Kennett and Anor v Mayrana Pty Ltd and Ors (No 9) [2008] NSWIRComm 106 (27 May 2008)

NEW SOUTH WALES INDUSTRIAL RELATIONS COMMISSION

CITATION :
Kennett and Anor v Mayrana Pty Ltd and Ors (No 9) [2008] NSWIRComm 106

FILE NUMBER(S):
IRC 3679 and 3680

HEARING DATE(S):
10 April 2007, 11 April 2007, 12 April 2007, 13 April 2007, 12 June 2007, 13 June 2007, 14 June 2007, 15 June 2007, 18 June 2007, 19 June 2007, 11 September 2007, 12 September 2007, 13 September 2007, 14 September 2007, 17 September 2007, 18 September 2007, 19 September 2007, 20 September 2007, 21 September 2007, 20 February 2008, 21 February 2008, 22 February 2008, 11 March 2008

DATE OF JUDGMENT:
27 May 2008

PARTIES:
MATTER NUMBER IRC 3679 OF 2003
_________________________________

KEITH FRANKLIN KENNETT
First Applicant

KF KENNETT NOMINEES PTY LIMITED
(ACN 007 739 568)
Second Applicant

MAYRANA PTY LTD
(ACN 101 363 688)
First Respondent

GARRATT'S LIMITED
(ACN 000 003 725)
Second Respondent

CHRISTOPHER CAMPBELL
Third Respondent

MICHAEL TRAYNOR
Fourth Respondent

MATTER NUMBER IRC 3680 OF 2003
_________________________________

MYONG HO PAK
Applicant

MAYRANA PTY LTD
(ACN 101 363 688)
First Respondent

GARRATT'S LIMITED
(ACN 000 003 725)
Second Respondent

CHRISTOPHER CAMPBELL
Third Respondent

MICHAEL TRAYNOR
Fourth Respondent

CORAM:
Schmidt J

CATCHWORDS: Unfair Contract - sale of English Language College business - whether applicants made agreements under which work was to be performed after sale - whether applicants performed work at the College after the sale - whether work performed under the impugned contracts or arrangements - issues of credit - who brought contracts to an end - repudiation considered - termination by respondents - consideration of fair notice - consideration of fairness of remuneration - sale agreement and section 106(2A) of Industrial Relations Act 1996 - fairness of sale price fixed by reference to profitability of College - profitability of College - due diligence exercise - expert evidence - hypothetical revenue figure not established - claimed net profit figure not established - unreliability of due diligence exercise not established - applicants not overborne in negotiations contracts varied - money orders - discretion - necessity for applicants to have clean hands - exercise of discretion refused, as to part of claim - money orders made

Evidence - expert - evidence rejected - difficulties in expert evidence considered

Evidence - section 30 of Evidence Act 1995 - application for use of an interpreter - right to give evidence through interpreter - not initially established - further application - consent

LEGAL REPRESENTATIVES
APPLICANTS:
Dr JP Berwick of counsel then Mr IC Latham of counsel
SOLICITORS:
GH Healey & Co
FIRST AND SECOND RESPONDENTS:
Mr AJ Bulley of counsel
SOLICITORS:
Gray & Perkins

THIRD RESPONDENT:
Mr BKB Cross of counsel
SOLICITORS:
Thomson Playford

FOURTH RESPONDENT:
Mr PW Taylor SC with Mr PL Carr of counsel
SOLICITORS:
Yeldham Price O'Brien Lusk
DLA Phillips Fox

CASES CITED:
Adamopoulos and Anor v Olympic Airways SA and Anor (1991) 25 NSWLR 75
Autobake Pty Limited v Budd (1986) 19 IR 18
Baker v National Distribution Services Ltd (1993) 50 IR 254
Brown v Rezitis [1970] HCA 56; (1970) 127 CLR 157
Christopher Noel Dayton v Woolworths Limited [2006] NSWIRComm 215
Dairy Farmers Co-operative Milk Co Ltd v Acquilina [1963] HCA 59; (1963) 109 CLR 458
Fish v Solution 6 Holdings Limited [2006] HCA 22; (2006) 225 CLR 180
Kennett and anor v Mayrana Pty Ltd and ors & Myong Ho Pak v Mayrana Pty Ltd and anor [2005] NSWIRComm 134
Kennett and Anor v Mayrana Pty Ltd and Ors and Myong Ho Pak v Mayrana Pty Ltd and Ors [2005] NSWIRComm 367
Kennett and Anor v Mayrana Pty Ltd and Ors (No 2) [2006] NSWIRComm 264
Kennett and Anor v Mayrana Pty Ltd and Ors (No 3) [2006] NSWIRComm 266
Kennett and Anor v Mayrana Pty Ltd and Ors (No 4) [2006] NSWIRComm 357
Kennett & Anor v Mayrana Pty Ltd and Ors (No 5) [2007] NSWIRComm 199
Kennett & Anor v Mayrana Pty Limited & Ors (No 6) [2007] NSWIRComm 234
Kennett & Anor v Mayrana Pty Ltd and Ors (No 7) [2007] NSWIRComm 236
Kennett & Anor v Mayrana Pty Ltd and Ors (No 8) [2007] NSWIRComm 239
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited [2007] HCA 61; (2007) 82 ALJR 345
Swann & Anor v Ultratune Aust Pty Ltd & Anor (1983) 5 IR 284
Wirraway (NSW) Pty Ltd v Ultra Tune Australia Pty Ltd (2006) 156 IR 367
Yim v Industrial Relations Commission of NSW [2007] NSWCA 77; (2007) 162 IR 62
Zahos v Industrial Relations Commission of NSW (2005) 148 IR 208

LEGISLATION CITED:
Evidence Act 1995
Industrial Relations Act 1996

TEXTS CITED:

JUDGMENT:

Matter No IRC 3680 of 2003

MYONG HO PAK v MAYRANA PTY LTD AND OTHERS
Application under s.106 of the Industrial Relations Act 1996

1 Professor Kennett and Mr Pak commenced these proceedings in July 2003 pursuant to s 106 of the Industrial Relations Act 1996 ('the Act'). The applications finally pressed pursuant to a second further amended summons filed in April 2007, challenged the fairness of 'the contract, arrangement or collateral arrangement, between the First and Second Applicants and the First, Second and Third Respondents, consisting of the negotiation to provide employment' to the applicants 'and associated sale of Excelsior College Pty Ltd' (Excelsior'). Both applicants claimed that they had performed work at the College, after the sale. The respondents denied that the applicants had performed such work, or that any of the challenged contracts or arrangements were unfair. Arguments that the Court had no jurisdiction to make the orders sought, were also maintained.

2 The applicants were the working proprietors of the College through their directorships and shareholding in Excelsior, the owner of the College. On the evidence, the College was sold by Excelsior to the first respondent, Mayrana Pty Ltd ('Mayrana'). The applicants did not sell their shares in Excelsior, nor were the applicants the vendors of the College under the sale agreement. They provided certain warranties and agreed to certain restraints. Despite the fact that Excelsior was the former owner and vendor of the College, Excelsior was never a party to these proceedings.

3 Mr Campbell, the third respondent, was a director and shareholder of the second respondent, Garratt's Limited ('Garratt's'), but not himself a party to any of the contracts or arrangements in question. Mr Traynor, the fourth respondent, was also not a party to any of the contracts or arrangements in question. He had conducted a due diligence on the College for Garratt's and had attended a meeting in August 2002 between Mr Campbell, Mr Pak and Professor Kennett, at which a revised sale price was negotiated. It was alleged that Mr Campbell and Mr Traynor had a culpable association with the resulting unfairness complained of in these proceedings.

4 I observed in Kennett and Anor v Mayrana Pty Ltd and Ors (No 4) [2006] NSWIRComm 357:

39 The claims which Mr Kennett and Mr Pak seek to advance are, in essence, that they were the working proprietors of the College; that Mr Campbell approached them with a proposal that Garratt's buy the College as a going concern and that they would then continue to work in the new expanded business which it was seeking to establish in the educational field. Garratt's already owned other colleges and was in the process of acquiring another college, as well as Excelsior College. Mr Kennett and Mr Pak accepted Mr Campbell's proposals, but the respondents managed to engineer a situation wherein on the one hand, Mr Kennett and Mr Pak neither had ongoing work in the expanded business, nor ever received the price for which they had agreed to sell the College, and on the other, they were bound by a three year restraint. The applicants seek to attack both the sale agreement and what was agreed in relation to the performance of work, which they claim was unfair. They also each claim that they in fact, performed work after the sale, but they were never paid for that work. They seek orders against Mr Traynor, on the basis of his alleged involvement in the operation of the unfairness they complain about.

5 The proceedings have a regrettably protracted history, even after the hearing finally commenced in September 2006. In 2005, a judgment was given by his Honour Justice Marks, in relation to the costs of certain interlocutory proceedings. (See Kennett and anor v Mayrana Pty Ltd and ors & Myong Ho Pak v Mayrana Pty Ltd and anor [2005] NSWIRComm 134). The Full Bench refused leave to appeal from that judgement. (See Kennett and Anor v Mayrana Pty Ltd and Ors and Myong Ho Pak v Mayrana Pty Ltd and Ors [2005] NSWIRComm 367).

6 There were earlier adjournments, when the matter was before her Honour Justice Staunton. The matter was re-allocated to me and there was then an application by the applicants that I disqualify myself from hearing the case. That application was refused. (See Kennett and Anor v Mayrana Pty Ltd and Ors (No 2) [2006] NSWIRComm 264). There was also a motion by the applicants in relation to summonses for the production of certain documents. (See Kennett and Anor v Mayrana Pty Ltd and Ors (No 3) [2006] NSWIRComm 266). Kennett (No 4) dealt with various jurisdictional points taken by the respondents.

7 In Kennett & Anor v Mayrana Pty Ltd and Ors (No 5) [2007] NSWIRComm 199, I dealt with a motion in which the applicants sought leave to lead further evidence, including from an expert, Mr Prior, who no longer adhered to the expert opinions which he had earlier expressed. In Kennett & Anor v Mayrana Pty Limited & Ors (No 6) [2007] NSWIRComm 234, I dealt with various objections to the expert evidence called by the applicants. In Kennett & Anor v Mayrana Pty Ltd and Ors (No 7) [2007] NSWIRComm 236, I dealt with the admissibility of further experts' reports, sought to be relied on by the applicants. In Kennett & Anor v Mayrana Pty Ltd and Ors (No 8) [2007] NSWIRComm 239, I dealt with yet a further motion filed by the applicants, seeking leave to lead further evidence.

8 The claims finally pressed by the applicants were in relevantly identical terms. Those pressed by Professor Kennett were:

(a) That any Contract, Arrangement or Collateral Arrangement will not be terminated without the consent of the First Applicant except for serious misconduct unless the Respondents jointly or individually pay the First Applicant:

(i) a period of notice of not less than the equivalent of 12 months remuneration at the rate of $120,000.00 per annum,

(iii) a payment of $200,000.00 as a consequence of the three year restraint of trade imposed,

(iv) that any Contract, Arrangement, or Collateral Arrangement shall not be terminated for reasons relating to the Applicant's conduct or performance unless:

(a) the First Respondent shall give the Applicant notice of intention to terminate the Contract and provide to the Applicant reasons for the proposed decision,

(b) the Applicant has been given an opportunity to defend himself against any allegations made in relation to his conduct or performance by the First, Second and Third Respondents,

(c) the First, Second and Third Respondents have undertaken a thorough investigation of any allegations made in relation to the Applicant's conduct or performance and any matters presented by the Applicant in his defence

(b) That the Contract will not be varied on the basis of the representations of the Fourth Respondent unless the Fourth Respondent or the First, Second or Third Respondents, or any one of them, pays to the Applicants:

(i) an amount of money equal to the value of his shares in the Second Respondent, at the value of $0.50 per share, as per the Contract of 5 July 2002, being part of the original agreed consideration totalling $210,000.00

(ii) an amount of money being $210,000.00 and the balance of the original agreed amount of the consideration to acquire the Applicants interest in the business of Excelsior College Pty Limited,

(c) The First, Second and Third Respondents shall not make any decision to terminate the Contract, Arrangement or Collateral Arrangement, save for serious misconduct and/or unreasonably having regard to:

§ 66 years of age;
§ Suffered from diabetes;
§ Was dependent as to capital needs upon completion of the contract;
§ Subject to a three year restraint of trade imposed by the contract.

(ii) the satisfactory performance by the First Applicant of his obligations under the Contract.

(iii) The representations made to the First Applicant by and on behalf of the First and Second Respondents by the Third Respondent that he would be engaged at a senior executive level on a full-time basis.

(iv) The misrepresentations made to the First Applicant by and on behalf of the First, Second and Third Respondents by the Fourth Respondent in relation to the accounting treatment of agents fees as at the date of the purchase of the business which purportedly reduced the net profit below $300,000.000.

(v) The misrepresentations made to the First Applicant by the Third and on behalf of the First and Second Respondents in relation to the premium value placed on the Second Respondent's shares at $0.50 when the market value was approximately $0.30 was due to information in the public domain relating to the purchase of Australian College of Technology and, its number of students, its wide range of course offerings, its profitability of approximately $700,000.00 per annum and its potential Chinese market.

9 The money orders sought in the second further amended summons were further varied in final written submissions and later, in oral submissions. As explained in final written submissions, they were:

An order for between 10 months and 2 years' notice, calculated at the rate of $120,000 per year.

An order for between 10 months and 2 years' notice, calculated at the rate of $65 per hour.

11 Evidence was given by the applicants and they called evidence from Mr Brash, CRICOS officer for New South Wales TAB; Mrs Brash, bookkeeper; Mr Prior, accountant; Mr Rodgers, chartered accountant and Ms Benson, business services manager at Taylor's College.

12 The respondents called evidence from Mr Campbell, managing director of second respondent and Mr Bloodworth, company secretary of Washington H Soul Pattinson Co Limited.

13 Before turning to the merits of the claim, it is necessary to deal with an issue which arose during the course of the hearing, when I initially refused an application to have Mr Pak give evidence through an interpreter, indicating that I would give reasons for that decision in due course.

14 The application was made immediately before Mr Pak was called, but only after an announcement that the evidence would be given through an interpreter, the respondents having been given no prior notice of such a course. An adjournment of the hearing was also then sought by the applicants, until later in the day, when an interpreter would become available. The applications for use of an interpreter and the adjournment were both opposed.

15 Thereupon, a further adjournment was sought - until the following day - in order that Mr Pak have an opportunity to put on affidavit evidence, as to his need for the assistance of an interpreter. The respondents proposed that such evidence be called from Mr Pak immediately and orally, so that he could explain his difficulties, or that evidence be called from Mr Pak's solicitor as to how this difficulty had arisen, but both courses were opposed by the applicants. The adjournment was finally granted, with a costs order against Mr Pak, in relation to the costs of the adjournment.

16 The next day the affidavit evidence was that Mr Pak was the joint managing director of Excelsior. Mr Pak had worked as the College's marketing director before the sale and had represented Excelsior and Professor Kennett in the negotiations with Mr Campbell of Garratt's, who had negotiated the purchase of the College for Mayrana. Until the adjournment application, there had never been any suggestion that Mr Pak's command of English was not sufficient to permit him to give his evidence in English. The negotiations between Mr Pak and Mr Campbell had been conducted in English. Mr Pak had sworn many affidavits in the proceedings, which were already in evidence, without the need for the assistance of an interpreter and he had given instructions during the course of the hearing in open Court, without the assistance of an interpreter.

17 In his further affidavit, Mr Pak deposed to a slight hearing difficulty, which he had developed in the past five years and a concern which had arisen in his mind during the course of the hearing that week, while listening to the cross examination of Professor Kennett, the other joint managing director of Excelsior, as to his ability to 'hear the questions put to me or fully understand the real meaning of the words.' Mr Pak is a native born Korean and was aged 70 years when he gave his evidence. He also speaks some Vietnamese, Mandarin and a little Japanese.

18 Initially, I refused Mr Pak's application, which was governed by s 30 of the Evidence Act 1995, which provides:

19 It followed that Mr Pak had a right to give his evidence through an interpreter, unless, on the evidence, it had to be concluded that he could understand and speak the English language sufficiently to enable him to understand, and to make an adequate reply to questions that were put to him when giving his evidence.

20 The evidence was that Mr Pak speaks in his native tongue at home; that he does not understand oral English as well as written English; that he can read English better than he can speak English; that he has a hearing problem; that he had had difficulty hearing clearly what the respondents' barristers were putting to Professor Kennett, during the Professor's cross examination and that he did not understand all of the questions Professor Kennett had been asked in cross examination. He also said that:

"Dr Berwick is trying to find out what you were thinking after talking to Mr Campbell."

