FEDERAL COURT OF AUSTRALIA Valra Pty Ltd v Mag Men Holdings Pty Ltd [2019] FCA 1897 File number: WAD 294 of 2016 Judge: BANKS-SMITH J Date of judgment: 20 November 2019 Catchwords: CONTRACT - contract interpretation - sale of shares under compulsory sale provision in shareholders agreement - where company in financial difficulty - where purchaser sought to acquire all shares - where come along clause utilised by company - where offer to shareholders must be on same terms - meaning of same terms - whether offer on arm's length terms - whether pre-conditions to execution of share transfer by company met - where no evidence that shares of any value CONTRACT - whether oral contract established - whether terms sufficiently certain to comprise contractual relationship - where claimed obligation was to vote as block and cooperate CONTRACT - whether good faith requirement in shareholders agreement breached - content of alleged duty - whether obligation of disclosure - whether duties of shareholders analogous to those of partners CORPORATIONS - oppression - claim by former minority shareholder under s 232 of the Corporations Act 2001 (Cth) - whether shareholder entitled to involvement in management decisions - whether use of come along clause oppressive - whether failure to disclose terms of agreements with creditors to compromise debts oppressive - whether use of provision to transfer shares between relatives used improperly - whether commercially unfair Legislation: Corporations Act 2001 (Cth) s 232 Cases cited: ACI Operations Pty Ltd v Berri Ltd [2005] VSC 201 Australian Competition and Consumer Commission v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 3) [2019] FCA 72 Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191 Australian Institute of Fitness Pty Ltd v Australian Institute of Fitness (Vic/Tas) Pty Limited (No 3) [2015] NSWSC 1639 Clarence Property Corporation Ltd v Sentinel Robina Office Pty Ltd [2018] QSC 95; [2019] 1 Qd R 144 Cunningham v Resourceful Land Limited and Ors [2018] EWHC 1185 (Ch) Dosike Pty Ltd v Johnson (1996) 16 WAR 241 Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [1998] NSWSC 413; (1998) 28 ACSR 688 Healey v Commissioner of Taxation [2012] FCA 269 Hillas & Co Ltd v Arcos Ltd [1932] All ER Rep 494 HNA Irish Nominees Ltd v Kinghorn (No 2) [2012] FCA 228 Huppert v Stock Options of Australia Pty Ltd [1965] HCA 30; (1965) 112 CLR 414 Joint v Stephens [2008] VSCA 210 Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 CLR 286 M&G Broad European Loan Fund Limited v Hayfin Capital Luxco 2 SARL [2017] EWHC 1756 (Ch) Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268 Mayfair Property Holdings Pty Ltd v Southland Packers Pty Ltd [2016] QSC 27 McCausland v Surfing Hardware International Holdings Pty Ltd [2013] NSWSC 902 McCausland v Surfing Hardware International Holdings Pty Ltd (No 2) [2014] NSWSC 163 Moffatt Property Development Group Pty Ltd v Hebron Park Pty Ltd [2009] QCA 60 Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 New South Wales v Stevens [2012] NSWCA 415; (2012) 82 NSWLR 106 Orrong Strategies Pty Ltd v Village Roadshow Ltd [2007] VSC 1 Paciocco v Australia and New Zealand Banking Group Ltd [2015] FCAFC 50 Re Bright Pine Mills Pty Ltd [1969] VR 1002 Schipp v Cameron [1998] NSWSC 997 Simsmetal Ltd v Wanless Metal Industries Pty Ltd (Unreported, NSWSC, 10 March 1997) Valra Pty Ltd as Trustee for Abdul Rahim Valibhoy Family Trust v Mag Men Holdings Pty Ltd [2016] FCA 23 Wayde v New South Wales Rugby League Ltd [1985] HCA 68; (1985) 180 CLR 459 Date of hearing: 16-19 October 2018 Date of last submissions: 25 October 2018 (Applicant) Registry: Western Australia Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 335 Counsel for the Applicant: Mr PD Lochore Solicitor for the Applicant: Dominion Legal Counsel for the Respondents: Mr J Garas with Mr TC Russell Solicitor for the Respondents: Pointon Partners ORDERS WAD 294 of 2016 BETWEEN: VALRA PTY LTD (ACN 126 540 841) AS TRUSTEE FOR THE ABDUL RAHIM VALIBHOY FAMILY TRUST Applicant AND: MAG MEN HOLDINGS PTY LTD (ACN 114 559 296) First Respondent COMINTRA PTY LTD (ABN 068 778 905) Second Respondent SOFIAH VALIBHOY AS TRUSTEE FOR M A VALIBHOY SUPERANNUATION (ABN 92 121 854 645) Third Respondent JUDGE: BANKS-SMITH J DATE OF ORDER: 20 NOVEMBER 2019 THE COURT DECLARES THAT: 1. The first respondent acted in breach of the Shareholders Deed in utilising cl 15.2 to transfer the shares owned by the applicant to Tactracom Pty Ltd. THE COURT ORDERS THAT: 2. Judgment in favour of the applicant against the first respondent in the sum of $100. 3. The applicant's claim is otherwise dismissed. 4. The parties are to confer as to costs orders and failing agreement are to provide outlines of submissions as to costs not exceeding five pages within 14 days, with costs to be determined on the papers, subject to further order. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. TABLE OF CONTENTS Witnesses and parties [5] Facts [18] 2005 - MMH incorporated and Comintra becomes shareholder [18] 2006 - Mezzanine financing brings in SLP, Rahim and Amin [20] The 2006 Shareholders Deed [25] The alleged oral agreement between the brothers about their shares [33] 2007 to 2009 - MMH continues to seek funding [35] The September 2009 resolution: Comintra and SLP provide loans [43] September 2009 - Variation to Shareholders Deed [52] The 2010 Share Restructure Implementation Deed [55] August 2012 - breakdown in relationship between Shariff and Rahim [59] Comintra and SLP continue to provide support into 2011-2013 [60] October 2013 - MMH must re-assess its financial position [65] The New Zealand operation - Mega Mags divested to Vali and Ravi [68] The Australian position - Vali provides interim financial support [75] Shariff resigns as director of MMH [78] Rahim requests information about MMH [79] February 2014 - the tipping point for solvency [86] Vali sells his shares in MMH to Shariff ahead of offer [92] The offer: MMH circular to shareholders about Tactracom proposal [93] Shareholder responses to the 10 March 2014 email [99] The Share Sale Agreements - Comintra and SLP [101] The 13 March 2014 phone call with Rahim [104] Events of 18 March 2014 [113] The signing of Valra's share transfer form [116] Valra's response and letters of demand [118] The pleaded case [123] The alleged breach of contract (Valibhoy Agreement) by Sofiah and Comintra by failing to cooperate as shareholders [125] The alleged breach of contract (Shareholders Agreement) by MMH by use of the come along clause [126] The alleged breach of contract (Shareholders Deed) by Comintra by breach of its good faith obligation [128] The alleged oppression by MMH [129] Relief sought [133] The witnesses [137] Breach of the alleged Valibhoy Agreement [149] Breach of Shareholders Deed by use of come along clause [176] Clause 15 [177] Terms of Share Sale Agreement [185] Negotiation of terms of Share Sale Agreement [193] The 'same terms' [198] Arm's length terms [221] Valra's argument based on absence of failure on its part to execute documents [237] Breach of Shareholders Deed [243] Breach by Comintra - lack of good faith [244] Terms of the Shareholders Deed [244] The misplaced analogy with partners [251] Proper principles to apply [256] Consideration [262] Oppression [275] Financial context [276] Principles [279] The transfer of Valra's shares purportedly in accordance with cl 15 (the contractual breach by MMH) [284] Exclusion from management decisions [288] The Mega Mags transaction [296] Claim that Valra was not given the opportunity to provide funding to MMH on the same terms as other shareholders [307] Keeping the separate agreements with Comintra and SLP hidden [313] Claim that Vali transferred his shares to Shariff clearly in contemplation of seeking to invoke cl 15 to acquire all shares in MMH through Tactracom and was aware that Tactracom would obtain majority ownership of MMH and half ownership of Mega Mags [316] Conclusion - oppression not established [319] The alleged overarching conspiracy [322] Relief [327] REASONS FOR JUDGMENT BANKS-SMITH J: 1 The applicant company (Valra) is a disgruntled former shareholder. It held shares in the first respondent, Mag Men Holdings Pty Ltd (MMH). MMH ran a magazine retail business in Australia and New Zealand through various subsidiary companies. 2 Valra alleges its shares in MMH were wrongly taken from it under compulsory share transfer provisions in a shareholders agreement, and it complains about that process by way of a number of different causes of action. 3 Valra seeks relief to the effect that the shares are returned to it. It concedes that the shares that were transferred were of nominal value only. It concedes (in effect) that any damages that flow from the relevant events are only nominal. 4 Behind that summary sits a breakdown in the relationship between brothers. Witnesses and parties 5 At the heart of the dispute are the two surviving of three Valibhoy brothers. With their consent, and as they share the same surname, I will refer to the related family witnesses by a single name only. 6 The first brother, Abdul Rahim Valibhoy (Rahim), is a director of Valra. He is a retired engineer. Valra became the trustee of Rahim's family trust in 2007. The other director is his son, Arif Rahim Valibhoy (Arif), a doctor. Arif has had the principal role in instructing lawyers on behalf of Valra but had no significant role in the preceding events. 7 The second respondent (Comintra) is a company controlled by the second brother, Mohamed Shariff Valibhoy (Shariff). Shariff describes himself as a property developer. 8 Shariff's son, Vali Mohamed Shariff Valibhoy (Vali), started working for MMH whilst still a university student. He commenced as operations manager, eventually rising to the position of the Australian managing director of MMH in 2010. He remained involved in MMH at all relevant times. 9 The third respondent, Sofiah Valibhoy (Sofiah), is the trustee of a family superannuation fund named for her late husband, Mohamed Amin Valibhoy (Amin). Amin died in 2011. He was the brother of Rahim and Shariff. 10 The three brothers were born in Singapore but later moved to Australia. 11 In short, there is a divide between Rahim and Shariff. That divide is reflected in these proceedings, with Valra on the one side, and Comintra on the other. Whilst Valra complains about Vali's conduct, Vali is not a party to the proceedings. 12 Each of Rahim, Arif, Vali, and Shariff gave evidence at trial. 13 Sahil Merchant (Sahil) and Ravindra Pathare (Ravi) were the founding members and directors of MMH. They are not related to the Valibhoy family although the connection was originally made due to a friendship between Shariff and Sahil. According to a March 2007 MMH information memorandum, Sahil has degrees in law and commerce and was a managing consultant for McKinsey & Co before becoming managing director of MMH and taking on responsibility for its sales, marketing and financial and legal affairs. Ravi was a pathologist before spotting the opportunity to buy a business in New Zealand known as Mega Mags and becoming an expert in the magazine industry. He resides in New Zealand. 14 An independent New Zealand private equity investor known as St Laurence Private Ltd (later known as Knox Investment Partners Ltd) also invested in MMH. It did so through a special purpose vehicle entity, SLP Mag Nation Ltd (SLP). SLP's directors at the relevant times were Mr Bret Jackson and Mr Tim Sumner. Mr Jackson has an MBA from Harvard Business School, was the managing director of Knox Investment Partners Ltd and became a non-executive director of MMH. By the time of the transfer of Valra's shares, SLP held 51% of the issued ordinary shares in MMH. It is not in issue that Knox Investment Partners and SLP are independent third party entities with no connection to the Valibhoy family. 15 The directors of MMH at the relevant times were as follows: (1) Sahil - appointed 1 June 2005 and resigned 18 October 2010; (2) Ravi - appointed 1 June 2005 and resigned 18 March 2014; (3) Bret Jackson, appointed 20 April 2006, resigned 18 August 2008, re-appointed 18 October 2010 and resigned 20 December 2013; (4) Shariff - appointed 18 October 2010 and resigned 20 January 2014; and (5) Vali - appointed 19 October 2010 and ongoing. 16 There were four subsidiaries of MMH. They were Mag Nation Pty Ltd (Mag Nation), Mag Nation Retail Services Pty Ltd (Mag Nation Retail Services) and Mag Nation Business Services Pty Ltd (Mag Nation Business), based in Australia, and Mega Mags Ltd (Mega Mags), based in New Zealand. Mega Mags in particular is relevant to some of the later events. 17 Tactracom Pty Ltd (Tactracom) is a company owned and controlled by Vali that was incorporated on or about 5 March 2014, and later came to acquire all the shares in MMH, including those obtained from Valra. Facts 2005 - MMH incorporated and Comintra becomes shareholder 18 MMH was incorporated in 2005 and ran a business known as 'mag nation'. 19 MMH initially sought seed capital. Through his friendship with Sahil, Shariff came to invest in MMH through Comintra. Initially Comintra acquired 100,000 class B preference shares in MMH for $100,000. 2006 - Mezzanine financing brings in SLP, Rahim and Amin 20 In around February 2006, MMH sought mezzanine financing for its operations, and secured interest from third party investors, as well as from Comintra. Shariff informed Rahim and Amin about the opportunity to invest. 21 In summary, SLP invested $850,000. 22 As part of MMH's quest for mezzanine financing, Comintra was offered the opportunity to invest $400,000. Shariff at this time had a close relationship with his brothers, although he resided in Melbourne whilst they resided in Perth. Comintra did not take up the entire $400,000 offer: instead, each of the brothers participated. Rahim acquired 135,000 series B preference shares for $135,000. Amin also acquired 135,000 series B preference shares for $135,000. Comintra acquired an additional 130,000 series B preference shares for $130,000. 23 The shareholdings in MMH following the mezzanine financing were as follows: Seed capital Mezzanine capital Shareholders Founding shares Series B preference shares Series B preference shares (with options attached) Ciutadella Pty Ltd 2,225,000 - 25,000 Candyfloss Ltd 2,225,000 - 25,000 Jassal Holdings Pty Ltd - 300,000 - Comintra Pty Ltd - 100,000 130,000 SR Nickless Pty Ltd - 100,000 - Urs Graf - 50,000 50,000 Amin and Sofiah - - 135,000 Rahim - - 135,000 James Baillieu - - 500,000 SLP - - 850,000 24 I note for completion that Ciutadella Pty Ltd (Ciutadella) is a company associated with Sahil, and Candyfloss Ltd (Candyfloss) is a company associated with Ravi. Amin, Sofiah and the corporate entities apart from SLP all hold the shares as trustees for various trusts. The 2006 Shareholders Deed 25 The change in the shareholding in MMH following the mezzanine capital raising is reflected in a shareholders deed executed in February 2006 (Shareholders Deed). The parties to the Shareholders Deed are Sahil and Ravi as founding shareholders (defined to include their related companies and trusts) and each of the shareholders referred to in the table above. 26 The Shareholders Deed provides for the shareholders to approve by 75% majority certain conduct, being an increase in the amount of issued shares, an amalgamation or merger with another company or the disposal of its main undertaking of MMH or a change of the Business (defined as, relevantly, the sale of magazines and other products (cl 4)). 27 It provides for nomination of directors by particular shareholders (cl 5). 28 It includes the common provisions to the effect that whilst directors may convene a directors meeting, the directors may meet together, adjourn and regulate their meetings as they think fit. There is a requirement of at least four Board meetings per year (and Board is defined as the directors) (cl 6). 29 The directors may make decisions by simple majority other than in the case of specified strategic, policy and investment decisions, which require a special resolution. Some of those specified decisions include the disposal of fixed assets having a book value of more than 25% of the consolidated fixed assets of the company, the incurring of liabilities exceeding $250,000 and the grant of security to secure debts exceeding $250,000 (cl 7). 30 The Shareholders Deed regulates the transfer of shares. Relevantly, certain transfers are 'permitted' and not subject to the prescribed regime. Permitted transfers include transfers of shares to a spouse or relative (cl 8). 31 The Shareholders Deed is of significance in these proceedings. In 2014, the 'come along' provisions of the Shareholders Deed (cl 15) were utilised and brought about the transfer of Valra's shares to Tactracom, such transfer being the issue at the centre of these proceedings. The relevant terms of cl 15 are set out later in these reasons. 32 Valra also relies on a 'good faith' term in the Shareholders Deed, which is also in issue. The alleged oral agreement between the brothers about their shares 33 Valra alleges that at about this point (late 2005 or 2006) the brothers also made an oral agreement. The alleged express terms of the oral agreement were that they would acquire shares in MMH and 'act as a block of shares' by voting collectively on their respective parcels of shares in relation to MMH. The alleged agreement was referred to as the Valibhoy Agreement. 34 The respondents deny any such agreement was made. 2007 to 2009 - MMH continues to seek funding 35 From early March 2007, MMH sought to raise further funds to expand its operations. 36 Its financial position is summarised, for example, in an Information Memorandum issued by MMH in about March 2007, that explained that the three stores then open had high rental; that it had incurred a net loss each year with continued forecast loss for the 2007 year; that it had raised $2.4 million in equity across two previous rounds of capital raising and was looking to raise between $3-4 million to help achieve growth. 37 Between September 2007 and September 2009, Shariff, Rahim and Amin each invested further in MMH through their respective investment vehicles in consideration for a range of preference shares. 38 On 10 June 2008, Sahil wrote to Rahim (and presumably the other shareholders), inviting a contribution to the funding of MMH. The email read in part as follows (unedited): We write to you at a critical stage in the evolution of mag nation. As you know, the last 2 and a half years have been a real journey, with successes, mistakes, lessons and accolades all thrown in together. The Board has just undertaken the biggest review of our overall strategy and direction in our short history, and amongst other things we want to communicate this to you. On a very practical note, the other main reason for this communication is to inform you about our short term funding requirements, and offer you the opportunity to invest in Notes in the company that are convertible to Preference Shares at your option. As founders of the Company, Ravi and I remain incredibly excited about our prospects and the potential to deliver both you and us a substantial return on investment. I am attaching to this email a detailed presentation that outlines where we are currently and where we aim to shepherd the company in the both the short and medium term. The presentation also outlines the case for investment in the Convertible Notes that are on offer. We request that you read over this presentation with care. … 39 The 'top up capital proposal' attached to the email revealed that capital was needed to 'get us through to early 2009', that 'the current portfolio will break even once we cut loose the 2 non-performing stores' and that the EBITDA (earnings before interest, tax, depreciation and amortisation) for the 2006-2007 financial year was a loss of $731,703 and the expected EBITDA for 2007-2008 was a loss of $1,093,991. 40 The capital raising was not successful, with only SLP applying for convertible debt. 41 In September 2008 MMH proposed a $2.2 million capital raising, a proposal sent to all shareholders. 42 According to Shariff, up until September 2009 there were various capital raisings and each of Comintra and Rahim's and Amin's family trusts participated, investing various amounts and receiving certain preference shares. The September 2009 resolution: Comintra and SLP provide loans 43 An important step in the chronology of events is the 2009 request for loan funds. 44 On 25 August 2009, Sahil and Ravi emailed the shareholders providing an update on the business, and proposed a resolution for MMH to raise $800,000 in debt from the shareholders. 45 The update explained, relevantly (as accurately summarised by the respondents), that: (a) the 2009 financial year 'saw us undertake a complete review of our strategy. Our retail model was not working and we had to either change our approach or die. We have managed to do the former, and since we have closed [two stores], our trading portfolio has managed to break even for the first time in our history…'; (b) the EBITDA for 2008-2009 was a loss of $1,022,936; (c) MMH was proposing to bring in $800,000 in loan capital, and that, as it involved equity, it had to be open to all shareholders and also had to be voted on and agreed to by the shareholders. The shareholders were asked to approve the resolution and invited to apply for loan units; and (d) changes were being proposed to the Shareholders Deed to 'clean up … governance issues'. Those proposed changes included conferring on the Valibhoys as a group a right to appoint a director (equivalent to the right held by SLP) in certain circumstances and changes to the conditions for compulsory sale of shares, referred to as a 'come along' provision (cl 15). 46 The resolution to raise the $800,000 loan capital was passed, including by votes made in favour of the resolution by Valra, Comintra and Sofiah. The resolution included terms that MMH would issue a new class of shares (class D preference shares) to the shareholders who advanced funds to MMH. 47 Valra admits that despite being provided with the opportunity to do so, it declined to loan MMH funds at this time. According to Shariff, he had regular discussions at this time with Rahim and Amin, and he told them that MMH was facing financial difficulties and needed funds. 48 Both Comintra and SLP entered into loan agreements secured by fixed and floating charges granted by MMH by which they agreed to each provide $400,000. I will refer to those as the Comintra Loan and the SLP Loan. I note executed copies of the loan agreements were not in evidence but the fact of those loans was not in issue. 49 This is an important event in terms of the role of the shareholders from 2009 onwards. Both Comintra and SLP supported MMH as creditors, in addition to holding shares. Valra, on the other hand, did not. It was not a creditor. It will be necessary to return to the significance of this distinction. 50 Relevantly, it is not in issue that the $400,000 Comintra Loan was drawn down by MMH in four tranches between September 2009 and February 2010. A loan account for the SLP Loan was in evidence and showed an advance of $400,000 by four tranches between September 2009 and March 2010. 51 As anticipated by the terms of the loans, both Comintra and SLP subscribed for the class D preference shares in MMH. September 2009 - Variation to Shareholders Deed 52 In September 2009 the Shareholders Deed was varied by a Deed of Variation. 53 Relevantly, the Shareholders Deed was varied by the introduction of a definition of 'Valibhoy' (which is defined as Comintra, Valra and (relevantly) Sofiah collectively and is set out in full below), by introducing a right for each of Valibhoy (as defined) and SLP to appoint a non-executive director, by amendments to the come along clause (cl 15) and by providing that the Shareholders Deed may only be amended with an affirmative vote from, relevantly, SLP and Valibhoy (as defined). 