Supreme Court New South Wales Medium Neutral Citation: In the matter of QB Foods Pty Limited [2021] NSWSC 1227 Hearing dates: 24 – 27 August 2021, 14 September 2021 Date of orders: 28 September 2021 Decision date: 28 September 2021 Jurisdiction: Equity - Corporations List Before: Black J Decision: Order to be made for Defendants to buy out Plaintiffs' shares in company. Parties to bring in short minutes of order to give effect to this judgment. Catchwords: Oppression — Members' rights and remedies — Whether conduct is oppressive to, unfairly prejudicial to, or unfairly discriminatory — Where first defendant increased salary without consent — Where first defendant took funds from company and then returned them — Where defendants resolved to issue shares in company in manner that would cause substantial dilution in plaintiffs' shareholding — Where other heads of oppression not made out. Oppression — Members' rights and remedies — Exercise of discretion as to remedy — Whether compulsory buyout orders as to Plaintiffs' or Defendants' shares appropriate in the circumstances — Whether to order company be wound up in oppression — Where relationship between the parties has broken down — Where both parties have contributed to present dispute. Legislation Cited: - Corporations Act 2001 (Cth), ss 232, 233, 461 Cases Cited: - Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd (2008) 66 ACSR 325; [2008] VSCA 86 - Asia Pacific Joint Mining Pty Ltd v Allways Resources Holdings Pty Ltd (2018) 125 ACSR 227; [2018] QCA 048 - Boyd v Feeney [2017] NSWSC 1595 - Byrne v A J Byrne Pty Ltd [2012] NSWSC 667 - Camden v McKenzie [2008] 1 Qd R 39; [2007] QCA 136 - Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; (2009) 257 ALR 610; (2009) 73 ACSR 1; [2009] HCA 25 - Craig v Silverbrook [2013] NSWSC 1687 - Dynasty Pty Ltd v Coombs (1995) 59 FCR 122; (1995) 138 ALR 64 - Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672; [2001] NSWCA 97 - HNA Irish Nominees Ltd v Kinghorn (No 2) (2012) 290 ALR 372 - John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 - Jones v Dunkel (1959) 101 CLR 298 - Mair v Rhodes and Beckett [2018] VSC 132 - MMAL Rentals Pty Ltd v Bruning (2004) 63 NSWLR 167; [2004] NSWCA 451 - Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 - Munstermann v Rayward [2017] NSWSC 133 - Nassar v Innovative Precasters Group Pty Ltd (2009) 71 ACSR 343; [2009] NSWSC 342 - New South Wales v Hunt (2014) 86 NSWLR 226; [2014] NSWCA 47 - O'Neill v Phillips [1999] 1 WLR 1092; [1999] UKHL 24 - Rankine v Rankine (1995) 18 ACSR 725 - Re a Company (No 00477 of 1986) (1986) 2 BCC 99,171 - Re Bicher & Son Pty Ltd (2020) 147 ACSR 108; [2020] NSWSC 711 - Re Bird Precision Bellows Ltd [1984] Ch 419 - Re Bird Precision Bellows Ltd [1986] Ch 658 - Re Catombal Investments Pty Ltd [2012] NSWSC 775 - Re Global Mortgage Equity Corporation Pty Ltd (2013) 97 ACSR 30; [2013] NSWSC 1586 - Re ICB Medical Distributors Pty Ltd [2018] NSWSC 1315 - Re Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547 - Re Pure Nature Sydney Pty Ltd [2018] NSWSC 914 - Re Rectron Electronics Pty Ltd [2013] VSC 384 - Re Scientific Management Associates Pty Ltd (2019) 141 ACSR 115; [2019] NSWSC 1643 - Re Swan Services Pty Ltd (in liq) [2016] NSWSC 1724 - Russell v Lee Holdings Pty Ltd (No 3) [2020] WASC 346 - Scottish Co-operative Wholesale Society Ltd v Meyer [1959] AC 324 - Shanahan v Jatese Pty Ltd [2019] NSWCA 113 - Smith v Gould [2012] VSC 461 - Snell v Glatis (No 2) [2020] NSWCA 166 - Societe d'Avances Commerciales (SA Egyptienne) v Merchants' Marine Insurance Co [1924] 20 Ll L Rep 140 - Solanki v Cufari [2014] VSC 345 - Tomanovic v Argyle HQ Pty Ltd [2010] NSWSC 152 - Tomanovic v Global Mortgage Equity Corporation Pty Ltd (2011) 288 ALR 310; (2011) 84 ACSR 121; [2011] NSWCA 104 - United Rural Enterprises Pty Ltd v Lopmand Pty Ltd (2003) 47 ACSR 514; [2003] NSWSC 910 - Varma v Varma (2010) 6 ASTLR 152; [2010] NSWSC 786 - Wambo Coal Pty Ltd v Sumiseki Materials Co Ltd (2014) 88 NSWLR 689; (2014) 290 FLR 18; (2014) 101 ACSR 643; [2014] NSWCA 326 - Watson v Foxman (1995) 49 NSWLR 315 - Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459; [1985] HCA 68 Texts Cited: - S Brenker & I Ramsay, "Legitimate expectations and the oppression remedy" (2020) 36 Aust Jnl of Corp Law 3 Category: Principal judgment Parties: Adriano Locantro (First Plaintiff) Pino Locantro (Second Plaintiff) QB Foods Pty Limited (First Defendant) Amy Stagnitta (Second Defendant) Gavin Stagnitta (Third Defendant) Representation: Counsel: B May (Plaintiffs) A Ogborne (Defendants) Solicitors: Turner Freeman Lawyers (Plaintiffs/) Paul Bard Lawyers (Defendants) File Number(s): 2020/340945 Judgment Nature of the proceedings 1. The Plaintiffs, Mr Adriano Locantro (to whom I will refer, without any disrespect, as "Adriano") and Mr Pino Locantro (to whom I will refer, also without any disrespect, as "Pino") seek relief in respect of the affairs of QB Foods Pty Ltd ("QB Foods"), including relief for oppression under s 232 of the Corporations Act 2001 (Cth). In particular, they seek an order that they purchase the shares in QB Foods held by the Second and Third Defendants (to whom I will refer, without any disrespect as "Gavin" and "Amy") respectively at fair value based on the shareholdings in QB Foods as at 26 November 2020. That order is presumably intended to require those Defendants to transfer their shares to Adriano and Pino, which they do not wish to do. Alternatively, Adriano and Pino seek an order that Gavin and Amy purchase their shares in QB Foods at fair value based on the shareholdings in QB Foods as at the same date. 2. By way of background, Adriano and Pino are brothers, and have interests in a bakery and café business trading as Locantro Fine Foods ("Locantro"). In their capacity as trustees of the Locantro Family Trust, Adriano and Pino jointly hold 31 DVVR class shares, 30 Equity ("EQ") class shares and 30 "Management" ("MGT") class shares in QB Foods. Gavin is the sole director of QB Foods and holds 1 DVVR class share in QB Foods. Amy is Gavin's wife and holds 30 DVVR class shares, 30 EQ class shares and 30 MGT class shares in QB Foods. In the result, Adriano and Pino together hold fifty per cent of the issued share capital of QB Foods, and Gavin and Amy together also hold fifty per cent of the issued share capital of QB Foods, and Adriano and Pino on the one hand and Amy on the other would share equally in a distribution of a surplus on a winding up. QB Foods manufactures and supplies pre-blended beverage products to food retailers which are used to make smoothies and other similar products. 3. Mr May, who appears for Adriano and Pino, points out that the rights and conditions associated with each class of shares are provided in cl 65.2 of QB Foods' constitution; the rights attaching to each class of shares are provided for by a schedule to that Constitution; the "EQ" class shares entitle the member to participate in the distribution of surplus assets on a winding up; the "MGT" class shares entitle the member to one vote per share held; and the "DVVR" class shares provide a right to receive such dividends as the directors from time to time declare, as well as being redeemable preference shares that can be redeemed at the discretion of the directors. Chronology, affidavit evidence and credit 1. I will first set out a chronology of events, which are in narrow compass, drawing partly upon Adriano's and Pino's chronology, but also including several other events which Adriano and Pino did not include in their chronology. 2. QB Foods was incorporated on 13 March 2014, and acquired a pre-existing business operated by a company associated with Gavin that had been placed in voluntary liquidation. On or about 1 July 2015, Adriano and Pino as trustees of the Locantro Family Trust were issued new shares in QB Foods for consideration of $100,000, fully paid. As I noted above, the new shares issued to Adriano and Pino constituted 50% of the issued capital of QB Foods, with Gavin and Amy holding the other 50%. 3. By email dated 27 September 2016 (Ex P3, ECB 558), Adriano made a request to Gavin that: "Just going forward, could you please include me in all financial meetings being planning and lodging with your accountant. It's no biggie, but I just think it's important that we are both there." 1. On or about 2 August 2017, Adriano, Pino, Gavin, Amy and QB Foods executed a document titled "Heads of Agreement of QB Foods Pty Ltd" ("HoA") (Ex P1, ECB 43ff). The recitals to the HoA provide that it was to take effect from 1 July 2015. Clause 5 of the HoA deals with additional funding of QB Foods and I will address that clause below in dealing with a share issue that is in dispute. Clause 6(c) of the HoA provides that purchases of capital equipment in excess of $10,000 were to be approved by both Gavin and Amy on one hand, and Adriano and Pino on the other, and I will also address that clause in dealing with a disputed purchase below. Clause 7 of the HoA deals with Gavin's salary and with Adriano's and Gavin's role in QB Foods and I will address that clause in dealing with issues in dispute below. Clause 10 of the HoA provides that dividends are payable at the discretion of the director based on QB Foods' financial position. 2. From 13 July 2018, Gavin's salary was increased to $66,560 with Adriano's and Pino's agreement or acquiescence, departing from the position previously provided by cl 7(a) of the HoA. On 1 December 2019, Gavin sought to have his salary further increased to $150,000 per annum, plus superannuation and car and mobile phone expenses. By email dated 10 December 2019, Adriano and Pino consented to that salary increase on several conditions (Ex P2, ECB 120-121) as follows: "(1) Adriano and Pino have full access to MYOB Live of QB Foods. (2) Should the business have a bad year, Gavin to take a pay cut to help cash flow. (This would happen in a year where there was an unexpected downturn.) (3) Should Adriano wish to work in the business in the future (either part-time or full time) Adriano will receive the same benefits and pay as Gavin Pro-Rated." 1. By his email dated 18 December 2019 (Ex P2, ECB 122), Gavin did not wholly accept the conditions that Adriano and Pino had sought to impose on that salary increase, and responded as follows: "#1 Access to QB MYOB live. I have discussed with you at length, not only recently but also many times before. This should really be information Privy in our work environment which is in Belfield not [Locantro's premises at] Leichhardt. From the early days of our partnership, I have been asking that both yourself & Pino come on a monthly or weekly basis and review and discuss all the financials of the company. But you have not wanted to do this. You can have access to a live read only file which I will arrange this week. The company information is Privy to you and Pino only. It is not information to share with others without my consent, accountants, bookkeepers, associates & friends. #2 If the business cannot afford to pay its employees in the future, as the company director I will make the appropriate decisions with the information we have at the time. #3 We have a contract in place for this, I don't see the relevance in your point, but yes pro-rated, same as me and the same as the contract which is an equivalent rate per hour. Ref in our contract, 7.B-3." 1. From 24 December 2019, or early January 2020, Adriano was allowed full access to QB Foods' "MYOB Live" financial software, satisfying one of the conditions that he and Pino had imposed on their consent to the increase in Gavin's salary. 2. By an email dated 12 February 2020 (Ex D2, ECB 1363), Gavin wrote to Adriano proposing that QB Foods start paying Adriano a wage as an employee of QB Foods, referring to the terms of the HoA and observing that: "The most important thing for me is to discuss how we can get you to commit to working at least one day per week? Preferably more if we want to take this business to the next level. Maybe before we have this meeting it might be an idea for you to have this discussion with Pino and see how you can step away (completely) at least one day a week from Locantro? If we do this, we can be clear on our direction with your work and your commitment and hopefully maximise your efforts to grow QB. I think if we don't do this, it will be another year of more of the same as what has been happening over the past 2-4 months, allot [sic] talk but really no solid commitment to working in the business on your behalf. (Just being honest). Let me know if we are on the same page here?" 1. On 28 February 2020, there was a discussion between Adriano and Gavin about the possibility that Gavin would buy him out or that he would buy Gavin and Amy out, and the latter was rejected by Gavin (Adriano 29.3.21 [61]). 2. On 3 March 2020, Gavin emailed Adriano (Ex D2, ECB 1363) noting that he was "not interested" in Adriano running the business from his office at Locantro and requesting that Adriano write a job description so it was clear how Adriano would be working in the business one day a week; complained about Adriano seeking to micro-manage the business and Gavin and the staff and checking up on Gavin through the staff, and followed up on the email dated 12 February 2020 to which I referred above. 3. By email also dated 3 March 2020 (Ex D1), Adriano wrote to Gavin as follows: "On Friday we had a pretty lengthy discussion on ownership and the future of this company and you made it quite clear that you no longer wanted to be partners with us. You made us an offer to give us (Locantro Trust) our money back ($250,000) + some money for our time – I took this as $50,000 = (Total of $300,000) to leave. … Then I made a counter-offer of $600,000 for the business + a guaranteed $200,000 in stock/entitlements (meaning you would walk away with a minimum of $800,000). Prior to discussing anything about emails, … my job role (which is outlined in our agreement as Business Strategy, New business development, Marketing, Social Media, Finance). I need to know your stand on our offer? As mentioned on Friday there are only 4 possible outcomes for the future for us and they are: (1) We sort out our problems and attempt to do this together (this is still my preferred option. (2) We buy you out. (3) You (Amy) buy us out. (4) We sell the whole business." 1. By a text message sent to Gavin on 4 March 2020 (Ex P3, ECB 408-409), Adriano advised that: "Hi Gav, I have tried to call you 2 times today and have called you for 5 days straight, yet you continue to ignore my calls. Part of your duty as a Managing Director of our company is to make yourself available to the owners and shareholders. Something you are currently not doing. Today, against our agreement and with no just cause you disabled my read only access to MYOB and disabled me of my QB emails. As a 50% shareholder of this business I take these actions of misconduct very seriously. I ask that we meet up tomorrow (what ever time suits you day or night) to resolve whatever problems and issues you may have and try to resolve them professionally." 1. On 4 March 2020, Adriano's access to QB Foods' "MYOB Live" financial software was removed. By an email dated 5 March 2020 (Ex P2, ECB 123), Gavin indicated his difficulties with Adriano's working practices and the reasons for removing his access from MYOB Live as follows: "My issue around this discussion is your lack of involvement and contribution to working in the business as agreed in our contract (Min 1 day per week). This really has not happened in any capacity, frequently as we agreed. Your idea and my idea of you working in the business are very different. I don't believe you have added any valuable contribution in a very long time. By adding value I mean working in the business to grow (NBD), Strategy and your list below as you have described in our agreement. Like I have said to you so many times in writing and in person, you showing up at the factory randomly from time to time without actually having a role is not productive and achieves nothing for our business in terms of growth. (It also takes me away from my work.) … Yesterday, I removed your access from MYOB Live because as MD [Managing Director], I am responsible to act in the best interests of the company. I made it very clear that, these files are NOT to be discussed with anyone without my consent, which you did and I know this is not the first time you have. I do not want our business being discussed among others without me or without my consent. … If you need company financials (or other info) I will always provide this to you at any time. There is clearly no benefit to the business by you having a live MYOB file. My [p]referred option is to stay as a partnership as is yours BUT, it cannot happen while you are not adding value to the business. This was our agreement from the start. …" 1. The parties further corresponded concerning their working relationship in mid-March 2020. By an email sent to Adriano and Pino on 16 March 2020 (Ex D2, ECB 1147), Gavin noted the then difficulties between the parties, noted his view that Adriano had not contributed one day per week over the last couple of years, although they are recognising they had spent many hours on the phone which were "not productive working hours"; expressed his concern as to the conditions imposed on his pay rise in 2019 and noted the risk of future issues as to his remuneration, and expressed the view that the condition imposed by Adriano and Pino as to full "MYOB Live" access had "nothing to do" with the amount of his remuneration; and addressed two possibilities for the future relationship between the parties as follows: "At this point getting out of the business is no longer an option for me, so I see two options for us moving forward that work. Option 1: Ongoing, Adriano works in the business one day a week as per our contract. Adriano is paid $30,014.40 plus Super P/A which is 20% of Gavin's wage as agreed. This would be a normal working day same as it is for Gavin from 8am – 6pm, a day of your choice. No other distractions with your other businesses and fully committed to the role in QB [Foods] on this day and during this time only. We will set you up as an employee in the system and you will be paid each fortnight like myself & the other employees. We will need to put together and (I need to agree on) your job description to ensure we have a clear role defined for you which will contribute to the growth and needs of business. You can have a desk here in [Head Office] and you can have access to QB [Foods] files which include MYOB full access in a readable format for this one day of the week, if you want it. NB: You will not have access to MYOB files outside of these work hours on personal devices. During this day you need to work on the business and contribute value to the growth of the company. It will not be a day for me to be reporting to you as a shareholder. We will have weekly/monthly meetings to raise concerns and discuss our progress and planning in the company. The reporting to Shareholder discussions can take place in these meetings." 1. It seems to me that this proposition was consistent with the HoA, so far as it contemplated that Adriano would work in the business one day a week and would, during this period, be remunerated for doing so; and, importantly, it would have permitted Adriano full access to QB Foods' MYOB files in a readable format, on the basis that he would access the information on QB Foods' premises while working in QB Foods' business. There seems to me to be nothing unreasonable about that approach, although it fell short of the "MYOB Live" access that Adriano and Pino had required as a condition of approving Gavin's earlier salary increase. 2. That email then identified an alternative proposal, as follows: "Option 2: Adriano steps back from working in the business, in turn you will sacrifice a wage, and take on the role of shareholder as you are. In this case you will receive weekly/monthly Sales and financial reports, and of course, as we do now, I am happy to chat with you to discuss the day to day running of the business and your thoughts when required. I would meet with you at least once a month to report back and ensure we have our business in check. These monthly meetings become the opportunity to raise concerns and discuss our progress and planning in the company. As Director of the company I will meet all my obligations to the shareholders, legally and ethically as best I can. Finally to elaborate further on your discussion around my reporting into you on a regular basis about the day to day running of the business. I am not comfortable with this and regardless of which option we choose for your involvement, I need to implement management style which works best for the company. This goes back to a partnership where clear roles are defined and you are not looking to do my role as GM." That alternative proposal did not provide "MYOB Live" access, as required by the conditions previously imposed by Adriano and Pino on Gavin's salary increase. It was not inconsistent with Adriano's and Pino's rights under the HoA, and contemplated a high level of reporting to them as major shareholders in respect of QB Foods' sales and financial reports. 1. On 20 April 2020, early in the COVID-19 pandemic, Gavin withdrew $120,000 from QB Foods' account. He subsequently repaid that amount as I note below. On 2 June 2020, Gavin removed Adriano's access to a QB Foods email address. 2. By a letter dated 11 June 2020, marked "without prejudice" but tendered without objection (Ex P2, ECB 125), Gavin advised Adriano, Pino and Amy that: "As sole director of the Company, I have always and will continue to comply with legislative provisions in relation to you as shareholders and will provide you with all such information as the company is required by law to provide to shareholders. Unless required by law, shareholders will not have access to the MYOB files or any other company information. All Company information provided to shareholders will be provided on a strictly confidential basis and is not to be used for the use or benefit of any other entity." 1. He referred to the recent economic downturn, presumably associated with COVID-19, and indicated that he anticipated that QB Foods would not have surplus funds to pay dividends in the foreseeable future; noted that it had no borrowing capacity because it had been unable to report any repeat earnings; noted that he had personally guaranteed loans in respect of the four company vehicles which were in excess of $150,000; referred to a proposal that QB Foods relocate to larger premises and purchase equipment to expand its operation, and proposed that each shareholder invest a further $200,000 in that financial year to begin that process. He also foreshadowed a further increase in his salary, and I address the claim in respect of that matter below. 2. On 26 June 2020, Gavin repaid the amount of $120,000 to QB Food's account that was withdrawn on 20 April 2020. Also on 26 June 2020, Gavin authorised the purchase of a forklift for QB Foods worth $24,530. I address the claim in respect of that matter below. 