Medicrew Pty Ltd v Van Veenendaal
[2023] QDC 129
•21 July 2023
DISTRICT COURT OF QUEENSLAND
CITATION: | Medicrew Pty Ltd v Van Veenendaal & Anor [2023] QDC 129 |
PARTIES: | MEDICREW PTY LTD ACN 168 584 727 (plaintiff) v KERRI JOY VAN VEENENDAAL (first defendant) and (second defendant) |
FILE NO: | 75/2017 |
DIVISION: | District Court |
PROCEEDING: | Civil Claim |
ORIGINATING COURT: | Maroochydore |
DELIVERED ON: | 21 July 2023 |
DELIVERED AT: | Maroochydore |
HEARING DATE: | 16-18 August 2021 and 15-16 November 2021 |
JUDGE: | Long SC DCJ |
ORDER: | 1. The plaintiff’s claim is dismissed against each defendant. 2. On the first defendant’s counterclaim, there be judgment for the first defendant, that the plaintiff pay damages for breach of contract in the sum of $42,133.32 (including interest in the sum of $12,462.32). |
CATCHWORDS: | TORT – CAUSE OF ACTION – INDUCING BREACH OF CONTRACT – CAUSING LOSS BY UNLAWFUL MEANS – Where the plaintiff claims damages for and injunctive relief in respect of a tort described as “interference with contractual relations” between the plaintiff and two medical practitioners in their employ, rather than any tort of causing loss by unlawful means – Whether either of those torts is recognised at law, as opposed to a tort of inducing breach of contract – Where the plaintiff does not pursue any allegation that the defendants utilised unlawful means or that their conduct was unlawful – Whether the plaintiff has established the elements of the tort of inducing breach of contract – Whether the plaintiff must prove each doctor was induced to actually breach their respective contracts of employment – Whether there was proof of intentional procurement or inducement of the breach of the doctor’s contracts with the plaintiff – Where the plaintiff failed to prove that the first and second defendants had an intention to procure or induce a breach of contract – Where the plaintiff fails to prove primary liability or breach of contract in order to ascribe any secondary liability to either defendant. EMPLOYMENT LAW – TERMINATION AND BREACH OF CONTRACT – UNLAWFUL TERMINATION – Where the first defendant makes a counterclaim for unlawful termination, or alternatively breach, of her asserted contract of employment with the plaintiff – Whether a written employment contract existed between the parties – Where the employment agreement did not provide for termination or notification of termination – Where the first defendant was not provided reasonable notice of the termination of her services – Where the first defendant was not otherwise wrongfully terminated. |
LEGISLATION: | Fair Work Act 2009 (Cth) ss 117 and 123(1)(b) |
CASES: | Byrne v Australian Airlines Ltd (1995) 185 CLR 410 Hadmor Productions Ltd v Hamilton [1983] 1 AC 191 Hooper Bailie Associated Ltd v Natcon Group Pty Ltd (1992) 28 NSWLR 194 Lonrho Plc v Fayed [1990] 2 QB 479 Lonrho Plc v Fayed [1992] 1 AC 448 Lumley v Gye [1853] EngR 15 Merkur Ireland Shipping Corporation v Loughton [1983] 2 AC 570 Multinail Australia Pty Ltd v Pryda (Aust) Pty Ltd & Anor [2002] QSC 105 |
| COUNSEL: | M White for the Plaintiff P Travers and R Varshney for the First and Second Defendants |
| SOLICITORS: | Butler McDermott Lawyers for the Plaintiff Cranston McEachern Lawyers for the First and Second Defendants |
Table of Contents
Introduction
The plaintiff’s claim
The tort of interference with contractual relations
The position in respect of Dr Housego
The position in respect of Dr Brownhill
Damages in respect of the claim
The counterclaim
Conclusion
Annexure
Introduction
In this matter there is both a claim and counterclaim between the parties to be determined:
(a)the plaintiff’s claim, against each defendant, is for damages for and injunctive relief in respect of, the tort of “interference with contractual relations” between the plaintiff and two medical practitioners;
(b)the first defendant’s counterclaim is for damages for unlawful termination, or alternatively breach, of her asserted contract of employment with the plaintiff.
It is not in contention that the plaintiff is an entity, as a duly incorporated company, nor that the genesis of these claims lies in the commencement by the plaintiff of a medical practice at Twin Waters, from no later than 1 July 2015, and the involvement of the first defendant, in particular, in the commencement and early operation of that practice. The plaintiff’s case included evidence from four witnesses who, at various times, had involvement as directors of the plaintiff: Mr Jones, Mr Van Wyk, Mr Benjamin and Dr Torrance. The plaintiff also called two medical practitioners it had employed in the medical practice, Drs Housego and Brownhill, and a forensic accountant, Mr Ponsonby. The first defendant, and her brother-in-law, the second defendant, also gave evidence.
It is convenient to set out some of the uncontentious context to these disputes:
(a)in or around March 2015, the first defendant and Mr Jones met at a school debating competition and discussed Mr Jones’ involvement in a “new type nurse-practitioner led” medical practice and they arranged to meet later to further discuss this;
(b)the plaintiff, who had been involved in the management of a medical practice previously conducted by a Dr Loftus at Twin Waters, met with Mr Jones and other directors of the plaintiff, in or around May 2015, in respect of the proposed opening of such a new type of medical practice at Twin Waters;
(c)in May and June 2015, the first defendant assisted the plaintiff in setting up its medical practice, which opened by 1 July 2015, at Shop 7, 175 Ocean Street, Twin Waters. The second defendant was also involved in respect of performing some handyman tasks, including assembly of furniture;
(d)before the end of June 2015, Dr Housego commenced providing services as a general practitioner at the medical practice;
(e)on or around 30 June 2015, Dr Housego performed a surgical procedure on the first defendant, which was subsequently the subject of a complaint made by the first defendant to the Australian Health Practitioners Regulation Authority (“AHPRA”), on or around 10 August 2015;
(f)on or about 9 July 2015, Dr Housego performed a dental procedure on the second defendant, which on his evidence involved the removal of seven teeth without his consent. On or about 24 August 2015, this was also the subject of complaint to the Health Ombudsman;
(g)on or about 16 July 2015 and through Dr Torrance, the first defendant’s relationship with the plaintiff was terminated;
(h)Dr Housego ceased working at the medical practice on or about 5 January 2016 and the plaintiff sent a letter to the Twin Waters Residents Association indicating that Dr Housego had departed to open his own practice in Lismore;
(i)on or about 8 January 2016, the plaintiff and Dr Housego executed a deed of settlement and agreement in respect of his services agreement with the plaintiff;[1]
(j)on or about 3 June 2016, Dr Brownhill executed a written contract of employment with the plaintiff, to provide general practitioner services to the medical practice;[2] and
(k)on or about 11 October 2016, Dr Brownhill terminated his contract, by sending a written resignation to the plaintiff, by email to a Mr James Denton.[3]
[1]Ex. 32.
[2]Ex. 6.
[3]Ex. 27.
The plaintiff’s claim
The plaintiff’s claim for damages and injunctive relief is made in reliance upon what is identified as “the tort of interference with contractual relations”.[4] The plaintiff specifically acknowledges a distinction to be drawn in respect of “the tort of causing loss by unlawful means”.[5] In short, the plaintiff’s claim is premised upon what is asserted as the respective roles of each defendant “in the ending of each of Dr Housego and Dr Brownhill’s contracts” with the plaintiff. More particularly, the allegation is that following the severing of the plaintiff’s relationship with the first defendant, each defendant was involved in “a campaign of harassment and intimidation directed at Dr Housego, in order to force him to leave the practice and deprive the plaintiff of the benefit of his contract.”[6] And there is alleged to have been similar interference in the performance of Dr Brownhill’s contract (as the replacement for Dr Housego) by delivery, to his home address, of “a notice containing the various false allegations against the plaintiff”.[7]
[4]Plaintiff’s submissions filed 22/2/22, at [8].
[5]Ibid [9].
[6]Ibid at [6].
[7]Ibid at [7].
The tort of interference with contractual relations
It is necessary to first determine what must be established in respect of the plaintiff’s claim, a matter upon which the submissions of the parties are at variance. That is perhaps, a reflection of observations previously made as to the “far from settled” state of the law in respect of this area.[8]
[8]Eg: See Slack v HRL Limited [2012] QSC 387 at [20] and [23].
Essentially, the point of departure between the parties, is as to whether the plaintiff must prove that each doctor was induced to actually breach his contract of employment.[9]
[9]Cf: Plaintiff’s written submissions at [31] and defendants’ written submissions at [143]-[146].
Each party recognises that in Sanders v Snell,[10] the High Court noted “the law in what have become known as the ‘economic torts’ is far from settled”. That judgment proceeded to deal with “the tort of inducing breach of contract” as distinct from recognising that “… developments in the United Kingdom suggest the emergence there of a tort of interference with trade or business interests”.[11]
[10](1998) 196 CLR 329 at [20].
[11]Ibid at [20], with citation of Hadmor Productions Ltd v Hamilton [1983] 1 AC 191; Merkur Ireland Shipping Corporation v Loughton [1983] 2 AC 570; Lonrho Plc v Fayed [1990] 2 QB 479, and on appeal Lonrho PLC v Fayed [1992] 1 AC 448.
For present purposes, two things may be noted from the decision in Sanders v Snell:
(a)First and germanely to the present circumstances, it was there concluded that where there had been a breach of contract of employment, by termination by the employer without the giving of the stipulated notice,[12] the appellant, the Minister for Tourism of Norfolk Island, who had sought the termination of that contract, had not procured or induced that breach of contract because of an inability of proof of procuring a breach of the contract, in that the Minister’s direction could “only be construed as directing the Bureau to terminate the contract lawfully”.[13] Relevantly, it was observed that:
[12]Ibid at [19].
[13](1998) 196 CLR 329 at [21] and [26].
“… the tort of inducing or procuring a breach of contract is not established by demonstrating only that the alleged tortfeasor hoped or wished that the contract would or might be breached. To establish an inducing or procuring of breach, something more must be shown than that the alleged tortfeasor harboured an uncommunicated subjective desire that the contract would or might be breached.
Showing what the tortfeasor desired may well be very relevant to the issue of the intention with which the alleged tortfeasor acted, but it is necessary to consider what was done, as well as what was desired. To persuade or direct a contracting party to terminate the contract lawfully is not to procure a breach of the contract.”[14]
[14]Ibid at [22]-[23].
(b)Secondly and as to the distinct allegation of “wrongful interference with … trade or business interests” (and after determining that such an allegation had been sufficiently raised in the trial),[15] it was observed:
[15]Ibid at [29].
“We do not think it is necessary to decide in this case whether a tort of interference with trade or business interests by an unlawful act should be recognised in Australia. For present purposes, it is enough to consider one element of that tort: the element of unlawful act.
The tort that is emerging, or has emerged in the United Kingdom, is a tort of interference with trade or business interests by an unlawful act directed at the persons injured. The element of unlawfulness is essential to the definition of the tort. Otherwise, conduct of the most unremarkable kind would be tortious. Any person engaged in trade or commerce will daily act deliberately to further that trader's economic interests by obtaining business that otherwise would go to a trade rival. The whole focus of the business of many, if not all, traders is to compete with trade rivals and by advancing their own economic interests, inevitably harm the economic interests of their rivals. In many cases the trader's conduct will be directed specifically at a particular rival. But, if the means of competition employed are lawful, and those means cause no breach of obligation, there is no warrant for holding the trader liable to the rival for the economic consequences of that competitive conduct. The fact that the conduct is engaged in deliberately or is directed specifically at the person who suffers economic detriment is not enough to make the conduct tortious. It may or may not, in given circumstances, give rise to statutory remedies.
In Mogul Steamship Co v McGregor Gow & Co Bowen LJ suggested that intentional conduct “calculated in the ordinary course of events to damage, and which does, in fact, damage another in that other person's property or trade, is actionable if done without just cause or excuse”. But although that principle, sometimes described as the prima facie tort theory, has been taken up in some jurisdictions in the United States it has not been adopted in this country or, for that matter, in England. Although the Court of Appeal's decision in Mogul Steamship was affirmed on appeal, the later decision of the House of Lords in Allen v Flood rejected purpose or motive as the sole controlling mechanism for tortious liability: "the law of England does not ... take into account motive as constituting an element of civil wrong ... [T]he existence of a bad motive, in the case of an act which is not in itself illegal, will not convert that act into a civil wrong for which reparation is due."