54 The Deed of Variation was signed in counterpart, including by Valra. The 2010 Share Restructure Implementation Deed 55 On 15 July 2010, Ravi and Sahil wrote to the shareholders of MMH, as follows: We trust that you are well. While Ravi and I have been in touch with most of you over the last few weeks, there are a few shareholders who we have not been able to contact. This letter is intended to fill everyone in on the current funding situation with the company, and how we are going to restructure ourselves for the future. As all of you will know, Sahil is ending his day to day involvement with the company as of the 16th of July. Subject to the completion of legal requirements, he will soon retire as a director of Mag Men Holdings and all of its subsidiaries. Our two largest shareholders, Knox Investment Partners [SLP] and Comintra Pty Ltd are going to continue to support the company and extend further funding via the existing debt facility that they currently have in place with the company. We are very grateful for this ongoing support. As a condition of this continued support, we are undergoing a complete share restructure. The shareholders are required to vote in favour of this share restructure. If the vote is not successfully passed, it is likely that funding will not be forthcoming and that the company would in that case need to be liquidated. As part of the restructure, the following things are occurring: 1. All series B, C and D shares will be cancelled, leaving only ordinary shares in the company - the idea is to simplify our share structure 2. The existing ordinary shares in the company, as well as new ordinary shares (on the same terms as the existing ordinary shares) will be re-distributed … … Both Ravi and Sahil acknowledge that this is not the outcome that anyone would have hoped for when making their initial investment. That said, the company is performing better than ever before, and both management and the largest shareholders can see light at the end of the tunnel. It is a survival imperative that the company immediately finds new funds for the business (ongoing attempts over the last 12 months at finding an exit have not been successful). As part of the restructure, we will soon be asking you to vote in favour of this proposed plan via a shareholders resolution, and sign a Share Restructuring Deed that will set out all of these changes. We want to be clear at this point in that the consequences of this restructure not being successfully executed will most likely mean that the company would then be put into administration, with little to zero return to both shareholders and debtholders. … 56 On 26 August 2010 Sahil (who was then still assisting MMH) wrote to the MMH shareholders attaching various documents, including a shareholders memo, a formal share buy-back letter, a Share Restructure Implementation Deed with an annexure deed particular to each shareholder, and a circular shareholders resolution for signing. The shareholders memo included the following relevant information: This memo explains a proposed simplification of our share structure. It is set within the context of the business looking for additional funding, but needing a more manageable share structure to attract that funding. The business has improved over the last 12 months in very trying retail conditions. At an operational trading level, the business continues to make money and performance at that level is still growing. However, we are still not covering our corporate overheads, although the monthly burn is decreasing and expected to continue to decrease. Based on a simplified structure and improved trading, our largest shareholders have agreed to continue debt funding the business via an extension of the commercial loans they have made to the Company. To this end, our lawyers have prepared a Share Restructure Implementation Deed (SRID) which sets out all terms relating to the simplification of the share structure of the Company, buy-backs and transfers and issue of new shares, conversion of existing Company debt and other necessary transactions. Going forward, our share structure will be easier to manage as we will not have varying share classes with differing rights attached to each class. ... 57 The Share Restructure Implementation Deed was executed by, relevantly, Rahim on behalf of Valra. It was a condition of that deed that each shareholder separately execute a deed of agreement that provided for the issue of ordinary shares in consideration for the relinquishment to MMH of its preference share. Valra executed such a deed. The separate agreements also provided for the forgiveness of certain debts owed by some shareholders (Sarah Merchant and Graf as to debts to MMH, and Ciutadella and Candyfloss as to debts to SLP). Further, as part of the restructure, in addition to selling its various class B, C and D preference shares back to MMH, Comintra acquired additional shares from Ciutadella and Candyfloss, so that after the reconstruction it owned some 21.06% of all issued ordinary shares in MMH. 58 The following table reflects the share holdings after the Share Restructure Implementation Deed: Post Completion Shareholders Ordinary Shares Percentage of Ordinary Shares SLP 5,100,000 51.00% Comintra 2,106,000 21.06% Valra 647,000 6.47% Amin & Sofiah 647,000 6.47% SR Nickless 15,910 0.1591% Sandra 12,240 0.1224% Graf 48,940 0.4894% Sarah Merchant 159,060 1.5906% Nishat Merchant 13,850 0.1385% Candyfloss 750,000 7.50% Vali 500,000 5.00% Total 10,000,000 100.00% August 2012 - breakdown in relationship between Shariff and Rahim 59 It is not in issue that from about August 2012 Shariff and Rahim ceased liaising with each other on MMH matters, and rarely otherwise. They have different perspectives as to the reasons for the breakdown in the relationship but little turns on that. Comintra and SLP continue to provide support into 2011-2013 60 Meanwhile MMH continued to trade with the support of Comintra and SLP. 61 That support was provided by extending the term of both the Comintra Loan and the SLP Loan and by providing further advances, adopting many of the original terms of the loans. The term of the pre-existing loans was extended by first extension letters (dated 1 September 2010) to September 2011 and then was further extended by second extension letters to September 2012. The extension letters also refer to the advance of further funds. The further advances are evidenced by loan ledgers and bank records. 62 Relevantly, Shariff gave evidence that in accordance with the first extension letter, Comintra advanced a further $350,000 by various tranches, with the final tranche paid on 17 May 2011. Comintra then agreed in accordance with the second letter to advance further tranches, and it did so (providing a further approximately $95,000) with the final payment made in June 2012. Shariff understood that SLP made similar advances under the September 2011 and September 2012 letters in the same proportion to its original loan. 63 Further, on around 3 October 2012 Comintra made an additional one-off advance of $100,000. Between April 2013 and July 2013, Comintra advanced an additional $190,000 in four tranches. 64 I note that although Vali had been a director of Comintra at various times, he resigned as at May 2013, leaving his parents as its only directors. October 2013 - MMH must re-assess its financial position 65 There were some discussions during 2013 with a New Zealand entity known as Opus about the prospect of it buying MMH. By October 2013, the discussions with Opus had not resulted in any proposal. MMH was left seeking further funding from Comintra and SLP to survive. 66 The following table, based on the unchallenged financial reports of MMH, indicates the profit and loss before income tax position for the business and, for reasons that will become relevant, including as at 17 March 2014 (losses in parentheses): FY 2010 FY 2011 FY 2012 FY 2013 Year to 17.3.2014 MMH (49,117) (286,859) (300,483) (1,247,777) (9,100,354) Mag Nation (557,293) (242,882) (216,706) (3,212,265) Mag Nation Business Services 287 169 44 Mag Nation Retail Services (41,682) (57,002) (443,577) Mega Mags NZ (283,594) (NZ 206,511) 67 As to major receivables, as at 30 June 2013 MMH was owed NZ$1,007,180 by the New Zealand subsidiary Mega Mags and AU$4,394,820 by Mag Nation. Relevantly, according to Vali, the directors of MMH considered the likelihood of recovery of the loan from Mega Mags to be 'non-existent'. According to Vali, Mr Jackson had talked about a preparedness to wind up Mega Mags. The New Zealand operation - Mega Mags divested to Vali and Ravi 68 It is worth noting that the directors of Mega Mags as at October 2013 were Ravi, Shariff, Vali and Mr Jackson. 69 At that time, the position of the New Zealand operation was such that Ravi requested an urgent injection of cash from MMH. Ravi emailed Mr Jackson, Mr Sumner, Shariff and Vali on 10 October 2013 informing them that he had received a call from Mega Mags' landlord to the effect that if the September 2013 arrears were not cleared then they would issue a notice and take possession. Ravi noted that Mega Mags would incur a make good obligation, might not have a store and would have debts to clear, plus the October rent was due on 16 October 2013. 70 Comintra and SLP were not prepared to fund the New Zealand arm of MMH any longer, and were prepared to see it wound up. Vali gave evidence to this effect. Shariff also gave evidence to the effect that as at October 2013 he (Comintra) was not prepared to provide further finding to MMH and he understood SLP had the same view. Vali and Ravi considered that they could make the New Zealand operation of the business work, and offered to take over the liabilities of Mega Mags by buying its shares from MMH. One of the terms was that the loan from MMH to Mega Mags (considered by the MMH directors to be in effect irrecoverable) be forgiven. 71 According to Vali, in October 2013 the MMH board decided to divest and sell the shares it held in Mega Mags to Vali and Ravi. 72 According to Vali, he and Ravi each injected AU$25,000 into Mega Mags in November 2013 to keep it running. The transaction itself did not complete until March 2014. 73 Vali's evidence was that the delay in completion was caused by the need to obtain Australian and New Zealand legal advice, and the lawyers took some time to respond and prepare the documentation. There is documentary evidence consistent with this explanation. For example, a draft Agreement for Sale and Purchase of Shares in Mega Mags prepared by New Zealand lawyers was emailed to Vali by Ravi on 16 January 2014. The draft names MMH as the vendor, with Vali and Ravi as purchasers, and includes confirmation by MMH of the discharge and release of the shareholder loan made by it to Mega Mags. 74 The sale and purchase of the shares and the release of the MMH debt was documented some time later. The loan debt forgiveness form was followed up by Ravi in January 2014 and signed by MMH on 21 February 2014. The Agreement for Sale and Purchase of Shares in Mega Mags made between MMH, Tactracom and Ravi was signed on 11 March 2014. Relevantly, in this final copy references to Vali as purchaser were struck through and references to Tactracom substituted. The share transfer forms were not completed until the MMH board meeting of 18 March 2014. This timetable for completion was the focus of some attention from the respondents and it will be necessary to consider it further. The Australian position - Vali provides interim financial support 75 The issue of ongoing financial support for the Australian arm of the business remained. By October 2013 Comintra and SLP had refused to provide additional funding. Vali offered to advance up to $250,000 but on terms. Those terms were that the Comintra and SLP loans to MMH would be subordinated to his loan, and that his loan to MMH would be repayable by 28 February 2014. Vali said his intention was that the loan would be repaid by 28 February 2014 from sale proceeds, if a sale to Opus went ahead. According to Vali, the funds were advanced for working capital purposes and to fund trading losses over the Christmas period. 76 The loan was documented by way of a written loan agreement made between MMH and Vali, a general security agreement made between MMH and Vali and a written priority deed whereby Comintra and SLP agreed to regulate the security priorities such that the security in favour of Vali ranked first. The copies of all documents in evidence do not bear a date but according to Vali the finance was made available from late 2013. In each case Vali has signed the documents before a witness who is named and is described as an accountant. Presumably if there were some issue as to the date of signing, the accountant could have been asked by Valra to confirm the relevant date. Vali's evidence was that the loan was originally omitted from the financial records of MMH because he omitted to provide copies of the suite of documents to MMH's accountants. That position was later rectified and there is no basis upon which I would reject Vali's evidence that the loan facility was available from late 2013. 77 The evidence was not clear as to how much of the $250,000 advance was drawn down, but certainly some of it was, as evidenced by bank account statements and Vali's evidence that he used his personal credit card to pay the expenses of the business. Shariff resigns as director of MMH 78 In January 2014 Shariff resigned as a director of MMH, leaving Vali and Ravi as its only directors. This is relevant in that at the time of the pending events in 2014 relating to the sale of MMH shares, Shariff was no longer a director and was only involved through Comintra. Rahim requests information about MMH 79 On 5 December 2013, Rahim sent an email to Ravi headed 'Mag Nation', requesting 'whatever shareholder information that may be available' and noted that: Shariff Valibhoy no longer represents me in any matter. Therefore, I would like to receive communications directly … 80 It can be inferred that Rahim was referring to the fact that Shariff was the 'Valibhoy representative' under the Shareholders Deed as amended. 81 Until that day, Rahim had not requested any information from Vali in relation to the financial performance of MMH and its subsidiaries. Rahim's evidence was that he had not received any information about MMH after the 2010 restructure, but that he had not paid any particular attention to the lack of information. He also said he had not been asked to assist MMH by providing loan or equity funding. He said he spent much of 2013 'getting his affairs in order' and recovering from Amin's death. His first communication with MMH after that time was the email to Ravi of 5 December 2013. 82 Vali responded on the same day by email, asking what information Rahim was after and offering to call Rahim. Rahim replied, stating that he was after routine shareholder information on performance and plans. 83 On 6 December 2013, Vali sent a further email to Rahim in which he provided a brief update on the performance of Mag Nation: With regards to mag nation, there really hasn't been much positive news to update. We've had 2 consecutive years of decline in sales. It has been a difficult environment for retail in general, and doubly so for retailers that deal in printed reading matter. The company has been struggling along for the past couple of years, and really has only been kept afloat by loans from the main NZ shareholder and Papa (Comintra.) The NZ based shareholder, Knox, (which owns approximately 51 % of the company) is also a majority shareholder in a large printing company and they are exploring the possibility of this company possibly taking over mag nation, to at least keep the business running. This plan is taking a long time to come to fruition, and in the meanwhile, the business exists on a sort of hand to mouth basis. It's the busiest time of the year for the business at the moment with Christmas fast approaching. If it's alright with you, I will put together a comprehensive report of the past 2-3 years and send it through to you after Christmas. In the mean time, I will forward you the filed accounts until 30 June 2012 (We won't file 30 June 2013 figures till next year) for your records, or if you rather, I can send them to you together with the report that I prepare. 84 Vali then provided information to Rahim as follows: (a) on 9 December 2013, tax returns and financial statements, including the financial statements for MMH and the Australian subsidiaries covering the 2010, 2011 and 2012 financial years; (b) on 19 February 2014, a shareholder update, discussed further below; (c) on 19 February 2014, further financial statements for the 2010, 2011 and 2012 financial years (being accounts forwarded from the external accountant); and (d) on 24 February 2014, tax returns for Mega Mags for the 2010, 2011 and 2012 financial years. 85 I return to the issue of the information provided to Rahim at this time when addressing the credibility of Rahim's evidence. In short, Rahim said under cross-examination that he did not review the financial statements when he received them or in December 2013, January 2014, February 2014 or March 2014. However, I note that the financial information contained in the documents that were provided was not at any point impugned by Valra. February 2014 - the tipping point for solvency 86 On 19 February 2014 Vali wrote to the shareholders. 87 Relevantly, the update to shareholders read as follows: As you are aware, it has been a long while since you've received an official update with regards to Mag Men Holdings. The last official communication you would have had would have been in mid 2010, when the previous Managing Director, Sahil Merchant, left the company. To jog your memories, in July 2010, we had 3 stores in Australia (Elizabeth St and Greville St. in Melbourne, King St in Sydney) and 3 stores in Auckland (Sylvia Park, Ponsonby and Queen St.). The company has had an especially difficult time these past few years. Apart from facing a general retail environment that has been extremely difficult for bricks and mortar stores to operate in, we have had to contend with the decline of many parts of the publishing industry. The latter has come about as a result of changes in the way in which information is consumed. The public is increasingly using e-readers and tablets to read publications which they would have previously bought physical copies of. Any expansion plans were shelved, and our focus was squarely on cutting costs. We have substantially reduced corporate staff and costs over this period. In addition to this, as leases have expired on loss making stores, we have shut them down. Specifically, we have closed 2 stores in Auckland - Queen St. in 2012 and Sylvia Park in 2013. As the remaining New Zealand operations continue to incur a loss, we have made the decision to separate and divest all New Zealand operations from Mag Men Holdings. What this means is that Mag Men will no longer be responsible for the existing New Zealand operations of the company. Ravi Pathare and Vali Valibhoy feel that they can make this operation viable, and accordingly, have taken over the liabilities and ongoing costs pertaining to Mega Mags Ltd. The Board considered the only viable alternative to this was to shut down the NZ business entirely. The King St store in Sydney continues to make a loss, and when the lease for that store expires in July this year, we are likely to shut down that store too. Given the difficult environment and circumstances that we have been operating in, the company has continued to make a substantial loss over the last few years and has survived mainly as result of drawing on the existing working capital loan facility with two shareholders, Comintra and Knox Partners, that has been in place since September 2009. More recently, Vali Valibhoy has provided the company with a secured loan for further working capital requirements. We are currently exploring being acquired by another, larger company that operates within the print and publishing industry. An acquisition of this nature would result in synergies for both parties. This line of action is very much in its infancy, and may well not eventuate at all. Should this be the case, then we will need to consider an extensive restructure of the company. Two directors of Mag Men Holdings have recently resigned, Bret Jackson, and Shariff Valibhoy. Ravi Pathare and Vali Valibhoy are continuing as directors of Mag Men Holdings. If you have any question, please do not hesitate to contact me or Ravi on the following email addresses or phone numbers … 88 According to Vali, by late February 2014 or early March 2014, it was apparent that any dealing with Opus would not proceed in a timely manner that would allow MMH to keep trading. No formal offer had been received from Opus. The agent for the landlord of the store referred to as the Elizabeth Street store in Australia told Vali that the landlord had passed away, and his estate wanted all rent and outgoings to be paid in full up to March 2014, as well as an increase in the bond that was part of the lease renewal. The agent told Vali that a default notice would be issued if the payments were not made in one week. Those liabilities totalled about $100,000. Vali said that MMH's cash flow at that time was insufficient to meet those payments and there were several other outstanding bills. He was concerned as to MMH's solvency. Vali said there were discussions between him and Ravi as directors about the alternatives of putting MMH into administration or liquidation. 89 At that time, MMH owed approximately $1.8 million to Comintra and $1.6 million to SLP. MMH had never repaid any principal or interest on those loans. Vali formed the view as a director of MMH that MMH was not financially able to repay the loans it owed to Comintra or SLP. 90 Vali gave evidence that during early 2014 he also sought advice as to options for MMH relating to insolvency, including administration, from an accounting firm, Worrells. He said he approached banks to seek support but nothing was forthcoming. 91 Vali said he was prepared to provide further funding to MMH (in addition to the $250,000 already documented), but only if he were able to take over MMH, the only real alternative being administration or liquidation. Vali sells his shares in MMH to Shariff ahead of offer 92 On 7 March 2014 Vali transferred his 500,000 shares in MMH (5% of issued shares) to Shariff. Such a transfer between relatives was permitted by cl 8.2 of the Shareholders Deed. Vali accepted that he undertook that course because by this time he had decided to make an offer to purchase all of the shares in MMH through his newly-incorporated company, Tactracom. The offer: MMH circular to shareholders about Tactracom proposal 93 On 10 March 2014 Vali and Ravi wrote to all shareholders about a restructure of MMH. The covering email read: Dear Shareholders, Please find attached details regarding a proposed extensive re-structure of Mag Men Holdings. If you agree to the terms proposed, simply reply to this email, saying 'I accept the proposal by Tactracom Pty Ltd to buy all shares in Mag Men Holdings' OR tick the appropriate box on the Acquisition Term Sheet and email a scanned copy of that document back to his email address after signing and dating it. Regards Vali and Ravi 94 The attached details read as follows: Dear Shareholders, I hope you are all well. We mentioned to you in our last update that Mag Men holdings was exploring being acquired by another larger company within the print and publishing industry. It has become clear that this transaction will not eventuate in a viable time frame, leaving the company with a substantial unfulfilled funding requirement. Accordingly, we have had to consider an extensive re-structure of the company. We also mentioned in our last update that Vali Valibhoy had recently provided the company with a secured loan. It is apparent that further funding is required by the company, which Vali is prepared to provide. Other avenues of funding were examined, but apart from Vali, no other party was willing to provide any further funding. To secure this further funding, a proposed acquisition is outlined in the attached term sheet. Please note that the proposed purchaser - Tactracom Pty Ltd is owned by Vali Valibhoy. Upon approval of the re-structure, documentation will follow. If you have any question, please do not hesitate to contact Ravi or Vali on the following email addresses or phone numbers: … 95 The proposed term sheet (also attached) read: Key Terms for the proposed re-structure of Mag Men Holdings Pty. Ltd. 1. Tactracom Pty Ltd A.C.N. 168 381 637 proposes to purchase all the shares in Mag Men Holdings Pty Ltd A.C.N. 114 559 296 for $100 with effect from Friday 7 March 2014. 