Case No: HC12C01765
Neutral Citation Number: [2015] EWHC 26 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 14/01/2015

Before :

MR JUSTICE WARREN
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Between :

	HANS HENNING REINHARD	Claimant	
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	ONDRA LLP (1)
MICHAEL ALEXANDER TORY (2)
BENOIT D’ANGELIN (3)	Defendants	

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Jeremy Callman and Naomi Winston (instructed by Charles Russell Speechlys LLP) for the Claimant
Robert Howe QC and Thomas Croxford (instructed by Mishcon de Reya) for the Defendants

Hearing dates: 20th, 21st, 24th, 25th, 26th, 27th, and 28th of March 2014, and 3rd and 4th April 2014
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Judgment
Mr Justice Warren : 
Introduction
1.	This is the trial of liability of the claim by the Claimant (“Mr Reinhard”) for damages, declarations and other relief relating to a written contract with the first Defendant (“Ondra”) dated 15 July 2009 and countersigned by Mr Reinhard on 11 September 2009 (“the Contract”).  Mr Reinhard joined Ondra on the terms of the Contract. The principal issues in dispute are whether, under the Contract, he became, or was entitled to become, a member of Ondra and if so on what terms as to profit share and capital interest.  
2.	Mr Jeremy Callman and Ms Naomi Winston appear for Mr Reinhard.  Mr Robert Howe QC and Mr Thomas Croxford appear for all three defendants (collectively “the Defendants”).
3.	Mr Reinhard is an investment banker.  Ondra, a limited liability partnership, is a financial advisory firm providing strategic advice and consultancy services in the investment banking industry. The second Defendant, Michael Tory (“Mr Tory”), and the third Defendant, Benoit d’Angelin (“Mr d’Angelin”) were two of the Founding Partners of Ondra and were registered members at all material times.  Two other individuals, Michael Baldock and Simon Morgan, are shown in Companies House records to have been registered as members as from 1 May 2009, but this would appear to have been a backdated entry.  The four members have been referred to throughout as “the Founding Partners” and I will use that expression accordingly. Mr Tory and Mr d’Angelin were (and remain) members of Ondra at all material times.  I am not sure whether it was common ground by the end of the hearing – I believe it was – that they were also the controlling minds of Ondra; whether or not it is common ground, I am satisfied from all that I have heard and read that they were.  
4.	Prior to entering the Contract, Mr Reinhard received a copy of a draft of a proposed LLP deed (“the April 2009 Draft LLP Agreement”) (marked “Draft 17.04.09”).  I consider this in some detail starting at paragraph 78 below.  Ondra contends that the essence of the April 2009 Draft LLP Agreement was that membership of Ondra was to be coterminous with the provision of services to Ondra as a member.  The structure of Ondra was that the firm was to be owned by the active partners each of whom gives up his interest in the firm upon departure, without compensation for the loss of his share of the equity.  The goodwill and value of any partnership share is thus kept within the firm and passed through the generations.  Ondra’s case is that the April 2009 Draft LLP Agreement was consistent with the vision for Ondra which the Defendants say was outlined to Mr Reinhard by Mr Tory and Mr d’Angelin in meetings prior to Mr Reinhard being offered employment, namely that ownership would cascade through the generations, and that departing partners would therefore not retain their share of the profits, nor be entitled to any payment for their share of Ondra.
5.	Mr Reinhard, in contrast, contends that, under the Contract, he was granted immediate membership of Ondra on such terms that his share could not be removed from him, and that he was, and remains, entitled to an ongoing share of the entire assets of the business, and of the profits, proportionate to his share.  He contends that the Contract entitled him to a 1% share in Ondra including, but not limited to, its profits.  This share, he says, increased to 2% in 2010 and should have increased to 3% in 2011.  The Defendants’ case is that the Contract gave Mr Reinhard only what they call a “notional share”; they accept that that share, whatever rights it conferred, was increased to 2% in 2010.  They dispute that it should have increased to 3% in 2011.  It has been suggested during the course of the hearing that a full 3% share in Ondra, conferring income and capital rights, may be worth as much as £10 million.  Mr Reinhard makes an alternative claim in misrepresentation.
6.	The Defendants point out that Mr Reinhard claims an interest which no other members of the firm have and claims that interest without being subject either to the terms of the LLP Agreement governing Ondra at the time of the Contract or on the terms which, according to the Defendants, were then proposed for such an LLP Agreement.  In essence, as Mr Howe and Mr Croxford put it in their closing submissions, Mr Reinhard “claims to be entitled to be a member of a club without being subject to any of its rules”.  I will be looking closely later at what the club was and what its rules actually were.  Mr Callman might put it another way and say that Mr Reinhard joined a club in its early days and that the committee of the club then attempted to impose rules on him which he had never agreed to and which they were not entitled to impose.  
7.	Ondra terminated Mr Reinhard’s employment in mid-2011; on the Defendants’ case, this brought an end to any rights which he might have had in Ondra.  He says that this dismissal was wrongful.  Ondra’s case is that it was entitled summarily to dismiss Mr Reinhard for breaches of Ondra’s internal share dealing policy and for sending certain confidential information to his home email address.  Mr Reinhard disputes the allegations and the Defendants’ interpretation of Ondra’s policy documentation; and he contends, in any event, that even on the Defendants’ approach, his breach would not have justified summary dismissal.  He claims for unpaid dividends, wrongful dismissal, underpayment of bonuses and unpaid expenses, all of which claims are denied by the Defendants.  Ondra counterclaims for breach of fiduciary duty for a sum equivalent to the amount of Mr Reinhard’s 2011 bonus.  
The Contract
8.	The construction of the Contract is central to the case.  It was the culmination of negotiations which I will come to in due course and was contained in an offer letter dated 15 July 2009 from Ondra to Mr Reinhard by which Ondra made a formal offer of employment to Mr Reinhard.  The relevant provisions of the Contract include the following:
“We are delighted to extend to you the formal offer to join our firm.  This letter sets out the terms and conditions of your employment with Ondra LLP (“Ondra”), and constitutes the principal statement of your employment particulars, as required by employment law.
1.	Your employment with Ondra will begin on 1 October 2009, or such later date as determined, but not later than 1 January 2010 (the “Commencement Date”)…
Your employment will continue for the standard initial period of three months from the Commencement Date (the “Initial Period”) and thereafter until it is terminated by either you or Ondra giving to the other not fewer than three months notice in writing, such notice to be given to expire at any time after the Initial Period.
2.		You will be based in Ondra’s offices and you will initially report to the founding partners.  You will join as a Managing Director and whilst your overall job description is to work as a core part of Ondra’s senior professional team to help our clients and in this way to contribute to building Ondra’s business over the longer term, your initial focus will be to build a strong M&A execution practice and longer term to help develop the firm’s broader relationships in the continent more generally.
3.		You will initially be granted a 1.0% share of the partnership.  This level of ownership interest will be reviewed each year in the light of your performance.  Every two years, starting from the 1 March 2009, Managing Directors will be formally reviewed for potential election to the corporate title of Partner.
4.		Upon finalization of your exit from your existing employer we are prepared to review whether an upwards adjustment to the initial ownership % may be appropriate.
....
6.		During your employment you will:
		…
•	comply with all regulations, policies, reasonable requests and instructions made by Ondra;
…
•	comply with any Ondra policy from time to time in force in respect of share dealing and in particular, will not deal in any shares or securities in any company where you have, or may have material non-public information. Further, before dealing in any event in any shares or securities, you will always ensure that you give me two full working days’ prior notice, to enable me to ensure that there is no possible conflict in you dealing in any such shares or securities.
7.		Your basic annual salary when you join will be £200,000 (the “Salary”) and is payable, less statutory and voluntary deductions, monthly in arrears in equal instalments by direct bank transfer on or about the last working day of each month.
The Salary will be reviewed annually by Ondra and any change notified to you.
....
8.	In addition to the Salary, you will be reimbursed for all reasonable expenses properly, wholly, exclusively and necessarily incurred by you in the performance of your duties for Ondra, upon production of receipts or other evidence for them that is satisfactory to Ondra.  You will also be eligible to receive a discretionary bonus.  The partnership will take into account various factors in exercising its discretion, such as the performance of Ondra as a whole and your individual contribution to the partnership.  
....
11.	Ondra will assist with relocation expenditure and will reimburse expenditure on the provision of receipts up to a maximum amount of €15,000. 
12.	In addition to public and bank holidays for England and Wales ……, you are entitled to 30 days’ holiday in each holiday year…….
…
15.	Ondra reserves the right, in its absolute discretion, to pay you your Salary (less statutory deductions) in lieu of any period of notice.
Notwithstanding the other provisions of this letter, Ondra has the right to terminate your employment immediately, without notice or pay in lieu of notice, if you are guilty of gross misconduct, if you commit a material breach of the terms and conditions set out in this letter …….
……
21.	This letter replaces all previous written or oral agreements between you and Ondra.  You confirm that you are not entering into this letter in reliance upon any oral or written representation made to you by or on behalf of Ondra. 
…………”
9.	I have not set out the provisions of the lengthy clause 14 which deals with Ondra’s confidential information and Mr Reinhard’s obligations of secrecy and confidentiality.  I will refer to it as necessary later in this judgment.
10.	I should make the point at this early stage that this case is not about rectification nor is it about granting relief for any mistake.  Ondra was a start-up business in relation to which, unfortunately as events have turned out, appropriate legal formalities were not dealt with as thoroughly or as expeditiously as (one can say with the benefit of hindsight) would have been desirable.  If Mr Reinhard is right about the true construction of the Contract, there is no alternative claim that it should be rectified to accord with what Mr Tory says was the intention of himself and Ondra, nor is any relief sought against Mr Reinhard based on a mistake on the part of Ondra in entering into the Contract.  This is not unimportant because some of the evidence which has been given is more appropriate for a rectification claim and some of the submissions which have been made go to merits which would be relevant to rectification but are not of much, if any, significance in relation to construction.  
The Parties (other than Ondra) 
11.	At this stage, I say something about the background of the individual parties.  I postpone until later in the judgment dealing with how they came across as witnesses and the extent to which I should accept their evidence.
12.	Mr Reinhard is a German citizen.  Before joining Ondra in October 2009, he worked for Goldman Sachs in Germany for about 11 years.  By that time, he was an experienced transaction banker, who specialised in the organising and execution of mergers and acquisitions and other highly complex corporate transactions.  His mother tongue is German.  He speaks excellent, fluent, English.  He produced an impressive CV for his discussions with Ondra before joining the firm.  As he says in his witness statement:
           “At Goldman Sachs I was considered a very strong performer.  Over the years I assembled a breadth and depth of experience from over 50 transactions across the entire  investment banking spectrum.  I worked on some of the most complex transactions that  were executed  out of the Frankfurt office”. 
13.	Mr Tory is a Canadian citizen who has worked in London for over 20 years.  He has worked in investment banking throughout his career, first with SG Warburg and then with Morgan Stanley where his last role was Head of UK Investment Banking.  In early 2006, he joined Lehman Brothers where he later became Head of UK Investment Banking, the role he held at the time of its collapse.  His evidence, which I accept, was that, in his view, the cause of the downfall of the banks was the structure of the industry which had moved away from the partnership model to a corporate model where the shares were freely traded and where the interests of the managers were not aligned with the interests of the bank and with the interests of its clients.  Quite what he meant by the partnership model is not, however, entirely clear: this is an aspect I will be dealing with later. 
14.	Mr d’Angelin is a French citizen who has worked in London for over 25 years.  He has worked in investment banking for nearly 30 years.  He held senior posts at BNP Paribas between 1988 and 1993, and worked for Lehman Brothers between 1993 and 2006 where his last role was as Head of the European Investment Banking Division, in which capacity he had met Mr Tory.  He moved to Centaurus Capital, an asset management firm, in 2006, becoming Chief Executive Officer in due course.
15.	Mr Tory and Mr d’Angelin were, together with two others, Simon Morgan and Michael Baldock, the Founding Partners of Ondra.  They took substantial personal financial risks in setting up the firm, more or less at the height of the financial crisis and immediately following the collapse of Lehman Brothers.   Mr Tory’s evidence about this, which I see no reason to doubt, is that the contributions were as follows: Mr Tory $750,000; Mr d’Angelin $827,000; Mr Baldock $750,000; and Mr Morgan $500,000.    
The Witnesses
16.	Mr Reinhard did not call any witnesses.  He himself did give evidence and was subjected to a lengthy cross-examination.  For the Defendants, Mr Tory and Mr d’Angelin gave evidence and were cross-examined.  They also called Mrs Mary Skelly, currently the Chief Operating Officer of Ondra who was also cross-examined.  I say something about each of them by way of introduction.
17.	Mr Reinhard gave his evidence in a very clear fashion.  He remained calm and measured at all times.  His oral evidence remained consistent with his witness statements.  I will deal in due course with some areas where Mr Howe suggests that his integrity is open to question and thus that I should treat his evidence with some degree of caution.  And I will, of course, deal with the central dispute of fact concerning what Mr Tory told Mr Reinhard about Ondra and his, Mr Tory’s, philosophy in creating the firm along with his co-founders.  I will need to decide whether Mr Reinhard’s consistency and his calm and measured presentation reflect the truth or whether they are masks for dishonesty.
18.	Mr Tory, too, gave his evidence in a clear fashion and was likewise calm and measured. Mr Callman submits that Mr Tory’s evidence was riddled with inconsistencies and that I should therefore prefer the evidence of Mr Reinhard.  
19.	Mr d’Angelin is a different character.  I would not describe him as either calm or measured: rather he was somewhat excitable especially when faced with the suggestion that his integrity was open to question and his memory mistaken.  Nor is he a person prone to modesty but perhaps his achievements justify a measure of self-congratulation.  His evidence is not, however, to be judged by reference to those human qualities but by an assessment of his honesty, a task I will undertake.  
20.	Mrs Skelly was not, I am afraid, an impressive witness.  She came across as partisan.  Some of her evidence was inconsistent and some of her answers were evasive.  But this does not matter because, in the event, her evidence was not of great importance.
Legislative provisions
21.	I now deal with the nature of an LLP and the legislation governing LLPs much of which is well known.  
22.	Unlike a traditional partnership, an LLP is a body corporate with legal personality separate from that of its members, which is formed by being incorporated under the Limited Liability Partnership Act 2000 (“the LLP Act”): see section 1(2).  It is to be noted that the  corporate body has “members” not “partners” even though the body is called a Limited Liability Partnership.  This is not without significance because the words and phrases “partner”, “partnership”, “Partner” and “Founding Partner” occur throughout the documentation and the evidence in the present case.  It is not always clear whether these words and phrases are being used interchangeably with member or membership; nor whether the phrases “partnership share” or “share of the partnership” are being used to describe the rights, interests and obligations of a person as a member of the LLP or something else.
23.	Except as far as otherwise provided by the LLP Act or any other enactment, the law relating to traditional partnerships does not apply to an LLP: see Section 1(5).
24.	Section 4(4) is important and provides as follows:
            “A member of a limited liability partnership shall not be regarded for any purpose as employed by the limited liability partnership unless, if he and the other members were partners in a partnership, he would be regarded for that purpose as employed by the partnership.”
25.	This curious provision was addressed in Tiffin v Lester Aldridge LLP [2012] EWCA Civ 35; [2012] 1 WLR 1887 (“Tiffin”) to which I will come in a moment.
26.	The mutual rights and duties of the members of an LLP are, subject as provided in the LLP Act or any other enactment, governed:
i)	by agreement between the members, or between the LLP and its members: see section 5(1)(a), or
ii)	in the absence of agreement as to any matter, by any provision made in relation to that matter by regulations under section 15(c) of the LLP Act: see section 5(1)(b).
27.	Regulations have been made under that section: they are, the Limited Liability Partnerships Regulations 2001 (SI 2001/1090) (“the LLP Regulations”).  These include, at regulations 7 and 8, various default provisions concerning the rights and obligations of members, which apply “subject to the provisions of the general law and to the terms of any LLP agreement”: see regulation 7. The most important of these default provisions, for present purposes, are as follows:
i)	All the members are entitled to share equally in the capital and profits of the LLP: regulation 7(1).
ii)	Every member may take part in the management of the LLP: regulation 7(3).
iii)	No member shall be entitled to remuneration for acting in the business of the LLP: regulation 7(4).
iv)	No person may be introduced as a member or voluntarily assign an interest in an LLP without the consent of all existing members: regulation 7(5).
v)	No majority of the partners can expel any member unless a power to do so has been conferred by express agreement between the members: regulation 8.
28.	Section 15 of the LLP Act also permits regulations to be made for the application of company law to LLPs.  The Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009 SI 2009/1804 (“the LLP Application of Companies Act Regulations”) have been made under that provision and apply substantial parts of the Companies Act 2006 to LLPs.
29.	Mr Howe and Mr Croxford state in their written closing submissions that section 4(2) provides that it is the members together who can confer membership on a new member rather than the LLP.  That is not quite the whole picture.  What section 4(2) provides is that any person may become a member “by and in accordance with an agreement with the existing members”.  If an LLP agreement provides for new members to be admitted by the LLP with the consent of the existing members, I do not see why the purported admission of a new member by the LLP with the consent of the existing members should not be effective, notwithstanding that there may not be a separate agreement between the new member, on the one hand, and the existing members on the other hand.  The LLP agreement is an agreement between the existing members; by authorising (under the LLP agreement) the LLP itself to admit a new member and by consenting to such admission, there is in my view a sufficient agreement for the purposes of section 4(2).
30.	From that brief description of the relevant provisions, Mr Howe and Mr Croxford identify a number of points arising which I set out in the following paragraphs.  I agree with what they say save as otherwise indicated.
31.	The first point is this.  Relations between the members are governed “by agreement between the members” and only “in the absence of agreement as to any matter” by the default provisions.  Accordingly, if there is an agreement in place between the members, there is no room for the application of any of the default provisions in relation to any matter governed by that agreement.  
32.	The second point under paragraph 30 above is this.  Section 4(4), on a literal wording, leads to an absurdity in that it posits an impossible situation under English law namely a situation where a person is at one and the same time both a partner in a traditional partnership and also an employee of the partnership.  This can never occur, because a partner in a traditional partnership can never be an employee.    
33.	That provision has, however, now been explained in two recent cases in which the issue before the Court was whether the claimants in those cases, who were each members of an LLP, could also claim to be either an “employee" or “worker" for the purposes of the employment legislation: see the Court of Appeal decisions in Tiffin and Clyde & Co LLP v Bates van Winkelhof  [2012] EWCA Civ 1207; [2012] IRLR 992, [2013] ICR 883 reversed by the Supreme Court at [2014] UKSC 32; [2013] ICR 730.  In Tiffin, the Court of Appeal considered the proper interpretation of section 4(4) of the LLP Act (which read literally produces an absurd result as Rimer LJ pointed out) and set out the various steps which a Court may need to go through in order to answer such questions.  In Tiffin Rimer LJ said this:
“Section 4(4) requires an assumption that the business of the LLP has been carried on in partnership by two or more of its members as partners; and upon that assumption, an inquiry as to whether or not the person in question would have been one of such partners. If the answer to that inquiry is that he would have been a partner, then he could not have been an employee so will not be, nor have been, an employee of the LLP.”
34.	In Clyde & Co, Elias LJ (with whom Richards and Lloyd LJJ agreed), endorsed this conclusion, extending it to “workers” within the meaning of section 230 of the Employment Rights Act 1996, even though they might not be employees.  His ruling at [68] is clear:
“In my judgment, therefore, a member of an LLP who, if it had not been registered as an LLP would have been a partner in an 1890 Act partnership, can be neither an employee nor a limb (b) worker within the meaning of s.230 of the Employment Rights Act 1996….”
35.	Although not strictly necessary, Elias LJ went on to consider a second ground of appeal namely the contention that even in an LLP the relationship between the member and the LLP itself is still to be located outside the employment sphere (as in the case of a traditional partnership).  In that context, he held that:
i)	The Parliamentary intention of s 4(4) was to ensure that “whatever the employment status of the partners under the 1890 Act, it should not alter as a result of incorporation. Rights should neither be gained nor lost when partners under the 1890 Act are transformed into members of the LLP under the 2000 Act.”: see at [48].
ii)	There were two principal reasons why a partner under the 1890 Act could neither be an employee nor a “worker”: see at [63-65].  
a)	The first is legal: since the partnership is not a separate legal entity, the parties are in a relationship with each other and accordingly each partner has to be employed, inter alia, by himself.  He would be both workman and employer which is a legal impossibility.  
b)	The second reason is more sociological. Employment presupposes a hierarchical relationship whereby the worker is to some extent at least subordinate to the employer.  Where the relationship is one of partners in a joint venture, that characteristic is absent
36.	Mr Howe and Mr Croxford submitted in their closing submissions that, although the creation of LLPs removed the first obstacle to the possibility that a member could be an employee of an LLP, the second remained: the effect of section 4(4) was that a member of an LLP could not be regarded as employed by an LLP “by virtue of that status [ie as a member] alone”, although Elias LJ did not entirely rule out the possibility that a member of an LLP might be made an employee by a separate agreement (…”Whether the member could enter into some separate employment relationship with the partnership, rather in the manner that a company director can do, would be a different question”): see [73] to [74].  
37.	Those paragraphs of the judgment, however, relate only to the second ground of appeal and explain Elias LJ’s view assuming section 4(4) had not been present: see in particular [72] where he concludes that on the analysis he had just carried out 
“Section 4(4) of the 2000 Act was strictly unnecessary.  Even without that provision, and notwithstanding the fact that LLPs are separate legal entities, which contract  in their own right, the essence of the relationship within the LLP is treated as being unchanged from the relationship between partners of an unlimited liability partnership, and it is not one of employment.”  
38.	In other words, what he is saying is that, absent section 4(4), the mere status of member (and the provisions of the LLP agreement) would not give rise to an employment relationship but he is not ruling out the possibility of a separate employment relationship.
39.	However, the effect of section 4(4) is stronger than just stated (ie “by virtue of that status alone”).  Elias LJ is not, so far as I can detect, suggesting that there might be circumstances where a person is both a member and an employee of an LLP.  The real significance of the decision is to extend the ambit of section 4(4) to “workers” as well as employees; and for present purposes the important message to take away is confirmation of the decision in Tiffin that a member of an LLP cannot be an employee of the LLP if he would have been a partner in the business of the LLP if it had been carried on as a traditional partnership.
40.	Some further light is shed by the decision of the Supreme Court in Clyde & Co.  The Supreme Court overturned the decision of the Court of Appeal in relation to the issue whether the reference in section 4(4) to “employed” could include a reference to engagement as a “worker”, holding that it did not.  Lady Hale gave a judgment with which Lord Neuberger and Lord Wilson agreed.  Lord Carnwath agreed with Lady Hale that the appeal should be allowed for the reasons which she gave.  During the course of her judgment, Lady Hale considered the correct interpretation of section 4(4).  
41.	Lady Hale disagreed with the approach of Rimer LJ in Tiffin.  Rimer LJ had formulated his approach as a way of avoiding the absurdity to which a literal construction led (as to which see paragraph 32 above).  As she put it:
“20.  He [Rimer LJ] went on to conclude that what section 4(4) must have been getting at is not what it says that it is getting at, which is whether the member “would be regarded … as employed by the partnership” if the members of the LLP were “partners in a partnership”; instead, in his view, it must have been getting at whether the LLP member would be regarded as a partner had the LLP been a partnership.”
21.   But, once it is recognised that the 2000 Act is a UK-wide statute, and that there is doubt about whether partners in a Scottish partnership can also be employed by the partnership, then there is no need to give such a strained construction to section 4(4) . All that it is saying is that, whatever the position would be were the LLP members to be partners in a traditional partnership, then that position is the same in an LLP. I would hold, therefore, that that is how section 4(4) is to be construed.
22.   The issue in Tiffin’s case was whether a member of an LLP could make a claim for unfair dismissal against the LLP.  That, of course, depended not on whether she is a “worker” in the wider sense used in section 230(3)(b) of the 1996 Act, but on whether she is an employee under a contract of employment.  On any view, “employed by” in section 4(4) would cover a person employed under a contract of service.
23.   The question for us is whether “employed by” in section 4(4) bears a wider meaning than that……”  
42.	On Lady Hale’s approach, the notional partnership with which section 4(4) is concerned will always include as a partner the person whose status as an employee is in question.  That person cannot be an employee of the LLP of which he is a member unless he could have been employed by the notional partnership of which he or she is treated as being a partner.  There is no scope, on this approach, for an enquiry as to whether the person would, on the facts, actually be a partner were two or more of the members of the LLP carrying on the business in partnership.  Under English law, a person cannot at one and the same time be both a partner and an employee of the partnership; but under Scottish law the position is unclear and the dual relationship (partner and employee) may be permissible and so section 4(4) still has content (albeit only in relation to Scotland).  At least at this level, I am bound by authority to conclude that that is the position under English law.  It is the position established in Ellis v Joseph Ellis & Co [1905] 1 KB 324 (discussed by Elias LJ at [52] of his judgment in Clyde & Co) and recognised by the Court of Appeal in Cowell v Quilter Goodison Co Ltd [1989] IRLR 392 and Tiffin.  It is implicit in the judgments of all of the judges in Clyde & Co that this is the current position.  It is true that Lady Hale and Lord Clarke acknowledge the force of the contrary arguments but with Lady Hale, at least, expressly declining to express a view on the point.  Lord Carnwath identifies the traditional view as being that a person could not be an employee of his own firm and expresses himself as “currently unpersuaded” by the arguments to the contrary.  I must, and do, proceed on the basis that a person cannot be an employee of the firm in which he is a partner.  
43.	On Lady Hale’s approach to section 4(4), it follows that, for an LLP incorporated in England and where the LLP Agreement is governed by English law, a person cannot be both a member and an employee.  For completeness, I should say that I would reject any suggestion that in such a case, recourse could be had to Scottish law by treating the notional partnership referred to in section 4(4) as a Scottish partnership.
44.	However, Mr Callman submits that what Lady Hale said about the approach to section 4(4) in an employment context, in contrast with the meaning of “worker” was obiter and that the law is as stated in Tiffin.  Mr Howe disagrees, submitting that her judgment on section 4(4) was necessary to her decision in that it was only following a proper construction of that section that she could consider whether it related to a “worker” as well as to an “employee”.  
45.	I do not consider that I need to resolve that particular disagreement since the result is the same on either approach on the facts of the present case.  This is because it is my view that if Mr Reinhard became a member of Ondra under the Contract augmented by the default rules (as is Mr Reinhard’s principal contention), he would have been a partner in the notional partnership envisaged by section 4(4) (just as were the claimants in Tiffin and Clyde & Co).   If one works through the express provisions of the Contract and the default rules, so far as not modified by those express provisions, I find it impossible to conclude other than that Mr Reinhard would have been a partner in the notional partnership.  If Mr Reinhard’s case is correct, he was entitled to share in the income and capital profits of the firm, he was entitled to play a part in the management of its business and he was entitled to a share in any surplus assets on a winding up.  These are more than powerful indicators that he would have been a partner in the notional partnership; they lead inevitably to that conclusion.  
46.	I should make clear that I am not deciding at this point in my judgment that Mr Reinhard in fact became a member of Ondra (whether at the time of the Contract or later); I am saying only that, if he did became a member under the Contract, then he would also have been a partner of the notional partnership and so could not at the same time have become an employee under the self-same Contract.  Logic therefore dictates, it seems to me, that if he became an employee under the Contract, he could not at the same time and under the self-same Contract have become a member.  Similarly, if he became a Member at a later time, he would necessarily be unable to continue as an employee.  
47.	Mr Callman submits otherwise, however.  His starting point is that the role of section 4(4) is not to determine whether a person is or is not a member. It applies only to determine whether a person who is a member is also an employee. He says that this is evident from the way the section is structured which makes it clear that it does not deal with acquiring membership.  There is nothing in Tiffin (or I might add Clyde & Co) which detracts from that submission.  It was common ground in that case that Mr Tiffin was a former member; his claims were brought on the premise that he had also been an employee.  Rimer LJ observed that a former member “may or may not be an employee” (see at [5] of his judgment).  He identified the question for the employment tribunal as being whether Mr Tiffin was an employee of the LLP noting that “As he was a member of the LLP, the answer to it required a navigation of section 4(4)”.   As to that, Mr Callman relies on what Rimer LJ said at [31]:
“The subsection is directed to ascertaining whether a particular member (call him ‘A’) of a limited liability partnership is or is not for any purpose an employee of it. The statutory hypothesis which the subsection requires in order to answer that question is that A and the other members of the limited liability partnership “were partners in a partnership”. …...”
48.	And so Mr Callman submits that the statutory hypothesis is to be applied in order to answer that question; ie whether someone who is a member is or is not, in addition, an employee.  He says that any attempt to apply the test in section 4(4) the other way around makes a nonsense of it. The answer would always be the same.  He illustrates the point by reference to this example.  A has an employment contract with an LLP.  Imagine that the LLP is a traditional partnership and A is employed by the partnership. On the basis of Ellis v Joseph Ellis & Co and Cowell v Quilter, A could never also be a partner. However, it is accepted by the Court of Appeal that this is possible: see Tiffin at 1900G-H, at [34]:
“it is clear that a member of an LLP can be an employee of it: that is what section 4(4) recognises.”
49.	So, he submits, this cannot be how the test is meant to be used. Trying to use section 4(4) to find out if an employee is a member corrupts the test. This is simply not what s 4(4) is there to do. 
50.	I do not agree with those submissions.  The Court of Appeal in Tiffin did not accept that a person in the position of A could also be a partner.  Indeed, it was to meet the problem arising from the fact that a person could not be both a partner and an employee that Rimer LJ devised the strained interpretation of section 4(4) which he did.  The passage quoted does not support the proposition put forward by Mr Callman: what it does show is that there can be circumstances where a person can be a member of an LLP (in contrast with a partner of a traditional partnership) and an employee at the same time.  But according to Rimer LJ, this can only be where the relationship between the individual and the other members of the LLP is not one which would have made him a partner of the notional partnership.  An example would be where an employee is made a member of an LLP but obtains no rights other than the right to continue to receive his salary; his position would be not dissimilar to that of a so-called salaried partner in a traditional partnership in those cases where the salaried partner is not a partner at all.  Of course, on Lady Hale’s approach, the individual could not be a member and an employee in any circumstances (so long as the law remains that a partner cannot be an employee of his own firm).  
51.	Mr Callman makes some further points in support of his contention which I should mention.
i)	First, he says that that it would be a nonsense to suggest that, because a person (ie Mr Reinhard in the present case) is an employee he cannot therefore be a member.  He submits that it must be open to the members to agree (see section 4(2)) whether someone becomes a member, whatever their status would have been in a traditional partnership.   I do not agree with the suggestion that it would be a nonsense to make that suggestion.  Quite the reverse: it is the logical corollary of a member being unable to become an employee unless he ceases to be a member.  Both propositions follow from the fact that it is not possible, in a traditional traditional partnership, for an individual to be both a partner and an employee.  There are some good reasons for thinking that the Supreme Court might take a different view of the current law on that last point if the matter were to come before it for decision, reasons articulated by Lady Hale in her judgment in Clyde & Co; and if those reasons prevail, then that would be reflected in the correct approach to the employment of a member of an LLP.  Although there are also some good reasons for thinking that an LLP ought to be able to employ a member, the fact that it cannot do so (other than in cases where the member would not be a partner in the notional partnership) is a reflection of section 4(4) which cannot simply be sidelined and ignored.  
ii)	Someone who would have been an employee in a traditional partnership is not prevented from being a subscriber when the LLP is formed and therefore a member under section 4(1).  That is, of course, correct; but it does not begin to answer the question whether the individual can continue as an employee if he in fact does become a member of the LLP.
iii)	Reliance is placed on what Elias LJ said in [73] of his judgment in Clyde & Co (as to which see paragraphs 36 and 37 above).  Mr Callman reads Elias LJ as suggesting that, even if the employment relationship would not have existed in a traditional partnership, it can still be imposed by an express contract. This is made possible by the fact that an LLP has a separate corporate identity from its members and can contract with its members as individuals, notwithstanding the result of the section 4(4) test.  As will be seen from the earlier paragraphs of this judgment just mentioned, I do not consider that that was what Elias LJ was saying at all.
iv)	Next, Mr Callman says that it would be a very peculiar conclusion to reach that section 4(4) somehow prohibited or negated an LLP’s freedom of contract to make someone both a member and employee,   particularly given that limited companies have such freedom.   I have some sympathy with the view that section 4(4) is a peculiar section in bringing about that result; but in my view, that is the result which the section has brought about.
52.	The third point under paragraph 30 above is this.  A further important distinguishing feature of an LLP, as compared to a traditional partnership, for present purposes, consists of the essential nature of any ownership interest.  A traditional partnership is not a separate legal entity, and therefore strictly cannot “own” anything.  Rather, the partners together jointly own all of the assets of the partnership in equity, regardless of who holds the legal title.  
53.	In contrast, an LLP is a separate legal entity and it owns all the firm’s assets, both legally and beneficially.  The members have no direct legal or beneficial interest in those assets.   Instead, the members have only those rights which their membership confers, rights which are ascertained in accordance with the relevant LLP agreement coupled with the statutory default provisions.  The members’ interests are subject to the terms and conditions applicable to their membership.
54.	Mr Howe and Mr Croxford submit that it is therefore not useful, as regards an LLP, to talk of an “ownership interest” or “share”, in a vacuum, as this begs the question as to what are the terms and conditions applicable to that membership.  In the Particulars of Claim, as originally formulated, Mr Reinhard asserted a claim to an “ownership interest” in the assets and profits of Ondra, independent of any Membership of the firm.  Master Bowles struck these claims out.  Mr Reinhard’s claim is therefore confined to a claim that he was entitled to Membership of Ondra, on certain particular terms.  I broadly agree with that submission certainly in relation to the concept of a direct “ownership interest” in the assets although it is to be noted that section 12(3)(a) of the LLP Act is drafted as if members do have a direct interest in property transferred to an LLP.  
55.	But so far as a “share” in an LLP is concerned, the position is different.  It makes perfectly good sense for members of an LLP to describe themselves as having “shares” in the LLP.  And the same goes for an “interest” in the LLP itself in contrast with a direct interest in the assets of the LLP.  Indeed, section 7(1)(d) of the LLP Act speaks of a member having assigned the whole or any part of his share and there are other statutory provisions taking the same approach eg sections 432(2)(a) and (4) Companies Act 1985 (“shares”), section 900(2)(b) Companies Act 2006 (“shares” and “interests”) and the LLP (Accounts) Regulations 2008  (“interest” and “interests”).  Further, the February 2009 LLP Agreement contains a definition of “LLP Interest”  as meaning “the interest of a Member in the LLP including all rights and obligations which it has in the LLP”; and the April 2009 Draft LLP Agreement refers (at clause 12, dealing with transfers) to a Member’s “interests in the LLP”.  These are perfectly sensible and understandable uses of the word “interest” in the context of a member’s relationship with the LLP.  Moreover, the Contract itself refers to an “ownership interest” and to the “initial ownership”; those terms make perfectly good sense if they are seen as describing the rights and obligations which membership of the LLP carries rather than as direct interests in the assets of the LLP.
56.	However, what rights such a “share” carries with it can only be ascertained by reference to the agreements referred to in section 5(1) LLP Act and to the default provisions of the Regulations.  
57.	Thus a member in an LLP has a bundle of financial rights and obligations and a bundle of administrative rights and obligations. Often those financial interests will include rights and obligations in relation to income profit or loss and capital profit or loss.  But there is no reason why the terms of an LLP agreement should not restrict a member to a share of income profit and give the member no right to any realised capital profit or to any share of profit on a dissolution.  Nor is there any reason why a share should not automatically pass to the remaining members (with or without payment) when the member ceases to work for the LLP although it is a nice (or so far as the present case is concerned perhaps a simply uninteresting and irrelevant) question whether an automatic accrual of that sort is part of the share or operates over a share.  I agree with the way the nature of the share is succinctly put in Whittaker and Machell, The Law of Limited Liability Partnership (3rd edition) at 8-18:
“….. the ‘share’ of  a member is the totality of the contractual or statutory rights and obligations of that member which attach to his membership; and that an ‘interest’ of a member is one or more components of his share.”
Accordingly, it is not right to view a share in an LLP as something existing in abstract: it is a function of the contractual and statutory rights governing the relationship between the members amongst themselves and between the members and the LLP.
58.	Mr Reinhard’s primary case, as presented by Mr Callman at all stages, including in a short further exchange of written submissions requested by me after the hearing had finished, is that Mr Reinhard was both an employee and a member at the same time.  On Lady Hale’s approach, this was not possible.  On Rimer LJ’s approach it was not possible either, in the light of my conclusion that Mr Reinhard would have been a partner in the notional partnership. 
59.	It follows, therefore, that, in order to succeed in his claim to have become a member of Ondra, Mr Reinhard needs to establish one of the following things:
i)	first, that the Contract did not, contrary to its express terms, in fact create an employment relationship; or
ii)	secondly, that the Contract did create an employment relationship but that Mr Reinhard did not become a member immediately, becoming a member only at a later stage, at which stage the employment came to an end.
60.	So far as his pleaded case is concerned, Mr Reinhard has kept his options open.  He pleads that the partnership share granted by the Contract should be construed and understood to mean an entitlement “as a member (whether or not also an employee….) of Ondra”.  That entitlement was, the pleading avers, to:
i)	1% of the net sale proceeds on a sale of the LLP as a going concern;
ii)	1% of any surplus of the assets of the LLP over its liabilities on a winding up; and 1% of any sums paid out from time to time in respect of Income and/or Capital Profits.
61.	He also pleads that he agreed to and was bound by the terms of the Contract with his mutual rights and duties as a member being set out in Regulations 7 and 8 of the LLP Regulations.  The pleading goes on to say that the partnership share “was independent of [Mr Reinhard’s] employment”.  Later on (see paragraph 13 of the Re-Amended Particulars of Claim) Mr Reinhard’s status in Ondra was alleged to be that of “(a) an employee and member or (b) a pure member (ie a member but not an employee)” [my emphasis]. In the alternative it is alleged that, if he commenced as an employee (and not as a member) then the Contract was “a binding agreement that he would be granted a partnership share in Ondra (which partnership share he had in any event acquired by the time of the, wrongful, termination of his employment)”.
62.	Mr Callman suggests that issues concerning Mr Reinhard’s status as an employee are not to the point.  He submits that the real question for me is whether Mr Reinhard did become a member and that there is no issue about whether he was an employee.  He refers to the judgment of Master Bowles when striking-out part of the Particulars of Claim:
“By my ruling on this application, the only realistic case that the Claimant can advance in respect of his ownership interest in Ondra is that he was granted a share of the partnership as a member.  Whether he was an employee member is entirely immaterial to that contention and does not call for any inquiry.”
63.	I do not know what, if any, submissions Master Bowles received in saying what he did in the second sentence of that quote.  I do not agree with the proposition that the matter is immaterial.  It seems to me to be of central importance since, if the Contract on its true construction did result in Mr Reinhard becoming an employee, it cannot be the case that he was also a member.  His ownership claim depends on his being a member (as Master Bowles observed in the first sentence of the quote).  
64.	Given the express wording of Clause 1 of the Contract, there are obvious difficulties with the suggestion that the Contract did not in fact create an employment relationship.  I will deal with this issue in more detail under the heading Construction later in this judgment.  At this stage, I simply remark that the difficulties are perhaps not insurmountable and refer to one authority.  In Ellis v Joseph Ellis & Co Mr Ellis was a member of a partnership formed for the purpose of working a mine.  He worked in the mine as a general foreman by arrangement with his partners, receiving a weekly wage out of the profits of the business.  He suffered a fatal accident working in the mine and his widow sought compensation under the Workmen’s Compensation Act 1897.  The issue was whether Mr Ellis fell within the statutory definition of “workman”, a term which was quite widely defined.  During the course of his judgment, Lord Collins MR (in part of a longer passage quoted by Elias LJ) said this:
“… It seems to me that, when one comes to analyse an arrangement of this kind, namely, one by which a partner himself works, and receives sums which are called wages, it really does not create the relation of employers and employed, but is, in truth, a mode of adjusting the amount that must be taken to have been contributed to the partnership assets by a partner who has made what is really a contribution in kind, and does not affect his relation to the other partners, which is that of co-adventurer and not employee.”
65.	And so it can be argued that the Contract, contrary to appearances, did not create a relationship of employer and employee at all.  Rather, it constituted Mr Reinhard a member of Ondra and, it being for him to have been both a member and an employee, his rights as a purported employee should take effect, as in Ellis v Joseph Ellis & Co, as an adjustment to his interests in Ondra.  
Facts
66.	In this section of my judgment, I deal with the facts.  Of particular importance are the facts which form the relevant and admissible matrix against which the Contract is to be construed. 
Ondra’s Founding Ethos 
67.	Mr Howe places great reliance on the philosophy of the founders in creating Ondra.  The founding ethos is central to the Defendants’ case on construction since their construction reflects that ethos whereas Mr Reinhard’s does not.  Mr Tory’s view of the cause of the downfall of the banks appears from his witness statement quoted at paragraph 195 below. Mr Tory’s evidence was  that his idea in creating Ondra and in bringing his co-founders together was novel, indeed radical and iconoclastic, in the investment banking world.  In their written closing submissions, Mr Howe and Mr Croxford identify four respects in which this was so:
i)	Instead of revenues being generated from large transactions, they would be generated from advice given to clients within long term relationships.  The fees from transactions would be discretionary rather than a principal source of revenue.
ii)	Ownership would be recycled over time within the organisation such that the partners from time to time would own the firm.
iii)	The bulk of compensation for partners would be derived from the profit share attributable to their ownership of the firm, with their level of ownership dependent upon the extent of their continuing contribution.
iv)	The firm would remain relatively small.
68.	It is asserted that the founding ethos of the firm was that Members of the firm should share in the profits generated by the equity whilst they remained Members, but that, like a traditional law firm or traditional banking partnership (but unlike the modern model of a bank or financial company), they would not be able to sell it independently or take it with them when they left – so that the value of equity created in the firm would remain in the firm, and could continue to be passed down to the new generations of Members.  Thus (to use my own words) a departing Member would not be entitled to any payment in respect of goodwill or, indeed, any other assets of the firm.  
69.	I do not know how a traditional banking partnership operated; and no evidence, whether expert or otherwise, was provided about that.  But what I do know from my own experience in dealing with solicitors’ partnerships is that such partnerships did in the past (Mr Howe does not explain how far back one needs to go for a “traditional” law practice to be found) often require an incoming partner to contribute to capital and thereby acquire an interest in the assets of the firm including goodwill and that an outgoing partner would often be entitled to payment in respect of his share, including payment in respect of goodwill.  It may well be that large, modern, solicitors’ practices adopt a different model although whether it is true that the general position today is that solicitors’ firms have rejected the model which I have just described, I do not know.  
70.	Mr Tory says that he had been inspired by the example set by his father and uncle in the 1950s, who built up the Canadian law firm, Tory and Associates (now Torys LLP), which became one of the largest and most respected firms in Canada.  Since no evidence has been provided about how that firm dealt with partnership succession, Mr Tory’s inspiration does not much assist me. 
71.	Mr Howe suggests that this modern model stands in stark contrast to the common intent in the financial services industry of swiftly growing a firm that could then be sold in the short term as a going concern so as to enrich the shareholders. The principal benefit of a lasting firm was that it would align the firm’s interests with those of the clients rather than seeking to extract the maximum fees from clients in the short term so as to increase the sale price of the business.  That may well be so.  But there can be no suggestion in the present case, even if Mr Reinhard’s case is correct, that the firm would be swiftly grown by its partners with a view to a sale in the short term.  Further given the focus of the business on strategic advice rather than on discretionary fee income, the tension between the interests of the firm and the interests of the clients would naturally be far less than in the sort of business of which Mr Tory was (mildly or more strongly) deprecatory.  In any case, I do not understand why any tension between those two interests would be heightened if an outgoing partner was to be paid for the value of their share of goodwill.  Moreover, it would always be open to the partners, even under Mr Tory’s business model, unanimously to decide to sell the business if the right offer were made.  In the case of Ondra, a decision on that would rest with the Founding Partners and their successors. 
72.	Mr Tory explained more than once the importance of what he described as the “core ethos” of the firm with goodwill “cascading” down the generations.  Mr Callman of course observes that there is no documentary evidence which supports the “core ethos” philosophy.  Mr Reinhard accepts that the business plan (to which I will come) does talk about “recycling” and the “next generation” but, as Mr Callman again points out, the documentation does not speak anywhere of this being without consideration.  
Successive LLP Agreements and Membership
73.	Mr Tory incorporated Ondra with his wife as the other subscriber on 15 October 2008.  Initially, there was no written agreement between the two partners as to their terms of membership.  Shortly after this, on 4 February 2009, they entered an LLP Agreement (“the February 2009 LLP Agreement”).  There are a number of provisions of it which I mention:
i)	Recital (C) stated that the parties are entering into the agreement “to govern their relationship as members of the LLP”.
ii)	“Capital Contribution” was defined as a contribution of capital by a Member in accordance with clauses 6.1 and 6.2.
iii)	“Designated Member” was defined as each of Mr Tory and his wife “and any other person who is a “designated member of the LLP” for the purposes of the Act [the Limited Liability Partnership Act 2000], in each case for so long as he or she remains a designated member of the LLP”.
iv)	“LLP Interest” was defined as “the interest of a Member in the LLP including all rights and obligations which it has in the LLP”.  
v)	“Member” was defined as each of Mr Tory and his wife “and any other person who is admitted as a member of the LLP, in each case in his or her capacity as a member of the LLP and for so long as he or she remains so”.
vi)	“Profit and Loss Sharing Percentage” was defined in relation to Mr Tory and his wife as, respectively, 99.9998% and 0.0002%. 
vii)	Clause 3 provided that the name of the LLP should be “Quattro Partners LLP” or such other name as the Members may from time to time agree.  “Ondra LLP” is the name subsequently adopted.
viii)	Clause 5.2 provided that the provisions of the agreement should come into force with effect from 15 October 2008, the date of incorporation.  
ix)	Clause 6 dealt with the funding of the LLP by Members, including the initial capital fundings of Mr Tory and his wife.
x)	Clause 8 provided that each of the Members should have day-to-day control over the management of the business.
xi)	Clause 9 dealt with accounts, allocations and distributions.  
a)	Clause 9.1 was concerned with Accounts: the LLP was to establish an income account, a capital account, a contribution account, and a loan account for each Member.  It provided for the credits and debits which were to be made to each account.  
b)	Clause 9.2 was concerned with allocation of income, income losses, capital gains and capital losses.  These allocations to Members were to be “in accordance with their respective Profit and Loss Sharing Percentages”.
c)	Clause 9.4 was concerned with distributions.
xii)	Clause 10 dealt with Transfers.  By clause 10.1, it was provided that no Member could sell or otherwise deal with “all or any portion of its LLP Interest without the written consent of each other Member”.  By clause 10.3 it was provided that the LLP could admit additional Members “on such terms as it [ie the LLP itself] considers fit with the consent of each of the Members”.
xiii)	Finally, clause 16 provided that no variation of the agreement would be valid unless “it is in writing and signed by or on behalf of each of the parties to this Agreement”.
74.	Mr Howe attaches little importance to the restrictions on transfer given the anticipated set up costs, the speculative nature of the business and the fact that the business model depends on the development of relationships as the source of revenue.  He submits that the hypothetical questions put to the Defendants’ witnesses as to the level or shares of “ownership” at that time are irrelevant, on the basis that the business had negative value given that none of those who had become involved (in particular the Founding Partners)  and who were capable of generating future revenues through their relationships were bound to remain or to work on behalf of the LLP.  I do not think that the Agreement can be sidelined in that way.  If a person had been shown the Agreement and told that he could join the firm on the basis of it, being given a stated percentage share, then it is the Agreement which would govern the relationship so that if the business flourished and the firm became valuable, his rights in the business and its assets would be found in the Agreement.
