NSW Court of Appeal Upholds Unjust Contract Ruling

The Court of Appeal upheld the primary judge's decision that a settlement and release deed was unjust under the Contracts Review Act 1980 (NSW), finding that the deed imposed an unreasonable burden on the employee without being reasonably necessary to protect the employer's legitimate interests.

OUTCOME: Dismissed

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: [COMPANY_1] v [NAME_4] [2020] NSWCA 246 Hearing dates: 11 September 2020 Decision date: 02 October 2020 Before: Basten JA at [1] Gleeson JA at [2] Leeming JA at [150] Decision: (1) Appeal dismissed. (2) Appellant to pay the respondent's costs. Catchwords: CONTRACTS – unjust contracts – Contracts Review Act 1980 (NSW) – where respondent employed by the appellant as an accountant – where respondent resigned following bullying and harassment in the workplace – respondent contacted the appellant's clients – where no covenant not to compete and no restraint of trade – appellant claimed respondent misused client information and contact list – where appellant made overbearing threats of litigation including criminal prosecution – deed of settlement and release entered into – where clause provided that respondent pay 'agreed fee' to appellant – whether deed was unjust in the circumstances – Contracts Review Act ss 7 and 9(2) – challenge to discretionary decision to refuse to enforce the deed AMENDMENT – appeal – notice of appeal – whether new ground of appeal should be permitted – late attempt to rely upon constraint in granting relief contained in Contracts Review Act, s 6(2) – amendment refused Legislation Cited: Annual Holidays Act 1944 (NSW), s 8 Contracts Review Act 1980 (NSW), ss 4, 6, 7, 9 Crimes Act 1900 (NSW), s 156 Fair Work Act 2009 (Cth), ss 44(1), 61(2)(d), 87(1)(a) Long Service Leave Act 1955 (NSW), s 7 Uniform Civil Procedure Rules 2005 (NSW) (UCPR), rr 41.2, 51.18(1)(e), 51.36(2) Cases Cited: Al-Maha Pty Ltd v Coplin [2017] NSWCA 318 Australian Bank Limited v Stokes (1985) 3 NSWLR 174 Canty v PaperlinX Australia Pty Ltd [2014] NSWCA 309 Chen v Song [2005] NSWSC 19 [COMPANY_5] of Sydney Ltd v Pollard (1983) 1 NSWLR 69 Del Casale v Artedomus (Aust) Pty Ltd [2007] NSWCA 172; (2007) 165 IR 148 [NAME_6] t/as Verve Energy v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 [NAME_8] by his Tutor Beatrice Ann Watkinson v Perpetual Trustees Victoria Limited (2009) 75 NSWLR 42; [2009] NSWCA 186 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 Government Insurance Office (NSW) v RJ Green & Lloyd Pty Ltd (1996) 114 CLR 437; [1996] HCA 6 House v The King (1936) 55 CLR 499; [1936] HCA 40 Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 [NAME_9] v University of Wollongong [1985] HCA 28; (1985) 59 ALJR 481 Perpetual Trustee Company Limited v Albert and Rose Khoshaba [2006] NSWCA 41 Provident Capital Ltd v Papa (2013) 84 NSWLR 231; [2013] NSWCA 36 Quickfund (Australia) Pty Ltd v Airmark Consolidators Pty Ltd [2014] FCAFC 70 Quintano v B W Rose Pty Ltd & Ors [2008] NSWSC 793 Robinson Helicopter Co Inc v McDermott [2016] HCA 22; (2016) 90 ALJR 679 [COMPANY_10] (Receiver and Manager Appointed) v [NAME_11] (Court of Appeal, 30 October 1998, unreported) Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 [NAME_12] v [NAME_13]; Loder v Bolton [2020] NSWCA 45 [COMPANY_14] v [NAME_16]; [COMPANY_18] v [NAME_19]; FirstMac Ltd v O'Donnell [2011] NSWCA 389 Toscano v Holland Securities Pty Ltd (1985) 1 NSWLR 145 Walton v National Employers' Mutual General Insurance Association [1973] 2 NSWLR 73 Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9 Water Board v Moustakas (1988) 180 CLR 491; [1988] HCA 12 West v AGC (Advances) Ltd (1986) 5 NSWLR 610 Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 77 ALJR 1598 Category: Principal judgment Parties: [COMPANY_1] (Appellant) [NAME_21] (Respondent) Representation: Counsel: [redacted] [NAME_25] (Respondent)

Solicitors: [redacted] [NAME_28] (Respondent) File Number(s): 2019/375018 Decision under appeal Court or tribunal: District Court of New South Wales Jurisdiction: Civil Date of Decision: 1 November 2019 Before: Olsson SC DCJ File Number(s): 2018/48420

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] [NAME_30] was an accountant employed by the appellant, [COMPANY_1] ([NAME_32]). He specialised in preparing financial statements and tax returns for self-managed superannuation funds that were clients of [NAME_32]. In late November 2016, [NAME_33] resigned from [NAME_32] following a sustained period of bullying and harassment in the workplace by his manager, [NAME_34]. Shortly before his resignation [NAME_33] incorporated a company, [COMPANY_37], and downloaded files of 16 clients who were family and friends (which he could not open) and a client list containing 350 client names and postal addresses (as to which there was no evidence of actual misuse by [NAME_33]). Following his resignation, [NAME_33] contacted clients of [NAME_32] by email, using contact email addresses in his mobile phone. [NAME_38] sent a demand to [NAME_33] on 4 December 2016 threatening legal action (including criminal prosecution). On 21 December 2016 the parties entered into a deed of settlement and release resolving claims by [NAME_32] that upon his resignation, [NAME_33] had engaged in, inter alia, unlawful conduct by using [NAME_32]' client information in relation to his own business – [NAME_36] – and was liable to criminal prosecution. Clause 2.1(f) of the deed relevantly provided that [NAME_33] "pay [NAME_32] an agreed fee for each Client that voluntarily wished to become clients of [[NAME_33]] arising from his…activities [and] conduct to date." The agreed fee was the amount charged or chargeable to the client for work on an annual basis. [NAME_33] was to pay 50% of this agreed fee upfront and the balance of 50% twelve months thereafter. Clause 5.1 provided for a qualified release of [NAME_32]'s claims against [NAME_33], contingent upon his compliance with cl 2.1. Clause 6 provided that payment of [NAME_33]'s employee entitlements was contingent upon his compliance with cl 2.1. In February 2018, [NAME_32] brought proceedings against [NAME_33] in the District Court claiming a liquidated sum (ultimately calculated as $181,059) as the amount owing under cl 2.1(f). [NAME_33] denied that the payment obligation in cl 2.1(f) was engaged and claimed that the deed was an unjust contract within the meaning of s 7 of the Contracts Review Act 1980 (NSW) (the Act) and should be set aside. The primary judge (Olsson SC DCJ) upheld [NAME_33]'s defence under the Act finding that the deed was an unjust contract under s 7 and dismissed the statement of claim which sought to enforce cl 2.1(f) of the deed. [NAME_32] appealed. The two principal issues before the Court were: whether her Honour erred in finding that the deed was unjust because of asserted errors in six factual findings, in taking into account the parties' historical dealings and in failing to consider sufficiently, or at all, a number of the considerations identified in s 9(2) of the Act; whether her Honour erred by failing to separately consider the question of relief under s 7(1) of the Act from the anterior question of whether the deed was unjust. Held, dismissing the appeal (per Gleeson JA; Basten and Leeming JJA agreeing): As to issue (i): The challenges to six factual findings of her Honour were not made good. First, there was no error in accepting [NAME_33]'s evidence in preference to [NAME_38]'s evidence. Second, there was no error in characterising [NAME_32]'s demand of 4 December 2016 as a continuation of [NAME_38]'s bullying and harassment of [NAME_33]. Third, [NAME_32] conceded that nothing turned on the date of [NAME_33]'s resignation. Fourth, her Honour did not make an express finding concerning ownership of certain software developed by [NAME_33]. Fifth, there was no error in accepting [NAME_33]'s evidence of his unpaid entitlements. Sixth, there was no error in finding that there was "no plan" by [NAME_33] to take work and clients from [NAME_32] when he incorporated [NAME_39] (2003) 214 CLR 118; [NAME_40] (2019) 372 ALR 383; and [NAME_41] (2016) 90 ALJR 679 considered. The finding of injustice involved an evaluative judgment. Her Honour was entitled to have regard to historical dealings between the parties prior to entry into the deed, including the bullying and harassment of [NAME_33] in the workplace, that [NAME_32]'s demand of 4 December 2016 contained overbearing threats of legal action (including criminal prosecution) and that this played on [NAME_33]'s mind when entering into the deed: at [99]. Her Honour correctly took into account relevant circumstances under s 9(2) of the Act and evidence at the time of the deed, giving sufficient reasons for her decision: at [100], [106] and [110]. The finding that cl 2.1(f) was unjust was inevitable, given that it was not proportionate to [NAME_33]'s asserted wrongdoing, and it imposed an unreasonable burden on [NAME_33] when it was not reasonably necessary to protect the legitimate interests of [NAME_32]: at [127] Perpetual Trustee Company Limited v Albert and Rose Khoshaba [2006] NSWCA 41 considered. As to issue (ii): By dismissing the statement of claim which sought to enforce payment of the "agreed fee" under cl 2.1(f) of the deed, the primary judge granted relief which was available under s 7(1)(a) of the Act: at [132] That her Honour did not consider alternative relief was not an error in the [NAME_43] sense, given that no contrary submission was advanced by the appellant at trial, nor did the appellant advance alternative terms which should be enforceable if the deed was found to be unjust.

