Mr Manson (misspelled Mason) in the sum of $US38,000. On 20 April 2020, Mr Manson wrote to Mr Lybert setting out a “discussion agenda”. The first item was “financial state of the business”. Mr Lybert responded to that: “Easy, the[re] isn’t one, I currently, singly, fund it”. Mr Lybert sent a further email at 06:45 on 21 April stating:

“I have read your email. I don’t have time for this rubbish we have a business to run. Malcolm - Keep your funding. Craig - I will talk to you later.”

  1. There appears to have been a meeting on 21 or 22 April, following which, at 11:34 on 22 April 2020 Mr Manson emailed Mr Lybert referring to “a good productive meeting, today felt much better like we are going somewhere”:

“I … owe you the business $38k now for instalment no 3.

My salary for April is $15k and expenses worked out in USD around $1.5k (we can work out the small change later). I propose I defer $5k this month (I have more cost this month, I have some legal fees to cover at the end of the month) so I will send you $26.5k USD to save you and I having to send to each other cash end of this month with conversions for you and me both ways?

May and June salary I propose 50% deferment, so pay me $7.5k USD.

That would leave $20k in total deferred for the three months at the end on [of] June against the 4th and final instalment, unless we are back travelling again in June which we can then revisit.

We can further review going forward in mid-June if things have not changed or improved in terms of corona virus and travel restrictions.

Have a think if your ok with this I will transfer the balance as agreed.”

At 11.41am Mr Lybert responded with his agreement.

  1. Although the amended statement of claim pleaded that on both 21 and 22 April 2020 Mr Lybert made a representation that the second defendant was “a going concern and would be able to pay the plaintiff his monthly wages as and when they fell due”, there was no express representation to that effect and, given the available evidence of what occurred on those days, I am unable to infer any relevant representation. I reject the second wage representation, as the evidence did not support the pleading.

Instalment payments for share acquisition

  1. The plaintiff’s claim in relation to the payments for shares may be summarised as involving a total failure of consideration. The contractual arrangements, as varied, provided for him to make payments of $US233,000, to acquire a 25% shareholding in a new company to be established by the defendants. The right to the shares crystallised upon payment of the full amount. At the time the contract was terminated, the invoice for the final amount of $US50,000 had not been issued and the full amount therefore had not been paid. The plaintiff sought restitution of the payments which had been made.

  2. Two points should be made in respect of the plaintiff’s pleading. First, it identified the subject of the share purchase as “PicksGroup work Stream PGS”: that is, it did not identify shares in Picks Group, the plaintiff’s employer. Secondly, referring to the 23 February 2020 variation, it pleaded that “the plaintiff would acquire a total of 25% of PGS shares in a company that would be incorporated in Cyprus”.

  3. The second defendant agreed that the plaintiff had entered into the Contract, but: [13]

“Denies the agreement was for the plaintiff to obtain shares in Pick[s] Group Pty Ltd, however, the Plaintiff was employed to commence a company called Picks Group work Stream PGS (PGS) which was to be located in Cypress [sic]. The Plaintiff was then to be solely employed as the director of PGS and received shares in PGS in accordance with clauses 24 to 26 of the Employment Agreement.”

13. Second defendant’s defence, par 1(b)

  1. The defence stated, and repeated, that “it was never agreed for the Plaintiff to obtain shares in the Second Defendant”, a matter which had not been alleged. However, the defence added one further allegation: [14]

“The Employment Agreement was only ever to remain in place while PGS was not operational and as soon as PGS was operational, the Employment Agreement would cease.”

14. Second defendant’s defence, par 1(e)

  1. While there was a power of termination conferred on each party under the Contract, the allegation in the defence was not part of the Contract. Nor was there any evidence to support it as a variation of the Contract.

  2. The plaintiff alleged that in December 2019 the plaintiff commenced his duties for the second defendant and that the plaintiff and the second defendant agreed that the first wage payment would be due on 30 January 2020. [15] The second defendant responded that the plaintiff commenced duties on 29 November 2019 and stated that the plaintiff was: [16]

“operating in Cypress [sic] and other locations around the world to set up PGS. It was agreed between the Plaintiff and the Second Defendant that funds invested by both the Plaintiff and Second Defendant would be utilised by the Plaintiff and Second Defendant in establishing PGS in Cypress.”

15. Amended statement of claim, par 10.

16. Second defendant’s defence, par 10.

  1. The last proposition was not to be found in the Contract; nor was there evidence of any agreement that the Cyprus company would carry on the business of Picks Group, but rather that it would be a holding company.

  2. The amended statement of claim further alleged:

“17   On 17 July 2020, the plaintiff asked the defendants to:

(a)   Return his instalment payments for the share acquisitions; and

(b)    Pay the plaintiff all the outstanding salary owing by the second defendant for January, April and May 2020 in the amount of USD 35,000.”

