Industrial Relations Commission of New South Wales in Court Session CITATION : Attard & Anor v Bridges Financial Services [2000] NSWIRComm 242 FIRST APPLICANT Paul Attard PARTIES : SECOND APPLICANT Avocari Pty Limited RESPONDENT Bridges Financial Services Pty Limited FILE NUMBER: IRC6082 of 1998 CORAM: Peterson J CATCHWORDS : Unfair contract - financial planning services industry - contract or arrangement whereby work performed therein - whether employee or independent contractor - arrangement ostensibly one of principal and independent contract over many years - termination of relationship without notice - recognised saleability of the business - deprivation of opportunity to sell the business - consideration of valuation and elements relevant thereto - money order made. LEGISLATION CITED : Industrial Relations Act 1996 CASES CITED : Legget and Anor v Aardvark Security Services Pty Ltd [2000] NSWIRComm 188 HEARING DATES: 04/10/2000; 04/11/2000; 04/12/2000; 04/13/2000; 04/14/2000; 06/07/2000; 06/08/2000; 08/14/2000 DATE OF JUDGMENT: 12/06/2000 APPLICANT Mr M J Kimber SC with Mr A B Gotting of counsel SOLICITOR Abbott Tout SYDNEY LEGAL REPRESENTATIVES: RESPONDENT Mr R Moore of counsel SOLICITOR Coleman and Greig SYDNEY. JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: PETERSON J DATE: 6 DECEMBER 2000 Matter No. IRC6082 of 1998 PAUL ATTARD & ANOR v BRIDGES FINANCIAL SERVICES PTY LTD Application under s106 of the Industrial Relations Act 1996 JUDGMENT 1 The first applicant, Paul Attard, and his company, Avocari Pty Limited ("Avocari"), the second applicant, have brought proceedings against the respondent, Bridges Financial Services Pty Ltd ("Bridges") in relation to a contract or arrangement under which the first and/or second applicants performed the work of providing financial advice both to clients of Bridges and to personal clients of the applicant/s. The claim is brought under s106 of the Industrial Relations Act 1996 and embraces aspects going to payments received and deductions made from income otherwise due during the course of the relationship between 1987 and 1997 and compensatory questions concerning the determination of that relationship. 2 The summons for relief seeks: (1) An order declaring void ab initio the contract of employment that was entered into between the applicants and the respondent on or about the 28th of September 1987 ('the Contract') OR (2) In the alternative to order (1), an order declaring void ab initio the contract for services entered into between the applicants and the respondent on or about 28 September 1987 (the 'Contract for Services') AND (3) An order declaring void ab initio the collateral contract and/or arrangement entered into between the first applicant and the respondent in or about October 1994 ('the Arrangement') OR (4) In the alternative to orders (1), (2) and (3), an order varying I part, either ab initio or from some other time, the Contract so as to insert the following terms: (a) "Neither Paul Attard nor Avocari Pty Limited shall be required to bear any of the expenses incurred in conjunction with the financial services work being undertaken by Paul Attard for Bridges Financial Services Pty Limited." (b) "The parties to this agreement intend to establish an employment relationship between Paul Attard and the Company and Mr Attard will, accordingly, be entitled to accrue all rights and benefits associated with employee status". (c) "Save by express agreement between the parties, the Company shall not require Paul Attard to contribute to any operational or other expenses incurred by the Company." (d) "Any discounts on commissions or any other financial allowances that the Company feels obliged to offer to any third party to secure and/or retain a referral source shall be absorbed by the Company and not passed onto Paul Attard". (e) "If, for any reason, Paul Attard incurs expenses or capital costs connected with the performance of his work as a financial advisor for the Company then these shall be reimbursed by the Company for any such expenditure within 30 days of Mr Attard notifying the Company as to the nature and extent of that expenditure or in any event, at or before the termination of this Contract". (f) "In the event that the parties to this Contract decide to convert it from an employment contract to an independent contractor agreement, then the Company will as at the date of conversion pay to Paul Attard all accrued employee entitlements including accrued annual leave and (if applicable) long service leave." (g) "In the event that the Company decides to terminate this Contract for reasons other than the serious and wilful misconduct of Mr Attard, then the Company will provide twelve months notice of any such termination." (h) "In addition to Mr Attard's entitlement to notice of termination, the Company acknowledges Mr Attard's right to sell his client base to a third party, provided that third party is acceptable to the Company. However, in the event that Mr Attard is unable to secure any purchaser of his client base within three months after the Company has given notice of its intention to terminate the Contract, or in the event that the proposed purchaser is not an acceptable third party to the Company, then the Company will purchase that client base from Mr Attard at a price to be determined by multiplying by 3 the average annual gross commission/fees paid to Mr Attard by the Company over the three years prior to termination." (5) In the alternative to orders (1), (2), (3) and (4), an order varying in part, either ab initio or from some other time, the Contract for Services so as to insert the following terms: (a) "In the event that the Company decides to terminate the Contract for Services for reasons other than the serious and wilful misconduct of Mr Attard, then the Company will provide twelve months notice of any such termination. (b) "Save by express agreement between the parties, the Company shall not require Attard to contribute to any operational or other expenses incurred by the Company." (c) "Any discounts on commissions or any other financial allowances that the Company feels obliged to offer to any third party to secure and/or retain a referral source shall be absorbed by the Company and not passed onto Paul Attard". (d) "In addition to Mr Attard's entitlement to notice of termination, the Company acknowledges Mr Attard's right to sell his client base to a third party, provided that third party is acceptable to the Company. However, in the event that Mr Attard is unable to secure any purchaser of his client base once the Company has given notice of its intention to terminate the Contract for Services, or in the event that the proposed purchaser is not an acceptable third party to the Company, then the Company will purchase that client base from Mr Attard at a price to be determined by multiplying by 3 the average annual gross commission/fees paid to Attard by the Company over the 3 years prior to termination". and to delete the following phrases: (e) In the event that the Court finds that the Contract for Services included the terms of the "Bridges Policy" (as found in Annexure "B" to the Affidavit of Colin Scully sworn 7 April 2000) (or, in the alternative, the "Bridges Policy") formed a collateral arrangement thereto): (i) The phrase in clause 5 of the "Bridges Policy" "in addition to any initiatives issued by the management of Bridges"; and (ii) the phrase in the "Policy Intentions" sections of the "Bridges Policy" section "provided that certain criteria are satisfied and provided that no adverse legal or commercial consequences arise to Bridges direct or as a result of a sale or disposition." (6) In the alternative to orders (1), (2) and (3), an order varying in part, either ab initio or from some other time, the Arrangement so as to insert the following terms: (a) "The parties intend by this Arrangement to create a principal/independent contractor agreement". (b) "Save by express agreement between the parties, the Company shall not require Attard to contribute to any operational or other expenses incurred by the Company." (c) "Any discounts on commissions or any other financial allowances that the Company feels obliged to offer to any third party to secure and/or retain a referral source shall be absorbed by the Company and not passed onto Paul Attard". (d) "In the event that the Company decides to terminate this Arrangement for reasons other than the serious and wilful misconduct of Mr Attard, then the Company will provide twelve months notice of any such termination." (e) "In addition