3. By a long letter dated 30 June 2020, Adriano's and Pino's solicitors set out an account of QB Foods' history; demanded copies of specified documents; sought to require that Gavin reduce his salary to $38,900 plus superannuation in accordance with the HoA, notwithstanding that that amount was less than the salary to which Adriano and Gavin had previously agreed; demanded the entry into a new shareholder agreement by Amy and Gavin; and indicated that, if that did not occur, Adriano and Pino would bring proceedings seeking relief under ss 461(1)(e)-(f) of the Corporations Act, which allow the Court to make an order for the winding up of a company. 4. Gavin and Amy's solicitors replied by letter dated 2 July 2020 (Ex P2, ECB 135) declining to provide undertakings sought by Adriano and Pino but recorded Gavin's undertaking to continue to manage QB Foods in the ordinary course of its business, including maintaining a complete record of its income and expenses from the conduct of its business; contended that Adriano had breached the requirement that he work with Gavin in the business for a minimum of one day per week and that Amy was entitled to buy the balance of the shares in QB Foods and had made an offer to do so and reopened the period for acceptance of that offer. Further correspondence followed between the solicitors. 5. On 30 July 2020, Adriano told Mr Ersan, QB Foods' factory manager, that he and Gavin were having "a bit of a dispute" and that: "Gavin is trying to rip me off. My intention is to take over the business from Gavin. When I take over, if you stay with me, I will give you a small share in the business, a promotion and a pay rise." Pino then joined the conversation and told Mr Ersan that "[Y]our job is safe with us" and Adriano requested him not to tell Gavin about the conversation. 1. That conversation led Mr Ersan to become concerned as to the security of his employment and he then resigned, although he was subsequently persuaded to remain with QB Foods on a casual basis. His letter of resignation dated 6 August 2020 addressed to Gavin provides a contemporaneous account of his conversation with Adriano and Pino as follows: "Last Thursday I visited Adrian's business in Leichhardt and he told me everything that is going. He told me that he was taking over your business from you very soon and not to worry that my job was safe. He offered me a promotion and a pay rise and said to me he would give me profit in the business when he takes over. He said he would look after me. Pino was there to and he agreed with Adrian. I don't believe that my job is safe anymore and I am scared that I will not be able to pay for my family in the future in this job if something happens to you. I do not want to work for Adrian as I don't really know or trust him what he is offering, and I do not want to be struck in arguments as stuck without a job may be." That letter then indicated his intention to resign and that he was "very upset". 1. On or after 26 August 2020, Gavin caused QB Foods to stop supplying its products to Locantro's Leichhardt store, where Adriano would not provide a confirmation requested by QB Foods as to the use of those products. By email dated 28 August 2020 sent to a staff member of QB Foods and copied to its accounts section, Adriano said that: "I have been contacted by several customers this week (customers which I have an existing relationship with through Locantro) which would like to come to the shop and have a taste test of our products. … This is a problem as I currently have no stock. … Also I have a two meter sign in the shop and have no stock. … I desperately need stock. Gavin is obviously trying to get Personal by not sending stock, but as a director of our company he should be acting in the best interest of all share holders and send the stock to a fully paying customer (which is Locantro). Please let me know if you would like up front payment as this will not be a problem." That email then set out an order for stock and had further exposed the dispute between QB Foods' shareholders to its staff (Ex P2, ECB 156). 1. By email dated 1 September 2020 (Ex P1, ECB 158), Gavin responded, reasonably enough, expressing concern as to Adriano's contact with QB Foods' staff in the email dated 28 August and requesting that Adriano contact him directly and stated that: "Your request for stock has been rejected because as you have stated in your email, your intentions are to use the stock for taste testing and sampling for Locantro new customers at the Locantro store. This is not acceptable. If there are new customers who are wanting to sample, they should be referred to me directly as would a normal new customer contact. Again, you have no authority to represent QB products and I instruct you to stop immediately." 1. That email also addressed issues as to delivery, given the previous dealing between Adriano and Mr Ersan, and observed that: "Please confirm by responding to this email that you agree NOT to use stock for any purpose other than it is intended use which is retail purpose only, ie: to serve to your customers in store. Once you have confirmed I can look at alternative arrangements to supply stock we can possibly supply by courier at your own expense. I take this opportunity to ask you and Pino again to meet with me and the shareholders (with or without lawyers) to discuss your intentions moving forward with hope of resolving your differences amicably." 1. Adrian responded by email dated 1 September 2020, which did not provide the requested undertaking and requested continued supply; suggested that the problems could not be resolved by reason of Gavin's inability to compromise and come to a fair and reasonable resolution; and insisted that all discussions take place through lawyers. 2. On 6 November 2020, Gavin sent a letter to Adriano and Pino concerning a proposed "Share Purchase Plan" and, when Adriano and Pino did not take up their portion of that issue, by resolution dated 27 November 2020 (Ex P1, ECB 82-83), resolved to issue further shares in QB Foods to Amy and Gavin. I address the claim in respect of that matter below. These proceedings were commenced on 1 December 2020 and, on that date, the Court granted an interlocutory injunction preventing QB Foods from issuing any shares or taking any step to effect "registration" of the shares purportedly issued to Amy and Gavin on 27 November 2020 or entering into a transaction that altered or diluted Adriano's shareholding in QB Foods. On 2 December 2020, that injunction was continued until further order. The "Share Purchase Plan" was subsequently cancelled on 1 February 2021. 3. I now turn to the affidavit evidence and cross-examination. In addressing that evidence, I have regard to the fallibility of human memory which increases with the passage of time, particularly where disputes or litigation intervene: Watson v Foxman (1995) 49 NSWLR 315 at 318–319; Varma v Varma (2010) 6 ASTLR 152; [2010] NSWSC 786 at [424]–[425]; Re Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547 at [7]; John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 at [94]-[96]; Boyd v Feeney [2017] NSWSC 1595 at [25]. I have also been conscious of the importance of the credit of witnesses where there is, in respect of some issues, inconsistencies in the oral evidence, and I bear in mind that the credibility of a witness and his or her veracity may be tested by reference to the objective facts proved independently of the testimony given, in particular by reference to the documents in the case, his or her motives and the overall probabilities: Armagas Ltd v Mundogas SA [1985] 1 Ll R 1 at 57; Craig v Silverbrook [2013] NSWSC 1687 at [142]. I have also had regard to Atkin LJ's observation in Societe d'Avances Commerciales (Societe Anonyme Egyptienne) v Merchants' Marine Insurance Co (The "Palitana") (1924) 20 LI L Rep 140 at 152 that "an ounce of intrinsic merit or demerit in the evidence, that is to say, the value of the comparison of evidence with known facts, is worth pounds of demeanour"; substantially the same view was taken by Keane JA in Camden v McKenzie [2008] 1 Qd R 39; [2007] QCA 136 at [34], by Leeming JA (with whom Barrett JA and Tobias AJA agreed) in State of New South Wales v Hunt (2014) 86 NSWLR 226; [2014] NSWCA 47 at [56]: see also Craig v Silverbrook above at [141] and Re Swan Services Pty Limited (in liq) [2016] NSWSC 1724 at [6] on which I have drawn for this summary of the case law. 4. Adriano and Pino rely on Adriano's first affidavit dated 1 December 2020. Adriano there set out the matters which are in dispute and referred to correspondence relating to the "Share Purchase Plan" in evidence which was largely admitted as a submission. 5. Adriano and Pino also rely on Adriano's second affidavit dated 29 March 2021 which referred to the nature of QB Foods' business. Adriano there claimed (Adrian 29.3.21 [15]) that he had leveraged his client relationships and used other contacts "to assist to deliver a client base to QB Foods of about 800 clients". It emerged in cross-examination that he had contributed to obtaining some clients for the Company, but not to the 800 client which it has developed over time through the activities of all its employees. Adriano also gave evidence that Locantro "was also responsible for the formulation of approximately 20% of the products that QB Foods might produce and supply". It emerged in his cross-examination that that evidence was highly misleading. It was likely not correct even by reference to the number of product lines sold by QB Foods, and was plainly not correct as to the volume of sales, as to which Locantro contributed less than one percent of the volume of products sold. 6. Adriano there referred to his having met Gavin when they were in high school, to his and Pino's investment in QB Foods in 2015, and to the HoA to which I have referred above. He claimed (Adriano 29.3.21 [28]) to have commenced working for QB Foods between three and five days every week, without payment, between July 2015 and July 2017. That evidence is unverifiable, since Adriano was working for Locantro at that time and did not produce any systematic record of work done for QB Foods, although the evidence indicates at least that frequently received and sent brief emails and text messages from and to QB Foods' clients and potential clients and also conducted product demonstrations for potential clients in that period. Adriano there also set out the nature of the work he claimed to have done and claimed to have built relationships with new clients of QB Foods using Locantro's connections, which is plausible in the circumstances. 7. Adriano's evidence (Adriano 29.3.21 [38]) was that he had requested access to QB Foods' MYOB data from July 2015 to December 2019 and that Gavin had responded that Adriano should ask him for the relevant information. He claimed not to have had that access until December 2019, although it emerged in his subsequent affidavit evidence and in cross-examination that he had in fact had access to at least some parts of the MYOB data, and particularly sales information, since at least July 2017. It is unlikely that he had simply forgotten that matter, when verifying his second affidavit, and the omission of reference to it, combined with the misleading evidence to which I referred above, left me with the strong impression that Adriano was prepared to tailor his evidence so as to seek to advance his and Pino's case. Adriano also there addressed a number of the specific issues on which he and Pino rely in the oppression claim, which I address below. 8. By a third affidavit dated 18 June 2021, Adriano led evidence that was partly in reply to other evidence led in the proceedings. He also led evidence which plainly exceeded the proper scope of reply evidence, much of which was admitted with a limiting order under s 136 of the Evidence Act 1995 (NSW) as submission or as his understanding and not proof of the fact. He took issue with significant aspects of Gavin's first affidavit. He acknowledged (Adriano 18.6.21 [80]) that he had received access to MYOB from 2017 on, but is evidence was that he could then only see sales data and not purchases or bank feeds, and he only received full access in January 2020 for a few months. He also there referred to conversations with Ms Radovic in relation to certain transactions in the MYOB file (Adriano 18.6.21 [90]); however, the Plaintiffs did not plead that there was anything improper in any aspect of those transactions. He also referred to text messages with customers and emails with customers during the period 2016 to 2020, and to an occasion on which he had an involvement with the hiring of a sales representative for QB Foods, and claimed that was a regular occurrence between 2015 to 2019 in evidence admitted with a limiting order under s 136 of the Evidence Act as submission and as evidence of his understanding and not proof of the fact. 9. Mr Ogborne, who appears for Gavin and Amy, submits that Adriano's evidence, when tested against contemporaneous or objective evidence, is untrue or greatly exaggerated. He refers to Adriano's claim that he had not had access to QB Foods' MYOB data file until December 2019, when he had had at least partial access to "MYOB Live" since July 2017 and had logged onto that system on many occasions between September 2018 and March 2020 (T47, Ex D2, 1215-1342). Mr Ogborne submits, and I accept, that it is highly unlikely that Adriano had simply forgotten the many occasions on which he had accessed that system in that period. Mr Ogborne also points to Adriano's shifting evidence, as between his affidavit evidence and in cross-examination, as to whether he had access to information in the MYOB system relating to purchases since July 2017. 10. Mr Ogborne also points to Adriano's evidence in chief that Gavin would only provide him with financial information if he directly asked for it (Adriano 29.3.21 [37]), which I accept was contradicted by the documentary evidence that, at least between May 2016 and June 2019, Gavin sent weekly sales reports to Adriano, as Adriano accepted in cross-examination (Ex D2, 1109-1146, T86). I am not persuaded by Adriano's evidence that, on each of the many occasions that Gavin had sent him sales reports by email, Adriano had specifically asked for it (T89); it seems to me implausible that such a process would have continued over the long period in which that information was provided. Mr Ogborne also points to Adriano's overstatement, in his affidavit evidence, of the number of clients which he had delivered to QB Foods (Adriano 29.3.21 [15]), which I noted above. Mr Ogborne also referred to the falsification, by evidence given by Mr Ersan which I accept below, of Adriano's evidence that he had a desk with a computer in QB Foods' office (Adriano 29.3.21 [29]); that evidence addressed an important matter, where Gavin's dissatisfaction with Adriano appears to have reflected the latter's unwillingness to undertake the day's work contemplated by the HoA from QB Foods' offices. Mr Ogborne also refers to Adriano's overstatement of the extent to which Locantro had contributed to the ingredients used in an "Indulgent" product. While I recognise the possibility of error in that respect, it seems to me that this evidence reflects a wider pattern of overstatement in Adriano's evidence in chief and in cross-examination, which I noted above. 11. I would not go quite so far as Mr Ogborne's submission that Adriano's evidence should not be accepted unless it deals with matters that are common ground or corroborated by other contemporaneous documents that he did not prepare or are against his interest; however, I approach his evidence with caution, and on the basis that it at least involves a significant degree of inaccuracy and overstatement. Mr May responds that the events in issue are the subject of documentary evidence; while that is largely the case, the conversations which lead to them and Adriano's contribution to the business are an important part of their context, and partly depend on his affidavit and oral evidence. The parties' recognition of that matter is, of course, implicit in the extent of that evidence and of his cross examination. 12. Adriano and Pino also rely on Pino's affidavit dated 29 March 2021. Pino referred to the purchase of shares in QB Foods and his evidence was that he had left Adriano to deal with Gavin and Amy in respect of matters involving the shareholding and the HoA. He led evidence as to QB Foods not supplying Locantro from August 2020 and to correspondence concerning that matter in October 2020 and I address that matter below. 13. Gavin and Amy rely on Gavin's affidavit dated 21 May 2021 which responds to Adriano's three affidavits dated 1 December 2020, 20 January 2021 and 29 March 2021 and Pino's affidavit dated 29 March 2021. Gavin there sets out the origins of QB Foods' business, which had originated with an earlier business which he set up to manufacture pet foods and he refers to his development, from early 2011, of frozen refreshments which would be supplied in a PET plastic tray. Gavin refers to setting up the specialised plant and equipment to manufacture a "smoothie" product from 2012 and to the supply of the product to Nestle in 2014. It appears that the company which then manufactured the product was placed in creditor's voluntary liquidation after Nestle discontinued the sale of the product and, in September 2014, QB Foods acquired and used the formulas for the manufacture of frozen pre-blended products, using the same plastic tray as had been used in the earlier business and commenced selling pre-blended smoothies to cafes from September 2014. 14. Gavin's evidence (Gavin 21.5.21 [19]) is that he has been the sole director and secretary for QB Foods and the general manager of its business since incorporation and he refers to the areas of its business for which he is responsible. He also refers to the manner in which QB Foods has developed its customer base (Gavin [27]ff) and to the persons who are now involved in dealing with customers. He also refers to a pet food manufacturing business which was operated by QB Foods, and has had only one remaining customer since June 2016, and ceased in mid-2020. Gavin takes issue (Gavin 21.5.21 [38]ff) with a number of aspects of Adriano's description of QB Foods' staff and customers, although it is not necessary to address the detail of these matters in order to determine these proceedings. Gavin also takes issue with Adriano's evidence as to whether Adriano secured particular clients as QB Foods' clients, and I pointed above to the misleading character of Adriano's evidence as to the number of customers that he had introduced to the business. Gavin also takes issue with Adriano's evidence as to the extent of Locantro's product range (Gavin 21.5.21 [60]ff) and I again noted that Adriano's evidence in that respect was misleading in dealing with that evidence above. Gavin also addresses issues as to the reliability of the plant and equipment of QB Foods, given its age (Gavin 21.5.21 [63]ff) and that is a matter of some significance to the valuation evidence led by Adriano and Pino. 15. Gavin also addresses (Gavin 21.5.21 [68]ff) his relationship with Adriano and refers to the fact that Locantro sold smoothies in its café from late 2014 and through to mid-2015. He refers to discussions with Adriano in mid-2015 as to the basis on which Adriano and Pino would invest in the business and gives evidence of a conversation in which he indicated, and Adriano accepted, that Gavin "must continue to have all the management rights and be able to make all the decisions about running the business". He also refers to his having advised Adriano that he was interested in Locantro's network, customer contributions and the value Adriano could add to the business as much as the money to be invested and referred to a discussion concerning Amy's right to buy back the shares if Adriano stopped working for QB Foods, a matter which is later addressed in the HoA. Gavin also refers (Gavin 21.5.21 [85]) to the execution of the HoA; to Adriano's later involvement with the business; to Gavin's perception, in late 2015 and early 2016, that Adriano was not meeting his obligation to work with him one day each week, where he was not attending QB Foods office; and to Adriano's view that he could continue to work from Locantro's Leichhardt premises rather than from QB Foods' office. 16. Gavin's evidence (Gavin 21.5.21 [97]) addresses the provision of live access to QB Foods' MYOB data file for certain information, including sales, purchases and accounts information, from mid-July 2017 and takes issue with Adriano's evidence as to the extent of the work he had undertaken for QB Foods and the manner in which that work was undertaken. Gavin also addresses the specific issues on which Adriano and Pino rely for their oppression claims, and I will address that evidence below. Gavin's also gives evidence (Gavin 21.5.21 [140]) of a discussion on 28 February 2020 with Adriano concerning Adriano's continued involvement in the business, and his evidence is that he told Adriano that "you can't be involved any longer in the business unless you are committed to working in the business as we agreed in 2015" and foreshadowed exercising the right for Amy to buy Adriano's and Pino's shares under the HoA, if Adriano did not work in the business going forward. He largely agrees with Adriano's account of the discussion of price at that meeting, and says that he told Adriano that he was not interested in selling out where he and Mr Ersan had built the business and Adriano had never worked in it. I recognise that there is a proximity in timing between that conversation and the withdrawal of Adriano's access to MYOB and it is at least possible that there was a connection between the two. 17. By a second affidavit dated 28 May 2021, Gavin gave further evidence in respect of the motor vehicles used by QB Foods, and his evidence was that a Ford Ranger utility was mainly used by him and he estimated that it was used 95% for business purposes, apart from his commuting to and from the factory. He also gave further evidence concerning QB Foods' balance sheet as at 30 June 2020 and to stock-on-hand and the manner in which stocktakes were undertaken. 18. Mr Ogborne submits, and I accept, that Gavin was largely a more reliable witness than Adriano, at least where specific events were concerned, and was generally prepared to concede matters against his interests. It seems to me, however, that Gavin was likely aware of the potential impact of later steps that he and Amy took, particularly in relation to the "Share Purchase Plan" on the control of QB Foods. I address that question below. 19. Gavin and Amy also rely on Amy's affidavit dated 21 May 2021. Amy's evidence was that she had not been involved in conversations between Gavin and Adriano concerning QB Foods or involved in management or making management decisions in relation to QB Foods. There is nothing inappropriate in that, where she is a shareholder and not a director or employee or QB Foods. Amy was briefly cross-examined and there is no issue as to her credit. 