Federal Court of Australia

Puxty v Monarch Advisory Group Pty Ltd (in liquidation) [2026] FCAFC 80

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 500 of the Corporations Act 2001 (Cth) leave is granted to the appellants to proceed against the respondent.

2.    The appeal is dismissed.

3.    Leave is refused to bring the cross-appeal against the orders made on 26 June 2025 and the cross-appeal is otherwise dismissed.

4.    Each party is to bear their own costs of the appeal and the cross-appeal.

5.    A party may apply in the form of written submissions (not exceeding three pages) filed by 4pm on 16 June 2026, to vary order (4) and if such application is made, it may be responded to by a written submission (not exceeding three pages) filed within seven days of such application.

6.    Subject to further order, any applications made pursuant to order (5) will be determined on the papers.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

COLLIER J:

1    I have had the great benefit of reading in draft the thoughtful and detailed judgments of Justices Wheelahan and McElwaine, and agree with the orders proposed by their Honours.

Associate:

Dated:    1 June 2026

REASONS FOR JUDGMENT

WHEELAHAN J:

2    I have had the benefit of reading in draft the reasons for judgment of McElwaine J. For the reasons given by his Honour, I agree that the appellants have not established any error in relation to the primary judge’s findings that Messrs Puxty and Coggan were in breach of the restraint clauses in their employment agreements and that grounds of appeal 1, 2, and 3 should therefore fail.

3    On the question of damages which is raised by both the appeal and the cross-appeal I conclude that the parties have not demonstrated any error in the orders that the primary judge made or in her Honour’s reasons for making them. I therefore reject grounds 4 and 5 of the appeal, and ground 1 of the cross-appeal.

4    I agree for the reasons given by McElwaine J that leave should be refused to Monarch to cross-appeal the primary judge’s order for costs.

5    In the result, both the appeal and the cross-appeal should be dismissed. Rather than having the inconvenience of separate taxations of costs of the appeal and the cross-appeal, there should be no order as to costs with the parties given the right to apply for a different order for costs if so advised.

Background

6    Monarch’s claims for damages against Messrs Puxty and Coggan as a result of their breaches of the post-employment restraints had two components –

(a)    Claim 1, being a claim for loss of profits between the termination of their employment on 31 January 2020 and completion of the sale of Monarch’s business to Newlane Risk Pty Ltd (Newlane) on 2 February 2021; and

(b)    Claim 2, being a claimed loss of valuable opportunity to, inter alia, achieve a higher price than the purchase price achieved on the sale of its business to Newlane.

7    The primary judge assessed Claim 1, being damages on account of loss of profits, in the sum of $106,145.60 and that assessment is not challenged by the appeal or cross-appeal.

8    As McElwaine J has noted, clause 19 of the employment contracts suffers from some drafting deficiencies. However, the defects in drafting are not material to the issues as they were argued on appeal. It was not in issue that the effect of the employment agreements was to preclude Messrs Puxty and Coggan, without the consent of Monarch, from soliciting, attempting to solicit, or accepting any instructions to perform any work from any client of Monarch for a period of 12 months from the date of termination of their employment.

9    The termination date of the contracts of employment was 31 January 2020. Shortly afterwards, Messrs Puxty and Coggan commenced working for the third-named appellant (Odyssey), which was a company that Mr Puxty had incorporated in September 2019 and of which they were both directors from February 2020. The primary judge found at PJ [105] that from early February 2020 Messrs Puxty and Coggan contacted clients using their Monarch email addresses and that some of those clients became clients of Odyssey shortly thereafter. The primary judge made findings at PJ [107] to [110] in relation to email communications with several identified clients that support an inference that Messrs Puxty and Coggan had solicited and accepted instructions from the clients during the 12-month restraint period.

10    By a written agreement dated 21 December 2020, Monarch agreed to sell the assets of its business to Newlane. The assets of the business comprised goodwill, the trail book, and business records, with each term being defined in the agreement. The consideration for the sale was a purchase price, subject to adjustments.

11    The purchase price had three components that were the subject of some complex provisions of the business sale agreement involving the use of inter-dependent defined terms. The first component was the Initial Purchase Price which was payable upon completion, with the completion date being nominated as 1 February 2021, or five business days after “the satisfaction of [sic] waiver of all Conditions”. The Initial Purchase Price was in the fixed sum of $504,000.

12    The second component was a Deferred Purchase Price that was payable on a Deferred Payment Date. The Deferred Purchase Price was specified in item 10 of schedule 3 of the business sale agreement as “30% x TBV - Initial Purchase Price”, where “TBV” was defined as –

TBV means:

(a)    the Annual Trail Commission x 2.7; plus

(b)    the Current Advice Fees x 2, equalling for the avoidance of any doubt $36,000.00

13    The term “Annual Trail Commission” was defined –

Annual Trail Commission means the Trail Commission receivable in respect of the Assessment Period, calculated on an annual revenue basis.

14    The term “Trail Commission” was defined –

Trail Commission means the management fees (or professional fees), trail payments, commissions, and payments payable by a Client (or receivable by the Vendor or Purchaser in connection with a Broker Agreement) pursuant to, or as a result of, a Broker Agreement.

15    And in turn, the term “Assessment Period” was defined –

Assessment Period means the twelve (12) month period preceding the Deferred Payment Date.

16    The Deferred Purchase Price was payable on a Deferred Payment Date which was to be agreed between the parties or in default of agreement to be determined by an independent expert. Although it might be said that there is some ambiguity in the business sale agreement as to when the Deferred Payment Date fell, the parties conducted the appeal on the assumption that the Deferred Payment Date was in May 2022, approximately 15 months after the expiry of the restraint period. It follows that the Assessment Period of 12 months preceding the Deferred Payment Date commenced about three months after the expiry of the restraint period.

17    The third component of the purchase price was an incentive payment of 5% of the TBV which could be reduced proportionally if the post completion client number was less than the completion client number.

18    For the purpose of calculating the purchase price under the business sale agreement, Monarch excluded clients that Mr Puxty claimed were his, with the exception of eight named clients. Ms Coulter gave evidence, which the primary judge evidently accepted, that she did not want Newlane to pay a figure for these clients only for them to leave, which would affect the deferred incentive price and incentive payment: PJ [114]. The reasonableness of Monarch’s conduct in excluding these clients from the business sale agreement was not put in issue by the appellants.

19    The primary judge found at PJ [115] to [119] that Newlane paid the purchase price to Monarch in the three components contemplated by the business sale agreement as follows –

115    As at the date of the sale agreement Monarch’s recurring revenue was $272,423 comprising:

(1)    $252,274 in insurance recurring revenue; and

(2)    $20,149.35 in advice fees.

116    The recurring revenue was multiplied by 2.7, totalling $681,139.80.

117    As to the advice fees, Monarch and Newlane agreed a figure of $18,000 due to various adjustments between the date of the sale agreement and settlement. The agreed figure of $18,000 was multiplied by 2 in accordance with the sale agreement, totalling $36,000.

118    The purchase price was made up of the two amounts set out in the two preceding paragraphs, $717,139.80 and by agreement rounded up to $720,000. The purchase price was paid in two instalments: an initial payment of $504,000 (inclusive of a $5,000 holding deposit) being 70% of TBV; and a deferred amount of $216,000 payable 15 months from the date of the sale agreement, being 30% of TBV.

119    The sale agreement also provided for an incentive payment in addition to the purchase price calculated as 5% of the TBV and only paid if, as of May 2022, the number of Monarch’s clients was the same as or more than the number of Monarch’s clients as at February 2021. This payment, in the sum of $36,000, was made in about May 2022.

20    To summarise, the following dates are relevant –

    1 February 2020:     the commencement of the post-employment restraint periods for Messrs Puxty and Coggan;

    12 December 2020:    the date of the business sale agreement;

    1 February 2021:    the completion date of the business sale agreement;

    31 January 2021:    the expiry of the restraint periods;

    May 2021:    the commencement of the Assessment Period for the purpose of calculating Annual Trail Commission as a component of “TBV”;

    May 2022:    the month that was 15 months after the sale of business and in which the deferred component of the purchase price was payable.

21    Monarch adduced evidence from Mr Michael Potter, a partner of Ernst & Young, in support of its claims of economic loss. In relation to Claim 2 Mr Potter based his calculations on a list of clients and other details contained in a document titled the Odyssey Revenue Report, which was described as an ongoing revenue report for the restraint period that was produced by Odyssey in the proceeding pursuant to a notice to produce. Mr Potter was asked to assume that all clients listed in the report were under restraint pursuant to the employment agreements. This assumption was supported by the evidence of Ms Coulter in her affidavit of 14 April 2023. Mr Potter referred to the clients listed in the Odyssey Revenue Report as the “clients under restraint”, and the clients were referred to by the parties as the “Puxty Clients”.

22    Mr Potter stated that the Odyssey Revenue Report referred to three categories of revenue for the clients under restraint –

(i)    Client fees: These fees refer to general fees received for services provided;

(ii)    New Business: These fees refer to the upfront commissions received for new business insurance, which in this case as the clients were all recurring clients comprises of fees associated with the renewal of insurance policies at new premiums or with new inclusions or exclusions; and

(iii)    Ongoing: These fees refer to the ongoing revenue received by the recipient each year a policy is in place.

23    Of the clients listed in the Odyssey Revenue Report, Mr Potter was asked to assume that 11 identified clients were related parties to other clients under restraint, that Monarch had not received any revenue from them, but that they had been signed up as clients of Monarch and were the subject of the post-employment restraints.

24    Mr Potter calculated alternative figures for an additional purchase, exclusive of GST and inclusive of GST, based upon what he identified as recurring revenue generated by the clients under restraint during the restraint period. Relevant to the appeal is the approach that was exclusive of GST which Mr Potter calculated as follows –

25    The Odyssey Revenue Report had been generated in respect of the restraint period of 1 February 2020 to 31 January 2021. Ms Coulter referred in her affidavit of 14 April 2023 to the Odyssey Revenue Report identifying the main types of revenue that were received, namely client fees for services provided, new business such as upfront commissions received for new business insurance for existing clients which included fees associated with the renewal of insurance policies at new premiums or with new inclusions or exclusions, and ongoing revenue received for each year that a policy was in place. Ms Coulter referred in her 14 April 2023 affidavit to the calculation of the “TBV” for the purposes of the business sale agreement. Somewhat confusingly, Ms Coulter said that “gross annual trail commission” was also referred to as “insurance recurring revenue”. To add to the confusion, at [144] of her 14 April 2023 affidavit Ms Coulter stated that –

The calculation of the Purchase Price did not include new business revenue. In my experience, this is standard practice when buying and selling financial planning books, because what is being sold and purchased is the existing client book as opposed to what future revenue might be incurred from new business.

26    In her second affidavit, which was sworn 29 May 2023, Ms Coulter confirmed that Mr Potter had been asked to calculate losses based upon “all income, not just recurring income”. Ms Coulter then stated at [55] and [56] of her 29 May 2023 affidavit –

Mr Potter’s calculation as to the quantum of the reduction of the purchase price in the Newlane Sale agreement concerns all recurring revenue (including initial commissions from CPI), excluding new business.

This is all correctly completed in the expert report.

27    Ms Coulter was cross-examined only briefly and at a generalised level about the differences between initial commission and recurring revenue and the industry practice in relation to the valuation of books in the financial services industry. On the question whether initial commissions were generally excluded from the valuation of client books Ms Coulter said that it depended upon the sales agreement, and that the position was specific to the individual arrangements. Ms Coulter was not cross-examined about the way in which Monarch’s “TBV” had been valued under the business sale agreement, and it was not put to her that the instructions and assumptions that Monarch gave to Mr Potter for the purposes of his report were inaccurate or inappropriate, nor was it put to her that the assumptions that Monarch had given Mr Potter did not accord with the defined term “Trail Commission” in the business sale agreement.

28    Mr Potter acted on the assumption that the figures recorded in the Odyssey Revenue Report would have been included in the calculation of Monarch’s trail book and applied for the purpose of calculating the purchase price under the business sale agreement had the clients under restraint been retained by Monarch. The categories of revenue that Mr Potter was instructed to assume comprised the “Insurance Recurring Revenue” were three types of revenue that Mr Potter identified, namely –

•    “INS1–Initial Comms” which referred to upfront commissions received for new business insurance.

•    “REN–Renewal Comm” which referred to ongoing revenue received by the recipient each year a policy is in place.

•    “TRA–Trail/Ongoing” which referred to a payment from an investment/superannuation provider for placing business.

29    Mr Potter was cross-examined at trial. The tenor of the cross-examination was to put to him that his report had been based upon assumptions, and that his conclusions did not take account of the risk that the Puxty Clients might not have remained with Monarch or Newlane. Mr Potter accepted that this risk was an essential component of a proper calculation of damages. Mr Potter also accepted that his calculations had not considered the prospect that the Deferred Purchase Price might not be payable on account of the fact that one or more of the Puxty Clients would have been lost to Monarch or Newlane prior to 1 May 2022. Mr Potter accepted that to factor in this type of risk in relation to retention of clients would require some industry-specific evidence or direct evidence in relation to the clients in issue, or a combination of both. However, Mr Potter added that this would be very difficult to gauge in circumstances where Messrs Puxty and Coggan had not heeded the restraint period. There was some cross-examination of Mr Potter based upon specific emails to Monarch from former clients who stated that they wished to continue having Messrs Puxty and Coggan look after their affairs. Mr Potter observed that it was difficult to express opinions based on the emails when Messrs Puxty and Coggan should have been precluded from dealing with the clients for a period. Mr Potter otherwise accepted that the risk that the clients would leave Monarch was an essential component of a proper calculation of damages. Mr Potter accepted that the risk might be attributable to factors unconnected to the actions of Messrs Puxty and Coggan, such as the natural attrition of clients for various reasons.