to Mr Attard's entitlement to notice of termination, the Company acknowledges Mr Attard's right to sell his client base to a third party, provided that third party is acceptable to the Company. However, in the event that Mr Attard is unable to secure any purchaser of his client base within 3 months after the Company has given notice of its intention to terminate the Arrangement, or in the event that the proposed purchaser is not an acceptable third party to the Company, then the Company will purchase that client base from Mr Attard at a price to be determined by multiplying by 3 the average annual gross commission/fees paid to Mr Attard by the Company over the 3 years prior to termination." and to delete the following phrases: (f) In the event that the Court finds that the Arrangement included the terms of the "Bridges Policy" (as found in Annexure "B" to the Affidavit of Colin Scully sworn 7 April 2000), (or, in the alternative, the "Bridges Policy" formed a collateral arrangement thereto): (i) The phrase in clause 5 of the "Bridges Policy" "in addition to any initiatives issued by the management of Bridges"; and (ii) The phrase in the "Policy Intentions" section at the "Bridges Policy" "provided that certain criteria are satisfied and provided that no adverse legal or commercial consequences arise to bridges direct or as a result of a sale or disposition." (7) An order that the respondent pay the first applicant: (a) a substantial sum of money to be determined by the Court based, inter alia, on the sums and considerations set out in paragraph D hereof; (b) interest on such sum of money from 29 April 1997 (or from such other date as the Court deems just) calculated pursuant to section 94 of the Supreme Court Act . (8) Costs and any other incidental orders. 3 Mr Attard was employed by the New South Wales Department of Education from 1973 to 1987 as a science teacher. From 1984 to 1987 he developed an interest in superannuation and the share market and in February 1987 he decided to undertake a Diploma of Financial Planning with the Securities Institute of Australia. In April 1987 it was suggested to him that he might consider becoming a financial planner. In May of that year he worked as a trainee financial planner with Bleakley & Associates, who required that he establish Avocari in order to receive payments for the work done. He was terminated by Bleakley & Associates after about three months. 4 On 7 September 1987 he was interviewed by a Joint Managing Director of Bridges, Mr Don Sharp. Mr Sharp said to him words to the effect: Bridges will be able to provide you with good lead sources especially with their connections with Credit Unions. Bridges is in the process of developing a new system and will be able to provide a comprehensive and detailed report to clients. Bridges operate on a 50%/50% split of all commissions and there are no deductions for any expenses. During the four weeks training we will pay you $300 per week. 5 He commenced training in the position of financial planner on about 28 September 1987, reporting to Mr Colin Scully, the other Joint Managing Director of Bridges. Consistently with Mr Sharp's observation, he received a 50/50 split of all commissions generated by him, without deductions for expenses. His role was to interview clients, write investment portfolios, place investments and provide ongoing advice and services to clients. 6 Bridges provided Mr Attard with office facilities, clerical assistance, research and technical training and administration. Where a financial planner worked from an office supplied and funded by the planner, the commission split was 70% to the planner and 30% to Bridges. Whichever commission rate applied, the planners were responsible to meet expenses such as travel, car, accommodation, entertainment and any other expenses incurred. 7 Within the first six weeks Mr Sharp said to him: You will need to set up a private company to receive payments. This is for tax reasons. Commission payments won't be made personally to you but will be paid to the company. He replied: "I already have one". 8 After he completed the initial training he was informed that Bridges would pay him a retainer of $1500 per month which was an advance to be recouped from any commissions earned. 9 Mr Attard's belief was that he commenced work with Bridges as an employee and that the use of his company for payment purposes had no bearing on the nature of that relationship. 10 The nature of the business engaged in by Bridges is the provision of financial and investment advice to members of the public. Bridges is a securities dealer licensed under s780 of the Corporations Law. In order to operate as a financial planner in the securities industry it is necessary to hold a dealer's license or a proper authority to act as a dealer's authorised representative, which indeed Mr Attard was of Bridges. 11 An authorised representative obtains clients from two sources: those generated directly by the representative and those referred by Bridges. The former class is referred to as "privat" (sic) clients - Bridges-referred clients usually constituted credit unions with whom Bridges has formed a relationship. In Mr Attard's case the principal such interest was the Teachers Credit Union ("the TCU"). 12 The distinction between Bridges-referred clients and privat clients essentially related to what I might call "ownership". Upon the termination of a relationship between Bridges and a representative, the Bridges-referred clients were intended to be retained by Bridges and privat clients were free to go with the departing representatives. Between 1987 and 1997 Bridges' practice, upon the departure of a representative, was to write to all that person's clients: to Bridges clients nominating the replacement representative and to privat clients informing them that the representative had left and offering the options of remaining with Bridges or remaining a client of the outgoing representative. 13 The income of the business derived from commission, brokerages or fees earned when investments were placed through Bridges. Initially such fees were paid at the time of the initial investment - "up-front fees". During the period of the relationship between the parties master trusts were developed, one such utilised by the respondent being The Portfolio Service ("TPS"), the fee structure of which was a 2.75% entry fee on non-cash investments with a 1.65% per annum ongoing management fee and an exit fee of 2.0% reducing to 0.0% after five years at a rate of 0.4% per annum. For investments in the TPS Bridges received up-front commissions of 2.5% (0.25% administration charge by the operator of the TPS) and also an up-front commission of 1.35% termed an "advance payment". Bridges also received 0.75% per annum on non-cash investments as an ongoing trail commission of which 0.35% was utilised to repay the 1.35% advance payment. Once this was repaid for each investment per client over a period of four or five years, the full amount of 0.75% would be paid to Bridges. Bridges also received 0.45% per annum on cash investments. 14 The existence of trail commissions is a matter of some significance in the proceedings. The evidence suggests that over time trail commissions assumed a proportion of planners' income of the order of 55%. It was this extended receipt of trail commissions which was referred to by the valuers called in evidence to assist in valuing the business, as "non-exertion income". It was this feature which was said in their evidence, to which reference will be made later, to make the business an attractive one and to have an effect upon the assessment of a multiplier to be applied to super profit assessed in the business to ascertain value. 15 Bridges had 115 individual credit unions which appointed Bridges to provide financial advice to their members. A number of those credit unions, during the period 1987 to 1997, developed a policy of requiring Bridges to pay a fee in order to retain the business. This fee was 15 per cent of the gross commission (later reduced to 12.5) otherwise payable to Bridges. This became a bone of contention between Mr Attard and Bridges, Mr Attard claiming that it was an expense for which Bridges had responsibility whereas Bridges contended it was a reduction in commission payable and that only the net figure should be split equally between Bridges and a representative. This issue is required to be determined in the context of the claims in the matter. 