The second defendant neither admitted nor denied those allegations.

  1. The amended statement of claim continued:

“18   The second defendant did not:

(a)    return the instalment payments made for the share acquisitions; or

(b)    pay the plaintiff his salary that remained outstanding for January, April and May 2020.

19   The plaintiff continued carrying out his duties for the second defendant until August 2020.

20   In August 2020, the second defendant wrongfully repudiated the Employment Agreement.”

  1. The second defendant’s defence in relation to those paragraphs read:

“18   The Second Defendant admits paragraph 18 of the Amended Statement of Claim but further says that it was agreed that once Covid-19 restrictions had eased, the Plaintiff would resume his position of setting up PGS in Cypress [sic] and be a shareholder of PGS.

19   The Second Defendant denies paragraph 19 of the Amended Statement Claim. The Plaintiff terminated the Employment Agreement in or around May or June without completing the agreed commencement of PGS.

20   The Second Defendant denies paragraph 20 of the Amended Statement of Claim.”

  1. The final elements of the amended statement of claim were as follows:

“25   The plaintiff was not issued with an invoice for the last instalment payment of USD 50,000 for the 25% of shares in the Cyprus Company. (Last Instalment Invoice)

26   In August 2020, prior to the issue of the Last Instalment Invoice, the second defendant wrongfully repudiated the Employment Agreement by removing the plaintiff’s access to his emails at the second defendant.

27   The plaintiff has not received any part of the 25% of shares in the Cyprus Company.

28   By reason of paragraphs 24 to 27 above, there has been a total failure of consideration in relation to the share purchase of 25% of the entity to be incorporated in Cyprus.”

In relation to the last two paragraphs, the defence read:

“27   The Second Defendant admits paragraph 27 of the Amended Statement of Claim and further say [sic] that the only reason the Plaintiff did not receive shares in accordance with the Employment Agreement is that he did not fulfil the Contract in setting up PGS. The Plaintiff’s breach of the Employment Agreement has caused loss and damages to the Second Defendant.

28   The Second Defendant denies paragraph 28 of the Amended Statement of Claim as the Plaintiff undertook extensive travel in commencement of setting up PGS which was fully paid by the Second Defendant. The Second Defendant has lost future potential revenue as a result of the Plaintiff’s breach of the Employment Agreement.”

  1. In essence, the position of the second defendant, adopted by the first defendant, was that the Contract required the plaintiff to set up the Cyprus company and, in so far as he failed to do that, he was author of his own misfortune. As explained below, none of the propositions relied on in the defence were made good by the evidence.

  2. First, the Contract did not require the plaintiff to establish a company in Cyprus. There is no doubt that the plaintiff was employed to develop the Picks Group business, primarily if not wholly outside Australia and particularly in Southeast Asia. On the basis of the documentary records of frequent reports of activities and meetings with potential clients, I infer that the plaintiff was diligent and active in that regard.

  3. Secondly, I infer that Mr Lybert held the same view in late February 2020 when he invited Mr Manson to take on the role of chief operations officer for Picks Group.

  4. Thirdly, I infer from the documentary record that Mr Manson did not have authority to register a company on behalf of Picks Group, and that it was Mr Lybert who was to undertake that function. It is true that Mr Lybert invited the plaintiff to travel to Cyprus, apparently for the purpose of having him sign a shareholder agreement whilst in Cyprus and possibly to sign other documents, although none was identified and no draft shareholder agreement was produced in evidence. Mr Lybert claimed in his email of 23 February 2020 that it was necessary to have the company registered in Cyprus (“February is vital month for us to complete company formation in Cyprus”) but no reason for that was given or apparent. I infer that the expression of urgency was a means of immediately extracting further funds from Mr Manson, valuing the company at a mere fraction of that which the original agreement had envisaged, supported by the fact that the money he obtained was to be transferred, not to a Picks Group account, but to his personal bank account.

  5. Fourthly, I infer that, as Mr Lybert visited the plaintiff in hospital in Bali on 23 February, he was aware of his condition and therefore the unlikelihood of him being able to fly to Cyprus the following week. I accept Mr Manson’s evidence that, on medical advice, he was unable to travel to Cyprus in the last week in February. No ticket was purchased for him to travel to Cyprus, either that week or at any time, although Covid intervened soon thereafter.

  6. Fifthly, whether Mr Lybert knew that he would be travelling to Cyprus when he spoke with the plaintiff in hospital in Bali is unclear. After noting Mr Manson’s acceptance of the increased share proposal, he wrote at 19:11 that evening, “looks like I have a flight, so see you soon ion [in] CY”.

