- Unreported Judgment
SUPREME COURT OF QUEENSLAND
2 October 2012
13 July 2012
Philip McMurdo J
1.The respondent is permanently restrained from:
(a)attending any premises conducted as a Fitness First Health Club or similar establishment, except with the written consent of the applicant;
(b)making any publication which disparages the applicant in respect of any conduct of the applicant which was the subject of the dispute between the parties which was settled by the deed executed by them and dated 29 March 2012 or in respect of the performance or otherwise of the terms of that settlement;
(c)writing, emailing, calling, texting or sending any other communication to any staff member or customer of a Fitness First Health Club, as to the dispute which was settled by that deed or as to that settlement, except to communicate the contents or effect of the letter signed by the parties on 29 March 2012.
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – INTERPRETATION OF MISCELLANEOUS CONTRACTS AND OTHER MATTERS - where the parties signed a deed of settlement and letter of acknowledgement in resolution of a dispute between them in relation to the respondent’s conduct at the applicant’s premises – where the deed of settlement prohibited the respondent from discussing any subject concerning the applicant, its staff , members or premises – where the deed of settlement made no reference to the letter of acknowledgment - where respondent claims that the letter of acknowledgment forms part of the contact made by the parties and that it was agreed that it would be distributed to customers and staff of the applicant to notify them of the settlement of the dispute – where the applicant denies that this was agreed – whether the applicant induced the respondent to believe that he could publish the letter of acknowledgement notwithstanding the terms agreed to in the deed of settlement – whether the respondent be allowed to disclose the contents of the letter
Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424, cited
Hoyts Pty Ltd v Spencer (1919) 27 CLR 133
Saleh v Romanous (2010) 79 NSWLR 453, considered
Heydon J D Cross on Evidence Australian edition LexisNexis, Australia, 2002
D de Jersey with J Sorbello for the plaintiff
D McNicol appearing on own behalf
Minter Ellison for the plaintiff
 The applicant operates a network of health clubs across Australia. They are used by people who become “members”, by contracting for the use of a club for the payment of a fee. The applicant’s standard conditions entitle it to terminate a membership in certain circumstances.
 One of the clubs is at Robina on the Gold Coast. The respondent became a member there last December. He is a self-employed fitness instructor. On 21 February 2012, the applicant saw fit to terminate his membership, upon the basis of what it said was his improper behaviour towards some of the staff employed at Robina. He denied (and continues to deny) that conduct. A dispute thereby arose as to the validity of the termination of his membership. The respondent went to the Robina premises and protested that termination.
 The parties agreed to settle that dispute, by documents which they signed on 29 March 2012. The termination of the membership was confirmed by that agreement. The respondent received a payment of $1,500 together with some gymnasium equipment for his use in his business. And he promised not to engage in any “conduct” as widely defined in the deed of settlement. I will discuss the terms of that deed, but in summary, the respondent undertook not to say or write anything to anyone about the applicant, the Robina premises or any other premises within the applicant’s network and not to contact any staff member, instructor, member or any other person associated with those places. There was no limitation on the duration of that restraint.
 The applicant’s case is that the respondent has breached and threatens to breach those provisions of the deed and that it should have a permanent injunction in the same extensive terms. The respondent says that he is relieved from performance of the deed, by the applicant’s own breaches of it.
 The parties signed two documents on 29 March. In addition to the deed of settlement, they signed a one page document, addressed to “Members and Staff Fitness First Robina”, which was described by the applicant’s solicitors, when sending it to the respondent, as a letter of acknowledgement. The respondent says that this document forms part of the contract made by the parties on that day. That is disputed by the applicant. In order to determine the effect of this letter of acknowledgement, it is necessary to say something of the preceding events.
 On 1 March, the applicant’s solicitors wrote to the respondent, complaining that the respondent had been distributing “flyers” in an attempt to cause the applicant damage, had been harassing patrons in or around the Robina premises and had emailed employees of the applicant (or perhaps employees of the Robina business) threatening to continue his campaign to cause the applicant damage. The letter called upon the respondent to discontinue that conduct immediately. It also informed him that the applicant intended to display a certain document at the Robina premises and to distribute it to “employees, patrons and individuals affected by your continuing conduct”.