16 The credit unions to which the applicant was assigned included the State Health Credit Union, the James Hardie Credit Union and from about 1990 solely the Teachers Credit Union, the former two of which had no retention commission requirement. This assignment was initially one day a week from about early 1990, but led to the setting up of an office within the premises of the Rooty Hill Branch of the TCU at which the applicant worked full time. 17 The relationship between Bridges and the TCU was formalised in an agreement entitled "External Consultancy Agreement", the recitals of which identified Bridges as being in the business of providing financial planning advice and portfolio preparation for members of the public; that Bridges (or its division Bridges Personal Investment Services) ("BPIS") is a stockbroker and holds a dealer's licence under the Securities Industry New South Wales Code and has developed systems, practices and policies for use in its business; and that the parties have agreed to enter into the agreement so as to provide a service to the members of the TCU by the use of the systems. BPIS granted and the TCU accepted the non-exclusive right to use the services of BPIS. By clause 4 the TCU was to supply and maintain at its cost a suitable office together with furniture, fixtures and fittings. The planner was to be supplied by the TCU with adequate and suitable office accommodation, equipment, secretarial assistance, telephones, and usual employee amenities. The TCU was to be solely responsible for the cost of employment of all "Non-professional staff unless otherwise agreed in writing by BPIS". Clause 6, Operational, provided as follows: 6.1 The obligation of BPIS under this Agreement shall include the following:- (a) to provide an Adviser to attend at the offices of the Credit Union at times which are mutually convenient for the purposes of interviewing and advising members of the Credit Union; (b) research of Products; (c) the provision of a Quarterly Newsletter to members introduced by the Credit Union; (d) the provision of Portfolio Watch Service to members introduced by the Credit Union; (e) the advertising and marketing of Services provided by BPIS; (f) the provision of displays and brochures for the offices of the Credit Union; (g) the conduct of seminars for the members of the Credit Union; (h) the provision of stockbroking services to members in conjunction with financial planning; (i) written Investment/Retirement Portfolios for the members of the Credit Union; and (j) the provision of editorials for publication in the local newspapers. 6.2 The obligations of the Credit Union under this Agreement include the following:- (a) all investment advice given to members of the Credit Union is to be given by the Adviser only under the direction of BPIS, except general advice given in the Normal Business of the Credit Union; (b) permit inspection by BPIS or its nominated representative of all records relating to the Services provided by BPIS; (c) authorise BPIS to deduct from any moneys held by BPIS on behalf of the Credit Union any moneys due and payable by the Credit Union to BPIS on any account; (d) carry on its business in a good and efficient manner; (e) give no investment advice, or accept any investments other than in the course of the Normal Business of the Credit Union; (f) not to direct or influence the Adviser to operate the investment advising service other than strictly in accordance with the terms of any manual or other direction supplied by BPIS from time to time; (g) maintain an appointment diary in which shall be entered details of all persons seeking investment advice from the Adviser; (h) employ Non professional staff; (i) provide the office and facilities as hereinbefore provided; (j) the conduct of investment seminars for the members of the Credit Union as approved by BPIS; and (k) the Credit Union shall not influence any advice given by the Adviser. 6.3 BPIS shall procure that the Adviser shall:- (a) not recommend any Products not included on the Recommended Products List; (b) use only BPIS letterhead and stationery in supplying Investment Portfolios; (c) comply with the requirements of BPIS from time to time with regard to the deposit, collection and remittance of investment moneys; (d) maintain proper records of all interviews and investment advice given; (e) prepare client questionnaires in the form required by BPIS from time to time; (f) conduct all client interviews in an efficient and professional manner; (g) in all applications for investments disclose BPIS as the licenced dealer recommending the investment; and (h) provide ongoing service to investors and carry out regular reviews of their investments and present the Portfolio Watch Service. (capitals used as in the agreement) 18 Clause 7, Income and Expenditure, provided for BPIS to pay to the TCU a commission for investments placed for all members of the TCU referred by it to BPIS for investment advice, amounting to 15 per cent of "all up front commissions and specifically excluding all overriders". BPIS was authorised to disclose to any member of the TCU or other persons that the commission was payable to the TCU. 19 Clause 2, Definitions, of the Agreement provided relevantly the following definitions: 2.1 "Adviser" means the person or persons employed by BPIS and made available to perform the obligations of BPIS under this Agreement. 2.3 "Investment Portfolio" means the recommended investment advice for a particular client. 2.5 "Non professional staff" means all those staff employed by the Credit Union for the purposes of this Agreement not being Advisers. 2.6 "Portfolio Watch Service" means the investment monitoring service provided by BPIS for its clients in the form of a performance report in respect of all of that client's investments. 20 Clause 5, Staff, included the following provision: 5.1 Any Adviser employed for the purposes of this Agreement shall be under the control and direction of BPIS and BPIS may, in its sole discretion, terminate the services of any Adviser. 21 Despite the requirements of the agreement between Bridges and the TCU it appears that the branch office at Rooty Hill consisted of office space supplied by the TCU and telephone costs. Otherwise, Bridges supplied computer equipment, furniture and the like. However, it was necessary that Avocari supply additional furniture and equipment at an approximate cost of $12,340. 22 There was no written form of agreement between representatives such as the applicant and Bridges. At a Bridges conference at Bowral in about April 1994 planners requested a formal agreement setting out the terms of their arrangement. Mr Attard's evidence was that Mr Scully agreed to that and asked him to do it. Mr Attard then sent a facsimile message to all Bridges financial planners indicating that there had been a meeting between Mr Scully and a number of planners: ". . . regarding a proposed agreement between Bridges and Authorised Representatives concerning saleability of their businesses. The main areas of concern involved how they could dispose of their ongoing income stream/goodwill in each of the following events: i) Retirement/Resignation ii) Loss of Proper Authority Status iii) Death/Permanent Disability I was (s)elected to draft an agreement on behalf of advisors and liaise with Colin Scully on the matter. After discussion with a number of advisers, we feel it would be prudent to seek legal advice on the matter, once an agreement is drafted. It is proposed, that a copy will be forwarded to interested advisers for comment. A final 'draft' will then be presented to Colin Scully. Hopefully, after discussion, a suitable agreement will result such that both Bridges and Advisors will have the opportunity to sign. The memorandum then made provision for recording the details of each subscription of $30.00 to be paid to Avocari. 23 Mr Attard's evidence was that shortly after sending the facsimile memorandum he was abused by Mr Scully for having done so. 24 On 22 April 1994 Mr Scully wrote to all financial planners in the following terms: Please disregard Paul Attard's memo dated 20th April 1994 re: Securities Representative Agreement. Bridges will be reviewing the current Authorised Representative Retirement Agreement and will advise you once the review has been undertaken. Mr Attard said that as far he was aware a document styled "Authorised Representative Retirement Agreement" did not exist. 