Other considerations, however, arise if the means employed are unlawful or if a breach of obligation is procured. Again, it is not necessary in this case to attempt to define what would be the boundaries of unlawfulness for the purposes of a tort of interference with trade or business interests by unlawful means. There are, however, several reasons for concluding that a want of procedural fairness by the appellant before giving the direction that he gave to the Bureau is not conduct that can be characterised as "unlawful means" for the purposes of this tort.” (citations omitted)[16]
[16](1998) 196 CLR 329 at [30]-[33].
And then concluded:
“In Mengel the Court overruled Beaudesert Shire Council v Smith. It thus rejected the proposition for which Beaudesert stood: that "a person who suffers harm or loss as the inevitable consequence of the unlawful, intentional and positive acts of another is entitled to recover damages from that other." And it did so having first noted that the preferable view of Beaudesert (and the view favoured in later cases that had considered it) was that an "unlawful act" was intended to refer to an act forbidden by law rather than an unauthorised act in the sense of an act that is ultra vires and void. The majority judgment in Mengel noted that it seemed that the "embryonic or emerging tort" of interference with trade or business interests by an unlawful act does not extend to all unlawful acts and "at least in that regard, it is in need of further definition". Their rejection of Beaudesert is, however, consistent with confining what is an unlawful act for the purposes of this tort (if, that is, the tort is to be recognised in this country). It is also consistent with (or at least not inconsistent with) excluding from the definition of what is an unlawful act for this purpose acts whose only "unlawful" aspect is that they are unauthorised in the sense that they are ultra vires and void.
The guidance from authority is necessarily uncertain at the moment; the tort is embryonic or emerging. Considerations of principle, however, provide a more certain guide and require that unauthorised acts of the kind just mentioned are excluded from the understanding of what is an unlawful act for the purposes of this tort. If they are not excluded, the tort of interference with trade or business interests by unlawful act would cover the whole of the field now covered by the tort of misfeasance in public office or would cover that field and much more, thereby extending the liability of public officers very greatly.” (citations omitted)[17]
[17]Ibid at [35]-[36]. The references to the named cases are Northern Territory v Mengel (1995) 185 CLR 307 at 336-337 in overruling Beaudesert Shire Council v Smith (1966) 120 CLR 145 at 156.
Further, the submissions of the parties also recognise the distinction in respect of the respective torts, as was subsequently explained for the United Kingdom, by the House of Lords, in OBG Ltd & Anor v Allan & Ors,[18] as follows:
[18][2008] 1 AC 1.
“8
The tort of causing loss by unlawful means differs from the Lumley v Gye principle, as originally formulated, in at least four respects. First, unlawful means is a tort of primary liability, not requiring a wrongful act by anyone else, while Lumley v Gye created accessory liability, dependent upon the primary wrongful act of the contracting party. Secondly, unlawful means requires the use of means which are unlawful under some other rule (“independently unlawful”) whereas liability under Lumley v Gye 2 E & B 216 requires only the degree of participation in the breach of contract which satisfies the general requirements of accessory liability for the wrongful act of another person: for the relevant principles see CBS Songs Ltd v Amstrad Consumer Electronics plc [1988] AC 1013 and Unilever plc v Chefaro Proprietaries Ltd [1994] FSR 135. Thirdly, liability for unlawful means does not depend upon the existence of contractual relations. It is sufficient that the intended consequence of the wrongful act is damage in any form; for example, to the claimant’s economic expectations. If the African canoeists had been delivering palm oil under a concluded contract of which notice had been given to the master of the Othello, Lord Kenyon would no doubt have considered that an a fortiori reason for granting relief but not as making a difference of principle. Under Lumley v Gye, on the other hand, the breach of contract is of the essence. If there is no primary liability, there can be no accessory liability. Fourthly, although both are described as torts of intention (the pleader in Lumley v Gye used the word “maliciously”, but the court construed this as meaning only that the defendant intended to procure a breach of contract), the results which the defendant must have intended are different. In unlawful means the defendant must have intended to cause damage to the claimant (although usually this will be, as in Tarleton v M‘Gawley Peake 270, a means of enhancing his own economic position). Because damage to economic expectations is sufficient to found a claim, there need not have been any intention to cause a breach of contract or interfere with contractual rights. Under Lumley v Gye, on the other hand, an intention to cause a breach of contract is both necessary and sufficient. Necessary, because this is essential for liability as accessory to the breach. Sufficient, because the fact that the defendant did not intend to cause damage, or even thought that the breach of contract would make the claimant better off, is irrelevant. In South Wales Miners’ Federation v Glamorgan Coal Co Ltd[1905] AC 239 the miners’ union said that their intention in calling a strike (inducing miners to break their contracts of employment) was, OPEC-like, to restrict production of coal and thereby raise its price. So far from wishing to cause the mine owners loss, they intended to make both owners and miners better off. The House of Lords said that this made no difference. It was sufficient that the union intended the employment contracts to be broken. It was no defence, as Lord Macnaghten put it, at p 246, that “if the masters had only known their own interest they would have welcomed the interference of the federation”.
[19]Ibid at [8]-[13] and [38], per Lord Hoffmann, with whom, as to this analysis and distinction, there was complete agreement; see: at [172]-[173] and [189]; [263]-[264]; [302] and [319].
Allen v Flood: the torts kept separate
9 The Law Lords who formed the majority in Allen v Flood[1898] AC 1 showed a clear recognition that Lumley v Gye 2 E & B 216 and causing loss by unlawful means are separate torts, each with its own conditions for liability. The difficulty for the plaintiffs in Allen v Floodwas that, although the jury found that the defendants had acted “maliciously” in procuring the shipyard not to employ them, the defendants had neither used unlawful means nor procured any breach of contract. In the Court of Appeal [1895] 2 QB 21 the plaintiffs had argued successfully that the essence of Lumley v Gye was that the defendant had acted maliciously. A breach of contract was not essential. But the majority in the House of Lords said that liability had been as accessory to the breach of contract. Lord Watson quoted from the judgments in the Court of Queen’s Bench and said, at p 106, that they embodied “an intelligible and a salutary principle”:
“He who wilfully induces another to do an unlawful act which, but for his persuasion, would or might never have been committed, is rightly held to be responsible for the wrong he has procured” (p 107).
10
Likewise Lord Herschell said, at p 123, that he was satisfied that “the procuring what was described as an unlawful act—namely, a breach of contract, was regarded as the gist of the action”.
11
Lord Macnaghten reserved his opinion on whether Lumley v Gye had been rightly decided but there can be no doubt about what principle he thought it laid down, see pp 151–152:
“where the act itself to which the loss is traceable involves some breach of contract or some breach of duty, and amounts to an interference with legal rights … the immediate agent is liable, and it may well be that the person in the background who pulls the strings is liable too, though it is not necessary in the present case to express any opinion on that point.”
12
When the case was argued before the House of Lords (see Lord Herschell, at p 132), the weight of the plaintiffs’ argument was shifted to the Garret v Taylor Cro Jac 567 and Tarleton v M‘Gawley Peake 270 line of authority, which were said to support the proposition that any unjustified interference with trade or employment was actionable. But the majority said that it was essential to liability in those cases that the defendant had injured the plaintiff by using unlawful means against a third party. Lord Watson, at p 104, described them as “cases in which an act detrimental to others, but affording no remedy against the immediate actor, had been procured by illegal means”. Lord Herschell said, at p 137: “In all of them the act complained of was in its nature wrongful; violence, menaces of violence, false statements.”
13
Thus the facts of Allen v Flood did not fall within Lumley v Gye because no breach of contract or other unlawful act had been procured and did not fall within the unlawful means tort because no unlawful means had been used. The majority did not accept that there was any other basis for liability. In particular, the fact that the defendant deliberately caused damage “maliciously” in the sense of having a bad or improper motive was rejected as a ground for imposing liability. As Lord Watson (whose, views, said Lord Macnaghten in Quinn v Leathem[1901] AC 495, 509 “represent the views of the majority better far than any other single judgment delivered in the case”) summed up [1898] AC 1, 96:
“There are, in my opinion, two grounds only upon which a person who procures the act of another can be made legally responsible for its consequences. In the first place, he will incur liability if he knowingly and for his own ends induces that other person to commit an actionable wrong. In the second place, when the act induced is within the right of the immediate actor, and is therefore not wrongful in so far as he is concerned, it may yet be to the detriment of a third party; and in that case according to the law laid down by the majority in Lumley v Gye 2 E & B 216, 232, the inducer may be held liable if he can be shewn to have procured his object by the use of illegal means directed against that third party.”
(Like Lord Macnaghten in Quinn v Leathem[1901] AC 495, 510, I think that the reference to Lumley v Gye in support of the second cause of action is a slip—“a rare occurrence in a judgment of Lord Watson’s”—because it obviously applies to the first cause of action).
…
38
In my opinion, therefore, the distinction between direct and indirect interference is unsatisfactory and it is time for the unnatural union between the Lumley v Gye tort and the tort of causing loss by unlawful means to be dissolved. They should be restored to the independence which they enjoyed at the time of Allen v Flood. I shall therefore proceed to discuss separately the essential elements of each.” [19]
In this context, the submission for the plaintiff adopts the terminology of distinguishing between the tort of “causing loss by unlawful means”, which is expressly not relied upon,[20] and reliance upon the tort of “interference with contractual relations”. The reliance upon the latter description and more particularly a contention that this tort extends to permit reliance upon “interference with the performance of the contract” as an alternative to establishing breach of the contract,[21] was contended to be supported by reference to a number of authorities. Some of these predate the decision in Sanders v Snell and also in respect of reliance upon the earlier United Kingdom authority, the decision in OBG Ltd. This approach not only invokes terminology adopted in authorities examined in the OBG Ltd decision and rejected as impermissibly seeking to unify the distinctly recognised torts,[22] but is not consistent with the approach taken to the only tort actually recognised in Sanders v Snell.[23]
[20]Plaintiff’s written submissions at [15].
[21]Ibid at [32].
[22]See [2008] AC 1 at [189].
[23](1998) 196 CLR 329 at [26].
Further, analysis of the subsequent Australian authorities upon which reliance is placed does not support any persuasive recognition of extension of the tort which is relied upon by the plaintiff here, to anything less than necessarily involving proof of accessorial liability for breach of contract by another.
For instance, in Multinail Australia Pty Ltd v Pryda (Aust) Pty Ltd & Anor[24] and Sai Teys McMahon Real Estate Pty Ltd v Queen Street Apartments Pty Ltd & Anor,[25] there is no such implication, in the adoption of the language of intended inducement to and causation of “breaking” of a contract.
[24][2002] QSC 105 at [24].
[25][2007] QSC 264 at [90].
Neither does the decision in Slack & Anorv HRL Limited & Ors[26] endorse any such position. There the determination of an application for summary judgment, or alternatively the striking out of parts of the statement of claim, turned upon considerations as to the pleading of the necessary requirements in respect of the intention of the defendant and particularly as to what was encompassed within the requirement of “intention to procure or adduce the doing of what it knew would be a breach of contract”.[27] Although there is reference to an unsettled state of the law in respect of these types of economic torts, there is no reference made to Sanders v Snell. There is, however, reference to the earlier decision in Mengel.[28] There is also reference to the decision in Short v Citibank,[29] which decision, as the extracts from it reproduced in the plaintiff’s written submissions demonstrate,[30] was in respect of a tort of intentionally procuring or inducing breach of contract.[31] Ultimately, the determination was against awarding summary judgment but on the critical issues as to the basis of the pleading of intention and particularly as to the distinction between “a case of constructive knowledge and reckless acting and a case of actual knowledge and deliberate acting,[32] the pleadings were found to be inadequate. It may be noted that in the OBG Ltd decision, another matter of agreement in the judgments was as to the necessary intention in respect of this tort being in respect of intention to procure a breach of contract as opposed to the “unlawful means tort” where “there must be an intention to cause loss”.[33]
[26][2012] QSC 387.
[27]Ibid at [22].
[28]Ibid at [23].