 The letter asked for written confirmation from the respondent that he would meet the requirements in that letter by 6 March. When he did not provide that confirmation, the applicant then displayed its document at the Robina premises, as it had foreshadowed in the letter. The notice was headed: “Attention all patrons information notice”. It contained a photograph of the respondent and the balance of the page consisted of text. It began with the statement that the respondent had been distributing “negative flyers regarding Fitness First’s action of terminating his membership”. It then contained a number of statements under the heading “Background”, much of which was defamatory. One was the statement that there had been numerous complaints about the respondent’s conduct, both from employees and patrons. It was said that the respondent’s membership was immediately terminated because of this misconduct, although that was not particularised. But it also made other assertions, defamatory of the respondent, which had little connection with the merits of the dispute as to his membership. The document sought to link those matters to his conduct at Robina by the assertions that the respondent had “a history of difficulties of this nature” and that the respondent had “a Restraining Order made against him under the Criminal Code” (whatever that may mean). It concluded with the statement that the applicant had had no choice but to terminate the respondent’s membership because his conduct and behaviour whilst a member had reduced the “level of safety and comfort” of its employees and patrons. It is unnecessary to determine the correctness of any of these assertions and it would not be possible to do so fairly upon the evidence here. What is important is that this document was calculated to discredit the respondent, in order to counter his campaign against the applicant. It can be seen then that the settlement was reached in circumstances where each side had made highly disparaging remarks about the other, specifically directed to an audience comprising the staff and members at the Robina premises.
 According to the evidence of Mr Reid, the applicant’s solicitor, he and the respondent exchanged correspondence and engaged in negotiations from the letter of 1 March. But after that letter, there is no correspondence which is in evidence until his email to the respondent on 27 March. It was as follows:
“I refer to the above matter.
Please find attached a draft Deed of Settlement and Release and letter of acknowledgment for your consideration.
Pursuant to this deed, you will be provided with:
- A set of dumbbells consisting of 30kg, 25kg, 20kg, 15kg, 10kg and 5kg weights;
- A spin cycle; and
- Payment in the sum of $1,500 to be utilised by you for any other equipment you may require.
Our client is willing and able to execute these documents upon confirmation you are satisfied with the terms. Payment can be made upon execution. …”
 Attached to that email were drafts of the deed of settlement and the letter of acknowledgement. The drafts were executed in that form at a meeting between Mr Reid and the respondent on or about 29 March. Mr Reid signed them for the applicant.
 The deed recited the respondent’s membership and its termination, the dispute as to that matter and the fact that:
“Between 10 February 2012 and 16 March 2012 [the respondent] engaged in the Conduct in respect of Fitness First Robina with a view to persuading Fitness First Robina to reinstate his Membership Application.”
It recited that the applicant was unable to reinstate his membership. Then there was this recital:
“In the interests of the complete cessation of the Conduct, and in the interests of [the respondent] being able to maintain his exercise regimen outside of Fitness First Robina or any other Fitness First gym location, the Parties have agreed to settle their Dispute on the terms set out in this Deed without any admission of liability whatsoever by either Party.”