25 Mr Attard then retained the services of solicitors to prepare a draft agreement. The advice received, together with a draft agreement, took into account two problems presently relevant. The first was that s786 of the Corporations Law requires Bridges to ensure that the representative is adequately supervised in the performance of the duties he is required to perform. This is suggestive of an employee/employer relationship. The other area of difficulty concerned termination of an agreement between a representative and Bridges, the effect of which would be to terminate the proper authority. There was also an issue concerning the assignment of business upon its sale, the attempt to describe the relationship as one of principal and independent contractor and to authorise the representative to conduct the representative's business as he saw fit. The suggested assignment provisions were relatively detailed but provided for an acknowledgment by Bridges that the clients and the business are those of the representative and that the representative may sell the business, including a list of clients, to any third party who is the holder of the proper authority from Bridges, without the need for the consent of Bridges. 26 There was also a provision preventing the representative from appointing any third party to carry out or perform any of the duties or obligations under the agreement. Provision was also made to ensure that the agreement could only be amended or added to in writing signed by both parties. 27 On 5 September 1994 Tony Frank, a financial planner, wrote to Mr Attard and a number of other planners who had been present at the Bowral meeting, reporting on a meeting having been held on 2 December to discuss progress of the draft agreement. The memorandum contained the following: All present felt that there was a need to proceed with discussions and eventual formation of an agreement that was acceptable to both Bridges and planners. The prime reason was seen to be a mechanism that would allow a planner to on-sell a business now that on-goings made it viable to "value" a planner's business. A draft agreement had been prepared by solicitors based on information supplied by Attard. After lengthy discussion and minor amendments, the draft agreement was submitted to Gooley. He agreed to peruse the draft and would submit it to Bridges if it met his approval. It was agreed that any further costs incurred by Bridges would be met by Bridges or expenses incurred on behalf of Financial Planners be passed onto all Planners on adoption. Gooley gave an undertaking that he would ensure that he would report back to Attard and Frank by the end of September. 28 In October 1994 Mr Attard attended a meeting with Mr Scully and Mr Frank to discuss the proposed agreement. Mr Scully put forward a counter proposal which he described as a "retirement agreement". After reading it Mr Attard said words to the effect: Colin, the agreement doesn't appear to cover what would happen in the case of an adviser being terminated, nor does it prevent changes to the commission structure without both parties agreeing. Mr Frank said words to the effect that : I'm happy with the agreement. Mr Scully did not respond. Mr Attard then felt he had no other choice but to agree to its implementation. He later approached Mr Scully to secure a copy of the agreement and was told: "No-one will receive a copy of the agreement and if they want to look at the agreement they would need to make an appointment with me". This was later confirmed in a memorandum from Mr Scully to financial planners which noted that: "A satisfactory agreement has been reached. It has been agreed to introduce a Bridges Policy which outlines the basis of the Financial Planners Retirement Arrangements. This Policy has been ratified and duly executed by the Board of Directors of Bridges, effective 26 October 1994. The Policy is available for inspection simply by contacting Colin Scully. Alternatively, you may like to contact Tony or Paul who can confirm the Policy has been agreed to and executed." 29 On 2 July 1996 Mr Scully wrote to financial planners indicating an intention to initiate a forum of elected planner representatives to provide a "vital link of two way communication between planners and management". The forum was to consist of seven elected planners representing five geographic regions throughout Australia. 30 In about September 1996 Mr Attard approached Mr Scully to discuss the question whether Bridges was intending to implement a new agreement with planners, as Mr Attard had been led to believe. Mr Scully, when asked why the agreement was to be introduced, said "The advisers wanted one". Mr Attard did not believe this to be true. 31 On 16 September 1996 Mr Scully circulated a memorandum to all planners annexing a Representatives and Agents Agreement, a confidentiality deed, a Service Agreement and an Office Agreement. 32 Mr Attard formed the view that in substance the draft agreements enabled Bridges to exercise complete control over the planners and it did very little to protect the interests of the planner. He deposed to having formed the view that the Agreement was unfair and unreasonable, because of the following features: (i) It provided no guarantee for current arrangements regarding remuneration, ie. Commissions, brokerage, fees, etc. (ii) It allowed advisers to be exposed to open-ended legal and taxation liabilities. (iii) It did not provide any security with respect to a representative's client base and therefore income. (iv) It allowed the Respondent to terminate the relationship with the representatives at will. (v) Little or no enforceable commitment on behalf of the Respondent to provide any or all services. (vi) No requirement for the Respondent to seek and obtain the Agreement of advisers to any changes to the present arrangements. (vii) Failure to allow advisers any recourse if the Respondent decided to terminate the relationship. (viii) The Agreement did not satisfactorily protect the interests of advisers if the Respondent sold the business. (ix) The Respondent claimed total ownership of so-called "Credit Union Referral" clients and therefore did not reflect the goodwill created by advisers. 33 Various members of the Representatives Forum resolved to obtain legal advice upon the draft agreements supplied by Mr Scully to the financial planners. It is sufficient for present purposes to say that the advice was critical of the agreements in a number of respects 34 The legal advice was circulated to the financial planners by memorandum dated 29 November 1996 from the Representatives Forum. Annexed was a copy of comments made by Mr Christopher Wren, the General Manager of Bridges. The Representatives Forum summarised their view this way: Each planner must look at his or her personal situation. If they have a substantial proportion of their business that is genuinely "private" clients, then the agreements do not pose an issue. For those planners who are almost completely involved in the traditional Bridges referral scenario it can be seen that the agreements, restrictive as they might be, do protect the client base and the planner only suffers if they leave Bridges, don't sell to another Bridges planner, stay in the industry and join another dealer group. 35 Mr Attard was not pleased with the changes proposed by the agreements. He saw the following deficiencies: (i) The absence of any guarantee of arrangements regarding payment of commissions if the respondent was to sell its business; (ii) The requirement for representatives to accept legal and taxation liabilities; (iii) No security to advisers for good will (sic) in respect of clients; (iv) The lack of consultation with the advisers regarding he changes; (v) Strict and onerous requirements regarding the termination provisions. 36 On 28 January 1997 Mr Attard received from Mr Wren, Bridges' General Manager, a revised Representatives Agreement, which was later amended further and was required to be signed by the planners. Mr Attard's understanding was that while he felt his position was not secure and was at risk if he did not sign the agreement, nevertheless his position would be worse if he did sign the agreement because Bridges would be entitled to terminate his services without notice. In about April 1997 Mr Wren telephoned him to arrange a meeting to discuss the agreements with Mr Scully to which he responded: Chris, I won't have a meeting until a number of issues which I have raised are resolved. These include any repayment of overpayments by Bridges should properly be accounted for and if there are still monies owed to Bridges, then my company, Avocari Pty Limited would pay by cheque and the money should not be deducted from my monthly commissions by Bridges without my authorisation. I believe that Colin Scully should also formally apologise to me and retract what is contained in the memorandum sent by him on 21 November 1995 regarding the Parramatta office. I believe that this was causing a negative attitude between us and needed to be resolved. The office at the Teachers Credit Union at Rooty Hill should have access to stockmarket quotes and TPS information to enable me to properly service my clients. I've been promised this for a long time and I was also told that it would be installed at the time that the new hardware was made available. This has not occurred. 