Devine Real Estate Concord Pty Ltd v Agha

Speaking metaphorically, the question which this judgment resolves is whether any life remains in the plaintiffs’ case against the second defendant. Senior Counsel for the plaintiffs urged an affirmative answer even if, to use his words, “the pulse may not be strong but it’s there” (Tcpt, 22 March 2023, p 61(32)). Having regard to the procedural history which is set out below, the Court has concluded that any life in that case was extinguished by the success of the second defendant in the Court of Appeal in the absence of a notice of contention by the respondents/plaintiffs. Because, for reasons unknown, no consequential dismissal order was sought or made in the Court of Appeal as coup de grâce, it falls for that to be done now by judgment being entered for the second defendant against the plaintiffs.

The plaintiffs (Devine) are companies and natural persons associated with the conduct of real estate businesses. The first defendant (Mr Agha) and the second defendant (Mr Coombe) were formerly employed by one or other of the plaintiffs. The original proceedings heard by Sackar J were primarily concerned to obtain injunctions and related relief against the defendants for restraint of trade and protection of the plaintiffs’ confidential information.

Justice Sackar delivered a judgment confined to all issues other than damages, making orders against both defendants. The defendants appealed. Mr Coombe was wholly successful in his appeal. Mr Agha was only partially successful. There is no dispute that the case continues against Mr Agha to quantify damages. However, despite Mr Coombe’s success in the Court of Appeal, no one asked that court to give effect to its judgment by dismissing the proceedings against him.

This judgment arises from two notices of motion.

By notice of motion filed 3 November 2022, Mr Coombe seeks these orders:

By amended notice of motion filed on 4 November 2022, the plaintiffs sought leave to file a further amended statement of claim (the FASOC). The parties agreed that the fate of the plaintiffs’ amended notice of motion would be determined by the outcome of Mr Coombe’s notice of motion for judgment. As I noted at the outset of these reasons, the Court has decided that as a result of the Court of Appeal’s decision upholding Mr Coombe’s appeal, the plaintiffs’ claim against Mr Coombe should be dismissed. The Court will, in the absence of agreement, hear the parties further on the question of Mr Coombe’s costs (including the orders sought in paragraphs 3 and 4 of his notice of motion).

The plaintiffs were represented by Mr G A Sirtes of Senior Counsel with Mr M Seck of Counsel. Mr P Doyle Gray of Counsel, together with Mr A Djurdjevic of Counsel, appeared for the defendants.

Before setting out matters of detail, it is convenient to begin with a procedural overview, given the now lengthy and convoluted litigious history of this dispute. I do so by gratefully adopting the summary by Sackar J in Devine Real Estate v Agha & Anor [2022] NSWSC 543 (“the Reopening Judgment”):

I shall return later in these reasons to the Reopening Judgment. However, it is sufficient for present purposes to observe that Sackar J refused the plaintiffs’ application to reopen their case on liability. The motions which are the subject of these reasons were the next step in the litigation.

I will next set out the relevant detail of what has occurred.

The matter was heard by Sackar J by reference to a statement of claim filed on 30 May 2018 (the SOC) and an amended defence dated 7 August 2018 (the Amended Defence).

The SOC pleaded this case against Mr Coombe:

The Amended Defence pleaded:

For present purposes, the salient matter to note is that the defendants put in issue the terms of Mr Coombe’s employment agreement with the exception that it was admitted that Mr Coombe’s employment agreement, at least by implication of law, contained a duty of fidelity while he was an employee. This pleading foreshadowed what became a hotly contested matter at the hearing before Sackar J, being whether Mr Coombe had ever executed a written employment agreement in the form of what was pleaded as the “then applicable REEF agreement”.

On 4 May 2018, Sackar J made consent orders which included:

The two rules referred to in the order are:

Sitting as Expedition Judge, Sackar J heard the proceedings pursuant to Order 4 set out in [15] above between August 2018 and June 2019, delivering his reasons on 28 June 2019: Devine Real Estate Concord Pty Ltd & Ors v Wajih Agha (aka Roger Agha) & Anor [2019] NSWSC 786 (“the Primary Judgment”). I begin by referring to the following preliminary paragraphs of the Primary Judgment:

Sackar J ultimately found that Mr Coombe did the things referred to in [36] and [37] of the Primary Judgment.