2. Mag Men Holdings Pty Ltd and its Australian subsidiaries will be purchased with all existing assets and all existing liabilities including outstanding tax liabilities. 3. By separate agreement, the major debt holders in Mag Men Holdings, have come to terms for treatment of their loans. Regards Vali Valibhoy and Ravi Pathare I accept this acquisition offer I do not accept this acquisition offer Signature: Date: Name: 96 Mr Jackson had seen the email in draft in advance (on 7 March 2014). Mr Jackson indicated acceptance that day but subject to transaction documentation. The draft email was also copied to Mr Sumner and Shariff. 97 A follow up email invited the recipients to also indicate by reply email if they rejected the offer. 98 Vali also spoke to shareholders by telephone following the 10 March 2014 email (including Rahim) in order to discuss the proposal. Shareholder responses to the 10 March 2014 email 99 In response to the email dated 10 March 2014: (a) SLP accepted the offer on the same day (by email from Bret Jackson at 12.45 pm); (b) Comintra accepted the offer on the same day (by email from Shariff at 1.31 pm); (c) Sofiah accepted the offer the same day (by email at 9.20 pm); (d) Shariff accepted the offer on 11 March 2014 (by email at 11.04 am); (e) Candyfloss accepted the offer on 11 March 2014 (by email from Ravi at 9.05 am); (f) Sara Merchant accepted the offer on 12 March 2014 (by email at 11.03 am); (g) Ciutadella (which based on the transfer then held 19,576 shares) accepted the offer on 12 March 2014 (by email at 8.10 am); (h) Nishat Merchant accepted the offer on 13 March 2014 (by email at 12.52 pm); and (i) Sandra Nickless confirmed her acceptance of the offer on 17 March 2014 (by email at 9.23 pm). 100 Shariff said that by this time he had accepted the loans advanced by Comintra to MMH would be written off. He did not communicate with Sofiah or Rahim about his decision to accept the Tactracom offer. There was no other evidence of communications between Shariff or Sofiah at this time. The Share Sale Agreements - Comintra and SLP 101 Meanwhile, Vali had also been liaising with the creditor stakeholders, Comintra and SLP. 102 Email exchanges between Vali, Shariff and Mr Jackson of 6 March 2014 indicate that they were then in discussion with Vali about the terms of a proposed issue of preference shares to them as part of the takeover. Those discussions culminated in the execution of a Share Sale Agreement by each of Comintra and SLP. 103 The Share Sale Agreement between Comintra as vendor, Tactracom as purchaser and Intracom Pty Ltd (as guarantor) provided for the transfer by Comintra of its shares in MMH to Tactracom on condition that Comintra agrees to cancel the loan otherwise due by MMH, and in consideration of such cancellation Comintra would be issued redeemable preference shares in the capital of Tactracom with a face value equivalent to the extent of the loan. A similar deed was entered into between SLP as vendor and Tactracom as purchaser. The drafts of the agreements were considered by lawyers, amended and finally executed on 18 March 2014. Further attention is given below to the specific provisions of the agreements in the course of examining their proper construction and effect. The 13 March 2014 phone call with Rahim 104 On 13 March 2014 Vali and Rahim engaged in a lengthy phone conversation (some 36 minutes) that was recorded by Rahim (unbeknownst to Vali). Both the audio and transcript were in evidence. 105 Vali's tone during the conversation is at all times helpful and respectful. 106 Rahim indicated he had not read the emails or documents that had been provided by Vali and he had just scanned them. Vali then provided a history to Rahim of the events that had led to the email of 10 March 2014 being sent. 107 Vali explained to Rahim, among other things, that the business had been losing money; that the New Zealand investor (SLP, but referred to as Knox) had invested but did not want to provide further funds; that Shariff (Comintra) had been matching SLP by providing funds when MMH needed working capital; that there had been conversations with Opus (introduced through SLP) but nothing had come of it and time was running out; creditors were chasing MMH through Vali; effectively the only solution if Vali was to keep going with MMH was to try a few things 'but I'm not going to keep going unless I have control of the company' so the proposal from Tactracom was put to shareholders; that shareholders holding more than 90% of the issued shares in MMH had already agreed to Tactracom's offer, which was sufficient to trigger a come along provision in the Shareholders Deed; that Tactracom did not need Valra's acceptance of its offer, however Vali would have preferred for Rahim to agree on behalf of Valra; that Vali had transferred his 5% shareholding to his father so he could make the offer and that transfers between family members were permitted under the Shareholders Deed; that there remained about $850,000 by way of liabilities such as tax and superannuation payments to be managed and assumed by Vali; that there was director approval to divest assets and that he had asked if shareholder approval was required but understood that it could be done with director approval; that it was agreed earlier in about November that Mega Mags would be divested, and Ravi was to keep half of Mega Mags; MMH could not repay the loans it owed to SLP and Comintra and the alternative if the shareholders had not accepted the proposal was that MMH and its subsidiaries would be put into liquidation. 108 Rahim complained during the call that he had not received information regularly over the years and in particular asked Vali if it was open to MMH to divest itself of assets without shareholder approval. He asked whether when loans were taken, shareholders needed to be informed. Vali said that as he understood it, it was not necessary to inform shareholders and that lawyers were involved, and he assumed they would have told him if it were necessary to inform shareholders. 109 It was clear that Rahim understood what was being put to him by Vali, because he said things during the telephone call such as 'basically what you're saying is that all the shareholders write off their shares', and that if less than 10% of shareholders do not want to sell their shares they 'basically don't have any rights' and must do so according to the Shareholders Agreement. 110 At the end of the call Vali agreed to provide copies of further documents to Rahim. 111 It is fair to say that during the telephone call Vali did not tell Rahim that MMH would exercise its power to sign the transfer form regardless of any further response from Rahim. Vali did, however, clearly state that MMH did not need Rahim's consent to do so. Further, I note at this point that the information given by Vali to Rahim during the phone call accords with the evidence generally. 112 Later that evening Rahim sent Vali a follow up email repeating his request for documents to be provided, including a copy of the Shareholders Deed. He also wrote that he was only then looking over the information that Vali had already sent to him, and he was not in a position to respond to the proposal. Events of 18 March 2014 113 As noted above, on 18 March 2014 the Share Sale Agreements with Comintra and SLP were finalised and executed. 114 Also on that day, Vali and Ravi attended a board meeting of MMH. The minutes record as follows: The directors considered all the Share Transfer terms were on arm's length basis in that every shareholder received the same consideration for their Share Transfer. The 2012 Financial Accounts were reviewed and subsequent trading position. Based on the substantial trading losses and substantial corporate debt, the current market value of Mag men Holdings Pty Ltd was nil. Table signed Share Transfers in favour of Tactracom Ply Ltd - totalling more than 90% - Comintra Pty Ltd - SLP Mag nation Ltd - Mohamed Amin Valibhoy & Sofiah Valibhoy - Candy Floss Pty Ltd - Nishat Merchant - Sarah Merchant - Cuitadella Pty Ltd - Mohamed Shariff Valibhoy Tactracom Pty Ltd was not controlled (within the meaning of section 50AA of the Corporations Act) by any of the shareholders. Confirm more than 90% Shareholders have signed share transfer giving effect to rights under Clause 15.1 of the deed. The terms of the share transfers were all the same. Valra Pty Ltd, S R Nickless Pty Ltd, and Sandra Teresa Nickless failed or declined to execute share transfers. It was noted that SR Nickless Pty Ltd and Sandra Teresa Nickless had accepted the terms of the offer; however they had not provided signed Share Transfers by the date of this meeting. Director of the company, Vali Valibhoy signed the remaining share transfers: - Valra Pty Ltd - S R Nickless Pty Ltd - Sandra Teresa Nickless. The ASIC form 484 updating the share holdings was signed and lodged. New share certificate was issued to Tactracom Pty Ltd. The Share Sale Agreement of March 2014 was tabled and following completion of the terms of the Agreement the loans from Comintra Pty Ltd and Knox Investment Partners were cancelled. 115 Later on 18 March 2014 Vali sent the following email to Rahim (with attachments): I have attached the following to this email: 1. Shareholder Register, indicating which shareholders have agreed to my proposal. 2. Original Loan Agreement between Comintra and Mag Men (2009) - SLP's loan agreement was the same, but with their Entity's name rather than Comintra's. (Note that this is the same as the working capital agreement). 3. A fixed and floating charge relating to the above loan agreement - again, there was one for SLP as well. 4. The loan extension letter which was issued to Knox [SLP] and Comintra 5. Shareholders' Deed As discussed last week, shareholders representing more than 90% of all shares in the company have agreed to my proposal, and have now transferred their shares in Mag Men Holdings to Tactracom P/L. As per the conditions in the shareholder's deed, I have proceeded to transfer the remaining shares, including yours to Tactracom. The signing of Valra's share transfer form 116 After receipt of acceptances, Vali circulated standard share transfer forms to each of the shareholders who had communicated their acceptance. He did not send a form to Valra as Valra had not indicated acceptance of the offer. 117 MMH, purporting to utilise the power under cl 15 to execute transfer forms on behalf of Valra (as a come along transferor), signed its transfer form on 18 March 2014. This was a matter hotly contested by Valra, who claimed that the form was executed on 14 March 2014 and before the pre-conditions for the exercise of the signing power were met. For reasons detailed below with respect to the alleged wrongful exercise of cl 15, I have found that Vali signed the form on behalf of MMH on 18 March 2014. Valra's response and letters of demand 118 On 19 March 2014 Rahim sent an email to Vali and Ravi referring to the restructure proposal of 10 March 2014 and stating that he did not consent to the transfer of his shares to Tactracom. 119 By email of 7 April 2014 Rahim wrote to Vali as follows: Further to my email of 19 Mar 2014, shown below here, we have received a sum of $6.47 into Valra Pty Ltd's account with the description 'DEPOSIT TACTRACOM P/L MAGMEN SHARES'. We have not consented to the transfer of VALRA's shares in Mag Men and would like to return this $6.47. Please provide bank account details to do this. For now, until we hear from you regarding the return of this unsolicited transfer, we will hold the $6.47 without prejudice to our rights in the matter of the transfer of our shares without our consent. 120 On 8 April 2014 Vali replied as follows: I refer to your email dated 7 April 2014 regarding the transfer of 647,000 ordinary shares in Mag Men Holdings Pty Ltd (MMH) from Valra Pty Ltd (Valra) to Tactracom Pty Ltd (Tactracom) in consideration for $6.47. I confirm that the share transfer was registered on 18 March 2014 pursuant to clause 15 of the Shareholders Deed dated 28 February 2006 (as previously advised by email that day). Valra's consent was not required to effect the share transfer. Valra became contractually obligated to transfer its shares in MMH under clause 15.1 when MMH's shareholders holding more than 90% of the issued shares agreed to sell their shares on arm's length terms to Tactracom. Tactracom was not controlled by any of those shareholders. Under clause 15.2. MMH was authorised to act as agent for Valra for the purpose of executing all such documents required to effect and complete the share transfer in accordance with Valra's obligations. The terms on which Valra's shares were transferred to Tactracom were the same as the terms on which all other MMH shareholders transferred their shares to Tactracom. Accordingly. Valra is entitled to retain the sum of $6.47 and you do not need to return it to MMH. 121 On 3 July 2014 the law firm Williams & Hughes wrote to Vali and Ravi on behalf of Valra alleging that the shares in MMH had been sold at an undervalue and that the terms of cl 15 of the Shareholders Deed had not been complied with. That was the precursor to this litigation. 122 Eventually Valra brought an application for preliminary discovery, which was allowed in part: Valra Pty Ltd as Trustee for Abdul Rahim Valibhoy Family Trust v Mag Men Holdings Pty Ltd [2016] FCA 23 (Valra v Mag Men No 1). In the determination of that application, Siopis J observed that in light of financial information that had been disclosed to Rahim between 9 December 2013 and the February 2014 update to shareholders, it was apparent that the continued financial viability of MMH depended entirely on the continuing support of Comintra and SLP (at [74]-[82] and incorporated for ease of reference below). The pleaded case 123 The statement of claim in this matter was refined on a number of occasions, with some claims abandoned during the course of the hearing. Proposed evidence on behalf of Valra that entailed irrelevant personal attacks on family members remained in witness statements despite pre-trial conferral as to objections, and was ruled inadmissible during the hearing. The claims were at times convoluted, with some addressed towards persons or entities who are not parties to the proceedings (such as Candyfloss and SLP), and lacked clarity as to the manner in which any relief was expected to operate. Had Valra properly considered the admissibility of evidence and questions as to the appropriate parties and relief earlier in these proceedings, the proceedings would have been much simpler for everyone involved and may have enhanced the prospect of settlement. Against that backdrop, there still remain many issues in this action to be determined. 124 The pleaded causes of action that remain can be summarised as follows. The alleged breach of contract (Valibhoy Agreement) by Sofiah and Comintra by failing to cooperate as shareholders 125 Valra alleges that Sofiah and Comintra failed to comply with obligations under the Valibhoy Agreement in that they failed to consult and act collectively with Valra in relation to the 'extensive restructure' planned by MMH. The alleged breach of contract (Shareholders Agreement) by MMH by use of the come along clause 126 Valra claims that MMH acted in breach of its fiduciary duty as an agent under cl 15.2 in executing a transfer of Valra's shares in MMH because it could not have been satisfied that the threshold conditions for the exercise of such powers were met. 127 Valra claims that as a result its shares should be reinstated or MMH should pay it damages. The alleged breach of contract (Shareholders Deed) by Comintra by breach of its good faith obligation 128 Valra alleges that Comintra breached its duty of good faith under the Shareholders Deed by entering into the Share Sale Agreement and concealing that agreement from Valra and says that as a result it suffered loss and damage, as but for the breach it would have retained its shares in MMH. The alleged oppression by MMH 129 Valra alleges that MMH's conduct was oppressive and unfairly discriminatory towards Valra within the meaning of s 232 of the Corporations Act 2001 (Cth). 130 The act in the conduct of MMH said to be oppressive is the transfer of Valra's shares purportedly in accordance with cl 15 (the contractual breach by MMH already pleaded). 131 The act in the conduct of MMH said to be unfairly discriminatory is that: (a) Valra was wrongfully excluded from MMH's management decisions that led to the invocation of cl 15; (b) Valra was not given the opportunity to participate in the divestment of MMH's shares in Mega Mags; (c) Valra was not given the opportunity to provide funding to MMH on the same terms as other shareholders; (d) MMH failed to disclose the forgiveness by MMH of the loan due by Mega Mags on 21 February 2014, or to disclose that the MMH shares in Mega Mags were sold to Tactracom and Ravi; (e) MMH implied by the March 2014 Memorandum and the 10 March 2014 email, alternatively by silence, that the separate agreements dealing with the loans due to Comintra and SLP were not part of the extensive restructure of MMH; (f) MMH kept hidden the fact that Comintra and SLP had agreed to sell their shares on the terms of the Share Sale Agreement; (g) Vali transferred his shares to Shariff clearly in contemplation of seeking to invoke cl 15 to acquire all shares in MMH through Tactracom and was aware that Tactracom would obtain majority ownership of MMH and half ownership of Mega Mags; and (h) the Shareholders Deed reflected that shareholders would have a level of participation in the management of MMH and Valra was given no such reasonable opportunity. 132 By reason of such conduct Valra contends that its shares were transferred to Tactracom against its wishes. Relief sought 133 In the end, the relief sought by Valra is limited. It sought no relief against Vali (based on any conflict of interest or otherwise) or Tactracom, who in any event are not parties to the proceedings. 134 As to MMH, Valra seeks a declaration that the transfer of Valra's shares was invalid and of no effect. It seeks to be reinstated as a member of MMH and seeks other undefined relief. 135 As to Comintra, the relief sought is for damages for breach of the good faith provision in the Shareholders Deed and other undefined relief. The suggestion, first made during the course of trial, that there might be an account of profits was properly abandoned by Valra's counsel. 136 The only relief sought against Sofiah was for damages with respect to the alleged breach of the Valibhoy Agreement. The witnesses 137 There is no doubt that Rahim feels aggrieved at the course of events that saw him lose his investment in MMH and because of MMH's financial failure. I am inevitably drawn to the conclusion that Rahim's grievance arises out of issues more complex than the loss of the shares, and is tied up in soured family relationships. Whilst I do not consider he was deliberately dishonest, in my view his grievance has clouded his objectivity and in turn coloured the credibility of his evidence. 138 I did not find Rahim to be a reliable or credible witness. His memory of events was imprecise, but I take into account that at the time of giving evidence he was 76 years old and the events were some time in the past. More troubling was his reluctance to accept propositions that were put to him that were not contentious on their face. Rahim seemed determined to doubt or challenge any proposition that he perceived as damaging to his case and seemed determined to arouse suspicion about Vali's and Shariff's conduct if the opportunity arose. 139 Two examples reveal Rahim's approach to giving evidence. 140 First, it was not in issue that Rahim did not tell Vali that he was taping the telephone call of 13 March 2014. When asked about the phone call during cross-examination, the following exchange ensued: You concealed it, didn't you?---I just didn't - didn't - I did not - I did not say I was recording it. Yes, you didn't disclose to him that you were recording?---I did not disclose it, yes. And there's no way he could have known that you were recording it?---I wouldn't know what he knows or what he doesn't. Come, now, Mr Valibhoy. You recorded the call?---Yes. And you didn't disclose that to him?---Yes. He's not in the same room with you, is he?---No, he's not. So he's not going to know that you're recording the call, is he?---Look, you have to ask him, please. 141 Second, the email exchanges indicate clearly that Vali obtained copies of financial accounts for the group from its external accountants (Carrington Myers) by email and on 19 February 2014 forwarded the email that attached those accounts to Rahim. 142 The following exchange occurred in cross-examination: --I received nine pages of signed - nine signed pages. Yes, which Vali told you and which the email, on its face, shows came from the external accountant; correct?---Yes, but they were not for all the companies. They were not for all the - - - The ones - - -?---There were just nine pages. Yes. That's fine. But the ones he gave you - - -?---Yes. You accept, don't you, that they came from the external accountant?---I accept that Vali says they came from the external accountants. So you don't believe that they came from the external accountant?---I - I - I - - - You think Vali was lying to you in the email?---I just have to - I - I am not suggesting, I just can only go by what's on the record. … Do you see where it starts saying, after Vali's name, Begin Forwarded Message?---Yes. And do you see again it's an email from Michael Mazey from Carrington Myers?---Mmm. And if you look at the content of the email?---Mmm. He says: Hi Vali, as discussed, find attached financials for 2010, 2011 and 2012 as requested. ?---Mmm. And the accountant has attached those financial statements and Vali has forwarded that email to you with those financial statements; correct?---Vali forwarded an email with some financial statements, but in a forward, you can - you can change attachments and all this kind of stuff. So you're suspicious that Vali has changed the attachments?---No. I - no. I - I - I cannot say I was suspicious at all. I can just look at what I received. When I saw the inconsistencies, anomalies, I get concerned. But you don't accept that these were the accounts that came from the external accountant: yes or no?---I received accounts - financial statements in December. I'm receiving financial statements in February. Yes?---When I look at the two of them, there are inconsistencies between the two. Just answer the question that I've asked, Mr Valibhoy?