Industrial Relations Commission New South Wales Medium Neutral Citation: Kennedy v Martinez [2011] NSWIRComm 137 Hearing dates: 18/03/2011, 03/06/2011 Decision date: 10 October 2011 Jurisdiction: Industrial Court of NSW Before: Walton J, Vice-President, Staff, Backman JJ Decision: (1) Leave to appeal is granted. (2) The appeal is dismissed. (3) The appellant is to pay the respondents' reasonable costs of the appeal. (4) The question of costs at first instance is reserved and the Court shall determine any contested issue as to costs awarded in the proceedings below on the papers, unless a party making written submissions in accordance with these Orders, seeks to make oral submissions. Catchwords: APPEAL - leave to appeal - unfair contract - Industrial Relations Act 1996 - s 106 - appellant signed a Deed of Agreement (the contract) becoming a fixed draw partner following a "merger" between Ebsworth & Ebsworth (E&E) and Home Wilkinson Lowry (HWL) - appellant's contract terminated after four months - significance of bargains freely made in assessing unfairness of the notice provision in the Deed - whether period of notice (one month) provided in the Deed was unfair - whether procedural unfairness in the process leading up to termination of the contract - pre-contractual representations - the appellant's performance - whether subjective considerations erroneously taken into account - the appellant's belief as to meeting his KPIs - the offer of a consultancy to the appellant - failure to call other witnesses - orders Legislation Cited: Industrial Arbitration Act 1940 Industrial Relations Act 1996 Cases Cited: A & M Thompson Pty Ltd and Others v Total Australia Ltd (1980) 2 NSWLR 1 All-Fect Distributors Ltd v Stewart [2007] NSWIRComm 24; (2007) 160 IR 90 John Burke Mulford v AW Butterell and Others as Partners of Grant Thornton Chartered Accountants [2001] NSWIRComm 137 Johnson v Snaddon [2001] VSCA 91 Lavings v Barclay Mowlem Construction (NSW) Ltd (1994) 99 IR 247 Port Macquarie Golf Club Limited v Stead & Another (1996) 64 IR 53 Category: Principal judgment Parties: Peter Ewan Kennedy (Appellant) Juan Jose Martinez (First Respondent) Ari Schachna (Second Respondent) Evan Stents (Third Respondent) Gail Owen (Fourth Respondent) Peter Van Rompaey (Fifth Respondent) Phillip Battye (Sixth Respondent) Roger Stansfield (Seventh Respondent) Simone Marin (Eighth Respondent) Craig Down (Ninth Respondent) Fanoula Galanakis (Tenth Respondent) Frank Xenos (Eleventh Respondent) Maurice Thompson (Twelfth Respondent) Paul Graham (Thirteenth Respondent) Peter Bramwell (Fourteenth Respondent) Picha Djohan (Fifteenth Respondent) Rick Horsley (Sixteenth Respondent) Ronnie Winchester (Seventeenth Respondent) Jonathan Kramersh (Eighteenth Respondent) David Jenkins (Nineteenth Respondent) Jason Warat (Twentieth Respondent) Jonathan East (Twenty-first Respondent) Lindsay Reed (Twenty-second Respondent) Matthew Reynolds (Twenty-third Respondent) Paul Gordon (Twenty-fourth Respondent) Peter Bittner (Twenty-fifth Respondent) Phillip Heraghty (Twenty-sixth Respondent) Philip Hunter (Twenty-seventh Respondent) Ross Williams (Twenty-eighth Respondent) Steven Henderson (Twenty-ninth Respondent) Virginia Waterhouse (Thirtieth Respondent) Wayne Jenvey (Thirty-first Respondent) Graeme Traves (Thirty-second Respondent) Karyn Reardon (Thirty-third Respondent) Mark Lightfoot (Thirty-fourth Respondent) Michael Cameron (Thirty-fifth Respondent) Peter Daley (Thirty-sixth Respondent) Rachel Weeks (Thirty-seventh Respondent) Scott Butler (Thirty-eighth Respondent) Simon Tolhurst (Thirty-ninth Respondent) Anthony Highfield (Fortieth Respondent) Brian Thomas (Forty-first Respondent) Bryan Belling (Forty-second Respondent) Chris Brierley (Forty-third Respondent) David Vaughan (Forty-fourth Respondent) Dennis Bluth (Forty-fifth Respondent) Douglas Vorbach (Forty-sixth Respondent) Elias Stephen (Forty-seventh Respondent) Elisabeth Ritchie (Forty-eighth Respondent) Grant Hummel (Forty-ninth Respondent) Jane Hewitt (Fiftieth Respondent) Joseph Hurley (Fifty-first Respondent) John Bartrop (Fifty-second Respondent) John Graves (Fifty-third Respondent) Jonathan Tapp (Fifty-fourth Respondent) Kerrie Chambers (Fifty-fifth Respondent) Lachlan Paterson (Fifty-sixth Respondent) Mark Harrowell (Fifty-seventh Respondent) Mark Webeck (Fifty-eighth Respondent) Martin Downing (Fifty-ninth Respondent) Matthew Harding (Sixtieth Respondent) Michael Bowyer (Sixty-first Respondent) Michael Neylan (Sixty-second Respondent) Nicholas Matkovich (Sixty-third Respondent) Paul Stephenson (Sixty-fourth Respondent) Peter Garrett (Sixty-fifth Respondent) Peter MacKenzie (Sixty-sixth Respondent) Robert Gardini (Sixty-seventh Respondent) Robert Johnston (Sixty-eighth Respondent) Robert Schneider (Sixty-ninth Respondent) Simon Liddy (Seventieth Respondent) Tim Griffiths (Seventy-first Respondent) Alice De Boos (Seventy-second Respondent) Andrew Miers (Seventy-third Respondent) Brian Olliver (Seventy-fourth Respondent) Damian Ward (Seventy-fifth Respondent) Danella Wilmhurst (Seventy-sixth Respondent) David Clarke (Seventy-seventh Respondent) Duncan Campbell (Seventy-eighth Respondent) John Bell (Seventy-ninth Respondent) John Cole (Eightieth Respondent) Julie Hamblin (Eighty-first Respondent) Julian McGrath (Eighty-second Respondent) Kirston Gerathy (Eighty-third Respondent) Mary Digiglio (Eighty-fourth Respondent) Penel Snyman (Eighty-fifth Respondent) Richard Graham (Eighty-sixth Respondent) Richard Gration (Eighty-seventh Respondent) Robert McGregor (Eighty-eighth Respondent) Sancia De Jersey (Eighty-ninth Respondent) Seamus Burke (Ninetieth Respondent) Sonya Kroon (Ninety-first Respondent) Steven Burns (Ninety-second Respondent) Stuart Westgarth (Ninety-third Respondent) Tom Suttie (Ninety-fourth Respondent) Jury Wowk (Ninety-fifth Respondent) Ashley Holland (Ninety-sixth Respondent) Denis Hall (Ninety-seventh Respondent) Grant O'Grady (Ninety-eighth Respondent) Representation: Mr I Neill, SC with Mr T Saunders of counsel (Appellant) Mr M Kimber, SC with Mr D Mahendra of counsel (Respondents) Haywards Solicitors (Appellant) Workplace Advisory Group (Respondents) File Number(s): IRC 1177 of 2010 Decision under appeal Citation: Kennedy v Martinez [2010] NSWIRComm 134 Date of Decision: 2010-10-01 00:00:00 Before: Boland J, President File Number(s): IRC 640 of 2009 Judgment 1This is an application for leave to appeal and appeal from a judgment of Justice Boland, President, dated 1 October 2010 in which his Honour dismissed the appellant's application, brought by way of a Summons for Relief under s 106 of the Industrial Relations Act 1996 (the Act). 2The appellant was a fixed draw (salaried) partner in a firm of solicitors called HWL Ebsworth (HWLE). The firm was the result of a merger between two law firms, Ebsworth & Ebsworth (E&E) and Home Wilkinson Lowry (HWL). Prior to the merger, the appellant had been a fixed profit partner at E&E. In the proceedings below, the appellant claimed that his contract with the respondents was "unfair, harsh and/or unconscionable under s 105 of the Act". On appeal, the appellant identified in oral submissions three general heads of unfairness, referable to the contract, which were relied upon at first instance. These were: (i) ... the contract was unfair in that it permitted Mr Kennedy's exclusion from the fixed draw partnership on only one month's notice. (ii) ... it permitted Mr Kennedy's exclusion from the fixed draw partnership in circumstances where he had not been afforded any procedural fairness, or, permitted Mr Kennedy's exclusion from the partnership because it did not positively require, that he not be excluded from the partnership other than in circumstances where he had been afforded procedural fairness. (iii) ... it allowed, or permitted, Mr Kennedy's exclusion from the partnership on criteria that were either not articulated or identified to him, or were contrary to pre-contractual representations that had been made to him. 3A primary focus of the appeal concerned the test for bargains freely made. In this regard, the appellant contended that Boland J had erroneously applied the test by treating it as determinative (or outweighing any other consideration) and being precluded or constrained from considering other relevant factors when assessing the claim that the contract was unfair because it provided only one month's notice. Other related areas of consideration in which errors by the primary judge were sought to be relied upon concerned the irrelevance of the appellant's capacity at the time he signed the contract; the fairness of the notice period provided in the contract; and the extent to which his Honour took into consideration the terms of the E&E partnership deed in assessing whether the period of notice provided was unfair. Other grounds of appeal which were relied upon to establish various errors in the judgment concerned the extent to which the respondents had identified or articulated to the appellant what performance criteria were applicable to him (and the extent to which the appellant understood the significance of those criteria); whether the appellant's contract was terminated contrary to pre-contractual representations made to him; his performance generally during the term of the contract; and, whether the appellant was afforded procedural fairness in the events leading up to and at the time of the termination of the contract. 4Before addressing these matters, it is necessary to set out some relevant factual background. Background 5Prior to becoming a fixed draw partner of HWL Ebsworth, the appellant had been a partner of E&E. He resigned as a partner of that firm when the partnership of E&E was dissolved on 23 July 2008. During his period as a partner of E&E, the appellant was, from some time in 1997, also the Managing Partner of that firm. According to Robert Guy Johnston, formerly a capital partner of E&E, prior to the appellant's appointment as the Managing Partner of E&E his practice had started to decline and was not at the level expected of a partner of comparable experience. Mr Johnston said that as a consequence of undertaking the role of Managing Partner the appellant's practice continued to decline and despite efforts made by him and by fellow partners of E&E the appellant's practice never really recovered, and certainly not to the levels required for capital partnership. 6The E&E partnership deed which governed the appellant's relationship with his fellow partners provided in clause 16.2(b) that: A partner will cease to be a partner: (a) ... (b) if a resolution that the relevant partner resign is passed by special majority, on the day three months following the date of that resolution (provided that the relevant partner has had 14 days written notice of the proposed resolution (and the basis for it) and is provided with an opportunity prior to the passing of the resolution to convince partners not to support the resolution). 7Following a recommendation of the E&E Profit Entitlement Committee the appellant agreed to become a fixed profit partner of E&E. For the period 1 July 2006 to 30 June 2007 he was paid a fixed draw of $220,000 per annum. The appellant became a fixed profit partner at that time because he was unable to sustain a practice that would support him as a variable profit partner. At the time the appellant became a fixed draw partner of HWLE he was paid $190,000 per annum by E&E. 8Some time in late 2007, John Graves, Managing Partner of E&E, contacted Juan Martinez, Managing Partner of HWL. According to Mr Martinez, Mr Graves said to him: E&E is in a very poor financial position and its partners are demoralised. I am concerned that if we do not merge our business with another business then the firm as a whole might dissolve altogether. I have been contemplating leaving E&E myself but I want to try and save it if I can. 9A series of discussions followed between the two men which ultimately led to HWL making an offer to E&E which had the following features (set out in summary form in the affidavit of Mr Martinez): (i) E&E would dissolve as a partnership and crystallise its debts at the point of dissolution; (ii) E&E partners would deal with those debts by arranging suitable finance; (iii) E&E partners who wished to join HWL could do so and if sufficient partners wished to join then HWL would change its name to "HWL Ebsworth"; (iv) All E&E partners who joined HWL would do so on the same status they had achieved at E&E at the point of dissolution. This would mean that a Fixed Draw Partner at E&E would join HWL as a Fixed Draw Partner; (v) Fixed Draw Partners at E&E who joined HWL would have their salaries increased by an additional $10,000 per annum; (vi) The engagement by HWL of any partners was a new engagement and HWL did not take on any accrued entitlements except that accruals of leave would be recorded and paid by HWL moving forward as a matter of convenience for administrative purposes. E&E was at all times responsible for this particular liability and HWL was to be reimbursed by EE for the relevant amounts. 