Judgment 1. BASTEN JA: I agree with Gleeson JA.

2. GLEESON JA: This appeal concerns a deed of settlement and release entered into by [COMPANY_1] ([NAME_32]) with a former employee, [NAME_30] ([NAME_33]), on about 21 December 2016. [NAME_33] resigned in late November 2016. Prior to that time he had been employed by [NAME_32] as an accountant since 2013 and by the previous owner of the business since 2000. He specialised in the preparation of financial statements and tax returns for self-managed superannuation funds (SMSFs) that were clients of [NAME_32]. The deed related to the settlement of claims by [NAME_32] that [NAME_33] had "in and around the time of his resignation engaged in unlawful conduct and breaches of myriad laws and regulations, not limited to employment law, intellectual property, contract law and privacy law".

3. In February 2018, [NAME_32] brought proceedings against [NAME_33] in the District Court claiming a liquidated sum (ultimately calculated as $181,059) in relation to his alleged failure to pay a "settlement sum" under the deed within 12 months, being an "agreed fee" for each client of [NAME_32] that voluntarily becomes a client of [NAME_33], or a client of any of his Associates (as defined), "arising from his and activities conduct to date" (sic). Clause 2.1(f) required 50 per cent of the agreed fee to be paid upfront with the balance of 50 per cent paid 12 months thereafter. An alternative claim for damages was made, but the basis of that claim was not pleaded. 4. [NAME_33] raised two defences. First, he denied that the payment obligation in cl 2.1(f) of the deed was engaged. Second, he relied on a defence that the deed was an unjust contract within the meaning of s 7 of the Contracts Review Act 1980 (NSW) (the Act) and should be set aside.

5. The primary judge (Olsson SC DCJ) upheld the defence under the Act finding that the deed was an unjust contract under s 7 and made orders that the statement of claim be dismissed and that [NAME_32] pay [NAME_33]'s costs up to and including 25 May 2019 on the ordinary basis and thereafter on the indemnity basis. 6. [NAME_32] has appealed. An application to add an additional ground of appeal at the hearing was refused. The amended notice of appeal contains 22 grounds and a total of 52 issues if the 30 sub-grounds are counted. It is not consistent with the requirements of the rules that the notice of appeal state "briefly, but specifically, the grounds relied on in support of the appeal": Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 51.18(1)(e). As I said in [NAME_12] v [NAME_13]; Loder v Bolton [2020] NSWCA 45 at [52]: The importance of brevity and precision in formulating the grounds of appeal cannot be overstated. Prolixity is inconsistent with the just, quick and cheap resolution of the real issues in proceedings: Civil Procedure Act 2005 (NSW), s 56(1). It also obscures apparent merit: Tame v New South Wales (2002) 211 CLR 317; [2002] HCA 35 at [70] (McHugh J).

1. Putting aside that difficulty, there are two parts to the appeal.

2. The first is whether her Honour erred by failing to separately consider the question of relief under s 7(1) of the Act from the anterior question of whether the deed was unjust. The second is whether her Honour erred in finding that the deed was unjust. Related to this are various challenges to factual findings. Logically, the second issue should be addressed first.

3. Whilst not the subject of a ground of appeal, the relief sought on appeal is judgment in favour of [NAME_32] in the amount of $181,059 plus interest (order 3(a)). Whether the causal element of [NAME_32]'s claim under cl 2.1(f) of the deed was established on the evidence was a matter disputed by [NAME_33] at trial and again in this Court.

4. For the reasons that follow, the appeal should be dismissed with costs.

Background 1. Given the subject matter of the appeal and the wide-ranging grounds of appeal, it is necessary to refer to the background to the dispute in some detail. 2. [NAME_33] is an accountant, having graduated from the University of Otago in 1992 with a Bachelor of Commerce. In about 2000, he began working at an accounting business in Sydney owned by [NAME_45]. There was no written employment contract. [NAME_33] received a salary and discretionary bonuses, and was entitled to four weeks annual leave and ten days sick leave per year. He was responsible for the preparation of financial statements and tax returns for SMSFs. From about 2003 he also calculated [NAME_32]'s payroll.

3. In July 2013, [NAME_48] sold the business to [NAME_34] and [NAME_49] by way of an asset purchase. Nothing turns on the difference in identity between [NAME_33]'s employers prior to 2013 and thereafter. [NAME_33] was the only senior superannuation specialist working in the business and worked directly with SMSF clients without any or any close supervision.

4. Commencing in the second-half of 2014, [NAME_33]'s work environment changed. His evidence was that [NAME_38]'s management style was dictatorial and his manner aggressive, that [NAME_38] would yell and scream at him within the presence of other staff and that he felt bullied and harassed. [NAME_33] said he was constantly questioned about what work he had done and on some days, whether or not he had actually done anything. He also received phone calls outside of work hours; often [NAME_38] was rambling and incoherent, other times he would yell and scream abuse, blaming [NAME_33] for something [NAME_38] perceived as having gone wrong, including alleged overpayment of staff. [NAME_33] said that as a result of [NAME_38]'s behaviour, he dreaded attending work each day. A co-worker, [NAME_52], gave evidence corroborating much of [NAME_33]'s account. The primary judge accepted their evidence and rejected [NAME_38]'s evidence that [NAME_32] was a "congenial place" to work.

5. On 28 November 2016, [NAME_33] called in sick to work. His evidence, which her Honour accepted, was that he felt miserable, his mental health was suffering, he could not bear the thought of going to work and he felt he could not keep going with [NAME_32]. While at home that day, [NAME_33] registered a company, [COMPANY_37] ([NAME_36]); he was the sole director and shareholder. His evidence was that he thought over the next six months or so he would set up his own business. Whilst he did not undertake any other steps that day to start his own business, he did log into his work account remotely and at 2.16 pm emailed to his personal email address, the files of 16 family and friends referred to as the "Handitax files". [NAME_33] was unable to open these files as he did not have access to the relevant software. [NAME_33]'s unchallenged evidence was that [NAME_48] had permitted him to complete this work through [NAME_32]'s systems on a non-billable basis. [NAME_38] said that he was unaware of this arrangement; the work was unauthorised by [NAME_32] and in breach of the terms of [NAME_33]'s contract of employment.

6. On 29 November 2016, [NAME_33] received a text message from [NAME_38] as he was travelling to work: You are paid too much to be sick. You had better work overtime this week to make up for calling in sick yesterday. 1. [NAME_33]'s evidence was that the text message was "the final straw", and pushed him over the edge. He made the decision to resign immediately. In cross-examination, [NAME_33] acknowledged that the way he resigned was wrong and that he did it out of frustration.

2. There was initially a dispute at trial as to whether [NAME_33] resigned on 29 November 2016, or the following day. Ultimately, [NAME_32] accepted that the precise date did not matter and the primary judge agreed, finding that [NAME_33] resigned on or about 29 or 30 November 2016 by sending a text message to [NAME_38].

3. On 30 November 2016, [NAME_33] logged into his work account remotely and emailed himself a contact list of the about 350 clients for whom he had performed SMSF work at [NAME_32]. The primary judge accepted [NAME_33]'s evidence that the list only contained client names and postal addresses.

4. After he resigned, [NAME_33] avoided answering [NAME_38]'s phone calls and messages. In cross-examination, [NAME_33] described his state of mind at the time as follows: I was just so stressed out – it was just another thing on top and I put – I felt that if I told him so much, I was just wishing I was heading off.

1. Between 1 and 2 December 2016, [NAME_33] emailed [NAME_32]'s clients from his personal email account using contact email addresses recorded on his mobile phone. His evidence was that he wanted to inform the clients that he had left [NAME_32] and that he was going to start up his own business. The email stated: It is with great regret to inform you that after 16 years I have left the employment of [COMPANY_1]. … If I can be of any assistance in the future, please don't hesitate to contact me on [mobile number] or email [email address at [NAME_36]].