[29](1912) 12 SR (NSW) 186 and on appeal, (1912) 15 CLR 148.
[30]Plaintiff’s written submissions filed 22/2/2022, at [16]-[17].
[31](1912) 12 SR (NSW) 186 at [202]-[203].
[32]Ibid at [61].
[33]See OBG Limited & Anor v Allan & Ors [2008] 1 AC at [62]-[64] and cf: [191]-[192], where a concept of intention by “wilful blindness” is contemplated.
For the plaintiff, reference is made to the following observations made in Donaldsonv Natural Springs Australia Limited:[34]
[34][2015] FCA 498, at [206] & [210]-[211].
“(a) Inducing breach of contract 206.
The various elements of the tort of inducing a breach of contract are not in doubt. First, there must be a contract. Second, the defendant must know that such a contract exists. Third, the defendant must know that if one of the contracting parties does or fails to do a particular act, that conduct would be a breach of the contract. Fourth, the defendant must intend to (and in fact) induce or procure that contracting party to breach the contract by doing or failing to do that particular act. Fifth, the breach must cause loss or damage to the plaintiff. Sixth, no defence of justification should be applicable.
… (b) Interference with contractual relations more generally 209. A direct or indirect interference with contractual relations can establish the tort. 210. As I have said, the classic case of direct interference is the tort of inducing a breach of contract. But direct interference with contractual relations is not confined to the procurement of a breach. If the defendant prevents or hinders a contractual party from performing his contract, even though it is not a breach, the tort may be established. 211.
But the tort may also be established by an indirect interference with contractual relations. But if indirect interference is relied upon, then unlawful conduct or means must be established as part of the interference (Torquay Hotel at 138). To appreciate why this is necessary, it is important to be clear about what is meant by indirect as compared with direct interference. Direct interference occurs where the defendant’s act or omission, whether as intervener or persuader, acts on the mind or position of one of the parties to the contract. Indirect interference occurs where the defendant’s act or omission acts on the mind or position of a third party (for example an employee or officer of a contracting party) which causes that third party to take or not take a step which then acts on the mind or position of one of the contracting parties. So expressed, one can appreciate why unlawful means are imposed as a requirement for indirect interference. The direct interference is prima facie unlawful because it directly touches one of the contracting parties and their contractual rights. But the same cannot be said where the defendant’s conduct acts first on a third party who is not a contracting party. Some other element of unlawfulness needs to be added beyond the ultimate intention of the defendant in seeking to interfere with the contract. The question is whether the action of the defendant on the third party involves an unlawful or wrongful act. Has the defendant persuaded or caused the third party to do an unlawful or wrongful act? There is a discussion of such matters in DC Thomson & Co Ltd v Deakin [1952] Ch 646 at 677 and 678.”
Earlier in the Donaldson decision and as some informative context for the cited extracts, it was observed:
“TORT OF INTERFERENCE WITH CONTRACTUAL RELATIONS 202.
There are various dimensions to the economic tort of interference with contractual relations. Before considering its application to the various contracts asserted in the present case, it is appropriate to be clear on the categories.
203.
The paradigm case of interference concerns the situation of direct interference where such interference amounts to procuring or inducing a breach of contract (Lumley v Gye [1853] EngR 15; (1853) 2 El & Bl 216;118 ER 749 (Lumley v Gye)). But it can extend to the defendant preventing or hindering one party’s contractual performance even though this may not amount to procuring or inducing a breach as such (Torquay Hotel Co Ltd v Cousins [1969] 2 Ch 106 (Torquay Hotel) at 138 to 139).
204.
Now, the relevant interference must be deliberate. But it can be direct or indirect.
205.
Where the interference is direct, the relevant act of persuasion, inducement or procurement is treated as being unlawful in and of itself. But where the interference is indirect, an independent unlawful act is required. Let me begin with the classic Lumley v Gye type tort.”
Therein and in the specific citation of the Torquay Hotel decision, lies the understanding of the stated extension of principle to which the plaintiff seeks to attach itself.
To similar effect, is the plaintiff’s reliance upon what was observed in respect of the tort identified in terms of “intentional interference with contractual relations”, in Mad Dogs Pty Ltd (in liq) v Gilligan’s Backpackers Hotel & Resort Pty Ltd & Anor (No 3),[35] as disclosed in the following passage:
[35][2015] QSC 319.
“[253]
It is necessary to show four elements to establish the tort of intentional interference with contractual relations:
(a) that there was a breach of contract or interference with the performance of contract;
(b) the defendant procured or induced the breach or interference;
(c) the breach was induced or procured, or the interference occurred, with the intention of injuring the plaintiff or alternatively where it must have been obvious to the defendant that the reasonable consequence of the procuring, inducing or interfering conduct would be to injure the plaintiff;
(d) there must be injury thereby caused to the plaintiff.
[254]
Implicit in these requirements is a requirement for proof of interference in the execution of a contract. That interference is not confined to the procurement of a breach of contract and extends to a case where a third person prevents or hinders another from performing his contract even though not a breach. In Bruce J Small No 1 Pty Ltd & Anor v Minister for Natural Resources & Anor Muir J cited authority for the proposition that for an inducement or a procurement to be actionable it must be either direct, or indirect and accompanied by an act wrongful in itself. His Honour went on to observe:
‘It … seems to be established that, in the case of indirect procurement or inducement, the tort will be constituted only if the alleged breach of contract has ensued as a necessary consequence of the alleged wrongful conduct.’” (citations omitted)[36]
[36][2015] QSC 319 at [253]-[254].
In that case, this occurred in consideration of a claim made against a person described as a de facto director of the first defendant company and upon a provisional basis,[37] after concluding that because of the findings that he had effectively acted as a director of that company, the second defendant’s position fell within the definition in s 9 of the Corporations Act2001 (Cth) and he therefore could not incur independent liability as a tortfeasor.[38] It may be further noted that not only was the alternative conclusion that the elements of the tort were not made out,[39] but this was upon the basis of consideration of an allegation of inducement of breach of contract, as follows:
“[259]
The evidence does not prove it likely that the relevant breach, that is the evincing of the continued intention to no longer be bound, was a necessary consequence of Mr Ainsworth’s conduct. On balance the evidence suggests that by that phase Mr Lewsey’s evincing of the relevant intention involved the active and aggressive assertion of his role as he perceived it on behalf of Gilligan’s. It cannot be said his conduct only ensued as a necessary consequence of Mr Ainsworth’s behaviours.”[40]
[37]Ibid at [252].
[38]Ibid at [243]-[251].
[39]Ibid at [260].
[40]Ibid at [259].
Again, the specific authority to which reference was made in terms of extension of an economic tort beyond liability for involvement in a breach of contract and to “a case where a third person prevents or hinders another from performing his contract even though not in breach”, was the Torquay Hotel decision.[41] That decision was specifically identified in the OBG Limited decision as an instance relating to what was there eschewed as an approach of unification of what was identified as separate torts, operating on different bases of liability and upon different elements. In particular, it was noted:[42]
[41]See: [2015] QSC 319 at [254] and footnote 217.
[42][2008] 1 AC 1 at [44] and [181]-[189].
“44 Finally, what counts as a breach of contract? In Torquay Hotel Co Ltd v Cousins [1969] 2 Ch 106, 138 Lord Denning said that there could be liability for preventing or hindering performance of the contract on the same principle as liability for procuring a breach. This dictum was approved by Lord Diplock in Merkur Island Shipping Corpn v Laughton [1983] 2 AC 570, 607—608. One could therefore have liability for interference with contractual relations even though the contracting party committed no breach. But these remarks were made in the context of the unified theory which treated procuring a breach as part of the same tort as causing loss by unlawful means. If the torts are to be separated, then I think that one cannot be liable for inducing a breach unless there has been a breach. No secondary liability without primary liability. Cases in which interference with contractual relations has been treated as coming within the Lumley v Gye tort (like Dimbleby & Sons Ltd v National Union of Journalists [1984] 1 WLR 67 and [1984] 1 WLR 427) are really cases of causing loss by unlawful means. … 181 A regrettable consequence of treating “preventing performance” as an extension of the Lumley v Gye tort has been to widen the ambit of this tort in an unprincipled fashion. It has meant that a defendant who intentionally harmed a plaintiff may be liable even though he did not use unlawful means nor did he induce a party to break his contract. A defendant may be held liable for intentional harm even though he did not cross the Rubicon by doing something he had no legal right to do. He is liable for intentional harm effected by lawful means.
182 This step was taken by the Court of Appeal in the well known case of Torquay Hotel Co Ltd v Cousins [1969] 2 Ch 106. A trade union and its officials blacked supplies of oil to the Imperial Hotel in Torquay. This prevented the oil company Esso from performing its contractual obligation to supply oil to the hotel. The Court of Appeal held this was actionable at the suit of the hotel.
183 In reaching this conclusion Lord Denning MR said Lord Macnaghten, in the passage quoted above from Quinn v Leathem [1901] AC 495, 510, extended the principle of Lumley v Gye. The time has come, Lord Denning stated, to extend the principle further, to cover deliberate and direct interference with the performance of a contract without causing any breach. The interference must be “direct”. Unlawful means was an ingredient of liability if, but only if, the interference was “indirect”, as in Evershed MR’s example of cornering the market in a commodity. In the instant case the interference was direct. So liability arose irrespective of whether the means used by the defendants to prevent performance of Esso’s supply contract was lawful or not.
184 The court went further in another respect. The court held that the tort applied even though the interference did not give rise to a breach of contract. Esso’s supply contract included a force majeure clause. This mattered not. What mattered was that Esso was prevented or hindered from performing its contractual obligations. This view of the law was approved by your Lordships’ House in Merkur Island Shipping Corpn v Laughton [1983] 2 AC 570, 608, per Lord Diplock.
185 With the very greatest respect I have difficulty with Lord Denning’s extension of Lumley v Gye 2 E & B 216. The effect of this extension is that a person who directly prevents performance of a contract by wholly lawful means, and thereby intentionally inflicts damage on the claimant, is liable to the claimant. No reason was given, and none is discernible, for this fundamental extension of the law. Why should a defendant, acting wholly lawfully, be liable in such a case, although the use of unlawful means is a prerequisite of liability if he intentionally inflicts damage in any other way?
186 Nor is the basis of the distinction between direct and indirect interference apparent. One would suppose the outcome on liability would be the same whether a person sought to achieve his end by direct or indirect means. It would be remarkable if this were not so.
187 This extension of the Lumley v Gye tort must be going too far. To hold a defendant liable where the intentional harm is inflicted by lawful means runs counter to the limit on liability long established in English law. So long as this general limit is maintained in respect of other forms of interference with a claimant’s business, and Lord Denning did not suggest this should be changed, the extension in liability proposed by him and seemingly approved by Lord Diplock is irrational. Despite the high authority of these cases, I have to say that on this occasion these distinguished judges fell into error. They were led astray by the width of Lord Macnaghten’s observations made in 1901, long before the unlawful interference tort became shaped. The jurisprudence of the economic torts had not then been thought through.
188 For these reasons this extension of the inducement tort of Lumley v Gye cannot stand consistently with the economic torts having a coherent framework. This extension is productive of obscurity and, hence, uncertainty. This, in turn, as Lord Diplock himself once said, is destructive of the rule of law: see Merkur Island Shipping Corpn v Laughton [1983] 2 AC 570, 612.
189 I feel bound to say therefore that the ambit of the Lumley v Gye tort should properly be confined to inducing a breach of contract. The unlawful interference tort requires intentional harm effected by unlawful means, and there is no in-between hybrid tort of “interfering with contractual relations”. In so far as authorities suggest or decide otherwise they should not now be followed. I leave open the question of how far the Lumley v Gye principle applies equally to inducing a breach of other actionable obligations such as statutory duties or equitable or fiduciary obligations.”
None of these decisions, including that of the House of Lords in OBG Limited, has any binding effect on this Court. But the distinction drawn in Sanders v Snell,[43] between what was referred to as the recognised tort of “inducing breach of contract” and the tort of “interference with economic interests” (by unlawful means) and then regarded as yet to be recognised in Australia, is to the same relevant effect.
[43](1998) 196 CLR 329.