 Clause 1(k) contained an extensive definition of “the Conduct” which it is necessary to set out in full:
“Conduct means the following:
(i)the preparation, printing, distribution, sending and/or dissemination of flyers, leaflets, handouts, brochures or any other form of written printed communication or any other material, printed or otherwise, whatsoever by McNicol in respect of, concerning or written about Fitness First Robina, Fitness First Australia, any other Fitness First gym location or any other Fitness First Australia affiliate, subsidiary or associated company or any other entity in any way related to Fitness First Australia to any member of Fitness First Robina or any other member of any other Fitness First gym location or any other member of the public or any other person whatsoever;
(ii)the preparation, distribution, sending and/or dissemination of any email transmission or dissemination of material by any other electronic medium whatsoever by McNicol in respect of, concerning or written about Fitness First Robina, Fitness First Australia, any other Fitness First gym location or any other Fitness First Australia affiliate, subsidiary or associated company or any other entity in any way related to Fitness First Australia to any member of Fitness First Robina or any other member of any other Fitness First gym location or any other member of the public or any other person whatsoever;
(iii)the preparation, distribution, sending and/or dissemination of any material by any internet based medium including, but not limited to, Facebook, Twitter, blog, website, web forum, discussion page, review or any other medium whatsoever by McNicol in respect of, concerning or written about Fitness First Robina, Fitness First Australia, any other Fitness First gym location or any other Fitness First Australia affiliate, subsidiary or associated company or any other entity in any way related to Fitness First Australia to any member of Fitness First Robina or any other member of any other Fitness First gym location or any other member of the public or any other person whatsoever;
(iv)the physical attendance of McNicol at the Premises or any other Fitness First gym location;
(v)contact by McNicol of any staff member, instructor, member or any other person in any way connected or associated with Fitness First Robina, Fitness First Australia, any other Fitness First gym location or any other Fitness First Australia affiliate, subsidiary or associated company or any other entity in any way related to Fitness First Australia by way of letter, email, telephone call, text message, Facebook message or any other form of internet based communication or any other form of written, verbal or non-verbal contact whatsoever;
(vi)to remove doubt, conduct means any communication by any medium or mode whatsoever that in any way refers to or concerns or refers to Fitness First Robina, Fitness First Australia, any other Fitness First gym location or any other Fitness First Australia affiliate, subsidiary or associated company or any other entity in any way related to Fitness First Australia.”
 By cl 2.1 of the deed, the applicant agreed to provide the respondent with certain equipment, within 14 days of the deed, upon the basis that the respondent did not at any time engage in the Conduct and on the further basis that cl 7 of the deed was strictly complied with by the respondent. That seems to have been an intended reference to cl 8 dealing with confidentiality, which is set out below.
 By cl 2.2, the applicant agreed to pay the respondent $1,500. By cl 2.3, the respondent agreed that he would “cease, desist and refrain from engaging in the Conduct and will not at any stage now or in the future engage in the Conduct”.
 Clause 3 was as follows:
(a)McNicol covenants never to disparage or speak ill of Fitness First or any of its services, affiliates, subsidiaries, officers, directors, employees or shareholders, instructors, staff members or any other person in any way associated with Fitness First.
(b)Fitness First covenants never to disparage or speak ill of McNicol.”
 Clause 6.1 contained a covenant by the respondent that he would not make any claims against the applicant in relation to matters the subject of the dispute and the deed.
 Clause 8, headed “Confidentiality”, was as follows:
“(a)The terms of settlement contained in this Deed, the factual circumstances surrounding the Dispute and the entering into of this Deed by the Parties, the Equipment, the Settlement Sum and any other matter is any way associated with the Dispute and the terms of this Deed are strictly confidential.
(b)A Party must not disclose or permit to be disclosed either directly or indirectly the terms of this Deed or details of any discussions or negotiations between the Parties in relation to this Deed except:
(i)with the express written consent of each other Party;
(ii)to the extent required by law;
(iii)on a confidential basis to their insurers (if any) or professional advisers or their Related Parties;
(iv)in the case of breach of any of the terms of this deed; or
(v)for the purpose of making a claim against any other person.
(c)McNicol accepts, agrees and acknowledges that the Equipment, the Settlement Sum and the terms of settlement contained in this deed are strictly confidential and must not be disclosed to any other person whatsoever except in accordance with clause 8(b)(i) to 8(b)(v) above.”
 Clause 11 of the deed was as follows:
“This Deed embodies the entire agreement between the parties to this Deed in respect of the subject matter of the Deed”.
 The letter of acknowledgment was in these terms:
“To Members and Staff
Fitness First Robina
As you may be aware, a dispute had arisen between Fitness First Robina and Mr Dean McNicol.
After meetings and discussion between the parties, it is acknowledged by both Fitness First Robina and Mr McNicol that there were misconceptions, miscommunication and misunderstandings by various persons which lead to the dispute.
