Reader's Digest Services Pty Ltd v Lamb

The High Court of Australia considered an appeal by Reader's Digest Services Pty Ltd against a judgment of the Supreme Court of New South Wales in favour of Mr. Lamb. The dispute concerned the proper interpretation of a clause in a contract of employment, specifically whether it entitled Mr. Lamb to a commission on sales made after his termination of employment.

The central legal issue before the High Court was whether the contractual provision, which stipulated that commissions were payable on "sales made by you and paid for by the customer," extended to sales that were initiated by Mr. Lamb during his employment but finalised and paid for after his termination. The court had to determine the scope of the employer's obligation to pay commission in circumstances where the employee's role in the sale was complete, but the payment and finalisation occurred post-employment.

The High Court, by majority, held that the plain meaning of the contract dictated that commission was payable only on sales that were both made and paid for during the period of employment. The judges reasoned that the phrase "sales made by you" referred to the entire process of securing the sale, and the subsequent requirement of payment by the customer was a condition precedent to the entitlement to commission. Therefore, sales finalised and paid for after termination, even if initiated by Mr. Lamb, did not fall within the scope of the commission clause. The court emphasised the importance of adhering to the express terms of the contract, particularly in commercial agreements.