Industrial Relations Commission of New South Wales in Court Session CITATION : Romanin v University Co-operative Bookshop Limited [2003] NSWIRComm 410 APPLICANT: Frank Romanin PARTIES : RESPONDENT: The University Co-operative Bookshop Limited FILE NUMBER: IRC 2567 of 2000 CORAM: Schmidt J CATCHWORDS : Unfair contract - terms of contract - whether applicant was a permanent employee - whether termination provisions had been agreed - permanent contract existed - contract found unfair - respondent's conduct unfair - required notice not given - mitigation - money orders - interest LEGISLATION CITED : Co-operatives Act 1982 (NSW) Industrial Relations Act 1996 HEARING DATES: 05/30/2003; 06/02/2003; 06/03/2003; 06/04/2003; 06/05/2003; 10/20/2003; 10/22/2003 DATE OF JUDGMENT: 11/25/2003 APPLICANT: Mr R Alkadamani of counsel SOLICITORS: Haywards Solicitors LEGAL REPRESENTATIVES: RESPONDENT: Ms C Ronalds of counsel SOLICITORS: Harmers Workplace Lawyers JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: Schmidt J DATE: 25 November 2003 Matter Number IRC 2567 of 2000 FRANK ROMANIN v UNIVERSITY CO-OPERATIVE BOOKSHOP LIMITED Application under section 106 of the Industrial Relations Act 1996 JUDGMENT 1 This application was brought by Mr Franco Romanin under s106 of the Industrial Relations Act 1996 ('the Act'), in relation to his former employment as General Manager of the respondent, the University Co-operative Bookshop Limited ('the Co-op'). Mr Romanin was recruited for that position, after having worked for the Co-op for a short period as acting General Manager, pursuant to a consultancy contract with Drake Personnel Limited ('Drake'). His employment was brought to an end by the Co-op in October 1999. 2 The relief claimed in the summons was: 1. An order pursuant to sub-section 106(1) of the Industrial Relations Act 1996 ("the Act") varying from its commencement the University Co-operative Bookshop contract or arrangement between the applicant and the respondent, particulars of which are given in paragraph 15 of Part B, so as to provide that, in the events that have happened, the respondent shall pay the applicant the sum determined in accordance with Part D. 1A. Further, and alternatively, an order varying the contract of employment between the Applicant and the Respondent such that the contract of employment, or the arrangement, contains the following terms and conditions: i. Salary of $244,000.00 per annum; ii. Provision of a fully maintained car to the value of $20,000.00 - $24,000.00 per annum iii. 9% employer superannuation contribution; iv. Payment of D & O indemnity insurance; v. Payment of reasonable mobile phone costs; vi. Notice of termination to be 12 months to increase by one month for every year of service or part thereof, or payment in lieu, any such payment in lieu to be based on Mr Romanin's total remuneration package; vii. Performance bonus based on 10% of increase profitability except that increases in profitability must translate to increases in cash flow above breakeven point; viii. Key Performance indicators in accordance with the attachments to the letter dated 20 August 1999 from Mr Howard on behalf of the respondent to Mr Romanin. 2. An order pursuant to sub-section 106(5) of the Act that the respondent shall pay the applicant the sum specified in Order 1 and/or Order 1A. 3. An order pursuant to section 372 of the Act that the respondent shall pay interest on the sum specified in Order 1 and/or Order 1A. 4. An order pursuant to section 181 of the Act that the respondent shall pay the costs incurred by the applicant of, and incidental to, these proceedings. D. The sum referred to in Orders 1 and 2 in Part A is calculated as follows: (a) an amount of $294,623.00 under the Notice Agreement, being (i) the applicant's annual salary of $244,000.00, (ii) a further amount on account of the applicant's salary for an additional month, being $20,333.00, (iii) an amount on account of superannuation contributions, at the rate of nine per cent of $264,333.00, being $23,790.00, and (iv) an amount on account of the motor vehicle provided to the applicant for 13 months at an annual rate of $6,000.00, being $6,500.00; and (b) an amount, particulars of which will be provided, that would have been paid to the applicant under the Bonus Agreement if he had been given the notice required by the Notice Agreement; and (c) an amount on account of the damage to the applicant's professional and personal reputation. 3 Not all aspects of the claim were finally pressed. 4 Evidence was called in the applicant's case from the applicant, his wife, Ms Sue Yin Oh, Professor Gerald Govett; Ms Beverley Nurick, Mr Adrian Diethelm, Barrister and Mr Graeme Orr, Senior Lecturer of the Faculty of Law, Nathan Campus, Griffith University. Ms Nurick and Mr Diethelm were not required for cross examination. The respondent called evidence from Mr Richard Howard, Army Officer and Company Director; Mr Alister Runge, Company Director and Mr Leigh Warnick, Solicitor and Company Director; former Chairman of the Board of Directors of Grange Resources NL. 5 The issues raised in the case required determination of what the terms of the contract of employment between Mr Romanin and the Co-op were, as well as whether the contract was unfair, so as to require relief being granted in these proceedings. There was no issue that Mr Romanin had been employed by the Co-op as its General Manager, despite the fact that there were questions as to whether the persons who sat as members of the Board which had appointed him, had been validly appointed to the Board and whether the resolutions whereby his appointment was made by that Board were valid. There was rather, a question as to whether or not the applicant was ever a permanent employee of the Co-op. The circumstances 6 Mr Romanin first worked at the Co-op in June 1999 as acting General Manager and Company Secretary, pursuant to two contracts, one between he and Drake and the other between Drake and the Co-op. He was paid $8,000 per week for that work by Drake. The Co-op also paid Drake an additional amount as its fee, paying a total of $12,000 per week for Mr Romanin's services. 7 This appointment had come about after the Co-op had suspended its previous General Manager, Mr Arthur Lee. There were questions as to the validity of that suspension and the later termination of Mr Lee's employment, which were also bound up with questions of the membership of the Board of the Co-op and the way in which it conducted its business. 8 There was considerable evidence led about these matters in the proceedings, all of which it is unnecessary to explore in detail. In summary, the position was that the Co-op had an elected Board of eight members, with a Chairman and Deputy elected by the Board members. The Board was split in two factions, each of which had four members. Mr Howard, who headed one faction, was the Chairman of the Board, having been elected to that position after Mr Runge had relinquished it, in December 1998. In May 1999, an attempt was made by Mr Runge and the other members of the opposing faction on the Board, to oust Mr Howard from that position. This led to proceedings in the Supreme Court, which came before Santow J and resulted in that endeavour coming to nought and costs orders being made against Mr Runge and other directors in his faction. 9 It appears that Mr Runge had not stood for re-election as Chairman in December 1998. Concerns, however, later arose on his part, about the way in which Mr Howard operated in his position as Chairman. These concerns were shared by other members of his faction and led to the unsuccessful attempt to remove Mr Howard. 10 The situation which appears to have been acrimonious enough prior to the proceedings before Justice Santow, deteriorated further afterwards. Some members of the unsuccessful faction, led by Mr Runge, refused to attend a number of Board meetings, as a part of a deliberate strategy, described by Mr Runge in a letter dated 22 May 1999 to the Manager Co-operatives, of the Department of Fair Trading. An investigation was sought, as well as the dissolution of the Board. In cross examination, Mr Runge explained that this was designed to ensure that a quorum could not be reached at Board meetings. He agreed that this was not a proper way to discharge his duties as a director and that later he altered his approach. 11 This approach appears to have led to an investigation by the Department and a report in August 1999, critical of various aspects of the Board's operations. It was not until 1 September that the Co-op was advised by the Department that it had been determined to appoint an inspector to hold an Inquiry under s405 of the Co-operatives Act 1992 (NSW). 12 In the meantime, problems of quorums at Board meetings arose as a result of the approach adopted by Mr Runge's faction, which affected the Board's ability to conduct its business. The Co-op took legal advice. Resolutions were not able to be dealt with at Board meetings and so the Co-op's rules, which permitted Board members to adopt written resolutions outside Board meetings, were utilised. Such a resolution was utilised to suspend Mr Lee, seemingly a supporter of Mr Runge. 13 On legal advice, Mr Howard's faction also took the view that certain of the directors had lost their positions on the Board as the result of their failure to attend Board meetings and new directors were appointed. The process whereby these appointments were made and how other Board decisions were then made, was also the subject of disagreement between the factions. 