Supreme Court New South Wales Medium Neutral Citation: Muscat v Qin [2024] NSWSC 113 Hearing dates: 28 August 2023 Date of orders: 15 February 2024 Decision date: 15 February 2024 Jurisdiction: Equity Before: McGrath J Decision: See [443]–[460] Catchwords: CIVIL PROCEDURE — preliminary discovery — to identify potential cause of action — where the plaintiff fails to satisfy any of the elements of Uniform Civil Procedure Rules 2005 (NSW) r 5.3 — where the plaintiff brought the application for an extraneous purpose and the court would exercise its discretion to refuse it Legislation Cited: Civil Procedure Act 1995 (NSW) Corporations Act 2001 (Cth) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Arnaout v Arnaout [2019] NSWSC 565 B & J Hudghton Investments Pty Ltd as trustee for the B & J Hudghton Family Trust v Lakeba Group Limited [2022] NSWSC 830 Beston Parks Management Pty Ltd v Sexton [2008] VSC 392 BGC Securities (Australia) Pty Ltd v Shillington [2022] NSWSC 611 Contour Building and Construction Pty Ltd v Kerr [2008] NSWSC 883 Ekes v Commonwealth Bank of Australia [2014] NSWCA 336; 313 ALR 665 Glencore International AG v Selwyn Mine Ltd [2005] FCA 801; 223 ALR 238 Globe Capital Administration Pty Ltd v Cecil Developments Pty Ltd atf the Cecil Developments Unit Trust (Receivers and Managers appointed) [2023] NSWSC 574 Hatfield v TCN Channel 9 Pty Ltd (2010) 77 NSWLR 506; [2010] NSWCA 69 Kevin Young v The Neil Jenman Group Pty Limited [2015] NSWSC 1908 Label Manufacturers Australia Pty Ltd v Chatzopoulos [2023] NSWSC 646 Morton v Nylex Ltd [2007] NSWSC 562 O'Connor v O'Connor [2018] NSWCA 214 Panasonic Australia Pty Ltd v Ngage Pty Ltd [2006] NSWSC 399; 69 IPR 595 Papaconstuntinos v Holmes a Court [2006] NSWSC 945 Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd (2017) 257 FCR 62; [2017] FCAFC 193 Port of Melbourne Authority v Anshun (1981) 147 CLR 589 Racing New South Wales v Racing Victoria Limited (No 2) [2023] NSWSC 576 RGA Reinsurance Company of Australia Ltd v Westpac Life Insurance Services Ltd [2020] NSWSC 1299 Rinehart v Rinehart [2015] NSWSC 1201; 108 ACSR 415 Roberts v Walter Developments Pty Ltd (1995) 16 ACSR 544 SMBC Leasing and Finance, Inc v Flexirent Capital Pty Ltd [2022] FCA 1393 St George Bank Ltd v Rabo Australia Ltd [2004] FCA 1360; 211 ALR 147 Steffen v ANZ Banking Group [2009] NSWSC 666 Tabcorp Holdings Ltd v Entain Group Pty Ltd [2023] NSWSC 220 The Pharmacy Guild of Australia v Ramsay Health Care Ltd [2019] NSWSC 1045 Victorian Taxi Families Inc v Taxi Services Commission (2018) 61 VR 91; [2018] VSC 594 Category: Principal judgment Parties: Andrew Muscat (Plaintiff) Yuxin Qin (First Defendant) TA Tools Pty Ltd (ACN 614 710 726) (Second Defendant) Representation: Counsel: FFF Salama and A Smyth (Plaintiff) ME Hall (Defendants) Solicitors: McArdle Legal (Plaintiff) DINA Lawyers (Defendants) File Number(s): 2023/36815 Publication restriction: Nil JUDGMENT INTRODUCTION 1. By summons filed 3 February 2023, the prospective plaintiff, Andrew Muscat, seeks an order pursuant to r 5.3 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) that the prospective defendants, Yuxin Qin (who also goes by the first name of Bill) and TA Tools Pty Ltd (formerly known as TaeguTec Tools Pty Ltd), give discovery of all documents or things which are or have been in their possession, custody or power within particular categories of documents. 2. In common legal parlance, such an application is known as an application for preliminary discovery. 3. In the summons, Mr Muscat sought preliminary discovery from Mr Qin and TA Tools of six categories of documents but, by the time of the hearing, 2 of those categories (categories 1 and 4) had been abandoned and an amendment made to one of the categories (category 2), such that the remaining 4 categories are in the following form: 1. all bank accounts in which were recorded transactions to do with [TA Tools] recording all withdrawals, deposits, loans or records of interest between 1 January 2021 and 31 August 2022, although only the production of bank statements in print or soft copy were sought in answer to this category (amended category 2); 2. all records to do with [TA Tools] made in the "GALFIN" software program between 1 January 2017 and 31 August 2022 (category 3); 3. all communications which refer to [TA Tools] with the Australian Tax Office (ATO) between 1 January 2017 and 31 August 2022 (category 5); and 4. all records of payments by or on behalf of [TA Tools] to any superannuation fund between 1 January 2017 and 31 August 2022 (category 6). 1. In the summons, Mr Muscat also seeks a number of ancillary orders, the making of all of which depend on the outcome of the application for preliminary discovery. Amongst those orders is an order that Mr Muscat be at liberty to use the documents disclosed by Mr Qin and TA Tools in compliance with preliminary discovery for the purposes of commencing proceedings against Mr Qin and TA Tools in this court or any other court. 2. Mr Qin and TA Tools both oppose the application for preliminary discovery. 3. The application for preliminary discovery was made more than 6 months after the consensual resolution of a significant dispute between Mr Qin and Mr Muscat concerning their then equal 50% respective shareholdings and directorships in TA Tools which had resulted in proceedings in this court. 4. On 14 July 2022, Mr Qin commenced those previous proceedings against Mr Muscat by filing an originating process seeking orders pursuant to ss 232 and 233 of the Corporations Act 2001 (Cth) for the forced sale of Mr Muscat's shares in TA Tools to Mr Qin due to the deadlock in the management and affairs of TA Tools (Previous Proceedings). 5. On 5 August 2022, Mr Muscat filed an interlocutory process in the Previous Proceedings also making an application under ss 232 and 233 of the Corporations Act for the forced sale of Mr Qin's shares in TA Tools to Mr Muscat on the same deadlock basis. 6. On 23 August 2022, the Previous Proceedings were settled on terms that Mr Muscat sold his shares in TA Tools to Mr Qin for an agreed price, resigned as a director and an employee of TA Tools and the Previous Proceedings were dismissed on 6 October 2022 with each party paying their own costs. As a result, Mr Qin now owns all of the shares of TA Tools and Mr Muscat has no further ownership or involvement in it. The precise terms of the settlement are dealt with in more detail below. 7. The Previous Proceedings followed a relatively short history of very significant, increasing and voluminous acrimony that developed between Mr Qin and Mr Muscat from mid-2022 over every aspect of the business, whether major or minor. 8. In the events leading up to the Previous Proceedings and during them, Mr Qin was represented by Dina Tadros of DINA Lawyers and Mr Muscat was represented by Chris McArdle of McArdle Lawyers. At many times, the communications passing between Ms Tadros and Mr McArdle were as terse in their content and tone as that of their respective clients towards each other, although it is clear that on several occasions both clients refused to adhere to sensible advice from their respective solicitors which would have reduced the level of disputation between them. EVIDENCE 1. At the hearing, Mr Muscat relied on the following evidence: 1. affidavit of Andrew Muscat affirmed 2 February 2023; 2. affidavit of Paul Corra affirmed 2 February 2023 (Mr Corra was an employee of TA Tools from October 2017 to April 2022); 3. affidavit of Andrew Muscat affirmed 15 May 2023; 4. affidavit of Andrew Muscat affirmed 28 June 2023; 5. affidavit of Paul Corra affirmed 15 May 2023; 6. affidavit of Chris McArdle affirmed 29 June 2023; and 7. affidavit of Andrew Muscat affirmed 12 August 2022. 1. At the hearing, Mr Qin and TA Tools relied on the following evidence: 1. affidavit of Yuxin Qin affirmed 19 April 2023 and the exhibit to that affidavit; 2. affidavit of Yuxin Qin affirmed 7 June 2023; 3. affidavit of Yuxin Qin affirmed 14 July 2022 and the exhibit to that affidavit; 4. affidavit of Yuxin Qin dated August 2022 (the contents of which was confirmed in the affidavit of Mr Qin affirmed 19 April 2023, referred to in (1) above); 5. affidavit of Dina Tadros affirmed 21 April 2023 and the exhibit to that affidavit; 6. affidavit of Joseph Awadalla affirmed 19 April 2023 (Mr Awadalla is a university student working part time as a paralegal for Ms Tadros); and 7. affidavit of Joseph Awadalla affirmed 7 June 2023. 1. Mr F Salama appeared with Mr A Smyth for Mr Muscat, instructed by McArdle Legal. Ms M Hall appeared as counsel for Mr Qin and TA Tools, instructed by DINA Lawyers. 2. At the hearing I gave leave to each of the parties to respectively cross-examine Mr Muscat and Mr Qin on limited topics. I am grateful to counsel for the efficiency and economy in the conduct of each cross-examination. 3. I formed the view that Mr Qin was an honest witness who endeavoured to give his evidence carefully, comprehensively and consistently with the contemporaneous documents. I accept his evidence. 4. I also formed the view that Mr Muscat was not an honest witness and gave evidence which was not credible in relation to several matters. I have made particular findings about those matters below. LEGAL PRINCIPLES 1. Rule 5.3(1) of the UCPR is in the following form: 5.3 Discovery of documents from prospective defendant (cf Federal Court Rules, Order 15A, rules 6, 7 and 9) (1) If it appears to the court that — (a) the applicant may be entitled to make a claim for relief from the court against a person (the prospective defendant) but, having made reasonable inquiries, is unable to obtain sufficient information to decide whether or not to commence proceedings against the prospective defendant, and (b) the prospective defendant may have or have had possession of a document or thing that can assist in determining whether or not the applicant is entitled to make such a claim for relief, and (c) inspection of such a document would assist the applicant to make the decision concerned, the court may order that the prospective defendant must give discovery to the applicant of all documents that are or have been in the person's possession and that relate to the question of whether or not the applicant is entitled to make a claim for relief. 