---Yes. Do you accept that on 19 February 2014 you received a forwarded email from the external accountant attaching all of these financial statements that you see behind this tab?---Yes. I am sorry, but what I can accept is that on that - on this date Vali sent me this email together with - I think if - yes, with these financial statements. 143 Rahim went on to say that he only scanned the financial documents and did not review them because he did not consider them to be formal accounts or because there were inconsistencies. 144 The inconsistencies that were revealed during cross-examination rose no higher than changes in signature clauses and some formatting of dates. Vali explained that the financial statements were prepared by the external accountant, MMH retained electronic copies, and Vali signed and emailed only the signature pages to the external accountants, and then posted the original. The inconsistencies were not as to substance and were explicable on the basis that the signature pages were at times detached and sent separately to the balance. Importantly, no inconsistency in any content - the actual accounts - was revealed. 145 It seems to me that Rahim sought to justify his resistance to reviewing the accounts on a very thin basis and because he perceived that it would support his argument that he did not receive sufficient information or time to consider Tactracom's offer to purchase his shares. 146 Shariff also had some difficulties with recollection, but in general was not evasive, and gave his evidence in a genuine and thoughtful manner. He understood the significance of some of the conflicts that might have arisen in the dealings, as was evidenced by the fact that he deferred to the majority shareholder SLP for the running of certain negotiations. It was apparent that he was concentrating carefully when giving evidence and cooperated in the process. I found him to be a credible witness. 147 The cross-examination of Vali was wide ranging. I found him to be an intelligent and careful witness who did his best to understand and answer the questions asked of him. He did not shy away from disclosure about any aspect of the transaction and readily made concessions. I found him to be a credible and reliable witness. 148 Much of Valra's case is documented. However, to the extent it is necessary to rely on oral evidence and to the extent that there is a conflict in the evidence between Rahim, on the one hand, and Shariff or Vali on the other, in light of my concerns as to the reliability and credibility of Rahim's evidence, I have preferred the evidence of Shariff and Vali. Breach of the alleged Valibhoy Agreement 149 Valra pleads that in around December 2005, Rahim for and on behalf of the A Rahim Valibhoy Trust, Comintra and Amin on behalf of the trustees of the MA Valibhoy Trust entered into an oral agreement which contained express terms that they would (i) invest in MMH by each purchasing a parcel of shares in MMH; and (ii) act collaboratively and cooperatively in respect of their parcels of shares and in particular that they would 'act as a block of shares by voting collectively on their respective parcels of shares in relation to MMH'. 150 Certain particulars of the alleged agreement were sought and provided. It was said that the Valibhoy Agreement was reached over the course of several discussions in person in Perth and over the telephone in or about December 2005 between Rahim for and on behalf of the A Rahim Valibhoy Trust, Shariff on behalf of Comintra and Amin on behalf of the MA Valibhoy Trust. When asked for further particulars of the alleged face-to-face discussions in Perth and the phone discussions, Rahim's response was that he does not recall what was said at each meeting and/or during each discussion but recalls the terms as alleged. 151 Shariff denies any agreement was entered into between the brothers, whether to the pleaded effect or at all, as to how they would vote or otherwise retain, sell or deal with the respective shares owned by the relevant entities. 152 In order to assess whether Valra has established the existence of an agreement and its terms, it is necessary to consider the competing oral evidence and look to any documentary or other evidence that might shed light on those matters. It is then necessary to consider whether the evidence is sufficient to establish that there was contractual intention and sufficient certainty of terms. 153 It is well established that the courts strive to uphold bargains: Hillas & Co Ltd v Arcos Ltd [1932] All ER Rep 494. To that end, the courts will construe the terms of an agreement with an inclination to give effect to the intention of the parties, even if that intention has been obscurely expressed: Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98; (2009) 40 WAR 191: [6] There are two limbs to the uncertainty doctrine. A contract (or a term thereof) is void for uncertainty if (1) all the essential and critical terms of the bargain have not been agreed upon or (2) the language used is so obscure and incapable of any precise or definite meaning that the court is unable to attribute to the parties any particular contractual intention: Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 at 436-437; Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd (2000) 22 WAR 101. Under the first limb, the contract is incomplete. Under the second limb, the court is unable to attribute a meaning to the language used by the parties. I refer to the latter as linguistic uncertainty. Both limbs apply only to essential terms. [7] Where, as in this case, contractual intention is proven, courts should be astute to adopt a construction which will preserve the validity of the contract: Meehan v Jones (1982) 149 CLR 571; Anaconda Nickel. [8] The appellant claimed that the expressions 'a price equal to at least ninety percent (90%) of the average closing prices for buying of Shares' and 'similar to' in cl 10.2 are linguistically uncertain. The claim is without merit for the reasons given by the trial judge and Buss JA. 154 Where the absence of an express provision in an agreement can be supplied by implying a term in order to give efficacy to the bargain, the courts will make the necessary implication: Moffatt Property Development Group Pty Ltd v Hebron Park Pty Ltd [2009] QCA 60 at [51]. 155 Rahim's evidence-in-chief was that: At some point in early 2006 Mohamed Shariff told me that Mohamed Amin and I should start with an initial investment of $135,000 each. Mohamed Shariff told me that the company was called Mag Men Holdings Pty Ltd (MMH). Mohamed Shariff also told me that his, Mohamed Amin's and my collective MMH shareholding would be large enough to prevent a unilateral takeover by a majority shareholder. Mohamed Shariff also said that we would act collectively as one voting block or unit on all matters in relation to MMH and that he would manage the investment for the three of us. I verbally agreed with Mohamed Shariff's proposal as did Mohamed Amin. 156 Shariff gave evidence that he made no such statement as to acting collectively as one voting block and that there was no such agreement as alleged. In particular, Shariff said that he: did not enter into any agreement with Rahim and Amin in around December 2005 or at any other time in terms to the effect … that we would invest in MMH by each purchasing a parcel of shares, and act collaboratively and cooperate in respect of our parcels of shares, including voting collectively. 157 Under cross-examination, Shariff expressly denied on a number of occasions making any such agreement. This was not something about which he had any hesitation. 158 As already indicated, I have reservations about the reliability and credibility of Rahim's evidence generally. He was unable to give any detailed evidence of the circumstances in which the alleged conversations took place or the timing. Rahim said he 'imagined' that it was entered into in about 2005 because 'that's around the time we went in'. Allowing for the passage of time, it is perhaps not surprising that particular details were not remembered, but it would then seem surprising, in the absence of any explanation for the difference in recall, that Rahim claimed to specifically recall the alleged terms of the agreement. 159 I also have no reason to doubt Shariff's evidence. In such circumstances, I would not be satisfied that Rahim has established on the balance of probabilities that any agreement was reached unless there is reliable corroborating evidence by way of documents or conduct that supports such a finding and undermines Shariff's evidence. 160 In my view, there is no such documentary or other reliable evidence that corroborates the making of any such agreement. There were no emails or other written communications between 2006 and 2014 that referred to any such agreement (noting it is permissible to have regard to evidence that post-dates the entry into a contract in order to assess whether or not any such contract exists). Rahim conceded as much in cross-examination. 161 In contrast, there were communications in which Valra was described as a shareholder but without any reference to being part of any collective block. Rahim's email to Ravi of 5 December 2013 is an example. During the telephone discussion of 13 March 2014 between Rahim and Vali, despite being told by Vali that shareholders holding more than 90% of the issued shares agreed to Tactracom's proposal, Rahim did not refer to any such agreement. Nor does he refer to it in his email to Vali of 14 March 2014 (the email sent late after the call with Rahim of 13 March 2014) or in any of the communications between Rahim and Vali after the transfer of 18 March 2014, 19 March 2014 or 7 April 2014. 162 It is also interesting to consider the content of two letters written on Valra's behalf by its then solicitors, Williams & Hughes, after the events of 18 March 2014. 163 On 3 July 2014 Williams & Hughes wrote to MMH's solicitors setting out what they said were instructions relating to the recent events, but making no mention of the alleged Valibhoy Agreement. 164 By separate letters from Williams & Hughes to Amin and Sofiah's children of the same date, Valra's solicitors referred to an alleged agreement between Amin and Rahim to the effect that Amin and Rahim via their respective trusts would together hold at least 10% of the shares in MMH and 'act together in relation to all decisions relating to MMH so as to avoid the compulsory sale provision under cl 15 of the MMH Shareholder's Deed'. 165 I note that the agreement referred to in the second Williams & Hughes letter was limited to an alleged agreement between Amin and Rahim and specifically refers to cl 15 of the Shareholder's Deed. In cross-examination, Rahim suggested that the second letter was making reference to the Valibhoy Agreement. However, clearly on its terms it is referring to an alleged agreement of a different nature. When challenged, Rahim explained that his solicitors had mis-conveyed in the letter the information that he had given. I do not find that explanation convincing, in light of the very particular description of the alleged terms provided by Williams & Hughes. 166 In an email from Sahil to Shariff of 19 April 2007, Sahil refers to various shareholder percentage scenarios and refers to the brothers 'as one block'. Rahim said in his evidence that he did not have any discussions with Sahil about the investment in shares and there is no evidence of details of the alleged agreement being conveyed to Sahil. Further, if Sahil was indeed informed of such an arrangement, it is surprising that when the Shareholders Deed, and in particular cl 15 of the Shareholders Deed, was amended in 2009, Sahil apparently did not address the existence of a fixed voting block with the shareholders. Such a collateral arrangement had the potential to undermine the efficacy of cl 15 of the Shareholders Deed or leave other minority shareholders more vulnerable to its implementation. One would have thought such matters would have been worthy of comment by a director of MMH. I am not convinced that the use by Sahil of the expression 'one block' is evidence of the existence of a contractual agreement as pleaded. 167 It is true that in 2009 the Deed of Variation introduced the defined term 'Valibhoy' as follows: Insert a new defined term 'Valibhoy' with definition Means the following three (3) shareholders collectively, (a) Comintra Pty Ltd (ACN: 068 778 905) a company incorporated in Australia and having its registered office at 64 Broadway, Camberwell, Vic 3124 (b) Valra Pty Ltd (ACN: 126 540 841) a company incorporated in Australia and having its registered office at 57 Philip Road, Dalkeith, WA 6009 (c) Mohamed Valibhoy and Sofiah Valibhoy ATF MA Valibhoy Superannuation, having their joint address at 74 Viking Road, Dalkeith, WA 6009; who shall act through their representative, Shariff Valibhoy of 64 Broadway, Camberwell, Vic 3124 (the Valibhoy Representative). A decision or act of Valibhoy under this Shareholders Deed will only be valid where made or confirmed in writing under the signature of the Valibhoy Representative, or any other person nominated in writing by the Valibhoy Representative to the Company. 168 However, I accept the respondents' submission that that definition does not disclose or evidence the formation of the Valibhoy Agreement as pleaded. It does no more than provide that when that expression is used in the Shareholders Deed, it is a reference to the relevant shareholders acting collectively, and it entitles them to act through a representative. The appointment of a representative without more does not purport to describe or create obligations as between each member when they are not acting collectively, and does not compel them to act collectively. Relevantly, the defined term 'Valibhoy' is not used in cl 15 which uses the word 'Shareholders' and does not incorporate in any manner the Valibhoy definition. Therefore, as a matter of construction, cl 15 applies to the Valibhoy entities as separate and distinct shareholders in any event. It is telling that the definition was not introduced into cl 15 despite other amendments to that clause effected by the Deed of Variation. 169 Nor is there any evidence of conduct on Shariff's part that supports Valra's claim about the Valibhoy Agreement. Rahim said in cross-examination that he expected that Sofiah would comply with the Valibhoy Agreement in her capacity as trustee of the relevant trust. Shariff's evidence was that he did not discuss the Tactracom acquisition of shares with Sofiah, which is consistent with his contention that there was no contractual commitment as to voting. There was no evidence that Rahim or anyone else informed Sofiah about the Valibhoy Agreement. 170 I take into account that Rahim and Shariff had many communications about their MMH investments, apparently until their falling out. Rahim said in his evidence in chief that until December 2013 Shariff was his main point of contact regarding MMH and that he was happy to be a silent investor and to be guided by him. Those communications, nor the fact that the brothers communicated, do not establish that there was a contractual agreement as pleaded. They do not establish a commitment to vote in any particular manner. 171 I am not satisfied that there is sufficient evidence to establish Valra's claim that the Valibhoy Agreement was made. 172 Furthermore, I am not satisfied that the express terms pleaded, even if agreed, were sufficiently clear or complete to evidence the contractual intentions of the parties. Even if there was agreement between Rahim, Shariff and Amin as pleaded, the terms of the agreement without more are unworkable. For example, nothing is said as to how disputes between the three brothers as to how shares were to be voted would be resolved. Nothing is said as to what course should be undertaken if any of the brothers wished to sell their shares. Nor is it clear whether the alleged agreement was confined to the shares being purchased in early 2006 (namely 130,000 by Comintra and 135,000 by each of Rahim and Amin's trusts) or was also intended to operate with respect to any further shares purchased. The terms do not address shares that were already held at that time by Comintra. 173 A term that impinges on the rights of a person or entity to exercise voting rights, particularly where it may influence the ability to realise shares, is a matter of some significance. It would be expected that the question of what mechanism was to operate if a party wished to vote differently would have been addressed if there were in fact an agreement between the parties. Valra contends that such gaps can be completed by a court if necessary. I do not agree. There would seem to be no means of ascertaining the intention of the parties as to what would happen in that scenario. Would there be a process by which the dissenting shareholder was compelled to sell their shares to the others in the group? Would the parties abide a majority decision? The purpose of a detailed shareholders deed is to attempt to address the many issues that might arise between shareholders of a company, and there sensibly was one in place between the shareholders of MMH. The general and uncertain terms of the separate Valibhoy Agreement, by contrast, tell against it being an enforceable contract in any event. 174 In conclusion I am not satisfied that the Valibhoy Agreement was ever made. It follows that no breach of any such contract is established. 175 I should add that the pleaded conduct said to comprise a breach of the purported Valibhoy Agreement is Sofiah's and Comintra's alleged failure to consult in relation to the Takeover Proposal (defined as the proposal that Tactracom would purchase all shares in MMH for $100) and their alleged failure to act collectively with Valra in relation to the Takeover Proposal. The alleged breach highlights the difficulty with the lack of certainty as to the terms of the alleged Valibhoy Agreement. Whilst it could be said that Shariff and Sofiah did not consult, neither did Rahim. There was no suggestion that Rahim attempted to consult with them about the proposal. Even had there been consultation, whether or not the three persons would have wanted to act in the same manner is doubtful. Absent agreement, even if the decision was made that they should act in accordance with a 2:1 majority or agree to act separately, the result would have been the same and the acquisition would have proceeded. There would have been no loss to Valra. Breach of Shareholders Deed by use of come along clause 176 At this point it is necessary to consider in more detail the terms of both the Shareholders Deed and the Share Sale Agreements. Clause 15 177 There are some 10 clauses of the Shareholders Deed providing for the transfer of shares in various scenarios. For example, cl 10 provides for a pre-emptive right for shareholders to purchase the shares of an 'outgoing shareholder' for the Price. 'Price' is defined and there is a regime for it to be determined if necessary by a valuer who must make a valuation of the share. 178 Central to this case is cl 15, which is to the following effect (taking into account the amendments made by the September 2009 deed of variation): 15 Transfer of Shares - Compulsory Sale on Exit (Come Along) 15.1 Conditions for Compulsory sale If: (i) the Shareholders holding at least 90% of [MMH's] issues Shares agree to sell the whole of their Shares in [MMH] to the same purchaser upon terms that are arm's length terms; [and] … (iii) that purchaser, within the meaning of section 50AA of the Corporations Act: (i) does not control, and (ii) is not controlled by any of those Shareholders, then: (iv) clauses 10 to 12 shall not apply, and (v) the remaining Shareholders must sell all their Shares in [MMH] upon the same terms, to the same purchaser. 15.2 Company may act as agent for Shareholder If (i) a Shareholder is required by clause 15.1 to sell all the Shareholder's Shares in [MMH], and (ii) a Shareholder fails or declines to execute any document required to effect and complete that sale, [MMH] may execute all such documents as are required to effect and complete that sale, including sale agreements and transfers of shares, but only if the terms of those documents are the same as the terms of the corresponding documents executed by the Shareholders holding at least 90% of [MMH's] issued Shares where the sale is occurring under clause 15.l(i) ... upon the same terms, to the same purchaser. 179 The ability to compel a transfer is therefore circumscribed by several requirements. Relevantly: (a) a threshold of shareholders holding 90% of shares must have agreed to transfer their shares; (b) the purchaser must not be controlled by any of the shareholders; (c) the agreement to sell must be 'upon the same terms', a requirement reiterated by cl 15.2' requirement that the company may execute documents 'only if the terms of those documents are the same as the terms of the corresponding documents'; (d) the terms must be arm's length terms; and (e) the shareholder must have failed or declined to execute any documents required to effect and complete a sale and documents to be executed must have been executed by shareholders holding at least 90% of MMH's issued shares. 180 The threshold of acceptance by shareholders holding 90% of MMH's issued shares is met on the evidence, so that condition is not in issue. 181 Valra has not established that Tactracom was controlled by any shareholder of MMH at the time. At most Vali may have had some interest as a beneficiary of the trust of which Comintra was trustee, but there was no evidence as to the nature of that interest and no evidence that it comprised any more than a beneficiary's interest in having a trust properly administered. 182 The real question is whether the shares were sold on the same terms. 183 As is apparent from the circular to shareholders of 10 March 2014, the only consideration offered to the shareholders for their shares was $100 for all shares. They accepted the offer to purchase their shares by email to the effect they 'accept the proposal by Tactracom Pty Ltd to buy all shares in Mag Men Holdings' or by ticking the acquisition box. They then signed a standard transfer form (apart from, relevantly, Valra). 184 It is then necessary to consider the terms by which Comintra and SLP sold their shares. Terms of Share Sale Agreement 185 The Share Sale Agreements were executed on 18 March 2014. Even by their name, it is clear that the Share Sale Agreements were relevant to the agreement by each of Comintra and SLP to sell their shares in MMH. 186 The recitals for the Share Sale Agreements were in the following terms: A. The Vendor owns the shares in the Company. B. The Vendor has agreed to sell and the Purchaser has agreed to purchase the Shares on the terms and conditions of this Agreement. C. At the request of the Vendor, the Guarantor has agreed to guarantee the obligations of the Purchaser under this Agreement. 187 Some definitions are relevant. 'Shares' was defined as the shares in MMH. 'Settlement' was defined as 'completion of the transfer of the Shares to the Purchaser in consideration for payment of the Consideration to the Vendor on the Settlement Date and other completion matters as contemplated by this Agreement'. 'Consideration' was defined as $21.14 for Comintra, and $51.12 for SLP (being the same price per share as received by the other shareholders). 188 Clause 2 provided: 2. Sale and Purchase of the Shares 2.1 Sale of the Shares The Vendor agrees to sell and the Purchaser agrees to purchase the Shares (together with all benefits, rights and entitlements accrued or attaching to the Shares) free from any Security Interest on the terms and conditions of this Agreement. 