I next set out those paragraphs of the Primary Judgment upon which Mr Sirtes SC relied for the proposition that these included findings which remained open (that is to say, unaffected by the subsequent decision of the Court of Appeal) upon which the plaintiffs were entitled to pursue Mr Coombe in relation to damages:

Because it is relevant to what occurred next, I also extract these paragraphs of the Primary Judgment:

Although his Honour delivered the Primary Judgment on 28 June 2019, orders to give effect to the Primary Judgment were not made until 4 December 2019. Those orders imposed several restraints on Mr Agha. The orders relevant to Mr Coombe were:

There was no issue that his Honour’s orders were the product of discussions between the parties. What is significant for present purposes is that I was not taken to any form of order contended for by either party which his Honour did not make, but which it was suggested might cast any light on the present issues. In other words, the orders which his Honour made did not involve the rejection of any other order which a party had asked him to make to give effect to the Primary Judgment.

This is an important point. The orders made by Sackar J reflect, in this respect, the reality of what was the hotly disputed matter between the parties, being whether Mr Coombe was bound by an employment agreement to the same effect as Mr Agha. His Honour observed in [84] of the Primary Judgment (set out in [19] above): “Particularly, the Plaintiffs focus on clause 6 of the Shareholders Agreement and clause 14 of the Employment Agreement as providing contractual obligations of confidentiality which they allege the First Defendant breached by disclosing client lists (submissions [636]-[658]).” As against Mr Coombe, Devine’s focus was to prove that he was bound by, and in breach of, terms to the same effect as the Employment Agreement.

His Honour undoubtedly made a number of findings of breach of the Employment Agreement by both of the defendants. Given those findings, it is also understandable that his Honour made the declaration “that Mr Coombe is bound by the same EA entered into as Mr Agha”. With the benefit of that declaration, the various findings by Sackar J of breach by Mr Coombe of that agreement could be visited upon Mr Coombe in any subsequent damages hearing.

For whatever reason, but I will infer because this was simply not a matter to which the parties gave any attention, the plaintiffs sought no orders in relation to breach by Mr Coombe of his admitted common law duty of fidelity. The evident reason for this is because while his Honour noted the admission in [381] of the Primary Judgment (set out in [19] above), his Honour’s findings were focused upon breaches of what was referred to in order 5 made on 4 December 2019 as the “EA”. In other words, it does not appear that his Honour was asked to make any findings expressly by reference to Mr Coombe’s admitted common law obligation of fidelity and, as appears from the Primary Judgment, no such findings were made.

On 20 December 2019, the defendants filed a notice of intention to appeal which was expressed to be in relation to “whole decision below”.

On 4 March 2020, the defendants filed a summons seeking leave to appeal, again expressed to be in relation to “whole decision below” and seeking “leave to appeal from the whole of the decision below”.

The summons included a notice of appeal also dated 4 March 2020 which I was informed was never filed because, in granting leave to appeal, the Court of Appeal made no order requiring the notice of appeal to be filed. Nevertheless, the proposed notice of appeal was expressed to be in relation to “whole decision below” and included under “details of appeal” that “the appellant [sic] appeals from the whole of the decision below”. Among the orders sought in the notice of appeal were:

The proposed notice of appeal contained 18 grounds, the most pertinent to Mr Coombe being:

The Court of Appeal heard the appeal on 23 July 2020. Its decision was delivered on 9 March 2021: Agha v Devine Real Estate Concord Pty Ltd & Ors [2021] NSWCA 29 (“the Appeal Judgment”).

The orders made on 9 March 2021 by the Court of Appeal to give effect to the Appeal Judgment were:

It will be noted that the two specific declarations made in relation to Mr Coombe were set aside. Notwithstanding the prayers in the unfiled notice of appeal reproduced in [28] above, no application was made to the Court of Appeal on behalf of Mr Coombe for an order that Devine’s claim against him also be dismissed with costs.

The Appeal Judgment comprised a judgment by White JA with whom Payne and McCallum JJA agreed.

White JA’s judgment included:

As noted in the summary set out at [8] above, Mr Agha’s application for special leave to appeal to the High Court was dismissed on the papers on 7 October 2021.

The next relevant step was the notice of motion filed by the plaintiffs on 29 March 2022 for leave to reopen the case that had been brought under the Corporations Act 2001 (Cth). This was a different part of the case to that which Devine now says still remains open to it (and therefore not requiring leave to reopen).