30    In relation to commissions for new business, Mr Potter agreed that he had been instructed to include some commission for new business as recurring revenue, that he had not been instructed that initial commissions were calculated at a higher rate than renewal commissions, and that he had not been instructed that initial commissions were upfront fees that were liable to be reimbursed if the client cancelled the policy resulting in a refund of premium. Mr Potter also accepted that he had not been instructed that an increase in premium on a recurring policy was to be treated as an initial commission and subject to the initial commission rate rather than the recurring commission rate.

31    At the conclusion of his cross-examination Mr Potter accepted that, if there was a risk of clients leaving, his report did not provide a fair or reasonable assessment of the loss, if any, that might have been suffered in respect of the sale price for the sale of the business.

32    The appellants relied at trial on an affidavit of Mr Puxty dated 18 May 2023 in which he challenged several assumptions underlying Mr Potter’s expert report. Most of the challenges related to whether revenue was correctly characterised as recurring or ongoing revenue for the purpose of the calculations and whether revenue attributed to new business had been correctly identified. Mr Puxty was not challenged in cross-examination in relation to these issues.

33    The appellants adduced expert evidence in the form of a report of Mr Paul Minett of the firm MartinMinett. Mr Minett was not required for cross-examination. In general terms, Mr Minett did not dispute Mr Potter’s assessment of loss for Claim 2 if viewed as a mathematical calculation based upon the assumptions that Mr Potter was asked to make. However, Mr Minett disputed some of the assumptions. Relevantly –

(a)    Mr Minett disputed that the upfront commissions for new business insurance that Mr Potter had included in his calculations were items of recurring revenue;

(b)    Mr Minett stated that his instructions were that an initial or upfront commission is a one-off fee paid at a higher commission rate (generally 80% of premium) which then reduced in subsequent years;

(c)    as a result, Mr Minett said that Mr Potter’s assessment of the calculations for Claim 2 was inflated;

(d)    Mr Minett also stated that Mr Potter had assumed, based upon his instructions, that all the Puxty Clients would have remained with Monarch during the restraint period and that a more accepted approach would be to incorporate a factor for risk, and to accept a level of contingency;

(e)    Mr Minett stated that approximately 32% of the Puxty Client income earned in the restraint period related to financial advice fees, whereas Monarch’s main area of expertise was in insurance, and that this was a consideration that should have been brought to account in the assessment; and

(f)    there was no accommodation of the risk that some clients would leave Monarch after the expiry of the restraint period resulting in an adjustment of the final sale price for the business.

34    Mr Potter and Mr Minett prepared a joint expert report, recording their points of agreement and disagreement. Neither Mr Puxty nor Mr Minett put forward any alternative set of calculations based upon any acceptance of what Mr Puxty claimed were incorrect features of the assumptions that Mr Potter had made. Nor was Mr Potter asked by Monarch to consider prior to trial the effect on his opinion of the matters raised by Mr Puxty in his affidavit of 8 May 2023. That course was consistent with Ms Coulter’s evidence that the assumptions that were provided to Mr Potter were correct.

35    At trial, Monarch read an affidavit of Alex Lee sworn 18 April 2023. Mr Lee was the managing partner of Newlane. Mr Lee stated at [8] of his affidavit in relation to the purchase price under the business sale agreement –

The purchase price pursuant to the Agreement was calculated by reference to Monarch’s annual trail commission and Monarch’s advice fees, collectively known as Monarch’s recurring revenue. Recurring revenue is the income that is received by Monarch and the recurring revenue amount underlies the value of Monarch’s “book” (number of clients).

36    Mr Lee stated that if at the time of settlement of the business sale agreement, which was 2 February 2021, Monarch’s book included additional clients and therefore a higher recurring revenue, then Newlane would have paid a higher price, and that it had the financial capacity to pay a higher price.

37    Mr Lee did not address in his affidavit whether Newlane would have agreed to pay for the Puxty Clients knowing that Messrs Puxty and Coggan had resigned and that the employment restraints would expire on 31 January 2021, which was before the completion date for the business sale agreement. Mr Lee was not required for cross-examination.

38    On the question of damages, counsel for the parties made submissions to the primary judge in relation to –

(a)    the capacity of Monarch to service the Puxty Clients from the commencement of the restraint period;

(b)    whether Monarch had established that all of the Puxty Clients would have been included in the business sale agreement, and that Monarch would have been paid for those clients;

(c)    the prospect that the Puxty Clients would return to Mr Puxty immediately upon being able to do so; and

(d)    the prospect that some or all of the clients would have left Monarch in any event.

39    The so-called “presumption against wrongdoers” featured heavily in Monarch’s submissions to the primary judge.

40    There were no submissions by the parties to the primary judge drawing attention to the significance of Mr Potter basing his calculations on the Odyssey Revenue Report, which related to the restraint period, rather than revenue in the 12-month period prior to the Deferred Payment Date in May 2022. Nor did Monarch develop submissions at trial which directed the primary judge’s attention to the definition of “Trail Commission” in the business sale agreement and the relevance of that definition to the assumptions which were given to Mr Potter. In closing submissions counsel for Monarch maintained that there were no errors in the assumptions given to Mr Potter and that the evidentiary foundation for the assumptions was in Ms Coulter’s affidavits.

The primary judge’s reasons

41    The primary judge held at PJ [197] that Monarch had not established the narrow set of assumptions on which Mr Potter was instructed to assess Claim 2. In particular, her Honour held that Mr Potter was not given any assumption about the risk of clients leaving the Monarch business or accurate instructions about “initial commissions” and “renewal commissions” and that these matters infected his calculation such that its reliability had, to an extent, been undermined as to establish quantum for Claim 2.

42    At PJ [198] to [202] the primary judge rejected a submission by Monarch that this was a situation where the assumption against wrongdoers applied to the assessment of damages. Her Honour held that the respondents had co-operated in providing the necessary evidence to assess damages for their breach.

43    The primary judge held that there was proof of the fact of loss, but that the problem was reliable proof of quantum. Her Honour held at PJ [203] that the fact of loss was established because at the time of the calculation of the sale price of Monarch’s business, revenue from the clients under restraint was not included. Her Honour applied the settled rule that mere difficulty in estimating damages does not relieve a court from the responsibility of estimating loss as best it can, citing Commonwealth of Australia v Amann Aviation Pty Ltd [1991] HCA 54; 174 CLR 64 (Amann Aviation) at 83 (Mason CJ and Dawson J), 102 (Brennan J), 135 (Toohey J) and 153 (Gaudron J).

44    The primary judge was satisfied that her Honour could undertake a reasonable assessment of loss for Claim 2 and did so by applying an aggregate 40% discount to Mr Potter’s exclusive of GST calculation of $324,080 to arrive at an assessment of $194,448. Her Honour’s reasons were at PJ [207] –

The respondents having cast doubt on some of the integers in Mr Potter’s calculation do not assist the Court by providing an alternative quantification. Their expert Mr Minett does not do so, nor does he provide a percentage by which the calculation of claim 2 might be reduced in light of the uncertainties. Monarch proffered that a reduction of 20% should be applied for “friends and family” who would in any event have left Monarch following Messrs Puxty’s and Coggan’s departure. In addition, having regard to the undermining of some of the assumptions given to Mr Potter and the fact that the assessment does not factor in the possibility of attrition in the Clients under Restraint by their departure from Monarch in the ordinary course of business I would reduce Mr Potter’s calculation by a further 20%. Thus, the damages for claim 2 are assessed as $194,448.

The grounds of appeal

45    By grounds 4 and 5 of their notice of appeal the appellants claim that the primary judge erred in the assessment of damages referrable to Claim 2 and seek to have the primary judge’s orders set aside –

4.    … Including in circumstances where the learned Trial Judge had held that:

a.    Monarch had not established the assumptions upon which its expert evidence on damages had been based (PJ [196]-[197]);

b.    Monarch’s expert evidence involved no consideration of the risk of attrition of clients prior to 1 May 2022 (PJ [190]);

c.    the relevant evidence as to attrition of clients was within the control of Monarch (PJ [202]); and

d.    there was an absence of reliable proof of the quantum of damages (PJ [203]),

the learned Trial Judge erred (at PJ [207]) in determining that Monarch had established an entitlement to any damages (or, alternatively, the quantum of damages as found by her Honour) in respect of “Claim 2”.

5.    Further to Ground 4 above, in arriving at the conclusion as to damages recorded at PJ [207], the learned Trial Judge:

a.    erred by failing to cast upon Monarch the onus of establishing the extent to which clients would have been retained (if at all) by Monarch as at 1 May 2022 (being the date upon which the Deferred Purchase Price was to be calculated); and

b.    erred (at PJ [207]) by seeking to overcome the evidentiary deficiencies in Monarch’s claim for damages by applying a discount factor of 20%, which step itself involved error because:

i.    Monarch had not established an entitlement to any damages for “Claim 2”, let alone 80% of its claimed amount;

ii.    there was no proper or adequate evidentiary basis for the conclusion that Monarch was entitled to 80% of its claimed amount, including because the selection of a discount of 20% for contingencies was itself based upon pure conjecture and lacked any evidentiary basis; and

iii.    in any event, her Honour failed to provide any adequate reasons as to how the discount factor of 20% was arrived at.

The grounds of cross-appeal

46    By ground 1 of the notice of cross-appeal Monarch claims that the primary judge erred in her Honour’s assessment of damages referrable to Claim 2 by assessing them in an insufficient sum –

1.    The Trial Judge erred:

a .    at [197] in finding that Monarch had failed to prove the assumptions about the risk of clients leaving the Monarch business or accurate instructions about “initial commissions “and “renewal commissions” and that these matters infected the calculation of damages; and (as a consequence)

b.    in reducing the damages for claim 2 (as defined in the Primary Judgment at [167]) by 20% beyond the 20% reduction for friends and family of the appellants.

Particulars

A.    The available evidence on client relationships and the industry indicated that all or, alternatively, almost all clients would have remained with Monarch during the period between 2 February 2021 and 1 May 2022.

B.    The available evidence was that “Initial Commissions” were included in calculating the sale price under the relevant sale agreement and, accordingly, ought to have been included in the “book value” which was the basis for the damages claim, including by reference to the:

i.    Affidavit of Tatiana Coulter dated 14 April 2025 [sic – 2023] at [133], [134] and [141];

ii.    Affidavit of Brett Puxty dated 18 May 2023 at [38] and [39];

iii.    Affidavit of Tatiana Coulter dated 29 May 2023 at [51]-[56]; and

iv.    Transcript at 21.44-47, 22.1-19, 105.34-39, 106.1-31.

C.    There was no proper basis for a finding that 20% of clients would leave Monarch in the period between 2 February 2021 and 1 May 2022.

D.    The Trial Judge failed to properly apply the presumption against wrongdoers, pursuant to which the Trial Judge should have resolved any doubtful question against the parties whose conduct made an accurate determination so problematic, which in this case was the respondents (at first instance).

The parties’ submissions in relation to the assessment of damages for Claim 2

47    I will summarise the submissions made by the parties in relation to the appeal and cross appeal relating to the assessment of damages for Claim 2.

The appellants’ submissions

48    The appellants submitted that the primary judge should have concluded that Monarch had failed to establish that any damages for Claim 2 should be awarded.

49    The appellants submitted in writing that Monarch’s claim for damages was premised on the proposition that had Monarch included the remainder of the Puxty Clients in the client book that was sold to Newlane, those additional clients would have been retained by Newlane until 1 May 2022 so as to trigger Newlane’s obligation to pay to Monarch a purchase price that took account of those clients. The appellants submitted that Monarch had failed in the Court below to establish that proposition.

50    The appellants submitted that Mr Potter had failed in his calculations to consider the risk that some or all of the Puxty Clients would have been lost by Newlane prior to 1 May 2022. The appellants submitted that Monarch’s failure to address that issue was not attributable to any conduct on the part of the appellants, that this was not a case where it was appropriate to draw inferences or resolve doubtful questions against the appellants, and that there was an absence of reliable proof of quantum. The appellants submitted that the restraint period expired on 31 January 2021, which was about 15 months before the deferred assessment date under the business sale agreement, which was in May 2022. The appellants submitted that there was a strong connection between Mr Puxty and the clients and submitted that 90 out of the 95 Puxty Clients returned within the restraint period.

51    The appellants also submitted that Mr Potter had failed to consider that “initial commissions” were calculated at higher rates than “renewal commissions” and that upfront fees were reimbursed by the financial advisor if the insurance policy was cancelled by the client. The appellants relied on the fact that Mr Puxty had filed and served his affidavit dated 18 May 2023 identifying claimed errors in the factual premises assumed or adopted by Mr Potter, that Mr Potter was not provided with a copy of the affidavit, and that there was no cross-examination of Mr Puxty in relation to its content.

52    The appellants submitted that in applying a discount factor of 20% (which was in addition to a discount factor of 20% that had been conceded by Monarch on account of “family and friends”) the primary judge had erred by impermissibly reversing the onus of proof and had given no reasons for applying a 20% discount factor. The appellants submitted that the genesis of the reduction was a submission made by Monarch in closing address and was not a figure which the appellants accepted as a response to their submissions about the assessment of damages for Claim 2.

53    The appellants submitted that the primary judge did not correctly apply the principles relating to the assessment of damages. The appellants submitted that this was not a case where Monarch could not adduce precise evidence about what had been lost but was a situation where it had not adduced such evidence, citing Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10; 196 ALR 257 at [38] (Hayne J) (Placer). The appellants submitted that Monarch did not prove loss because it did not prove on the balance of probabilities that Monarch and Newlane would have retained the Puxty Clients as at 1 May 2022.