37 A memorandum dated 21 April 1997 was circulated by Mr Scully to planners advising that the former Retirement Agreement had been revoked by the Board as a result of the introduction of the new Representative and Agent Agreement. 38 On 22 April 1997 Mr Attard met with Mr Scully and Mr Wren at Bridges' Head Office in Sydney. Mr Scully asked Mr Attard to list his objections to the Agreement, which he did. He said that as each objection was made, Mr Scully would proffer an explanation and then say "next". Mr Attard said the conversation with Mr Scully included the following: Mr Attard: I don't think that there are any benefits in the Representative Agreements for the advisers. Mr Scully: Well, the financial advisers would be able to sell their client base. Mr Attard: The financial advisers can sell their client base through the retirement Agreement. Mr Scully: The representatives Agreement overrides the retirement Agreement. Do you intend to leave Bridges? Mr Attard: No I don't. Mr Scully: Someone who had raised the same concerns or similar concerns to you told me that they were not going to leave and then subsequently left. . . . . . Mr Scully: Do you have any other problems with the Agreements? Mr Attard: Yes I do, but they are minor. I believe that the substantial issues need to be resolved before we talk about the minor issues. Mr Scully: Well, you're quite thorough. Mr Scully then shook Mr Attard's hand as he was about to leave. 39 A problem had arisen between Mr Attard and Bridges in April 1997 whereby he had disconnected his "AREV system", a computer link which was intended to convey updated client information to Bridges on a continuing basis. This was done by Mr Attard as a form of direct action in protest at Bridges' failure to supply him with other information he felt was necessary to properly service his clients and was his right to have and which is referred to in his response to Mr Wren, set out in paragraph 36 hereof. Unfortunately this act was regarded by Mr Scully as an indication Mr Attard was going to leave Bridges and take Bridges information with him, as the discussion set out in paragraph 38 indicates. (It is noteworthy that between November 1996 and April 1997 Mr Attard estimated nine planners had resigned). This appears to have been the major reason Mr Scully acted later to terminate the relationship with Mr Attard. 40 On 29 April 1997 at 7.45am Mr Attard arrived at the TCU office at Rooty Hill. Upon entering his office he observed Mr Scully was there to whom he said: Colin, what's going on? Mr Scully handed him a letter the effect of which was to terminate Mr Attard's contract without notice. There were two other members of Bridges management in the office with Mr Scully. Mr Scully said to Mr Attard: I need to speak to you. Mr Attard then attempted to seek legal advice but found it was too early for his phone call to be answered. He then said to Mr Scully: Isn't there any way we can resolve this issue? Mr Scully asked: Do you have any of Bridges' material at home? which Mr Attard did not answer. Mr Attard then went to see the Manager of the TCU at Rooty Hill, Ms Teresa Mason, to whom he said: Teresa, do you know what's going on? She responded: I'm sorry for what has happened. I had nothing to do with it. John Prescott (the General Manager of the Teachers Credit Union) authorised me to let the Bridges' people into your office. 41 He then returned to his office where Mr Scully asked for the return of his keys. Mr Attard said: The office belongs to the Teachers Credit Union and you have no right to take possession of the keys. Mr Scully then asked one of the managers with him: Can you please get Teresa up here now? Ms Mason then arrived, asked for the keys and Mr Attard handed them to her. 42 He was then asked by Mr Scully to collect his personal belongings; to take as much as he could then, and to identify what was to be left behind, to be collected on another day. As he was identifying his things, a security guard and a manager from another TCU office arrived. Mr Attard was very embarrassed to be monitored by the security guard because of the appearance it created that he may have done something dishonest. This appearance was later confirmed to him by members of the TCU staff. He subsequently became aware that a number of his clients, his colleagues and also the staff of the TCU had been notified that day of his termination. 43 The applicant attended the TCU on 3 May 1997 to collect the rest of his belongings. He found that most of the paper work, files and floppy discs had already been removed. He later found that some of his personal paper work which contained confidential financial details had been placed in the TCU rubbish bin. He also discovered that his personal laptop computer had its hard drive wiped (this was a computer purchased at Avocari's expense). This computer contained many of the software programmes Mr Attard had developed over the years. 44 The applicant's earnings during the course of his relationship with the respondent were as follows: 1988 $20,220.00 1989 $55,449.00 1990 $91,317.00 1991 $121,316.00 1992 $258,748.00 1993 $144,022.00 1994 $274,064.00 1995 $196,423.00 1996 $208,801.00 1997 $165,912.00 (up until April 1997) The years 1992-1997 inclusive average out at a per annum rate of $213,525.00. 45 In April 1997 Mr Attard had a client base of approximately 400 "active" clients with substantial funds invested and receiving a quarterly portfolio watch report, with about $50m in funds under management. He also had approximately 2,000 "inactive" clients as potential investors and referral sources. He estimated the market value of this client base at $630,000.00. 46 Mr Attard had, earlier in April 1997, made some enquiries with other financial planning firms in the event that his services were terminated. He commenced as a financial planner with Charter Financial Planning on or about 6 May 1997. 47 The applicant's case included a strong attack upon the nature of the legal relationship between Mr Attard and Bridges. The attitude of Bridges at least from some point in 1987, some months after their relationship was established, was that the true nature of the relationship was that of principal and independent contractor. The concern of Bridges was to maintain that position and to avoid the risk of any contrary finding, particularly in respect of matters such as income tax and payroll tax, neither of which were deducted. There appears to be no other conclusion available but that when the parties commenced their relationship in 1987 it was one of employer and employee. Mr Attard's interview with Mr Sharp made no contrary point. The $300 per week payments made for the training period probably ought be characterised as wages despite Bridges' description of them as non-repayable loans. There was simply no discussion of any matter which would encourage the view that the parties had a consensual position of intending to create an independent contractor relationship. The arrangement by which the applicant would receive an equal split of commission was not necessarily inconsistent with a relationship of employment. 