2.2 Title, property and risk The title to, property in and risk of the Shares: (a) until Settlement, remains solely with the Vendor; and (b) passes to the Purchaser on and from the Settlement Date. 2.3 Consideration In consideration for the transfer of the Shares, the Purchaser agrees to pay the Consideration to the Vendor on the Settlement Date. 189 Clause 3 provided: 3. Loan owed by the Company to the Vendor 3.1 Cancellation of the Loan As and from Settlement, the Vendor agrees to cancel the Loan and release the Company from any Claim in relation to the Loan. 3.2 Issue of Redeemable Shares In consideration for the Vendor cancelling the Loan owed to it by the Company and releasing the Company from any Claim in relation to the Loan, the Purchaser agrees to issue the Redeemable Preference Share to the Vendor at Settlement. 190 Clause 4 provided: 4. Settlement 4.1 Time and place of Settlement Settlement shall occur on the Settlement Date at the Settlement Place or as otherwise agreed by the parties. 4.2 Obligations of the Vendor at Settlement At Settlement the Vendor must: (a) deliver a duly executed share transfer form in respect of the Shares to the Purchaser; and (b) deliver any other document reasonably requested by the Purchaser regarding the transfer of the Shares. 4.3 Obligations of the Purchaser at Settlement At Settlement the Purchaser must: (a) pay the Consideration to the Vendor; and (b) issue and allot the Redeemable Preference Share to the Vendor. 191 The guarantee by Intracom Pty Ltd, as referred to above, was in the following terms: 6. Guarantee 6.1 In consideration for the Vendor entering into this Agreement and performing its obligations under this Agreement, the Guarantor hereby guarantees the due and punctual performance of the Purchaser's obligations under this Agreement and the Redeemable Preference Share. 6.2 The Guarantor's obligations under clause 6.1 will immediately cease to apply upon any redemption of the Redeemable Preference Share, unless a liability of the Purchaser crystallised under the Redeemable Preference Share prior to redemption. In that case, the Guarantor's obligations will continue to apply only in relation to the liability of the Purchaser that crystallised prior to redemption. 192 The Share Sale Agreements each contained a single annexure, which set out the rights, privileges and obligations attaching to the Redeemable Preference Shares as follows: 1. Subject to clause 2, right to receive notice of and to attend shareholders meetings and to exercise voting rights equal to 12.6% of the voting rights exercisable by all shareholders; 2. Tactracom may not undertake any transaction requiring shareholder approval under Tactracom's Constitution or the Corporations Act 2001 if all holders of Redeemable Preference Shares vote against it; 3. Right to promptly receive 12.6% of the proceeds, net of all direct transaction costs and direct transaction taxes, of any sale (whether in part or whole, direct or indirect, by share sale or asset sale) of Tactracom's business or undertaking within 5 years of the issue of the share; 4. Right to promptly receive 12.6% of any dividend declared out of the profits or reserves of Tactracom; 5. Otherwise no right to interest on the paid up capital of the share; 6. Tactracom shall have the right to redeem the share at its sole discretion upon 7 days' written notice at any time after 5 years of the issue of the share in consideration for $100 without releasing Tactracom from any crystallised liability; and 7. In a winding up of Tactracom a right to receive payment of $100 in priority to other shareholders and no right to participate in the division of any surplus assets or profits of Tactracom without releasing Tactracom from any crystallised liability. Negotiation of terms of Share Sale Agreement 193 The terms of the Share Sale Agreements were negotiated between Tactracom and SLP. Shariff, as the director of Comintra, was not involved in the negotiations. He said in his evidence (and I accept) that he told Mr Jackson he was concerned about a potential conflict because Vali as the controller of Tactracom is his son. He said that he would not have agreed to sell his shares in MMH unless Comintra received the same deal as SLP. It is apparent that SLP therefore negotiated terms upon which it was prepared to sell its shares in MMH and deal with its debt and Comintra abided by such terms. 194 It is not clear exactly when negotiations for the agreements with Comintra and SLP commenced but it was by 6 March 2014 at the latest. On that date Mr Jackson sent an email to Vali setting out: Key terms of the Pref Shares; • 12.6% (each party) of the total consideration received on the sale of the business in any form (in one transaction or in multiple transaction, direct or indirect, shares or assets by the company or its shareholders). • Performance of the company under this agreement is guaranteed by the shareholders (i.e. the payment upon exit is guaranteed to protect the shareholder class in the event of share sale) • Company and shareholders cannot enter into any agreement that is not ordinary course of business without the consent of the preference shareholders • Rights exist for 5 years and payment to be made within 14 days of underlying transaction 195 Between 14 and 17 March 2014, Vali, Mr Jackson and Mr Sumner on behalf of SLP and their respective solicitors exchanged emails negotiating the terms of the Share Sale Agreements. Pursuant to these negotiations, the right to receive 12.6% of any dividends and proceeds of sales of Tactracom's business were added to the redeemable preference shares, and Intracom Pty Ltd was included in the deeds as a guarantor of the performance of Tactracom's obligations under the Share Sale Agreements. Intracom Pty Ltd was a company also controlled by Vali. 196 The drafts of the agreements were considered by lawyers and were amended to reflect the negotiated terms. In particular, an email dated 14 March 2014 to Vali from his solicitors was to the following effect: Hi Vali, Further to your email this afternoon, please find attached a further amended version of the Share Sale Agreement (in marked up and clean formats). As discussed, I have left in reference to the forgiveness of the loan owed by Mag Men Holdings, because we understand that the loan is to be forgiven as part of the overall transaction. We can use other words instead of 'forgiveness', such as 'cancel'. Mag Men Holdings cannot issue shares in Tactracom, so it would be incorrect to say that the loan is being repaid. … 197 In an email to Mr Sumner of 17 March 2019, Vali outlined the procedure contemplated by the Share Sale Agreements as follows: Hi Tim, I have checked on the procedure around issuing of preference shares in Tactracom, and the procedure is as follows: 1. SPA is signed 2. Shares are transferred to Tactracom (Once Knox transfers shares to Tactracom, Mag Men will be able to administer come along rights) 3. A board meeting of mag men holdings is held, where a resolution approving share transfers to Tactracom's offer is passed, and so, as per the shareholders' deed, all shares in Mag Men will be acquired by Tactracom. 4. As soon as No. 3 is done, a board meeting of Tactracom will be held to issue preference shares in Tactracom, with the rights of Preference shares being referred to in the annexure of the SPA. The 'same terms' 198 Valra submitted that the share transfers were not on the same terms because Comintra and SLP had additional and 'more attractive' terms by way of the Share Sale Agreements, albeit that the prescribed consideration for the shares was the same. 199 The respondents contended that the terms upon which the shareholders, including Comintra and SLP, agreed to sell their shares were the same, in that the shares were sold at the same price per share: the fact that Comintra and SLP received redeemable preference shares in Tactracom is irrelevant because those shares were in consideration of the cancellation of the loan debts. The respondent submitted that it was important to maintain the distinction between what Comintra and SLP received as shareholders as against what they received in their capacity as creditors. 200 The parties did not address this issue in any detail. 201 The question is to what extent departure from the terms offered to the shareholders apart from Comintra and SLP is permitted by the expression 'the same terms'. 202 To my mind, the respondents' submission, although superficially attractive, does not engage with the substantive question of construction. 203 The principles of construction of a contract are well known. The court is to take into account the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. It is to be assumed that the parties intended to produce a commercial result: Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 at [35] (French CJ, Hayne, Crennan and Kiefel JJ). 204 In my view a reasonable business person in the position of the shareholders would have considered that the commercial purpose of the come along clause was to permit a purchase to proceed where a significant majority of shareholders support such a course, but at the same time to guard against the use of incentives or side deals that might influence the purchase price that a minority shareholder might otherwise receive. 205 As to the Share Sale Agreement, I do not accept the respondent's submission that it comprises two agreements in the one document made with Comintra and SLP in different capacities that can be considered severally. The obligations are mutual and conditional. They are not siloed. So much is clear from the terms of cl 2.1 that expressly provide that the sale of shares in MMH is 'on the terms and conditions of this Agreement' (consistent also with recital B); from the definition of settlement with its reference to 'other completion matters' and the simultaneous settlement and performance of obligations at settlement; and because the guarantee is a guarantee of all obligations on Tactracom and is given in consideration of Comintra and SLP as vendors 'entering into this Agreement'. 206 Further, it is clear to me that even if the share sale by Comintra and SLP and the grant of shares in consideration for the cancellation of the respective loans were to be considered separate agreements in the one document, they were part of a suite or package of agreements by which Tactracom provided valuable consideration for the obligations of Comintra and SLP. A contrary view would rest on a narrow approach to the consideration issue, not justified by the terms or commercial reality underlying the suite or package of agreements. 207 Having reached that conclusion, the question then is the extent of the difference in the terms offered to the shareholders generally and those offered to Comintra and SLP. 208 Authorities on come along (and similar) clauses are surprisingly sparse, and have provided little guidance, particularly as to 'same terms'. 209 Valra referred to McCausland v Surfing Hardware International Holdings Pty Ltd [2013] NSWSC 902. In that case, a 'drag along' clause was found to have been wrongly exercised on the basis that on the terms of the relevant cl 12, it was not open to the initiating purchaser as a then current shareholder to rely on it. The question of 'same terms' did not arise, and in fact the drafting of the relevant drag along clause was not analogous insofar as the terms of any offer were concerned: see cl 12 at [160], [612]. 210 Of more assistance are cases on rights of first refusal. Although not strictly analogous, similar questions as to the certainty of terms of offers may arise. In Mayfair Property Holdings Pty Ltd v Southland Packers Pty Ltd [2016] QSC 27 the Court considered the terms of an offer to purchase land made to a lessee as grantee of a right of first refusal by the vendor owner, and the terms of an offer made by an investor purchaser. The offer made by the investor purchaser contained various clauses not included in the offer made to the lessee by the owner. Upon analysis of the competing terms, the Court held that a narrow approach to 'same terms' was to be preferred such that the only room for departure was for terms personal to one party. It concluded that the relevant offer was not on the 'same terms' within the meaning of that expression in the relevant lease: at [38]-[46]. 211 In this case, the differences between the offers to the shareholders generally and the offer to Comintra and SLP include the following: (a) Comintra and SLP received a guarantee of Tactracom's obligations; (b) they received the potential to receive payment by way of dividends that would set off some of the loss on the cancellation of their debts, a term that could not sensibly be offered to non-creditor shareholders; and (c) they retained an indirect interest in MMH through Tactracom's acquisition of all the shares in MMH. 212 The respondents sought to minimise the relevance of the additional terms, submitting that the final two clauses of the terms provide Tactracom with the ability to redeem the preference shares within five years, 'for the princely sum of $100, and that reflects the true value of those shares'. That submission favours a broad approach: that is, that the question of 'the same terms' should not be taken too literally and that as long as the material, commercial terms are similar, then the terms should be construed as 'the same'. 213 The submission ignores the potential upside for Comintra and SLP by way of the other terms upon which the preference shares were issued, for example, voting rights with respect to Tactracom and rights to proceeds of business or sale assets and to dividends. The guarantee was to my mind in fact an advantage offered only to Comintra and SLP, albeit the amount to be paid for the shares was small. I accept the potential, as noted by Valra, for the additional terms to operate as an incentive to Comintra and SLP to sell the MMH shares at the price offered. After all, SLP negotiated for those additional terms. Objectively, they provide to Comintra and SLP the potential for benefit. I have not ignored the debts that Comintra and SLP agreed to cancel: but they were seemingly irrecoverable debts. Comintra had accepted the debts would otherwise be written off. In short, I cannot properly dismiss the additional terms as irrelevant and unrelated to the terms of the share sale. 214 But the construction question to my mind is resolved by reference to the terms of cl 15. I reject the broad approach urged by the respondents in favour of a narrow approach to 'the same terms'. I prefer this approach because: (a) the context of a coercive compulsory transfer of property and the protective purpose of the come along clause favour a narrow and strict approach to the construction of cl 15, an approach that ensures it is only used in the limited circumstances provided for; (b) the parties have not agreed that the shares are simply to be sold 'for the same price'. That may have involved a different approach to the assessment of consideration. In contrast to other provisions of the Shareholders Deed that refer to the 'price' of shares, they have expressly agreed that a sale is to be on the same 'terms', a choice of words that indicates that terms apart from price were to be assessed in the balance; and (c) nor have the parties used more imprecise terms such as requiring a sale to be on the same 'material' terms, language which would introduce room for argument as to relative materiality. The drafting is precise and may be seen as deliberately so, to avoid the relative uncertainty that more general language might introduce. 215 The interpretation of a come along clause (however named) will always be a matter that depends upon the particular words of the clause in question. However, the approach in Mayfair Properties supports the narrow approach to the construction of cl 15 that I have preferred. 216 The result of this narrow approach is that there may be circumstances where it is not appropriate to utilise a drag along clause: see, by analogy in the context of a right of first refusal, Simsmetal Ltd v Wanless Metal Industries Pty Ltd (Unreported, NSWSC, 10 March 1997) (Cohen J), where it was held that a personal condition could not be accepted by a grantee, such that the notice of exercise of a right of first refusal could not be valid: at [41]. However, such a consequence simply re-directs the attention of a proposed purchaser to other methods by which minority shares may be acquired. 217 I should add that research has uncovered two decisions of the United Kingdom High Court of Justice that address drag along clauses, although they are of little assistance. 218 In Cunningham v Resourceful Land Limited and Ors [2018] EWHC 1185 (Ch), the defendant company's shareholders agreement gave a syndicate of majority shareholders who wished to transfer their shares to a bona fide arm's length purchaser the power to require the remaining shareholders to transfer their shares to that purchaser upon the same terms. The plaintiff owned shares in the company, which was in administration. Those shares were share swapped to the subsidiary of a creditor of the company under the drag along clause. The plaintiff sought rectification of the share register because the transaction was not bona fide or at arm's length. He argued that the syndicate shareholders, who had also made loans to the company, received a collateral benefit or inducement because the sale gave them the prospect that their loans would be repaid. This argument was rejected. The Court noted that the loans remained unchanged by the transaction and there was no evidence of collusion, side deals or special inducements. The fact that the Court referred to such matters supports the view that they are relevant when considering utilisation of a come along clause. 219 In M&G Broad European Loan Fund Limited v Hayfin Capital Luxco 2 SARL [2017] EWHC 1756 (Ch) various transfers of shares by which the defendants increased its shareholding were challenged on the basis that (amongst other things) there was non-compliance with a drag along clause and right of first refusal. The complaint was that the sellers of shares were only prepared to sell their shares if at the same time there was a sale of its share of senior debt, although that requirement was not strictly a condition. The relevant clause required that offers be on the same 'material terms'. The Court considered that without more an arrangement as to a sale of debt was not a material term. The Court was only concerned on the application with the narrow construction point and did not determine any question of fact: however, it anticipated that other arrangements might as a matter of fact be material. The reference to 'material terms' in the relevant clause and the separate nature of the agreements distinguishes the case from that before me. 220 Finally, I note the respondents' argument based on the terms of the share transfer form: that is, that MMH executed the same transfer form with respect to each shareholder. I do not consider that fact assists their 'same terms' argument. The transfer form is a standard document that does not provide for the inclusion of any details of the terms of a transfer apart from share price and does not record, or purport to record, all the terms of the agreement to transfer. Arm's length terms 221 Whilst not necessary in light of my finding as to 'same terms', I will briefly address the question of whether the sale terms between Tactracom and the respective shareholders were 'arm's length terms'. 222 Valra pleads that the terms upon which Shariff, Comintra, SLP and Candyfloss agreed to sell their shares in MMH to Tactracom were not at arm's length, but it is clear from the matters relied upon in the pleading that it conflated the question of the relationship between parties and the terms upon which they transacted. 223 Valra relies upon the statement of Dodds-Streeton J in ACI Operations Pty Ltd v Berri Ltd [2005] VSC 201: [223] The above authorities indicate that an arm's length relationship is that of strangers, or parties who are unaffected by existing mutual duties, liabilities, obligations, cross-ownership of assets, or identity of interests which present a capacity in either party to influence or control the other, or an inducement to serve that common interest, which might operate to modify the terms on which strangers would deal. 224 However, as her Honour continued, the concept of an arm's length relationship is different to that of an arm's length dealing or transaction, despite the potential overlap: ACI Operations Pty Ltd v Berri Ltd at [224]. 225 The principles as to determining whether parties are dealing at arm's length were usefully summarised by McKerracher J in Healey v Commissioner of Taxation [2012] FCA 269: [95] The parties accept that the authorities establish these principles: 1. Whether the parties dealt at arm's length is a question of fact: Trustee for the Estate of the late AW Furse No 5 Will Trust v Cmr of Taxation (1990) 91 ATC 4007 (at 4017); Granby Pty Ltd v FCT (1995) 129 ALR 503 (at 507); Commissioner of Taxation v AXA Asia Pacific Holdings Ltd (2010) 189 FCR 204 (at [106]). 2. There is a distinction between dealing at arm's length and an arm's length relationship: ACI Operations Pty Ltd v Berri Ltd (2005) 15 VR 312 (at [224]). Whether the parties did not deal at arm's length is not to be decided by answering whether the parties were not in an arm's length relationship. The fact that the parties are themselves not at arm's length does not mean that they have not, in respect of a particular dealing, dealt with each other at arm's length: Re Hains; Barnsdall v Cmr of Taxation (1988) 81 ALR 173 (at 177); Trustee for the Estate of the late AW Furse No 5 Will Trust (at 4014-4015). 3. Whether the parties dealt at arm's length involves an analysis of the manner in which the parties to a transaction conducted themselves in forming that transaction: Granby (at 506). 4. At issue is whether the parties have acted separately and independently in forming their bargain: Granby (at 507); ACI Operations Pty Ltd (at [226]) (did the parties apply 'independent separate wills'); AXA Pacific Holdings Ltd (at [105]). There should be an assessment of whether the parties dealt with each other as arm's length parties would be expected to behave so that the outcome is a matter of real bargaining: Trustee for the Estate of the late AW Furse No 5 Will Trust (at 4015); Granby (at 506 and 507); AXA Pacific Holdings Ltd (at [105]). 5. It is relevant to consider the nature of any relationship between the parties: Trustee for the Estate of the late AW Furse No 5 Will Trust (at 4015); Granby (at 506). 6. If the parties are not at arm's length the inference may be drawn that they did not deal with each other at arm's length: Granby (at 506); ACI Operations Pty Ltd (at [225]). 226 The following remarks of Habersberger J in Orrong Strategies Pty Ltd v Village Roadshow Ltd [2007] VSC 1 are also useful: [719] In a series of tax cases, aspects of what is 'at arm's length' in different provisions in the income tax legislation have been considered. Two points come out of those decisions. First, in the words of Jenkinson J in Collis v Federal Commissioner of Taxation: The question is not whether the parties were at arm's length but whether they were dealing with each other at arm's length. [720] This is because as Hill J said in Copperart Pty Ltd v Federal Commissioner of Taxation: … in a particular fact situation related parties may deal with each other at arm's length in relation to a transaction and unrelated parties may deal with each other not at arm's length in relation to a particular transaction. [721] The second aspect is the objective nature of the test. In Trustee of the Estate of the late AW Furse (No 5) Will Trust v Federal Commissioner of Taxation Hill J said: What is required in determining whether parties dealt with each other in respect of a particular dealing at arm's length is an assessment whether in respect of that dealing they dealt with each other as arm's length parties would normally do, so that the outcome of their dealing is a matter of real bargaining. (Emphasis added). The reference to what parties 'would normally do' clearly is an objective test. (footnotes omitted) 227 An objective consideration of the terms of the transaction is called for: that is, are the terms of the transaction of the nature that arm's length parties acting in that capacity would have achieved? 