54    In oral submissions, counsel for the appellants submitted that the evidence did not establish that the Puxty Clients would have been included in the business sale agreement, submitting that they would already have been lost to Monarch prior to 1 February 2021. Counsel submitted that the lost opportunity which Monarch claimed had not been established on the balance of probabilities, and for this reason, together with the claimed flaws in the assumptions that Mr Potter was asked to make, Monarch had not discharged its onus.

Monarch’s submissions

55    By its response to the appellants’ submissions on appeal Monarch submitted that the primary judge was incorrect to find that the reliability of Mr Potter’s calculations was undermined by the assumptions given to him. Monarch submitted that her Honour erred by finding that the assumptions underlying Mr Potter’s report that related to initial commissions and renewal commissions were not established and erred in finding that Mr Potter should have factored in a further reduction in clients so as to cause a reduction in the Deferred Purchase Price.

56    In relation to the evidence of Mr Puxty that challenged the assumptions provided to Mr Potter, Monarch submitted that the assumptions were supported by evidence given by Ms Coulter in her affidavit sworn 29 May 2023 and that her evidence was that the assumptions given to Mr Potter were consistent with how TBV was calculated for the business sale agreement. Monarch submitted that the definition of “Trail Commission” in the business sale agreement (see [13] above) did not exclude “initial commissions” but rather included, inter alia, “management (or professional fees), trail payments, commissions, and payments payable by a Client (or receivable by the Vendor or Purchaser in connection with a Broker Agreement)” (emphasis added). Monarch submitted that when regard was had to the definition of “Trail Commission”, revenue that was classified as “new business” was within the definition of “TBV” in the business sale agreement as it was revenue derived from the clients that Odyssey took from Monarch as a result of the breaches of the restraint clauses by Messrs Puxty and Coggan. Monarch relied on the evidence of Ms Coulter to which the primary judge referred at PJ [32] –

Ms Coulter explained that recurring revenue in the context of financial planning is the income received from an existing client base in the form of commissions from insurance companies or advice fees funded via superannuation funds and that, upon a client taking out an insurance policy for the first time, an initial commission is payable upfront to the advisor, typically at around 66% of the first year’s insurance premium. The recurring revenue is usually 10% to 30% of a premium in the case of renewal commission for insurance, depending on how the policy is set up.

57    Monarch submitted that Ms Coulter’s evidence was consistent with the evidence of Mr Lee, the managing partner of Newlane, that “[r]ecurring revenue is the income that is received by Monarch and the recurring revenue amount underlies the value of Monarch’s ‘book’ (number of clients)”. Monarch submitted that Ms Coulter’s evidence was also consistent with the definitions of TBV, Annual Trail Commission, and Trail Commission in the business sale agreement and that the evidence established that TBV included “initial commissions”, being commissions on new products for existing clients. Monarch submitted that that the assumptions given to Mr Potter were therefore correct.

58    Monarch submitted that there was no need to cross-examine Mr Puxty in relation to his evidence on these issues because his evidence was based upon his understanding of industry practice and it was not suggested that he was privy to how TBV was calculated under the business sale agreement.

59    Monarch submitted that, contrary to the way the appellants had cross-examined Mr Potter at trial, the fact Mr Potter was not told that “initial commissions are calculated at a higher rate than renewal commission”, or that “initial commissions are upfront fees that need to be reimbursed if the client cancels the insurance policy”, was irrelevant, because the price payable under the business sale agreement was based upon revenue calculations that included initial commissions. For much the same reason, Monarch submitted that it was irrelevant that Mr Potter was not told “even with a recurring insurance policy, if the premium increased year to year, the amount of the increase is treated as subject to initial commissions, as opposed to renewal commission rates, and this component is treated as new business”. It was irrelevant because the price under the business sale agreement was based upon revenue calculations that included initial commissions.

60    As to the risk of client attrition, Monarch, like the appellants, submitted that the primary judge did not provide adequate reasons for why the reduction of 20% was chosen and had failed to apply correctly the presumption against wrongdoers. Monarch submitted that the question whether the clients would have remained with Monarch and then Newlane but for the breach of the restraint clauses by Messrs Puxty and Coggan was an inherently difficult task that was caused by their wrongful conduct. Monarch submitted that the Court should therefore assess damages in a robust manner, relying on the presumption against wrongdoers, the onus of proof, and resolving doubtful questions against the party “whose actions have made an accurate determination so problematic”, citing LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd (1989) 24 NSWLR 499 at 508 (Hodgson J).

61    Further, Monarch submitted that the available evidence supported a finding that the clients would not have left to such an extent as to cause a reduction in the Deferred Purchase Price. Monarch relied on the fact that following the purchase of the business by Newlane, Ms Coulter became an employee of Newlane and that under the business sale agreement there were essential employment terms that included that Ms Coulter’s term be 15 months from completion. Monarch relied on the primary judge’s acceptance at PJ [179] to [180] that Ms Coulter had a more than 20-year career in financial services and that Monarch had established its ability, via Ms Coulter, to service the clients under restraint. In light of those findings, the primary judge had made no reduction in the assessment of damages under Claim 1 for lost profits other than the accepted 20% reduction on account of “family and friends” of Mr Puxty or Mr Coggan. Monarch submitted that Ms Coulter had commenced the business in 2012 and built it to over 215 long term clients at the time Monarch sold its business, suggesting that if anything the TBV would, at the very least, have remained steady as at the Deferred Payment Date. It was submitted that Monarch did not receive payments directly from clients, but instead was usually paid by dealer groups and, given the nature of the business, it was clear that revenue was generally of a recurring nature.

62    Monarch submitted that the primary judge had not reversed the onus of proof. It submitted that it had established the price which it would have obtained under the business sale agreement had Messrs Puxty and Coggan not solicited or accepted instructions to perform work for clients in breach of their contractual obligations. It was submitted that there was no evidence from them as to how they would go about soliciting clients, or their prospects of successfully doing so after the restraint period had expired. It was submitted that hypothetical assessments, without any proper evidentiary basis, that clients would have left Monarch were impossible to determine properly, and that this difficulty arose because of Messrs Puxty’s and Coggan’s breaches of their post-employment restraints. It was submitted that this was precisely the circumstance in which the presumption against wrongdoers should be applied.

The appellants’ submissions as cross-respondent in response to the cross-appeal

63    The appellants disputed Monarch’s submissions in relation to the construction and operation of the business sale agreement and the calculation of “TBV” as defined in the agreement.

64    The appellants submitted that Mr Potter had calculated loss by reference to the Odyssey Revenue Report, which did not relate to revenue in the 12-month Assessment Period prior to the Deferred Payment Date in May 2022, but related to revenue earned by Odyssey from the Puxty Clients during the restraint period, which was 1 February 2020 to 31 January 2021. The appellants submitted that the revenue that Odyssey earned from the Puxty Clients during the restraint period included new business from those clients that attracted upfront commissions. It was submitted that in consequence, the amounts in the Odyssey Revenue Report for fees earned from the Puxty Clients during the Restraint Period could not simply be extrapolated in order to calculate a hypothetical annual Trail Commission uplift for the period from, say, May 2021 to May 2022. It was submitted that initial commissions from Puxty Clients recorded in the Odyssey Revenue Report did not represent an ongoing level of revenue, and that initial commissions were calculated at a higher rate which then dropped off in later years, and that fees for insurance policies were not necessarily a source of recurring revenue because insurance policies could be cancelled and, in that event, fees would need to be reimbursed. The appellants submitted that Ms Coulter had confirmed these matters in cross-examination.

65    On the question of the risk that Puxty Clients would leave Monarch and then Newlane prior to 1 May 2022 the appellants submitted that Monarch did not adduce any direct evidence going to the issue of retention of clients. It was submitted that the notion of a 20% discount for the risk of “family and friends” leaving Monarch arose in closing submissions, and that the figure was “entirely plucked out of thin air” and was not calculated in any meaningful way. It was submitted that the primary judge was therefore correct to conclude that Monarch had failed to prove the assumptions underlying Mr Potter’s calculations, because Mr Potter’s calculations assumed a 100% retention rate and that assumption had not been proven.

66    The appellants submitted that for the purposes of Claim 2 the evidence positively established that there would have been a very significant risk, in fact a high probability, of Monarch and then Newlane losing all, or almost all, of the Puxty Clients prior to 1 May 2022. The appellants relied on the evidence in the form of a spreadsheet prepared by Mr Puxty that showed that 90 of 95 clients left Monarch and transferred their business to Odyssey during the restraint period. The clients included Mr Puxty and his family members. I add here for context that most of those clients are recorded in the spreadsheet as having executed transfer forms in March, April and May 2020. The appellants submitted that there was therefore a strong evidentiary basis for concluding that by 1 May 2022 all or almost all of the Puxty Clients would have been lost to Monarch and Newlane with the result that Monarch had failed to prove that any loss under Claim 2 was suffered.

67    The appellants submitted that Ms Coulter could have but did not lead any evidence as to her own dealings with the Puxty Clients. It was submitted that this type of evidence might have permitted the Court to assess the approximate likelihood of Monarch and Newlane retaining any of those Puxty Clients notwithstanding their pre-existing connection with Mr Puxty. It was submitted that had such evidence been adduced, Mr Puxty would have had an opportunity to answer and test the evidence.

68    The appellants returned to the question of the classes of revenue that Mr Potter was instructed to consider in his calculations. The appellants maintained that Mr Potter had adopted inaccurate assumptions in his calculations, relying on the various claims that Mr Puxty had made in his 18 May 2023 affidavit.

Monarch’s reply submissions as cross-appellant

69    Monarch did not dispute the appellants’ submission that the Assessment Period for the purposes of the calculation of the TBV was between May 2021 and May 2022 and therefore fell outside the restraint period. Instead, Monarch submitted that this feature did not affect its cross-appeal in relation to the assessment of damages under Claim 2.

70    First, the appellants submitted that the Initial Purchase Price, although agreed at $504,000, had been calculated by reference to 70% of the TBV – necessarily at the time of the business sale agreement – and that this component of the purchase price would have been higher but for the breaches of the restraint clauses by Messrs Puxty and Coggan. It was not in issue on the appeal that the lost profits claim under Claim 1 was to be reduced by 20% on account of “family and friends” and was otherwise established. It was submitted that any reduction in the assessment of damages under Claim 2 due to client attrition, insofar as it related to the Initial Purchase Price, could only be 20% because they would be the same lost clients causing a reduction to the loss of profits under Claim 1.

71    Second, the appellants submitted that the Deferred Purchase Price was defined in the business sale agreement as 30% of the TBV by reference to the Assessment Period. It was submitted that if – hypothetically – all the Puxty Clients left before the commencement of the Assessment Period in May 2021, then the reduction on Claim 2 would be around 30% of the claim, reflecting the value of the Deferred Purchase Price in addition a reduction of around 14% (20% of 70%) in loss of opportunity to increase the Initial Purchase Price by reference to loss of “family and friends” clients. Monarch submitted that the primary judge’s reduction of 40% would have been approximately correct if the Court had found that all the Puxty Clients would have left immediately before the commencement of the Assessment Period.

72    Further, addressing the appellants’ argument that clients would have left Monarch or Newlane after the expiry of the restraint period, Monarch submitted that the fact that most Puxty Clients left Monarch during the 12-month restraint period did not provide a strong evidentiary basis for concluding they would have left after the restraint period. Monarch submitted that the primary judge had correctly recognised at PJ [164] that the 12-month restraint was “to permit Monarch an opportunity to deal with the client and ‘cement its connection’ or to sever Messrs Puxty’s and Coggan’s connection”. It was submitted that the very purpose of the restraint was to prevent the Puxty Clients leaving Monarch.

73    In response to the appellant’s submission that Ms Coulter could have but did not lead evidence as to her dealings with the Puxty Clients Monarch submitted that the relevant issue was what would have occurred if Messrs Puxty and Coggan had not breached their obligations and that the appellants did not lead any evidence to suggest that the clients would have left Monarch in any event.

74    Monarch submitted nonetheless that determining loss by reference to the loss of opportunity to obtain a higher Deferred Purchase Price was an inherently difficult task, because it turned on whether clients would have remained at Monarch and that the difficulty of proof was a function of the breach of the restraints. Monarch repeated its submission that in these circumstances the presumption against wrongdoers should have been applied.

75    In relation to the underlying assumptions that were provided to Mr Potter for the purpose of his calculations, Monarch reiterated its submission that there was no error in using “initial commissions” when calculating loss for the purpose of assessing damages under Claim 2. Monarch accepted that revenue from “initial commissions” was higher than renewal commissions, and that they had been taken into account by Mr Potter when calculating the TBV using the Odyssey Revenue Report which was referrable to revenue during the restraint period. However, Monarch submitted that there was no basis to suggest that “initial commissions”, that is commissions for new products, would be lower in the Assessment Period than the restraint period. It was submitted that Mr Puxty had worked for the Puxty Clients over years at previous firms and that the commissions, including “initial commissions” earned from the Puxty Clients in the restraint period were the best guide to what commissions would be received in the Assessment Period.

76    In response to the appellant’s submission that the 20% reduction for “family and friends” had been “entirely plucked out of thin air” Monarch submitted that the figure was a reasonable assumption of client attrition and vicissitudes in light of the evidence before the Court. Monarch submitted that the evidence was that after about six months working at Wizdom, Mr Puxty had taken about $30,000 in revenue from family and friends, and that in cross-examination Mr Puxty claimed that a list of 19 persons recorded in a letter from MinterEllison were “friends” (but not family) who came with him to Wizdom. It is difficult to evaluate this submission because it footnoted a non-existent transcript reference and referred to a document that was not included in Part C of the appeal book.