10A memorandum of understanding (MOU) in relation to the proposed merger was conditionally approved by the partners of E&E on 18 December 2007 and took effect from 20 December 2007. Clause 4.2 of the MOU provided: On the Merger Date, all of the E&E fixed profit partners who sign this Memorandum prior to the Condition Satisfaction Date will be admitted to the HWL partnership as fixed draw partners at the profit share agreed in the calibrations referred to in clause 18. The remuneration of the E&E fixed profit partners will be not less than their level of remuneration as at the date of the signing of this Memorandum. 11The final agreement to merge the two firms was set out in an addendum to the MOU (the Addendum MOU) which was approved by the partners who then joined the partnership of HWL either as fixed draw partners or capital partners. HWL changed its name to HWLE on 5 May 2008. 12Clause 3.2(b) of the Addendum MOU, which applied to fixed draw partners, provided: The Ebsworth & Ebsworth Fixed Profit Partners' profit entitlements and those for the new fixed draw partners under clause 3.3 will apply from the Merger Date until 30 June 2009, subject to: (i) the Ebsworth & Ebsworth Fixed Profit Partners and those for the new fixed draw partners under clause 3.3 being entitled to participate in the normal Merged Practice remuneration reviews for all fixed draw profit partners as at 1 July 2008, on the basis that their performance in the EE Legal Practice and in the Merged Practice will be taken into account; and (ii) in such circumstances their remuneration not being reduced below that set out in Schedule 2, whilever they meet their KPIs as defined in the HWL Partnership Deed (copy annexed as Schedule 7), and excepting in the case of manifest neglect to their practice or other unusual circumstances. 13The appellant, as Trustee for the Kennedy HWL Practice Trust, signed a Deed of Agreement on 16 April 2008 (the Deed), on that date becoming a fixed draw partner of HWLE on a salary of $195,000 per annum. The appellant's "salary" was described in clause 2.2 of the Deed as a, "share of HWL profit distributed to the Kennedy Trust". Clause 2.4 of the Deed contained Notice provisions which provided that either party may terminate the Deed by giving one month's notice in the event of a period of continuous service with HWL of "less than 3 years". 14In a second affidavit, relied upon in the proceedings below, the appellant explained that he did not seek to negotiate a longer period of notice than was set out in clause 2.4 of the Deed. His reasons for not doing so were set out in his affidavit as follows: (a) I had consented to the merger, and bound myself to the Addendum MOU, in the belief that (i) subject only to the qualifications stipulated in clause 3.2 of the Addendum MOU, my remuneration as a Fixed Draw Partner was guaranteed until 30 June 2009, (ii) my performance as a Fixed Draw Partner would be assessed having regard to the 'KPIs" referred to in clause 3.2, rather than subjectively, and (iii) the only identified consequence of a failure on my part to meet those KPIs, or even the manifest neglect of my practice, was a reduction in my remuneration, and even then only after I had had the benefit of a remuneration review. (b) I believed that the terms of the merger did not contemplate that I - or any other Fixed Draw Partner - could be excluded from the newly merged partnership as a consequence of failing to meet those KPIs. (c) I believed that the state of mind that I have described in subparagraphs 14(a) and (b) was shared at least by (Richard Gration). I attached particular significance to his views in this - as well as other - matters because I regarded him as being in effect my agent for the purposes of negotiating the terms of the standard Deed of Agreement. (d) I believed that the power of termination conferred by clause 2.4 of the standard Deed of Agreement was qualified by those aspects of the Addendum MOU that I have discussed in this paragraph. In the result, (i) my belief was to the effect that that my partnership could not be terminated under clause 2.4 on the ground of performance before 30 June 2009, and (ii) I believed that during that period the only consequence of a failure to perform to the standard set out in the KPIs would be a reduction in my remuneration after I had had the benefit of a remuneration review. 15With regard to sub-paragraph (c) above, Richard Gration, a former fixed profit partner of E&E, had been authorised by the appellant to negotiate on his behalf amendments to the original standard Deed. According to the appellant, Mr Gration had a number of concerns with aspects of the proposed Deed, one of which concerned the preservation of accrued annual leave at E&E and its transfer as an entitlement of the former E&E fixed draw partners at HWL. The appellant recalled having a conversation with Mr Gration with regard to clause 3.2(b) of the Addendum MOU in the following terms: I said: I do not know why you are negotiating so hard for the annual leave. The Capital Partners have lost their entitlements in the merger. The agreement for Fixed Draw Partners only lasts to 30 June 2008 and then Juan Martinez can do what he wants. It's in the MOU. Richard Gration: No, you're wrong. That was changed to 30 June 2009. I'll show you. We went into his office and he showed me the Addendum MOU. I read it and saw that the date stipulated in clause 3.2(b) was 30 June 2009. I said: I haven't got a copy of that. Can I copy what you have. Well, we all stay to 30 June 2009. Richard Gration did not say anything in response to my statement. The relevance of bargains freely made to the issue of unfairness of notice 16According to the appellant, the test for bargains freely made lies at the heart of this appeal. Moreover, it was contended by the appellant that Boland J, having identified the test, erroneously applied it by treating it as being determinative of whether the contract was unfair within the meaning of s 106 of the Act, or in the alternative, as outweighing any other consideration relating to the fairness of the contract. 17The submission, as we apprehended it, was directed to Boland J's assessment of the Notice provision in clause 2.4 of the Deed and whether that provision was unfair. In the judgment Boland J considered the circumstances in which the appellant had signed the Deed by first setting out the approach he proposed to take: [62] In resisting the claim, the respondents relied on the proposition that Mr Kennedy agreed to join the new firm as a fixed draw partner and signed the Deed with his 'eyes open'. As it was said in A & M Thompson Pty Ltd v Total Australia Ltd [1980] 2 NSWLR 1 at 14 per Perrignon and Dey JJ in relation to the predecessor of s 106 (s 88F of the Industrial Arbitration Act 1940), a much more searching examination of the circumstances is required than that. I propose to carry out the necessary examination. However, this is not a case of oppressive exploitation or one where there was unequal bargaining power and what the applicant may not avoid is that: (a) the MOU was negotiated by senior lawyers after a proper due diligence process; (b) the Deed applicable to Mr Kennedy was negotiated by Mr Richard Gration, a partner with E&E, who had Mr Kennedy's authority to do so; (c) Mr Kennedy was an experienced solicitor, with training and experience in employment law, including unfair contracts; (d) it was always open to the applicant to decline to join the merged firm. 18According to the appellant, the above passage extracted from the judgment reflected the correct test but Boland J failed to apply it. 19Boland J's findings on the issue are recorded in the following relevant passages of the judgment: [71] Initially I had formed the tentative view that Mr Kennedy's situation was akin to that of an employee, and in some respects it is. From that perspective, it could appear to be unfair that a person who had spent 36 years with a firm received only one month's notice of termination of his contract shortly after there had occurred what might be regarded as a transmission of the firm's business to another firm. [72] However, even if that were an acceptable premise for considering the fairness of the notice period (there is a respectable argument that a partner in a law firm is more akin to a self-employed person), what may not be overlooked is that Mr Kennedy was an experienced lawyer well versed in employment law, who voluntarily agreed to take up the position of a fixed draw partner with one of the conditions, which was well known and understood by him and which he chose not to re-negotiate, being one month's notice of termination if the period of continuous service with the new firm was less than three years. There was no evidence that Mr Kennedy was led to believe that his years of service with E&E would be deemed to be years of service with HWL, for the purpose of calculating his notice entitlement. Indeed, he chose not to ask the negotiating committee to negotiate a notice period which would, in his view, recognise his years of service with E&E. [73] It was contended that not to give full weight to Mr Kennedy's service with E&E would fail to give appropriate recognition to the fact that Mr Kennedy relied on the representations that HWL's acquisition of E&E was a merger. It was submitted Mr Kennedy had been taken in by this misrepresentation. He was led by it to believe that HWLE would carry on, and give effect to, the values of fairness and integrity that had characterised E&E, where it had not been his experience that partners were discarded without the benefit of any procedural fairness. [74] Putting aside the question of procedural fairness, which I shall deal with later, even if E&E had survived and Mr Kennedy had remained with that firm, his notice of termination would have been subject to the provisions of the E&E Partnership Deed, which provided: A Partner will cease to be a Partner if a resolution that the relevant Partner resign is passed by Special Majority, on the day three months following the date of that resolution (provided that the relevant Partner has had 14 days written notice of the proposed resolution (and the basis) for it and is provided with an opportunity prior to the passing of the resolution to convince partners not to support the resolution). [75] It was submitted for the applicant that Mulford v Butterell [2001] NSWIRComm 137 at [105] was a useful analogy. There it was held by Schmidt J in relation to a former partner of an accounting firm: [105] The upshot of all of these matters is that I have been persuaded that in the circumstances of this case, having in mind the longstanding relationship between the parties, the nature of the business they had in common, the provisions of the deed and the circumstances in which the relationship was brought to an end, including the parties' respective conduct, which I have outlined, a notice period of 12 months was appropriate to redress the unfairness found. [76] Even if the Court were to find procedural unfairness in relation to the termination of Mr Kennedy's contract, the difficulty in accepting that 12 months' notice was appropriate is that the maximum Mr Kennedy would have received under the E&E Partnership Deed was three months. On any view of it, the applicant could not be entitled to be put in a better position than he would have been in had the E&E provisions regarding termination been incorporated in his individual Deed. [77] In any event, Mr Kennedy made his decision to become a fixed draw partner of HWLE against the background that there was considerable doubt E&E would survive and he did so with the full knowledge and understanding of a solicitor versed in employment law as to what the new arrangement meant for him in terms of the amount of notice he would receive if his contract was to be terminated. If the Court were to accept that Mr Kennedy was entitled to have his years of service with E&E counted for the purpose of calculating his notice entitlement it would have the potential to seriously undermine the principle that the Court should not use its extensive discretion to interfere with bargains freely made by a person who was under no constraint or inequality, or whose labour was not being oppressively exploited: see Stevenson v Barham (1977) 136 CLR 190 at 192 per Barwick CJ. ... [106] Subjectively, one might be tempted to conclude that a person who has served a firm for 36 years and for a period of that, at the highest level, is entitled to more that one month's notice that his contract will be terminated and that to provide for only one month's notice is patently unfair. Subjectivity though, is not the test. One is required to consider the facts objectively and apply the law. [107] In doing so, the Court is required to have regard to all the circumstances, including the conduct of the applicant. In this case, the particularly unusual feature is that the applicant was a lawyer of very considerable experience who practised in the field of employment law and had experience in the unfair contracts jurisdiction. He was exceptionally well placed to know and understand the terms of any contract under which he was to provide his services, to avoid any exploitation or disadvantageous arrangement that he may have been asked to accept, and to defend any unfair or wrong criticism of his performance. [108] At the time of the merger, the applicant's practice was not strong and his firm was struggling to survive. Negotiations between E&E and HWL occurred involving senior lawyers, due diligence was carried out and the applicant was satisfied the merger should occur. The applicant had access to all relevant documentation regarding the merger. The applicant raised no objections to the MOU or the Addendum MOU. The applicant allowed a partner of E&E to negotiate his individual Deed of Agreement. The applicant raised no objection to the terms of the Deed and signed it. The applicant was well aware of the notice provisions in the Deed. The proposition that the Addendum MOU provided a guarantee of tenure until 30 June 2009 and took precedence over the notice provisions of the Deed is untenable for the reasons I have given. 