  7. Whether Mr Lybert in fact visited Cyprus in February 2020 cannot be known on the evidence. In his affidavit of 4 December 2024, he said that he did, but for reasons explained below, I am not inclined to accept any of the evidence given by Mr Lybert which is not supported by documentation or surrounding circumstances.

Mr Lybert’s credibility

  1. Mr Lybert’s affidavit gave his address as one in Lindfield NSW, which he agreed he had left more than a year before he swore the affidavit.

  2. The only express denial made by Mr Lybert in the defence filed on his own behalf was that he “never received funds from the Plaintiff in his personal capacity”. That was in response to an allegation that the plaintiff had paid him $US15,000 on 24 February 2020, deposited in an HSBC account in Mr Lybert’s name. The documentary evidence demonstrated the correctness of the plaintiff’s claim. When cross-examined in relation to his denial, Mr Lybert prevaricated. When shown an email from him giving his account details and directing that the money be paid to that account, he said:

“Ok. And if that’s the way it is, then that’s fine.”

He then accepted that it was not Picks Group’s Westpac account but his personal account HSBC account, and responded:

“Okay.  In that case, yeah.  In that case, yes.  Wait.  This is because you're on the HSBC as well, right?  Yeah.  Okay.  Yep.  Okay.  Yeah, accept that.  Yeah.  That's fine.” [17]

17. Tcpt, 1 April 2025, p 26(45).

  1. The attempt to qualify the answer even when the falsity of his defence was patent, was one example of a number of responses in his evidence in which he searched for an explanation which might justify his conduct, usually by way of speculation.

  2. In his affidavit, Mr Lybert described a meeting in Sydney in about 2018. He stated:

“At this meeting, Malcolm, Craig [Miller] and I discuss[ed] setting up a company called Pick [sic] Group PGS in Cyprus and through Europe. My focus was to do this in Singapore, however, Craig and Malcolm were really trying to sell the idea for Cyprus.”

  1. In cross-examination by Mr Manson he gave the following evidence: [18]

    18. Tcpt, p 46(5)-(47).

“Q   So Mr Lybert, you suggested that it was me that wished to set up in Cyprus?

A   The company ‑ we'd already been working in Cyprus. I mean, it was already going that way. The only request from you to go to Cyprus was when I saw you in Bali and we made the agreement that you was going to run the Cyprus piece. Cyprus is not new to you. Cyprus is already as a part of the PGS sort of layout ….

Q   So you'd already worked in Cyprus?

A   It was already built up to Cyprus.

Q   So you have already worked in Cyprus?

A   Yeah.

Q   But you knew that I had never been to or worked in Cyprus?

A   Yeah, I'd lived in Cyprus and worked in Cyprus before, as you know.

…

Q   So it was you who was setting up the Cyprus entity‑‑

A   Yes.

…

Q   So the intent was that the intellectual property would be transferred into the Cyprus holding company?

A   Mm‑hmm.

Q   And each of the project companies would hire or lease the IP from the company? Is that not correct?

A   Eventually, yes. Becoming a service agreement type of construct.”

  1. Mr Lybert was then taken to the passage in his affidavit set out at [70] above. When read to him, he responded: [19]

“A   No, the Cyprus piece had already existed, all right. It was already there. I don't understand that piece. I don't know what it says in there and I don't understand that piece. That's not correct.

Q   Mr Lybert, this is your affidavit.

A   I'm well aware of that.

Q   So can you please explain what this means to us?

A   I can't, no. I don't know. So the Cyprus entity was brought around into focus from you, and Craig as well, post‑February, I suppose. Before that, I never really had any intention of doing anything in Singapore. So I don't understand the context of that, I'm afraid.

Q   But this is your affidavit, Mr Lybert.

A   I'll revisit that. That might need to be changed, because I don't understand why that is; I had nothing to do with Singapore.”

19. Tcpt, p 47(9)-(24).

  1. My Lybert also stated in his affidavit:

“8   On or about late 2019 Malcolm and I verbally agreed to commence a business partnership together. It was agreed that Malcolm would set up a company in Cyprus which would be its own entity in accordance with Cyprus regulations. This entity was to provide training courses and platforms in Cypress and Asia. The main course that was to be provided was a Safety and Compliance course to the oil and gas industry. Picks Group Pty Ltd had offered very similar courses here in Australia which is why Craig and Malcolm wanted to utilise the Pl [IP?] already in Picks Group Pty Ltd.”

  1. Whatever may have been a verbal agreement, it was superseded by the Contract. Further, I do not accept the implication that the driving force behind the Contract was a proposal by Mr Manson (or Mr Miller) to utilise the resources of Picks Group. The documentation, discussed further below, demonstrates that Mr Lybert was at all times the person driving the business and recruited Mr Manson to help to develop his business.