75.	The LLP Agreement clearly needed to be changed in order to reflect the involvement of the other Founding Partners.  Slaughter and May prepared a number of drafts.  By the beginning of March 2009, the shape of the documents which would ultimately govern the LLP was becoming crystallised.  As can be seen from email discussion between the Founding Partners on 3 March 2009, the “grant of equity” was intended to be governed by a partnership agreement.  And so one sees, in the context of a discussion concerning the proposed terms of contract for Stewart Bennett, the following exchange taking place.  By an email dated 3 March 2009 Simon Morgan raised a number of questions, including these: 
“- What happens to equity grants in the event someone chooses to leave? There is no mention of vesting term, conditional ownership or buyout/forfeiture on termination.
- What is our policy/approach on buyouts and cash payments.  Case-by-case?  Formal limits, which if requiring excess, need approval? Hate to be overly formalistic, but seems to beg the question.  Right now, with limited revenue accruing, it could be somewhat onerous…..
These may all be matters that were cemented before my coming along, so apologies if I am treading ground already covered.”
76.	The fact that Mr Morgan was raising those questions in the way which he did shows that the “core ethos” cannot, by this time, have been effectively communicated to him.
77.	Mr Baldock responded stating:
“-The equity grant is governed by the partnership agreement. Effectively, other than yearly distributions, the partnership stake has no lasting value until someone has been at the partnership for ten years. It is forfeited back to the partnership if someone leaves.
Simon-did you get the latest copy of the Partnership agreement?”
78.	It is not clear precisely which draft of the LLP Agreement was then extant.  It was probably the one dated 1 March 2009 which contains, at clause 5.5D, terms on exit broadly similar to those in later drafts.  At the hearing, the draft most referred to was one dated 17 April 2009 (“the April 2009 Draft LLP Agreement”) under the Slaughter and May reference NV/SCW.   The parties named in this draft were (parties 1 to 4) the four Founding Partners (parties 5 to 12) a number of corporations including certain intending investors (which I will refer to as “the Investors”) and (party 13) Ondra itself.  Mr Tory’s wife was not included as a party in the draft.  It is apparent from recital (B) that, by the time the draft came to be executed, she would have transferred her share to Mr d’Angelin, Mr Baldock and Mr Morgan each of whom would have been previously admitted as a Member.  The  April 2009 Draft LLP Agreement included the following:
i)	Recital (C) explained that the four Founding Partners were the Members of the firm and wished to admit BDA Co, Baldock LLC, Morgan LLC and the Investors as members of the LLP.  These entities were part of the structure through which the Founding Partners other than Mr Tory would hold their interests in the LLP.
ii)	Recital (D) explained that the parties intend the agreement to govern the terms on which the LLP would operate and regulate the relationship between the Members themselves and between the Members and the LLP “from the date of this agreement”.
iii)	The terms of adherence of new Members were set out in a draft deed contained at Schedule 4.  
iv)	The April 2009 Draft LLP Agreement envisaged the execution of a “Deed of Allocation” which was defined as 
“a deed of allocation between the Founder Members and a Member (or in the case of a Deed of Allocation regarding a Founder Member, amongst the Founder Members) setting out the LLP Proportion and Voting Interests of such Member, subject to consequential amendment in accordance with this agreement, together with the Capital Contribution made by such Member under the terms of this agreement and substantially in the form set out in Schedule 5 to this agreement”
v)	“Founder Member” was defined as Mr Tory, Mr d’Angelin, Mr Baldock, Mr Morgan, BDACo, Baldock LLC and Morgan LLC “together with any New Member that shall be nominated as a Founder Member by the Founder Members acting unanimously in writing”.
vi)	“LLP Proportion” was defined as the Member’s share in Income Profits, Income Losses, Capital Profits and Capital Losses as recorded in the Deed of Allocation executed by the Members and his “Voting Interest” was likewise defined by reference to that Deed.
vii)	“Withdraw” was defined as ceasing to be a Member with Withdrawal, Withdrawn and Withdrawing being construed accordingly and with deemed Withdrawal being included within the definition.
viii)	By clause 2.1, with effect from the Effective Date (the date when all FSA approvals had been obtained), Baldock LLC, Morgan LLC and the Investors were to be admitted as Members.  Whether the omission of BDA Co was deliberate or an error, I do not know.
ix)	By clause 2.2, it was provided that “the Members will be those persons listed in Schedule 1 (Members) and such persons as may from time to time become Members…..”.  Schedule 1 named the parties to the agreement other than Ondra itself.
x)	By clause 2.3, the Members agreed that 
“Except as otherwise provided in this agreement, the Members hereby agree that the rights, duties and liabilities of the Members shall be provided in, and the relationship between the Members and the LLP shall be governed by, the Act [the Limited Liability Partnerships Act 2000] and the Regulations [the Limited Liability Partnerships Regulations 2001].  The provisions of Article 7 of the Regulations shall not apply to the extent that they are inconsistent with this agreement.”
xi)	Clause 5.2 made provision for New Members.  No person could be admitted as a New Member (with a limited exception found in clause 12.1) without the prior unanimous consent of the Founder Members.  The LLP Proportion and Voting Interests of the New Member were to be determined (with a corresponding reduction in the LLP Proportion and Voting Interest of other Members) in accordance with clause 8.8(B) and 5.4(C).  Those clauses provided that LLP Proportion and the Voting Interests of any New Member was to be agreed by the Founder Members when they consented to the admission of that New Member. 
xii)	Clause 5.5 concerned Withdrawal of a Member.  
a)	Clause 5.5(A) provided that a Member “shall Withdraw or shall be deemed to Withdraw upon such Member’s death or Disability” (ie Disability as defined in the definitions section). 
b)	Clause 5.5(C) dealt with the right of the LLP to bring to an end the Membership of a Member.  The LLP had the right exercisable with the written consent of the Founder Members to serve a written notice (called an Exit Notice) on a Member to “deem the Withdrawal of such Member, without any further action on the part of the LLP”.  An Exit Notice could be served in the situations set out in paragraphs (i), (ii) and (iii).  In the present case, the Defendants rely on paragraph (ii) which provides for deemed Withdrawal
“upon the expiry of 60 days following service of the Exit Notice if, in the reasonable opinion of all the Founder Members, the Member…..on whom the Exit Notice is served has materially underperformed in his role in respect of the Business… ”
c)	Clause 5.5(D) provided that any Member who Withdraws or is deemed to Withdraw shall automatically surrender all of his Voting Interests, any right to his LLP Proportion and all other interests in the LLP save as otherwise expressly stated in the agreement and subject to Clause 5.5(G).  The share of the Withdrawing Member would automatically accrue pro rata to the remaining Members (excluding the Investors).  
d)	Clause 5.5(F)(i) provided that a Withdrawing Member should pay to the LLP all sums due to the LLP (excluding any amounts outstanding under his Capital or Current Accounts).  
e)	Clause 5.5(G)(i) and (ii) provided, in the other direction, for payment to the Withdrawing Member (or his personal representatives) an amount equal to his allocation of Income Profits less Income Losses for the then current accounting year and also any amounts standing to the credit of his Current Account (or as yet unallocated amounts determined in accordance with clause 8.5).
f)	Special provision was made under clause 5.5(G)(iii) for payment of further sums in the case of a “Founder Member…..who Withdraws or is deemed to Withdraw in accordance with clause 5.5(A)”.  
g)	Further special provision was made in clause 5.5(G)(iv) for a Founder Member who Withdraws or is deemed to Withdraw after 10 or more whole years as a Member.  He would become entitled to a percentage share of profits for a number of years, the percentage and the number of years being calculated by reference to the formula set out in the paragraph.  Clause 5.5(G)(vi) provided for any amount standing to the credit of the withdrawing Member’s Capital Account to be allocated to all Members pro rata to their LLP Proportions; and clause 5.5(G)(viii) provided for the Member to cease to have any rights, obligations or liabilities under the agreement with certain exceptions. These provisions would, of course, have displaced the default provisions under the LLP Regulations.
xiii)	Clause 6 dealt with Members’ rights and duties.  I need mention only clause 6.1 which is relied on by the Defendants.  Under that clause, an individual becoming a Member under the terms of the April 2009 Draft LLP Agreement agreed that the activities of the LLP should be substantially his sole business activity and that he would devote substantially the whole of his working time, attention and skill to the business of the LLP.  
79.	A discrete area of dispute has arisen over the meaning of clause 5.5(G)(iii).  The issue is whether, as the Defendants submit, it was to apply only to a Founder Member who Withdraws under clause 5.5(A) that is to say only as a result of Death or Disability, or, as Mr Reinhard submits, it applies to any Withdrawal by a Founder Member.  The relevance of this goes to the issue of the construction of the Contract: Mr Reinhard relies on his interpretation of clause 5.5(G)(iii) to show that the shares of Founder Members would not pass down the generations without payment and that the alleged founding ethos did not really exist in the minds of the Founding Partners.  I do not propose to spend time on this dispute.  I have reached the clear conclusion that the Defendants’ interpretation is to be preferred.  The language of the sub-clause is, I think, clear.  There is nothing to lead me to reject that meaning in favour of some other interpretation.  
80.	The February 2009 LLP Agreement was amended by a deed of variation on 28 April 2009 (“the April 2009 DoV”) made between Mr Tory, his wife, Mr d’Angelin and Ondra.  By the April 2009 DoV, Mr Tory’s wife transferred her interest to Mr d’Angelin and he was appointed a Member.   Voting rights were created: Mr Tory held 98.9998% and Mr d’Angelin the remaining 0.0002%. Mr Tory’s evidence – and this seems obviously correct – is that by that stage, neither Mr Tory nor Mr d’Angelin intended that agreement to be the final agreement which would govern their membership of the LLP or the affairs of the LLP.  Be that as it may, the April 2009 DoV was the only formal LLP Agreement subsisting until 31 March 2010. 
81.	Mr Baldock had heard of Ondra and Mr Tory’s plans and, sometime in October 2008, contacted Mr Tory to express interest in becoming involved.  Mr Tory’s evidence, which I accept, is that their discussions were productive and it was agreed that Mr Baldock should become a “Founding Partner”.  His evidence does not disclose, however, when he was to become a partner nor the terms on which he would do so.  Even now I do not know what share he was intended to obtain or did in fact obtain.  Mr Baldock was responsible for Ondra’s New York office which has been up and running since January 2009; so it can be seen that his involvement with Ondra dates back to that time at the latest.
82.	Mr Tory’s evidence, which again I accept, is that he contacted Mr Morgan in January or February 2009.  They knew each other well.  Mr Morgan was recruited to Ondra in early 2009.  Again, he was to be a Founding Partner, but as with Mr Baldock, Mr Tory’s evidence does not disclose when he was to become a partner nor the terms on which he would do so; and, again, I do not know what share he was intended to obtain or did in fact obtain.  
83.	When Mr Baldock and Mr Morgan were in fact admitted as members is not entirely clear.  The Defendants’ pleaded case is that they were admitted on 1 May 2009 as Members subject to the terms of the April 2009 Draft LLP Agreement.  There is no documentation relevant to this admission save that the LLP Agreement dated 31 March 2010 (to which I will come) states at recital (C) that they “have been admitted as New Members of the LLP” without stating when.  Their admission without any documentation would, in my view, have been perfectly possible: the terms for admission of new Members prior to 31 March 2010 were to be found in the February 2009 LLP Agreement as varied by the April 2009 DoV, which did not contain any requirement for a deed of adherence or a deed of allocation as contemplated in the April 2009 Draft LLP Agreement.  
84.	Mr Howe submits that the admission of Mr Baldock and Mr Morgan was nonetheless incapable of varying the terms of the February 2009 LLP Agreement as varied by the April 2009 DoV so that the Profit and Loss Sharing Percentage remained unchanged until 31 March 2010 when valid amendments were made.   Until that time, any interest in the LLP held by anyone other than Mr Tory and Mr d’Angelin was, according to Mr Howe, incapable of being anything other than a notional interest, binding in honour only.  
85.	I do not agree with those submissions.  It is true that clause 16 of the February 2009 LLP Agreement provided that no variation should be valid unless it was in writing and signed by the parties (in this context, Mr Tory and Mr d’Angelin).  But clause 10.3 provided that the LLP itself could admit additional Members “on such terms as it considers fit” (my underlining) provided that it did so with the consent of each of the Members.  There was no requirement for those terms to be agreed in writing.  If the existing Members were to consent to the admission of a new Member on terms that the new Member would have a specified Profit and Loss Sharing Percentage, that term would take effect under clause 10.3 without the need for a variation under clause 16.  I reject Mr Howe’s submission to the contrary.  I have no reason to think that this is not what must have occurred when Mr Baldock and Mr Morgan were admitted provided, of course, that their oral agreements with Ondra specified a percentage share, a matter on which I am entirely in the dark.  
86.	Mr Howe also suggests that clause 10.3 can be operated only if clauses 10.1 and 10.2 are complied with: although a person might be admitted as a member under clause 10.3 without the written consent of the Members, he could not obtain a share without the written consent of the Members under clause 10.1.  I reject that submission too.  The award of a share to an incoming Member by the LLP is not, in my judgment, a disposal of any sort by the existing Member and does not fall within clause 10.1.  Nor does clause 10.3, in my judgment, require written consent.  
87.	On 31 March 2010, the four individual Founder Members together with the investment entities Baldock LLC and Morgan LLC and certain corporate investors (the list is slightly different from those listed in the April 2009 Draft LLP Agreement but I will continue to refer to them as the Investors) entered into an LLP Agreement (“the March 2010 LLP Agreement”).  This was substantially in the same form as the April 2009 Draft LLP Agreement which I have already addressed in some detail.  I note one difference, however which is the introduction of a new clause 5.5(C).  This gives a Founder Member the right, once he has been a Founder Member for 6 or more complete years, to serve a Tapered Withdrawal Notice which, in effect, allows him to wind down over a period of years receiving less each year by way of profit and exercising reduced voting rights and correspondingly having to work less time.  
88.	On the same day, the Founder Members entered into a separate deed (“the March 2010 Amendment and Withdrawal Deed”) by which Mr Morgan withdrew as a Member and relinquished his share.  Recital (E) stated that the deed was being executed to “formalise, in writing, the agreement” referred to earlier in the deed concerning the admission of Mr Baldock and Mr Morgan as Members as from 1 May 2009.   By clause 2.1, Mr Baldock and Mr Morgan were admitted, pursuant to clause 10.3 of the February 2009 LLP Agreement, as Members with effect from 1 May 2009; and by clause 2.4, each of the parties agreed to amend the terms of the agreement in accordance with clause 3, in particular by providing for the Voting Interest and Profit and Loss Sharing Percentages set out in the table appearing at the end of the clause.  They are redacted in the copy in the bundle so I do not know the actual percentages save for that allocated to Mr Morgan.  I do not even know if the total allocation to the Founding Members was 100%.  I suspect not since there would need to be a formal allocation to the Investors to reflect their interests under the March 2010 LLP Agreement.  Further, clause 2.5 of the March 2010 Amendment and Withdrawal Deed provided for Mr Tory to be entitled to all Voting Interests and Profit and Loss Sharing Percentage not allocated to another Member under clause 2.4 “until such time as the LLP Agreement is amended to admit further investors”.  
The Quattro Units term sheet
89.	There is no later iteration of the LLP Agreement of relevance to these proceedings although I will make mention later of a further such agreement dated 28 November 2011.  There is, however, one other document which it is convenient to mention at this stage.  This is the Quattro Units Term Sheet (Quattro being the name of the firm before it was changed to Ondra).  It was provided to Mr Reinhard during the course of his recruitment.  I will refer to this as “the first draft Term Sheet”.
90.	Ondra, to repeat, was a start-up business and, as such, needed outside investment to get off the ground.   $15 million was raised as capital for Ondra in a capital raising venture that commenced in February 2009 – of which about $3 million was provided by the Founding Partners themselves, as investors. The first draft Term Sheet (which was probably the first draft of any sort) was headed as “a summary of the proposed terms of the Quattro Loan Stock ($7.5 million) and the Quattro Ordinary Shares ($7.5 million) combined “the Quattro Units””.  It was envisaged that an investor would acquire a combination of Loan Stock and Quattro A Shares: there was no facility to acquire one without the other, and that is reflected in the adoption of the term “Quattro Units” to describe the combination.
91.	The first draft Term Sheet was dated 3 February 2009. It was provided to Mr Reinhard during the course of his recruitment.  It was clearly drafted on the footing that investors would obtain “Quattro A Shares/Partnership interest”.  It must, therefore, have been envisaged that an LLP Agreement would come into existence which would provide the investors with those Shares and interests.  I say “must”, although I suppose that, just as the Defendants assert that Mr Reinhard received only a notional share until the execution of some future LLP Agreement whose terms were, as yet, uncertain, so too the investors might have only notional interests with their contractual rights subsisting solely as a matter of contract between Ondra and themselves.  I do not find it necessary to go into that question.
92.	The first draft Term Sheet contained brief descriptions of Quattro Loan Stock, Quattro A Shares and Quattro B Shares.  I do not need to say anything about the Loan Stock except to note that, in the event of failure to repay at maturity date, successive elections were given to the Loan Stock holders to convert their loans into Quattro A Shares.
93.	In relation to the Shares, under the heading “Quattro A Shares/Partnership interest” one finds the following:
 “Quattro’s A Shares will represent 10% of Quattro’s total equity share capital or partnership interest (which will comprise Quattro A Shares and Quattro B Shares, as described below). All references below to “shares” can be read as “partnership interest” for all purposes, ie voting, dividends etc
Quattro A Shares will carry full voting rights ie each Quattro A Share will have voting rights equal to the voting rights of each Quattro B Share.
Quattro A Shares will be entitled to a full annual distribution in cash of the share of 100% of the profits attributable to the Quattro A Shares.
……..
The Partners of Quattro agree to meet with any and all holders of Quattro Units at meetings to be convened at least twice per annum to discuss the progress and performance of the business.
…….
Holders of Quattro A Shares will have the right to subscribe for their pro rata share of any new equity capital raising by Quattro.
………
Holders of Quattro A shares will not be permitted to sell any of their shares for three years.  After that, Quattro A Shares must first be offered to other holders of Quattro A shares and, if not taken up, then to holders of Quattro B shares.
…….
The valuation for the Quattro A Shareholder Put [A shareholders were to have a put option on Quattro for 6 months from 31 December 2014] will be based on a multiple of the latest year’s operating profit of Quattro.
…….
Quattro B Shares will be owned by the Founding and New Partners of Quattro from time to time. The Founding Partners will initially own in aggregate around 90 per cent. of Quattro’s B Shares, with the precise level and distribution between the Partners to be determined and disclosed to investors prior to completion of this offering.
94.	Under the heading “Quattro B Shares” one finds the following:
“Quattro B Shares will be owned by the Founding and New Partners of Quattro from time to time. 
The Founding Partners will initially own in aggregate around 90 per cent. of Quattro’s B Shares, with the precise level and distribution between the Partners to be determined and disclosed to investors prior to completion of this offering.  
Quattro intends to reserve a substantial percentage of its equity share capital for all its staff and to leave a significant percentage initially “unallocated”, providing flexibility to attract new recruits and to reflect continuing performance.
Every several years (to be determined), Quattro intends to implement a “dynamic reallocation” of Quattro B Share ownership, through issuance of new Quattro B Shares to “next generation” partners and Managing Directors, according to performance. This will have the effect of ensuring that Quattro’s ownership structure is “over time recycled” to maintain the dynamism and motivation of the talent pool and therefore preserve and Quattro’s grow value for all its shareholders.” 
95.	It is to be inferred from these provisions of the first draft Term Sheet that a “Partner” was a person engaged in running the business (ie the Founding Partners and any New Partner) in contrast with the investors who would be a combination of lenders and holders of equity; they would be members of the LLP but would not be seen as Partners in that sense.
96.	The first draft Term Sheet seems to have been supplanted by a slightly later draft dating from 11 February 2009.  This later draft formed part of a pack of documents which can be seen from the example in the bundle of such a pack being sent to one potential investor comprising (i) final copy of business plan (ii) summary term sheet for Quattro Units (iii) draft subscription agreement and (iv) draft loan note terms.  These were not provided to Mr Reinhard.  
97.	Under these proposals, it was explained that the investors would make their investment by a combination of (i) equity investment ($7.5 million) by subscription for ordinary shares in a company (“InvestorCo”) which would “invest such funds for an interest in the LLP” (perhaps with the (unstated) intention that InvestorCo would become a member of Ondra) and (ii) by the issue of loan notes which would be issued directly to the investor by Ondra.  The only provision of the summary term sheet which I wish to mention at this stage is this: under the heading “Put option” was to be found “August 2015, based on 5.5 times operating profit for the year ending 30 April 2015”.  
98.	The draft subscription agreement for an Investor referred to the Members as being Mr Tory, Mr d’Angelin and Mr Baldock (but not Mr Morgan) who were also the intended shareholders of InvevstorCo; and “Partnership Agreement” was defined as “the partnership agreement between [those three] and InvestorCo dated [x] 2009”.   There was, of course, never intended to be a traditional traditional partnership: the partnership agreement just referred to must have been envisaged as an LLP Agreement between the Partners (ie the three individuals) and InvestorCo, all of whom would be members of Ondra.  It was intended, it can be inferred, that by the time the subscription agreement was entered into, Mr Tory, Mr d’Angelin and Mr Baldock would be the Members, and that Mr Tory’s wife would have ceased to be a Member.   There may well be a reason why Mr Morgan did not feature, but I am not aware of such a reason.  
99.	Clause 3.1 contained an undertaking by InvestorCo to invest the subscription monies derived from the relevant Investor as a Capital Contribution in the LLP in consideration for “an interest in the LLP as set out below” and there followed a table (with the figures left blank) for Capital Contribution, number of Voting Interests and Profit/Loss Share Proportion.  “Profit/Loss Share Proportion” is not a defined term.  But “Profit” was defined and meant any profit whether of an income or capital or any other nature of the LLP.  Since InvestorCo was to be a Member according to the terms of the “Partnership Agreement”, the rights carried by “the interest in the LLP” to be obtained under Clause 3.1 would fall to be ascertained by the rights given to InvestorCo as a result of its Capital Contribution under the LLP Agreement.  The current draft of the LLP Agreement was dated 10 February 2009 and was sent to Ms Arnold on that date.  It is substantially in the same form as the April 2009 Draft LLP Agreement.  Clause 3.2 of the subscription agreement contained an undertaking by the LLP to issue to InvestorCo “the interest in the LLP set out in clause 3.1”.  Everything was in draft at this stage, but the structure of the documentation and how the different documents would interlink was tolerably clear.  Whether the investors were sent the draft LLP Agreement, I do not know.
100.	Clause 4 spelt out in more detail the terms of the put option referred to in the summary term sheet.  The Investor could require InvestorCo to purchase the subscription shares during August 2015 at a price equal to five and half times the Operating Profits Per Share (a term which was defined in the subscription agreement).
101.	$15 million was in fact invested at this stage: Mr Tory’s evidence is that this was done on the basis of the documents inviting the investments including the 11 February 2009 version of the Summary Term Sheet.  That cannot be quite right.  The 11 February 2009 documentation envisaged a single investment vehicle which would become a member of the LLP with all investors holding shares in that investment vehicle.  The actual formalisation of the investments saw a number of investment companies becoming members of the LLP, reflecting the different investments of different persons.   Nothing turns on this difference, however.  But it does appear to be the case that the relevant subscription agreements were not signed until considerably later and the relevant loan notes were not issued until 11 February 2010.  Membership shares were not formally granted to the Investors until the March 2010 LLP Agreement became effective in August 2010.
102.	Mr Howe suggests that the precise legal entitlements of the Investors at this or any other stage is of little or no relevance.  That may be so, but it does not mean that the basis on which they were to invest and obtain interests at some stage is irrelevant.  Mr Callman submits that the first draft Term Sheet (which was what was provided to Mr Reinhard) provides some assistance when it comes to construing the Contract.  He draws attention to the following in particular:
i)	“partnership share” is used interchangeably with “equity share capital”;
ii)	Resale and pre-emption rights are set out for partnership shares (and the shares are seen as having real value like ordinary shares in a limited company or partnership shares in a partnership where payment is made to acquire the share of an outgoing partner);
iii)	Quattro B shares (that is to say the 90% not owned by the Investors) are “owned” by the Founding Partners and New Partners (that is to say, next generation junior partners);
iv)	Equity share capital/partnership share is to be used to “attract new recruits” (such as Mr Reinhard as Mr Callman observes);
v)	In addition, a “dynamic reallocation” is envisaged “every several years”, which is referred to as ensuring that Quattro’s ownership structure is “recycled” over time to maintain dynamism and motivation of “the talent pool” and to “grow value for all its shareholders”.
103.	And thus, Mr Callman submits, the first draft Term Sheet envisages next generation talent like Mr Reinhard being given a real share in Ondra at the outset and an increasing share over time. This, he says, also accords with Mr Tory’s own evidence about the process with equity being passed from Founding Partners to junior partners albeit that he sought to draw from the recycling process an additional element that outgoing partners must give up their share for no consideration when they leave.   But this, he comments, is not on the face of the first draft Term Sheet, nor does it necessarily follow from the whole “recycling” process, which can work equally well with outgoing partners being bought out for value when they leave, or indeed retaining their shares even after they leave. Indeed, the Investors hold shares even though they do not work at Ondra.
Mr Reinhard’s decision to leave Goldman Sachs
104.	Mr Reinhard explained in his witness statement the impetus for his decision to leave Goldman Sachs.  His account was not, in my view, undermined in cross-examination and I accept it.  By his account, he had been successful at Goldman Sachs.  He was well remunerated.  His last base salary was €174,000 pa plus benefits amounting to over €16,000 pa.  Bonuses on top of that were an important element of his compensation.  In three out of his last four years at Goldman Sachs his bonus was more than €400,000 (the exception being the crisis year 2008).   I am satisfied that Ondra was aware of the components of Mr Reinhard’s compensation and knew the amounts that he was actually paid in the years prior to joining Ondra.  
105.	Mr Reinhard’s evidence, which I accept, is that by the end of 2007, he had come to the conclusion that the time had come to move on.  He enjoyed the work and (unsurprisingly) found the compensation attractive.  But he no longer felt quite “at home” as he put it and concluded that he would probably move within the next couple of years.  One factor, but not the only factor by any means, in his eventual decision to move was his promotion, or rather lack of it, to the Goldman Sachs level of “Managing Director”.  He had been put up for election by his superiors in 2007 which was a year earlier than usual for someone of his experience and qualifications.  He was not elected, and sees this largely as the result of a policy decision taken in 2007 that nobody would be elected early save in exceptional circumstances.  As I see it, he may have been good, or even very good, at his job but nonetheless there were not the exceptional circumstances which would justify an early promotion.  
106.	His perception was that he would be elected to Managing Director status in 2008.  He says, and I accept, that the signals which he was receiving from those supporting his promotion during 2008 were positive.  Then, before the elections, came the financial crash and the collapse of Lehman Brothers.  Goldman Sachs, not surprisingly to my mind, became more restrictive in Managing Director elections that year.  He was told in November 2008 that he would not be elected that year.  He says, and again I accept, that this was largely owing to the unprecedented market environment but was told by his superiors that they would support him and were confident he would be elected in late 2009.  
107.	He decided over the Christmas break in 2008 to make the move.  In his witness statement, he set out his thinking at the time about the options open to him and where he wanted to go.  I do not propose to go into the detail of it.  But he says that he went about the job search in a very targeted manner.  I am sure that that is the case.  Having seen Mr Reinhard in the witness box, I was impressed with his clear analysis, and his calm rational approach, to answering questions.  It is entirely understandable that he would have brought that same focus to his job search.
108.	I also accept what he says in paragraph 28 of his witness statement to the following effect.  Compensation and long term wealth creation were, hardly surprisingly to my mind, important considerations: 
i)	In a large firm (such as investment banks or large equity funds) he looked for an attractive base salary and attractive bonus scheme.
ii)	In a small or young firm (such as small boutique investment banking firms or small private equity funds), he was interested in a share of ownership benefiting from increases in the value of those shares if things developed well.  He was conscious that moving to a small, young firm was risky and involved what he describes as a “step-down” from Goldman Sachs in terms of the new firm’s reputation and how it would look on his CV.  He says also that an essential part of what he was looking for in such a start-up firm was a permanent shareholding: whether that is so, or at least whether that was what he was looking for in Ondra, is something I consider in a moment and am not to be taken, at this stage, as accepting.
109.	From March 2009 onwards, Mr Reinhard’s evidence, which again I accept, was that he held discussions with a number of head-hunters, including Jo Mills, of The Rose Partnership, a firm which was acting for Ondra in its search.  Ondra was, I accept, one of the first opportunities which became apparent: he was attracted and excited by it and did not pursue many other possibilities.  In his witness statement, he mentions two possibilities which he did start out on pursuing but from which he withdrew, in one case because he had decided to join Ondra, and in the other because he did not see a good enough fit between himself and the company’s internal culture.  
110.	I mention these aspects of Mr Reinhard’s evidence because they show, and I am satisfied, that he was not under pressure to leave Goldman Sachs.  Nor was he, having decided to leave, short of opportunities to pursue: he was not threatened with nowhere to go and so was not effectively under pressure to take a position with Ondra.  
Mr Reinhard’s contact with Ondra leading to an offer to join
111.	From about 18 March 2009 to 19 April 2009, various contact was made, directly or indirectly, between Mr Reinhard and Mr d’Angelin.   The parties cannot agree, however, even as straightforward a matter, one might think, as their respective interest in each other.  Mr Howe submits that Mr Reinhard “pressed himself” on Ondra.   Ondra was in fact keen to meet him “after an intercession by Christian Meissner”, Mr Tory, I do not doubt, was of the view that Ondra needed an M&A candidate.  Mr Howe submits that Mr Reinhard was one of many well-qualified candidates interested in the role.  He submits that Ondra was keen to hire an M&A “Managing Director” or “MD” and that both Mr Tory and Mr d’Angelin were very clear that they wanted someone with strong execution skills who was capable of growing a business through the development of relationships.  
112.	Mr Reinhard has a different perspective on the initial introductions.  I need to deal with the history of events in a little detail:
i)	He contacted Ms Mills by phone on 18 March 2009 to discuss potential options in investment banking, in particular on the boutique side.  He sent her an email with his CV and the list of transactions he had worked on in the past and they agreed to speak in detail on 20 March.
ii)	In the discussion on 20 March 2009, she talked about Ondra in great detail, describing the firm and its key individuals, especially Mr Tory. The gist of what she said, according to Mr Reinhard,  was as follows:
a)	Ondra was a ‘boutique’ investment bank set up by Mr Tory in late 2008.  Ondra called itself an “Advisory Partnership” and advisory was the core business of Ondra.
b)	Ms Mills had a mandate from Ondra to search for a senior M&A banker at the next-generation partner level and she thought that Mr Reinhard fitted this search profile very well.
c)	Ondra was currently hiring a next layer of partners below the four Founding Partners and the M&A role that she was talking to Mr Reinhard about was one of the slots on this next partner level which involved a shareholding in Ondra.  For this next layer of partners, Ondra was looking for high-calibre people in their mid-thirties with past experience at the bulge bracket investment banks.  She mentioned that Ondra had already made a hire on the next partner level in the financial institutions/FIG sector. 
d)	Ondra was looking for an M&A banker with a focus on the European continent, preferably a candidate from France, but other nationalities and in particular someone from Germany would be considered by Ondra as well.
e)	Ondra had secured start-up financing from “friends & family” and from a “Canadian individual”, which showed the confidence that others had in the business and which provided security for the partners and employees of Ondra regarding the initial funding of the business.
f)	In her view, Mr Reinhard would fit perfectly into the M&A role that Ondra wanted to fill, due to his past experience and reputation, even though he was not French.  She considered Mr Reinhard to be a very strong performer and was excited that he was interested in Ondra.  She said that she would introduce his name to Ondra and set up a meeting with Mr Tory and others in the Ondra team.
iii)	Mr Reinhard says that it is not correct to say, as the Defendants allege in their Re-Amended Defence, that he “actively sought out Ondra and, through an intermediary, persuaded [Mr d’Angelin and Mr Tory] to interview him”.   As referred to above, it was, he says, Ms Mills who first made him aware of Ondra and that she had a search mandate from Ondra; she said that she wanted to present him to Ondra under this mandate.  
iv)	Not having heard from Ms Mills for some days, Mr Reinhard emailed her on 1 April and 6 April to check the status and to remind her.  This is borne out by the email exchanges.
v)	Mr Reinhard’s evidence is that, in early April 2009, he contacted Mr Christian Meissner to learn more about Ondra and the individuals behind Ondra and to discuss other opportunities more broadly.  Mr Meissner was a senior capital markets banker who had worked with Mr Tory and Mr d’Angelin at Lehman Brothers.  Mr Reinhard knew Mr Meissner from his time at Goldman Sachs, where he had been prior to joining Lehman Brothers. Mr Reinhard approached Mr Meissner by email on 6 April 2009 and they agreed to meet on 9 April in London.
vi)	They duly met on that date.  Mr Reinhard’s evidence is that they discussed Ondra, the individuals behind Ondra and other potential career opportunities.  He told Mr Meissner that a head-hunter had presented the opportunity at Ondra to him and asked him whether Mr Meissner, too, could facilitate an introduction to Ondra.  It was agreed that Mr Meissner would contact Mr d’Angelin and/or Mr Tory at Ondra and also, in pursuit a different opportunity, a Mr Kristian Bagger, the European head of the US boutique Moelis although, in the end, this was never followed up.
vii)	Mr Meissner got back to Mr Reinhard by email on 17 April 2009, saying that he had spoken to Mr d’Angelin and that Mr Reinhard should contact Mr d’Angelin, as he would be very interested to speak.    
viii)	In the meantime, Ondra had heard about Mr Reinhard from Ms Mills.  In an email of 16 April 2009, she had written to Ondra that he was “widely regarded as the wunderkind of the German M&A team!  The guy that noone [sic] felt you could ever shake loose over the years.” Mr Meisnner  also emailed Mr d’Angelin with plaudits stating that Mr Reinhard was “an outstanding M&A banker” and that he could “recommend” him. 
ix)	Mr d’Angelin replied to Mr Reinhard by email on 19 April 2009 saying “Christian, for whom I have the highest respect, told me very good things about you and I am very keen to meet you”.  
x)	Mr Reinhard and Mr d’Angelin arranged a phone call on 21 April 2009 during which they agreed that it made sense for Mr Reinhard to come to London to meet in person and for interviews.  Ondra internal emails on the day after this initial call described Mr Reinhard as a “top notch MA candidate” (an area where they were “struggling”) and “an extremely senior M&A candidate that comes highly recommended by Christian Meissner” .
113.	I accept Mr Reinhard’s account of his discussions with Ms Mills and how it was he came to be introduced to Ondra both by her and through Mr Meissner.  It is clear to me that both sides were keen to meet each other.  I do not consider that it is correct to describe him, as Mr Howe does, as having pressed himself on Ondra.  In accepting Mr Reinhard’s account I accept, in particular, that the impression given to him was that the recruit to the position he was interested in would become a partner in the business.  However, there is no evidence about what, if anything, was said about the nature of this partnership interest.  He might have gained the impression that he would have a share in the business as a whole and not simply a share in income profits while he remained in post.  If he did so, there is no evidence to suggest that anything was said to him by Ms Mills to disabuse him of that impression. 
Events from 23 April 22 May 2009: interviews and meetings on 23 and 27 April and 11 and 22 May 2009 and phone call on 15 May 2009
114.	There were meetings between Mr Reinhard and Ondra on 23 and 27 April 2009.  These meeting, together with later meetings on 11 and 22 May and a phone call on 15 May, are of very great importance to the case.  The gulf between the parties’ accounts of what was said is large.  I will summarise each side’s story (and the events between the meetings).  I will in due course attempt to bring some resolution of the disputes.  In doing so, I will take account of other evidence which I deal with later, in particular about the circumstances of Mr Reinhard’s departure from both Goldman Sachs and Ondra, since such evidence may have some impact on the credibility of the witnesses and therefore some impact on my findings in relation to events up to 22 May 2009.  I start with Mr Reinhard’s account (see down to and including paragraph 175 below) making some observations as I go along.
115.	But before I do that, I should mention certain documents relating to the employment of two other employees of Ondra.  These are not admissible on the question of construction of the Contract, but they do go to what Mr Tory meant when using the word “equity” in discussions with Mr Reinhard and to what the core ethos actually was.
116.	The first relates to Cassandre Danoux.  Her employment contract was dated 17 November 2008 and makes no reference to a partnership share.  However, a letter of the same date to her from Mr Tory contains supplemental terms.  These comprised two elements – a “cash bonus” and a “Long Term Equity Award”.  One finds this:
“In recognition of your contribution to the development of Quattro in its early formative stages, Quattro has agreed to grant you a Long Term Equity Award (“LTEA”) with a value of US$1,000,000 which will vest in two equal annual tranches, 1st January 2010 and 1 January 2011 (“Vesting Dates”).  From the time each tranche of the LTEA vests you will be [sic.] issued with the underlying equity shares or partnership units in Quattro and will therefore be entitled to all dividends or other distributions made by Quattro on its shares, in accordance with Quattro’s then prevailing distribution policy.  You will of course also participate, in respect of your LTEA shares, in any appreciation in capital value which Quattro generates, and in particular you will be treated in the same way as regards any future value realisation opportunities as Quattro’s Founding Partners, including myself.  The vesting will be automatic provided you have continued as an employee on the Vesting Dates.
….
Your LTEA will before formally granted to you early in 2009 once Quattro’s capital structure and valuation has been determined….. The actual number of Quattro equity shares (or partnership units as the case may be) represented by your LTEA will be calculated in accordance with the valuation at that time…. The stipulated value of your LTEA will be granted to you irrespective of Quattro’s eventual corporate form or its valuation in the fundraising.”
117.	It is, I think, very difficult to read that LTEA as anything like the “share of the partnership” which the Defendants say Mr Reinhard became entitled to under the Contract.  Ms Danoux’s LTEA was clearly something which was seen as having a capital value in the region of $1,000,000.  Although vesting of each tranche was conditional on being employed at the relevant dates, there is nothing to suggest that a tranche which had vested would be taken away again on cessation of employment.  The LTEA was made in recognition of a past contribution to the development of Quattro and might therefore be expected to endure in the same way as the share of an investor.  
118.	On 8 April 2009, Mr Tory wrote to Ms Danoux again with updated figures and vesting dates - $200,000 on 15 May 2009 and a balance of $1,000,000 on 1 January 2010.  The letter includes this:
“…you will be credited with the relevant underlying partnership share and will be entitled to all dividends or distributions thereafter.  Given the total valuation of Ondra’s equity of approximately US$75 million, your initial partnership share will be approximately 1.6 per cent……”
119.	The letter also provided that this share would not be visible to anyone at Ondra other than the Founding Partners and Mr Kirkwood.  Clearly the Managing Directors were not to know of this arrangement with Ms Danoux.  It can be seen, therefore that as late as April 2009, Mr Tory is clearly, in my view, using the word equity in the sense that Mr Reinhard has always understood it to be being used.  And it can be seen also that Mr Tory considers Ondra to be worth $75 million.  
120.	The second relates to Henna Korpikari with the final documents being in materially identical terms, her contract being dated 9 December 2008.  In her case, however, there is in the bundle an earlier draft to the same effect.  
121.	I find it impossible to accept Mr Tory’s explanation that these documents were simply a mistake.  A mistake in late 2008 is just about conceivable, but in April 2009 we see Mr Tory confirming, in Ms Danoux’s case, what had been promised in November 2009.  I can only conclude that these two individuals, at least,  were intended to obtain interests of a lasting duration and not ones which would automatically come to an end when they ceased to be employed.
122.	The following paragraphs set out Mr Reinhard’s version of events.
Mr Reinhard’s story 
123.	The April meetings were predominately for Ondra to interview him.  Ondra had been sent in advance his CV and a list of the transactions he had worked on.  Only a limited time was spent on the discussion of Ondra’s business.  
124.	He presented himself as an ‘execution banker’ and made clear that he was not a ‘relationship banker’:
i)	He presented himself as a banker with a broad experience in M&A and equity/debt financing transactions and with particular strength in project execution;
ii)	He made clear that he was not a ‘relationship banker’ who, if hired by Ondra, would bring a list of clients and an existing revenue base on day one.  He made clear that he was able to win the confidence of clients over time when working together with them, but that he was not experienced in ‘cold calling’ and in developing new relationships from scratch.  He made clear to Mr Tory that he wanted to develop into more of a relationship banker over time, to become better in client coverage and business development, and that he was looking for a firm and an environment that would be supportive and help him achieve that.
iii)	Mr Tory made clear that Ondra was looking to fill a position of a junior or “next generation” partner who would get a partnership share in Ondra, who brought with him experience in M&A and who could help Ondra’s business on the continent, especially in France and Germany.  This confirmed to Mr Reinhard what he had heard earlier from Ms Mills. 
iv)	The initial meeting took place on 23 April in Ondra’s London offices.  This was the first time that he had met Mr Tory and Mr d’Angelin in person.  He was interviewed by the two of them together with Gaynor Arnold, Ondra’s then compliance officer.  The day after that interview, he was invited to a second day of interviews which took place on 27 April 2009, again in Ondra’s offices.  
v)	On that occasion, he was interviewed again with Mr Tory, Mr d’Angelin and Ms Arnold.  He also met with Mr Baldock, Mr Kirkwood, Elena Ciallie (a junior partner), Cassandre Danoux and Henna Korpikari (both non-partner employees and both previously with Lehman Brothers).  
vi)	During the meeting on 27 April 2009 Mr Tory provided Mr Reinhard with Ondra’s business plan.  This was not discussed in detail then, but it was agreed that there would be a discussion about it in the next meeting (which in fact took place on 11 May 2009).
vii)	Ondra clearly had real interest in Mr Reinhard. Mr Tory emailed Mr Reinhard after the second day of interviews saying “our whole team enjoyed meeting you as well” and “You are a fine person of great integrity and we look forward to seeing you again.” Ondra’s enthusiasm is reflected in later internal emails referring to the desire to “market” or “sell” the position to him.  
125.	I interrupt my summary of Mr Reinhard’s account, to describe the business plan which was given to him on 27 April 2009.  It is dated February 2009 and runs to some 32 pages.  The Executive Summary on p3 describes Ondra (then named Quattro) as providing “Objective, long time horizon, strategic advice to clients, freed from a “league table” orientation”.  Under the heading “What Makes Quattro Distinct?”  appear the names of the four Founding Partners; and one of the distinctive features of Quattro include “No-one’s “name on the door”; peer level partnership more resilient for clients and stronger next generation talent”.   There is no mention of Mr Tory’s wife, even though she and Mr Tory were the only members of the LLP at that stage.  
126.	On p 9 under the heading “Alignment of Investor Interest with Partners” appears the following:
“As a matter of ownership philosophy and good business practice, Quattro believes it is imperative for the long term interests of its outside investors (‘A’ Shareholders) and its Partners to be closely aligned.  We have therefore embedded the following principles into the apportionment of reward amongst Quattro’s key constituents (outside shareholders, partners and employees):
……..
Ownership will remain the primary source of economic reward to partners of Quattro.  The recycling of partnership interest over time will ensure the continuity of the ownership ethos.”
127.	On p 11 under the heading “Culture” appears the following:
“Partnership Model
•	 ….. 
•	Widespread distribution of partner/employee ownership to create full alignment with all constituents
•	Attractive for the best talent: a chance for young professionals to grow and create value
…….
Economic Model
•	Overall participation in the economic success of the entire business 
•	Not based on personal revenue contribution
•	Periodic adjustment of ownership to reflect ongoing contribution to the business and to attract and retain the very best next-generation professionals
•	…… 	
128.	The business plan also contains various tables of financial information and projections, the detail of which I do not propose to explain.  
After the April interviews
129.	Returning to Mr Reinhard’s account, following the 27 April 2009 meeting he prepared (for his own use and not shared with Ondra) a spreadsheet reflecting the financial information and projections contained in the business plan.  One purpose of this was to establish what his compensation package might look like.  He understood that his compensation would include three elements: base salary, bonus and dividends on his partnership share.  He understood that he would hold a partnership share from the start and that it would increase over time.  (I interpose to say that the Defendants challenge the assertion that this is what Mr Reinhard understood; and whether or not he did understand that, they say that a reasonable person in his position would not have had that understanding.) 
130.	He understood also that (i) the partnership shares were held not only by the four Founding Partners but also by junior partners/Managing Directors as well as by non-partner employees (ii) junior partners/Managing Directors would have a share from the start and such a share would increase over time and (iii) as their percentages grew, and as the headcount increased, the Founding Partners would give up parts of their shares.  
131.	While setting up this spreadsheet, Mr Reinhard made some typed notes for himself raising the key questions which he wished to address at his next meeting with Mr Tory, which took place on 11 May 2009.  The notes appear in the bundle at pp 600-602.  I have no doubt that they were contemporaneous notes and that they do, indeed, reflect Mr Reinhard’s thinking and his understanding from his previous meetings and the documents with which he had been provided.  He relies particularly on the following items in the notes:
i)	One of the questions under the heading “Business Setup” was “Is there still a chance to co-invest”.  Mr Reinhard wanted to understand whether there was an opportunity, in addition to the partnership share which he understood was being initially granted to him, to buy additional shares on terms like those on which the outside investors had acquired shares.
ii)	The first and second points under “Compensation Model” showed that he understood there to be three elements of compensation, namely base salary, bonus and dividends.  
iii)	In the third point under “Compensation Model”, he asked whether there would be (as he understood the case to be) equity ownership by employees, that is to say whether individuals who were not partners (whether Founding Partners or junior partners/Managing Directors, as he thought he would be) held partnership shares as well and, if so, in what amounts.  
iv)	Under “Role, Compensation, etc.” one question he noted was “Initial equity ownership for me?”  He says, and I accept, that he was here raising the question “How much”? and not the question “Whether?”.
v)	The next questions he noted was “All new entrants treated equally with respect to comp and equity ownership?  All MDs as well?”  He expected that as a junior partner/Managing Director he would own a partnership share from the start and was interested whether all Managing Directors were treated equally with respect to the size of their initial partnership shares and compensation. I accept that explanation.
vi)	The sixth point noted under “Role, Compensation, etc.” was “Time horizon for an MD until partnership?  Requirements/expectations to becoming partner?”   He says that this question had nothing to do with an initial partnership share (which he understood he would be receiving from the beginning) but related to when he moved from the corporate title Managing Director to the higher-status title of Partner.   This, he says, is consistent with what is found on p 3 under the heading “Aspiration” where the third bullet point is “Progress and become partner in 3-4 years”.  
vii)	Under “Existing skill set” he noted “Ability to win clients’ confidence over time”; but also noted under “Development areas” the need to develop “Client coverage and marketing” and “Business development”.
132.	For my part, I think some of the questions which Mr Reinhard wished to raise for discussion shows that the language being used was somewhat imprecise.  I can understand that the word “partner” with or without an upper-case leading letter might be being used as a title within Ondra and that an individual might have an equity interest in the LLP without having the title “Partner”.  But it would then be confusing to describe that equity interest as a “partnership interest” or “partnership share” when the interest is not that of a partner at all.  The equity interest would better be described as a membership interest since an interest in any LLP derives from the LLP agreement and the default statutory provisions which govern the relationship between those persons (the members) who own the LLP.  I can see where the language comes from: Ondra is, after all, a Limited Liability Partnership and it may be thought, therefore, to be a perfectly sensible use of language to describe an ownership interest in the LLP as a partnership interest.   Having said that, and jumping ahead (since I consider this corporate title later) I accept that Mr Reinhard understood – as was in fact the case – that “Partner” was a title within Ondra and was not the same as membership of Ondra.
The 11 May 2009 meeting
133.	On 5 May 2009, there was a brief phone call between Mr Reinhard and Mr Tory during which a further meeting was arranged.  This next meeting with Ondra – on this occasion with Mr Tory alone – took place on 11 May 2009.  This meeting was clearly very important to Mr Reinhard in reaching a decision whether to join Ondra assuming that he was to be offered a position.  I do not doubt that Mr Reinhard relied on what Mr Tory told him in making his decision.  