14 Thereafter, rather than business being conducted at Board meetings by vote of the directors present, it was often conducted by written resolutions circulated outside Board meetings. While such a procedure was provided for under the Co-op rules, some of the opposing faction also failed to vote at all on such resolutions. There were questions as to whether they had been given sufficient time and information to do so. The view taken was that such directors had voted against the resolution, so as to permit Mr Howard to exercise the Chairman's casting vote. This had the result that the resolution in question was adopted. This mechanism was utilised to replace some directors and to appoint others in their place. 15 Legal advice as to the validity of such an approach to Board resolutions, as well as whether or not certain directors remained as members of the Co-op's Board, was sought by the Co-op and also by Mr Ronald Ma and Mr Vincent Pang, both directors who were members of Mr Runge's faction and who the opposing faction was treating as having lost their Board positions. The advice received by the Co-op from its lawyers and Mr Diethelm of counsel, conflicted with the advice given to Mr Ma and Mr Pang by Mr McCarthy QC and later by Mr Broun QC. Further approaches to the Supreme Court were canvassed by some of the directors and by the Co-op, which finally initiated further proceedings. They were later discontinued. These problems also led to the elections called for the Board in 1999 being deferred. Mr Diethelm later gave further advice as to the validity of various Board resolutions. Eventually, the directors voted at a meeting, that the Registrar of Co-operatives should be asked to appoint an administrator of the Co-op. 16 The Inquiry later conducted by Mr Elms, recommended in January 2000, that an administrator should be appointed. This appears not to have occurred. 17 The difficulties at Board level continued even during this Inquiry. Discussions between various Board members eventually resulted in several directors, including Mr Howard, resigning from the Board and others being appointed in their place. Thereupon it was decided by the Board that some directors, Professor Govett and Professor Duffield, had not been validly appointed to the Board. They were removed and Mr Pang and Mr Ma were recognised as still being Board members. Mr Runge was then elected Chairman and the reconstituted Board then suspended Mr Romanin from his position of General Manager and reinstated Mr Lee. The Board later dismissed Mr Romanin. The letter of termination of 22 October provided that: 'Dear Mr Romanin, I advise that University Co-operative Bookshop Limited hereby terminates your contract. In accordance with the relevant contract, you are entitled to 7 days notice. We note that you have already been paid to the end of the month and, therefore, no further entitlements are due to you. For the avoidance of doubt, I confirm that the Co-op denies that you are employed pursuant to any contract of employment dated 20 August 1999 as alleged by your solicitors, Snelgrove & Partners. Please return all books, records, documents and other materials and things which you have in your possession, custody or power which belong to the Co-op by 5:00pm Tuesday 26 October 1999. Yours sincerely UNIVERSITY COOPERATIVE BOOKSHOP LTD 18 All of these developments formed a background to Mr Romanin's employment and on the Co-op's case, involved matters in which Mr Romanin had involved himself as a 'player'. So far as Mr Romanin was concerned, the relevant events were that he approached Drake as an employment agency. It put him forward for the acting General Manager's position, which he accepted when it was later offered to him, having earlier met with Mr Howard and Mr Watts. Mr Howard had told him at their meeting of the hostile environment, that the position was difficult and that 'it would need a person of some resilience to overcome the issues'. 19 Mr Lee wrote to Mr Romanin shortly afterwards to advise him that his appointment was 'grossly improper'. Mr Runge also informed him that he should not be there, like the previous acting General Manager, given the views of half the Board. When he refused to accept this, Mr Runge commenced a campaign of daily contact with Mr Romanin by telephone, email and fax communication, seeking information and requesting material. He also attempted to have Mr Romanin obtain legal advice on matters of concern to him. Mr Romanin refused to take steps not authorised by the Board. Mr Runge pursued his view that the Board had no authority to act as it was and that Mr Romanin had not been properly appointed. 20 It was Mr Romanin's evidence that while he was the acting General Manager and after the Co-op had advertised the permanent position of General Manager/CEO, Mr Howard approached him and encouraged him to apply. Mr Howard denied this in his affidavit evidence, but conceded in cross examination that he had 'given indications that I wanted him to apply.' 21 There was much conflict in the affidavit evidence of Mr Romanin and Mr Howard, as to what was said in this discussion and many others. When cross examined there was also much which Mr Howard apparently had no memory of, at all. Despite this, it was common ground that Mr Romanin applied for the position; he was interviewed by the selection committee, comprising Mr Howard, Professors Govett and Duffield and Mr Watts, along with other applicants on the shortlist; he was the preferred candidate and was offered the job. 22 Despite the fact that Mr Romanin then performed the work, there was also an issue as to whether Mr Romanin accepted the job when it was offered and if he did, what the terms of the resulting contract were. The sequence of events was that a selection committee was established. It met on 28 July and discussed potential candidates and terms. A remuneration package of $250,000, was discussed by the selection committee. Professor Govett had also in July provided a draft service agreement for consideration by the Co-op's lawyers. It provided for 12 months notice in the first year and an additional month per year thereafter. The selection committee interviewed the candidates and unanimously selected Mr Romanin. There was a Board meeting on 10 August which considered the question of Mr Romanin being offered the position. 23 There were two versions of the minutes of the 10 August Board meeting, one referring to a proposed contract being presented to the Board for approval prior to signing and the other not. Both versions however referred to Mr Romanin being offered the position. It is not possible to reach a conclusion as to which version was accurate. In any event, the meeting proceeded on an informal basis, because of a view then pressed by Mr Runge, that a meeting which had not commenced within 30 minutes lapsed. As a result, a written resolution was later adopted, by 6 of the 8 directors. It provided 'RESOLVED that the Co-op offer employment to Franco Romanin as General Manager/CEO on terms and conditions as shall be determined by the selection committee.' 24 On 12 August, Mr Runge sent an email to Directors raising his concern, amongst other things, that while estimates of the total annual package had been provided to the Board, no details of the breakdown of what was proposed by way of bonus had been discussed. He also asked whether a draft of the final contract would go to the Board for approval. 25 On 13 August, Mr Howard sent a memo to directors advising that Mr Romanin had been appointed 'subject to the successful negotiation of mutually agreeable terms and conditions by the recruitment committee'. He referred to negotiations as to key performance indicators and other conditions, concluding that 'obviously the final proposal agreed must be subject to Board approval before any contract is signed'. 26 On 16 August, Mr Romanin wrote in relation to the discussions he had had with Mr Howard, proposing various terms. 27 On 17 August the selection committee met and discussed the terms and conditions to be offered. Professor Govett's evidence was that while Mr Howard suggested the package should be $250,000 including a car, he and Professor Duffield believed that it should be plus a car. Mr Watts had no opinion. 28 Mr Howard agreed with this, but denied other aspects of the conversation. 29 Accordingly, contrary to the Co-op's final submissions, it was common ground that Mr Howard was authorised by the selection committee to offer up to $250,000, plus a vehicle. There was also a Board meeting on 17 August, at which Mr Romanin was also discussed. He was not present. There were disputes between Mr Howard, Professor Govett and Mr Orr as to whether a probationary period and notice was required by the Board. Professor Govett's evidence was that all those present agreed that there should be no probationary period and that a service agreement providing appropriate recompense for termination was preferable to a fixed term contract. This provided better protection for both employer and employee at this level. Mr Howard's evidence was that he was strongly of the view that there should be a probationary period and that the Board did not decide that there should not be one. He did not deny the discussion as to notice. 30 The minutes recorded: 2.2 The following Rule (62) (a)(i) resolutions passed since the previous Board meeting were read out in full: i) Appointment of the General Manager/CEO created on 10th August 1999 and effective as at 12th August 1999 ii) Board meeting 17th August 1999, created 11 August 1999 and effective 12th August 1999 It was resolved to ratify each resolution. Carried unanimously. … 4.4 The Chairman advised that the Company Secretary had been appointed as General Manager/Chief Executive officer, to commence on 16 August. The Company Secretary advised that he would be on leave for the period 23 August to 31 August, inclusive. It was agreed that an interim letter of appointment will be provided followed by a formal contract of employment. 