  2. Mr Lybert’s affidavit continued:

“9   As this new entity in Cyprus was a similar model to the second defendant, Picks Group Pty Ltd, hereinafter called ‘Picks Group’, the Cyprus entity was to be called ‘PicksGroup PGS’, hereinafter called ‘PGS’, in which Malcolm would be a 10% shareholder and receiving 10% of the annual profits. In addition, Malcolm was to be paid a director wage of $180,000 USD per year once the company was set up. Prior to the company being set up, Malcolm was just to receive reimbursement for his costs and expenses in the set-up process. Malcolm and I engaged a Cyprus Lawyer to assist with setting up PGS, however, I was informed by our Cyprus Lawyer that Malcolm did not attend the meeting to setup PGS.”

  1. The statement that Mr Manson was to be paid a director’s wage once the Cyprus company was set up was not consistent with the Contract: the plaintiff was to be paid a salary by monthly instalments of $US15,000 from the time that Mr Lybert deemed his work to have commenced. To say that the plaintiff was “just” to receive reimbursement for his costs and expenses in the set-up process was inconsistent with the terms of the Contract. The actual payments made and the negotiations over set-offs, in which Mr Lybert participated, demonstrate the knowing falsity of his evidence.

  2. It was clear from the cross-examination of Mr Lybert that it was he who engaged a Cyprus lawyer and that the plaintiff had no part in that. Further, the suggestion that he was informed by “a Cyprus lawyer” that the plaintiff did not attend the meeting to set up PGS is inconsistent with his own testimony. It was Mr Lybert who set up the meeting in the Cyprus, which Mr Lybert says he attended, but the plaintiff did not. If he went to Cyprus in that week, he cannot have been reliant upon the lawyer to inform him that Mr Lybert did not attend. In any event, as it was his evidence that all travel was to be undertaken through Picks Group’s travel agent and no bookings were made for the plaintiff to attend such a meeting: the implication that the plaintiff was at fault in not attending was false.

  3. Mr Lybert further stated:

“12   Due to the rushed nature of this venture, and Malcolm putting constant pressure on me to formalise an agreement as he wanted to commence the setup of PGS, I simply grabbed an Employment Agreement that Picks Group had been utilising for their employees and amended it to reflect what Malcolm and I had agreed. It was not my intention for Malcolm to ever become an employee of Picks Group and on reflection, this clearly was the wrong document to have Malcolm sign. From our discussions, the agreement was that of a joint venture to set up this Cypress entity for Malcolm to operate.

13   The Employment Agreement, which meant to be a joint venture was signed on 27 November 2019.”

  1. Again, Mr Lybert’s subjective intentions are irrelevant. However, I do not accept that Mr Lybert did not understand that the plaintiff was to become an employee of Picks Group. Nor do I accept that he “grabbed an Employment Agreement” in the way described: the agreement was carefully tailored to Mr Manson’s circumstances, including by making no provision for superannuation. Nor do I accept that if a mistake had been made, it was due to pressure imposed by the plaintiff.

  2. As to the statement that the agreement was “meant to be a joint venture”, I accept that that is partly true in that the Contract provided for payments to be made to acquire shares in a proposed Cyprus holding company for Picks Group.

  3. Mr Lybert further stated in his affidavit:

“17   In 2020 all flights and travel were closed down due to Covid-19 and neither Malcolm nor myself could continue to promote PGS. I was unaware that PGS was not even registered at this stage and I believe Malcolm was living in Bali at the time worldwide travel was stopped ....”

  1. I do not accept that the plaintiff was unable to “continue to promote PGS” from March 2020. I accept that face-to-face training sessions were not possible from March 2020 until the termination of the contract in August or September 2020. However, it is clear from the unchallenged documents tendered by Mr Manson that he continued to engage in such work online. He was frustrated in his activities primarily by the absence of a business plan and lack of information as to the financial status of Picks Group, which were the responsibility of Mr Lybert. It is apparent, both from documents supplied by the plaintiff and from statements by Mr Lybert, that promotional work was being undertaken up to 4 June 2020.

  2. I reject Mr Lybert’s claim that he was “unaware that PGS was not even registered” in March 2020. Nor did he “believe” that the plaintiff was living in Bali: he had visited him there in late February and had personal knowledge of his situation. I do not accept the implication that the plaintiff was in charge of the process of registering PGS in Cyprus. Mr Lybert’s demand for an immediate payment of cash on 23 February 2020 demonstrated that the party applying pressure was Mr Lybert (although the reasons are not apparent unless it was a device to extract cash from the plaintiff) and that he was controlling the process of registration.