20This brings us to a consideration of what is the "correct test" for the proper application of bargains freely made in unfair contract cases under the Act. There are numerous authorities on the issue, a number of which were brought to our attention by the appellant. It is only necessary for present purposes to refer to a few of these authorities. 21In Terzian v Gattelari [1972] AR (NSW) 591 Shepherd J found that the contract there under consideration was unfair in accordance with s 88F of the Industrial Arbitration Act 1940 (the 1940 Act), a predecessor provision to s 106. In a passage to which the appellant in these proceedings directed our attention, Shepherd J said (at p 599): The second argument put forward on behalf of Mr Gattellari was based upon the fact that Miss Terzian at the time she signed the agreement was fully aware of its contents and had been independently advised about it. The exercise of jurisdiction under the section does not depend on there having been misrepresentations, innocent or fraudulent, or misapprehension on the part of an applicant as to the nature of his rights and obligations under a contract. The Commission is concerned with the objective question of whether or not the contract or arrangement in question is, inter alia , unfair. If it is, it matters not that the applicant ought to have realised that it was unfair when he entered into it. In considering this argument I have taken into account dicta in cases dealing with contracts in unreasonable restraint of trade where it is said that parties bargaining on equal terms are usually the best judges of what is and what is not reasonable for the protection of their mutual interests. See Esso Petroleum v Harper's Garage (supra) at p.300 per Lord Reid. I do not come to the question of whether considerations such as his Lordship mentioned can have any bearing on cases to be decided under s 88F of the Industrial Arbitration Act . In my opinion the parties were not of equal bargaining strength and the principle, if applicable generally in this jurisdiction, is not one to be applied in this case. Finally, in relation to this argument I should say that although Miss Terzian had had properly explained to her the terms and conditions of the written agreement into which she entered, she was not to know precisely the extent to which or the circumstances under which Mr Gattellari acted as an agent or manager in the theatrical industry and he does seem to me to have, to an extent, misled her in promising her that he would act as her personal manager. 22A & M Thompson Pty Ltd and Others v Total Australia Ltd (1980) 2 NSWLR 1 considered what was a fair period of notice in accordance with s 88F of the 1940 Act. In an important passage, the majority (Perrignon and Dey JJ) said at [69]: It has been said that fairness is determined by the commonsense approach of a juryman, and that it is a moral and not a legal issue ( Davies' case (5b)). Whether this be so or not, it does seem that, in distinguishing between what is fair and what is not fair, the judge must apply standards which appear to him to provide a proper balance or division of advantage and disadvantage between the parties who have made the contract or arrangement. In doing so, he would always have to bear in mind the conduct of the parties, their capability to appreciate the bargain which they had made and their comparative bargaining positions when entering into the contract or arrangement. 23Perrignon and Day JJ also referred to earlier cases decided under s 88F in which instances of fraud and misrepresentation had featured on the issue of unfairness of a contract, observing that the absence of those features was no decisive answer to the question of unfairness. The majority also observed that the fact that the applicants, Mr and Mrs Thompson, "had their eyes open" when they entered into the subject licence agreement was insufficient to dispose of the issue, emphasising that, "s 88F envisages a much more searching examination of the circumstances" (at [70]). The majority added (at [71]): ... In a proper case, in which fraud is not present and in which the complaining party fully understood the bargain, an order may be made based on unfairness. For there may be present elements such as those mentioned by Lord Denning MR in certain of the cases cited. One looks to see whether there were genuine negotiations between the parties prior to the contract; whether it can be said that the contract was "moulded" by negotiation; or whether, on the other hand, it was the case of the imposition of a "standard form" upon a party, who had no choice but to "take it or leave it". 24The majority found that the Thompsons were confronted with a "take it or leave it" situation with regard to their contract, that the bargaining positions of the parties could not be regarded as equal, and, in fact, they had no bargaining capacity at all: at [77]-[79]. 25In Port Macquarie Golf Club Limited v Stead & Another (1996) 64 IR 53, Mr Stead was a professional golfer who commenced work for the appellant as a golf professional serving club members and members of the public. A written agreement made on 29 January 1975 (the first agreement) which regulated the relationship of the parties, expressly provided that it, "shall be determined forthwith ... by either party hereto giving to the other three calendar months' notice of determination in writing expiring at any time". A second agreement made on 29 November 1988 was in substantially similar terms. 26Sometime after the second agreement was entered into the appellant presented to Mr Stead a draft replacement agreement which provided for termination by notice in writing by either party in certain specified circumstances or, "by two months' prior notice in writing". At this time, Mr Stead had been the resident professional golfer at the appellant's Club for 25 years. He sought legal advice in relation to the draft agreement and a meeting took place between the Club and Mr Stead. Minutes of the meeting recorded that, "with an exception of an increase in Mr Stead's remuneration and a reduction in the storage fees to be charged for Mr Stead's motorised buggies, no material changes were sought by Mr Stead". Mr Stead was asked during the meeting whether he wished to raise any other matters about the new contract. He replied, "No, I'm happy". After the meeting, the appellant advised Mr Stead of its desire to finalise the new agreement. This was followed by a letter to the appellant from Mr Stead's legal advisers who proposed various changes to the draft agreement. The appellant, while acknowledging its receipt of the letter, did not engage in further communications with Mr Stead until it gave him three months' notice of termination of the contract in accordance with the provisions of the second agreement. 27The principal challenge on appeal was to the primary judge's findings on the unfairness of the notice provision. It was contended on behalf of the appellant that Mr Stead was the cause of his own misfortune in losing the contract, when the appellant had exercised the three months' notice provision because he had full knowledge of the consequences of failing to reach a new agreement when the contract was being reviewed. 28In rejecting these submissions, the Full Court said (at [63]): ... We are of the view that the appellant's approach is far too limited and simplistic as to the proper determination of whether the provision concerned in the 1988 contract was fair at the relevant time, that is, at the time a new contract was being negotiated. In other words, the approach took no account of the total circumstances of the contractual relationship as it had developed over very many years, whereas his Honour expressly did so. And, most importantly to us, it disregarded the relative bargaining positions of the parties during the negotiations for a new contract when, by its letter dated 4 June 1992, the appellant advised the first respondent ''that in the event of the above Agreement not being concluded by the above date, to be evidenced by execution by both parties thereto, the Club shall act further in the matter as it may be advised''. 29Cahill Dep CJ at first instance had determined a fair notice period to be nine months and varied the contract accordingly. The Full Court found no error in the approach, although it expressed concern at Mr Stead's conduct during the negotiations for a new contract in circumstances where he had full knowledge of the consequences of failing to reach agreement on the new contract (that is, that his contract would be terminated unless agreement was reached in the terms proposed by the appellant). The Full Court's concern was directed to the discretion to vary the contract, not to the finding of unfairness at first instance. This was said to be because, given the extensive discretions allowed to the Court, the Court should not interfere, "with bargains freely made nor where there was no restraint or inequality nor oppressive exploitation: Stevenson v Barham at 192". 30The Full Court found, effectively, that Mr Stead was not in a position of equal bargaining capacity at the time he entered into negotiations with the appellant with regard to the draft proposed agreement, accordingly, the discretion to vary the contract had been properly exercised. In this regard, the Full Court said that Mr Stead had been placed in a "take it or leave it" situation and that he must be regarded as having "minimal bargaining capacity in the formulation of a new contract": (at p 73). 31All of these cases, in contrast to the circumstances before Boland J, proceeded upon the basis that the applicants had been placed in positions of unequal bargaining power in relation to their impugned contracts. Of course it does not follow from this observation that in circumstances where the contract under consideration has been freely entered in a position of equal bargaining capacity that a court is precluded from finding unfairness, by reference to that contract. As the cases demonstrate all relevant circumstances must be considered and taken into account. 32One authority to which our attention was directed by the appellant in which unfairness was found in circumstances where the contract was freely entered into is All-Fect Distributors Ltd v Stewart [2007] NSWIRComm 24; (2007) 160 IR 90. In that authority, the respondent (the applicant below) had entered into an agreement which provided remuneration substantially below what would have been payable under an applicable award. The issue under consideration was whether that circumstance rendered the contract unfair when other circumstances established on the evidence, that the contract had been freely entered into by the parties. 