Fortunately, the parties have now met and resolved the dispute and their differences.
The matter is now at an end – fully and finally resolved – and both parties have agreed that the matter should now be put behind them so that both parties can move on.
Mr McNicol will no longer be attending Fitness First Robina.
There will be no further comment on the matter and all matters relating to the dispute are confidential.”
 The deed made no reference to the letter of acknowledgment. This is curious, because the evident intent of the parties was that some use might be made of the letter. It was not a document destined only for the applicant’s archives. It was addressed to members and staff at the Robina premises. The applicant must have thought that the letter was of some potential use to it, because its solicitor prepared it and required the respondent to sign it (as well as the deed) in order to receive the benefit of the settlement. And the letter was likely to be beneficial to the respondent, as going some way towards reducing the effect of the document which the applicant had published at Robina. The effect of the letter was that the dispute had arisen not from misconduct on the part of anyone, the respondent in particular, but from misunderstandings by “various persons”. As I will discuss, the document was not sent to members and staff, at least to most of them. The first question then is whether the applicant agreed to do so.
 There was no evidence given by the respondent on this question, who argued his own case. In his pleading, he alleged as follows:
“7.…It was agreed upon by both parties that [the letter of acknowledgement] would be distributed and displayed in the same manner and timeframe as the disparaging flyer Fitness First had displayed and distributed. This was agreed upon so all external and third parties who had been likely to have seen the Fitness First flyer and posters would be made aware the issue had been resolved.
(c)… It was discussed that the letter of acknowledgement would not breach the confidentiality clauses of the deed effectively overriding the deed conditions whilst the letter of acknowledgement was to be displayed and distributed by Fitness First. …”
The respondent swore some affidavits. But none contained evidence as to this subject. One affidavit simply exhibited relevant documents including those to which I have already referred, without saying any more. The result is that the only evidence upon the subject of what was agreed about the letter of acknowledgement came from Mr Reid.
 In cross-examination, Mr Reid disagreed with the suggestion that the applicant had agreed to publish the letter of acknowledgement as alleged in the Defence. Then as to what use could be made of the letter, at one point Mr Reid said:
“I understood the position, and as my instructions, which is how I came to know these things, were that Fitness First had communicated the letter of acknowledgement to staff members and members were told that if members asked about the matter, that’s what they were to be told, and that’s all.”
Later in his cross-examination he said:
“As I understood the deed of acknowledgement, and I drafted it, it was intended that if either party had to communicate in relation to the matter because they were asked, that is how they should communicate a response.”
 The first difficulty for the respondent’s pleaded case is cl 11 of the deed. He must demonstrate that despite his agreeing in the terms of that clause, the true agreement was one which was made partly in writing and partly orally, and that the oral term required the applicant to publish the letter. Upon the state of the evidence, that case must fail.
 A collateral promise which is not able to be enforced as a contract can still be enforced as a promissory estoppel, by an equitable restraint on the exercise or enforcement of the promisor’s rights: Saleh v Romanous. But again, the evidence does not establish the elements of such an estoppel. In particular, it would be inconsistent with Mr Reid’s evidence to find that he induced an expectation in the respondent that the letter would be published.
 Mr Reid’s evidence was in relation to his own understanding or intention, which may be imputed to the applicant. But the fact of Mr Reid’s own intention as to the publication of this letter is relevant in assessing what, in all probability, his words and conduct did in fact convey to the respondent: see e.g. Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd. It is likely that in their meeting of 29 March, Mr Reid said something to the respondent which conveyed his own understanding or intention as to the use to be made of the letter of acknowledgment. I infer that Mr Reid thereby made the respondent believe that the letter could be used by either party. It is improbable that he said something to the effect that the letter could be used only by the applicant. The fact that it was co-signed for the applicant indicated a potential use of the letter by the respondent. And the letter was plainly beneficial to the respondent, particularly having regard to the strict and extensive restraints imposed upon what he could say about the dispute, by the deed of settlement.