20. Gavin and Amy also relied on the affidavit dated 29 April 2021 of Mr Ersan, who was previously employed as the factory manager at QB Foods and now performs that role as a casual employee, since he resigned his employment on 6 August 2020. Mr Ersan was a plainly credible witness, who was independent of the parties in dispute, although a letter of resignation (to which I referred above) indicated that he had a favourable view of Gavin as a "great boss and great friend" and a less favourable view of Adriano. I accept Mr Ersan's evidence and it undermines Adriano's credit since it falsifies his evidence as to as basic a matter as to whether Adriano ever had a desk in QB Foods' office. 21. Mr Ersan refers to the occasion when he went to deliver a smoothie order to Locantro and I have set out the conversation that then occurred in the chronology above. Mr Ersan's evidence was that he then became very worried about his job security, which was important to him where he was married with children and had a mortgage and was providing financial help to his brother's family, and to his decision to resign his position with QB Foods after that conversation. He referred to his letter of resignation dated 6 August 2020 addressed to Gavin to which I have also referred on the chronology above. Mr Ersan also referred to a subsequent conversation with Gavin in which he agreed to stay with QB Foods as a casual employee on the basis the position could be reviewed when the dispute with Adriano and Pino was resolved. Mr Ersan also gave evidence of the age of the machinery used in the business; that it had begun to break down "a lot"; referred to the delays in production when machinery failed; and gave evidence of the acquisition of a second forklift which had increased freezer capacity by about 40% and reduced labour hours rotating stock in the freezer. I address the issue as to the acquisition of that forklift below. He also denied Adriano's evidence that Adriano had ever had a desk in QB Foods' office with a computer, to which I referred above. 22. Gavin and Amy also relied on the affidavit dated 29 April 2021 of Ms Radovic, who was also a credible witness and whose evidence I also accept. She referred to her work as a bookkeeper, initially for QB Foods and subsequently for both QB Foods and Locantro. She refers to having told Adriano in early June 2020 that Gavin had never requested her not to discuss QB Foods' accounts with him and to her decision to resign from both Locantro and QB Foods on that day. She also refers to Gavin having previously told her that it was okay to discuss QB accounts with Adriano because he was "not hiding anything", but that she did not feel comfortable with discussing QB Foods accounts with Adriano while working at Locantro's office. She refers to Adriano having asked her more specific questions regarding expenses transactions in MYOB in late 2019 and to her suggestion that he talk to Gavin and review the invoices held in QB Foods' office which have a more detailed explanation than the MYOB records. 23. Ms Radovic refers to her resignation from Locantro in mid-July 2020, to her oral resignation from QB Foods, and to her subsequently agreeing to continue to work for QB Foods. She also set out the matters which led to her resignation as Locantro's bookkeeper in a letter of resignation addressed to Pino and Adriano at Locantro, where she observed that: "I may be a bookkeeper for QB Foods Pty Ltd, but it is not in my professional capacity to be discussing the financials of it outside the QB Foods premises. On many occasions I have been asked certain questions regarding the MYOB data by Adriano, some questions I did answer, some not – because we were not at the QB Foods' office. I have told Adriano on many occasions that it is not up to me to give answers, but that he and Gavin should have regular meetings, weekly, monthly or whatever and clarify the daily operations of the company." 1. By her second affidavit dated 21 May 2021, Ms Radovic denied Adriano's evidence that she had a conversation with Adriano about pay rates, superannuation and other entitlements of QB Foods staff in about February 2020. Her evidence was that Gavin prepared wages and superannuation in MYOB and made the payments and that her only role was to reconcile the payments as they were debited to QB Foods' bank accounts with the entries in MYOB made by Gavin. I accept Ms Radovic's evidence in that respect, given the view that I formed of her credit, and that further undermines the reliability of Adriano's evidence. 2. Gavin and Amy relied on the affidavits dated 20 May 2021 of Mr Darin and Mr Nicols, who consent to be appointed as liquidator of QB Foods, in the event that a winding up order is made. By his affidavit dated 28 May 2020, Mr Chard confirmed that no other winding up application was pending against QB Foods as at the date of this application. The parties also relied on expert accounting evidence which I will address in dealing with the question of relief below. Adriano's and Pino's oppression claim 1. I should first refer to the applicable legal principles, as to which I have drawn upon Counsels' submissions and my summary of the relevant principles in Re Pure Nature Sydney Pty Ltd [2018] NSWSC 914, Re ICB Medical Distributors Pty Ltd [2018] NSWSC 1315 at [65]ff and Re Bicher & Son Pty Ltd (2020) 147 ACSR 108; [2020] NSWSC 711 at [73]ff. Section 233(1)(d) of the Corporations Act relevantly provides that the Court may make an order for the purchase of shares by a member of a company and s 233(1)(j) allows the Court to make an order requiring a person to do a specified act. Such an order may be made where the matters specified in s 232 of the Corporations Act are established. 2. Section 232 of the Corporations Act in turn provides that the Court may make an order under s 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." 1. Section 232 of the Corporations Act and its predecessors extend to conduct involving "commercial unfairness" or where the conduct complained of involves a visible departure from the standards of fair dealing and a violation of the conditions of fair play, or a decision has been made so as to impose a disadvantage, disability or burden on the plaintiff that, according to ordinary standards of reasonableness and fair dealing, is unfair: Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 at 704; Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459; [1985] HCA 68. In Morgan v 45 Flers Avenue Pty Ltd above at 704, Young J observed that the phrases "oppressive, unfairly prejudicial or unfairly discriminatory" in a predecessor to s 232 of the Corporations Act should be construed as "a composite whole and the individual elements mentioned in the section should be considered merely as different aspects of the essential criterion, namely commercial unfairness". His Honour also there noted that whether oppression was established was to be determined by reference to the nature of the business carried on by the company and the nature of the relations between its participants and: "whether objectively in the eyes of a commercial bystander, there has been unfairness, namely conduct that is so unfair that reasonable directors who consider the matter would not have thought the decision fair." 1. The principles applicable to a claim for oppression were also summarised by Austin J in Tomanovic v Argyle HQ Pty Ltd [2010] NSWSC 152 at [39], and the Court of Appeal noted the parties did not challenge that summary of the applicable principles in Tomanovic v Global Mortgage Equity Corporation Pty Ltd (2011) 288 ALR 310; (2011) 84 ACSR 121; [2011] NSWCA 104 at [140]. His Honour observed that: "(a) consistent with the principle that the purpose of relief is to terminate the effects of oppression, relief will generally be inappropriate as a matter of discretion if there is no continuing oppression: Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304, at [182]; [2009] HCA 25; (b) unfairness is assessed by reference to whether "objectively in the eyes of a commercial bystander, there has been unfairness, namely conduct that is so unfair that reasonable directors who consider the matter would not have thought the decision fair": eg, Campbell v Backoffice Investments Pty Ltd (2008) 66 ACSR 359, per Basten JA at [181]; [2008] NSWCA 95; (c) while it is recognised that conduct may be oppressive if inconsistent with the "legitimate expectations" of shareholders, expectations are not immutable. The non-fulfilment of expectations will not establish oppression, if there has been some good reason for the extinguishment of the expectation: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672, at [85], [86], [175]; [2001] NSWCA 97; Nassar v Innovative Precasters Group Pty Ltd (2009) 71 ACSR 343, at [96]; [2009] NSWSC 342 per Barrett J; (d) "it is important when assessing corporate activities to see if there has been oppression that judges do not remain in their ivory tower": Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1988) 28 ACSR 688, Young J at 739; [1998] NSWSC 413; (e) a particular matter which will be taken in account in assessing the gravity of any allegation of oppression, is the extent to which the minority shareholder has "baited" the majority shareholder to act in an oppressive manner: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1988) 28 ACSR 688, at 741; [1998] NSWSC 413 …" 1. In Munstermann v Rayward [2017] NSWSC 133 at [22], Stevenson J summarised the applicable principles as follows (omitting citations): "(1) The test of oppression is an objective one of unfairness ... (2) The court must look to determine whether on the balance of probabilities the objective commercial bystander would be satisfied that the affairs of the company were being conducted unfairly … (3) A director may act oppressively in the sense relevant to the operation of s 232 and yet not breach any fiduciary or other duty owed as a director ... (4) Conduct of a company's affairs may be oppressive even though the conduct is otherwise lawful ... (5) Conduct that has the effect of paralysing a company in the operation of its business is properly characterised as conduct contrary to the interests of the members as a whole … (6) A shareholder of 50 per cent of the shares in a company can seek relief for oppressive conduct because they do not have control in the form of power to prevent the oppression, particularly where individual strong arm tactics are used … (7) The court must formulate an opinion about oppression or unfair prejudice as at the date of the institution of proceedings and the issue of relief under s 233 must be determined at the date of the hearing … (8) The discretion under s 233 is wide as to the appropriate remedy … (9) The nature of the remedy chosen by the court under s 233 will be dependent upon the conclusions drawn by the court as to the type of oppression with which the court is dealing and the court will choose the remedy which is least intrusive …. (10) The aim of any order under s 233 must be to put an end to the oppression … (11) The court should only look to wind up an otherwise solvent company as a "last resort" … (12) As a remedy for oppression, an oppressor can be ordered to sell their shares to the oppressed party …. (13) If an order is to be made for the purchase of shares under s 233 the task of the court is to fix a price that represents a fair value in all the circumstances." [citations omitted] 1. Mr May submits and I accept that conduct may be oppressive even when the defendant believes that he or she is acting for proper purposes: Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; (2009) 257 ALR 610; [2009] HCA 25 at [176]. Mr May also refers to my observation in Byrne v A J Byrne Pty Ltd [2012] NSWSC 667 at [45] that: "Unfairness is assessed by reference to whether "objectively in the eyes of a commercial bystander, there has been unfairness, namely conduct that is so unfair that reasonable directors who consider the matter would not have thought the decision fair" and can be established by wrongful exclusion from participation in a company's management or by conduct in breach of a shareholders or services agreement even if the person undertaking that conduct thinks he or she is acting properly: Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 at [176]; Harding Investments Pty Ltd v PMP Shareholdings Pty Ltd (No 2) [2011] FCA 567; (2011) 282 ALR 229 at [10]." 1. In their pleading, Adriano and Pino placed substantial weight on the concept of "legitimate expectation", although Mr May placed less weight on that concept in his submissions (to which I return below) and greater weight on whether conduct would appear unfair in the eyes of a commercial bystander. In a helpful academic article (S Brenker & I Ramsay, "Legitimate expectations and the oppression remedy" (2020) 36 Aust Jnl of Corp Law 3), on which I have partly drawn for the discussion that follows, the authors note that: "A 'legitimate expectation' in the oppression context can be defined as 'an understanding or apprehension of a member which, because of equitable considerations, would make it appear unfair, to a commercial bystander, to permit the strict assertion of legal rights'. The court is not concerned with the subjective aspirations, hopes, assumptions or understandings of the individual member; a legitimate expectation arises from a common understanding, between the parties, on which their relationship is based and must be established objectively. A legitimate expectation is a reference to 'what the parties, by words or conduct, have actually agreed', although it is not necessary that such agreement be enforceable in law. An expectation is 'legitimate' when it 'reasonably appeared likely to happen'. The 'standard case' in which denial of a legitimate expectation may constitute oppression is where shareholders have entered into an association upon the understanding that each of them who has ventured their capital will also participate in the management of the company. In such a case, the member has a legitimate expectation of participation in management and it will usually be considered unjust, inequitable or unfair for a majority to use their voting power to exclude the member from participating in management without giving the member the opportunity to remove their capital upon reasonable terms." 1. This concept draws, in part, on Re a Company (No 00477 of 1986) (1986) 2 BCC 99,171 at 99,174 where Hoffmann J observed, in respect of a broadly corresponding provision in s 459 of the Companies Act 1985 (UK), that: "The member's interests as a member who has ventured his capital in the company's business may include a legitimate expectation that he will continue to be employed as a director and his dismissal from that office and exclusion from the management of the company may therefore be unfairly prejudicial to his interests as a member." 1. Subsequently, in O'Neill v Phillips [1999] 1 WLR 1092 at 1104; [1999] UKHL 24, Lord Hoffmann observed that the concept of "legitimate expectation" was "a label for the 'correlative right' to which a relationship between company members may give rise in a case when, on equitable principles, it would be regarded as unfair for a majority to exercise a power conferred upon them by the articles to the prejudice of another member" and referred to the "standard case in which shareholders have entered into association upon the understanding that each of them who has ventured his capital will also participate in the management of the company", where "it will usually be considered unjust, inequitable or unfair for a majority to use their voting power to exclude a member from participation in the management without giving him the opportunity to remove his capital upon reasonable terms. The aggrieved member could be said to have had a 'legitimate expectation' that he would be able to participate in the management or withdraw from the company." 1. Several subsequent Australian cases have referred to the concept of "legitimate expectation", including Nassar v Innovative Precasters Group Pty Ltd (2009) 71 ACSR 343; [2009] NSWSC 342 at [109]–[110] and Austin J's judgment in Tomanovic v Argyle HQ Pty Ltd above at [39(c)] and [42]. In HNA Irish Nominees Ltd v Kinghorn (No 2) (2012) 290 ALR 372 at 490; (2012) 88 ACSR 427; [2012] FCA 228, Emmett JA in turn observed that, where a company is an association of persons for an economic purpose by agreement, its constitution will usually be taken to regulate the company's affairs and: "In order to give rise to an equitable constraint based on legitimate expectation, what is required is a personal relationship or personal dealings of some kind between the parties seeking to exercise the legal right and the party seeking to restrain such exercise, such as will affect the conscience of the former." 1. However, difficulties with the concept of "legitimate expectation" were noted by the Court of Appeal in Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672; [2001] NSWCA 97, where Spigelman CJ observed (at [62]) that the Court may look behind the company's constitution for any understanding or expectation that management rights would continue but also that that the "introduction of a word such as 'legitimate' before a noun referring to an act or condition, is more a mode of expressing a conclusion than an independent criterion" and Fitzgerald JA observed that the term was potentially unhelpful and distracting and the question was whether or not, in all the circumstances, oppression had been established. Those difficulties were also noted by Campbell JA on appeal in Tomanovic v Global Mortgage Equity Corporation Pty Ltd above at [166]ff, to which Counsel referred in submissions, and in Wambo Coal Pty Ltd v Sumiseki Materials Co Ltd (2014) 88 NSWLR 689; (2014) 290 FLR 18; (2014) 101 ACSR 643; [2014] NSWCA 326 where Barrett JA (with whom Bathurst CJ, Beazley P agreed) observed that: "denial of 'legitimate expectation', of itself, does not attract the statutory jurisdiction and that an essential finding is that the impugned conduct was objectively oppressive, unfairly prejudicial or unfairly discriminatory in the way the legislation contemplates." 1. In Mair v Rhodes and Beckett [2018] VSC 132 at [514], to which Emeritus Professor Ramsay and Ms Brenker refer in the article noted above, Digby J observed that: "In Australia, the term 'legitimate expectation' has been described as unhelpful and as distorting the objective assessment of fairness in the context of oppression proceeding. To the extent that 'legitimate expectation' is a component to the test for unfairness, this phrase refers to an understanding or apprehension of a member which, because of equitable considerations, would make it appear unfair, to a commercial bystander, to permit the strict assertion of legal rights." 1. I also accept that, as Ms Brenker and Emeritus Professor Ramsay recognise, there may be an overlap between the matters treated as relevant to the concept of a "legitimate expectation" and those that are relevant to determining whether conduct is oppressive, unfairly prejudicial or unfairly discriminatory in the relevant circumstances. I have also borne in mind the observation in Tomanovic v Global Mortgage Equity Corporation Pty Ltd above that each case has to be considered on its own facts and circumstances, and by reference to the conduct as a whole. Adriano's and Pino's role in QB Foods 1. It will be convenient to deal with several associated issues as to Adriano's and Pino's role in QB Foods together, although the parties dealt with them separately. By way of background to these claims, Mr May submits that several circumstances provide the background to the alleged oppressive conduct, as follows: "(a) in about July 2015, Adriano and Pino (in their capacities as trustees of the Locantro Family Trust) invested $100,000 of their funds into QB Foods; (b) this investment was in consideration for Adriano and Pino being issued 50% of the "DVVR", "MGT", and "EQ" classes of shares on issue in QB Foods, with Gavin and Amy collectively holding the other 50% in each class; (c) at the time of the investment, an agreement was reached between all four shareholders with respect to how certain affairs of the Company would be conducted from that point forward, including the roles and responsibilities that each of Adriano and Gavin were to play in the Company; (d) this agreement between shareholders was later formalised in writing in the Heads of Agreement, with Gavin executing the Heads of Agreement on his own behalf and separately on behalf of the Company; (e) following the investment, Adriano was allocated a Company email address, as well as a key to the factory premises, and he began working for QB Foods in accordance with the Heads of Agreement; and (f) Adriano continued working for QB Foods between 2015 and 2020, without any salary, until the events that are the subject of the present proceedings. Some of these matters are uncontentious and arise from the chronology which I set out above, although the proposition that Adriano ever worked for QB Foods in the manner contemplated by the HoA was highly contentious and was not established by the evidence. 1. I have referred to Adriano's and Pino's emphasis on the concept of "legitimate expectations" above. They relied, in this respect, on cl 7(b) of the HoA which provides that Adriano's role in QB Foods is to include working with Gavin on QB Foods' business for a minimum of one day per week for the life of the HoA; that Adriano will not be remunerated for the first 24 months, being from 1 July 2015 to 30 June 2017 and, from 1 July 2017, will be remunerated based on the hours worked per week at the equivalent of Gavin's hourly rate; and his role was to include the performance of specified tasks namely Business Strategy, New Business Development, Marketing, Social Media, and Finance. Adriano and Pino plead (SOC [16]) that, by reason of clause 7(b) of the HoA, Adriano had a legitimate expectation of a right to participate in the management of QB Foods with respect to those areas. Gavin and Amy respond (Defence [10]) that, on the proper construction of the HoA, the management of QB Foods was to be carried out solely by Gavin as its (sole) Managing Director and the work to be performed by Adriano while working with Gavin on QB Foods' business would not involve its management; and that, on the proper construction of the HoA, if Adriano was not actively committed to working on QB Foods' business at least one day per week, then Amy had the right to buy Adriano's and Pino's shares. 2. Mr Ogborne submits and I accept that the position as to any "legitimate expectation" of Adriano to participate in the management of QB Foods is distinguishable from the position addressed in Campbell v Backoffice Investments Pty Ltd above, where the shareholders agreement and service agreement provided for two shareholders to be the joint managing directors of the company. By contrast, here, it is apparent from both the HoA and QB Foods' constitution that Gavin was to continue to have the day-to-day control of QB Foods' operations as its sole managing director, although the HoA also contemplated that Adriano would perform at least one day's work in the business of QB Foods as I have noted above. 