33On appeal, the majority, Walton J, Vice-President, and Staff J, approached the issue by considering whether the respondent had been under, "'no restraint or inequality', his 'labour was not being oppressively exploited' or operating under no other circumstance as would have rendered the bargain unfair for the purposes of the Act" (at [30]). At first instance, Boland J had found that despite the fact that the respondent had freely entered into the contracts it was nevertheless a "very one-sided bargain". On appeal, the majority found no error in the primary judge's conclusion (at [32]): In our view, his Honour's finding lead to the conclusion that the respondent's labour was "oppressively exploited". The appellants received the respondent's customer base in the Eastern Suburbs at a minimal cost. The hours worked by the respondent meant that he did not have time to undertake business outside of those worked for the appellants. In addition, the respondent received less remuneration than he would have received had he been employed as a sales representative and less than what he would have received as an employee under the Award. Hence, despite a finding of a freely made bargain between the parties, it was open to the Court in this case to exercise its discretion to interfere with this bargain upon determining that it was unfair. 34In the judgment, the majority set out twelve tests formulated by the Full Court in Stead . Most of the tests are relevant to the present appeal on the issue of unfairness of the contract and accordingly we propose to apply them. They are, relevantly: ... 2. In determining whether a finding of unfairness or otherwise under the section has been established, the general principle is that an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge; in deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusions of the trial judge, but, once having reached its own conclusion, will not shrink from giving effect to it: Warren v Coombes (1978) 142 CLR 531 at 551. ... 4. In addressing error, an appellate court should not interfere with the trial judge's conclusions on facts unless it is of the opinion that they were not reasonably open (or were clearly wrong) on the evidence: Victorian Stevedoring and General Contracting Co Pty Ltd v Dignan (1931) 46 CLR 73 at 107; Clarke & Walker Pty Ltd v Secretary of the Department of Industrial Relations (1985) 3 NSWLR 685 at 690-692; 14 IR 269 at 273-274: Abalos v Australian Postal Commission (1990) 171 CLR 167 at 178ff; Hussmann Australia Pty Ltd v Walker (1993) 48 IR 396 at 406; Walker v Industrial Court of New South Wales (1994) 53 IR 121 at 129; and Haynes at 154. 5. The nature and degree of the unfairness within the purview of s 275, as a matter of law, relates to ordinary standards of fairness by directing attention to the particular circumstances of the individual contract or arrangement concerned; whether or not a contract or arrangement is unfair is a matter to be decided upon examination of the facts of each particular case: Incitec Ltd v Barry (1992) 45 IR 148 at 154; and Baker at 270. 6. Unfairness may arise either from the terms of the contract or arrangement itself, the surrounding circumstances and/or from the manner of performance or operation of the contract or arrangement: Barry v Incitec Ltd (1991) 45 IR 143 at 146; Incitec Ltd v Industrial Court of New South Wales (1992) 45 IR 155 at 157-158; and Baker at 270-271. 7. The test of unfairness involves the commonsense approach characteristic of the ordinary juryman by applying standards providing a proper balance or division of advantage and disadvantage between the parties who have made the contract or arrangement, bearing in mind the conduct of the parties, their capability to appreciate the bargain they had made and their comparative bargaining positions when entering into the contract or arrangement: Davies v General Transport Development Pty Ltd [1967] AR (NSW) 371 at 374; A & M Thompson Pty Ltd v Total Australia Ltd [1980] 2 NSWLR 1 at 13; and Baker at 271-272. 8. If a contract or arrangement be found to relevantly offend one or more of the grounds, such as it being unfair, contained in s 275(1) then the next question involves the exercise of a discretion, to be performed judicially, as to whether the contract or arrangement should be avoided or varied: Hodges at 63; Autobake at 20; and Baker at 267. 9. If it be decided to avoid or vary the contract or arrangement under s 275(1) then a further discretion arises as to whether an order should be made under s 275(3) for the payment of money in connection with the contract or arrangement declared void or varied: Hodges at 63; Autobake at 20; and Baker at 267. 10. The proper approach as to the discretionary aspects requires an appellate court not to reverse a decision of the trial judge on a matter involving the exercise of discretion unless it reaches a clear conclusion that the members of the appellate court would have taken a view different from that of the trial judge if they had been in his place and that the trial judge had failed properly to exercise the discretion committed to him: House v The King (1936) 55 CLR 499 at 504-505; Mace v Murray (1955) 92 CLR 370 at 378; Wilson v Gozney [1978] AR (NSW) 134 at 150; Baker at 267; and Haynes at 154. 11. The discretions allowed by s 275 to the Court are extensive and the Court should not interfere with bargains freely made by a person who was under no restraint or inequality, or whose labour was not being oppressively exploited: Stevenson v Barham (1977) 136 CLR 190 at 192; and Baker at 276. 35What these tests demonstrate (in combination with the authorities which we have considered above), is that consideration of whether a contract has been freely entered into is applicable at all stages of the inquiry, that is, when examining whether the contract is unfair, and if so, whether to exercise any of the discretions available to the Court to void or vary the contract and whether orders should be made by way of monetary relief in connection with the contract. 36The appellant sought to place considerable emphasis in submissions made orally during the hearing of the appeal, that although the factors such as his legal experience, his deliberate choice not to negotiate a longer period of notice, and his capacity to understand the terms and conditions of his contract were relevant considerations, they were not the only factors that Boland J was required to take into account in assessing whether a one-month period of notice was unfair. According to the appellant, Boland J was also required to consider, but did not, other relevant factors such as his age, professional standing, seniority, and length of service. 37We find ourselves unable to agree with these submissions. First, Boland J sought to make it clear at the commencement of his consideration that he proposed to conduct a searching examination of all the relevant circumstances. His Honour was aware that, consistent with the orthodox approach set out in the authorities, the respondents' proposition that the appellant had agreed to join the firm and sign the Deed with his "eyes open" was just one of many considerations which he was obliged to take into account. Secondly, his Honour expressly referred to the appellant's contention that one-month's notice was unfair when regard was had to his length of service with E&E. (The appellant had only been a partner at HWLE for some four months before his expulsion from the partnership.) We have earlier set out his Honour's remarks in relation to the appellant's length of service at E&E. Those remarks illustrate that his Honour considered that factor. He expressed his tentative view that if the appellant's status were akin to that of an employee it "could appear to be unfair that a person who had spent 36 years with a firm received only one month's notice of termination of his contract". His Honour weighed the factor against the appellant's considerable experience as a lawyer, his capacity to fully understand the notice provision, the fact that he signed the Deed under no constraints and the fact that he deliberately chose not to negotiate a further period of notice. In addition, his Honour referred to the absence of evidence, which might have provided a basis for the appellant's belief that his years of service with E&E would be deemed to be years of service with HWL for the purpose of calculating his notice entitlement. Thirdly, in passages earlier extracted, his Honour returned to the issue of the appellant's length of service, as well as his professional standing and seniority, remarking that on a subjective level he "might be tempted to conclude" that the appellant was entitled to more than one month's notice. Having made those observations, his Honour repeated his earlier comments that, "[s]ubjectivity is not the test. One is required to consider the facts objectively and apply the law. In doing so, the Court is required to have regard to all the circumstances, including the conduct of the applicant". 38In our view, this is precisely what his Honour did. In this regard, his Honour followed the approach set out in A & M Thompson which we have extracted above and which his Honour specifically referred to at the commencement of his consideration. What is clear from his Honour's consideration of the issue of unfairness of the notice period is that he did not confine his consideration to factors relevant to the "eyes wide open" test (those factors set out by his Honour in the judgment at [72]). As his Honour sought to point out on more than one occasion, all relevant factors including the appellant's seniority, his length of service, and professional standing were considered in striking an appropriate balance with the competing factors. The fact that the appellant freely entered into the contract, as his Honour's reasons demonstrate, was neither determinative of the issue under consideration, nor did it outweigh other factors such that those other factors were given no weight, as was suggested by the appellant. 39Before leaving this issue we note that the cases to which our attention was directed by the appellant which considered the relevance of bargains freely made all concerned applicants who were employees. There was no suggestion that the approach taken in those cases could not be appropriately applied to a partner. 40This brings us to another issue raised by the appellant with regard to the precise nature of the contractual relationship between the appellant and the respondents. 41It was contended that the appellant's position was materially indistinguishable from that of an employee, because he had no right to share in the profits of the firm above his entitlement to a fixed draw, he had no liability for debts incurred by the firm, and he had no right to participate in the management of the firm. According to the appellant, he was in a similar position to the applicant in John Burke Mulford v AW Butterell and Others as Partners of Grant Thornton Chartered Accountants [2001] NSWIRComm 137. 42In Mulford , an issue arose as to whether the applicant was an employee of the partnership, or a salaried (fixed draw) partner. The partnership arrangement in Mulford comprised "A" partners and "B" partners. A partners were equity partners, and B partners were salaried partners. This arrangement was reflected in the terms of the Partnership Deed to which all partners had agreed. The applicant was a B partner and received an annual salary of $110,000, which was paid through the mechanism of a trust, with trust distributions made to his wife. 43In examining the issue, Schmidt J considered relevant provisions of the Partnership Act 1892. Her Honour found that the applicant was a partner not an employee. Those findings are set out below: [44] Here, the partnership agreement established a particular regime of mutual rights and obligations as between the A and B partners, including in relation to the liabilities of the firm. Section 19 of the Partnership Act makes it plain that they were so entitled to agree. The Act leaves the partners free to agree with each other about such matters, as they see fit, subject only to considerations such as illegality. Nothing of that kind was suggested here. [45] It was also submitted that the fact that the applicant was paid money, described as a 'salary,' indicated that he did not share in the profits of the firm, (one of the tests of partnership referred to in s2 of the Partnership Act ). The evidence as to the arrangements made for the payment of such 'salary' while the applicant was a B partner, demonstrated that the agreed amount was paid at the applicant's direction, in part to him and in part to his wife in the way earlier described. As I earlier found, this arrangement was entirely inconsistent with the existence of an employment relationship. The mere fact that the applicant was a salaried partner and received payments described as a 'salary', does not of itself throw any doubt on the existence of a partnership between the parties. [46] The law has long recognised that partners are free to agree with each other that a partner might be paid a salary, rather than a fixed percentage of profit. Here, given the terms of the partnership deed, particularly in clause 4, the view long taken in decisions such as that of the Privy Council in Watson v Haggitt [1928] AC 127, that such a salary is in truth a share of the profits, must be accepted. Here, indeed the agreement expressly made provision for payment of the B partner salaries out of the profits of the firm, before the distribution of the remaining profits to the equity partners, (see cl 4). This was not an unimportant right, particularly given that for some time the salary received by the applicant exceeded the share of profits which the respondents received out of the partnership business. 