  3. Mr Lybert made several statements in his affidavit to the effect that further documentation could be obtained. They were as follows:

“17   … As a result of the Covid pandemic, and no payments being made to Malcolm for the joint venture, Malcolm attempted to obtain Australian Government benefits even though he was living in Bali. He was upset and frustrated that he was unable to obtain such government assistance. These emails can be pulled from old google drive once I have been able to reinstate the drive.

…

21   In or about late February 2020 and just prior to the travel restrictions, Malcolm and I agreed to meet in Cyprus so that we could together set up PGS as Malcom was not undertaking this. I flew to Cyprus and stayed in Paphos, and visited our Cyprus Lawyer. I am attempting to locate the flight tickets, however, they are in Picks Group files. I will provide the tickets as soon as I locate them.

…

25   I have contacted the lawyer we engaged in Cyprus and I am just waiting on correspondence seeking Malcolm to attend and set the company up. I will provide this correspondence as soon as I have received it.

…

28   I am still attempting to obtain bank transactions for Pick [sic] Group should the expenditure which has been difficult [sic]. I will provide such expenditure as soon as it comes to hand.”

  1. None of the documentation referred to in any of these paragraphs was tendered. No documentation was annexed to Mr Lybert’s affidavit. He was asked several questions in relation to promised documentation, the last part of which was as follows: [20]

“Q    You allege that obtaining expenditure transactions from the bank has been difficult, but surely, there was a set of accounts identifying separately charges towards PicksGroup and Cyprus.

…

Q   And setting up the holding company accounts.

…

Q   … Why was it never shared?

A   So, first of all, you've not asked me for any of the accounts that was in PicksGroup, so I never did. Second of all, the reason why it's not up here at the moment is because all of our physical files have, since the start of this sort of conversation, have miraculously disappeared two weeks ago now, or four weeks ago, from a break in in my house. So I now need to go back at FCM to pull out all of these transactions.”

20. Tcpt, 1 April 2025, p 59(21).

  1. The email exchange between the plaintiff and Mr Lybert on 15 June 2020 was admitted on the basis that it revealed an ongoing request from the plaintiff, which had commenced with the April exchanges discussed above, seeking financial documentation in relation to the Picks Group services business. To the extent that the documentation involved Picks Group, Mr Lybert had refused to provide financial information on the basis that the plaintiff was not a shareholder or director of that company and had not been offered a shareholding in that company. To the extent that the accounts and financial statements did not involve Picks Group, Mr Lybert sought to distinguish between a “cost centre” in Australia and “streams of work” being undertaken in various countries, of which the Cyprus operation was proposed to be one. To all of which the plaintiff stated contemporaneously: [21]

“I have no visibility of cost nor control/approval on expenditure, nor indeed of any of the revenue generated or access to bank accounts or monthly management accounts. You are the sole trader/owner/shareholder of the Australian entity and you do what you wish, that is not acceptable to me if I’m to be part of something bigger nor is it what you offered me when you were here in Bali in February it was as described above ….

You continue to be secretive and unwilling to share financial information or e-mail correspondence between potential clients or afford access to accounts accountants or lawyers involved in your business.

… The budget I prepared showed salaries, cars, expenses, travel etc for all three of us we all have to suffer the same until things improve. Dividends would be paid based on how well PicksGroup performed on the basis of your share percentages normal business practice and as there is no other entity this was based on the Australian entity until we can open a holding company. I asked you if you were happy with the proposed budget you said ‘all good’ but you continue to ignore it.”

21. Email, Manson to Lybert, 15 June 2020.

  1. The plaintiff was referring to a prospectus that he had prepared for a proposed investor. He had been chasing accounts from Mr Lybert. On 15 June 2020, Mr Lybert responded with respect to the 2019 accounts:

“I’m working in accounts. It is not my priority at the moment. I will not get certified accounts that I can not change until I’m happy with them.”

In response to Mr Manson’s email, Mr Lybert stated:

“The[re] is no lies or false promises. You need to look at the current environment. … We are lucky to have any services at all. Second of all, this is the cost center you are talking about not PGS. Now, I do have a set of accounts coming to me either today or tomorrow. But you will need to understand that I will only follow the Australian process for this. That is final.”

  1. I do not accept Mr Lybert’s evidence that the plaintiff had not asked for accounts. His statement was contradicted by several contemporaneous documents from Mr Manson dated between April and June 2020.

  2. Mr Lybert referred in cross-examination to other documents supporting earlier evidence that he had at least sought to do business in Cyprus prior to the arrangements with the plaintiff. He said: [22]

“That was before our agreement, of course.  We had some work that we're setting up in Cyprus, as we've obviously been doing that for quite a while.”