21 Mr Pak was not called to give oral evidence in support of his application, nor was he required for cross examination. There was no suggestion that he had required the assistance of an interpreter to prepare his affidavit.

22 The point at which the trial had then reached, was that the applicants had tendered all of their affidavit evidence; the respondents' motions that the proceedings be dismissed for want of jurisdiction had been dismissed; the applicants' evidence having been taken at its highest; the trial had been underway for many days; and Professor Kennett's cross examination was complete. Mr Pak had not been present for all of that cross examination, but had been present for a number of days.

23 Mr Pak's concern as to the sufficiency of his English had arisen in part because of his difficulty in hearing questions put to Professor Kennett in court. That may have arisen because of where he was seated in the court room, behind the bar table. In any event, such a difficulty was not a proper basis for a witness giving evidence through an interpreter. Indeed, there were sound amplification mechanisms available to assist Mr Pak with that problem. Such assistance was available on request and even though not requested, was then made available as the result of steps which I took, when Mr Pak was called to give his evidence. Mr Pak indicated that the sound amplification equipment assisted with his hearing difficulty, although he chose not always to use the equipment. Mr Pak was invited to indicate if he was having any problems hearing, or understanding any questions put to him. On one occasion he indicated that he was having difficulty hearing questions put to him. That difficulty was able to be resolved by an adjustment of the sound amplification equipment.

24 As to his understanding of the English language, on Mr Pak's evidence, that concern had arisen because of his difficulty understanding some questions which Professor Kennett had been asked in cross examination. That evidence had to be considered in a context where there were many affidavits already in evidence, where Mr Pak had attested to his many discussions with Professor Kennett, Mr Campbell and others and Professor Kennett's evidence, that Mr Pak had represented himself, Professor Kennett and Excelsior in the negotiations with Mr Campbell over the sale of the College.

25 Mr Pak's latest 2007 affidavit indicated that he endeavours to use English in Australia, 'when necessary'. There was no question that all of the conversations about which Mr Pak had already given evidence, were conducted in English. There was other evidence led in Mr Pak's case from those who had had conversations with him. There was no suggestion, of any kind, in any of that evidence that Mr Pak had had any difficulty speaking, or understanding English, or that those who had spoken to him, had had any difficulty in understanding him.

26 Mr Pak had lived in Australia since 1974. Up to 1992, he had operated a restaurant. In 1992, he had commenced an English Language College. It had 150 students when it closed in 1994. The students were then transferred to another college, where Mr Pak worked as marketing manager. In 1997, Mr Pak took a position at Excelsior College as marketing director. In 1998, Mr Pak acquired an interest in the College, eventually owning 40% of the shares and Professor Kennett 60%. Student numbers grew from 10 to 20 in 1997, to some 893 in 2002, the year the College was sold to Mayrana. When Mr Pak was called, Professor Kennett had given his evidence, which was that Mr Pak was responsible for marketing and financial matters at the College and that Professor Kennett was responsible for the educational services which it provided.

27 There was no evidence that Mr Pak had experienced any difficulty in the preparation of his many affidavits; that he had required the assistance of an interpreter to prepare them, or to have documents translated for him; or that he had experienced any difficulties in dealing with his legal advisers, of the kind which he described having experienced on 14 June, prior to that day. Despite the adjournment of the hearing to permit Mr Pak to put on evidence to support his application, there was no suggestion that he required the assistance of an interpreter to prepare the affidavit on which he relied, nor was there any evidence called to support his explanation of his difficulty, for example, from an interpreter of the Korean language, or from his legal advisers.

28 Consistently with what had occurred to that point in the proceedings, in his latest 2007 affidavit, Mr Pak's evidence was not that he could not understand or speak English sufficiently to enable him to understand and make an adequate reply to questions that might be put to him, when he was called to give his oral evidence. His concern was rather that he would not 'fully understand the real meanings of the words'.

29 That evidence had to be considered in a context where, even during the course of submissions the previous day, when various adjournment applications were made, Dr Berwick sought and obtained instructions from Mr Pak in open court about matters which arose during the course of the hearing, including as to the costs of his adjournment applications, without any apparent difficulty and without the need for any assistance from an interpreter.

30 In Odgers, Uniform Evidence Law, Seventh Edition, at [1.2.2300], reference is made to the Australian Law Reform Commission proposal that the words used in s 30 of the Evidence Act 1995, 'to enable the witness to understand', should have provided 'to enable the witness to understand fully'. That formulation was not adopted. This was a relevant consideration in this matter, given that Mr Pak's evidence was not that he could not understand English, but rather that he had a concern about fully understanding the meaning of words which might be used in questions put to him in cross examination.

31 The parties also referred to two authorities. The first, the High Court's judgment in Dairy Farmers Co-operative Milk Co Ltd v Acquilina [1963] HCA 59; (1963) 109 CLR 458 , where it was observed at 564:

32 Reference was also made to the Court of Appeal's judgment in Adamopoulos and Anor v Olympic Airways SA and Anor (1991) 25 NSWLR 75, where Kirby P (as he then was), observed at 78:

34 Section 30 of the Evidence Act has been enacted since these judgments were given. A witness may now give evidence through an interpreter, unless the witness 'can understand and speak the English language sufficiently to enable the witness to understand, and to make an adequate reply to, questions that may be put about the fact.'

35 On Mr Pak's evidence, the difficulty which had arisen on 14 June, when Dr Berwick had asked him a question in conference which he did not understand, was dealt with by his solicitor, putting the question to him in another way. Even witnesses who are native English speakers do not always understand questions put to them by counsel when being examined in court. When that occurs, the problem is usually addressed by the question being put in a different way. It followed, given the nature of the difficulty Mr Pak explained he had experienced at his conference with his counsel on 14 June 2007 and how that difficulty was resolved, that if he did experience any difficulty in understanding any particular question put to him at the hearing, that difficulty could also be dealt with in the usual way.

36 In light of all of that evidence, I came to the conclusion that Mr Pak did have the ability to speak the English language sufficiently to enable him to understand, and to make an adequate reply to questions put to him. It followed that a right to give his evidence through an interpreter had not been established and the objection to the evidence being given with the assistance of an interpreter, had to be upheld.

37 When announcing my refusal of the application, I indicated, however, that Mr Pak's counsel was at liberty to renew Mr Pak's application, if it appeared that his oral evidence threw a different light on the conclusions I had reached. Mr Pak was also invited to indicate, at any time, if he had any difficulty in either hearing, or understanding any question put to him. I adopted that course because Mr Pak had, to that point, not given any oral evidence. It was thus possible that when his oral evidence was given, a different conclusion to that which had been reached on the affidavit material, might arise. It was also possible that it could transpire that even though not generally having a right to give his evidence through an interpreter, Mr Pak might have that right in relation to parts of his evidence, given the subject matter being dealt with. (See the discussion in Odgers at [1.2.2320].)

38 As it transpired, Mr Pak's application was later renewed. Mr Pak was a quietly, but quickly spoken man, who spoke English with a heavy accent. On the first occasion the application was renewed, Dr Berwick had misheard an answer Mr Pak had given, shortly after cross examination had commenced. Sound amplification equipment in the court room was adjusted, in order to make Mr Pak's evidence easier for counsel to hear and Mr Pak was also asked to speak up.

39 The second occasion on which the application was renewed, a short while later, was after Mr Pak gave a series of answers to questions about documents to which he had been taken in his evidence and meetings he had been questioned about, when his repeated answer was 'I don't know'. Dr Berwick raised a concern that Mr Pak had given up answering questions, because of a lack of understanding of the questions he was being asked, even though he had not indicated any lack of understanding, or difficulty in relation to those questions. To that point, Mr Pak had given such an indication on very few occasions, in relation to particular questions, which had then been rephrased and he had then answered them without apparent difficulty.

40 After an adjournment, Mr Pak was asked a series of questions, through a Korean interpreter, including a question about his understanding of the questions which had been asked of him, to which he had replied 'I don't know'. Mr Pak indicated that he had understood the questions which he had been asked. In those circumstances, the application for use of an interpreter was not pressed further.

41 As the evidence unfolded, while being cross examined first by Mr Bulley and then by Mr Cross, it appeared that Mr Pak was a very careful witness, taking considerable time to consider the answers which he gave to various questions. In many cases, his answers suggested that he had but little memory of the dates on which various meetings occurred, who attended them, or what was said at them. He appeared to have no difficulty in indicating when he did not understand a question and did so, albeit on relatively few occasions.

42 When Mr Pak came to be cross examined by Mr Taylor SC, the position altered. Mr Pak was being examined about financial matters. He appeared to become frustrated and to be having significant difficulty, both in dealing with documents to which he was taken and in answering Mr Taylor's questions. This situation arose late in the afternoon. After an overnight adjournment, after Mr Taylor resumed his cross examination, Mr Pak indicated that he was having difficulty in understanding Mr Taylor's questions. Mr Taylor then invited Dr Berwick to make a further application that Mr Pak's evidence be given through an interpreter. When the application was made, it was not opposed.

43 After an adjournment, the cross examination resumed with the assistance of an interpreter. Mr Pak was being cross examined about information provided by Excelsior to Mr Campbell about its operations, which Mr Pak and Excelsior's accountant, Mrs Brash, had produced and provided to Mr Campbell.

44 Despite the assistance of the interpreter which was then available to him, Mr Pak did not much avail himself of that assistance. He continued to answer many of the questions asked of him in English, without first waiting to allow the interpreter to translate the questions. He also did not require many other of Mr Taylor's questions to be translated, even when he answered them in Korean and had his answer translated. The assistance of the interpreter did not, however, appear to alleviate Mr Pak's frustration with many of the questions he was being asked, or his apparent difficulty in answering them.

45 Mr Pak's evidence continued thereafter, with the intermittent assistance of an interpreter, whenever he felt he needed such assistance. No objection was taken by any party to this approach.

46 When the hearing resumed in September 2007, a different pattern emerged. Almost all of Mr Pak's evidence was then given with the assistance of an interpreter. Despite that assistance, Mr Pak's understanding and recollection of what had occurred, appeared to have deteriorated significantly.

47 I make these observations because they became relevant to an assessment of various of the issues which here arose for determination.

48 As will be apparent from what I observed at the outset, as to the various judgments already given in this matter, it proceeded with some difficulty to the point of final submissions. The difficulties did not end there.

49 In February 2008, when the hearing resumed for the conclusion of the evidence and final submissions, after an adjournment since September 2007, the applicants pursued a motion filed the previous day, seeking yet another adjournment of the hearing, in order that written submissions could be filed. That application was opposed by the respondents and was refused. The affidavit supporting the motion plainly did not reveal the true circumstances which had led to the making of that application.

50 The position then was that the only evidence left to be dealt with, was some short cross examination of Mr Bloodworth, on his affidavit and the tender of several documents, to which no objection was taken.

51 I took the view that no good purpose would be served by the parties being put to the additional cost of yet another adjournment in these protracted proceedings, in order that written submissions could be prepared. There had been ample time to prepare submissions. While no directions had been given in relation to written submissions, there was no reason why they could not have been prepared, had the applicants thought there was utility in adopting that course. Indeed, I was informed that they had taken some steps to prepare such submissions, although they were incomplete. The respondents were in a similar position. In the circumstances, I did not require the parties to prepare written submissions and refused the adjournment application.

52 The case then advanced for the applicants by Dr Berwick was that Mr Traynor had become a 'player' in the negotiations between the parties as to the sale price of the College. He had acted unfairly towards the applicants, during the meeting on 1 August 2002, with the result that they had been coerced into agreeing to a revised price formula, under which the College had been acquired at an unfair price. Mr Traynor was the person at the meeting with the greatest expertise in accounting matters. He had not, however, uncovered in his due diligence exercise, the inherent inadequacies of the financial system maintained by the College, which had been revealed in Mr Prior's evidence. This had resulted in the applicants being unfairly pressured to agree to a decreased sale price.

53 It was argued that the evidence showed that both Professor Kennett and Mr Pak had made oral agreements for ongoing senior roles in the respondents' expanded enterprise. It was on the basis of those agreements, that the negotiations for the sale of the College had continued to the point where agreement on the sale was reached. That agreement included restraint of trade provisions for each applicant, which would not have been agreed, but for the oral contracts earlier made with Professor Kennett and Mr Pak. Both Professor Kennett and Mr Pak had performed work at the College after the sale under those agreements, for which they had never been paid, before they were terminated.

54 It followed that the evidence had demonstrated a jurisdictional basis for the relief sought, as well as the unfairness complained of.

55 Having made these submissions, during the course of the afternoon, Dr Berwick found himself unable to continue with his submissions, because he explained, he needed to consult the applicants' expert, Mr Prior. He pressed for another adjournment, to the following day. That application was granted, with costs reserved.

56 The next morning the applicants' submissions resumed. A further adjournment was then sought, because written submissions on which the applicants wished to rely in relation to the expert evidence they had called, as to the College's profitability and financial affairs, had not yet reached Court. Dr Berwick explained that even when they arrived, he was not in a position to put those submissions. He required a further opportunity to consult with the applicants' expert, Mr Prior, before he was able to proceed. While the application was again opposed, it was finally granted after the written submissions were brought to Court and handed up, on the basis that Dr Berwick would be given the further hour he sought, to address those submissions the following day. The question of costs was again reserved, with the respondents indicating that they would wish to be heard on the question of costs being ordered against the applicants' legal representatives.

57 The applicants filed further written submissions during the adjournment and when the hearing resumed the next day, after further discussions between the parties, Dr Berwick announced that he could no longer proceed and withdrew from the proceedings. Mr Healey then sought a further adjournment, after explaining why the applicants' instructing solicitors found themselves unable to complete their clients' submissions. Again, the adjournment was granted, despite the respondents' objections, with costs reserved, after further directions were given.

58 That course was taken in circumstances where the respondents rightly complained as to the approach taken by the applicants in the proceedings. As they argued, costs orders may be unable to adequately compensate them for all that has transpired. Nevertheless, I was satisfied that in order to do justice between these parties, given the position in which the applicants appeared to have been placed by their legal advisers, the application had to be granted.

59 On 5 March 2008 a further written submission was filed for Professor Kennett, in which his case was revisited and the remedy pressed was clarified to be:

60 Otherwise, it was 'conceded that there is not sufficient evidence to properly calculate the loss caused by the sales aspects except so far as it relates to the loss of employment referred to earlier'. The written submissions earlier filed in relation to Mr Prior's evidence, were not further referred to.

61 Written submissions for Mr Pak, to similar effect, were also filed with the money order sought being claimed to be:

62 The concession in relation to 'the loss caused by the sales aspects' was also reiterated.

63 At the resumed hearing, Mr Latham of counsel announced an appearance for the applicants. He was asked to clarify what money orders, if any, were sought in relation to the sale of the College, given the above concession. After a further adjournment, the clarification given on instructions was:

64 This claim was not addressed in the further written submissions which had been filed during the adjournment. When asked how such orders could be made, given that the vendor of the College, Excelsior, was not a party to the proceedings, it was conceded that no orders of avoidance or variation of the sale agreements could be made in these proceedings. While the money order sought was, nevertheless pressed, Mr Latham could not advance any submissions to explain how such money orders could flow from a finding that employment agreements made with Professor Kennett and Mr Pak were unfair. Why it was, in those circumstances, that money orders in connection with the sale of the College were still pressed, was somewhat difficult to understand, but left the proceedings in the position where these claims had to be dealt with by the respondents and the Court.

65 The case for the respondents was that the evidence could not permit the conclusion that either Professor Kennett, or Mr Pak, had performed the claimed work at the College after the sale. Nor had they established that any work had been performed pursuant to any of the contracts or arrangements relied upon in the proceedings.

66 In summary, it was argued that the conclusions as to various contested evidentiary matters would have to be reached, in large measure, on the basis of conclusions as to the credibility of various witnesses, including the applicants. It was submitted that neither Professor Kennett nor Mr Pak were reliable witnesses. Their evidence would not be accepted, when it conflicted with that of other witnesses.

67 In any event, the claims made as to the alleged unfairness of the contracts in question, had not been established on the evidence. Even if all of these arguments were decided against the respondents, the money orders sought would not be made, because no evidentiary foundation had been established in respect of any claim still pressed. Further, even if any money orders were to be contemplated, the exercise of the Court's discretion would, nevertheless, be refused, given the evidence of the moneys still owed to the respondents, under the sale agreements and otherwise. At the least, such moneys would be set off.

68 Finally, jurisdiction as to the making of various of the orders, still remained in issue and would require determination. Such jurisdictional findings were simply not available, on the evidence.