Consideration

77    The general rule at common law is “that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed”: Robinson v Harman (1841) 1 Ex 850 at 855; 154 ER 363 at 365 (Parke B), cited in Cessnock City Council v 123 259 932 Pty Ltd [2024] HCA 17; 281 CLR 39 (Cessnock) at [6] (Gageler CJ), [48] (Gordon J) [117] (Edelman, Steward, Gleeson and Beech-Jones JJ), [190] (Jagot J). The onus of proving the fact of loss was on Monarch and the standard of proof was upon the balance of probabilities: Badenach v Calvert [2016] HCA 18; 257 CLR 440 (Badenach) at [34] (French CJ, Kiefel and Keane JJ); Cessnock at [48] (Gordon J), [127] (Edelman, Steward, Gleeson and Beech-Jones JJ), Evidence Act 1995 (Cth), s 140(1).

78    Monarch’s burden was to demonstrate a causal connection between the breaches of the restraint clauses and the loss of an opportunity to obtain a higher price than it did for the sale of its business. The assets that Monarch sold to Newlane under the business sale agreement included its goodwill. Its goodwill included its connections to clients and the right to do business with those clients to the exclusion of Messrs Puxty and Coggan during the restraint period: see Federal Commissioner of Taxation v Murry [1998] HCA 42; 193 CLR 605 at [29] to [31] (Gaudron, McHugh, Gummow and Hayne JJ). The evident commercial purpose of the restraint clauses in the employment contracts between Monarch and Messrs Puxty and Coggan was to give Monarch the opportunity to cement its relationship with its clients in the 12-month period following Messrs Puxty’s and Coggan’s departure. It thereby gave Monarch an opportunity to secure client connections which was a source of its goodwill.

79    Monarch’s goodwill of which its clients were a source was of some value: cf, Badenach at [39]. Putting to one side the “family and friends” clients who were the subject of a concession by Monarch at trial, Monarch established the existence of a substantial and not merely speculative opportunity to retain a body of clients during the restraint period and as a result to obtain a higher price for the sale of its business. The existence of that opportunity was established by –

(a)    evidence of all the surrounding circumstances from which an inference arises that the connection to the clients was a valuable source of Monarch’s goodwill;

(b)    the fact that Messrs Puxty and Coggan had successfully solicited the clients in breach of the restraint clauses;

(c)    the fact and content of the business sale agreement which provided for the calculation of the purchase price based upon fees, trail commissions, and other payments in respect of Monarch’s clients;

(d)    Ms Coulter’s unchallenged evidence at [140] of her affidavit sworn 14 April 2023 that, save for eight clients, she did not include in the sale clients that Mr Puxty claimed were his because in circumstances where Messrs Puxty and Coggan had already taken a number of clients, she did not want Newlane to pay for those clients only for them to leave; and

(e)    the unchallenged evidence of the managing partner of Newlane, Mr Lee, as to Newlane’s capacity and willingness to pay a higher purchase price if additional clients had been included in the sale.

80    The existence of client connections and the value that might be attributed to them was in the contemplation of Monarch and Messrs Puxty and Coggan at the time the employment agreements were entered into. That is because the restraint clauses to which Messrs Puxty and Coggan were subject were directed to enhancing the value of the goodwill that arose as a result of those connections and the opportunity to reinforce the connections to those clients free of interference from Messrs Puxty and Coggan. The diminution in the value of goodwill reflected in the purchase price under the business sale agreement arose naturally as a result of the breaches of the restraint clauses.

81    Monarch having established its lost opportunity on the balance of probabilities, it remained to assess the value of the loss. In truth, there were multiple breaches of the employment agreement that occurred, and each solicitation of or acceptance of work from a client contributed to Monarch’s lost opportunity to obtain a higher price for the sale of its business. The assessment of loss directs attention to the value to be attributed to the client connections which were preserved by the restraint clauses which Messrs Puxty and Coggan fractured as a result of their breaches.

82    The assessment of the value of Monarch’s lost opportunity did not require proof on the balance of probabilities: Maritime Union of Australia v Fair Work Ombudsman [2015] FCAFC 120 at [28] (Allsop CJ, Mansfield and Siopis JJ), citing Malec v J C Hutton Pty Ltd [1990] HCA 20; 169 CLR 638 at 642 to 643 (Deane, Gaudron and McHugh JJ) and Sellars v Adelaide Petroleum NL [1994] HCA 4; 179 CLR 332 (Sellars) at 352 to 356 (Mason CJ, Dawson, Toohey and Gaudron JJ) and 368 (Brennan J). The assessment of value attracted three overlapping and interacting principles that were applicable to the evaluation of both probabilities and possibilities that informed the assessment of damages.

83    The first principle is that the Court must do its best to quantify the loss even if a degree of speculation and guess work is involved, at least in cases where there cannot be precise evidence of loss: Amann Aviation at 83 (Mason CJ and Dawson J), citing Biggin & Co Ltd v Permanite Ltd [1951] 1 KB 422 at 438 (Devlin J); Placer at [38] (Hayne J, Gleeson CJ, McHugh and Kirby JJ agreeing). Otherwise, proof is required with as much certainty as is reasonable having regard to the circumstances and the nature of the acts themselves by which the damage is done: Ratcliffe v Evans [1892] 2 QB 524 at 532 to 533 (Bowen LJ). See also: Zonia Holdings Pty Ltd v Commonwealth Bank of Australia Ltd [2025] FCAFC 63; 427 ALR 233 at [614] to [616] (Murphy, Moshinsky and Button JJ).

84    The second principle is that the value of the lost opportunity depends upon an evaluation of a past hypothetical set of events that did not occur following the breaches of the restraint clauses, namely the retention of clients to the point where they made a contribution to an increased purchase price that Monarch might have been able to secure for its business. As I have explained, while the existence of the opportunity must be proven on the balance of probabilities, the assessment of the value of the opportunity measured by reference to the likelihood of the retention of clients occurring does not, and may be assessed as a possibility the degree of which goes to the valuation of the loss.

85    The third principle is derived from the direction of Pratt CJ to the jury in Armory v Delamirie (1722) 1 Stra 505; 93 ER 664 concerning difficulties of proof of loss that are caused by the wrong or breach of obligation that is the subject of the cause of action. The principle was considered in the context of breach of contract in Cessnock, particularly by Edelman, Steward, Gleeson and Beech-Jones JJ at [127] to [168]. See also, Murphy v Overton Investments Pty Ltd [2004] HCA 3; 216 CLR 388 at [74] (Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ) and the cases cited. The third principle was referred to by Monarch in its submissions as the “wrongdoer principle”. This label is liable to mislead. The principle is not a broad-ranging presumption against wrongdoers. The principle is better referred to as the “facilitation principle”, which recognises that it is concerned with the facilitation of proof and acknowledges that the legal onus of proving loss remains with an applicant. The facilitation principle is concerned with the sufficiency and weight of evidence in relation to the assessment of damages rather than the onus of proof. It sits with the first and the second principles which I identified above and with other principles that guide the evaluation of evidence such as that essayed in Blatch v Archer (1774) 1 Cowp 63; 98 ER 969 that “all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted”: see Cessnock at [129]. The facilitation principle allows courts to adopt a robust approach to the assessment of damages and the drawing of inferences where a respondent, by its wrongful conduct, has prevented or impeded an applicant from adducing precise evidence of loss, and in those circumstances authorises the resolution of doubtful questions against the wrongdoer.

86    The case advanced by Monarch at trial was directed to two different types of opportunity. The first was the opportunity to earn profits on account of the Puxty Clients that was the subject of Claim 1 which is not the subject of discrete appeal or cross-appeal. The lost opportunity the subject of Claim 2 was a different opportunity. It was dependent upon establishing a separate course of events and was the subject of different contingencies.

87    In relation to Claim 2, at trial Monarch initially sought to advance a case of precise loss calculated by reference to the Odyssey Revenue Report and Mr Potter’s opinion based upon it. However, in truth Monarch’s loss could not be calculated with such precision. To start with, the concession in relation to “family and friends” took a proportion of clients out of the cohort of clients who represented valuable opportunities. The assessment of damage then depended upon establishing hypothetical events which could not be established with certainty and was affected by the following reasonable contingencies. First, there was the prospect that not all of the balance of the Puxty Clients would have been included in the sale or would have remained with Monarch at the date of settlement of the sale of business. Secondly, there was the prospect that not all of the balance of the Puxty Clients would have remained with Newlane at the Deferred Payment Date. And thirdly, there was the evidence and submissions before the primary judge in relation to what client-related income should form the basis of the calculations in assessing the value of the lost opportunity.

88    There were two periods of time that invited different considerations in assessing the value of the lost opportunity. First, there was the period up to the sale and settlement of the sale of business during which the Messrs Puxty and Coggan were precluded from soliciting or accepting any instructions from, or performing any work for, the Puxty Clients. Secondly, there was the 12-month Assessment Period prior to the Deferred Payment Date in May 2022, during which Messrs Puxty and Coggan were not subject to the restraints and indeed had not been the subject to the restraints from 1 February 2021. Mr Lee did not give any direct evidence as to his preparedness to pay a purchase price on account of clients who had previously been clients of Mr Puxty and who would not have been the subject of any restraint immediately upon settlement of the sale of business, but as I have mentioned, he was not required for cross-examination.

89    Overlaying the above is that Monarch requested Mr Potter to calculate his figures based upon the Odyssey Revenue Report and he was not given a corresponding report that was prepared in respect of the Assessment Period. However, this was not a point that the appellants took at trial, or a topic on which Mr Potter was cross-examined, and I therefore give it no significance: see Whisprun Pty Ltd v Dixon [2003] HCA 48; 200 ALR 447 at [51] (Gleeson CJ, McHugh and Gummow JJ). The point might have been met by further evidence or argument if it had been foreshadowed by the appellants in their evidence or in their opening submissions. Instead, the failure of the appellants to take the point and to adduce evidence of income earned by Odyssey in relation to Puxty Clients in the Assessment Period tells against that evidence being to their advantage.

90    On its face there appeared to be some force in Monarch’s submission to this Court on the cross-appeal that the assessment of damages should not have taken into account the claimed difference between commissions on new business and recurring commissions because the relevance of that distinction was not to be determined by Mr Puxty’s evidence about general practice in the industry but by the terms of the business sale agreement and its provisions in relation to the calculation of the purchase price. However, the primary judge received very little assistance from the parties in relation to this issue.

91    Ms Coulter’s affidavit evidence in which she asserted the correctness of the assumptions given to Mr Potter was terse. The cross-examination of Ms Coulter on the issue did not challenge her evidence that the valuation of a book of clients depended upon the terms of the sales agreement, and that the valuation was specific to each individual arrangement and was not determined by industry practice which was the case that the appellants had advanced through the evidence of Mr Puxty. Ms Coulter was not challenged in cross-examination in relation to her evidence as to how the purchase price under the business sale agreement had been arrived at, and as I have mentioned the appellants did not require Mr Lee for cross-examination. Further, Ms Coulter was not confronted in cross-examination with any suggestion that the evidence in her 29 May 2023 affidavit concerning the correctness of the assumptions given to Mr Potter was wrong.

92    The written and oral submissions advanced on behalf of Monarch to the primary judge on the question of the correctness of the assumptions adopted by Mr Potter were spare, almost to the point of non-existent, with Monarch submitting in writing at [32] of its closing submissions –

Thirdly, to the extent that the Respondents seek to undermine the assumptions made in the Potter report, those attacks are of no effect when having regard to the presumption against wrongdoers.

93    This submission was misconceived and was correctly rejected by the primary judge.

94    In oral submissions at the conclusion of evidence counsel for Monarch followed the structure of the written submissions and said nothing about the evidence in relation to the correctness of the assumptions that Monarch gave to Mr Potter in relation to commission income and the inclusion of a new business component. Nor did counsel for Monarch say anything about the issue in reply submissions.

95    For their part, the appellants did claim in their final written and oral submissions to the primary judge that Mr Potter was not given accurate instructions in relation to initial commissions, new commissions, and new business. But these submissions did not deal with Ms Coulter’s evidence that the valuation of the book depended upon the terms of the agreement, they did not descend into any detail, and as the primary judge remarked at PJ [207], the appellants did not assist the Court by offering an alternative hypothesis for the assessment of damages.

96    The primary judge made no error in discounting the sum arrived at by Mr Potter’s calculations by an initial 20%. That amount was based upon a concession made by Monarch and did not require evidence. The concession was tantamount to an acceptance that the opportunity to retain the “family and friends” clients had no value. Accordingly, the primary judge’s reduction by a further 20% on account of doubts about the assumptions that Mr Potter was given and the need to account for the risk that not all of the balance of the Puxty Clients would result in an increased sale price for the business, should be seen as a reduction of 25% in relation to the loss of valuable opportunity that Monarch had established.

The cross-appeal fails

97    It is convenient to deal with the cross-appeal first.

98    Monarch has not established any error in the primary judge’s finding at PJ [197] that Mr Potter’s assumptions resulted in an overestimation of the value of the lost opportunity. Monarch’s submission on appeal in relation to the construction of “TBV” under the business sale agreement was not advanced at trial. The point should not therefore be entertained in this Court as a basis for questioning the primary judge’s assessment of Mr Potter’s report: Coulton v Holcombe [1986] HCA 33; 162 CLR 1 at 7 (Gibbs CJ, Wilson, Brennan and Dawson JJ). The time and place for Monarch to run its arguments was at trial. Further, as I have explained at [93] to [97] of these reasons, Monarch provided the primary judge with little to no assistance in assessing the correctness of the assumptions given to Mr Potter. The affidavit evidence of Ms Coulter and Mr Lee provided no explanation of the meaning of the terms used in the business sale agreement or how those terms justified the assumptions. Monarch’s written submissions in relation to the assumptions given to Mr Potter were also unilluminating, relying entirely on the so-called “wrongdoer principle”, which I have noted was misconceived.