22. Tcpt, 2 April 2025, p 66(20).

  1. Mr Lybert was then taken to an email to the proposed investors asking them to pay money into his personal bank account. The cross-examination continued: [23]

    23. Tcpt, 2 April 2025, p 67(15).

“Q   Why would you ask them to do that if it was for Picks Group?

A   It's just - we just always did. That was just easier. It was in the same account. It was just easier. You can't - it's hard to justify some of the banking things sometimes. I just used their account. I've don't have an answer for that to be honest. Again, hindsight.

Q   You don't keep separate bank accounts for Picks Group and yourself?

A   I do. Of course, we kept separate accounts for Picks Group. But it was just - I don't know, it would have been easier doing business, to be honest with you. So, it would have just been whatever I had to hand.

Q   So you don't have - or you do have separate accounts, but you choose to put money into your own account rather than –

A   Well, it's for ease of doing business. It's very clearly - regardless of the account that you use, it's very clearly a Picks Group piece. It's on Picks Group emails and paper. I use lots and lots of different work streams, and if I was using different work streams, I'd use a different account for it. Yes, they're all in the same bank, but –

Q   How do you keep separate accounts, and why were these accounts never provided to myself?

A   Your accounts that you're talking about for your company, for our company, for PGS, the stuff that we set up, right, the stuff that you asked me for then, we didn't have a set of accounts for it.”

  1. My impression of My Lybert as a witness was that he was careless with the truth. Many of his answers lacked clarity and on occasion the obfuscation was deliberate. I am satisfied that no audited accounts are available for Picks Group and that there are no audited or unaudited accounts for the business to be undertaken through the proposed new company which was to be established in Cyprus. I am satisfied that Mr Lybert did not require all payments in relation to the shareholding in the proposed new company to be kept in an account of Picks Group, nor any other separate account; at least some payments were comingled with his own personal funds, as he appeared to concede.

Findings

  1. Based on this evidence, I make the following findings as to the termination of the Contract:

  1. Picks Group employed the plaintiff to develop a business involving the provision of educational services to other businesses outside Australia.

  2. The plaintiff devoted himself to that task up to August 2020. He was prevented from continuing the work thereafter, not by travel restrictions consequent upon Covid, but by the absence of financial accounts for Picks Group and a coherent business plan; these were sought from Mr Lybert on a number of occasions but were not supplied. I infer they did not exist. His work was finally terminated by the withdrawal of access to the Picks Group email and LinkedIn accounts.

  3. The registration of a holding company in Cyprus in which the plaintiff would hold a share, at first 10% and then 25%, was an initiative for which Mr Lybert was solely responsible. Mr Manson’s presence in Cyprus in February 2020 was not a prerequisite to registering the company; his absence did not prevent its registration. Mr Lybert failed to effect its registration, without which there was no shareholding for Mr Manson.

  4. It was an implied and essential term of the Contract that Picks Group and Mr Lybert would take all necessary steps to make available to Mr Manson the opportunity to purchase shares in a new holding company which was intended to obtain the profits from the developed business.

  5. By failing to register the company and invoice Mr Manson for the last instalment of capital payments, Mr Lybert prevented Mr Manson from obtaining the shareholding the subject of the Contract, for which they, Mr Lybert and Picks Group, had received part-payment. Their actions jointly prevented the completion of the Contract.

Legal principles

  1. As has been explained, the defences filed by the defendants (with solicitors then acting for them) did not raise an issue as to frustration. Nevertheless, both in his evidence and in written submissions, Mr Lybert appeared to rely upon such a defence. To avoid potential unfairness to self-represented parties, it is appropriate to address the issue of frustration.

  1. It is also necessary to identify the principles relevant to the plaintiff’s claim for a “total failure of consideration” in relation to the shareholding agreement and the circumstances in which the payments made by him may be recovered.

Frustration of contract

  1. The basic principle regarding frustration of a contract, which has been accepted on numerous occasions by the High Court, is as follows: [24]

“… frustration occurs whenever the law recognises that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract … It was not this that I promised to do.”

24. Brisbane City Council v Group Projects Pty Ltd (1979) 145 CLR 143 at 159–163 (Stephen J); [1979] HCA 54; Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 356–357 (Mason J); [1982] HCA 24; Davis Constructors Ltd v Fareham Urban District Council [1956] AC 696 at 729 (Lord Radcliffe).

  1. In the present case, the factor relied upon by the defendants was the limitations and constraints resulting from Government responses to the pandemic in early 2020. That there were constraints on travel and on face-to-face meetings in many countries may be accepted as part of general knowledge, although, had it been challenged, it would be necessary for the defendants to provide some evidence of the circumstances in the countries in which they sought to operate. In this case, that was not required. The affected obligations must be identified by reference to the terms of the Contract, as well as the circumstances in which they came to be performed.