It should be noted that in Donaldson, reference was made to each of the decisions in Sanders v Snell and OBG Limited. The approach there taken was further explained as follows:[44]
[44][2015] FCA 498 at [212]-[218] and therefore immediately following the passage extracted above, at para [14].
“212.
213.
Whether the tort can be established by indirect interference is not beyond controversy. The High Court has not dealt with this directly. The High Court in Zhu v Treasurer of the State of New South Wales[2004] HCA 56; (2004) 218 CLR 530 expressed the tort in broader terms than inducing a breach of contract. First, it referred to the tort in terms of an interference with contractual relations, connoting that something short of causing a breach may be sufficient to establish the tort. Second, in the proceedings at first instance, a claim for indirect interference was made. The High Court referred to this indirect interferenceclaim (at [38]) without exception; it was not said that indirect interference could not in appropriate circumstances constitute the tort. Although Zhu principally turned upon the defence of justification, it provides implicit support for a tort of interference with contractual relations, embracing both direct and indirect interference.
Lord Hoffmann in OBG Ltd v Allan[2007] UKHL 21; [2008] 1 AC 1 (OBG)at [6] to [8] distinguished the different genesis of the tort of inducing breach of contract as compared with the tort (English only) of causing loss by unlawful means. Further conceptual divisions were made categorising the former tort as one of accessorial liability and the latter tort as one of primary liability. He rejected a unified tort theory embracing both torts, but he did accept a Venn diagram type description (see at [21]).
Now Australian jurisprudence has rejected a more general economic tort of causing loss by unlawful means (the rejection of Beaudesert Shire Council v Smith [1966] HCA 49; (1966) 120 CLR 145 by Northern Territory of Australia v Mengel (1995) 185 CLR 307(Mengel)) and has been lukewarm about a slightly narrower economic tort (in theory) of interference with trade or business interests by unlawful means (Sanders v Snell (1998) 196 CLR 329 (Sanders)). I do not need to trouble myself further at that conceptual level. 214. But there is one aspect of Lord Hoffmann’s discussion concerning direct and indirect interference with contractual relations that needs to be considered. His Lordship expressed doubt as to the tort of indirect interference with contractual relations. Rather, he preferred to put such conduct into the broader category of the tort of causing loss by unlawful means.
215. Lord Hoffmann at [38] said: [21] In my opinion, therefore, the distinction between direct and indirect interference is unsatisfactory and it is time for the unnatural union between the Lumley v Gye tort and the tort of causing loss by unlawful means to be dissolved. They should be restored to the independence which they enjoyed at the time of Allen v Flood. I shall therefore proceed to discuss separately the essential elements of each. 216. His Lordship addressed what he considered to be an unsatisfactory distinction by making two related moves. First, he took indirect interference and put it into the broader category of the tort of causing loss by unlawful means. That move is not available to me. Second, by doing so, he confined Lumley v Gye to its plain vanilla application. But again, I do not consider that the tort of interference with contractual relations is so restricted.
217. His Lordship suggested that Lumley v Gye “created accessory liability, dependent upon the primary wrongful act of the contracting party” (at [8]), whereas indirect interference, which required unlawful means, was a tort of primary liability. So he considered that blending indirect and direct interference into the one tort was inappropriately blending primary and accessorial liability. Now whether that is so does not affect the approach I am required to take. But this primary and accessorial liability distinction may not be all that clear or clean. Accepting that indirect interference involves a tort of primary liability, so too may be the case with direct interference. Direct interference may involve, in some cases, not inducing a breach as such. It may involve preventing or hindering a contracting party’s performance which does not involve or produce a breach (see earlier at [203]). In such a case, such conduct of the defendant would not amount to accessorial liability, for there would be no “primary wrongful act of the contracting party” [my emphasis]. In such a situation of direct interference the defendant would have primary liability.
218. In my view, the tort of indirect interference with contractual relations is available under Australian law. But both the relevant intention as well as the separate unlawful conduct or means must be established as being involved in the interference.”
In the context of the discussion to this point, it is of significance to note the final observation in this passage. Further and upon factual considerations, neither case sought to be made by Donaldson, both upon the grounds of what was so identified respectively as direct and indirect interference in contractual relations, was found to be established.
Moreover and as appropriately noted for the plaintiff,[45] in a later decision: State Street Global Advisors Trust Company v Maurice Blackburn Pty Ltd (No. 2),[46] the same judge made the following observations referable to his earlier decision in Donaldson:
[45]Plaintiff’s written submissions at [29].
[46][2021] FCA 137 at 416 at [411]-[423].
“411 It is convenient to begin by referring to Donaldson v Natural Springs Australia Limited [2015] FCA 498 at [202] to [220] where I made the following points. 412 There are various dimensions to the economic tort of interference with contractual relations. So, it is appropriate to be clear on the categories.
413 The relevant interference must be deliberate. But it can be direct or indirect. Where the interference is direct, the relevant act of persuasion, inducement or procurement is treated as being unlawful in and of itself. But where the interference is indirect, an independent unlawful act is required.
414 The paradigm case of interference concerns direct interference which amounts to procuring or inducing a breach of contract (Lumley v Gye (1853) 2 El & Bl 216; 118 ER 749). 415 The various elements of the classic Lumley v Gye tort are not in doubt. First, there must be a contract. Second, the respondent must know that such a contract exists. Third, the respondent must know that if one of the contracting parties does or fails to do a particular act, that conduct would be a breach of the contract. Fourth, the respondent must intend to and in fact induce or procure that contracting party to breach the contract by doing or failing to do that particular act. Fifth, the breach must cause loss or damage to the applicant. Sixth, no defence of honest and reasonable belief should be applicable.
416 Now it is not in doubt that the gravamen of the tort is intention to induce or procure breach, with knowledge that such a breach will interfere with contractual rights (Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26 at 43 per Lindgren J). And wilful blindness or reckless indifference can constitute knowledge for this purpose. Further, knowledge of the contract may provide a sufficient basis for inferring the necessary intent. In other words, a person’s knowledge that he is by his conduct inducing a breach of contract may be sufficient to establish the required intention (see Allstate Life Insurance at 37). Questions of knowledge and intention are interrelated. However, a bona fide belief reasonably entertained that so to act would not result in a breach of contract might negate the requisite intent (see Short v City Bank of Sydney (1912) 15 CLR 148 at 160 per Isaacs J).
417 Now as I have said, from knowledge one may be able to infer intention. But it is intention that must be shown. So, for example, merely to show that the tortfeasor could or did foresee the consequence of tortious conduct is not sufficient.
418 Further, let me say something more on the question of knowledge of the contract, if it be said that that is the foundation from which intention can be established by inference. In some cases, where the contract is of a standard type or a standard class of contract, it may not be necessary for the tortfeasor to have precise knowledge of its terms for intention to be inferred. But where one is not dealing with such standard scenarios, in order for the claimant to establish intention by inference from knowledge, it may be necessary to establish knowledge of more precise aspects or terms of the contract. This will all depend on the nature of the case being advanced and the type of breach being asserted. So, in the present case, being a case dealing with a non-standard or bespoke contract scenario, for State Street (US) to establish the tort, it needed to show more knowledge on the part of MBL than just the fact of the existence of the master agreement; it needed to show that MBL had knowledge of the relevant terms of that agreement.
419 Further, for the tort of inducing breach of contract, a distinction should be made between “procuring” or “inducing” on the one hand, and “advising” on the other hand. The former may be actionable. The latter is not. To induce a breach is to create a reason for breaking it. To advise a breach is to point out that a reason already exists.
420 So, even if the requisite knowledge is established, the inducing or procuring conduct of MBL must itself be proved. In Allstate Life Insurance, Lindgren J cited with approval what was said by Street J in Short v City Bank of Sydney (1912) 12 SR (NSW) 186 at 202 to 203 that:
The words “induce” and “procure” in their ordinary significance, I think, convey the idea of persuasion or contrivance, and I think that a person complaining of a breach of contractual relations brought about by these means must show that the person whose actions are complained of did something in the nature of effectually persuading or prevailing upon the other party to the contract to violate his obligations under it. The persuasion may take the form of advice or friendly solicitation, or it may take the form of intimidation or molestation, but in every case I think that it must be shown that the defendant deliberately intervened between the contracting parties, either with the express design of depriving the plaintiff of the benefit of his contract, or under such circumstances that he must have known that the effect of his intervention would be to deprive the plaintiff of that benefit.
421 Merely facilitating a breach, or entering into a transaction that is inconsistent with the contracting party’s obligations, is insufficient. It must be established that the relevant impugned conduct operated on the will of the contracting party. If the contracting party has already decided to commit a breach, no liability attaches to the mere acceptance of the benefit of that breach.
422 The element of inducement or procurement represents a high bar. It is not enough for the alleged wrongdoer to know that a breach may well happen or is the natural and probable consequence of the alleged wrongdoer’s activities; he must take some step which manifests an intention to induce the breach. What must be shown is some persuasion, encouragement, assistance or pressure that is aimed at the contract such that there is a clear causal link between the respondent’s conduct and the breach.
423 Before discussing indirect interference, I should note that direct interference can extend to conduct that prevents or hinders a party’s contractual performance or encourages the same even though this may not amount to procuring or inducing a breach of contract as such. But that is not my case. As I have said, State Street (US) alleges that MBL in two time frames procured or induced the artist to breach the master agreement.”
His Honour then proceeded to deal with what he identified as the establishment of a tort by “indirect interference with contractual relations”, in respect of which he noted that “unlawful conduct or means must be established as part of the interference”.[47] His Honour then effectively repeated what he had observed in Donaldson at [212]-[218].
[47]Ibid at [424].
Two matters, in particular, may be noted in respect of these observations. First, and in respect of the influence derived from reference to the High Court’s decision in Zhuv the Treasurer of the State of New South Wales,[48] it is expressed as follows:
“212 Whether the tort can be established by indirect interference is not beyond controversy. The High Court has not dealt with this directly. The High Court in Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530 expressed the tort in broader terms than inducing a breach of contract. First, it referred to the tort in terms of an interference with contractual relations, connoting that something short of causing a breach may be sufficient to establish the tort. Second, in the proceedings at first instance, a claim for indirect interference was made. The High Court referred to this indirect interference claim (at [38]) without exception; it was not said that indirect interference could not in appropriate circumstances constitute the tort. Although Zhu principally turned upon the defence of justification, it provides implicit support for a tort of interference with contractual relations, embracing both direct and indirect interference.” [49]
As is there noted, the complicated circumstances which arose in Zhu were principally canvassed in the context of consideration of the defence of justification. Although it is correct that the consistent reference, in the judgment, is to “the tort of interference with contract”, it is otherwise clear that in the proceedings below, the allegations not directed at liability for breach of contract were dealt with separately and in requirement of unlawfulness attaching to the relevant conduct and to the extent to which there was endorsement in the High Court judgment, it was on that basis. Accordingly, care must be exercised not to take the conclusion that the High Court “expressed the tort in broader terms than inducing a breach of contract” out of necessary context.
[48](2004) 218 CLR 530.
[49]See Donaldson [2015] FCA 498 at [212]; cf: State Street Global Advisers Trust Company [2021] FCA 137 at [425].