228 It is unclear on what basis it is asserted that the terms as between Shariff and Tactracom were not arm's length. The pleaded case appears to rely on the fact that Shariff is Vali's father and Shariff acquired shares from Vali so that Vali could divest himself of shares in MMH and so purport to implement the come along clause. The fact that the Shareholder Deed expressly provides for the transfer of shares between relatives tells against a negative inference being drawn from such transfer alone. Valra submitted in closing submissions that there was a close family relationship between Vali, Shariff and Sofiah which means that the terms negotiated may not have been arm's length. 229 Shariff's evidence (which I accept) was that he did not discuss the sale of the MMH shares at all with Sofiah. Nor did he check at the time to see if any 90% threshold might be met. Shariff was not asked about the basis upon which he accepted the sale price for the shares he held personally. It does not follow from any reason why Shariff first purchased those shares from Vali or from his relationship with Vali or Sofiah that the terms to which Shariff agreed for the sale of the shares in MMH were not arm's length terms, and I decline to draw that inference in this case. I take into account that the terms were the same as those agreed to by other shareholders (leaving aside Comintra and SLP) and without any discussion with Sofiah. I also take into account that there was no evidence that the value of the parcel of shares owned by Shariff (5%) was of anything more than nominal value and so no evidence to suggest that hypothetical parties who were unquestionably at arm's length and acting at arm's length would not have agreed to such a sale price for their shares. In the end, the claim fails for lack of evidence from which I can infer that the terms for the sale of the shares held personally by Shariff were not arm's length terms. 230 As to the terms between Tactracom and Comintra and SLP, the terms of sale were the terms of the Share Sale Agreement. The question is whether those terms were arm's length terms. Here there is evidence that SLP negotiated to protect its own interests (noting the evidence under the heading 'Negotiation of terms of Share Sale Agreement'). The agreement was drafted by lawyers and communications took place between lawyers. There is no suggestion that Tactracom and SLP are related parties: to the contrary, the evidence was that SLP is an independent private equity investor. There was no suggestion of another manner by which MMH might avoid insolvency. In such circumstances, again there is insufficient evidence from which I can determine that the terms agreed by SLP were other than the reasonable terms that parties in an arm's length relationship dealing at arm's length would agree in the circumstances. 231 Further as to Comintra, it is to be recalled that Shariff quite deliberately decided to follow in the footsteps of SLP's negotiated course rather than negotiate terms himself on behalf of Comintra. That he did so reduces the impact of his personal relationship with Vali. That he has adopted terms negotiated by a private equity investor looking after its own interests and represented by lawyers in a scenario where MMH is facing insolvency supports the finding that the terms upon which Comintra entered into the Share Sale Agreement were arm's length terms. Shariff's evidence was that he wanted Comintra to get the best return on its investment. 232 I accept that if the question was whether the price ($51.12) paid by Tactracom for the SLP shares, viewed in isolation from the conditional Share Sale Agreement, was an arm's length term then it would be answered in Valra's favour, having regard to the level of negotiation undertaken with respect to the forgiveness of debt in contrast to the share sale price. It seems to me in such a scenario it could properly be inferred that SLP was not greatly concerned as to what price it could negotiate for the shares, in a situation where it instead negotiated for beneficial conditions of the shares it stood to acquire in Tactracom. The reasoning in ACI Operations Pty Ltd v Berri Ltd provides support for such inference: at [240]-[242]. The outcome would be the same with respect to Comintra, which adopted those terms. 233 However, properly construed, the question to be asked for the purpose of cl 15.1(i) is whether the terms as between SLP and Tactracom are arm's length and I have already determined that those terms insofar as Comintra and SLP are concerned are the terms of the Share Sale Agreement. Addressing the question with a focus solely on the $51.12 share sale price rather than the terms of the Share Sale Agreement as a whole is therefore somewhat artificial and in fact highlights the importance of the requirement that the terms of sale offered to shareholders by cl 15.1 (i) and (v) be the same. 234 Valra also contends that the terms were not arm's length terms because SLP and Comintra acquired an interest in subsidiaries of Tactracom by the transaction. The contention in the pleading is somewhat opaque, but if it suggested that the entities were related because of the subsequent shareholding, the suggestion must be rejected. The point of time of assessing whether the parties are related because of a shareholding (and noting that assessment is not what is required by cl 15.1) must be at the time of entry into the transaction, and not based on whatever the relationship might be after and as a result of the transaction. On the other hand, if Valra is referring to the acquisition of shares in support of the hypothetical argument referred to at [232] above, then it would be relevant in the sense that it was part of the package of terms for which SLP negotiated. 235 As to the terms of the sale between Tactracom and Candyfloss, the pleaded case relies on Ravi's involvement in the acquisition of the Mega Mags business. As I find below, that agreement was reached in October 2013, before Vali injected a further $250,000, while there was still hope that Opus might assist in a restructure of MMH and before Vali decided to buy out the shareholders. The events predate the share acquisition proposal. 236 I do not consider those events can properly be relied upon to impute to Candyfloss through Ravi (and neither is a party) knowledge or conduct that suggest their acceptance of the price offered for the MMH shares in March 2014 was somehow tainted and based on anything other than a consideration of Candyfloss's commercial interests. Ravi did not give evidence. In any event, I take into account that the terms were the same as those agreed to by other shareholders (leaving aside Comintra and SLP). I also take into account that there was no evidence that the value of the parcel of shares owned by Candyfloss (7.6% of issued shares) was of anything more than nominal value and no evidence to suggest that hypothetical parties who were unquestionably at arm's length and acting at arm's length would not have agreed to such a sale price for their shares. The claim based on the sale by Candyfloss fails for lack of evidence from which I can infer that the terms for the sale of its shares were not arm's length terms. Valra's argument based on absence of failure on its part to execute documents 237 Vali circulated standard share transfer forms to each of the shareholders who had communicated their acceptance of the offer. The date of execution of the transfer forms by the shareholders as vendors was in issue. Valra contended that the transfer form for Valra was executed by MMH on 14 March 2014, was executed before the preconditions for the exercise of the power under cl 15.2 were met, and was therefore invalid. This was because first, at that point Valra had not failed or declined to execute any document required to effect the sale; and second, shareholders holding at least 90% of MMH's issued shares had not as at 14 March 2014 yet executed corresponding documents. 238 I do not accept Valra's contention that it had not relevantly failed or declined to execute any document required to effect and complete the sale. It was necessary that it accept in writing the offer of 14 March 2014 if it wished to proceed. It failed to do so. That was a sufficient failure to execute a document that was necessary to complete any sale. 239 As to the date of execution, Vali said he executed and dated the forms as transferee (i.e. on behalf of Tactracom) on 14 March 2014 before circulating them to shareholders. The shareholder transferors signed on various dates and inserted the date on the form as applicable, and returned them to him. I have reviewed the share transfer forms. The standard transfer forms were executed by Shariff for shares held in his name and also for shares held by Comintra as transferor on 14 March 2014, and it is clear from the documents that the respective dates of signing by the transferor and transferee have been written in different handwriting. The standard transfer form for SLP indicates it was signed by SLP on 18 March 2014. There are other examples where the transferor has signed on 16 March 2014 (Sarah Merchant). It can be seen from the dates of the forms that by 18 March 2014 shareholders holding 90% of the shares issued in MMH had executed documents transferring their shares to Tactracom. 240 However, as to the transfer form for Valra, the signature box for execution by Tactracom is dated 14 March 2014 but the signature box for MMH on behalf of Valra is undated. Valra contended it was signed on 14 March 2014. 241 Vali said he signed the share transfer form on behalf of MMH for (relevantly) Valra under cl 15.2 on 18 March 2014. The minutes of the meeting of 18 March 2014 corroborate Vali's evidence that the share transfer form for Valra was signed by MMH on 18 March 2014. I have no reason to reject Vali's evidence. 242 Valra challenged the date of execution of the share transfer forms based on an ASIC Form 484 relating to MMH which was (according to the document) filed electronically on 18 March 2014 and indicates that all shareholders transferred their shares on the 'earliest date of change' of 14 March 2014. Vali explained that as he understood it the ASIC Form 484 was prepared and lodged by MMH's accountant after the 18 March 2014 meeting. The form bears the address of MMH's accountants. Vali said that the reference to a date change of 14 March 2014 insofar as it purports to apply to all shareholders is in error. I agree that the date inserted in the ASIC form does not comprise reliable evidence of the date on which the forms were signed by the transferors, including MMH on behalf of Valra. So much is apparent by reference to Ms Merchant's signed form. Having reviewed the standard share transfer forms, I have no reason to doubt Vali's evidence that the Valra form was not signed by him as a director of MMH until 18 March 2014, as is also reflected in the Minutes. Accordingly, this aspect of Valra's case does not succeed. Breach of Shareholders Deed 243 It follows from my finding as to 'same terms' that MMH's conduct in signing the transfer of shares transferring Valra's shares to Tactracom was not authorised by cl 15.2 of the Shareholders Deed. Relief is addressed below. Breach by Comintra - lack of good faith Terms of the Shareholders Deed 244 Valra pleads that Comintra breached its duty of good faith under the Shareholders Deed by entering into the Share Sale Agreement and concealing that agreement from Valra and says that as a result it suffered loss and damage, as but for the breach it would have retained its shares in MMH. 245 The provisions of the Shareholders Deed relied upon are cl 3.2(c) and cl 31. 246 Clause 3.2(c) provides that the parties to the Shareholders Deed agree to exercise their shareholder rights (being rights attached to the shares and rights under the deed and constitution) to procure that they act in good faith and in the best interests of the Company at all times and in relation to the discharge of their obligations under the deed. 247 Clause 31 provides that: The parties hereto agree to be just and faithful and act in utmost good faith: (a) as parties to [the Shareholders Deed] (b) in the conduct of [MMH's business]; and (c) in the execution of any documents or procedures required under [the Shareholders Deed]. 248 Valra pleads that the duty of utmost good faith: (i) included a duty on shareholders in MMH to deal fairly and honestly with one another; and (ii) included a duty of disclosure that prohibited a shareholder from keeping from a minority shareholder the knowledge of an agreement (a Bilateral agreement) with another shareholder or an entity controlled by a shareholder or a close relative of a shareholder, when the Bilateral agreement was integral to MMH's planned restructure. 249 There is a difficulty with the contention that the duty of utmost good faith includes a duty of the particularity pleaded as to a 'Bilateral agreement'. Valra seems to conflate the nature and content of a duty with the facts that might give rise to a breach of such duty. 250 A further difficulty arises from Valra's submission that the duty of good faith includes a duty of disclosure by analogy with the position of parties to co-ownership deeds, who, it is said, take on duties analogous to partners when they take on a duty to act in good faith. The misplaced analogy with partners 251 Valra relies on Clarence Property Corporation Ltd v Sentinel Robina Office Pty Ltd [2018] QSC 95; [2019] 1 Qd R 144. Clarence Property concerned a co-ownership deed between two corporations as co-owners of an income earning commercial property. The respondent secretly 'poached' a director of the applicant, and the applicant brought proceedings claiming breach of a contractual term analogous to the present case. Although the deed provided that the corporations were not partners, the Court noted that the structural analogy with partnership was 'apparent' where the parties jointly owned and operated the commercial property: at [53]. 252 Valra then relies on Schipp v Cameron [1998] NSWSC 997. In Schipp, the Court found that partners owe to one another duties of the utmost good faith, which include a duty to render true account and full information of all things affecting the partnership. Einstein J said in that case: [725] Where a joint venture agreement does constitute a partnership at law, the participants in the joint venture are, of course, subject to all of the fiduciary obligations which flow from a partnership relationship. [726] Each member of a partnership owes fiduciary obligations to act in the joint interests of the partners in relation to the conduct of the business of the partnership and in respect of its assets: Helmore v Smith (1886) 35 Ch D 436. In Birtchnell v Equity Trustees Executors & Agency Co Ltd, Dixon J considered the scope of those fiduciary obligations. His Honour held that : 'As a general rule however, the relationship between partners is a fiduciary one. 'Indeed, it has been said that a stronger case of fiduciary relationship cannot be conceived than that which exists between partners … The relation is based, in some degree, upon a mutual confidence that the partners will engage in some particular kind of activity or transaction for the joint advantage only. In some degree it arises from the very fact that they are associated for such a common end and are agents for one another in its accomplishment.' … '[t]he subject matter over which the fiduciary obligations extend is determined by the character of the venture or undertaking for which the partnership exists, and this is to be ascertained, not merely from the express agreement of the parties, whether embodied in written instruments or not, but also from the course of dealing actually pursued by the firm.' [(1929) 42 CLR 384 at 408] [727] Partners owe to one another duties of the utmost good faith. This includes a duty to render true account and full information of all things affecting the partnership; a duty of honesty in dealings with third parties, whether or not the particular transaction is of a partnership nature; a duty to account to other partners for any benefit or gain obtained in circumstances where there was a conflict of personal interest and fiduciary duty or a significant possibility of such a conflict; and, a duty to account for any benefit or gain obtained or received by reason of, or by use of, their fiduciary position or of any opportunity or knowledge resulting from it. 253 Valra submits that there is 'no relevant distinction' between parties to a co-ownership deed and shareholders who are parties to a shareholders agreement, having regard to Schipp and Clarence Property. I do not accept that submission. First, part of the Court's reasoning in Clarence Property as to why a structural analogy with partnership was 'apparent' was because the parties were jointly carrying on the business of the property. A basis for such comparison is absent here: it is the role of directors to carry on the business of the company and the roles of the directors and shareholders are delineated, as discussed above. In any event, the Court in Clarence Property found that the relevant conduct took place outside the performance of the contract and so the duty of utmost good faith did not apply to it. 254 Factually, the role of the co-owners in Clarence is quite removed from the role of the MMH shareholders. Further, the Shareholders Deed expressly provides that nothing in the deed or in any document referred to in it shall constitute any of the parties a partner of the other (cl 32). That provision cannot be ignored. Nor has Valra pleaded a breach of any fiduciary duty. 255 I do not consider the parties to the Shareholders Deed are to be equated with partners. It cannot be said that their duties are therefore equivalent to those of partners. Proper principles to apply 256 That is not to say that there might not be circumstances where a duty of good faith might not require disclosure of particular information, as explained by Allsop P in Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268: [16] Further, in contracts such as these in a context such as this, the obligation of utmost good faith necessarily requires for its fulfilment a degree of co-operation between the parties in a reasonable way in the furtherance of their contractual objectives. It is both appropriate and necessary to assess such matters with a degree of objectivity as well as considering a party's honesty. Depending on the facts as they arise, the necessary cooperation may require, as here, a party to disclose information to the other, listen to the other and negotiate in good faith about the working out of the contract in its living performance. 257 However, care must be taken in transposing duties that might arise in particular contractual relationships to another. For example, as further explained by Allsop P in Macquarie: [18] The law of insurance has had a well-known and well-understood usage of the phrase 'utmost good faith' for over two centuries. It is an obligation that binds both insurer and insured. It is an obligation that has assisted in the efficient working of insurance markets in a practical way. In particular, the commercial working of the relationship between insurer and insured requires the (pre-contractual) disclosure of material information in order that the risk can be assessed and priced on a sound footing and with appropriate despatch. Care should be taken not to transpose the meaning of the phrase in that commercial context to other contexts, whether as a matter of law or mere equivalence. Nevertheless, it is an example of positive disclosure of information being the step necessary to satisfy the normative legal standard. 258 The contractual relationship considered in Macquarie was a long-standing commercial relationship. The performance of the agreements required planning by both parties, consultation among the parties and the expenditure of very large amounts of money upon planning and building work and the operation of a significant hospital in proximity to, and in connection with, a large hospital of the other party (at [8]). 259 The proper approach in considering a contractual obligation requiring good faith is to have regard to the bargain and its terms, and the nature of the contract or relationship. 260 The Full Court in Paciocco v Australia and New Zealand Banking Group Ltd [2015] FCAFC 50 said as follows: [288] The usual content of the obligation of good faith that can be extracted from cases such as Renard Constructions, Hughes Bros Pty Ltd v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (1993) 31 NSWLR 91, Burger King Corporation v Hungry Jack's Pty Ltd [2001] NSWCA 187; 69 NSWLR 558, Alcatel Australia Ltd v Scarcella [1998] NSWSC 483; 44 NSWLR 349, and United Group Rail Services Ltd is an obligation to act honestly and with a fidelity to the bargain; an obligation not to act dishonestly and not to act to undermine the bargain entered or the substance of the contractual benefit bargained for; and an obligation to act reasonably and with fair dealing having regard to the interests of the parties (which will, inevitably, at times conflict) and to the provisions, aims and purposes of the contract, objectively ascertained. [289] None of these obligations requires the interests of a contracting party to be subordinated to those of the other. It is good faith or fair dealing between the parties by reference to the bargain and its terms that is called for, be they both commercial parties or business dealing with consumers. As Posner J said in Market Street Associates Ltd Partnership v Frey 941 F.2d 588 (1991) the contractual notion of good faith varies in what is required for its satisfaction by reference to the nature of the contract. But the notion is rooted in the bargain and requires behaviour to support it, not undermine it, and not to take advantage of oversight, slips and the like in it. To do so is akin to theft, and if permitted by the law led to over-elaborate contracts, and defensive and mistrustful attitudes among contracting parties. At 595 Posner J said: The contractual duty of good faith is thus not some newfangled bit of welfare-state paternalism or (pace Duncan Kennedy, 'Form and Substance in Private Law Adjudication', 89 Harv Law Rev 1685, 1721 (1976)) the sediment of an altruistic strain in contract law, and we are therefore not surprised to find the essentials of the modern doctrine well established in nineteenth century cases. [290] The standard of fair dealing or reasonableness that is to be expected in any given case must recognise the nature of the contract or relationship, the different interests of the parties and the lack of necessity for parties to subordinate their own interests to those of the counterparty. That a normative standard is introduced by good faith is clear. It will, however, not call for the same acts from all contracting parties in all cases. The legal norm should not be confused with the factual question of its satisfaction. The contractual and factual context (including the nature of the contract or contextual relationship) is vital to understand what, in any case, is required to be done or not done to satisfy the normative standard. … [292] Good faith does not import an equitable notion of the fiduciary that is rooted in loyalty to another in the service of her or his interests: Smith L, 'Fiduciary Relationships: Ensuring the Loyal Exercise of Judgement on Behalf of Another' (2014) 130 LQR 608. Rather, it is rooted in honest and reasonable fair dealing: Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268 at [12]-[13]. 