  2. As noted by Kirk JA in Cao v ISPT Pty Ltd: [25]

“[24]   In summary, the doctrine arises where the contract in question has continued operation and some new circumstance arises in which it falls to be performed. Frustration applies if that circumstance renders the context of performance so different from what the parties had assumed as to render the contract a fundamentally or radically different thing from what had been contracted for. Any relevant assumption of the parties is to be found from what is contemplated in the contract as understood in the surrounding circumstances in which it was made. The change in the assumed context must be such as to take it outside those risks for which either party had assumed responsibility.”

25. [2024] NSWCA 188 (Meagher JA and Griffiths AJA agreeing).

  1. Kirk JA stated that “[w]here a contract is frustrated it is taken automatically to be terminated from that time on”. [26] Kirk JA further observed that,

“[36]   … the test looks to the effect of the supervening event on performance of the contractual obligations and, it should be added, on enjoyment of the contractual rights. The focus is not per se on the consequences of supervening events on the business or fortunes of a contracting party. That events have turned out badly for that party does not mean that they are no longer bound by the contract.”

26. Cao at [26].

  1. Cao was a case involving a three-year lease of a restaurant which had commenced on 1 October 2019. The restaurant closed on 23 March 2020 when the first of a series of State health orders came into effect. It never reopened. The tenant went into liquidation in May 2021. In resisting a claim for rent and other amounts owing under the lease, the appellants, who were the guarantors of the tenant’s obligations, contended that the lease was frustrated from 23 March 2020.

  2. The claim of frustration resulting from the State government’s response to the Covid-19 pandemic was rejected. Although the financial viability of the restaurant may have been seriously undermined by the restrictions, the restaurant could have continued to operate as a take-away business whilst lockdown orders were in place, and thereafter. Accordingly, it could not be said that the lease was a thing of no value to the tenant.

  3. In the present matter, there was no evidence of the effect of the pandemic on the Picks Group business. At first, Mr Lybert treated the pandemic as a source of opportunity, rather than a potentially fatal blow to his business operation. Further, as already noted, the evidence demonstrated that the plaintiff was able to continue with his business activities over several months from March 2020. In short, the evidence failed to establish that the Picks Group business was unable to operate from March 2020. On the contrary, it appears to have continued to operate. Mr Lybert’s apparent inability or unwillingness to pay the plaintiff’s salary predated the onset of the pandemic. Finally, there was no evidence that the pandemic had any influence on the decision of Mr Lybert not to make available the promised shareholding in the holding company.

  4. To the extent that Mr Lybert’s own evidence and submissions sought to rely upon the doctrine of frustration, I would reject the availability of the defence.

Breach and repudiation

  1. The plaintiff relied upon the contention that the defendants, and in particular Picks Group, had repudiated the Contract by denying him access to the company’s electronic resources, without which he could not continue to develop its business. Further, it had breached an essential term of the Contract which was that Picks Group would both establish a holding company (referred to as PGS) and invoice him for capital payments to allow him to obtain a shareholding in the holding company according to the agreed timetable. Its failure to establish the company and invoice him for the final payment prevented his entitlements crystallising and constituted breach of an essential term of the Contract.

  2. In Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd,[27] Brennan J observed:

“Repudiation is not ascertained by an inquiry into the subjective state of mind of the party in default; it is to be found in the conduct, whether verbal or other, of the party in default which conveys to the other party the defaulting party's inability to perform the contract or promise or his intention not to perform it or to fulfil it only in a manner substantially inconsistent with his obligations and not in any other way.”

27. (1989) 166 CLR 623 at 647; [1989] HCA 23.

  1. A similar principle was stated by Mason CJ in Laurinda at 634, and was adopted by the joint reasons of four members of the High Court in Koompahtoo Aboriginal Land Council v Sanpine Pty Ltd. [28] Whether or not the breach of an essential term constitutes repudiation, it will provide a basis for termination of the contract. [29]

    28. (2007) 233 CLR 115; [2007] HCA 61 at [44] (Gleeson CJ, Gummow, Heydon and Crennan JJ); see also Dyco Pty Ltd v Laundy Hotels (Quarry) Pty Ltd [2021] NSWCA 332 at [82] – [83] (Bathurst CJ), a statement of principle not affected by the appeal to the High Court.