1. Rule 5.3 of the UCPR has been the subject of considered analysis and application by judges at first instance and in the Court of Appeal of this court, including with reference to the counterpart Federal Court rule (although that jurisprudence pertains to the counterpart Federal Court rule as it existed prior to 13 January 2023, at which time it was amended). 2. As stated in O'Connor v O'Connor [2018] NSWCA 214 by Simpson AJA (McColl and Macfarlan JJA agreeing) at [21], r 5.3(1) comprises multiple elements which the applicant for such an order must demonstrate, namely that: 1. the applicant may be entitled to make a claim for relief from the court against the prospective defendant; 2. the applicant has made reasonable enquiries to obtain sufficient information to decide whether or not to commence proceedings; 3. having made reasonable enquiries, the applicant is unable to obtain sufficient information to make the decision whether or not to commence proceedings; 4. the prospective defendant may have or have had possession of a document or thing that could assist in determining whether the applicant is entitled to make a claim for relief; and 5. inspection of such a document would assist the applicant to make the decision whether or not to commence proceedings. 1. The following principles applicable to the operation of r 5.3 have emerged from the authorities and concern the operation of the rule generally as well as each of its constituent elements: 1. A literal reading of r 5.3 produces a difficulty in construction which is to be resolved by taking a beneficial and broad view of the operation of the section: Globe Capital Administration Pty Ltd v Cecil Developments Pty Ltd atf the Cecil Developments Unit Trust (Receivers and Managers appointed) [2023] NSWSC 574, Slattery J at [34] citing O'Connor at [86]–[90]. 2. To order preliminary discovery against a prospective defendant, all five circumstances set out in r 5.3(1) must exist: Tabcorp Holdings Ltd v Entain Group Pty Ltd [2023] NSWSC 220, Stevenson J at [35]; O'Connor at [21]; Globe Capital at [33] citing O'Connor at [21] and Tabcorp at [35]. 3. The court has recently emphasised that the threshold requirements set out in r 5.3 are low — it must appear to the court that an applicant may be entitled to make a claim for relief, and that a prospective defendant may have or have had possession of relevant documents or things, and that inspection would assist the applicant to decide whether to commence proceedings: O'Connor at [23]; Racing New South Wales v Racing Victoria Limited (No 2) [2023] NSWSC 576, Ball J at [30] citing Simpson AJA in O'Connor at [23]; Label Manufacturers Australia Pty Ltd v Chatzopoulos [2023] NSWSC 646, Weinstein J at [18] citing O'Connor at [23]). Indeed, Simpson AJA in O'Connor at [69] referred to the comments of Allsop CJ in Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd (2017) 257 FCR 62; [2017] FCAFC 193 at [2], where his Honour criticised a practice of treating applications for preliminary discovery (under the Federal Court rule) as "a form of mini trial where a form of fact finding takes place, well beyond the mandate of the words of the rule." In O'Connor at [76], Simpson AJA specifically stated that: It is well established that determination of an application under r 5.3 does not involve a determination of the merits of any claim for relief the applicant might propound. 1. This was applied in Label Manufacturers by Weinstein J at [21] and emphasised in Arnaout v Arnaout [2019] NSWSC 565, Lindsay J at [32(e)] stating: Given the interlocutory character of an application for preliminary discovery, the Court should not lightly conclude that an application should be dismissed as not supporting a conclusion that the applicant "may have been entitled to make a claim for relief". 1. Rule 5.3 uses the expression "it must appear to the court" and the previous form of its Federal Court counterpart (rule 6) used the expression "there is reasonable cause to believe" (the new Federal Court rule in rule 7.23 now requiring the prospective applicant to demonstrate that it "reasonably believes"). They are not identical, and the test in r 5.3 may be wider than the test in the previous Federal Court rule and impose a lower threshold: Panasonic Australia Pty Ltd v Ngage Pty Ltd [2006] NSWSC 399; 69 IPR 595, Young CJ in Eq at [22]; Hatfield v TCN Channel 9 Pty Ltd (2010) 77 NSWLR 506; [2010] NSWCA 69, McColl JA at [50]; O'Connor at [24] and [28]. Notwithstanding these differences, the propositions stated in St George Bank Ltd v Rabo Australia Ltd [2004] FCA 1360; 211 ALR 147 at [26] about the operation of the previous form of the Federal Court rule are equally applicable to the operation of r 5.3: Steffen v ANZ Banking Group [2009] NSWSC 666, McDougall J at [19]-[20]; O'Connor at [26]. In my view, rule 5.3 also imposes a lower threshold than the new form of the counterpart Federal Court rule. 2. The first element — the applicant may be entitled to make a claim for relief from the court against the prospective defendant. It is not necessary for the applicant to show even a prima facie or pleadable case for relief. While "the mere assertion of a case is insufficient", it will be sufficient if it "appears to the court" that the applicant may have a right of action against the respondent resting on some recognised legal ground. More than mere assertion and more than suspicion or conjecture is required. While the applicant is not required to specify with precision the cause of action proposed, the applicant must provide some particularisation of the nature of the relief in contemplation beyond mere assertion, suspicion or conjecture. The use of the word "may" indicates that the court does not have to reach a firm view that there is a right to relief and that the rule is to be beneficially construed, that is, given the fullest scope that its language will reasonably allow: St George Bank at [26(a), (d)]; Panasonic at [20]; Morton v Nylex Ltd [2007] NSWSC 562, White J at [25]; Hatfield at [47]–[49]; O'Connor at [23], [27], [30]; RGA Reinsurance Company of Australia Ltd v Westpac Life Insurance Services Ltd [2020] NSWSC 1299, Stevenson J at [110]; Tabcorp at [37]. 3. In Racing New South Wales at [35]–[36], Ball J observed the following in relation to the operation of UCPR r 5.3(1)(a): 35 Two points should be made about these last two decisions. First, I do not read White J's judgment in Morton v Nylex Ltd as saying that the test imposed by UCPR r 5.3(1)(a) is a purely objective test. It is the plaintiff who makes the decision whether to commence proceedings and it is for the plaintiff to identify the claim for relief it is considering bringing and the additional information it says it needs to decide whether to bring those proceedings. The question for the Court is whether there is a reasonable basis for thinking that the plaintiff may be entitled to make a claim for relief of that type and, if so, whether the information the plaintiff says it lacks is reasonably necessary to make a decision on whether to bring such a claim. 36 Second, the question is whether objectively the plaintiff has sufficient information to bring proceedings, not whether it has sufficient information to plead a particular cause of action. Often, the answer to the first question will follow from the answer to the second. But it need not. To the extent that the plaintiffs made a concession in Tabcorp to the contrary, in my opinion that concession was wrongly made. I return to this point below. 1. The second element — the applicant has made reasonable enquiries to obtain sufficient information to decide whether or not to commence proceedings. What amounts to "reasonable enquiries" is a question of fact to be determined having regard to all the relevant circumstances of the particular case and it does not follow from the mere fact that further enquiries could have been made, and would have been helpful, that the omission to make those inquiries is a failure to make reasonable enquiries. The applicant must place before the court "all of the evidence already available to it relevant to the sufficiency of the information it possesses to enable a decision to be made whether to commence the proceeding. The applicant must not hold back information": Glencore International AG v Selwyn Mine Ltd [2005] FCA 801; 223 ALR 238, Lindgren J at [15]. The court is entitled to take into account the relationship (if any) between the applicant and the prospective defendant and whether there are other means of obtaining the information. The cost, delay and utility or uncertainty of resorting to those alternative means is also relevant. The question is whether objectively the applicant has sufficient information to decide whether to commence proceedings, not whether or not it has an apparently arguable case to commence proceedings, or whether the applicant has sufficient information to plead a particular cause or action, or whether the respondents have documents which may assist to build up a case which the applicant could now decide to bring: Papaconstuntinos v Holmes a Court [2006] NSWSC 945, Simpson J at [16]–[17]; Morton at [33]; Steffen at [15], [87]; Hatfield at [51], [165]; O'Connor at [76], [90]; Arnaout at [32(h)]; The Pharmacy Guild of Australia v Ramsay Health Care Ltd [2019] NSWSC 1045, Ward CJ in Eq at [251]; RGA Reinsurance at [114]; Tabcorp at [41]–[42]; Racing New South Wales at [32], [36]–[37]. 2. The third element — having made reasonable enquiries, the applicant is unable to obtain sufficient information to make the decision whether or not to commence proceedings. An applicant must show that they are "lacking something reasonably necessary to make a decision whether to institute proceedings": Morton at [33]. The test is objective but not purely so, requiring the applicant to disclose what information they already have relevant to making such a decision, to identify what information is lacking and to give clear evidence as to "the ways the information they have gleaned is insufficient to enable them to decide whether or not to commence proceedings": Rinehart v Rinehart [2015] NSWSC 1201; 108 ACSR 415, White J at [94]. Meeting the test does not rest merely in the assertion of the applicant or their legal adviser. Pre-action correspondence and notices of claim are significant for the purposes of such an inquiry. The question permits some consideration of the apparent strength or weakness of the applicant's case yet does not involve a determination of the merits of any claim for relief an applicant might propound. Hence, an applicant may be entitled to preliminary discovery of documents relevant to available defences, or the extent of apprehended breaches, or the likely quantum of damages, as well as of documents which may establish whether there is a cause of action, but a potential claim that is so weak as to be untenable or unarguable will not suffice: St George at [26(f)]; Morton at [33]–[34]; Kevin Young v The Neil Jenman Group Pty Limited [2015] NSWSC 1908, Hidden J at [33]; B & J Hudghton Investments Pty Ltd as trustee for the B & J Hudghton Family Trust v Lakeba Group Limited [2022] NSWSC 830, Rees J at [23]; O'Connor at [70]. 