48 However, some weeks later the need for a corporate structure was raised by Bridges, in respect of which Mr Attard was able to and did employ Avocari, the corporation he had acquired for utilisation with Bleakleys. Were the matter to have rested there one might be more willing to accept the view submitted on behalf of Mr Attard that there was no more here than an amateurish attempt to disguise a true employee/employer relationship by simply introducing a corporate structure for payment purposes. The matter was not left there. The parties thereafter for approximately a decade contracted on an understanding which reflected not employment but a principal/contractor relationship; it would be disingenuous to suggest otherwise. Avocari was not merely a vehicle to "receive payments". It was used by the applicant, in the usual way, to provide him with taxation advantages; to establish a superannuation fund for him; to provide office furniture and equipment at the Parramatta office which Mr Attard felt necessary but was unable to otherwise obtain; to be his employer. Further, the payment structure of commissions, based as it was on a 50/50 split, was predicated upon the relationship having this fundamental feature. The absence of annual leave and long service leave accrual was an inherent aspect of the relationship which again can only be regarded as a feature of the division of commission. It may be accepted that there are arguments in favour of the proposition that the relationship was one of employer and employee, not the least of which concerns Bridges' postulation of the relationship with certain former planners as either employment or principal and agent in a statement of claim filed in the Supreme Court by Bridges seeking to restrain those planners from advising clients of Bridges, other than privat clients, and an account of profits, damages etc. Also, perhaps at a lower level of persuasion, the reference contained in Bridges' agreement with the TCU (see paragraph 20 hereof). There is, in my opinion, an unconscionable aspect to the proposition, only advanced after the relationship has continued on this basis for 10 years, that it should be viewed, with hindsight, differently to that which was truly intended. The Commission possesses a discretion to deal with issues of this kind in the making of its orders. Were the relationship, in law, one of employment then a discretionary question would arise as to whether the benefits obtained by Mr Attard in the context of his corporate structure would need to be brought to account (as to which see Leggett and Anor v. Aardvark Security Services Pty Ltd [2000] NSWIRComm 188, 15 September 2000). Alternatively, the view is available to be taken that the Commission ought in the resolution of the proceedings consider the fairness of the relationship as it was predicated between the parties and if the relevant unfairness is found in that context to seek to remedy that matter. That is the approach I intend to take. There is no inherent unfairness in the concept that Bridges was intent upon pursuing a course which established and maintained a particular legal relationship. A Right of Sale? 49 Mr Scully recognised in his evidence that an issue between Bridges and the planners over a long period had been the formalisation of a right to sell a planner's business upon leaving Bridges. In August 1993 Mr Scully circulated to all planners a memorandum referring to the concept of having a consultants retirement agreement. The memo made the point that for a number of reasons Bridges had decided not to proceed with such an agreement. The memo concluded with this paragraph: However, in the interest of achieving such an objective should any adviser wish to make an appointment to view the draft agreement at our Parramatta office or to discuss the procedure for implementing such an agreement, please do not hesitate to contact me. 50 The draft agreement provided for the "consultants" giving notice in writing to Bridges of the wish to sell or dispose of the business. It provided for the possibility of a sale to an incoming or existing consultant of Bridges. It also provided that in the event the consultant was unable to obtain expressions of interest to purchase the business then "the Company as a last resort shall be offered the opportunity to purchase the Business from the Consultant subject to conditions as agreed . . ." 51 Mr Scully suggested that Mr Attard would have seen the draft agreement on 24 August 1993, a date in respect of which he, Mr Scully, had a diary note recording Mr Attard's attendance upon him at 9am. Given Mr Attard's interest in these matters I can readily accept that he would have responded quickly to the invitation to view the draft agreement and that Mr Scully's diary note may be taken as confirmation of that fact. However, Mr Scully deposed to Bridges' Board of Directors, having ratified "the draft agreement" . . . "essentially in the same terms" in October 1994. A comparison of the draft agreement and that which Mr Scully said was ratified demonstrates they are in quite different language; the second document omits any reference to Bridges being a buyer of last resort. 52 Mr Attard contended in evidence that on 11 October 1994 he and Mr Frank were shown by Mr Scully a document purporting to be the final version, which contained a reference to Bridges as the buyer of last resort at a multiplier of 1.5 times the ongoing commission. A copy of such a document did not surface in evidence. However, Mr Scully did refer in evidence to Bridges as the buyer of last resort under the "Retirement Policy" but deposed "it has never bought the business of a financial planner". 53 The October 1994 policy document in evidence purports to have been executed on 26 October 1994 by Mr Scully and Mr Reg Richardson, then the Chairman of Bridges. It is called "Bridges Policy - Financial Planners/Consultants Retirement Arrangements." 54 Mr Frank's evidence was that this must have been the document that he saw on 11 October 1994. His recollection was generally vague about that matter. However, the issue here is whether this document, produced by Mr Scully very late in the proceedings despite it having been the subject of a notice to produce served by the applicants 12 months before, is in effect a fabrication. No matter what difficulty I might have with portions of Mr Scully's evidence, it seems to me there is no basis upon which I should conclude on the applicant's recollection of having seen something in a document in 1994 that the document does not represent the policy adopted by Bridges. This is particularly so when the forerunner draft contained a buyer of last resort provision, which is capable of having operated on Mr Attard's memory, and where there is no other written record, even one made by Mr Attard, of the buyer of last resort provision being retained in the October 1994 version of the policy. On the face of the document, as signed by Mr Scully and Mr Richardson, no buyer of last resort provision was adopted. Nevertheless, there is a real significance in the document's recognition of a saleable "business". 55 The applicant's case contained a complaint about the way in which Bridges had unilaterally introduced many changes over the course of the parties relationship which operated to Mr Attard's financial detriment. The first was the introduction of the payment of 15 per cent commission to the TCU which had the effect that Bridges split on a 50/50 basis only 85 per cent of the total nominal fees. The payment of the 15 per cent commission to a credit union in these circumstances which, as Mr Scully attested, was a necessary condition for Bridges and its financial planners performing the work, does not seem to me to be properly described as an "expense" which should have been borne entirely by Bridges. The effective sharing of that burden appears to me to have been entirely appropriate. But, in any event, there is another matter of concern raised in the evidence about this issue. Mr Scully's evidence was that neither the State Health Credit Union or the James Hardie Credit Union required the payment of such a fee. These were the credit unions with which Mr Attard was working prior to his being allocated, at his request, the TCU, "a plum" as it was described in the evidence. When he commenced to work with the TCU the 15 per cent commission scheme had already been in operation for some time. It was therefore not a unilateral introduction by Bridges of a fee in that regard at all. 56 It is to be remembered that Mr Attard deposed that one of the main reasons he joined Bridges was that they had access to credit union lead sources. 57 This leads to the next point referred to by Mr Attard, which concerned the obligation he said was imposed upon him to provide a secretary at his cost, as to two-thirds thereof. Mr Scully explained this matter in evidence as having not been introduced without discussion with financial planners. It was necessary, he said, in changing arrangements between Bridges and the planners, to have regard to the general acceptance of the planners of any proposed change. It was not in Bridges' interest to unilaterally impose onerous changes upon its financial planners. Planners were entitled to share a secretary or personal assistant and therefore share the cost. The secretary or personal assistant was an additional resource which enabled planners to undertake activities which should result in their businesses growing. It was designed to foster growth of the financial planners. Again this happened in the latter part of 1988 when Mr Attard was allocated to service particular credit unions. I consider it quite unreal of Mr Attard to expect that his working arrangements could not be expected to be changed, particularly with respect to business development and retention matters. 