134.	At this meeting, Mr Tory gave to Mr Reinhard a number of documents, namely a print-out of the equity and earnings trajectories (“the Trajectories”), the first draft Term Sheet (see paragraph 89 above) and an Ondra marketing presentation. Mr Tory wrote some handwritten notes on the back of the terms of the first draft Term Sheet which showed the current team structure of Ondra.  Although the Defendants say that the first draft Term Sheet was provided to Mr Reinhard at some time between 27 April and 11 May, I think, on balance, that it was provided, as Mr Reinhard says, at this meeting.
135.	The first page of Trajectories bears the title “Illustrative Partner Equity Trajectory”.  It contains lines for Base Salary, Bonus (showing Central Case), Partnership Share, (expressed as a %age) and Equity Dividends (showing Low Central Case and High).  There is a further line showing “Central Case Total” which is the cumulative total of Base Salary, Central Case Bonus and Central Case Equity Dividend.  This final line was the trajectory for an individual partner’s total compensation.  Central case bonus started at £320,000 in 2009 rising to £1,500,000 in 2015 with Partnership Share starting at 1% and rising to 5%.  The second page is headed “Illustrative Partner Earnings Trajectory”.  It contained the same lines but the figures were higher; in particular, Partnership Share is shown at a steady 5%.
136.	The marketing presentation contains, under the heading “Governance designed to ensure long term focus” this bullet point: “Partnership builds in generational transition mechanism to ensure sustainability and quality of ‘next level’ talent”.  
137.	Mr Reinhard perceived the meeting as adding detail to what he had understood from Ms Mills and his earlier meetings with Ondra.  Mr Reinhard has set out, in his witness statement, a lengthy account of the meeting.  Much of the detail is not relevant, other than by way of background, to what I have to decide.  I confine myself to the following parts of his account.
138.	Mr Reinhard understood from Mr Tory that Ondra wanted to build up a full capability to execute projects for clients from start to finish and with all necessary services being provided by Ondra.  He understood that the reason Ondra wanted to hire him was to add expertise and depth in M&A.  Thus, the ambition of Ondra was to build a full-scale boutique with deep capabilities in project execution and an ability to execute projects without the involvement of other banks.
139.	They discussed Ondra’s current financial performance and its longer-term business plan.  Mr Reinhard took some notes during the meeting.  There is no reason at all to think that they did not reflect what Mr Reinhard understood was being said to him (although there is, of course, the possibility that he misunderstood and that the notes do not therefore reflect what Mr Tory said); and there is no reason to think that he deliberately omitted to take a note of something important (although there is, of course, the possibility that he did not appreciate the importance of something which was being said and failed, therefore, to note it).  
140.	His account, now, of what he understood from Mr Tory’s explainion to him, is set out below and as is largely reflected in the notes.  I describe the essence of the explanation which Mr Reinhard says he was given, adding some comments as I go along, in the following paragraphs:
i)	Ondra currently had retainer fee income from 8-9 clients and the near-term target was to increase that number to 12 retainer clients.  With 12 clients, Ondra would ‘break even’, meaning that the retainers would cover all operating costs and any success fees earned would then be available for bonuses and for dividend distributions to outside investors, partners and anyone else at Ondra who held partnership shares.  
ii)	Ondra was targeting $15-20 million in revenues from retainers and success fees for the fiscal year to March 2010 (effectively only a 9 month period between summer 2009 when the business started making its first revenues and the fiscal year end in March 2010).
iii)	Costs were very tightly controlled and a profit (before taxes, bonus and dividend distributions) of $10 million would be a target, albeit an “ambitious” one, for the year to March 2010.
iv)	With respect to the expansion plans for Ondra, the gist of what Mr Tory said, although this does not appear from the note, was that his plan was to ramp-up the business in the short term to about 30-40 people, and to hire only selectively thereafter.  In the very long term he could not imagine Ondra to ever have more than 100 employees.  
v)	Mr Tory’s view of Mr Reinhard’s role, as recorded in the note, included his working on relationships including about 40 existing relationships with Mr Tory and/or Mr d’Angelin.  
vi)	I accept Mr Reinhard’s account in paragraphs i) to v) above.
vii)	The notes included a heading “comp model” (ie compensation model) under which one finds:
•	base £180-200 for partners and MDs
•	bonus pool: slightly <50% of op. profit
•	partners vs. MD: partners should make more on dividend than bonus. 
•	bonus for partners and MDs therefore tapers off
•	ownership: should not be too dispersed
10-15 people should “be the firm”
Max 15-20 partners in long-term
viii)	In this context, Mr Reinhard says that he was using the word “partner” as a reference to the Founding Partners.  I accept that. As to the third and fourth bullet points, see paragraph xxvii) below.
ix)	Mr Tory also indicated that selling the business in a couple of years or floating it on the stock exchange was not an aim of the business plan, but that if Ondra happened to ever be approached with an acquisition proposal, the partners would then have to make a decision about Ondra’s future.  I accept that evidence.  
x)	As to the first draft of the Term Sheet which was given to Mr Reinhard, he did not go through this with Mr Tory in detail although Mr Tory did explain the key terms.  This part of the discussion appears in Mr Reinhard’s notes under the heading “equity sale”.  
xi)	Mr Tory described the financing and the partnership shares issued to outside investors in similar terms to financing of a corporation that issues common shares. In the meeting, he used words like “equity”, “shares” and “ownership” when referring to the partnership shares and he called the profit distributions “dividends”.  I accept that this was the gist of what Mr Tory said.  Mr Reinhard understood these terms to mean a permanent stake in Ondra, like owning shares in a stock corporation, not a construct that could be taken away.  The first draft Term Sheet which had been provided at the meeting also used terms such as “Ordinary Shares”, “shares”, “share capital” and “equity share capital”.  Mr Tory referred to the partnership share granted to junior partners using the same terms, as did the documents given to Mr Reinhard.  
xii)	Mr Tory told Mr Reinhard that he was happy with the terms achieved in this financing.  He also stated, with pride, that the capital injection represented a valuation of Ondra of at least $75 million, if not even $150 million, and that Mr Reinhard should consider the partnership share which he would get in Ondra as very valuable. As to this, see paragraphs 259- 260 below.
xiii)	Mr Reinhard says that it was clear to Mr Tory and himself how the $75 million valuation was calculated:  if the investors valued 10% of the equity at $7.5 million, then 100% of the equity of Ondra was valued at $75 million. 
xiv)	Mr Tory said that a more appropriate way, in his view, was to value Ondra at $150 million.  The gist of what he said was that from a valuation perspective the $7.5 million loan should be considered as equity as well.  The reason for that would be that the loan was ‘stapled’ with the equity, and that each investor had to provide equity and loan in equal amounts.  Also, from a risk perspective the loan would only be repaid if Ondra was successful, so it carried risk like equity.  With the loan considered as similar or identical to equity in the valuation, the investors had effectively provided $15 million in exchange for 10% in Ondra, valuing the whole of Ondra at $150 million.  Mr Tory denies this account and, indeed, challenges the analysis involved in it.
xv)	Mr Tory also said words along the lines that this showed Mr Reinhard how valuable the partnership share was that he would get in Ondra at the start. The same would be true of the increases in his partnership shares over time.  He made a direct comparison between the value of the partnership share that Mr Reinhard would receive and the value of the shares held by the outside investors.  He said that based on the valuation of Ondra as a whole of between $75 million and $150 million a 1.0% stake granted to me would be worth between $750,000 and $1.5 million.  
xvi)	Mr Reinhard asked Mr Tory about any further documentation showing the outside financing or any other corporate documents.  Mr Tory responded by saying that there was a short agreement in place among the Founding Partners and that the final documentation with the outside investors was still in the process of being drawn up.
xvii)	He explained that initially he and his wife had set up Ondra and used a short agreement for this.  Based on how the four Founding Partners had been described to Mr Reinhard throughout the discussions, he assumed that the four Founding Partners (and maybe Michael Kirkwood as Ondra’s Chairman) were by then parties to it and that Mr Tory’s wife was no longer involved.
xviii)	Mr Reinhard was not shown or told about the 28 April 2009 DoV.
xix)	Mr Tory said that Ondra was currently in the process of drafting the final documentation for the investment by the outside investors.  He described this as an agreement that was under discussion between Ondra and the outside investors and that it was an early draft which did not concern him.  Mr Reinhard said that he understood this and that he just wanted to review it to get more certainty about the external financing.  He was under the impression that the funding by the outside investors had already taken place, based on the first draft Term Sheet only, and that the final documentation was now following as a formality.  Mr Reinhard’s impression was that Mr Tory was reluctant to hand him a copy of the draft agreement.  He did not, in fact, provide a copy at the meeting, but agreed that his assistant would send one later.  
xx)	Mr Reinhard enlarged in his witness statement on this aspect of the meeting.  His evidence, which is hotly contested by Mr Tory, is that Mr Tory did not say (and Mr Reinhard did not come away from the meeting understanding) that the draft agreement with the outside investors or any terms of it would have an impact on his position or his partnership share or his role within Ondra. Mr Tory described the draft agreement as being for the outside investors only.  He did not mention any of its contents or terms.  He did not connect the draft agreement to the partnership share that Ondra would be granting.  Mr Reinhard was never asked to agree to be bound by the draft agreement and it was never suggested to Mr Reinhard that he would be.  On the contrary, it was given to him only after it had been asked for as part of Mr Reinhard’s due diligence on the outside financing, and it was provided on the basis that it was a draft being negotiated with the outside investors and not as a document which did apply, or one day would apply, to Mr Reinhard.  He was never asked to agree to any terms governing his partnership share but was simply told that he would get a partnership share on joining Ondra and that the percentage size of his partnership share should increase over time.  
xxi)	It is part of Mr Reinhard’s case that the meeting of 11 May 2009 would have been the most natural point in time for Mr Tory to have told Mr Reinhard about the draft LLP agreement and to tell him how the document was relevant to him.  He adds that, had Mr Tory told him that the draft agreement would apply to him in any way, then he would most probably have had it reviewed by his own lawyer.  He did not do so because he was told that it was not relevant to him.  This discussion, it will be remembered, took place at the 11 May 2009 meeting; it was not until later that any draft agreement was actually provided to Mr Reinhard.  
xxii)	Mr Tory said that Ondra was building up a “next generation” of partners (such as Mr Reinhard) below the Founding Partners.  The “next-generation” or junior partners would carry the title Managing Director, have a partnership share in Ondra from the start, and develop the business together with the Founding Partners.
xxiii)	Mr Reinhard was told that his role was to be the senior M&A execution banker at Ondra.  Below the level of the Founding Partners, he would be the most experienced M&A banker.  He would work directly with Mr Tory, Mr d’Angelin and Mr Baldock.
xxiv)	Mr Reinhard made it clear that he would not bring relationships and revenues to Ondra on day one.  Mr Tory said words to the effect that he understood this, that they were hiring him for his M&A expertise and that they saw the potential for him to become more of a relationship banker over time; Ondra did not have any expectation that he would bring in revenues for the next three years.
xxv)	Mr Tory laid out three ways for Mr Reinhard to achieve the goal of becoming more of a relationship banker and for Ondra to assist him in doing so.  Essentially, these were through introductions to existing Ondra relationships, own client development by Mr Reinhard himself over the medium term, and joint client development where Mr Tory or others in Ondra would team up with Mr Reinhard jointly to break into new client relationships.  Mr Tory called this the “joint greenfield” approach (the term included in Mr Reinhard’s notes).  Mr Reinhard noted Mr Tory’s view of his, Mr Reinhard's role. He would be able to use existing contacts of Ondra (“‘relationship inheritance pool’, immediate”) and “‘long-term own relationship pool’, medium term – no expectation of revenues in 3 years”).
xxvi)	Mr Tory went on to describe Ondra’s compensation model in general as it is reflected under the heading “comp model” in Mr Reinhard’s notes (see paragraph vii) above).   As to bonuses, Mr Tory did not suggest that these would be calculated by reference to the partnership shares or by reference to any kind of ‘notional share’, they were simply discretionary bonuses.  Dividends would be paid to partners (Founding Partners and junior partners/Managing Directors), the investors and other holders of partnership shares out of the profits of Ondra, after bonuses had been paid and by reference to their percentage partnership shares. 
xxvii)	Starting from an initial level of 1.0%, the partnership share of a junior partner/Managing Director should increase to 5% in 3-4 years after joining.  The Founding Partners would give up part of their initial partnership shares for this purpose and would not mind the resulting dilution of their partnership shares, because the overall business would be getting bigger, more profitable and more valuable.  Mr Tory referred to this as “recycling”, that is to say, the transfer of shares from the Founding Partners to the junior partners.  
xxviii)	For the Founding Partners, who initially held the larger partnership shares, dividends would be more important than bonuses.  Thus in the note, Mr Reinhard included that for “partner vs. MD: partners should make more on dividend than bonus”.  Mr Reinhard explains that part of the note in this way: for junior partners/Managing Directors bonuses would initially, when the partnership share of the junior partner/Managing Directors was still low, be more important than dividends.  As the partnership share of junior partners/Managing Directors increased over time and as Ondra became more profitable, dividends would become more important for junior partners/Managing Directors while their bonuses would remain rather flat.  In the long run, all Founding Partners and junior partners/Managing Directors would make more out of dividends than bonuses and bonus “therefore tapers off”, as he wrote in the notes.  Although he does not say this expressly in the note, it is implicit in what he does say that the reference to partners in “partners vs. MD” is to Founding Partners.   
xxix)	Mr Tory took Mr Reinhard through the Trajectories which he had been handed in the meeting.  I have described their content at paragraph 135 above.  
xxx)	The first page of the Trajectories showed the trajectory of the “Partnership Equity” for a junior partner/Managing Director.  Mr Tory described it as an illustration of Mr Reinhard’s likely future ownership and compensation path.  He did not describe the Trajectories as “aspirations”, or as “aspirational documents based on an assumption of excellent performance” by both Ondra and Mr Reinhard as Ondra has alleged.  The “High” case described might be described as aspirational but the Central Case, on which the discussions focused, was to reflect the most likely future development of Ondra.
xxxi)	The second page showed the trajectory of the “Partner Earnings” for a partner who holds a constant 5% partnership share.  That did not, on any footing, apply to Mr Reinhard (since he did not have a share of that size and nor was he a “Partner” in terms of hierarchical title) and Mr Tory put less emphasis on it.  
xxxii)	The numbers in the Trajectories showed the compensation for an individual and were consistent with the business plan for Ondra as a whole.  Mr Reinhard later carried out the reconciliation between the business plan and the Trajectories as part of his due diligence.  
xxxiii)	Mr Tory put a lot of emphasis on the Trajectories (a suggestion strongly denied by the Defendants) in order to describe the compensation and ownership path that Mr Reinhard could expect.  The substance of Mr Tory’s representations was as follows:
a)	Mr Reinhard would start with a base salary of £180,000 to £200,000, like all Founding Partners and other junior partners/Managing Directors.
b)	He would receive an annual bonus which would be dependent on the performance of Ondra as a whole and Mr Reinhard’s individual performance.  If all went according to plan, this could be in the region of $320,000 in the first year.
c)	He would initially start with a partnership share in the order of 1.0% with potential for increase to around 5.0% and, if things went reasonably well, within 3 to 4 years.
d)	He would receive dividends/distributions on the partnership share.  They would be a pro-rata share of the annual profit (after bonuses paid to all employees and partners) distributed by Ondra and, as such, dependent on Ondra’s performance.  
xxxiv)	At the end of the meeting, Mr Tory wanted to understand how Mr Reinhard planned to make his exit from Goldman Sachs and when he could start at Ondra.  Mr Tory was aware that there were typically long notice periods in Germany.  He was very eager to get Mr Reinhard on board as quickly as possible, and he feared that Goldman Sachs might insist on Mr Reinhard serving his full notice period.  Mr Reinhard explained that his plan was to inform Goldman Sachs about his intention to leave as soon as he had agreed terms with Ondra and had a contract from Ondra in his hands.  He said that his intention was to start working at Ondra as soon as possible and that he would try to negotiate a shorter notice period with Goldman Sachs.  His expectation was that he could start at the latest on 1 January 2010 but he hoped that it might be as early as 1 September 2009.
141.	After the meeting, Mr Reinhard reviewed the documentation and considered his decision.  In his witness statement, he explains his thinking process and how he understood the documents.  That evidence is not relevant or admissible on the issue of construction of the Contract.   It is worth noting, however, the fact that the Trajectories were either wholly consistent or at least broadly reconcilable with the business plan which Mr Reinhard satisfied himself about.  In the light of his understanding (or at least of what he now says was his understanding) he made up his mind, sometime before 15 May 2009, that he wanted to join Ondra provided, he says, that he was made an offer along the lines of what he had understood Mr Tory to be indicating and in line with the business plan and the Trajectories, namely, a base salary of £180,000 to £200,000, a discretionary bonus in line with the Trajectories and a partnership share in Ondra of 1.0% to 1.5% at the start (with an expectation of it increasing to 5.0% in about 3-4 years).  
142.	On 13 May 2009, Mr Reinhard was sent an email by Mr Tory’s assistant, Carole Evans, saying that she was sending a copy of “the Partnership Agreement” and seeking confirmation of his address.  In his witness statement, Mr Reinhard refers to her sending “the draft LLP agreement between Ondra and the outside investors that I had asked for in the meeting on 11 May 2009”.  He cannot recall when he received the courier delivery.  His evidence is that he did not view the document as having any relevance to the terms of his relationship with Ondra; he only wanted to look at it as part of his due diligence on the financing by the outside investors.  The document was not accompanied by any explanatory document and nor was one – or indeed any verbal explanation – provided subsequently.  I will return to that evidence later. 
143.	His evidence, which I do accept, is that he did not review the document which he had been sent, the April 2009 Draft LLP Agreement, until 20 and 21 May 2009 when he was preparing for another meeting with Ondra which took place on 22 May 2009. He had not looked at it before making his decision to join or before the phone call on 15 May 2009, to which I now turn, to inform Mr Tory of that decision.
The 15 May 2009 phone call
144.	On 15 May 2009, Mr Reinhard phoned Mr Tory to tell him that he had decided he would like to join Ondra and to discuss the terms of Ondra’s offer.  He had prepared some notes in preparation for the call containing a list of matters which he wished to raise in discussion.  That note is in the bundle and it has further writing on it which Mr Reinhard added during the course of the conversation.  This, again, is an important conversation which I need to deal with in some detail.  Mr Reinhard’s account is as follows:
i)	The call started with Mr Reinhard stating that he wanted to join Ondra, provided they made him an attractive offer.  Mr Tory was very pleased to hear of this decision and confirmed that Ondra wanted him to join.
ii)	Mr Tory then laid out the terms of the offer.  He said that Mr Reinhard’s title would be “Managing Director”.  He said that Ondra had only the two titles namely “Partner” and “Managing Director” and none of the other roles carried titles.  Only the four founders had the title “Partner”.  Mr Reinhard and others who joined on his level as junior partners (Stewart Bennett, Adam Gishen and Elena Ciallie) would have the “Managing Director” title.  It is interesting to see Mr Reinhard use the words “junior partners” in this part of his evidence.  He sees “Partner” as a hierarchical term but, so it appears to me, sees a “partner” as denoting a person who has a “partnership interest” or “partnership share”.
iii)	Mr Tory told Mr Reinhard that his base salary would be £200,000 per year and that all partners (Founding Partners and junior partners/Managing Directors) would receive the same.  Mr Tory said that Mr Reinhard’s initial partnership share would be 1.0%.  Mr Tory said that Elena Ciallie had the same and Stewart Bennett had slightly more.  
iv)	Mr Tory said that Mr Reinhard’s bonus would be at least as high as the base salary.  Not only is that consistent with the central case of the Trajectories, but Mr Tory accepted in cross-examination that that was the sort of explanation he would have given with the added rider that this would be so where Ondra had succeeded and where the individual had succeeded.  He confirmed that Mr Reinhard would not be disadvantaged as compared with his peers because he was joining slightly later than them.
v)	The evidence which I have recorded in paragraphs ii) to iv) above is no more than a slight fleshing-out of the manuscript notes which Mr Reinhard took during the course of the conversation.  I accept it as correct.  In saying that, I do not intend to say anything about what was understood by Mr Reinhard or by Mr Tory about the meaning of “partnership share”.
vi)	There is one further item in those notes which I should mention.  It reads “5.0% is a “full partner”.  Michael thinks 3-4 years, 5 years would be long”.  As to that, Mr Reinhard says that he told Mr Tory that he viewed the partnership share as the “main source of value”: that is certainly something which he had included in the handwritten notes which he had prepared before the phone call.  It was in that context that Mr Reinhard asked Mr Tory whether they could fix a trajectory for increases in his partnership share or discuss what Mr Tory’s expectations would be as to how his partnership share would increase.  Mr Tory said that he expected Mr Reinhard to reach a 5.0% partnership share in 3-4 years.  A level of 5.0% would be consistent with being a “full partner”, by which Mr Reinhard understood Mr Tory to mean a peer/contemporary to the original Founding Partners.  Mr Tory said that he thought that if it took Mr Reinhard 5 years to reach this point, that would be taking a long time.  I accept this fuller account of what is reflected in the item of the note which I have quoted at the beginning of this paragraph.  
vii)	Mr Reinhard says that, although this is not reflected in his manuscript notes, he asked Mr Tory whether Ondra would be willing to make up losses he might suffer in case he failed to receive his bonus payments and/or his employee shares at Goldman Sachs.  Mr Tory responded that he would wait and see how Goldman Sachs treated him on his departure.  He said words to the effect that if Mr Reinhard suffered any major loss as a result of leaving his previous employment, then Ondra would be willing to consider an increase in the percentage partnership share to above 1.0%.   Mr Reinhard agreed with this approach.  Clearly there was discussion of this issue at some time since clause 4 of the Contract makes express provision to that effect.  I accept that it was raised by Mr Reinhard in this conversation (and it was raised again later, at the 22 May 2009 meeting, as will be seen).
viii)	Mr Reinhard was, I am sure, keen to acquire what he saw as further equity in Ondra.  He says that he asked Mr Tory whether he or friends/family could buy additional partnership shares (in addition to the 1.0% equity that he thought he was being granted for joining), as the outside investors had done.  Mr Tory responded that Ondra had now raised sufficient financing and did not need more outside capital.  I accept that Mr Reinhard did ask this question in this conversation.  It is interesting that he uses the words “additional equity” in his evidence which I am sure reflect the gist, if not the precise words, of what he asked.  He quite clearly saw the equity which he thought he would be acquiring as his 1% initial share as no different from the equity which investors were obtaining.  
ix)	The manuscript note records Mr Tory’s views on taxation.  It records that income and bonus are taxable but states “holding in Jersey for dividends”.  As to that, Mr Tory said that dividends could be paid through a holding company in Jersey.  It is not clear what Mr Reinhard understood by that.   I note here that Mr Tory would have known about the revised investment proposals summarised in the 11 February 2009 summary term sheet and draft subscription agreement but Mr Reinhard was not aware of those documents at this stage.  Mr Tory would have known, therefore, that the shares of investors were to be held through a corporate structure involving InvestorCo.  But it was never the case that the shares of even the Founding Partners as working executives in the business would be held in that way.
x)	Mr Reinhard says, and I accept, that Mr Tory and he then agreed that Ondra would send a formal offer letter, reflecting the terms they had just discussed.  Mr Reinhard was to finalise his exit from Goldman Sachs.
xi)	Although the notes which Mr Reinhard prepared for the discussion included items “cost of moving” and “trial period? What if it goes awfully bad”, these items were not discussed.  Mr Reinhard says there was not time to do so.  It does not matter because Mr Reinhard had a further opportunity to raise them when he met with Mr Tory and Ms Arnold on 22 May 2009 (as to which see paragraphs 159ff below).
145.	It is clear that, in his discussion on 15 May 2009, Mr Tory was acting with the knowledge and approval of his co-Founding Partners and of Mr Kirkwood.  He had discussed with them the terms of the offer which he would make to Mr Reinhard.  In that context, I mention the following internal emails:
i)	The first is an email from Mr Tory to his co-Founding Partners explaining his thinking and expressing his high opinion of Mr Reinhard (whom he saw as a certainty for promotion to Managing Director at Goldman Sachs that year).  He recommended bringing Mr Reinhard in as a Managing Director and with the same base salary as for “all partners and MDs” (partners being a reference to the Founding Partners and MDs being a reference to Mr Bennett, Mr Gishen and Ms Ciallie).  The email contained this:
“And finally on ownership, just to remind you Elena is at [redacted] Adam at [redacted] and Stewart at [redacted].  In my view, the right answer for Henning is 1%.....”
ii)	Mr Kirkwood replied saying these proposals made perfect sense: “MD + 200k + 1%”.   Mr d’Angelin and Mr Baldock replied “Ok”.  Mr Morgan replied “Copasetic” (which, I learned, is a slang term for “I entirely agree”).  
After the 15 May phone call until a further meeting on 22 May 
146.	On 18 May 2009, Ms Arnold sent Mr Reinhard a draft of the formal offer of employment and partnership share by email.  It was very much in the form of the Contract as eventually signed.  Mr Reinhard says he read the draft offer letter (he obviously did so) and was in agreement with all the major points (role, title, base salary, bonus and initial partnership share) subject to one point.  That point was the omission of a clause that his bonus would be at least equal to his base salary, which, on Mr Reinhard’s account, Mr Tory had told him was part of the offer in the call on 15 May 2009.  However, he says that he decided that he did not need to insist that that be inserted as a clause in the letter because (i) he trusted the verbal commitment which he had received and (ii) he was confident that he would in fact be paid higher bonuses than that in the light of the Trajectories. 
147.	Mr Tory refers to another phone call.  He says this in his witness statement:
“The Claimant called me on 18 May 2009 to say that he was very pleased with the offer.  He did not accept at this stage but I could tell that he probably would.  He specifically said that, although he was expecting to start as a Managing Director, he was pleased that is what we had offered to him.  He also made the point that he liked the "egalitarian implication" of the fact that the base salary was the same for Managing Directors and partners.”
On the "equity", he said that he thought it was a generous offer but wanted to check that it was in line with his contemporaries.  I said that broadly it was, but explained to him without giving any specifics that Stewart Bennett was a more seasoned Managing Director and therefore had been offered more.  His only point of substance was whether we could provide any assistance in the event that he lost his bonus at Goldman Sachs by reason of his resignation.  I said that we should wait to see what happened in relation to that.  
148.	Mr Reinhard made no reference to a phone call on that date in his witness statement. I think that Mr Tory is confused and that what he records as a separate conversation on 18 May was really part of the conversation on 15 May.  This is supported by reference to Mr Tory’s email to the other Founding Partners on 18 May 2009 (a Monday).   The email included the following:
“Made the offer late Friday [that was the 15 May]….He likes the egalitarian implication of the base salary being uniform for all MDs and partners….. And on the equity, he thought it was a generous offer and his only question was whether it was in line with his contemporaries…. I said broadly yes, but volunteering that Stewart was more seasoned as a three year MD or so therefore had more.”
149.	The email, of course, records what Mr Tory had discussed on 15 May and does not record a conversation on 18 May.  I think Mr Tory must simply have taken the date of the email, rather than the date of the conversation, when preparing his witness statement.  In fact, I do not think that anything turns on this minor error if I am right in my conclusion.  
150.	Mr Reinhard called Mr Tory on 20 May 2009 to confirm that he accepted the terms of Ondra’s offer.  He told Mr Tory that there were only small points in the letter that he wanted to address with him or Ms Arnold.  He said that he would be in London on 22 May 2009 so would come to Ondra’s offices to finalise the offer letter.
151.	Before the meeting on 22 May 2009 the most important issue on his mind was, he says and I accept, the draft offer letter which he had read and re-read many times.   On 20 and 21 May 2009 he also looked at the April 2009 Draft LLP Agreement.  He says, and I accept, that these were the first times on which he did so after he had received it by courier some time in the previous days.
152.	In preparation for the meeting on 22 May 2009 Mr Reinhard made some notes to himself (“Observations on Offer Letter”) listing points he wanted to raise.  Although it is apparent from those notes that he had read the April 2009 Draft LLP Agreement, that was the subject of a separate note.
153.	Both sides rely on these notes: Mr Reinhard to show what was concerning him and to demonstrate what he (reasonably) understood from what he had seen and been told, and the Defendants to show that Mr Reinhard had a full understanding of the April 2009 Draft LLP Agreement and of the terms on which his partnership share was being offered.  I need to deal with them in some detail.  I start with the note on the draft offer letter.
i)	First bullet (referring to clause 3 of the offer letter):  “For this, do we sign a Deed of Adherence and a Deed of Allocation at the time when I sign the contract?  Is the Capital Contribution a de-minimis amount or a meaningful amount?”  Although this is more a matter for argument than evidence, I note that Mr Reinhard’s position is that he thought little documentation was required.  He regarded the outcome of his discussions, as reflected in the draft offer letter, as clear but nonetheless wanted to know whether there was anything else to sign in addition to the offer letter.  I accept, as Mr Callman submits, that his questions suggest that he expected to have the partnership share at the time of and with the signing of the offer letter.  
ii)	However, the questions show that he had read the April 2009 Draft LLP Agreement since this was the only source he would have had for his references to the terms Deed of Adherence, Deed of Allocation and Capital Contribution.  Had he understood the draft LLP Agreement properly, he would have known that a share in accordance with the terms of that Agreement would not have given him a share in the sense which he now maintains was agreed.  His explanation for the use of these terms was that he had learned them from reading “the draft agreement for the outside investors” by which he means the April 2009 Draft LLP Agreement which he had been sent.  He then makes this observation:
“I was not specifically referring to a deed of allocation or adherence to the draft LLP Agreement itself. What I was trying to ascertain was whether I would be required to sign any formal document other than the draft letter that had been sent to me.  In noting down my question in the way that I did, I was not in any way indicating that I had been told, understood or agreed that I would need to sign up to the draft agreement with investors once it was finalized in order to get my partnership share, or for any other reason. ”
iii)	Mr Reinhard also says in his witness statement (at paragraph 107) that he understood that the four Founding Partners (and maybe also the Chairman, Michael Kirkwood) were now parties to the original partnership agreement between Mr Tory and his wife.  As to that he says this:
“That also led me to note down to ask Ondra whether more documentation or formalities would be needed to formalise the partnership share I was being given in the offer letter.  I also knew that a further document was being prepared for the outside investors, which I had been told was an early draft and did not concern me.”
iv)	Second bullet (referring to clause 3 of the offer letter):  “Further on (3) and how it relates to the LLP Agreement: Does becoming a “Partner” in the words of the Offer Letter mean becoming a “Founding Member” in the meaning of the LLP Agreement?  Background of the question is that Founder Members have certain additional rights and certain additional withdrawal provisions in the LLP Agreement”.  Mr Reinhard had understood from his discussions with Mr Tory and from the terms of the draft offer letter that there were two titles at Ondra – Partner and Managing Director.  However, the draft LLP agreement (which he again describes as an agreement with outside investors) refers to “Members”, “Founder Members” and “New Members”. He says that these categories appeared to him to have different rights and withdrawal provisions under the draft LLP agreement, but that he had not understood them fully.  It was not clear to him what those member categories meant or how or whether the draft offer letter and the titles “Partner” and “Managing Director” used in the draft offer letter related to them.  And so he noted this bullet point as a matter to pursue to obtain clarification.  
v)	Third bullet (referring to clause 4 of the offer letter):  this concerned Mr Reinhard’s exit from Goldman Sachs.  As part of this point, Mr Reinhard recorded “I would like to get an understanding what amounts of the 2009 bonus and of additional % you think about, when I leave my current job without bonus and/or without shares that they still owe me”.  In other words, he wanted to discuss with Mr Tory how to handle his exit from Goldman Sachs and get an understanding of what increase in his percentage partnership share Ondra was thinking about, in case he suffered a loss when leaving Goldman Sachs.
vi)	Bullet seven:  “I trust it will not happen, but what if it does not work out and we decide to part ways soon after having started?  Again, I don’t expect any financial package (Other than what is typical or normal in such instance), but I would like to have the possibility to take up working soon after.  I have some ideas for this, let’s discuss tomorrow”.   Mr Reinhard’s explanation for the inclusion of this point was that he wanted to make sure that, in case things did not work out from the very outset and he left Ondra very soon after joining, he would be free to leave Ondra without restrictions such as lengthy notice periods.  
154.	I turn now to the note on the April 2009 Draft LLP Agreement.  It is to be observed that the note is divided into two parts.  The first part (“Questions/Observations Regarding the Ondra Partnership Agreement”) lists points/questions which had occurred to Mr Reinhard as he went through the draft LLP Agreement; the second part (“Summary of Certain Topics in the Ondra Partnership Agreement”) contains a factual summary of many of the provisions of the draft Agreement which Mr Reinhard has clearly gone through in some detail albeit, on his case, with the focus being on financial due diligence and on the basis that the draft did not concern him directly.
155.	As to due diligence, Mr Reinhard says that he wanted to be sure that the capital from outside investors was really locked in.   He reiterates that the draft agreement had been described by Mr Tory as one concerning the outside investors only, and so he did not approach it as a document which would have an impact on his role or position at Ondra or on his partnership share in Ondra.  He says that he went through the draft at some length but did not read all of it and, indeed, did not understand all of it, for instance, how the various clauses and definitions interacted, or how it related to the UK laws and regulations.  The notes were meant only for him and he did not intend to share them with Ondra (although following a request by Ms Arnold, he did later send some points to her: see paragraph 171ff below).  He noted down points that were triggered by his reading of the document.  
156.	Mr Reinhard emailed Mr Tory on 21 May 2009 including a list of three topics which he wanted to discuss on 22 May 2009.  The first topic, the most important matter as the email states, was to finalise the offer letter.  Later in the email Mr Reinhard set out the matters which he wished to raise in twelve bullet points reflecting the points on the offer letter which he had noted down on his read-through and which I have looked at above.  In particular, he repeated, in essence, the points noted in paragraphs 153 i), iv) and vi) above.
157.	The second topic related to the draft LLP Agreement in relation to which he wanted to “discuss a couple of questions…. These are only questions for my edification, nothing that has an impact on my decision or the offer letter”. Mr Reinhard explains this as a desire to complete his due diligence on the draft document and on the capital injection by outside investors and to make sure that he understood some of the things that, having read the draft partnership agreement, he says that he did not understand clearly.  
158.	The third topic related to “next steps” and in particular, the termination of his employment with Goldman Sachs.  His evidence now is that he wanted to lay out to Mr Tory how he intended to finalise his exit from Goldman Sachs and get his agreement to that.
The meeting on 22 May 2009
159.	On 22 May 2009, Mr Reinhard met with Mr Tory and Ms Arnold. Mr Reinhard’s account in his witness statement of the meeting appears in the following paragraphs.  Since the timing of the meetings has some significance in relation to an email sent by Mr Reinhard to Ms Arnold (see paragraph 169  below), I should note here that on 20 May 2009, Carole Evans sent an internal email, to among others, Ms Arnold, telling the recipients that Mr Reinhard had just spoken to Mr Tory to say that he wanted to join Ondra and was travelling to London on 22 May 2009 and would “be in the office at 13:30 to meet with Michael”.   Carole Evans’ email asked Ms Arnold whether she would be free to meet him that day, to which she responded that she would be really happy to do so.  The entries found in the e-diaries for Ms Arnold and Mr Tory show respectively at 13.30 “Meeting with Henning Reinhard (Michael meeting Henning afterwards)” and at 14.30 “Henning Reinhard”.
160.	Nonetheless, Mr Reinhard’s witness statement states that he first met with Mr Tory.  This was a fairly short meeting, Mr Tory leaving it to Ms Arnold to deal with many of the points and to sort out the details.  Mr Reinhard’s impression was that Mr Tory was did not want to go into the detail of the offer letter or questions that he had raised.   Rather, what Mr Tory was focused on was getting Mr Reinhard on board, understanding how and when he would leave Goldman Sachs, when he could start and when an announcement could be made to the broader Ondra team and externally. 
161.	Mr Reinhard told Mr Tory once again that he liked the terms of the draft offer letter and that he had only minor points on it, all of which were already in the email of 21 May 2009.  Mr Tory said words to the effect that he had seen the email, that he and Ondra were willing to accommodate his points on the offer letter so he should simply take them up with Ms Arnold.  
162.	In relation to the first bullet point in the email dated 21 May 2009, Mr Reinhard asked, in relation to Clause 3 of the offer letter, Mr Tory whether there was anything else to sign in addition to the offer letter: clearly if he did ask that question then it can only have related to his obtaining a partnership share. The reply was that the offer letter was all there was for Mr Reinhard to sign and that there would be no Deed of Allocation or Deed of Adherence. Mr Tory said that the documentation for outside investors was Ondra’s priority and repeated that it did not concern Mr Reinhard.  He said that the other junior partners/Managing Directors had also just been given an offer letter.  Mr Reinhard accepts that he understood that there might be further documentation to follow for him and the other junior partners by way of administration or filing with relevant authorities or registers, but he did not expect any of those later formalities to change what was agreed in the offer letter.  
163.	After Mr Tory had made clear that the offer letter was all that Mr Reinhard was required to sign, there was no further discussion about titles and member categories.  Mr Reinhard had raised questions about this in the second bullet point of his notes for the meeting (see paragraph 153 iv) above) and repeated in the email dated 21 May 2009.  Mr Reinhard says that those questions were no longer relevant because he was not expecting to sign any further documentation.
164.	Mr Reinhard emphasises that at no stage was it put to him that he was only going to be granted the initial partnership share later, or that the grant of the initial partnership share would be dependent on time passing or on his performance, or that he was going to be bound by the draft LLP agreement with outside investors.  He was not told (then or at any other time) that any withdrawal provisions in the draft LLP Agreement would apply to him.
165.	One topic from the list of questions which was raised by Mr Reinhard was what would happen if it was realised early on that things were not going to work out.  Mr Reinhard said words to the effect that it was important to him that he would then be free to leave immediately and without restrictions such as lengthy notice periods.  It was agreed that this was a very unlikely scenario but Mr Tory confirmed that Ondra would not impose restrictions in such a case.  The question of what would happen to Mr Reinhard’s 1.0% partnership share in such situation did not come up and was not discussed.  
166.	Mr Tory did not want to discuss the questions which Mr Reinhard had raised about the draft LLP agreement with outside investors and referred him to Ms Arnold.  Mr Reinhard reiterates that it seemed that Mr Tory did not consider it relevant to discuss the draft LLP agreement with him having told him before that it did not concern him and that Mr Tory did not want to spend time on such detail.  Mr Tory said that Ms Arnold knew the terms of the agreement and the discussions with the outside investors and that Mr Reinhard could ask her his questions. 
167.	Mr Reinhard then met with Ms Arnold.  They first went through the few changes that he wanted in the offer letter.  Ms Arnold met the request to put in 30 instead of 25 days of vacation and the request that Ondra assist in the costs of relocating from Germany to the UK.  With respect to relocation expenditures she did not say anything about how the claim should be notified; she simply agreed that Ondra would assist Mr Reinhard and put into the offer letter that Ondra would pay “on the provision of receipts up to a maximum of €15,000” as appears in Clause 11 of the Contract.  They did not go through any of the points in the bullet points regarding the offer letter in the email of 21 May 2009.
168.	Mr Reinhard did start to address with Ms Arnold some of his questions and observations on the draft LLP.  The discussion did not proceed for long.  Mr Reinhard gained the impression that she did not want to spend much time with him on an agreement which only concerned the outside investors.  He would have assumed that if the draft agreement was going to have a direct impact on him, Ms Arnold would have discussed it with him.  
169.	Mr Reinhard had some of his observations on the draft LLP agreement on his BlackBerry smart phone which he was checking as he talked to Ms Arnold.  She was involved in the drafting of this agreement (with the outside investors as Mr Reinhard emphasises again).  She indicated that some of his points were helpful for her or were points that she wanted to look into.  She therefore asked whether he could simply send her the list of points by email instead of going through them.  Although the points had only been his own notes and had not been intended for Ondra, Mr Reinhard says that he wanted to be helpful and agreed to do so, emailing the list to her after the meeting.  He did not send the email to her to get answers, and neither she nor anyone else at Ondra ever got back to him on the email.
170.	Ms Arnold then immediately made the changes in the offer letter and gave Mr Reinhard two copies of the final version of the letter, dated 22 May 2009.  At some stage before Mr Reinhard left Ondra’s offices, Mr Tory had signed one of those copies.  Ms Arnold, he says, understood that he would counter-sign the letter only when his exit from Goldman Sachs was final.  
171.	I should mention here that Mr Reinhard’s evidence about the sending of the email to Ms Arnold has given rise to some questions.  The message on Mr Reinhard’s BlackBerry was his own message sent from his computer.  It has the same content as his note of questions in preparation for the meeting which I have discussed above.  His evidence is that he thinks he completed the message in his flat in London and sent the message to himself from his computer there.   The email from him to himself appears in the bundle and is timed at 13.00.  The email forwarded from his BlackBerry to Ms Arnold is in identical terms.  The blackberry email is shown as having been sent at 14:30 and the forwarded message is shown, under “Original message” as timed at 13:59:36.  There is nothing to suggest that he sent the same email to himself twice, once at 13.00 and once at 13.59.  One explanation (although I have had no evidence about whether this is possible) may be that he sent it at 13.00 according to his computer clock and that it was recorded as sent at 13.59 according to his BlackBerry clock.  That could be so if his computer was set to GMT and his BlackBerry to German time.    He would then have had time to get to Ondra’s offices and to have sent his email to Ms Gaynor at 14.30.  The only other matter which might assist with the timing of events is an internal message from Mr Tory’s PA to Ms Arnold timed at 15.20 saying that Mr Reinhard and Mr Tory had just finished their meeting.
172.	In the light of all of that, Mr Callman now accepts that Mr Reinhard may be mistaken about the timing of his meetings with Mr Tory and Ms Arnold and that his meeting with her may have taken place first and that after the meeting with Mr Tory the Contract was printed out by Ms Arnold and then signed by Mr Tory and given to Mr Reinhard.  Mr Callman says that the order of the meeting cannot be stated with certainty.  But given the timing of these emails and given the respective diary entries for Mr Tory and Ms Arnold, the obvious conclusion – and the one I draw – is that the meeting with Ms Arnold took place first.
173.	If that is the correct course of events, then Mr Callman’s submissions are these:
i)	Mr Reinhard is mistaken as to his recollection of the order of meetings, although he is likely to have met again with Ms Arnold after the meeting with Mr Tory to be handed the Contract to sign, which may account for the slip of his otherwise reliable memory as to the order of events.  
ii)	This does not suggest that Mr Reinhard’s recollection of what was actually discussed at those meetings is mistaken.  I do not altogether agree with that.  Mr Reinhard’s evidence is that Mr Tory told him to address many of his questions to Ms Arnold; by the time he met with Mr Tory, Mr Reinhard would already have had his meeting with Ms Arnold and would therefore need a second meeting to obtain answers from her to the points in his email of 21 May.  But he does not, in his evidence, suggest that there was a second meeting.
iii)	Mr Callman submits that, importantly, in his oral evidence Mr Tory was entirely unable to recollect what was discussed, merely repeating that Mr Reinhard’s emails must have been the agenda for the meeting.
iv)	At no stage did Mr Reinhard receive a response in writing to either his email to Mr Tory or his email to Ms Arnold.  Had these matters been discussed, there would have been a response and, had Mr Reinhard understood that the draft LLP agreement was intended to apply to him, he would have pressed for a response. Mr Tory does not agree with that.  He maintains that the email of 21 May was an agenda for the meeting which did not require a response other than the oral response given at the meeting on 22 May.
v)	The meeting with Mr Tory is likely to have been no more than 45-50 minutes long which would be comfortably filled with the matters which Mr Reinhard explains in his evidence were discussed.  That last proposition is one which I can and do accept.  Having seen Mr Tory in the witness box, I have gained the firm impression that he gives lengthy responses to questions, at least when asked of him in the witness box albeit that the responses do not always answer the question.  In relation to matters which were raised by and discussed with Mr Reinhard, I see no reason to think that he would be more succinct or terse.  If the order of events was a meeting with Ms Arnold followed by a meeting with Mr Tory, it seems likely that the first meeting was either still in progress or had only finished shortly before 14.30 when Mr Reinhard sent his email to Ms Arnold.  And so it would seem that the meeting with Mr Tory would have been of the sort of duration mentioned by Mr Callman.  
174.	There is another explanation, of course, which is that Mr Reinhard sent his email to Ms Arnold before he had his meetings with either her or Mr Tory.  I think that is unlikely given that he prepared the note for his own use (as I accept) and that he had sent an email the day before raising the main issues he wanted to discuss.  I find as a fact that the email was sent to Ms Arnold either during or shortly after his meeting with her.
175.	Why does all this matter, it might be asked.  The reason is that it might be seen as demonstrating that Mr Reinhard’s evidence is incorrect in relation to the timing of critical meetings; and if it is wrong in relation to timing, it might also be wrong in relation to content.
The Defendants’ story
176.	I now turn to the Defendants’ evidence about the founding of Ondra and about the events from 23 April to 22 May 2009.  The evidence comes principally from Mr Tory although Mr d’Angelin also provided some material.  I shall focus only on those parts which are contrary to the story as Mr Reinhard has told it.
177.	In his witness statement, Mr Tory has provided evidence about the recruitment of the first managing directors.  He stated that the intention of the Founding Partners was that the individuals would join Ondra with the title of “Managing Director” and added that “we hope they would become partners of Ondra in due course”.  By partner, he meant, I am sure, a member of the LLP.  A “core element”, he asserted, was that the Managing Directors would be able to market and introduce clients to Ondra (although this, he says  was not a “key element” in all respects – Mary Skelly, the CEO, became a partner but had limited dealings with clients and was not responsible for introducing clients).  This ability to introduce new business was, he says, agreed between the Founding Partners as a “key requirement” to any MD becoming a partner.  Mr Tory was keen to emphasise this in his witness statement:
“I was clear that before any of the Managing Directors actually became Partners (by which I mean a member of the LLP pursuant to the intended but not yet existing LLP agreement) they would first have to prove themselves.  Whilst I was keen to grow Ondra, I also want to ensure that before any Managing Directors were promoted to the partnership that they had demonstrated their abilities, including their ability to introduce and retain clients.….  I was also conscious that, in becoming partners, they would forfeit their employment rights with Ondra.” 
178.	I am afraid I have not grasped the subtle difference between what is core and what is key.  Whether this “key requirement” was communicated to other Managing Directors I do not know.  But what is clear, in my assessment of the evidence, is that, whatever else he may have been told, Mr Reinhard was never told that his entitlement to a partnership share (or his right to become a member of Ondra) was in any way conditional upon his demonstrating an ability as a rain-maker as I explain in more detail later.   
179.	Mr Tory has also explained that what Ondra proposed to offer to new Managing Directors was a market-rate salary and a discretionary bonus dependent on their and Ondra’s performance but that the Founding Partners wanted to offer a share of Ondra’s profits.  This has been referred to as a “notional share” in the proceedings, but Mr Tory does not believe it is how he referred to it at the time.  According to Mr Tory, it was their intention that the notional share would crystalise into a share in Ondra when the Managing Director became a member (or partner, to use the word used by Mr Tory himself in his witness statement).  The idea, he says, was that in the meantime salary plus bonus would be no less than the distribution which would have been received if they had actually been a partner.   
180.	Mr Tory acknowledges the opaque drafting of the employment contracts given to MDs in relation to their notional shares.  He acknowledges that the contracts do not state that becoming a partner was subject to signing the partnership agreement in due course at which time they would cease to be employees.  In a side-swipe at Mr Reinhard, he states that, to people of the commercial calibre of their recruits, “this would have been obvious” expressing himself satisfied that Mr Reinhard understood what he was being offered. 
181.	Both Mr Tory and Mr d’Angelin have given evidence about what they told earlier recruits as Managing Directors so as to bolster, I assume, their accounts of what they told Mr Reinhard.  I do not find that evidence of assistance, even if it is admissible, not least because the Defendants have not seen fit to call those other recruits to give their accounts of what they were told.  
182.	The Defendants maintain that Mr Reinhard forced himself on Ondra: that is how Mr Howe put it in his submissions, perhaps only as an interpretation of Mr Tory’s evidence that Mr Reinhard “actively sought out Ondra” and through Mr Meissner, “persuaded Mr Tory and Mr d’Angelin” to interview him.  Of course it is right that Mr Reinhard became keen to be interviewed by Ondra; but equally, it is apparent that Ondra were equally keen to interview him and it does the Defendants no credit that they now wish to portray Mr Reinhard as a less attractive prospect than he clearly was.  