The essential circumstances in Zhu were explained as follows:
“2 Mr Peter Tao Zhu (the plaintiff) was born in the People’s Republic of China (China) in 1962. He migrated to Australia in 1989 and became an Australian citizen on 16 April 1997. 3 On 11 March 1999, the plaintiff entered an agreement (the Agency Agreement) with TOC Management Services Pty Ltd, the second defendant (TOC). It authorised and obliged him to sell memberships in an ‘‘Olympic Club’’ (the Club) to residents of China. It is now not controversial that the Agency Agreement was breached when TOC purported to terminate it on 5 November 1999. Nor is it now controversial that TOC was persuaded to commit that breach by the first defendant, the Sydney Organising Committee for the Olympic Games (SOCOG). SOCOG also interfered with the Agency Agreement in two other ways — by preventing TOC from performing it, and then by causing the New South Wales police to arrest the plaintiff. 4 In December 1999, the plaintiff sued for interference with contract. Bergin J, sitting in the Equity Division of the Supreme Court of New South Wales, conducted a twenty day trial between 30 July and 11 September 2001. On 23 November 2001, she gave judgment for the plaintiff against SOCOG in the sum of $4,234,319. That figure included $95,000 in aggravated damages for injury to the plaintiff’s feelings as a result of the arrest and $200,000 in exemplary damages by reason of SOCOG’s ‘‘high-handed and reprehensible’’ behaviour in relation to all three interferences (24). 5 After hearing argument on 29 and 30 October 2002, the New South Wales Court of Appeal (Sheller, Giles and Hodgson JJA) allowed an appeal on 20 December 2002 (25). It found that SOCOG had established the defence of justification…”[50] [50]Zhu at [2]-[5]
Therefore, the essential issues related to the defence of justification, with the High Court setting aside the orders of the Court of Appeal (NSW). More particularly, as to the primary allegations of interference with contract, the following was noted:
“The trial 33 SOCOG concessions. SOCOG conceded that TOC remained legally bound to perform the Agency Agreement at least until its purported termination on 5 November 1999. It conceded that it instructed TOC to terminate the Agency Agreement, and that the other ingredients of the tort of interference with contract were present. It conceded that the grounds for termination stated in the letter of 5 November 1999 were not soundly based. But in all other respects SOCOG fought the trial hard. … 35 Invalid termination of Agency Agreement. The trial judge found that TOC’s purported termination of the Agency Agreement on 5 November 1999 was not valid. She rejected SOCOG’s arguments that the letter of 4 June 1999 varying the Agency Agreement and consenting to the exercise of the Option was not a contractual document; that the plaintiff procured the exercise of the Option by misrepresentation; and that there were numerous repudiatory breaches of the Agency Agreement by the plaintiff, including acts of dishonesty, justifying termination of it by TOC. She did find some breaches of the Agency Agreement, but held that, whether taken separately or together, they would not have justified termination.”[51] [51]Zhu at [33] and [35].
Then and after notation of the trial judge’s findings as to breach of contract, in respect of what were described as the “first” and “second interference”,[52] the judgment continued:
[52]Ibid at [35]-[37].
“38 Third interference: indirect interference by causing the plaintiff’s arrest. The trial judge found that the plaintiff was arrested because the police believed that he had been raising money by representing himself as a person who was entitled to sell Club memberships in China without having authority to do so. That belief was based on information from Ms Ford, which was communicated to them directly at a meeting on 3 December 1999 — in particular, information that the plaintiff was using non-genuine membership certificates. The trial judge found that the plaintiff would not have been arrested on 6 December 1999 had the police been informed by SOCOG of the following facts: that the plaintiff had obtained at least 657 Club memberships; that the plaintiff had paid over $260,000 to TOC; that the purported termination of the Agency Agreement on 5 November 1999 was under challenge by the plaintiff in correspondence; that Mr Wang Zhiang had, on 25 August 1999, sought and received assurances from SOCOG officers in the absence of the plaintiff that the Club was genuine; that SOCOG had delivered many blank membership certificates to the plaintiff; and that he was entitled to issue them or have them issued. 39
40
The trial judge found that since the Agency Agreement remained on foot until the plaintiff terminated it by commencing proceedings on 22 December 1999, SOCOG’s inducement of the police to arrest the plaintiff on 6 December 1999 was ‘‘unlawful and an intentional infliction of harm to the plaintiff. It amounted to an indirect interference with the contractual relationship’’. The trial judge called SOCOG’s conduct in relation to the arrest ‘‘quite extraordinary’’, ‘‘high handed and disgraceful’’, springing from ‘‘a refusal to deal in good faith’’ and ‘‘reprehensible’’.
In this Court, SOCOG denied that the arrest of the plaintiff was an interference with contract on the ground that it did not prevent the plaintiff from carrying out the Agency Agreement, and from taking advantage of the opportunity it afforded to make profits in
the period between the arrest on 6 December 1999 and the termination of the Agency Agreement on 22 December 1999. 41 This submission fails. Before the trial judge it was common ground that the arrest of the plaintiff prevented him from carrying out the Agency Agreement. SOCOG did not contend at trial that the arrest had not caused the plaintiff loss. It argued only that it had not caused the arrest. SOCOG’s conduct of the trial precludes it from now contending that inducing the arrest of the plaintiff was not a separate and independent tort of interference with contract.”[53] [53]Zhu at [38]-[41].
Notably, the following also appears as the footnote to paragraph [41]:
[54]Zhu at footnote (31).
“(31) SOCOG also contended that there was no independent illegality in its conduct — neither in the form of an unlawful arrest as between the police officers and the plaintiff, nor in the unlawful procurement by SOCOG of an arrest through the innocent medium of the police officers. This submission faces numerous problems. Contrary to SOCOG’s argument, the allegation was probably made in the pleadings, and it was common ground at the trial that the arrest was independently unlawful because it was made without reasonable cause, which explains why the trial judge made no explicit finding on the point. It is unlikely that the trial judge would have concluded that SOCOG’s inducement of the police to effect the arrest was an indirect interference with the Agency Agreement without deciding either that the arrest was without reasonable cause or that its procurement was independently tortious, particularly in view of the critical language she employed. The Court of Appeal must have shared her Honour’s view, since it would not otherwise have described the arrest as “an ill-considered infringement of [the plaintiff ’s] basic rights”. SOCOG did not contest the justice of this language. No ground of appeal to the Court of Appeal took the point. However, for reasons given below at 589 [165]-[166] it is not necessary to decide whether SOCOG’s third interference involved independent illegality.”[54]
Secondly, and apart from what has been noted in respect of the distinction pursued in Donaldson, as between direct and indirect interference in contractual relations, coming from authorities discredited in the OBG Limited decision,[55] the particular distinction was also, in the OBG Limited decision subjected of the following particular criticism:
[55]See paragraphs [9] and [18], above.
“34 The distinction between the original Lumley v Gye tort and its extension in DC Thomson & Co Ltd v Deakin has been described in later cases as a distinction between “direct” and “indirect” interference. The latter species requires the use of independently unlawful means while the former requires no more than inducement or persuasion. But the use of these terms seems to me to distract attention from the true questions which have to be asked in each case. For example, in Daily Mirror Newspapers Ltd v Gardner [1968] 2 QB 762 the Federation of Retail Newsagents resolved to boycott the “Daily Mirror” for a week to put pressure on the publishers to allow its members higher margins. The federation advised their members to stop buying the paper from wholesalers. The publishers claimed an injunction on the ground that the federation was procuring a breach of the wholesalers’ running contracts with the publishers to take a given number of copies each day. Counsel for the federation (see the judgment of Lord Denning MR, at p 781) said that it was a case of indirect inducement because the federation “did not exert directly any pressure or inducement on the wholesalers: but at most they only did it indirectly by recommending the retailers to give stop orders”. Lord Denning said that it did not matter whether one procured a breach of contract “by direct approach to the one who breaks the contract or by indirect influence through others”. There seems to me much sense in this observation, although whether it leads to the conclusion that the defendant should be liable in both cases or neither is another matter. 35
36
In Torquay Hotel Co Ltd v Cousins [1969] 2 Ch 106, 138–139, Lord Denning changed his mind. He said that there was a distinction between “direct persuasion”, which was “unlawful in itself”, and bringing about a breach by indirect methods, which had to involve independently unlawful means. On reconsideration of the Daily Mirror case he thought the federation had “interfered directly by getting the retailers as their agents to approach the wholesalers”.
This treats the distinction as turning simply upon whether there was communication, directly or through an agent, between the defendant and the contract-breaker. But, like Lord Denning in the Daily Mirror case, I cannot see why this should make a difference. If that is what the distinction between “direct” and “indirect” means, it conceals the real question which has to be asked in relation to Lumley v Gye 2 E & B 216: did the defendant’s acts of encouragement, threat, persuasion and so forth have a sufficient causal connection with the breach by the contracting party to attract accessory liability? The court in Lumley v Gye made it clear that the principle upon which a person is liable for the act of another in breaking his contract is the same as that on which he is liable for the act of another in committing a tort. It follows, as I have said, that the relevant principles are to
be found in cases such as CBS Songs Ltd v Amstrad Consumer Electronics plc [1988] AC 1013 and Unilever plc v Chefaro Proprietaries Ltd [1994] FSR 135. By the test laid down in these cases, the federation could not have incurred any liability. They were not encouraging or assisting the wholesalers in breaking their contracts. They were simply advising their members to exercise their own freedom to buy whatever newspapers they liked. The wholesalers had no right to the co-operation of the retailers in enabling them to perform their contracts. Liability could not depend upon the accident of whether the federation had communicated (directly or through an intermediary) with the wholesalers. The distinction between direct and indirect interference was therefore irrelevant and misleading. 37 The distinction between direct and indirect interference has the further disadvantage that it suggests that the “primary form” of the Lumley v Gye tort and the extension of the tort are mutually exclusive. Interference cannot be both direct and indirect. But, as I have said earlier, there is no reason why the same act should not create both accessory liability for procuring a breach of contract and primary liability for causing loss by unlawful means. 38 In my opinion, therefore, the distinction between direct and indirect interference is unsatisfactory and it is time for the unnatural union between the Lumley v Gye tort and the tort of causing loss by unlawful means to be dissolved. They should be restored to the independence which they enjoyed at the time of Allen v Flood. I shall therefore proceed to discuss separately the essential elements of each.”[56]
[56]OBG Limited at [34]-[38].
From this review of authority, it is tolerably clear that the basis upon which the plaintiff seeks to plead and establish its case, by adoption of an extension to what is recognised as a tort encompassing accessorial liability for inducing or procuring illegality in the form of breach of contract and without any attempt to prove, or proof of, adoption of illegal means, is not recognised by the law as it is to be applied in this Court.
That difficulty is reflected in the third further amended statement of claim (“TASOC”), as follows, as it relates to the plaintiff’s contract with Dr Housego:
“16 The acts pleaded in paragraph 15 above constituted harassment of Dr Housego by the First and Second Defendants. 17 By committing the acts pleaded in paragraph 15 above, the First and Second Defendants knowingly and intentionally, and without justification, interfered in the performance of Dr Housego’s Contract (“the First Interference”).”
Whilst there is the description that the conduct of the defendants “constituted harassment of Dr Housego”, there is no further pleading in terms of ascribing any sense of particular illegality to any such conduct and, as has been noted and no doubt at least for that reason, such an approach is expressly disavowed in the concluding submissions. Rather, the pleading continues, as follows:
“Breach of Dr Housego’s Contact
18.On or about 6 January 2016, Dr Housego, without lawful justification, breached his contract with the Plaintiff by refusing to continue to provide services to the Plaintiff in accordance with the terms of his contract.
19.The breach pleaded in paragraph 18 above amounted to a repudiation of Dr Housego’s Contract, which the Plaintiff thereafter elected to accept by way of a Settlement Agreement and Deed of Release dated 8 January 2016.
20.The breach pleaded in paragraph 18 above was directly caused by the First Interference.
21.The First and Second Defendants knew and intended by that First Interference, Dr Housego cease performing his obligations to the Plaintiff under his contract such as to bring about the breach pleaded in paragraph 18 above.
22.Further, the First and Second Defendants intended by the First Interference to cause harm to the Plaintiff.”
Similarly, in respect of the allegations in relation to Dr Brownhill, the relevant pleadings are:
“Interference with Dr Brownhill’s Contract
27.On or about 8 October 2016, the First and/or Second Plaintiff caused to be delivered to the home address of Dr Brownhill a notice in writing which contained the following words:
“ATTENTION – DR ADAM BROWNHILL
Re: Medicrew Pty Ltd Medicare Fraud
Medicrew at Twin Waters, is under several concurrent investigations into fraudulent billing practices using nurse practitioner & general practitioner Medicare intern codes. Authorities include the Australian Taxation Office, Department of Human Services, Office of the Health Ombudsman, Primary Health Network & RACGP.
Directors for Medicrew Pty Ltd, James Torrance, Mark van Wyk, James Denton & Steven Jones have all been cautioned on several occasions by several Australian Federal & State Agencies, as well as private foreign companies that previously issued Cease & Desist orders for commercial copyright infringements.
It is hoped the above information assists you in maintaining the professional integrity it has taken your career to achieve.”
(‘the Notice’).
28. The matters alleged in the Notice with respect to the Plaintiff were false.
29.By delivering the Notice to Dr Brownhill the First and Second Defendants knowingly and intentionally, and without justification, interfered in the performance of Dr Brownhill’s Contract (‘the Second Interference’).