1. The primary judge found that [NAME_33] did not directly say in his emails to the clients that he was going into business by himself. Her Honour noted that some responses from clients were to the effect of a "Thank you and good luck", others asked [NAME_33] who was replacing him at [NAME_32], others asked if he was going out on his own, whilst others expressed the view to [NAME_38] that they were only a client of [NAME_32] because of [NAME_33] and his specialty in doing the SMSF work.

2. On 4 December 2016 [NAME_38] sent a demand by email which [NAME_33] described as distressing, but typical of [NAME_38]'s communications with him. The demand required [NAME_33] to take six steps including, ceasing to make contact with clients, or persons who have referred clients to [NAME_32], and informing all such clients and persons of his intention not to accept their work or custom. [NAME_38] asserted in his demand that: * [NAME_33] had stolen private information and other intellectual property of [NAME_32] and that [NAME_33] was actively using the stolen information and intellectual property to steal [NAME_32]'s clients; * [NAME_33]'s actions had given rise to a breach of his employment terms, breach of the Copyright Act, a crime under "at least" s 156 of the Crimes Act 1900 (NSW), failure of the "fit and proper person" test for tax agent registration, failure of the "fit and proper person" test for SMSF audit registration, failure of the APES 110 ethics for professional accountants, breach of NTAA ethics standards, breach of the Privacy Act, and breach of the Tax Administration Act, the Privacy (Tax File Number) Rule 2015, the Superannuation Industry (Supervision) Act "and a myriad of other such laws". 1. [NAME_55] spoke to [NAME_33] after he had received the 4 December demand and reported to [NAME_38] that [NAME_33] did not want to go to court, he wanted to come to an agreement and "[h]e is shitting himself". [NAME_38] agreed with [NAME_55]'s suggestion to leave the matter with him and he would manage the dispute with [NAME_33].

2. On 8 December 2016, [NAME_33] and [NAME_55] met. [NAME_55] asked [NAME_33] to attend to outstanding work which was piling up until [NAME_32] could find a replacement. [NAME_33] agreed, saying he did not want the clients to suffer. [NAME_55] also asked [NAME_33] if he would be prepared to sign a contract which said that he would pay [NAME_32] half the fees for any of its clients that come across to him from that point onwards for the next two years. [NAME_33] responded: "Yes, provided you pay my entitlements". In response to [NAME_55]'s question as to what he was owed, [NAME_33] gave [NAME_55] a spreadsheet listing his entitlements but did not keep a copy. [NAME_55] agreed that they would be paid before Christmas. 3. [NAME_33] gave evidence that at the conclusion of this meeting his understanding was that [NAME_55] would attend to payment of his entitlements; that he would do work, for a flat fee to be paid in advance, to assist [NAME_32] with its SMSF clients whom it could otherwise not service; and if any other [NAME_32] clients gave their work to him going forward (beyond those who had already told him they would come across to work with him), he would give [NAME_32] half the fee generated by those clients. [NAME_33] said that he was completely worn out, stressed and distressed by [NAME_38]'s threats of legal action against him.

4. On Friday, 16 December 2016 at 4.10 pm, [NAME_55] sent an email to [NAME_33] attaching a draft deed of settlement, which had been prepared by [NAME_56], the solicitors for [NAME_32]. They exchanged emails in relation to the draft deed on Monday, 19 December 2016. [NAME_33] provided his comments in an email at 9.23 am. The draft deed was not in evidence, but it is apparent from [NAME_33]'s comments that the draft contained some clauses which were not included in the final deed. 5. [NAME_55] replied by email at 1.37 pm. As to the change requested by [NAME_33] to what became cl 2.1(d), [NAME_55] responded, "Acknowledged", but the amendment to this clause which [NAME_33] had sought was not made. As to the legal costs of preparing the deed, [NAME_55] replied that he believed [NAME_33] should pay "our legal fees if not all, then in part". [NAME_33] responded by email at 2.33 pm agreeing to pay half of the legal costs to draw up the deed. That change was not included in the final deed. 6. [NAME_33] signed the deed on about 21 December 2016. He acknowledged in his evidence that he should have obtained legal advice, but said that at the time he just wanted to put the whole episode behind him and move on as quickly as possible.

7. On about 24 December 2016, [NAME_33] received a cheque from [NAME_32] for his long service entitlements between 2000 and 2013. It seems that this amount was $18,155.37. [NAME_33]'s evidence was that the balance of his entitlements totalling $6,907.07 remained unpaid. This amount comprised annual leave ($2,367.01) and the 2.774 weeks long service leave accrued from 2013 to November 2016 ($4,540.07).

8. Between December 2016 and about June 2017, [NAME_33] provided contract services to [NAME_32] as contemplated under the deed (cl 4).

9. On 2 February 2017, [NAME_33] sent an email to [NAME_55] following up his request for payment of, among others, outstanding wages (for annual holidays) and long service leave totalling $6,958.63. [NAME_55]'s email response that day was silent as to payment of these amounts.

10. On 24 July 2017, [NAME_33] received an email from [NAME_38] at 8.19 am asking him to supply details of any clients moving to him and the expected date of payment under the deed. This was a reference to the "agreed fee". [NAME_38] responded by email at 9.32 am stating that he would not be forwarding any payment to [NAME_32] until [NAME_32] paid his outstanding entitlements. [NAME_38] replied by email at 10 am stating: These are two separate issues and will be paid separately.

1. Later that day [NAME_38] sent another email at 12.30 pm stating: Obviously we will not be paying you whilst you owe us monies. Please advise your solicitor so he can be contacted.

1. In response to the cross-examiner's proposition that at no stage did he complain that the deed was unfair to him, [NAME_33] gave the following answer: A: It wasn't till I looked at closer that I realised how unjust it was and I know I – I signed it because I felt I did the wrong thing by leaving the way I did and I wanted to make amends to that and I just wanted to go away. It seemed like a solution – I wish I never did. I deeply regret it but at the time I just wanted to fix the problem and that – 1. The cross-examination of [NAME_33] continued: Q: In fact your complaint was really that you weren't going to pay under the deed because in your opinion you hadn't been fully paid your entitlements. That's the reason why you didn't pay? A: Initially, yes, yes. Initially when I – it was my understanding that that must be fully paid at the time of signing it.

Key terms of the deed 1. The terms "Claim" and "Loss" were widely defined in cl 1 of the deed. "Clients" was defined to mean any and all past and present clients of [NAME_32] or any other customer of [NAME_32]. It is not in dispute that [NAME_36] was an "Associate" of [NAME_33] as that term was defined in the deed.

2. Clause 2.1 dealt with actions to be undertaken by [NAME_33] (referred to as RT) and relevantly provided:

2. Actions to be undertaken 2.1 RT must, irrevocably and unconditionally: (a) immediately stop canvassing, soliciting, reducing, ceasing or enticing away from [NAME_32] the Clients (which includes ceasing to call them and solicitor [sic] them away from [NAME_32]) and must procure each of his Associates do the same; … (c) immediately cease to provide any advice (including, without limitation, financial, investment, superannuation, accounting, or tax) to any Client that he personally is not licenced or authorised to provide. (d) from the date of this Deed, obtain prior consent of [NAME_32] in writing before he provides advice that he intends to provide that he is licenced [sic] or authorised to provide to any Client; … (f) pay [NAME_32] an agreed fee for each Client that voluntarily wishes to become clients of RT (or any Associate of RT) arising from his and activities conduct to date. RT shall pay 50% of this agreed fee upfront at the time the Client becomes a client of RT and the balance of 50% to be paid 12 months thereafter. [NAME_32] is entitled to withhold and exercise a lien over that Client's records and documents until 50% of the agreed fee is paid. The agreed fee for these purposes is whatever fee, reimbursement, cost or expense that is charged or chargeable to the Client for the SMSF work that is undertaken for that Client on an annual basis.

1. Clause 3.1 acknowledged that [NAME_33] had developed software privately and had used it to prepare materials and documents for clients, and acknowledged that this "software" belonged to [NAME_33]. This was a reference to an Excel spreadsheet which [NAME_33] had created at home during his early days at [NAME_32], and used for all his SMSF work. [NAME_33]'s evidence was that he had developed this spreadsheet using his knowledge acquired at another accounting practice, and that from mid-2015 [NAME_38] was highly critical of [NAME_33]'s use of this spreadsheet, describing it as "rubbish".

2. Clause 3.2 provided that [NAME_33] granted [NAME_32] at no cost or charge to [NAME_32] a non-exclusive royalty fee and non-transferable licence to use this software to complete the SMSF work for [NAME_32]'s clients.

3. Clause 4.1 provided that on and from the date of the deed [NAME_33] agreed to work for [NAME_32] as an independent contractor, on specified terms, relevantly, a "rolling month-to-month contract that [NAME_32] would issue [NAME_33], on a case-by-case basis, a scope of work outlining the SMSF work to be completed".