99    Further, Monarch has not demonstrated that Mr Potter was correct to assume that all of the Puxty Clients would have remained at Monarch until the Deferred Payment Date. Common sense would dictate otherwise. In addition, there was evidence that supported some reduction in the assessment of damages under Claim 2 on account of the risk that the goodwill that attached to some of the Puxty Clients might not have been sold with business. That evidence included evidence of Mr Potter in cross-examination that an analysis of client retention might have been better informed by industry-specific evidence or direct evidence in relation to the clients in issue. And while Mr Potter maintained that the inclusion of all the clients in the sale was a starting point, he accepted that there was a question of risk that was an essential component to a proper calculation of damages which he described as a difficult calculation.

100    Insofar as Monarch submitted that the primary judge failed to provide an explanation for the additional 20% reduction, the absence of any more reasoning than her Honour gave is explained by the fact that her Honour was given no assistance by Monarch in understanding how the quantum would be affected by the inaccuracies in Mr Potter’s assumptions. Instead, Monarch sought to have uncertainties in the quantum resolved entirely in its favour on the basis of the “wrongdoer principle”. As I have explained at [88] above, what Monarch referred to as the “wrongdoer principle” is more correctly referred to as the “facilitation principle”. It is one of several principles that guide the evaluation of the sufficiency and weight of evidence. It is to be applied alongside those other principles, including the principle in Blatch v Archer. In refusing to apply the “wrongdoer principle” determinatively, the primary judge observed at PJ [202] that it was within Monarch’s power to marshal proof of client attrition rates from the business and in the industry generally. Indeed, in oral submissions before the primary judge Monarch foreshadowed but did not press an application to lead evidence as to the number of clients likely to remain with a business after an advisor leaves. It was also within Monarch’s power to advance argument before the primary judge as to the meaning of the terms of the business sale agreement, and accordingly the basis on which the assumptions given to Mr Potter were developed. It did not do this. It is fixed with the incomplete basis on which it ran its case at trial.

The appeal on damages fails

101    It does not follow from the foregoing that Monarch has failed to prove on the balance of probabilities that it sustained the loss of a valuable opportunity by reason of Mr Puxty’s breach of the restraint clause. As I have explained at [82], Monarch discharged that burden by evidence of the surrounding circumstances, the nature of the business sale agreement, and the affidavits of Ms Coulter and Mr Lee. Monarch could not value precisely the lost opportunity in order to establish the quantum of damages: PJ [203]. It did not follow, however, that it was not open to the primary judge to arrive at an estimation of loss.

102    Mr Potter’s report remained a foundation for assessing the value of the lost opportunity even though the assumptions underpinning it resulted in an overestimation. The appellants’ expert at trial, Mr Minett, wrote in his report that Mr Potter ought to have adopted “a methodology incorporating risk, and applying a level of contingency or sensitivity (as appropriate) in the calculation”. Mr Minett did not suggest in his report that incorporating risk might lead to the conclusion that there was no valuable opportunity at all.

103    Further, as the primary judge observed at PJ [207], the appellants did not instruct Mr Minett to prepare an alternative quantification. It was open to the appellants to instruct Mr Minett to do so in a manner that accounted for the contingencies that they had identified, being the risk of client attrition and the exclusion of some revenue from the calculation of the purchase price under the business sale agreement. If such evidence called into question the existence on the balance of probabilities of a valuable opportunity, the result might have been otherwise. But it was not led.

104    There was therefore no error by the primary judge in concluding on the basis of the remaining evidence that the existence of a valuable opportunity had been proved. Further, there was no error in proceeding to value Monarch’s lost opportunity, notwithstanding that it was difficult to do so in the absence of any real assistance from the parties, by using Mr Potter’s report as a starting point. As I have noted, the primary judge’s assessment of loss was really a 25% reduction on Mr Potter’s figures on the basis that the “family and friends” clients presented no valuable opportunity. The task that the primary judge performed in estimating the value of Monarch’s lost opportunity accorded with the statement of Brennan J in Sellars at 368 –

Although the issue of a loss caused by the defendant's conduct must be established on the balance of probabilities, hypotheses and possibilities the fulfilment of which cannot be proved must be evaluated to determine the amount or value of the loss suffered. Proof on the balance of probabilities has no part to play in the evaluation of such hypotheses or possibilities: evaluation is a matter of informed estimation.

(Emphasis in original, footnote omitted.)

105    The primary judge had available to her the figures on which Mr Potter relied, some of which were extracted in Mr Minett’s report. On appeal, the appellants did not take this court to any of that material to suggest that the primary judge’s assessment was wrong because it was attended with any specific error, or on the ground that her Honour’s assessment was not reasonable. Like Monarch, the appellants are fixed with the way they conducted the case at trial and on appeal.

Associate:

Dated:    4 June 2026

REASONS FOR JUDGMENT

MCELWAINE J:

106    The primary judge upheld a contractual claim for breach of a post-employment restraint, awarded damages and dismissed a cross-claim which contended that despite the employment restraint, the employer had separately defined clients that were not subject to it. Monarch Advisory Group Pty Ltd was the employer, Brett James Puxty and Francis Coggan were the employees and Odyssey Advisory Services Pty Ltd was and is a financial planning company in competition with Monarch and in which Mr Puxty and Mr Coggan held shares and were the directors. The reasons of the primary judge were published on 23 May 2025: Monarch Advisory Group Pty Ltd v Puxty (No 4) [2025] FCA 534; (2025) 340 IR 291 (primary judgment or simply PJ). Her Honour required the parties to submit agreed consequential orders, or if not competing submissions.

107    After publication of the primary judgment, Tatiana Coulter, the sole director of Monarch, took steps to place it into voluntary liquidation. On 20 June 2025, the primary judge, inter alia, (1) gave leave to Mr Puxty and Odyssey, as the cross-claimants, to proceed against Monarch (the cross-respondent) pursuant to s 500 of the Corporations Act 2001 (Cth), (2) found in favour of Monarch on the claim for $300,593.60; (3) otherwise dismissed the statement of claim; (4) entered judgment in favour of Mr Puxty and Odyssey on the cross-claim for $30,000; (5) otherwise dismissed the cross-claim; (6) set off the judgment amounts against each other and entered judgment for Monarch in the principal amount of $270,593.60, (7) plus interest of $74,000; and (9) ordered that costs be determined on the papers.

108    On 26 June 2025, the primary judge ordered; (1) the respondents to pay 60% of Monarch’s costs of the claim and; (2) Monarch to pay 20% of the cross-claimants’ costs of the cross-claim: Monarch Advisory Group Pty Ltd (in liq) v Puxty (Costs) [2025] FCA 697 (costs judgment or simply CJ).

109    The parties are each dissatisfied with those orders. Mr Puxty, Mr Coggan and Odyssey (appellants) appeal orders 2, 5 and 6 made on 20 June and consequentially, assuming success, each of the orders of 26 June 2025. Monarch as the cross-appellant appeals orders 2 and 6 of 20 June 2025 and order 1 of 26 June 2025. Monarch requires leave to appeal the costs orders: Harvard Nominees Pty Ltd v Dimension Agriculture Pty Ltd (in liq) [2023] FCAFC 140; (2023) 299 FCR 224.

110    For the reasons that follow, I have concluded that grounds 1, 2 and 3 of the appeal fail. I would also refuse leave to appeal the costs orders with the consequence that ground 2 of the cross-appeal fails. For the reasons given by Wheelahan J, with which I agree, grounds 4 and 5 of the appeal and ground 1 of the cross-appeal also fail. Further, I agree with his Honour that there should be no order as to the costs of the appeal or the cross-appeal with a right to apply for a different order.

Claims made and claims abandoned

111    Stripping away the density of the pleaded claims and defences, by the point of closing submissions before the primary judge the material issues were as follows.

112    Monarch confined its claim to damages for breach of the post-employment restraints in the contracts signed by Mr Puxty and Mr Coggan each of which is dated 7 December 2018. The primary terms are identical. Clause 19 of each is poorly drafted, but no point was taken at trial that the clauses were unenforceable for that reason. The parties proceeded on the common basis that the effect of the clause was that, without the employer’s prior consent, from the termination date the employee is not to solicit, attempt to solicit, or accept any instructions to perform any work from any client during the restraint period. As is commonly the case in such clauses, the restraint period was defined in a cascading way. The primary judge found that a restraint period of 12 months was reasonable and hence valid and enforceable: PJ [166]. There is no appeal against that finding.

113    Clause 19 contained a definition of “client”; including any person or entity to which the employer provided services during the employment. It was not in dispute before the primary judge that the clients of Monarch included persons and corporations who were clients of Mr Puxty before he became an employee of Monarch. Mr Puxty had acted as a financial adviser for approximately 20 years before becoming an employee of Monarch. He had known Ms Coulter since approximately 2010 both as a friend and business associate. They were “good friends”: PJ [23]. When Mr Puxty joined Monarch as an employee, he brought with him a number of clients. They were known as the AON clients, by reason of the fact that they were clients of Mr Puxty when an employee of AON Hewitt Australia and in respect of which his post-employment restraints had expired.

114    Mr Puxty and Mr Coggan resigned as employees of Monarch with effect from 31 January 2020. The contractual post-employment restraints commenced on 1 February 2020. Despite the restraint, Mr Puxty and Mr Coggan solicited the AON clients and many left to become clients of Odyssey.

115    Monarch contended it was entitled to an award of damages for breach of contract formulated in two components. Claim 1, a loss of profit between 31 January 2020 and 2 February 2021. Claim 2, a lost opportunity claim which requires some context. Monarch sold its business as a going concern to Newlane Risk Pty Ltd pursuant to a Sale of Business Agreement dated 21 December 2020. Payment of the purchase price was staged with a component only being payable if a recurring revenue amount was reached post the sale. For claim 2, Monarch contended that but for the departure of clients to Odyssey, it could have achieved a higher sale price.

116    Mr Puxty, Mr Coggan and Odyssey did not dispute the solicitation of AON clients. The defence was that Monarch had agreed that Mr Puxty could “take back” the AON clients. That contention rested on acceptance that there was an a priori oral agreement or consent reached or given in late 2018 (before the employment agreements were signed) that Mr Puxty “was entitled to take back the entitlement to provide services to the clients who had been brought into the business by him if the proposed arrangement whereby Madison Marcus would become a shareholder and investor in [Monarch] and whereby [Mr Puxty] would become a shareholder in [Monarch] failed to eventuate” . It was common ground that the law firm Madison Marcus had engaged with Ms Coulter in discussions concerning a business arrangement that the firm would refer clients to Monarch and would, by its operating company Consolidated Corporate Pty Ltd, acquire a substantial shareholding in Monarch. On 13 March 2018, Consolidated acquired a 50% shareholding in Monarch. It divested that shareholding on 4 March 2019. A further aspect of Mr Puxty’s defence was that in or about January 2020, Ms Coulter provided consent, for the purposes of clause 19 of the employment agreements, for Mr Puxty to take back the AON clients.

117    There were other defences that were abandoned by the time of closing submissions. In summary, a joint venture was relied on as having been agreed in 2019 to the effect that the employment agreements were a component of a suite of agreements between Mr Puxty, Mr Coggan, Monarch and Madison Marcus whereby Mr Puxty would introduce and transfer his clients to Monarch and receive payment therefor, Monarch would be entitled to the revenue derived from servicing those clients and if Mr Puxty left Monarch, he would be entitled to take back his clients. Another defence was that this joint venture arrangement was terminated by mutual consent, or that a new joint venture was entered into on or about 20 April 2019 whereby the employment agreements would be terminated and Mr Puxty and Ms Coulter would become equal shareholders in and directors of Monarch in consideration of the transfer of Mr Puxty’s clients, he would become an employee of Monarch with a salary of $150,000 per annum and that he would provide funding to Monarch upon his appointment as a director and his acquisition of shares. It was further contended that in about January 2020, the joint venture was terminated by consent, whereupon it was agreed that Monarch would transfer to Mr Puxty his clients and that Odyssey would thereafter be entitled to the revenue generated therefrom.

118    In the cross-claim, Mr Puxty and Odyssey pleaded the “take back” defence differently. That is, that in late 2018 there were discussions between Mr Puxty and Ms Coulter concerning “a potential business arrangement” whereby Mr Puxty would bring to Monarch his clients, but on the “understanding” that there was or would continue to be in place an arrangement between Monarch and Madison Marcus whereby the firm would be a shareholder in Monarch and would refer clients to it. It was then contended that Ms Coulter and Mr Puxty agreed that if Madison Marcus “ceased to be involved in the Monarch business and/or failed to provide referrals to Monarch” that Mr Puxty would be “entitled to take back” the clients that he had agreed to bring to Monarch and thereafter would be entitled to conduct business on his own account. Mr Puxty transferred his clients, but Madison Marcus were unable to provide the promised referrals and ultimately ceased the firm’s business arrangement with Monarch. In consequence, Mr Puxty terminated his employment but in breach of the agreement Monarch failed to “execute the documentation that was required in order to cause” Mr Puxty’s clients to be transferred. This caused damage to Odyssey that it particularised in an amount of $48,416.92 and which quantum it submitted was not disputed.

119    Separately, Mr Puxty cross-claimed an amount of $30,000 for money lent to Monarch. This claim was not ultimately disputed by Monarch.

How did the primary judge resolve the claims?