183.	As to the meeting on 23 April 2009, Mr Tory says this in his witness statement:
“…..  At this first meeting, Benoit and I described Ondra to the Claimant and what we were trying to achieve.  I told him about the core ethos of Ondra and in particular, that we wanted to create a business that was different, that would endure and where the ownership would "cascade" through the generations without consideration and that departing partners would not retain their share of the profits, nor be entitled to any payment for their share of Ondra.  I also made it very clear that Ondra was unique, in that the Founding Partners would not "sell out" and were not interested in building a business as a "get rich quick" plan.   We were still a very small start-up business, but we knew that these points were an important part of what made us different and so this was clearly explained to all of the senior hires who might become partners in the future, including the Claimant.”
184.	Mr Tory states also that he repeated the core ethos and the cascading of ownership through the generations in the subsequent meeting on 27 April 2009.  
185.	Mr Tory says that Mr Reinhard made it clear to him in those, and other, meetings that he felt that he would be able to help Ondra by starting to build a client base for Ondra in Germany by “for example, assisting with general Mergers and Acquisitions…. advisory work”.  Mr Tory states that 
“the particular advantage he brought was that, because he was German and was working in Germany for Goldman Sachs, he believed that he would be able to start to build a client base for Ondra in Germany and we assumed he would have a network of contacts in Germany…...”
186.	I do not doubt that Mr Reinhard indicated his skill areas in M&A work.  However, Mr Tory seems to be suggesting that Mr Reinhard indicated that he had existing client-getting/building skills.   Having heard cross examination of Mr Tory and Mr d’Angelin on this aspect of the case, I reject that suggestion.  It is clear to me that they knew that Mr Reinhard needed to develop those skills.  No doubt they thought that he would be able to do so and it may be that they were over-optimistic.  I am satisfied, however, that Mr Reinhard projected himself as he describes as set out in paragraph 124 above.  
187.	Mr Tory’s description of the 11 May 2009 meeting in his witness statement is brief and, I consider, unfocused.  The principal paragraphs are as follows:
“At my meeting with the Claimant on 11 May 2009, I outlined the role that we had in mind for him and outlined our compensation model.  I explained that partners and Managing Directors are paid the same basic (of £180,000 to £200,000) as a draw for partners, but as a salary for Managing Directors.  I also explained that Managing Partners were paid a discretionary bonus but were also granted a notional share in Ondra, which would crystallise as their "partnership" share once they became partners.  But, in the meantime, when their salary and discretionary bonus were aggregated, we would seek to ensure that they would be paid no less than the distribution they would have been entitled to had they been partners.  I explained to the Claimant that, over time, the intention was that the discretionary bonus for Managing Directors would be replaced by profit share as Ondra's profitability increased.  In the same way that I explained it to Stewart Bennett (as set out above), I also explained that over time, and subject to the individual's performance, we would hope to increase the share of profits awarded to the Managing Directors, including the Claimant.  I explained that the intention was that the Founding Partners would reduce their share in Ondra so that all Ondra partners would hold a share of profits in Ondra of approximately 5%, which I felt was the right amount for each partner to truly feel that they were an "owner" of Ondra.
…..
I made it clear to the Claimant that he would be joining as a Managing Director and he was therefore aware that he would not be joining as a partner.  In terms of timing, I believe I made it clear to him that he would be made a partner "when we were ready", that is, when the Founding Partners were ready to promote him to the partnership.  Further, I made it clear to him that in any event, before he could be appointed a partner, the partnership agreement needed to be finalised and that given all of the other matters that needed to be dealt with, this was not a priority for the Founding Partners.” 
188.	Given the critical importance of what was said in this meeting, and given Mr Tory’s earlier evidence that the description “notional share” is not one he would have used (see paragraph 179 above), reference to “notional share” is not an entirely helpful piece of evidence. Mr Tory does not even state the gist of what he said to demonstrate that he explained the concept of what is now called the notional share in a way that Mr Reinhard could understand.  The second paragraph quoted draws no distinction between “partner” and “Partner”.  The word “partner” is really being used interchangeably with “member”; in contrast, “Partner”, according to Mr Reinhard’s evidence, is a corporate title within Ondra indicating, in effect, hierarchical status but not legal entitlement.  One could be a member without being a Partner (as is the case with the Investors) or vice versa (although this might be unlikely). 
189.	Mr Tory’s evidence is that, during the meeting on 11 May 2009, the draft Ondra partnership agreement was discussed.  Although he cannot recall if he offered to send it to Mr Reinhard or whether he asked to see it he, again, wanted Mr Reinhard to see it so that he could see that everything that Mr Tory was saying about Ondra being different was correct, and that this was reflected in the draft agreement.  After the meeting, he says that he asked his PA, Carole Evans, to send the draft to Mr Reinhard.  There is no dispute that this was done.  It can be seen that Mr Tory and Mr Reinhard have radically different accounts of what was said about any draft agreement: see paragraph 140 xix) above for Mr Reinhard’s account. 
190.	Coming to the phone call on 15 May 2009, Mr Tory’s witness statement states that he explained to Mr Reinhard that Ondra wanted him to join as a Managing Director.   His starting salary would be £200,000 and he would also be entitled to a discretionary bonus.  He went on:
“In terms of notional share, I told him he would be granted a 1% notional share in Ondra which would be his share of Ondra if he became a partner.  I also explained that we would hope to increase that share over time, which would be subject to performance.  Further I explained that, in the meantime, we would seek to ensure that his salary, when aggregated with his discretionary bonus, would be no less than the distributions that he would have been entitled to in respect of his share, had he been a partner.”
191.	I make the same observation as previously concerning the use of the words “notional share”; Mr Tory does not give the gist of what he said.  But what is clear from this passage is that it is Mr Tory’s case that Mr Reinhard knew he was not immediately becoming a partner (in the sense of member – of course he knew he was becoming a Managing Director rather than a Partner in terms of hierarchy).   That is, of course, denied by Mr Reinhard as is the evidence in the last sentence of the quote which in essence is saying that the salary and bonus were a floor so that, if the share of income representing the notional share exceeded the aggregate salary and bonus, then the share would be payable but there would be no question of aggregating all three elements.  
192.	Mr Tory’s evidence about the 22 May 2009 meeting is at radical variance with that of Mr Reinhard, although it is at least common ground that the email of 21 May formed the background to the discussions.  Mr Tory’s evidence is that he dealt with a number of points in that email.  In particular, he explained Mr Reinhard would not be a Founding Member of Ondra and would not enter into a Deed of Adherence or Allocation until the draft deed had been finalised and signed by the Founding Partners.  Mr Tory made clear that this would be done "when we were ready", that is, when the Founding Partners were ready to promote him to the partnership and when the partnership agreement had been finalised.  In the meantime, he explained to Mr Reinhard that he would be an employee of Ondra and would be considered, in due course, for admission as a partner.  Further, he explained that, whilst he was an employee, his salary would be equivalent to the draw that he would have received as a partner. It was explained that he would be paid a discretionary bonus and that the aggregate of the salary and bonus would mean that he would receive at least as much as he would have received as a partner with a 1% allocation of profits, albeit that it was obvious from the Trajectories that, even if the business did well, he would, for the first years of his employment, be paid by way of salary and remuneration far more than his notional share of profits. 
193.	At “our meeting”, Mr Tory says that he asked Mr Reinhard how he was proposing to resign.  “To my surprise and contrary to each previous articulation by the Claimant as to his rationale for joining Ondra, he responded by stating that he was simply going to tell them he was resigning because Goldman Sachs had passed him over for promotion to Managing Director.  I was shocked, first because this was the first time that the Claimant had expressed to me that this was the reason that he was resigning.  I now wondered whether this was his real reason, rather than the reasons that he had previously given in our discussions, that is, he was excited by Ondra's model and was seeking a new challenge and, given he had pursued us, that Ondra "fitted the bill".  This left me disappointed that the Claimant did not seem to have "bought into" what we were trying to create at Ondra by which I mean that he was telling me that he was intending to resign because Goldman Sachs had not promoted him, whereas we had all thought that he was resigning because he was excited about joining Ondra.  I did briefly wonder if I had been "played" and whether I was doing the right thing in recruiting him.  However, I decided to give the Claimant the benefit of the doubt.  I encouraged him to resign in what I felt would be a more professional, courteous manner rather than what would appear to Goldman Sachs as a fit of pique at his lack of internal recognition”.   
194.	Mr Tory refers to the two notes prepared by Mr Reinhard (headed "Observations on Offer Letter" and "Questions/Observations regarding the Ondra Partnership Agreement)" expressing the view that it is clear from these documents that Mr Reinhard had “conducted a detailed and forensic review of the draft partnership agreement and its future effect upon him”.  Mr Tory firmly rejects Mr Reinhard’s case that he did not realise that the draft LLP Agreement which had been provided to him was the agreement that he would sign if he became a partner but rather, was simply the agreement to be signed by the external investors in Ondra; and he denies that he said that the draft was "the agreement with the outside investors" or words to that effect.  
195.	Mr d’Angelin had less direct involvement in Mr Reinhard’s recruitment than Mr Tory.  Insofar as he was involved, his account is entirely consistent with Mr Tory’s evidence.  In his witness statement he says that they told Mr Reinhard about the core ethos of Ondra and their wish to create a business that was different and which would endure.  He recounts that Mr Tory explained at the initial meeting that “we intended that the ownership would cascade through the generations and that departing partners would not retain their share of the profits, nor be entitled to any payment for their share of Ondra” although, of course, Mr Reinhard denies that any such things were said to him on that, or any other, occasion.  Mr d’Angelin’s evidence about the nature of the core ethos is slightly fuller than that of Mr Tory.  The following appears in his witness statement:
“[Mr Tory] was very clear that part of his vision was creating an institution that would outlast us all, where each partner would leave their share of the business behind when they left for no consideration, so that the goodwill in the partnership would "cascade" down the generations.  
…….. I believe that the main reason for the collapse of Lehman Brothers and, in fact, the whole financial crisis, was that the banks had moved away from the traditional style partnerships and that partners (and employees) owned equity, which they could trade in the open market for a profit.  I strongly believed that the integrity of a partnership, and its successful long term future was strongly aligned with the ownership "cascading" down the generations.  This principle was therefore as fundamental to me as well as to Michael Tory.”
196.	I interpose here to say that Mr d’Angelin perceived one cause of the crisis as having been the possibility of trading shares in the open market for profit.  However, even on Mr Reinhard’s case, this could not occur (at least without the consent of the Founding Partners) with Ondra.  One reason for this is because Mr Reinhard would obtain an initial share of only 1% and it would not be likely that he would ever obtain more than 5%: he would never be in a position to compel a sale or winding-up of the business in order to realise a profit.  Another, more important reason, is that regulation 7(5) of the LLP Regulations would apply so that a voluntary assignment (for instance on sale) by a member would be prohibited without the consent of all existing members.
197.	Mr d’Angelin confirms Mr Tory’s evidence that before Managing Directors could “become Partners” (by which he meant a member of the LLP) pursuant to the intended but not yet existing LLP agreement, they would first have to prove themselves.  Mr d’Angelin, it can be seen, correctly, it seems to me for present purposes, draws no distinction between a member and a partner.  But in using the word Partner with an upper case leading letter, he begs the question whether there is anything in Mr Reinhard’s alleged understanding that “Partner” was simply a title within the organisation and was not a conclusive indicator of whether a person was member or entitled to a “partnership share”.  He also confirms Mr Tory’s evidence about new recruits being offered a share of profits which would crystallise and become their share of Ondra “when they signed the partnership agreement and became partners” (“partners” with a lower case leading letter).  Like Mr Tory, he does not think that “notional share” was a term ever used at the time although he perceives it as a neat way to describe what was being offered; and he confirms that they would often refer to the notional share as “equity” but this was only a shorthand.
198.	Mr d’Angelin has given evidence about the meeting on 23 April 2009.  His witness statement is very brief in relation to this and, in effect, simply confirms Mr Tory’s evidence.  In particular, he reiterates that departing partners would not retain their share of the profits or be entitled to any payment for their share. 
199.	Mr d’Angelin refers to the email from Mr Tory to the other Founding Partners on 15 May 2009.  Rather disingenuously, he describes the proposal put forward by Mr Tory including “a notional share of 1%”.  Of course, Mr Tory did not refer to a notional share at all or, indeed, to equity: he referred to “ownership”.  
200.	Mr d’Angelin expresses a strong view to the effect that he finds it incredible that Mr Reinhard understood that the draft LLP Agreement was not relevant to him.  That is a matter for me: I am not assisted by Mr d’Angelin’s assessment of Mr Reinhard’s credibility.
201.	What happened after Mr Reinhard joined Ondra is not admissible on the matter of construction of the Contract: it is not permissible to interpret what an agreement means by how the parties acted under it.  However, where a word or phrase is used in a contract where the meaning of that word or phrase is ambiguous, or where a matrix of fact is relied on to show that the word or phrase has a particular meaning which may not accord with it most natural meaning, I see no reason why the way in which that word or phrase has been subsequently used should not be put in evidence to resolve that ambiguity or to demonstrate that a party understood a particular word or phrase in a particular way.  It is for that reason that I include in my discussion of the facts certain material which might, at first sight, be though to be irrelevant.  
202.	In February 2010, Ondra prepared a paper titled “Introduction to Ondra Partners”.  On the third page is a heading “Ondra’s Model is Differentiated”.  Under that heading is to be found this:
“Ownership evolution: unique amongst advisory firms, Ondra’s founding partners committed to passing ownership to the next generation over time to attract and retain the highest quality talent;”
203.	And on the third page is a heading “Culture”.  As part of the “Economic Model” it is stated that 
“our Partners share overall participation in the economic success of the entire business.  Their compensation is not based on personal revenue contribution and periodic adjustment of ownership reflects ongoing contributions to the business to attract and retain the very best next-generation professionals…”
204.	Included in the bundle are three charts.  They appear in the same tab as an email chain on 4 March 2010 between Mr Baldock and Mr Kirkwood.  It is not entirely clear to me that the charts are actually the attachments sent to Mr Kirkwood but I believe the tab was prepared on the basis that they were.  The first chart is headed “Ondra Partners Organisational Chart”.  It shows nine participators (to use a neutral word) namely, Mr Kirkwood, the four Founding Partners, Jersey, UK and US investors and “Other Partners/Employees”; beneath each name is the word “Interest” with the figure for each redacted.  The next chart is headed “Investor Ownership”.  It has two subheadings “Outside Investors” and “Partner Investors”.  The latter are the four Founding Partners and Mr Kirkwood.  Under the column “Ownership” appear redacted figures.  I do not know whether the figures shown for Partners represents only their percentage share based on their capital investment as with outside investors or whether it also includes their interests as working partners.  The third chart is headed “Other Ownership”.  Again, the figures are redacted.  There are three classes of ownership identified “Other Partner Ownership”, “Other Employee Ownership” and “Other Ownership”.  The first category comprised of the junior partners and the second category comprised of two employees.  The interest of the Founding Partners (other than that reflecting their capital investment) is not shown on this page which suggests that the entirety of their interests were shown on the second chart. 
205.	Two emails in the thread are relevant: the first from Mr Kirkwood:
“Would I be correct in assuming that those of the partners who have paid in cash equity have some additional equity interest embedded within the 10% shown as “Investor Group” ?
For instance, with [redacted] having invested, say, [redacted] or [redacted] of the total of “external” capital, I assume that he thus has an additional [redacted] of the equity on top of the percentage you show against his name…….”
206.	Mr Baldock’s reply was:
“Yes, the 10% investor group includes all the equity which was “sold”…….”
207.	Neither the charts nor the emails contain anything which points to the share or interest of an investor being different in kind from the share or interest of a partner; the word “equity” is used to refer to each.
Departure of Mr Morgan
208.	Some time in the first two or three months of 2010, Mr Morgan made clear that he wished to depart from Ondra.  I do not know why he decided to do so, but it resulted in discussions about the terms on which he would leave.  The upshot was that it was decided to execute two deeds, namely the March 2010 LLP Agreement and the March 2010 Amendment and Withdrawal Deed the provisions of which I have already explained. 
209.	Following Mr Morgan’s departure, and the ending of his membership rights (whatever they were) in the LLP, the Founding Partners considered how they might further benefit the Managing Directors.  I do not know what had previously been said to the Managing Directors or what discussion the Founding Partners had held.  But on 4 March 2010, Mr Baldock sent to Mr Tory, Mr Kirkwood and Mr d’Angelin an email setting out a draft of his proposed message to the Managing Directors (receiving from Mr d’Angelin the reply “Very good”).  The draft included this:
“1)     We are granting you an additional X% of the equity of Ondra…
….
2)	We believe there is real monetary value in the equity of Ondra, and want to emphasize the commitment we (the founding partners) made when we started the firm, to re-circulate the equity and evolve the ownership of the firm over time
a.  We could have kept the equity ourselves   
b. We could have sold the equity to a third party (mention inquiries from our outside shareholders about buying more ….)
3)	There is an increasing burden of responsibility as your equity ownership increases.”
210.	This document is not, of course, admissible on the question of construction of the Contract.  But it is admissible to show the way in which the Founding Partners were using the concept of “equity” and thus to explain what Mr Tory meant when he used that word in his discussions with Mr Reinhard.   Mrs Skelly suggests that “equity” was being used, and was understood, in the sense of a right to future income.  But if that is right, the immediate question which springs to mind is for how long that income right was to last.  Mrs Skelly’s response is that it is the period while the relevant person remains working at Ondra.  It is difficult to spell that out of the document: a third party purchaser (see paragraph 2)b. of the draft message) would surely have expected his share to be a capital asset in the same way as the holder of a share in a company.  The point which can be made, however, is that the document refers to the granting of an additional equity, the obvious inference being that it is of the same character as any existing equity. And since the “equity” in the draft message has a capital value, so too does existing equity.
Performance and performance concerns
211.	I have received a great deal of evidence about Mr Reinhard’s performance after March 2010.  I cannot possibly rehearse all of the evidence.  The parties are miles apart in their perceptions.  Mr Reinhard considers that his performance on the M&A front (for which he was required) was always of the highest standard.  For my part, I have no reason to doubt that and I do not think the Defendants say otherwise.  He maintains that his relations with clients was good and rejects the suggestion made by the Defendants that he was somehow reticent and unwilling to engage with even established clients of Ondra.  I accept that he was involved, with success, in a number of projects with clients together with other members of the relevant Ondra team.  And I accept that he was involved, again with success, in recruiting, training and mentoring; and he helped Mr Tory in the structuring and valuation of a potential investment by a Bahrain client as he sets out in paragraph 142 of his witness statement.  
212.	He views his own progress in developing his relationship skills as satisfactory but maintains that the Defendants failed to give him the support which he was entitled to expect and that they failed to fulfil the promises made to him at the time of his recruitment making it difficult for him to realise his own potential.  He says also that there was “a change in Ondra’s strategy that, while not made explicit and, in fact, left unsaid, made it harder for him to succeed in the organisation”.   
213.	The Defendants saw Mr Reinhard’s relationship skills as deficient and, more importantly, that they were not improving. They had concerns about his ability to work within the Ondra teams. And they doubted his leadership qualities. No doubt the parties could spend a great deal more time explaining their reasons for their contrasting provisions than they already have, but one thing is clear which is that communications between Mr Reinhard on the one hand and the Founding Partners on the other hand, had broken down. It does not really matter much why this happened. It resulted in the eventual decision by Ondra to dismiss Mr Reinhard.
Feedback on Performance
214.	I should, nonetheless, say something about Mr Reinhard’s appraisal (as part of an Ondra wide appraisal scheme) in October 2010. In the course of his appraisal, he completed a self-assessment form.  He recognised the need to “step up the effort in marketing” and to “Be more involved in other, existing client relationships…”.  The “long-term objective” was to generate business in Germany stating the need to discuss how this was to be achieved in relation to matters such as resources.  There were assessment forms from Mr Baldock, Mr d’Angelin and Mr Tory but these were not shown to Mr Reinhard.  Those individuals all identified his excellent technical skills and the high quality of his work.  Otherwise, the assessments contained negative comments in important areas:
i)	Mr Baldock saw client focus as Mr Reinhard’s great shortcoming believing that he “doesn’t have the DNA to aggressively pursue clients or business” despite being given every opportunity and support.  It was hard to justify keeping him as a partner and “I don’t believe he has what it takes to became a contributing partner”.
ii)	Mr d’Angelin lamented that the work was seldom impactful as he “struggles to find the competitive edge”; and he lamented also that Mr Reinhard did not seem to share and understand “our culture”.  He had “no capabilities or desire to originate” and “is in the wrong seat at Ondra.  We probably make the mistake of hiring him as a partner whilst he is still operating at a much more junior level”.
iii)	Mr Tory was the least negative in some respects, describing Mr Reinhard as a clear and natural communicator but with a need to improve on conveying “more human warmth to help build bonds with clients”.  But “Entrepreneurial instinct is lacking, needs urgent upgrading, especially the simple urge to ‘get out there and try’, which is his single biggest development need”.
215.	There was no feedback given to Mr Reinhard on this review until the discussion to 7 December 2010 to which I now come.
Events leading up to Mr Reinhard’s departure from Ondra 
216.	The first inkling that Mr Reinhard had that Ondra and the Founding Partners were not happy with his performance or his fit with Ondra was in a discussion with Mr Tory on 7 December 2010.  I have no doubt that, as he says, it came as a surprise to him.
217.	Mr Tory had invited Mr Reinhard to go for a coffee in the coffee shop in Ondra’s office building.   Mr Reinhard thought it was for a social chat.  But it turned out that Mr Tory wanted to talk about Mr Reinhard’s future. He was surprised and now says the coffee shop did not appear to be an appropriate setting at all for a discussion of this type (a sentiment with which it is not difficult to agree). Be that as it may, Mr Reinhard and Mr Tory had a discussion about the former’s future at Ondra and the concern which the Founding Partners had. They do not, in their evidence, agree what precisely was said, and I do not think anything turns on those differences. I do however make the following findings:
i)	Mr Tory said that the Founding Partners had not made up their minds about Mr Reinhard’s future.  
ii)	At no time in the meeting did Mr Tory say or even hint that he “had intended to give [me] notice at this point”, as alleged in the Re-Amended Defence at paragraph 34.  Whatever Mr Tory’s intentions, I am sure he did not give notice at that point or even say that he was thinking of doing so.
218.	I should record Mr Reinhard’s evidence on one aspect, but I do not make any findings. Mr Reinhard’s case is that he told Mr Tory that there were three key issues that made it difficult for him to succeed in within Ondra:  first, the lack of cooperation among the partners generally and of the three founding partners with me in particular; second, the lack of joint exercises in client targeting and of joint marketing initiatives (rather ‘every man for himself’); and third, the ‘light-touch’ advisory model of Ondra as opposed to a ‘full capabilities’ model. Mr Tory listened to his concerns but he did not make any suggestions as to how he and the other Founder Partners would help improve the issues raised.  He told Mr Tory that he was convinced that he could show him and the other Founding Partners how valuable he was to Ondra.  Mr Tory agreed that he should have this opportunity and they agreed to meet with the other Founder Partners in the coming days to  discuss further
Discussion on 17 December 2010
219.	Following the coffee shop discussion, there was a further discussion on 17 December 2010.  Mr Reinhard, Mr Tory and Mr d’Angelin were present in person in Ondra’s offices and Mr Baldock attended by phone.
220.	Again, the parties do not, on their evidence, agree what precisely was said, and again I do not think anything turns on those differences. I do, however, make the following findings in accordance with Mr Reinhard’s evidence:
i)	The three Founding Partners said words to the effect that they were uncertain whether Ondra was the right place for him and whether he was the right person for Ondra.  
ii)	Everyone agreed to see how things developed over the first 4-6 months in the New Year.  The importance of the two projects he had been involved in and of  the role that he would play in their execution was acknowledged by the three Founding Partners.
Meetings on 13, 17, and 20 May 2011
221.	By May, the Founding Partners had clearly formed the view that there was no marked improvement in Mr Reinhard’s performance – that is to say not his technical performance but his relationship performance – and did not see a long-term future for him at Ondra. I accept Mr Reinhard’s evidence that at the meeting on 13 May, he was given three options by Mr Tory:
i)	Leave immediately.
ii)	Become a consultant and work part time on a case-by-case basis.
iii)	Continue to work for Ondra but only on the two projects mentioned above with a clear time horizon for leaving Ondra.
222.	The question of bonus was discussed in the context of an overall leaving “package”.  The figure of £50,000 was proposed by Mr d’Angelin.  Mr Reinhard said that that was much too low and did not reflect his performance.  He said that he considered the proposed bonus to be an “insult” and urged them to reconsider.  It was agreed that there would be another conversation on the next Monday, 16 May 2011.
223.	On that day, neither Mr Tory nor Mr d’Angelin was available for the follow-up discussion that had been agreed.  On the same day Mr Reinhard sent a number of emails to his personal email account at home.  This action is the subject matter of complaint by Ondra since the emails contained confidential information of Ondra.  I come to this later.
224.	Mr Reinhard did, however, meet with the three Founding Partners on the next day, 17 May 2011. I accept his evidence as follows:
i)	He repeated how unhappy he was with the bonus figure. 
ii)	He reminded them that they had not informed him what dividend/distribution Ondra was going to pay on his partnership share for the year ended 31 March 2010.
iii)	He stated that £50,000 could not be intended as the aggregate of bonus and dividend/distribution.
iv)	He referred to the three options which I have mentioned. The decision was that the third option was best for everyone.
v)	There was no proposal for a financial package by Ondra although Mr Reinhard had expected one to be presented.  So he put forward his own proposals.  Clearly Mr d’Angelin did not like what he was hearing: he said he had “heard enough” and walked out of the meeting.  Mr Tory and Mr Baldock stayed behind but did not give any feedback on the proposal.
 Meeting with Mr Tory on 19 or 20 May 2011
225.	Mr Reinhard and Mr Tory met again on 19 or 20 May 2011 (Mr Reinhard cannot remember which: it does not matter).  Mr Tory did not make any proposal about remuneration under the third option nor for the “package” which the Founding Partners had in mind.  Mr Tory said only that Mr Reinhard was asking for too much.  The discussions over the third option were leading nowhere – the parties were miles apart on Mr Reinhard’s involvement and on his remuneration.  Mr Tory said that the only option he saw then was the first option, that is to say for Mr Reinhard to leave Ondra immediately.   This was the time when Ondra communicated its decision to part ways. It is clear, I consider, that he was not agreeing to go – he was being fired.
226.	I am satisfied that, Mr Tory did not tell him at this meeting (or indeed at any time) that because Ondra was terminating his employment, his partnership share would be taken away.  Neither did he say that Mr Reinhard would no longer be a member. Mr Reinhard did not agree to a removal of his partnership share, and did not resign as a member.
227.	After that meeting, my assessment of the events is that matters proceeded as if Mr Reinhard had ceased to be employed. I accept the following evidence from him:
i)	He informed his clients on the two projects that he was leaving Ondra and handed over their affairs to others within Ondra. 
ii)	On 26 May 2011, Ms Skelly informed him that access to his email account, blackberry and Ondra computer systems would be cut off.
iii)	On 31 May  2011 he went to Ondra’s offices for a meeting with Ms Skelly and found his access pass had been de-activated.  The receptionist was unable to tell him when this had occurred and could not tell him the date, but said the computer told her that his employment had terminated to which Ms Skelly who was present  said “No”.                   
228.	On 3 June 2011, a letter attached to an email was sent terminating Mr Reinhard’s employment as of 3 June 2011.  The material parts read as follows:
“I confirm that Ondra Partners has concluded that your employment will be terminated with effect from today’s date, for the reasons discussed with you.
You will receive your normal salary up to today’s date.  You will also receive a payment in lieu of your three month notice period and payment in lieu of all holiday accrued but untaken up to today’s date (both less statutory deductions).  Your P45 will be sent to you shortly.”
Findings of fact
229.	I have already made a number of findings of fact. In this section of my judgment, I propose to reach my findings of fact insofar as they are required in order to resolve the issue of construction of the Contract.  In doing so, I bear in mind the evidence which has been given in relation to other aspects of the case since that evidence may have an impact of the credibility of the witnesses. 
230.	I attach great importance to the documentary evidence, of course.  This includes, in particular, Mr Reinhard’s notes of the meetings with Mr Tory and Mr Reinhard’s own notes prepared for such meetings.  As I have said, I see no reason to think that the notes of the meetings were inaccurate in what they in fact recorded; nor do I think that they should be taken as omitting anything which Mr Reinhard regarded as significant.  I am certainly of the view that he did not deliberately omit anything which he saw as significant – there would be no reason for him to so do so – and that if something significant was said by Mr Tory, the failure to note it was because the message had not been clearly communicated by Mr Tory.  It could be suggested that another reason for failing to note something is because it is in practice impossible for a person actively participating in a meeting to take a full note of it; Mr Reinhard might simply not have had time to note everything of significance.  It is impossible, however, to think that Mr Reinhard would not have noted anything said by Mr Tory which was fundamentally inconsistent with his own understanding.  
231.	Mr Reinhard, Mr Tory and (to a lesser extent) Mr d’Angelin were all subjected to lengthy cross-examination.  It is impossible, in this already over-long judgment, to describe the ebb and flow of the cross-examination.  It is not even helpful in the present case, in contrast with many pieces of litigation, to focus on particular questions and answers since, taken in isolation, they do not indicate how the witnesses came across to me and how reliable they are.  What I do say is that each of them came across as an honest witness with a great deal of integrity.  It is certainly the case that none of them was demonstrably shown to be dishonest.  I am sure that each of them believes that what he has told me is the truth.  But I am equally sure that there is an element of reconstruction by each of them in their evidence about the meetings.  Each of them has done two things.  First, he has recollected in general terms the sort of things which he actually said and restated them to me with a gloss which supports his case.  Secondly, he has persuaded himself that things which were certainly not said clearly, and perhaps not at all, were communicated with clarity to the other party.  Thus although the evidence of Mr Reinhard and Mr Tory on certain aspects of their meetings is very different, it does not follow that either of them is deliberately untruthful.  This is so even where the difference is so stark that the first reaction is to think that one of them must be lying.  An example of this is their different evidence about what Mr Tory did or did not say about the draft agreement being only for outside investors and of no concern to Mr Reinhard about which I will say more later.  In Mr Tory’s case there is one piece of evidence which has caused me some disquiet, see paragraph 299 below. But ultimately I do not consider that this leads me to question his fundamental honesty.
232.	This element of reconstruction is particularly apparent in the evidence of Mr d’Angelin.  As he said on a number of occasions, he is not a lawyer, let alone an English lawyer and, although his English is good, he does not regard himself as fluent: he did not have as good an understanding of the nature of an LLP as he might have.  He gave slightly different answers at different stages of his evidence about the nature of the “core ethos” of Ondra and about how he saw Ondra, particularly in terms of its governance and ownership.  In any case, it was Mr Tory who took the lead in the recruitment of Mr Reinhard.  In summary, I did not find Mr d’Angelin’s evidence to assist me.
233.	As can be seen from what I have already written, the Defendants have given a great deal of evidence about the underlying philosophy of Ondra and its “core ethos”; and I have already addressed this aspect in outline at paragraphs 68 to 70 above.  I accept much (but not everything) of what Mr Tory and Mr d’Angelin said about that.  I do not doubt that Mr Tory saw Ondra as entirely different from existing investment banks; nor that he saw the aligning of clients’ interests with those of Ondra itself and that he deprecated the “short-termism” which he perceived as prevalent in the world in which he had been working; nor that he wanted to create a business which would endure over time and, indeed, past his own time.  
234.	I am also quite sure that he saw the passing-on of shares in the business to the next generation as part of the core ethos in the sense that the Founding Partners would make available, without payment, shares in Ondra to the next generation of partners.  This was at least part of the “cascading” of interests which became almost a mantra in his evidence.  What I am less certain about is whether that cascading of interests included onward cascading by next-generation partners to the generations beyond.  For instance, if a next-generation partner reached a level of 5%, it is unlikely, I consider, that he or she would have been expected to forgo part of that 5% to enable another incoming partner to obtain a share, at least so long as the Founding Partners were still working and held substantially larger shares. I am also less certain about how much thought had been given to what would happen to a departing partner’s share.  However, my conclusion taking account of all of the evidence is that it was, at least by the time of the recruitment exercise leading to Mr Reinhard’s employment, Mr Tory’s intention (shared by the other Founding Partners) that the structure of Ondra would provide for incoming partners to leave without any payment in respect of their shares.  I base that conclusion principally on the successive drafts of the LLP Agreement which consistently, from February 2009 onwards, provided for a departing partner, other than the Founding Partners, to receive no consideration for their shares and, even in the case of the Founding Partners, provided for consideration which did not equate to market value.  That approach to the passing of shares is exemplified in the emails passing between Mr Baldock and Mr Morgan in relation to the recruitment of Mr Bennett: see paragraphs 75 to 77  above.  Whether this intention was effectively communicated by Mr Tory to anyone is open to question: the fact that Mr Morgan asked the question which he did in that email exchange suggests that the position had not been made clear, even to one of the Founding Partners. And as will be seen, I do not consider that he communicated it to Mr Reinhard.
235.	There is one aspect of Mr Tory’s evidence concerning his intentions in relation to the LLP about which I am very doubtful and do not accept.  In this context, I refer to the passage in his witness statement set out at paragraph 177 above.  I can accept that Mr Tory was looking for Managing Directors with partnership capability and that an ability to introduce and retain clients would be important.  I do not, accept, however, that it was a hard-and-fast requirement that an individual would have to prove himself in that respect before even being considered for partnership (or rather, I should say, membership of Ondra).  I consider that Mr Tory is putting his evidence rather more strongly than is justified.  There is another point arising from that same passage of the witness statement.  In the last sentence quoted he says that he “was also conscious that, in becoming partners, they would forfeit their employment rights”.  I do not think for a moment that Mr Tory had this point in mind at the time.  He only came to realise the relevance of this point at a later stage.  By 2011, the point had been reflected in the drafting of the documentation, with the draft LLP Agreement including a provision (at Clause 5.2(C)) which was not included in the drafts in existence before and during Mr Reinhard’s time at Ondra under which a new partner was to give prior confirmation of the cessation of his employment.  The fact that it was not reflected in the earlier drafts suggests that the point had not been appreciated by the lawyers let alone by Mr Tory himself.  It may, but here I speculate, have arisen as a result of the problems which Ondra had experienced over Mr Reinhard’s departure.  
236.	I have found it helpful to consider the matter in two temporal stages.  The first stage is the period up to the time when Mr Reinhard was sent the April 2009 Draft LLP Agreement by Carole Evans at some point of time after 13 May 2009; and the second stage is the period after that.  
237.	I have already dealt with Mr Reinhard’s account of his contacts with the head-hunters and with Mr Meissner and how it was that he came to have his first interview with Ondra.  I have accepted that account.  I also accept:
i)	 his evidence about how he presented himself to Ondra (see paragraph 124(i) and (ii) above); 
ii)	that mention was made of a partnership share (see paragraph 124(iii)) but I conclude that this was only in general terms with nothing said about the quantum of the share, about what rights it would carry and nothing express about when it would be granted;  
iii)	what he says about the business plan in the remainder of paragraph 124; 
iv)	his evidence about the sort of posts he was considering and the importance to him of the various different elements of what he was looking for by way of remuneration, as to which see paragraphs 107 and 108 above;
v)	his discussions with the head-hunters: see paragraph 109 above.
238.	It is clear that, following the 27 April 2009 meeting, Mr Reinhard prepared the spreadsheet referred to in paragraph 129 above.  I have no doubt that Mr Reinhard understood when he prepared the spreadsheet that his compensation would comprise the three elements referred to (base salary, bonus and dividends on partnership share).  That this was his understanding is supported by the contemporary notes which he prepared referred to at paragraph 152 above.  I am satisfied that whatever was said to him in the April meetings, he did not understand that he would be obtaining only what Mr Tory now refers to as a notional share; that is to say (as I understand the result of the concept) that he would receive, in effect, the greater of (i) his notional share of the profits and (ii) his basic salary plus bonus.  
239.	At this stage, at least, there was nothing, in my view, which would have led Mr Reinhard to think that dividends were not in addition to salary and bonus.   Mr Tory has explained what he says his and the other Founding Partners’ intentions were as to which see paragraph 179 above.  I am satisfied that this intention, assuming it is established, was not communicated to Mr Reinhard in the April meetings; or, if something was said, it was not sufficiently explained for Mr Reinhard to have understood it.  I reject the Defendants’ suggestions (i) that Mr Reinhard did understand that his compensation would not include the three elements and (ii) that a reasonable person in Mr Reinhard’s position would have done so.
240.	I note here, on the topic of the passing of partnership shares, that the business plan which Mr Reinhard was given refers to the “recycling of partnership interest over time” to “ensure the continuity of the ownership ethos”; but that follows on immediately from the statement that “Ownership will remain the primary source of economic reward to partners…”.   It is far from clear that the reader of the business plan would understand that a partner leaving the LLP would lose his share; but even if that is the correct reading, it does not follow, and is certainly not expressly stated, that the outgoing partner would not be entitled to any payment in respect of his share. 
241.	It is clear that there was discussion in the April meetings about Mr Reinhard obtaining a partnership share.  But my conclusion from everything I have heard is that there was no discussion at those meetings about what this meant.  Although the language which all the witnesses have used is the language of partnership without any recognition of the differences between a partnership and an LLP, nothing turns on that in my view.  In referring to a share in the partnership, it is clear that both parties had in mind obtaining an interest of some sort as a member of the LLP.  Thus even on the Defendants’ case, Mr Reinhard was to obtain an interest (“partnership share”) as and when he was elected as a “partner”  and signed the relevant deeds of adherence and allocation once the LLP Agreement had been finalised.  Clearly, the Defendants envisaged Mr Reinhard becoming a member with the rights conferred by the LLP Agreement, thus obtaining a “share” or “equity” in Ondra.  
242.	I consider it to be clear that Mr Reinhard understood at this stage (ie following the April meetings) that, if he joined Ondra, he would become entitled to what he saw as a share in Ondra.  To put that into the language of an LLP, he would become a member of Ondra with a percentage share of the rights and interests in the same way as other members.  Quite what this involved is a matter I consider in more detail starting at paragraph 248 below.
243.	Moreover, he did not, in my assessment, at that stage understand that his interest as a member could be brought to an end, or would automatically come to an end, when he left Ondra let alone that it would do so for no consideration.   I reach that conclusion from an assessment of the evidence overall.  Support for it is found in the notes in which Mr Reinhard raised a number of key questions which I have referred to where he refers to obtaining “equity”.  I have no doubt at all that Mr Reinhard used the word “equity” in the way that it would be used in a company context, that is to say as a shareholder.  Transposing that concept to a conventional partnership, he saw “equity” as meaning a share in the business.  I suspect that he had a limited understanding of the LLP structure but I am sure that he would readily accept that in the context of that structure, his “equity” would be given effect to by his becoming a member with rights, under the LLP agreement, to share in income and capital profits with his share having a value to him on leaving Ondra.  I do not accept that Mr Tory and Mr d’Angelin explained to him that the share of a partner would come to an end upon his ceasing to be engaged with Ondra.  They may have used the word “cascading”.  Although I have come to understand as the result of cross-examination what Mr Tory understands by that concept, Mr d’Angelin was less coherent.  I can well understand, and indeed so hold, that even if something was said about “cascading” to Mr Reinhard, it was not done so in words which communicated the meaning which the Defendants now attribute to it.  It should not be overlooked that, in the first draft Term Sheet, recycling was the word used to describe the effect of the issuance of new shares; cascading can, I think, be viewed in that way too.
244.	On the other side, I think that, by this time, Mr Tory and Mr d’Angelin intended that the share in Ondra of a new-generation partner would come to an end if and when that partner left the business (other than the case of the winding-up of Ondra) and that it would do so without consideration.  This intention is reflected in the successive drafts of the LLP Agreement.  Although the letters to Ms Danoux and Ms Korpikari remain unexplained, they do not lead me  to a  different conclusion.  However, I do think that that intention was not as rigid as Mr Tory pressed on me.
245.	I do not accept, however, that when any of the Founding Partners used the word “equity” (whether at the stage of the recruitment of Mr Reinhard or later) in relation to new recruits, they were talking only about a share of income profits.  That would be a curious use of the word.  It is clearly not the way in which the word was used in several of the documents which I have mentioned in my review of the parties’ respective stories.  But having said that, there is nothing curious about an “equity” which comes to an end in certain circumstances.  For instance, in the case of many conventional partnerships, the partnership deed provides for the share of a partner to accrue automatically to the continuing partners, with or without payment.  It makes perfectly good sense to describe a partner as having an equity in the firm even in the case where, on departure, the share accrues to the continuing partners for no consideration.  Indeed, in the major firms of solicitors and accountants where outgoing partners receive no consideration (other than return of the income and capital accounts), the partners are perfectly properly referred to as “equity partners”.  And so I see no inconsistency between (i) the Founding Partners intending the new-generation partners to have “equity” in the sense of becoming members of the LLP with a share in profits, whether of an income or capital nature and a share in the proceeds of any winding-up and (ii) the interests of the new member coming to an end without consideration in certain events, in the present case on ceasing to be engaged in the business.  The more natural meaning of the word, however, is the meaning which Mr Reinhard understood it to have.  It is for the Defendants to demonstrate that he should have understood in some other way.  
246.	I make similar observations about the use of the word “ownership” commenting that it is, in my view, more difficult in the case of “ownership” to treat it as covering an interest which can be brought to an end.
247.	I have no doubt that Mr Reinhard understood, following the April meetings, that if he joined Ondra, he would become a partner with a partnership share in the sense of membership of the LLP.  Further, he understood that this membership interest would be granted immediately upon his joining Ondra.  Support for this conclusion is also to be found in the notes to which I have referred at paragraph 131 above which I do not repeat here but speak for themselves.  On the other hand, I think it unlikely that Mr Tory stated expressly to him that his partnership share would be granted immediately; and if he used words which Mr Reinhard saw as consistent with an immediate grant, I think it unlikely that Mr Tory intended those words to imply an immediate grant.
248.	It has been suggested by the Defendants that the differences between the investor equity and partnership equity was well understood by Mr Reinhard and that he knew that partner equity did not carry any rights on the departure of a partner; Mr Reinhard was seeking to acquire by, purchase, equity of the same type as outside investors had acquired precisely because he appreciated that his partner equity would not carry any rights on leaving.  I reject that submission.  At this stage, after the April meeting, Mr Reinhard knew only in the most general terms about the differing rights attached to investors’ shares and partners’ share.  I have no doubt the question in this paragraph of his note was raised because he wanted additional equity (which he would have to purchase) not that he wanted equity of a different type: he thought they were the same.
249.	In summary, my findings come to this: By this stage (after the April meetings) Mr Reinhard understood that he would join Ondra with a salary, a bonus and a dividend on his share in the partnership (which is to be interpreted as a distribution to him as a member of the LLP).  He understood that he would become a partner (ie member) from the very beginning; he had no reason to think that his membership was to be postponed to a later date, still less that it was dependent on performance, particularly performance in terms of gaining and retaining clients.  There was nothing in the material with which he was provided that would have (or ought to have) lead him to a different understanding.  In particular, Mr Tory did not say anything, or if he did say anything he did not do so in a way which communicated his message clearly, to lead him to a different understanding.  It was reasonable for him to have that understanding. The objective person having all of the information which Mr Reinhard had would have had the same understanding. 
250.	I come then to the meeting on 11 May 2009 as to which see, for Mr Reinhard’s story, paragraph 133 above and, for Mr Tory’s story, paragraph 187 above.
251.	I accept Mr Reinhard’s evidence about Mr Tory’s description of his ambitions for Ondra as set out in paragraph 138 above.
252.	I do not accept Mr Tory’s evidence that he explained the concept of what he now refers to, by way of shorthand, as the “notional share” nor do I accept that he explained that Ondra would “seek to ensure that [Managing Directors] would be paid no less than the distribution that they would have been entitled to had they been partners” so that salary plus bonus would in effect be a floor on remuneration. The first reason for reaching that conclusion is that I am not satisfied that, by this time, the Founding Partners had formed an intention consistent with the “notional” share. But even if that were wrong, and even if Mr Tory did say something about this, I am entirely confident that he did not adequately convey his message to Mr Reinhard.   
253.	Mr Tory’s suggested explanation is at odds with the Trajectories referred to at paragraph 134 above which show three elements of remuneration and a total.  It is clear that the Trajectories were handed to Mr Reinhard during this meeting.  I accept Mr Reinhard’s evidence that Mr Tory took him through them.  Whether it is right (as Mr Reinhard says) or wrong (as Mr Tory says) that Mr Tory put a lot of emphasis on the Trajectories in order to describe the compensation and ownership path that Mr Reinhard could expect does not matter much.  The point is that the Trajectories were given to Mr Reinhard and whether or not they were reasonable projections or merely aspirations does not detract from the type of remuneration which Mr Reinhard would receive or, if the aspirations turned into realities, from the level of remuneration which he would receive.
254.	My conclusion is supported by the cross-examination of both Mr Tory and Mr d’Angelin.  Mr Tory’s answers were difficult to follow and consisted largely of assertion and an inability, or perhaps refusal, to give a coherent explanation consistent with his case.  Mr d’Angelin was presented by Mr Callman with an example where a Managing Director had, for the relevant year, a salary of £200,000 and a bonus of £100,000 and where he also had a 1% notional share which would produce £50,000 for the relevant year.  Mr d’Angelin’s final position was that “We will seek to ensure that it [ie the total remuneration] will be £350,000….”.  
255.	Further, in the early years, it is highly unlikely that a 1% share of profit would exceed salary plus bonus.  Even on the Defendants’ case, it was expected that Mr Reinhard would become a partner within 2 to 3 years, or a maximum of 5 years.  It is surprising in those circumstances that the Defendants, on their case, saw any need for mention of  a notional share at all: in practice, it would never bite since the notional share would be highly unlikely to produce more than salary plus bonus in the period before Mr Reinhard actually became a partner. 
256.	I am satisfied not only that the obtaining of a share in the partnership, in the sense that he understood what a share would be, was very important to Mr Reinhard also that he understood that he would obtain a share upon joining Ondra.  This conclusion is really all part and parcel of my rejection of the Defendants’ case that Mr Reinhard was given a clear explanation of his “notional” share (albeit not in language which used that word).  If he had understood from the discussion on 11 May 2009 that he would obtain his share only at some future date if and when the Founding Partners considered it appropriate, it is simply inconceivable that he would not have expressed surprise and astonishment to Mr Tory (and quite possibly simply have terminated discussions there and then).    It is clear that he did not do so.  I conclude that, whatever was said to Mr Reinhard, he did not understand (and a reasonable person in his position would not have understood) that obtaining his partnership share was subject to the conditions for which the Defendants contend; and reaching that conclusion as I do, there is nothing, in my view, which would justify the conclusion that, nonetheless, he did, or that an objective person would, understand that he would not obtain his share until the LLP documentation had been finalised.
257.	In reaching that conclusion, I take account of Mr Reinhard’s notes (see paragraph 131 above) of the meeting on 11 May 2009 which reflect his understanding of the result of the discussion.   I have already made some observations about the matters recorded in those notes which I do not need to repeat here.  I do, however, repeat that I have no reason to think that these notes are inaccurate in what they do say; and I repeat that I consider it highly unlikely that Mr Reinhard omitted anything of significance from his notes.  In particular, if Mr Tory had effectively communicated to Mr Reinhard that which he, Mr Tory, says he did (see paragraph 187 above), then it would appear in the note.  
258.	The only parts of the note which might be seen as presenting a problem for Mr Reinhard are the third bullet point under the heading “comp model” (as to which see paragraph 140 (vii) above) and his evidence about the value of Ondra (as to which see paragraph 140 (xii) and (xiii) above).   I have set out Mr Reinhard’s explanation of the third bullet point in paragraph 140 (xxviii) above.  His explanation was not shown, in cross-examination, to be other than what he intended the note to record.  Further, it is to be noted that the “partner” appears with a lower case leading letter earlier in the note where Mr Reinhard records “partners bought 1% each themselves” which is clear a reference to the Founding Partners.  I accept his explanation.  