3. Mr Ogborne points out, and I accept, that Adriano and Pino purchased their shares in QB Foods at the time that it was already operating the business, which had developed from a business operated by Gavin in an earlier company, and used recipes and manufacturing techniques that he had created; and that Gavin's evidence, which I accept, is that he and Adriano had discussed his wish to continue to have management control of QB Foods after Adriano and Pino invested in it, at the time of that investment (Gavin 21.5.21 [10]-[16], [79]-[81], [83]). As I have noted above, the HoA itself contemplated that Gavin would remain the sole managing director of QB Foods (cll 6-7) and was consistent with the continued operation of QB Foods' constitution, which vested the power to manage QB Foods' business in its managing director, and also contemplated that Gavin would be QB Foods' full-time general manager and perform the daily tasks required to operate the company. It seems to me that, read as a whole, nothing in the provisions in the HoA that contemplate that Adriano would work "with Gavin on the business" in specified areas undermines the overall structure of the HoA and QB Foods' constitution which confer management control upon Gavin. 4. I accept that there is evidence that Adriano took active steps, particularly in the early years of his and Pino's involvement in the Company, to promote its products to customers of Locantro and associates, and Gavin accepted in cross-examination that he had several strategy meetings or discussions with Gavin. However, there is little evidence that he was regularly or systematically involved in management or decision-making and it seems to me that any "legitimate expectation" of such an involvement is narrowed both by the terms of the HoA and QB Foods' constitution and by his lack of wider involvement in management as a matter of fact. I have not neglected Mr May's detailed submissions as to wider case law as to the role of an "executive officer" and "management" of a company. However, I am not assisted by those submissions in respect of the narrower question of the structure of QB Foods' HoA and constitution and the factual question of the nature of Adriano's work in QB Foods. Meetings with QB Foods' accountant 1. The first of the issues relating to Adriano's claim to exclusion from management of QB Foods is a claim that Gavin failed to permit Adriano and Pino to meet with QB Foods' accountant. Adriano and Pino plead (SOC [18]) that, since June 2015, Gavin has excluded Adriano and Pino from meetings with QB Foods' accountant, Mr Hurwitz, and (SOC [19]) that the exclusion of Adriano from meetings with QB Foods' accountant was a breach of cl 7(b) of the HoA; a denial of Adriano's "legitimate expectation" of a right to participate in the management of QB Foods; and oppressive to, unfairly prejudicial to, or unfairly discriminatory against Adriano and/or Pino within the meaning of s 232 of the Act. Gavin and Amy respond (Defence [13]) by denying that Adriano requested that he or Pino be included in meetings with Mr Hurwitz, and pleading that Gavin has not had any face-to-face meetings with Mr Hurwitz between 1 July 2015 and the commencement of these proceedings and all contact during that period with Mr Hurwitz has been by email or telephone. 2. I have referred to Adriano's email dated 27 September 2016 to Gavin in respect of meetings with the accountant above. In his second affidavit, Adriano also referred (Adriano 29.3.21 [44]-[45]) to having asked Gavin whether he met with QB Foods' accountant every quarter and to Gavin's response that he did not do that but that he would ensure that Adriano was invited and could come to any meetings with the accountant. It appears that Gavin did not meet with that accountant but conducted dealings with him by email and telephone calls, and Adriano did not participate in that process. Gavin's evidence (Gavin 21.5.21 [113]) outlines the manner in which he dealt with the accountant for QB Foods and his evidence that Gavin has always managed the accounts for QB Foods, with a capable bookkeeper who helped with data entry and reconciling receipts and payments with bank statements and using the MYOB system, and he deals with QB Foods' accountant by email or telephone rather than meeting in person with him. He denies that Adriano had ever asked to meet with QB Foods' accountant, although it is not necessary to address that factual dispute in order to determine the proceedings. 3. In closing submissions, Mr May refers to Adriano's 27 September 2016 email to Gavin and to Gavin's evidence in cross-examination that there were no meetings with the QB Food's accountant (T182-183). Mr May seeks to draw on the principle in Jones v Dunkel (1959) 101 CLR 298 in reliance on the fact that the accountant was not called, but it seems to me that nothing flows from that where Gavin's evidence that he conducted his dealings with the accountant by telephone and by meetings was not seriously contested, and it was hardly necessary that Gavin and Amy call another witness to establish that matter. Mr May also submits that the form of "meeting" was largely irrelevant, but I do not accept that submission for the reasons noted below. 4. Mr Ogborne responds that cl 7(b) of the HoA does not impose any relevant obligation on Gavin, and specifically does not impose any obligation to involve Adriano in meetings with QB Foods' accountant or, I interpolate, to conduct such meetings, as distinct from imposing an obligation on Adriano in respect of his work within the business. Mr Ogborne also submits that Adriano had no wider expectation of participating in the day-to-day management of QB Foods, where the HoA and constitution provided for Gavin to manage QB Foods' day-to-day business as I noted above. It is also notable that, although Adriano and Pino complain as to Adriano's exclusion from meetings with the accountant (which, on the evidence, did not take place) and now seek to widen that complaint to his lack of involvement in other dealings with the accountant by email and telephone, they bring no substantive complaint that there was any inaccuracy or default in respect of QB Foods' financial or taxation affairs, and the evidence suggests that QB Foods' financial position has generally strengthened as its business has improved over the relevant period. 5. I will assume, without deciding, that it is open to Adriano and Pino to put submissions beyond the scope of their pleaded claim as to meetings with the accountant, where there is no apparent prejudice to Gavin and Amy in their doing so. I also recognise that cl 7(b) of the HoA contemplated that Adriano have a working involvement in the business and that the HoA required Adriano's and Pino's agreement to certain financial decisions of QB Foods. However, QB Foods' constitution also conferred management powers on Gavin as its director and the arrangement between the parties plainly contemplated that Gavin would continue to have the day-to-day conduct of QB Foods' business. It is not necessary to decide whether it would have been unreasonable for Gavin to decline to involve Adriano in physical meetings with the accountant, where Adriano had no express right to attend such meetings under the HoA and that would arguably intrude on the day-to-day management of QB Foods, where there is no evidence that such meetings took place. It seems to me that it was not oppressive for Gavin not to involve Adriano in emails or telephone calls with the accountant, particularly where Adriano was generally working from Locantro's rather than QB Foods' premises. It seems to me that neither the HoA nor any reasonable expectation of Adriano and Pino as the holders of half the shares of a company in which Gavin was the sole director and the managing director had any reasonable expectation that they would participate in such telephone calls or email correspondence, and it is not suggested that they did not have access to QB Foods' annual financial reports and other financial information. Oppression is not established in respect of this matter, alone or together with other matters. Access to financial information on "MYOB Live" 1. Next, Adriano and Pino raise an issue concerning access to QB Foods financial information maintained on QB Foods' "MYOB Live" software. They plead (SOC [27]-[29]) that, on or about 24 December 2019, after many previous requests by Adriano, Gavin granted Adriano access to the MYOB database for QB Foods; on or about 4 March 2020, and without warning to Adriano, Gavin removed Adriano's access to the MYOB database for QB Foods; and Adriano's access to the MYOB database had not been restored as at 1 December 2020, the date these proceedings were instituted. 2. Gavin and Amy respond (Defence [22]) by admitting that, on or about 24 December 2019, Gavin allowed Adriano access to the MYOB database for QB Foods; plead that his doing so fulfilled one of the conditions of the agreement increasing Gavin's salary to $150,000 per annum, plus super, and paying for the costs of his Ford Ranger and mobile phone as part of his remuneration; and plead that access was granted to Adriano to QB Foods' MYOB database on the condition that he would maintain the confidentiality of QB Foods' accounts recorded in that database and use those accounts only for the proper purposes of QB Foods. They admit (Defence [23]) that, on or about 4 March 2020, Gavin removed Adriano's access to the MYOB database for QB Foods; and contend that Adriano had breached the confidentiality of QB Foods' accounts recorded in the MYOB database and used the accounts for an improper purpose; and that, between 24 December 2019 and 4 March 2020, Adriano had shown QB Foods' accounts recorded in the MYOB database to Locantro's bookkeeper (namely Ms Radovic, who was also QB Foods' bookkeeper) and asked her questions about those accounts for the purpose of advancing Adriano's and Pino's interests in their dispute with Gavin and Amy. 3. Adriano and Pino plead (SOC [30]) that Gavin's removal of Adriano's access to the MYOB database for QB Foods was a breach of cl 7(b) of the HoA; a denial of Adriano's legitimate expectation of a right to participate in the management of QB Foods; and oppressive to, unfairly prejudicial to, or unfairly discriminatory against Adriano and/or Pino within the meaning of s 232 of the Act. Gavin and Amy respond (Defence [24]) by denying that Adriano had any legitimate expectation of a right to participate in the management of QB Foods, whether as a result of cl 7(b) of the HoA or otherwise; pleading that Adriano had not taken any role or interest in the management or decision making of QB Foods' business; and pleading that the removal of his access to the MYOB database was fair and reasonable. 4. Turning to the evidence as to this matter, as I noted above, Adriano's evidence (Adriano 29.3.21 [57]) was that he had requested access to QB Foods' MYOB data from July 2015 to December 2019 and that Gavin had responded that Adriano should ask him for the relevant information and that he was first provided read only access to the MYOB database for QB Foods in late December 2019, implicitly in response to the arrangement reached in respect of Gavin's salary at that time. It emerged in Adriano's later affidavit evidence and his cross-examination that he had had access to the MYOB database, in respect of some aspects of it, from at least July 2017. Adriano also referred to a conversation with Ms Radovic, who as I noted above was the bookkeeper for both Locantro and for QB Foods, in which she had informed him that Gavin said that he could talk to her about the MYOB file (Adriano 29.3.21 [59]). That evidence was supported by Ms Radovic's evidence to similar effect in cross-examination. Gavin's position in that respect is inconsistent with his seeking to conceal aspects of QB Foods' financial affairs, an unpleaded allegation that from time to time emerged in cross-examination, but is arguably also inconsistent with the basis on which Gavin later terminated Adriano's access to the "MYOB Live" system.. 5. Gavin also gives evidence (Gavin 21.5.21 [96]) as to Adriano's access to MYOB data, and refers to Adriano having access to MYOB data for sales, purchases and accounts from July 2017. There was a dispute as to the extent of that access which it is not necessary to resolve in order to determine the proceedings. He refers to Adriano and Pino requiring full access to MYOB as a "condition" of Gavin's salary increase, on 10 December 2019, and refers to the circumstances in which he cancelled Adriano's access to MYOB on 4 March 2020. His evidence (Gavin 21.5.21 [137]) is that he did so because Adriano had been asking QB Foods' bookkeeper, Ms Radovic, questions about its expenses while she had been working at Locantro and that had continued on several occasions. I referred to Ms Radovic's evidence as to that matter above. 6. By his email dated 5 March 2020, to which I referred in the chronology above, Gavin advised Adriano of the reasons for removal of access to MYOB and claimed that Adriano had discussed QB Foods' business "among others without me or without my consent" contrary to the position set out in his email of 19 December 2019. This rationale for the cancellation of MYOB access is not wholly convincing, particularly where Ms Radovic's evidence is that Gavin had previously advised her and she had advised Adriano that Gavin had no objection to Adriano asking her questions about QB Foods' financial information, where he had "nothing to hide". There is more than a little inconsistency in Gavin giving permission for that approach and then removing Adriano's "MYOB Live" access after it was followed. However, I also bear in mind that, by that email, Gavin advised Adriano that: "If you need Company financials (or other info) I will always provide this to you at any time." By his further email dated 16 March 2020, to which I also referred in the chronology above, Gavin also offered Adriano full access to "MYOB Live" at QB Foods' office for the one day of the week that he had agreed to work for QB Foods, under "option one" set out in that email. 1. Mr May puts this claim by reference to a proposition that Adriano's role with QB Foods involved "finance" under the HoA, the grant of full MYOB access in late December 2019 was one of the conditions imposed by Adriano and Pino on Gavin's salary increase, and the removal of that access in March 2020. He submits and I accept that a refusal to provide appropriate access to a Company's books and records may amount to oppressive conduct: Solanki v Cufari [2014] VSC 345 at [60]. However, that proposition turns on the question what is "appropriate access" and it does not follow that even a substantial shareholder in a closely held proprietary company is entitled to access to all financial records of the company on a continuing basis or that it would generally be oppressive to decline to provide such access on that basis. 2. Mr May also submits that the removal of Adriano's access to MYOB, after he queried company expenses, would be viewed by an objective bystander as being especially unfair. It was not established that that removal was a response to any query as to those expenses, as distinct from Gavin's response to Adriano's seeking to address that matter by raising it with Ms Radovic rather than with Gavin. It is not necessary to determine whether, strictly, that involved any breach of confidentiality by Adriano, and I recognise that Ms Radovic likely already knew some of the relevant information in her capacity as QB Foods' bookkeeper. It is plain that at least Ms Radovic regarded the manner in which Adriano had approached the issue with her as inappropriate. It also does not follow from the fact that Adriano's access was removed after he had raised questions with Ms Radovic, that it was removed because of the nature of those questions, rather than because of the manner in which they had been raised with Ms Radovic rather than with Gavin. 3. Mr Ogborne responds that Adriano was using the information obtained from "MYOB Live" for his own purposes, rather than for QB Foods' financial management or its benefit, because he did not seek to raise any of the matters raised with Ms Radovic with Gavin. Mr Ogborne points out that the questions raised with Ms Radovic appear to have been directed to whether Gavin had used the QB Foods' credit card or other accounts for personal purposes, although it is again notable that no claim of that character is put by Adriano and Pino in the proceedings. Mr Ogborne submits that, where Adriano had no legitimate expectation of a right to participate in QB Foods' management, and where he breached the confidentiality condition on which ahis access to MYOB live was granted, and was provided with management reports on sales and end of year financial statements and had the opportunity to request other financial information, then the removal of his access to "MYOB Live" was not oppressive conduct. 4. I am not satisfied that this matter rises to the level of oppression, where Adriano and Pino did not have any right as shareholders to live access to QB Foods' MYOB file under the HoA or at general law as significant shareholders in QB Foods; and it is not apparent to me that they could reasonably insist on that access as a precondition to approving a salary increase for Gavin, where the question of Gavin's reasonable salary had no logical connection with whether they were or were not given information to which they were not entitled under the HoA or at general law; or reasonably claim to be oppressed when they were deprived of the access to which they had no right as shareholders in QB Foods. I am reinforced in that view where, on 5 March, Gavin had confirmed their continuing access to financial information concerning QB Foods, and, on 16 March, had made a reasonable offer which would have allowed Adriano access to "MYOB Live" on a weekly basis at QB Foods' premises, had he been prepared to work for one day a week for QB Foods (as the HoA contemplated) from those premises. The claim for oppression is not established on this basis, alone or together with other matters. Removal of Adriano's access to a QB Foods' email address 1. Next, Adriano and Pino raise an issue concerning the removal of Adriano's access to a QB Foods' email address from June 2020. They plead (SOC [31]-[33]) that, since about 2015, Adriano had utilised a QB Foods' email account; on or about 2 June 2020, Gavin shut down Adriano's QB Foods' email account; and that account had not been restored to Adriano as at 1 December 2020, the date these proceedings were commenced. Gavin and Amy admit (Defence [26]-[28]) that Adriano had occasionally utilised that email account; plead that the email account was not being used for QB Foods' purposes but for Adriano's personal benefit; admit that, on or about 2 June 2020, Gavin shut down that email account; and admit that account had not been restored as at 1 December 2020. Adriano and Pino plead (SOC [34]) that Gavin's removal of Adriano's access to the QB Foods' email accounts was a breach of clause 7(b) of the HoA; a denial of Adriano's "legitimate expectation" of the right to participate in the management of QB Foods; and oppressive to, unfairly prejudicial to, or unfairly discriminatory against Adriano and/or Pino within the meaning of s 232 of the Act. Gavin and Amy deny (Defence [29]) that Adriano had any legitimate expectation of a right to participate in the management of QB Foods, whether as a result of cl 7(b) of the HoA or otherwise; plead that he had not taken any role or interest in the management or decision making of QB Foods' business; and plead that the shutting down his use of the QB Foods email account was fair and reasonable. 2. Adriano's evidence (Adriano 29.3.21 [68]) is that Gavin closed his email account on or about 11 June 2020. I have also had regard to Adriano's evidence as to the extent of the work which he undertook for QB Foods, which he says was at least initially between 3 and 5 days per week without payment and that he was working for nine or more hours a day on the days he worked for QB Foods, and, in cross-examination, his evidence that he would sometimes work 5 days a week for QB Foods, although he was also working for Locantro in its shop at the same time (T90). It seems to me that that evidence should be approached with caution. I have also not neglected the evidence that Adriano received orders from customers on a regular basis, and sent them on to QB Foods albeit that generally appears to have often occurred by text message rather than by email. I have also had regard to Gavin's acceptance in the course of his cross-examination that Adriano took a number of steps, particularly in relation to dealings with customers, on QB Foods' behalf (T145ff) and that there were also some discussions between Gavin and Adriano as to business matters (T171ff). 3. Gavin addresses the closure of Adriano's email account (Gavin 21.5.21 [142]ff) and refers to a meeting with Adriano on 3 June 2021 and to Gavin's then observing that Adriano had sent virtually no emails to generate any work for the business since December 2019. Gavin's evidence is that his review of Adriano's email box indicated that, over the previous six months, Adriano had sent few emails relating to QB Foods and a large number of emails for personal purposes, and the evidence broadly supports that proposition. Gavin relies on that matter to support his decision to block Adriano's access to his QB Foods email address. 4. Mr May submits that the shutting down of Adriano's email access was oppressive to, unfairly prejudicial to, or unfairly discriminatory against Adriano and Pino within the meaning of s 232 of the Act. Mr Ogborne responds that the removal of that access did not involve a breach of cl 7(b) of the HoA or a denial of any expectation by Adriano of a right to participate in QB Foods' management, where the email was largely not used for management matters and that QB Foods (or, more precisely, Gavin) was entitled to prevent its email account from being used predominantly for personal matters unrelated to the business. 5. It seems to me that Gavin's exclusion of Adriano from the QB Foods' email account was at least an aggressive step, in the context of the other areas of dispute between the parties, which was likely to inflame the existing difficulties between the shareholders. It is not necessary to reach a finding as to whether it amounted to oppression, where I have found that other steps taken by Gavin, including his salary increase from July 2020, his taking of $120,000 from the Company (later returned) and the "Share Purchase Plan" which I address below amounted to oppression of a more substantial character and a finding as to this matter would not affect the relief that I would order. Exclusion from access to premises 1. Adriano and Pino also raise an issue which they characterise as the exclusion of Adriano and Pino from QB Foods' premises, although the evidence raises only a much narrower question of whether he was given after hours' access to those premises after December 2020. Adriano and Pino plead (SOC [35]-[36]) that, on or about 10 March 2020, Gavin excluded Adriano from QB Foods' premises by changing the locks and Adriano was still unable to access the premises as of 1 December 2020, the date proceedings were instituted. Gavin and Amy deny (Defence [30]) that the locks for the doors to the premises were changed on 10 March 2020 and say that the key which had previously been provided to Adriano and Pino would have enabled them to open the doors to the premises on that date; plead that the locks were changed on about 22 December 2020 as part of an upgrade in the security of the premises and were not changed to exclude Adriano and Pino from the premises; plead that the doors of the premises have generally been unlocked and the premises open and accessible during QB Foods' business hours from about 5am to 6pm on weekdays during the period from 1 July 2015 to 1 December 2020; and, so far as Gavin knows, Adriano has not sought access to QB Foods' premises outside business hours at any time from 1 July 2015 to 1 December 2020. 