31 There was no reference to a probationary period or notice in the minutes. Mr Howard's evidence in cross examination, however, was that 'the Board would not have agreed to not have a probationary period because Graham Orr, a committed socialist, would never have agreed to the omission of a probationary period'. He 'felt strongly there should be a probationary period as did I and Mr Watts and that constitutes half of the meeting, it follows that there could have been no agreement which is why I assume the minutes don't reflect any such agreement.' Mr Howard denied that this evidence was a fabrication. He also went onto assert that at least half of the Board required a probationary period, but that this didn't matter, because negotiation of terms had been delegated to the selection committee. He also denied that this evidence was an invention. 32 Mr Romanin was permitted to call evidence in reply from Mr Orr on this matter. (See interlocutory judgment of Romanin v University Co-operative Bookshop Limited [2003] NSWIRComm 326) Mr Orr's evidence supported that of Professor Govett. He said that he was not a 'committed socialist' and that he did not believe that the contract should have contained a probationary period. He had told Mr Howard of his view and explained his reasons for it, which included the circumstances then confronting the Co-op. Mr Orr could not recollect anyone at the Board expressing a strong view in favour of a probationary period. Nor was reference made at the time to the Co-op's policy and procedures manual. All members of the Board acted on the understanding that Mr Romanin had been permanently appointed. In cross examination Mr Orr also explained that the suggestion that Mr Romanin had not accepted the offer, was never raised. He understood that Mr Romanin was in the job. 33 On Mr Romanin's evidence, he then discussed the termination provision of his contract with Mr Howard on 19 August. He was concerned with the security of his tenure and sought a 5 year term. Mr Howard explained that what was proposed by the Co-op was 12 months' notice during the first year and an extra month for each year of service thereafter. Mr Romanin accepted this. Mr Howard denied such a conversation took place. 34 Mr Romanin's explanation of his attitude at the time was that under his contract with Drake, he was paid $8,000 gross per week, plus superannuation. Under the Co-op's offer this would reduce to $4,692 gross plus superannuation. Given this reduction and the uncertain Board position, he wanted to be reassured that he would not be treated as his predecessor, Mr Lee, had been. In the circumstances, he would not have accepted the offer, without being reassured by Mr Howard that the termination provision was agreed. I observe at this point that I found the explanation an entirely credible one. 35 On 20 August, Mr Howard wrote to Mr Romanin, advising: Dear Frank The Board of Directors of the University Co-operative Bookshop Ltd has resolved to offer you employment as General Manager/CEO of the Co-op commencing Monday 16 August 1999 on the following terms and conditions: · $244,000pa salary · Provision of a fully maintained appropriate vehicle · 9% employer superannuation contribution · Payment of D&O indemnity insurance · Payment of reasonable mobile phone costs · Performance based bonus to be agreed - annually assessed · Separation/termination provisions and payment (in line with industry standards) to be agreed · Key Performance Indicators to be agreed The responsibilities and duties of the position are as those in the attached document. On behalf of the Board, I congratulate you on your appointment and look forward to working with you in the future. Yours sincerely Richard Howard Chairman On behalf of the Board of Directors. 36 Mr Romanin was in Singapore on his honeymoon at the time. There was an issue as to whether Mr Howard read the letter to him, when they spoke by phone on 23 August, and whether Mr Romanin then accepted the offer. On Mr Romanin's evidence the reference to termination and industry standards was discussed and Mr Howard explained that notice would be as they had already discussed. After discussing other matters, Mr Romanin accepted the offer. Ms Oh's evidence, was that she was present while Mr Romanin was speaking to Mr Howard and heard him say: 'I want 12 months.' Mr Romanin also informed her after the phone call had concluded, that he had accepted the offer. 37 Mr Howard's evidence was that Mr Romanin declined to accept the offer when they spoke on 23 August. He preferred to wait until he knew what was being offered by the Co-op in terms of termination, KPI's and bonus. Upon his return from Singapore, Mr Romanin confirmed that he had not accepted the offer. Mr Romanin denied that this had occurred. Mr Howard explained that he would never have agreed to the type of termination clause contained in Professor Govett's draft contract, because it was contrary to what was required, in order to protect the Co-op's financial interests. For similar reasons he insisted on a probationary period. 38 On his evidence, despite this state of affairs, Mr Howard then agreed to announce that Mr Romanin had been appointed permanently to the position, because of Mr Romanin's urgings that this was necessary for the stability of the Co-op. Again, Mr Romanin disagreed. On his evidence, the announcement reflected the agreement he had reached. 39 It was common ground, that the Co-op then terminated its agreement with Drake when he returned from his leave. Mr Romanin commenced being paid at the rate provided in the 20 August letter, effective from 16 August. Mr Romanin also then provided the necessary documentation usually provided by employees and the Co-op announced his appointment publicly, in a variety of ways, including in the Co-op newsletter of 8 September. He was also provided with a car, as had been agreed. The newsletter said that Mr Romanin had been appointed as General Manager, on a permanent basis. 40 There was an issue as to who had written what appeared in the newsletter. Mr Romanin's evidence was that it had been drafted by Mr Howard and Ms Nurick. Again, Mr Howard denied this. His version was that the idea was Mr Romanin's, as were the words. 41 Ms Nurick was responsible for the publication and gave evidence as to how particular Mr Howard was as to what appeared therein. Mr Howard required that drafts receive his prior approval before being published. He often extensively rewrote drafts provided to him. She could not recollect what had occurred in relation to the particular announcement, but had no reason to think that there had been any departure from Mr Howard's normal practice. She was not required for cross examination. 42 Professor Govett's evidence was that he was anxious to understand whether or not Mr Romanin had accepted the Co-op's offer. On 7 September, he sent a memo to Mr Howard, saying that he was concerned about the lack of progress in 'finalising the terms of employment' for Mr Romanin as CEO, with the outstanding issues being the actual remuneration package, the terms of employment and the service agreement. His view was that it was unconscionable to expect Mr Romanin to work 'without a legally binding contract'. He proposed a deadline of the 21 September Board meeting and suggested that the selection committee should review the proposed agreement, 'with the view of making a recommendation to the Board.' 43 On 9 September, Mr Howard advised him by email that: 'I provided your Service Agreement proforma to Michael Carroll some weeks ago and also gave him copies of the KPI and performance bonus proposals after we discussed them, along with the Letter of Offer to Frank that you also received. My understanding is that the latter Letter of Offer constitutes a legally binding contract at such point as Frank signifies his acceptance of it. I met with Michael on Tuesday of this week and he acknowledged that he had been delayed in finalising a draft contract as a result of other commitments but agreed to have the document in my hands by the end of this week. As soon as I receive it, I will arrange for copies to be sent to all committee members and to Frank, after which we should meet. It will then remain for us to further negotiate the KPIs and performance bonus terms with Frank, although the basic remuneration has already been agreed at $244k plus fully maintained car, plus 9% super, plus D&O insurance, plus mobile phone costs. I understand that Frank is currently being paid on this basis. To assist the process, I have requested that Michael make himself available at the next board meeting to answer directors' questions. 44 Professor Govett then spoke to Mr Romanin, who confirmed that he had accepted the offer. He then spoke to Mr Howard, who also confirmed this. Again, Mr Howard denied having done so. On 15 September, Professor Govett again wrote to Mr Howard saying that he had been reassured by his advice, but remained concerned at the delay in providing the agreement. He suggested that new legal advisers be engaged by the Co-op. He also sought an explanation for the delay. In his oral evidence, Professor Govett explained that he then understood that Mr Romanin had been permanently employed. Professor Govett's understanding was the same as that of Mr Orr. 45 The Co-op's lawyers had been instructed to prepare a service agreement. A draft was finally provided to Mr Romanin on 15 September. It provided for 6 months' notice of termination and a probationary period. Mr Romanin was dissatisfied with these terms. In his view they departed from the agreement he had already reached. He proposed to take the matter up with the Board, but because of the way in which events developed thereafter, the Board never in fact considered these matters, prior to Mr Romanin's employment being terminated. Professor Govett's view was that the agreement was directly contrary to the Board discussion on 17 August. 