4. Clause 5.1 provided a qualified release in favour of [NAME_33]:

5. Release and Discharge 5.1 From the date that [NAME_32], acting in good faith, is satisfied in its absolute discretion, that RT fully discharges and complies with all of its obligations under clause 2.1, [NAME_32] releases and discharges RT from all Claims and Losses in respect of the matters raised in the email dated 4 December 2016, a copy of which is enclosed as Annexure A.

1. Clause 6 dealt with the payment of [NAME_33]'s employee entitlements:

6. Employment entitlements From the date that [NAME_32], acting in good faith, is satisfied that RT fully discharges and complies with all of its obligations under clause 2.1, [NAME_32] agrees to pay RT his proper and lawful employee entitlements that accrue to him as at the date of termination of employment. RT directs and authorises [NAME_32] to withhold from those employee entitlements any amount that RT owes [NAME_32].

The case at trial 1. [NAME_32] initially pleaded and claimed in its lay and expert affidavit evidence that the "agreed sum" was the amount of income lost by [NAME_32] by reason of clients moving to [NAME_36], ultimately [NAME_32] framed its claim in the amount of $181,059 as the amount of income earned by [NAME_36] in relation to [NAME_32] clients who moved to [NAME_36]. In some cases the fee charged by [NAME_36] was the same as the previous year's fee charged by [NAME_32]. In other cases the fee was higher or lower. The claim by [NAME_32] included an amount invoiced by [NAME_36] on 18 April 2018. 2. [NAME_33]'s defence under s 7 of the Act relied upon the twin propositions that the deed was procedurally unjust, having regard to the circumstances leading up to the execution of the deed, and substantively unjust because the deed held over [NAME_33] payment of his statutory entitlements and required that he pay to [NAME_32], in perpetuity, 100 per cent of any fees earned, at any time, from all past and present clients of [NAME_32] who wished to become clients of [NAME_33]. It was argued that this was not reasonably necessary for the legitimate protection of [NAME_32]'s rights, particularly when his employment contract contained no covenant not to compete and no restraint of trade. 3. [NAME_32]'s response was essentially that there was no bullying or harassment of [NAME_33] in the workplace but even if such conduct was established, it was not relevant at the time of entry into the deed, because [NAME_55] conducted the negotiations and [NAME_33] was educated and well able to negotiate in his own interests. [NAME_32] said that cl 2.1(f) did not operate in perpetuity and the terms of the deed were a proportionate response to the wrongdoing by [NAME_33] and reasonably necessary for the legitimate protection of [NAME_32]'s own interests.

A. Was the deed an "unjust" contract (grounds 3-22)

Some principles concerning relief under Contracts Review Act 1. It is only necessary to refer to some matters of principle concerning claims for relief under the Act.

2. The Act has been accurately described as "a short, clearly drafted and powerful statute, giving the courts of New South Wales authority to grant relief in respect of contracts or provisions of contracts that were 'unjust'": Quickfund (Australia) Pty Ltd v Airmark Consolidators Pty Ltd [2014] FCAFC 70 at [120] (Allsop CJ). The term "unjust" is defined in s 4 to include "unconscionable, harsh or oppressive".

3. In West v AGC (Advances) Ltd (1986) 5 NSWLR 610 (West), McHugh JA recognised (at 620) that a contract can be unjust "because of the way it operates in relation to the claimant or because of the way in which it was made or both". That is a contract could be unjust because it contained "substantive injustice", which arises "because its terms, consequences or effects are unjust", or because of "procedural injustice", which arises "because of the unfairness of the methods used to make it", or both.

4. McHugh JA also observed (at 621) that if a defendant has not been engaged in conduct depriving the claimant of a real or informed choice to enter into a contract and the terms of the contract are reasonable as between the parties, the contract could not be considered unjust simply because it was not in the interest of the claimant to make the contract or because they had no independent advice. However, the guidance provided in West is not definitive of the scope of the Act. As Spigelman CJ stated in Perpetual Trustee Company Limited v Albert and Rose Khoshaba [2006] NSWCA 41 ([NAME_57]) at [73]: His Honour's reasoning is instructive. It was, however, directed to the issues in that case. Where the Court has to apply a standard as general as what is "unjust", it cannot be confined by such reasons as if they were rules. I do not understand McHugh JA to have put forward these observations as rules. Rather, the observations are to be understood, correctly, as identifying relevant considerations entitled to significant weight.

1. The broad evaluation of unjustness under the Act involves the normative evaluation of the totality of relevant circumstances. As Allsop P remarked in Provident Capital Ltd v Papa (2013) 84 NSWLR 231; [2013] NSWCA 36 at [7]: Central to the normative evaluation is the recognition that there is a need for the protection of some people in some circumstances, who are not able fully to protect their own interests against factors that may cause injustice. That vulnerability may come from one or more of many circumstances, such as lack of education or of intelligence, from gullibility, from the predation of fraud and greed, and also sometimes from loyalty and love. The characterisation of a contract as unjust and the sheeting home to the other contracting party of the consequences of its unjustness may be a difficult evaluative exercise. At its heart, however, is the recognition of the inadequacy of one party to protect her or his interests in the circumstances.

1. In an application for relief under s 7 of the Act, the Court undertakes a three-stage process: [NAME_57] at [99] (Handley JA), [106] (Basten JA). The first stage is to make findings of primary fact. The second stage involves a finding that the contract is or is not "unjust". The third stage is the exercise of the power to grant relief under the Act which may, but need not, follow from the conclusion that a contract is unjust. In undertaking that process, the Court need not approach each stage in a particular order or necessarily identify each stage as a separate step: [NAME_57] at [106] (Basten JA).

Primary judge's reasons 1. The essential findings of fact relevant to the appeal are as follows: 1. [NAME_33] was a quiet and polite man who was in an emotionally fragile state when he left [NAME_32]. He had been bullied, harassed, humiliated and belittled in the course of his employment and that came to a head at the end of November 2016. The poor morale and the bullying [NAME_33] faced on a daily basis were firmly corroborated by [NAME_58], whom her Honour found was a credible and straightforward witness. These findings are not challenged. 2. [NAME_33] had not formulated any plan to steal clients, but rather incorporated [NAME_36] on a day he had taken off sick due to his emotional dysregulation. The preponderance of evidence was that [NAME_33] was not actively using private information or intellectual property of [NAME_32] to steal business custom of its clients. 3. the 4 December demand was a confronting, intimidating, belligerent and threatening letter. [NAME_33] was shocked and upset by its contents and tone, which essentially demanded that if [NAME_33] did not accede to the six requests made in it, he would be reported to various professional organisations and possibly be referred for breaches of law. 4. the overbearing threats of legal action, including criminal prosecution, "played on [NAME_33]'s mind".

1. Addressing the considerations identified in s 9, to the extent that they were regarded are relevant to the circumstances, the primary judge made the following findings.

2. First, both parties were equally capable and had similar educational backgrounds.

3. Second, although the deed was the subject of some negotiation, there was inequality in bargaining power. Reference was made to six matters: 1. [NAME_33]'s emotionally fragile state due to the longstanding management style of [NAME_38] (which was corroborated by [NAME_58]'s evidence); 2. the overbearing threats of legal action in the 4 December demand played on [NAME_33]'s mind; 3. the time of [NAME_33]'s resignation was "plainly a period of intense emotional dysregulation for him"; 4. the withholding of entitlements unless the Deed was entered into and making such payments contingent on compliance with cl 2.1 was unconscionable; 5. whilst [NAME_33]'s conduct in taking client lists and downloading the Handitax files did not reflect well on him, it did not negate a finding that there was an inequality in the bargaining power between the parties; 6. [NAME_33] genuinely believed he was liable to [NAME_32] and would probably be sued or prosecuted for (as it turns out) things he did not do.

1. Third, whilst [NAME_33] could have but did not seek independent legal advice, her Honour accepted his explanation that he did not do so because he was "confused, flustered and a little bit bewildered by everything that had happened".

2. Fourth, a review of the emails exchanged between [NAME_55] and [NAME_33] concerning the draft deed "reveals that generally [NAME_33] capitulated to [NAME_32]".

3. Fifth, as to the terms of the deed: 1. cl 2.1(f) did not permit determination of the quantum of the fees, reimbursements, costs and expenses that were charged or chargeable to a Client (which in turn would form the Agreed Fee payable by [NAME_33] to [NAME_32]; 2. the operation of cl 2.1(f) was not limited as to time, and on one reading of the deed, which her Honour considered to be particularly compelling, this obligation was in perpetuity; 3. the release and discharge of [NAME_33] in cl 5.1 was indefinite, since it was dependent on [NAME_33]'s compliance with cl 2.1, and in particular cl 2.1(f) which did not have any definitive endpoint; 4. [NAME_32] was not entitled to withhold [NAME_33]'s statutory entitlements, which were contingent on [NAME_32] determining that [NAME_33] had fulfilled his obligations under cl 2.1.