Breach of Dr Brownhill’s Contract
30.On or about 10 October 2016, Dr Brownhill, without lawful justification, breached his contract with the Plaintiff by refusing to continue to provide services to the Plaintiff in accordance with the terms of his Contract.
31.The breach pleaded in paragraph 30 above amounted to a repudiation of Dr Brownhill’s Contract, which the Plaintiff thereafter elected to accept.
32.The breach pleaded in paragraph 30 above was directly caused by the Second Interference.
33.The First and Second Defendants knew and intended that by the Second Interference, Dr Brownhill would be intimidated such that he would be prevented from performing his obligations to the Plaintiff under his contract such as bring about the breach pleaded in paragraph 30 above.
34.Further, the First and Second Defendants intended by the Second Interference to cause harm to the Plaintiff.”
It may be seen that although there is, in these pleadings, some conflation of elements of what has been recognised in the OBG Limited decision as separate torts, it is the absence of any pursuit of, or identification of, adoption of unlawful means or conduct by the defendants, which prevents reliance upon anything other than the tort recognised in Sanders v Snell as the tort of “procuring or inducing breach of contract”. By way of contrast, it may be noted that the elements of the separate tort recognised in the OBG Limited decision, in terms of “causing loss by unlawful means”, were there described in terms of:
(a)“a wrongful interference with the actions of a third party in which the claimant has an economic interest”,[57] with the most important question being “what should count as unlawful means”, in the context of the following observation in Allen v Flood:[58]
“When the act induced is within the right of the immediate actor, and is therefore not wrongful insofar as he is concerned, it may yet be to the detriment of the third party; and in that case…the inducer may be held liable if he can be shewn to have procured his object by the use of illegal means directed against that third party.”[59]
(b)“An intention thereby to cause loss to the claimant”.[60]
(c)The causing of loss to the claimant.[61]
[57][2008] 1 AC 1 at [47].
[58][1898] 1 AC 1 at [96].
[59]See: [2008] AC 1 at [45].
[60]Ibid at [47].
[61]Ibid at [46] and [58].
As to the tort recognised in Sanders v Snell, and which is the only cause of action open to the plaintiff here, it suffices to note the summary of the elements provided in Donaldson:[62] The issue in this case is as to the application of the elements of the cause of action and not any defence and critically, as will be seen, in respect of the establishment of any breach of contract, let alone any intention on the part of either defendant to induce either doctor to do so.
[62][2015] FCA 498 at [206]; see paragraph [14], above. No issue arises here in respect of the 6th element identified in terms of a defence of justification, nor in terms of the differently framed 6th element (in terms of “no defence of honest and reasonable belief”) as noted in State Street Global Advisors Trust Company v Maurice Blackburn Pty Ltd(No. 2) [2021] FCA 137 at [451].
However, an essential difficulty confronting the plaintiff’s case is that it has not been pursued in specific reference to the necessary elements of this tort. Before considering the evidence which is relied upon, it is convenient to note some further propositions in respect of the subjective elements of the tort. That is, as to proof of knowledge of the contract and the procurement or inducement of an act breaching the contract, with intention to induce or procure such breach.
Whilst and necessarily there must be knowledge of the contract, it is not necessary that this knowledge extends to the particular terms and conditions. Ultimately and as noted in Donaldson:[63]
[63][2015] FCA 498 at [207].
“207 As was said in Daebo Shipping Co Ltd v The Ship Go Star (2012) 207 FCR 220 at 89, “[t]he gravamen of the tort is the defendant's intention to induce or procure the breach in the knowledge that such a breach will interfere with the plaintiff's contractual rights” (LED Technologies Pty Ltd v Roadvision Pty Ltd (2012) 199 FCR 204 at [40] to [54] and Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26 at 43). Reckless indifference can constitute knowledge for this purpose. Further, knowledge of the contract may provide a sufficient basis for inferring the necessary intent. In other words, a person's knowledge that he is by his conduct inducing a breach of contract may be sufficient to establish the required intention (see Allstate Life Insurance at 37). However, a bona fide belief reasonably entertained that so to act would not result in a breach of contract might negate the requisite intent (see Short v City Bank of Sydney (1912) 15 CLR 148 at 160).”
Similarly, and in Sanders v Snell it was observed:[64]
[64](1998) 196 CLR 329 at [22] – [23].
“22 It may be accepted for the purposes of argument that, as the trial judge held, the appellant's subjective wish was that the respondent be “summarily and immediately dismissed”, that is, that the contract “be terminated at the earliest possible date”. But the tort of inducing or procuring a breach of contract is not established by demonstrating only that the alleged tortfeasor hoped or wished that the contract would or might be breached. To establish an inducing or procuring of breach, something more must be shown than that the alleged tortfeasor harboured an uncommunicated subjective desire that the contract would or might be breached. 23 Showing what the tortfeasor desired may well be very relevant to the issue of the intention with which the alleged tortfeasor acted, but it is necessary to consider what was done, as well as what was desired. To persuade or direct a contracting party to terminate the contract lawfully is not to procure a breach of the contract...” (citations omitted)
Further, in the OBG Limited decision, it was observed:[65]
[65][2008] 1 AC 1 at [39] – [43], per Lord Hoffmann.
“39 To be liable for inducing breach of contract, you must know that you are inducing a breach of contract. It is not enough that you know that you are procuring an act which, as a matter of law or construction of the contract, is a breach. You must actually realize that it will have this effect. Nor does it matter that you ought reasonably to have done so. This proposition is most strikingly illustrated by the decision of this House in British Industrial Plastics Ltd v Ferguson [1940] 1 All ER 479, in which the plaintiff’s former employee offered the defendant information about one of the plaintiff’s secret processes which he, as an employee, had invented. The defendant knew that the employee had a contractual obligation not to reveal trade secrets but held the eccentric opinion that if the process was patentable, it would be the exclusive property of the employee. He took the information in the honest belief that the employee would not be in breach of contract. In the Court of Appeal [1938] 4 All ER 504, 513, MacKinnon LJ observed tartly that in accepting this evidence the judge had “vindicated his honesty … at the expense of his intelligence” but he and the House of Lords agreed that he could not be held liable for inducing a breach of contract. v
40 The question of what counts as knowledge for the purposes of liability for inducing a breach of contract has also been the subject of a consistent line of decisions. In Emerald Construction Co Ltd v Lowthian [1966] 1 WLR 691 union officials threatened a building contractor with a strike unless he terminated a subcontract for the supply of labour. The defendants obviously knew that there was a contract—they wanted it terminated—but the court found that they did not know its terms and, in particular, how soon it could be terminated. Lord Denning MR said, at pp 700–701:
“Even if they did not know the actual terms of the contract, but had the means of knowledge—which they deliberately disregarded—that would be enough. Like the man who turns a blind eye. So here, if the officers deliberately sought to get this contract terminated, heedless of its terms, regardless whether it was terminated by breach or not, they would do wrong. For it is unlawful for a third person to procure a breach of contract knowingly, or recklessly, indifferent whether it is a breach or not.”
41
42
This statement of the law has since been followed in many cases and, so far as I am aware, has not given rise to any difficulty. It is in accordance with the general principle of law that a conscious decision not to inquire into the existence of a fact is in many cases treated as equivalent to knowledge of that fact: see Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2003] 1 AC 469. It is not the same as negligence or even gross negligence: in British Industrial Plastics Ltd v Ferguson [1940] 1 All ER 479, for example, Mr Ferguson did not deliberately abstain from inquiry into whether disclosure of the secret process would be a breach of contract. He negligently made the wrong inquiry, but that is an altogether different state of mind.
The next question is what counts as an intention to procure a breach of contract. It is necessary for this purpose to distinguish between ends, means and consequences. If someone knowingly causes a breach of contract, it does not normally matter that it is the means by which he intends to achieve some further end or even
that he would rather have been able to achieve that end without causing a breach. Mr Gye would very likely have preferred to be able to obtain Miss Wagner’s services without her having to break her contract. But that did not matter. Again, people seldom knowingly cause loss by unlawful means out of simple disinterested malice. It is usually to achieve the further end of securing an economic advantage to themselves. As I said earlier, the Dunlop employees who took off the tyres in GWK Ltd v Dunlop Rubber Co Ltd 42 TLR 376 intended to advance the interests of the Dunlop company. 43 On the other hand, if the breach of contract is neither an end in itself nor a means to an end, but merely a foreseeable consequence, then in my opinion it cannot for this purpose be said to have been intended. That, I think, is what judges and writers mean when they say that the claimant must have been “targeted” or “aimed at”. In my opinion the majority of the Court of Appeal was wrong to have allowed the action in Millar v Bassey [1994] EMLR 44 to proceed. Miss Bassey had broken her contract to perform for the recording company and it was a foreseeable consequence that the recording company would have to break its contracts with the accompanying musicians, but those breaches of contract were neither an end desired by Miss Bassey nor a means of achieving that end.”
In a separate judgment and in contrasting the operation of what was there identified as the separate tort of “interference with a trade or business by unlawful means” and notation of that tort having essential elements of intention to inflict harm and to do so by the adoption of unlawful means,[66] the concept of intention was noted as follows:[67]
[66]Ibid at 141 in [163], per Lord Nicholls.
[67]Ibid at [164] – [166].
“164 I turn next, and more shortly, to the other key ingredient of this tort: the defendant’s intention to harm the claimant. A defendant may intend to harm the claimant’s business either as an end in itself or as a means to an end. A defendant may intend to harm the claimant as an end in itself where, for instance, he has a grudge against the claimant. More usually a defendant intentionally inflicts harm on a claimant’s business as a means to an end. He inflicts damage as the means whereby to protect or promote his own economic interests. 165 Intentional harm inflicted against a claimant in either of these circumstances satisfies the mental ingredient of this tort. This is so even if the defendant does not wish to harm the claimant, in the sense that he would prefer that the claimant were not standing in his way. 166 Lesser states of mind do not suffice. A high degree of blameworthiness is called for, because intention serves as the factor which justifies imposing liability on the defendant for loss caused by a wrong otherwise not actionable by the claimant against the defendant. The defendant’s conduct in relation to the loss must be deliberate. In particular, a defendant’s foresight that his unlawful conduct may or will probably damage the claimant cannot be equated with intention for this purpose. The defendant must intend to injure the claimant. This intent must be a cause of the defendant’s conduct, in the words of Cooke J in Van Camp Chocolates Ltd v Aulsebrooks Ltd [1984] 1 NZLR 354, 360. The majority of the Court of Appeal fell into error on this point in the interlocutory case of Miller v Bassey [1994] EMLR 44. Miss Bassey did not breach her recording contract with the intention of thereby injuring any of the plaintiffs.”
And then contrasted with the tort of “inducing a breach of contract”,[68] as follows:
[68]Ibid at [168].
“172 Thus understood, the rationale and the ingredients of the “inducement” tort differ from those of the “unlawful interference” tort. With the inducement tort the defendant is responsible for the third party’s breach of contract which he procured. In that circumstance this tort provides a claimant with an additional cause of action. The third party who breached his contract is liable for breach of contract. The person who persuaded him to break his contract is also liable, in his case in tort. Hence this tort is an example of civil liability which is secondary in the sense that it is secondary, or supplemental, to that of the third party who committed a breach of his contract. It is a form of accessory liability. 173 This form of liability is to be contrasted with the tort of unlawful interference. This is a “stand-alone” tort of wide scope, imposing primary liability on a defendant for his own conduct, irrespective of whether on the facts anyone else may also be liable, either in contract or in tort. On this I agree with Philip Sales and Daniel Stilitz in their stimulating article “Intentional Infliction of Harm by Unlawful Means” (1999) 115 LQR 411, 433.”