44The facts which underpinned her Honour's conclusion that the applicant was a partner are analogous to the facts in this matter. The appellant was a fixed draw, or salaried, partner, who, by arrangement with the partnership had his salary paid into the Kennedy Trust. Under Clause 2.2 of the Deed, that salary was referred to as, "the share of HWL profit distributed to the Kennedy Trust as a Fixed Draw Partner". Clause 2.3 of the Deed provided that, "the share of profit distributed to the Kennedy Trust will be paid on a fortnightly basis". Clause 3.2(b) of the Addendum MOU also referred to "Fixed Profit Partners' profit entitlements". Clause 14.1 of the HWL Partnership Deed provided: Share of Profits Any Fixed Draw Partner who is appointed and accepts appointment as a Fixed Draw Partner may be named as partner in all statutory records. Fixed Draw Partners shall received a share of profits as determined by the Executive consistent with any contract entered into by such Fixed Draw Partner. 45The language of these documents is "inconsistent with the existence of an employment relationship", and the fact that the appellant was paid a "salary" does not facilitate a conclusion that the appellant was an employee. As Schmidt J observed in Mulford (at [46]) partners are free to agree, in accordance with the Partnership Act , that some may be paid a "salary" while others receive a fixed percentage of profit. The language of the documents, moreover, tends to confirm that the appellant's "salary" was more accurately characterised as a share of the profits. 46The appellant also contended on appeal that Boland J erroneously took into account the E&E Partnership Deed in his consideration of whether the period of notice provided in Clause 2.4 of the Deed was unfair. In our view, the contention was misplaced. At first instance, the appellant claimed that 12 months' notice was appropriate. A reading of his Honour's reasons on this particular aspect reveals that the observations about the E&E Partnership Deed were made on an assumed basis, namely, that even if procedural unfairness were found, the maximum to which the appellant would have been entitled was three months' notice. 47It was also contended that Boland J failed to give proper weight to the appellant's combined "employment" with E&E and HWLE in assessing the notice claim. On this issue, Boland J observed: [15] In relation to the notice provisions in the Deed, notice of termination was based on the 'period of continuous service with HWL'. In other words, 'years of service' as a partner with E&E were not to be 'carried over/forward' into the new firm, such that those years of service would be counted either for notice of termination purposes or for the calculation of any other entitlements on termination other than as specified. 48In our view, Boland J's interpretation of Clause 2.4 of the Deed was correct. The clause reveals a clear contractual intention between the parties that the appellant's earlier tenure with E&E would not be taken into account for the purposes of calculating notice under the Deed. These considerations are readily distinguishable from those encountered by Walton J, Vice-President, in Ross v GN Comtext (Australia) Pty Limited [2000] NSWIRComm 133; (2000) 107 IR 1, a case relied upon by the appellant in support of the contention. In that case, the applicant had relocated from the United Kingdom in order to work in Australia for a related corporation. After several months in Australia the applicant's employment was terminated on the ground of redundancy. His contract provided for one month's pay in lieu of notice. Walton J found that the period of notice was inadequate. In doing so, his Honour took into account a number of features which included that the applicant had been employed by the Comtext Group for almost eight years and the respondent corporation was part of that group. Other factors taken into account by his Honour were that he had been employed within the corporate group in different countries in circumstances where employees were compelled or encouraged to relocate to new countries. His Honour also found that the applicant, upon his arrival in Australia, had been permitted by the respondent to form an expectation that his employment would continue for some period. 49In contrast, the appellant in these proceedings had been a partner in E&E, an unrelated entity, prior to becoming a partner in HWLE. In addition, the terms of the Deed provided that his prior years of service at E&E would not be taken into account in calculating his period of notice. 50The appellant also sought to rely on the majority judgment (Wright J, President, and Walton J, Vice-President) in Powerlan Ltd & Anor v Squires [2006] NSWIRComm 390; (2006) 158 IR 299 in support of the contention that his entire period of service in E&E and HWLE should have been taken into account and that Boland J's failure to do so meant that proper recognition was not given to the fact that the appellant relied upon the representation that HWL's acquisition of E&E was a merger. 51Powerla n is also distinguishable, in our view. At first instance, the primary judge had found the contract, a business sales agreement, unfair and assessed the appropriate amount of redundancy on the basis of the respondent's prior service with Powerlan and his prior service with Centrelink. Powerlan had contended that it was not appropriate to take the respondent's prior service with Centrelink into account given the clear terms of the business sales agreement under which Powerlan had purchased the Centrelink business. The majority observed (at [22]) that, although the business sales agreement was inconclusive as to whether the prior service with Centrelink ought to be disregarded in calculating redundancy pay, there was nothing in the Agreement which excluded the payment of redundancy. The present proceedings in contrast, concerned a provision in clear terms that the appellant's earlier tenure with E&E would not be taken into account when assessing a period of notice. 52There appeared to be no dispute that the "merger" between the two firms was more in the nature of an acquisition. We do not see this feature, however, as progressing the appellant's case. Boland J found that the appellant could not have misunderstood the true contractual intention of the parties in relation to Clause 2.4 of the Deed. For reasons which we have already set out it is our view that his Honour's finding, and the reasons based on that finding, do not disclose an error. Procedural Unfairness 53According to the appellant, his contract was, or became, unfair by reason of the fact that it did not prevent the respondents from terminating his partnership without affording him procedural fairness. Before we consider the several bases which underpinned this contention, it is necessary to set out the evidence and Boland J's reasons and findings in relation to this evidence. 54Sometime shortly before 30 July 2008 Mr Martinez met with Mr Belling during which the following conversation took place: Juan Martinez: "I am a bit concerned with Peter Kennedy's practice. He does not seem to be getting much traction." I said: "I have known Peter for a long time, he acted for us in the NRMA Float Litigation as a specialist practitioner in insurance liability and he and Tony Scotford did a very good job. I was a bit surprised when he told me in the street a couple of years ago he was practising in Employment and Industrial Law as I thought he had a substantial insurance practice. I subsequently learnt that Peter went into management for a period of time. I know from my own experience that can be very disruptive. He and Alice talked to Seamus and I prior to the merger and Peter said he had no WIP [work in progress] and not enough work." Juan Martinez: "Well I'm getting around all the Partners to see what their plans might be I'm meeting with Peter following this. Would you mind getting him to come up?" I said: "No problem." 55The view Mr Martinez had formed of the appellant's practice was based on earlier discussions he had had with other partners, including Lachlan Paterson, the Chief Operating Officer of HWL at that time, and Mr Belling. In relation to information received from Mr Patterson, Mr Martinez, in cross-examination, said: He was also a direct report in relation to marketing and he was also a direct report in relation to IT and other matters. I would have received quite detailed sort of updates about where he was observing people getting traction, where he was observing people being active in terms of entrenching their practise, any strategies around practice development; that was his key role and that's what he reported to me on directly. 56Mr Martinez met the appellant for the first time at a meeting between the two of them on 30 July 2008. The meeting, insofar as Mr Martinez was concerned, formed part of his 'fixed draw partner review' (presumably in accordance with the remuneration review anticipated in Clause 3.2(b) of the Addendum MOU). The appellant, however, was not advised of this by Mr Martinez. During the meeting, the appellant was asked by Mr Martinez, "What's in your head?", to which the appellant replied: My approach at the moment is really month to month. I prefer to do litigation. I need to have referrals within the firm and not from the outside. The problem with Workplace Relations at Ebsworth was there was not a big enough commercial practice to generate internal referrals. It is too difficult to generate work externally away from what the rest of the firm is doing. 57According to the appellant, the following conversation took place at the end of the meeting: Juan Martinez: "I'm thinking about splitting workplace relations into a separate group and give it a different focus. I think we can do things a different way. Have you spoken to the other partners about the work?" Peter Kennedy: "No. There has been so much flux in the last 12 months. Now that it's settled down I can speak to the others." Juan Martinez: "I will speak to other partners about your month to month problem." Peter Kennedy: "When you are doing work for a panel you know that work is going to come to you." 58In the proceedings below, Mr Martinez said the appellant's account of the conversation was largely accurate, but he added that after the appellant had indicated to him that his approach was "month to month", he had responded: Isn't that a hopeless position for a partner? How can that be a vision or a basis on which to rebuild a practice which is fundamental to a Partner? Otherwise we could simply have an associate in the position to do the work. 59Mr Martinez said that the appellant did not respond to this statement. The appellant on the other hand denied that it had been said. 60Between 30 July 2008 and 14 August 2008, Mr Martinez considered financial information relating to the appellant's performance against his time, billings and receipts budgets (the KPIs). In cross-examination, Mr Martinez accepted that the appellant, between the period 5 May and 30 July 2008, "was ahead on each of his time, billing and cash budgets". By about 14 August 2008, Mr Martinez, who was finalising his fixed draw partner review analysis, informed Mr Graves and Mr Johnston that the appellant had, "no clients, no vision and no aspirations other than take each month as it comes". Mr Graves' response to this was, "I can only agree generally". 