46 The termination of Mr Romanin's employment followed a number of events. As I noted, in May 1999, Mr Runge and a number of other directors in his faction had written to the Department of Fair Trading, seeking the appointment of an administrator, because, amongst other things, in their view the Board had become ungovernable. They also advised that they no longer proposed to attend Board meetings. An investigation had followed. 47 Professor Govett, along with Professor Duffield, had been appointed as deputy directors, while two other directors took leave. They later accepted appointment to Board positions, in place of Mr Ma and Mr Pang, who had been declared to have vacated their offices, because of their failure to attend Board meetings. This approach accorded with the legal advice which the Co-op had received at that time. Professors Govett and Duffield had sat on the selection committee, which had resulted in Mr Romanin's appointment and had participated as directors in various meetings and resolutions adopted by the Co-op's Board, after their appointments. 48 At the Board meeting on 21 September, Professor Govett proposed a resolution that the Board approach the Registrar of Co-operatives, for the appointment of an administrator, because the directors regarded the Board as having become ungovernable. All Board members, apart from Mr Runge, supported the resolution and directed Mr Romanin to write to the Registrar accordingly. Mr Romanin instructed the Co-ops' solicitors, Carroll & Knudsen to settle the letter. Instead, they wrote advising the Co-op that the Registrar could not appoint an administrator and that such a letter should not be sent. 49 This advice gave rise to some concern, that the Co-op's lawyers were being instructed by Mr Howard, who was failing to provide the necessary information to the Board. Professor Govett wrote to Mr Romanin raising his concern and asking him to circulate a resolution to directors, that Mr Howard's authority to obtain legal advice for the Co-op be rescinded and that Mr Romanin be given the sole authority to obtain legal advice for the Co-op and to report to the Board thereafter. His letter said that he was concerned that the Board, having resolved to seek the appointment of an administrator, was being hindered. His evidence was that he believed that if legal matters were put in the hands of the CEO/Company Secretary, the Board would have a prospect of exercising the necessary control over the Co-op's legal affairs, which it was unable to exercise over the Chairman. 50 Mr Howard was very concerned that Professor Govett's resolution had been circulated by Mr Romanin. It was, however adopted. Mr Romanin then instructed another firm of solicitors, Snelgrove & Partners, to settle the letter to the Registrar, which was then sent. Mr Romanin explained in cross examination that he had made a pragmatic decision, in order to deal with the problem which had arisen. Mr Romanin's actions, however, also raised concerns amongst the Board members. The Board had not approved other solicitors being instructed. Mr Howard raised this issue with some of the other Board members. 51 Mr Romanin's evidence was that after the 21 September meeting, Mr Howard's approach altered. He stopped attending his office at the Co-op daily and became more aggressive towards him. On 5 October, he and Mr Howard discussed the legal representation which the Co-op would have at the Inquiry. The two departmental investigators had made a report in August, which was critical of various aspects of the Co-op's operations, including at Board level. Mr Howard was particularly anxious for the Co-op to deal with matters critical of him and Mr Romanin was of the view that there had to be a distinction drawn between the position of the Co-op and that of individual directors. Mr Romanin suggested that if Mr Howard required a specific course of action, that he should put it in writing and Mr Romanin would circulate it to the Board and get direction. Mr Howard responded 'That just won't do. I see what you are getting at and it will not happen, rest assured.' 52 Mr Howard denied this. His evidence was that after the 21 September meeting Mr Romanin's behaviour towards him altered. He became 'aggressive and insubordinate'. Mr Howard ceased his negotiations with Mr Romanin about the service agreement, as he believed that the Board was no longer in a position where it could negotiate such matters. Mr Howard also formed the view that Mr Romanin was anxious for an administrator to be appointed, in the hope that he would be appointed 'to run the Co-op unfettered by an oversighting Board'. It is convenient to observe that no foundation for these views was established on the evidence. They seemed to rather reflect an antipathy which Mr Howard had developed towards Mr Romanin. 53 The evidence showed that Mr Howard perceived Mr Romanin to be supporting Professor Govett, rather than Mr Howard. He formed the view that Mr Romanin's approach to circulating resolutions proposed by other directors and adding items to the agenda of the Board meeting sought by other directors, without his prior approval, were inconsistent with Mr Romanin's obligations as Company Secretary, and his own powers as Chairman. 54 It is also interesting to observe, at this point, that in cross examination it was put to Mr Romanin that by September, he had formed the view that Mr Runge 'needed to be pulled into line' and that he was performing 'a role which was partisan in relation to Board directors.' He denied both suggestions. He also denied that he was 'actively creating difficulties in relation to directors dealing with each other'. He also denied that he 'was straying far outside the bounds of what a General Manager and Company Secretary should properly perform in relation to the Board' 55 A Board meeting was called for 6 October, at Mr Howard's request. The Board then considered Mr Howard's concerns and dealt with them on a basis which plainly did not satisfy him. At the Board meeting, Mr Howard asked Mr Romanin to leave the meeting, immediately on its commencement. In his absence Mr Howard raised with the other Board members his concerns about Mr Romanin's conduct. Professor Govett's evidence was that he supported Mr Howard's' view that another firm of solicitors should not have been instructed, without prior Board approval and that Carroll & Knudsen, the Co-op's existing lawyers should continue being used by the Co-op. His view as to the other matters complained of by Mr Howard, was that they were a storm in a tea cup and nothing but a misunderstanding, which Professor Duffield had already discussed with both Mr Howard and Mr Romanin. Upon his return, Mr Romanin was instructed by the Board to use Carroll & Knudsen. In cross examination, Mr Romanin explained that he had never intended to alter the Co-op's solicitors, but had engaged other solicitors to settle only one letter. He had used his personal solicitors, but could see no difficulty with that course and had not thought it necessary to gain the Board's prior approval to do so, in the particular circumstances with which he was then dealing. 56 There were no minutes of this Board meeting of 6 October. Mr Romanin had taken notes and there was an issue as to what had happened to them and who had responsibility for preparing the minutes, given what later transpired, which I find unnecessary to resolve. In cross examination Mr Romanin's evidence was that he did not have an opportunity to produce the minutes. Mr Howard and Mr Runge's evidence was that the notes were a fabrication. Mr Runge also denied that Mr Romanin gave him these notes when he was dismissed. 57 Mr Howard's general concern about what had occurred was, however, plainly such, that he set about instigating a rapprochement with Mr Runge. On 6 October, they discussed and agreed that the appointment of an independent mediator was the only way to resolve the Boardroom disputes. On 7 October, Mr Romanin was advised by other employees that the two factions had reached an agreement, which involved the reappointment of Mr Lee and the reinstatement of Mr Ma, Mr Pang and Mr Tan. Mr Romanin spoke about his position to Mr Orr and Professor Mahler, another board member. 58 On 10 October, Mr Runge circulated two written resolutions for consideration by the members of the Board. One sought to curtail the powers which Mr Romanin had been given by the Board. The second, to appoint a mediator. Mr Romanin's evidence was that they were not carried and that another resolution circulated on 12 October also failed. 59 On 11 October, the Co-op received advice from Carroll & Knudsen as to how the costs of the proceedings before Santow J which Mr Runge, Mr Pang, Mr Tan and Mr Ma had been ordered to pay, could be recovered. On 12 October, Mr Romanin instructed the Co-op's lawyers to issue bankruptcy notices. Mr Runge's evidence was that there had been no attempt made to recover these costs from he or the other directors, before this instruction was given and that Mr Romanin's instructions were out of proportion to the amount of legal costs at stake. Mr Romanin's evidence in cross examination was that payment had already been requested by the Co-op's lawyers. In re-examination he explained that there had been discussions and a number of unsuccessful attempts to recover the costs, to which there had been no response and that he understood this was an inexpensive way of getting the parties to talk about how the costs would be paid to the Co-op. Mr Runge explained in cross examination that the costs were not in fact paid, until after the Elms Inquiry. 