There are then the following observations:
“191 I turn next to the mental ingredient of the Lumley v Gye tort. The mental ingredient is an intention by the defendant to procure or persuade (“induce”) the third party to break his contract with the claimant. The defendant is made responsible for the third party’s breach because of his intentional causative participation in that breach. Causative participation is not enough. A stranger to a contract may know nothing of the contract. Quite unknowingly and unintentionally he may procure a breach of the contract by offering an inconsistent deal to a contracting party which persuades the latter to default on his contractual obligations. The stranger is not liable in such a case. Nor is he liable if he acts carelessly. He owes no duty of care to the victim of the breach of contract. Negligent interference is not actionable. 192 The additional, necessary factor is the defendant’s intent. He is liable if he intended to persuade the contracting party to breach the contract. Intentional interference presupposes knowledge of the contract. With that knowledge the defendant proceeded to induce the other contracting party to act in a way the defendant knew was a breach of that party’s obligations under the contract. If the defendant deliberately turned a blind eye and proceeded regardless he may be treated as having intended the consequence he brought about. A desire to injure the claimant is not an essential ingredient of this tort. 193 For completeness I mention, but without elaboration, that a defence of justification may be available to a defendant in inducement tort cases. A defendant may, for instance, interfere with another’s contract in order to protect an equal or superior right of his own, as in Edwin Hill & Partners v First National Finance Corpn plc [1989] 1 WLR 225.”[69]
It must be observed that Mr Benjamin presented as particularly not wanting to be in the witness box and as evasive, particularly in terms of any commitment to a position in respect of what he acknowledged appeared to be his signature on the copy document which became Exhibit 49A. This extended to the evidence sought from him in order to ultimately support the tender of Exhibit 11, as follows:
“Do you recall when you prepared and signed your statutory declaration?‑‑‑Look, I can’t remember. I can’t remember but you did show me that document. So I can only go by ‑ ‑ ‑
HIS HONOUR: Well, why don’t you put the document in front of him ‑ ‑ ‑
MR WHITE: Thank you, your Honour.
HIS HONOUR: ‑ ‑ ‑ and ask him about that document, as to how it relates to the events. Mr Travers, that’s the foundation that has to be laid, isn’t it?
MR TRAVERS: It is, your Honour. I accept that.
HIS HONOUR: If it’s – if it can be.
MR WHITE: So is that the statutory declaration to which you refer?‑‑‑Yes.
HIS HONOUR: Or a copy of it, I assume.
MR WHITE: Is there a date at the bottom of that?‑‑‑Yes, October, 23rd of October 2015, yes.
So that’s about four months after your apparent signature on that agreement?‑‑‑Yes.
HIS HONOUR: Yes.
MR WHITE: So, Mr Benjamin, now that you’ve seen the contents of that, what do you say about those statements that you make about ‑ ‑ ‑
HIS HONOUR: Well, no, the question has to be, doesn’t it, Mr White, at the time of making the statutory declaration, were the events of – that you’re addressing, relating to the 22nd of June 2015 clear in your memory?‑‑‑I could have thought so. I would have thought so. I’m not overly familiar with the law other than ‑ ‑ ‑
Don’t worry about the law. Just ‑ ‑ ‑?‑‑‑Well, statutory declarations are, you know, serious in nature. So I would only have signed something and drafted something that I believed to have been true at that time.
…
In respect of the statutory declaration itself, do you recall the circumstances giving rise to you signing that?---No.
Or why you would have signed it?---I don’t recall the details. All I can tell you is my nature would be, if I thought something was presented to me that I didn’t do, then this is the reason I would have signed the stat dec. That’s just - - -
The matters - - -?---Yeah.
The matters that are spoken to you by – spoken to by you in that statutory declaration?--- No, I mean, I don’t - - -
Well, so - - -
HIS HONOUR: No, just wait for the question.
MR WHITE: - - - if you look at this, the nature of the matters that are stated there, without saying what they are, are those the kind of matters that you would have had knowledge of during your time with Medicrew?‑‑‑I’d have to say yes. I mean, I couldn’t have signed a stat dec without knowing those things. I – I ‑ ‑ -”[186]
Further, and when cross-examined as to the first defendant’s contention that he did execute the agreement on 22 June 2015, in the context of his other involvement in dealings with the first defendant, including a meeting on 21 June 2015, his consistent response was in terms of lack of recall.[187] The tenor of evasion in his evidence was finally confirmed as follows:
“MR TRAVERS: Okay. You certainly can’t recall that you didn’t sign, can you – do you?‑‑‑I can’t recall.
Okay. Mr Benjamin, the – the Medicrew practice is – is on Ocean Drive, isn’t it?‑‑‑I don’t know. Ocean Drive?
The Medicrew practice itself, is it on Ocean Drive?‑‑‑I don’t know.
So you have no recollection of – of where the office is – that the company that you started traded from?‑‑‑I was speaking to the barrister last week, told that the company’s not particularly viable. So I don’t know – why would it be on my radar? It’s not.
Okay. Would you accept, Mr Benjamin, if I told you that the location of the office was – is in the vicinity of Mongolia Lane, Twin Waters?‑‑‑Really? I wouldn’t know.”[188]
[186]T2-40.25-2-41.13 and T2-46.29-2-47.2.
[187]T2-52.40–55.25.
[188]T2-55.27-41.
Considered individually there was nothing about Mr Benjamin’s presentation or the content of his evidence to encourage any sense of reliability of it, including and more particularly in the plaintiff’s reliance upon the earlier statutory declaration. Mr Benjamin’s evidence did not extend to any clear assertion that the contents of the statutory declaration were then recorded as his truthful recollection in respect of what did or did not occur on 22 June 2015 or in respect of Exhibit 49A. Consistently, his position was couched in terms of acknowledgment of no more than that he had made the statutory declaration and his understanding of the serious nature of his execution of such a document and that in those circumstances it would have represented his recollections. Accordingly, and whilst his evidence may have been sufficient to entitle the plaintiff to tender Exhibit 11, there is obvious difficulty, in the absence of any other confirmatory evidence, in giving any particular weight to the assertions in Exhibit 11.
However, the plaintiff also relies upon a transcript of the proceedings conducted in the Magistrates Court at Maroochydore on 22 June 2016,[189] when, on her guilty pleas, the first defendant was dealt with for criminal offences relating to her involvement in the medical practice of Dr Loftus at Twin Waters, being offences of stealing mail and a folder containing medical records and causing a detriment by cancellation of utility services; and a further offence, relating to the plaintiff, of attempting to dishonestly induce a person to allow access to a post office box. The first and second offences occurred in February and March 2015 and the third in July 2015. The particular reliance is upon assertions then made to the Court as to her associations with both Dr Loftus’ practice and the plaintiff, being that, as was first noted in the prosecutor’s submission (subsequently to a submission that her offences “are akin to stealing as a servant in that, although terminated from her association with the complainant company, she certainly utilised her position and that association within the company to commit the offences”):[190] “she was never employed”;[191] and that the third offence occurred in circumstances where she: “was not formally employed and had an association, and at times, or she also was required or also told that her association was terminated.”[192]
[189]Ex. 56.
[190]Ex. 56, pp 1-4.46-1-5.2.
[191]Ex. 56, pp 1-5.30.
[192]Ex. 56, pp 1-6.40-42. Reproduced as per transcribed.
More particularly, the plaintiff seeks to rely on parts of the submissions made by the solicitor then appearing for the first defendant and in explanation of an absence of any employment agreement with the plaintiff, as admissions made on instructions to the first defendant’s agent.[193] Those particular assertions (as they are underlined) appear in this immediate context:
“Your Honour, if I take it with the, first, the Twin Waters Medical Centre. In terms of how it all began, just very briefly, Ms Veenendaal assisted Dr Loftus with respect to some matters that he was facing. She’d mediated for him. She also assisted in other ways such as, with respect to the lease, and aspects like that. Also, paying utilities. His professional circumstances were under pressure and he started to rely on Ms Veenendaal more and more for assistance, both on a personal level and through the business. There was a perceived agreement - and it’s documented in those letters and emails – that Ms Veenendaal would be made a part-owner of the business in February 2015. Whether Mr Loftus – Dr Loftus intended to follow through on that arrangement, is unknown. But that’s certainly under – what assumption she was going under at the time.
She put in more and more work into the business and was of the view that she was going to be a part-owner. She felt some responsibility for that business. The relationship between Dr Loftus and Ms Veenendaal broke down. She was told she was no longer to have anything to do with the practice. She felt as though she’d been used and very unfairly dealt with. She accepts that she wasn’t a paid employee so that in – she accepts that. And my friend has indicated that and then he’s contradicted himself by saying that she was in a position of trust. Yet he’s also made emphasis on the fact that she was never a paid employee.
….
In terms of Medicrew, your Honour – well, after Dr Loftus left Australia, Medicrew took over the premises that he previously occupied and there was some problems in respect of where clients went and that – they – that clientele was just left.
There was discussions then had between Ms Veenendaal and Medicrew as to a position available for her in their practice, and essentially, although they discussed with her – her a potential position, an expected salary – they had those negotiations with her; it never reached the point where a contract was actually entered. Medicrew – and it’s on some of their documentation as well – did have an informal arrangement with Ms Veenendaal and kept that arrangement primarily because she had a relationship with existing landlords.
So between offering her to present a proposal about her role that she would play in the practice which was on the 21st June to when the lease was entered on the 1st July, there was an informal arrangement between them. Just prior to the 16th July the police advised Medicrew that Ms Veenendaal was being investigated in relation to the Twin Waters matter and Medicrew severed their ties with her. She again had trouble accepting that and attempted to continue to pick up the mail, and she really had problems with accepting that she’d been brushed aside again. And really, her trying to access the mail was an inability, as my friend has indicated, to accept that she no longer had a role to play in that business.”[194]
[193]See: R v Delgado Guerra [2002] 2 Qd R 384.
[194]Ex. 56, pp 1-8.35-1-9.8 and 1-10.9-28.
The essential point of departure in the respective position of the parties is reflected in the following cross-examination of the first defendant:
“So the meeting was called on the 21st of June. After the meeting the directors invited you to come back to them with what your expectations were regarding your role?‑‑‑They asked me to come back to them with what incentive scheme I wanted, but the role – it was handed over to Adam Benjamin to formalise employment – employee status.
All right. I’d suggest that it was left unresolved in your court and you never came back to them with your expectations?‑‑‑No. That’s totally wrong.”[195]
[195]T5-46.27-34.
The plaintiff relies upon Exhibit 13, an email enclosing a letter signed by Dr Torrance and sent to the first defendant on 20 July 2015, proposing her execution of an attached draft agreement containing terms and conditions for a proposed “ex-gratia payment in the amount of $4,000.00 inclusive of GST made by Medicrew Pty Ltd in full and final settlement” of an unspecified issue or dispute. However, the executed and attached letter contained the following by way of explanation:
“Termination of Services
Further to our notice of Thursday 16th July 2015, we hereby confirm termination of your services to Medicrew Pty Ltd in relation to the setup of the Twin Waters Medicrew Medical Centre, effective COB 16th July 2015.
In consideration of the services you provided up to and including the above date, inclusive of all expenses, offsets and other claims the parties may have against each other, Medicrew Pty Ltd offers to pay you an ex-gratia payment in full and final settlement in the amount of $4,000.00 inclusive of GST within 7 days of you confirming your written acceptance with the terms and conditions of this payment as set out below:”[196]
That letter also sought to make clear that apart from specified confidentiality and non-disparagement conditions, another was as to the provision by the first defendant of a corresponding tax invoice. There is some tendency for this to “cut both ways”, in circumstances where the plaintiff’s position in this matter is ultimately for a conclusion that the first defendant is entitled to nothing, in that there was simply an absence of any concluded agreement in respect of remuneration for the “services” provided by the first defendant. Further and as the first defendant said, she didn’t accept the proposal, as she contended “it was incorrect”.[197] Accordingly, there is no contended inconsistency in the approach of the first defendant.
[196]Ex. 13.
[197]T5-52.11-12.
The plaintiff does, however, contend there is substantial inconsistency as to the first defendant’s reliance upon the document she says was executed on 22 June 2015. In addition to that arising from the submissions made in Court on her behalf on 22 June 2016, the first defendant was cross-examined as to:
(a)her application to the Fair Work Commission, prepared and executed by her legal representative and dated 4 August 2015. As the first defendant agreed,[198] there is no reference to the document executed on 22 June 2015 in that application. That omission may be viewed in the following relevant context of what was asserted in support of a claim for unpaid wages, superannuation, an amount for one month’s notice and reimbursement of some expenses:[199]
[198]T5-78.35.
[199]Ex. 53 at p 4.
“….