61Mr Belling gave evidence that sometime in late August 2008, he had the following telephone conversation with Mr Martinez: Juan Martinez: "Bryan I've been thinking about Peter Kennedy's position and I'm going to meet with him when I'm up next week. I'm very concerned when I asked him about his practice and his business plan and he told me it was a month to month proposition. Frankly that's not good enough for somebody who wants to maintain partnership. Peter seems to have no plans or no proposal as to how to build a practice." I said: "Well he has quite a legacy at Ebsworth & Ebsworth. Have you thought about that in the context of treating with Peter?" Juan Martinez: "I am prepared to recognise Peter's legacy with Ebsworth & Ebsworth. I propose offering him a consultancy for at least 12 months to afford him the opportunity to think about what he wants to do but I cannot maintain his partnership if he is not prepared to seriously address building a practice. Frankly what he said to me was disrespectful of his other partners." I said: "What do you have in mind?" Juan Martinez: "I think I'll offer him $120 or $125". ... I said: "Do you want me to talk to Peter beforehand?" Juan Martinez: "I don't think so. I'll meet with Peter and see how we go." 62Mr Belling said that shortly after the conversation he spoke to the applicant. He gave the following account of the conversation: I said: "Juan tells me he's going to talk to you about your future." Peter Kennedy: "I've received an invitation to meet with him on 3 September 2008." I said: "He has some concerns about your practice and maintaining your status as a partner but I think he may make you an offer as to consultancy or some such." I waited for Peter to respond but he did not. I then said: "Peter you have to think seriously about such an offer. I think Juan is prepared to offer you at least 12 months at a fixed sum to give you time to decide what you want to do. I don't know that many strings will be attached other than he will expect you to do your best and return to the firm at least the equivalent or better than what you are achieving now. Although he has not said so expressly I think it might be a recognition of your services to Ebsworth & Ebsworth." I waited for Peter to respond but he did not. I then said: "You need to be concerned that you're not pushed out after 30 years on timing other than your own. That could do you some reputational damage. You need to buy yourself some time to make your own arrangements if you judge that you can't succeed here. I am pleased that Juan is going to offer you something as I would like to think there is some dignity attaching to the way we handle these matters. You don't have to accept Juan's first offer, talk him up a bit. Let me know how you go." 63The appellant denied that any conversation had taken place with Mr Belling at the time or in the terms deposed to by Mr Belling in his affidavit and confirmed by him in oral evidence. 64In an email sent to Messrs Grave and Johnston on 26 August 2008, Mr Martinez wrote: (a) that he was going to offer Mr Kennedy a consultant's position at a remuneration of $125,000 per annum and that was the best Mr Martinez could do; and (b) the reality was that there was no real position for Mr Kennedy at all. 65Mr Johnston responded that it was his "sense" that it would not be a surprise to the appellant. 66At around this time, the appellant approached a managing partner of another firm in order to ascertain whether it had a position for him. According to the appellant, he also "speculated" that the purpose of a further meeting with Mr Martinez to be held on 3 September 2008 was because Mr Martinez had been made aware of the appellant's approach to another firm or that Mr Martinez was proposing to reduce his remuneration. The appellant also conceded that he "had a fairly good idea that it might not be a friendly or happy meeting". In the period between 30 July and 3 September 2008, the appellant took no steps to develop a plan to build his practice within the firm. 67On 3 September 2008 the second meeting took place between the appellant and Mr Martinez. Prior to that meeting, Mr Martinez at no time informed the appellant of the purpose of the meeting or of the likely topics of discussion during that meeting. Mr Martinez informed the appellant that he did not meet the criteria for being a partner. In doing so, he identified three criteria he had taken into account, namely, performance, inability to rebuild a practice, and inability to detail a plan for the future as a partner. He also proposed a consultancy arrangement to the value of $125,000 per annum. The appellant advised Mr Martinez that he would have to think about the proposal, obtain advice and respond by the following Friday. According to the appellant, at no time was he made aware of the criteria for partnership or how he had failed to meet that criteria and at no time had he been informed that his performance was different or unacceptable. In addition, he said he received no warning that his partnership would or might be terminated. 68In the judgment, Boland J referred to an issue between the partners about whether Mr Martinez gave notice of the termination of the Deed during the meeting. According to Mr Martinez he did. The appellant said he was not of that understanding. On Friday, 5 September 2008, the appellant advised Mr Martinez that he would not accept the offer of a consultancy. The appellant ceased to be a partner at HWLE on 3 October 2008. 69In written submissions, the appellant set out what were alleged to be the respondents' failures to afford procedural fairness to him: (a) Mr Kennedy was not advised of the purpose of his meeting with Mr Martinez on 30 July 2008. (b) Mr Kennedy was not informed that Mr Martinez formed an adverse view of his performance at the meeting on 30 July 2008, nor was he informed of the basis for that view. (c) Because Mr Kennedy was not informed that Mr Martinez formed an adverse view of his performance at the meeting on 30 July 2008, he was not given an opportunity to rectify any criticism by Mr Martinez of his performance. (d) During the meeting on 30 July 2008, Mr Martinez asked Mr Kennedy "What is in your head?" There was nothing to indicate that Mr Kennedy's career as a partner hinged on Mr Martinez's assessment of his response to this apparently innocent, and unspecific, question. Mr Kennedy responded by saying that his approach at that time was ' really a month to month'. ... However, Mr Martinez made no attempt to explore what Mr Kennedy had meant by his response, or to squarely and directly ask Mr Kennedy to explain his plan for the future was, or to tell Mr Kennedy that his partnership was at risk of being terminated if he did not come up with, and inform Mr Martinez about, a plan for the future. To do so was procedurally and substantively unfair. (e) The meeting on 30 July 2008 concluded with Mr Martinez informing Mr Kennedy that he was thinking about splitting workplace relations into a separate group and giving it a different focus. Mr Kennedy's Contract was terminated before he was afforded any opportunity to have the benefit of such changes. (f) Similarly, Mr Kennedy was not given the chance to benefit from the advantages that he and the other partners of E&E had been told would accrue to them from the 'merger'. The partners of E&E were told that one of the advantages of the 'merger' would be more opportunities to develop their practices. In April 2008 Mr Martinez held the view that, after the transaction between HWL and E&E, there should be opportunities for people like Mr Kennedy to develop a practice. Mr Belling agreed. (g) At no time prior to 3 September 2008 did Mr Martinez or any other partner of HWL Ebsworth inform Mr Kennedy that his performance or conduct was deficient or unacceptable in any way. 70The result, according to the appellant, was his exclusion from the partnership on grounds that he was never given any proper opportunity to explain, address, or rectify. 71In oral submissions, the appellant added three further considerations to the alleged failure nominated in paragraph (f), extracted above. These were that: (i) he had never had the benefit of a remuneration review; (ii) contrary to Mr Martinez's representation to the appellant at the meeting of 30 July 2008, Mr Martinez did not speak to the other partners with a view to affording assistance to the appellant; (iii) he was never given an opportunity to participate in the marketing programme at HWLE, or receive any training under the programme notwithstanding that it was one of the additional benefits of the merger. 72Boland J accepted that the appellant had not been advised of the meeting of 30 July 2008, or been informed that Mr Martinez had already formed an adverse view of his performance. His Honour found that the appellant should have been made aware of matters either at or prior to the meeting and the failure of Mr Martinez to do either of those things was a, "flaw in the process that impinged on its fairness". Nevertheless, his Honour was unconvinced, in view of the appellant's (unresponsive) nature, that, "any advanced warning or formality in process would have made any difference to the appellant's response to the situation". Boland J also accepted the evidence of Mr Martinez that he had remonstrated with the appellant immediately after the appellant had informed him of his "month to month" approach to work. His Honour's reasons for preferring the account of Mr Martinez over the appellant's account were not the subject of challenge during the appeal. 73In our view, the approach taken by Boland J on this issue was open to him. The procedural deficiencies, which his Honour found had occurred by reason of the conduct of Mr Martinez, were effectively overtaken by events in the aftermath of the meeting of 30 July 2008 and by the appellant's conduct, after that meeting. As his Honour found, the appellant's notion that the meeting was simply a friendly chat was inconsistent with his later speculation that the meeting on 3 September 2008 might have been for the purpose of reducing his remuneration, and with his behaviour in contacting another law firm after the 30 July meeting for the purpose of enquiring whether a position might be available. 74By the time of the 3 September 2008 meeting, the appellant could have been in no doubt, as his Honour found, that his position as a fixed draw partner might be under threat. After the 30 July 2008 meeting, the appellant was on notice that Mr Martinez was dissatisfied with his "month to month" approach to work. He had failed to articulate any firm idea about how he might rebuild his practice. His Honour also found persuasive that the appellant, "had hardly any current work". There was ample evidence to establish this finding. His Honour accepted Mr Belling's account of a conversation he had had with the appellant at a cafe shortly before the merger in April 2008. According to Mr Belling, the appellant told him that he had, "no work in progress and hardly any current work". At a further meeting after the merger with Mr Belling and some other partners at Mr Belling's house on 20 May 2008, the appellant told Mr Belling: I have no employment WIP (work in progress) because I have billed everything to date. I have very little future employment work of which I am currently aware for a junior solicitor. As I have always, I am doing things in other areas. 75In addition, Mr Johnston's evidence, which was not challenged, was that the appellant's practice had been in decline for some years and he had not been successful in rebuilding his practice prior to the merger. 76In addition to these matters, Boland J took into account the appellant's concession in cross-examination that he had a, "fairly good idea that it (3 September meeting) might not be a friendly or happy meeting", and, that the appellant knew the 3 September meeting was the time for him, "to put his best foot forward". 77Of critical significance to this issue, his Honour found, was the conversation the appellant had with Mr Belling after Mr Martinez had spoken to Mr Belling and voiced his concerns about the appellant's performance. Mr Belling, during discussions with the appellant, put him firmly on notice that Mr Martinez had concerns about his practice and maintaining his status as a partner within the firm. Mr Belling informed the appellant that Mr Martinez was considering offering him a consultancy. Mr Belling advised the appellant to think seriously about such an offer but that he did not have to accept Mr Martinez's first offer and should, "talk him up a bit". Boland J's findings with regard to Mr Belling's account of this discussion were also not challenged on appeal. 78The appellant contended that it was both procedurally and substantively unfair for Mr Martinez to have told him on 30 July 2008 that his partnership was at risk of being terminated if he did not present a viable plan for the future. There was no evidence of which we have been made aware, that might have formed the basis for such a contention, that is, that Mr Martinez was contemplating such an outcome at that time. Later, when Mr Martinez had formed the view that the appellant's partnership should be terminated and replaced by a consultancy agreement, the appellant was forewarned of this by Mr Belling. His Honour, in commenting on this aspect of the evidence, observed that armed with this information, the appellant took no steps at all to assist his cause, prior to the 3 September meeting. 