1. In BGC Securities (Australia) Pty Ltd v Shillington [2022] NSWSC 611, Henry J stated at [41] (citations omitted): The evaluation of whether it appears that the applicant may have a claim for relief is different to the question of whether the applicant is unable to obtain sufficient information to decide whether or not to commence proceedings. The consideration of whether the applicant has "sufficient information" contemplates that an applicant lacks a piece of information which is "reasonably necessary" to decide whether to commence proceedings. Information bearing upon that practical decision may include questions such as whether defences exist, the strength of any such defences and the quantum of a claim. 1. The fourth element — the prospective defendant may have or have had possession of a document or thing that could assist in determining whether the applicant is entitled to make a claim for relief. It is no answer to an application under r 5.3 to say that the proceeding is in the nature of a "fishing expedition" as it expressly contemplates what might once have been castigated as fishing. That said, r 5.3 is not to be used for conducting a wide-ranging fishing expedition: St George Bank at [26(h)]; B & J Hudghton at [22]. 2. In Beston Parks Management Pty Ltd v Sexton [2008] VSC 392, Hollingworth J at [53] said in relation to rule 32.05 of the Supreme Court (General Civil Procedure) Rules 2015 (VIC), which is in substantially similar terms to rule 5.3: Although some "fishing" enquiry is permitted, a "flimsy foundation" or "mere hunch" will not be sufficient to constitute reasonable cause. 1. In Victorian Taxi Families Inc v Taxi Services Commission (2018) 61 VR 91; [2018] VSC 594, Derham AsJ at [71] outlined the principles relevant to the equivalent of the fourth element as follows (citations omitted): (a) "possession" means "possession, custody or power"; (b) there must be a reasonable cause to believe that the respondent "has or is likely to have or has had or is likely to have had in that person's possession any document relating to the question whether the applicant has the right to obtain the relief". This requires the identification of documents that relate to the question whether the applicant has the right to obtain the relief; and (c) that inspection of the document by the applicant would assist the applicant to make the decision. This involves consideration of what the applicant lacks and what is reasonably necessary for it to make a decision regarding whether to institute proceedings. That involves consideration of what the applicant has to advance its right to relief. 1. The fifth element — inspection of such a document would assist the applicant to make the decision whether or not to commence proceedings. Preliminary discovery cannot be used to build up a case which an applicant has already decided, or could decide to bring: Morton at [33]; SMBC Leasing and Finance, Inc v Flexirent Capital Pty Ltd [2022] FCA 1393, Lee J at [4]. Similarly, a party who has already asserted an entitlement to commence substantive proceedings could not sustain an application for preliminary discovery under this rule: Contour Building and Construction Pty Ltd v Kerr [2008] NSWSC 883, Barrett J at [10]–[14]. 2. Finally, if each of the five elements are satisfied, the court has a discretion whether or not to order the respondents to provide discovery of the documents in question, which is to be exercised judicially and with regard to the case management provisions of the Civil Procedure Act 2005 (NSW) and the UCPR. In the exercise of this discretion, the applicant's prospects of success can be relevant and the discretion operates as a brake on any excesses that may flow from a beneficial construction of the rule, meaning that the court may refuse to grant an order even where all the factors referred to in UCPR r 5.3 are satisfied. Courts regularly decline to exercise such discretion in cases where the grant of discovery would be disproportionate to the relevance of the documents and the potential benefit obtained by the plaintiffs: St George Bank at [26(a)]; Hatfield at [52], [165]; O'Connor at [24]–[29]; B & J Hudghton at [19]; RGA Reinsurance at [107]; Arnaout at [32(j)]; BGC Securities at [44]. RELEVANT FACTS General observations 1. The parties decided that they would place before me every single piece of email and mail correspondence passing between them, contained in six volumes of the Court Book and comprising more than 680 individual documents tracking the bitter history of their disputes throughout 2022 and 2023. Those documents display the full entrails of their rancorous dealings and the issues which led to the Previous Proceedings in a manner that the parties mistakenly believed would assist me. Included amongst the material I was asked to consider were affidavits that had been prepared by the parties for the purposes of the Previous Proceedings. 2. The material made for very unhappy reading as much of what was written between them could, at best, be characterised as insulting and sarcastic. 3. I invited the parties to tell me which documents could be removed from the six- volume Court Book. The only Court Book size-reducing suggestion made was that I could remove the numbered dividers between documents but none of the documents themselves. I was informed that it would be necessary for me to consider all of the material in detail for the purposes of determining the application for preliminary discovery. I have undertaken that unenviable and time-consuming task at their urging, which has unnecessarily delayed the delivery of this judgment and made it far lengthier than the real issues in the dispute deserved. 4. Very few of the documents contained in the six volumes were the subject of any mention in the written and oral submissions of the parties or of any cross-examination. I have particularly concentrated my examination on those documents to which I was taken. While I have read and considered in detail the content of all of the documents placed before me, for many of them I have only summarised the effect of the principal issues which were raised in them. For other more important documents, I have made specific reference to them. 5. Because there were so many emails sent on the same date, as the parties traded their rapid-fire accusations and allegations, it has been necessary for me to specifically identify the time at which each email was sent so that they can be distinguished from each other. 6. For an interlocutory application of this type, in assessing the material placed before me it is not possible to resolve differences between the recollection of individual witnesses about particular events contained in multiple affidavits, most of the content of which is contested between them. This task was made easier by the fact that due to the breakdown in the relationship between Mr Qin and Mr Muscat, they appear to have had very few conversations with each other except for during the events of 22 July 2022, which are dealt with in more detail below. 7. I was also not assisted by much of the affidavit material placed before me by Mr Qin and Mr Muscat, which tended to veer into self-serving commentary, submissions and accusations rather than providing a secure basis for the necessary factual task I was required to undertake. 8. In any event, I have preferred to rely on the documentary evidence (where it is available) to form my views of the events which have taken place. I have endeavoured to keep in mind the admonition of Allsop CJ in Pfizer Ireland at [2] not to undertake a mini trial involving fact-finding beyond the mandate of the words in r 5.3 of the UCPR. 2016: Establishment of TA Tools and Distribution Agreement with TTHQ 1. As mentioned above, there is a relatively short history of increasingly hostile dealings between Mr Muscat and Mr Qin concerning the shareholding and operations of TA Tools, which does not seem to have arisen until some years after they established TA Tools together. 2. TA Tools was established on 8 September 2016 with Mr Muscat and Mr Qin as its two directors, with each of them also holding 50% of the shares in TA Tools. 3. The primary business of TA Tools is the selling of metal cutting tools sourced from a South Korean company called TaeguTec Ltd (TTHQ) pursuant to an Exclusive Distribution Agreement dated 17 October 2016 between TTHQ and TA Tools. TTHQ is the largest cutting tools manufacturer in Far-East Asia and forms part of the IMC Group which is the second-largest company for metalworking products globally. 4. Mr Qin and Mr Muscat had previously both worked for TaeguTec Australia Pty Ltd (TTA), a subsidiary of a company within the IMC Group, with Mr Qin working for TTA from 2006 to 2016 and Mr Muscat working for TTA from 2012 to 2016. In 2016, Mr Quin was the Financial Controller and Secretary of TTA and Mr Muscat was the Acting General Manager of TTA, previously having held the role of National Sales Manager at TTA. 5. In around 2016, IMC Group decided to sell TTA or cease its operations, at which time the business opportunity arose for Mr Qin and Mr Muscat to set up TA Tools to take over as the Australian distributor for TTHQ. 6. Each of Mr Qin and Mr Muscat were employed by TA Tools. Mr Qin's title at TA Tools was Finance and Operations Manager and Mr Muscat's title was Sales and Marketing Manager. TA Tools' office is located in Castle Hill, NSW. 7. Mr Muscat was originally a fitter and turner, working in that trade for 10 years before becoming involved in the sales and distribution of TTHQ's tools in Australia. 