259.	As to the value of Ondra, Mr Tory denies that he said that Ondra might be worth $150 million.  And he says, with some justification I think, that to value Ondra in that way would be wrong in principle.  And he suggests that a person as financially literate as Mr Reinhard could not possibly have believed the $150 million figure to be correct.  I can see how it might be said that Ondra was worth $75 million by reference to the capital invested by the outside investors of $7.5 million to obtain a 10% share of the equity taking into account Ondra’s liabilities including the debt owing in respect of the loans of $7.5 million made by investors.  I can also see that, because they were stapled with the equity, it might be suggested that the loans could be perceived as similar to equity, although that is not without some difficulty.  But even if it were proper to do so, that does not mean that the investors have received 10% of Ondra in return for their total investment of $15 million.  Rather, they have received 10% together with the right to repayment of $7.5 million plus interest.  If one were to view the loan as equity, it would represent a further 10% of the equity so that the investors would be receiving a notional share considerably greater than 10% for their total investment.  The back-of-the-envelope value therefore remains at $75 million.  To put this another way, if the investors had contributed the whole $15 million by way of equity acquisition and had not made a loan at all, they would not have done so for a 10% share.  I do not believe that Mr Tory said that, in his view, Ondra was worth $150 million (even if the loans of $7.5 million were taken out of the balance sheet).  What I can accept, however, is that there was a conversation in which he pointed out that the loan was stapled with the equity and that investors were prepared to risk a total of $15 million in the business in return for a 10% share plus return of their investment of $7.5 million and interest.  But even that does not indicate a value of $150 million.  This, then, is an unsatisfactory element of Mr Reinhard’s evidence, but it does not cause me to doubt the conclusions which I have so far expressed about what he understood. 
260.	Nonetheless, I do conclude that the value of Ondra was discussed and that Mr Tory said it could be worth $75 million.  That is consistent with his letter to Ms Danoux dated 8 April 2009.  And I also conclude that from what he said Mr Reinhard reasonably understood that he would have a share which was worth about $750,000.  This would have reinforced Mr Reinhard’s prior understanding of what he would be obtaining and was inconsistent with the proposition that, on leaving employment, his share could be brought to an end.  Indeed, there was, I find, nothing in the discussion which linked the period during which he would hold his share to the period of his employment.
261.	I am also satisfied that Mr Reinhard was concerned to conduct a due diligence exercise and, in that context, was concerned to know about the investment which the outside investors had in fact made.  He was given the first draft Term sheet; I accept his evidence as recorded in paragraphs 140 x) to xi)  above.  It is a curious feature of the case that Mr Reinhard was not sent, and was not even told about, the subscription agreement which had, by this time, been drafted and formed the basis on which the outside investors actually made their investments.  Mr Reinhard’s evidence is that he asked Mr Tory about any further documentation showing the outside financing and, as recorded at paragraph 140 xvi) above, he was told there was a short agreement in place.  He enlarges on this as explained at paragraph 140 xix) above.  Perhaps the final documentation which Mr Tory referred to was the subscription agreement the draft of which (dated 11 February 2009) I have already referred to at paragraph 96 above which Mr Reinhard had not seen and indeed was not provided with until after this litigation commenced.  There seems no reason to doubt Mr Reinhard’s evidence about this: it would have made perfectly good sense for Mr Reinhard to ask the questions which he said he asked about further documentation; and, as it happens, the response which he says Mr Tory gave was perfectly accurate, namely that final documentation for the investment by outside investors (ie the subscription agreement and associated documents) was in the process of drafting, and that this document was an early draft which did not concern him.  Moreover, it would have been perfectly correct for Mr Tory to have told Mr Reinhard that the subscription agreement did not concern him.
262.	There was, however, clearly also some discussion about the agreement governing the LLP.  Mr Reinhard’s evidence is set out at paragraphs 140 xvii) to xxi) above.  I see no reason to doubt, and accept, what he says as recorded in paragraphs 140 xvii) and xviii).  It is what, if anything, further was said about the partnership agreement where the evidence of Mr Reinhard and Mr Tory is at odds.  
263.	Having rejected Mr Tory’s account of the meeting so far as concerns his explanation of the “notional” share, and the time at which Mr Reinhard could expect to obtain an actual share, I approach Mr Tory’s evidence about his explanation of the draft LLP agreement with a measure of scepticism.  I am satisfied that whatever Mr Tory did or did not say, Mr Reinhard was not aware from their discussion at the meeting on 11 May 2009 that there was in draft form a partnership agreement which was to apply to him from the commencement of his employment and under which his share, as he saw it, (more properly, his interest as a member of Ondra) would automatically come to an end with no consideration being received by him when he ceased to be engaged by Ondra.   Nor was he aware that the obtaining of his share was intended by Mr Tory to be conditional on the completion of the draft LLP Agreement and on his satisfactory performance.  I reject Mr Tory’s evidence that he “made it clear to him that in any event, before he could be appointed a partner, the partnership agreement needed to be finalised”.  And, not having made it clear, all the documentation which Mr Reinhard had seen (including, in particular, the business plan and the first draft Term Sheet) led him to believe, as it would in my judgment have led the reasonable and objective reader to believe, that the share he would obtain was of an enduring nature which would not come to an end automatically or on notice following the end of his employment.
264.	If Mr Reinhard had appreciated that all he was being offered was a share at some time in the future when the Founding Partners thought it appropriate and was one for which he would receive no consideration on leaving Ondra, I am sure, again, that he would have expressed surprise and astonishment to Mr Tory (and would again quite possibly simply have terminated discussions then and there).   He clearly did neither of those things.
265.	I reach those conclusions whether or not Mr Tory actually said that the agreement was “not for him”.  I use the word “agreement” here because it is not entirely clear what documents were actually the subject matter of the part of the discussion in which that comment, according to Mr Reinhard, was made.  Mr Reinhard’s evidence is that he asked Mr Tory about any further documentation showing the outside financing or any other corporate documents.  He did not know, when he asked that question, whether there was any such documentation, let alone that there was a draft LLP agreement in existence which might form part of that documentation.  I find as a fact that Mr Reinhard did ask that question and that he received the reply that the final documentation with the outside investors was still in the process of being drawn up.  I do not think that, from this, he understood, or should have understood, that the documentation relevant to the investors included a draft LLP Agreement.  It is possible that Mr Tory referred to that documentation as not being for Mr Reinhard.  
266.	Mr Reinhard’s evidence is also that, at some time during the discussion,  Mr Tory explained the initial formation of Ondra and his understanding about the status of the other Founding Partners: see paragraph 140 xvii)   above.  I accept that evidence.  On balance, I think that Mr Tory did mention the existence of a draft LLP Agreement but I reject any suggestion that Mr Tory told him that it would, when finalised, apply to him.  
267.	On the other hand, I am sure that Mr Tory did not say that the draft LLP agreement would not apply to him.  That would have been entirely counter to the core ethos which, as I have already said, Mr Tory intended, at least by this stage, should be observed.  He might well have said words which gave Mr Reinhard the impression that the LLP Agreement was not for him; and my conclusion is that, rightly or wrongly, Mr Reinhard did gain that impression.  But that is very different from the unequivocal statement which Mr Reinhard attributes to Mr Tory in his evidence if it is to be taken as a reference to the draft LLP Agreement rather than to the draft subsequent agreement.  My conclusion is that, however much Mr Reinhard has come to believe it, Mr Tory did not say to him in clear and unequivocal terms that the draft LLP Agreement was not for him.  
268.	In summary, I am satisfied that Mr Reinhard did not, immediately after the 11 May 2009 meeting, understand that there was a draft LLP agreement in existence the terms of which would apply to him when finalised.  Nor did he understand that the terms of any existing draft LLP Agreement, or substantially the same terms, would apply to him when, as was always his understanding, he obtained his partnership share on the commencement of his employment.  He did not have an understanding that the share which he would obtain could be taken away from him when he left employment.
269.	Quite apart from what Mr Reinhard himself understood, I am not prepared to hold, on the evidence which I have heard, that a reasonable and objective person in the position of Mr Reinhard would, immediately after the 11 May 2009, have understood that there was a draft LLP agreement in existence the terms of which, or substantially the same terms, would apply to him.  Quite the reverse.  I think the reasonable and objective person would have been under the same impression and had the same understanding as Mr Reinhard, as set out in summary in the preceding paragraph, an impression and understanding gained from the documents which had been provided and by what was said by Mr Tory.
270.	Mr Reinhard’s evidence about the discussion at the 11 May 2009 meeting of his role and title is set out at paragraph 140 xxii) to xxv) above.  I accept his evidence.  It is consistent with his note of the meeting.  In particular, it was known that Mr Reinhard would need to develop his skills as a relationship banker.  I do not think that that was, in the end, a matter of contention.  Rather, the complaint of Mr Tory and Mr d’Angelin is that he did not live up to their hopes and expectations in developing those skills.  I shall consider that aspect  further when considering Mr Reinhard’s claims in relation to his bonus.  I accept his evidence that he was told by Mr Tory that he would not be expected to bring in revenues for the next three years as a relationship banker (in contrast with his contribution to fee income through application of his M&A expertise).
271.	I also accept Mr Reinhard’s evidence concerning the compensation model which I have summarised in paragraphs 140 xxvi) and xxvii) above.  I should record, however, that Mr Tory says that the word “ownership” in the fifth bullet point under “comp model” was not his word; however, I have no doubt that it captures the concept of what Mr Reinhard understood they were talking about.  I should also add that, although it is correct that the “recycling” referred to by Mr Reinhard (see paragraph 140 xxvii) included the dilution of the Founding Partners’ shares, and it may be that Mr Tory said something to Mr Reinhard which referred to such dilution as recycling, I am sure that it had always been part of Mr Tory’s intentions that there would be recycling in the future in the sense that a departing partner would cease to have any interest and would receive no consideration for his share (although this was not clearly communicated to Mr Reinhard and the wording of the business plan in this respect was at best opaque from the Defendants’ point of view).  
272.	Although in my discussion of the 11 May 2009 meeting I have referred to the importance to Mr Reinhard of obtaining a partnership share, I should say something more about what that share was perceived by him to be.   
273.	Mr Callman’s contention is that, by this stage, 11 May 2009, Mr Baldock and Mr Morgan had been admitted as partners.  If that is correct, then in the absence of any contrary evidence, I can only assume that terms of the February 2009 LLP Agreement (the then current governing document) together with the default provisions of the LLP Act and the LLP Regulations applied as between them (although it would be surprising if there had not been an express agreement about their respective shares).  In particular, whatever the understanding about what the eventual LLP Agreement might contain, the Agreement was then only in draft and it was, on Mr Callman’s approach, not an agreement sufficient to exclude the statutory default provisions.  The fact that there were negotiations about the terms of Mr Morgan’s departure in 2010 does not suggest that the exit terms contained in the draft LLP Agreement was seen as a binding obligation at that time.  Accordingly, Mr Reinhard’s share was not restricted to income and it did not automatically come to an end on the departure of a partner nor was there a right for Ondra or any of its members to terminate that share.
274.	Mr Howe makes some submissions about the status and rights of the Founding Partners to suggest that the Founding Partners, other than Mr Tory, did not themselves have the sort of interest which Mr Reinhard now claims for himself.  It is convenient to deal with those submissions at this stage of my judgment.  Mr Howe says that, whatever may have been the Founding Partners’ subjective perceptions as to their entitlements vis a vis each other and Ondra, it does not follow that those perceptions correctly reflected the legal position.  He submits that the Founding Partners operated between themselves on the basis of agreements in principle, and did not concern themselves with the actual legal position.  Thus:
i)	Mr d’Angelin may (or may not) have considered, if you had asked him in, say, early May 2009, that he had a “share” of the firm.  Legally, however, he might only have been entitled to enforce the share reflected in the April 2009 DoV and in the March 2010 Amendment and Withdrawal Deed.  
ii)	Similarly, Mr Baldock and Mr Morgan agreed to join and became Founding Partners in principle in late 2008 and early 2009.  They were then subsequently treated as having become Members “as of” 1 May 2009 and later signed the March 2010 Amendment and Withdrawal Deed confirming this.  It does not follow, according to Mr Howe,  that this is in fact what occurred, as a matter of law: they may well have only truly become Members when they signed the March 2010 Amendment and Withdrawal Deed.
iii)	When Mr Morgan left Ondra, he was paid a sum of money.  He had invested money on joining Ondra and it is said by the Defendants that what he was paid on leaving was repayment of his investment.  Mr Howe submits that, if a dispute about the terms of his departure had arisen, Mr Morgan could have contended that he had invested that money on the terms set out in the subscription invitation which he had accepted by conduct when he paid the money.  The payment represented a reasonable and legitimate compromise of Mr Morgan’s potential claims as an investor.  It had nothing to do with paying him anything for his share of Ondra as a Founding Partner.
275.	As to i) of the preceding paragraph, it is clear that Mr d’Angelin did become a member of Ondra and that he did so on the terms of the February 2009 LLP Agreement, taking over the share previously owned by Mr Tory’s wife.  It was accepted by him that that tiny share was never intended to be his share in Ondra.  I would find it very surprising if Mr Tory and Mr d’Angelin had not determined (Mr Howe would probably submit “in principle”) their respective shares.   Sharing the core ethos, as they did, they no doubt intended to execute, in due course, a suitable LLP agreement, but until they did so, Mr d’Angelin was, from the end of April 2009, a member of Ondra in accordance with the terms of the February 2009 LLP Agreement whatever his other legal rights might have been – for instance to insist on an amendment to the February 2009 LLP Agreement to give him a greater share or to insist on the execution of a new LLP Agreement in the terms, or substantially the terms, of the April 2009 Draft LLP Agreement.  
276.	As to ii), the March 2010 Amendment and Withdrawal Deed recites a verbal agreement to admit Mr Morgan and Mr Baldock as members with effect from 1 May 2009 or later obtaining of FSA approvals (defined as “the Effective Date”).  The operative part of the deed provides for them to be admitted with effect from the Effective Date; I do not know when the Effective Date was, but it had clearly arrived before 31 March 2010 and the way in which Mr Howe puts his submissions is that it was in fact 1 May 2009.  The verbal agreement was not, however an actual admission of them as partners at the time that the agreement was made: that could only happen once they had obtained FSA approvals.   It is not clear, however, that the verbal agreement to admit did operate as an admission on 1 May 2009.  That would depend on the precise terms of the agreement as to which I know nothing.  But it is at least possible that they did become members on 1 May 2009 on the terms of the February 2009 LLP Agreement which was the then governing document.  Whereas an increase in Mr d’Angelin’s share from the tiny amount provided for in the April 2009 DoV would need to be in writing (in accordance with Clause 16), Mr Morgan and Mr Baldock could be admitted without any need for writing and be given their shares accordingly.
277.	But all of that seems to me to be beside the point.  Mr Reinhard knew (and the reasonable person would have known) nothing of this.  All he knew was that there had been a short agreement between Mr Tory and his wife but that from everything he had been told he reasonably believed that the partners were now the Founding Partners (and possibly Mr Kirkwood).  He would have had no idea, at that stage, that anyone might be a member on the terms of the April 2009 Draft LLP Agreement or anything like it because he had not seen it or had its terms explained to him.
278.	The next event of importance was the phone call on 15 May 2009 during which Mr Reinhard indicated to Mr Tory that he had decided to join Ondra.  Although at this stage he had received the April 2009 Draft LLP Agreement, he had not, as I accept, read it.  Accordingly, his decision to join had been based on his understanding of the partnership share which he would obtain as explained above.  He had, however, made some notes in preparation for the phone call and he made some notes during the call. I have already accepted some of his evidence: see paragraphs 144 v), vi), x) and xi) above.  
279.	I also accept the broad thrust of what I have recorded in paragraph 144 vii) above concerning recompense if Mr Reinhard failed to receive a bonus from Goldman Sachs.  Mr Reinhard relies on this as supporting his case that he was promised an immediate share in Ondra which was not limited simply to a profit share.   I do not agree with that.  If the Defendants’ primary contention that Mr Reinhard would only be entitled to a profit share were correct, it would be entirely consistent for the Defendants to have been willing to contemplate an increased profit share as compensation for the loss of bonus since, as everyone hoped and expected, the relationship was not going to be short-term.  However, there does appear to me to be a measure of inconsistency in such compensation being provided by an increased partnership share if, as is the Defendants’ case, Mr Reinhard would only become a partner when his performance was judged satisfactory by the founding partners.  This supports my conclusion that Mr Reinhard was expecting an immediate partnership share (whatever the rights attached to that share might be).
280.	Reverting to the possibility of Mr Reinhard wishing to acquire what he saw as further equity in Ondra, it is common ground that Mr Reinhard asked if he could invest in Ondra in the same way as the outside investors and that he was told that he could not do so because the current round of capital raising was closed, adequate capital having been subscribed.  I do not accept that Mr Tory explained at all the difference between the investors’ shares and the partners’ shares; and I do not accept that he explained at all, and certainly not in clear terms which Mr Reinhard should have understood, that he would have a 1% notional share which would be his share if he became a partner.  Nor do I accept that Mr Tory explained that his salary plus bonus would be no less than his 1% notional share of profit.  
281.	On the other hand, I do not accept that it was part of Mr Tory’s offer that Mr Reinhard’s bonus would be at least equal to his base salary.  I am sure that bonus was mentioned and find that Mr Tory said that bonus would be expected to be as high as base salary: see further at paragraph 144 iv) and v)  above; but I cannot imagine that what Mr Tory said could been taken as a promise that the bonus would reach this level.  
282.	What he said was, at highest, the expression of an expectation and possibly only of a hope.  Indeed, Mr Reinhard says that he was confident about that expectation which was part of the reason, on his case, that he did not push for this commitment to be included in the Contract.  Nor do I think that he assured Mr Reinhard that the projections in the Trajectories were anything other than possible scenarios, albeit that the central case did show a generous level of bonus.  
283.	I have recorded at paragraph 145 above some email correspondence relating to the terms on which other Managing Directors were engaged by Ondra.  I do not think these take matters further.  The emails are consistent with the Defendants’ case about what they intended the contractual arrangements with Managing Directors to be.  And although Mr Reinhard thought that the terms he was being offered were the same as the terms which were applicable to others, he did not know what had been said to them and nor was he told what had been said to them.  The emails do not assist the Defendants’ case.  If anything, they support Mr Reinhard’s case, for they show Mr Tory talking of “ownership”.  The use of that word suggests to me that Mr Tory saw the partners collectively as owning Ondra (which they did) and that the Managing Directors, like the Founding Partners, owned their respective shares.  But that is not to say that the share of an individual should come to an end without payment so that the continuing partners would retain ownership of the whole enterprise, and thus be able to effect the core ethos by providing shares to new incoming partners. 
284.	My conclusion, in summary, is that after the 15 May 2009 phone call, Mr Reinhard’s understanding of what he would be obtaining in terms of remuneration and partnership interest was no different from his understanding before that meeting.  It was, in my judgment, not unreasonable for him to have that understanding.  The reasonable and objective person would have been of the same view.
285.	As has been seen already, Mr Reinhard was sent the draft Contract on 18 May 2009 (although it is not clear precisely when he received it but nothing turns on that).  On 20 May 2009, he called Mr Tory to confirm that he accepted the offer and had only a small number of minor points to address.  A meeting was fixed for 22 May 2009 to finalise matters.  I have already held that Mr Reinhard had not reviewed the document sent to him by Carole Evans on 13 May 2009 (ie the April 2009 Draft LLP Agreement) until 20 or 21 May 2009 and thus had not reviewed it when he stated his intention to accept the offer contained in the draft Contract.  At that stage, therefore, he still reasonably understood that he would be obtaining an immediate 1% partnership share without any reason to think that it would automatically terminate with no consideration on his ceasing to work at Ondra.  Further, he reasonably understood that his remuneration would include the three elements – basic salary, bonus and dividend in respect of partnership share.   Not having reviewed that April 2009 Draft LLP Agreement, he would, quite reasonably, have read the Contract itself as entirely consistent with his understanding (he at least, I am sure, having no idea that there might be any difficulty under English law in being both an employee and a member of an LLP at one and the same time).  
286.	By the time of the meetings on 22 May 2009, Mr Reinhard’s information was different.  He had received and read the April 2009 Draft LLP Agreement and made his two sets of notes in preparation for the meetings (see paragraph 152 above) and he had sent the email dated 21 May 2009 to Mr Tory (see paragraph 156 above).  But although he had read and analysed the Agreement, it is apparent to me that he was unclear about how it related to the draft Contract.  
287.	In particular, the second and third bullet points in the email dated 21 May 2009 show that he was unclear how Clause 3 of the draft Contract operated.  Mr Reinhard wanted to know whether a Deed of Adherence and a Deed of Allocation were to be signed when he signed the Contract; and he wanted to understand how Clause 3 related to the LLP Agreement, wishing to understand how “Partner” as used in Clause 3 related to “Founder Member” in the LLP Agreement.  In raising that second aspect, the background was, he stated, that “Founder Members have certain additional rights and certain additional withdrawal provisions in the LLP Agreement”.  
288.	It is submitted by the Defendants that it must have been clear to Mr Reinhard, even before the meeting on 22 May 2009, from the terms of the April 2009 Draft LLP Agreement which he had received and analysed, that the partnership interest which he was being offered under the Contract comprised only the rights which he would receive as a Member (holding a 1% interest) under that LLP Agreement.  It is said that it can be seen from the email that he knew that at some stage the necessary Deeds would have to be executed and his question about the meaning of “Partner” shows that he knew that he would be affected by the LLP Agreement, his query being about precisely what status he would have under it.  It is said that the page of Mr Reinhard’s notes headed “Questions/Observations Regarding the Ondra Partnership Agreement” demonstrate that he fully understood that the LLP Agreement would apply to him.  In particular, he asked himself whether he would be held harmless and wished to discuss the non-compete provision in his own case.  
289.	Those submissions have considerable force but ultimately I reject them.  I have already explained what Mr Reinhard believed, and reasonably believed, he would be obtaining in terms of remuneration and partnership share following the 15 May 2009 phone call and after the 21 May 2009 meeting.  I have already held that obtaining a partnership share (in the sense that Mr Reinhard perceives such a share) was an important part of what he understood he would obtain under the Contract.  In my judgment, it is clear that, had Mr Reinhard understood the terms of the draft LLP Agreement, which he had received, read and analysed, as defining the partnership interest which he would obtain, his email dated 21 May 2009 would have been very different.  Had he understood the draft LLP Agreement to be the document which defined the rights attached to his share he would have queried it in no uncertain terms.  The draft Contract would have represented a fundamental move away from what he, up to then, thought that he would be obtaining.  He would not have presented the list of points in relation to the offer which he did in the way which he did.  Whether this is actually relevant to the issue of construction, and what a reasonable and objective person in Mr Reinhard’s position would have understood, are different questions to which I come later.  
290.	I do not perceive the issues and questions which he did raise and ask in the email as being inconsistent with that conclusion.  If the email taken by itself is read through the eyes of a person sharing Mr Reinhard’s understanding of what he thought he had been offered and believing that the document he had been sent following the meeting (ie the April 2009 Draft LLP Agreement) was not for him, those issues and question all make some sense.  
291.	I do not consider that this conclusion is affected by Mr Reinhard’s question about what would happen if things did not work out and saying that he did not expect any special financial package. That question was, I consider, directed at the consequences of an early termination of the employment relationship.  Mr Reinhard did not have his partnership share in mind.  It does not appear, in any case, that this issue was discussed at the meeting on 22 May 2009.  
292.	However, the page of Mr Reinhard’s notes headed “Questions/Observations Regarding the Ondra Partnership Agreement” does, I acknowledge, give rise to more difficulty for him.  But at the stage when it was prepared – before the meeting on 22 May 2009 – Mr Reinhard was under the impression, as I have held, that the agreement which had been discussed in the 11 May 2009 meeting was only for outside investors.  Since he had been sent the April 2009 Draft LLP Agreement in response to his request for further documentation in relation to the outside investors, he would have been under the impression that the draft Agreement was not for him.  Mr Reinhard’s focus on the draft LLP Agreement was as part of the financial due diligence which he has described and that, subjectively, he did not appreciate that these were the terms, or substantially the terms, on which a partnership share was being offered to him, either immediately or at some time in the future.  Whether a reasonable person in his position would have reached the same conclusion is a different matter which I come to.
293.	I should explain my perhaps opaque reference in the preceding paragraph to “the agreement which had been discussed”.  Neither the evidence from Mr Reinhard nor Mr Tory has addressed this possibility: 
It was in fact the case that documentation with the outside investors was being drafted.  The pack of documents sent to potential investors contained draft documentation which was not, as I understand it, in a final form ready to be executed.  Although the draft subscription agreement refers to an LLP Agreement, it is not possible to tell from the documents in the bundle whether a draft was included as part of the pack.  I have wondered whether the parties might simply be acting under a misunderstanding, the proverbial ships passing in the night.  Perhaps in answer to his question about further documentation, Mr Tory did have in mind the draft subscription agreement; and perhaps he did, perfectly accurately, describe that as a document for the outside investors and as an early draft which did not concern Mr Reinhard.  But then he sent Mr Reinhard the draft LLP Agreement rather than the draft subscription agreement, and Mr Reinhard therefore took what Mr Tory had said about the documentation intended for the outside investor as applying to the draft LLP Agreement.  
I have wondered if this provides the true explanation.  But it is speculation and was not investigated in cross-examination or submissions.  I must leave it there.
294.	Notwithstanding those conclusions, Mr Reinhard must, in my view, have appreciated that in due course some formal agreement would have to be signed to which he would be a party and he himself recognises that he might have to execute a deed of adherence and a deed of allocation.  Documents of that sort cannot exist in the air, as it were, but must relate to an underlying LLP Agreement.  He must have appreciated that a formal LLP Agreement would need to be executed at some time in order to define with clarity what his membership rights were since the February 2009 LLP Agreement was not adequate to deal with the involvement of the outside investors and was hardly adequate to deal with the participation of Mr Baldock, Mr Morgan or Mr Reinhard himself.  The fact is that he was sent the April 2009 Draft LLP Agreement.  Even if that was “not for me” as he put it, he cannot have thought that his own membership rights would be left entirely undocumented when a formal document was already in draft for the Founding Partners and the investors.  Or, if he did think that, it is not something which an objective and reasonable person could have thought.
295.	The discussions on 22 May 2009 are therefore of great importance.  One question is whether Mr Reinhard understood, by the end of his meetings with Mr Tory and Ms Arnold, that his partnership share was an interest as a member of Ondra under the terms of the April 2009 Draft LLP Agreement or an agreement in substantially similar terms.  Another question is what a reasonable and objective person in Mr Reinhard’s position would have understood.
296.	There are unsatisfactory aspects of the evidence of both sides about what was said at that meeting.   Mr Reinhard has, I have held, got the order of the meeting wrong: see paragraph 172 above.  As a result, he has reconstructed his evidence to fit with that order of events.  In particular, his evidence that Mr Tory told him to take various points up with Ms Arnold (see paragraphs 166 and 167 above) is unlikely to be accurate.  It was not, of course, impossible that this is what Mr Tory said since it would have been open to Mr Reinhard to meet with Ms Arnold again; but so far as the evidence reveals, he did not do so and the important points which he needed answering remained unresolved.  But having said that, it does not much diminish the force of the evidence which he gave.
297.	Mr Tory’s evidence was not satisfactory.  I agree with Mr Callman that, (to use my words), Mr Tory’s recollection of the meeting was not good and was based only on the proposition that the email of 21 May 2009 formed the agenda for the discussion.  I am afraid that this part of his evidence appears to me to be very much reconstruction and is a reflection of what he wished he had said.  I do not accept that Mr Tory told Mr Reinhard that he would be considered in due course for admission as a partner (by which he clearly meant as a member of Ondra).  Nor do I accept that he explained that Mr Reinhard’s salary would be equivalent to the draw that he would receive as a partner: indeed, his witness statement to that effect does not reflect what he says he explained on other occasions to the effect that salary plus bonus was a “floor” so that he would receive the greater of that floor and his notional share of partnership profits.  
298.	As to Mr Tory’s evidence in his witness statement recorded at paragraph 183 above so far as concerns the Deeds of Adherence and Allocation and promotion to the partnership, I reject the contention that it was explained to Mr Reinhard that he would become a partner in the sense of a member of Ondra with a share as such a member only when the Founding Partners were ready to make him one and when the partnership deed was finalised.  He may have said, but it is not necessary for me to decide, that Mr Reinhard would only become a “Partner” (in the sense that that hierarchical title was used within Ondra) when the Founding Partners were ready to promote him to that title.  He may have said that Mr Reinhard would not enter into the two deeds until a later stage; but that is consistent with Mr Reinhard’s own evidence that he was told that there would be nothing for him to sign other than the Contract.
299.	At paragraph 193 above I have recorded Mr Tory’s reaction to Mr Reinhard’s  indication of how he was going to handle his departure from Goldman Sachs. It is this evidence which has caused me to make the remarks which I did at paragraph 231 above. I simply do not believe that this can have been Mr Tory’s reaction. If he had really thought what he now says he thought, he would surely have mentioned his concerns to the other Founding Partners; there is not a hint that he did so. It is also highly unlikely that he would simply have given the benefit of the doubt to a potential recruit whose commitment to the business  might be questionable, especially given Mr d’Angelin’s position that there were plenty of talented young bankers out there who would be very keen to work with him and Mr Tory. It is another reason to treat other parts of Mr Tory’s evidence with some circumspection. 
300.	My conclusions in summary are, on the one hand that, following the 22 May 2009 meeting with Mr Tory and Ms Arnold, Mr Reinhard understood that he was being offered a contract which included the following terms:
i)	the creation of an employment relationship under which he would receive a base salary and bonus;
ii)	the grant of a 1% partnership share which would be immediate.  It was not postponed to some time in the future when the LLP Agreement had been finalised nor was it dependent on some future decision by the Founding Partners to admit him;
iii)	he did not understand that the partnership share would automatically terminate for no consideration if he ceased to work at Ondra or that Ondra or  anyone else would have the right to terminate his membership.  Whether the interest might automatically accrue to the LLP or the other members with a right to payment is, I suspect, not a possibility he considered but if he had done he might have seen the reasonableness of it; however, no-one suggests that as a possible outcome;  
iv)	he understood that there was an existing partnership agreement in place (ie based on the February 2009 Agreement).  He did not know its terms, but he believed it governed the relationship between Ondra, the Founding Partners and possibly Mr Kirkwood.
301.	From then, until Mr Reinhard signed the Contract in September 2009, nothing was said to him which caused him, or should have caused him, to realise that his understanding was mistaken.
302.	On the other hand, my conclusion is that Mr Tory and Mr d’Angelin (and possibly the other Founding Partners, but nothing turns on that) did intend Mr Reinhard to obtain a partnership share (or as I prefer to put it, membership of Ondra) but only on the terms of the April 2009 Draft LLP Agreement or substantially similar terms.  Unfortunately, that was not clearly communicated by Mr Tory to Mr Reinhard.  
303.	I must now state one finding of fact which will be relevant to the misrepresentation claim.  It is that when he signed the Contract in September 2009 (and a fortiori at all times before that), Mr Reinhard understood that he would obtain a partnership share in the sense which I have discussed at length, that is to say, materially, a 1% share which would endure during the period of his membership with there being no unilateral right on the part of Ondra or the other members of Ondra to terminate his membership.  That understanding led him to enter into the Contract when otherwise he would not have done so; I am satisfied from the totality of the evidence which I heard from Mr Reinhard that he would not have entered into the Contract if he had not understood that to be the case.  At this stage, I make no findings of fact about whether Mr Reinhard’s understanding about what he would obtain by way of his partnership share arose as a result of representations capable of amounting to misrepresentation (and, if so, whether those representation gave rise to actionable misrepresentations which may be a question of mixed fact and law).
304.	All of this discussion goes to the subjective understandings of the parties, and in particular of Mr Reinhard.  Although I have spent a great deal of time considering what each of the parties believed (for reasons already explained) the issue is one of construction of the Contract.  The question is not what Mr Reinhard or Mr Tory believed or intended the Contract to mean; it is what an objective and reasonable person would understand it to mean in the context of the matrix against which it is to be construed.  I now turn to that issue. 
Construction 
305.	Mr Reinhard’s claim to a partnership share, a share in both income and capital including goodwill, turns critically on the true construction of the Contract.  The general principles of construction are not in dispute.  Reliance is placed by both sides on the oft-quoted passage (I do not quote it again) from the speech of Lord Hoffmann in Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896 at 912H-913F (although it is to be noted that Lord Hoffmann explained further what he meant by “absolutely anything” which would have affected the way in which the document would have been understood in AG of Belize v Belize Telecom Ltd [2009] 1WLR 1988).  And both sides rely on the summary of the principles given by Lord Bingham in BCCI v Ali [2002] 1 AC 251, at [8]:
“In construing this provision, as any other contractual provision, the object of the court is to give effect to what the contracting parties intended. To ascertain the intention of the parties the court reads the terms of the contract as a whole, giving the words used their natural and ordinary meaning in the context of the agreement, the parties' relationship and all the relevant facts surrounding the transaction so far as known to the parties. To ascertain the parties' intentions the court does not of course inquire into the parties' subjective states of mind but makes an objective judgment based on the materials already identified. The general principles summarised by Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 912-913 apply in a case such as this.”
306.	A fuller statement, but still a summary, is given by Lord Neuberger in Pink Floyd Music Limited v EMI Records Limited [2010] EWCA Civ 1429 (a dispute about the provisions of a commercial contract): 
“16.	Each of the declarations granted below raises a question of interpretation of a provision in a commercial contract. The answer to such a question does not simply depend upon the words used in that provision: it is also dependent on the other provisions of the contract, on commercial common sense, and on the surrounding circumstances (or the matrix of facts) at the time the contract was made. Accordingly, when construing a provision in a commercial document, one should not carry out “a detailed semantic and syntactical analysis of the words used” – per Lord Diplock in The Antaios II [1985] AC 185, 201.
17. 	The ultimate aim of interpreting such a provision is to determine what the parties to the contract meant by it. And that involves ascertaining what a reasonable person would have understood the parties to the contract to have meant. In that connection, we were referred, in particular, to passages in the speeches of Lord Hoffmann in Mannai Investments Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, passim, Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 912F-913G and in Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101, paras 21-26.
18. 	Those well known and important passages demonstrate that while one may proceed on the prima facie assumption that the words at issue mean what they naturally say, they cannot be interpreted in a vacuum. The words must be interpreted by reference to what a reasonable person (who is informed with business common sense, the knowledge of the parties, including of course of the other provisions of the contract, and the experience and expertise enjoyed by the parties, at the time of the contract) would have understood by the provision. So construed, the words of a provision may have a meaning which is not that which they may appear to have if read out of context, or the meaning which they may appear to have had at first sight. Indeed, it is clear that there will be circumstances where the words in question are attributed a meaning which they simply cannot have as a matter of ordinary linguistic analysis because the notional reasonable person would be satisfied that something had gone wrong in the drafting.”
307.	To similar effect, although the decision heralds an even more liberal approach than the earlier cases, is Rainy Sky v Kookmin Bank [2011] 1 WLR 2900.  In that case, Lord Clarke referred to the judgment of Lord Neuberger in Pink Floyd, and agreed with him (see at [14]) that:
“[Mannai, ICS and Chartbrook] show that the ultimate aim of interpreting a provision in a contract, especially a commercial contract, is to determine what the parties meant by the language used, which involves ascertaining what a reasonable person would have understood the parties to have meant.” 
308.	Mr Howe relies on other passages from the judgment of Lord Clarke.  First, after an extensive review of the authorities, he approved the following passage from the judgment of Longmore LJ in Barclays Bank plc v HHY Luxembourg SARL [2011] 1 BCLC 336 at [25]-[26] which “neatly summarises the correct approach to the problem”:
“25. The matter does not of course rest there because when alternative constructions are available one has to consider which is the more commercially sensible. On this aspect of the matter Mr Zacaroli has all the cards …
26. The judge said that it did not flout common sense to say that the clause provided for a very limited level of release, but that, with respect, is not quite the way to look at the matter. If a clause is capable of two meanings, as on any view this clause is, it is quite possible that neither meaning will flout common sense. In such circumstances, it is much more appropriate to adopt the more, rather than the less, commercial construction.”
309.	That passage, and Lord Clarke’s approval of it, need to be put in context.  In the preceding paragraph of his judgment, Longmore LJ identified the two rival constructions describing the one he considered to be correct (overruling the Judge below) as “at least as natural” as the other.  In other words, there were in that case, as Mr Callman submits, two equally good readings of the clause and the Court used a “commercially sensible” test to assist in choosing between the two competing “natural” constructions of the words.  Whether that is the position in the present case, or whether (as Mr Callman submits) the construction for which the Defendants contend requires a serious contortion of the language of the clause, is something I will need to address. 
310.	Mr Howe also refers to Lord Clarke’s approval of the judgment of Lord Mance in Re Sigma Finance Corporation [2010] BCC 40 at [12].  I do not need to include the somewhat lengthy citation of that passage.  Lord Clarke concluded as follows (at [21]):
 “The language used by the parties will often have more than one potential meaning. I would accept the submission made on behalf of the appellants that the exercise of construction is essentially one unitary exercise in which the court must consider the language used and ascertain what a reasonable person, that is a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant. In doing so, the court must have regard to all the relevant surrounding circumstances. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other.”
311.	Before leaving the cases on interpretation, I should mention Mr Howe’s reliance on Chartbrook v Persimmon Homes [2009] 1 AC 1101 at [25] where Lord Hoffmann said this:
“[T]here is not, so to speak, a limit to the amount of red ink or verbal rearrangement or correction which the court is allowed. All that is required is that it should be clear that something has gone wrong with the language and that it should be clear what a reasonable person would have understood the parties to have meant.”: per Lord Hoffmann in Chartbrook v Persimmon Homes [2009] 1 AC 1101 at [25].
312.	That particular passage provides me with no assistance.  It is not to be taken as carte blanche for the Court to adopt whatever construction it considers “fairer” or even “more commercial”.  Lord Hoffmann made those observations in the context of the correction of clear mistakes through the process of construction, as appears from [22] to [23] of his speech.  But, as I observed early in this judgment, the present case is not concerned with rectification or with relief from the consequences of a mistake.  The task with which I am faced is one of construction of a provision which, whilst at best from the Defendants’ point of view, is ambiguous, is not one of which it can be said a mistake has clearly been made.  
313.	I remind myself that, as is well-known and uncontroversial, when construing a document the following matters are inadmissible and irrelevant:
i)	The subjective intentions or understandings of the parties (see e.g. any of the authorities cited above).  Although both sides’ witnesses have given some subjective evidence as to what they thought they were agreeing, that evidence is inadmissible and the question of what the Contract meant, properly construed, is a question of objective intention ascertained in the light of the principles appearing from the cases I have mentioned above.  On construction, I therefore ignore the passages in Mr Reinhard’s witness statement in which he describes what he understood the documents which had been provided to him to mean, or what he allegedly understood from alleged statements made to him by Mr Tory in meetings.  I ignore also (other than in assessing credibility) the parts of the cross-examination of the Defendants’ witnesses in which they were asked about their subjective understandings of the Contract, or the nature or hypothetical consequences of the “ownership share” which Mr Reinhard claims.
ii)	Pre-contractual negotiations: see (Chartbrook, affirming the rule in Prenn v Simmons). Although detailed negotiations over the terms of the Contract (oral or written) are not, therefore, relevant or admissible, this does not mean that all pre-contract communications are irrelevant.  The documents exchanged and factual information given form part of the matrix against which the Contract is to be construed. But matters which were not known by or reasonably available to both parties at the time of the Contract do not fall into that category and cannot form part of that (objective) matrix.  
iii)	Post-contractual conduct: see Whitworth Street Estates Ltd v Miller [1970] AC 583.  Such conduct is not admissible on an issue of construction (in contrast with rectification).
314.	Although that last proposition is, or should be, uncontroversial, its practical application may not be without difficulty.  Mr Howe submits that inadmissible matters include the following:
i)	Post contractual statements that Mr Reinhard was a “partner” (for whatever reason – marketing or otherwise).
ii)	Post contractual statements that Mr Reinhard was an “owner”, whatever that may have meant.  This includes, in particular, the Organisational Chart on which Mr Reinhard has placed reliance in submissions and evidence.  He says that it is obvious that the terms “ownership” and “equity” were used fairly loosely within Ondra in the early days.  He submits that the chart – even though it was apparently submitted to a regulator – was no more than an example of this; and that it is on any view irrelevant to the proper construction of the Contract.  
315.	I agree that these matters are all matters which in principle are irrelevant as direct evidence of the meaning of the Contract.  However, evidence on these matters may help in identifying what Mr Tory and Mr d’Angelin said and did not say to Mr Reinhard in their pre-contractual meetings and what Mr Reinhard could reasonably have understood was being said to him; and to that extent, the evidence is relevant to establishing the matrix against which, on the Defendants’ case, the Contract must be construed.  For instance, if “ownership” and “equity” were used fairly loosely within Ondra, that would contrast with the clear message which the Defendants say was given to Mr Reinhard about the nature of the interest which he would obtain.  
316.	It is principally for this reason that I have gone though a very lengthy fact-finding exercise.  It is also because the dividing line between evidence going to establish the admissible matrix against which a contract is to be construed and evidence going simply to the intention or understanding of the parties is not always a clear one.  In the present case, that dividing line is far from obvious.
Terms applicable to incoming members of an LLP
317.	Both sides have referred to some of the cases decided in the context of traditional partnership law concerning the terms on which an incoming partner joins.  Mr Howe relies on the old decision of Austen v Boys (1857) 24 Beav 598, where, at 606, Sir John Romilly MR stated:
“There is no doubt that if two partners take a third partner without specifying the terms on which he becomes such partner, he has the same rights and is subject to the same liabilities as the two original partners; the terms and conditions of the partnership which bind them bind him, unless a new contract is made between them. So also if the conditions of his becoming partner are partially set forth to the extent that they are not specified and involved by necessary inference therein, he will be bound by the terms of the partnership contract affecting the two original partners with whom he associates himself.”
318.	That passage is quoted in a footnote (1286) in paragraph 10-256 of Lindley & Banks on Partnership (19th ed) where it is suggested that this was strictly obiter and went too far.  The basis for that suggestion appears to be what Lord Lindley himself has said, as quoted in the text of paragraph 10-25: 
“When a person has been admitted into an existing firm, and no express agreement had been made as to his rights and liabilities, the inference is that as between themselves his position is the same as the other partners.   If they are bound by existing articles he will be bound by the same articles, if his conduct justifies the conclusion that he has assented to them…. If the incoming partner has no knowledge of any prior agreement between the others, he cannot be bound thereby for nothing he can have done can be regarded, under those circumstances, as evidence of any assent thereto on his part; and it is upon such presumed assent that the rule in question is founded.”
319.	Mr Howe also relies on the club cases.  For example, in John v Rees [1970] Ch 345, 388D-E, a case concerning the rules applicable to members of the Pembrokeshire Divisional Labour Party, Megarry J stated:
“Certainly I do not think it is necessary to bring home to every member when he joins exactly what the rules of the association are. I do not see why someone who joins a club should not do so on the basis that he will be bound by the rules of the club, whatever they may be: see, for example, Raggett v. Musgrave (1827) 2 C. & P. 556 , where the rules, though accessible, were neither posted up nor sent to members.”
320.	This also reflects the effect of s. 5(1) of the LLP Act, as pointed out above, which states that the mutual rights and duties of members are governed by agreement between the members and only in the absence of agreement are they governed by the default regulations. Where there is such an agreement prior to a new member being admitted, and that member is admitted pursuant to an agreement falling within s. 4(2) of the LLP Act, the new member becomes a member on the terms of the existing agreement between the members in the absence of any express agreement to the contrary.
321.	My own view is that a person becomes a member of an existing LLP on the terms of the LLP agreement which governs the relationship between the existing members among themselves and between the existing members and the LLP itself.  This is subject to (i) any express agreement to the contrary (ii) to any implied term which can be established and (iii) the terms being capable of application to the new member although this may simply be part of (ii).
The rival constructions: 
Mr Reinhard’s construction
322.	Mr Callman submits that the Contract is clear and admits of only one meaning; the Contract certainly has one, and only one, natural meaning, with the Defendants struggling to reach their interpretation in accordance with the established rules and principles of construction.  Although using the language  of an employment contract in clauses 1, 7 and 8, he says that clauses 3 and 4 use very clear and specific words which give an interest which goes beyond employment.  Thus by clause 3, Mr Reinhard was to be “granted a 1.0% share of the partnership” (in fact the clause commences with the words “You will initially be granted”) and “This level of ownership interest” would be reviewed each year in the light of performance.  And by clause 4, Ondra stated that upon finalisation of Mr Reinhard’s exit from Goldman Sachs it would be prepared to “review whether an upwards adjustment to the initial ownership % may be appropriate”.  
323.	One ordinary, and perhaps the most natural, reading of clauses 3 and 4 in the context of the Contract as whole is, as Mr Callman submits, the grant of an actual share in Ondra.  I have already addressed what it means to have a “share” in an LLP.  I have also explained that an “interest” or “ownership interest” relates to such a share rather than to the underlying assets of the LLP and that what is comprised in a share can only be ascertained from the combination of the LLP agreement and the statutory default provisions which govern the various relationships between those involved, that is to say the members and the LLP itself.  So, on this ordinary meaning of the words used in clauses 3 and 4, Mr Reinhard is granted a 1% share (in the sense explained) in Ondra.  
324.	Mr Callman emphasises that Mr Reinhard was “granted” a 1% share of the partnership. This was a “grant” without monetary payment. It was a one-off grant which did not depend on his working for Ondra for any particular period of time (although no doubt the mutual expectation was that the parties were embarking upon a medium to long term relationship).  The grant was part of the consideration for the obligations which Mr Reinhard undertook and for entering into the Contract, that is to say for agreeing to join Ondra.  This is to be contrasted with his being given some sort of additional remuneration from time to time equivalent to what he would have received if he had been a member entitled to 1% of the income profits of the business.
325.	This concept of an “interest in the partnership” is consistent, Mr Callman would say, with how the Investors were treated.  At all times after the making of their investments, the Investors had shares in the sense discussed, shares which were eventually, and accurately, given formal documentary substance in the March 2010 LLP Agreement.  No-one suggests that they did not have equivalent interests before the formal documentation was executed.  Mr Howe has suggested that this is because the Term Sheets and other documents comprising the investment proposal would govern the relationship between Ondra and the Investors once their investments had been made.  That is one explanation.  But if it is right, it shows that it was perfectly possible for persons (whether corporate or individual) to have shares in Ondra before the March 2010 LLP Agreement had been executed.  There is no reason in principle why Mr Reinhard could not have been a member with more than the notional or virtual interests for which the Defendants contend.  
326.	The word “initially” in clause 2 would, Mr Callman says, in its usual meaning suggest “at the outset”, and here, in context, means on joining Ondra and he says that the time of joining is what the word “will” refers to; support for that might be found in clauses 1 and 2 where the use of the words “initial” and “initially” refer to the commencement of the employment, but their use in those contexts makes the reference date absolutely clear.  I do not disagree that this lends some support to his contentions, but it is very slight.
327.	More significantly, Mr Callman points out that the share initially granted  is to be reviewed annually in the light of performance.  And the third sentence of clause 3 envisages a review every two years, starting from the 1 March 2009, for potential election to the corporate title of Partner.  It would be very strange to find in a single provision the sort of review envisaged in the third sentence being carried out every two years from the 1 March 2009 starting date and yet to find that the share “initially” granted was not to be granted until some later, possibly much later date. This is particularly so given the annual review contemplated by the second sentence.  That would, I agree with Mr Callman, be contrary to the most natural meaning of the words used.
328.	Further assistance in the task of construction is to be derived from a consideration of the linkage between the first sentence of clause 3 ending “...a 1.0% share of the partnership” with the opening words of the next sentence “This level of ownership...” Taking the two together almost inevitably entails that the initial share of the partnership is itself being treated as “ownership”.  The word “ownership” is used without any qualification; the ownership is not qualified as “notional” or “conditional” or “virtual”.  I agree with Mr Callman when he says that this would suggest strongly that Mr Reinhard became entitled to an immediate ownership of some sort – not, of course, in the underlying assets of Ondra but rather to a share in Ondra in the sense which I have explained it.