The motion to reopen was dismissed by Sackar J in the Reopening Judgment, delivered on 5 May 2022, which included:

This recitation of the procedural history then brings matters to the point of the two notices of motion which are the subject of these reasons, having been filed by Mr Coombe on 3 November 2022 and by the plaintiffs on 4 November 2022 (see [5] and [6] above).

In order to understand the case which the plaintiffs now say they remain able to bring against Mr Coombe, it is necessary to set out the FASOC with its deletions. The effect of those deletions, according to the plaintiffs, is to conform the pleading to so much of the case as they say remains:

It will be recalled that, insofar as paragraph 97(1) of the operative pleading alleged a term of fidelity by implication of law, that was admitted by Mr Coombe. However, as Mr Doyle Gray submitted, and will be apparent from the extracts which I have set out in [19] above, Sackar J made no findings in the Primary Judgment of a breach of that term.

In relation to paragraph 97(2), Mr Coombe denied any such term, including by implication of law. There appears to have been no argument before Sackar J, and certainly no finding in the Primary Judgment, that insofar as Mr Coombe’s terms of employment included common law terms, they included an obligation in contract of confidence of the kind pleaded.

In relation to the proposed form of paragraph 101 of the FASOC, it was submitted for Mr Coombe that those allegations were either contrary to conclusions reached by the Court of Appeal or were not the subject of any finding by Sackar J or by the Court of Appeal at all. Because of the overall conclusion which the Court has reached, it is not necessary to parse proposed paragraph 101 in detail to reach a concluded view on that submission.

In necessarily setting out the procedural history at length, I have not overlooked that each party also referred the Court to some materials such as transcript of argument including, for example, exchanges between the bench and the bar in the Court of Appeal (one example of which I set out in [51] below). I have not included these in the procedural narrative because the judgments and orders of the Court are sufficiently clear for the purposes of the present task and it is unnecessary to have regard to such extraneous material. Even if that conclusion be wrong, none of those additional materials would have changed the Court’s conclusion.

No disrespect is intended to the thorough, and in some respects ingenious, arguments advanced by the parties by reducing them to their essence in what follows.

For Mr Coombe, it was submitted that four closely related principles of finality applied in the present case:

In support of these, the Court was referred to the decisions of the High Court in Clayton v Bandt (2020) 272 CLR 1; [2020] HCA 44 and Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28. Mr Coombe’s fundamental proposition was that the question of his liability to the plaintiffs had been fully litigated at first instance, on appeal and, to the extent it was relevant, a subsequent attempt to reopen that failed, such that there was nothing left in the case against him, so that he was therefore entitled to judgment.

For the plaintiffs, it was submitted that the real question was whether Sackar J had made factual findings establishing liability in Mr Coombe which remained intact after the Appeal Judgment that could provide a basis for determining the quantum of damages against Mr Coombe. Returning to Mr Sirtes SC’s metaphor, he submitted (Tcpt, 22 March 2023, p 61(29-30)) that “what we have done is we’ve sought to piece together a very confined basis to say there is still life left in this patient”.

Insofar as Mr Coombe sought to rely on the principles referred to in [45] above, I accept Mr Sirtes SC’s submission that they have no application to the present case because they speak to the rights of parties (or their privies) in subsequent proceedings between them by reason of what happened (or did not happen) in earlier proceedings between them. The case at bar concerns the parties’ rights in relation to these very proceedings. This extends to the hearing the Court of Appeal, which while a specified appellate court exists within the Supreme Court and is not a separate entity: Smith v Yusen Daly Smith International Pty Ltd (in liquidation) (2001) 53 NSWLR 385; [2001] NSWCA 458, with the hearing in the Court of Appeal being by way of rehearing (UCPR Part 50 r 50.16(1)).

However, that conclusion is of no real assistance to the plaintiffs. The legal principles referred to by Mr Coombe set out in [45] above are all manifestations of the fundamental public policy interest in the finality of litigation: the State is concerned to ensure that there be an end to litigation (interest reipublicae ut sit finis litium). That principle extends to the conduct of parties within the same set of proceeding (including any appeal) and is the reason why, as I will next elaborate, the Court has concluded that Mr Coombe is now entitled to the dismissal of the proceedings against him.