58 The next matter I deal with in this context concerns portfolio watch fees. Those fees related to what was called the Portfolio Watch Service under which Bridges maintained an overview of clients' portfolios on a continuing basis. The fee was levied upon a sliding scale according to the market value of the particular portfolio. In November 1989 the maximum fee was increased from $150 to $400 and planners were required to pay the fee by way of a deduction by Bridges from commission due to them. It was changes of this sort which convinced Mr Attard that Bridges considered itself entitled to vary the terms of what he referred to as his "contractual arrangements" without his consent. This caused him on a number of occasions to speak with Mr Scully about consolidating terms in an agreement. The aggregate cost over 10 years of the items I have listed, including two relatively small amounts of $24,442 as a result of an organisational restructure and $15,635 in relation to a branch manager's fee imposed for a relatively short period of time, $1,183 resulting from the 15 per cent deduction from commission due from the TCU and a cost of $122,667 over the years for a secretary, gave a total of $344,632. This sum Mr Attard viewed as, in effect, unauthorised deductions from what was otherwise due to him. It seems to me to pay no regard to the need to maintain a fluidity of sorts in relation to these matters given the fact that Bridges did not have a captive market. Just as the 15 per cent fee or commission payable to the TCU and other credit unions resulted from predatory approaches to those credit unions from competitors of Bridges, and became necessary from Bridges' point of view to preserve the business, changes in the market needed to be responded to in order to ensure that Bridges' services were able to be provided on a basis competitive with other operators. In this context, it is not appropriate to try to reconstruct the arrangement which the parties engaged in for many years. The claim made by Mr Attard in respect of the perceived loss of $181,883 deriving from the 15 per cent credit union commission would have the effect that Bridges would be required to pay entirely for that element. Given that the net commission received by Bridges and then divided with the planners was 85 per cent of the notional 100 per cent fee, such an approach would be entirely without merit. I consider Mr Attard's position in relation to this item to be quite misconceived. There was, in my consideration of this matter, and indeed the other deductions which have been referred to, no unfairness of any relevant kind visited upon Mr Attard. The fact of the matter is that for a period of approximately 10 years he had the opportunity to work in the industry and as I have noted, averaged over the last five of them, in excess of $200,000 per annum in fees for his advice. To speculate that he may have received more than that sum were these deductions not effected, is to raise the question whether, in relation to the TCU, the business would have been available at all between 1988 and 1997. It is impossible to conceive that Bridges paid 15 per cent of the total fees due to the TCU for no reason. The reason advanced by Mr Scully is the only plausible one available. It was not a business expense in the ordinary sense but rather a necessary contribution to maintain the very existence of the business. It was that existence which permitted Mr Attard to earn what I consider to have been a substantial sum on an annual basis in the fulfilment of his obligations. 59 Finally, on the issue of unilateral changes, I observe that despite making contemporaneous complaints that he had not agreed to changes, he acquiesced and continued thereafter on the altered basis, in some respects for many years. This position was reflected in his agreement in cross-examination that he would have been prepared to continue on the terms operating between the parties at the date of termination. 60 I now turn to deal with the question whether the business of Mr Attard had a value which was likely to be able to be obtained upon an appropriate sale. There appears to be no basis in the evidence for concluding that the business, identified perhaps most appropriately as an "income stream", was not saleable for value. Mr Scully, in his evidence, adverted to the fact that sales had been effected in his experience, usually between outgoing planners and other planners within Bridges' structure. As to value, there are three sources within the evidence: an estimate made by Mr Scully and the evidence of two witnesses advanced, one by each side, as experts in the valuation of businesses. The first, called by Mr Kimber, was Max John Kurz. He is a qualified valuer by occupation. He is a licensed business broker and valuer and has been working as such for 17 years. He is a director and part-owner of K E Business Advisory Services Pty Ltd which has operated for five years in the field of business sales and evaluations. Mr Kurz's position was that the business has a value within the range of 2.5 to 3 times the assessed super profit of the business. The multiple is determined by the level of risk attaching to the business. Here, a large part, approximately 75 per cent, of income is what was described as non-exertion, recurring income. That factor had two effects in Mr Kurz's valuation. Firstly, it assisted him readily to assess the multiplier at 2.5 to 3 and, secondly, it caused him to consider that the skills of a para-planner (a person employed by an authorised representative but without the skills and/or qualifications of the representative) would be sufficient to maintain the income level received by Mr Attard. Mr Kurz treated Mr Attard's income as referrable to a substantial number of clients, anywhere between 400-1500 clients. He regarded the TCU as a referral source but not as a client. Mr Hilton Deane, the valuation expert called by Bridges, treated the TCU as a single client and, because of that fact and the highly competitive nature of the industry, considered a multiplier of 1.5 to 2 should be used. 61 The multiplier, in Mr Kurz's opinion, should be applied to a figure of $146,000 per annum which consists of the $216,412 average income over the last complete five years reduced by the secretarial costs for which Avocari was liable ($15,000) and the $40,000 notional salary attributable to a para-planner necessary, in effect, to replace Mr Attard. Also deductible for this purpose Mr Kurz would not deduct other expenses revealed in the annual accounts of the business which are of a non-recurring or personal nature because they are not true operating expenses that a purchaser would necessarily incur. These were referred by him in his evidence as "add backs" to the gross profit revealed by the accounts. Mr Kurz's efforts in this regard, then, were more directed to the actual position and an assessment of super profit in that context other than for the para-planner salary to which I shall return. 62 Mr Deane is the principal of R H Deane & Co, a business which undertakes real estate and business valuation. He holds the Degrees of Bachelor of Economics and Master of Business Administration (Macq.). He is a Real Estate Institute accredited practising valuer, a certified practising valuer and a registered real estate valuer. His approach to the determination of residual (or "super") profit was to calculate earnings before interest and tax, deduct a suitable salary for the proprietor and an appropriate return on investment. This, he contended, was possible to obtain from a proforma income statement "which critically requires knowledge of financial relationships from past years". The super profit is then capitalised to determine an amount representing goodwill. He said the capitalisation rate, or multiplier, will be subjective. He came to the view, in part based upon confidential enquiries made through a similar financial planner, that the multiplier of 1.5 to 2 should be used if applied directly to trail commissions. 