11.In June 2015 the Applicant’s employment with the Respondent was verbally formalized and she was offered the position of Practice Director by the Respondent and accepted this position. The Applicant was verbally offered and accepted a $120,000 salary and was promised that the agreement would be formalized in writing once the Respondent had an opportunity to prepare a contract of employment. The Applicant received a verbal brief which was to ‘get the practice ready and operational as quickly as possible’.
….
14.The Applicant was required to complete and did complete an ‘employee details form’ in which she provided information to facilitate payroll; the information the Applicant provided included her Tax File Number.
….
18.On 20 June 2015 Mr Mark Vanwyk (Director of the Respondent) sent a text message to the Applicant inviting her to attend a meeting at his home the next day. On 21 June 2015 the Applicant met with Directors of the Respondent to further discuss the terms and conditions of her employment; present at this meeting were Mr Murray Sneesby, Dr James Torrance, Mr Mark Vanwyk, Mr Adam Benjamin and the Applicant.
….
27.On 12 July 2015 Mr Vanwyk sent a text message to the Applicant requesting that she confirm her name and residential address for the purpose of finalizing her contract of employment. On or about this date the Applicant participated in a conversation Mr Vanwyk in which he confirmed that he would be using a ‘payroll company’ to facilitate payment of the Applicant’s salary. On 12 July 2015 Mr Vanwyk sent a text message to the Applicant confirming that he would present the Applicant with a contract of employment the following week.
28.On 15 July 2015 the Applicant received a text message from Mr Vanwyk who stated that a contract of employment would be presented to the Applicant the next day.”[200]
The first defendant later identified Exhibit 59, as a copy of a document she provided to Mr Benjamin providing her tax file number and bank account details for payment of her salary;[201]
(b)an email from Mr Van Wyk dated 12 July 2015, in which he requested that the first defendant forward her “full name and residential address for inclusion in your contract” and her response of the same date, providing those particulars and including the question: “Do you want an ABN as well??”;[202] and
(c)an email dated 11 August 2015,[203] sent by the first defendant to WorkCover Queensland for the purpose of a workers’ compensation claim, relevantly including the following assertions:
“My salary was to be $120,000 per annum. This is what was agreed at a meeting at the Directors’ home early in the piece and they said they would also set in a ‘lucrative’ bonus package as well. They had confirmed only the day before my departure that my contract was going to be given to me on the Wednesday night. Even on the Thursday when asked to leave I was told by Dr James Torrance, Managing Director of Medicrew, that he had been in meetings with ‘their legal team and their insurance people and that at this stage I was a liability and I was to vacate the building immediately’. I was given no further information other than that. Nothing in writing at the time, and no other explanation. I was devastated, in pain and upset.”
[200]Ex. 53 at pp 5-6.
[201]T5-107.27–108.10.
[202]Ex. 55.
[203]Ex. 54.
Despite the implications of these prior assertions made for and by the first defendant, at the very least in furthering the earlier made observations as to the view formed as to the unreliability of her evidence, on this critical question as to her counterclaim, it must necessarily be concluded that, on this single issue, she is substantially and objectively supported and confirmed by the documents admitted as Exhibits 49B and 49C.
These documents were admitted in order to provide copies, produced at different times, of a photograph and accompanying data recorded in conjunction with both using her telephone to take and store the photograph and to retrieve all of that information. Further and in the context of initial opposition to this and in the context of suggestion of absence of prior disclosure of one or more of these copies, the plaintiff, after provision of opportunity for inspection of the availability of the information reproduced as Exhibit 49C, in the context of accompanying records, upon or by using the first defendant’s mobile telephone, did not ultimately maintain any objection to the admission of the exhibits.[204]
[204]T5-17.11 - 5-26.45
Accordingly, they were received without any qualification of the basis upon which they were tendered, being in reliance of the accuracy of the accompanying data as to date and location of the recording of the image of the executed agreement. Further and notwithstanding that consistently with the pleadings, the first defendant was challenged in terms that Mr Benjamin never executed that agreement,[205] and that it did not exist at the time of making her application to the Fair Work Commission, in August 2015,[206] there was no specific contention put to or canvassed with the first defendant as to her having fabricated any information in exhibits 49B and 49C.
[205]T5-71.5.
[206]T5-73.45 – 5-74.10.
In these circumstances and despite the countervailing considerations, the inexorable conclusion is that the first defendant’s evidence as to the execution of the written agreement on 22 June 2015, is objectively confirmed, consistently with the possibilities of oversight, confusion or omission of reference (for whatever reason) as to this agreement, in the prior assertions made by or for the first defendant in relation to her relationship with the plaintiff.
As the plaintiff points out, the pleading of the amended counterclaim is problematic. First, that claim is couched in the following terms:[207]
“This counterclaim is made by the First Defendant against:
1. The Plaintiff for damages in the sum of Three Hundred Thousand Dollars ($300,000.00) for unlawful termination of her contract of employment (Employment Contract) dated the 22nd of June 2015 – the commencement of remuneration to be backdated to 5 May, 2015 – as previously agreed between the First Defendant and the Plaintiff;
2. Damages to be assessed by the Court for unlawful termination/breach of contract of the Employment Contract since the date of the counterclaim herein;
3. Interest on damages.”
[207]SFADC at pg. 19, paras [1]-[3] in the amended counterclaim.
The pleading as to unlawful termination of the contract executed on 22 June 2015 is pleaded as follows:[208]
“5. The Plaintiff unlawfully terminated the First Defendant’s Employment Contract on the basis of the unlawful allegation that the written document dated the 22nd June, 2015 herein was an ‘informal contract’ which gave rise to the Plaintiff’s right to terminate the First Defendant’s contract without reason.
6. The Plaintiff’s termination of the Employment Contract on the basis that there was no intention to enter into contractual terms with the First Defendant was unlawful and based on the false allegation that the First Defendant had defamed the Plaintiff its directors and employees;”.
As the plaintiff contends, none of these specific allegations have been established.
[208]Ibid at [5]-[6].
However, it is also to be noted that the relief sought by way of counterclaim was then expressed as follows:[209]
“1. The First Defendant counter claims against the Plaintiff for damages for unlawful termination of her Employment Contract in the sum of $300,000.00 to the date of the counter claim.
2. Further damages and ongoing loss sustained by the First Defendant as a consequence of the Plaintiff’s unlawful termination/breach of her Employment Contract – such damages to be assessed by the Court as being just and reasonable.
3. Interest on damages pursuant to section 58 of the Civil Proceedings Act 2011 (Qld).”
[209]Ibid at p 21.
As is apparent and common ground, the contract upon which this counterclaim is based was not for a fixed term of employment. Neither does it expressly provide for termination or notification of termination. As the plaintiff specifically points out,[210] in the case of such a contract, there is a presumption that the contract is terminable on reasonable notice except in circumstances justifying summary dismissal.[211] In any event, what would constitute reasonable notice will depend upon the circumstances of engagement and of each individual case.
[210]Plaintiff’s written submissions, filed 22/2/22, at [126].
[211]Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 429.
The circumstances here do not justify the claim of unlawful termination of this contract, except to the extent that there may have been a wrongful termination due to less than reasonable notice.[212] That is, there is no justifiable basis for the first defendant’s final submissions in terms of allowing damages for a period of three years from 5 May 2015, at the agreed contractual rate of $120,000 per annum, an amount which is in excess of that specifically pleaded. Further and to the extent that there has been a wrongful termination due to less than reasonable notice, the first defendant’s damages would necessarily be premised on an amount to be paid for any such period.
[212]Cf: Sanders v Snell (1998) 196 CLR 329 at [16] – [19].
An essential difficulty for the first defendant is her own position, in reliance upon the written agreement, notwithstanding, as it is effectively expressed, and as the first defendant also suggested, it was of a provisional nature as to the final terms of her engagement.[213] In that context, as the plaintiff contends, the issues which came to the attention of the plaintiff as to the police investigation into matters relating to the first defendant’s prior association with Dr Loftus and his practice (including complications which were emerging in respect of unresolved issues as to the rights of possession of the patient medical records relating to Dr Loftus’ practice), were such as to provide a reasonable basis for the plaintiff’s loss of confidence in the first defendant and for the termination of the contract. Although the first defendant contends that such conclusions are not sufficiently evidenced,[214] otherwise and in apparent cognisance of the difficulties, the ultimate submission for the first defendant is that she is, at a minimum, entitled to damages for the period from 5 May to 16 July 2015, in accordance with the terms of the contract.[215]
[213]T5-15.1-16 and T5-16.37–17.11.
[214]Defendant’s written reply filed 29/3/22, at [48].
[215]Defendant’s written reply filed 29/3/22, at [49].
As the first defendant has proven the contract upon which she relies and it was common ground that she was not otherwise paid for that period of engagement, in breach of the terms of that contract, and where her counterclaim is expressed broadly enough to encompass such a claim, she is entitled to appropriate award in accordance with an appropriate process of termination.
The conclusion as to the loss of confidence in the first defendant as a basis for termination of services is adequately provided by the evidence of Dr Torrance.[216] However, the then inconclusive nature of these concerns may not be regarded as sufficient to warrant such summary dismissal, in lieu of reasonable notice. And certainly not sufficient, in each circumstances, to amount to a conclusion of serious misconduct in order to engage s 123(1)(b) of the Fair Work Act 2009 and thereby exclude the operation of s 117 of that Act.[217] Accordingly, the requirement was of a period of at least 1 week notice of termination, with allowance of payment in lieu of the appropriate period of notice.
[216]T2-66.1–2-68.45.
[217]As discussed above at para [65], as being incorporated into the engagement agreement with Dr Brownhill.
Here, some relevant circumstances are that the agreement stipulated that the engagement was from 5 May 2015, in obvious recognition of the efforts directed by the first defendant, from that point, at the establishment and operation of the plaintiff’s medical practice. On 16 July 2015, that period of engagement was in excess of 10 weeks. The agreement also referred to a monthly pay cycle but that was not defined as to the date that would occur and the implication is that such a cycle had not been implemented prior to 16 July 2015, as an explanation for no payment having been made to the first defendant. However and although it was couched in terms of confirmation of termination on 16 July 2015, it was not until the email, sent on 20 July 2015, that the first defendant was given written notice of termination.[218] There is also evidence that despite the sudden purported termination on 16 July 2015 and albeit in the context of some engagement of negotiations as to the first defendant’s entitlements, she did provide some further assistance to the plaintiff, as evidenced by her email on 21 July 2015, advising as to the site PK1 approval and the identifying number, as had been obtained by the first defendant.[219]
[218]Ex. 13.
[219]Ex. 58 and T2-68.25–2-69.5.
In these circumstances, the earliest period of appropriate notice would have been on 27 July 2015. Therefore, the first defendant’s damages for breach of her contract of engagement are assessed as:
(a)$27,096.77 for unpaid salary (including in respect of notice to 27 July 2015);[220] and
(b)$2,574.19, in respect of employer provided superannuation entitlements.[221]
[220]Calculated as 2 months at $10,000.00, up to 4 July 2015, and a further 22/31 days x $10,000.00: $7096.77.
[221]The first defendant seeks this at a rate of 9.5%, without contrary contention for the plaintiff.
Interest as claimed pursuant to s 58 of the Civil Proceedings Act 2011, will be allowed on the total sum of $29,670.96 from 20 July 2015, in the sum of $12,462.36, in accordance with the approach suggested in the final submissions of the first defendant, without any specific contention raised for the plaintiff. That is, by adoption of the interest calculator provided on the Queensland Courts website, in specific application to the calculation of pre-judgment interest on default judgments, pursuant to s 58 and Practice Direction No. 6 of 2013.[222]
[222]That calculation is annexed to these reasons.
Conclusion
For the reasons which have been set out, there will be orders to the following effects:
(a)The plaintiff’s claim is dismissed against each defendant;[223] and
(b)On the first defendant’s counterclaim, there be judgment for the first defendant, that the plaintiff pay damages for breach of contract in the sum of $42,133.32 (including interest in the sum of $12,462.32).
[223]In the circumstances, including where there has been no case pursued or established in respect of any unlawful conduct on the part of either defendant, there is no basis for any injunctive relief.
Otherwise, the parties will be provided with further opportunity to be heard as to any further orders, including as to costs.
Annexure
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