2. Gavin's evidence (Gavin 21.5.21 [141]) was that the locks were changed as part of a minor security upgrade completed in December 2020, and there is documentary evidence supporting that proposition. Gavin's evidence was that the work was not carried out to lock Adriano out from QB Foods' premises, and I accept that proposition, although there is no suggestion that Adriano was then given a key that would work with the new locks. Gavin's evidence is also, and I also accept, that the premises were in any event unlocked, open and accessible to Adriano during QB Foods' business hours from about 5am to 6pm on weekdays during the period from 1 July 2015 to 1 December 2020. 3. Adriano and Pino plead (SOC [37]) that the shutting out of Adriano from access to QB Foods' premises was a breach of clause 7(b) of the HoA; a denial of Adriano's legitimate expectation of a right to participate in the management of QB Foods; and oppressive to, unfairly prejudicial to, or unfairly discriminatory against Adriano and/or Pino within the meaning of s 232 of the Act. Gavin and Amy respond (Defence [31]) by denying that Adriano had any legitimate expectation of a right to participate in the management of QB Foods, whether as a result of cl 7(b) of the HoA or otherwise; pleading that the Adriano had not taken any role or interest in the management or decision making of QB Foods' business; and pleading that the changing of the locks was fair and reasonable. 4. Mr May pressed the allegation as to exclusion from QB Foods' premises, although seeking to reformulate it as a failure to provide a further key to Adriano or Pino from December 2020, and as a matter that the Court could take into account in determining relief. It seems to me that the difficulty with this claim is that Adriano was plainly not excluded from QB Foods' premises and did not seek to access them over a long period in which such access was available to him in business hours. The significance of any change of locks at QB Foods' premises is diminished by Adriano's evidence (Adriano 29.3.21 [66]) that he felt there was little point in going to the factory after he lost access to the MYOB database and did not attempt to use his key. The evidence does not establish that the locks were changed prior to December 2020; Adriano gives no evidence of seeking to access QB Foods' premises out of hours between March and December 2020 or being unable to do so; and, even if he had any expectation of participating in the management of QB Foods, the evidence established no reason that he had any need for out of hours access to QB Foods' premises to do so. This matter does not establish oppression, alone or together with the other matters raised. Purchase of forklift 1. Adriano and Pino also raise an issue concerning the purchase of a forklift. They plead (SOC [49]-[51]) that, on or about 26 June 2020, Gavin procured that QB Foods purchase a forklift for the price of $24,530. Gavin and Amy admit (Defence [44]) the purchase of the forklift; plead that it was a second-hand forklift which was needed urgently for QB Foods' business due to the pallet stacking and un-stacking that became necessary to manage the refrigerated storage of the extra supplies required to operate the business under the COVID-19 pandemic; and plead that, in about January and February 2020, Gavin informed Adriano of his intention to purchase a second-hand forklift to be able to pallet stack extra supplies in the refrigerated storage room. Adriano and Pino plead that they were not consulted and did not agree to the purchase of the forklift; and the purchase of that forklift was a breach of cl 6(c) of the HoA and was oppressive to, unfairly prejudicial to, or unfairly discriminatory against Adriano and/or Pino within the meaning of s 232 of the Act. 2. Adriano's evidence (Adriano 29.3.21 [94]) was that he had been given no information by Gavin as to the purchase of a forklift in May 2020; that evidence, given the specific reference to the date, is not necessarily inconsistent with Gavin's evidence that he had previously discussed the purchase of the forklift with Adriano, who had not objected to it. Adriano also pointed to discussions of previous major purchases with him (Adriano 29.3.21 [95]-[96]) which is not consistent with any lack of openness by Gavin at any earlier time. Gavin gives evidence of the commercial justification for the purchase of the second forklift (Gavin 21.5.21 [167]ff), which is supported by Mr Ersan's evidence; that he discussed alternatives for storing stock, by adding pallet racking and a new forklift, or alternatively renting an additional site with a built in freezer, with Adriano; that he subsequently advised Adriano that renting another factory would be too expensive because of the uncertainty surrounding COVID-19, and Adriano then indicated that he would leave the reconfiguration of the pallet racking and purchase of another forklift to Gavin. He also refers to contemporaneous correspondence with third parties as to the reconfiguration of the pallet and the purchase of the forklift and to a further discussion about that matter with Adriano on 3 June 2020. 3. In submissions, Mr May refers to Adriano's evidence in cross-examination that the purchase of the forklift had not been mentioned to him, but I approach that evidence with caution given the view that I have formed of Adriano's evidence generally. Gavin's evidence in cross-examination was that he had discussed the purchase of the forklift and the commercial need for it with Adriano, although he fairly acknowledged that he had not told them of the purchase of the particular forklift. Mr May also submits that the issue is whether or not Gavin was conducting QB Foods' affairs in a manner consistent with the HoA and not whether the forklift was "needed urgently", or indeed whether its acquisition was in QB Foods' interests. I am not persuaded that the latter questions can be disregarded in that way. Although the purchase of the forklift, if undertaken without Adriano's and Pino's agreement, would have breached cl 6(c) of the HoA so far as it required both shareholders' approval for purchase of equipment in excess of $10,000, it does not follow that that breach would have amounted to oppression if its outcome was in QB Foods' interests. 4. In closing submissions, Mr Ogborne refers to the expenses incurred by QB Foods for refrigeration costs in the year ended 30 June 2020, relating to the need for external freezer storage because of difficulties in managing pallet storage in QB Foods' onsite freezer, and to the options to address those expenses, including reconfiguring the existing freezer by adding pallet racking and acquiring an additional forklift. Mr Ogborne's primary submission is that Adriano and Pino agreed to the purchase of the forklift for the purposes of cl 6(c) of the HoA by reason of approval given to Gavin by Adriano in late February 2020; and he additionally submits that the purchase of the forklift was fair and reasonable where it significantly increased pallet storage in QB Foods' onsite freezer and resulted in savings in costs incurred in external freezer storage and the improved efficiencies to which Mr Ersan referred in his affidavit evidence and cross-examination (Ersan 29.4.21 [22]-[25]). 5. Assuming, without deciding, that Adriano had not consented to the purchase of the forklift, then that purchase would have breached cl 6(c) of the HoA; however, the evidence indicates it was undertaken for QB Foods' benefit and not for any private advantage of Gavin and Amy and Adriano and Pino should, acting reasonably, have consented to it. This matter, alone or together with other matters, did not rise to the level necessary to establish oppression. Failure to supply smoothie mix to Locantro from August 2020 1. Adriano and Pino raise an issue concerning a failure to supply smoothies mix to Locantro from August 2020. They plead (SOC [52]-[53]) that on or about 26 August 2020, Gavin caused QB Foods to stop supplying Adriano and Pino's business, Locantro, with QB Foods' products and the refusal to supply QB Foods' products to Locantro was oppressive to, unfairly prejudicial to, or unfairly discriminatory against, Adriano and/or Pino within the meaning of s 232 of the Act. Gavin and Amy admit that Gavin caused QB Foods to stop supplying Locantro with QB Foods' products, although the evidence suggests that admission was too wide and QB Foods had in fact ceased to supply only Locantro's Leichhardt store and continued to supply its Hunters Hill store, which had given a conformation requested by QB Foods. They plead that QB Foods stopped supplying Locantro with its products after Adriano refused to comply with an implied condition of sale that applied to all customers, namely, that the customer agree to use the products only for retail sales. 2. Adriano gave evidence (Adriano 29.3.21 [83]ff) of email correspondence relating to QB Foods' refusal to supply products to Locantro from late August 2020. He acknowledged that he had received an email refusing to supply Locantro until he gave an undertaking not to use the product for taste testing and that he did not give that undertaking because (in evidence admitted with a limiting order under s 136 of the Evidence Act as a submission and not proof of the fact) he had "customers of QB that wanted to taste test". Gavin refers to the delivery of products by Mr Ersan to Locantro on 30 July 2020 and to Mr Ersan having subsequently advised him that Adriano was "trying to take over the business" and had offered Mr Ersan a small share in the business and a pay increase (Gavin 21.5.21 [153]ff), and I have referred to Mr Ersan's evidence corroborating that evidence above. He refers to an order subsequently placed by Locantro on 1 September 2021 which was at least three times the usual size of Locantro's orders, which stated that the purpose of the order was to conduct taste testing with several customers which had an existing relationship through Locantro. Gavin also refers to an email sent on 1 September 2020 which he claims restated the position regarding taste testing, Adriano's representation of QB Foods and contacting QB Foods' staff and which offered to supply Locantro if it agreed not to use the stock other than for retail purposes. His evidence is that Locantro did not provide such a confirmation. He also refers (Gavin 21.5.21 [159]) to having supplied product to Locantro's Hunters Hill store, apparently operated by Adriano's sister, who provided confirmation that the product was for that store's use. 3. Mr Ogborne submits that supply has been withheld from Locantro's Leichhardt store because it has not confirmed that it will not use the stock other than for retail purposes and that supply was continued to Locantro's Hunters Hill store when it provided that confirmation. Mr Ogborne submits that, irrespective of whether Locantro wished to offer taste tests in order to independently market QB Foods' products, QB Foods was entitled to adopt its standard practice for marketing its products, which involved a QB Foods' representative taking sample stock to the particular customer's premises and showing the customer how to make smoothies at those premises, rather than at a third party location such as Locantro's premises. 4. I recognise, in respect of this allegation, that s 232(e) of the Act extends to conduct that is oppressive to a member or members "whether in that capacity or in any other capacity". However, it does not seem to me that the confirmation sought by QB Foods was unreasonable in the circumstances; it was open to Locantro to give it and Locantro chose not to do so for the Leichhardt store and to that extent chose not to receive supply on the same basis as its Hunters Hill store and QB Foods' other customers; and there is no suggestion that Locantro's store at Leichhardt would not have been supplied with the relevant products, had Adriano and Pino been prepared to confirm they would use the stock in the manner in which it was ordinarily used by QB Foods' customers. This matter, alone or together with other matters, does not rise to the level necessary to establish oppression. Gavin's increases in salary 1. Adriano and Pino rely (SOC [14]) on cl 7(a) of the HoA which provides that Gavin will be remunerated by a salary of $38,500 per annum gross, plus superannuation; and for the life of the HoA will also include a payment of 20% of gross sales (calculated on a GST- excluded basis) generated from pet food sales to any single customer where that customer is invoiced in excess of $250,000 (incl. GST) in a single financial year. They plead (SOC [20]) that, on or about 1 December 2019, Gavin sought an increase in his salary to $150,000 per annum, plus superannuation, as well as the costs of a Ford Ranger and mobile phone to be paid by QB Foods. Gavin and Amy admit (Defence [15]) that, on or about that date, Gavin informed Adriano and Pino that he considered that QB Foods should increase his salary to $150,000 per annum, plus super, and pay for the costs of his Ford Ranger and mobile phone as part of his remuneration. Adriano and Pino also plead (SOC [21]) that, by email from Adriano to Gavin dated 10 December 2019, Adriano and Pino offered to agree to the requests made by Gavin to increase his remuneration and additional benefits, on the conditions that Adriano was to have full access to MYOB, QB Foods' accounting software; Gavin was to agree to take a pay cut in the event that QB Foods had poor financial performance in any given financial year, being defined as an unexpected downturn in profits; and Adriano was "to have the right to work in the business of QB Foods full time if he chose to do so, and if so on the basis that he would receive the same benefits and remuneration (on a pro-rata basis) as Gavin". Gavin and Amy admit (Defence [16]) that agreement. 2. Adriano and Pino plead (SOC [22]-[23]) that, despite no agreement being reached on an increase in Gavin's remuneration and benefits, Gavin caused QB Foods to pay him the equivalent of a $190,000 salary package, and the payment of Gavin's additional salary and benefits referred to above was a breach of cl 7(a) of the HoA; and contrary to the interests of the members of QB Foods as a whole within the meaning of s 232 of the Act. Gavin and Amy respond (Defence [17]-[18]) that Gavin, as managing director, resolved that QB Foods pay him a salary of $150,000 per annum, plus super, and pay the costs of his Ford Ranger and mobile phone as part of his remuneration; admit that he caused QB Foods to pay him that salary and remuneration on that basis; plead that Gavin, as managing director, was entitled under QB Foods' constitution to determine the terms of his remuneration regardless of the terms of the HoA and regardless of whether or not any agreement was reached with Adriano and Pino; plead that agreement was reached with Adriano and Pino to vary cl 7(a) of the HoA to provide for Gavin to be paid a salary of $150,000 per annum, and that the conditions imposed by Adriano and Pino were fulfilled; also plead an estoppel that it is not necessary to address; and plead the salary paid to Gavin was reasonable. 3. Turning now to the evidence as to this matter, Adriano gives evidence (Adriano 29.3.21 [48]ff) of a meeting with Gavin in December 2019, at which Gavin requested an increase in his salary to about $150,000 plus super and all other extras, and claims that he said that equated to a package of about $185,000; Adriano said that he did not think the business could currently afford it and he thought it was "well over market value"; and Gavin responded "this is not negotiable". There is a dispute as to that conversation, which it is not necessary to resolve in order to determine the proceedings. Adriano also refers to his email dated 10 December 2019 to Gavin, which put several conditions to which I referred above on that salary increase and to Gavin's response dated 18 December 2019 which did not wholly accept those conditions, which I also addressed in the chronology above. Adriano also gives evidence (Adriano 29.3.21 [56]) of a further meeting with Gavin on 28 February 2020, in which he claims to have said that he wanted to work fulltime in the business and Gavin to have responded that "there is no space for you in the business". There is a dispute as to that conversation and, on balance, I am not persuaded that it occurred in these terms. The correspondence prior to that time indicates that Gavin was encouraging Adriano to take a greater role in the business and Adriano did not then do so, and I think it unlikely that he or Gavin had reversed their previous positions by 28 February 2020, although Gavin's position no doubt changed at a later date as his and Adriano's relationship deteriorated. 4. Gavin responds (Gavin 21.5.21 [117]) to Adriano's evidence as to the increase in his salary and refers to an increase in his salary to $1,000 a week after tax in July 2018, with Adriano's agreement, and to his salary continuing at that level until December 2019. He refers to a discussion in November 2019 with Adriano, in which he requested a salary increase where QB Foods was performing well. That evidence is consistent with Adriano's email of 15 November 2019 to which I have referred in the chronology set out above. Gavin refers to research which he had undertaken to determine the salary paid for a general manager and to a further discussion on 5 December 2019 where Gavin sought a salary of about $150,000 per annum plus superannuation; Adriano raised the question whether that was "too high" and noted it was about $185,000, presumably inclusive of superannuation; and Adriano agreed that Gavin's salary should be increased but suggested that was "too much" and Gavin pressed for that increase and said it was "not negotiable". 5. Gavin also refers to the subsequent email dated 10 December 2020 in which Adriano and Pino put conditions on the salary increase, to which I have referred in the chronology above, and says (Gavin 21.5.21 [124]) that he was not asking Adriano or Pino for agreement and merely advising them of his decision, where he had made all decisions about salary and wages for staff since 2015. He refers to his response to Adriano's email on 18 December 2019, to which I have also referred in the chronology above, and to a telephone call in which he protested the imposition of conditions on his salary (Gavin 21.5.21 [126]). He returned to that issue in an email dated 16 March 2020 which I also set out in the chronology above. He denies (Gavin 21.5.21 [130]) that Adriano ever asked him to permit Adriano to work full-time in the business, and noted that he had emailed Adriano as late as 3 March 2020 seeking to have Adriano "commit to working at least one day per week" in the email to which I referred in the chronology above. I have noted above that I think it unlikely the conversation occurred as set out in Adriano's evidence. 6. Mr May develops an elaborate argument that, although agreement was reached in principle for Gavin's salary increase in November 2020, Gavin failed to provide the "consideration" promised under the agreement, presumably being compliance with the conditions which Adriano and Pino had imposed upon that salary increase. Mr May recognises that cl 13.1 of QB Foods' constitution allows the directors to appoint a director as managing director, on such terms as to remuneration as the directors see fit, and acknowledges that that clause does not require a resolution of the company's members to approve that remuneration, by contrast with the position under cl 16.1 of the constitution in respect of other directors' remuneration. Mr May submits that the HoA was effective to impose a limitation on Gavin's remuneration, referring to the approach taken by Judd J in Re Rectron Electronics Pty Ltd [2013] VSC 384 at [68]-[69] and develops a further elaborate submission as to the possibility of an estoppel binding upon Gavin and QB Foods arising from cl 7(a) of the HoA. It does not seem to me that I need address that question in so technical a manner where, as Mr May also fairly recognises, the Court should properly focus on whether the relevant conduct was such that an objective bystander would consider it not to be commercially fair, having regard to the arrangement between QB Foods' members: Re Scientific Management Associates Pty Ltd (2019) 141 ACSR 115; [2019] NSWSC 1643 at [209]. 7. Mr May also acknowledges that the parties had agreed to vary Gavin's salary, but relies on the three conditions imposed by Adriano and Pino on such a variation. He refers to Adriano's evidence, largely accepted by Gavin, that Gavin had taken the position that his salary increase was "not negotiable" and that he and Pino had "no choice" other than to agree to it. However, that seems to me to reflect only that that Gavin insisted on his view that he should be paid a higher salary in the relevant circumstances, which does not seem to have been particularly unreasonable position, and that Adriano and Pino chose to accept that position, albeit on conditions, rather than holding Gavin to the unreasonably low salary specified in the HoA or the somewhat increased salary that had been agreed in July 2018 after QB Foods' performance had improved. There is nothing about that negotiation that supports the oppression claim. 8. Mr Ogborne puts a somewhat technical response that the three conditions to Gavin's salary increase set by Adriano and Pino in December 2019 were satisfied, and did not provide that the package was only agreed for so long as Adriano had full access to MYOB Live, but accepts that that access could not be immediately and arbitrarily revoked so as to subvert the grant of access, and submits that did not occur. Both Counsel accept that the evidence does not establish that the business had a "bad year" so as to require Gavin to take a pay cut under the second condition set by Adriano and Pino, where QB Foods appears to have improved its performance even during the earlier part of the COVID-19 pandemic in the financial year ended June 2020. I also accept Mr Ogborne's submission that the third condition did not provide Adriano a right to work in the business full-time, as distinct from providing that he was to receive the same benefits and pay as Gavin, pro-rated to the extent to which he worked in the business. Mr Ogborne also submits that, where Adriano and Pino do not contend that the salary paid by QB Foods to Gavin from December 2019 was not a fair market rate, and where Gavin previously worked for a wage below market rate, then it was fair and reasonable and not oppressive that Gavin be paid the increased salary in the context of QB Foods' improved financial performance. 