79It was also contended by the appellant that he had never had the benefit of a remuneration review, "whether under clause 3.2 of the Addendum MOU or otherwise". It would appear, however, that Mr Martinez was in the process of conducting remuneration reviews when he spoke to the appellant on 30 July 2008. Although he omitted to inform the appellant of that fact, it is difficult to accept that the appellant would, or could, have been entirely unaware of it. First, the appellant was aware because of clause 3.2 of the Addendum MOU, that a remuneration review would take place of fixed draw partners, "as at 1 July 2008". Secondly, the appellant was aware in May 2008, as his Honour found, that other partners of the newly merged firm had either left the new firm following a review or had changed their status following such review. 80In support of the submission on the issue of procedural fairness the appellant sought to rely on a particular passage from Lavings v Barclay Mowlem Construction (NSW) Ltd (1994) 99 IR 247 at 256: In my opinion, the adoption of, to use the respondent's words, ''a meaner leaner culture'' towards efficiency and profitability of the employer's operations should not also have involved the adoption of such a culture towards resultant human relations problems. The reverse should have been the case. This was not a case involving any misconduct, or even ''unsatisfactory'' performance of duties, despite that some element of disharmony in the employment relationship was later alleged in the proceedings in the respondent's evidence in reply. Certainly there was no such suggestion on 19 August 1993 and, if it had been a factor in the dismissal, then there would arise added considerations about unfairness. However, I am satisfied, as I have earlier stated, that the only material reason for termination was because the applicant was redundant following the restructuring and elimination of his position in order to achieve greater economy and efficiency of operations. These are laudable and necessary objectives, but should be pursued with appropriate consideration and concern, and with reasonable provision for, affected employees. And Mr Byford, with the benefit of hindsight, very properly conceded in effect that there were deficiencies in the approach to and the execution of the applicant's termination. 81It was contended, in reliance on the above passage, that however desirable "financial hygiene" may have been to the respondents, fairness dictated that, "if the appellant was to be discarded because he was thought financially unhygienic, then he was entitled to a reasonable and fair measure of procedural fairness, and he didn't get it". 82The observations of Hill J in the above passage should not be taken out of context. In Lavings , the applicant's termination of employment, his Honour found, came as a "shock" and was, "a complete surprise". In contrast, the appellant, as Boland J found, had ample indications and warnings that his partnership might be terminated and he would be offered a consultancy at the 3 September meeting. He also had sufficient time to act on those indications and warnings but instead chose to do nothing. 83Accordingly, we can discern no error in the findings and conclusions drawn by Boland J to the effect that Mr Martinez was entitled to proceed as he did, and the process in which this had occurred was not procedurally unfair. His Honour's key reasons and findings on this issue are set out below: [93] As I earlier mentioned, although Mr Martinez did not advise Mr Kennedy of what he intended to do at the meeting on 3 September, Mr Belling forewarned Mr Kennedy. Mr Kennedy's response at the meeting was almost benign notwithstanding he knew what was coming. It was an opportunity to say to Mr Martinez that he had not had sufficient warning his role as a fixed draw partner was at risk and that he needed time to prepare a proper plan to rebuild his practice; it was an opportunity for Mr Kennedy to question the basis upon which Mr Martinez had come to his decision; it was an opportunity to say to Mr Martinez that it was his (Mr Kennedy's) understanding that if he were meeting the financial KPIs that was all that was required of him and, therefore, no grounds existed to terminate his contract as a fixed draw partner; and it was an opportunity to assert his belief that he had tenure until 30 June 2009. Mr Kennedy did none of these things despite his undoubted capacity to do so borne of over 30 years' experience as a solicitor, most of those years having been spent as a partner. [94] Moreover, it is an untenable proposition for a solicitor of Mr Kennedy's experience and standing to contend that he was left 'in the dark' about what was expected of him as a partner and what criteria applied to a partner. Even if Mr Kennedy did not know instinctively what was required of him in the new environment, it was spelt out in presentations to partners prior to the merger and he could not have been under any misapprehension that from the commencement of the merged firm there was to be a new level of rigour as to acceptable performance across all parameters, financial and otherwise. Assuming even then that he was still none the wiser as to what was required of him, the meeting with Mr Martinez on 30 July, and it being made clear a month-to-month approach was not acceptable, the obvious question would have been, 'well, what is it that you expect of me?' But such a question was not asked. [95] In the absence of any defence by Mr Kennedy of his position or any proposal to rebuild his practice, Mr Martinez was entitled to proceed with his proposal to terminate Mr Kennedy's contract and to offer a consultancy. It is readily apparent that Mr Kennedy did not have a practice that would sustain his position as a fixed drawer partner nor any plan or strategy to improve the position he was in. It is not a tenable proposition that provided Mr Kennedy was meeting the financial KPIs there was no obligation to take steps at least to ensure that would continue to be the case in the future and to look for opportunities to grow the practice. That was clearly part of the obligation on fixed draw partners in the merged firm, but in Mr Kennedy's case there was a complete lack of initiative That a senior partner (and former Managing Partner) like the applicant would have believed that his performance would only be assessed as if he was a senior associate or as an employed solicitor in the new environment is a proposition I am unable to accept. Pre-contractual representations 84The appellant also contended that Boland J was in error in not finding that the contract was, or became, unfair by allowing, or not preventing, the respondents from acting contrary to, and misleading him in relation to, representations made to him prior to the merger. Those representations were: (a) "We deal robustly with those who do not meet the agreed KPIs"; (b) "If you meet your KPIs the firm will be successful"; and, (c) "You really only come up on the radar to be dealt with if you fail to meet your KPIs and that is because they are not onerous". 85The representations were attributed to Mr Martinez, made by him before the merger during presentations to the E&E partners. 86There was no issue on appeal that the appellant at the time of his termination was substantially complying with his KPIs. Moreover, according to the respondents, the appellant's contract was not terminated because of any partial failure by the appellant to meet his KPIs. 87The representations on their face do not suggest that any failure to meet the agreed KPIs could, or would, result in termination of the contract. Nor do they carry with them any indication that compliance with KPIs was the only criteria by which performance within the firm of fixed draw partners (and other partners) would be assessed. 88Boland J, in our view, properly rejected any suggestion that the sole criterion presented to the appellant by Mr Martinez which might otherwise act to secure his tenure was meeting his KPIs. The evidence, quite apart from providing no support for the suggestion, indicates that compliance with KPIs was only one aspect of a partner's performance which might be taken into account in deciding whether to terminate the contract and further, that the appellant was aware of that fact. Documents, purporting to be copies of slides which formed part of the presentation by both Mr Martinez and Mr Patterson to E&E partners prior to the merger, revealed HWL's expectation of performance by partners in the merged firm. The slides refer to Partner Performance Criteria as constituting five separate components, namely, "leadership", "marketing", "vision and growth", "practice development", and "finance". The measurement criteria for "finance" consisted of "client base", "personal KPIs" and "Debtors & WIP". The appellant was also aware as his Honour found, that at E&E his performance as a fixed draw partner was assessed by reference to revenue (50 per cent) and other contributions to the firm (50 per cent). According to Mr Martinez a similar approach was adopted within HWL. 89Boland J found it "an untenable proposition" that a solicitor of the appellant's experience and standing could contend that he was "left in the dark" as to what was expected of him as a partner and what criteria applied to him as a partner. His Honour also referred to the presentations to partners which "spelt out" what was required of the appellant at HWLE. Accordingly, as his Honour found, the appellant could not have been, "under any misapprehension that from the commencement of the merged firm there was to be a new level of rigour as to acceptable performance across all parameters, financial and otherwise". His Honour also found that it was, "not a tenable proposition that provided Mr Kennedy was meeting the financial KPIs there was no obligation to take steps at least to ensure that would continue to be the case in the future and to look for opportunities to grow the practice". 90The appellant also contended that he had been misled as to the nature of the merger, namely, that it was clearly an acquisition. The appellant was taken in by this misrepresentation, it was said, because he was led to believe that HWLE would carry on, and give effect to, the values of integrity and fairness that had characterised E&E. Boland J, it was contended, did not find, as he should have done, that the contract was, or became unfair, by allowing or not preventing the respondents from misrepresenting the true nature of the transaction. 91Identical contentions were raised before Boland J who rejected them in the following passage in the judgment: [61] Undoubtedly understanding the terms on which E&E would merge with HWL, the applicant obviously decided to join the new firm as a fixed draw partner. As a longstanding solicitor and managing partner at one time of a reasonable sized firm, Mr Kennedy could not have misunderstood that the objective in merging was to ensure the firm's survival, albeit in another form, and in order for that to be achieved there would be more stringent rules regarding - to use that dreadful term - 'financial hygiene'. It could not have been Mr Kennedy's expectation that it would be business as usual, but rather he would be required to operate 'in a more efficient and rigorous environment, where expectations are clearly identified and partner roles and supervision responsibilities are clearly defined'. Mr Kennedy accepted in his evidence that in joining the new firm he would be subjected to a higher level of scrutiny and required to make a greater contribution than hitherto had been the case. 92It is our view that his Honour's approach to the issue was unattended by error. In cross-examination in the proceedings below, the appellant conceded that he did not undergo any "performance checking" at the time he joined the merged firm and that fixed draw partners joined the merged firm as a "job lot". He also admitted knowing that after he joined HWLE there would be a higher level of scrutiny and a "higher level of contribution to the firm". In addition, the terms of clause 3.2(b) of the Addendum MOU provided that a post-merger review of all fixed draw partners would occur on 1 July 2008. These matters provided ample foundation to support Boland J's conclusions. The appellant's performance 93The appellant also contended that because the evidence established that he had been substantially complying with his KPIs, he had current work, and he had a plan to rebuild his practice during his short-term partnership at HWLE (a period of only four months) that the termination of his contract was an unfairly disproportionate response to the incidental shortfall in his performance against his KPIs. Accordingly, the contract was, or became, unfair because it permitted the respondents to dismiss him on 30 days' notice, or did not preclude them from doing so. Boland J's error, it was contended, was making findings which were not open on this evidence. These findings, extracted by the appellant from the judgment, were said to be the following: (i) that the appellant had hardly any current work; (ii) that he had no practice to sustain his position; (iii) he