69 As to Mr Campbell, it was argued that no evidentiary basis had been established for the making of any orders against him. Neither the summons, nor the applicants' submissions, attempted to establish a foundation for the making of such orders. Mr Campbell was a director of Garratt's, a publicly listed company, who had conducted the negotiations for the purchase of the College. Other than his directorship and shareholding, the evidence had not shown that he had derived any benefit from the matters complained of. It followed that the claims made against him must be dismissed.

70 As to Mr Traynor, it was argued that the case had failed utterly. It was noted that it had been submitted that:

71 Not only had it been accepted that the applicants had failed to establish any evidentiary foundation for the money orders sought in respect of the sale price, no other evidentiary case had been established, which would permit the making of any orders against Mr Traynor.

72 No case had been advanced in submissions that Mr Traynor had owed the applicants any duty; not even Mr Prior's evidence was relied upon. Otherwise, it was noted that if reliance was placed on what was advanced at paras [27] and [29] of the applicants' written submissions, no orders could follow. Those submissions were:

27. The first applicant submits that the formula is unfair because under it the price was determined by the first three respondents upon the analysis of profit by the fourth respondent. The analysis done by the fourth respondent was fundamentally unfair:

(ii) in that in using such information, the fourth respondent did not exercise due care as required in circumstances where the fourth respondent shown(sic) have known that the information was inaccurate;

(iii) because the fourth respondent owed a duty to the first applicant to perform his duties with due care

29. The inaccuracy of the records of the college is shown in the evidence of Mrs Brash. In cross examination she admits that she had nothing to do with the student services database. T 917 L11 and L 34. She was concerned with MYOB. Mr Matthew Brash was the person who would actually enter information into the data base. If he did not get a specific record he knew by experience how much to deduct T894 L27. He would record his "estimate" of what the agent had paid. There was also significant differences between the Trust account and the MYOB system. The fourth respondent admitted these problems when he expressed the view in his letter dated 3/10/02 (MTA Vol 1 of 3 pp 2 - 4) to the third respondent that he did "'not' form an opinion on the veracity of the information provided by the management of Excelsior College." Further the respondent accepted that the records were inaccurate. At paragraph 45 of his affidavit, he states that the Trust Account Balances Report was unreliable.

73 Those submissions failed, however, to take account of the evidence given about these matters by Mrs Brash, Mr Brash and Professor Kennett. That evidence showed that there was, in fact, no foundation for the submissions advanced.

74 In reply, it was submitted that Mr Campbell was a substantial shareholder in Garratt's and a director and accordingly, on the approach of the High Court in Brown v Rezitis [1970] HCA 56; (1970) 127 CLR 157, orders could be made against him.

75 The relief sought the variation of the employment contracts, to insert protective provisions. It followed that there was a jurisdictional foundation for the orders sought. As to Mr Traynor, it was argued that the entirety of the submissions at [27] to [29] had to be considered and that there was an evidentiary foundation for the claims there advanced against him.

76 Mr Latham was unable to explain, however, how the money orders of $300,000 sought in relation to the sale of the College, could flow from the variation of the two alleged employment contracts.

Consideration

77 In Wirraway (NSW) Pty Ltd v Ultra Tune Australia Pty Ltd (2006) 156 IR 367, in relation to the High Court's judgment in Fish v Solution 6 Holdings Limited [2006] HCA 22; (2006) 225 CLR 180, the Full Bench observed at [42]:

78 In this case, both the question of whether any work at all was, in fact, performed by the applicants at the College after the sale and, if it was, whether it was performed under the impugned contracts or arrangements, as claimed, was in issue between the parties.

79 In Kennett (No 4), I noted at [55] that it was accepted by the respondents that the applicants' evidence, taken at its highest, was capable of providing a basis for the conclusions that the applicants had performed work at the College, after its sale to Mayrana and that the claimed oral contracts had earlier come into existence. What must now be resolved is whether those conclusions remain available, given that the applicants' evidence has been tested and the respondents' evidence has been heard.

80 Credit issues, it should be noted, were difficult to resolve in this case. The evidence of both Professor Kennett and Mr Pak was given in such a way that I came to the conclusion that their evidence had to be approached with some caution. I also, however, came to have reservations about some aspects of Mr Campbell's evidence.

81 On the question of the performance of work and the existence of the asserted contracts, the conflicts in the evidence of these witnesses was resolved by the evidence of other witnesses and contemporaneous documents, which shed light on the issues in contest between the parties.

82 In final submissions, the applicants' case was explained to be that Professor Kennett had entered an oral agreement with Mr Campbell, that he would perform work at the College after the sale, and that he had, in fact, later performed such work, as agreed. But for that agreement, the College would not have been sold on the terms agreed, which included a three year restraint.

83 The sale had resulted from an approach initially made by Mr Campbell to Mr Pak, on behalf of Garratt's. It had been in the fastener business. Mr Campbell had put a proposal to the Garratt's Board, that the company go into the education industry, by making various acquisitions, including the College. The Board accepted that proposal and accordingly, Mr Campbell pursued discussions with Mr Pak and Professor Kennett.

84 Professor Kennett gave detailed evidence as to the discussions which led to his agreement with Mr Campbell. It was apparent from this evidence and that of Mr Pak and Mr Campbell, that ongoing roles for Professor Kennett were the subject of repeated discussions over many months. Both a part-time consultancy and senior ongoing roles were discussed. What was disputed was whether any relationship at all was finally agreed. In his first affidavit, sworn on 5 April 2005, Professor Kennett's evidence was that he had a meeting with Mr Campbell and Mr Traynor on either 6 or 13 June 2002, when Mr Campbell provided him with an organisation chart and they had a conversation to the following effect:

85 In his affidavit evidence, Mr Campbell denied meeting with Professor Kennett and Mr Traynor on 6 or 13 June, or ever discussing or offering Professor Kennett the 'executive role of President'. On his evidence, at that stage, Garratt's had not even gathered enough information about Excelsior College to contemplate offering to acquire the business or assets of the College. Mr Campbell denied providing the claimed documents to Professor Kennett at such a meeting. He also explained that he could not have then discussed the Australian College of Technology with Professor Kennett, because he had not even heard of that College, until 3 July 2002.

86 In cross examination, Professor Kennett's evidence was that this discussion did occur, although he conceded that he might have got the date of the meeting incorrect. He explained that it took place before the offer to buy the College was made and that the discussion took place in the context of what would occur, if an offer to purchase the College went ahead. He insisted that the Australian College of Technology was then mentioned to him by Mr Campbell, who told him that they were thinking of buying it, but he agreed that the document annexed to his affidavit, which Mr Campbell denied having provided to him, was created later in time.

87 In a further affidavit sworn on 22 January 2006, Professor Kennett's evidence was that on 19 or 20 June, he had a conversation to this effect with Mr Campbell:

88 Mr Campbell denied such a conversation. On his evidence, their conversation was to different effect:

89 Mr Campbell also denied having advised Professor Kennett of anything about Australian College of Technology on 19 June, because he had not heard of that College as at that date.

90 In cross examination, Professor Kennett agreed that he told Mr Campbell that day:

91 Professor Kennett denied the balance of Mr Campbell's version of the conversation. Professor Kennett did agree, however, that as at 19 June, he had not been offered any position. Nevertheless, he insisted that he and Mr Campbell had discussed the position of President. Mr Campbell's evidence was that such a position had never been contemplated, or discussed. On 5 July 2002, Garratt's offered to purchase Excelsior. The letter contained a price formula, proposed a due diligence exercise and required the applicants to indicate their support of the sale of the College by Excelsior.

92 It was Mr Campbell's evidence that it was Professor Kennett who again raised the possibility of a role after the sale, at a meeting on 8 July, when he said:

93 Professor Kennett and Mr Pak denied that there had been any meeting on 8 July.

94 It was Mr Campbell's evidence that on 9 July he met with Mr Pak and discussed the possibility of ongoing roles for he and Professor Kennett. Mr Pak warned him only to consider engaging Professor Kennett as a consultant, not in full-time management. Mr Pak denied that this was what he had said, but himself gave no evidence as to the content of this conversation, in his affidavit.

95 Professor Kennett said in his January 2006 affidavit, that he again discussed employment with Mr Campbell on 10 July:

96 Professor Kennett also deposed that later that day, he had another conversation with Mr Campbell, in the presence of Mr Traynor, to this effect:

97 Professor Kennett also explained that in his opinion, the position of President of all of Garratt's educational operations and Principal of one of the Academies established for post graduate studies, would require a full-time appointment.

98 Mr Traynor did not give evidence in these proceedings. Although the applicants tendered one of the affidavits Mr Traynor had sworn, in their case, it did not deal with this topic. Mr Campbell's evidence was that the discussions on 10 July were to different effect:

99 In cross examination, Professor Kennett agreed that they had the following discussion on 10 July:

103 On this evidence, it is clear that Mr Campbell and Professor Kennett agreed, that on 10 July, they had discussed Mr Campbell's offer of a six month contract for 10 hours a week, extendable on mutual agreement; with the right to terminate after the first three months; and Professor Kennett to be remunerated at $65 per hour. While they both agreed that these terms were later to be reduced to writing, Professor Kennett claimed that he had accepted this offer. It was Mr Campbell's evidence that Professor Kennett had only accepted the offer in principle.

104 Both Professor Kennett and Mr Campbell also agreed that in their discussions, they had referred to a document which Mr Campbell provided at the meeting. The document provided:

105 In cross examination, Professor Kennett explained that points 1 and 2 of the document referred to a permanent executive position and points 3 to 6 to an interim position, while the various colleges Garratt's was acquiring, were restructured. In submissions, it was clarified that it was this document and the discussions on 10 July, which Professor Kennett claimed reflected the terms of the oral employment agreement, which was attacked as being unfair in these proceedings.

106 It was Mr Campbell's evidence that the 'on completion of acquisition' document did not reflect an offer, but rather the points which were discussed that day between he and Professor Kennett. Mr Campbell denied making any offer of employment to Professor Kennett, prior to the sale. On his evidence, this document reflected the points discussed that day, not any concluded agreement. On his evidence, an offer was not made to Professor Kennett until 19 August, when an offer was made by Academies Australasia (Management) Pty Ltd, another of the Garratt's group of companies, which was not a party to the proceedings.

107 It was also Mr Campbell's evidence that it was never suggested to him that the sale of the College was dependent on offers of employment being made to anyone, although Professor Kennett and Mr Pak's evidence was that without such employment, they would not have sold the College.

108 In an email of 9 July to members of the Garratt's Board, Mr Campbell advised that he had to sort out terms for Professor Kennett's contract and on 10 July, he advised the Board:

109 In his April 2005 affidavit, Mr Pak's evidence was that in July, while Professor Kennett was overseas, he met with Mr Campbell and asked what position he would give Professor Kennett. He could not recall whether the answer was 'President' or 'Principal', but Mr Campbell also said:

110 The call option deed, whereby Excelsior agreed to sell the College, was entered on 19 July. An announcement was also made to the Stock Exchange, in terms settled with Professor Kennett, which dealt with Professor Kennett, stating:

111 The announcement had been drafted by Mr Campbell and agreed with Professor Kennett, after their discussion on 10 July. Mr Campbell agreed in cross examination that the announcement referred to Professor Kennett having an ongoing role with Garratt's expanded educational arm; that he would be staying and that he would be working with the groups' educational operations.

112 On 23 July, when announcing the sale to staff and students, Professor Kennett advised that he would continue as Principal.

113 On 24 July, Professor Kennett and Mr Campbell met again. Professor Kennett's evidence was that they had a conversation to this effect:

114 Mr Campbell denied such a conversation took place. Garratt's had then engaged Mr Traynor to conduct a due diligence on the College. The advice he later gave was that it was operating at a substantial loss. There was a meeting on 1 August, to discuss this advice. In cross examination, Mr Campbell agreed that when he met with Mr Pak and Professor Kennett on 1 August, he was annoyed, having received advice from Mr Traynor as to the College's true financial position. Mr Traynor's advice was that the College was operating at a loss of over $130,000, not at a significant profit of some $300,000, as had been represented by the applicants. It was also common ground that Professor Kennett was agitated and upset at the meeting, at which a revised sale price was negotiated. The new terms were later documented and the transaction was concluded on 16 August.

116 On the evidence, Excelsior acted in accordance with this requirement. The purchaser made offers of employment to the Excelsior staff it wanted to retain in the ongoing business. No such letters were sent to Professor Kennett or Mr Pak.

117 The sale agreement also included a three year restraint for both Professor Kennett and Mr Pak. Mr Pak's evidence was that the only reason the three year restraint was agreed was because of the ongoing employment offered and that 'employment offers to Kennett and me were said by Campbell to be outside of Clause 7.1.'

118 On 19 August, Academies (Australasia) Pty Limited wrote to Professor Kennett, offering him a casual position for 10 hours a week as a consultant, at a rate of $65 per hour, payable monthly in arrears.

119 In cross examination, Professor Kennett's evidence was that this offer was not consistent with his discussion with Mr Campbell on 10 July and that he never accepted it.

120 Professor Kennett explained that he flew to Iran on 6 September and that on 3 September, he had a discussion with Mr Campbell before he left. Their conversation was:

121 Mr Campbell explained that the offer of 19 August was made after he had discovered that the College was not profitable, as had been represented by Professor Kennett and Mr Pak. His evidence was that the conversation on 3 September was to the following effect:

Mr Kennett: "I would like to talk to you about the employment offer you have made".

Mr Kennett: "I would like more flexibility and not be required to work 10 hours per week, every week, but be able to work more some weeks and less in others."

I said: "I am prepared to increase the proposal so that you can work a maximum of 40 hours per month, and to give you one month's notice of termination of the arrangement if it has been on foot for more than 6 months, but they are the only matters that are negotiable. I need you to respond and let me know if you are going to accept the proposal urgently."

I said: "Hold on. You are not an employee or authorised to go off on our business or at our expense. I have never agreed to or authorised this trip. I am not convinced about the potential of the Iranian market and do not agree to spend any money on such a trip. However if you enrol any students with us we will pay you a commission as we do with others. If you enrol them with other colleges, that's fine. You no longer control this business, and as stated in our letter of offer of employment if you want to work for us then any expenses require prior approval. In this case I have not received your acceptance of our offer and in any event I have not been asked for approval of the trip, and I am not giving it. We re not funding this trip and you are not acting on behalf of our college and you are not authorised to make any commitments on our behalf. Is this understood?

123 In cross examination, Professor Kennett also agreed that to that point, he and Mr Campbell had not agreed on any full-time position and all that was on offer was a six month contract for a part-time consultancy of 10 hours per week. Nevertheless, Professor Kennett insisted that an earlier oral agreement had been reached on 10 July as to the six points he discussed that day with Mr Campbell. He explained that in these circumstances, he found the 19 August offer an insult, to which he did not respond until after his return from Iran on 27 September.

124 Professor Kennett then received a letter of 26 September, in which Mr Campbell advised him that he had until 3 October to accept the offer of 19 August. Professor Kennett explained in cross examination, that he did not go to Iran for the College; and that the trip had been arranged before the sale. He had, however, agreed with Mr Campbell that if he was able to get students while he was there, they could be enrolled at the College, but no such students were acquired. He explained that he '[d]id set up a number of opportunities but you don't acquire students in three weeks. If you did, life would be a lot easier'.

125 Professor Kennett did not respond to Mr Campbell's 26 September letter within the time specified. On 4 October, he replied claiming that at the meeting of 3 September, certain verbal agreements had been reached in relation to the offer of 19 August. In cross examination, Professor Kennett also explained again that he believed that he had made a verbal agreement with Mr Campbell in July; and a further verbal agreement in September. As a result, he expected a revised contract, reflecting that agreement and ongoing discussions of a permanent role. Professor Kennett agreed that this was still open to negotiation and that he was prepared to accept a part-time consultancy. He denied that to that point, he had not received any legal advice about his employment position.

126 On 8 October, Professor Kennett met with Mr Campbell and Mr Bloodworth to discuss the offer of employment which had been made. Mr Campbell's evidence was that the discussion was:

I said "I wanted this meeting to discuss the offer of employment that we had made and to clarify a number of matters, especially the incorrect matters in your recent letter. First, the offer of employment was set out in our letter of 19 August and you did not accept that offer."

Kennett said "I am still eager to work for you but I would require a monthly retainer to be paid"

I said "There was never any proposal for any retainer or other payments to you. The terms in the offer of 19 August are in line with what you agreed 'in principle' to what you would accept, if offered a role, when we discussed the matter on 10 July 2002. The only change that we made to our offer of 19 August was that we would agree to change the hours of work from 10 hours per week to 40 hours per month to allow you more flexibility. This was at your request. The matters in your letter [referring to the letter of 4 October 2002] were not discussed or agreed as you suggest. As you have not accepted the terms we offered, the offer has now lapsed and there is nothing more to discuss. Also the office was have allowed you to use for your own business is now needed. So please remove your belongings from the office within the next week."