9. It seems to me that agreement was reached as to the increase in Gavin's salary in December 2019, albeit Adriano and Pino sought to impose, and Gavin did not wholly accept, conditions on that agreement which had no obvious connection with whether Gavin was then paid a reasonable salary. Adriano and Pino do not seek to establish that the salary was in fact paid to Gavin under that agreement was out of market or inappropriate given QB Foods' significantly improved performance. Assuming, without deciding, that one or more of the conditions that Adriano and Pino had sought to impose was or were not complied with in the longer term, for reasons that I address elsewhere in this judgment, that does not seem to me to rise to the level necessary to establish an oppression claim. 10. Adriano and Pino plead a further claim in respect of a further salary increase for Gavin from July 2020. They plead (SOC [24]) and Gavin and Amy substantially admit (Defence [19]) that, by letter dated 11 June 2020 from Gavin to Adriano and Pino, Gavin advised Adriano and Pino that from 1 July 2020 he intended to procure that QB Foods pay him increased wages reflecting the increase in the Consumer Price Index or 4% each year, whichever is greater, in addition to a performance bonus of 5% of QB Foods' gross profit (excl. GST) increase in annual profit from the previous financial year. Adriano and Pino plead (SOC [25]) that the payment of Gavin's additional salary and benefits was a breach of cl 7(a) of the HoA and contrary to the interests of the members of QB Foods as a whole within the meaning of s 232 of the Act. Gavin and Amy respond (Defence [20]) that Gavin has not been paid the additional salary and benefits to which that letter referred and rely on other defences raised in relation to the earlier salary increase. In his affidavit evidence, Gavin acknowledges that he had in fact received a 4% salary increase from 21 August 2020 which increased his salary to $156,052 per annum although his evidence is that he did not take the 5% performance bonus (Gavin 21.5.21 [148]). 11. Mr May points out that Adriano's and Pino's agreement was not sought to the increase in salary and benefits to which Gavin referred in his letter to shareholders dated 11 June 2020 and Gavin accepted that in cross-examination (T189). Gavin also accepted in cross-examination that he had taken that 4% salary increase in his salary from about 21 August 2020 (T189-190), although he had not taken additional benefits. Mr May submits that this further increase in salary, without Adriano's and Pino's agreement and without reaching any further agreement as contemplated by the HoA, was contrary to the interests of QB Foods' members and oppressive to Adriano and Pino for the purposes of s 232 of the Act. Mr Ogborne responds that, as managing director, Gavin was entitled under cll 13.1 and 16.1 of QB Foods' constitution to determine the terms of his remuneration and that the increase in remuneration is fair and reasonable given QB Foods' financial performance. I accept that Gavin has the constitutional power to determine that remuneration increase, but that power is confined by the provisions of the HoA, and it is not necessary to decide here whether they operate only by contract or as an amendment of the constitution by shareholders' unanimous consent. 12. It seems to me that this salary increase, in the then circumstances, amounted to oppression. It occurred without consultation with or the consent of Adriano and Pino, which was at least contemplated by the HoA, and allowed Gavin to extract an economic benefit from QB Foods to the exclusion of Adriano and Pino at a point the shareholders were in conflict. The fact that it was arguably within Gavin's powers as sole director of QB Foods to bring about that result, although that would have been in breach of the HoA, is not an answer to the oppressive character of the conduct . Gavin's taking of $120,000 from QB Foods 1. Adriano and Pino also plead (SOC [46]-[48]) that, on or about 20 April 2020, and without notice to the members of QB Foods, Gavin caused QB Foods to provide him with an interest-free loan of $120,000; that loan had no benefit to QB Foods; and the procuring of that loan by Gavin was contrary to the interests of the members of QB Foods as a whole within the meaning of s 232 of the Act. The taking of that amount did not have the formality of a "loan", although it was recorded in that manner in QB Foods' financial records. Gavin and Amy respond (Defence [41]-[43]) that Gavin withdrew the amount of $120,000 from QB Foods' account on 20 April 2020 in the early days of the COVID-19 pandemic as temporary security by QB Foods for its estimated total liabilities secured by personal guarantees provided by him and that amount was returned to the first defendant's account on 26 June 2020; and they do not admit that the taking of that amount was contrary to the interests of the members of QB Foods. 2. Gavin admits withdrawing $120,000 from QB Foods' bank account on 20 April 2020 and returning it on 26 June 2020 (Gavin 21.5.21 [160]ff) and explains that he did so when the business suffered severely and orders substantially dropped because of COVID-19 restrictions and he was concerned as to his personal guarantee of some of QB Foods' creditors and that he may be required to pay those creditors personally. That is not sufficient justification for the transaction, so far as it contemplated Gavin would use those funds to give a preference to those creditors to Gavin's advantage in avoiding liability under the guarantees. His evidence is that he repaid that money once QB Foods qualified for a Jobkeeper allowance and he believed that QB Foods was then "safe". 3. Mr May submits that the payment of $120,000 to Gavin's personal account cannot be said to have been in QB Foods' interests, and could only have endangered its solvency and increased the likelihood that it would default on its obligations, and was contrary to the interests of members as a whole. He submits that, notwithstanding the funds were returned, the Court may make orders although the relevant conduct has ceased: Campbell v Backoffice Investments Pty Ltd above at [182]. I must nonetheless bear in mind that the funds were returned in assessing the significance of the conduct. Mr Ogborne, in response, points to Gavin's recognition that he should not have withdrawn the money from QB Foods' bank account and refers to the circumstances in which that withdrawal was made. He refers to Gavin having returned the money to QB Foods' account on 26 June 2020 and submits that: "When viewed within the context of Gavin's track record of conscientious financial management of QB Foods, this incident does not suggest that there is any ongoing oppressive conduct being committed against [Adriano and Pino] that justifies relief being granted pursuant to s 233 of the Corporations Act 2001." 1. I accept that Gavin took this amount from the Company in difficult times and the amount was repaid within about two months. Nonetheless, that conduct seems to me to have amounted to oppression, particularly when combined with the increase in Gavin's salary and the proposed issue of further shares in QB Foods to which I now turn. Issue of new shares in QB Foods 1. Adriano and Pino attack a share issue in QB Foods and rely (SOC [12]) on cl 5 of the HoA which provides that, if QB Foods requires additional funding in addition to loans already made to QB Foods by Gavin and Amy, and if either party is not willing to commit equal funds, then the additional funds may be loaned by the other party. They plead (SOC [38]) that, by letter from Gavin to Adriano and Pino dated 11 June 2020 (to which I referred in the chronology above) and despite Adriano still not having access to "MYOB Live", his QB Foods email account, or access to QB Foods's premises, Gavin requested that Adriano and Pino invest a further $200,000 in QB Foods prior to 30 June 2020, in return for further shares to be issued in QB Foods. Adriano and Pino also plead (SOC [39]-[41]) that, by letter from Gavin to Adriano and Pino dated 6 November 2020 (to which I referred in the chronology above) and despite Adriano still not having the access noted above, Gavin (on behalf of QB Foods) wrote to Adriano and Pino with details of a "Share Purchase Plan", which would result in new shares in QB Foods issued to any subscriber at the price of $1.00 per share; and that, as at 6 November 2020, no additional funding had been made available to QB Foods by Gavin or Amy in accordance with cl 5 of the HoA; and Adriano and Pino did not subscribe to the "Share Purchase Plan". 2. Gavin and Amy respond (Defence [7]) that this clause permitted Adriano and Pino, on the one hand, and Gavin and Amy on the other hand, to loan additional funds to QB Foods if the other party was not willing to commit equal funds, but did not limit the ways in which QB Foods could raise additional funding, whether as a loan or as capital, and that the HoA did not prevent QB Foods from duly exercising its powers under its constitution to raise additional funding. They admit (Defence [32]) that QB Foods requested that each of Adriano and Pino, on the one hand, and Gavin and Amy, on the other hand, invest a further $200,000 to relocate to larger premises and purchase some capital equipment to expand QB Foods' operation and plead that the nature of the investment, whether by loan or share issue, was not specified in QB Foods' report to shareholders dated 11 June 2020. They also admit (Defence [34]-[36]) that, on 6 November 2020, Gavin wrote to Adriano and Pino with details of a "Share Purchase Plan" which, if accepted, would result in new shares in QB Foods being issued in certain numbers to certain subscribers at the price of $1.00 per share; plead that the "Share Purchase Plan" was structured so as to enable Adriano and Pino and Gavin and Amy to each subscribe for shares and retain their respective 50% shareholding; admit that, as at 6 November 2020, no funding in addition to the loans described in cll 2 and 3 of the HoA had been made available to QB Foods by Gavin and Amy; and otherwise deny the allegations. 3. Adriano and Pino also plead (SOC [42]) and Gavin and Amy deny (Defence [36]) that, on or about 27 November 2020, Gavin (in his capacity as director of QB Foods) accepted a subscription to the "Share Purchase Plan" by Amy and himself, and resolved to issue 66,000 "DVVR" shares to Amy, 66,000 "EQ" shares to Amy, 60,000 "MGT" shares to Amy and 2,198 "DVVR" shares to himself at $1.00 per share ("Share Issue Resolution"). Adriano and Pino then plead (SOC [43]-[45]) that the Share Issue Resolution was made in circumstances that there had been no prior valuation report prepared to value QB Foods' shares; that the shares to be issued under the Share Issue Resolution did not reflect the fair value of those shares and would dilute the shareholding of Adriano and Pino in QB Foods from 50% to less than 1%; and the Share Issue Resolution and the purported issue of shares under it was contrary to the interests of the members of QB Foods as a whole and oppressive to, unfairly prejudicial to, or unfairly discriminatory against, Adriano and/or Pino within the meaning of s 232 of the Act. Gavin and Amy (Defence [37]) admit that the Share Issue Resolution was made where there had been no prior valuation report prepared to value QB Foods' shares; and plead that Adriano and Pino were provided by QB Foods with all of the financial information and documents that they requested prior to not subscribing to the "Share Purchase Plan", including financial statements of QB Foods for the financial years ended 30 June 2015 - 30 June 2020 and management reports for each quarter of the current financial year. That also plead (Defence [40]) that, in the event, the "Share Purchase Plan" was cancelled, and QB Foods accepted requests by Gavin and Amy to withdraw their application for shares in QB Foods and to refund the monies paid with its share application, and refunded the monies paid by them. 4. Turning now to the affidavit evidence, Gavin addresses the commercial justification for the capital raising (Gavin 21.5.21 [195]ff) and refers to a report to shareholders issued on 11 June 2020, to which I referred in the chronology above which proposed a capital injection of $200,000 by each shareholder in that financial year, and also addresses the further share offer in November 2020. 5. Mr May acknowledges, in submissions, that shares were allotted to Gavin and Amy following the resolutions of 27 November 2020, although they were not issued to them by reason of the injunction granted by the Court. Mr May relies on cl 5(a) of the HoA headed "Additional Funding" and submits that the plain and ordinary meaning of that clause is that, if QB Foods requires additional funding in addition to the loans already in place, and either party is not willing to commit equal funds, then the additional funds may be loaned by the other party. Mr May also submits that clause prevented QB Foods from raising money other than by a loan, either by both shareholders or otherwise by the shareholder who was prepared to make a loan pursuant to that clause. Mr Ogborne responds, and I accept, that that clause is a facultative provision which permits one shareholder to make a loan even if the other will not and does not prevent QB Foods issuing shares to its shareholders. That is, however, not a complete answer to the proposition that the share issue may have been oppressive in the circumstances. 6. The more substantial question, in the relevant circumstances, is whether the shares were allotted at under value or in a manner that would have been unreasonably dilutive of Adriano and Pino had the issue proceeded, so as to amount to oppression on that basis: Dynasty Pty Ltd v Coombs (1995) 59 FCR 122; 138 ALR 64 at 74-75. Mr May points, with substantial force, to the fact that the issue of the shares, had it proceeded without Adriano's and Pino's participation, would have reduced Adriano's and Pino's interest in QB Foods' shares to 0.05% of each of the DVVR, EQ and MGT shares on issue, and that is a substantial dilution of their interest in QB Foods on any standard. Mr Ogborne responds that this allegation is of "historical significance" as the "Share Purchase Plan" was cancelled by resolution on 1 February 2021, albeit after the Court had restrained the proposed issue of the shares. Mr Ogborne also points out, and I accept, that by the time of Gavin's letter dated 6 November 2020 concerning the proposed "Share Purchase Plan", Adriano and Pino had been provided further information concerning QB Foods' financial position, including financial statements up to 30 June 2020 and information as to company expenses and sales for the financial year ended 30 June 2020, and were then provided with copies of QB Foods' bank statements at their solicitor's request on 26 November 2020. Mr Ogborne also submits that, where the "Share Purchase Plan" was cancelled on 1 February 2021, the Court would not grant relief in respect of that matter. 7. It seems to me that, given the developing dispute between the parties, the offer to issue new shares in QB Foods at $1.00 each was oppressive, since Gavin was plainly better informed than Adriano and Pino as to the details of QB Foods' affairs, and it was reasonably foreseeable that Adriano and Pino would not wish to invest a substantial additional amount in QB Foods in the midst of the dispute and that their economic interest in QB Foods would be substantially diluted if they did not do so. The applicable principles in respect of relief 1. As I noted above, Adriano and Pino seek a buy-out order in respect of Gavin and Amy's shares by way of relief. Gavin and Amy seek (in submissions to which the Plaintiffs took no objection, although not in their pleaded Cross-Claim) the inverse order that they buy out Adriano's and Pino's shares, and alternatively seek a winding up order. It will be convenient to address the principles in respect of the alternative forms of relief first, before determining those applications. 2. The Court can make an order for the purchase of a shareholder's shares by another shareholder under s 233(1)(d) of the Corporations Act. The Court can also make a winding up order under s 233(1)(a) of the Corporations Act or on the just and equitable ground under s 461(1)(k) of the Corporations Act. Section 467(4) of the Corporations Act applies where a winding up order is sought on the just and equitable ground, and the matters identified in that section, including the availability of some other remedy and whether the applicant is acting unreasonably in seeking to have QB Foods wound up instead of pursuing that other remedy, also apply where a winding up order is sought under s 233 of the Act. 3. Although Adriano and Pino seek an order that they buy out Gavin's and Amy's shares, the case law (generally decided in cases involving majority and minority shareholders rather than equal shareholders) has recognised that an offer by Gavin and Amy to buy out their shares, or an order to that effect, can sufficiently address a claim in oppression. I have referred to the offer made by Gavin to buy out Adriano's and Pino's shares in QB Foods in February 2020, and the counter-offer made by Adriano as recorded in his email dated 3 March 2020, in the chronology above. In Nassar v Innovative Precasters Group Pty Ltd above at [108], Barrett J observed that oppression was not established where parties showed a willingness to seek in good faith an agreed basis for buying out the remaining shareholder. Where oppression or unilateral exclusion of the minority by the majority is established, Courts have also often ordered the majority to buy out the minority's shares. Such an order has been described as "the most usual order" where the applicant seeks to leave the oppressed company: RP Austin & I Ramsay, Ford Austin & Ramsay's Principles of Corporations Law (LexisNexis Butterworths, 2015) [10.475.12], approved in Mair v Rhodes and Beckett above at [716]. (I recognise that here that Adriano and Pino do not seek to leave QB Foods but to require Gavin and Amy to do so). 4. The basis of such an order was identified in one of the earliest oppression cases, Scottish Co-operative Wholesale Society Ltd v Meyer [1959] AC 324 at 369, where Lord Denning observed in respect of the corresponding English section that: "One of the most useful orders mentioned in the section — which will enable the court to do justice to the injured shareholders — is to order the oppressor to buy their shares at a fair price … It is, no doubt, true that an order of this kind gives to the oppressed shareholders what is in effect money compensation for the injury done to them: but I see no objection to this. The section gives a large discretion to the court and it is well exercised in making an oppressor make compensation to those who have suffered at his hands." 1. In Re Bird Precision Bellows Ltd [1984] Ch 419 at 430 (upheld by the Court of Appeal in Re Bird Precision Bellows Ltd [1986] Ch 658), Nourse J observed that: "On the assumption that the unfair prejudice has made it no longer tolerable for [a minority shareholder] to retain his interest in the company, a sale of his shares will invariably be his only practical way out short of a winding up. In that kind of case it seems to me that it would not merely not be fair, but most unfair, that he should be bought on the fictional basis applicable to a free election to sell his shares in accordance with the company's articles of association, or indeed on any other basis which involved a discounted price. In my judgment the correct course would be to fix the price pro rata according to the value of the shares as a whole and without any discount, as being the only fair method of compensating an unwilling vendor of the equivalent of a partnership share." 1. As I noted above, in O'Neill v Phillips above, Lord Hoffmann observed that "it will usually be considered unjust, inequitable or unfair for a majority to use their voting power to exclude a member from participation in the management without giving him the opportunity to remove his capital upon reasonable terms"; that observation implicitly recognises that the removal of such a shareholders, on fair terms, would not be unjust or inequitable. His Lordship also there noted (at 1107) that, where a majority shareholder wants to "put an end to the association … it will almost always be unfair for the minority shareholder to be excluded without an offer to buy his shares or make some other fair arrangement". 1. His Lordship identified characteristics of a reasonable offer as being to purchase the shares at "fair value" which, if not agreed, should be determined by a competent expert, and noted that a fair offer would be at "a value representing an equivalent proportion of the total issued share capital, that is, without a discount for its being a minority holding". As I observed in Byrne v A J Byrne Pty Ltd above at [67]: "The matter giving rise to unfairness was there identified as exclusion from the management of the company without a reasonable offer for the plaintiff's shares; and that analysis treated the majority's decision to exclude the minority as the source of the obligation to make a reasonable offer for the shares." [emphasis added] 1. In Rankine v Rankine (1995) 18 ACSR 725 at 730-731, Thomas J in turn observed that: "In granting a remedy in favour of an oppressed shareholder … by ordering the compulsory purchase of the applicant's shares at a stated price, the court is in effect awarding compensation for the respondents' breach of duty. The nature of the duty is both subtle and complex, and not capable of exhaustive definition". The buy-out orders sought by Adriano and Pino 1. Mr May submits that a buy-out order in favour of Adriano and Pino is appropriate where Gavin has engaged in oppressive conduct and neither Adriano nor Pino were responsible for the breakdown of the relationship between Adriano and Gavin. I have found above that there has been a degree of oppressive conduct on Gavin's (and to a lesser extent in, respect of the share issue, Amy's) part, but I do not accept the latter proposition. Mr May submits that there should be no doubt that Adriano and Pino have the experience to operate QB Foods. It seems to me that that plainly was not established, where Locantro's business does not involve any substantial manufacturing process, but I would not have declined to make a buy-out order that was otherwise warranted on the basis that Adriano and Pino might ultimately be unable adequately to run the business and come to regret the relief they had obtained. 