Mr Sirtes SC, entirely properly, accepted that his clients’ path to success in resisting Mr Coombe’s application and being entitled to proceed in damages against Mr Coombe was a narrow one. That path is blocked, at the outset. While Devine now wishes to press a case in damages against Mr Coombe based on what might be referred to as the common law contract and, in particular, the implied right of fidelity pleaded in paragraph 97(1) set out in [12] above, for all the evident care which attended Sackar J’s findings in the Primary Judgment, there is no express finding of breach of such an obligation. Mr Sirtes SC accepted that there was no such finding in terms, but submitted that “it is true his Honour has not made that finding but merely because his Honour hasn’t specifically used that formulation doesn’t mean that the finding that he has made informed by the previous findings don’t give rise to a claim on that basis and that’s precisely what his Honour Payne JA picked up on” (Tcpt, 22 March 2023, 60(3-7)).

The reference to Payne JA is to this exchange Mr Doyle Gray and Payne JA, in which his Honour referred to [385] of the Primary Judgment (set out in [19] above) (Tcpt, 24 July 2020, p 21(37-50)):

Mr Doyle Gray then purports to answer that and make other submissions over two pages of transcript, to which White JA is recorded as responding (Tcpt, 24 July 2020, 23(45)) “[w]ell, I’m not sure that I followed all of that, unfortunately, Mr Doyle Gray”. With great respect to Mr Doyle Gray, I find myself in the same position. However, the essential point (which has already been made in [43] above) is that Payne JA’s observation in argument to Mr Doyle Gray is irrelevant to determining the formal effect of the judgment and orders of both Sackar J and the Court of Appeal.

I do not accept Mr Sirtes SC’s submission recorded in [50] above. The absence of an express finding by Sackar J of breach by Mr Coombe of the admitted implied obligation of fidelity (or of such a finding by the Court of Appeal on a notice of contention) is fatal to the plaintiffs’ case on the present motions. Having regard to the procedural history and the principle of finality, it is not open to the plaintiffs now to seek to identify a breadcrumb trail of factual findings that will lead them to a present entitlement to maintain an action in damages for a breach not expressly found by the trial judge, or pressed for by the plaintiffs in the Court of Appeal.

That is not to make any criticism of the plaintiffs for their conduct of the litigation. The fact that Sackar J’s focus was on the allegation of a written agreement with both Mr Agha and Mr Coombe is unsurprising. It is typical in cases of this kind, and the very reason for urgency in their disposition by the Court, that the focus is on the entitlement of the plaintiff employer to assert restraints of trade against the defendant former employee. In this case, the restraint of trade in the sense of non-competition was only available against Mr Coombe if he was found to be a party to an agreement in the terms of the REEF agreement. Beyond the fact of the admitted implied term in the pleading, there is no suggestion in the material to which the Court has been taken on these applications that anyone gave what might be called the common law aspect of the matter any real thought.

Mr Coombe’s motion engages another aspect of the principle of finality, which is that it is fundamental to the conduct of litigation in accordance with the overriding purpose that a party be held to its pleaded case or, if the matter has been conducted otherwise, to the case the parties chose to litigate. This well understood approach was recently affirmed by the Court of Appeal in Kimberley Developments Pty Ltd v Bale [2023] NSWCA 25 (per Leeming JA with whom Kirk JA and Griffiths AJA agreed):

In the present case that principle has application not because the parties litigated a case outside the pleadings, but because they obviously confined most, if not all , of their forensic attention, I infer for the reason set out in [54] above, to the major issue that was advanced in the pleadings, namely whether or not Mr Coombe was also bound by the written REEF agreement. The same application of the principle of finality must apply where a party does not actively pursue a particular issue, albeit one that has in fact been pleaded.

There can be no doubt that both the intent and effect of the Court’s order for the separate determination of liability (see [15] above) was that all questions of liability on any basis which the plaintiffs sought to propound were to be determined at that hearing. It is apparent from the Primary Judgment that is what his Honour sought to do in a hearing that went over many days and months.

There is ample scope for a party, having considered a judge’s reasons, to seek to persuade the judge that she or he has failed to make a finding or deal with an argument which that party says was properly before the Court for determination, but which appears to have been omitted from the judgment. Quite apart from any provision in the rules, the court has inherent jurisdiction to deal with that situation. Such an application may give rise to an argument between the parties as to whether or not the allegedly argued but omitted matter properly bears that characterisation, but that possibility does not gainsay the undoubted existence of the jurisdiction.