did not have a plan or strategy to improve his position; (iv) he had a complete lack of initiative; (v) his practice was at a low ebb and he faced difficulty rebuilding it; (vi) the respondents were entitled to terminate the contract and had offered him a consultancy; (vii) he had obligations as a fixed draw partner to build up his practice, formulate a plan to improve his position, and look for opportunities to grow in the practice; (viii) he had been the subject of reports in a negative vein. 94We have already made findings on the extent of the evidence relied upon by Boland J with regard to the appellant's KPIs, whether he had any current work, and whether he had formulated a plan or strategy to rebuild his practice during his term of partnership at HWLE. 95There was no dispute between the parties that the appellant had been substantially complying with his KPIs. This aspect of the appellant's current performance while at HWLE was not a determining factor in the decision to terminate his contract. The evidence with regard to the matter of the appellant's "current work" at HWLE does not support the proposition that he had current work of any significance, that is, sufficient to sustain his practice as a partner. Boland J found that the appellant had hardly any current work. The finding was based on accounts given by Mr Belling, which were accepted by his Honour and were not challenged on appeal. It was also based on what Boland J regarded as "scant evidence" of the appellant's current matters. That evidence was that he had four employment law matters but the size and scope of those matters, as well as the appellant's level of involvement in them, was unknown. There was also the unchallenged evidence of Mr Johnston, a colleague of the appellant for many years at E&E, that the appellant's practice had been in decline for some years and he had been unsuccessful in rebuilding it. There was also some evidence from Mr Graves whose response to Mr Martinez's assessment of the appellant's performance ("no clients, no vision and no aspirations other than take each month as it comes") was, "I can only agree generally". This evidence, we infer, together with Mr Patterson's reports formed a basis for Boland J's finding that the appellant had been the subject of reports, "in a negative vein". 96The contention that the appellant had a plan or strategy to improve his position is simply not sustainable on the evidence. Boland J noted that in the period 30 July to 3 September 2008 the appellant took no steps to develop any proposal or plan to build his practice. The appellant in cross-examination in the proceedings below was asked what was his plan or strategy to build his practice. He responded: A. The plan to build my practice was to go to the client that constituted eighty per cent of the fees of the firm, find out if they were doing, if the firm was getting employment work from them and try and get that employment work. Looking at the position of the top heavy number of partners in the employment group I thought that would be difficult so I thought I would still look for the traditional sources of work I had got from Ebsworth and Ebsworth, Law Cover and other professional indemnity claims and usually claims requiring a great deal of knowledge of past experience and what had happened so that they could be done. 97He conceded, however, that he had not articulated this plan to Mr Martinez because, he said, Mr Martinez, "did not ask for more detail". 98Boland J also referred to the appellant's, "complete lack of initiative", in realising his obligations to take steps to formulate a plan, improve his practice and look for opportunities to grow the practice. In our view, Boland J was entitled to find that the appellant lacked initiative. His Honour, in relation to the 30 July meeting during which Mr Martinez remonstrated with the appellant about his "month to month" approach to his work, remarked that despite the "clear signal" from Mr Martinez that this approach was not acceptable, the appellant took no steps to develop proposals to build his practice and advise Mr Martinez accordingly. The appellant's reason for not doing so was that Mr Martinez had not asked him for details. Moreover, when Mr Belling forewarned the appellant in August 2008 that Mr Martinez had concerns about his practice and was considering offering him a consultancy, the appellant did nothing to defend his position to Mr Martinez, or to any other partner, despite having both the time and opportunity to do so. 99As for Boland J's finding that the appellant had obligations as a partner to build up a practice, formulate a plan, and generally improve his position within the firm, such obligations, we think, are uncontroversial and entirely consistent with the obligations of partners in a law practice. Modern-day partnerships are commercial enterprises or undertakings, the principal object of which is to make profits: see, for example, Johnson v Snaddon [2001] VSCA 91 at [27] per Buchanan JA (with whom Ormiston and Batt JJA agreed). Subjective considerations 100Boland J was also said to have fallen into error by taking into account irrelevant considerations namely, the subjective views of Mr Martinez which he had formed, based on his own assessment of the appellant's performance, as well as the views of other partners. 101Mr Martinez considered three criteria in deciding to terminate the appellant's contract. These were the appellant's performance, his inability to rebuild a practice and his inability to detail a plan for the future. Those criteria were assessed by Mr Martinez by reference to his own views and to those of other partners. 102The views of Mr Martinez and of other partners with regard to the appellant's performance have already been canvassed in some detail in this judgment. We can see no error in Boland J's approach in having regard to those views in his finding that the respondents' decision to terminate the appellant's contract did not render that contract unfair. It is also not correct to suggest that Mr Martinez did not have regard to any objectively assessable aspects of the appellant's performance. Nor is it correct to suggest that Boland J did not objectively consider whether the contract was unfair (in permitting, or allowing, or not preventing, the respondents from terminating that contract). An objective fact taken into account by Boland J (and Mr Martinez) was that the appellant's practice was in a state of decline at E&E and he had not been successful in rebuilding it during his period of engagement at HWLE. It was also an objective fact that the appellant had conceded to Mr Belling that he had "hardly any work". In a similar vein, the evidence, viewed objectively, disclosed that the appellant was unresponsive to indications and forewarnings that his practice might be placed in jeopardy following the first meeting with Mr Martinez. As to the opinions of Messrs Graves and Johnston, for example, they were not the subject of challenge. Boland J was entitled to give them appropriate weight. The views of Mr Martinez were also properly taken into account by Boland J. They were based on evidence of conversations with the appellant and with other partners, which Boland J accepted, and which were also not the subject of challenge on appeal. Equally, his Honour was entitled to place reliance on Mr Patterson's reports. The fact that those reports were not before Boland J is not to the point. Mr Patterson was not called to give evidence or produce the reports and Mr Martinez's account of what Mr Patterson said was, again, unchallenged. The appellant's belief as to meeting his KPIs 103In the proceedings below, the appellant gave evidence to the effect that he believed that from the date of the merger until 30 June 2009 the only identified consequence of a failure to meet his KPIs, or the manifest neglect of his practice, would be a reduction in remuneration. This belief was based on his interpretation of clause 3.2(b) of the Addendum MOU. Boland J found that the appellant did not honestly and genuinely hold that belief. According to the appellant, it was not reasonably open on the evidence for Boland J to make this finding. We cannot agree. Boland J's reasons for being unconvinced of the appellant's "belief" that clause 3.2(b) gave him security of tenure at least until 30 June 2009 were soundly based on the available evidence. His Honour found first that the clause only purported to maintain profit entitlements subject to certain specified events and it did not infringe on any right of the respondents to terminate the appellant's contract under clause 2.4 (the notice provision). According to his Honour, this would have been evident to the appellant who was an experienced lawyer and if there were some doubt with regard to the inter-relationship between the two provisions, the "prudent course" would have been to seek clarification, or to seek a longer period of notice, neither of which was done by the appellant. Moreover, his Honour did not accept the appellant's evidence that he had expressed his belief as to his interpretation of clause 3.2(b) to Mr Gration. There was no challenge to this finding. In addition, his Honour found persuasive that the appellant did not communicate his belief to Mr Martinez at any stage by way of raising it in defence, in order to prevent the respondents from moving against him before 30 June 2009. It is no answer, contrary to the appellant's contention, to suggest that it would have been futile to assert his construction of clause 3.2(b) to Mr Martinez. The relevant fact is that the appellant made no attempt to do so. His Honour also found persuasive the fact that E&E had sought the "merger" because of financial difficulties, which made it "most unlikely" that HWL intended to offer a higher level of security to fixed draw partners of E&E that was not enjoyed by any existing partner at HWL or had been enjoyed by any E&E partner. 104Finally, Boland J referred to the HWL Partnership Deed, to which the appellant had access, which made it clear that even capital partners of HWL had no security of tenure. We note that clause 24 of the Partnership Deed contained provisions for the expulsion of capital partners from the partnership. The offer of a consultancy to the appellant 105The appellant also submitted that Boland J erred in making, and relying upon, his finding that the respondents' offer to the appellant of a consultancy was conceivably negotiable. Again, we can perceive no error in this finding, in particular, when regard is had to Mr Belling's account of his conversation with the appellant in August 2008 during which he advised him to consider accepting the offer of a consultancy but at the same time to negotiate ("talk him up") for a higher remuneration. 106The appellant also found complaint with Boland J's finding that the respondents' offer to him of a consultancy was not unreasonable and that by rejecting the offer the appellant had failed to mitigate any loss. In disposing of this complaint we would simply note that because Boland J was satisfied that there was no contractual unfairness it was not necessary for his Honour to consider the question of relief and the attendant issue of mitigation. Failure to call other partners 107The appellant also contended that Boland J had erred in relying upon his "irrelevant finding" that the appellant did not call evidence from any other partner of the firm to suggest that his situation had been inappropriately managed and/or that he had been unfairly treated. The finding, however, was not central to, or determinative of, Boland J's finding that, contrary to the appellant's submissions at first instance, the bases upon which Mr Martinez decided to terminate the appellant's contract and to offer a consultancy were not entirely subjective. We have already dealt with this finding and resolved it against the appellant. 108In conclusion we have identified no appealable errors in Boland J's judgment. Accordingly, the appellant's appeal must be dismissed. The appellant requested that costs orders made by Boland J at first instance be reserved until the appeal is determined. Accordingly, we make the following orders: (1) Leave to appeal is granted. (2) The appeal is dismissed. (3) The appellant is to pay the respondents' reasonable costs of the appeal. (4) The question of costs at first instance is reserved and the Court shall determine any contested issue as to costs awarded in the proceedings below on the papers, unless a party making written submissions in accordance with these Orders, seeks to make oral submissions. Amendments 11 October 2011 - Correction to extract from: Lavings v Barclay Mowlem Construction (NSW) Ltd (1994) 99 IR 247 at 256. Amended paragraphs: 80 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. Decision last updated: 11 October 2011