2. I am not persuaded that the buy-out order sought by Adriano and Pino should be made. First, and most importantly, the case law to which I have referred above indicates that it will commonly be sufficient to address an oppression claim, including one that involves an alleged exclusion from management, for the party that has been excluded to be bought out at the fair value of its shares. It seems to me that Adriano and Pino have not established that would be insufficient to remedy the oppression which has been established in this case, and there are other factors which suggest that a fair remedy does not require or warrant their excluding Gavin and Amy from the business. First, as I have noted above, Gavin had established the business, and QB Foods' constitution and the HoA contemplated that he would have management control of it. Second, while I recognise that Adriano has promoted sales of QB Foods' products to Locantro's customers and to associates, I am not persuaded that he worked in the business in the manner contemplated by the HoA or across the range of areas there contemplated, and it is plain that he took the attitude that he could do what he wished in that respect. Third, it seems to me that Adriano's and Pino's conduct has substantially contributed to the breakdown in the parties' relationship by seeking to condition the increase in Gavin's salary in December 2020 on their being provided additional rights not contemplated by the HoA, and particularly a right for Adriano to work full-time in the business if he wished, and by raising any concerns as to QB Foods' financial information with Ms Radovic rather than with Gavin. Fourth, at least since the date of their conversation with Mr Ersan on 30 July 2020, Adriano and Pino have been manoeuvring to "take over the business from Gavin", where it has now achieved a degree of success, a result which would allow them to profit from, rather than compensate them for, the matters of which they complain. 3. I am not persuaded that, in these circumstances, an order for the compulsory purchase of Amy's and Gavin's shares by Adriano and Pino is necessary or appropriate. I will address the converse application made by Gavin and Amy and the valuation evidence led by both parties below. Gavin and Amy's Cross-claim and their application for buy-out orders 1. By their Cross-Claim, Gavin and Amy plead (SOCC [4]) that the working relationship between Gavin and Adriano was predicated on mutual co-operation, trust and confidence. They rely on aspects of the HoA which they contend had the effect that Gavin, as QB Foods' sole managing director and general manager of its business, would make all management decisions in the running of QB Foods and its business and that Adriano would trust and have confidence in Gavin to make those management decisions; Adriano would work with Gavin on QB Foods' business at least one day per week in circumstances where he may not always be under Gavin's supervision or at QB Foods' premises and Gavin would trust and have confidence in Adriano to carry out that work for at least one day per week; in working for QB Foods, Adriano would have direct and unsupervised dealings with customers and potential customers of QB Foods' business and with other employees and Gavin would trust and have confidence in Adriano to act in QB Foods' best interests in those dealings; and Gavin and Adriano would co-operate and act in QB Foods' interests in considering whether to agree to capital purchases in excess of $10,000. 2. Gavin and Amy also plead (SOCC [5]) that the working relationship between Gavin and Adriano has broken down, since Adriano no longer trusts or has confidence in Gavin making all management decisions in the running of QB Foods and its business, and relies on Adriano's request that he be appointed a director of QB Foods; Adriano's and Pino's failure to invest further funds in the business as requested on 30 June 2020 or to subscribe for further shares in QB Foods; and Gavin no longer trusts or has confidence in Adriano to carry out work with Gavin on QB Foods' business for at least one day per week, by reason of several matters. They also plead (SOCC [6]) that the personal relationship between Gavin and Adriano has broken down such that, since about 3 June 2020, they have not been on speaking terms and (SOCC [7]) that is just and equitable that QB Foods be wound up within the meaning of s.461(1)(k) of the Act. 3. In their Defence to the Cross-Claim, Adriano and Pino deny that the working relationship between Gavin and Adriano was predicated on mutual co-operation, trust and confidence as those terms are understood in the context of the relief sought by Gavin and Amy; largely take issue with the other matters pleaded by Gavin and Amy; and plead (Defence to Cross-Claim [7]) that a winding up order on just and equitable grounds is not in the public interest where there is another remedy available, being the relief sought by Adriano and Pino in the Statement of Claim; QB Foods is solvent and employs a number of people; QB Foods was not incorporated upon mutual arrangements or understandings between its current shareholders, where Adriano and Pino acquired their 50% interest in QB Foods after it was already established; the working relationship of Gavin and Adriano is not one of quasi-partnership, and rather their rights, expectations, and obligations arise under the HoA; there is no "deadlock" in that "the business of QB Foods does not rely on or require mutual co-operation, trust, and confidence between Gavin and Adriano, and QB Foods has been continuing to function throughout these proceedings despite Gavin excluding Adriano from any involvement in QB Foods"; they contend that Gavin is responsible for the breakdown in the personal relationship between him and Adriano by reason of the oppressive conduct of Gavin complained of by Adriano and Pino in these proceedings; and also that they wish that QB Foods continue to trade. 4. Gavin and Amy sought a buy-out order in respect of Adriano's and Pino's shares at the hearing, although they had not pleaded a claim for that relief, and the leave granted to them to file a Cross-Claim did not extend to seeking that relief. Adriano and Pino did not take any point that this relief was not open to them and, on that basis, I will address this claim now and their pleaded Cross-Claim and winding up application below. Mr Ogborne submits that Gavin and Amy are the proper parties to purchase the shares of Adriano and Pino where Gavin had founded, developed and managed QB Foods, and that Adriano had failed to comply with the obligation under the HoA to work for at least one day a week throughout the life of the agreement, which would give Gavin and Amy the right to purchase the shares of Adriano and Pino under the HoA. 5. I have held above that Gavin's conduct in relation to his salary increase from July 2020 and his taking of $120,000 from QB Foods (later repaid) and Gavin's and Amy's conduct in respect of the share issue was oppressive to Adriano and Pino. I also considered whether an order that Gavin and Amy buy out Pino and Adriano at fair value would be inappropriate, where it would, on one view, allow Gavin and Amy to achieve, by a buyout, the exclusion of Adriano and Pino from the business that would have been substantially achieved by the share issue, had that issue of those shares not been restrained by interlocutory relief. However, the case law which I have referred above recognises that it will generally be sufficient to remedy a claim in oppression that the shares of the excluded party be bought out at fair value; I have held above that the alternative buy out order sought by Adriano and Pino should not be made; I find below that a winding up order should not be made; and neither of the parties wishes me to make no order and leave the status quo in place. In these circumstances, I consider that the proper order here is the most common order made in applications of this kind, that Gavin and Amy buy out Adriano's and Pino's shares at fair value, which will remedy the oppression I have found by ensuring that they are not locked into the company without an economic return for their holding. I now turn to address the question of the fair value of their shares. The expert valuation evidence 1. Turning now to the expert valuation evidence, I bear in mind the nature of a "market value" test as described in MMAL Rentals Pty Ltd v Bruning (2004) 63 NSWLR 167; [2004] NSWCA 451 at [55], in the context of the purchase of shares on exercise of a call option, by Spigelman CJ (with whom Mason P and Hodgson JA agreed) as follows: "A test of a "market value", whether in a statutory or contractual context, usually invokes the test long established and frequently applied in Spencer v The Commonwealth of Australia (1907) 5 CLR 418 esp at 432 and 440–441 of a willing but not anxious purchaser and vendor, bargaining with each other. This approach was most recently expressed in a joint judgment of three judges of the High Court in Marks v GIO Australia Holdings Ltd [1988] HCA 69; (1998) 196 CLR 494 at 514: "… The value … is to be identified according to what price freely contracting, fully informed parties would have offered and accepted for it." 1. The range of accepted valuation methodologies was noted by Dixon J in Smith v Gould [2012] VSC 461 at [125], where his Honour observed that: "In theory, all valuation methodology for a business is based on its cashflow. Discounted cashflow is the most commonly accepted valuation methodology. Other common valuation methodologies include capitalisation of future maintainable profits, capitalisation of future maintainable dividends, value of net tangible assets on a going concern basis, or notional realisation of assets (hypothetical liquidation)." 1. In Shanahan v Jatese Pty Ltd [2019] NSWCA 113 at [79], to which Mr May refers, Bathurst CJ observed, in respect of a valuation by reference to future maintainable earnings, that: "Future maintainable earnings (or profits) are the level of profits which, on average, the business being valued can be expected to maintain in real terms, notwithstanding the vagaries of the economic cycle: Wayne Lonergan, The Valuation of Business, Shares and Other Equity (4th ed, 2003, Allen & Unwin) at 34; Commissioner of Succession Duties (SA) v Executor Trustee and Agency Company of South Australia Ltd (1947) 74 CLR 358 at 362; [1947] HCA 10; Gregory v Commissioner of Taxation (Cth) (1971) 123 CLR 547 at 565; [1971] HCA 2." 1. In closing submissions, Mr May also referred to professional commentary concerning valuation by reference to a capitalisation of future maintainable profits or earnings, in Mr Lonergan's book, The Valuation of Business, Shares and other Equity, published in 2003, and I note that text was also referred to in Shanahan v Jatese Pty Ltd above. I bear in mind Mr Lonergan's emphasis on the desirability of adopting a "long term" view and applying a "high level of commercial judgment" in determining such a valuation; neither proposition appears to be particularly controversial, but neither assists in determining the value of QB Foods' business in the particular case. I also bear in mind Mr Lonergan's comments as to the character of a hypothetical purchaser, to the extent that such a concept is relevant in determining market value. I also recognised that, as I observed in Re Global Mortgage Equity Corporation Pty Ltd (2013) 97 ACSR 30; [2013] NSWSC 1586 to which Mr May refers, the Court is not bound to choose between the respective valuations prepared by accounting experts, adopting one or the other without modification, although any adjustments to an expert valuation must be supported by the evidence and must, I would add, not involve the Court exercising specialist accounting or valuation expertise which it (and quite possibly Counsel) do not have. 2. Mr May also submits, and I accept, that the Court has a discretion in fixing a fair price in oppression cases, which is not constrained by ordinary valuation principles and does not require the price to be the market value of the shares: United Rural Enterprises Pty Ltd v Lopmand Pty Ltd (2003) 47 ACSR 514; [2003] NSWSC 910 at [34]-[38]; Shanahan v Jatese Pty Ltd above at [47]. Mr May also refers to Rees J's observation in Re Scientific Management Associates Pty Ltd (2019) 141 ACSR 115; [2019] NSWSC 1643 that the basic requirement in an oppression suit is that "the valuation must be fair on the facts of the particular case", and will be determined as a "price that is fair in all the circumstances having regard to the value that the shares would have had but for the oppressive conduct". I bear that observation in mind, but note that there is no basis for a finding that the oppressive conduct which I have found to be established had any adverse impact on the value of Adriano's and Pino's shares in QB Foods. Her Honour went on to observe, by reference to authority, that: "The price to be paid is compensatory in nature, aimed at redressing the wrong done, so the price is not confined to ordinary valuation principles and will not always reflect the real worth of the shares …" 1. Before turning to the expert reports, I should note one unusual aspect of Adriano's and Pino's approach to the valuation of QB Foods' business and its shares. As I noted above, their primary position was that an order should be made that would allow them to buy out Gavin's and Amy's shares in QB Foods, and implicitly require Gavin and Amy to sell those shares to them. Their primary position was that they would be a buyer of those shares, but they led expert accounting evidence which sought to establish that the business and those shares had a substantially higher value than that for which Gavin and Amy contended, so they would then be required to pay substantially more to buy out Gavin and Amy if they obtained the relief that they sought, than if the evidence led by Gavin and Amy were accepted. I asked Mr May whether I had misunderstood this position in oral closing submissions and he responded as follows: "Your Honour has not misunderstood. Our primary relief is that the defendant[s] sell their shares to the plaintiffs at fair value. That's our primary relief. And this valuation [seeking to establish that Adriano and Pino should have to pay more rather than less to acquire those shares] I will take your Honour to is what we say is fair value." 1. Adriano's and Pino's approach would, of course, be more readily explicable if they anticipated that they would not succeed in obtaining a forced sale of Gavin and Amy's shares in all the circumstances, possibly including that Gavin had established the business and the company and had management control of it under its constitution and the HoA and that Amy had the right to buy out Adriano's and Pino's shares under the HoA in specified circumstances, rather than the reverse. On that basis, it would be in Adriano's and Pino's interests to seek to establish a higher value of the business and the shares in QB Foods in anticipation of a more likely result that Gavin and Amy would be ordered to buy out their shares in QB Foods, rather than the reverse. However, Mr May did not suggest that that was their position. 2. Turning now to the expert valuation evidence, Adriano and Pino relied on three reports of Mr Paul Green dated 14 December 2021 (Ex P9), 5 February 2021 (Ex P10) and 12 July 2021 (Ex P11) and Gavin and Amy relied on reports of Mr Russell dated 16 April 2021 (Ex D4) and 26 July 2021 (Ex D5), and the parties also relied on a joint report of Messrs Green and Russell dated 12 August 2021 (Ex J1). Part of that joint report, setting out a further quantification of the value of the business undertaken by Mr Green, was not admitted for the reasons set out an earlier judgment in the course of the hearing, where Adriano's and Pino's reliance on that part of that report would have deprived Gavin and Amy of an opportunity to lead lay evidence responding to the basis of that new valuation and where that part of the report was not admissible as expert evidence in any event. 3. Mr Green's reports dated 14 December 2020 and 5 February 2021 were in substantially similar form, with the latter updating his valuation of the business to 24 January 2021 based on an MYOB file provided to him. Those reports were partly superseded by his 12 July 2021 report and the new valuation approach that Mr Green sought to adopt (but which was not admitted into evidence) in the experts' joint report. Mr Green indicated that, consistent with the approach adopted by Mr Russell, he adopted a "market value" for QB Foods' business being the price that would be negotiated in an open and unrestricted market between a knowledgeable, willing but not anxious buyer and a knowledgeable, willing but not anxious seller acting at arm's length. Mr Green also indicated the basis on which he had valued particular assets of the business, including motor vehicles. 4. In his first report, Mr Green valued the business as at 30 June 2020 as $1,278,000 including net depreciated book value of motor vehicles. He there noted that the business had not been profitable up to and including the 2019 financial year, with its first profit having been made in the 2020 financial year. He noted the significance of determining future maintainable earnings and an appropriate capitalisation rate to a valuation, but made assumptions in his first report as to the reasonable level of ongoing sales of the business which did not appear to have been supported by evidence, and provided an insufficient explanation of why he adopted a capitalisation rate of 30%, which did no more than identify several factors that were relevant to determining a capitalisation rate and then, without any further explanation, assert that a capitalisation rate of 30% was appropriate. 5. Mr Green adopted the same approach in his second report, with the same inadequacies, which extended the period of financial performance which was taken into account from 30 June 2020 to 24 January 2021, by reference to management accounts, and reached a value of $2,232,476, including the value of the business at 24 January 2021 of $1,744,000 and the value of remaining net assets. Mr Green there acknowledged that that valuation would need to be reduced by $200,198 if, as is the case, the further share issue to Gavin and Amy had not proceeded. He indicated that he had made adjustments to the actual financial performance of the business to align its trading performance with pre-COVID-19 results. In both his first and second reports, Mr Green also replaced actual capital expenditure for the business with what he regarded as a "reasonable level of ongoing annual capital expenditure"; it seems to me that he had no basis to do so by reference to his accounting expertise and he did not adequately support that adjustment by disclosed reasoning. 6. Mr Green's third report dated 12 July 2021 was partly a reply to Mr Russell's report dated 16 April 2021, but also updated Mr Green's valuation to 31 May 2021, decreasing his valuation to $2,033,231, including the reduced value of the business of $1,686,000 and the value of remaining net assets. That updated valuation was prepared by reference to updated management accounts to 31 May 2021. That report did not adjust for QB Foods' lack of pet food income during the 2021 financial year, overstating its maintainable revenue by $270,867, which was later corrected by Mr Green in the joint report. Mr Green again adopted a "notional capital expenditure" which understated QB Foods' actual capital expenditure; and again maintained Mr Green's earlier capitalisation rate without any adequate explanation for why it was adopted. Mr Green also expressed the view that Mr Russell had materially understated the maintainable level of smoothie sales for the business in his report, apparently based on Mr Green's assessment of the capacity for growth in respect of smoothie sales, but Mr Green was plainly not qualified to make that assessment by his accounting expertise. Mr Green also expressed views as to the extent to which Gavin could be replaced in the business, which he was also not qualified to express those views by his accounting expertise. In submissions, Mr May referred to Mr Green's evidence in cross-examination that he had assumed that pet food revenue would drop off and be replaced by revenue from smoothie sales, although that was inconsistent with that he had said he had done in his reports. 7. Gavin and Amy in turn relied on Mr Russell's report dated 16 April 2021 (Ex D4). Mr Russell there identified a number of difficulties with incomplete information and unreasonable assumptions made in Mr Green's first report, and some but not all of those matters were addressed by further information in Mr Green's subsequent reports. Mr Russell understandably also raised concerns as to the basis on which Mr Green had expressed views as to the level of "maintainable smoothie sales" and to his inclusion of pet food income where that income had ceased and to his substitution of his view of "reasonable" capital expenditure for QB Foods' actual capital expenditure. Mr Russell indicated his view that the capitalisation rate selected by Mr Green (without adequate explanation, as I noted above) was too low for several reasons, including that it gave too little weight to the fact that QB Foods had only recently achieved profitability after a history of trading losses and failed to consider capacity constraints of the business and limitations on its growth, and risks arising from the fact that QB Foods was a "one product" business and that issues arising from the COVID-19 pandemic were not resolved. It seems to me that there is substantial force in those criticisms of Mr Green's approach. 8. Mr Russell, in his first report, also valued QB Foods business on the basis of future maintainable earnings and provided a more detailed explanation of the adjustments he had made to do so than had Mr Green, and also provided a more specific explanation of the basis on which he had derived a capitalisation rate of 35-40% for QB Foods business. He concluded that the business had a value in the range of $613,854 to $701,547 and had an equity value in the range of $659,625 to $747,318. By his further report dated 26 July 2021 (Ex D5), Mr Russell updated his valuation to 30 June 2021 and concluded that the business had a value in the range of $324,250 to $370,571 and its equity value was in the range of $409,250 to $455,571, a substantially lower value than he had reached in his earlier report. He maintained the view that it was appropriate to value the business on the basis of its future maintainable earnings and adjusted for the absence of pet food sales in the year ended 30 June 2021 and the costs of using additional external cold storage capacity in the business and provided a relatively detailed explanation of the normalisation adjustments he had made. He otherwise adopted a significant part of the approach adopted in his earlier report and maintained the capitalisation rate of 35% to 40%, also noting that QB Foods' operational capacity constraints had been met during the 2021 financial year and it was not able to increase its growth without significant investment in new operating equipment and relocating to larger and more suitable premises in one location, that COVID-19 had recurred in the Greater Sydney area after 30 June 2021 and that sales volumes achieved by QB Foods after 1 July 2021 had been adversely affected by the COVID-19 pandemic and lockdown. 9. The joint report (Ex J1) in turn identified a number of areas in which Mr Green and Mr Russell disagreed. I have referred above to aspects of that report which were not admitted into evidence so far as Mr Green there sought to develop a new methodology and a substantially higher valuation of the business, to which Gavin and Amy had no opportunity to respond by lay evidence. Mr Russell there increased his value of the business to between $479,250 and $547,714 and his equity value for the business to between $575,837 and $644,302. 