In this case, upon delivery of the lengthy and detailed Primary Judgment, and in circumstances where the plaintiffs accept no express finding was made in relation to the admitted term of fidelity or an unwritten contract implied by conduct more generally, the plaintiffs made no application to his Honour of the kind to which I have referred. Furthermore, although the circumstances in which it might have succeeded are considerably more limited, no application was made under UCPR Part 36 rule 36.16 to vary his Honour’s orders.

The next point to note is that Mr Agha and Mr Coombe sought leave to appeal (leave not being opposed) from the whole of the Primary Judgment.

While not contentious, in addition to the observations in [48] above, it is helpful at this point to recall the nature of an appeal. This is helpfully summarised in D Mildren, The Appellate Jurisdiction of the Courts in Australia, Second Edition, Federation Press (2023) at 1.01 (citations omitted):

In the Court of Appeal, insofar as Mr Coombe appealed from Sackar J’s declaration that Mr Coombe was “bound by the same EA entered into by Mr Agha”, the whole question of Mr Coombe’s liability (including the legal source of that liability) was open for argument before the Court of Appeal as a rehearing. The plaintiffs’ conduct which is dispositive of their opposition to Mr Coombe’s present application for judgment is that, in the Court of Appeal, the plaintiffs as respondents failed to file a notice of contention seeking to have the Court of Appeal affirm Sackar J’s finding of contractual liability in Mr Coombe on a basis other than the Employment Agreement, in this case for breach of the implied duty of fidelity and (depending on the scope of that duty of fidelity) the equitable (rather than contractual) duty of confidence.

It may be thought that a notice of cross-appeal may have been the more apt procedure. However, that does not matter for present purposes. Procedural purity would not have been allowed to overcome substantial justice: if the plaintiffs had wanted to obtain clear findings of a liability in damages in Mr Coombe on bases other than those expressly found in the Primary Judgment, it would have been open to them to do so in the Court of Appeal. They did not.

No reason for this has been advanced, including no submission that failure to do so was attributable to an error on someone’s part. There is no basis to conclude whether, by their own error or by reason of something which was said in the Court of Appeal, the plaintiffs somehow failed to pursue the question of Mr Coombe’s liability in damages on some basis other than that determined by Sackar J.

The Court of Appeal set aside those orders of Sackar J which would have been the basis for Mr Coombe’s liability in damages to Devine. With the setting aside of those orders, Devine’s claim against Mr Coombe has been fully and finally determined in his favour on all issues because no question of damages can arise when he has succeeded on the issue of liability as that issue was litigated both before Sackar J and the Court of Appeal. There are no orders or declarations extant against him.

The fact that some factual findings may remain which could form the start of an alternative theory of liability against Mr Coombe does not change that result. That is because if it had either been taken up with Sackar J after he delivered the Primary Judgement or in the Court of Appeal, there would undoubtedly have to have been a full consideration of the scope of the duty of fidelity and whether it had been breached, including (in the absence of also pursuing and obtaining any findings as to the equitable duty of confidence) whether it provided an independent basis for obtaining relief against Mr Coombe either by way of injunction or for damages. The time for having that argument passed when no notice of contention was filed in the Court of Appeal and that court disposed of the plaintiffs’ case against Mr Coombe by upholding the latter’s appeal.

All of that being said, it remains somewhat inexplicable as to why Mr Coombe did not seek to have the proceedings against him dismissed as part of the orders made by the Court of Appeal. The mystery is compounded when he did not make any such application in answer to the plaintiffs’ further unsuccessful reopening application before Sackar J. Whatever the reasons for Mr Coombe’s apparent inaction in his own interest on at least two occasions, the fact that Mr Coombe (on the view which I have reached) could have had the proceedings dismissed against him earlier does not provide a reason why the Court should not do so now.

The proceedings against Mr Coombe will be dismissed. Insofar as Mr Coombe’s motion seeks an order that his costs of the proceedings be paid on the indemnity basis, that application was not the subject of argument. The parties will be given an opportunity to seek to agree a form of orders to give effect to these reasons (including to agree, if they can, the question of costs) together with what orders should be made in relation to the filing of the FASOC.