329.	A similar point arises in relation to Clause 4 which also uses the word “ownership”.  Mr Callman suggests, correctly, that this picks up on the discussion which Mr Reinhard had had with Mr Tory about compensating him in the event of loss of his bonus on leaving Goldman Sachs.  He relies, of course, on the use of the word “ownership” as indicating that he would be obtaining a partnership share in the sense which he understood.  
330.	Mr Callman’s conclusion from all of this is that, as a matter of construction, clause 3 of the Contract is an agreement that Mr Reinhard becomes a member with a partnership share on joining Ondra.  This happened at the same moment as his employment commenced as had been agreed in the Contract.  It makes no difference to that conclusion that he was not registered as a member with Companies House (any more than the non-registration of a shareholder in a limited company is determinative of his share ownership).  Nor can the subsequent history of the treatment of other junior partners have made any different to Mr Reinhard’s own status.  The fact that other junior partners entered into deeds of adherence and allocation and formally terminated their employment on 1 December 2011 was a matter between them and Ondra. It occurred well after Mr Reinhard had ceased to be an employee.  Indeed, Mr Callman may well be right in suggesting that this was ‘educated’ by the Defendants’ experience with Mr Reinhard. 
331.	Assuming that Mr Callman is right in his submissions that Mr Reinhard became a Member, it is necessary to address in more detail what rights and obligations his “1% share of the partnership” conferred on him.   Mr Callman submits that Mr Reinhard obtained that share on the terms of the Contract, augmented by the default rules where they have not been ousted by the specific agreement, so that, for instance, his share is 1%, rather than being an equal share as it would be under default rule 7(1).  Mr Callman also says that Mr Reinhard’s remuneration for acting in the business is his agreed salary plus bonus rather than nothing as it would otherwise be under default rule 7(4).   I will have more to say about that later in considering the impact of section 4(4) of the LLP Act. 
332.	The issue, then, is what the terms of the Contract do provide.  Mr Callman’s argument runs like this.:When the LLP was incorporated there were no terms agreed, therefore the default rules applied in totality. When Mr Tory and his wife entered into the 4 February 2009 LLP Agreement, the terms of that Agreement governed the relationships between the Members (Mr Tory and his wife) and between each of them and the LLP with the default  provisions of the LLP Regulations applying to matters falling within those regulations and not covered by the Agreement.  Thus far I agree.
i)	When Mr d’Angelin reached an oral agreement with Mr Tory, Mr Callman says that he did not, at that point, agree to the terms of the 4 February 2009 LLP Agreement and therefore the terms of his membership were governed by the default rules.  I do not agree with that; if the oral agreement – rather than the April 2009 DoV – resulted in Mr d’Angelin becoming a partner, that would, in my view, have been on the terms of the 4 February 2009 LLP Agreement save and insofar as inconsistent with the oral agreement.  If it had been part of the oral agreement that Mr d’Angelin should have an X% share (I have been left completely in the dark about what share he was ever intended to have or in fact obtained under the 31 March 2010 LLP Agreement) and assuming that Mr Tory’s wife had consented to his becoming a Member, the terms on which he was entitled to his X% would, in the absence of some other agreement, have been those provided for by the 4 February 2009 LLP Agreement.  But this is all academic in the case of Mr d’Angelin since, by the April 2009 DoV he in fact became a Member on the terms of the 4 February 2009 LLP Agreement.  It is also academic to consider what rights he would have had to a share greater than 0.0002% since (i) it is entirely obvious that that tiny percentage was never the percentage which either he or Mr Tory ever intended he should end up with (ii) the 31 March 2010 LLP Agreement formalised whatever percentage he was intended to obtain.
ii)	Mr Callman next submits that Mr Baldock and Mr Morgan never agreed to be bound by the 4 February 2009 LLP Agreement and so the terms of their Membership must have been under the default rules, at least until they signed the 31 March 2010 LLP Agreement.  I do not have the material to assess whether that is correct or not.  I do not know the terms of the oral agreement entered into by them; I do not know whether it was in fact effective to constitute them as Members.  Assuming it was effective to do so, then it is highly probable that their oral agreements would have provided for them each to have a percentage share in the LLP; and the terms on which such shares were to be enjoyed may also have been the subject of the oral agreement: I simply do not know whether that is so or not.  Mr Callman asserts that Mr Baldock and Mr Morgan never agreed to be bound by the draft 4 April 2009 LLP Agreement, but there is no reliable evidence whether that is so or not.  Indeed, the only evidence relates to Mr Morgan’s departure from Ondra.  There were discussions about the terms on which he would leave and, in the end, he departed with only repayment of his capital contribution and, in formal terms, this was implemented by the execution of the March 2010 LLP Agreement.   But, as I have said before, the fact that there were discussions suggests that it was not immediately and obviously clear that either he or Ondra were bound by a provision to the same effect as that found in the draft April 2009 LLP Agreement.  
iii)	Mr Callman next goes through the default rules to explain how they apply and how the partnership would work vis a vis Mr Reinhard once he had become a Member.  His conclusion is that Mr Reinhard obtains a 1% share which he holds either in accordance with the terms of the February 2009 LLP Agreement or as a free-standing share, but in each case supplemented by the statutory defaults provisions.  He says that this produces a workable scheme.  I agree with him that the result is a workable scheme.  Equally, the scheme which results from an application of the applicable provisions of the 4 February 2009 LLP Agreement supplemented by the provisions of the Contract and default provisions is also a workable scheme.  In either case, I should note, regulation 7(4) is inapplicable because of the express provision as to payment of salary and bonus contained in the Contract (although I should repeat that I will come later to the impact of section 4(4) LLP Act on these conclusions).  
333.	As part of his argument on construction, Mr Callman addresses the question whether there can be different terms applying to Mr Reinhard from those  which apply to other Members.  Clearly, in my view, there is nothing in principle objectionable to different members of an LLP having different rights and obligations.  It is all a matter of agreement.  The parties can agree anything they like subject to compliance with (a) general principles of contract law and (b) any special provisions affecting an LLP (such as section 4(4) LLP Act).  For instance, different treatment could be afforded to different classes of member when they leave the LLP.  Thus it could be provided that the shares of each class should automatically accrue to the continuing partners, but that one class should be entitled to payment but the other should not.  Or it might be provided that one class should be entitled to share in profits of any nature, whether income or capital, but that another should share only in income profits.  Or one class of member could be entitled to the first tranche of £X profit with the members as a whole sharing any profit in excess of that in stated shares.  
The Defendants’ construction 
334.	The Defendants’ case by the time of closing submissions was that clause 3 of the Contract does not, and indeed cannot, confer immediate Membership of the LLP on the terms alleged by Mr Reinhard.  Properly construed in its context and in accordance with commercial reality, it amounts only to a promise to make Mr Reinhard a Member in due course, on the same terms applicable to all Members in his position, namely substantially in the form as those set out in the April 2009 Draft LLP Agreement; but subject to him executing the necessary documents, including in particular a Deed of Adherence.
335.	The Defendants also say that, on a proper construction of the Contract, Mr Reinhard was entitled in the meantime to have a notional share of the profits, so that he would be no worse off than if he had been a member and drawing such a share.  Mr Howe maintains that this was how Mr Tory and Mr d’Angelin believed that the arrangement should work although, I must add – and I do not think he would dispute – that is not, of course, relevant to the question of construction.  Mr Howe does, however, accept that it is not easy to spell this aspect of their understanding out of clause 3 merely by a process of construction.  It will be apparent from my findings of fact that I doubt that this was in fact how either of them thought the arrangement should work; the evidence shows at best confusion on their part, particularly in the case of Mr d’Angelin and what they now say they understood is very much a matter of reconstruction.  In any case, it is clear, as I have held, that the proposal was not explained to Mr Reinhard or, if it was explained at all, that was not done in a way which he would a have understood. 
336.	The Defendants’ alternative case is that clause 3 was subject to an implied term that any Membership, when conferred, would be on the same terms as applied to all other Members – namely those set out in the April 2009 Draft LLP Agreement, when finalised – although whether that was the version executed in 2010 or the version executed in 2011 is not clear and does not matter.
337.	The construction briefly described above has not always been the Defendants’ case.  Following Mr Reinhard’s claim letter of 26 July 2011, the Defendants’ solicitors responded in two letters.  The first dealt largely with the employment claims.  The second dealt with the partnership share.  It was said that the reason for inclusion of clause 3 in the Contract was that it set out “the notional % interest by reference to which your client’s bonus would be calculated”. This is wholly inconsistent with the way in which the Defendants’ case was pleaded and is now advanced.
338.	As to the pleading, this is found at paragraph 21 of the Re-Re-Amended Defence which is in the following terms.
“21. The proper construction of the reference to ownership interest within the Contract, given the factual matrix set out above, is as follows:
21.1.	Ondra had an intention to admit the Claimant as a New Member of Ondra with a 1% share allocation by the entering by the Claimant into a Deed of Adherence and Deed of Allocation following the entering of an LLP Agreement by the Founding Members substantially in the form of the proposed deed but subject to such amendments to the proposed deed as the Founding Members considered appropriate;
“21.2.	Prior to becoming a New Member, at which point his employment would terminate, the Claimant was to be an employee but to be given a notional entitlement to 1% of the profits of Ondra, such an entitlement being coterminous with his employment;
21.3.	The entitlement to 1% of the profits was to be subject to a lower floor of £200,000 per annum that being the Claimant’s salary entitlement under his contract of employment but that salary was to be set off against any entitlement to profits;
21.4.	A discretionary bonus might be paid, the size of which would be affected by both the performance of Ondra and the personal performance of the New Partner in question;
21.5.	The matters set out above would ensure that the total remuneration as an employee was at least as great as would have been received had the Claimant been a member with a percentage allocation of profits.”
339.	Set out in full in that way, it is not surprising that Mr Howe accepts that it is not easy to spell this aspect of their understanding out of clause 3 merely by a process of construction.  But hard as it may be, that, he says, is the right answer.
340.	The Defendants’ case turns largely on the core ethos of Ondra, which I have explained at length, forming part of the matrix against which the Contract is to be construed and on the explanation, in accordance with that core ethos, of what Mr Reinhard would obtain by way of an interest in Ondra.  My findings of fact, however, lead inevitably to the conclusion that the core ethos (which I accept that Mr Tory and Mr d’Angelin shared) was not effectively communicated to Mr Reinhard at any stage, including during the meeting on 22 May 2009, and was certainly not something which the objective person reading the Contract would have known.  It cannot, therefore, form part of the matrix against which the Contract is to be construed.  Further, Mr Reinhard did not understand from what was communicated to him, that his share would be (i) granted only in the future (ii) on terms that it would come to an end when he left Ondra and (iii) that it would come an end with no consideration becoming payable.  The Defendants cannot, therefore, rely on what Mr Reinhard understood as supporting their case.  In any event, what he understood would go to a claim for rectification by Ondra, if Mr Reinhard succeeds on construction and is not admissible in relation to construction.  
341.	Applying the principles of construction which I have discussed already, Mr Howe submits that it is self-evident that Clause 3 of the Contract cannot be construed as Mr Reinhard claims, so as to confer an immediate “partnership share” on Mr Reinhard.  On the contrary, on a proper construction, it is clear that the Contract did not confer immediate membership, but only a conditional indication of future membership on terms to be settled in due course – namely, those contained in the Draft LLP Agreement, once finalised.
342.	Mr Howe provides a number of reasons for this including the following (some of which I will deal with as I go along):
i)	the Contract is an offer of employment, not a contract setting out membership of Ondra; thus
a)	The Contract is not expressed to be a partnership deed or anything like it.  
b)	An offer of employment is, on the face of it, mutually inconsistent with an offer to join a partnership.  Mr Howe adds that reasonable commercial parties would be well aware of this, a matter I will address later. 
c)	It contains all the usual attributes of a contract of employment and none of the usual features of a deed of partnership.
d)	Clause 3 of the contract anticipated an election to partnership in due course, the initial contractual status being that of Managing Director.  In and of itself this indicated that at the time of joining as an employee, the prospect of partnership was future rather than present. 
e)	The Contract contained detailed provisions regulating the obligations as employer and employee of Ondra and Mr Reinhard but none concerning what on his case would be the more important relationship between the partners themselves.
ii)	The fact that the only parties to the contract are Ondra and Mr Reinhard strongly indicates that the document is not intended in itself to confer Membership.  I do not think that there is much in this point.  It is clear that the Contract was entered into with the consent of all of the Founding Partners.  In any case, under the February 2009 LLP Agreement, it was Ondra which admits a person to membership.
iii)	The context in which the Contract was made included that the parties knew, or can be objectively taken to have known, that:
a)	The core, founding ethos of the firm was that Membership would be conferred only on terms that ownership would be passed down through the generations (plural); and that, in order to permit that, Members would relinquish their interests on leaving, for no consideration.  
This particular point cannot stand in the light of my findings of fact.
b)	There was already a short LLP Agreement in place between the Founding Partners, but it was intended to replace this with a fully worked out agreement in due course.  By the short LLP Agreement, I assume Mr Howe means the February 2009 LLP Agreement as varied by the April 2009 DoV, neither of which Mr Reinhard had seen and the second of which he did not even know about.  
c)	The fully worked out agreement would be substantially in the form of the April 2009 Draft LLP Agreement, with which Mr Reinhard was provided, and which he reviewed in detail before signing the Contract.
iv)	It is also clear that, on any view, the parties cannot have intended to confer an immediate “partnership share” on Mr Reinhard for a number of reasons including the following:
a)	The terms of ownership for which Mr Reinhard contends are wholly inconsistent with the core ethos of the firm, as explained to him orally and described in the pre-contractual documents with which he was provided.  
This point cannot stand in the light of my findings of fact, since the core ethos was not explained in a way which he understood and nor do the pre-contractual documents make this ethos clear.
b)	It is highly improbable that reasonable commercial parties would intend to confer on Mr Reinhard, a potential new Member who was (on any view) joining in a junior position to the Founding Partners and had contributed no capital personally, Membership of Ondra on very substantially better terms than those which applied to Founder Members themselves (as set out in the February 2009 LLP Agreement, as amended).  Yet this is precisely what Mr Reinhard alleges.  
I do not understand why the terms Mr Reinhard contends for are said to be better: Both he and the Founding Partners would be subject to the terms of the February 2009 LLP Agreement supplemented by the statutory default provisions.  I agree that it might seem surprising that the Founding Partners would intend to confer a share of that nature on a person such as Mr Reinhard but I doubt that it can be said to be highly improbable that any reasonable commercial person would do so.  One might think that reasonable commercial parties would make their offer clear.  In any case, Mr Reinhard makes the contrasting point that he would not be likely to move from the sector in which he was already employed and in which he had good prospects of employment even away from Goldman Sachs. 
c)	It is equally improbable that reasonable commercial parties could have intended that Mr Reinhard would become a Member on any terms other than those which would be applied in due course to all the other Members.  Mr Howe refers to the cases on partnerships and clubs which I have already mentioned.  
I do not consider that those cases support this proposition.  They do support the proposition that a person joining a club does so on the basis of the rules of the club applicable to the existing members.  In the present case, that would mean on the terms of the agreement subsisting between those persons who were members of the LLP in September 2009 when Mr Reinhard signed the Contract.  The Defendants need to rely on some other proposition to enable them to impose the terms of the April 2009 Draft LLP on Mr Reinhard.
d)	The terms granted to Mr Reinhard would have left the investors without any means of enforcing the rights in their “Term Sheet” despite Mr Reinhard being aware of those rights.  
It is correct that Mr Reinhard knew of the investment and of the first draft Term Sheet (although he was not provided with or told about the later documents including the subscription agreement).  Accordingly, the only “rights” which he knew of were those disclosed in the first draft Term Sheet.  From that, he knew that the investors were to become members of Ondra and must have realised (or at least, a reasonable person in his position should have realised) that the rights envisaged by the Term Sheet needed to be reflected in the LLP Agreement.  He was clearly concerned about the position of the investors in the sense that he wanted to ensure that they were “locked in” as he put it and this was why he carried out his due diligence.  But equally, he would have realised that the lock-in would be on terms which were not reflected in the existing LLP Agreement between the Founding Partners.
e)	The Membership terms for which Mr Reinhard contends would also have the commercially absurd consequence that Mr Reinhard could have left – or even been dismissed for gross misconduct – after working for one day, and been entitled to a perpetual 1% share of the profits of Ondra, and a 1% share of its net assets on dissolution.  Reasonable commercial parties cannot reasonably have intended such a result. 
Mr Reinhard suggests that this would just represent a penalty on Ondra for making “a hiring mistake”.   And, as already noted, there is a contrasting commerciality point which Mr Reinhard makes namely that he would not be likely to move from the sector in which he was already employed and in which he had good prospects of employment even away from Goldman Sachs if he could be removed from the LLP without compensation as, on the Defendants’ case, he could be even soon after he was hired. This is an important point given the significantly lesser remuneration which Mr Reinhard would receive in the early period (at least) of his new role.
f)	A separate point is that, as is clear from Mr Reinhard’s email of 21 May 2009, he did not consider that this would have been reasonable at the time.  I have already considered what Mr Reinhard meant in saying what he did: he was not referring to the partnership share at all but was considering the financial consequences of his loss of employment.
v)	It is, moreover, impossible for Mr Reinhard to have joined on the terms which he claims, given the fact that Membership of the LLP was governed at the time of the contract by the February 2009 LLP Agreement, as amended.  Accordingly Mr Howe submits:
a)	There was therefore no room for the application of the terms on which Mr Reinhard claims to be a member.  The LLP Agreement determined the Profit and Loss Sharing Percentage and it could only be varied in writing. 
b)	Equally, there was no room for the application of the default terms in the LLP Regulations.  Relations between the Members were governed by the express terms of the LLP Agreement.
c)	Although Clause 10.3 might allow Ondra to admit Mr Reinhard as a Member with the consent of the Members without any writing, he could not be given any entitlement to a share of the profits, as this is fixed by the Profit and Loss Percentage – which cannot be varied without a written instrument.
I reject that submission.  Clause 10.3 permits the admission of a new member by Ondra with the consent of the existing members “on such terms as it considers fit”.  If Ondra considered it fit to admit Mr Reinhard on terms that he should have a 1% Profit and Loss Sharing Percentage, it was in my judgment able to do so (with the consent of the existing members) without the need for a written variation of the LLP Agreement.  
vi)	Mr Howe observes that “Naturally, C relies heavily on a literal interpretation of the words of Clause 3 itself”. He submits: 
a)	The document, although originally based on a general Offer of Employment template prepared by Olswang, was not negotiated between lawyers, and in particular Clause 3 was not drafted by or between lawyers.  It is a document passing between businessmen, and insofar as it attempts to deal with the subject of Membership of the LLP it is not a carefully drafted agreement: it is instead expressed in very short form, using loose and colloquial language.  
I do not attach a great deal of weight to that submission.  The Contract must be construed according to ordinary canons of construction although I bear in mind that it is not a lawyer’s document.  Clause 3 is, however, apparently intended to have contractual force: it appears under the introductory words as part of the employment particulars required by employment law.  And yet, on the Defendants’ case, Mr Reinhard obtained no more than the prospect that, at some undefined time in the future he would be considered for partnership (ie membership) if and when the Founding Partners thought he merited it.  
b)	Even read literally, Clause 3 is ambiguous and unclear, as it states that Mr Reinhard “will” be granted a “1% share of the partnership”.  As to this:
i)	The word “will” could be imperative, but it could also be future.
I agree.  Indeed, there is an element of futurity in it in that Mr Reinhard would not, in my judgment, on any view become a member until the commencement date of his employment, that is to say 1 October 2009.  
ii)	The Contract is plainly an offer of employment; but an employment relationship is generally mutually incompatible with being a partner, or a member of an LLP – which implies that Membership is to be conferred at some future point in time, not immediately, at which point the employment relationship will cease.  I shall deal with this later. 
iii)	The meaning of the phrase “1% share of the partnership” is also inherently unclear, as in the context of an LLP there is no such thing as “a share of the partnership”.  There can only be membership, which will, inevitably, be on terms – which are not addressed in the Contract.
The first sentence is true.  But for reasons already discussed, it is clear that in using this language, the parties were contemplating membership of the LLP carrying with it rights and interests as a member.  The real issue is what those rights and interests were, just as the real question, had this been a traditional partnership, would have been what rights and interests were comprised in the partnership share.   The second sentence is a dangerous submission for the Defendants to make.  If the membership terms are not addressed in the Contract (other than the percentage share which the Contract clearly does address), the statutory default provisions apply once it is accepted that the Contract does give rise to an entitlement to membership upon commencing employment.
iv)	Moreover, as noted above, the parties were aware when they made the Contract that (a) there was already an LLP Agreement in place, and (b) it was intended to replace that with a more detailed agreement in due course.
c)	I agree that Clause 3 is ambiguous for the reasons given.  The essential and critical ambiguity is that the meaning of “partnership share” is unclear.  And so I agree that this is not a case in which I can determine the proper interpretation of the Contract merely by resort to a literal reading of the words, or a “detailed semantic and syntactical analysis of words”.  I must have regard to the commerciality of the matter, in accordance with Rainy Sky.   
d)	Mr Howe’s alternative argument is to say that, if a literal reading is applied, it has a number of bizarre consequences: it would be a case where something has gone wrong with the language which the Court is able to correct as a process of construction.  The most significant of those is one which I have already considered at paragraph iv) e) above, namely that, if Mr Reinhard turned up on the first day and either immediately walked off or was dismissed, he would still keep his 1% share of Ondra in perpetuity.   Mr Howe’s other points go to the consequences of Mr Reinhard having become a member, and the need to unravel matters taking place after he had joined the LLP.  These matters are, however, inadmissible, in my view.  They are, at best from the Defendants’ point of view, conduct which shows what the parties understood the Contract to mean; but post-contract conduct is not an admissible matter on an issue of construction (in contrast with rectification).  
vii)	In summary, Mr Howe says that Clause 3 therefore plainly does not, and indeed cannot, confer immediate Membership of the LLP on the terms alleged by Mr Reinhard.  Properly construed in its context and in accordance with commercial reality, it amounts only to a promise to make Mr Reinhard a Member in due course, on the same terms applicable to all Members in his position, namely substantially in the form as those set out in the April 2009 Draft LLP Agreement; but subject to him executing the necessary documents, including in particular a Deed of Adherence.
Implied term 
343.	If the Defendants do not succeed on construction, they plead an implied term the effect of which is that Clause 3 was subject to an implied term that any Membership, when conferred, would be on the same terms as applied to all other Members – namely those set out in the Draft LLP Agreement, when finalised.

Conclusions on construction
344.	I come now to state my conclusions on construction.  I do so in the first instance ignoring the impact of the LLP Act and the LLP Regulations and then turn to the impact, if any, which those provisions have on my provisional conclusions.
345.	Although, as Mr Howe points out, the major focus of the Contract is on the employment relationship between Mr Reinhard and Ondra, Clause 3 cannot be explained simply as a term of the employment relationship.  It is clearly intended to say something about the LLP itself.
346.	In using the language of partnership, confusion is engendered because a share in a conventional partnership is not the same as membership of an LLP.  In my view, however, it is clear that the parties were not intending to draw any distinction between “partner”/“partnership” and “member”/“membership”.  Clause 3 is saying, in effect, that Mr Reinhard will become a member with a 1% membership share (whatever that may mean: see below).  The reference to “ownership” is a reference to the “share of the partnership” and is thus to be read as the amount of the membership share.  
347.	The reference to “Partner” is to the corporate title within Ondra.  It is not to be read as a reference to “partner” and thus to “member”.  The fact that there will be a review for potential election to the corporate title of Partner says nothing, in my view, about when Mr Reinhard would become a member.  
348.	It is impossible, in my view, as a matter of construction to conclude that Mr Reinhard would become entitled to that share only at some date in the future when the Founding Partners consider that he merits it.  He was, in my judgment, entitled to a partnership share at some time, the question being When?
349.	It is less clear whether the grant of the share is to be postponed to some later time when further documentation is finalised.  The answer to that may depend on whether, taking the Contract as a whole, the rights conferred by the “partnership share” are to be ascertained in accordance with (i) Mr Callman’s primary submission (ie as set out in paragraph 7 and 8 of the Re-Amended Particulars of Claim) (scenario 1) or (ii) the terms of the February 2009 LLP Agreement supplemented by the statutory default provisions (scenario 2) or (iii) the terms (or substantially the terms) of the April 2009 Draft LLP Agreement (scenario 3).  If it is scenario 1 or 2, then contractually Mr Reinhard would, I consider, become entitled to the grant of his share at the commencement of his employment.  The use of the words “will initially be granted” rather than “will initially become entitled to” do not, in my view, lead to a contrary conclusion (although those words might influence the choice of scenarios 1 or 2 rather than scenario 3).
350.	But if it is scenario 3, it can be suggested that Mr Reinhard would be entitled to become a member only when the LLP Agreement had been executed and only upon execution by him of the necessary Deed of Adherence and Deed of Allocation.  The use of the words “will initially be granted” rather than “will initially become entitled to” are consistent with that result.  However, this approach is not without difficulty.  The April 2009 Draft Agreement was, after all, only a draft; the Founding Partners and the investors might not have been able to agree a final draft whatever their expectations were at the time of Mr Reinhard’s recruitment.  There might have been fallings-out or circumstances might have changed making the draft inappropriate.  It is one thing to say that  Mr Reinhard acquired only rights based on the terms of the April 2009 Draft LLP Agreement.  It is quite another to say that he only acquires those rights on execution of the formal documentation: I do not consider that Mr Reinhard’s rights can have been that tenuous and conclude that he was intended to obtain his share upon taking up his employment.
351.	I note in passing that this possibility was given reality in the contract dated 20 March 2009 entered into with Stewart Bennett which expressly provides, in clause 2 that “When you join you will be admitted as a partner to the Ondra Partnership with an initial corporate title of Managing Director” and in clause 3 it is provided that “You will initially be granted a [redacted] share of the partnership”.  This solution is not commercially bizarre or even odd.  That is recognised by Mr Tory himself, it seems to me.  In the phone call on 15 May 2009, when Mr Tory told Mr Reinhard that he would have an initial 1% share, he described Mr Bennett as having slightly more: it does not seem that Mr Tory intended any of the Managing Directors to be treated differently and yet it would seem that Mr Bennett might have obtained the entitlement to his interest on the commencement of his employment.  On what terms he acquired it, if he did acquire it, I do not know. 
352.	If scenario 3 is correct, then the March 2010 LLP Agreement qualifies, in my judgment, as the relevant executed deed, albeit that it was not seen as the final version.  At the very least, Mr Reinhard then had a contractual right to be admitted as a member with a 1% share according to the terms of that LLP Agreement. 
353.	There is, however, a difficulty in relation to consents which may have an impact on the conclusion that, whatever the partnership share was, Mr Reinhard obtained it at the commencement of his employment.  The difficulty flows from the requirement that the consents of the existing members are required for the admission of a new member (which is so whether it is Regulation 7(5) or Clause 10.3 of the February 2009 LLP Agreement which applies).  In my judgment, the consent required is that of the members in September 2009 when Mr Reinhard signed the Contract.  It is implicit in Regulation 7(5) (“consent of all existing members”) and Clause 10.3 (“the consent of each of the Members”) that such consent is obtained from the members at the time of the agreement with the new member to admit him.
354.	The consent of the Founding Partners/Members was in fact obtained. So, to the extent that consents of Mr Baldock and Mr Morgan were needed in addition to those of Mr Tory and Mr d’Angelin, they were obtained.  As to the investors, they had made their investments through the investing companies before Mr Reinhard came on the scene and might therefore be said to be members whose consent was required.  I do not consider that to be correct.  It is clear that the investing companies did not sign any formal documentation until March 2010.  Having signed that documentation, it is entirely academic as between them and Ondra what their legal position was in the period from the date of their subscription to the date of execution of the March 2010 LLP Agreement.  But what can be said with some confidence is that their legal rights would flow from having paid their subscription monies, which they did, on the basis of the draft subscription agreement.  That, in turn, referred to a draft LLP Agreement the form of which, I am entitled to infer, and do infer, was that of the April 2009 Draft LLP Agreement or something very similar.  I doubt very much that the investing companies did become members of Ondra before execution of the March 2010 LLP Agreement; but if they did become members, it can only have been on the terms, or substantially the terms, of the April 2009 LLP Agreement.  Under that Agreement, their consent to the admission of a new Member is not required: see Clause 5.2(A).  The involvement of the investors did not therefore inhibit the Founding Partners from admitting Mr Reinhard as a member.
355.	The position in relation to the other Managing Directors is more problematical.  The Defendants’ case, of course, is that the Managing Directors did not become members of Ondra before they signed the 2011 LLP Agreement.  No-one has appeared before me to argue for any different  conclusion.  If that is right, then their consent was not needed for Mr Reinhard to become a member in October 2009.  
356.	However, if contrary to their case Mr Reinhard was, as a matter of construction of the Contract, to become a member on the commencement of his employment then the suggestion is made that the other Managing Directors mployed under similar contracts, also became members.  Since their employments commenced before Mr Reinhard signed the Contract, their consent was required to his becoming a member and there is no evidence that they did so consent.  That suggestion cannot be quite right: the first Managing Director to be employed could become a member with the consent of the Founding Partners.  If he did become a member, the argument is that the next Managing Director to be employed could not become a member without the consent of the first, and so on.  
357.	I cannot reach a conclusion on whether any Managing Director other than Mr Reinhard became a member before signing the 2011 LLP Agreement.  I do not know the details of what each Managing Director was told before signing his contract of employment and simply cannot judge whether he or she did become a member, whether on the terms of the February 2009 LLP Agreement or otherwise.  This is true even of Mr Bennett whose contract does, I accept, suggest strongly that he did become a member.  What I can say, however, is that if they did become members and did so on the terms of the April 2009 Draft LLP Agreement, then their consents were not required because Clause 5.2(A) was to be one of the terms of that membership.  
358.	In the light of that, I do not consider that it is open to the Defendants to rely on the possible need for the consent of the Managing Directors as an aid to construction of the Contract. If it were the case that one or more of the Managing Directors was a member when the Contract was entered into and if it were the case that they had not given consent, then it would be arguable that the Contract should not be given a construction which resulted in Ondra agreeing to do something which it could not do because it did not have the requisite consent.  But where it has not been demonstrated even on a balance of probabilities (as is the case) that one or more of the Managing Directors was a member, I do not consider that such an argument gets off the ground.  It would, in any case, leave Ondra liable in damages to Mr Reinhard unless it were not to procure his admission to membership on the terms for which he contends.  
359.	Accordingly, in my judgment, as a matter of construction of the Contract, Mr Reinhard was to become a member on the commencement of his employment.  In my judgment, that is in fact what happened in the absence of any proof that any of the other Managing Directors was a member.  And so I reject not only the submission that Mr Reinhard would only become a member as and when the Founding Partners decided that he should but I reject also the submission that he would become a member only when the LLP Agreement had been finalised and executed.  
360.	The questionsthen are these: On what terms was he admitted?  What was the offer which was being made by proffering the draft Contract?  It is clear, in my view, that the only choices are (i) the February 2009 LLP Agreement as amended by the April 2009 DoV and (ii) the terms of the April 2009 Draft LLP Agreement in so far as applicable to him (with perhaps an obligation on him eventually to sign up to a final version in that form or a substantially similar form).  In either case, he obtains a 1% share.  I do not consider that Mr Reinhard can claim to be entitled to a membership interest defining his rights simply by reference to the statutory default provisions but giving him 1% instead of an equal share and allowing him to be paid notwithstanding that he is a member.  In my view the words “partnership share” can only be interpreted as meaning a share under the existing terms (that is to say choice (i)) or a share under an alternative identified constitution (that is to say choice (ii)).  
361.	There is nothing legally heretical in either of those choices.  Quite clearly the offer to be made to an incoming Managing Director such as Mr Reinhard could have been one of immediate membership on the terms of the February 2009 LLP Agreement; such an offer could have been made against the background of an intention to amend the LLP Agreement to reflect the core ethos in the expectation that the incoming Managing Director had indicated that he would be happy to embrace that ethos.  His legal entitlement to his share on that basis would be clear although, if he later declined to embrace that ethos, Ondra and the Founding Partners might have some remedy, perhaps based on misrepresentation, against him.  It would make no difference, in my view, whether Mr Reinhard had seen the February 2009 LLP Agreement or not if the offer was, on its true construction, being made by reference to it.  
362.	But equally clearly, the offer to be made to an incoming Managing Director could have been one of immediate membership, but on the terms of the draft LLP Agreement then in existence, so far as such terms were capable of application, with an agreement that he would sign up to the final form of LLP Agreement either in that form or in a form to substantially the same effect.  Mr Callman submits that this is heresy because Mr Reinhard never agreed to be bound by the document he was sent in May 2009 (the April 2009 Draft LLP Agreement) and did not even see, let alone sign, any later iterations of it.  But that submission, I think, misses the point.  If the offer in the draft Contract is to be construed in the sense of choice (ii), then Mr Reinhard’s acceptance of that offer provides his agreement to be bound by its terms (or substantially similar terms).
363.	Unfortunately, the offer contained in the Contract was not made clearly in one, rather than the other, of those ways (or indeed any other way).  On the one hand, Mr Reinhard knew that an LLP Agreement had been entered into by Mr Tory and his wife although he had not seen it.  He understood from everything which he had heard that the Founding Partners were all partners in (or, as I would say, members of) Ondra although he did not know about the April 2009 DoV.  On the other hand, he knew that Ondra was a start-up business and was provided with a draft LLP Agreement which on its face was apt to deal with the terms on which not only a new member would join but which dealt also with the position of the Founder Members in a way that was wholly inconsistent with their having rights and interests of the sort which Mr Reinhard now asserts.
364.	I have found this a finely balanced decision, but in all the circumstances of the case, I consider that a reasonable and objective person in the position of Mr Reinhard would have understood that what was being offered was membership on the terms of the April 2009 Draft Agreement.  He would have appreciated that the draft was not in final form but would also have appreciated that in its core elements it was how the Founding Partners – the existing members – intended Ondra to operate.  He would have understood that he was not being offered something which was, in one or more of its elements, fundamentally at odds with that draft Agreement.  Mr Howe has identified a number of factors leading to this conclusion.  I have already dealt with and rejected some of them: in particular, I have rejected one of his main arguments, namely the one based on the core ethos as part of the background matrix because I have found that the core ethos was not effectively communicated to Mr Reinhard.  The factors which remain and on which I principally rely are these:
i)	The Contract is an offer of employment, not a contract setting out membership of Ondra (see paragraph 342 i) above and the several sub-paragraphs).  This is relevant because the employment relationship is clearly the predominant aspect of the Contract providing Mr Reinhard with a salary and bonus.  The Contract is not drafted with a focus on the membership element with a provision that Mr Reinhard would, as a member, be entitled to drawings equivalent to his salary and bonus.  The grant of the partnership share was a reward for services and not a capital acquisition in return for a financial investment.  This is a pointer, but only a pointer I accept, to the “partnership share” enduring for the period of the employment.
ii)	As part of that point, it should be noted that the draft contained an obligation (at Clause 6.1) on each of the working Members to make Ondra substantially his sole business activity and to devote substantially the whole of his time to it until his Withdrawal.  That would signal to a reasonable and objective person in Mr Reinhard’s position that the reward which the Contract provided was intended to be conditional on continuing involvement in the business.  This is not to put the cart before the horse ie that Clause 6.1 can only be relevant (the cart) once it has been decided that the draft Agreement defines the “partnership share” (the horse).  Rather, the reasonable and objective person would see a consistency between the employment aspects of the Contract and the membership aspects. 
iii)	The Contract contained detailed provisions regulating the obligations as employer and employee of Ondra and Mr Reinhard but none concerning the important relationship between the members themselves.  It would be surprising if an outsider, having no existing relationship of trust and confidence such as existed between the Founding Partners, was to join an LLP on the vague and general terms which would apply if the relationship was governed by the February 2009 LLP Agreement and the statutory default provisions.  In contrast, if the terms of the April 2009 Draft LLP Agreement govern the relationship, the detailed provisions are there for all to see.
iv)	This was a start-up business as was well-known to Mr Reinhard and would have been known to the objective potential member. A reasonable and objective person would anticipate that the formal constitution might not have been completed; and if he did not anticipate it, he would have known, from receipt of the April 2009 Draft LLP Agreement that the documentation was not in fact complete.  Mr Reinhard knew that there was a LLP Agreement between Mr Tory and his wife, but he had not seen it and did not know its terms.  The reasonable and objective person is not to be treated as having a greater understanding of the Agreement.  Mr Reinhard assumed that the other Founding Partners were partners/members but he knew nothing about the terms on which they had joined.  Mr Reinhard must have appreciated – certainly a reasonable and objective person would have appreciated – that further documentation would be put in place.  Subject to the point that, on his case, he was told that the agreement did not concern him, it is, I think, obvious that an incoming Managing Director would appreciate that he was not being offered a share other than in accordance with the provisions of the draft with which he had been provided.  
v)	Further, the reasonable and objective person would be more likely, I consider, to pay more regard to a document with which he had been provided (the April 2009 Draft LLP Agreement) than to a document with which he had not been provided (the February 2009 LLP Agreement) but of whose existence and purpose he knew.  The reasonable and objective person who believed that he was contracting on the basis of the February 2009 LLP Agreement would surely have asked to see it; and that is even more likely given that he has been provided with the April 2009 Draft LLP Agreement.  The reasonable and objective person, knowing of the existence of the February 2009 LLP Agreement and of the April 2009 Draft LLP Agreement would not have thought that he was being offered membership on the basis of the default statutory provisions, with only the quantum of his share being an agreement displacing the default provisions.
vi)	The reasonable and objective person would have appreciated that the April 2009 Draft LLP Agreement was intended to provide for the terms on which the investors would participate.  Indeed, even Mr Reinhard appreciated that.  The reasonable and objective person would have expected that the offer of membership which was being made to him should be consistent with the terms on which the investors were to participate.  Although the rights and interests of the Founder Members and new working members under the draft Agreement are significantly different from those of the outside investors, the draft LLP was a comprehensive document embracing the rights, interests and obligations of all members and it is not possible to divorce the two sets of interests, rights and obligations.  The reasonable and objective member would not have understood that the agreement which clearly was of importance to the outside investors was somehow no concern of his.  
365.	The objective person could only have come to a different conclusion if he had thought that the draft he had received was simply some sort of a discussion document, or a document containing proposals for a new approach to the governance of Ondra.  But he would clearly have known – and Mr Reinhard’s own notes make clear that he appreciated – that under those proposals, his membership could be terminated on the cessation of his employment.  If Mr Reinhard’s construction is correct, he would have been able, once he had become a member, to refuse to have anything to do with the proposals and to have blocked them.  I do not consider that the objective person could reasonably have considered that this was what was being offered to him in the context of a start-up business and the recruitment of new Managing Directors.
366.	Further I reject Mr Callman’s argument, attractive as it is for its simplicity, as set out at paragraph 332 above.  The error in that argument, in my view, is that it fails to recognise what the terms of the offer actually were.  It does not address the point that the “partnership share” must relate to “membership” and that the rights attached to membership can only be found by reference to the relevant agreement supplemented by the statutory default provisions.   This is not a case of persons coming together for the first time to form a new enterprise in the form of an LLP when the only agreement is that each of them should have a particular share.  In such a case, the agreement within the meaning of the LLP Act is very limited and the statutory default provisions will fill the gaps.   
367.	In contrast, in the present case, as I have said, the choice for the identification of the “partnership share” is between the terms of the February 2009 LLP Agreement and the terms of the April 2009 Draft LLP Agreement.  And for the reasons just given, the choice comes down in favour of the latter. 
368.	Mr Howe has made a further argument, namely that Mr Reinhard needed to execute Deeds of Adherence and Allocation before he could become a member.  In my judgment, there was no need for him to do so.  This is because, on the construction which I consider to be correct, there is no pre-existing LLP Agreement in terms of the draft (because it is only a draft) to which he could adhere or in respect of which there is an allocation requirement: rather the Contract resulted automatically in membership.  Instead, his admission is to be effected pursuant to the terms of the February 2009 LLP Agreement but in accordance with the terms of the April 2009 Draft LLP Agreement insofar as applicable 
369.	There is one further comment I would make.  It is that it may be that Mr Reinhard was under an obligation to execute an LLP Agreement in the form of the draft or substantially in that form, when eventually ready for execution.  This, in my view, would have been the March 2010 LLP Agreement.  He was never offered the opportunity to execute it.  The fact that he did not do so cannot take away his membership rights.  In any case, it is quite possible that he did not need to execute it since he would be bound by Clause 7.2 of the April 2009 Draft LLP Agreement dealing with amendments with the consent of Members holding a majority of Voting Interests.  
370.	I have not overlooked the parties’ arguments concerning the uncommerciality of each rival construction.  
371.	I do not consider that either construction has consequences which make it uncommercial and thus to be rejected.  It is true that Mr Reinhard’s construction means that he might have left Ondra soon after joining and yet would retain his 1% share.  That is true, but the commercial reality is that that was very unlikely to happen; but if it did happen, in the short term, the commercial reality, again, is that Mr Reinhard and Ondra would reach some sort of severance deal at a time when Ondra’s business was loss making.
372.	But against that has to be measured the disadvantage to Mr Reinhard of the construction for which the Defendants contend. It is not simply the absurdity (I would go so far as to put it that high) of the suggestion that clause 3 of the Contract means no more than that Mr Reinhard will be considered for a partnership share (in contrast with election to the title “Partner”) at some time in the future when the Founding Partners consider he merits it.  Putting that point aside, Mr Reinhard suffers the disadvantage that his engagement would be capable of being terminated on three months’ notice and he would then have to leave with nothing.  It is no less commercially absurd to think that Mr Reinhard would have left a good position at Goldman Sachs (with no other position to go to) in order to join a start-up venture from which he could be dismissed without cause with that period of notice than it is to think that Ondra would not have offered him a position which would have enabled him to leave and at the same time retain his share.
Implied term
373.	I will deal with this very briefly, although I have had substantial submissions both on the law and its application to the facts in the present case.   In the light of the construction which I consider to be correct, there is no need for, and no scope for the application of, an implied term.  There is simply no need to imply a term for which the Defendants contend because it would add nothing to the result of the construction which I have held to be correct.  The important practical point is that Mr Reinhard’s share is held upon the terms applicable to the share of a New Member and thus effectively comes to an end following the appropriate period of notice following a Withdrawal Notice.   As to that, I am not presently aware whether such a notice has been served on Mr Reinhard to protect against the possibility that he might, contrary to the Defendants’ submissions, be held to have become a member.
374.	If, contrary to my judgment, Mr Reinhard’s construction were to be preferred, it is not easy to see how the term of which the Defendants contend could be implied.  The very factors which would lead to the implication of such a term ought already to have lead to rejection of Mr Reinhard’s construction.  
Section 4(4) LLP Act
375.	For reasons already given, Mr Reinhard could not, in English law, be both an employee and a member with a share of that nature.  On the construction which I favour, ignoring the effect of section 4(4) of the LLP Act, the Contract appears to provide precisely that.  Something must therefore give way.  In theory there are (at least) the following possibilities:
i)	He became an employee subject to all of the provisions of the Contract relating to employment but did not become a member in which case either 
a)	Clauses 3 and 4 are to be totally disregarded or
b)	Clause 3 and 4 are to be given some effect.
ii)	He became a member with a 1% share but did not become an employee in which case either 
a)	the provisions of the Contract relating to the employment relationship are to be totally disregarded or
b)	those provisions are to be given some effect.
iii)	He became an employee subject to all of the provisions of the Contract relating to employment but did not become a member at the time when he commenced his employment.  He was entitled to become a member at some later date.
376.	I have not heard argument focused on this point.  The arguments which I did receive were really directed at whether section 4(4) had any scope for application at all.  Mr Callman said it did not; Mr Howe said it did with the result that the construction for which he contended should prevail. Before deciding on the final impact of section 4(4), I consider that I should hear further submissions on the basis of the conclusion on construction which I have reached ignoring section 4(4).  It may help if I give some brief indication of my current thinking.
377.	The choice it seems to me is between possibilities i) b) and ii) b) and that choice cannot be dismissed.  In favour of i) b), the overwhelming “flavour” of the Contract is the creation of an employment relationship with the grant of a partnership share seen as part of the reward of that employment.  Another factor is the use of the language of partnership which is strictly inapposite.  
378.	In those circumstances, rather than reject clauses 3 and 4 as incompatible with the rest of the Contract, one approach would be to construe “share in the partnership” in a way that does not give rise to a right to membership but gives Mr Reinhard a right to receive certain additional remuneration.
379.	On that basis, Mr Reinhard obtains by way of additional remuneration during his period of employment precisely the same as he would obtain from the 1% share of profits to which he would be entitled as a member were he able to be a member. 
380.	On the other hand, in favour of ii) b), it can be argued that the economic effect of the Contract could best be given effect by giving effect to the intention to create membership with the provisions for payment of salary and bonus being read as provisions for remuneration of Mr Reinhard as part of the agreement envisaged by section 4(2) LLP Act.  Other provisions of the Contract relating to the terms of the employment which it envisages can still take effect as a matter of agreement between Mr Reinhard and Ondra but are not to be categorised as employment obligations.
381.	The difference in outcome between these solutions is this: as a member in accordance with the terms of the April 2009 Draft LLP Agreement, Mr Reinhard would retain his share until the expiry of a Withdrawal notice following the cessation of his employment whereas, as an employee, his remuneration would cease either upon the termination of his employment or, perhaps, after a period equivalent to the minimum period of a Withdrawal Notice under Clause 5.5 of the LLP Agreement.  
382.	There may be other solutions which Mr Reinhard or the Defendants would say better reflects the moulding that needs to be carried out.
2% Share
383.	Mr Reinhard claims that his share was increased to 2% in 2010.  There is no doubt that it was.  But there is no reason, in my judgment, to think that the increase was on terms different from the original grant.  I do not consider that the effect of the grant of the additional 1% can be taken as admitting Mr Reinhard to membership and thus, in the light of section, 4(4) LLP Act, bringing an end to his contract of employment.
3% Share
384.	Mr Reinhard claims that his percentage share should have been increased from 2% to 3% during the course of 2011.  It was not.  I deal later with this claim by Mr Reinhard, but if he is right that he should have been given a larger share, he would have received it on the same terms as the 2%.
Remedies 
385.	I leave open the question of remedies, if any, which Mr Reinhard might have as the result of my conclusions.  I am not at all clear what, if any, remedy he might have.  It may depend on the correct approach to the effect of section 4(4) discussed above.  Thus, if possibility ii) b) is correct, Mr Reinhard is entitled to his share (be it 2% or 3%) which would, it is strongly arguable, terminate only pursuant to a Withdrawal Notice (Clause 5.5 being one of the terms of his “share of the partnership” within Clause 3 of the Contract).  I do not know if such a notice has been served.
Misrepresentation
386.	Mr Reinhard has an alternative claim if he does not succeed in establishing a grant of partnership share (giving rise to his membership of Ondra) at the commencement of his employment contract.   It is a claim for negligent misrepresentation under section 2(1) Misrepresentation Act 1967 (“MA 1967”) or, in the alternative at common law. It relates to two representations. 
i)	A representation that he was being given a partnership share. This part of the claim is in the alternative to his claims that he has a partnership share or that he should be compensated for the failure to give him a share (ie damages for breach of a contract under which he was to be, but was not in fact, granted a share).
ii)	A representation that his level of bonus would be at least equal to base his salary. 
i) Partnership share
387.	The pleaded case is that it was represented to Mr Reinhard prior to joining Ondra that upon joining he would be granted a share or interest in Ondra.  This is clearly to be read as a reference to a partnership share as described in paragraph 8 of the Re-Amendment Particulars of Claim namely an entitlement as a member to (i) 1% of the net proceeds of sale of Ondra as a going concern (ii) 1% of the surplus assets on a winding up and (iii) 1% of any sums paid out in respect of income or capital profits.  The pleading also makes clear at paragraph 19 Mr Reinhard’s case that he could not cease to be a member other than by agreement between all the members or if he gave reasonable notice to that effect under section 4(3) LLP Act.  It is apparent, therefore, that the partnership share referred to in the pleading is one which cannot be terminated unilaterally by Ondra.  Paragraph 38 of the pleading claims that, if Mr Reinhard did not become entitled to a partnership share, then the representations on which he relies were false.  In my view, reading these paragraphs together, the pleading is wide enough to embrace an argument that there was a representations by Mr Tory to the effect that Mr Reinhard would become a member and that, implicitly, that would be on terms which did not allow for the termination of his membership (and thus of his partnership share) other than by agreement or on notice from Mr Reinhard.