1. Sixth, the intelligibility of the language of the contract "troubled" her Honour, given the operation in perpetuity of cl 2.1, the uncertainty of cls 5.1 and 6 and the wide definition of "Clients", which included past clients of [NAME_32].

2. Seventh, there is a strong argument that there was unfair pressure or unfair tactics because of the tone of the 4 December letter and the withholding of [NAME_33]'s entitlements.

3. Eighth, whilst [NAME_32] was entitled to some protection as a result of "direct poaching" of clients by [NAME_33], such protection would not extend to past clients of [NAME_32], nor would it justify reimbursing [NAME_32] for clients who voluntarily wished to transfer work to [NAME_33]. Nor was withholding [NAME_33]'s statutory entitlements reasonably necessary to protect [NAME_32]'s interests.

Challenge to factual findings 1. It is convenient first to deal with the [NAME_32]'s challenge to the following factual findings: 1. the acceptance of [NAME_33]'s affidavit evidence in chief (ground 9); 2. the characterisation of the 4 December demand as a confronting letter and constituting unfair pressure or unfair tactics (grounds 10, 15 and 22); 3. the date of resignation (grounds 12 and 13); 4. the ownership of software (grounds 14 and 16); 5. the employee entitlements (grounds 18, 19 and 20); and 6. the finding of "no plan" to take work or clients of [NAME_32] (ground 21).

1. Appellate review of findings of primary facts takes place in accordance with the principles applicable to an appeal by way of rehearing. Where the findings involve an assessment of the credibility or reliability of witnesses, the review is conducted in conformity with the principles stated or affirmed in Fox v Percy (2003) 214 CLR 118; [2003] HCA 22. That includes findings of secondary facts which are based on a combination of these impressions and other inferences from primary facts: Lee v Lee (2019) 266 CLR 129; [2019] HCA 28; at [55].

2. In order to succeed in setting aside factual findings affected by impressions of the trial judge about credibility and reliability of witnesses, [NAME_32] must establish that "incontrovertible facts or uncontested testimony" demonstrate that the trial judge's conclusions are erroneous, or that the decision is "glaringly improbable" or "contrary to compelling inferences" in the case: [NAME_59] v [NAME_60] at [28]-[29]; Robinson Helicopter Co Inc v McDermott [2016] HCA 22; (2016) 90 ALJR 679 at [43]; [NAME_61] v [NAME_61] at [55].

(1) Acceptance of [NAME_33]'s affidavit evidence-in-chief 1. [NAME_32] contends that the primary judge erred in accepting [NAME_33]'s affidavit evidence in chief without qualification and rejecting or failing to consider and weigh all of the evidence adduced by [NAME_32] from [NAME_38] and [NAME_62], an IT consultant retained by [NAME_32]. 2. [NAME_38] was the principal witness called by [NAME_32]. On two critical issues, her Honour rejected his evidence and preferred [NAME_33]'s evidence. Those issues were the bullying and harassment of [NAME_33] in the workplace, and whether [NAME_33]'s employee entitlements had been paid. [NAME_32] only challenged the latter finding. For the reasons given below that challenge should be rejected: see [80]-[85]. 3. [NAME_62]'s evidence was directed to investigations which he made in August 2017 extracting from [NAME_33]'s Outlook emails, the emails of 28 and 30 November 2016: see [15] and [19] above. It was unnecessary for her Honour to refer to [NAME_62]'s evidence, given her observation that [NAME_33] did not dispute sending these emails.

4. Two further points should be noted. First, there is a tension between [NAME_32]'s reliance on this ground and its position in oral argument which effectively eschewed reliance on [NAME_38]'s evidence when submitting that the appeal could succeed by reference primarily to [NAME_33]'s evidence and contemporaneous documents. Thus whilst not formally abandoning this ground, the reality is that it was not pressed.

5. The second matter is the significance of the failure of [NAME_32] to include, as required under the rules, a narrative statement of challenges to factual findings, including the findings contended for and supporting references to the transcript and other evidence: UCPR, r 51.36(2). The consequence of that omission is that [NAME_32] did not articulate how any alternative findings of fact based on an acceptance of some unidentified part of [NAME_38]'s evidence would have led to a different outcome.

(2) The 4 December demand 1. [NAME_32] contends that the primary judge erred in characterising and giving weight to the 4 December demand as a continuation of [NAME_38]'s bullying conduct towards [NAME_33]. 2. [NAME_32] submitted that the language and contents of the demand was justified by the context in which it was written, pointing to three matters. First, the demand was "an immediate reaction and without the benefit of and explicitly subject to legal advice". Second, the language of the demand was necessitated by the circumstances of [NAME_33]'s departure, his failure to return [NAME_38]'s calls and messages, and the discovery by [NAME_32] that [NAME_33] had been making contact with clients by telephone and email. Third, the demand ought to be considered in the "broader context of what are typically and unexceptionally strident and urgent demands when issues of breach of confidence and infringement of intellectual property rights arise".

3. None of these submissions is persuasive. That the demand was written explicitly without the benefit of legal advice did not in any way qualify the assertion by [NAME_38] of a wide range of claims of serious contraventions of the law by [NAME_33], including the criminal law, specifically the offence of larceny by a servant contrary to s 156 of the Crimes Act 1900 (NSW). Whatever views [NAME_38] may have held of the circumstances of [NAME_33]'s resignation or contacting [NAME_32] clients in early December 2016, that did not justify making threats of criminal prosecution.

4. Nor was [NAME_38] justified in demanding that [NAME_33] take steps to redress the asserted wrongdoing, beyond the relief to which it was reasonably arguable [NAME_32] was entitled to assert against [NAME_33] as an employee for any breach of contract as an employee by making copies of confidential information such as client files or contact lists, or as a former employee for any breach of an implied contractual duty of confidence which continued beyond the termination of employment, or for any breach of an equitable duty of confidence by using client contact lists to approach clients after termination of the employment. As to the nature of the duties owed by a former employee: see Del Casale v Artedomus (Aust) Pty Ltd [2007] NSWCA 172; (2007) 165 IR 148 at [37] (Hodgson JA); cf Campbell JA at [77], [137].

5. Her Honour's finding that the demand "played on [[NAME_33]'s] mind" was well open on the evidence of [NAME_33], which was corroborated by [NAME_55]'s report to [NAME_38] that [NAME_33] was, in effect, terrified by the demand. The range of conduct comprehended by the concept of procedural injustice is wide and can include bullying behaviour: see [COMPANY_14] v [NAME_16]; [COMPANY_18] v [NAME_19]; FirstMac Ltd v O'Donnell [2011] NSWCA 389 at [291] in relation to the content of the word "unconscionable". There was no error in taking into account that the bullying and harassment by [NAME_38] had a continuing effect on [NAME_33] after his resignation.

(3) Date of resignation 1. [NAME_32] contends that her Honour erred in finding that [NAME_33]'s resignation occurred "on or about 29 and 30 November 2016". [NAME_32] says that the correct date is 30 November 2016. These grounds may be put aside as nothing turns on the date of resignation, a matter ultimately acknowledged by [NAME_32] at trial and that remained its position in this Court.

(4) Ownership of software 1. [NAME_32] contends that her Honour erred in finding that [NAME_33] owned certain software in the form of Excel spreadsheets prior to entry into the deed.

2. This ground mischaracterises her Honour's findings. Her Honour referred to [NAME_33]'s evidence concerning the circumstances in which he had created and used a spreadsheet for his SMSF work since his early days at [NAME_32] (see [39] above), but did not make a finding as to whether [NAME_33] or [NAME_32] owned the software. Rather, having noted that [NAME_32] disputed [NAME_33]'s claim to ownership of this software, her Honour recorded how that dispute was dealt with in the deed: [NAME_32] acknowledged that the relevant software developed by [NAME_33] belonged to him (cl 3.1) and [NAME_33] agreed to grant a licence of that software to [NAME_32] (cl 3.2).

(5) Entitlements on resignation 1. It is not in dispute, as her Honour found, that [NAME_32] was not entitled to withhold employee entitlements on any basis. The applicable legislative provisions are s 7 of the Long Service Leave Act 1955 (NSW) which prohibits contracting out of long service leave entitlements, and the provisions of the Fair Work Act 2009 (Cth) which superseded the prohibition on contracting out of annual holiday leave contained in s 8 of the Annual Holidays Act 1944 (NSW). The Fair Work Act provides a minimum standard, relevantly, of 4 weeks annual leave for each year of service: ss 44(1), 61(2)(d) and 87(1)(a).