63 Taking into account his approach to the determination of super profit, he considered that Mr Kurz's figure of $200,000 was too high. He would allow a minimum of $60,000 proprietor's salary (advice from Bridges indicated to him $80,000-$100,000) and deduction for expenses in the order of 20 to 25 per cent of total revenue. He included a deduction for rent, of $10,000, an expense which Mr Attard was not required to meet; $30,000 for a secretary (as against $15,000 actual) and $20,000 for other miscellaneous unidentified operational expenses. 64 Mr Scully's evidence was that in his experience businesses sold for between 1 to 1.5 times, more generally 1.5, the value of fees. No facts were adduced to support that experience. However, on that approach the value, based on 1.5 times the last 5-year average of fees, would be about $320,000. 65 Neither Mr Kurz nor Mr Deane had prior experience in valuing businesses of this kind. It was necessary that they apply their expertise to the facts supplied to them. As is the usual experience, the opinions with respect to value varied widely according to the interests of the party retaining the particular expert. I make that observation without intending to reflect in any way unfavourably upon either witness: it is merely the inevitable fact that when courts are to be presented with expert evidence designed to support the case of a party, the evidence will be supportive, otherwise it would not be adduced. A further problem raised by this evidence is that it does not actually reflect a real worth in the marketplace, in the sense that it is supported by evidence of actual or recent sales. 66 Mr Moore argued that in the assessment of value, recognition needed to be given to the requirement of a purchaser for a covenant restricting the applicant from working in the industry for a period of years. I do not consider this should devalue the assessment in this case for the reason there was not a sale but a deprivation of the opportunity to sell. In any event, the caution I have taken to the adoption of a multiplier seems to me to be adequate to offset any countervailing factor in this regard. 67 Equally, I do not react favourably to Mr Deane's discount from super profit of the "buying a job" element he saw in super profit. This jurisdiction is replete with examples of business purchases which involve a premium, sometimes called "goodwill", which is of no other significance than it "buys a (secure) job". 68 While generally I found Mr Kurz's evidence preferable to Mr Deane's, neither witness impressed me as providing what was necessarily a valuation or an approach to valuation which should be embraced fully. One example is the reliance in the determination of super profit by Mr Kurz upon a salary being attributable to a para-planner, a level of skill or qualification which he considered was only necessary to maintain the business which the applicant had developed. That view is highly speculative. There are a number of ways in which a purchaser could operate the business. A purchaser could be, it appears, an investor who would be capable of not physically working in the financial planning activities but employing a person to do it. That person could be a para-planner, as Mr Kurz suggests, or at any level up to a senior financial planner. The purchaser might be a senior planner who would work directly in the business. Further, the estimate of 15 to 20 hours per week to maintain the business leaves no opportunity for long term growth development and takes no account of the apparent fact that the applicant worked largely full-time in the maintenance of the business himself. The utilisation of a para-planner's salary ($40,000) as against an experienced financial planner's salary ($80,000-120,000) has the effect of maximising the assessed super profit of the business. While it may be a theoretical or even actual possibility, the range of possibilities extant dictates to my mind that a more conservative approach needs be taken. For myself, I have difficulty seeing why any salary less than that which might be fairly attributable to Mr Attard could be utilised in the assessment of this notion of super profit. However, I consider that I am bound by the evidence in this regard. Taking a cautious approach I would adopt the maximum salary said by the experts to be deductible on this account, namely $60,000 advanced by Mr Deane. 69 The multipliers advanced in the evidence were 1.5 (Mr Scully); 1.5 to 2 (Mr Deane); and 2.5 to 3 (Mr Kurz). This range indicates the total lack of science involved in trying to find a value for the business on some theoretical basis. I propose to adopt a middle ground approach by assessing the multiplier as 2.5, being above the highest multiplier advanced by Mr Deane and within the range advanced by Mr Kurz. I would apply the multiplier to super profit ascertained by deducting from the average annual income of $216,412 a nominal salary figure of $60,000 and an expenses figure of $28,000, being $15,000 for a share of secretary, $10,000 motor vehicle expenses and $3,000 depreciation. However, there is a further essential deduction. 70 The applicants were not deprived of all of their business. The accounts of Avocari advanced by Mr Kurz relate to the total income of the business, which was saleable and may have been sold if the opportunity had not been denied. But a value on that whole business is merely notional where the applicant has actually lost a part but retained some of the business. In assessing super profit a deduction must be effected for that part which was retained. The percentage the expenses I have allowed above ($88,000) bears to gross fees ($216,412) is 40.66%. Taking that as a guide, the $50,000 fees income earned by Mr Attard from the clients he retained would reduce to a net figure of $29,665. That figure should be the further deduction from super profit for this purpose. 71 Applying that approach, the super profit to which the multiplier of 2.5 is to be applied is $98,747. Accordingly, the value which I would attribute to the business is $246,867. This is the sum which the applicant was denied by the peremptory termination by Bridges. It is the sum which I order be paid as providing appropriate compensation for that aspect of the applicant's loss. It takes no account of any notions such as notice of termination or a later reduction in earnings suffered by the applicant. I consider that the sum is appropriate for the reason that had he been enabled to sell the relevant business components on the date of his departure, the concept which underpins what I consider to have been the real unfairness in the matter, the return to him would have been the value of the business as it is now assessed. 72 At the date of termination Mr Scully had sensed that the applicant was about to follow a course not dissimilar to that which had been taken by other planners who had left taking what Mr Scully perceived as some of Bridges' business with them. His fear may be understandable given the applicant's conduct but it was, in fact, without foundation. I accept the applicant's evidence that he was not engaging in such a process. However, even were there some substance in Mr Scully's suspicions, the question would arise whether the appropriate remedy would be the termination of the relationship with the total loss by the applicant of the value of the business he had developed, which was recognised as saleable. Given my conclusions on the facts, this question requires no resolution. 73 The applicant also sought compensation of $9,000.00 for the loss of his computer programmes and information, "wiped" by the respondent from Mr Attard's personal computer files. The only evidence on the matter is the applicants, from which it is clear Bridges' actions caused him unnecessary loss. I would grant this claim. 74 I find the contract or arrangement between Avocari and Bridges, in consequence of which Mr Attard performed the work the subject of this judgment, an unfair contract within the meaning of s105 of the Act for the reason that, in the circumstances of the case, it denied the applicants a reasonable opportunity to sell the business which had been developed by the applicants. I order that the contract or arrangement be varied as at the date of its termination to provide that upon its determination Bridges is liable to pay to the applicants the sum of $246,867 in respect of the value of the business. 75 I order that Bridges pay the applicants the sum of $255,867, plus interest from the date of commencement of these proceedings in accordance with s94 of the Supreme Court Act, 1970, and costs as agreed or as assessed. 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