60 On 12 or 13 October, Mr Romanin removed various original Co-op documents from the Co-op. In cross examination, Mr Romanin accepted that some of these documents were not his to take. The Inquiry was then underway. His explanation was that apart from personal papers, he had removed original documents which he had already been informed he would be required to produce to the Inquiry. Notices to produce were later served upon him by the Inquiry and he provided the documents accordingly. He also kept copies of documents which he attached to the submission which he later made to the Inquiry. When later asked to return these documents by the Co-op, Mr Romanin advised that he had supplied them to the Inquiry. Mr Romanin explained that he was aware that there was a history of Co-op documents being tampered with, or removed and he was anxious to ensure that he was in a position to supply the documents which he was aware the Inquiry was after, so that it could not later be said against him, that he had supported one faction or another on the Board; that he had failed in his obligations to the Inquiry; or that he had committed any offences under the Co-operatives Act 1992 (NSW). 61 On 13 October, Mr Romanin circulated an advice obtained from Mr Diethelm, in which he agreed with views earlier expressed by Mr McCarthy and Mr Broun about Mr Howard's use of the Chairman's prerogative. This led to a further significant change in Mr Howard's position. 62 On 14 October, Mr Howard resigned, at an emergency Board meeting, which Mr Romanin did not attend. A number of written resolutions had earlier been adopted, appointing three new directors, following the resignations of Dr Mahler, Mr Orr and Mr Tan and removing Mr Romanin from the position of Company Secretary. Unsurprisingly in those circumstances, Mr Romanin did not attend the meeting. In cross examination, he also explained that he had been advised by the Co-op's solicitors, that he should not attend the meeting unless invited, advice which he accepted. These resolutions had not been circulated by Mr Romanin, in accordance with the Co-op's then usual practice, but had been sent to him by those directors, who had voted in favour of them. 63 Mr Watts also resigned at the meeting and was replaced by Mr Lau. Mr Runge was elected Chairman. The minutes record that Mr Michael Tooma was appointed Company Secretary and that other written resolutions had been adopted on 13 October, which included the discontinuation of the Co-op's Supreme Court proceedings and the appointment of a mediator. The minutes noted the concern expressed by Professors Govett and Duffield, at what had transpired. It was also resolved, however, that their appointments were ineffective and that they were no longer to be recognised as directors, after the various opinions from counsel were tabled at the meeting. 64 That day, Mr Romanin was informed of the resolutions adopted and was confronted by security guards at work. 65 Another Board meeting took place later that day. The minutes record that Mr Romanin's position was then discussed. It was resolved that the 'offer' to Mr Romanin be 'withdrawn'; he be suspended on full pay and that he refrain from attending the Co-op's offices and that Mr Lee "remained" General Manager. 66 On 15 October, Mr Romanin found that the locks on his office had been changed. Mr Lee met Mr Romanin and advised him of what had occurred. Mr Runge arrived and confirmed this. Mr Tooma also wrote to him, confirming the withdrawal of the offer made to him and his suspension. Mr Runge's evidence was that he met that day with Mr Romanin and Mr Tooma. Mr Romanin told them that he had accepted the Co-op's offer, but that this was inconsistent with Mr Howard's advice to them. Mr Romanin's evidence was that he then gave Mr Runge his notes of the 6 October Board meeting. Mr Runge denied this. Mr Romanin was then required to relinquish his keys and passes. On 22 October his employment was terminated. 67 A report was made by Mr Elms in January 2000. It was recommended that an administrator be appointed to the Co-op. Mr Romanin's keeping of the documents was dealt with in the report. 68 There were also a number of issues raised in the proceedings as to Mr Romanin's performance and conduct. As well as the evidence of the problems which existed at Board level, which undoubtedly impacted in a very significant way upon the work which Mr Romanin was required to perform as General Manager/CEO and Company Secretary, the evidence showed that these problems affected the Co-op's everyday operations, which fell to Mr Romanin to manage. Indeed, the Board minutes of 14 October refer to industrial action taken by staff and a resolution adopted by the Board to pay the staff involved for 'time taken off work in strike action during the previous 6 months.' 69 It is unnecessary to deal with these matters in great detail. I note, however, that from soon after his employment commenced, Mr Romanin was called upon to deal with industrial disputes, in which various issues flowing from the effect which the approach adopted by various members of the Board were having upon staff, had to be dealt with. The Co-op also faced problems with suppliers delaying or refusing supplies, because of the instability at Board level, which impacted upon the shops which the Co-op operated and its revenue. There was no suggestion that the financial viability of the Co-op was ever at risk as a result, but the evidence showed that the work which Mr Romanin was called upon to do as CEO of the Co-op, as well as the Co-op's operations, were affected by the problems at Board level. 70 Apart from issues going to the question of the legal advice which Mr Romanin had obtained from another firm of solicitors in October, there were other concerns raised by the Co-op in the proceedings about Mr Romanin's performance. None of these matters appear to have been an issue prior to the termination of his employment and were not involved in the Board's decision to bring his employment to an end. The parties' cases For the applicant 71 Mr Alkadamani of counsel submitted for the applicant that the evidence showed that Mr Romanin had worked for the Co-op, in accordance with the terms of its offer of 20 August. The evidence showed that the matters there identified as requiring further discussion, had been the subject of discussion and finally agreement. Even if the parties had not reached agreement on those matters, what had been agreed was sufficient for employment on the basis of the other terms to have crystallised. 72 At that time, Mr Romanin was in Singapore, where Mr Howard spoke to him on 23 August. Mr Romanin's case was that a notice period of 12 months, plus one month for each year of service had been agreed. This accorded with the evidence of Professor Govett. The letter proposed notice in line with industry standards. It followed that if there had been no express agreement as to notice, a period of reasonable notice was required, which it was argued would be assessed as 12 months, given all of the evidence. It was also argued that even if the Court found that the contract contained a 7-day notice period, the Court would not hesitate to find that term unfair. Such a conclusion was not, however, available on the evidence. 73 It was submitted that the evidence of Professor Govett would be preferred on issues in question, especially in the case of conflict with Mr Howard. On important issues it was argued that the Professor's evidence was supported by that of Mr Orr. Documentary evidence also supported his version of events. Mr Romanin's evidence would also be preferred over that of Mr Howard, particularly given that Mr Howard's evidence was also contradicted by that of Mr Orr and Ms Oh. 74 It was argued that the Court would not permit the Co-op to benefit from steps it had taken, inconsistently with the law. Mr Romanin was entitled to rely on Mr Howard, the principles of ostensible authority and the outside management rule. The Co-op should be bound by the promises it had made. It was unfair to now burden the applicant with the Co-op's legal uncertainties. 75 It was also argued that the criticisms directed at Mr Romanin would be rejected. The evidence showed that he had endeavoured to comply with his obligations to the Co-op, having regard to Board resolutions. For the respondent 76 Ms Ronalds of counsel submitted for the Co-op that the issues which required determination in the proceedings were: (a) was Mr Romanin employed by the Co-op at any stage during the course of his working relationship with the Co-op? (b) what were the terms under which Mr Romanin initially commenced work for the Co-op in the Acting General Manager/Company Secretary position? (c) was the offer of employment by the Co-op to Mr Romanin for the permanent position of General Manager/CEO subject [to] the successful negotiation of the terms and conditions of employment by the parties and the approval of the Board regarding these terms and conditions? (d) did the parties successfully negotiate the terms and conditions attached to the permanent position of General Manager/CEO? (e) what were the terms of the contract of employment which subsisted immediately prior to its termination? Specifically, was the contract a short term arrangement between the parties which was terminable on seven days' written notice (as per the Drake Arrangement (as defined in paragraph 3.4 below))? (f) does the (sic) Mr Romanin's state of mind and knowledge of various issues, such as the doubtful validity of relevant Board decision and the general instability of the working environment within the Board and the Co-op, have any impact on: (i) what findings the Court should make with regard to the terms of Mr Romanin's contract of employment with Co-op which subsisted immediately prior to the termination of his employment; and (ii) the Court's exercise of its discretion to vary or avoid the contract and/or make monetary orders to remedy any unfairness found in the contract or the conduct of the Co-op pursuant to that contract? (g) does the conduct of Mr Romanin and any lack of good faith on his part have any impact on the exercise of the Court's discretion to vary or avoid the contract or make monetary orders to remedy any unfairness in the contract or conduct pursuant to that contract? (h) what findings should the Court make in relation to the credit of the various witnesses who gave evidence in this case? 77 It was argued that while Mr Romanin had become an employee of the Co-op, the terms of his employment on termination were that he was the Co-op's acting General Manager/Company Secretary, a position of uncertain duration and of a very insecure nature, terminable upon 7 days' notice without cause and one day's notice by the Co-op, if there were performance issues. 