2. Nevertheless, [NAME_32] submitted that her Honour erred in finding that [NAME_33] was not paid his entitlements when he resigned from [NAME_32], "or at any other time".

3. First, [NAME_32] relied upon [NAME_38]'s evidence that he believed that all entitlements had been paid to [NAME_33]; this belief was based on what he had been told by a new bookkeeper engaged by [NAME_32] after [NAME_33] had left. Little weight if any could be given to [NAME_38]'s evidence; it was second-hand, the bookkeeper did not give evidence and no document was tendered recording the bookkeeper's calculations. Against this, [NAME_33]'s evidence on this topic was not challenged, and as the person in charge of [NAME_32]'s payroll at the relevant time he could reasonably be expected to have had a correct understanding of his entitlements.

4. Second, [NAME_32] relied upon the fact that [NAME_33] did not respond to a letter from the solicitors for [NAME_32] dated 6 October 2017 asserting that he had been paid all of his entitlements. That is of little significance, given that there were earlier demands by [NAME_33] for payment of the balance of his entitlements which went unanswered: see [32] and [33] above.

5. Third, [NAME_32] disputed that the "copy" document annexed to [NAME_33]'s affidavit was the document he gave to [NAME_55] on 8 December 2016, but did not keep. [NAME_32] emphasised that the "copy" spreadsheet had been prepared apparently after the part payment of long-service leave on about 24 December 2016. Whilst this criticism has force, it was not a matter put to [NAME_33] in cross-examination. Nor does it undermine [NAME_33]'s unchallenged evidence that he gave [NAME_55] a spreadsheet of his entitlements at the 8 December 2016 meeting. The reasonable inference is that the document which [NAME_33] gave [NAME_55] contained a calculation of his long service leave from 2003 to 2013 ($18,155.37) and his annual leave and long service leave from 2013 to 2016 ($6,907.07).

6. Fourth, reliance was placed on the part payment of [NAME_33]'s long-service leave entitlement on or about 24 December 2016. Plainly, her Honour overlooked this evidence, however, the error is immaterial. The unjustness of cl 6 in making payment of entitlements contingent on compliance with cl 2.1 was to be assessed at the date of the deed.

7. Accepting that her Honour's finding is likely to have been was based, at least in part, on the reliability of [NAME_33]'s evidence, no [NAME_59] v [NAME_60] error has been demonstrated.

(6) "No plan" finding 1. [NAME_32] contends that her Honour erred in finding that [NAME_33] had no intention or plan to take work or clients of [NAME_32]. This ground is directed to challenging the finding that when [NAME_33] incorporated [NAME_36], his intention was not to start that business until the next financial year. Her Honour said: The plaintiff argued that the incorporation of his own company was evidence that [NAME_33] had intended and planned to take work and clients away from [NAME_32]. I do not agree. His evidence was that he took one day of sick leave because he simply could not bear the thought of going to work, and resigned the following day. It was plainly a period of intense emotional disregulation [(sic] for him and in that context I do not find that he had formulated any plan at all. 1. [NAME_32] accepted in oral argument that it could not point to any incontrovertible facts to demonstrate that this finding was wrong as at 28 November 2016: [NAME_59] v [NAME_60] at [28]. However, [NAME_32] submitted that her Honour failed to address [NAME_33]'s subsequent conduct on 30 November 2016 when he logged in remotely to his work computer and sent to his private email address the names and addresses of 350 superannuation clients of [NAME_32]. That criticism is unfair given the context of her Honour's finding; it was directed to answering the submission of [NAME_32] at trial that an inference of a plan to take work and clients of [NAME_32] should be drawn from the incorporation of [NAME_36].

2. Her Honour otherwise took into account [NAME_33]'s conduct in downloading client lists and the Handitax files: see [56(5)] above. [NAME_32] has not demonstrated the error contended for.

Challenge to the finding of injustice 1. The standard for review of a finding of injustice is that in Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9: see [NAME_57] at [100] (Handley JA), [107] (Basten JA); Canty v PaperlinX Australia Pty Ltd [2014] NSWCA 309 at [125] (Gleeson JA, Barrett and Emmett JJA agreeing); Al-Maha Pty Ltd v Coplin [2017] NSWCA 318 at [29] (Meagher JA, Macfarlan and Gleeson JJA agreeing).

2. The written submissions of [NAME_32] challenging the finding of injustice are directed to three areas. One is that her Honour erred in her approach to the evaluation of injustice by taking into account or giving too much weight to historical matters relating to [NAME_38]'s conduct towards [NAME_33] in the workplace (grounds 3 and 4). Conversely, it was contended that her Honour failed to have regard to the immediate context of the deed and the public interest in compliance with the provisions of the deed, certainty of contractual relations and resolution of disputes (grounds 5, 6 and 8).

3. Next, it is said that her Honour failed to take into account or give sufficient weight to parts of the evidence and failed to consider various s 9(2) matters (grounds 7 and 11).

4. Finally, it is said that her Honour erred in her construction of cl 2.1(f) of the deed as "at least arguable if not probable" as operating in perpetuity (ground 17).

Significance of historical matters 1. In determining whether a contract or a provision of a contract is unjust, s 7(1) of the Act directs the court's attention to "the circumstances relating to the contract at the time it was made". Plainly, those circumstances can include historical dealings between the parties to the contract where, as in a case such as the present, those dealings have relevance to whether there is procedural injustice leading to the entry into the contract, or substantive injustice contained in the terms of the contract.

2. That this is the correct approach to s 7 finds support in the enumerated matters, which the Court may consider under s 9(2) of the Act, to the extent that they are relevant to the circumstances. Those matters include the courses of dealing to which any of the parties has been a party: s 9(2)(k).

3. Here, the course of dealing between the parties involved the bullying and harassment of [NAME_33] in the course of his employment. Whilst that finding is not challenged, [NAME_32] argued that the nexus between [NAME_38]'s conduct and [NAME_33]'s decision to enter into the deed was broken by [NAME_32] using [NAME_55] to conduct the negotiation of the deed with [NAME_33]. That submission should be rejected.

4. First, as the primary judge found, the 4 December demand contained overbearing threats of legal action (including criminal prosecution) which "played on [NAME_33]'s mind", given the many months of bullying and harassment before he left [NAME_32]. There is no challenge to that finding.

5. Second, the despatch of [NAME_55] to conduct the negotiation while introducing a different face did not alleviate the continuing effect of [NAME_38]'s conduct which her Honour found played on [NAME_33]'s mind and informed the context in which [NAME_33] decided to enter into the deed, and without seeking independent legal advice.

6. There was no error in taking into account the historical dealings between the parties prior to [NAME_33]'s entry into the deed.

Relevant circumstances at the time of the deed 1. [NAME_32] contends that her Honour erred in failing to have regard to the circumstances relating to the deed at the time it was made, including its commercial setting and purpose, the public interest in compliance with provisions of the deed, certainty of contractual relations, the two-sided nature of the deed, and the relative professional and educational capabilities of the parties. None of these complaints should be accepted.

2. First, her Honour had regard to the commercial context (s 9(2)(l)), when noting that the parties had come to the decision that the dispute had to be settled. Her Honour also took into account the email negotiations between [NAME_33] and [NAME_55] (s 9(2)(b) and (c)).

3. Second, her Honour had regard to [NAME_33]'s economic circumstances, educational background and literacy (s 9(2)(f)), finding that both parties were equally capable and had similar educational backgrounds.

4. Third, her Honour took into account that [NAME_33]'s decision to enter into the deed was made without the benefit of independent legal or other advice, although he had the opportunity to seek such advice (s 9(2)(h)). Her Honour accepted [NAME_33]'s explanation for not having done so, given his state of mind at the time and there is no challenge to that finding.

5. Fourth, her Honour expressly noted the terms of cl 4 of the deed relating to the performance of contract work by [NAME_33] for [NAME_32]. But the existence of that separate arrangement, which was a short-term solution for [NAME_32]'s inability to service its clients until it found a replacement for [NAME_33], did not preclude a finding that other provisions of the deed, such as cll 2.1(f), (5) and (6) were unjust.

Assessment of the evidence 1. Ground 7 listed 23 items of evidence or matters which [NAME_32] submitted were not taken into account either at all or sufficiently in her Honour's evaluation of whether the deed was unjust.

2. There are two substantial difficulties with this ground. First, the complaint is inconsistent with the approach of [NAME_32] in oral argument noted above; [NAME_32] primarily relied upon [NAME_33]'s evidence and the contemporaneous documents. Second, the submissions of [NAME_32] did not identify how or why any of the evidence or matters referred to would have altered the primary judge's finding that the deed was unjust.