8. Mr Qin has a background as an accountant with a Bachelor of Economics, which he obtained in China, and a Master of Commerce from the University of New South Wales. He is a certified practising accountant registered with CPA Australia since 2011. December 2016: Shareholder Agreement and roles of Mr Muscat and Mr Qin 1. On 16 December 2016, Mr Muscat and Mr Qin entered into the Shareholder Agreement, the relevant provisions of which include the following (where TA Tools is defined as the Corporation, Mr Muscat as Andrew and Mr Qin as Bill, with all grammatical errors left in place): WHEREAS, all of the issued shares and outstanding stock of the Corporation are owned in the following percentages: Andrew 50% Bill 50% WHEREAS, the Shareholders hereto deem it to be in the best interest of the Corporation to act together concerning the management of the Corporation as well as to make provision for the contingency of the death or disability of any Shareholder and to set forth the manner and method by which a Shareholder may sell his stock during his lifetime. NOW, THEREFORE, IT IS MUTUALLY AGREED AS FOLLOWS; FIRST: MANAGEMENT AND OPERATION OF THE CORPORATION A. 1. Directors and Officers. For the duration and term of this Agreement, the Shareholders will elect and continue in office as Directors of the Corporation the following: Andrew: Director Bill: Director The Officers of the Corporation shall be: Andrew: Manager – Sales & Marketing Bill: Manager – Finance & Operation; Company Secretary 2. Definition of the roles: - Sales: Sales channel management and development - Marketing: 1) Product marketing – product life cycle management, product pricing; AND 2) Communication marketing – Advertising, promotions, public relationship - Operations: Finance, logistics, customer service, compliance, office management B. Voting. All decisions within the ordinary course of business shall be made by the unanimous consent of both the Managers, who shall have equal say in the management of the ordinary course of business of the Corporation. In addition, for the purposes of selling, terminating, liquidating, entering loans or changing the basic purposes of the Corporation, the quorum and voting requirements shall be 100 percent of all shareholders and/or directors. Simultaneously herewith the Certificate of Registration is being amended to provide for the terms of this section. C. Checks. All cash, checks and instruments for the payment of monies are to be deposited in the Corporation's bank account. All checks drawn upon such account are to be signed jointly by the both Managers and/or their nominees. D. Salaries. The both Managers agree to draw equal salaries, as voted upon by the Board of Directors of the Corporation. E. Employment. The both Managers agree to work full-time and exclusively for the Corporation. Neither party shall be permitted to own an interest in, operate, join, control, participate in directly or indirectly, or be connected as an officer, employee, agent, independent contractor, partner, stockholder or principal of or in any corporation, partnership, firm, association, person or other entity soliciting orders for, selling, distributing or otherwise marketing products, goods, equipment and/or services which directly or indirectly compete with the business of the Corporation, without the express written consent of the other, which consent shall not be unreasonably withheld. Both parties shall provide such services to the operation of the Corporation and Corporate business as shall be deemed proper and necessary, including keeping each other informed of all letters, accounts, writings and other information which shall come to their attention concerning the business of the Corporation. Both parties shall keep or cause to be kept full records of each transaction of the Corporation and shall maintain such records at the principal office of the Corporation at Unit 36, 7 Anella Avenue, Castle Hill NSW 2154, or at the principal office of the Corporation's accountant. Said records shall be open for inspection and examination by each of them, or their duly authorized representative, at all reasonable times. Notwithstanding the foregoing, each of the Executive Officers above named agreed to be employed by the Corporation and the Corporation agrees to employ them under the following terms and conditions: 1. The employment of each such Officer shall continue so long as he is a Shareholder of the Corporation. 2. Each Executive Officer devotes all of his working time, energy and attention solely and exclusively to the business of the Corporation, and none of his working time to any other firm or business without the written consent of the other. … G. Indemnity. In the event any Shareholder is held personally liable for any liability of the Corporation, then the other Shareholder shall indemnify him against fifty percent thank you (50%) of any such personal liability. … 1. The remaining principal provisions of the Shareholder Agreement detail the consequences of the death of a shareholder of TA Tools, restrictions on the sale of shares in TA Tools, restrictive covenants, and other matters, none of which are relevant to the determination of the application for preliminary discovery. 2. The Shareholder Agreement sets out the roles and responsibilities of Mr Muscat and Mr Qin. In practical operation, their roles and responsibilities were as follows: 1. Mr Muscat was responsible for sales and marketing, including the remote supervision of three salespeople respectively located in New South Wales, Victoria and Queensland and also responsible for managing four distributor accounts, respectively in New South Wales, South Australia, Western Australia and Tasmania; and 2. Mr Qin was responsible for all other aspects of the operations of TA Tools, which included all of the operational functions of management and administration, supervising and assisting two other employees in customer services, accounts receivable, purchasing, logistics, stock management and warehouse duties; managing all of the accounting duties (such as accounts payable, payroll, taxation, cash flow management, managing costs and expenses and negotiations with suppliers for costs reductions); managing the IT; and looking after the daily banking and mailing, office supplies and office maintenance and repairs. 1. Mr Muscat's role was such that he worked for the most part remotely and seldom attended the office of TA Tools. This was due, in part, to the location of the three sales staff and the distributor accounts in other states. Mr Muscat initially lived in Marayong in Sydney, but since around March 2021 Mr Muscat has resided at all relevant times in Toowoomba in Queensland, frequently travelling interstate as part of his sales role. Mr Muscat was only rarely in the office of TA Tools in the 18 months leading up to July 2022. Mr Muscat has subsequently relocated to Mackay in Central Queensland. 2. The cross-examination of Mr Qin was instructive on these matters (T47): Q. Mr Qin, under the shareholder's agreement between you and Mr Muscat you each have separate roles, is that right? A. Yes. Q. Your role is essentially the man in the office doing the accounts and the books? A. More than that. Q. Tell the Court? A. So not only admin including logistics, purchasing, warehouse, internal staff management, basically except for sales and marketing, everything else for ꟷ Q. So you ran the show in the office and Mr Muscat ran the show outside the office, is that right? Sales. A. Sales, sales and marketing, so basically I would say customer relationships managed by Mr Muscat. Q. And he was on the road and you were in the office? A. Yes. 1. The Shareholder Agreement featured heavily in the allegations and counter-allegations that came to characterise the disputes that subsequently arose between Mr Qin and Mr Muscat, as catalogued below. GAL and GALFIN software system 1. TA Tools used two reporting software systems called GAL and GALFIN (the latter being the financial accounting system) which were managed and administered by TTHQ and used under licence by TA Tools as part of the arrangements under the Distribution Agreement. The data is provided by the software reports on a calendar, rather than a financial, -year basis. 2. It appears from the financial reports extracted from GALFIN in the financial years ended 30 June 2020, 30 June 2021 and 30 June 2022, that TA Tools traded profitably across that period with the vast majority of sales occurring from products that had been supplied by TTHQ. 3. The main source of income and profit of TA Tools derived from the sales made pursuant to the Distribution Agreement with TTHQ. 2017 – 2020: Issues with ATO and excess stock 1. There is no evidence of any major strain or dispute between Mr Muscat and Mr Qin until early 2022. This is despite Mr Muscat making requests of Mr Qin for payments to be made by TA Tools to him in 2017 and 2018, when money was obviously tight within TA Tools, as evidenced by the payment plan the company had in place in 2018 with the ATO to pay off outstanding tax debts over the following years. 2. In July 2018, Mr Muscat offered to buy out Mr Qin's shareholding in TA Tools but the proposal did not progress. 3. In June 2020, a problem arose due to the fact that TA Tools had been amassing stock over the previous two years, resulting in a large amount of obsolete stock, which Mr Muscat proposed should be offloaded to their customers at special pricing because it was a "massive burden on our company and bottom line". Mr Qin agreed with Mr Muscat that TA Tools needed to address the issue by working through the obsolete stock list and seeing "what the best possible way is to get rid of each item, by either selling at a discounted price or returning to [TTHQ]". 4. In 2020, Mr Qin lodged the tax returns for TA Tools for 2017 and 2018 (T56–57). 5. By late October 2020, TA Tools owed $339,134.56 to the ATO. February 2021: Loan Agreement with Mr Muscat 1. On 10 February 2021, Mr Muscat entered into a Loan Agreement with TA Tools pursuant to which he lent $75,000 to be used as security for a bank guarantee issued to TA Tools by National Australia Bank (Loan Agreement). The terms of the Loan Agreement were that it was for a period of five years from 10 February 2021, with interest payable at 9% per annum once each year on 15 January and the loan principal repayable by TA Tools on 10 February 2026. 