128 Professor Kennett also agreed that the concept of a monthly retainer was a new element which he had introduced and that Mr Campbell said:

129 Mr Campbell also explained that he did not agree that Professor Kennett's correspondence of 4 October reflected their discussions. He regarded the 19 August offer as having lapsed and accordingly met with Professor Kennett on 8 October, when they had the following conversation:

Kennett said "I am still eager to work for you but I would require a monthly retainer to be paid"

130 Mr Campbell explained that his letter of 10 October followed this conversation up. He received no reply. The letter disagreed with Professor Kennett's claims and confirmed that the 19 August offer had lapsed. The letter provided:

131 Despite this letter and the discussions he had with Mr Campbell, Professor Kennett claimed that he remained at the College until November 2002, working with students and staff. In January 2003, Professor Kennett sent Garratt's an invoice for work he claimed to have performed, which provided:

132 On Professor Kennett's own evidence, there can be no doubt that this invoice did not reflect the work which he claimed in these proceedings that he had, in fact, performed at the College after the sale. For example, he accepted that his three week Iran trip in September, was not undertaken for the College and that he stopped working at the College in October, or November. He also agreed that there had never been any agreement that he would be paid at the rate of $100 per hour. It follows, that the January invoice does not evidence the terms of any agreement Professor Kennett ever claimed to have reached.

133 In an affidavit sworn on 17 November 2005, Professor Kennett's evidence was that:

134 Professor Kennett insisted that when he had attended the College after the sale, for about three days a week, he undertook work such as teaching certain English and business classes, explaining that these classes were not prearranged or timetabled, but were undertaken to meet staff requests or absences; he dealt with students; he spoke to staff about programmes and he worked with Mrs Benson on various documentation. At another point in the cross examination, Professor Kennett explained that this work took, on average two days a week.

135 Mr Campbell's evidence was that after the sale, Professor Kennett occasionally attended the College, using his old office, while the space was not otherwise required. He understood that the Professor and Mr Pak were there clarifying and reconciling the vendor's books and records as to student's prepayments, an issue still outstanding between Excelsior and Mayrana, the purchaser of the College, in relation to the sale price. He also understood that the Professor was engaged on personal business, while at the College. On Mr Campbell's evidence, Professor Kennett did not represent, or work for Mayrana, nor did he carry out the duties of Principal of the College. To the contrary, Mrs Benson had been appointed acting Principal after the sale and an offer had earlier also been made in July, to another person for the position of Principal, at the same time that Professor Kennett claimed that the position of Principal had been offered to him.

136 It was Mrs Benson's evidence that she accepted ongoing employment at the College after the sale; that she had there observed Professor Kennett following the sale, doing the same things he had done beforehand. She had assumed that he was the Principal.

137 In cross examination, Mrs Benson confirmed that Professor Kennett returned to the College, after his September trip to Iran, but she was not sure for how long, it could have been for a month or so. She recollected that he asked her if she needed help. She also recalled him then seeing students; and students making appointments to see him.

138 Mr Campbell denied that Professor Kennett had ever carried out duties of Principal/President of the College after the sale as he claimed, or that he had consent or authority to carry out those roles, or to perform other work. As to Mrs Benson's evidence, when it was put to him, Mr Campbell said:

139 It is unnecessary to further outline the various other evidence which touched on all of these matters. The conclusions which I have reached from all of the evidence, is that during the sale negotiations with Mr Campbell, Professor Kennett was seeking an ongoing, senior role with the purchaser, Garratt's, after the sale, as well as a directorship of the acquiring company. That possibility was discussed between he and Mr Campbell, both before and after Excelsior received the offer to purchase the College and granted the option to purchase. There was, however, never any discussion in which it was suggested to Mr Campbell that the agreement to sell the College was conditional on such a senior role being offered by the purchaser, or accepted by Professor Kennett. Nevertheless, Mr Campbell certainly discussed with Professor Kennett, the possibility that both such a senior role and a directorship would be forthcoming for Professor Kennett, once the various acquisitions Garratt's was then pursuing, had been finalised.

140 There was a file note in evidence, dated 19 July 2002, when the call option deed was executed, prepared by Mr Rhodes, Excelsior's solicitor, who advised Professor Kennett and Mr Pak on the terms of the sale agreement, including the price formula, which depended on the profitability of the College being established. That note suggested that an ongoing role with the purchaser, was not a crucial factor in the decision to sell, rather it was a concern as to the ongoing viability of the College, which was the active concern at the time. The note said:

141 Mr Rhodes was not called by the applicants to give evidence, even though, quite clearly, his evidence would have been relevant to various of the matters in issue between the parties. While neither Professor Kennett nor Mr Pak agreed that the financial position of the College was a factor in their decision to sell the College, given the evidence as to the state of the College's records and the applicants' inability, even in these protracted proceedings, after the extensive exercises undertaken by Mr Prior, to establish that the College was, in fact operating profitably, a matter which I will deal with below, that this note reflected what the applicants told Mr Rhodes, at this meeting, cannot seriously be doubted. In July 2002, Excelsior was plainly an anxious vendor, given its financial position.

142 Nevertheless, the fact remains that Mr Campbell and Professor Kennett certainly discussed the possibility that both a senior role and a directorship would be forthcoming for Professor Kennett, once the various acquisitions Garratt's was then pursuing, had been finalised. Professor Kennett's evidence in cross examination, confirmed that nothing in that respect was ever finally agreed. Mr Campbell's interest in having such a relationship with Professor Kennett disappeared, once Mr Traynor's advice as to the College's true financial position was revealed in August. As a result, no offer of a senior position was ever made to Professor Kennett, or accepted by him.

143 On all of the evidence, I am, however, satisfied that what was agreed by Professor Kennett and Mr Campbell at their 10 July meeting, was that in the meantime, the Professor would accept an appointment as a consultant, working 10 hours per week, at a rate of $65 per hour, after the sale, as per the terms of Mr Campbell's 'after acquisition' document. Mr Campbell's advice to the Board that this was but an 'in principle' agreement, was inconsistent with Professor Kennett's evidence and with the announcement made to the Stock Exchange on 19 July after the option deed was executed, which, as Mr Campbell conceded, indicated an ongoing role had been agreed with Professor Kennett. I am satisfied that what was agreed was that the part-time consultancy would continue for an initial period and that the position of Principal, and a directorship of one of the Garratt's group of companies, could emerge later. The terms of any such later appointments were not then finalised. Agreement was, however, reached in relation to the immediate consultancy, upon the sale being completed.

144 Consistently with that agreement having been made, the sale was then announced to the Stock Exchange, together with an ongoing role for the Professor. It is difficult to imagine that the announcement would have been made in the terms Mr Campbell and Professor Kennett agreed, if they did not then have a common understanding as to the consultancy which they had discussed, having been agreed. It is highly implausible to think that either of them would have so misled those to whom the announcement was made.

145 The details of the Professor's role were not revealed in the announcement made to the Stock Exchange, nor was the agreement which had been reached in relation to the consultancy documented, other than in the discussion document Mr Campbell had prepared for the hearing. It had been agreed the terms were to be formally documented later. It was common ground that both Mr Campbell and Professor Kennett expected that to occur. Mr Campbell, however, took a different course, once the College's true financial position had been revealed by Mr Traynor's investigations.

146 Mr Campbell changed his mind about the Professor's potential senior role, after the advice he received from Mr Traynor, that the College had not been trading profitably, on the basis earlier represented by the applicants. This led to a renegotiation of the sale price on 1 August. The sale of the College was accomplished by a deed of completion, entered on 16 August, reflecting the revised terms agreed on 1 August.

147 Consultancy terms were then also offered, as outlined in the letter of 19 August. The details of those terms were not acceptable to Professor Kennett, giving Mr Campbell the opportunity to claim that in fact, no agreement to a consultancy had earlier been reached. On the evidence, that involved a repudiation of the consultancy agreement, which had earlier been reached in the July discussions.

148 Professor Kennett then sought to negotiate further as to what was offered in the 19 August letter. No agreement was reached. The offer was not accepted and it later lapsed. While Professor Kennett claimed, the following January, to have been entitled to be paid at the rate of $100 per hour, for 10 hours per week, for work performed from 19 August to 31 January, there was no evidence from which it could be concluded that such an agreement had ever been reached. To the contrary, on the Professor's own evidence it was plain that there was no such agreement. Nor did his evidence support the claim that he had performed all of the work to which the invoice related.

149 After the sale, the respondents agreed that Professor Kennett and Mr Pak should have access to the College and use of their old offices, to seek to reconcile the College's records in relation to student prepayments, a matter outstanding in relation to the final sale price. Excelsior had to make a payment to the purchaser in respect of those fees. Professor Kennett and Mr Pak disagreed with Mr Traynor's calculation of the sum in question and they were given access to the College records, in order that they could seek to reach agreement on the outstanding sum. They were also both contractually obliged to assist the purchaser, for a month after the sale.

150 It was common ground that they each attended the College after the sale, for periods extending beyond that month. Contrary to Mr Prior's assertion that a dispute about the sale price only arose after the sale was finalised, with the collapse of the agreement as to ongoing work, the evidence showed that, while the sale price had been renegotiated on 1 August, the parties recognised they had an ongoing disagreement in relation to the adjustment of student prepayments, which was to be the subject of further negotiations after the sale agreement was entered on 16 August. This was reflected in the final sale agreement.

151 The sale agreement also included a dispute mechanism to deal with the issue of calculation of student prepayments. It was not availed of by the applicants. Instead, in August 2003, they initiated these proceedings. It was common ground that this issue has never been resolved and that Excelsior still owes a substantial sum to the purchaser, in respect of these prepaid student fees.

152 On the evidence, this issue was one which Professor Kennett dealt with while at the College after the sale, but he claimed that he also worked as a consultant, as he had earlier agreed, when he physically attended the College, on two or three days per week.

153 The Professor claimed that after August, he continued performing work at the College, of the kind he had previously performed as Principal, although he accepted in cross examination, that he did not undertake the role of Principal. That was consistent with the evidence that after the sale, Mrs Benson accepted appointment as acting Principal and represented the College in ongoing dealings with the Board of Studies, for example. The College had also offered the position of Principal to another person. There was no evidence that Professor Kennett was asked to perform such work, after the sale.

154 Perhaps it was the case that Professor Kennett conducted himself while at the College during this time, as if, in fact, he remained the Principal and had been engaged to undertake such duties. That was the tenor of Mrs Benson's evidence and would have been consistent with the announcement which Professor Kennett had made to the College, at the time of the announcement to the Stock Exchange. There was no evidence that Professor Kennett did so, as the result of any request made of him by Mr Campbell, or pursuant to any contract or arrangement, which required him to perform the work of Principal, as an employee or otherwise. To the contrary, the oral agreement made in July, was not that he would be employed as the Principal of the College, but that he would initially work for 10 hours a week, as a consultant.

155 Nevertheless, on the evidence, Professor Kennett performed various work at the College after the sale. Mrs Benson, the acting Principal was aware of the Professor's activities and saw nothing untoward them. She certainly took no steps to stop his activities. Nor was there any evidence that she was told by Mr Campbell, that Professor Kennett was not continuing to work at the College after the sale, as had earlier been announced. Mr Campbell denied having authorised Professor Kennett to undertake any such work, but it would appear both that the acting Principal was aware that it was being performed and that the College accepted the benefit of that work. There is every reason to believe that it was, in fact, work of the kind contemplated by the oral consultancy agreement.

156 It follows that in so far as the question of repudiation of the July agreement arises from the 19 August letter and the discussions surrounding its contents, that Professor Kennett cannot be seen as having accepted the repudiation. To the contrary, he continued to act in accordance with the oral agreement. The principle of repudiation in the context of work agreements was discussed by Marks J in Christopher Noel Dayton v Woolworths Limited [2006] NSWIRComm 215 at [44] to [64]. There his Honour observed at [51], 'it may be easier to recognise that an election has been made where an innocent party elects to affirm a contract post repudiation rather than elects to treat the contract as being at an end.' On the evidence, this was such a case.

157 In Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited [2007] HCA 61; (2007) 82 ALJR 345, the High Court recently considered the concept of repudiation and the resulting termination of a contract, by the other contracting party, observing at [56]that:

158 Here, Professor Kennett elected to continue attending the College undertaking work of which the acting Principal of the College was aware, while he pursued the ongoing negotiations with Mr Campbell, as to the terms of the consultancy. Had Mr Campbell truly been of the view, that there was no proper basis for Professor Kennett continuing to remain at the College, particularly after receiving his 4 October letter, undoubtedly he would have taken steps available to him, to ensure that Professor Kennett stopped attending the College, where he continued to perform such work. Mr Campbell never advised Mrs Benson that Professor Kennett no longer had any association with the College, or with the purchaser. There was simply no evidence that such advice was ever given either to College staff or to students.

159 What must also be considered is the circumstances in which the consultancy agreement was brought to an end. Professor Kennett was eventually asked by Mr Campbell to remove himself from the College premises and he did so. When this occurred was not established, because Professor Kennett's evidence was unclear as to when he ceased working at the College. He only recollected that it was some time in October or November. Nevertheless, it is clear on the evidence, that thereby the consultancy was brought to an end. Thereafter, neither party conducted themselves on the basis that the consultancy remained on foot and no further work was performed by Professor Kennett, despite what the January invoice later claimed.

160 On the evidence, it must be concluded that the consultancy contract was thereby brought to an end by the respondents, in all likelihood before the conclusion of the initial three month term agreed, without payment for the work performed and without giving the one month's notice, agreed by Professor Kennett and Mr Campbell in July.

161 Mr Pak also claimed to have made an oral agreement with Mr Campbell, prior to the sale, that he would continue working in a marketing position at the College after the sale, being paid at the same $65 hourly rate, which had been agreed with Professor Kennett. Unlike Professor Kennett's position, there was no documentary evidence of such an offer having been made.

162 Professor Kennett's evidence as to his understanding of what was proposed for Mr Pak was earlier set out. It corroborated Mr Pak's evidence. Mr Campbell's evidence was, initially, that Mr Pak never wanted to work for the purchaser and so possible employment was never discussed. In cross examination, Mr Campbell said that while he had discussed the possibility of an ongoing role at the College for Mr Pak, Mr Pak had advised him that he wanted to retire. Consequently, Mr Pak had never been offered any position after the sale, nor had he accepted one.

163 There was no dispute on the evidence, however, that Mr Pak remained at the College, occupying his old offices after the sale, until he was asked to vacate the office in December 2002. Mr Pak claimed to have been undertaking marketing work for the College during that period. Such work included approaching the College's agents, to establish if they were willing to enter new agency agreements with the purchaser, but with commissions reduced from 25 to 20%.

164 Mr Campbell claimed that Mr Pak did not perform any work for the College, but that he was merely present to attend to the outstanding reconciliation of prepaid student fees. Given the period of time during which Mr Pak remained at the College, considerably longer than Professor Kennett, this evidence was somewhat implausible. Nor, it should be noted, was evidence called by the respondents from anyone who was employed to perform the work Mr Pak claimed to have performed for the College, after the sale.

165 Mrs Benson was the acting Principal of the College. In that position she was present at the College and on her evidence, aware of Mr Pak's activities on behalf of the College. In cross examination, her evidence was that after the sale, until some time in December, she saw Mr Pak at the College every day, from about 8.30am to 5.30pm or so. She could remember being told that he was continuing in the same marketing role as he had before. She observed him continuing to see students and agents during this period. Again, it appears that Mr Campbell took no steps to advise College staff or students that Mr Pak no longer had any role at the College.

166 In January 2003, Mr Pak also sent an invoice for the work he claimed to have performed, which was never paid.

167 Again, the evidence as it stands leaves open the clear possibility that despite Mr Campbell's denials, an oral agreement for a consultancy was made with Mr Pak, before the sale, as Mr Pak claimed. On the evidence of the acting Principal Mrs Benson, Mr Pak performed marketing work for the College after the sale. The College enjoyed the benefit of that work, until the contract was terminated, without notice in December.

168 It was also Mr Pak's evidence that he would not have sold the College, or agreed to a three year restraint without the consultancy having been agreed. I am unable to accept that evidence. There was no evidence that such a position had ever been the subject of any discussion, either with Mr Campbell, or Professor Kennett. I earlier referred to the state of the College's finances and Mr Rhodes' note. That evidence made Mr Pak's evidence in this respect, somewhat implausible.