3. Aside from these difficulties, the 23 items broadly fall into two categories. The first category includes matters which her Honour made reference to, at least in substance when recounting the circumstances in which [NAME_33] entered into the deed or addressing the question of injustice. The second are matters which her Honour did not expressly refer in her reasons, being the items raised in sub-pars (d), (h), (k), (m), (n), (p), (q), (t), (u), (v) and (w) of ground 7.

4. As to the first category, caution has been expressed against adopting a mechanistic approach to the assessment of the considerations identified in s 9(2): [NAME_57] at [101] (Handley JA), [112]-[113] (Basten JA). The assessment of the broad concept of unjustness involved an evaluative judgment, and it cannot be said that the matters referred to by her Honour were not taken into account in that regard: [COMPANY_64] v [NAME_65] at [7]; [NAME_57] at [101] (Handley JA), [107] (Basten JA).

5. As to the second category, it does not follow that her Honour failed to take a matter into account if the particular item of evidence or matter was not expressly referred to in her Honour's reasons. The primary judge delivered an ex tempore judgment following the conclusion of the trial. It is clear that her Honour had all of the evidence in mind and the basis of the decision was made apparent in her reasons. In Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247, Mahoney JA said at 271: In my opinion, the law does not require that a judge make an express finding in respect of every fact leading to, or relevant to, his final conclusion of fact; nor is it necessary that he reason, and be seen to reason, from one fact to the next along the chain of reasoning to that conclusion.

1. There is no ground of appeal that her Honour failed to give sufficient reasons. In any event, discharge of the obligation to give reasons does not require lengthy or elaborate reasons. What is necessary is a statement of the essential ground or grounds upon which the decision rests: [NAME_66] v [COMPANY_68] at 280 (McHugh JA). In my view, the reasons given were sufficient to explain the essential grounds upon which the decision rests.

Construction of cl 2.1(f) 1. [NAME_32] contended that the primary judge erred in finding that it was "at least arguable if not probable" that any fee [NAME_33] received for any work was to be paid to [NAME_32] in perpetuity under cl 2.1(f) of the deed, and then applying that construction in finding that the deed was unjust and granting relief.

2. Elsewhere in her reasons the primary judge referred to the construction of cl 2.1(f) as "in perpetuity" as "[o]ne reading of the deed (and a particularly compelling one)" and as "ongoing" in the sense that "the terms of the deed are certainly open to the inference that its operation was meant to be ongoing". It is convenient to put aside for the moment the required causal connection between [NAME_33]'s "activities [and] conduct to date" and an [NAME_32] client becoming a client of [NAME_33]. This is addressed below at [121]-[126].

3. The issue is to determine what a reasonable person in the position of the parties would have taken the "agreed fee" to mean: [NAME_6] t/as [NAME_69] (2014) 251 CLR 640; [2014] HCA 7 at [35]. The starting point, as the primary judge correctly observed, is that on its face cl 2.1(f) is not limited as to time. However, reading the "agreed fee" as covering all fees for all subsequent work for those [NAME_32] clients who become a client of [NAME_33] seems unlikely to have been the intention of the parties. In support of that view, [NAME_32] submits that a time limitation is to be inferred from the use of the words "annual basis" in the definition of the "agreed fee". [NAME_32] says that these words refer to the usual charge over 12 months not accumulated charges in perpetuity.

4. On [NAME_32]'s construction, which I consider to be reasonably arguable, the expression "annual basis" has a dual operation in that it defines the method of calculation of the agreed fee and also limits the period over which the fee is calculated for an [NAME_32] client who becomes a client of [NAME_33]. The effect of this construction is that the agreed fee in cl 2.1(f) only applies in relation to the first 12 months of fees charged or chargeable to any client of [NAME_32], past or present, who becomes a client of [NAME_33] at any time after the date of the deed, provided the causal nexus with [NAME_33]'s "conduct [and] activities to date" is satisfied. In this sense cl 2.1(f) is an ongoing obligation, albeit satisfaction of the causal nexus is likely to lessen over time; for example, if an [NAME_32] client continued with [NAME_32] for a year after the deed and then decided to move his or her work to [NAME_33], it is unlikely that the causal nexus would be satisfied.

5. Let it be assumed, favourably to [NAME_32], that cl 2.1(f) contains a temporal limitation of this kind. Even on this construction the provision imposed an unreasonable burden on [NAME_33] when it was not reasonably necessary for the protection of the legitimate interests of [NAME_32].

6. First, an obligation to pay 100 per cent of revenue charged to a client of [NAME_33] is disproportionate to the asserted wrongdoing by [NAME_33] in emailing to himself 16 Handitax files of family and friends (which in any event could not be opened), downloading a client list containing 350 names and postal addresses (as to which there was no evidence of actual misuse by [NAME_33]) and using contact email addresses in his mobile phone to inform clients in early December 2016 that he had left [NAME_32] and giving his new contact details.

7. Second, the burden of such an obligation is unreasonable given that there is no allowance for [NAME_33]'s skill and effort in providing services.

8. Third, the burden of the obligation is also unreasonable insofar as it requires [NAME_33] to fund 50 per cent of the payment obligation in advance of receipt of any fees from his client.

9. Reference should be made to two other aspects of cl 2.1(f). Neither is straightforward.

(i) Determination of agreed fee in advance of performance of any work 1. Her Honour thought that the quantum of the agreed fee would be difficult to determine at the time a client became a client of [NAME_33]. That view contains an assumption, which does not seem to have been contested at trial, that the client and [NAME_33] did not agree on the amount of fees to be charged prior to [NAME_33] commencing work. Against this, [NAME_32] submits that the agreed fee is that "charged by [[NAME_32]]" prior to [NAME_33]'s resignation, or the fee "charged to the client by [[NAME_33]]" for the year following [NAME_33]'s resignation.

2. The difficulty with [NAME_32]'s submission is that it did not address the mechanism for determining the agreed fee, if there is a difference between the two fees suggested by [NAME_32] as the appropriate fee. It cannot be assumed that [NAME_33] would always charge the same fee as [NAME_32] had charged in the previous year, and the evidence reveals that [NAME_36] did not always do so; its fee for some clients was lower and for other clients higher than the fee charged by [NAME_32] to the same client in the previous year. Thus the primary judge was correct to observe that there is uncertainty as to the determination of the 50 per cent advance payment required by cl 2.1(f).

(ii) Meaning of "arising from"

1. The words "arising from" require some causal connection between the events or circumstance referred to and the specified matter. [NAME_32] accepted so much. There are two aspects of the causal inquiry. First, what causal connection is required between a client of [NAME_32] becoming a client of [NAME_33] and the specified "activities [and] conduct to date"? Second, what is meant by the phrase "activities [and] conduct to date", which is not a defined expression in the deed? 2. On the first matter, [NAME_32] did not advance any submissions. Authority in other contexts suggests that the requisite nexus may be satisfied by a less proximate relationship than that required by the phrase "caused by": see Government Insurance Office (NSW) v RJ Green & Lloyd Pty Ltd (1996) 114 CLR 437 at 443 (Barwick CJ), 445 (Menzies J), 447 (Windeyer J); [1996] HCA 6; Quintano v B W Rose Pty Ltd & Ors [2008] NSWSC 793 at [7]. In the case of an indemnity policy covering claims "arising out" of negligence, it has been held to be sufficient if the claim is one "originating in, or springing from, the thing specified": Walton v National Employers' Mutual General Insurance Association [1973] 2 NSWLR 73 at 84.

3. On the second matter, [NAME_32] submitted that the words "activities [and] conduct to date" were only intended to capture [NAME_33]'s "admitted wrongful conduct prior to entry into the deed". That interpretation suffers from the difficulty that the deed does not contain any such admission by [NAME_33]. Two other possible interpretations fall for consideration.

4. One is that the words "activities [and] conduct to date" take their meaning from the earlier reference to [NAME_33]'s conduct in recital C, that he had "engaged in conduct and activities" "that [NAME_32] considers are unlawful … and are breaches of a myriad of laws and regulations … and breaches of professional and ethical standards …". On this reading, what answers the description of [NAME_33]'s "activities [and] conduct to date" in cl 2.1(f) is a matter for [NAME_32]'s opinion. The effect would be that [NAME_32] would be the arbiter of what was wrongful conduct by [NAME_33]. That seems unlikely to have been the parties' intention.

5. The other possible reading is that the words take their meaning from the preceding reference in cl 2.1 (a) to [NAME_33] agreeing to cease "canvassing, soliciting … enticing away from [NAME_32] the Clients". On this reading, [NAME_33]'s "activities [and] conduct to date" is conduct which objectively answers the description in cl 2.1(a). This seems more likely to accord with the parties' intentions.