388.	Let me get section 4(4) LLP Act out the way at the outset.  I have held that, ignoring the Act and as a matter of construction, Mr Reinhard would have become a member with a 1% share on the terms of the April 2009 Draft LLP Agreement.  The only reason why he might not actually receive that share is because of the impact of section 4(4) ie if possibility i) b) is correct.  If that were the only reason why the representations which, on Mr Reinhard’s case, were made by Ondra, were not fulfilled, then I do not consider that he could possibly have a claim based on misrepresentation.  I do not consider that Mr Reinhard could rely on the impact of the LLP Act on the Contract, the terms of which he knew and agreed, as giving rise to a misrepresentation by Ondra when it turns out that their common intention was frustrated.
389.	Further, jumping ahead, I reach the conclusion that Clause 21 of the Contract (as to which see paragraphs 400ff below) does not provide the Defendants with a knock-out blow.  
390.	So, leaving section 4(4) aside and eliminating Clause 21 as a defence, my conclusion on construction would have the result that Mr Reinhard was granted a share in Ondra.  In terms of the pleading,  my constructions result in his having while he was a member each of the items listed in paragraphs (i) to (iii) of paragraph 387 above.  
391.	Whatever the position might be on the pleadings, the submissions made by Mr Callman, and responded to by Mr Howe, have focussed on the scenario under which Mr Reinhard was not entitled, as a matter of construction, to a share at all (or at least not until finalisation of the LLP Agreement) but would be entitled to a notional share.  Thus in paragraph 242 of his written closing, Mr Callman says that, should I find that Mr Reinhard was not given a partnership share under the Contract, then the representations that he would be given a partnership share must have been false.: this was because, in Mr Callman’s submission, Mr Tory was very clear, in his own mind, about Ondra’s core ethos and that he intended to grant only a notional share rather than a partnership share, and yet, on Mr Reinhard’s case nonetheless represented that Mr Reinhard would obtain a partnership share.  
392.	Mr Callman has not really addressed, in the context of the misrepresentation claim, the possibility that Mr Reinhard might become a member on the commencement of his employment, but would become entitled only to a share which was terminable on his leaving employment.  I do not criticise him for that.  He could not, of course, have known what answer I would give on construction and the one which I have decided is correct is not one which either side embraced, representing as it does something of an intermediate position between their favoured constructions.  Nor has he addressed – he could not do so before knowing my findings of fact – whether what I have held to have been represented by Ondra’s pre-contractual documentation and what I have, and have not, held Mr Tory to have said or implied amounts to actionable misrepresentation.  Let me give two examples:
i)	Mr Reinhard’s case was that Mr Tory told him that Ondra might be worth as much as $150 million and that Mr Reinhard’s share might therefore have a value of $1.5 million.  I have rejected that, but I have held that there were discussions during which Mr Tory said that Ondra might be worth as much as $75 million so that Mr Reinhard understood his share could have a value of around $750,000.  
ii)	Mr Reinhard’s case was that Mr Tory expressly told him in clear terms that the April 2009 Draft LLP Agreement was not for him.  I have rejected that, whilst at the same time being of the view that what Mr Tory did say left Mr Reinhard with that impression.  
393.	These, and other examples which could be given, show that Mr Callman has not had the opportunity properly to present Mr Reinhard’s case on misrepresentation in the appropriate factual context.  Although in many cases it is right to expect a person claiming that he has acted on the basis of a misrepresentation to make good his case on the basis of different factual conclusions which the judge might make, the present case is not one where that could have realistically been expected of Mr Callman.  The permutations and combinations of different outcomes of both fact and construction were legion and could not reasonably all be dealt with.  
394.	My conclusion is that I should receive further submissions on this aspect of the case in the light of my findings of fact.  In this context, I have left open the question whether Mr Reinhard’s understanding about what he would obtain by way of his partnership share arose as a result of representations capable of amounting to misrepresentation and, if so, whether those representation were actionable misrepresentations.  If the parties consider that I need to make further factual findings (on the evidence as it stands) in order properly to address the misrepresentation claim, then they should indicate what further findings they invite me to make.  I will then consider whether or not to make any further findings of fact.  
395.	In any case, if the misrepresentation claim is pursued, I would like to receive submissions about what follows, if anything relevant does follow, from the fact that any misrepresentation may have been corrected in the Contract.  I say “may” because the Contract was certainly ambiguous even though I have resolved the ambiguity in the way which I have.  That may not be good enough to displace the misrepresentation, if any, and its impact.  In this context, the decision in Peekay International Ltd v Australia & New Zealand Banking Group Ltd [2006] EWCA (Civ) 386 needs to be addressed; and see Chitty on Contracts (31st ed) vol 1 at 6-042.
ii) Bonus
396.	The second alleged misrepresentation is that Mr Tory told Mr Reinhard that his level of bonus would be at least equal to base his salary.   I reject this allegation.  It is to my mind virtually inconceivable that Mr Tory would have said anything that could reasonably have been taken as a firm commitment that the bonus would be of this amount.  At the very most, Mr Tory might have said something to the effect that he hoped or expected that the bonus would be of that amount.  But it is not pleaded that Mr Tory gave such an indication without believing it to be an indication which he could not properly have given.  If, one asks, Mr Tory intended to give any such commitment – so that the commitment ought to have appeared as a term of the Contract – why was Mr Reinhard not simply given a larger base salary?    There may be many answers to that question, but one of them is that, as the membership dividend went up, the bonus would gradually play a less important part in the overall remuneration.  The bonus was, I am sure, intended to be genuinely discretionary and I consider that Mr Reinhard should have realised that.
397.	Further, I am not satisfied that Mr Reinhard placed any reliance on what was said about the level of bonus.  His own evidence is (i) that he knew before he signed it, that the Contract did not contain any such provision and (ii) that he positively decided not to raise it because (a) he trusted Ondra and, importantly, (b) he formed his own view on the basis of the figures that he had seen that profits would support this level of bonus.
398.	Moreover, he did not complain when he received his first, 2010, bonus that it was not in accordance with his supposed entitlement, for instance by saying he was willing to accept a smaller bonus than his entitlement for the good of the firm.  In cross-examination he accepted that the bonus did not cause him “any major issue” and that he “accepted the bonus amount”.  He did not make the point when he received his 2011 bonus, although he did make lots of other complaints about its size.  Although post-contractual events are not admissible in construing a contract, I see no reason why post-contractual events should not be admissible to support or refute a suggestion that the contract was entered into as the result of a misrepresentation.
399.	I address in a moment the question whether Clause 21 satisfied the test of reasonableness, but whether or not it does, its very presence in the Contract is supportive of the Defendants’ case in relation to the alleged misrepresentation about the level of bonus because it suggests that Mr Reinhard did not rely on any such representation.  I agree with the way Mr Howe puts it:
i)	Mr Reinhard was aware that the proposed contract contained an express term which contradicted his alleged representation; 
ii)	he was aware that by Clause 21 he expressly agreed that he had not relied on any such representations; but
iii)	he chose to say nothing about the matter, and signed the Contract anyway.
Clause 21 of the Contract
400.	Clause 21 of the Contract provides as follows:
“This letter replaces all previous written or oral agreements between you and Ondra.  You confirm that you are not entering into this letter in reliance upon any oral or written representation made to you by or on behalf of Ondra.”
401.	The Defendants rely on this in an attempt to defeat both misrepresentation claims.  Mr Callman submits that this “non-reliance” provision is of no effect because it is not a fair and reasonable term within the meaning of section 11 Unfair Contract Terms Act 1977 (“UCTA 1977”) and so is displaced by section 3 MA 1967.  The requirement of reasonableness in section 11 is that it is: 
“a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made.”
402.	In my judgment, clause 21 does not pass the test of reasonableness.  It is to be noted that the test is whether the term is fair and reasonable and not whether its application to the particular facts in question is reasonable.  The following matters are central to my decision on this aspect of the case:
i)	The clause is very widely drafted and seeks to exclude liability for all pre-contractual misrepresentations (at least insofar as they are not fraudulent).  The clause would cover very serious misrepresentations had they been made eg a clear representation that the April 2009 Draft LLP Agreement was not for Mr Reinhard and that he need not be concerned with it or a clear representation that Mr Reinhard would obtain a share which did not come to an end on the termination of his employment.  I do not consider that a clause which covers matters as important as that can be said to be fair and reasonable.
ii)	Whilst Mr Reinhard was an experienced M&A banker, there is no reason to assume that he would have been familiar with contracts of this sort; and quite clearly he was not in fact familiar with them.  
iii)	Clause 21 was drafted on behalf of Ondra.  It was its standard form as Mr Tory explained.  
iv)	Clause 21 was not specifically negotiated.  It was not even brought to Mr Reinhard’s attention, as Mr Tory accepted in cross-examination.  Mr Reinhard was not aware nor was he made aware of its effect or its consequences. 
403.	Quite apart from those factors, section 3 MA 1967 places the onus on Ondra to show that clause 21 satisfies the requirement for reasonableness in section 11 UCTA 1977.  Although Mr Howe has made submissions in relation to the reasonableness of clause 21 in relation to the alleged misrepresentation about the level of bonus, he has not made any submissions about clause 21 in the context of the alleged misrepresentation about the partnership share.  Nor has he made any submissions about the nature of clause 21 or its potential for wide application other than to assert that a term of this nature is both fair and reasonable.  I accept, of course, that such a clause can be fair and reasonable (as a term to much the same effect was held valid in Axa Sun Life v Cambell Martin [2011] 2 Lloyd’s Rep 1 at [63] – [66] (Stanley Burnton LJ) and at [108] (Rix LJ), a case to which Mr Howe referred).  But on the facts of the present case, the Defendants have not, in my judgment, fulfilled the onus placed on them by section 3 MA 1967.   
404.	Mr Callman also takes a pleading point.  He submits, correctly, that the reasonableness of clause 21 has not been pleaded by the Defendants, nor have they provided any evidence to the effect that clause 21 was fair and reasonable.  This pleading omission is, he says, fatal, referring me to Papa-Johns (GB) Ltd v Doyley [2011] Lexis Citation 92 at [259].  The pleading point was taken in Mr Callman’s opening skeleton argument.  Mr Howe does not deal with it in his written closing and, so far as I can recollect or determine from the transcript, he has not dealt with it there either.  He has certainly not sought to amend.  Although different minds might take different views about whether clause 21 is fair and reasonable, it is, I think, clear that it is not so obviously fair and reasonable that the onus cast on the Defendants is so slight that the point does not need to be pleaded.  This is another reason for rejecting the defence to the misrepresentation claims that clause 21 is fair and reasonable and satisfies the reasonableness requirement of section 11 UCTA 1977.
Claim to 3% partnership share
405.	Mr Reinhard’s case is that Ondra failed to consider whether his partnership share should have been increased from 2% to 3% in 2011. Clause 3 of the Contract provides that: “… This level of ownership interest will be reviewed each year in the light of your performance…”.   This claim is put on the basis of an express contractual obligation to consider an increase in his partnership share on an annual basis and an implied obligation to exercise the discretion rationally and not capriciously.  Further, it is contended that any proper exercise of discretion would have resulted in an increase being awarded.
406.	Ondra accepts that it had an obligation to consider an increase in the partnership share in the light of Mr Reinhard’s performance and exercise that discretion properly, but it is denied that there was a failure so to act or that any rational exercise of discretion would have resulted in the grant of an increase in the partnership share.  The Defendants submit that, as at the date of his dismissal on 3 June 2011, Mr Reinhard had been employed for less than two years and there had already been one increase in his partnership share. Thus no such contractual obligation to consider had in fact accrued.   I note that the Defendants’ acceptance of their obligations is couched in terms of an increase in Mr Reinhard’s notional share, it being their case that he had no actual share.  I do not imagine that, in the light of my findings, they would contend that they would dispute that Ondra had a similar duty in relation to the actual share.  
407.	On this timing issue, Mr Callman points out that the first review (after which Mr Reinhard’s share was increased from 1% to 2%) was carried out in the spring of 2010 (probably in late March or early April).  He says that the Defendants’ case cannot be correct: a review after early April 2011 (and certainly one as late as September 2011, the second anniversary of Mr Reinhard’s employment) would have been more than one year later than the previous review and this would be a breach of clause 3.
408.	The answer to this timing dispute turns on the meaning of “each year in the light of your performance”; and in construing that phrase, it needs to be remembered that it appears in the same clause as the second sentence under which “Every two years, starting from 1 March 2009, Managing Directors will be formally reviewed for potential election to the corporate title of Partner”.   The meaning of that phrase is not entirely clear.  The main areas of uncertainty are (i) whether the “year” is the accounting year of Ondra, the year of Mr Reinhard’s employment or the calendar year (ii) whether the year starts to run again when a review is carried out so that, if it is carried out in the middle of whatever is the relevant year, a new year starts to run and (iii) whether the review has to be carried out during the year or whether it can be carried out within a reasonable time after the end of the year.  The correct answer is, unfortunately, very much a matter of impression.  Since the review is to be carried out in the light of performance, my view is that the review must be carried out either near the year end or within a reasonable period from the year end.  I understand that Ondra’s year of account runs from 1 April (although this leaves without explanation why 1 March 2009 is specified as the starting date for the 2-yearly review of Partnership status).  It is also to be expected, I think, that the share of partnership review would take place at the same time for each Managing Director or employee which makes me doubt that the year of review is intended to start with the date, or anniversary, of the commencement of employment.  On that footing, the review in the spring of 2010 was properly carried out.  The next review should have been carried out by 1 April 2011 or within a reasonable time thereafter.  I consider that a reasonable time expired before June so that Mr Reinhard was still employed by the time that the review should have been carried out.  It was not carried out.  Therefore Ondra is in breach of contract.
409.	In relation to that breach, Mr Reinhard is entitled to damages for breach of contract.  I will postpone consideration of the measure of damages in principle until after considering the claim in respect of bonus.
Claim to bonus
410.	In relation to bonus, Mr Reinhard claims damages for underpayment of bonus.  It is common ground that the bonus is discretionary (subject to Mr Reinhard’s claim, which I have already rejected, that he was entitled to a bonus of an amount equal to at least his base salary).  
411.	The claims for bonus rest on the exercise of discretion by Ondra under clause 8 of the Contract: 
“You will also be eligible to receive a discretionary bonus.  The partnership will take into account various factors in exercising its discretion, such as the performance of Ondra as a whole and your individual contribution to the partnership.”
412.	The principles governing the exercise of such a discretion are now well settled.  It must be exercised in good faith and rationally and not perversely:  see Clark v Nomura International plc [2000] IRLR 766 (“Nomura”) as approved in Horkaluk v Cantor Fitzgerald International [2005] ICR 402.  In Nomura, Burton J rejected the tests of capriciousness on the one hand, and absence of reasonable or sufficient grounds on the other.  He considered that the correct test was one of irrationality or perversity (of which capriciousness would be a good example), adding that this meant “that no reasonable employer would have exercised his discretion in this way”.  He regarded this as the same test as that applied in what is now the Administrative Court.  Another authority is Keen v Commerzbank AG [2006] EWCA Civ 1536 (“Keen”), [2007] ICR 623 in which Moses LJ made some observations about the provision of information in relation to the award of bonuses: see at [111]:
“……..An employee must establish, at least, a prima facie case of irrationality, before an employer is required to justify his decision. For example, an employee would be able to rely upon a refusal to pay an award, despite the success of his department, or a significantly lower award than one awarded to comparable fellow employees.  It is likely that such cases can only be met by a sustainable explanation from the employer. The need to provide reasons arises, not to give the right to challenge content, but because, without any explanation, the employee is likely to succeed. In short, in cases which do not rely upon a breach of the implied duty of trust and confidence, the absence of reasons is only of evidential significance. The absence of reasons is not dispositive of the issue of rationality.”
413.	In order to establish a breach of Ondra’s contractual obligation, Mr Reinhard’s case is that Ondra has not considered exercising its discretion at all or, in exercising it, has either not acted in good faith, or has acted irrationally or perversely.  There is a high hurdle for Mr Reinhard to pass.  As stated by Mummery LJ in Keen at [59]:
“it would require an overwhelming case to persuade the court to find that the level of a discretionary bonus payment was irrational or perverse in an area where so much must depend on the discretionary judgment of the bank in fluctuating market and labour conditions.”
414.	Mr Reinhard relies for his claim on a number of factors.  I start with the basis on which he was recruited.  I have already dealt with, and accepted, Mr Reinhard’s evidence about the basis on which he was recruited.  It is clear that this was for his M&A execution skills, rather than as a ‘relationship banker’.   But it is also clear that there was an expectation that, over time, he would develop relationship skills and build up a client base of his own.  This was more than a hope: Mr Reinhard could not reasonably have expected that, if he failed to develop these skills,  his employment with Ondra would go on indefinitely.  
415.	It is also the case that Ondra had a gap to fill in its M&A team.   Mr Reinhard was seen as something of a catch: see the emails referred to at paragraph 112 above; in particular, an email from Mr d’Angelin to Mr Tory’s secretary asked her to try to find time for Mr Tory to meet Mr Reinhard because “It is really important. This guy is a top notch MA candidate and we are struggling on that front”.   This is confirmed by Mr Tory’s own comments in his witness statement that “[Mr Reinhard’s] background in M&A complemented the skill set that we had already recruited” and his oral evidence that  “We needed to fill the M&A gap”.
416.	Mr Reinhard’s evidence, which I accept, is that he had always made clear that he was not a relationship banker.  Evidence of this can be seen from the part of his notes for the meeting on 11 May 2009.  Although he refers to building the business in Germany in the same notes, I consider it to be clearly established that he envisaged that there would be support for him in doing this.
417.	It is certainly the case that Mr Reinhard understood that the Founding Partners would help him develop in those areas.  Indeed, Mr Tory in cross-examination agreed that it was “part of our responsibility to nurture and build a successful generation”  As Mr d’Angelin said:
“….What we wanted him to do is develop M&A and at the same time develop relationships on the Continent.  We knew, my Lord – and I accept that point – that he didn’t have the relationships to originate very large transactions, day one.  We knew that, but wanted him to develop that, yes.”
418.	At paragraph 140 xxv) above, I have recorded the gist of Mr Reinhard’s evidence about what Mr Tory told him about three ways in which Ondra would assist him in achieving the goal of becoming a relationship banker.  He also included in his notes the reference to “long-term own relationship pool” and “no expectation of revenues in 3 years”.  I accept all of that evidence and reject Mr Tory’s evidence that he said no such things.  
419.	Mr Callman submits that the idea that Ondra was not expecting Mr Reinhard to generate revenue at the time they recruited him is supported by the Business Plan which states: “economic model: not based on personal revenue contribution”. He also submits that the suggestion that the base revenue assumptions show that Managing Directors had to generate their own revenue is not borne out by the document itself.  Whilst it shows fees being generated by Managing Directors, both by way of retainer and value partnerships, there is no reasonable inference to draw that Managing Directors have to originate new clients.  I do not consider that the Business Plan provides any support to Mr Reinhard’s position on this issue.  It is, in my view, entirely neutral.  The quoted phrase indicates at best from his point of view that remuneration will not turn on personal contribution but says nothing about what personal contribution is expected.  The base revenue assumptions say nothing, either way, about which Managing Directors are assumed to be making a contribution.  
420.	Next, Mr Callman relied on certain amendments made by Mr Tory to clause 2 of the draft contract which, he submits, make it quite clear that Mr Reinhard was not intended to generate revenues in the short term. These amendments were incorporated into the Contract.  This comparison does not add much, if anything, to the Contract or its ordinary and natural meaning.  The draft is not, in any case, admissible on construction although it is admissible, in my view, as part of the relevant material in considering whether Ondra has acted irrationally or perversely in relation to the award of bonus.  A comparison of the documents shows that Mr Tory inserted the following relevant words shown in bold, with deletions shown black-lined:
“2.	…whilst your overall job description is to work as a core part of Ondra’s senior professional team to help our clients and in this way to contribute to building Ondra’s business over the longer term, your initial focus will be to building a strong M&A execution team practice and longer term to help develop the firm’s broader relationships in the continent more generally. Your main geographical focus will be the UK and the continent.”
421.	When asked about the purpose of these changes in cross examination, Mr Tory did not answer the question although Mr Callman did not press the point.  It does not matter.  It is, I think, obvious that there was a deliberate amendment to the draft to reflect what Mr Reinhard had explained his skills and deficiencies were and recognises that “initially” (however long that may be) his function was not to help develop relationships but that in “the longer term” (whenever that may begin) he would help (not, it is to be noted, take responsibility for) developing broader relations in the continent.  That is not to say that, even in the short to medium term, Mr Reinhard would not be obliged to start learning his new skills.  Indeed, it is obvious that he had to do so otherwise he would not be in a position, in the longer term, to help develop relationships.  
422.	Mr Callman also relies on the width of the discretion in clause 8 of the Contract and the factors to be taken into account.  Mr Reinhard’s bonus depends not only on the performance of Ondra as a whole but also on his own contribution.    It is right, in my view,  that it does not necessarily follow that a poor performance by Ondra as a whole necessarily means that no bonus needs to be paid: it is only one of the factors to be taken into account.  
423.	It is also right, as Mr Callman further submits, that Mr Reinhard’s own contribution must be assessed by reference to how he was expected to perform in accordance with the Contract.  The building of a strong M&A execution practice was therefore an important factor.  That, however, was stated to be the focus of his initial role, but it was not the exclusive territory of his duties.  He would still need to start on the process of learning his new skills.  Although he might not have progressed to the stage of being able successfully to develop new relationships on the scale which was to be expected in the longer term, Ondra was entitled, in my judgment, to make an assessment of how he was progressing.  If it had become apparent that his progress was negligible or nothing like that which had been anticipated, that is a factor which Ondra was entitled to take into account.  
424.	Mr Callman also relies on the Trajectories and the statement by Mr Tory that bonus would not be less than salary.  As to the latter, I have already rejected the proposition that Mr Tory gave an assurance that bonus would be at least equal to salary or that the central case in the Trajectories was to be read as any sort of commitment.  If it is the case that the projections for profit in the Trajectories were not met, then the weight which can be attached to them in the context of an award of bonus is very slight indeed.  No case has been run that the projections were unrealistic and a misrepresentation so that any attack on the level of bonus based on irrationality or perversity must be judged against the actual profits (as to which I have been provided with little information).  
425.	However, it is, in my view, right to say that the central case of the Trajectories would have been perceived by a recruit presented with them as a benchmark for their bonus; that is to say that, if their performance merited it, the bonus amount, given actual profits in the order of the central case, would be as indicated in the central case.  Indeed, Mr d’Angelin accepted in cross-examination that a person joining Ondra with the Trajectories in front of them would understand that this was what was anticipated as a benchmark for bonus.  I therefore accept that the Trajectories formed part of the materials to which Ondra should have had regard in making decisions about Mr Reinhard’s bonus.  
426.	The principal purpose of a bonus in accordance with the Contract was, it seems to me, as a reward for performance.  That, I think, is apparent from the factors which are expressly mentioned and are to be taken into account.   The exchange between Mr Callman and Mr Tory went like this:
“What do you regard a bonus as being for? 
A.	In recognition of performance. 
Q.	Past performance over the previous year.  
A.	There is an element of obviously the performance on particular projects, the origination efforts.  It’s a blend of things for which …..  Then they are aggregated, all the different qualitative factors, citizenship, how they related to their peers, which then go into determining the total bonus.”
427.	Mr Callman says that it was not suggested by any of the witnesses that Ondra took (or should have taken) into account the need to pay good bonuses to retain employees.  In the light of that, and the purpose identified in the preceding paragraph above, it is therefore suggested that retention of staff can play no part in a bonus decision.  I do not agree with that.  The evidence does not establish that the purpose described by Mr Tory was the exclusive purpose of a bonus.  Mr Callman did not ask him, or any other witness, whether there was any other purpose.  I am not, in any case, clear what Mr Callman seeks to make of the point.  If it is right to award £X bonus as recognition for past services, I do not see why an additional amount £Y should not be awarded in order to retain a key individual whom it is feared might depart or to prevent a key individual from even contemplating leaving. What would be objectionable is for the bonus of £X to be reduced because there is no wish to retain the individual concerned.  But even taking account of that, I do not see as open to challenge a decision to allocate a bonus pool among employees as a whole and to pay more by way of bonus to those whom it is wished to retain than to others, provided that there is proper recognition of the value of the past performance.  
428.	The history of Mr Reinhard’s performance needs to be addressed.  There is no doubt that before April 2010, Mr Reinhard performed very well.  As Mr Tory said in cross examination:
“In the early days at Ondra, as the reference you've just made, the calibre of the technical work that he produced in the early days when he showed some initial promise and very good initial promise, was outstanding and on numerous occasions I complimented him on the technical proficiency of his work, and beautifully written English, better than my crude Canadian, and it was very, very high quality work, and his grasp of complexity was exceptional”
429.	And similarly, Mr d’Angelin accepted that he did not start to have concerns about Mr Reinhard’s performance before May and June 2010.
430.	The bonus paid to Mr Reinhard for the year ending March 2010 was £85,000. He had only worked for six months of that financial year. His bonus grosses up to £170,000 for a full year. Mr Tory accepted that it was paid because Ondra had been pleased with Mr Reinhard’s performance.  
431.	Mr Callman then makes this submission.  While this is roughly equivalent to the sums paid to other junior partners (which I accept is the case), it is less than Mr Reinhard’s base salary (£200,000) and less than shown in the Trajectories (£320,000).  There is no evidence that Ondra took these markers into account when exercising their discretion as to Mr Reinhard’s bonus. In exercising its discretion Ondra should have had regard to its own published strategies and this failure demonstrates irrationality. 
432.	I disagree.  Such evidence as there is suggests that Ondra was actually loss-making in the year-ending March 2010.  There is nothing irrational or perverse in the level of bonuses paid generally to Managing Directors for that year.  And even if – and there is no evidence about this – Ondra did not take into account the Trajectories or base salary, there was clearly no promise that bonus would be as much as base salary.  The base case on which the central case in the Trajectories rested was that Ondra would show an operating profit with a bonus pool of £6.3 million.  That pool was not available and the central case therefore not reached.  No claim is made that the central case was a misrepresentation because there could be no reasonable belief that the based case was realistic.  It does not seem to me that the failure to pay Mr Reinhard a bonus in excess of £85,000 can on any footing be said to be irrational or perverse in these circumstances.
433.	Moving on to the later bonus for 2011, Mr Callman accuses Ondra of moving the goal posts.  He submits that the Defendants are unable to point to a change in Mr Reinhard’s performance after March 2010.  It is, he says, quite clear that he continued to do what he was recruited to do. The change came from Ondra. 
434.	This change, according to Mr Reinhard, came because of a change of approach at Ondra.  This was caused by the financial results of Ondra.  In the first part of 2010, it can be seen from Mr Tory’s witness statement that Ondra was loss making and that the Founding Partners were paying the bonuses from their own (and investors’) capital contributions. Mr d’Angelin described these early days as “nerve-wracking”; and the Founding Partners were concerned about the “gruelling bonus round” which they were going through and about the “cash burn” that Ondra was going through.  These financial circumstances are not a matter of contention.
435.	According to Mr Callman, the Founding Partners became focused on having junior partners who could bring in clients. He has referred to emails which he says demonstrate this clearly: 
i)	Mr d’Angelin’s email of 27 March 10 2010 to his co-Founding Partners, Mr Kirkwood and Ms Skelly which states: 
“The point I WANT TO STRESS (did the same very bluntly with Mustafa) is that [redacted] HAS to produce significant PL quickly. Partners are probably “costing” $1/ 1.5mm plus a year ($300k in salary, $150/200 in marketing costs, $250/500 in additional juniors we will need and they all want a bonus… ) . We are currently going through a gruelling bonus round where we will end up paying ourself  nothing , it therefore clearly can’t happen again next year …”.:
ii)	Mr Tory’s email of 29 March to Mr Baldock in which, explaining why the same recruit should be hired, he stated that “… he will make money for us quickly…”.
436.	And so, Mr Callman goes on, Ondra’s original recruiting strategy was abandoned and the expectation on junior partners already in place also changed. This meant that Mr Reinhard was now being measured against different criteria from those set out in his Contract. 
437.	The result was that he received only a £50,000 bonus when his performance, measured against the criteria which should have been applied, was so low as to be an irrational and/or perverse decision on the part of Ondra.  
438.	Mr Callman relies on the table of bonuses paid to Mr Reinhard’s peer group.  The three members of the group are identified only by the letters A, B and C.  A received £550,000, B received £660,000 and C received £475,000.  Mr Howe’s position is that these bonuses are not admissible to demonstrate the sort of level of bonus to which Mr Reinhard should be entitled.  They were not pleaded as comparators; had they been, evidence could have been produced to demonstrate why the three individuals deserved the bonuses which they got.  
439.	Mr Callman submits that, whilst not pleaded, they remain relevant to my consideration.  This is because I have to look at the Trajectories.  The bonuses paid to Mr Reinhard’s peers show, it is said, whether the Trajectories still remained valid benchmarks even if the central case for profit was not achieved.   This submission fails to take account of the possibility that A, B and C were actually achieving what it was expected that Mr Reinhard would be able to achieve.  It may be that those individuals were in fact generating business.  There is nothing perverse or irrational in giving a bonus to A, B and C for achieving what they were employed to do larger than the bonus given to Mr Reinhard for achieving what he was employed to do.   As a matter of fact, they have made different contributions to the partnership.
440.	The Defendants’ position in relation to the 2011 bonus is that the £50,000 was a generous figure.  Reliance is placed on the feedback forms (see paragraph 214 above) at the end of 2010 which fully justify the decision taken in relation to the 2011 bonus.  Ondra would, it is said, have been fully justified, in view of Mr Reinhard’s unsatisfactory performance, to pay him no bonus; but he instead received £50,000.
441.	The Defendants’ case is that the bonus discretion was considered in the light of his role as a junior partner who was supposed to be creating relationships and generating business or at least moving towards that goal. In that role, he failed and thus the bonus was rational. There was no obligation to consider his bonus on the basis that he was undertaking the role of more junior members of staff and was effective at execution.
442.	That last submission is important.  It recognises that the Founding Partners considered that Mr Reinhard should already have achieved actual results rather than have simply demonstrated that he was developing along the road to achieving results.  His case is that he was employed on the basis that he would not be expected to generate revenues (or at least any significant revenues) within that period; I agree with that and find as a fact that that was the basis on which he was employed.  I accept that it is also the case that Mr Reinhard was perfectly reasonably expected to develop his relationship skills and he was recruited on the mutual understanding that he would do so; and whatever his own perceptions are, I consider that the assessments by the Founding Partners in the feedback forms were genuinely and reasonably held.  In other words, they perceived Mr Reinhard as not living up to expectations in terms of his potential to generate business.  
443.	The reality nonetheless, in my judgment, is that one factor taken into account in assessing Mr Reinhard’s bonus was that he had failed to generate revenues; in other words, it was considered that he should have achieved actual results rather than demonstrated that he was developing along the road to achieving results.  He was not being assessed for bonus only on the basis that he had failed to live up to expectations.
444.	The submission is also important because it demonstrates that Mr Reinhard was to be assessed for bonus on the basis that he was doing the same job as more junior members of staff. I have seen only Mr Reinhard’s evidence about the level of bonus achieved by more junior members of staff. His recollection is that they were paid significantly in excess of £50,000. Ondra did not provide evidence on this issue. If Mr Reinhard’ recollection is correct, it cries out for an explanation (which has not been given) of why Mr Reinhard’s bonus was not of a similar level.
445.	In my judgment, Ondra did not exercise its discretion properly.  It took into account and gave considerable weight to a factor which should not have played any part in the assessment of bonus, namely that Mr Reinhard had not generated new business.  In doing that, they failed properly to consider what weight should be given to his, apparently excellent, performance in other aspects of his work.  I am left with the firm impression that his bonus was assessed on the basis that he had failed to achieve that which Ondra considered was reasonably to be expected of him, whereas it should have been assessed on the basis of what he had actually achieved.  Having failed to give proper weight to what he had achieved and having improperly taken into account that which he did not achieve, Ondra was in breach of contract.  In the language of the cases, the decision was irrational or perverse.
446.	This does not necessarily mean, however, that the actual bonus of £50,000 was an inappropriate figure.  For instance, Mr Reinhard’s performance as an M&A execution expert may have been excellent, but I have no idea of what contribution it made to the performance of Ondra as a whole (a factor expressly to be taken into account under clause 8 of the Contract).  I have no idea of the bonuses achieved by other staff or the basis on which they were awarded nor of the factors taken into account in assessing the bonuses of Mr Reinhard’s peer group. 
447.	Nonetheless, it seems to me that in applying the incorrect criteria, Ondra was in breach of contract by failing properly to exercise its discretion even if it awarded a figure which, acting properly, it could have awarded.  But that goes to the measure of damages.  I say damages, because Mr Reinhard’s remedy, if he has one, is for damages for breach of contract.  This was the way in which the matter was approached in Clark v Nomura. This is a matter for the trial of quantum.  If Mr Reinhard fails to achieve a greater award, that may well be reflected in any costs order.
448.	In carrying out that exercise, the court has the same unfettered discretion as Ondra which must be exercised reasonably.  It is not to be assumed that the discretion would have been exercised so as to give the least possible benefit to a claimant if such an assumption would be unrealistic on the facts: see Rutherford v Seymour Pierce Ltd [2010] EWHC 375 (QB), [2010] IRLR 606 at [33], Nomura at [40] and Horkaluk v Cantor Fitzgerald International at [64] to [72].  However, on the facts of the present case, far from being unrealistic, it is clear to me that Ondra, had it acted in accordance with its obligations, would have awarded the minimum bonus which was proper. It will be for Mr Reinhard to persuade me that £50,000 was an irrationally or perversely low figure.
449.	Mr Reinhard also claims a bonus in respect of the period of his employment from April 2011 to the termination of his employment and during the notice period (during which the PILON payment remained unpaid).  Ondra’s position is that it does not have to pay a bonus if Mr Reinhard was not employed when the time for payment bonuses arrived. Mr Reinhard’s position is that clause 8 of the Contract should be construed so as to entitle him to a pro rata bonus for the period of employment.  In practice, this means that when Ondra conducted its bonus round in spring 2012, it should have awarded Mr Reinhard a bonus in respect of his period of employment and period of notice.
450.	As a matter of construction of clause 8, I agree with Mr Callman that Mr Reinhard was eligible to receive a bonus in respect of the period from April 2011 (I use that date to identify the start date of the period as the same date as the end of the period in respect of which the 2011 bonus was payable) to 3 June 2011.  When Ondra came to consider bonuses generally in 2012 it should have considered Mr Reinhard as well as its current employees.  In the absence of express words requiring him to remain in employment when the time came for the exercise of the discretion in spring 2012, the construction of clause 8 is, in my view, clear.  Further, there is I consider no scope for an implied term.  The position then is that Mr Reinhard is entitled to an award of damages if he can prove any for the breach of contract. This is a matter for the quantum hearing.
451.	The whole bonus question is, however, subject to one further consideration.  It is the effect of Mr Reinhard’s trading activities on (i) how Ondra could have exercised the discretion and how the court should not exercise it and (ii) whether, indeed, those trading activities result in Mr Reinhard having to repay the 2011 bonus.  
452.	For reasons given at length later in this judgment, I conclude that Mr Reinhard’s trading activities and his failure to obtain approval for his trading account would have justified his summary dismissal.  I add here that it would have justified his dismissal at any time after the end of March 2010 had the facts up to that time been known to Ondra.  Thus he could have been dismissed prior to the time when the bonuses for 2011 were awarded.  
453.	The first question then is whether Ondra would have been justified in withholding a bonus which it would otherwise have awarded.  In my judgment, the answer is that it would not have been justified in doing so.  Suppose that Ondra had discovered the facts in March 2011 and actually dismissed Mr Reinhard on 1 April 2011.   Having worked for the whole year in respect of which his and other employees’ bonuses were to be assessed, he had provided all of the services in respect of which the bonus had been earned.  I do not consider that this right, I would call it an accrued right, can be abrogated by the termination of his employment even if that termination is by reason of gross misconduct.  Although repudiation of a contract generally absolves the innocent party from further performance of his obligations, that does not apply to accrued rights: for instance, it is clear that arrears of salary would be recoverable.  The right to be considered for a bonus in respect of a past period of service falls, in my view, within the same principle.  On the facts, Mr Reinhard’s trading activities had no impact whatsoever on Ondra’s business or Mr Reinhard’s performance; there can be no reason for reducing the bonus which would otherwise have been given.
454.	 If that it is the correct position had there been an actual termination of Mr Reinhard’s employment in April 2011 (as in my view it is), then the termination of his employment which actually occurred in June 2011 cannot put Ondra in any better a position.  Accordingly, the breaches of contract on the part of Mr Reinhard arising out of his trading activities provide Ondra with no defence to the bonus claims.  
455.	The same analysis applies to Mr Reinhard's claim in respect of bonus from 1 April 2011 to 3 June 2011.  So far as his claim during the notice period, or rather the period in respect payment in lieu of notice was expected by Mr Reinhard, is concerned, he can claim no bonus.  He did not work during that period and therefore did not earn any bonus.  Since he could have been summarily dismissed on 3 June 2011, he cannot say that he was or should be treated as employed during that period.  
456.	Ondra counterclaims for return of the £50,000 bonus actually paid or for an equivalent amount of damages.  It follows from what I have already said that this claim must be dismissed.
457.	I return to the issue of the increase in the share in the partnership from 2% to 3%.  I have held that Ondra was in breach of contract in failing to consider whether Mr Reinhard’s share should be increased.   I consider that a similar approach applies to the exercise of the discretion to review the level of ownership under clause 3 of the Contract as applies to the award of a bonus under clause 8.   Mr Reinhard is entitled to an award of damages only if, had Ondra considered whether to increase his share, it would have been irrational or perverse for it not to have done so.  I do not consider that it would have been perverse or irrational for it not to have done so.  By the latest time at which the discretion should have been exercised, late May 2011, and indeed slightly earlier in March 2011 before which the discretion did not, on any view, need to be exercised, it was clear that the Founding Partners believed that Mr Reinhard had no future at Ondra.  It would have been entirely rational and sensible for them to conclude that Mr Reinhard should not be given a further share.  That is so on my construction of “share of the partnership” and, a fortiori, on Mr Reinhard’s case about what such a share entitled him to.  Unlike the bonus which was seen principally as a reward for past services, the award of an increased partnership share is surely to be seen as anticipating some further contribution to the business.
458.	Accordingly, I dismiss Mr Reinhard’s claim to an increase in his share from 2% to 3%.
Payment in lieu of notice – PILON
459.	Assuming that Mr Reinhard’s dealing activities would have justified summary dismissal if Mr Reinhard’s contract of employment was still in force, the question arises whether Ondra is absolved from making any payment in lieu of notice which was outstanding when those activities were discovered and reliance placed on them as a breach of the Contract.
460.	Although the letter of dismissal did not mention clause 15 of the Contract, it is clear that Ondra was purporting to exercise its rights under that provision. Mr Reinhard’s case is that once Ondra had triggered the PILON, the sum due under it was a debt due to him. Therefore, even if Ondra establishes that he was guilty of conduct sufficient to permit summary dismissal, the PILON payment remains due.  While clause 15 allows Ondra to terminate without notice and without a payment in lieu in a number of specified circumstances, it does not permit Ondra to resile from the contractual consequences of its choice, after that election has been made. There is no release mechanism. Mr Callman relies on Cavenagh v Williams Evans Ltd [2012] IRLR 679 (“Cavenagh”), at [36] to [39].  In that case, the PILON provision was in materially the same terms as the present case:
“The Company may terminate the Appointment forthwith by paying salary… in lieu of the required period of notice….”
461.	In Cavenagh, the employer informed Mr Cavenagh by a letter dated March 2010 that he would become redundant and that he would receive “all appropriate payments in lieu of any notice period”.  The employer subsequently discovered that Mr Cavenagh had wrongly procured a payment of £10,000 to be made to his pension fund.  He sued for six months’ salary and other benefits in kind in lieu of notice.  The Judge at first instance dismissed the claim holding that his prior gross misconduct had given the employer a complete defence to the debt claim.  Mr Cavenagh’s appeal was allowed.  It is important to explain why.
462.	The first point to note is that the employer’s counsel raised an entirely new point which had not been taken below: see at [33].  The point was that the service agreement was not lawfully terminated because it had not made the payment promised.  The case was therefore indistinguishable from Boston Deep Sea Fishing and Ice Co v Ansell (1888) 39 Ch D 339 CA which concerned an employer’s liability to pay damages for wrongful dismissal and the successful attempt by the employer to rely on a subsequently discovered breach by the employee which would have justified his summary dismissal.
463.	At [34] of Cavenagh, Mummery LJ (with whom the other judges agreed) said that it was too late for this new point to be taken so that the case proceeded on the basis that Mr Cavenagh had a claim in debt.  But he added this:
“In any event, the point does not take the matter any further as, even if non-payment of pay in lieu was a breach by the company, it would not be a repudiatory breach.  The position was that there had been a lawful termination of Mr Cavenagh’s service agreement in accordance with its terms, even though the company had not made the promised payment in lieu.  Both sides treated the service agreement as at an end as from that date.  Mr Cavenagh did not work again after that date.”
464.	It appears from that passage that Mummery LJ saw the PILON provision in that case as, at best from the employer’s point of view, resulting in a breach of contract in failing to make the payment not in wrongfully serving a notice terminating the employment without making, either before or simultaneously with the notice, the payment in lieu.  The same point is made by Tomlinson LJ at [53] where he says this:
“Here what had occurred was in essence a termination on six months’ notice, albeit the employer had exercised the right to dispense with the notice period by making or promising to make [my emphasis] the appropriate payment in lieu.”
465.	On the basis of the pleaded case and argument below, however, Mummery LJ set out the analysis in [36] to [38]): By the March 2010 letter, the employer purported to exercise its contractual power to terminate without notice but with payment in lieu and the employer agreed to make that payment.  A debt by the employer to Mr Cavenagh thereby accrued.  Having chosen to terminate the contract in that way, the employer was not entitled to resile from the consequences of its choice by later following the different common law route of accepting repudiation by relying on Mr Cavenagh’s pre-termination conduct.  
466.	Ondra’s case is that, although the Contract terminated summarily on 3 June 2011, it is nonetheless entitled to justify that termination on the basis of gross misconduct discovered after that termination.  Reliance is placed on Boston Deep Sea Fishing because, it is said, the Contract terminated as a result of Ondra’s breach of contract since the notice of termination could not properly be given unless the payment had been made.  
467.	It is said that no debt arises in relation to the payment in lieu of notice because such a payment does not serve to terminate a contract of employment until it has been paid and the employee has been given notice that it has been paid.  Reliance is placed on Geys v Societe Generale [2013] ICR 117 (“Geys”).  
468.	In Geys the facts,  so far as material were as follows:
i)	The contract of employment contained a PILON clause as follows:
“SG reserves the right to terminate your employment at any time with immediate effect by making a payment to you in lieu of notice (or if notice has already been given, the balance of your notice period)…” 
ii)	SG was obliged to make a termination payment if it terminated the contract in the absence of particular circumstances, none of which applied. That termination payment was calculated differently if the employment terminated before or after 31 December 2007, the latter being more valuable to the employee.
iii)	On 29 November 2007, Mr Geys was handed a letter which stated that his employment was being terminated with immediate effect. It went on to state that SG would “arrange for the appropriate termination documentation to be provided to” Mr Geys.  It did not mention payment in lieu.
iv)	On 7 December, Mr Geys’ solicitors  wrote to SG enquiring as to the proposed payments and reserving his rights.
v)	On 10 December 2007, Mr Geys was sent a severance agreement together with another letter containing a list of payments that SG proposed to make to him in consideration of entering the agreement. He was asked to agree the terms by returning a signed copy but he declined to do so.
vi)	On 18 December 2007, SG paid a sum of money into his bank account that was of the same amount that would have been due had SG made a payment in lieu of notice.    He was not informed about this payment by SG and did not know it had been made.
vii)	On 21 December 2007, Mr Geys’ solicitors wrote again asking for further information about how the proposed payments had been calculated and again reserving his rights.  
viii)	Mr Geys became aware of the payment which had been made on 18 December 2007 before the end of December 2007.  
ix)	On 2 January 2008, the solicitor wrote to SG informing them that Mr Geys had decided to affirm his contract of employment.  In other words, he rejected what was in fact a breach of contract by SG as a repudiation.  
x)	On 4 January 2008, SG wrote to Mr Geys informing him that a payment in lieu of notice had been made on 18 December 2007. The contract deemed that letter to have been received on 6 January 2008.
xi)	On 7 or 8 January 2008, Mr Geys saw a payslip showing that the sum included payment in lieu of notice.
469.	The principal issue for determination was when the contract was terminated. The Court held, Lord Sumption dissenting, that the contract had not been terminated on 29 November 2007, because that was a repudiation by SG which was not accepted by Mr Geys and thus incapable of bringing the contract to an end.
470.	Mr Howe says that the Court also held, with Lady Hale giving the lead judgment in relation to that issue, that for a PILON to effect the termination of a contract of employment it was necessary for that payment not only to be made but for the fact of the payment to be notified to the employee which thereby brought the contract to an end; and he refers to [58] of her judgment.  In these circumstances, announcing an intention to make a payment in lieu of notice does not bring the contract of employment to an end – rather that election has no effect until payment is made and the fact of payment is notified.
471.	It is important, however, to note that Lady Hale’s apparently general words were said in the context of the particular PILON provision in issue.  These apparently general words are directed, I think, only at that or similar forms: see [50] where she noted that the resolution of the questions at issue “is of great importance to the large numbers of employees and employers who are party to PILON clauses in this form” ie providing for termination with immediate effect “by making a payment to you in lieu of notice”.  What any particular PILON provision actually means is, obviously, a matter of construction of that provision.  It would make perfectly good sense for a PILON provision to make clear that an employer could elect to make a payment in lieu of notice and then give notice, with actual payment taking place at some time during what would have been the notice period: clearly what Lady Hale said would not apply to such a provision.  
472.	In Geys, the PILON clause clearly required, as a matter of construction, that the payment in lieu could not be made after termination of the contract: it provided for the termination “by making a payment”.  This method of termination – by payment – was an alternative to termination by the appropriate notice period.  In Cavenagh too, the PILON provision permitted termination “by paying salary and the value of all other contractual benefit”.  In contrast, in the present case the right reserved to Ondra is “to pay you your Salary (less statutory deductions) in lieu of any period of notice”.  As a matter of construction of clause 15, it is open to Ondra, in my judgment, to operate that provision by the service of a notice terminating the employment with immediate effect and, at the same time, electing to pay Salary in lieu of any period of notice.  It is not necessary to have made payment before the notice can properly be served.  Clause 15 provides the sort of right of election which Geys decided was not available under the form of PILON provision there under consideration.  I accept, of course – and as Lady Hale says – that it is important for an employee to know where he stands.  Under the PILON provision concerned in Geys, Mr Geys was entitled to know that a payment had been made and what it was for.  In the present case, Mr Reinhard was entitled to know that clause 15 had been invoked and to know that he was not being dismissed summarily either wrongfully or for cause.  
473.	If I am wrong on construction, then there are two different reasons why Mr Reinhard nonetheless had the right to the payment of his Salary in lieu of notice.
474.	The first is because the service of an immediate notice coupled with such an election would not be a repudiatory breach of contract, as Mummery LJ observed in relation to the termination of Mr Cavenagh’s employment at [34] of his judgment.  The result is that Mr Reinhard’s contract of employment was lawfully terminated even though the promised payment of Salary had not been made.  He became entitled to recover payment of his Salary as a debt.  