120    Her Honour attributed little weight to the oral evidence of Ms Coulter and Mr Puxty concerning their recollection of conversations in 2018 and 2019, preferring the documentary evidence: PJ [12]. It should be observed that each in their respective affidavits set their evidence out that conversations occurred “to the effect” in an “I said” and “he said or she said” format, some of which was quite detailed and given without the benefit of contemporaneous documents, such as notes or confirming emails. Her Honour did in part reference the oral evidence and to a limited extent made findings accordingly. There is no ground of appeal that her Honour erred in not making findings in favour of the appellants based on the detail of the oral evidence of Mr Puxty. The appeal grounds turn solely on the objective meaning that her Honour gave to contemporaneous documents and her assessment of the background factual matrix.

121    The primary judge did not make any adverse credibility findings of the evidence Ms Coulter or Mr Puxty.

122    The primary judge found that the catalyst for discussions between Ms Coulter and Mr Puxty in mid-2018 was the proposed arrangement with Madison Marcus and that Ms Coulter expected the firm to be a significant source of referrals and revenue, with the prospect that the business would be built up over time and may then be listed on the ASX: PJ [35]. There were discussions, commencing in early September 2018, between Ms Coulter, Mr Puxty and a representative of Madison Marcus, Mario Kardum, to the effect that Monarch would pay for the clients of Mr Puxty based on a multiple of recurring revenue and he would also receive a shareholding in Monarch comprising a 6% equity: PJ [39]-[42].

123    There was an issue about Mr Puxty’s ability to transfer a subset of clients, referred to as the WiZDOM clients, in that Mr Puxty was subject to a post-employment restraint. Mr Puxty believed that these clients were not subject to a restraint but nonetheless offered to obtain a release: PJ [44]-[50]. He did not obtain a release, Madison Marcus did not want to be involved in any disputes concerning these clients and ultimately it was agreed that the WiZDOM clients would not be transferred, which led to a financial adjustment of the proposed arrangement: PJ [51]-[56]. The recurring revenue amount was reduced to $150,000 per annum to reflect that: PJ [57]. That left only the AON clients to be transferred to Monarch: PJ [59].

124    In late November 2018, Ms Coulter and Mr Puxty discussed the possible transfer of the AON clients to Monarch prior to finalisation of the employment agreements. They differed materially in their recollections and for that reason the primary judge focused only on the contemporaneous text messages: PJ [60]. The messages are central to the appeal and were set out in full by the primary judge at PJ [60] and [63]. They commence at 2.15pm on 28 November 2018. It is unnecessary in these reasons to set out the entire exchange. Ms Coulter commenced with a series of messages about close friends and family clients of Mr Puxty that she anticipated were not subject to any post-employment restraints and a discussion of client value by reference to a spreadsheet. Ms Coulter then raised her concerns about the viability of the “partnership” with Madison Marcus as follows:

Ms Coulter: I’m going to have a very frank conversation with Mario tomorrow and tell them they are not treating this like a partnership and I’m having second thoughts.

Then you and I can figure something out

Lol its not (all) your fault

Mr Puxty: we can’t fuck Francis around either

Ms Coulter: I know I know – no pressure at all (emoji’s omitted)

Hence why I am going to ring Mario and say that they key person to get on board is you so let’s arrange a Skype (ie to say we can push Rex out longer so they don’t try to meet him)

Mr Puxty: You’ve got this (emoji omitted)

Ms Coulter: (emoji’s omitted)

Can you move those clients that are at risk of not moving to me? As a temporary measure?

It can still be mag-Newcastle adviser code but I can send them my fsg

Mr Puxty: We’ll see

Ms Coulter: You know I wouldn’t fuck you over

- ie if all this falls over you can transfer them back. This will work

- it’s just taking them much longer than expected… clearly

And I will put that in writing!

Mr Puxty: I trust you (emoji omitted)

125    There was a further exchange on 29 November 2018, commencing with a message from Ms Coulter at 1.27pm. Once again, it is unnecessary to set out all of the messages. The important exchange commenced with Ms Coulter again expressing her doubts about the “partnership” with Madison Marcus:

Ms Coulter: I tell you, last night I was ripping up the partnership agreement

Mr Puxty: Where’d there goal of $6M go?

Ms Coulter: Exactly. Oh it’s still there but they don’t want to pay for anything nor make a contribution. I’ll send you the other spreadsheet – basically for us not to go into deficit we need $12k from feb

Mr Puxty: That’ll be up to them then

Ms Coulter: Yes- just sent to you

If I rip up the partnership before March next year – let’s just get on with everything and I’ll share 25% equity with you

Q- why wouldn’t you start moving those time critical clients to MAG- Newcastle?

Mr Puxty: I probably will

I just need time to see them

Ms Coulter: Let’s just do it. It’ll be banked. We make up our own rules. Fuck Clint – let’s move his clients too beforehand

Tell Clint you need time to go and see them. See them, send them to me. Tell Clint they will move over in the new year…

Mr Puxty: Let’s see what the lawyers come back with but it’s a fall back

Ms Coulter: This will move forward, it’s more around time and not losing any of your clients whilst we enter month 6 of discussion

Sent another email to you that I sent to them

Mr Puxty: (emoji omitted)

126    Mr Puxty and Mr Coggan signed the employment agreements on 7 December 2018, and commenced as employees on 20 December 2018, whereupon Monarch “took on” the AON clients: PJ [74]. Mr Puxty’s employment agreement incorporated his remuneration package in appendix B. It referenced a base salary of $130,000 per annum plus superannuation of $12,350 per annum. It then provided:

Incentive payment

The employee is eligible to participate in the Incentive Payment Program. The details of the Incentive Payment Program will be given to the employee on or around the commencement of each financial year.

127    It was common ground that when Mr Puxty signed his employment agreement he also received a document titled: Performance Review & Bonus: PJ [73]. This document provided for a performance review to 30 June 2019, set a number of measures necessary for achievement of satisfactory performance and separately under the heading “Bonus” provided:

The Employee shall be entitled to a bonus calculated at 40% of any revenue generated and received over the agreed hurdle of two (2) times the employees total remuneration package for that financial year. The revenue generated and received in each financial year, for purposes of calculating the bonus payable, will require that a maximum of 50% of the agreed hurdle be a contribution from existing client recurring revenue, excluding any preexisting recurring revenue that the Employee brings to the company from their previous clients whilst the employee was engaged with AON.

Any entitlement to a bonus will be paid to the employee within sixty (60) days from the end of each Financial Year.

A review of the criteria upon which the performance of the Employee is assessed will be undertaken on an annual basis by the Company.

128    At PJ [73], the primary judge recorded the explanation of Mr Puxty that this clause expressly excluded the AON clients as they were to be purchased by Monarch and would contribute to his ability to acquire equity in Monarch. For that reason the Performance Review & Bonus document then provided:

For every $50,000 worth of recurring revenue that the Employee brings to the company from their previous clients whilst the employee was engaged with AON, the company will pay the employee two (2) times recurring revenue (i.e. $100,000) within three (3) months of the recurring revenue coming across to the company. The company will retain 25% (i.e. $25,000) of any such payment in trust for a period of twenty four (24) months.

In order for the company to pay the employee the retained 25% component of the recurring revenue based payment referred to above, the employee will be required to maintain 100% of the recurring revenue introduced to the company for a period of twenty four (24) months, failing this an adjustment will be undertaken based on any lost recurring revenue at two (2) times the amount of lost recurring revenue that has occurred during the twenty four (24) month period.

Upon the successful maintaining of $150,000 in recurring revenue that the Employee brings to the company from their previous clients whilst the employee was engaged with AON, noted above, for a period of twenty four (24) months, the Company will grant the Employee 5% profit shareholding in Monarch Advisory Group (A.C.N. 155 549 705).

129    By January 2019, Ms Coulter harboured doubts about the arrangement with Madison Marcus. Mr Puxty’s evidence was that Ms Coulter told him that if she walked away from the deal then she would either “put together a deal together between [them], or you can have your clients back and do your own thing”, which Ms Coulter denied: PJ [75]. Her Honour set out the text message exchange of 22 January 2019:

Ms Coulter: Get rid of these cunts and take your pay to $150, mine back to $180 and Francis to $100

It’s on the agenda. Just spoke to Ramy

Mr Puxty: Food for thought (emoji omitted)

Good luck

Let me know how you go (emoji omitted)

Ms Coulter: Aleks a little stressed at the moment. May push back her trip to see you guys until after our audit

Mr Puxty: Hopefully they will come to the party and the leads will start flying in (emoji omitted)

Ms Coulter: You can still zoom her – might be a good break

Mr Puxty: No Probs

We’ll soon have a big list of transfers for her to send and chase up (emoji omitted)

Ms Coulter: That’s what I said to Ramy – we are all in this for it to work… but it’s not so we need to put a plan in place of [sic] we need to dissolve it

Mr Puxty: I might even get authorised today….(emoji’s omitted)

Ms Coulter: Let’s hope so (emoji’s omitted)

130    The derogatory reference in in the first message was to Madison Marcus: PJ [76]. Ms Coulter also messaged Mr Puxty on 29 January 2019 as follows:

Also- depending on what happens with MM agreement, can you please think about and let know your pref:

•    big / no buy out

•    smaller (but reasonable) equity/ buy out 2x

131    The primary judge recorded at PJ [77] Ms Coulter’s acceptance that “if the agreement with Madison Marcus fell over, she would need to have discussions with Mr Puxty about a new arrangement, if there was going to be one going forward”.

132    On 11 February 2019, Ms Coulter emailed Madison Marcus to the effect that she did not wish to proceed, due to insufficient client referrals: PJ [78]. She orally informed Mr Puxty of that fact on 13 February 2019 and confirmed it in a text message of 25 February 2019. Ms Coulter was then of the view that new employment agreements would be required for Mr Puxty together with an equity share in Monarch. The parties did not agree the terms: PJ [81]-[85]. Ms Coulter set out her proposal of 60/40 equity and a new remuneration arrangement with reasons in an email of 13 May 2019 and explained why she did not agree to Mr Puxty’s proposed equal shareholding: PJ [83]. Her Honour rejected Mr Puxty’s oral evidence to the effect that Ms Coulter ultimately agreed to an equal equity split during a meeting on 12 July 2019: PJ [88].

133    Mr Puxty and Mr Coggan continued as employees in accordance with their contracts. On or about 8 November 2019, Mr Puxty told Ms Coulter that he and Mr Coggan were contemplating departing Monarch as employees. The exit terms were discussed in more detail on 29 November 2019 and 17 January 2020: PJ [91]-[93]. Ms Coulter believed that an outcome of those discussions was that Mr Puxty would take back the AON clients and compensate Monarch for their value. Mr Puxty denied that he agreed to pay for the clients: PJ [94]-[95].

134    Mr Puxty and Mr Coggan resigned as employees with effect from 31 January 2020. The parties attempted to resolve the impasse about the AON clients. Ms Coulter pressed for a payment for the release of the clients which Mr Puxty resisted. On 25 February 2020, Ms Coulter emailed Mr Puxty and stated, amongst other things, that discussions about the purchase of the clients “ceased in March 2019, and above all, this agreement was not executed and was made null and void in March 2019”: PJ [99]. On 8 March 2020, Ms Coulter emailed Peter Ornsby of RI Advice (of which Monarch was an authorised representative) by way of explanation of the dispute with Mr Puxty: PJ [100]. Her email included:

March - July 2019

- MAG ceased their partnership with MM as we were not receiving the anticipated referrals; and therefore the purchase of Brett’s book at 2x recurring revenue was null and void.

…

- Brett maintained until 17 January that he didn’t know what he was going to do and most likely would join Francis. Up until 20 December we were still discussing options on how to stay together, even running new financial forecasts

…

Pete, I know that the restraint route is tricky and messy however I have to recover costs and by keeping him and Francis on restraint it will go some way to recovering these costs.

…

135    At PJ [101], her Honour recorded Ms Coulter’s evidence to the effect that her reference in those emails to “null and void” was intended only as a reference to the Amended Incentive Program as set out in the Performance Review & Bonus document and not to the employment agreement of Mr Puxty.

136    Odyssey was incorporated in September 2019 and Ms Coulter became aware of that fact in March 2020: PJ [104]. Her Honour made several findings to the effect that Mr Puxty and Mr Coggan commenced to solicit the AON clients from February 2020 to become clients of Odyssey: PJ [105]-[111].

137    On 21 December 2020, Monarch entered into a Sale of Business Agreement with Newlane which completed on 2 February 2021. Inter-alia, it provided for a total book value to calculate components of the sale price by reference to gross annual trail commissions and gross current advice fees, each of which formed the recurring revenue: PJ [112]-[113].

138    At PJ [126] the primary judge identified three issues for consideration: (1) did Monarch consent to Mr Puxty breaching the employment restraint clause; (2) if not, is the restraint enforceable; and (3) if there was a breach of the restraint clause, what damages should be awarded?

139    On the first issue, her Honour found that Monarch did not give prior consent for the purpose of the restraint clause: PJ [131]. Her Honour recorded that the respondents’ case principally relied on the text messages of November 2018: PJ [132]. At PJ [133] her Honour made 15 separate background findings of fact most of which are not in dispute and to a large extent are relied on by the appellants in contending error in her Honour’s ultimate conclusion at PJ [134] and [139] that Monarch did not give consent for the purpose of cl 19 of the employment agreements. In summary the findings that are central to appeal grounds are first, the text message exchange of 7 November 2018, including “claw back on the book we buy from you within a certain time frame if you leave/take clients” did not amount to an unequivocal statement by Ms Coulter as to what would happen if Mr Puxty left. Rather, it was made at a time when Ms Coulter had not seen the proposed employment agreement between Mr Puxty and WiZDOM, after which the negotiations further developed.