169 It is convenient to make some further observations at this point, in relation to credit. I earlier outlined the considerable difficulties with Mr Pak's cross examination and the repeated attempts, late in the trial, to lead further affidavit evidence from Mr Pak, in an attempt to bolster what, by then, had plainly been perceived by the applicants' legal advisers as a weakness in the evidentiary case.

170 I have serious reservations about certain aspects of the conduct of these proceedings, by the applicants' legal representatives. I do not include Mr Latham, in that observation. The impact of their approach to the conduct of the case, both on its course and the case presented for the applicants, has resulted in various applications made for the applicants being granted at certain points, with costs orders being made against the applicants, or the question of costs reserved, with the respondents foreshadowing that costs orders will be sought against the applicants' legal representatives. Those matters are yet to be argued.

171 I have been anxious to ensure that such matters did not have an inappropriate impact on my consideration of certain matters of credit. So far as Mr Pak was concerned, the approach which he adopted in answering some matters raised with him in cross examination, was also problematic, as I have earlier explained.

172 Mr Pak was an elderly man, who was apparently not in good health, and who had great difficulty in answering some questions raised with him. He was plainly uncomfortable and irritated on occasions, for reasons which were not readily apparent and ought not to be guessed at. This is one case where a witness' demeanour in the witness box, will truly not be readily apparent from a reading of the transcript, but which must have an impact on the determination of a number of questions of credit. Mr Pak's repeated reluctance to answer some questions, even when there could be no possible doubt that he had understood them, because he had the assistance of an interpreter, meant that his evidence had to be approached with some reservations as to its accuracy.

173 Having given these matters careful consideration, I have concluded that some of the answers which Mr Pak gave in his cross examination were both implausible and somewhat self serving. Those were not, however, reservations which I had in relation to his evidence, that he had agreed with Mr Campbell to perform marketing work at the College after the sale on a consultancy basis, at the same rates as Professor Kennett had agreed. Professor Kennett's evidence supported that evidence, as did the evidence of Mrs Benson. In this respect, I am unable to prefer Mr Campbell's denial that while a position was discussed, no consultancy agreement was reached with Mr Pak. It seems to me entirely implausible, that Mr Campbell would have permitted Mr Pak to continue occupying his office at the College, until December 2002, had there been no basis for him being there, other than attending to the checking of prepaid student fees still outstanding.

174 On the evidence, Mr Pak attended the College every day, from about 8.30am to 5.30pm. Work had to be done in relation to the outstanding student prepayments issue, which Mr Pak attended to. What also needs to be considered is the evidence that during this period, Mr Pak received a substantial cheque for some $38,000, which it was common ground ought to have been paid to the purchaser, but which he banked in Excelsior's account. That money has never been accounted for. This opportunity appears to have arisen from the work Mr Pak was doing in relation to the agents Excelsior formerly dealt with. Mr Pak's evidence was that he was then engaged in negotiating reduced commission fees with them. How much time was finally spent by Mr Pak attending to Excelsior's concerns, rather than in performing consultancy work, was not much addressed in his evidence, explaining no doubt the very belated attempts made to bolster this aspect of his case.

Period	Weeks	Hours	Amount
19 August - 30 August	2	80	$5,200.00
2 September - 27 September	4	160	$10,400.00
30 September - 1 November	5	200	$13,000.00
4 November - 29 November	4	160	$10,400.00
2 December - 20 December	3	120	$7,800.00
6 January - 9 January	1	32	$2,080.00
TOTAL	19	752 Hours	$48,880.00

176 I will return to this issue in the context of money orders but note at this stage, that, on the evidence, I am satisfied that Mr Pak had agreed to a consultancy, to be paid at the rate of $65 per hour, for performing marketing work at the College after the sale. That agreement was brought to an end, without notice, by Mr Campbell in December 2002. Mr Pak was never paid for the work he performed under the consultancy.

177 In addition to the claim for payment for work performed, the complaints advanced related to notice and remuneration. Both applicants sought variations, requiring the giving of between 10 months and 2 years' notice. Payment was sought at the rate of $120,000 per annum in the case of Professor Kennett, and at the rate of $65 per hour, in the case of Mr Pak.

178 I can see no basis upon which it could be concluded that the rate of $65 per hour agreed by Professor Kennett for the initial consultancy work was unfair. There was simply no evidentiary foundation for a rate of $120,000 per annum for the work in fact performed, on the evidence.

179 The claim rested on Professor Kennett's opinion, that $120,000 would have been a fair rate, had he been employed full-time as Principal. No such position or rate was ever agreed. Reliance was also placed on evidence, which showed that an offer of a Principal's position had been made by Garratt's to another person, at the rate of $150,000 per annum. As I have found however, Professor Kennett never performed that work for the purchaser, and no agreement to such a position was ever concluded.

180 The possibility of such a position foundered, after Mr Campbell discovered that he had been misled as to the Colleges' profitability. On their own case, in these proceedings, the applicants had operated the College business on a basis where the College had maintained such inadequate records, that they were completely unreliable. It must follow that they were also an entirely unreliable basis upon which representations as to the profitability of the College should have been made, during the sale negotiations. On the evidence, an agreement that Professor Kennett be given a position of Principal was not a condition, or a precondition, of the sale of the College. The prospect that such a position would emerge later, when Garratt's various acquisitions were finalised, was plainly dashed when it became apparent that the College had operated unprofitably, contrary to the representations repeatedly made by the applicants.

181 On Mr Campbell's evidence, after the sale, it was also discovered that there were problems with the College's entitlement to offer various courses, contrary to earlier representations. Further, payments of some $38,000, made after the sale were banked into Excelsior's account by Mr Pak. It seems that Professor Kennett remains a director and majority shareholder of Excelsior and Mr Pak a director, and minority shareholder. They have never accounted to Mayrana for that money. Nor have they ever ensured that payments outstanding from Excelsior, in relation to prepaid student fees have been made. It would defy commonsense to think that in the face of problems such as these, any position of Principal, with a College owned by any company in the Garratt's group would, or could have materialised for Professor Kennett. Such conduct on his part would have made employment in such a senior and responsible position, entirely untenable. In those circumstances, the claim for payment at the rate of $120,000 for the work in fact performed, simply had no foundation.

182 Nor can I see any basis upon which it could be concluded that the consultancy agreements were unfair, in not providing for notice of between 10 months and 2 years.

183 It cannot be overlooked that Professor Kennett's consultancy contract was brought to an end without notice. The contract was for an initial six month period, but terminable after three months, with the giving of one month's notice. In the circumstances, given the time at which the contract was brought to an end, probably before the end of the initial three month period, I have concluded that a fair period of notice would then have been nine weeks. This would reflect a further payment of $5,850.

184 Mr Pak worked until some time in December, when he was asked to leave. There were no agreed hours. He claimed in his January invoice that he had worked 40 hours per week. That he was at the College during such hours, was supported by the evidence of Mrs Benson, as was his claim that he was performing marketing work. What also needed to be considered was the obligation to assist the purchaser for a month and the work undertaken for Excelsior in relation to prepaid student fees. Doing the best I can on the evidence, I have concluded that a fair assessment of the evidence was that Mr Pak performed the claimed work for a period of some 14 weeks. This would reflect a sum of some $36,400.

185 Mr Pak also claimed 10 months to 2 years' notice. In all of the circumstances of the case, I am unable to see that he, in fairness, ought to have received more than four weeks' notice, payment in lieu of which would amount to a sum of $10,400. Whether he ought to have received any notice at all, given the circumstances in which he came to bank into Excelsior's account, a cheque for $38,000 which it was accepted in these proceedings was money which unquestionably ought to have been paid to Mayrana, is another matter, to which I will return.

186 In final submissions, no money orders were pressed in relation to the claimed unfairness of the sale agreement restraint provisions. Accordingly, I do not further consider those claims.

187 The claims advanced in relation to the sale of the College, depended upon the provisions of s 106(2A) of the Act, which provides:

(2A) A contract that is a related condition or collateral arrangement may be declared void or varied even though it does not relate to the performance by a person of work in an industry, so long as:

(a) the contract to which it is related or collateral is a contract whereby the person performs work in an industry, and

(b) the performance of work is a significant purpose of the contractual arrangements made by the person.

188 In Kennett (No 4), I concluded as to the requirements of s 106(2A)(a) that:

190 These conclusions were challenged by the respondents, as being available in the face of the evidence as it now stands. The respondents also further argued that no unfairness of the kind asserted by the applicants had, in any event, been demonstrated on the evidence. It is unnecessary to come to any final conclusions as to whether a significant purpose of the contractual arrangements here in question was the performance of work, given the other conclusions which I have reached on the evidence, as to the merits of the claim. Suffice it to say, I am entirely doubtful that such a case was finally established.

191 The nature of the claimed unfairness, as I understand the case finally advanced for the applicants, was of essentially three kinds. Firstly, that the formula originally agreed, whereby the sale price would be determined having regard to the College's profitability, was unfair. Secondly, that the respondents' conduct, which included the due diligence exercise undertaken by Mr Traynor and the resulting meeting on 1 August, where the sale price was renegotiated, were unfair, so as to make the contract unfair; and finally, that the revised terms were unfair, given the financial outcomes for the applicants.

192 Somewhat curiously, underpinning all of these complaints, was the claim that the financial affairs of the College were so poorly managed by the applicants, that they provided an opportunity to the respondents to unfairly exploit them in the negotiations as to the sale price of the College. That claim has to be approached, having in mind the longstanding jurisprudence of the Court and its predecessors, in cases such as Swann & Anor v Ultratune Aust Pty Ltd & Anor (1983) 5 IR 284, where Watson J observed at 296:

193 On one view of the case as finally put for the applicants, they were entirely the authors of their own misfortune. This conclusion seems irresistible, given the evidence as to the way in which they conducted the College's affairs; how they kept its financial records and how they approached their negotiations with Mr Campbell. The reasons for those observations, will be explained below.

194 The applicants' various complaints as to the fairness of the sale price was also wrapped up with the events which followed the sale of the College, namely the alleged collapse of the Garratt's share price, on Professor Kennett's original affidavit evidence, to a value of nine cents a share. That had a significant impact on the applicants, who had accepted a large number of Garratt's shares, as part of the purchase price. Ultimately, this aspect of the complaint was not much explored in the case, but it ought not to be overlooked that even the first offer, which the applicants accepted, involved them taking half of the agreed $700,000 sales price, by way of Garratt's shares. Plainly, from the outset, as experienced businessmen, the applicants were prepared to accept the risks inherent in accepting such shares, as a substantial part of the agreed purchase price.

195 I have earlier outlined how it came to be that Mr Latham acknowledged that the Court could not make orders of avoidance or variation of the sale agreement, because Excelsior, the vendor of the College, was not a party to these proceedings and had not moved the Court for such orders. It seems that this concession was properly made, having regard both to what s 108 of the Act contemplates, and the evidence, as it finally stood. It was also consistent with the approach discussed by Handley AJA in Yim v Industrial Relations Commission of NSW [2007] NSWCA 77; (2007) 162 IR 62 at [100] - [102]:

[100] The only claim based on the contract of employment was for unpaid wages at the contract rate. This would not attract the Commission's jurisdiction which depends on an order being made which avoids or varies the contract or arrangement. The contract of employment was with Korea Ginseng Australia Pty Ltd (the company) which was not a party to the proceedings in the Commission.

[101] If the Commission has jurisdiction over a particular contract etc and the parties to that contract are parties to the proceedings an order avoiding or varying that contract will have its intended effect. If the other party to the contract is not a party to the proceedings it will not be bound by any order of the Commission and a purported order avoiding or varying the contract will be ineffective. The other party will not be bound by the order, and the contract in its original form will remain in force.

[102] The Commission has no jurisdiction therefore to avoid or vary the employment contract with the company in the proceedings as presently constituted. Moreover the company cannot be added as a respondent because the 12 months time bar in s 108B has long since expired and cannot be extended: BEA Systems Pty Ltd v Industrial Relations Commission (NSW) (2005) 63 NSWLR 347, 143 IR 111.

196 Why Excelsior was not a party to the proceedings was never explained. The applicants were the only shareholders and directors. Whatever be the explanation, the absence of the vendor company was a significant impediment to the case which the applicants finally pursued. Nevertheless, the applicants claimed that money orders of $300,000 could flow to them, consequential upon the variation of their employment contracts.

197 I can see no basis upon which such a conclusion could be reached. I was entirely unable to see how the order sought could be made, consequential upon any of the variations sought by the applicants to their consultancy agreements. Tellingly perhaps, Mr Latham had to concede that the applicants had not addressed such orders in their written submissions and could advance no oral submissions by way of explanation of the foundation for the exercise of such a discretion.

198 In any event, I am well satisfied that such an order could not be made, even if some jurisdictional foundation could be found for it, as a money order consequential upon a variation of the consultancy contracts, given the evidentiary case. Again, this difficulty was acknowledged by the concession in the applicants' written submissions, that the evidence had not established any particular level of profit for the College.

199 The evidence of Mr Pak and Professor Kennett, as it emerged in cross examination, certainly showed that there was some disarray in the records maintained by Excelsior. Professor Kennett and Mr Pak were the working proprietors of the College through their shareholding in Excelsior. On his evidence at the outset of the hearing, Professor Kennett was in possession of certain of the College's records, which he had used to calculate the money claims then advanced by the applicants in these proceedings. His affidavit evidence, was that the College's profit in the relevant year was $34,381.00, a figure on which the applicants relied in the conciliation proceedings. Despite this, Professor Kennett had great difficulty in producing such documents, even in answer to notices to produce served upon him by the respondents. When finally produced, the case as to the money orders sought essentially collapsed, as they were then advanced, because Professor Kennett's cross examination showed that the documents he relied upon, in preparing his evidence as to the College's income and earnings, did not support the evidence he gave. The result was that objections to aspects of his affidavit evidence were upheld. This, no doubt, helped explain why Mr Prior, who had put on certain opinion evidence as an expert, later resiled from those opinions and was then engaged by the applicants to provide further expert evidence, albeit on a different basis. He, too, experienced difficulty with obtaining documents relevant to the exercises he undertook, from the applicants, but eventually produced calculations to show profit of $300,000, after he gained access to documents produced by the respondents.

200 The evidence showed that when negotiations for the sale of the College commenced, Professor Kennett and Mr Pak each had a belief that the College was operating profitably, despite the losses sustained by the College in the previous financial year. Professor Kennett denied discussing with Mr Campbell, that in the financial year ending June 2002, the College was operating on the basis of a profit of over $300,000, maintaining that they had only ever had a general discussion as to profit. Mr Campbell's evidence was that he received repeated assurances from both Professor Kennett and Mr Pak as to that level of profitability. Professor Kennett, however, accepted that he had agreed that Mr Pak was to provide information as to profitability to Mr Campbell, in answer to a list of questions, which the purchaser required answered, including in relation to financial matters.

201 That the College was operating on the basis of a $300,000 profit was certainly the information which was provided to Mr Campbell. The source of that understanding and its reliability was, however, another matter, about which there was conflict.

202 Professor Kennett's evidence in cross examination was that in June 2002, Mrs Brash was the book keeper employed by the College to keep its financial records. He claimed to have been unaware that Mr Pak had told Mr Campbell that the profit level was $300,000, or that Mrs Brash had provided financial information to Mr Campbell to quite different effect. There was no question that Mrs Brash informed Mr Campbell that the College had a profit as at 31 May 2002 of some $102,000. Professor Kennett denied discussing that information, or earlier advice from Mr Pak that the College had been operating at a profit of $300,000, with Mr Campbell, before an offer to purchase the College was received. He also denied having discussed such a profit level with Mr Pak. Professor Kennett claimed that at the time of these negotiations, he had no idea what profit level the College was operating at.

203 On Professor Kennett's evidence, it was not until he received the offer letter of 5 July, that he was aware of the represented profit level of $300,000. He then claimed to have asked Mr Pak if the College had made such a profit and that Mr Pak had assured him, that he had looked at the profits with Mrs Brash. Professor Kennett agreed that he understood that the offer then made, was entirely dependent on the College's profit in 2002, not being less than $300,000 and if it was, the sale price of $700,000 (half in cash, half in Garratt's shares) would be proportionately less. The agreed formula was:

204 Professor Kennett agreed that he understood this offer and accepted it on 9 July, but denied having met and discussed it with Mr Campbell. On his evidence, he accepted the offer, without obtaining either legal advice or financial advice. The only advice which he sought was from Mr Pak. He could not recollect speaking to Mrs Brash. If he had, she would presumably have told him that she had advised the purchaser that day, that the College's profit for the year was in fact only some $25,000. Professor Kennett also claimed in cross examination, that he had not checked the accuracy of what Mr Pak told him, relying on Mr Pak, who had responsibility for the College's financial affairs. It has to be observed that Professor Kennett's evidence as to those matters, was rather implausible and was contradicted in various respects by Mr Pak and even by his own first affidavit, where Professor Kennett claimed that he had examined 'overall figures, bank balance and the previous financial document for the year ending 2000/2001'. It was also inconsistent with the note made by Mr Rhodes in July, earlier quoted.