10. In submissions, Mr May criticised Mr Russell's selection of capitalisation rate and his reference to production capacity constraints of QB Foods' business, to which I referred above. Mr May also submits, drawing upon Mr Lonergan's text, that the capacity restrictions in the business "should be treated as a short term inefficiency, and thus not an impediment in the calculation of future maintainable earnings". In particular, Mr May criticises Mr Russell's view that, despite the growth experienced by the Company in its sales and profit from trading since it was established, its prospects for growth are now limited by operational constraints and the fact that Mr Russell has taken that into account in his valuation of the business. I am not persuaded that that criticism is justified. The existence of significant operational constraints, arising from the age and capacity of the equipment used in the business, was addressed in Gavin's evidence and corroborated by Mr Ersan's affidavit evidence and cross-examination, and Mr Ersan was a knowledgeable and credible witness in respect of the Company's manufacturing operations. I have not neglected Mr May's contention, advanced in cross-examination, that such capacity constraints may result from freezing capacity limits rather than equipment limits, although it was not established that was the only limiting factor. 11. As Mr May points out, both Mr Russell and Mr Green recognise the possibility that, by additional capital investment, older equipment could be replaced and repair costs and time impact of breakdowns reduced, potentially leading to greater production efficiency, capacity gains and increased profits; but it does not follow that the business should be valued at a higher figure where that has not occurred and QB Foods cannot presently fund that additional investment, not least because Adriano and Pino have declined to invest additional capital and the share issue which may have made available additional funds for that purpose was restrained by the Court on their application and subsequently abandoned. While I accept that an arm's length purchaser of the business might well choose to replace that equipment after its purchase, it seems to me highly unlikely that it would set its purchase price for the business at a level that paid the vendor for production capacity which the vendor could not achieve and which would only be achieved if the purchaser then took the commercial risk involved in upgrading the company's production and refrigeration facilities and invested additional capital in the business in order to do so. At the least, it seems to me that such a purchaser would allow for the additional capital cost of those works and a return on its investment which took into account the risk of that investment in determining the purchase price to be paid for the business. 12. Mr May criticises the view expressed in Mr Russell's report that QB Foods had "numerous competitors" where the evidence suggests there is limited competition in respect of pre-blended smoothie products. I am not persuaded that this is a basis to depart from the capitalisation rate adopted by Mr Russell, where the evidence does not establish that products supplied in other forms are not competitive with pre-blended products in the relevant café markets. Mr May's submission turns upon a limiting of the relevant market, to pre-blended products only, and the basis for that limitation was not established; obviously enough, the proposition that there is only one or two producers of a product in a particular manner does not exclude competition if that product can be substituted by products produced in a different manner. Mr May also criticises Mr Russell's view that the industry in which QB Foods is operating is "experiencing little growth", but points only to QB Foods' recent history of growth in that respect. It seems to me that the fact that a new entrant to a market experiences a period of significant growth does not establish that the industry in which it operates is growing generally, and still less that that new entrant will continue to grow at a rapid rate into the indefinite future. Mr May also places significant weight upon the fact that QB Foods' business has been largely limited to the Sydney metropolitan area and its fringes, but it seems to me that that provides little support for the higher valuation advanced by Mr Green, where the lay evidence provides little or no basis for any view that QB Foods has any present organisational or production capacity to extend its business interstate or nationally. 13. Mr May also submits that Mr Green's capitalisation rate should be adopted in preference to Mr Russell's capitalisation rate, by reference to the matters which I have addressed above and because Mr Russell fairly agreed that a reasonable value could alternatively have reached the capitalisation rate of 30% which Mr Green had adopted. While that concession fairly reflected the uncertainty involved in determining capitalisation rates, it provided no basis to suggest that Mr Green's capitalisation rate was preferable to Mr Russell's capitalisation rate in that respect. 14. Mr May also addressed an adjustment made by Mr Green for legal expenses incurred by QB Foods in respect of a dispute as to document production in these proceedings, and the relevant invoices for those expenses were produced on notice to produce and were tendered (Ex D6). Mr May submits that a substantial amount of those costs was not for the benefit of QB Foods and related to a contested application for access to MYOB information which was determined by Lindsay J as vacation duty judge in January 2021, and as to which the question of costs was reserved by his Honour. Mr May also submits that QB Foods, as a neutral party in the litigation, had no grounds for resisting the Plaintiffs' application for access to that information and that application was determined in Adriano's and Pino's favour. It seems to me that QB Foods had a proper interest in the question of how access was to be given to its financial information in the proceedings, which, in principle, would support its taking a role in and incurring costs in respect of that application. However, it is not necessary to form a final view as to that matter, where that charge was not a recurrent or ordinary course expense of the business and, in my view, is not properly taken into account in assessing the maintainable earnings or profit or value of QB Foods' business. 15. Mr May also criticised Mr Russell's approach to several other expenses of QB Foods' business. Mr May submits that Mr Green's figure for accountancy fees should be preferred to Mr Russell's estimate of accountancy fees and I am not persuaded that Mr Russell's higher figure for accountancy fees should be adopted. Mr May also submits that Mr Green's lower estimate of advertising expenses should be preferred to Mr Russell's higher estimate of advertising expenses; that Mr Green's depreciation figure should be preferred to Mr Russell's depreciation figure, although the difference between the two is marginal; and that Mr Green's lower figure for repairs and maintenance should be preferred to Mr Russell's higher figure, drawing support from the proposition that old equipment could be replaced with new equipment. I am not persuaded that these adjustments should be made. Each of the figures involves an estimate, and all involve questions of business judgment as to the underlying expenses and accounting judgments in respect of the estimates; it does not seem to me that there is any real basis on which to adjust these expense items, where Mr Russell's approach reflects the actual position and the other expense figures appear to be within the range of acceptable business and accounting judgments. Adriano and Pino also attacked a provision of $70,000 for make-good expenses on QB Foods' leased business premises in Mr Russell's report, as unsupported by evidence. I am not persuaded that I should require an adjustment of that figure, where a provision for such expenses appears to be appropriate, and Adriano and Pino do not offer any alternative basis for a proper calculation of that provision. 16. Mr May also raised several questions as to alterations in expenses as between QB Foods' management accounts reports as at May 2021 and its financial reports as at 30 June 2021, on which Mr Russell relied, apparently questioning the reliability of the expense levels contained in the financial reports as at 30 June 2021. I am not persuaded those matters give rise to any reason for concern, where adjustments of this kind can properly arise in finalising year-end accounts, and the criticisms would not support a finding of any lack of integrity or reliability in those accounts. Mr May also addressed the issues as to QB Foods' history of profit growth, capacity constraints, profit margins and particular expenses in oral submissions (T329-332) and also addressed the capitalisation rate and make-good expenses in oral submissions (T333). 17. Mr Ogborne in turn advanced several criticisms as to the approach adopted by Mr Green in his valuation of QB Foods as at 31 May 2021, including his treatment of pet food sales and his treatment of particular items such as the extent of private use of motor vehicles and his treatment of business expenses. Mr Ogborne submits that Mr Russell's valuation as at 30 June 2021 correctly accounts for the absence of pet food income and for motor vehicle expenses and responds to the several criticism`s made by Mr May of Mr Russell's approach to future maintainable earnings and to expense items, which I have addressed above. 18. As will be apparent from my comments in respect of Mr Green's reports above, I do not consider that the basis of Mr Green's earlier valuations were established, either by proof of the assumptions on which they were based or by sufficient disclosure of reasoning supporting the lower 30% capitalisation rate which he adopted. I prefer Mr Russell's updated valuation of the business in the joint report so far as it is necessary to reach a determination of its value and the value of the shares in QB Foods. However, the maintainable earnings adopted in Mr Russell's report should be adjusted to exclude the legal expenses incurred by QB Food in the proceedings, to which I referred above, and reduce the amount allowed for accountancy fees as noted above, while maintaining Mr Russell's rather than Mr Green's capitalisation rate. I am also not persuaded that any wider discretionary adjustment to that value is warranted where it has not been shown that the oppressive conduct that I have found had any adverse effect on the value of Adriano's and Pino's shares. In particular, the share issue was not completed; the monies taken by Gavin from QB Foods were repaid, without causing any loss to it or its creditors or shareholders, other than possibly a minimal interest cost; and the higher salary paid to Gavin, although not approved by Adriano and Pino, was not shown to be out of market. As an exercise of a judicial discretion, I prefer the mid-point of Mr Russell's valuation range where there is no reason to prefer the higher or lower end of that range, as adjusted to exclude legal expenses of these proceedings and reduce accounting expenses as noted above. Gavin and Amy's winding up application 1. Gavin and Amy pleaded, and Adriano and Pino resisted, a claim for an order that QB Foods be wound up under s 233(1)(a) of the Corporations Act or on the just and equitable ground under s 461(1)(k) of the Corporations Act. I bear in mind that, at least where a company is established on the basis of relationships of mutual confidence, a winding up order may be made on the just and equitable basis under s 461(1)(k) of the Corporations Act where irreconcilable differences emerge between its members: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd above at [89]; Nassar v Innovative Precasters Group Pty Ltd above at [97]–[98]. The Court may also make a winding up order on that basis in circumstances that do not amount to oppression, although a person who is responsible for the breakdown of the relationship is less likely to be afforded relief: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd above at [89]-[90]; Nassar v Innovative Precasters Group Pty Ltd above at [90], [96], [117]. 2. There is no absolute rule that the Court will not wind up a solvent company, while accepting that winding up is a last resort: Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd (2008) 66 ACSR 325; [2008] VSCA 86 at [119]; Re Pure Nature Sydney Pty Ltd above at [76]. In Asia Pacific Joint Mining Pty Ltd v Allways Resources Holdings Pty Ltd (2018) 125 ACSR 227; [2018] QCA 048 at [46]–[47], [62], McMurdo J noted that: "In my view, the reasonableness of the applicant's position is to be assessed by reference to the consequences of the events and circumstances upon which the application is founded and what is necessary to redress them. If they could be redressed only by a winding up, then the pursuit of a winding up order would not be unreasonable in the relevant sense. On the other hand, if there is an alternative remedy which would equally redress those consequences, then an applicant's preference for a winding up order would usually be considered to be unreasonable, because ordinarily the winding up of a solvent company will have far reaching effects. It will not only deprive the other shareholders of their investment in a solvent enterprise, but it will also be likely to affect the interest of others, such as the company's employees and third parties whose interests from transacting business with the company would be affected. It is the likelihood of substantial and wide ranging prejudice of this kind which would cause judges to describe a winding up of a solvent company in this context as an extreme step." In Re ICB Medical Distributors Pty Ltd above at [221], I noted that the Court will be reluctant to grant a winding up order so as to further a plaintiff's personal or other interests at QB Foods' expense and in a manner that would be adverse to third parties. 1. I also bear in mind the Court of Appeal's recent observations as to the comparative merits of a buy-out order and a winding up, in the different context of an asset-holding rather than a trading company, in Snell v Glatis (No 2) [2020] NSWCA 166. Leeming JA (with whom Bell P and Meagher JA agreed) there held that an order made by the trial judge for the defendant to buy out a plaintiffs' minority shareholdings in a group of companies should not have been made, notwithstanding her Honour's careful and comprehensive review of the authorities supporting that approach, where there was insufficient evidence that the defendant could comply with that order within the specified timeframe, the company was not running a business but collecting rents on leased property, and winding up was a realistic means of securing to the plaintiffs their share of the value of the group and preventing ongoing oppression. Leeming JA referred to several matters which tended against the making of a buyout order and in favour of a winding up order, namely that the companies were not actively trading; that there was a potential for hardship, given the time that was allowed for compliance with that order, admittedly, where a very large amount would be required to be paid to acquire the relevant shares; and that a buyout order could easily lead to injustice and delay, if the plaintiff could not or did not comply with it, and could advance a defence of hardship to an application to enforce the order, so that the resolution of the remedy for oppression was not advanced. Bell P agreed with those observations and noted (at [6]) that, although there are statements in the authorities that winding up is a last resort in a case where oppression is found, that remedy should be considered in an appropriate case, even if neither party seeks it. 2. That decision has since been considered in Russell v Lee Holdings Pty Ltd (No 3) [2020] WASC 346, where the parties had exchanged buyout offers and asserted their capacities to meet any orders made to that effect. Although that was not a case involving an actively trading business, Martin J there treated the Court of Appeal's decision in Snell v Glatis above as a counterweight to the authorities describing winding up as a remedy of last resort, which I address below. In Re Crow Inn Pty Ltd (No 2) [2020] NSWSC 1749, Rees J referred to Leeming JA's observation in Snell v Glatis that the circumstances in which a shareholder must realise assets in order to meet a buy-out order lend themselves to the appointment of a liquidator for the purposes of ensuring that occurs independently of the parties. Although each party had there sought buy-out orders, Rees J instead ordered that the companies be wound up. 3. Mr Ogborne submits that the working relationship between Gavin, as QB Foods' sole managing director and general manager, and Adriano as a shareholder who was to work in the business with Gavin for a minimum of one day per week, was predicated on mutual cooperation, trust and confidence, and refers to the provisions of the HoA which contemplated that arrangement. Mr Ogborne submits, and I accept, that the evidence makes clear that the relationship between Gavin and Adriano has broken down, and these proceedings amply demonstrate that matter. Mr Ogborne refers to Re Catombal Investments Pty Ltd [2012] NSWSC 775 at [19]-[20], where Brereton J observed that a deadlock or disagreement in the management of a company's affairs was a common case for a winding up on just and equitable grounds under s 461(1)(k) of the Corporations Act, particularly where a company was formed on the basis of personal relationships involving mutual confidence, and that confidence had broken down. 4. Mr May responds that a winding up order is not in the public interest where the relief sought by Adriano and Pino by way of a buy-out order (or, I should add, the relief sought by Gavin and Amy by way of a converse buy-out order) is available; QB Foods is solvent and employs a number of people; and the obligations between the respective shareholders arise from the HoA rather than in a quasi-partnership, and QB Foods' business does not rely on or require mutual cooperation. I accept these are relevant factors. Mr May also submits that Gavin is responsible for the breakdown in the personal relationship with Adriano; I do not accept that submission, to the extent that it treats Adriano and Pino as not also contributing to that breakdown, for the reasons that I have noted above. He submits that Adriano and Pino wish that QB Foods should continue to trade. 5. I bear in mind that it was contemplated that Adriano would have a role in the specified areas of QB Foods' business. It would plainly be unworkable for the parties to be in business arrangements which involve them having to make decisions cooperatively, collaboratively or jointly, although I recognise that is arguably not required here where Gavin is sole director and managing director and can make proper decisions on that basis, subject to the rights afforded to Adriano and Pino under the HoA and the obligations imposed on Gavin as a director under the Corporations Act. I recognise that QB Foods is profitable and apparently conducting a successful ongoing trading business despite the breakdown in the shareholders' relationship and it would plainly not be in the interests of employees of QB Foods that it cease to conduct that business. 6. Had I not been satisfied that an order that Gavin and Amy buy out Adriano's and Pino's shares at fair value would remedy the oppression that I have found, I would have concluded that a winding up order should be made, where the relationship between the parties has broken down. I will not make that order where another remedy will sufficiently address the oppression. I recognise that order does not have the necessary consequence that the business would cease to trade, since a liquidator may permit one or other party to operate the business under licence while a sale process is undertaken, and the parties and third parties can then place competing bids to acquire the business in a sale process undertaken under the liquidators' control. However, that order would at least have a risk that the business would cease to trade and its going concern value would be lost, where a liquidator may not wish to take the risk of continued trading or customers may not wish to trade with a company in liquidation, and that result is plainly adverse to QB Foods' ongoing employees, its customers and likely also its shareholders, although they would have brought it upon themselves. 7. I considered whether, as in Re Bicher & Son Pty Ltd above, neither a buy-out order nor a winding up order should be made, leaving the business to continue to trade under Gavin's management and leaving the parties in their existing commercial relationship. That does not seem to me to be a desirable result given the breakdown in the parties' relationship as evidenced by the events which I have set out above and the fact of these proceedings. I am reinforced in that view where both Counsel indicated, in closing submissions, that their respective clients preferred a winding up order to the parties being left to continue their existing relationship, if each could not achieve its preferred result of a compulsory acquisition of the other's shares. Conclusion 1. For these reasons, I will order that Gavin and Amy buy out Adriano and Pino's shares at a value determined in accordance with the mid-point of Mr Russell's valuation range as set out in the joint expert report, as adjusted to excluded legal expenses of these proceedings and reduce accounting expenses as noted above. My preliminary view is that there should be no order as to the costs of the proceedings, where there has been a mixed result, since Adriano and Pino have established oppression in respect of a minority of the matters on which they rely, but not shown that it had brought about any diminution of the value of their interest in the business, have not established the higher value of their interest in the business for which they contended or that they rather than Gavin and Amy should acquire the other parties' shares in QB Foods; and Gavin and Amy have conversely succeeded in their defence of most but not all of the oppression allegations and in obtaining substantially the relief they sought at the hearing. However, I will afford the parties an opportunity to be heard as to the specific orders to be made to give effect to this relief (including the adjustments that are required in respect of Mr Russell's valuation) and as to costs. 2. I therefore make the following order: 1 Direct the parties to bring in agreed short minutes of order to give effect to this judgment and as to costs within 14 days or, if there is no agreement, their respective short minutes of order and submissions not exceeding 10 pages (in one and a half spacing and Arial 12 point font) as to the differences between them. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 29 September 2021