140    Second, the concern in early November 2018 was that Mr Puxty may be in breach of his employment restraint if he proposed to bring any WiZDOM clients to Monarch and that he had lied to Madison Marcus on that issue.

141    Third, the critical text messages of 28 November 2018, though sent when Ms Coulter was having second thoughts about the arrangement with Madison Marcus, related to a temporary transfer of clients before Mr Puxty became an employee of Monarch. This was a subset of Mr Puxty’s clients – those at risk of not moving to Monarch. If Mr Puxty did not become an employee “if this falls over” then Monarch would transfer them back to Mr Puxty. In context this text exchange did not concern the broader question of what would occur after Mr Puxty became an employee if the arrangement with Madison Marcus did not proceed or was otherwise unsatisfactory.

142    Fourth, after the text message exchange of 28 November 2018, Mr Puxty commenced to negotiate his employment terms, he did not request a carve out for his transferred clients from the post-employment restraint.

143    The primary judge rejected Mr Puxty’s arguments that the entire agreement clause did not assist Monarch (the provision of prior consent is consistent with cl 19) because it had not been established that consent was given.

144    Her Honour also rejected Mr Puxty’s reliance on post-contractual conduct of Ms Coulter as evidence that Monarch gave consent to Mr Puxty to take back the AON clients if the arrangement with Madison Marcus did not proceed: PJ [136]-[138]. Her Honour found that this conduct was limited to the taking of an equity position in Monarch in that event and not to the terms of employment.

145    As to issue (2), her Honour found the restraint clause to be valid and enforceable for a period of 12 months following termination of employment: PJ [140]-[166]. The appeal does not challenge those findings.

146    As to issue (3), the primary judge commenced with setting out the principles applicable to an award of damages for breach of employment restraints, about which no issue is taken on the appeal: PJ [170]-[172].

147    Her Honour first addressed claim 1 which concerned a loss of profit in the period 1 February 2020 to 31 January 2021. With the assistance of expert evidence her Honour accepted the evidence of Monarch’s expert Mr Potter that the loss was $132,682, which her Honour then discounted by 20% to derive an amount of $106,145.60. The discount was accepted by Monarch, conformably with evidence from the respondents’ expert Mr Minett to reflect that “sensitivities or contingencies” were likely to have affected the client retention rate of clients who were family and friends of Mr Puxty and Mr Coggan: PJ [182]-[184]. The appeal does not challenge that finding.

148    Claim 2 concerned the lost opportunity of being able to achieve a higher sale price in negotiations with Newlane. Mr Potter undertook a calculation by applying the reduction in recurring revenue methodology as set out in the Sale of Business Agreement. He calculated an overall reduction in the purchase price of $356,493 inclusive of GST or $324,080 exclusive of GST: PJ [185]. The joint expert report of Mr Potter and Mr Minett expressed agreement on a number of matters, including the mathematical accuracy of the calculation of Mr Potter: PJ [186]. The primary judge recorded the effective components of the cross-examination of Mr Potter at PJ [188]-[196]. These concerned the treatment of GST, that the deferred purchase price was payable 15 months after completion and he was not asked to and did not consider that some or all of the clients the subject of the restraint would have been lost by Monarch or Newlane prior to 1 May 2022 (the date on which the deferred purchase price was payable). He further accepted that he was instructed that the calculation of the purchase price did not include new business revenue and was not informed that initial commissions are calculated at a higher rate than renewal commissions.

149    These matters led the primary judge to find at PJ [197]:

As is apparent Mr Potter was instructed to calculate damages for claim 2 based on a narrow set of assumptions which Monarch has not established on the evidence. In particular, Mr Potter was not given any assumption about the risk of clients leaving the Monarch business or accurate instructions about “initial commissions” and “renewal commissions” (see [32] and [195] above as to the way in which these commission work). These matters infected his calculation of damages for claim 2 such that its reliability has, to an extent, been undermined to establish quantum for claim 2.

150    The primary judge rejected Monarch’s submission that these matters did not undermine the opinion evidence of Mr Potter by application of the assumption against wrongdoers: PJ [198]-[202]. Her Honour reasoned that principle to be distinguishable because the respondents did not ever stand in the way of providing information to accurately determine the damages claim. The cross-appeal challenges that finding.

151    The primary judge considered the assessment of damages as falling within the well-known principle that difficulty in proof does not relieve a court from doing the best that it can on the available evidence at PJ [203]-[204]. Her Honour reasoned that she could undertake a reasonable assessment of quantification on the basis that the cross-examination of Mr Potter had undermined the certainty of his calculations, but nonetheless his approach “provides a starting point”: PJ [204]. From there, her Honour commenced with the GST exclusive calculation of $324,080 and then at PJ [207] found:

The respondents having cast doubt on some of the integers in Mr Potter’s calculation do not assist the Court by providing an alternative quantification. Their expert Mr Minett does not do so, nor does he provide a percentage by which the calculation of claim 2 might be reduced in light of the uncertainties. Monarch proffered that a reduction of 20% should be applied for “friends and family” who would in any event have left Monarch following Messrs Puxty’s and Coggan’s departure. In addition, having regard to the undermining of some of the assumptions given to Mr Potter and the fact that the assessment does not factor in the possibility of attrition in the Clients under Restraint by their departure from Monarch in the ordinary course of business I would reduce Mr Potter’s calculation by a further 20%. Thus, the damages for claim 2 are assessed as $194,448.

152    It is important to understand what her Honour there did. Monarch accepted that the family and friends 20% discount should apply to claim 1 and claim 2. Her Honour went further and applied a further 20% discount to claim 2. The appeal and the cross-appeal each challenge that finding. The appellants contend that Monarch failed to establish any entitlement to an award of damages for this head of loss, there was no adequate basis in the evidence to award 60% of the amount calculated and her Honour failed to provide adequate reasons for the additional 20% discount. Monarch in the cross-appeal contends that her Honour erred in finding that it had failed to prove the assumptions made by Mr Potter and there was no proper basis for the additional 20% reduction.

The appeal

153    Grounds 1 and 2 raise the same issue and ground 3 is parasitic thereon: did Monarch agree or give consent to return of the AON clients to Mr Puxty? The complaint is that the primary judge erred at PJ [133]-[138] in concluding that objectively the text messages of November 2018, read in context and having regard to the underlying factual matrix, did not evidence an agreement to return the AON clients if the proposed arrangement with Madison Marcus did not proceed.

Submissions

154    The submissions of Mr Bedrossian SC in support of these grounds may be shortly summarised. At PJ [81] the primary judge found that Ms Coulter accepted that a new arrangement was required with Mr Puxty in consequence of the departure of Madison Marcus. It did not materialise, yet Monarch maintained an entitlement to keep the AON clients. Participation by Madison Marcus as investors and a significant source of referrals was central to the proposal that Mr Puxty should join Monarch as an employee and eventually an equity owner. Absent Madison Marcus, Monarch’s client base was insufficient to justify Mr Puxty’s involvement: “the viability of the entire partnership arrangement with [Madison Marcus] rested upon the flow of referrals”: PJ [42]. Madison Marcus acquired a 50% equity in Monarch on 13 March 2018, which was the catalyst for the early discussions and text messages which resulted in Ms Coulter making an approach to Mr Puxty to join Monarch in June 2018: PJ [31]. It was not put to Mr Puxty in cross-examination that he would have joined Monarch without the participation of Madison Marcus.

155    Mr Puxty’s participation was necessary to increase the client base of Monarch and because he had the experience and skills to service the referred clients: PJ [16], [40], [62]. The entire premise of the discussions and text messages between Ms Coulter and Mr Puxty from June 2018 was the participation of Madison Marcus and the anticipated flow of client referrals.

156    Ms Coulter began to doubt the viability of including Madison Marcus in early November 2018: PJ [62]. In the evening of 28 November 2018, Ms Coulter expressed her frustration in a text message to Mr Puxty, to the effect that she intended to have a very frank discussion that Madison Marcus were not treating the arrangement “like a partnership” and that she was having second thoughts: PJ [60]. The text messages continued and Ms Coulter made a request that Mr Puxty move “those clients that are at risk of not moving to me? As a temporary measure?” to which Mr Puxty responded “We’ll see” and Ms Coulter replied with: “you know I wouldn’t fuck you over”. In context that was an assurance by Ms Coulter that if the Madison Marcus arrangement did not proceed, that Mr Puxty could depart Monarch with the AON clients. That assurance amounted to prior consent within the meaning of cl 19 of the employment restraint.

157    The submissions also rely on concessions and admissions made by Ms Coulter in cross-examination that her reference to “Claw back on the book we buy from you within a certain time frame if you leave/take clients” in her text message of 7 November 2018 (PJ [42]) was a reference to the acquisition of Mr Puxty’s clients by Monarch and that if Mr Puxty left he could take clients, but with a financial adjustment.

158    Further reliance is placed on post-contractual conduct of Ms Coulter being her reference to “null and void” in the email to Mr Ornsby of 8 March 2020: PJ [100]. This conduct is put on the basis of an admission by Ms Coulter that there was an agreement to the effect contended by Mr Puxty. The primary judge erred at PJ [138] in concluding that this did not assist Mr Puxty because the email was concerned with negotiations that Mr Puxty might take an equity share in Monarch, that is the Performance Review & Bonus document and not the terms of the employment agreement. It is neither factually nor legally possible to engage in that separation.

159    Mr Mahendra for Monarch commences by emphasising that identification of error is indispensable in respect of these grounds, the primary judge enjoyed the usual advantage of assessing the credibility of the witnesses and her Honour’s findings should not be overturned unless glaringly improbable or contrary to compelling inferences. The appellants inconsistently pleaded the agreement or consent relied on. In the Further Amended Defence the contention is that in late 2018 Ms Coulter reached an agreement with Mr Puxty pursuant to which he was entitled to take back the entitlement to provide services to the clients that he brought to Monarch if Madison Marcus did not become shareholders and investors in Monarch and also if Mr Puxty did not acquire equity in Monarch. In the Amended Statement of Cross-Claim, the contention is that Ms Coulter and Mr Puxty agreed that if Madison Marcus ceased to be involved in the Monarch business and/ or failed to provide referrals to Monarch, Mr Puxty would be entitled to take back his clients and to conduct business on his own account.

160    Mr Puxty failed to give clear evidence in support of either in his evidence-in-chief, he did not reveal when the conversations with Ms Coulter occurred, the text messages of 28 November 2018 make no reference to an oral conversation and Ms Coulter in her evidence denied the alleged conversations. It was open to the primary judge to find (PJ [133(14)]) that the “if all this falls over” reference in the text message of 28 November 2018, was to the proposed employment of Mr Puxty and Mr Coggan. The employment of each was agreed on the terms set out as signed on 7 December 2018. Mr Puxty did not seek any amendment to carve out from the restraint his transferred clients if the arrangement with Madison Marcus did not proceed or if he failed to secure an equity interest in Monarch, despite that cl 15 of each contains an entire agreement provision. This cannot be reconciled with the appellants’ case that it was the objective common intention of the parties that Mr Puxty could take back his clients in one or more of the pleaded circumstances.

161    A further contextual matter when considering the immediate context of the 28 November 2018 messages is that at the time the arrangement with Madison Marcus had not fallen over the firm held through Consolidated a 50% equity in Monarch.

162    Mr Puxty admitted in cross-examination that the 28 November 2018 messages concerned taking back his clients, if he did not become an employee: PJ [133(14 (b))]. Finally, the primary judge correctly rejected the post-contract admission contention as a reference only to the amended incentive program.

Resolution of grounds 1 and 2

163    This is not a case where the appellate function is constrained by credibility findings. The primary judge did not make any adverse credibility finding concerning the evidence of Ms Coulter or Mr Puxty. Her Honour placed little weight on the oral evidence, preferring the contemporaneous documents. The appeal grounds do not contend that the primary judge erred in proceeding in that way and the appellants’ submissions invite this Court to form its own conclusions based on the documents: Jadwan Pty Ltd v Rae & Partners (a firm) [2020] FCAFC 62; (2020) 278 FCR 1 at [402]-[415].

164    Despite pleading an anterior agreement, Mr Bedrossian in oral submissions explained that he opened and ran the case at trial “on the basis that the communication or communications in context were the unilateral, one-way communication of consent for the purposes of clause 19”. Mr Mahendra did not controvert that submission. Thus, the primary judge was not required to find in the objective circumstances offer and acceptance supported by consideration and an intention to create legal relations. That is how the primary judge approached resolution of the first issue that her Honour identified (from PJ [128]) to reach her conclusion (at PJ [139]) that Monarch did not give consent for the purposes of cl 19 of the employment agreements.

165    Clause 19 does not provide for the form of consent. It does not specify the circumstances where consent may be given. It does not require an application. The normal principles of contractual interpretation apply: Butt v Long [1953] HCA 76; (1953) 88 CLR 476 at 487; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 at [46]-[48]. There is no formality requirement in cl 19 for the giving of the employer’s prior consent for the employee to, inter alia, solicit or perform work for clients. The ordinary and natural meaning of consent is to give assent; to agree; comply or yield (Macquarie Dictionary (3rd ed, Macquarie Library, 1997) at 466). Neither context nor the objective understanding of a reasonable businessperson require a different meaning.

166    From the objective sequence of events (the background factual matrix) that the primary judge set out in detail, I highlight the following. Ms Coulter and Mr Puxty first met professionally in late 2010 and over time became good friends. Ms Coulter established Monarch in 2012 and Mr Puxty would often assist her professionally in the building out of her business. By 2013 or 2014, they began to have discussions about potentially working together, but that option was not then feasible as the business of Monarch was insufficient to justify the engagement of employees or some form of co-ownership with another person.