205 Mr Pak's evidence was to entirely different effect, claiming that his responsibility at the College was for marketing. In cross examination, it was his evidence that at the time of the negotiations with Mr Campbell, the College trust account stood at more than $3 million. He said that he had then asked Mrs Brash to tell him roughly, what the College profit was, at the moment. She gave him a piece of paper, advising that they were making more than $300,000 profit. That was what he advised Professor Kennett and Mr Campbell, who, he agreed, was interested in the profitability of the business, from the outset of their discussions.

206 Mr Pak had great difficulty recollecting dates of various meetings, various conversations and various documents. He agreed, however, that he referred Mr Campbell to Mrs Brash, to provide answers to questions which he had. Mr Pak could not recollect whether he saw the information Mrs Brash subsequently provided to Mr Campbell, before it was sent to him. There was no doubt however, that on 21 June, Mrs Brash sent Mr Campbell a letter, advising that the College's net profit for 2002, to that point, was $101,815.

207 Mr Campbell's evidence was that this led him to meet with Professor Kennett and Mr Pak on about 21 June, to advise them that he did not intend to proceed with the acquisition, given Mrs Brash's advice as to profit. The applicants denied that this occurred. Mr Campbell's evidence was that he was told by Professor Kennett that the figure was wrong and that profit did exceed $300,000. Mr Campbell suggested that:

208 There was no contest that Mr Campbell was the author of the formula agreed. Nor, however, could there be any doubt that the source of the $300,000 profit figure, was the applicants. Both Mr Pak and Professor Kennett understood this formula and were content with it at the time. On all of the evidence, it appeared that Excelsior was by then an anxious vendor. This was denied by the applicants who, however, provided no other explanation as to how and why this formula was agreed.

209 Mr Pak also claimed that at the meetings he attended with Mr Campbell and Professor Kennett, he did not get deeply involved in the discussions. He explained that he was only a 40% shareholder and as such, he listened to Professor Kennett. He agreed, however, that the offer price which Excelsior received, always depended on profitability of at least $300,000. He understood that if that level of profit was not reached, the sale price would reduce. Mr Pak agreed that he was content with the offer received on that basis and that when the offer was discussed at a meeting on 2 July, Mr Campbell asked that the profit figure of $300,000 be confirmed again, and that he did so.

210 Mr Pak also agreed that while Professor Kennett was in Iran for a period, that it was he, who was negotiating with Mr Campbell. On 5 July, the written offer was made. Mr Pak agreed that he understood that offer, including how net profit was to be calculated and that a due diligence was then to be conducted by the purchaser. He discussed the offer with Professor Kennett on his return and then met with Mr Campbell. Mr Pak agreed that Professor Kennett wanted the transaction completed quickly. After the meeting, the offer letter was signed by he and Professor Kennett, on 9 July.

211 Mr Pak also agreed that he then discussed the sale with Mr Campbell and told him that he was happy about the sale; that he did not agree with how Professor Kennett operated and that it was he, Mr Pak, who did most of the work. Mr Pak disagreed, however, that any disagreements with Professor Kennett about management style, was his reason for wishing to sell the College.

212 Mr Pak also explained that while he later executed the deed of sale, his English was not good enough to permit him to completely understand it. He relied on his solicitor's advice. He agreed, however, that the sale price reflected the agreement earlier reached. His advice to Mr Campbell reflected his understanding, obtained from Mrs Brash, that the College profit was about $300,000, but on his evidence, Mr Pak had not checked this figure independently. On Mr Pak's evidence he did not have responsibility for the College's financial affairs. He was a 40% shareholder and Professor Kennett 60%. Financial matters were Professor Kennett's concern, not his. This evidence entirely contradicted that of Professor Kennett.

213 Evidence was called from Mrs Brash. She had control of the College accounts and banking at the time of the sale. She denied ever having an understanding that the College was operating on the basis of a profit level of $300,000 in 2002, when the College was sold. She also denied that she had ever provided such advice to Mr Pak. That denial was consistent with the documents which Mrs Brash provided to Mr Campbell, which initially advised that in May 2002, profit stood at $101,815. In early July, that figure was revised, downwards to some $25,000 for the 2001/2002 financial year.

214 In considering the applicants' evidence, it cannot be overlooked that a call option deed was signed on 19 July. There the price formula was renegotiated, on terms then proposed by the applicants, to exclude certain 'extraordinary' expenses, in calculating profit. This was to the applicants' undoubted advantage.

215 It would appear on the applicants' evidence, that the concept of the College operating at a profit level of $300,000, only ever arose because of Mr Pak's misunderstanding of advice Mrs Brash had given him, and because neither Professor Kennett, nor Mr Pak, themselves then checked the basis of that understanding, by looking at the College's financial records. On the applicants' case, they never sought any confirmation as to the accuracy of their understanding from people such as Mrs Brash, the College's external accountant Mr Rodgers, or anyone else. Nor did they ever themselves look at the College's financial records, to satisfy themselves as to the accuracy of their understanding. Given the renegotiation of the price formula in the 19 July call option deed, that evidence was difficult to accept.

216 Clearly, before the call option deed was entered by Excelsior on 19 July, the applicants had a concern as to what sale price the agreed price formula would produce, which they sought to address in their negotiations with Mr Campbell. That the applicants would have given no thought at all to what the price formula would produce, given what it depended upon, would have been quite surprising. The case which the applicants pursued in these proceedings was that the various systems which Excelsior operated were entirely unreliable. The applicants themselves gave no detailed evidence about this. It was a concept which emerged in Mr Prior's amended opinion evidence. It would seem that this was not a matter of concern to the applicants at the time of the negotiations about the sale price of the College, which all revolved around representations that the College was operating profitably and the purchaser being given access to the College's records and employees, so that a due diligence exercise could be conducted, to satisfy the purchaser as to the College's financial performance.

217 A fundamental aspect of the attack mounted by the applicants on the fairness of the sale agreement, through Mr Prior's expert evidence, was the complaint that the College's systems and financial records were unreliable, so unreliable, in fact, that Mr Traynor ought not only to have uncovered their unreliability, but ought to have advised the applicants of the difficulty and ought to have assisted them in the renegotiation of the sale price with his clients, Garratt's.

218 The curious thing about the claim so advanced, was that Professor Kennett and Mr Pak were the working proprietors of Excelsior, the vendor company of the College. It was they who managed the College business and the records which it maintained, with the assistance of the employees they engaged, such as Mr Brash and Mrs Brash. The College business had to be managed in a way which satisfied various statutory requirements, in relation to how students' fees were dealt with and accounted for by Excelsior. The finances of Excelsior were independently audited by Mr Rodgers. It was the applicants who made representations as to profitability to the respondents. Given the applicants' evidence, particularly that given by Professor Kennett in cross examination, it cannot be doubted that, in reality, they had a real understanding of the systems Excelsior operated and of difficulties inherent in the way in which those systems were maintained.

219 Despite all of this, it was common ground that Mr Campbell was repeatedly assured that the College was operating at a $300,000 profit level, at least by Mr Pak, even though, at the same time, Mrs Brash was providing advice to entirely different effect.

220 Mrs Brash was directed to provide various information to Mr Campbell. She did so in June 2002. That information included advice that the College had an operating profit to May, of only some $102,000. Despite the suggestions by Mr Pak and Professor Kennett, that they had not understood this to be the position at the time, I am well satisfied that if that truly was the case, it can only have been the result of a total failure by Professor Kennett and Mr Pak, to pay attention to their own affairs, in any sensible fashion. I believe this to have been exceedingly unlikely, given the evidence as to the advice which they sought from Mr Rhodes on 19 July and the note he made of this discussion, which referred to the need to change the price formula. That formula was then in fact renegotiated in Excelsior's favour. It was Professor Kennett's evidence that it was he who negotiated these amendments to the formula with Mr Campbell, in relation to how the College's profit was to be assessed, Mr Campbell agreeing to exclude back payments to English teachers and costs of relocation of the College premises in December 2001, in calculating the College's profit.

221 Somewhat incredibly, on the evidence, despite their understanding of the formula, to which they had agreed and its renegotiation in July, Professor Kennett and Mr Pak claimed they had not taken any steps to satisfy themselves as to the actual result of the application of the price formula. Neither of them, for example, asked either Mrs Brash or Mr Rodgers to undertake the proposed calculation, or to advise them what the outcome of the application of the formula would be, given the College's financial performance. Nor did they seek, themselves, to make any attempt at the calculation. Nevertheless, when the call option and sale agreement were both signed for Excelsior in July, the result was that Garratt's had until 31 August 2002, to exercise the call option.

222 The fairness of the original price formula was challenged, as I noted, as being unfair, in having regard to profitability of the College. On the evidence, that complaint was not made out. Purchase of a business as a going concern by reference to its profitability, is hardly an uncommercial basis for a sale. On the evidence, there was nothing inherently unfair about the agreement reached on that basis, in this case.

223 It was apparent that profitability was clearly understood to be a concern of Garratt's, from the outset of the negotiations, which followed Mr Campbell's approach to Mr Pak. On the applicants' case, they did not have to sell the College. It was they who made representations as to profitability, which had no foundation in fact. The complaints about the inadequacy of the financial records which had been maintained for the College by Excelsior, provided no basis for any complaints as to the unfairness of the bargain which the applicants freely made, which involved the sale price for Excelsior being determined by reference to its profitability. The applicants were, after all, the managerial mind of the vendor of the College, Excelsior, which accepted the offer made in early July. They were working proprietors of the business. The records Excelsior maintained were entirely within their control, even though they disagreed in their respective evidence as to which of them, in fact, had responsibility for such matters. After further consideration, the applicants renegotiated more favourable terms, before signing the call option deed in July, when Excelsior agreed to sell the College as a going concern. The evidence showed that the applicants had legal advice, which confirmed the risk flowing from the formula, if profitability was less than represented. I can find no unfairness in any of those circumstances.

224 Mr Traynor was engaged by Garratt's to conduct a due diligence exercise, as to the calculation of the College's net profit, pursuant to the agreed formula. Mr Traynor was thus given access to the College and its staff, systems and records. At the end of July, Mr Traynor advised Garratt's of his view, that the College had, in fact, traded at a loss of some $126,000. It was this advice which led to the renegotiation of the sale price, at a meeting on 1 August. What was agreed, in the meeting attended by Professor Kennett, Mr Pak, Mr Campbell and Mr Traynor, was that the price formula would be renegotiated to:

225 The purchaser later calculated that the prepaid student fees amounted to $327,945, after setting off the $149,000, referred to in paragraph (b) of the formula. This left some $178,000 which the applicants had to pay to the purchaser under the revised formula. After some further negotiations, it was agreed that Excelsior would be given time to check the calculation, with the result that $130,000 was paid to the purchaser on 16 August, leaving a balance due of some $48,000. This has never been paid by Excelsior.

226 What was next challenged, through expert evidence of Mr Prior, was the reliability of the conclusions Mr Traynor had reached in his due diligence exercise, in circumstances where the case which the applicants advanced was that the computer systems which the College operated and the information which they produced as to profitability in 2002, which was the subject of the exercise Mr Traynor conducted, were quite unreliable.

227 How the expert evidence called from Mr Prior, which the applicants finally relied on, came to be called, was explained in Kennett (No 7), where leave to call that evidence was granted. Similar leave was granted in relation to further affidavit evidence then sought to be called from Mr Rodgers, Mr Brash and Mrs Brash.

228 Mr Prior finally had access to all of Mr Traynor's reports, working papers and affidavits. Unlike Mr Traynor, he had not, however, had access to the College's operating computer systems, or even, it would appear, various records which Professor Kennett possessed. He concluded, nevertheless, that the College records were unreliable and that the information which they had produced, in respect of which Mr Traynor's due diligence had been conducted, should not have been utilised in determining what the College's net profit had been. That conclusion was reached, even though it appears that, unlike Mr Traynor, Mr Prior had undertaken no checking process, to establish whether or not, in fact, the College's systems had produced unreliable results.

229 What Mr Prior did in his exercise, was to produce a hypothetical revenue figure for the College. In doing so, he had regard to the 2001 College price list and the information produced by the College's CMS database system, as to the names of students and the courses which they undertook. Knowing that the College did not in fact charge students the prices appearing in this price list and that such prices were discounted by Mr Pak, as a matter of his discretion and negotiation, Mr Prior, nevertheless, ignored the information maintained in the CMS system as to what students had, in fact, been charged. Instead, Mr Prior developed a notional charge for each student, by applying a discount factor to the price list, which he fixed at some 19%. The reliability of that discount figure was not established. In his evidence, Mr Prior said that he was aware that discounts of up to 100% were offered by the College and that in his opinion, a range of 20-30% was a reasonable discount. That was an obvious difficulty with the discount factor Mr Prior, in fact, selected for his exercise. There were other problems with the approach Mr Prior adopted to establishing fees paid by students, but even given its shortcomings, the result of his approach to discounting the College price list fees, was not then used to calculate the College's hypothetical revenue.

230 Instead, Mr Brash was then engaged to input data into a spreadsheet which Mr Prior had devised, in order to calculate a hypothetical revenue figure for the College. The difficulty with that approach was revealed by the evidence given by Mr Brash in cross examination, as to how he undertook that exercise.

231 Mr Brash explained that he had used a report produced by the College's CMS system, as the source of the students' names and students' numbers, as well as start dates and end dates of the courses for some students. He entered that information in the spreadsheet. In other cases, course dates had already been entered in the spreadsheet. The spreadsheet also already contained certain commission amounts. The spreadsheet then calculated a course fee for each student. Mr Brash also, however, determined that other adjustments should be made to individual student fees, so produced, 'if they appeared excessive'.

232 Mr Brash explained that he had kept no record of what adjustments he had made as a result of this approach, or the students in respect of whom he had made those adjustments, in creating the spreadsheet. Mr Brash explained that he had not been asked to do so. It followed that the basis upon which Mr Brash had altered the course fees allocated to particular students in the spreadsheet, was not 'transparent', to use a word Mr Prior used repeatedly to describe the approach which he had devised, to this calculation of hypothetical revenue. The undoubted result of the exercise was that there could be no certainty that the spreadsheet reflected what students were actually charged. There was no reference to, or explanation of, this aspect of the exercise Mr Brash had undertaken, in Mr Prior's report. It emerged only in cross examination of Mr Brash. The result was that Mr Brash's approach could not be tested, given that changes to student course fees in the spreadsheet, were made by Mr Brash on an entirely impressionistic basis, in relation to the calculation of fees of unidentified students.

233 That it might have been possible to identify which students were affected by Mr Brash's approach and how, by a line by line examination of the schedule, was no answer to the obvious deficiencies in the approach Mr Prior had adopted to calculating the College's profitability in 2002. The end result was that there could be no certainty that the gross College revenue figure produced as the result of Mr Prior's approach to the calculation of revenue via the spreadsheet and the adjustments made by Mr Brash, bore any real relationship to the College's actual revenue. Nor was it apparent that this exercise had produced figures any more reliable than the system which the College itself had operated.

234 The inherent difficulty with Mr Prior's approach was revealed by Professor Kennett in cross examination, where he explained that:

235 That the CMS database information maintained by Mr Brash at the time such decisions were made, was likely to have been a more reliable record of the College's true revenue in 2002, than the later theoretical exercise Mr Prior had devised for Mr Brash to undertake, seemed entirely obvious on this, and other evidence.

236 The evidence was that the College's CMS database system, recorded the actual course fees students had been charged, by reference to the invoice issued to the student. This system also maintained information as to commission payments made in respect of students. That information had been input into the system by Mr Brash, whose evidence in cross examination was that he endeavoured to make sure that the record so kept, was an accurate one. The fees charged to students were determined by Mr Pak. As Professor Kennett explained, there was not just one fixed set fee for the courses which the College offered. The fee actually charged, was recorded in the invoice issued to students and that information was then transferred to the CMS database. The accuracy of the CMS database recording of student fees had been subjected to a checking process, in Mr Traynor's due diligence exercise. That had been undertaken by way of a comparison between the database and the student files, which the College also maintained. That process had led Mr Traynor to the conclusion that the database record was sufficiently reliable for the due diligence exercise he was conducting.