2. In cross-examination, Mr Qin agreed that he also made a $75,000 loan to TA Tools repayable in five years to be used as security for the same bank guarantee from NAB (T49). 2021: Amounts owed to ATO 1. In April 2021, TA Tools had a debt of about $350,000 owing to the ATO. 2. In August 2021, TA Tools had an overdue amount of $268,338.57 payable to the ATO. April 2022: Genesis of the breakdown of relationship between Mr Muscat and Mr Qin 1. By April 2022, the relationship between Mr Qin and Mr Muscat had irretrievably broken down and any trust between them had been completely lost, causing deadlock in the operations of TA Tools. 2. The catalyst for the disputes appears to be a number of arguments which arose as a result of Mr Muscat's corporate credit card being declined in March 2022, Mr Qin reminding him that the credit card was for business purposes only and Mr Qin's suggesting that they would need to review Mr Muscat's personal spending on it. 3. What then followed was a further succession of emails from April 2022 onwards which demonstrated escalating tensions and declining trust between Mr Qin and Mr Muscat, at the centre of which were demands made by Mr Muscat to Mr Qin for payments of money to be made by TA Tools to Mr Muscat, with accompanying threats by Mr Muscat to leave the business if those payments were not made. 4. Mr Qin agreed in cross-examination that it was at this "point in time, effectively like the volcano erupting between" himself and Mr Muscat (T49). He also said that by this time he did not trust Mr Muscat and there was mutual distrust between them (T51). 5. The events that took place during April 2022 and beyond are outlined in more detail below. 4­ – 28 April 2022: Mr Muscat's demands for money resisted by Mr Qin 1. On 4 April 2022 at 6:08pm, Mr Muscat sent an email to Mr Qin enquiring "how are funds looking like this quarter?" and asserting: So I can stop my wife screaming at me and so I stay married I hope we can do a 5k payment to ourselves? We have Jayden's 21st next month and as you know extra funds will help. But main reason is I can show we are paying back something and it will resolve a issue [sic]. I know you have to do that 20k as well so let me know. Months are flying by but as it's April already I hope we can. 1. In cross-examination Mr Muscat agreed that at the time he sent this email his wife was not screaming at him but he did not concede the obvious proposition that what he wrote was incorrect and that he wrote it to make Mr Qin feel sorry for him, instead evasively and repeatedly asserting that he "was using it as an example" (T27–28). 2. On 5 April 2022 at 10:42am, Mr Qin sent an email to Mr Muscat in which he said he would pay two months of super, two months of salary withholding tax, and Toll Priority invoices first, and that after that month's salaries were paid he would "see what [they could] do for [themselves]". 3. In response, on 6 April 2022 at 3:14pm, Mr Muscat sent an email to Mr Qin saying "[a]s long as we can pay ourselves 5K as now I really need it" and referred to having problems with septic water at his house and a wife who wanted to go back to Sydney. 4. On 6 April 2022 at 3:47pm, Mr Qin sent an email to Mr Muscat saying "[i]t depends on how much cash we'll still have in hand after paying the salaries etc. next week" and asserting that they "[had] to pay suppliers" and address "[b]usiness first". 5. On 6 April 2022 at 3:54pm, Mr Muscat sent an email to Mr Qin saying "[y]eah but if I get divorced then there is no business as I'll be leaving", followed by a further email at 3:55pm bluntly stating "[a]nd 'family' first, business second!". 6. On 6 April 2022 at 4:16pm, Mr Qin sent an email to Mr Muscat agreeing that family should come first but that it should not be mixed up with the business, and requesting that Mr Muscat try to deal with family matters within his family and not let such matters "hurt the business". Mr Qin concluded by saying that they would pay themselves for the debt with whatever amount was left available, and that it was on the to-do list but "not the top priority, and [nor should it] be." 7. On 6 April 2022 at 4:27pm, Mr Qin sent a further email saying that the business needed to be looked after and it could not be held accountable for "whatever happened or may happen" in their personal lives. 8. On 6 April 2022 at 6.08pm, Mr Muscat responded by saying that he agreed but that the company had to pay back their funds, and that they could not keep arguing about the same thing, otherwise Mr Qin should make him an offer and he could have the business. Mr Muscat concluded by saying "[i]f my relationship doesn't last due to the business and we can't pay ourselves back I'll simply walk away!". 9. On 6 April 2022 at 6:10pm, Mr Muscat sent a further email to Mr Qin saying "[t]he debt is top priority as it's personal funds owed!" and that they needed to discuss it again. 10. On 6 April 2022 at 6:35pm, Mr Qin sent an email to Mr Muscat saying that if Mr Muscat had not asked for extra payment to help with his personal needs then they wouldn't have had this issue at all, pointing out that he himself had also lent money to the company and wanted his money back, but that they needed to be patient. Mr Qin concluded by saying that if Mr Muscat was seriously considering walking away from the business, they needed to discuss and resolve it. 11. On 6 April 2022 at 7:11pm, Mr Qin sent an email to Mr Muscat asking him to remember that the personal money was used "as the guarantee for IMC [Group]", that they could free up those funds if they had equity, and that he could borrow money from the bank or use the equity as guarantee. 12. On 6 April 2022 at 7:30pm, Mr Muscat sent an email to Mr Qin saying that they "shouldn't be baring [sic] any personal liabilities at this stage" and suggesting that TA Tools "should have equity in the stock alone, should it not, to cover 150K?". 13. On 6 April 2022 at 8:21pm, Mr Qin sent an email to Mr Muscat asserting that the company had spent $150,000 on them when Mr Muscat "needed money for building [his] house, for moving home and even for [his] holidays, for all kinds of personal reasons", the consequence now being that the company would take more time to pay back the guarantee money to them both. 14. On 7 April 2022 at 8:39am, Mr Qin sent an email to Mr Muscat noting that the company was obligated to pay the guaranteed money back to them, that their sales varied from month to month as did their cash flow, that they couldn't put a fixed frequency or amount to the repayments. Mr Qin went on to say "[w]henever we can, we'll pay ourselves as much as possible" on the condition that it should not affect paying other debtors or cause the company's debt to increase. In the email, Mr Qin then set out a priority ranking of payments from high to low, being employee salaries and superannuation, trading stock purchases, new BAS and taxes, director's guarantee money and old debt owing to the ATO. Mr Qin expressed his hope that this would be the last time they argued about the matter. 15. On 7 April 2022 at 8:41am, Mr Qin sent an email to Mr Muscat indicating that the company could not afford to pay them an extra $153,000 as it had done in past years as paying the two of them extra had resulted in their debt to the ATO climbing up to $350,000 in 2020. Mr Qin clarified that the company had had to borrow money from the ATO to help Mr Muscat out of his personal situations, and that the debt owing to the ATO only started to drop down from where it was in 2021 because they agreed that they would cease making extra payments to themselves, concluding that they would "see whether we can, or how much we can pay us later in the month." 16. On 7 April 2022 at 8:50am, Mr Qin sent an email to Mr Muscat saying that he would do the payments that day for February (withholding tax and the BAS for the 2021 December quarter), with both payments long overdue because they did not have the necessary funds in the last quarter. 17. On 7 April 2022 at 9:29am, Mr Muscat sent an email to Mr Qin challenging him in the following way: Why do you think you get to make the decision exactly? These are personal funds that can be returned in a heartbeat if we close the company as it's just our cash sitting there. If you don't want to return any of your funds then that's fine that's your decision. The Bright Tooling order can proceed at 25K or not at all as this won't impact any sales in the short term. Paying ourselves may not be a high priority for you but it is for me. So we make payment today of 25K to Bright and still get goods as "I know" what sells. And we make payment of 5K to ourselves. If you want to free up cash then buy me out and you can make all decisions 1. On 7 April 2022 at 9:33am, Mr Muscat sent an email to Mr Qin proposing to cancel an order, asserting that "[p]ayment of personal funds is high on the priority list for me!" 2. On 11 April 2022 at 5:39pm, Mr Muscat sent an email to Mr Qin enquiring about the total on his company credit card so that he would not "[get] embarrassed again", stating that he was reluctant to even use it due to the arguments between them, that he did not understand why they did not increase the limit and that he gets "worried (and stressed) that every time [he] use[s] it it will decline!". 3. On 11 April 2022 at 8:44pm, Mr Qin sent an email to Mr Muscat informing him that $1,400 was available on his credit card. Mr Muscat responded by email that same day at 9:24pm, saying that "[a]s always the small amount on card is just ridiculous as I feel like a child asking for money! This just frustrates me to no end and I'm over it!" 4. On 11 April 2022 at 9:29pm, Mr Muscat sent an email to Mr Qin complaining that he had "already mentioned accommodation was expensive due to Easter etc and there is a couple of meals if the company can afford me to eat that is. Plusparking etc etc. This has to change honestly…… I could stay at a backpackers if u prefer". 