    29. See Associated Newspapers Limited v Bancks (1951) 83 CLR 322; [1951] HCA 24.

  2. In the present case, the steps taken by the defendants effectively prevented the plaintiff from continuing to carry out his activities in accordance with the Contract. His evidence in that respect was unchallenged. The conduct constituted a repudiation permitting the plaintiff to terminate the contract, as he did. He is entitled to recover the capital payment made by him for a purpose which was frustrated by the second defendant’s repudiation. The amounts are not in question; interest must be calculated. The plaintiff undertook a calculation of interest payable on the capital amounts on the basis that termination occurred at the end of August 2020. Accordingly, interest is calculated on an amount of $US183,000 from 1 September 2020.

Calculation of interest

  1. This calculation requires attention to the currency in which the orders are expressed. Usually, this Court would make orders in amounts calculated in Australian dollars. However, there is no doubt that the Court has power to order payments in another currency. [30] The plaintiff is resident in Scotland and the defendants in Australia. The Contract was to be executed entirely overseas and the payments pursuant to the Contract were to be made (and were made) in US dollars. It is appropriate therefore that judgment be entered in US dollars. Care must be taken, however, in calculating interest in such a case. [31] In the present case no evidence was proffered as to the appropriate rates and the only available course is to use the rates applicable locally, but subject to a discount to avoid over-compensating. [32]

    30. Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co (1989) 15 NSWLR 448 at 463-464 (Kirby P), 471-472 (Hope JA, McHugh JA agreeing); BHPB Freight Pty Ltd v Cosco Oceania Chartering Pty Ltd (No 4) [2009] FCA 1448; 263 ALR 63 at [5] (Finkelstein J).

    31. Maschinenfabrik Augsburg-Nurenburg Aktiengesellschaft v Altikar Pty Ltd [1984] 3 NSWLR 152 (Rogers J); BHPB Freight at [8].

    32. See also, State Bank of NSW Ltd v Swiss Bank Corporation (1995) 39 NSWLR 350 at 360 (Priestley, Handley and Sheller JJA).

  2. The power of the Court to provide for a judgment including interest on the amount of the judgment is found in s 100(1) of the Civil Procedure Act 2005 (NSW). The rates at which the prejudgment interest is calculated are set out in a table in accordance with UCPR, r 6.12(8)(a). The calculation of prejudgment interest is based on the Reserve Bank cash rate plus 4%. However, the amount of interest is in a discretion of the Court. I propose to allow interest at the rate of 4% from 1 September 2020 until 31 December 2022, a period of two years four months. For the period from 1 January 2023 until 15 May 2025, a similar period, interest has been calculated at 7%. In each case, the interest rates are below the lowest rates payable during those periods pursuant to the table. So calculated, the total amount of interest is, in round figures, $US47,000. Accordingly, there will be judgment for the plaintiff against the second defendant in respect of the capital payments made by him in the amount of $US230,000.

  3. With respect to the unpaid wages, interest should be calculated on $US35,000 from 1 July 2020 and on $US30,000 from 1 September 2020 at the rates adopted above. I allow an amount of $US17,000 for interest on unpaid wages.

  4. Finally, it is necessary to calculate separately the interest payable by the first defendant, Mr Lybert, on the amounts paid into his bank account, namely $US41,500. Interest, calculated on the same basis as for the second defendant, amounts to $US10,650. There will be judgment for the plaintiff against the first defendant in respect of those capital payments received by him in the amount of $US52,150.

Orders

  1. The calculation of the appropriate judgment amounts is set out above. Two further matters should be identified in respect of the orders.

  2. First, the capital payments, although not for shares in Picks Group, were to be made pursuant to the Contract between Mr Manson and Picks Group. To the extent that moneys were paid into the bank account of Mr Lybert, in satisfaction of the contractual obligation, it should be inferred that the amounts were so paid at the direction of Picks Group. Picks Group therefore remains liable for the full amount of the payments made which are to be reimbursed. However, the plaintiff was entitled to, and did, seek judgment against Mr Lybert for the amounts paid into his bank account.

  3. The result will be that the total amount the subject of the orders will exceed the total amount paid together with interest. There can be no double recovery. It follows that, however the moneys are recovered, the amount to which the plaintiff is entitled with respect to the capital payments will not exceed the amount of the order made against the second defendant.

  4. Accordingly, I make the following orders:

  1. With respect to reimbursement of capital payments made by the plaintiff:

  1. order that the first defendant pay the plaintiff $US52,150;

  2. order that the second defendant pay the plaintiff $US230,000.

  1. With respect to the claim for unpaid wages, order that the second defendant pay the plaintiff $US82,000.

  2. Order that the first and second defendants pay the plaintiff’s costs of the proceedings.

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Endnotes

Decision last updated: 15 May 2025

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Brisbane City Council v Group Projects Pty Ltd [1979] HCA 54
Brisbane City Council v Group Projects Pty Ltd [1979] HCA 54
Brisbane City Council v Group Projects Pty Ltd [1979] HCA 54