237 Mr Prior did not conduct a similar exercise. Mr Brash did not make any reference to the student records, in the 'impressionistic approach' which he adopted, when adjusting student fees in the spreadsheet Mr Prior had devised. Nor, it seems, did Mr Prior even check the outcome of the process Mr Brash had undertaken, in order to determine whether a reliable outcome for establishing the College's revenue had been achieved. No comparisons were made with the CMS database records, nor it appears, was Mr Pak, who had determined actual course fees charged, asked his view as to the accuracy of the outcome of Mr Brash's exercise.

238 That the end result of the process Mr Prior had devised, could have been a more reliable measure of the College's revenue, than the information which the CMS system had produced in 2002, cannot be reasonably accepted. That view was confirmed by other evidence which Mr Prior gave.

239 While Mr Prior initially insisted, vehemently, in his evidence, that the spreadsheet on which his calculations rested, contained no errors of any kind, he having carefully checked its accuracy, he immediately had to concede that material errors had been made, when his attention was drawn to a number of obvious errors, appearing on the face of the document. This concession necessitated the deduction of over $120,000 from the notional revenue which had been calculated.

240 The reason why those errors were obvious on the face of the document, was because they showed students as having undertaken more than 100% of their course in the 2002 year. Mr Prior explained that these errors had resulted from input errors, in relation to the start and finish dates recorded for the courses these students were undertaking.

241 Despite this, Mr Prior did not accept that other input errors in relation to course dates could have occurred, which were not obvious on the face of the resulting schedule. Only those errors which resulted in a calculation that over 100% of a course had been undertaken in the year, were readily apparent. That other errors had been made, with the result that course fees were calculated by reference to periods of time either longer, or shorter than the students in fact undertook courses for, could not be excluded on the face of the document. Despite Mr Prior's denials, there can be no question that it was entirely possible that other input errors of this and other kinds, could have been made.

242 Again, it followed from Mr Prior's explanation, that unless a line by line check of the thousands of entries in the spreadsheet was undertaken, any other input errors could not be detected. Mr Prior's assurance, as an expert, that he had undertaken the necessary checks to ensure that such errors had not occurred, could not reasonably be accepted in the circumstances, as establishing the accuracy and reliability of the spreadsheet, given that even significant errors, which were plainly obvious by a simple reading of the face of the document, had not been detected by the checking process Mr Prior had undertaken.

243 That there were other problems with the approach Mr Prior had devised for his calculation of the College's revenue and profitability, which made it an unreliable basis for any conclusions to be reached as to the due diligence exercise conducted by Mr Traynor, was apparent from other evidence.

244 Mr Prior explained that he had adopted his approach on the basis of his understanding of the unreliability of flat file database systems such as the CMS system and what his enquiries had established, as to the problems Mr Brash faced in maintaining the College's CMS system, prior to the sale. It is obvious that any system which relies on data entry by human beings is subject to the possibility of errors occurring. That the College's system otherwise suffered from errors of the kind which Mr Prior explained on his understanding, flat file systems could be subjected to, was not established. The other witnesses called in the applicants' case did not explain such system problems. Mr Prior's concerns as to the problems Mr Brash faced, were not demonstrated to have any foundation in fact. As Mr Prior conceded, he had never seen the College's system in operation. What he had been told as to any errors or problems which the system was actually experiencing prior to the sale, was not apparent from his report, where only vague references to problems were made. Mr Prior provided no further detail of such difficulties in his cross examination.

245 Mr Prior's evidence was that he had advised the applicants to obtain other expert evidence on the CMS system and to seek the production of various information from the manufacturer of the system. Those steps had not been pursued by the applicants. It followed, of necessity, that I was unable to accept Mr Prior's concerns, as a proper basis for concluding that Mr Traynor had erred in making reference to the College's actual student records maintained in the CMS system, in determining the College's revenue.

246 In any event, even if Mr Prior's concerns about the reliability of the CMS system were capable of proper acceptance, the approach adopted to the devising of the spreadsheet on which his calculations were based, could not be accepted as having created a reliable basis for assessing the College's revenue. It was an exercise flawed both conceptually and in its execution.

247 There were other problems with Mr Prior's report. In his calculation of College expenses, which had to be deducted from gross revenue in order to establish profitability, Mr Prior specified a figure. While some supporting documents were annexed to his report, there was no explanation given as to how Mr Prior came to the view that the expenses in question should have been so deducted.

248 In cross examination, Mr Prior explained how he had asserted his 'independence', in making an assessment in relation to these expenses. He explained that what he had done was to require Professor Kennett and Mr Rodgers to discuss these expenses, while he listened to their discussion. He then asked Mr Rodgers what opinion he had formed and then himself came to a view, as to whether Mr Rodger's opinion should be accepted.

249 Neither this curious process, nor the reasoning upon which either Mr Rodgers, or Mr Prior, came to their conclusions, were revealed in the report. Once cross examined, however, Mr Prior accepted that he had come to the incorrect conclusion in relation to a number of these expenses. As for those which he did not concede, he was entirely unable to point to anything in the attached documents, or in his report, which provided an explanation of the conclusions which he had reached. It followed that this aspect of the report, was also not established to have any convincing or reliable basis.

250 Of further concern was the basis upon which Mr Prior's calculations of profit were then made. Having arrived at a 'theoretical revenue figure', which was plainly flawed, Mr Prior went on to compare that sum with actual data which he accepted as reliable, flowing from, for example bank account records and the College's MYOB system, maintained by Mrs Brash. There can be no doubt, on his own explanations, that Mr Prior worked backwards, from the net profit figure of $300,000 which he sought to demonstrate, to arrive at a revenue figure. In order to match up that notional profit figure, with his theoretical revenue figure, while accommodating actual sums, which could not be disputed, given their source from bank records and the MYOB system, Mr Prior had to come up with a further notional amount. The figure was $253,131, which on his approach, comprised 50% unbilled revenue and 50% debtors. In his comparative analysis table, at page 35 of his report (exhibit 58), Mr Prior described this as:

251 Mr Prior's evidence in cross examination showed that this was a blatant exercise undertaken in order to justify the claim that in 2002, the College was operating at a profit level of $300,000. That such unbilled revenue and debts existed, was not established.

252 The evidence of Professor Kennett and Mr Pak made crystal clear, however, that the only basis which they ever had for asserting that the College was operating at a profit of $300,000 came from Mrs Brash. Most tellingly, her evidence in cross examination was that she had never understood, or advised Mr Pak, that the College's profitability was at that time $300,000. It was Mrs Brash's practice to give Mr Pak and Professor Kennett a trial balance at the end of each month. She had daily control of all accounts and banking for the College. She was not involved with the CMS system, claimed in these proceedings to be so unreliable, as to justify Mr Prior's exercise. The same claim was not made in relation to other of the College's financial records maintained by Mrs Brash. She well understood that the College was not operating at the profit level Mr Prior sought so assiduously to demonstrate in these proceedings. That endeavour failed utterly, as was finally conceded by the applicants in final submissions.

253 On instruction of the applicants in June 2001, Mrs Brash sent a document to Mr Campbell, in which she advised that the College's profit figures to 10 May were around $102,000. She later provided profit figures to 30 June, advising that the profit was only some $25,000. In cross examination, Mrs Brash explained that in 2002 she had never thought that the College was making profit of $300,000; that she had never told Mr Pak that it was and that she had never given him such advice in a document. This evidence directly contradicted that of Mr Pak.

254 It seems unlikely that Mr Pak would have concocted a profit figure of $300,000 at the time of his discussions with Mr Campbell. It follows from all of the evidence that the concept of the College operating at a profit level of $300,000, can only have come from Mr Pak misunderstanding what Mrs Brash told him at the time.

255 There was utterly no reason why Mrs Brash's evidence should be doubted. That Mr Prior seemingly never ascertained what was always known to Mrs Brash, as to Excelsior's profitability in 2002, seems extraordinary, in all of the circumstances, finally revealed in the evidence in this case.

256 There was simply no foundation, anywhere in the evidence, for the concept that the College was operating at a profit level of $300,000 in 2002. All of Mr Priors' efforts did not make it so.

257 All of the difficulties in the process Mr Prior devised and pursued in reaching the conclusions expressed in his report, no doubt explains why it was that despite all of Mr Prior's efforts, his concluding opinions opened with:

258 The onus fell on the applicants to demonstrate that the contracts here in question were unfair. Mr Prior was called, in order to show the unfairness of the renegotiated sale price, given the claimed inaccuracy and unreliability of Mr Traynor's due diligence exercise, which had resulted in an opinion, that a loss of some $126,000 had been sustained by the College. Despite the difficulties Mr Prior had himself, in reaching any concluded views as to the College having made any particular level of net profit, Mr Prior was prepared to express the view that Mr Traynor's opinion was 'unreliable, unsafe, unfair and reckless'. I am entirely satisfied that Mr Prior's report did not provide any sound support for that view. There was also a suggestion, at one point, that Mr Traynor had conducted an audit and had obligations to the applicants in that respect. There was no evidentiary foundation for that claim. Mr Traynor was simply not engaged on that basis, for the work which he undertook in connection with the acquisition of the College.

259 Rather, Mr Traynor was engaged by the purchaser to conduct a due diligence on the College and to advise as to its profitability, under a formula agreed by the vendor and purchaser. He conducted that due diligence from 2 July, with the assistance of four other accountants. On the morning that the due diligence commenced, Professor Kennett spoke to Mr Traynor at the College. On his evidence, led by the applicants in their own case, Mr Traynor then advised Professor Kennett that the due diligence would focus on the profitability of the College.

260 The College's profit and loss statement for the 2002 financial year finally disclosed a profit of only some $25,000, not $300,000 as the purchaser had been repeatedly advised, and student fees of some $1.9 million. Mrs Brash explained that this latter figure only represented cash drawn from the trust account, not actual earnings, which were maintained in the student record database. Mr Brash provided Mr Traynor with a report from that database, which showed gross student fee income of some $2.2 million and net tuition fees of some $1.8 million, after agent commissions were deducted. The veracity of this report was tested, by reference to the College enrolment records and attendance records, as well as an overdue fees report. Reference was also made to the Excelsior tax returns, which disclosed some $1.8 million revenue. The figures were further tested by reference to standard pricing information for each course and information supplied by Professor Kennett. A theoretical test was also conducted, which showed maximum theoretical revenue of some $2.3 million, without allowing for discount and assuming all students attending. Mr Traynor concluded that the Revenue Report, Mr Brash had provided, calculated revenue accurately and was a reliable source for determining College income.

261 It was this exercise which was the subject of Mr Prior's attack, a matter to which I will return to below.

262 Mr Traynor also checked the reasonableness of the Profit and Loss Account reflecting commission fees of only some $119,000, while the Revenue Report reflected almost $500,000 commission expenses. Professor Kennett provided a list of all agents, who it was indicated mostly charged 25% commission, although in a conversation Professor Kennett told Mr Traynor it was approximately 20%. At the end of his exercise, Mr Traynor applied an 18.94% commission rate. It was the way in which commission payments were dealt with by Excelsior, which was well known to the applicants, which necessitated this investigation. A significant portion of agents fees were deducted at source and were never reflected as expenses, in the College's financial statements. They were, however, recorded in the CMS system. Both that system and the MYOB system contained the relevant information. This was what Mr Traynor investigated.

263 A list of debtors was prepared from information provided by Mr Brash. A list of fixed assets provided by the College was checked and items previously disposed of, or not included in the sale, were identified by Professor Kennett. Depreciation was calculated by Mr Traynor, after it was discovered that no depreciation had been included within College expenses, payroll tax had not been accrued for the 2002 year and that was calculated. Various expenses were investigated with Mrs Brash and the amount of the College's unearned income liability calculated. Mrs Brash also provided a trust account balance for each student. This report was identified to be inaccurate in a number of respects and information was sought from the College student records database, to identify payments received from students, in relation to courses not yet undertaken.

264 It seems that it was this last exercise, which led to a disagreement between the parties to the sale, as to the amount which Excelsior had to account to the purchaser, for fees received for courses yet to be provided to students, after the sale. It was later agreed that this would be the subject of further investigation by Mr Pak and Professor Kennett and they were given access to College records for that purpose, after the sale.

265 Mr Traynor provided Garratt's with a report as to his conclusion with supporting documents. Mr Prior conceded, in cross examination, that Mr Traynor had based his calculations, which were mathematically correct, on the Colleges' data. Mr Prior had never identified any flaws or errors in what Mr Traynor had so done and had established no inaccuracy in the calculations. He also agreed that Mr Traynor's analysis accorded with the agreed price formula.

266 The money orders sought against Mr Traynor and Mr Campbell, were pursued on the basis of the High Court's judgment in Brown v Rezitis. In Zahos v Industrial Relations Commission of NSW (2005) 148 IR 208, the Court of Appeal considered the basis upon which money orders might be made against a person, who is not a party to the contract in question, by reference to the High Court's judgment in Brown v Rezitis, observing, relevantly at [67]:

[67] There are references to "subterfuge" and "culpable association" in Brown, but such matters in themselves do not provide the relevant jurisdictional connection. The role of the salesman Joyce in Brown may have been culpable in that he represented the business agent that acted on behalf of the contracting party in arranging the contract with the worker. But this was not enough to engage the jurisdiction of the Commission in a manner supporting the orders under challenge in Brown. The High Court accepted that the contracting party had no means to pay the award wages that were due, consequent upon the setting aside of the contract. But this offered no reason why Mr Joyce, the salesman, should have been ordered to pay an amount by way of compensation for non-receipt of such wages. It was not an order made "in connection with contract or arrangement" which the Commission had avoided (see at 167). As pointed out by Barwick CJ (at 168) and by Menzies J (at 171-172), the vice of the order that made Joyce jointly and severally liable for the whole of the moneys payable by the contracting party was that such an order did not have the requisite real connection with the contract or arrangement that had itself attracted the Commission's jurisdiction.

267 As both Mr Prior and Mr Rodgers conceded, Mr Traynor had no contractual obligations to the applicants, either under any contract, or by any agreement or relationship which he himself had with the applicants. Nor did he have any professional obligations to Excelsior, the vendor of the College, or to the applicants.

268 Despite this, in his report, Mr Prior expressed the view that Mr Traynor had a conflict of interest towards the applicants. Mr Prior's answers in cross examination, showed that he both misunderstood the nature of the transaction between the parties and the conceptual basis of such a conflict. Mr Traynor plainly had no conflict of interest at all, as Mr Rodgers properly conceded. While Mr Prior wasn't prepared to make that concession, he was entirely unable to explain how any conflict could have arisen, other than in terms which referred to his own sense of 'disquiet'. Plainly, that can not be a basis upon which the opinion expressed by Mr Prior in relation to Mr Traynor's obligations, could sensibly rest.

269 The steps which Mr Prior explained ought to have been taken by Mr Traynor, in order to resolve the conflict he perceived, as to the profitability of the College, would have involved Mr Traynor both in a breach of his contractual obligations to Garratt's and professional misconduct, as Mr Prior eventually conceded. Tellingly, in his cross examination, Mr Rodgers, who in his affidavit evidence had earlier expressed his agreement with the conclusions which Mr Prior had reached in relation to conflict, agreed on reflection, that Mr Prior's suggestions were 'ridiculous'. On its face, this aspect of Mr Prior's evidence was simply nonsensical and could not be accepted. The fact was that the case brought against Mr Traynor in these proceedings, was completely flawed.

270 When Mr Campbell met with Professor Kennett and Mr Pak on 1 August, Mr Traynor was in attendance. He had earlier provided his advice, as Mr Campbell had already advised Mr Pak. Mr Traynor's written opinion included a summary, together with supporting documentation, all of which was provided to the applicants, as Mr Pak accepted. While Professor Kennett claimed not to have seen that documentation, I am unable to accept that evidence. It was certainly not supported by Mr Pak, who explained that the advice was discussed at the meeting, when he was surprised by the figure that the College had lost some $126,000.

271 Mr Traynor's analysis was discussed. Both Mr and Mrs Brash were working nearby, although they did not attend the meeting. Neither Professor Kennett, nor Mr Pak called on them. Mr Traynor's conclusions were discussed and Professor Kennett challenged aspects of his conclusions. The meeting plainly became heated. That Professor Kennett and Mr Pak were overborne in the discussion, was not, however established. They were both experienced businessmen, the working proprietors of the business, well familiar with the matters dealt with in Mr Traynor's report. Professor Kennett telephoned Mr Rodgers, who gave advice that Mr Traynor's treatment of various matters in his advice to Garratt's, was correct. No advice was sought from either Mrs Brash or Mr Brash.