78 While Mr Romanin had been offered permanent employment, there had never been any agreement reached. The terms offered were subject to negotiation and then final Board approval. The negotiations never concluded and terms were never approved by the Board. Mr Romanin's transfer to the Co-op payroll was a cost saving measure for the Co-op, not because he had taken up permanent employment. 79 It was also argued that Mr Romanin was always aware of the problems existing at Board level, the full nature and extent of the dispute and the doubtful validity of decisions being made by the Board. This included in relation to his own situation. The Court would not accept his attempt to paint himself as an innocent victim of the warring factions. He became an active participant and 'player' in the dispute. 80 It would also be accepted that he engaged in conduct unacceptable to his duties and obligations as General Manager. The documents which he removed, his appointment of Snelgrove & Partners, his personal solicitors, to act for the Co-op and his instructions that the costs of the Supreme Court proceedings were to be recovered from some directors, were relevant to this issue. 81 Detailed submissions were put as to Mr Romanin's lack of credit, as opposed to that of Mr Howard. Submissions as to credit were also made in relation to Professor Govett and Mr Runge. 82 It was argued that no unfairness was established, either in relation to the contract in question, or the Co-op's conduct under the contract. If, however, a finding of unfairness was reached, a reasonable notice period would be found to be one month, given a variety of identified factors. The applicant's case in reply 83 In reply, it was argued by Mr Alkadamani that the evidence showed that the applicant had properly fulfilled his duties in extraordinarily difficult circumstances. It was the Co-op which brought his employment to an end by asserting that its offer was withdrawn. It did not then assert that there had been any misconduct or poor performance. It followed that such allegations, raised in these proceedings, could not impact upon a proper determination of notice - either on the basis of what reasonable notice might require; what industry standards were, or what had been agreed on 23 August. 84 The construction that two separate contracts between Drake and the Co-op and Drake and Mr Romanin, comprised an arrangement which could not lead to the conclusion that Mr Romanin was bound by the arrangement, as the Co-op had suggested. He was not even aware of the terms of the arrangement between Drake and the Co-op and could not be bound by them. 85 The evidence did not establish that Board approval was required for employment of Mr Romanin, after the 20 August offer. The matter had already been delegated by the Board to the selection committee which had authorised Mr Howard to negotiate on certain terms. He had done so and the offer had been accepted. The evidence showed that an agreement had been concluded and then the parties had acted accordingly. 86 The only place where a 7-day notice period arose was in the agreement with Drake. Mr Romanin was not a party to, or bound by that agreement. Such a term had never been discussed with him. Even when appointed acting General Manager, it had been for an initial 4 week term and then indefinitely, until the Board determined otherwise. 87 The Co-op's desire for a more formal service agreement than the offer letter of 20 August, could not lead to the conclusion that no agreement was reached. Even Mr Howard was aware at the time that the Co-op was bound by its offer. It was also relevant that in the service agreement which Mr Romanin rejected as reflecting his agreement, 6 months' notice was proposed. It followed that this would be the absolute minimum period of notice which fairness would require in the circumstances. 88 Further detailed submissions were advanced as to the evidence. They included reasons why Mr Runge's evidence would not be preferred in relation to matters where he was in conflict with other witnesses. As to the submissions in relation to Mr Romanin's curriculum vitae, it was argued that he had provided a proper explanation for all matters raised with him as inconsistencies. There was no evidence that Mr Romanin had improperly obtained the Elms report and the evidence showed that he secured Co-op documents which were supplied to the investigation. He clearly acted in the best interests of the Co-op in doing so. He had not been dismissed for any misconduct and the issues now raised as to such matters could not go to the question of proper notice on termination. Consideration The terms of the contract 89 I have no hesitation in finding that the Co-op's case as to whether or not Mr Romanin had been appointed to a permanent position and what the terms of any contract between the parties might be, was entirely unsustainable on the evidence. Indeed, it was inconsistent with the Board minutes of 17 August, in which his appointment was noted and the evidence that both Mr Romanin and the Co-op acted on the understanding that the offer of 20 August had been accepted. The evidence showed that the terms of the Co-op's offer had been delegated to the selection committee to deal with. It had done so. Mr Howard acted to make the offer, although not entirely on the basis which had already discussed by the Board and the selection committee. The letter of 20 August set out the terms of the offer. They were discussed and accepted and Mr Romanin thereafter worked and was paid in accordance with that offer. As Mr Howard advised Professor Govett early in September, the agreement was binding. The parties acted accordingly, both as between themselves and in their dealings with employees and third parties, until the device of 'withdrawing' the offer was hit upon by the Board in October. 90 That the Co-op wished to reflect what had been agreed in a formal service agreement, cannot detract from the conclusion that a binding employment agreement existed. Even if the parties had not agreed on key performance indicators, or the details of a bonus scheme, a binding agreement was plainly in place when the offer of 20 August was accepted. The absence of final agreement on the details of those two terms, was not such as to preclude the parties' agreement to the employment being effective. I will return to the question of notice, but at this stage merely observe that if the parties had not reached one mind on this question at the time that the employment was agreed to commence, in August, the result was that in the ordinary way, the common law implied a term that reasonable notice of termination of the contract was required. 91 The Co-op's later 'withdrawal' of the offer in October and the resulting termination of the employment, without any notice, was plainly a breach of the parties' contractual obligations. The Co-op's conduct towards Mr Romanin, as revealed on the evidence, also made the unfairness of the contract blindingly clear. 92 The Co-op plainly required the work of General Manager/CEO and Company Secretary to be performed. There had been a significant turnover of CEO's in preceding years. The evidence showed that anyone appointed to this position at the time in question, would have been placed in the most invidious position. The Co-op's undertaking is a large and important one. The evidence was that it has over a million members, turnover in the vicinity of $80million per annum and is one of Australia's top 500 companies. It has over 40 outlets, employs over 250 staff and has some 37% of the tertiary market. 93 The work of running that business under the conditions prevailing at the time Mr Romanin was employed, was plainly difficult. The evidence led by both parties as to the conduct of Mr Howard and Mr Runge, put them into a most unflattering light. It must lead to the rejection of the submission that their behaviour, or the resulting treatment Mr Romanin received from the Co-op, can be excused, because he was aware of the difficulties which existed at Board level, having been warned about them by Mr Howard and because he became a 'player' in these machinations. To the contrary, I find that Mr Romanin tried to undertake his duties, consistently with his obligations and the Board's directions, under the most difficult of circumstances. 94 Mr Romanin's case was that 12 months' notice of termination, as provided in Professor Govett's draft service agreement, had been discussed on 19 August and later agreed in his discussions with Mr Howard, while he was in Singapore, after the 20 August letter was read to him. This Mr Howard denied. The service agreement later produced by the Co-op's lawyers, on Mr Howard's instructions, proposed for 6 months' notice. Mr Romanin did not accept this, protesting that this and the probationary period there included, were contrary to what had been agreed. Professor Govett and Mr Orr's evidence was that those terms were contrary to the discussion by the Board on 17 August. Many of the issues in this case turned upon questions of credit. Regrettably, I have concluded that much of Mr Howard's evidence was very difficult to accept. Not only was it inconsistent with that of Mr Romanin on many points, but also with aspects of the evidence of Ms Oh, Professor Govett, Mr Orr, Ms Nurick and Mr Diethelm. I have concluded that in such cases, Mr Howard's evidence cannot be preferred. 