261 In Australian Competition and Consumer Commission v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 3) [2019] FCA 72 Colvin J considered a long list of authorities addressing good faith in a contractual context, including Macquarie, at [706]-[750]. His Honour summarised the principles as follows: [746] Having regard to the above authorities which indicate some progression and development in the understanding of what is required by an obligation to act in good faith in a contractual context, I would summarise the current state of the unwritten law as to the meaning of good faith for the purposes of cl 6(1) of the Code in the following terms: (1) the term 'good faith' imports a normative standard to be observed by the parties in dealings as to matters to which the standard is applied; (2) the normative standard embraces an obligation to act honestly and with fidelity to the bargain concluded between the parties; (3) the normative standard also embraces an obligation to act co-operatively in matters related to performance; (4) the standard does not require a party to subordinate its legitimate interests to those of the counterparty, but is does require due regard to the legitimate interests that both parties have in the performance of the contract they have made; (5) conduct which is dishonest, capricious, arbitrary or motivated by a purpose which is antithetical to the evident object of any provision of the franchise agreement or the Code that governs the conduct being scrutinised or conduct which is otherwise motivated by bad faith will not meet the standard; (6) where the scrutinised conduct, viewed in the particular context, is objectively unreasonable then the unreasonableness may form part of the basis for a conclusion that there has been a lack of good faith, but objective unreasonableness is insufficient of itself to amount to a lack of good faith; and (7) the quality of the scrutinised conduct is to be evaluated having regard to the circumstances of the particular parties, particularly their sophistication, commercial power and the relative significance for each party of the subject matter of the conduct. Consideration 262 In this case, the starting point is the Shareholders Deed and the obligations it imposes with respect to a shareholder who, like Comintra, receives an offer to sell their shares. It is also important to distinguish the role of directors and shareholders. The shareholders are entitled to have regard to their own interests, and are not subject to the same duties and obligations as directors. 263 The Shareholders Deed is proscriptive as to steps that apply to the transfer of shares. There is no doubt that shareholders must comply with those provisions insofar as they impose obligations on them. As already noted, some clauses require disclosure of price; some require prior provision of notices. So disclosure obligations on the part of a selling shareholder are addressed by the terms of the Shareholders Deed itself. 264 Protection is afforded to a minority shareholder in the context of cl 15. It is provided by the very terms of the clause itself: the requirements for arm's length terms, that the purchaser is not controlled by any shareholders and for same terms. 265 Having said that, nor is cl 15 to be construed as if it entirely for the benefit of a minority shareholder. The provision also benefits shareholders who want to take advantage of an offer to sell their shares if a small number of shareholders resist that course. 266 The company (MMH) cannot utilise cl 15.2 if it is not satisfied as to those preconditions. That is, the role of the company is interposed between the shareholders. The shareholders do not make decisions as to the exercise of the come along clause. The clause, the potential that it might be utilised and the role of parties in implementing it are expressly disclosed by the terms of the Shareholders Deed. 267 Comintra's position must also be considered. In contrast to Valra, it was both a creditor and a shareholder, and was entitled to look after its own commercial interests in both capacities. It knew that MMH was not in a financial position to continue without support and so objectively it was in the best interests of MMH that a deal be done. The MMH shares were of nominal value and so there was no issue of a sale of shares at an undervalue. Comintra was not a majority shareholder. It was not in a position to determine voting for the purpose of cl 15. It was not present or represented at the MMH directors meeting of 18 March 2014 when the clause was utilised. 268 Comintra's own conduct should also be considered. It deliberately refrained from negotiating the terms of the Share Sale Agreement because of a perceived conflict of interests. In that scenario, it should not be criticised for leaving the running of negotiations to SLP. It was also aware that MMH was communicating with shareholders and that MMH had disclosed to them by the 14 March 2014 circular the fact that separate terms for creditors (who could have moved to wind up the company) were agreed. There was no evidence of 'concealment' as alleged. It is unclear when Comintra became aware of the precise terms of the Share Sale Agreement: it was not executed until 18 March 2014, so after it had accepted the Tactracom offer. It was also unclear at the time that Comintra would ever benefit or profit from the Share Sale Agreement. At most there was some prospect of some return to set off against the forgiven loans if MMH under Tactracom's ownership were able to turn it around into a profitable venture in the future. 269 Further, there is no evidence that Comintra had set about conduct such as calculating percentages or ensuring that cl 15 could be utilised. Shariff did not add up the numbers at the time. Importantly, he did not speak to Sofiah (the come along clause would not have been utilised had Sofiah also rejected the share offer). There is no suggestion Comintra purported to influence voting by other shareholders. 270 Nor is there any suggestion that had Valra made inquiries of MMH for further detail about the offers made to Comintra and SLP that it would not have been forthcoming. Comintra had no cause to believe that MMH or Tactracom, the parties driving the process, were concealing any information, particularly as the circular to creditors referred to the agreements, albeit not in specific terms. 271 In those circumstances, Valra has not satisfied me that Comintra was obliged to disclose the Share Sale Agreement or that it intended to enter into it. Nor am I satisfied that any want of good faith on the part of Comintra has been established. Its actions in addressing the unsecured debt due to it, in circumstances where MMH had no real option but an insolvency regime, were consistent with protecting its legitimate interests. There is no evidence that the existence of an agreement with Tactracom relating to the debt was deliberately concealed or that Comintra's aim or motivation was to somehow keep the existence of the agreement concealed in order to enable Valra's shares to be appropriated or for any other reason. I do not consider that its conduct in failing to directly disclose knowledge of the agreement was in bad faith, dishonest or capricious. 272 For completeness, I note that an absence of 'same terms', as already found, does not of itself establish a lack of good faith. In ACI Operations Pty Ltd v Berri Ltd, Dodds-Streeton J similarly found that an offer was not 'arms length' but there was no want of good faith: at [200]. 273 I also note that even if I were wrong in finding that no lack of good faith has been established as pleaded, then a breach by Comintra would still result in only nominal damages, as Valra's complaint is the loss of shares where it has not established that those shares had any value and so no loss has been established. 274 Finally, I should mention that the manner in which Valra's pleadings were revised left, perhaps inadvertently, a reference to Comintra's alleged knowledge of the Mega Mags share sale to Tactracom and Ravi as part of the claim of lack of good faith on the part of Comintra. It was not developed in the closing submissions. Indeed, it was submitted by Valra that 'There is little evidence before the Court that Comintra knew that MMH would sell Mega Mags to Tactracom and Ravi for nominal consideration'. For its claim based on breach of the good faith term Valra focussed on Comintra's position with respect to the Share Sale Agreement as addressed above. I am not satisfied that any absence of good faith was established arising out of Comintra's alleged knowledge of the terms of transfer of MMH's shares in Mega Mags. Oppression 275 The oppression case as particularised is summarised at [130]-[131] above. Financial context 276 I have set out in the 'Facts' section some of the pertinent financial information as to MMH. Before addressing the oppression claim, it is important to recall the circumstances in which the conduct of which Valra complains occurred. I respectfully adopt the following paragraphs from Siopis J's reasons in Valra v Mag Men No 1 (and in which MMH is described as Mag Men Holdings): [76] … a feature of the balance sheet in respect of each of those years [ending June 2009 to 2012] was that the major asset of Mag Men Holdings was a receivable in the form of a loan made by Mag Men Holdings to Mag Nation, the subsidiary company conducting the Australian operating business, which varied from $6.5 million in 2009 to $8.1 million in 2012. It is also the case, that during that period the major liabilities of Mag Men Holdings comprised loans from Knox Partners and Comintra. As at June 2012, the financial statements of Mag Men Holdings showed total liabilities of $2.65 million of which $2.27 million comprised monies owed by Mag Men Holdings on these two loans. [77] A major determinant, therefore, of the financial viability of Mag Men Holdings, as reflected in those financial statements, was the recoverability of its major asset, namely, the receivable, being the loan made to Mag Nation. The recoverability of this loan depended in turn upon the financial position of the borrower, namely, the Australian operating company, Mag Nation. [78] A perusal of the financial statements for Mag Nation during that period shows that Mag Nation's major asset was a loan made to Mega Mags for $3.6 million. The other assets were also loans to related companies. Therefore, the extent to which Mag Nation was in a position to service and repay the loan made to it by Mag Men Holdings, depended upon its own trading performance and the trading performance of the other operating company, namely, Mega Mags, which as I said, conducted the New Zealand business. [79] However, the financial statements in respect of each of Mag Nation and Mega Mags showed that the each company was a loss making enterprise during the whole period in question. Mag Nation incurred a loss of $607,829 in 2009, $557,293 in 2010, $242,882 in 2011 and $216,706 in 2012. Further, the financial statements for Mag Nation also show that in each of those years the current liabilities exceeded the current assets of the company by about $500,000; and that the total liabilities of Mag Nation exceeded its total assets by $2.09 million in 2009, $2.6 million in 2010, $2.8 million in 2011 and $3.1 million in 2012. Further, the tax returns for Mega Mags showed that it had up to 30 June 2012 incurred accumulated losses in excess of $3 million. I might add that the financial statements of all the companies did not reveal any fixed or other assets of any significant value. [80] … a perusal of those financial statements showed that Mag Nation was in no position to repay the monies advanced to it by Mag Men Holdings, and that Mag Men Holdings was indebted to each of Comintra and Knox Partners in substantial amounts. [81] It was apparent, therefore, that the continued financial viability of Mag Men Holdings depended entirely on the continuing support of its two main lenders, because in the event that the two main lenders withdrew their support from the parent company and required repayment of their loans, the parent company would not be able to meet its liability under the loans by calling upon the receivable from Mag Nation. In other words, the financial viability of Mag Men Holdings as reflected by the net asset position relied on by Valra, was illusory. [82] As mentioned, in December 2013, Vali had sent Rahim an email stating that Mag Men Holdings was operating from 'hand to mouth' and that its continued viability depended upon the continued financial support of its two shareholder lenders. As set out above, the financial statements which Vali sent to Rahim, confirmed that position. 277 I observe in addition that once SLP and Comintra declined to provide further support, Vali had himself provided the interim $250,000 facility and was using his credit card to advance funds under that facility and pay other creditors of MMH. Attempts to secure an offer from Opus were unsuccessful. Approaches to banks for finance were unsuccessful. The directors were faced with liquidation as the only real option. The shares held by the shareholders were of nominal value only. That is the scenario in which the conduct of MMH is to be assessed. I note at the outset that such scenario is quite distinct from that considered by the Court in McCausland, where oppression was made out in circumstances that included the purported implementation of a drag along clause involving voting by certain shareholders, but where the relevant shares were found to be of value and were transferred at an undervalue. 278 It is also to be remembered that MMH was not a small family company. Although family members (or their interests) held shares, the majority shareholder was external and there were other non-related shareholders. Principles 279 Section 232 of the Corporations Act provides: The Court may make an order under section 233 if: (a) the conduct of a company's affairs; or (b) an actual or proposed act or omission by or on behalf of a company; or (c) a resolution, or a proposed resolution, of members or a class of members of a company; is either (d) contrary to the interests of the members as a whole; or (e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity. 280 There are many cases dealing with the meaning and application of those expressions. There is a particularly useful exposition of the relevant case law in Australian Institute of Fitness Pty Ltd v Australian Institute of Fitness (Vic/Tas) Pty Limited (No 3) [2015] NSWSC 1639 at [86]-[110]. Each case will depend on the particular circumstances and it is not appropriate to lay down a rule for every case. Whether the affairs of MMH were conducted in a manner that is oppressive to, unfairly prejudicial to, or unfairly discriminatory against Valra within the meaning of s 232(e) and as pleaded and particularised must be assessed having regard to all the circumstances. 281 In Wayde v New South Wales Rugby League Ltd [1985] HCA 68; (1985) 180 CLR 459 at 472 473, Brennan J described the test as follows: The question of unfairness is one of fact and degree ... The test of unfairness is objective and it is necessary, though difficult, to postulate a standard of reasonable directors possessed of any special skill, knowledge or acumen possessed by the directors. The test assumes (whether it be the fact or not) that reasonable directors weigh the furthering of the corporate object against the disadvantage, disability or burden which their decision will impose, and address their minds to the question whether a proposed decision is unfair. The court must determine whether reasonable directors, possessing any special skill, knowledge or acumen possessed by the directors and having in mind the importance of furthering the corporate object on the one hand and the disadvantage, disability or burden which their decision will impose on a member on the other, would have decided that it was unfair to make that decision. 282 In Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 at 704 Young J stated that the provisions are looked at as a composite whole, with the individual elements seen 'merely as different aspects of the essential criterion, namely commercial unfairness': see also Dosike Pty Ltd v Johnson (1996) 16 WAR 241. 283 Of particular importance in considering the issues at hand are the following: (a) a minority shareholder is often in a position of disadvantage, including financial disadvantage, but that does not in itself constitute oppression. The fact that a minority shareholder does not get her or his way in relation to the conduct of the affairs of the company will not be sufficient, in and of itself, to constitute oppression, as was made apparent in McCausland at [647] and Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [1998] NSWSC 413; (1998) 28 ACSR 688 at 740 (reversed for other reasons in Fexuto Pty Ltd v Bosnjak Holding Ltd [2001] NSWCA 97; (2001) 37 ACSR 672); (b) the role of directors and shareholders is to be respected. The court must 'avoid an unwarranted assumption of the responsibility for management of the company': Wayde v NSW Rugby League at 467. The manner in which the affairs of the company may be conducted is closely regulated by rules to which the shareholders have agreed. In HNA Irish Nominees Ltd v Kinghorn (No 2) [2012] FCA 228, Emmett J considered that: [507] The mere fact that a decision by directors might affect the interests of a shareholder adversely is not of itself sufficient, assuming good faith, to render the decision oppressive, unless it was one that no reasonable directors could have made: see John J Starr (Real Estate) Pty Ltd v Robert R Andrew (A'asia) Pty Ltd (1991) 6 ACSR 63 at 67. The court will not interfere with the traditional roles of directors and shareholders in managing and controlling a company, as provided for in its constitution, unless appropriate cause is shown. (c) the question of commercial unfairness is to be judged having regard to the facts known to the parties at the time of the conduct complained of, and not by reference to what subsequently transpires or facts which subsequently become known: Joint v Stephens [2008] VSCA 210 at [138]; (d) the relevant context to be taken into account includes the course of conduct undertaken by the parties, including the conduct of the plaintiff: Joint v Stephens at [136]. The conduct of the plaintiff might render the conduct of the other side not unfair; (e) it may be oppressive if directors or majority shareholders conduct the affairs of a company in a way that advances their own interests or the interests of others, to the detriment of a minority shareholder: Re Bright Pine Mills Pty Ltd [1969] VR 1002 at 1011. The transfer of Valra's shares purportedly in accordance with cl 15 (the contractual breach by MMH) 284 In my view, the mere fact of a contractual breach may not of itself comprise conduct that is oppressive to, unfairly prejudicial to or unfairly discriminatory towards a minority shareholder. 285 It seems to me that the decision made by the directors of MMH to implement cl 15 was done on the incorrect assumption that the proper question was whether all shareholders were offered the same price for the MMH shares. 286 The minutes indicate that the directors had regard to the elements of cl 15 but were wrong as to the question of construction as to 'same terms'. That is not a straightforward question, as these reasons indicate. I do not consider it is established that the directors acted in bad faith in seeking to utilise the clause. They were mistaken but that does not of itself rise to the level of oppressive or unfairly discriminatory conduct. 287 In reaching this conclusion the matters I take into account include that: (a) there is no evidence that the shares were sold at an undervalue and Valra accepts their value was nominal only; (b) Vali responded quickly and in a forthcoming manner in providing information to Rahim (and other shareholders) when it was requested; (c) there is no suggestion that Valra received less or different information to that received by other non-creditor shareholders; (d) there is no evidence that MMH sought to influence Sofiah or other shareholders to support the transaction to ensure that a 90% threshold was reached; (e) there is no evidence other shareholders conspired or communicated as to the manner in which they might vote or that they sought to achieve a 90% majority position so that cl 15 might be utilised; and (f) there was a commercial imperative for MMH to consider and implement cl 15 in order to facilitate the takeover which would potentially avoid an inevitable insolvency regime: the evidence does not establish it was seeking to utilise the clause for any ulterior purpose. Exclusion from management decisions 288 There is overlap between the allegation that Valra was wrongfully excluded from MMH's management decisions that led to the invocation of cl 15, and its submission that the Shareholders Deed reflected that shareholders would have a level of participation in the management of MMH and Valra was given no such reasonable opportunity. 289 The right of shareholders to be involved in decisions affecting the company are determined by the constitution and, in this case, the Shareholders Deed. The complaint relied upon by Valra is based on a lack of evidence of formal board meetings, a lack of reports to shareholders so that it was difficult for the shareholders 'to exercise any control or influence over the management of the company', and an assertion that there was an expectation that there would have been open disclosure by the directors 'for instance of the fact that the takeover was structured the way that it was to try to fit into the terms of the come along condition'. 290 Valra had no entitlement to participate in the day to day management of MMH. The matters that were required to be voted upon by shareholders were prescribed in the Shareholders Deed. This was not purely a family company or quasi-partnership where family members might have some expectation of a position of employment or decision making: the majority shareholder was an independent investment body and it was appropriate that the company be managed having regard to the Shareholders Deed. 291 It is also important to remember that pursuant to the Shareholders Deed, Shariff was the Valibhoy Representative. The directors of MMH were entitled to a point to assume that information was provided to Rahim as relevant by Shariff, and indeed the evidence of both Rahim and Shariff was that prior to their falling out, Shariff did speak to Rahim about the business of MMH regularly. Despite having fallen out with Shariff in around August 2012, Rahim did not inform Vali until December 2013 that Shariff no longer represented him and he did not seek information from Vali until that time. 292 Having said that, as Vali freely acknowledged, there was a lack of formal information flowing to shareholders after Comintra and SLP had put in place their facilities and were funding MMH. The imperative to make contact with shareholders again in 2013 appears to have been the indication that such financial support would not continue. That seems to have been the catalyst for the report of 19 February 2014. It appear that the directors of MMH took the approach that until and unless there was a need to report on some significant event, they did not provide regular formal reports to shareholders. 