5. On 11 April 2022 at 9:31pm, Mr Qin sent an email to Mr Muscat asserting that for business use only, $5,000 was "more than enough" and that Mr Muscat had used the card for personal use. Mr Qin suggested that he himself would book the flight, accommodation and hire car for the business trip using his card, and then Mr Muscat would be free to use his own card only for "meals and contingence [sic] expense." 6. On 11 April 2022 at 9:37pm, Mr Qin sent an email to Mr Muscat asking if it was necessary for Mr Muscat to do the Cairns business trip over the Easter holidays due to the expense of travelling in high season, telling him to "[t]ry to avoid high season for business trip because everything is expensive!". 7. On 11 April 2022 at 10:00pm, Mr Muscat sent an email to Mr Qin stating "I will acknowledge any of those emails as you are not speaking to a child NOR an employee". In the context, it appears that Mr Muscat meant to say that he would not acknowledge the emails in question. 8. Five minutes later, Mr Muscat sent an email to Mr Qin indicating that it was as though Mr Qin thought Mr Muscat required permission to do his job or choose what time of the year to travel. Mr Muscat further remarked, "[y]ou need to remove your 'director' title as it seriously has gotten to your head! Your comments are so uncalled for it's beyond a joke." 9. On 11 April 2022 at 10:06pm, Mr Qin sent an email to Mr Muscat declining to comment on Mr Muscat's previous email. Regarding the company card and Mr Muscat's use of funds, Mr Qin stated "I only talk facts based on evidences [sic], and try to work out what's the best solution for our company moving forwar [sic]." 10. On 11 April 2022 at 10:09pm, Mr Muscat sent an email to Mr Qin suggesting that they will never see eye-to-eye as "all [Mr Qin] sees is the financial side" and he does not understand the sales/travel side of things. Mr Muscat suggested that "[t]he best solution for the company moving forward is that we simply part ways!". 11. On 11 April 2022 at 10:10pm, Mr Qin sent an email to Mr Muscat suggesting that they stop exchanging mails because he could see it was going towards a wrong direction. Mr Qin suggested that they need to calm down, think about the matter and have a formal conversation the following day, concluding "[c]all me or I'll call you". 12. On 11 April 2022 at 10:19pm, Mr Muscat sent an email to Mr Qin that read as follows: I have 400 kms driving tomorrow visiting customers. I know you think I'm just on holidays but you are wrong! All you have to do is increase the stupid card limit and treat the other director with the respect he deserves! But as you obviously have a trust issue there is nothing further to discuss. 1. On 11 April 2022 at 11:06pm, Mr Qin sent an email to Mr Muscat in which he asked, rhetorically, "[d]o I have a trust issue or is it you who abuse my trust? Trust is earned not asked." Mr Qin observed that the credit card issue was an example, and that Mr Muscat "repeatedly [broke] the rules", necessitating Mr Qin's involvement. Mr Qin then suggested that Mr Muscat just pay back any money spent for personal use into the company card, "[p]roblem solved!". 2. On 14 April 2022 at 8:13am, Mr Muscat sent an email to Mr Qin stating that if Mr Qin did not want to pay himself back, that was his decision, but Mr Muscat wanted his funds back "asap", stressing that it was not Mr Qin's decision to make, like he had in the past. He asked Mr Qin to work out what funds were remaining, saying that "we have to have excess funds as you said in your previous email to Duncan we had enough cash flow to pay 35K to new supplier!", and demanding that they could "then return at minimum $15k each today!". 3. On 14 April 2022 at 9:22am, Mr Qin sent an email to Mr Muscat stating that he was processing the salaries and payments, concluding "[n]o need to remind you I have my personal funds invested in this company as well, more than your investment." 4. On 14 April 2022 at 9:53am, Mr Qin sent an email to Mr Muscat asking why he was under the impression that Mr Qin did not also want his money to be paid back. Mr Qin noted, "as long as the business grows it will pay the money back earlier and bring more returns on my investment. This is the difference between our opinions." 5. On 18 April 2022 at 6:57pm (and again at 6:58pm), Mr Muscat sent an email to Mr Qin advising that Mr Qin was not to put any further funds into the company. Mr Muscat advised that if the company could not get overdraft or credit facilities, then in moments when the company required additional funds "TTK and suppliers [would] need to wait" to be paid. Mr Muscat then requested "a concise spreadsheet please that shows in detail what our exact expenses to run this company are that shows 'totals' of real cost to run this company each month." Mr Muscat also requested that Mr Qin send him "the ATO screen print of what is owing for outstanding taxes." Mr Muscat then confirmed that until the company was in a position to generate excess funds to pay back their personal and company debts, they should refrain from "all extra travel events", as they were unlikely to generate sales. 6. On 18 April 2022 at 7:46pm, Mr Muscat sent an email to Mr Qin advising that he would forward a new expense claim for May that included his "personal payment portion" for the trip, that could be deducted from "[his] $1500 amount". 7. On 19 April 2022 at 8:02am, Mr Qin emailed Mr Muscat suggesting that they wait for a day or two and "see how much fund [sic] will come in." Mr Qin confirmed that he would send an updated "exp list", noting that some "exp items" had gone up since they last discussed the topic, as well as the "ATO debt numbers". Mr Qin agreed that unnecessary travel should be cancelled but suggested that each trip be decided on a case-by-case basis, as repaying the company's debts should not affect its normal business operation. Mr Qin noted that because of the investment in "NSW and Infrabuild", the business could easily achieve double-digit growth and set a goal of "3.9M or maybe 4M for the year" and in turn "pay out the debt sooner." 8. On 19 April 2022 at 11:58am, Mr Qin emailed Mr Muscat advising that $92,000 was required to run the business, plus $10,000 per month to repay the old debt to the ATO. Mr Qin suggested that were they grow to the sales to $310,000 per month, they would be able to repay the debt owing to themselves and allocate $1,000 per month for travel. Mr Qin also confirmed that the balance of the debt owing to the ATO was reduced to $150,000 and suggested that they would be able to pay out the debt to the ATO in "[j]ust one more year". 9. On 19 April 2022 at 12:42pm, Mr Muscat sent an email to Mr Qin suggesting that what Mr Qin had sent him was "just a spreadsheet with numbers without corresponding evidence" and that the travel budget previously discussed was much higher than $1,000 per month. He also noted that sales were well over $310,000 per month, yet they weren't paying all debts. Mr Muscat asked if this was a payment plan from the ATO and requested the balance sheet and the company financials. He also asked when they would be "paying [the] debt to [themselves]." 10. On 19 April 2022 at 2:35pm, Mr Qin sent an email to Mr Muscat clarifying that the travel budget previously discussed reflected the state of affairs that existed in the second half of 2021, when there was no dedicated salesperson in New South Wales. Mr Qin asked whether Mr Muscat and Duncan would continue travelling to Victoria, Western Australia, Tasmania and South Australia. He reminded Mr Muscat of Mr Muscat's recent call to stop all travel, which Mr Qin did not think was good for the business, hence his allocation of $1,000 per month for travel in the spreadsheet. He further noted: You've known that $10K is a "enforced payment" that ATO gets from our bank account each month. What's our average monthly sales in last quarter? $855K. Dividing it by 3 is $285K per month. Sales is low in Q1 is understandable because of the seasonality. But from April this needs to increase to $315K per month as a minimum, or $3.8M for the whole year. See the cash in / out details from 01 Dec 2021 to present. Total Cash Inflow was $1,328K (including the $20K I lent to the company), Total Outflow was $1,360K. This tells us the business was $50K in short of cash in the past 4 months. Just remind you that I've been training Kerrie-Anne so I try to reply to your emails as soon as I can, as this discussion is equally important. The next thing is the balance sheet, it'll be sent to you soon. Our expenditures are very tightly controlled. Paying back to ourselves (when and how much) all depends on how much sales we can get. The more sales we make, the faster the debt will be paid out. 1. On 19 April 2022 at 3:09pm, Mr Muscat sent an email to Mr Qin stating that the fact that the business was $50,000 short of cash in the past four months meant that the company could not "stay afloat" or pay back the personal debt. Mr Muscat again asked Mr Qin to confirm when payment would be made. 2. On 19 April 2022 at 5:06pm, Mr Qin sent an email to Mr Muscat providing responses to the statements made by Mr Muscat in his earlier email in dot-point form: This statement above means the company cannot physically stay afloat and definitely cannot afford to pay back the personal debt. - This will be the case if you don't believe we can grow out sales by 13% this year to $3.8M. But with our investment in NSW and sales growth from Infrabuild, I believe this target is not hard to achieve. Maybe we can even go beyond that. If I invested the 75K into a house my returns on capital growth alone would return more than our business so financially worse off again. - That's your point of view. I'd say this company has been paying good salaries to everyone plus the $150K extra payments……However, at the end of the day, what you want to do for yourself is your decision. So, any thought or plan? We can talk about it. And you still have not told me when payment will be made? - The answer is, this depends on sales number. Achieving $3.8M sales for the year will enable us to pay out the ATO debt in 15 months. After that we'll be able to pay back to ourselves at $10K per month ($5K for each person). The higher the sales, the faster we can pay out our debt. Let's focus on growing sales as that's the cure for everything! No need to mention again, if we had not paid that $150K extra, this personal debt wouldn't exist and we won't have to go through all these issues today. 