6. However, not all canvassing of clients of [NAME_32] by [NAME_33] prior to the date of the deed would necessarily be wrong, because [NAME_33] was not subject to a non-compete obligation and there is no restraint of trade obligation. Hence, the effect of this reading would be that [NAME_33]'s "activities [and] conduct to date" is not confined to conduct which amounts to a breach of an equitable obligation of confidence, or a breach of an implied term of the employment contract operating after the employment has been terminated. That would impose an unreasonable burden on [NAME_33] when not reasonably necessary for the protection of the legitimate interests of [NAME_32].

7. The finding by her Honour that cl 2.1(f) was unjust was inevitable.

B. Should cl 2.1(f) of the deed have not been enforced (grounds 1 and 2)

Standard of review 1. Unlike the finding of injustice (see [89] above), the exercise of the discretion to grant relief under s 7 of the Act is subject to review by an appellate court in accordance with the principles stated in House v The King (1936) 55 CLR 499; [1936] HCA 40: see [NAME_57] at [100] (Handley JA), [109] (Basten JA).

2. Thus it is not enough that the appellate court would have exercised the discretion differently from the trial judge. The trial judge must be shown to have acted on a wrong principle or mistaken the facts, or to have made an error of a kind vitiating the exercise of discretion, such as failing to take into account a material consideration or taking into account an immaterial consideration, or reaching a decision that is unreasonable or plainly unjust: [NAME_43] at 504-505.

Primary judge's reasons 1. Having found that the deed was unjust, her Honour declined to enforce [NAME_32]'s claim for breach of cl 2.1(f) of the deed. Her Honour's reasons were brief: That being the case I do not have to consider further the claim for damages, the statement of claim is dismissed, the exhibits may be returned.

Submissions 1. [NAME_32] contends that the primary judge erred in dismissing the statement of claim for essentially three reasons: 1. the order made for dismissal of the statement of claim was not an order her Honour had power to make under s 7(1) of the Act; 2. her Honour failed to consider whether it was just to order any of the relief provided for in s 7(1), either at all or for the purpose of avoiding as far as practicable an unjust consequence or result; 3. her Honour erred in failing to have regard under s 9(5) to the conduct of the parties to the proceedings in relation to the performance of the contract since it was made and only order relief to the extent that her Honour found that it was just to grant the relief for the prescribed purpose.

Decision 1. As to (1), the relief that the Court may order under s 7(1) of the Act includes: "it may decide to refuse to enforce any or all of the provisions of the contract": s 7(1)(a). By dismissing the statement of claim which sought to enforce payment of the "agreed fee" under cl 2.1(f) of the deed, her Honour granted relief which was available under s 7(1)(a).

2. As to (2), counsel for [NAME_33] specifically referred in closing submissions at trial to s 7(1)(a) of the Act as one form of appropriate relief in this case. [NAME_32] did not make any submission to the contrary. Specifically, [NAME_32] did not submit that the deed ought to be varied, nor did it advance alternative terms which it contended should be enforceable if the primary judge otherwise found the deed unjust. Her Honour proceeded to determine the question of relief in a manner consistent with the way in which the parties had presented the issue at trial. No [NAME_43] error has been demonstrated.

3. As to (3), [NAME_32] did not submit at trial that relief should be declined because the deed had been partly performed by [NAME_33] performing contract work for [NAME_32] up until June 2017. For this reason, it is unfair to criticise her Honour for not having made express reference to this matter when ordering relief. In any event, given the short-term nature of the arrangement in cl 4 of the deed, which had come to an end when her Honour was considering relief, it did not relevantly inform the question of whether the enforcement of cl 2.1(f) was unjust.

C. The claim by [NAME_32] for judgment against [NAME_33]

1. In the amended notice of appeal, [NAME_32] sought judgment against [NAME_33] in the amount of $181,059 plus interest. Although this claim for relief does not arise in view of the conclusions above, I will briefly indicate my reasons why it could not succeed in any event.

2. At trial, and again in this Court, [NAME_33] took the point that the evidence did not establish that clients of [NAME_32] became clients of [NAME_36] "arising from" his activities and conduct up to 21 December 2016, as referred to in cl 2.1(f) of the deed. Whilst not deciding the question, the primary judge observed: I do not think that a conclusion can be drawn that clients only went to [NAME_36] at [NAME_33]'s invitation. Some clients may have left [NAME_32] for other reasons (such as its decision to send its work offshore). … 1. [NAME_32] accepted that there was no evidence at trial directed to an examination of nexus between [NAME_33]'s activities and conduct up to the date of the deed and the circumstances in which clients of [NAME_32] became clients of [NAME_36]. It follows that whatever meaning should be given to the phrase "activities [and] conduct to date", even if [NAME_32] had succeeded on appeal, its claim for relief would have failed because the evidence did not establish the requisite causal nexus to obtain relief under cl 2.1(f) of the deed.

D. Refusal of amendment application 1. [NAME_32] sought leave to amend the notice of appeal at the hearing to add an additional ground raising a threshold question, namely, whether [NAME_33] was precluded from obtaining relief by the operation of s 6(2) of the Act, which is in the following terms: (2) A person may not be granted relief under this Act in relation to a contract so far as the contract was entered into in the course of or for the purpose of a trade, business or profession carried on by the person or proposed to be carried on by the person, other than a farming undertaking (including, but not limited to, an agricultural, pastoral, horticultural, orcharding or viticultural undertaking) carried on by the person or proposed to be carried on by the person wholly or principally in New South Wales.

1. The question raised by s 6(2) is not whether the contract was for business purposes. The question is whether the person was carrying on or proposed to carry on a trade, business or profession in the course of or for the purpose of which it could properly be said that the contract was entered into: Toscano v Holland Securities Pty Ltd (1985) 1 NSWLR 145 at 148-149 (McLelland J); [NAME_8] by his Tutor Beatrice Ann Watkinson v Perpetual Trustees Victoria Limited (2009) 75 NSWLR 42; [2009] NSWCA 186 at [95] (Allsop P). 2. [NAME_33] objected to the proposed amendment. [ADDRESS] refused the amendment and indicated that it would give its reasons in its judgment. My reasons for joining in the refusal of the amendment are as follows.

3. First, no explanation was given by [NAME_32] for the delay in raising the proposed amendment until shortly before the hearing, or why the matter was not relied upon at trial.

4. Second, that the primary judge did not consider the threshold question raised by s 6(2) is not a "curiosity" of the trial, as suggested by [NAME_32]. The primary judge did not consider the operation of s 6(2) because it was not relied upon by [NAME_32].

5. Third, the submission by [NAME_32] that the new point required no additional evidence was contested by [NAME_33]. The relevant principles in this regard are clear. The High Court has repeatedly emphasised that a party is bound by the conduct of his or her case. In [NAME_9] v University of Wollongong [1985] HCA 28; (1985) 59 ALJR 481, the plurality said (at 71): Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.

1. As explained in Water Board v Moustakas (1988) 180 CLR 491 at 497; [1988] HCA 12 if: all the facts had been established beyond controversy or where the point is one of construction or of law, then a Court of Appeal may find it expedient and in the interests of justice to entertain the point, but otherwise the rule is strictly applied.

1. In Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 77 ALJR 1598, the High Court said at [51]: It would be inimical to the due administration of justice if, on appeal, a party could raise a point that was not taken at the trial unless it could not possibly have been met by further evidence at the trial. [Citations omitted.]

1. Here, [NAME_32] did not point to the existence of any exceptional circumstances. The new point is not simply one of construction or of law. Nor can it be accepted that all the facts relied upon for the new point have been established, let alone established beyond controversy. It would be unfair to allow [NAME_32] to raise the new point on appeal.

2. Nevertheless, I will indicate my view as to its merits based solely on the evidence at trial. On that assumption, I would have concluded that as at 21 December 2016 [NAME_33] was not carrying on a business in the course of or for the purpose of which it could properly be said that the deed was entered into. [NAME_36] was carrying on business, not [NAME_33]. The deed was entered into for the purpose of compromising a dispute between [NAME_33] and his former employer. This conclusion accords with well-established authority on 6(2). In addition to the cases mentioned at [139] above, see: [COMPANY_5] of Sydney Ltd v Pollard (1983) 1 NSWLR 69 at 79-80 (Rogers J); Australian Bank Limited v Stokes (1985) 3 NSWLR 174 at 177 (Rogers J); Chen v Song [2005] NSWSC 19 at [187]; [COMPANY_10] (Receiver and Manager Appointed) v [NAME_11] (Court of Appeal, 30 October 1998, unreported).

Orders 1. The appeal has failed. There is no reason why costs should not follow the event: UCPR, r 41.2. 2. Accordingly, I propose the following orders: 1. Appeal dismissed. 2. Appellant to pay the respondent's costs. 1. LEEMING JA: I agree with Gleeson JA.

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