272 Mr Traynor's report was not expressed in the identical terms to the formula the parties had used. Of itself, that was not apparently the subject of real difficulty, as even Mr Prior accepted. Rather, it was Mr Traynor's conclusions as to various matters relevant to the calculation of profit, which were the subject of negotiation at the meeting on 1 August. As a result, Mr Campbell accepted various of the positions put by the applicants in the discussions of those matters, to the applicants' benefit. On Mr Pak's evidence, there was discussion about debt and depreciation, but he was not much involved in the discussion, which he left to Professor Kennett. On the evidence, assets were also discussed. During the course of the meeting, Professor Kennett spoke to Mr Rodgers, who confirmed Mr Traynor's approach to certain matters. Mr Pak could remember very little of this discussion, or indeed, much else of what was discussed, but he agreed, however, it was he who suggested renegotiating the price to Professor Kennett. As a result, the applicants' negotiated a new price with Mr Campbell, who said that he would have new contractual documents drawn up to reflect the agreement reached. An amended deed reflecting the new terms was later executed on 7 August.

273 On their evidence, both Professor Kennett and Mr Pak were surprised and disappointed by the results of Mr Traynor's due diligence. I am rather sceptical that this was in fact so, particularly having in mind Mrs Brash's earlier calculation, that the College's profit level was only some $25,000 and what the applicants told Mr Rhodes in July, which had led to the renegotiations of the price formula. Nevertheless, the case finally pressed for the applicants during Dr Berwick's submissions, was that the sale agreement was unfair, because the applicants were oppressed and overborne at the meeting, at which the revised sale price was negotiated.

274 Professor Kennett's evidence, that he executed the Deed of Sale of the Business on 7 August and the Deed of Completion of Sale on 16 August, because he feared that if he did not, he would receive nothing for his share of the business, was simply not credible. This evidence was contradicted by Mr Pak. The claim that Professor Kennett and Mr Pak were overborne by the course which was taken at the meeting on 1 August, was also not credible. On Mr Campbell's evidence, the meeting commenced on the basis that Garratt's did not wish to proceed with the acquisition. Mr Campbell felt that he had been misled. Undoubtedly, this was a tense meeting at which tempers flared, but the fact remained that the revised terms were discussed at Mr Pak's suggestion. What was agreed was later documented and executed. In the intervening period, the applicants had access to all of Excelsior's records, to Mr Brash and Mrs Brash, to Mr Rodgers and their lawyer, Mr Rhodes. Had they had any real doubts, or concerns, about the accuracy of the exercise undertaken by Mr Traynor, or the fairness of the new terms, they could have readily taken advice. They certainly did take legal advice from Mr Rhodes and on 16 August, the final Deed of Completion of the sale was executed.

275 As Professor Kennett explained in cross examination, he then again sought and obtained further variations to the final Deed of Sale, before it was executed. The parties also then agreed to permit Excelsior a further period to finalise the calculation of what it owed the purchaser in relation to prepaid student fees. The evidence simply did not make out that the applicants were ever unfairly overborne in these negotiations. That they later regretted the bargain which they had made, is not a basis upon which unfairness may be found.

276 In Baker v National Distribution Services Ltd (1993) 50 IR 254, Fisher CJ and Hungerford J observed at 271 in relation to the statutory predecessors to s 106 of the Act:

277 Even if I were inclined to accept the applicants' evidence in relation to how they were overborne at the 1 August meeting, which I am not, before any order of variation could be made, assuming that there was a proper basis upon which to so vary the applicants' employment contracts, the claimed unfairness had to be demonstrated. The orders sought by variation effectively sought to restore the original sale price of $700,000, with consequential money orders of $300,000.

278 The difficulty with that claim, was that the original price formula depended on profits of at least $300,000 being established, or a reduction in the price followed. The applicants entirely failed to make out the evidentiary case on which the order claimed could rest. As they conceded, they did not establish that the College's profit had been $300,000, or any other figure. The revised sale price reflected Mr Traynor's view that the College was not operating profitably. Even Mrs Brash's calculations showed that profit levels in 2001/02 were only at some $25,000, but tellingly, her evidence in cross examination, was that the College's records did not reflect payments made weekly to the applicants, for the work they performed at the College. These payments would also appear to have impacted on profit levels. This may well have explained why it was that the applicants felt it unnecessary to seek the assistance of either Mrs Brash or Mr Rodgers, in their consideration of Mr Traynor's advice that the College was, in fact, not operating profitably and why it was that they came to agree on a revised sale price, which on all of the evidence, seemed finally to be to their advantage.

279 At the time of the 1 August meeting, Garratt's had not exercised its call option. Unless it did, Excelsior, was not bound to sell Garratt's the College. Mr Pak agreed that when the new price was negotiated, he was relieved. He was aware that Garratt's could have walked away from the acquisition, which neither he nor Professor Kennett then wanted. In that respect, the evidence of Mr Campbell that as at 1 August, Garratt's was not prepared to proceed with the acquisition and the evidence of Mr Campbell and Mr Pak, that it was Mr Pak who suggested that the price should be renegotiated, must be accepted. That was entirely consistent with Professor Kennett's concession in cross examination that he, too, understood that at that point, Garratt's had no obligation to acquire the College. That the applicants were anxious to renegotiate the sale price, in the circumstances with which they were faced was understandable. Excelsior was plainly an anxious vendor. By that time, the applicants were certainly aware that even on Mrs Brash's calculations, the College had a profit of only some $25,000. In these proceedings, despite their extraordinary endeavours, the applicants failed to demonstrate that Mr Traynor had erred in the conclusions which he reached, that the College was in fact, operating at a loss. There was no basis upon which it could be concluded that he had conducted anything other than an appropriate due diligence exercise.

280 That the revised sale price was unfair, was not established. What finally could not be overlooked was that what Mr Prior was dealing with in his reports, was the information produced by the computer systems which the applicants themselves had in operation at the College. It was the applicants who provided information which those systems produced, to the purchaser of the College, who then engaged Mr Traynor to conduct a due diligence exercise in relation to that information. The idea that the College's systems and the information which they produced were so unreliable, that the information should have been ignored by Mr Traynor, in favour of an entirely notional exercise such as that which Mr Prior later embarked on, is one which has only emerged in these proceedings, as part of an exercise directed at manufacturing a $300,000 profit, a figure which only ever represented a misunderstanding of what Mr Pak had been told by Mrs Brash. The state of the College's computer systems and financial records were never a problem raised by the applicants, at the time of the sale. At the time, they were entirely content to proceed on the basis of the information which the systems, which they operated at the College produced, being subjected to a due diligence exercise.

281 The due diligence led to Mr Traynor's advising Garratt's that the College had been operating at a loss. That was the subject of discussion at the 1 August meeting. Professor Kennett's evidence, that he felt shocked, confused and humiliated at the 1 August meeting and that Mr Campbell threatened that the College could be acquired for no payment at all, was not plausible. That would not have been the result of the application of the formula. Professor Kennett and Mr Pak negotiated a revised formula at the meeting. Mr Pak's evidence was that they were relieved. That was entirely likely to have been so, given the evidence in this case as to the way in which he and Professor Kennett had been operating the College business and its financial performance. They did not execute the amended deed until 7 August, when they again negotiated amendments to the final agreement, in terms advantageous to them.

282 It seems to me that it was the consequences of the sale, not the problems of the financial systems which the applicants had maintained at the College, or the fairness of the revised sale price, which finally gave rise to two difficulties for the applicants, with what they had agreed. The first was the need to identify which students had prepaid for courses not yet delivered by the College, so that amount could be adjusted in the sale price, with a resulting adjustment to the cash component. The second was the alleged collapse of the value of the Garratt's shares, which the applicants had accepted as a part of the revised sale price. Indeed, while Professor Kennett denied in cross examination, that he knew that he had to sell the College, because it was an unprofitable business, he accepted that he had received the cash and shares in Garratt's, which had been agreed, but complained that the shares 'quickly depreciated'. That complaint was finally not one which was paid any attention in the case pressed for the applicants, for reasons which were not revealed.

283 Under the terms of the original sale agreement, if the parties were in disagreement as to the calculation of the College's profit, there was required to be an arbitration process, involving the use of an independent valuer. That provision remained in the agreement as finally executed, but Excelsior has never pursued its rights to such an arbitration, or it appears, ever considered that to be an attractive course.

284 Excelsior had the benefit of fees paid by students for courses which would be delivered by the purchaser after the sale. There was no contest that an adjustment to the sale price should have been made to account for those fees. That aspect of the sale price was not attacked as unfair. The complaint was that the calculation of this sum was adversely affected by the unreliable records maintained by the College, in relation to student fees. These unreliable records were the subject of the exercise undertaken by Mr Brash, in accordance with Mr Prior's instructions. This exercise was entirely flawed, for reasons already explained. That this exercise could have resulted in figures more reliable than those maintained by the College, was not established.

285 The applicants have utterly failed to establish this aspect of their case and so it must fail. As observed by the Full Bench in Autobake Pty Limited v Budd (1986) 19 IR 18 at 18:

286 Even if some different view were available, no basis was established for the claimed money order of $300,000 and no foundation for the variation of the applicants' employment arrangements, to deal with the complaints as to the fairness of the sale agreement, was established.

287 Mr Campbell's involvement in these proceedings flowed from his representation of Garratt's in various negotiations. He was both a director and shareholder of Garratt's, a public company. It was this involvement and the particular complaints advanced in relation to what transpired at the meeting on 1 August, which led to him being made a party to the proceedings. I am satisfied that no case was made out, which would warrant any orders being made against Mr Campbell. The conclusions which I have reached in relation to the unfairness of the consultancy contracts, of themselves are not sufficient to warrant orders being made against Mr Campbell, who, in this respect was merely the person through whom the corporate respondents acted.

288 It is also pertinent to observe that the claims made against Mr Campbell and Mr Traynor, were advanced, even though this was not a case where there was ever any suggestion that the contracting party could not have paid any amounts owed to the applicants, or ordered to be paid by the Court in these proceedings. Why such a course was adopted, was unclear and not explained.

Money orders

289 What next requires consideration is whether any money orders should be made. In accordance with the statutory scheme, such orders can only flow from a conclusion that the contracts in question were relevantly unfair, so as to require orders that they be declared void or varied. I have concluded that the applicants each made the claimed oral consultancy agreements in their discussions with Mr Campbell. In Professor Kennett's case, he worked about 10 hours per week, during the period from 19 August to the date of termination some time in October/November, excluding the three weeks when he travelled to Iran.

290 In cross examination, Professor Kennett explained that the claim of payment on his invoice to 31 January, reflected the initial agreement of a six month consultancy. He explained that the period 19 August to 31 January, was six months minus two weeks, that is 24 weeks. He agreed that he had left the College over a weekend in October or November and that he had not performed the duties he claimed in his invoice, after his departure. It was not demonstrated that he performed the work for which payment was thereafter claimed. Nor did Professor Kennett establish what date it was in which he left the College.

291 Professor Kennett also explained that he had selected the rate of $100 per hour for his invoice, because he believed that Mr Campbell had made variations to their agreement which were convenient to him 'and I believed that if he could make variations I had the same right'. This is not a basis upon which a money order at the rate sought, can properly rest, particularly given Professor Kennett's concession, that he was not acting as College Principal during the period claimed. I have not found the agreed rate of $65 per hour to be unfair.

292 The onus fell on Professor Kennett to make out the case advanced. At best, he made out that he worked 10 hours per week, for some seven weeks, which would represent a payment due of a sum of $4,550 for the work performed. On the approach of the High Court in Brown v Rezitis, it is clear that such a consequential money order may be made pursuant to s 106(5), (see the discussion at p 167), as payment for work actually performed. In Mr Pak's case, I have concluded that he established, at best, that he worked for 40 hours per week, for some 14 weeks, representing a sum of $36,400, at $65 per hour.

293 In each case, I have also concluded that the contracts were brought to an end without notice and that in fairness, notice of nine weeks in Professor Kennett's case and four weeks in Mr Pak's case, ought to have been given. Each contract must be varied, to provide for such notice.

294 The question of whether any discretion should be exercised in favour of these applicants, raises certain difficulties, however. This was recognised by the applicants' acceptance, that in determining any money orders, the Court would consider what remained outstanding to Mayrana under the sale agreement, as well as the sum which was wrongly banked in the Excelsior account by Mr Pak, after the sale.

295 This concession was properly made, given the Court's jurisprudence as to the necessity of applicants seeking orders under s 106, coming to the Court with clean hands. As I have noted, Excelsior was never a party to these proceedings. Together, however, the applicants were the managerial mind of Excelsior. Excelsior's conduct has been both entirely within their control and to their benefit, given their shareholding and directorship in the company. Excelsior was the vendor of the College and the decision not to make it an applicant in these proceedings, can only have been made by the applicants. Given the provisions of s 106(2) of the Act, that decision cannot shelter the applicants from the consequences of their conduct, to the benefit of Excelsior, as they properly accepted.

296 I turn then to the notice claim made in relation to Mr Pak. How money orders could flow, in relation to such notice, is difficult to conceive. How could it be thought that Mr Pak would have been entitled to receive notice of termination, given that it was not disputed that he had wrongfully taken and banked a cheque of some $38,000, into Excelsior's account, which had come into his hands, while working at the College after the sale? Excelsior still retains that sum. On any view, that was serious misconduct, warranting termination of Mr Pak's consultancy contract. I am unable to see how a discretion could justly be exercised in Mr Pak's favour by this Court, as to notice, in those circumstances.

297 Can money orders otherwise be made in favour of the applicants in the face of the evidence that they have failed both to ensure that Excelsior paid to Mayrana, the sums outstanding under the sale agreement on account of prepaid student fees, and also failed to account for the moneys Mr Pak banked into Excelsior's account? On one view, that would require the exercise of the discretion granted by s 106, inconsistently with the underlying policy of the legislation.

298 What must be considered is that s 106 provides applicants with a mechanism, whereby certain contracts found to be unfair, harsh or unconscionable might be declared void or varied, to remedy the unfairness found. The jurisdiction is such that those individuals responsible for that unfairness, may not shelter behind the corporate veil, in order to shield them from the consequences of their acts, in cases where a corporate respondent, who is the actual party to the contract in question, does not have the funds to meet any consequential money order made. It appears to me that conversely, justice requires that Professor Kennett and Mr Pak, as the applicants in these proceedings, cannot put beyond the Court's consideration their own conduct, which was to the benefit of Excelsior, the corporate party to the transactions here attacked as being unfair, by bringing proceedings without making Excelsior a party to the proceedings.

299 On the other hand, I also take the view that what must be considered in this case, is that Professor Kennett and Mr Pak have never been paid for the work which they performed at the College after the sale, as they had agreed; the respondents have denied the existence of the contracts which they made with Professor Kennett and Mr Pak and the work which they performed; and that those contracts were brought to an end without notice. The contracts have been found to be unfair on the evidence. Plainly, that situation is also one which cannot be condoned by the Court, given this statutory scheme.

300 In weighing these considerations, I have concluded that justice requires money orders to be made in favour of the applicants, which reflect both the unfairness found in the two contracts and which sets off the sums owing by Excelsior. I take the view that approach will result in a proper balance of the respective conduct of these parties, as s 106(2) contemplates, and will do justice between them.

301 For the reasons given, the claims against Mr Campbell and Mr Traynor must be dismissed. The applicants' contracts must both be declared unfair and varied as to notice. Consequential money orders should follow, on the basis I have earlier outlined - in Professor Kennett's case as to both notice and outstanding pay and in Mr Pak's case, as to pay only, offset as I have earlier discussed. The parties are, accordingly, directed to bring in short minutes of orders reflecting the conclusions reached.

302 If the parties are unable to agree as to the terms of such orders within 21 days, they are to file and serve the orders they each propose and I will hear from them as to those orders, on a date to be fixed.

303 As to costs, I have earlier dealt with the course which this litigation has taken. Various costs orders have already been made against the applicants, in relation to various applications, some of which I have earlier mentioned. The respondents have also indicated that they wish to be heard on the question of costs orders, including orders being made against some of the applicants' legal representatives.

304 If such an application is pressed, the applicants' legal representatives will undoubtedly have the right to be heard. In that event, it may be the case that the applicants will need to consider being separately represented, if their interests and those of their legal representatives depart from each other. That is a matter for the applicants to consider and take advice about.

305 I raise these issues for the parties' consideration. They might be the subject of some sensible discussion. In the event that the parties are unable to agree on the question of the appropriate costs orders, they have liberty to approach. That liberty should also be exercised within 21 days.

Industrial Relations Commission of New South Wales

Kennett and Anor v Mayrana Pty Ltd and Ors (No 9) [2008] NSWIRComm 106 (27 May 2008)