1. On 19 April 2022 at 5:25pm, Mr Qin sent an email to Mr Muscat urging Mr Muscat to comply with the plan discussed and pay back the funds he had used for personal purposes into the card account straightaway. Mr Qin noted that the $1,500 per month was part of Mr Muscat's salary which should be paid in the middle of each month on the regular pay day, when Mr Qin was paid too. He concluded: "[s]ame rules apply on everyone." 2. On 19 April 2022 at 5:31pm, Mr Muscat sent an email to Mr Qin demanding that he stop "going on about 'past payments'!" and "[s]top using that as the basis of every discussion!". Mr Muscat commented that Mr Qin was saying that the company could not afford to stay afloat and confirmed that he would not wait an additional 15 months for his personal money to be returned. 3. On 19 April 2022 at 5:35pm, Mr Muscat sent an email to Mr Qin stating "[t]ake it from my personal funds that the company owes me. We get interest right. Use that!". 4. On 19 April 2022 at 6:00pm, Mr Qin sent an email to Mr Muscat asking him to suggest where the money could be taken from at present. Mr Qin also reiterated that he too would like the money paid back to themselves and for the company to be debt-free as soon as practical. 5. On 19 April 2022 at 6:32pm, Mr Muscat sent an email to Mr Qin advising that he and his wife were not prepared to wait any longer. Mr Muscat suggested that there was no option but to close the company — that way the bank guarantee funds would have to be released. 6. On 19 April 2022 at 7:03pm, Mr Muscat sent an email to Mr Qin in the following terms: 15 months for ATO and then with interest on money another 20 months at 5K per month to ourselves. Three years…… That was not agreed when we lent money. We agreed this would be paid back straight away OR the company would source funds to pay back and now you are changing what was agreed! 1. On 19 April 2022 at 8:39pm, Mr Qin sent an email to Mr Muscat noting that closing the business required both owners to agree and it was Mr Qin's intention to protect the business, "so it's a No from me". Mr Qin further stated: You want your money back, then let's focus on growing sales. If you don't want to or can't do that, you may consider selling your shares. You already asked me several times to buy you out. Now it's your change [sic] to put your offer on the table then we can discuss. 1. On 19 April 2022 at 9:22pm, Mr Qin sent an email to Mr Muscat seeking to remind him why they each loaned an additional $75,000 to the company: to help Mr Muscat settle the sales of his old house and the purchase of his new house so he could move from Sydney to Toowoomba. Mr Qin further stated: We had three bitter arguments in the past five years of our business partnership. The 1st time you pushed the company to hire your wife; the 2nd argument was last year you required to cancel a bank guarantee because you moved to Toowoomba; now this time you're pushing the company to pay back the loan while it can't afford to do so at present. These argument [sic] are unhealthy, they distracted us from doing right and better things for the business and for ourselves long term benefit. All the arguments were caused by your family needs or issues. If you can't stop doing this and focus on looking after the business, then maybe it's time for you to move on as you already asked me several times to buy you out. So please either stop causing issues anymore or put an offer on the table to sell your shares. I'm not going to waste any more time talking about paying the debt now. It will be paid out, just a matter of time. 28 April 2022: Mr Muscat's requests for logins and passwords 1. On 28 April 2022 at 11:28am, Mr Muscat sent an email to Mr Qin with the following text: Bill please send me all the company log in details along with any passwords required to access anything and everything to do with the company. I'll need anything to do with ASICS log in, ATO so I can log in and see any taxes owing etc and payments, all log ins for company email accounts, phones, computer systems etc etc. All of this should be on file anyway and if so just sent it to me so I can file on my side. 1. Mr Qin was concerned that if he gave Mr Muscat such access, he would not maintain its confidentiality or would change the passwords and company records to TA Tools' detriment. Mr Qin emphasised that Mr Muscat could always attend in person at TA Tools' office or have someone else inspect the hardcopy financials, but he never did that. Mr Qin did not know why TTHQ had not given Mr Muscat access when they set up GALFIN in 2016. Mr Qin said that prior to that request Mr Muscat had never involved himself at all with the financial data for which Mr Qin was responsible at TA Tools. 2. When Mr Qin was challenged in cross-examination about why he had refused to provide Mr Muscat with passwords and logins, he said "it was due to the vibe that we were in at that time" and "I was afraid that he would take the password and take the whole control of the company and then kick me out of the company" (T50). 3. On 28 April 2022 at 11:53am, Mr Qin sent an email to Mr Muscat saying that the login was locked with his personal ID and that he would check if he could grant access to Mr Muscat. 4. On 28 April 2022 at 11:59am, Mr Muscat sent an email to Mr Qin suggesting that they have a generic company login so they could both have access at any time and that they would have to set up new profiles if required so access was transparent to both of them for ASIC, ATO, phones, email accounts, company computer systems and GALFIN. 5. On 28 April 2022 at 12:27pm, Mr Qin sent an email to Mr Muscat saying that from the questions he had asked in the past few days, he was sure that Mr Muscat was involving someone in looking into their finances and due to concerns about confidentiality, Mr Qin needed to know who they were and whether they were an independent third party and qualified for the purpose. Mr Qin said "[i]t must be approved by both of us for someone getting access to our financials" and suggested that Mr Muscat call him to discuss. 6. On 28 April 2022 at 1:10pm, Mr Muscat sent an email to Mr Qin denying that he was involving anyone else and saying that due to recent actions he had realised that he needed to take more control with items of the company they were both liable for, including the finances. He repeated his request for passwords and logins. 7. On 28 April 2022 at 1:13pm, Mr Qin sent an email to Mr Muscat saying that this was a serious topic, that if he wanted to check the numbers Mr Qin would run him through them, and that "[t]here is no way any third party person can see this unless both of us approve it!". 8. On 28 April 2022 at 1:17pm, Mr Muscat sent an email to Mr Qin asserting that there was no third-party and that the information was for himself so he could "have full access at all times to everything." 9. On 28 April 2022 at 2:11pm, Mr Qin sent an email to Mr Muscat saying "this area falls into my duty. I can run you through them. Otherwise we can just organise a proper audit." 28 – 29 April 2022: Mr Qin advises TTHQ of dispute with Mr Muscat 1. On 28 April 2022 at 2:39pm, Mr Qin sent an email to Michael Han of TTHQ informing him about the "bitter argument" between himself and Mr Muscat over the previous two weeks, the trigger for which, he explained, was Mr Muscat's desire to withdraw company funds for his personal (rather than business) needs and Mr Qin's rejection of the same. Mr Qin commented that the argument was ongoing and that Mr Muscat had refused Mr Qin's request to talk directly, with all communications over the past two weeks occurring via email. Mr Qin mentioned that Mr Muscat had asked Mr Qin to buy him out, but that Mr Muscat was now saying that he wanted to buy out Mr Qin instead. Mr Qin indicated that he would like to take over the whole business and asked that he be permitted to register his intention when the time came. 2. On 29 April 2022 at 11:56am, Mr Han sent an email to Mr Qin saying that intervening with internal shareholder disputes would be "inadequate and improper" and that he hoped they could resolve their conflict and trusted that they would protect TTHQ's name and business in Australia. 3. On 29 April 2022 at 12:03pm, Mr Qin wrote to Mr Han thanking him for his email and stating "regardless [of] my business partners [sic] intention and attitude, I'm determined to hold the ground and do everything I can to hold this business as a whole piece." 30 April 2022: Mr Muscat's further requests for logins and passwords 1. On 30 April 2022 at 10:11am, Mr Muscat sent an email to Mr Qin saying he was still waiting for his request for company logins to be actioned, noting that it was his third request and asking that it be made a priority and actioned as soon as possible. Mr Muscat said that he needed access to all financial and company logins for everything listed and that once they had been sent, they would need to inform each other of any password changes within 24 hours so that it could be updated and filed. 11 May 2022: Mr Muscat's lawyer becomes involved in the dispute 1. On 11 May 2022 the solicitor for Mr Muscat, Chris McArdle of McArdle Legal, sent a letter to Mr Qin referring to a dispute between Mr Muscat and Mr Qin under the Shareholder Agreement about a number of allegations, including loans being made by Mr Qin to TA Tools, decisions being made without the unanimous consent of the shareholders, the refusal by Mr Qin to provide passwords that had been requested by Mr Muscat and tax owing by TA Tools of at least $150,000. The solution proposed, by agreement or by arbitration under the Shareholder Agreement, was the dissolution of TA Tools, financial settlement, and for each of Mr Muscat and Mr Qin to go their separate ways. At the conclusion of the letter, demand was made that Mr Qin grant full and open access for Mr Muscat to all aspects of TA Tools, including by providing all password access within 24 hours. 