Silverbrook Research Pty Ltd v Lindley

Silverbrook Research Pty Ltd appealed to the Court of Appeal of New South Wales against a decision of the primary judge concerning a breach of an employment contract. The dispute arose from the employer's alleged failure to review the employee's salary and to set performance objectives for the payment of a bonus, which the employee claimed resulted in a loss of commercial opportunity or chance to increase remuneration and receive bonus payments.

The Court of Appeal was required to determine whether the employer had breached implied terms of good faith, trust, and confidence by failing to review the employee's remuneration and to set performance objectives relevant to bonus payments. Furthermore, the Court had to consider how to assess the value of the lost opportunity to increase remuneration and receive a bonus, particularly in light of the employer's discretion in determining bonus payments, and whether an ex gratia payment made to the employee should be taken into account in reducing any damages awarded.

The Court reasoned that the employer's discretion regarding bonus payments was not unfettered and had to be understood within the proper scope and content of the contractual obligations. The assessment of the lost opportunity required consideration of probabilities and possibilities. The Court also held that the overriding principle of compensation meant that an ex gratia payment, if sufficiently connected to the contractual claim, could be taken into account to reduce the damages awarded. The parties were directed to bring in short minutes giving effect to the reasons of Allsop P and Beazley JA, including proposed orders for costs.