95 It was Professor Govett and Mr Howard who drafted the duty statement and selection criteria for the CEO position. They were both involved in the work of the selection committee from the outset, although Mr Howard conducted the negotiations with Mr Romanin. I accept Professor Govett's evidence that on 17 August the Board discussed and agreed that no probationary period would be offered, nor would a fixed term contract, but a termination provision would be included. As Professor Govett said he observed to the other Board members at the time, Mr Romanin was already effectively in the position and neither term had been mentioned in the recruitment material. The Co-op's lawyers had been provided a draft agreement. It provided for a notice period consistent with the discussions between Mr Howard and Mr Romanin on 19 August. It did not provide for probation. While the Co-op's policies and procedures referred to probation, whether or not the Board wished to include such a term in the particular circumstances with which it was confronted in recruiting a CEO, was a matter entirely for it. Mr Orr's evidence was that these policies were not discussed in the context of Mr Romanin's appointment and that, consistently with Professor Govett's evidence, probation was inappropriate in the circumstances. 96 The letter of 20 August made no reference to such terms, also consistently with Professor Govett's version of the Board's consideration, rather than Mr Howard's. Mr Orr's evidence supported that of Professor Govett. I reject Mr Howard's evidence on these matters. In all of the circumstances revealed on the evidence, had I come to a different view, as I have noted, the offer accepted would have resulted in a contract containing a term requiring the giving of reasonable notice on termination. 97 In his later advice to Professor Govett in September, reporting on the whereabouts of the service agreement, even Mr Howard reported that all that remained to be negotiated was 'the KPI's and performance bonus terms'. Professor Govett regarded the termination provision later included in the service agreement produced by the Co-op's lawyers, to be inconsistent with the earlier discussions by the Board. He and Mr Romanin expected this matter to be discussed at the next meeting on 21 September, but the question of Mr Romanin's service agreement was not then reached, given the motion to appoint an administrator, as there was no confidence in the Chairman, Mr Howard. Mr Howard, Professor Govett explained, thereupon abruptly terminated the meeting. 98 Professor Govett explained the reasons for his support for the appointment of an administrator at that time, as follows: (a) the Board was essentially ungovernable; (b) there were a number of legal challenges as to who was or was not a director; (c) there was endless legal expense both in terms of money and time with no resolution in sight; (d) at least two of the unchallenged directors had little wish to continue what they considered an unrewarding activity; (e) I believed that the removal of the entire Board which would result from the appointment of an Administrator would allow many operational problems to be solved and bring some much needed stability to the Co-op. 99 Given the evidence of the circumstances, these reasons seemed entirely understandable. They gave the lie to the suggestion that somehow Mr Romanin had become involved in supporting a particular 'line' which Professor Govett wished to pursue at Board level. To the contrary, Professor Govett having joined the Board, on the recommendation of the Co-op's lawyers, appears also to have been confronted with a difficult and plainly thankless task, given the machinations being pursued by the two factions. The evidence showed nothing other than an attempt, on his part, to act in the best interests of the Co-op, rather than that of either faction. Mr Romanin acted likewise. 100 The result of these events, for Mr Romanin, were rather ironic. Mr Howard had earlier advised Professor Govett in September, that the acceptance of the 20 August letter had amounted to a binding contract and had ensured that the Co-op acted accordingly. After the Board's adoption of the resolution to seek the appointment of an administrator and that later adopted in order to constrain him from instructing the Co-op's lawyers, Mr Howard resigned from his position on the Board, but informed Mr Runge that there had been no acceptance by Mr Romanin of the Co-op's offer. Mr Runge and the others who then comprised the Board, did not question this advice, but acted accordingly. In the intervening period, Mr Howard had come to be most dissatisfied with what he perceived to be Mr Romanin's lack of support for him. Mr Runge had long been acting to resist his appointment. For Mr Romanin, it seemed that having now managed to attract the ire of both Mr Runge and Mr Howard, they united against him. Mr Lee, who had himself earlier been removed from his position, seemingly as the result of his support for Mr Runge's faction and not that of Mr Howard, was then reinstated to Mr Romanin's job, leaving no work for Mr Romanin to do. 101 The final result for Mr Romanin was effectively a summary dismissal, even though there was no ground for the Co-op to take such a course. This involved an obvious breach of the Co-op's contractual obligations to Mr Romanin. He had been offered and accepted his position on a basis which included a term as to notice. Even if such a term had not been agreed, he was entitled to reasonable notice. He received 7 days' notice. On any view, this cannot have satisfied even an obligation under the contract to give him reasonable notice. 102 The Co-op wanted to formalise its arrangement with Mr Romanin in a more comprehensive service agreement than what was offered, discussed and accepted in August. The final terms of such a contract were to be considered by the Board. This was, however, not inconsistent with an intention to offer and commence Mr Romanin's permanent employment beforehand, in accordance with terms negotiated by the selection committee. The evidence showed that this is what occurred. The terms of the offer which was made in the letter of 20 August, prepared by Mr Howard, was not entirely consistent with the earlier discussions at Board and selection committee levels. This departure appeared to be entirely consistent with Mr Howard's approach in other areas. 103 The evidence showed that the members of the Board had serious concerns about Mr Howard's approach to his role as Chairman. This included that the Board was not being kept properly informed as to what instructions Mr Howard was giving the Co-op's lawyers and what advice he was receiving from them. For my part, I have formed reservations about the general reliability of his evidence in these proceedings, both in relation to his affidavit evidence and that given orally. Much of his evidence was implausible. 104 For example, in his first affidavit, Mr Howard's evidence was that on 11 August, he agreed with Mr Romanin to let the Drake arrangement continue for another month, because Mr Romanin needed the money. Despite this, shortly afterwards Mr Romanin agreed that his employment direct with the Co-op would commence from 16 August, at the salary rate which was effectively halved, even though no permanent employment had then come into effect. This was because Mr Romanin wanted to wait to see what bonus and termination arrangements he would be offered by the Co-op, before accepting. In its case, the Co-op described this arrangement as designed to achieve a cost saving for it, not permanent employment for Mr Romanin. 105 In his second affidavit Mr Howard changed this evidence. His evidence was that his earlier version of his conversation with Mr Romanin on 11 August was not complete. He then added that on 11 August he told Mr Romanin that he could start with the Co-op, but until mutually agreed terms were reached, 'you will continue on the Drake terms'. The result was that: 'Accordingly, Mr Romanin's employment shifted to the University Co-operative Bookshop Limited ("Co-op") on a strictly provisional, month to month basis, subject to mutual agreement being reached on the terms of the his permanent appointment. The terms of this temporary appointment remained the same as the Drake engagement, apart from the fee to be paid to Drake by the Co-op." 106 The Co-op's case was that this meant that Mr Romanin was only entitled to 7 days' notice, as provided in the contract between Drake and the Co-op. Even on Mr Howard's version, such a term was never discussed, or agreed between he and Mr Romanin. In cross examination, Mr Howard confirmed that he then terminated the Drake arrangement, effective 13 August. The two versions of what was said by Mr Howard on 11 August, were both entirely implausible and inconsistent with each other. The Co-op's case in these proceedings was similarly implausible. Mr Romanin's version, which I earlier outlined, by way of contrast, was entirely credible and consistent with the other evidence, to which I have already referred. 