 It is improbable that Mr Reid said that the letter could be used only in a responsive way, that is to say if either party were asked about what had happened. That is firstly because of the way in which the letter was addressed, suggesting that it was to be published generally, rather than to an individual who inquired. Secondly, as is discussed below, Mr Reid advised his client that all staff should be informed that the dispute had been settled, the respondent would not be returning and that that was the end of the matter. The letter of acknowledgment was apparently drafted for making such a communication to all of the staff.
 I infer then that the applicant through Mr Reid induced a belief in the respondent that notwithstanding the deed of settlement, the respondent could himself publish the letter to any staff or members. Probably he then assumed that the applicant would do so.
 There is no necessary inconsistency between a right to publish the letter and the provisions of cl 3 and cl 8 of the deed of settlement. But the publication of the letter of acknowledgment, if made by the respondent even in answer to some question of him, would seem to be part of “the Conduct” as defined by cl 1(k) and which is thereby precluded by cl 2.3. That conduct includes any contact by the respondent with any staff member or member of Fitness First Robina in any way related to that establishment or the applicant. According to the definition of Conduct in cl 1(k)(i), it would include the sending of any document in respect of Fitness First Robina or the applicant. So even if a member were to ask the respondent about the outcome of the dispute, according to the deed he would be precluded from answering that inquiry, and in particular, by doing so through the provision of this letter. That is inconsistent with what Mr Reid induced the respondent to believe.
 This belief as to the letter has a consequence for the relief which should be granted to the applicant. Having induced that belief and the deed having been signed in that circumstance, the applicant should not be given an injunction which restrains the respondent from making a publication which is to the effect of the letter. Arguably, that consequence could be described in terms of an equitable estoppel. But it is sufficient to say that the respondent was induced by the applicant to execute the deed under a mistake, which was that it would not preclude his making a communication by or to the effect of the letter of acknowledgment. The question is not whether the deed could now be rescinded for that mistake. It is whether equitable relief should be given in terms which would permit the applicant to take advantage of the respondent’s mistake. The answer is that the relief must be fashioned in a way that prevents that occurring.
 What I have said already disposes of the respondent’s principal argument of a breach of contract. Because the applicant was not bound to publish the letter of acknowledgment, there was no breach by its non-publication. But I should record what did or did not happen. The evidence indicates that there was effectively no publication of the letter. Mr Reid, in his affidavit, said that he advised the applicant through its Robina manager, Ms Rebel Whale, and the applicant’s employed lawyer, that they should “notify and direct all staff and personnel of the Applicant” that the dispute had been resolved, the respondent would not be a member at Robina, the matter was at an end and that “there should be no discussion or ongoing reference to the events that had arisen in relation to the dispute”. Advice in those terms would have indicated nothing about the particular use to be made of the letter. Ms Whale gave evidence that she “notified and directed all staff” consistently with Mr Reid’s advice. In her affidavit evidence she said nothing about the letter. But when cross-examined, she said that she had sent an email “to every HOD department” which attached the letter of acknowledgment with instructions to “give it to their staff members”. She was unable to say whether it had been distributed to the staff. At another point she said that her email had attached the deed rather than the letter of acknowledgment. No such email is in evidence.
 I find that the letter of acknowledgment was not distributed to staff and members of the Robina club. There is no evidence that it was distributed to members. There is some evidence that Ms Whale sent it to some staff with instructions to further distribute it. But because she was uncertain as to whether she had attached the letter or the deed to what she said was her email in this respect, it is not established that the letter was distributed to any staff. It was incorrect then for the appellant to have submitted, as it did in its written submissions, both when applying for interlocutory and final relief, that the letter had been distributed to staff.
 The applicant duly paid the respondent the settlement sum of $1,500. It also provided the equipment as promised in the deed. It was a little late in doing that, but the equipment was supplied, and the respondent accepted it, before any act of the respondent which might be characterised as an election to be no longer bound by the contract. The equipment was to have been provided within 14 days of the execution of the deed, which was on 29 March. On 20 April, the respondent accepted delivery of the equipment and emailed Mr Reid saying that the applicant “has not breached the agreement and the issue has been settled in respects to gym equipment and settlement sum”.