293 I note that MMH was not obliged to report to shareholders on the day to day management of MMH. Valra contends, for example, that it should have reported on the divestment of a 'significant asset', being the debt due to Mega Mags. However, that was not a significant asset but rather one of apparently no value at all. 294 I accept that MMH could have done more in terms of updating shareholders, even if just to indicate over the years that there was nothing of significance to report. But the question is whether the flow of information was such as to comprise unfair or oppressive treatment of Valra. 295 The following are relevant: (a) Vali accepted under cross-examination that the directors did not conduct four formal Board meetings a year. However, the directors were also entitled to meet informally and such a meeting still comprises a meeting of directors. They were entitled to meet together, adjourn and regulate their meetings as they think fit. There is no evidence that decisions were made by the directors without meeting with each other at all or other than with regard to the terms of the Shareholders Deed as to the types of matters that require shareholders' resolutions or without the appropriate majority voting of directors; (b) having said that, there is no doubt that even where meetings were convened informally, there should have been a process for recording minutes and the directors seem to have relied instead upon email records. The lack of proper governance in terms of minutes does not reflect well on MMH, but I am not persuaded that decisions were made without proper consensus of the directors; (c) I would not be persuaded that a historical or general assertion of a lack of information evidenced oppression or unfairness. For such serious allegations, there needs to be some nexus between the alleged lack of information and the impugned conduct; (d) as to the allegation that Valra was denied the opportunity to provide funding on the same terms as other shareholders, the documentary evidence indicates that it was invited to invest and was invited to loan funds to MMH. This is addressed further below; (e) as to the allegation that it was not provided with information or enough time to consider information about the Tactracom proposal to acquire shares, that assertion is not made out on the facts. Valra received financial information from Vali from December 2013, at the time that Rahim disclosed that Shariff no longer represented him in any matter. Vali responded quickly and provided the 6 December 2013 update, tax returns and financial statements, the 19 February 2014 shareholder update and additional tax returns and financial statements. Rahim chose to only scan the financial documents. That was his choice, just as it was his choice to doubt the veracity of the financial statements provided and to fail to read them in detail or take any advice about them; and (f) as already noted, there was no entitlement on the part of a minority shareholder to participate in management decisions on the part of MMH, and that includes a decision by MMH about the proposal by Tactracom to purchase the shares. For example, it was not for a minority shareholder to determine whether or not MMH should pass on the proposal made by Tactracom to the MMH shareholders, or determine the manner in which MMH should deal with such an offer. The proposal was made to the shareholders. The Shareholders Deed provided for the relevant regime that applied to any such acquisition offer. MMH was obliged to have regard to the Shareholders Deed and the shareholders were bound by that deed. The Mega Mags transaction 296 Of the matters particularised and referred to at [131] above, three can be dealt with together as relating to the Mega Mags sale. The first is the contention that Valra was not given the opportunity to participate in the divestment of MMH's shares in Mega Mags. This can be dealt with together with the issue of failure to disclose the forgiveness by MMH of the loan due by Mega Mags on 21 February 2014, and failure to disclose that the MMH shares in Mega Mags were sold to Tactracom and Ravi. 297 The starting point is that I accept the evidence to the effect that Mega Mags was unable to pay its debts as and when they fell due without continued financial support. Creditors were demanding payment, and SLP and Comintra were prepared to wind up Mega Mags rather than continue to prop it up. As noted by Siopis J in Valra v Mag Men No 1 at [79], the tax returns for Mega Mags showed that it had up to 30 June 2012 incurred accumulated losses in excess of $3 million. There was no prospect of it being in a position to repay the debt it owed to MMH. Therefore, the receivable was of no value to MMH. Whilst it is true that the directors of MMH decided to write off that debt, in so doing they did not divest any asset of value. That was not the type of management decision that needed to go to shareholder approval, having regard to the terms of the Shareholders Deed. 298 Similarly, the shares held by MMH in Mega Mags had no real value, having regard to its financial position. Valra evinced no evidence to the contrary. There is no suggestion that the Mega Mags shares were sold at an undervalue and no evidence that supports an inference that MMH was depleting its asset pool by anything of value. 299 Viewed pragmatically, leaving aside the debt due to MMH, Mega Mags was continuing to incur trading debts and rent in circumstances where it was seemingly unable to meet those debts. There was a benefit to MMH in divesting itself of that arm of its business in such circumstances, in that it would no longer be called upon to support Mega Mags in circumstances where there was no prospect of repayment. Again, the decision to sell such non-performing assets was a decision for management, having regard to the terms of the Shareholders Deed. The sale of the shares in one subsidiary and the release of the debt due by one subsidiary did not constitute the sale of the main undertaking of MMH. Having regard to the financial circumstances of Mega Mags, that is not a transaction that prejudiced the MMH minority shareholders and it had the benefit that the prospective purchasers were willing to assume the third party liabilities. 300 I am satisfied that the MMH directors decided in October 2013 to release the Mega Mags debt and sell the shares to Vali and Ravi. This finding is of some importance because Valra contends that the divestment of Mega Mags was part of the same transaction or restructure that resulted in the transfer of its MMH shares to Tactracom. 301 Having carefully considered the evidence, I accept the respondents' position that the Mega Mags deal was agreed some four to five months before the Tactracom proposal to acquire all shares was advanced. 302 I have formed that view because it is supported by the following evidence: (a) Ravi's email of 10 October 2013 is a clear signal of the serious financial situation that Mega Mags was in, with repossession of their tenancy threatened; (b) the fact that both Vali and Ravi injected $25,000 in November 2013 is explicable on the basis that they had agreed by that time to take over the third party liabilities of Mega Mags if no deal with Opus was secured; (c) Vali's evidence as to the decision having been made by the board of MMH in October 2013 is credible and not seriously challenged; (d) Vali's explanation for the delay in settlement is supported by documentary evidence, being the draft sale documents prepared by lawyers in January 2014; (e) the removal of Vali under the Agreement for Sale and Purchase of Shares and substitution of Tactracom as purchaser is explicable on the basis that during the delay in settlement Vali commenced and pursued negotiations for the acquisition of the MMH shares and incorporated Tactracom in March 2014; (f) the release of the Mega Mags debt to MMH was signed in February 2014, prior to the negotiation of the terms of the Share Sale Agreement; and (g) there is nothing in the Agreement for Sale and Purchase of Shares that makes it conditional on the acquisition by Vali/Tactracom of the shares in MMH. 303 At the time of the decision to divest the New Zealand operations, Mr Jackson was still a director of MMH, along with Shariff, Vali and Ravi. The shareholders (including Valra) were informed by the 19 February 2014 update that MMH had decided to divest the New Zealand operations to Ravi and Vali. Tactracom did not exist at that time and the information provided was therefore accurate. The fact that Tactracom and not Vali was the ultimate purchaser makes no real difference in the scheme of things. Either way, Vali's involvement was disclosed. Taking into account the disclosure of the divestment and the parties in the 19 February 2014 update, I do not consider that there was any relevant failure to disclose the involvement of Ravi and Vali. 304 Shareholders were also informed that Ravi and Vali were by then (February 2014) the remaining directors of MMH (no issue of quorum was run in the proceedings). Rahim complains that Valra was not provided with information about the divestment, and it is true that no shareholder approval was sought (or required), but as already noted, prior to completion MMH disclosed that Vali and Ravi were acquiring the New Zealand interests. Whilst the precise terms were not disclosed, it ought to have been no surprise to a shareholder that to achieve the stated positon that MMH would no longer be responsible for the New Zealand operations involved Vali and Ravi taking over the operations including by acquiring the shares from the parent, MMH. There is no evidence Rahim asked any questions about the divestment until the 13 March 2014 phone call, almost a month later. He been provided with financial information about the group. There is no evidence he indicated any interest in assuming any role with Mega Mags, whether as funder, shareholder or otherwise. 305 Whilst MMH did not inform shareholders in the 19 February 2014 update that MMH had agreed to release the Mega Mags debt (the release had not occurred by that date), that was not an egregious or unfair omission in my view. It may have been prudent for MMH to have disclosed that information, but that alone does not make the conduct unfair or oppressive towards minority shareholders in circumstances where there was no prospect of recovery of the debt and the conduct was not detrimental to minority shareholders. Vali said that the omission of a reference to that information was an oversight but that he considered it obvious (in effect) that no-one would seek to resurrect Mega Mags with such a debt still in place. 306 Taking into account all of those circumstances, I do not consider that Valra has established that the conduct of MMH in releasing the debt due by Mega Mags and selling the Mega Mags shares to Vali/Tactracom and Ravi on terms that they would assume responsibility for Mega Mags' liabilities was conduct detrimental to it as a minority shareholder. Claim that Valra was not given the opportunity to provide funding to MMH on the same terms as other shareholders 307 The assertion that Valra was denied the opportunity to provide funding to MMH on the same terms as other shareholders, and in particular Comintra and SLP, is not established. 308 As recorded above, the opportunity to loan funds was raised in an email to shareholders in August 2009. Valra and the other shareholders were invited to lend money to MMH, and passed a resolution to raise $800,000. Valra admitted by way of its pleaded reply that it declined to loan funds to MMH. 309 Both Comintra and SLP agreed to lend money to MMH pursuant to that resolution, which gave rise to the establishment of secured loans that were subsequently extended and increased, and funded MMH's trading losses and existence up to late 2013. Those are the same loans that Comintra and SLP wrote off in March 2014, in exchange for the redeemable preference shares in Tactracom under the Share Sale Agreement. 310 In short, Comintra and SLP assumed the burden and risk of funding MMH's trading losses over that time. Valra did not advance funds despite the invitation to do so and, as it happens, avoided suffering the losses ultimately incurred by Comintra and SLP in respect of their unrecoverable loans to MMH. 311 In any event, Valra was well aware of MMH's poor trading and financial position. It could have at any time (including on receipt of financial information in December 2013) offered to provide financial assistance, but did not do so. 312 The fact that Valra did not receive redeemable preference shares in Tactracom was a consequence of the fact that unlike Comintra and SLP, Valra did not provide financial accommodation to MMH and therefore was not a creditor. The other minority creditors did not receive such shares either. Those shares were offered to Comintra and SLP because of their status as creditors. Keeping the separate agreements with Comintra and SLP hidden 313 Valra contends that MMH implied by the 10 March 2014 circular and attachment, alternatively by silence, that the separate agreements dealing with the loans due to Comintra and SLP were not part of the extensive restructure of MMH. It also contends that MMH kept hidden the fact that Comintra and SLP had agreed to sell their shares on the terms of the Share Sale Agreement. 314 It is true that the precise terms of the Share Sale Agreement (to which neither MMH nor other shareholders were parties) were not disclosed by MMH. However, I am not satisfied that MMH portrayed the deals with Comintra and SLP as something other than part of the proposed 'extensive restructure'. The key terms for the proposed restructure as circulated to the shareholders expressly referred to the major debt holders in MMH having come to terms for treatment of their loans. Sensibly, that can only have been a reference to Comintra and SLP, being the creditors who provided the working loan facilities that MMH expressly referred to in the 19 February 2014 update to shareholders. Comintra and SLP were always in a different position to other shareholders. It was clear that they would no longer support MMH as MMH informed its shareholders that apart from Vali, no-one was willing to provide further funding. It would be objectively unsurprising that terms were reached with major creditors in order for any acquisition proposal to go ahead. Further, presumably it was open to an interested shareholder to seek further details about the specific terms of the separate agreements. 315 It follows that I do not accept the contention that the agreements with Comintra and SLP were 'kept hidden'. Claim that Vali transferred his shares to Shariff clearly in contemplation of seeking to invoke cl 15 to acquire all shares in MMH through Tactracom and was aware that Tactracom would obtain majority ownership of MMH and half ownership of Mega Mags 316 Vali was quite upfront about the fact that he transferred his shareholding in MMH so that he could then seek to pursue an acquisition of the shares. He had by that time invested a further $250,000 in MMH and was willing to invest more but only on terms. He was looking for a solution to avoid liquidation. He held only a relatively small parcel of shares. There was nothing improper about utilising the terms of the Shareholders Deed, which expressly permitted a transfer between relatives, in order to place himself in a position where he could seek to effect an acquisition of shares, whether it was necessary to use the cl 15 come along clause or not. 317 Valra underplays the significance of the obligations assumed by Tactracom. Both Mega Mags and MMH had external third party creditors (leaving aside SLP and Comintra) and those debts were not released by the respective companies as part of the transactions. Tactracom did not acquire interests in the companies free from debt. It assumed the risk with respect to those debts, in that failure to meet them would return MMH and Mega Mags to a vulnerable solvency position without ongoing support. 318 The fact that a shareholders deed permits a certain course of conduct does not mean that there might not still be a finding of oppression or commercial unfairness. Conduct must still be assessed taking into account all of the circumstances. Taking into account the matters that have already been addressed as to the allegation of oppression and the Mega Mags transaction and the utilisation of cl 15, I do not consider the conduct of Vali that is complained of established commercial unreasonableness on the part of MMH. Vali's involvement in Tactracom was also disclosed to shareholders. Conclusion - oppression not established 319 Having viewed the impugned conduct both separately and collectively, I am not satisfied that Valra has established its case under s 232 of the Corporations Act. 320 Taking into account the matters raised by the oppression claim and the above reasons, bad faith on the part of Vali or Shariff is not established. It cannot be said that the decisions made by the MMH directors in the financial situation in which it found itself were decisions that no reasonable director would have made. I have not ignored the position of Vali and his role as a director of MMH, but his interest in Tactracom was disclosed, his actions did not prejudice minority shareholders whose shares had no established value, his financial support of MMH during a period where it had no other feasible option was in the interests of MMH, and there was no sale of shares at an undervalue. The shareholders were on notice of the financial position of MMH and that the directors had formed the view that there was no real option but liquidation. The conduct was not discriminatory towards Valra. Valra was in the same position as other minority shareholders. Valra's own conduct is not determinative but is not irrelevant. Whilst its conduct does not alter the outcome, it chose to refrain from considering financial information and did not seek out information until December 2013, at which point that information was readily provided. 321 Even if Valra had established its case under s 232, Valra did not establish any loss. The relief sought against MMH for breach of the Shareholders Deed is addressed below and Valra has not established a basis for any additional relief nor sought anything additional in the prayer for relief. The alleged overarching conspiracy 322 By way of submissions that in part covered ground beyond its pleaded case, Valra sought to connect a number of events and portray them as a deliberate plan. Some of the allegations were confined and abandoned at trial, but the theme appeared to remain alive in closing submissions. I will briefly explain why I do not consider Valra has established that MMH or Vali had any grand plan to deprive Valra of its shares. 323 Sometimes a hindsight view tends to misplace emphasis. This case is an example of that. Whilst the delay in settlement of the Mega Mags divestment perhaps gave the appearance of a staged plan for Vali to acquire the business of MMH, I do not consider that was the intent at the time. Rather, MMH at that time was still hoping for alternate funding or purchasing opportunities. That did not come to pass and Vali, who had already provided an advance, was looking for a way to avoid liquidation. The dire financial circumstances of MMH were no secret to its shareholders. It is not surprising that in such circumstances the directors then looked to the interests of both shareholders and creditors in trying to find a way to save MMH from inevitable liquidation or administration. 324 Valra places weight on a comment by Vali during his phone call with Rahim about Mega Mags being the 'start' of the whole thing and suggests that such comment evidences that Mega Mags was part of the planned extensive restructure. Vali's comment does not refer to the start of any plan, and as clarified by Vali in re-examination was no more than a reference to the start of the chain of events as discussed. Furthermore, the 'extensive restructure' is referred to by MMH in the 19 February 2014 circular and the Mega Mags divestment is not included as part of that extensive restructure. 325 The restructure followed the Mega Mags divestment, and as a result of the failure to find options for MMH. Valra has not established the Mega Mags divestment was undertaken as part of a predetermined or staged plan. 326 With an external majority shareholder and creditor such as SLP and with other shareholders such as Sofiah who had not (it would seem) disclosed any particular position on a sale of their shares, there could be no certainty that Vali's acquisition proposal would be accepted. Nor was there any suggestion that Vali assumed that Valra would not acquiesce to the proposal. He hoped that Rahim would in fact acquiesce. Vali faced unknowns in making his acquisition offer. Shariff stood back and let SLP drive negotiations. Shariff did not conspire with Sofiah. Those matters undermine Rahim's contention that the whole course of events was part of a calculated and deliberate plan. Relief 327 It follows that the only relief to which Valra is entitled is against MMH and relates to the wrongful exercise of its power under cl 15.2 of the Shareholders Deed to execute the share transfer form relating to Valra's previous shareholding. 328 Valra's contention that the relevant shares should be re-transferred to it and the register rectified is flawed. It seeks to have shares owned by Tactracom transferred to it although Tactracom is not a party to these proceedings. I would decline any such relief. 329 The appropriate relief, if any, is damages. However, the damages that flow from that breach are only nominal. The relevant principles for the assessment of damages are not in issue. Valra is to be put in the position it would have been in with respect to damages as if the contract had not been breached. 330 The issue of quantification of damages was raised directly during the trial. It is not seriously in issue that as at 18 March 2014 the MMH shares were of only nominal value and accordingly any damages that flowed from their transfer would be at best nominal. This follows from the apparent insolvency of the company at that time, as foreshadowed and addressed by Siopis J in Valra v Mag Men No 1, and as to which Valra evinced no evidence. 331 In the absence of any proof as to loss, it is inevitable that any damages arising from the transfer of Valra's shares would be nominal: Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 CLR 286 at 301; and Huppert v Stock Options of Australia Pty Ltd [1965] HCA 30; (1965) 112 CLR 414 at 424, 431. As to quantum, the award should be a 'token amount': New South Wales v Stevens [2012] NSWCA 415; (2012) 82 NSWLR 106 at [77]. 332 That any damages would be only nominal was in any event expressly conceded by counsel for Valra. Valra had the opportunity to put on expert evidence as to the value of the MMH shares, was on notice from Valra v Mag Men No 1 (at least) that value was in issue in the proceedings, chose not to put on any expert evidence and disclosed its concession as to any damages being nominal only late in the proceedings. 333 In short, there was no evidence that the shares were of any value. There was no evidence as to loss. Accordingly, Valra has failed to establish any loss, and I would assess damages at the nominal sum of $100.00. 334 Valra is entitled to a declaration as to the breach: McCausland v Surfing Hardware International Holdings Pty Ltd (No 2) [2014] NSWSC 163 at [14]-[17]. 335 As to costs, I anticipate that the parties will be far apart in their views as to who should be regarded as the successful party and where costs should fall. Accordingly, I will hear the parties as to costs. I certify that the preceding three hundred and thirty-five (335) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Banks-Smith. Associate: Dated: 20 November 2019