107 I finally observe that what was beyond any doubt on the evidence was that the contract did not provide for 7 days' notice. Nor could it be doubted that in all of the circumstances revealed in this case on the evidence, that such a period, or indeed a month's notice, the alternative pressed by the Co-op, would not have remedied the unfairness demonstrated in this contract. Was the contract fair? 108 There can be no doubt on the evidence, that the contract was unfair. The Co-op pressed its case that there was no unfairness, because Mr Romanin took up employment with the Co-op, fully aware of the problems existing at Board level and the questions which existed as to the validity of his employment. 109 The problems which this Board was experiencing were undoubtedly of the most serious kind, impacting not only Board members and Mr Romanin, but also other staff, suppliers and members of the Co-op. The evidence raised obvious questions as to the way in which some of those who were members of the Board at the time were conducting themselves and whether they were then and at other times, in serious breach of their obligations as directors. 110 That being so, it seems quite extraordinary that the Co-op, in these proceedings, would seek to rely on those matters in defence of the unfairness undoubtedly visited upon Mr Romanin in his employment. There was plainly a need for the Co-op to have someone perform the work of the General Manager and Company Secretary. There had been ongoing turnover in the position of General Manager. Mr Lee had been suspended by the Board. Mr Romanin was recruited to the acting position, after the first person appointed to that position was prepared to remain for no longer than a day, after having been subjected to a heated attack from one director. Allegations of assault flowed from that confrontation. Mr Lee was then dismissed, around the time that he made a submission to the investigation being conducted by the Department, as the result of the approach made by Mr Runge's faction. 111 Unsurprisingly, in that context, Mr Howard warned Mr Romanin of the difficulty of the task facing him. That difficulty perhaps explained why the Co-op was prepared to pay $12,000 per week for the acting position to be filled. The foreshadowed problems almost immediately materialised, with Mr Romanin being confronted by Mr Runge at the Co-op's office, to be informed bluntly of the problems at the Board level and that he should not remain. Mr Runge was a supporter of Mr Lee and undoubtedly tried to pressure Mr Romanin into leaving. Mr Lee did likewise. This was plainly not a fair, or appropriate, way for Mr Romanin to have been treated. If the Board had problems, they should have been resolved in some other, appropriate way. 112 Mr Romanin was then met with an apparent deluge of requests, complaints and demands by Mr Runge, which the Co-op complained in these proceedings, were not attended to by Mr Romanin. I do not accept that those complaints had a proper basis. Nor was this a proper way for a member of the Board of any company or co-operative to treat any employee, let alone the General Manager and Company Secretary. One early example of the demands made was that Mr Romanin obtain legal advice on matters of concern to Mr Runge, in relation to the ongoing Board controversies. These were plainly matters for the Board members. Mr Romanin ought not to have been hounded as he undoubtedly was. Indeed, as Mr Runge conceded in cross examination, it was entirely appropriate for Mr Romanin to have followed the Board's resolutions as to how legal advice would be obtained. 113 Mr Romanin was undoubtedly aware of the problems which the Co-op experienced in having sufficient members of the Board attend its meetings, so that a quorum was achieved and the needs of the Co-op could be addressed by the Board. Those problems can only have made his own job unnecessarily more difficult than it needed to be. He was also undoubtedly aware that the Chairman, Mr Howard, unable to achieve a quorum, resorted to circulating written resolutions. Some members of the opposing faction also refused to vote on some such resolutions and this led to the Chairman exercising a casting vote. The Co-op's legal advice was that this was lawful. The directors who were the authors of these problems, obtained contrary advice. Ultimately, Mr Runge's faction regained control of the Board of the Co-op. That under their control, the Co-op now seeks to rely on Mr Romanin's understanding of the Co-op's difficulties, as the result of the behaviour of directors who ought to have conducted themselves differently, in order to resist the claims here made, only demonstrates, in my view, the unfair conduct adopted towards Mr Romanin, which the Co-op still persisted with, even during these proceedings. 114 I am well satisfied that Mr Romanin has demonstrated the unfairness of the contract here in question, as well as the unfairness of the conduct of the Co-op towards him. Given the problems in existence at the time that the Co-op was recruiting a General Manager and Company Secretary, a proper process would have involved the terms of the contract offered being firmly settled in written form by the Co-op, before any offer was made. 115 That this course was not followed, permitted the controversies as to whether or not the offer was accepted and what was agreed as to notice, to arise. Indeed, it permitted both Mr Howard and Mr Runge to unfairly manipulate the circumstances which later developed. It is unnecessary to determine whether they then perceived this to be to the Co-op's advantage, or whether they were rather merely intent on doing harm to Mr Romanin. In either case the proper course is for relief to be granted. For the reasons explained, the proper exercise of the discretion to vary the parties' contract requires that the contract be varied ab initio, to require the Co-op to give Mr Romanin 12 months' notice of termination, or payment in lieu thereof. 116 In coming to that conclusion, I reject the submission that any conduct of Mr Romanin would properly lead the Court to decline to exercise the discretion conferred by the section, in his favour. In taking that course, I do not necessarily condone the actions taken by Mr Romanin, to secure the documents he was concerned might otherwise have been removed from the Co-op, as he understood had happened in the past. I note, however, that at that time the Inquiry was underway; he was concerned that Co-op documents had been tampered with in the past; he had been made aware of the documents which the Inquiry would require; he informed the Co-op as to what he had done and he provided the documents to the Inquiry, when the anticipated summons was served upon him. Mr Romanin then also took the trouble to assist the Inquiry, by making a submission to it, as to the matters about which he was aware. He was not obliged to do so. By then his employment had been terminated. On the evidence, the course he took in the circumstances in which he found himself was consistent with the public interest, even if it gave rise to difficulty for particular Board members, or indeed the Co-op. I am satisfied that it would not be a proper exercise of the Court's discretion were Mr Romanin to now suffer, as a result, in these proceedings. 117 I have somewhat greater reservations in relation to what the evidence revealed in relation to Mr Romanin's curriculum vitae. All the advice in the world about presenting one's skills and experiences in their best light, given the particular position for which one is applying, ought not ever to lead to a document which does anything other than to provide an absolutely truthful picture of the experience one has had in one's career. Here, Mr Romanin did not accurately describe several aspects of his working life, in the curriculum vitae he provided with his application. For example, the document suggested that at one point he was a qualified solicitor, when he was at that time an articled clerk. 118 I am, however, satisfied on the evidence that the errors in the document were not such as to have misled the Co-op as to Mr Romanin's qualifications, skills, or his experiences, overall. Having in mind the evidence as to the parties' respective conduct, I have concluded that this evidence can be given no weight at all, in disentitling Mr Romanin to relief under the section. I find that the other complaints advanced against Mr Romanin had no relevance to the questions which must here be resolved. They were matters raised by the Co-op, to deflect proper attention from its own failures. 119 There was also evidence as to the steps taken by Mr Romanin to find other employment after his dismissal. I am satisfied that the money orders made must have regard to the sums which he earned in the various consultancies and employment which he later undertook. I am also satisfied that an order for interest should be made. In the circumstances of this case, the proper time from which interest should flow is from the date of termination of the employment. Orders 120 For all of these reasons, I make the following orders: 1. The parties' contract is varied ab initio to require the Co-op to give Mr Romanin 12 months' notice of termination or payment in lieu thereof. 2. The Co-op is to pay Mr Romanin: (i) a sum calculated by reference to the value of his total package, for a period of 12 months, including salary, motor vehicle, superannuation and insurance, less any salary and other earnings achieved by Mr Romanin in any alternative employment or consultancy undertaken in that period, plus (ii) interest on that sum, calculated from the date of termination of his employment, to the date of judgment. 121 The usual order as to costs would be that the Co-op bear Mr Romanin's costs, as agreed or assessed. If the parties are unable to agree on that question, or on the calculation required by the order made, the matter may be restored to the list. That liberty should be exercised within 28 days of the date of judgment. ------------------------ DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.