475.	The second reason stems from the fact that it is common ground that Mr Reinhard’s contract of employment came to an end on 3 June 2011.  Mr Howe submits that, since no three month notice was given and since payment had not been made pursuant to clause 15, this could only have been as a result of Mr Reinhard accepting Ondra’s repudiatory breach.  It could not, I add, have been because Ondra accepted Mr Reinhard’s repudiatory breach (ie his alleged gross misconduct) since Ondra did not know about it at the time and, indeed, if it had done, it could have summarily dismissed Mr Reinhard anyway.   I do not think that is the only analysis of what happened.  What really happened was that Mr Reinhard had no choice other than to accept that he could no longer work at Ondra.  He, no doubt realistically, saw that his employment relationship and his employment contract were at an end.  He accepted that in the context of a letter which told him that a payment in lieu of notice would be made.  I do not see why that has to be analysed as the acceptance of repudiatory breach of the Contract rather than as an acceptance that the assurance in the letter of a future payment in lieu of notice was an effective invocation of clause 15.  In other words, the letter was not taken as a breach of contract at all, let alone a repudiatory breach, but was to be seen as the actual implementation of clause 15.
476.	If I am wrong about all of this, then Mr Howe’s analysis would be correct.  The result would be that the contract of employment could have come to an end on 3 June 2011 only as a result of the acceptance by Mr Reinhard of Ondra’s repudiatory breach.   In that case, Ondra would be liable to pay damages for sums that would have accrued during the notice period had notice been given unless it can justify the termination. It seeks to do so on the basis that Mr Reinhard’s share dealing, the failure to make disclosure of it and the sending of confidential information to his private email address in anticipation of his termination amounted to breaches entitling it to terminate the contract summarily.  Although this does not strictly arise in the light of my decision in relation to the effect of clause 15 of the Contract, I should make, briefly, some findings of fact in case I am wrong. 
Alleged gross misconduct
477.	Ondra’s case is that Mr Reinhard’s conduct, which was discovered after service of the 3 June 2011 notice to terminate his employment, amounted to gross misconduct amounting to repudiatory breach which would have justified his summary dismissal.  Alternatively, it is said that he acted in breach of fiduciary duty justifying summary dismissal.  Mr Howe did not, rely on the second paragraph of clause 15 of the Contract.  That clause permits Ondra to terminate Mr Reinhard’s employment immediately without payment in lieu of notice “if you are guilty of gross misconduct, if you commit a material breach of the terms and conditions set out in this letter….”.  The terms “set out in this letter” would include the provisions of other regulations and policies binding on Mr Reinhard under clause 6, first bullet point, of the Contract.  Since Mr Howe has not relied on material breach in contrast with gross misconduct, I will deal with the matter on the basis that the Defendants need to establish gross misconduct on the part of Mr Reinhard.
478.	The alleged misconduct falls into two categories: improper personal share trading; and sending confidential information home.
479.	Mr Howe submits that the question whether these breaches were sufficiently serious to amount to repudiation requires consideration of whether Mr Reinhard’s conduct showed disregard of the essential conditions of the contract, reference being made to Laws v London Chronicle [1959] 1 WLR 698, 700.   In the context of a financial services firm, failing to comply with requirements as to share dealing are necessarily of that nature given the risks that may accrue to the firm as a result of breach.  
480.	Mr Callman puts forward a different test, namely that as a general proposition, the conduct must be “wilful and deliberate contravention of an essential term of the contract or gross negligence”, reference being made to Robert Bates Wrekin Landscapes Ltd v Knight UKEAT/0164/13, at [24], per HHJ David Richardson.
481.	As will appear, I do not need to resolve the perhaps subtle difference between these two approaches.
Personal Share Trading
482.	The relevant documents spelling out Mr Reinhard’s obligations are the Contract, at clause 6, a Personal Account Dealing Notice (“PADN”) and Ondra’s Compliance Manual.
483.	In clause 6 of the Contract it is provided as follows:
“During your employment you will:
…
comply with any Ondra policy from time to time in force in respect of share dealing and in particular, will not deal in any shares or securities in any company where you have, or may have material non-public information. Further, before dealing in any event in any shares or securities, you will always ensure that you give me two full working days prior notice, to enable me to ensure that there is no possible conflict in you dealing in any such shares or securities.”
Since Mr d’Angelin signed the contract on behalf of Ondra, “me” must be him, although I am sure that a notice to any of the Founding Partners or perhaps even the Compliance Officer would be good enough.
484.	The PADN provides (so far as is relevant):
“3	  The Partnership must be informed promptly of any personal transaction entered into by a Relevant Person and the Partnership will keep a record of the personal transaction notified to it or identified by it, including any authorisation or prohibition in connection with such a transaction.  Furthermore Ondra Partners Personnel cannot buy or sell securities in the companies specified in the list of restricted companies (‘the Restricted List’) which may be issued by the Partnership from time to time unless they have received specific approval from the Partnership. Such approval should be sought from the Compliance Officer.
….
5   The Restricted List is intended to identify … companies dealt with by the Partnership where Ondra Partners Personnel may have access to unpublished price sensitive information.”
6	 The Restricted List may not always be complete and accordingly, where a member of Ondra Partners Personnel wishes to buy or sell an investment and he/she believes that one of the Partnership’s clients may be involved or is otherwise in doubt whether he/she is free to deal in the securities of a particular company, he/she must inform the Compliance Officer in advance of his intentions and seek the approval of the Compliance Officer. Approval will be given or denied without explanation;
7	Subject to compliance with the procedures set out in this notice, Ondra Partners Personnel are permitted to deal in securities in companies which do not appear on the Restricted List unless the Compliance Officer has refused permission to deal or, following reference to the Compliance Officer by Ondra Partner’s Personnel, the Compliance Officer’s decision is awaited;
…….
10	Ondra Partners Personnel shall immediately report to the Partnership in writing any purchase or sale of securities effected by or on behalf of the member of Ondra Partners Personnel….
……..
14	Strict compliance with the following requirements should be observed at all times to ensure maintenance of the Partnership’s reputation.  In respect of personal transactions by Ondra Partners Personnel, they may not:
………….
(ii)  deal on, or advise, or procure others to deal on inside information however obtained and whether or not such inside information or dealings fall within the terms of the Insider Dealing Act or the Market Abuse Rules…”
485.	The PADN was sent to Mr Reinhard under a cover of a letter dated 11 September 2009, the same day on which he signed the Contract.  He signed a copy of the PADN for Ondra’s files on 6 October 2009.  It commenced by telling Mr Reinhard that he was being supplied with the PADN following the requirement of the FSA to notify him of “certain requirements imposed on you in respect of your personal account transactions”.  It provided that Ondra “attaches great importance to strict compliance with this undertaking” and noted that “breach of this undertaking can amount to gross misconduct for the purposes of our disciplinary procedures and could result in your dismissal without notice”.
486.	As to the Restricted List, the evidence establishes that Mr Reinhard knew that it might not be complete – he admitted as much – because something might have arisen since the list was last circulated round the firm.  He also knew on at least one occasion that a company which should have been on the Restricted List had been omitted.   That is not to say that he ever dealt in the shares of a company which he knew had been omitted or that he failed to comply with clause 6 of the PADN: I find as a fact that he never did either of those things.  
487.	Mr Callman’s submission is that the PADN provided an exhaustive code governing share dealing.  Mr Howe contends that it is unlikely that the PADN was intended to supersede the Contract.  This, he says, is particularly so given that the PADN is a general notice for use throughout Ondra whereas the provisions of clause 6 of the Contract were particular to Mr Reinhard.  It may be true that it is a general notice, but it also the case that other employment contracts which I have seen for other personnel also contain the same provision for 2 days’ notice.  Indeed, Mr Tory’s evidence was that the Contract and contracts for other personnel were based on an Olswang template.  
488.	Although it might be suggested that there is a conflict between the need to give two days’ notice under the Contract and the apparent permission to trade contained in clause 7 of the PADN, I do not see a real conflict between the two.  It is a perfectly coherent structure for Ondra to set out the requirements as to share dealing required by the FSA (as are found in the PADN) and to supplement those requirements in the contract of employment with each employee.  The requirement to notify Mr d’Angelin (or possibly simply Ondra) two days before making a trade does not require consent to be given; rather it gives an opportunity for Ondra to identify a hitherto unappreciated difficulty and, if necessary, to place the relevant company on the Restricted List or otherwise to prohibit the trade (for instance, by identifying certain information as inside information and relying on clause 14 of the PADN).  If no response is received to the notification, then the PADN would then permit Mr Reinhard to trade.
489.	Whether or not that is correct, matters moved on, however, as a result of the provision to Mr Reinhard of the Compliance Manual.  On 11 June 2010, he signed an acknowledgment of receipt of the Compliance Manual confirming that he had read and understood its contents.  He acknowledged that he understood that:
“compliance with the following is a condition of my employment/registration, and continuance of employment/registration with Ondra Partners LLP”
and there followed a list including the Compliance Manual itself.
490.	The Compliance Manual states at Chapter 11 (a clear and concise 2 page Chapter) that “the Personal Account Dealing Notice will form part of your contractual relationship with Ondra Partners and you must comply at all times with its detailed provisions” and appends the PADN.   It also states:
“The basic position of the Partnership is; you are prohibited from holding a personal dealing account, either in the UK or overseas, unless this has been notified to, and agreed in advance, in written format with the Compliance Officer. 
Where you are permitted to hold a Personal Dealing Account, it is your obligation to obtain prior permission of the management and ensure that copies of all contracts/statements of all transactions undertaken by you on your Personal Dealing Account with a third party are sent immediately to the Compliance Officer.” 
And at the end of the Chapter, in bold type, it provides:
“It should be noted that you have an ongoing obligation to inform the Compliance Officer of any personal accounts that you hold.”
491.	Mr Callman submits that the Compliance Manual does not form part of the contractual provisions. It is not stated to take contractual effect and there is nothing else which would give contractual effect to it.  I do not agree.  Mr Reinhard’s own signed acknowledgement expressly confirms that compliance with the Compliance Manual is a condition of his employment.  Moreover, the Contract provides, at clause 6, second bullet point, that Mr Reinhard will comply with “all regulations, policies, reasonable requests and instructions made by Ondra”.  The Compliance Manual clearly falls within that rubric as at least one of a policy, a reasonable request and an instruction.  
492.	Mr Callman identifies an inconsistency.  The Compliance Manual asserts both that it is the requirements in the PADN which must be complied with and that permission must be sought for all trades.  The reason he says that permission must be sought for all trades is that the second paragraph of the Compliance Manual quoted at paragraph 490 above refers to obtaining the prior permission of management.  Mr Howe also construes the Compliance Manual as requiring prior permission for all trades.  That is probably the correct reading although it is not entirely clear.  Assuming it is the correct reading, then there is an apparent inconsistency in that the Compliance Manual requires prior consent to a trade from the management and yet the PADN appears to permit dealing where the relevant company is not on the Restricted List etc.  
493.	In my judgment, there is no relevant inconsistency.  The PADN is referred to in the first paragraph of Chapter 11 explaining that the FSA Rules contained specific provisions relating to personal account dealing.  The PADN sets out the requirements.  The Compliance Manual puts further detail in place, adding a stricter requirement and, indeed, one going beyond the Contract; that stricter requirement is the need to obtain approval from, rather than just giving notice to, Ondra.  Further, the Compliance Manual repeats and emphasises the requirement to give notice of trades to the Compliance Officer.  
494.	Although the combination of documents might be described as slightly confusing, it is clear on any view (once it is accepted, as in my judgment it must be, that the Compliance Manual has contractual force) that Mr Reinhard was required (i) to obtain approval from the Compliance Officer to the holding of his Jersey trading account and (ii) to notify the Compliance Officer of each trade he executed.  Further, although the position is not so clear – this is where the combination of documents may be seen as slightly confusing – there was an obligation on Mr Reinhard at least to notify Ondra in advance of any trade and, in my view of the meaning of the Compliance Manual, to obtain prior permission to make any trade.  
495.	Mr Reinhard never notified or obtained approval for his personal dealing account.  He was therefore in continuing breach of contract.  Further, he did not inform Ondra or the Compliance Officer of any trades which he had entered into.  Each trade therefore gave rise to a new breach of contract.   
The Trading
	The Defendants’ case
496.	The Defendants’ case, in summary, is this:
i)	Over an extended period, between 13 May 2010 and 31 March 2011, Mr Reinhard carried out more than 85 trades in a wide variety of shares and other tradable instruments which are set out in the Table attached to the Re-Re-Amended Defence and Counter Claim. He did this whilst trading a portfolio of shares worth around €1 million, through an offshore dealing account held at SG Hambros in Jersey.
ii)	Mr Reinhard did not reveal the existence of his personal account, nor ask for permission to use it.  Nor did he seek any authorisation for any of his trades prior to carrying them out, or notify Ondra of them afterwards (promptly or at all).
iii)	By failing to disclose his personal account dealings – before or after he carried them out, or even the very existence of his personal dealing account, Mr Reinhard broke one of the cardinal rules of investment banking, and committed very serious breaches of contract.
iv)	Furthermore, he engaged in a number of transactions which were improper; or (at the very best) represented grave and inexcusable lapses of judgment by a highly experienced investment banker, who certainly ought to know better.
497.	In more detail, the allegations and submissions on the part of the Defendants are these:
i)	Mr Reinhard commenced dealing on 13 May 2010.  He says that he was open about his trading, pointing out that he sat opposite the Compliance Officer, Mrs Skelly.  However, although she sat opposite Mr Reinhard when he made his first two trades on 13 May and 21 May, her evidence, which I accept, is that she then moved.
ii)	Mr Reinhard accepted that the share purchase instructions were mainly given during working hours and that he did not inform anyone of the fact that he undertook personal account dealings.  
iii)	One of the two examples he gave of circumstances where the Restricted List was incomplete was in relation to Ineos, which though private had publicly traded bonds.  It should have been on the Restricted List from November 2009.  Mr Reinhard accepted that trading in bonds of a company in relation to which Ondra had confidential or price sensitive information was “unthinkable”.  Such a company should have been on the Restricted List.
iv)	Mr Reinhard had been in possession of confidential and market sensitive information concerning Ineos in April 2010 and later including in relation to its bonds and the bonds of Kerling plc, a company under common ownership.  His involvement extended to advising his Ondra colleagues on 26 July 2010 as to appropriate subjects for the agenda for an Ineos Management Meeting, which included the trading outlook and value creating ideas.  Two days later, on 28 July 2010, he sought pricing information from his broker in relation to the bonds of both Ineos and Kerling.  His broker responded with the details of the available bond for Kerling and sought more details in relation to Ineos. Mr Reinhard responded seeking the details for the Euro-denominated tranche of all of the bonds including Ineos – again no doubt to keep his activities outside the UK.  Further he sought the bid/ask pricing and the minimum denomination to trade for, among others, the Kerling bond.
v)	There can be no doubt that if he had traded in the Kerling bond or the Ineos bond he would have been guilty of market abuse and might have committed an offence of insider dealing contrary to Part V of the Criminal Justice Act 1993.  He did not in fact trade in any of the five identified bonds at the time but did later trade in bonds in Peri, one of the bonds whose prices were originally sought by him.  Further, he maintained the Ineos and Kerling bonds on his “Short Term Watchlist and Short Term to-dos” highlighted in yellow on his trading spreadsheet which he kept updating at least till the end of October 2010.  This falsifies his initial suggestion in cross examination that he only sought the prices to see what sort of pricing SG Hambros could offer him on bonds and used Ineos and Kerling as random examples and was never thinking about buying the bonds.
vi)	This potential transaction is the appropriate lens through which to view Mr Reinhard’s explanations of his share trading and his systematic breaches of the PADN.  He had no intention of complying with any of the procedures not least because he believed he would not be caught.
vii)	In an email dated 18 April 2010 which Mr Reinhard sent to his colleagues to inform them of the content of the weekly Ineos call, reference was made to Project Gershwin.  This was a joint venture project between Ineos and BASF, as was obvious from his note.  He remained aware that this project was taking place because Ineos kept Ondra informed and abreast of it.
viii)	He was informed of details of the Ineos CEO Day fixed for 16 November 2010, which had an item concerning Project Gershwin on the agenda. Mr Reinhard was in prior receipt of the agenda.  The Defendants allege that Mr Reinhard had been sent and knew of the content of the slides for that agenda item before the meeting.  It is said in Mr Howe’s closing written submission that the slides for the Project Gershwin agenda item were found on Mr Reinhard’s computer and show the precise scale of the project.  I do not know the evidence on which that assertion is based; Mr Reinhard has no recollection of seeing the slides and does not accept that he did.  In his oral closing submissions, Mr Howe said that, even if Mr Reinhard did not see the slides, he did accept that he was aware of the deal, not  necessarily all the details, but the essential point of it being a large deal joint venture between Ineos and BASF. 
ix)	Project Gershwin resulted in a joint BASF/Ineos press release on the day of announcement on 30 November 2010 and further releases on the same day by analysts covering BASF which described it as “Breaking News”.
x)	Mr Reinhard acquired shares in BASF on a number of occasions between knowing details of the proposed deal in April 2010 and the final decision to approve the joint venture on 16 November following the CEO Day on 16 November 2010, including a trade just hours after the Project Gershwin slides had been presented at the Ineos CEO day. 
xi)	On each such occasion, he was in possession of material confidential information that was likely to be price sensitive and knew as much. His explanation was simply that he bought the shares not because of the confidential information but for unrelated reasons. He would not admit, even with the benefit of hindsight, that it was improper to trade, his only concern being whether it could be established that the information he held was truly price sensitive for BASF. He did accept, in a response to a question from me, that it might have been better not to do these trades and at least to have raised it with Mr Tory or the Compliance Officer before doing so.  But he did not accept that he had done anything improper and could not judge whether he had any confidential or price-sensitive information.
xii)	This pattern of trading in companies with whom he had dealings for Ondra was also apparent in his dealing in Rheinmetall shares. His diary recorded that he was to follow up Rheinmetall (suggesting that he had already had some prior contact) on 9 August and have a telephone conference with them on 7 September.  Notwithstanding this contact or attempted contact, he bought shares in Rheinmetall on 2 July 2010, 6 July 2010 and 8 November 2010. And so Mr Howe says that, although his denial that he held confidential information about Rheinmetall is not testable, the lack of judgment in trading is obvious and the reason for not notifying his trades is inconsistent with an honest desire to comply with the rules on PADN.
xiii)	In relation to E.ON, the position was, it is said, stark:
a)	Mr Reinhard had been invited to pitch for work by a contact at E.ON on 28 June 2010;
b)	On 2 July 2010, a draft engagement letter for E.ON was prepared together with a detailed pitch proposal and a fees letter; 
c)	At 12:21 on 2 July 2010, he informed Mrs Skelly that E.ON was a conversion target for him;
d)	He purchased shares in E.ON on 2 July 2010 at 15:35;
e)	He then pitched to E.ON on 7 July 2010.
Some more detail is given at paragraphs 503ff below where I consider Mr Reinhard’s justification for his actions.  
xiv)	If the pitch had been successful, E.ON would have had to be on the Restricted List regardless of the level of price sensitive information held. To prepare the pitch proposal Mr Reinhard had undertaken a great deal of work at Ondra’s expense. To trade in such circumstances shows a remarkable lack of judgment, at best. In relation to Wacker Chemie, he had been a key contact at Ondra for Ineos and the recipient of much price sensitive and confidential information. 
xv)	Wacker Chemie was the only other beneficiary of an anti-dumping complaint made by Ineos Oxide seeking the imposition of tariffs on non-EU producers of vinyl acetate. That complaint was lodged shortly before his trading in Wacker Chemie shares but revealed to the market after his trades. Again, regardless of his level of actual knowledge, his dealing in chemical companies despite having acquired a great deal of confidential knowledge and price sensitive information about Ineos shows a profound error of judgment.
xvi)	Mr Reinhard never saw fit to inform Ondra of his actions let alone seek permission.  This was the case despite seeing trading requests being made by other personnel in relations to shares that were not on the Restricted List and circulated by the Compliance Officer for approval in advance of trading.  The documents which I have seen show this to be the case; these even include a request from Mr d’Angelin to Mrs Skelly (forwarded by her to all partners) to ascertain whether there would be any problem dealing in certain specified shares.
xvii)	Given the trading requests he made in relation to the Ineos and Kerling bonds and the secrecy of his trading despite the clearest and most express obligations of openness, it should be inferred that he knew he would never be given permission to carry out the trading and kept it secret for that reason.  Furthermore, if he had disclosed prior to the award of the 2011 bonus that he had been engaging in such trading over the preceding months without seeking prior approval and without subsequent disclosure, Mr Tory and Mr Skelly gave evidence to the effect that he would have been dismissed forthwith. 
Mr Reinhard’s riposte
498.	What does Mr Reinhard say about all of this?  He accepts that he traded using a nominee account held by his brokers in Jersey, funding the purchases from a Jersey bank account and purchasing only on foreign exchanges.  The Defendants say that this was obviously done to keep his deals secret from Ondra.  He says that this is not the case and that he used this structure for tax reasons.  Clearly tax considerations formed part of his reasons.  In addition, he says that he was not attempting to keep matters secret from Ondra.  He was, after all, dealing from the office on his Ondra computer and sending email instructions from that computer.  He could hardly have been intending to keep matters secret given that modus operandi.  
499.	He does accept – he could hardly do otherwise – that he did not gain approval for the use of his Jersey nominee account or even inform Ondra of its existence. However, he says that he always took a very careful approach when trading.  He checked against the Restricted List, which was circulated on a weekly basis and did not trade in any companies on that list. According to Mrs. Skelly, the Restricted List is intended to contain Ondra’s clients and other companies about which Ondra may have inside information. This could include target clients.  Mrs. Skelly accepted in cross examination that:
“MR CALLMAN:  And if the lead partner, ie; here Mr Reinhard, in a proper exercise of his consideration takes the view that it only needs to be on the conversion target list and not on the restricted list, that is perfectly proper and appropriate, isn’t it? 
A.	Correct” 
500.	Mr Reinhard also checked against all of Ondra’s active client engagements and all of Ondra’s client dialogues, which he knew from the weekly meetings Again, he did not trade in any company which fell into this category. Only if his trade was in a company which did not fall into either of these two classes would he trade. If he had had any doubts on this score, he would have checked with the Compliance Officer. He was clear in his evidence that he went through a careful process before buying or selling any investments and he was never in doubt, as required by clause 6 of the PADN. It is not of course, possible to test that. I will assume for present purposes that he was very careful as he suggests.
501.	Mrs. Skelly herself would go through a similar process.  If she was asked about a trade, she would check the Restricted List and, if the company was not on it, she would check with the partners to see if there was any issue with the trade being conducted.  That is evidence from Mrs Skelly on which Mr Reinhard himself relies; and I see no reason to doubt it.  But this, surely, supports the Defendants’ case that prior notice of a trade was required.  Just because a company was not on the Restricted List did not mean that it would be perfectly proper to trade, as is demonstrated by the fact that sometimes the Restricted List was incomplete.  The giving of notice would provide Ondra with the opportunity to make sure that the trade would be unobjectionable and Mrs Skelly took that opportunity by checking with the partners.
502.	Mr Callman submits that Mr Reinhard’s process was in line with clause 6 of the PADN: it is true that he failed to notify post-trade but this was always in circumstances where he had taken careful steps to ensure that his trades were appropriate. The requirement to notify post-trade is, he submits, merely a recording requirement, nothing more: it is not an essential term of the Contract. The secondary nature of this provision is said to be evidenced by the fact that Ondra made no reference to it in their letter of 21 June 2011 in which reliance was placed on trading in breach of contract as justification for withholding the payment in lieu of notice; this was the obvious place to set out the nature of any serious allegations.  I agree with the submission that a failure to report trades would not, by itself, breach an essential element of the Contract or amount to gross misconduct although it is of a far more serious nature than Mr Callman suggests – “merely” a reporting requirement.  However, that is not to say that the breach is simply to be ignored: coupled with other breaches concerning trading, it is a factor to take into account in assessing whether Mr Reinhard’s conduct amounts to gross misconduct.
503.	As to E.ON, Mr Callman notes, correctly, that was not a client of Ondra.  On 28 June 2010 E.ON invited Ondra to prepare a pitch to it on 7 July 2010 for work in relation to the sale of a 70% stake in a power station in Poland.   Mr Reinhard was the lead partner. In his view, E.ON did not need to go on the Restricted List. It was not yet a client, it had not asked Ondra to sign confidentiality forms as part of the pitch and the information Ondra had about the sale would not affect share price.
504.	In her witness statement, Mrs Skelly states that partners are all aware that they have to notify her of “invitations to pitch” so that “we can consider whether there are any names that need to be added to the Restricted List”.  On the same day as receiving the invitation to pitch, Mr Reinhard notified all the partners (including Mrs. Skelly) of the pitch.  He says, and I accept, that he also told her on 2 July 2010 that it should go on the list of Conversion Targets. Mrs. Skelly did not add E.ON to the Restricted List and did not discuss with Mr Reinhard whether he considered that it needed to be added to the Restricted List. In cross-examination, Mrs. Skelly could not point to any information held which Ondra had that meant it should have been on the Restricted List: 
“Q.	What information do you say that the Claimant actually had that means that he made the wrong decision in putting it on the conversion list and actually, although it was not yet a client, should have put it on the Restricted List?
A.	I didn’t say he had any information.  What I did say is that it is at best a serious lapse of judgment……”
505.	Similarly, she could provide no good explanation of why, if it needed to be on the Restricted List, she had not asked him about it after being notified.  A better inference is that she was clearly content that it need not be added to the Restricted List.  I agree with that assessment.
506.	I accept Mr Reinhard’s evidence that Mr Tory (and other partners) worked with him on the pitch.  And I find that none of them put E.ON on the Restricted List.  It was accepted by Mrs Skelly that they could have done so.  No good explanation has been produced of why, if it needed to be on the Restricted List, Mr Tory had not put it on there.  I am not satisfied that it needed to be on the Restricted List. 
507.	Mr Reinhard accepts that he traded in E.ON on 2 and 6 July 2010.  Given that no one else at Ondra thought that E.ON needed to be on the Restricted List, it is entirely implausible, Mr Callman submits, for Ondra now to assert that if permission had been sought for these trades, it would have been refused.  It is submitted that the Defendants have blown these trades up out of all proportion in order to try bolster their defence of gross misconduct.  Whether they have blown it up in that way and for that purpose may or may not be the case; I cannot assess that.  
508.	Mr Callman can derive some support for the proposition that this trade, taken by itself would not have justified summary dismissal, from the Defendants’ reactions when they discovered these trades.  In particular, it is noted that the trades were not reported by Ondra to the regulator, the FSA, in June 2011, notwithstanding the requirement to do so where: 
i)	it becomes aware of information which would be reasonably material to or affect the assessment of an approved person’s, or a candidate’s, fitness and propriety: FSA Supervision Manual, RR 10.13.7 or 10.13.16; or 
ii)	a significant breach of a rule or requirement has occurred: R 15.3.11; or 
iii)	a firm “suspects that one of its employees may be guilty of serious misconduct concerning his honesty or integrity and which is connected with the firm's regulated activities or ancillary activities”: R 15.3.17.
[The references are to the FSA Rules in force in June 2011.]
509.	Mr Tory’s evidence is that he did not want to report Mr Reinhard to the FSA because he did not want to hinder his career prospects; but this, it seems to me, supports the submission that he was not seriously concerned by Mr Reinhard’s actions. As Mr Callman says, if there had been any real concern and if Mr Tory had taken his obligations to the FSA seriously, he would have had to make a report in any event.  I dismiss, as being without merit, the suggestion made by Mr Tory that there was no need to report because Mr Reinhard’s employment had already terminated and because his regulation had ceased. 
510.	Ondra did, eventually report Mr Reinhard to the Financial Conduct Authority (as the FSA had become) on 20 September 2013. It asserts that, though it carried out an investigation in June 2011, it did not realise until late 2013 that Mr Reinhard traded shares in E.ON close to the date of a failed pitch in relation to the sale of a stake in a power station by E.ON in Poland. I agree with Mr Callman that this position is not credible. Either Ondra took the matter seriously enough to have carried out a proper investigation, in which case it must have identified the E.ON trades and the decision to report in 2013 was designed to damage Mr Reinhard in the litigation, or it did not take the matter seriously in 2011 and so did not investigate properly. 
511.	Mr Callman further submits that, in any case, a reasonable enquiry and analysis in June 2011 would have revealed that Mr Reinhard did not, in fact, do anything inappropriate in trading in E.ON shares.    I accept Mr Reinhard’s evidence a) that he did not believe he had any information about E.ON which could be described as price sensitive and b) that his decision to make the trades was not made on the basis of any information he gained about E.ON through the pitch.  Even Ondra, when notifying the matter to the FCA, was not confident that there was a need to do so.  Its letter included this: “It is not clear to us at this stage that it requires notification under the FCA rules, but we thought it sensible to bring it to your attention”. The FCA has taken no action to date. 
512.	Finally, in relation to the E.ON trades, it is worth underlining that even the Defendants do not assert that Mr Reinhard breached the terms of the PADN.  Instead the submission is that to trade in the circumstances shows a remarkable lack of judgment. 
513.	I now turn to Mr Reinhard’s response to the Defendants’ complaints in relation to the other trades mentioned above – Ineos and Kerling, BASF, Rheinmetall and Wacker Chemie.  These trades were raised very late in the day with relevant documentation being provided by the Defendants just before the start of Day 1 of the hearing and then on Day 3 when Mr Reinhard was already in the witness box and had to answer questions without having had the opportunity to refresh his memory or discuss them with his lawyers.  I should record that none of the allegations which were intended to be backed up by these documents has been pleaded and no application has been made to amend the pleadings.  Mr Callman submits that, unpleaded as they are, their only relevance is to the credibility of Mr Reinhard.  Mr Howe’s explanation for introducing this material at the time was that it went to Mr Reinhard’s credibility and in particular to his denials in relation to his activities on his personal account.  I take account of them only for that purpose and do not consider that I should take account of them as separate examples of conduct amounting to gross misconduct.  
514.	Mr Reinhard’s responses to the allegations which I recorded above are as follows:
i)	Ineos and Kerling: Ineos was one of Ondra’s clients. Kerling Plc was a subsidiary of Ineos. On 28 July 2010, Mr Reinhard asked Société Générale if he could buy bonds in his portfolio with them. He then gave examples of companies, which included Ineos and Kerling. At no stage did he buy bonds or invest in any other way in either of these companies. In fact, it was he who pressed, in November 2010 for Ineos to be put on the Restricted List.  This is factually correct, but it does not expressly address the Defendants’ concerns that he kept Ineos and Kerling bonds on his watchlist (see paragraph 497 v) above) until the end of October.  However, it is clear to me that Mr Reinhard was well aware that he could not use any inside information and the fact that he was instrumental in having placed Ineos on the Restricted List satisfied me that he never intended to trade in Ineos or Kerling bonds. 
ii)	BASF: From at least 2007 onwards, it was (as I accept) public knowledge that BASF was looking to sell part of its plastics operation dealing with styrene.  From November 2009 onwards it was (as I again accept) public knowledge that BASF was in talks to form a styrene joint venture. That joint venture was with Ineos.  Ineos referred to the joint venture as “Project Gershwin”. Mr Reinhard’s evidence was that he thought this was not a project on which Ondra had an advisory mandate, though Ondra was kept abreast of progress in very general terms [T3; 116/8-25].  On 16 November 2010, Ineos held a CEO day  at which Project Gershwin was to be discussed.   Mr Reinhard did not attend that day, but was sent the agenda.  It is alleged that he was also sent slides about the project, but the covering email refers only to the agenda.  Mr Reinhard has, as mentioned above, no recollection of having seen the slides  and does not accept that he did.  As I understand the evidence, these slides were in fact found by Ondra on his computer in which case he must have received them unless they had been placed there without his knowledge, a proposition I reject.  I find that it is more likely than not that he was sent the slides.  
iii)	It is alleged that Mr Reinhard gave the order to purchase shares in BASF on 16 November 2010 because of the information in those slides. This is denied by him. It was public knowledge that there was to be a JV: Ondra has not, Mr Callman submits, succeeded in demonstrating either that the fact that the JV was with Ineos could make any difference to the sale price or that he had any relevant information about the JV. Mr Reinhard says, and I accept, that BASF was not on the Restricted List.  Mr Tory accepted in cross-examination that if he had thought BASF should go on the Restricted List, he, as the lead partner on the Ineos project, would have put it on there. But he did not do so, so that logic must be that he did not consider that Ondra’s relationship with Ineos required BASF to be put on the Restricted List.
iv)	Further, Mr Callman submits that the allegation ignores the fact that Mr Reinhard also traded in BASF shares on 2 and 6 July 2010 and 11 August 2010.  And so, Mr Callman says, it is clear that Mr Reinhard had already made his decision to trade in BASF long before the CEO day. He also traded subsequently on 16 August 2011, after the identity of BASF’s joint venturer had been announced.   
v)	Rheinmetall: Rheinmetall was not one of Ondra’s clients. Mr Reinhard’s evidence (which I accept) was that he tried to set up a meeting on behalf of another junior partner at Ondra with Rheinmetall who had a client which wanted to meet with Rheinmetall.  He had a brief telephone conversation with them in September 2010 but no meeting was arranged. Neither he, nor Ondra ever had an engagement with Rheinmetall or any information from them. He bought shares in Rheinmetall on 2 and 6 July and 8 November 2010. It is plain he says, that these trades were entirely unrelated to the telephone conversation.  I agree with that assessment and reject the submission by Mr Howe  that the trades display an obvious lack of judgment.  
vi)	Wacker Chemie: Again, Wacker Chemie was not one of Ondra’s clients. Ondra’s allegation is that Mr Reinhard was privy to information that Ineos (which produced the same product as Wacker) was intending to make a complaint to the EU under anti-dumping provisions and that this would have had a beneficial impact on Wacker. The complaint was made on 22 October 2010.  He bought shares in Wacker Chemie on 8 and 17 November 2010.  His evidence, which I accept on this aspect of the case, was that he had no information whatsoever relating to this complaint.  Ondra has produced no evidence that anyone at Ondra, let alone, Mr Reinhard, knew about the complaint or of any effect on price. It was not put on the Restricted List. 
515.	The upshot of the Defendants complaints and Mr Reinhard’s ripostes are, in my judgment, therefore as follows:
i)	Mr Reinhard was in breach of the provisions of the Compliance Manual (and thus in breach of clause 6 of the Contract) by failing to gain approval for his share dealing account in Jersey and (perhaps more significantly) even telling Ondra about it.  This was a serious breach.
ii)	I proceed on the assumption that Mr Reinhard’s evidence that he was careful to ensure that such trades as he carried out did not breach the requirements of the PADN is correct; he carried out checks and was not guilty of a lack of probity.  
iii)	But he does not explain why he failed ever to comply with the reporting requirement contained in clause 10 of the PADN and in the Compliance Manual.  This failure was again a breach of contract.  The failure was, in my view, a serious breach of contract, although whether it is, by itself, sufficiently serious to warrant summary dismissal is a matter I will come to. 
iv)	The E.ON trades were not in relation to a company on the Restricted List.  The trades were carried out in breach of contract, no notification having been given or consent obtained, and the failure to report them was a further breach.  I doubt very much that, had Mr Reinhard sought permission to trade, he would have obtained it.  Nonetheless, taken by themselves and ignoring (i) and (ii) above the breaches were not, in my assessment, so serious as to warrant summary dismissal.  They represented a serious lack of judgment.
v)	Apart from the trades in BASF, I do not consider that the other trades not already mentioned (Rheinmetall and Wacker Chemie) gave rise to breaches of contract which, taken by themselves, would have justified summary dismissal.
vi)	As to Ineos and Kerling bonds, no trades were carried out.  But it is said by the Defendants that Mr Reinhard held inside information, a proposition I accept in the light of my finding that he received the slides for the CEO meeting.  Whatever his reasons for keeping Ineos and Kerling on his watch list, the possibility of abusive behaviour goes to underline the need for proper disclosure of accounts and reporting of transactions.  
vii)	The BASF trade caused more difficulty for Mr Reinhard.  But, for reasons already given (see paragraph 513 above), I do not consider that the Defendants can rely on these trades as giving rise to a breach of contract justifying summary dismissal.  Instead, evidence about them can only be relied on in relation to Mr Reinhard’s credibility, in particular in respect of his evidence about the absence of any intention to keep his share dealing secret.  So far as his evidence is concerned, I do not detect anything in what he has said about the Ineos/BASF matters throws light on his credibility one way or the other.  I ought to add, however, that I doubt very much that, taken in isolation (and again ignoring (i) and (ii) above), the BASF trades amounted to a breach of contract justifying summary dismissal.
viii)	There is no evidence that Ondra has suffered any damage as the result of Mr Reinhard’s trades.
516.	Mr Callman attempts to sideline the failure to report trades.  He says that this is simply one minor element of the requirement in clause 3 of the PADN which in and of itself cannot amount to gross misconduct. If it had amounted to gross misconduct, then it would have been referred to in the letter dated 21 June 2011 which I have already referred to.  He submits that, when I take into account the process which Mr Reinhard went through, and consider it against the background of the way Ondra operated as a whole, it is clear that he did nothing wilfully to defy an essential term of his Contract and did not behave in a way which was grossly negligent.  The alleged breaches only go to part of the contract, not to its heart: Neary v Dean of Westminster [1999] IRLR 288, at 21 & 22. Something of an altogether more serious nature (like for example insider trading) would have been required.  Mr Callman goes so far as to say that Mr Reinhard did nothing to dent the trust and confidence that Ondra had in him.  He may not have dented it before the trades were discovered, but to suggest that Ondra’s trust and confidence was not reasonably dented by the discovery is unsustainable.
517.	What Mr Callman has not done is give any satisfactory excuse for the failure to obtain approval for the Jersey account or for the failure to notify or obtain permission for trades.  He does, of course, submit that the PADN is the exclusive governing document, but I have rejected that; he has no answers to give if he is wrong, as I have held him to be, on that point.  Further, his focus has been very much on what would have happened if approval had been sought to the trades carried out.  But that misses the point.  The seriousness of the failure to obtain approval for the account or to notify trades in advance cannot be judged solely by the nature of the trades actually carried out.  The point of the requirements is to have in place a structure which prevents, so far as this can be done, either abuse or accidental breach of the strict compliance requirements imposed by the regulator.
518.	In my judgment, the combination of failures by Mr Reinhard amounted to gross misconduct within the meaning of clause 15 of the Contract. These failures were:
i)	to obtain approval for the Jersey account, and more importantly, even to notify Ondra of the existence of the account;
ii)	to report a single one of the 85 or so trades over the course of a period exceeding a year;
iii)	to obtain approval prior to any of those trades and even to give Ondra prior notification of such trades.  Whilst many of the trades may have been wholly unobjectionable, there must at least be a question mark over some, if not all, of the specific trades discussed above.  The point is not whether those trades actually did involve the misuse of confidential or inside information; rather the point is that Ondra did not have the opportunity to check the position.  If it had checked the position, it might have prohibited each and every transaction (this is particularly so in the case of BASF) even if it was nonetheless appropriate to keep the relevant company off the Restricted List.  
Confidential information
519.	I do not propose to deal with this aspect of the case.  In the light of my findings that Mr Reinhard was in breach of contract which would have justified his summary dismissal, it adds nothing to the Defendants’ case (whether their defence or counterclaim) to establish a further serious breach which did not, on any view, occur until late in the day.  The claim gives rise to serious issues about what case the Defendants can, in the light of the pleadings and witness statements, actually run before me.  And the number of disputes within the issue about the principles to apply lead me to conclude that I should not extend even further the length of this judgment.  There are, I think, no findings of fact which need to be made.  It is clear what material was sent and Mr Reinhard’s reasons for sending the material are not, I think, in dispute.  An appellate court, if this matter were to proceed further, would be in as good a position as me to apply the law to the facts.  
Expenses
520.	Clause 11 of the Contract provides for Ondra to assist with Mr Reinhard’s location expenses up to a maximum of €15,000 on the provision of receipts.  
521.	Clause 8 relates to the general expenses clause and provides:
“In addition to the Salary, you will be reimbursed for all reasonable expenses properly, wholly, exclusively and necessarily incurred by you in the performance of your duties for Ondra, upon production of receipts or other evidence for them that is satisfactory to Ondra” 
522.	Mr Reinhard says, and I so find, that he incurred relocation expenses under clause 11 in the sum of £10,725.66 (€12,299.12 converted at the 31 May 2011 exchange rate) for a removal company.  He also says, and again I so find, that he also incurred £2,058.55 of expenses under clause 8, made up of:
i)	expenses incurred interviewing candidates in June 2009, (before he joined Ondra);
ii)	day to day expenses incurred in March and April 2010; and
iii)	day to day expenses incurred between 10 March 2011 and 23 May 2011.
Of this, Ondra has conceded that the expenses incurred in May 2011 of £186.59 are due to Mr Reinhard, but they purport to set these off against their counterclaim.
523.	I find that Mr Reinhard submitted the receipts for these expenses on 23 May 2011 and 31 May 2011. 
524.	Ondra contends that Mr Reinhard has submitted his expenses too late. Mr Reinhard submits that there is no basis for this contention: there is no express contractual term requiring him to submit his expenses by a particular deadline.  
525.	He also submits that there is no basis for an implied term that “such expenses were notified and claimed sufficiently promptly to ensure that they could be charged on to clients where appropriate and accounted for by Ondra as soon as reasonably practicable after the time they were incurred” as is pleaded by Ondra.  
526.	Mr Reinhard was emailed a copy of a travel and subsistence policy on 6 October 2010.  That document does not, itself, introduce any contractual term requiring expenses to be claimed by a particular date:
i)	First, the policy states clearly that it does not have any contractual force.
ii)	Secondly, while it sets out a time limit, it does not provide that expenses will not be reimbursed if not claimed within the time limit but provides only that there is a risk that they may not be paid.  Thus under the heading “Deadline” it is stated that expenses must be submitted for payment by the 26th of every month and “If you submit your expenses late and we cannot recharge these to the client Ondra may not reimburse you”.  
iii)	 Thirdly, the policy was brought in after a number of the expenses were incurred and cannot be said to apply to those in any event.  
iv)	Fourthly, the policy clearly sets out at the start that it applies to “business expenses that are incurred in the performance of your duties”.  That clearly does not cover relocation expenses.
527.	Mr Reinhard says, and I so find, that in practice, expenses claimed late by him were always paid: for instance, an email to him on 20 December 2010 confirmed that expenses incurred between July and September 2010 would be paid, 5½ months after they were incurred and an email to him dated 26 January 2012 confirmed that expenses incurred between April and August 2010 would be paid, 8½ months after they were incurred.
528.	In her evidence Mrs. Skelly confirmed that, despite the policy, Ondra’s practice was to reimburse expenses submitted late.  She was unable to say at what point she would have refused to reimburse an expense.  This accords with Mr Reinhard’s evidence that his expenses were reimbursed regardless of when they were submitted.  
529.	Even if such a term were to be implied, Mr Reinhard’s case is that he notified his expenses within, in all the circumstances, a reasonable time. 
530.	Ondra’s response is simple.  It is that such claims needed to be submitted promptly and they were not claimed until the end of his employment. It is self-evident that any business needs to know what its debts are so that they can be paid or accrued in the accounts and needs to have swift notice of any expenses that can be charged on to a client. Mr Reinhard has sought to claim for expenses for which he plainly had no intention of claiming and for which he would not have claimed had his employment not been terminated. 
531.	As a matter of construction of the Contract, there is no time limit for making expenses claims.  If Mr Reinhard is to be deprived of an apparent contractual right, Ondra needs to rely on an implied term.  It must surely be the case that there is some time-limit on making a claim: it cannot be right that Mr Reinhard could make a claim several years after incurring the expenses.  I do propose to lay down what a long-stop date would be.  In relation to the claims for expenses which are not chargeable against a client of Ondra – that is to say the removal expenses and expenses incurred in relation to interviewing candidates – I do not consider that it was too late for Mr Reinhard to make his claims when he did.  His claims for those amounts succeeds.
532.	So far as the expenses which could, had they been claimed in time, have been passed on to clients but which no longer could be, the position may be different.  It is not, however, possibly to imply a term to the effect that claims cannot be made where the right to claim reimbursement has been lost; it is not necessary, by reference to any of the traditional tests applied in relation to the implication of terms or by reference to the more principled analysis carried out by Lord Hoffmann in A-G of Belize v Belize Telecom Ltd, to imply such a term.  It may be that, on a case by case basis, Ondra would be able to raise a defence to a claim based on estoppel, but the facts of the present case do not establish such a defence.  It is clear that the claim made by Mr Reinhard was made long before any long-stop date had arrived even assuming that I am right in saying that some time-limit must be imposed.  
533.	In my judgment, therefore, Mr Reinhard’s expenses claim succeeds.
Counterclaim
534.	Ondra counterclaims for return of the £50,000 bonus actually paid for 2011.  This claim is put on the basis that Mr Reinhard owed fiduciary duties to Ondra which included an obligation to disclose his own acts of misconduct at the time of such acts occurring.  Had he disclosed his own breaches in relation to share trading he would not have received a bonus for 2011 whether because of an immediate termination of his employment or on the basis that the bonus discretion would not have been exercised in his favour.  
535.	It follows from what I have already said when discussing Mr Reinhard’s claim to an additional bonus for 2011 that I reject the second of those reasons (ie no bonus on the basis that the discretion would not have been exercised in his favour).  As to the first reason (an immediate termination), the submission here appears to be that the employment would have been terminated as far back as March 2010 by which time Mr Reinhard had already commenced trading without having an approved account (or even one which he had notified to Ondra) and was systematically failing to report his trades.  
536.	One argument here is that the employment contract is to be treated as terminated at that time so that the bonus would not have been earned.  In this context, there is not, in my view, room for this counterfactual assumption to play any part.  If it were correct, it could equally well be said that Mr Reinhard’s salary had not been earned and he should pay that back too.  
537.	Another argument is that the employment contract could have been terminated on 3 June 2011 (when it was in fact terminated) by reason of the breach of fiduciary duty.  That may be so; but in the light of my decision about gross misconduct, that is the position anyway.  There is no more reason to deprive Mr Reinhard of the bonus actually paid on the basis of a breach of fiduciary duty than on the basis of gross misconduct.  
538.	This makes it unnecessary to decide whether a fiduciary duty was owed by Mr Reinhard to Ondra which required him to disclose his own serious misconduct as a result of his trading activities.  I doubt that there was such a duty, not least because there was already a subsisting contractual duty of disclosure to inform Ondra of his dealing.  I do not decide the point.
Conclusions 
539.	My conclusions in summary are as follows:
i)	As a matter of Construction of the Contract ignoring the effect of section 4(4) LLP Act, Mr Reinhard would have become a member of Ondra on the commencement of his employment.
ii)	The terms of his membership were to be found in the April 2009 Draft LLP Agreement when he became a member, although formally those terms may have been superseded by the terms of the March 2010 LLP Agreement.  So far as Mr Reinhard is concerned, there are no material differences between those two documents.
iii)	However, the effect of section 4(4) of the LLP Act is that Mr Reinhard could not be both a member and an employee of Ondra.  I have considered some possible ways in which to resolve the conflict at paragraphs 378 to 382 above. I will make a decision on this point after receiving further submissions.
iv)	The claims in misrepresentation can be dealt with only after further submissions.
v)	Mr Reinhard is entitled to damages for breach by Ondra of its contractual duties in relation to the 2011 bonus.  Whether the bonus of £50,000 was in fact irrational or perverse is to be the subject of further argument on a quantum hearing if the matter is pursued.
vi)	Ondra’s counterclaim for repayment of £50,000 bonus is dismissed. 
vii)	Mr Reinhard’s claim to an increase in his partnership share from 2% to 3% is dismissed.
viii)	Mr Reinhard’s claim to payment in lieu of notice succeeds. This includes a right to receive an amount which he would have received by way of dividend in respect of the notice period if he had been a member with a 2% share.
ix)	Mr Reinhard’s claim for expenses succeeds.