 The remaining allegation is that the applicant breached the deed by disparaging or speaking ill of the respondent, contrary to cl 3(b). There is no evidence to establish that allegation.
 It follows that the respondent has failed to prove any breach, or at least a breach which has excused him from performance of the deed.
 I go now to the alleged breaches by the respondent. The first is that the respondent sent emails to Mr Reid in which he threatened to hand the “issue” to the media and to commence an “adversarial public campaign” against it. There are emails to that effect which are in evidence.
 The second alleged breach is that the respondent has approached an employee of the applicant at a shopping centre on two occasions, seeking to discuss with her the termination of his membership and the dispute. The fact that the respondent did speak to that employee in about April 2012 about those matters is demonstrated by his own emails. This was a breach of the deed because it involved some contact by him with a staff member of Fitness First Robina which involved a communication that referred to or concerned that club. Under the deed, such a contact constitutes a breach regardless of whether it was of a harassing or intimidating kind.
 Thirdly, it is alleged that on 31 May, the respondent sent emails to 17 of the applicant’s clubs which disparaged the applicant and disputed the validity of the termination of his membership. Plainly he did so, the emails are in evidence.
 On the same day, as the applicant pleads, he sent 18 emails to media outlets which were to the same effect. On the following day he sent another 16 emails to fitness centres which were to the same effect and on 2 June, he distributed leaflets outside the Robina premises and there spoke to members about the dispute and about the termination. None of this conduct, by way of emails and that attendance outside the club, is disputed. The defendant has breached and threatens to further breach the deed.
 I am also satisfied that if there is no injunction, the respondent’s conduct will not only continue but be likely to cause damage to the applicant’s reputation and its business. Therefore the applicant has made out a case for some relief and it remains to consider what that relief should be.
 The applicant seeks a restraint in terms which largely replicate those of cl 1(k), cl 2.3, cl 3(a) and cl 8 of the deed. I have concluded already that the terms of an injunction should be such as to prevent the applicant from taking advantage of the respondent’s mistake about the letter of acknowledgment. That means that he ought to be permitted to disclose the contents or the substance of that letter. He ought to be free to say that the dispute as to the termination of his membership did arise but that it was settled, with each side acknowledging that it was the result of misunderstandings by several people.
 And there are further reasons for not granting an injunction in the wide terms sought by the applicant. This is not because the very extensive restraints which are expressed in the deed ought to be qualified in their contractual effect. It is because courts have a wider interest in the resolution of disputes than that held by the parties and will seek to make orders, in circumstances such as this, which are likely to resolve the dispute rather than exacerbate it. To enforce the contract by an order which is, word for word, a replication of the deed would be to markedly increase the potential for further litigation. That potential is due not only to the ambiguity of some provisions of the deed but also to the fact that the restraints to which the respondent agreed went far beyond the context of his conduct which had led to the dispute.
 The plaintiff’s interest in the substantial performance of its contract can be sufficiently protected by more limited orders and which would lessen the potential for further litigation. The respondent should be enjoined from attending any of the Fitness First establishments, except with the written consent of the applicant. He should be restrained from making any publication which disparages the applicant in respect of any conduct of the applicant which was the subject of the dispute which was settled by the deed on 29 March 2012 or in relation to the performance or otherwise of the terms of that settlement. He should also be restrained from writing, emailing, calling, texting or sending any other communication to any staff member or customer of a Fitness First club, relating to the dispute between the parties or as to its settlement, except to communicate the contents or effect of the letter signed by the parties on that date. As to confidentiality, by these proceedings the terms of the compromise have been disclosed. These proceedings were held in open court, as they should have been and neither side suggested otherwise. It is not appropriate now to endeavour to impose a restraint upon a breach of cl 8.
- Published Case Name:
Fitness First Australia Pty Ltd v McNicol
- Shortened Case Name:
Fitness First Australia Pty Ltd v McNicol
 QSC 296
02 Oct 2012
No Litigation History