167    At various times Mr Puxty expressed dissatisfaction with his employment arrangements to Ms Coulter. On 21 October 2017, Ms Coulter in a text message advised Mr Puxty of her first client referral from Marcus Maddison. On 19 January 2018, Ms Coulter in a text message advised Mr Puxty that Marcus Maddison had “come to the valuation party”. On 13 March 2018, Marcus Maddison through Consolidated acquired 50% of the equity in Monarch. On 19 March 2018 Ms Coulter in a text message advised Mr Puxty that Madison Marcus had “found a mortgage company who writes $100 mil a month. They always recommend insurance but don’t have anyone to recommend…. until now”. Mr Puxty had expertise in insurance, including joint venture protection. On 27 April 2018, Ms Coulter in a text message advised Mr Puxty that Madison Marcus “were very very impressed” with information that she had passed to them, from Mr Puxty, concerning joint venture insurance. On 5 May 2018, Ms Coulter in a text message informed Mr Puxty that she needed to “get [him] to Monarch ASAP”. In June 2018, whilst in Bali, Ms Coulter began to formulate a proposal to work with Mr Puxty on the basis that he would bring in approximately $200,000 in recurring revenue. To that end, on 19 June 2018, Ms Coulter in a text message advised Mr Puxty that her husband wished to speak with him about joining Monarch. Then followed a series of discussions to the effect that Mr Puxty would work with Ms Coulter in the opening of an office in Newcastle. The primary judge found that it was “difficult to accept” that these discussions were not connected in some way with the arrangement between Monarch and Madison Marcus: PJ [35]. That finding was clearly correct. In mid-2018, Ms Coulter requested financial details from Mr Puxty so that she could put a proposal to Madison Marcus, including expected salaries for Mr Coggan and Mr Puxty and the expenses of opening an office in Newcastle: PJ [34]-[36].

168    On 6 September 2018, Ms Coulter, Mr Puxty and Mario Kardum from Marcus Maddison had a meeting. They discussed a financial multiplier to be paid to Mr Puxty in consideration for his clients (based on a multiple of recurring revenue) and payment over time. They also discussed that Mr Puxty may be offered an equity in Monarch.

169    On 7 November 2018, Ms Coulter in a text message to Mr Puxty referenced a proposed 6% equity for Mr Puxty, that Marcus Maddison would have to “put their hands in their pockets” and were “acutely” aware of the referrals that Monarch required and that Mr Puxty would receive preferential shares in Monarch. Her text included: “Claw back on the book we buy from you within a certain time frame if you leave/take clients”. That statement by Ms Coulter evidences a future requirement for payment by Mr Puxty in return for a transfer by Monarch of clients: it is not consent to a taking without payment.

170    Ms Coulter requested Marcus Maddison to prepare employment agreements on 8 November 2018. There were difficulties concerning Mr Puxty and the WiZDOM clients which resolved on 19 November 2018, when Ms Coulter advised Mr Puxty that the proposed incentive would need to be amended to exclude those clients: PJ [55]-[57].

171    That brings me to the central text messages of 28 and 29 November 2018. I emphasise the doubts expressed by Ms Coulter about the arrangement with Madison Marcus, her request to “move” at risk clients as a “temporary measure” to be managed in the Newcastle office by Monarch with its authorised representative authority. Mr Puxty’s response was non-committal: “We’ll see”. The immediate response from Ms Coulter was reassuring: “You know I wouldn’t fuck you over” which she explained as meaning: “if all this falls over you can transfer them back. This will work – its just taking much longer than expected… clearly”, which Ms Coulter offered to put in writing. Mr Puxty accepted the assurance, responding: “I trust you”.

172    On 29 November 2018, Ms Coulter informed Mr Puxty of her frustration with Madison Marcus, to the point that: “last night I was ripping up the partnership agreement” and if she did: “lets just get on with everything and I’ll share 25% equity with you”. Next she asked: “why wouldn’t you start moving those time critical clients to MAG-Newcastle?” to which Mr Puxty replied: “I probably will. I just need time to see them”. This emboldened Ms Coulter, who responded with:

Let’s just do it. It’ll be banked. We make up our own rules. Fuck Clint-lets move his clients too beforehand.

173    “Clint” was a reference to Clint Ducat from WiZDOM.

174    The primary judge found at [133(14)-(15)] that these messages concerned Monarch’s proposed employment of Mr Puxty and Mr Coggan and what would happen to any clients transferred to Monarch if the employment did not eventuate. Her Honour explained why as follows (as part of subparagraph (14)):

(a)     earlier in the conversation, Mr Puxty had thought he had “messed up the deal” because he had “failed to deal with this restraint issue before entering into negotiations”;

(b)    Mr Puxty acknowledged in evidence that Ms Coulter’s “second thoughts” concerned his prospective employment. While he tried to resile from that evidence his understanding was ultimately clarified in the following exchange with counsel for Monarch:

Mr Mahendra:     You understood, and looking at page 54 [of Exhibit D], you understood, based on the discussions you were having with Ms Coulter at this time, that the representation that was made to you was, if you transfer those clients prior to the commencement of your employment and it falls over, in the sense you don’t commence employment, Ms Coulter would transfer them back to you. You understood that, didn’t you?

Mr Puxty:     Understood she would send them back.

(c)     the only concern that had been expressed throughout the exchange was about Mr Puxty’s employment with Monarch as opposed to any issue with Madison Marcus at the time; and

(15)     relevantly following the text message exchange on 28 November 2018:

(a)     Mr Puxty negotiated and entered into the Puxty Employment Agreement;

(b)     despite Mr Puxty seeking amendments to the Puxty Employment Agreement, he did not seek and it did not contain any term consistent with his contention or recording Monarch’s consent to the effect that if the Madison Marcus partnership fell over, he could take his clients with him. Although not determinative, I also observe that Mr Puxty acknowledged that his failure to obtain in writing a similar carve out in his employment agreement with WiZDOM was an issue in relation to his onboarding with Monarch such that the issue of restraint clauses and appropriate documentation of any agreed variation thereof would reasonably have been at the fore of Mr Puxty’s mind;

(c)     to the contrary, the Puxty Employment Agreement included the Restraint Clause which had no carve outs to record Monarch’s alleged consent. Similarly, no such consent was recorded in any other document at the time of execution of the Employment Agreements; and

(d)     the Puxty Employment Agreement contained as cl 15 an entire agreement clause in the terms set out at [68] above.

175    Save for one matter, each of those findings accord with the objective circumstances as evidenced by the documents, the background circumstances and the sequence of events. Where I differ from the primary judge is the relevance of the evidence given by Mr Puxty in cross-examination as to his understanding 28 November 2018 text messages. His subjective understanding was irrelevant on the objective meaning inquiry. Nonetheless, that evidence was not considered by her Honour as dispositive and the reference to it does not undermine the force of each other objective finding.

176    There was no error by the primary judge in making the critical finding that the 28 November 2018 text message reference to “if this falls over” concerned what would happen if Mr Puxty transferred at risk clients before becoming an employee of Monarch. If he did not become an employee then he would be entitled to those clients. The reasons of the primary judge at PJ [133(14)(a), (c) and (15)] are compelling and which I gratefully adopt and add the following.

177    Mr Puxty was aware by no later than 28 November 2018, that that Ms Coulter had doubts about the viability of the “partnership” with Madison Marcus: “they are not treating this like a partnership and I’m having second thoughts”. It was common ground on the pleadings in the cross-claim that Mr Puxty did introduce some clients to Monarch in late 2018 and early 2019, but it was controversial whether he did so in his capacity as an employee. In submissions before us this was not clarified. On 29 November 2018, Ms Coulter had informed him that she was “ripping up the partnership agreement” and they then discussed a greater equity for Mr Puxty in Monarch in that event. No agreement was reached. Nonetheless, he later agreed to become an employee of Monarch on 7 December 2018, and in doing so accepted the employment restraints and transferred the AON clients to Monarch in consideration of receiving payment therefor as set out in his employment agreement. Objectively, none of this is consistent with acceptance that Monarch had earlier provided consent to take back the AON clients at the conclusion of the employment. Whilst it is true that involvement by Madison Marcus was an important component of a more detailed arrangement between the parties, the appellants’ pleaded contentions of a joint venture agreement including a term that Mr Puxty would be entitled to take back his clients if he left Monarch, or that the joint venture was later terminated with agreement that Mr Puxty’s clients would be transferred to him, were abandoned at trial. The appellants confined their case to prior consent for the purposes of cl 19 of the employment agreement.

178    Further, there is a fundamental problem with the appellants’ arguments concerning the legal effect of the text messages of 28 and 29 November 2018. Mr Bedrossian’s arguments reduce to this: there is no requirement that consent can only be given after the employment agreement is entered into. However, that the reference to “prior” consent is not temporally restrained does not answer how it is that Monarch could give consent pursuant to a clause that did not exist at the time? A clause that had not been drafted or agreed to. A clause that did not then restrain Mr Puxty or confer any benefit on Monarch. A clause that did not then operate on any class of clients.

179    Clause 19 speaks to the giving of prior consent by the employer as the mechanism for release of the employee from the contractual restraints it imposes. The source of the dispensing power is the contract, not some amorphous antecedent discussion or statement by a representative of the putative employer. If objectively it had been the intention of the parties to reach back in time and give contractual effect to an a priori consent then the clause would have been expressed to that effect or, as the primary judge correctly reasoned at PJ [133(15)], the clients identified could easily have been carved out from the operation of the clause.

180    These are insuperable obstacles to acceptance of the appellants’ arguments. They are not answered by the appellants’ reliance on the post-contractual conduct. Such conduct cannot be used as an aid to the construction of a written agreement: Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 at [35] (Gummow, Hayne and Kiefel JJ); Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603 at [11]–[13] (Allsop P), [58] (Giles JA), and [306]–[335] (Campbell JA). The primary judge correctly stated these principles at PJ [136]. Here, the appellants no longer assert the existence of a prior agreement. Nonetheless, they submit that the “null and void” reference by Ms Coulter in her email to Mr Puxty of 25 February 2020 and her third-party email of 8 March 2020 to Mr Ornsby evidence that Ms Coulter knew that a new arrangement was required with Mr Puxty following the departure of Madison Marcus on 4 March 2019.

181    Her Honour concluded that the principles concerning admissions did not assist the appellants because they concerned the Performance Review & Bonus document, not the employment restraint: PJ [138]. I do not accept the appellants’ submission that her Honour erred in that finding in failing to understand that Ms Coulter had made admissions that there was an agreement that Mr Puxty could take the AON clients and/ or that it is not possible to separate the Performance Review & Bonus from the employment contract. First, the so-called admissions are equivocal. Earlier I mentioned the email to Mr Puxty. At PJ [99] the primary judge found it was sent in the context of attempts to resolve the dispute about the bonus or transfer of the clients. There is no appeal against that finding. Relevantly, Ms Coulter’s email included:

Thank you for your email below.

As you are aware, the purchase of your clients was a program that was relevant whilst Monarch (MAG) was partnered with Madison Marcus (MM);

...

As you know, the partnership between MM and MAG dissolved on 1/3/2019, and since then you and I have had several discussions around what our ‘partnership’ would look like going forward as purchasing your book of clients was no longer relevant nor feasible for MAG.

...

You sent me a list of Wizdom clients on 19/11/2018 as a prerequisite to MM/MAG finalising the employment agreement.

...

[D]iscussions around the purchase ceased in March 2019, and above all, this agreement was not executed and was made null and void in March 2019,

...

182    The email to Mr Ornsby is set out at [137]. The objective meaning of each is clear. March 2019 is when Madison Marcus departed by divesting the shareholding in Monarch. Ms Coulter and Mr Puxty then discussed the implications, including new employment agreements for him and Mr Coggan and him taking a greater equity stake in Monarch. Nothing was resolved at that time. Thus, “null and void” is no more than a reference to those proposals being off the table after Mr Puxty and Mr Coggan resigned. It also follows that the recurring revenue AON client bonus referred to in the Performance Review & Bonus could not be met because funding for the payments was to come from Madison Marcus, which Ms Coulter explained to Mr Puxty in her email of 13 May 2029: PJ [83]. Finally, there is no reference in these documents to any antecedent consent for the purposes of cl 19 of the employment agreements.

183    For these reasons grounds 1 and 2 fail and ground 3 does not arise as it depends on acceptance that there was an agreement to return the AON clients, which Monarch breached.

The costs appeal and costs cross-appeal

184    The appellants’ challenge to the costs orders assumes substantial success on the appeal. They have failed in that objective.

185    As to the Monarch cross-appeal, the primary complaints are that her Honour failed to apply the general principle that costs follow the event and or considered the abandonment of claims in closing submissions as a basis to depart from the general principle. These contentions overlook the requirements for leave to appeal.

186    The primary judge perfectly understood the general principle, and that it may be departed from in appropriate cases to deprive a successful party of all or a portion of its costs: CJ [11]-[12]. Her Honour reduced the entitlement of Monarch to reflect the costs incurred in addressing claims that were abandoned at a very late stage: CJ [13]-[15]. Monarch’s submissions seek to tinker at the edges: the evidence on the abandoned claims was equally relevant to the breach of contract on which it succeeded, there was no evidence that disclosure was more extensive than if the claim had been confined to the contract claim and her Honour did not find that Monarch engaged in improper or unreasonable conduct. None of that discloses a House v The King error.

187    These arguments overlook that her Honour correctly focused on the overarching purpose at s 37M of the Federal Court of Australia Act 1976 (Cth) as a primary consideration in the exercise of her discretion. Monarch has not demonstrated that the exercise of her Honour’s broad discretion is attended with sufficient doubt to warrant reconsideration, nor that substantial injustice will result if leave is refused.

Associate:

Dated:    5 June 2026