17–23 May 2022: Disputes over payments 1. On 17, 19 and 20 May 2022, Mr Muscat and Mr Qin traded emails over the alleged failure of Mr Muscat to approve payments to Mr Qin and suppliers (being KIS Corporate, TNT and Impact Tools), which caused TA Tools' accounts with those suppliers to be placed on credit stop. Mr Qin claimed that this caused damage to the reputation of TA Tools. Mr Muscat said that this was the result of the failure of Mr Qin to supply him with passwords (which Mr Qin denied) and also repeatedly insisted that his lawyer, Mr McArdle, be copied into all correspondence between them. 2. On 20 May 2022 at 12:17pm, Mr Muscat sent an email to the sales department of Impact Tools (a supplier to TA Tools) asking it to send him the TA Tools transaction report from 1 January 2022 until the current date, concluding with the words "please make sure to reply to this email with information." By reply email that day at 1:53pm, Carl Martin (in the administration department of Impact Tools) sent a document to Mr Muscat listing all of the sales invoices from 20 January 2022 to 18 May 2022 that had been issued by Impact Tools to TA Tools. In cross-examination, Mr Muscat agreed that the reason he sent this email to Impact Tools was because he wanted to check some of the financial interactions with Impact Tools so he could check how Mr Qin was recording them (T32). In the course of this cross-examination, Mr Muscat initially stated that he "didn't deal with the suppliers" and that he did not remember contacting suppliers to check how Mr Qin was recording the financial transactions with those entities in the TA Tools financial books and records (T30). When confronted with the email exchange on 20 May 2022 with Impact Tools, Mr Muscat agreed that the evidence he had initially given that he had not contacted suppliers in 2022 was incorrect. 3. On 20–23 May 2022, Mr Muscat exchanged emails with Mr Qin about Mr Muscat's claims to be reimbursed for expenses charged to his business credit card for a trip to Sydney in May 2022, which Mr Qin challenged and asked to be substantiated with evidence. 23 May 2022: Failure to pay invoices from TTHQ 1. On 23 May 2022 at 8:08pm, Mr Qin sent an email to Mr Han of TTHQ informing him that a payment to TTHQ would be delayed because Mr Muscat said he wanted to check each line on the invoices, and that Mr Qin had approved the payment that morning but that all payments needed to be approved by both Mr Muscat and Mr Qin. Mr Qin said that he had followed Mr Han's instructions and tried to resolve the problem a peaceful way and maintain the day-to-day business operation running normally, but there had been little progress and that the "door for peaceful discussion and negotiation is nearly closed, but not yet." 2. On 23 May 2022 at 9:38am, Sun Min Yoon of TTHQ emailed Mr Qin, copying in Mr Muscat, setting out the list of invoices due that week totalling $47,255.83. 3. On 23 May 2022 at 9:43am, Mr Qin sent an email to Mr Muscat asking him to approve payment of those TTHQ invoices. 4. On 23 May 2022 at 4:27pm, Mr Qin sent an email to Mr Muscat reminding him to approve the payment to TTHQ that day. 5. On 23 May 2022 at 4:34pm, Mr Muscat sent an email to Mr Qin saying that he needed the TTHQ tax invoices before payment could be processed and again asked him to copy in his solicitor, Mr McArdle. 6. On 23 May 2022 at 4:44pm, Mr Qin sent an email to Mr Muscat saying that he already had the invoices and that Mr Muscat should check them. 7. On 23 May 2022 at 6:34pm, Mr Muscat sent an email to Mr Qin, copied to Mr McArdle, saying that he had been busy and would get to them as soon as possible but would first have to "check each line with all the ordered product". Mr Muscat noted that he had informed TTHQ. 23 May 2023: Impasse over hiring staff 1. On 23 May 2022 at 5:34pm, Mr Qin wrote to Mr Muscat saying that he had been hiring a replacement person for "Paul" [Corra], regardless of the dispute between them, and that "Debra" had agreed to re-join them part-time and could start as early as that week. 2. On 23 May 2022 at 6:39pm, Mr Muscat sent an email to Mr Qin, copied to Mr McArdle, saying that he would get back to him shortly, but to "please refrain from employing any staff including Debra." Mr Muscat also said that "[o]ur dispute is the first matter at hand and needs to be resolved first and foremost" and "[s]o for now it can stay the way it is with the staff we have!" 3. On 23 May 2022 at 8:59pm, Mr Qin sent an email to Mr Muscat saying that they had an equal say in the management of the ordinary course of the business but were also required to act together in the best interests of the business. Mr Qin then detailed the reasons why Debra should be employed to fill the vacancy, to ensure that the office was operating effectively to support customers and the sales team, noting that this was a matter falling within Mr Qin's responsibilities and not Mr Muscat's. He concluded that it was in the best interests of TA Tools for Debra to start and that resolving the dispute should not become a "prerequisite" for running the business normally. 4. On 23 May 2022 at 9:21pm, Mr Muscat sent an email to Mr Qin, copied to Mr McArdle, saying that it was not in the best interest of the company for Debra to be employed and that it had to be a mutual signed-off decision, so Mr Qin could not appoint her. Mr Muscat also said that the "company is in the process of dissolution" and that there would be "no impact to customer service or sales." 5. On 23 May 2022 at 10:02pm, Mr Qin sent an email to Mr Muscat saying that he had never agreed to dissolve the business and that he had suggested a meeting between them to discuss resolving the dispute but had not received any response. Mr Qin said that until they reached agreement on the dispute, the business should operate as usual. He observed that Mr Muscat did not work in the office, so "what would he know about the high stress situation there[?]". Mr Qin noted, further, that the workload was not sustainable for the staff and could not continue at its current volume. 6. On 23 May 2022 at 10:17pm, Mr Muscat sent an email to Mr Qin, copied to Mr McArdle, saying that he knew everything about office duties as he had been involved with the IMC group for over 23 years, that he was certain it was sustainable, and that Mr Qin already had his answer. Mr Muscat also said that his normal working hours were more than 12 hours per day but he did not complain, that he had a "recorded logbook of Mr Qin's hours for years" and "recorded footage of office hours" whilst he was travelling, doing 60-hour weeks, and was more than certain that "a little hard work [would be] OK and great for the business". 7. On 23 May 2022 at 11:27pm, Mr Qin sent an email to Mr Muscat, copied to Mr McArdle, asserting that failing to refill a vacant position and allowing existing staff to work under high pressure for an extended time was not in the best interest of TA Tools and would affect customer service. Mr Qin also said that the dispute between them should and could be resolved in a professional way without "playing these dirty tricks". Mr Qin added that in New South Wales, the actual sales were "down by 7% in 2021 and further down by 27%" for the first two months in 2022, and that Mr Muscat was claiming holiday travel as business expenses and had not once travelled to the states where the salespeople needed support. 24 May–1 June 2022: Cancellation of attendance at AUSTECH exhibition and staff dragged into the dispute 1. On 24–31 May 2022, Mr Muscat and Mr Qin fell into dispute over Mr Muscat's unilateral decision to cancel the attendance of Mr Qin and other TA Tools staff at the AUSTECH exhibition in Sydney because he did not think it was in the best interests of the company. Mr Qin disagreed with that decision; Mr Muscat in response asserted that it was a matter which fell within his domain. 2. Most unfortunately, Mr Muscat and Mr Qin included the TA Tools staff in their respective emails about the issue, making it clear that they were in a shareholder dispute. 3. On 24 May 2022 at 3:27pm, Mr McArdle sent an email to Mr Qin and Mr Muscat suggesting that it was in their interests that the fighting in front of staff cease because it would make people uneasy, cause talented people to leave and make the business less valuable. This sensible advice came to no avail with Mr Muscat and Mr Qin continuing to copy in staff members on subsequent emails on the topic. 4. The dispute involving staff widened on 31 May 2022 and 1 June 2022 when Mr Muscat sent an email to Kerri-Anne Eldridge (a staff member at TA Tools), which he copied to other staff members, asking her to do her job without taking direction from Mr Qin, a directive Mr Qin then countermanded by asking Mr Muscat to refrain from sending such emails, which, he said, caused "unnecessary confusion and distress to staff", and to attend to his own responsibilities. 1 June 2022: Mr Muscat contacts further supplier 1. On 1 June 2022, Mr Muscat had an email exchange with May Demaisip of DHL. This occurred after a conversation between them during which Mr Muscat requested a payment history from January 2022 to date from TA Tools. A document listing all payments from 27 January 2022 to 16 May 2022 made by TA Tools to DHL was thereafter supplied. In cross-examination, Mr Muscat admitted that the reason he was contacting DHL was because he wanted to check how Mr Qin was recording financial interactions with DHL in TA Tools' books and records (T33). 2–3 June 2022: Further disputes over expenses and Mr Qin's lawyer becomes involved 1. On 2 June 2022 at 3:13pm, Mr Qin sent an email to Mr Muscat, copied to Mr Qin's solicitor (Dina Tadros of DINA Lawyers) and Mr McArdle, saying that he had asked Mr Muscat to provide tax invoices, receipts and booking confirmations for spending on the business credit card but had not received any of those supporting documents and therefore had cancelled the business credit card. Mr Qin requested that Mr Muscat print the statements between December 2021 and May 2022 and send them together with relevant supporting documents. Mr Qin concluded by saying that for future business travel, the company policy required that all bookings were to go through Mr Qin. 2. On 2 June 2022 at 3:24pm, Mr McArdle sent an email to Ms Tadros, copied to Mr Qin and Mr Muscat, asking her to call him and stating, "Bill has no authority to cancel the corporate credit card." On 2 June 2022, Ms Tadros and Mr McArdle then exchanged emails to make arrangements to discuss the issue. 3. On 3 June 2020 at 10:07am, Mr Muscat sent an email to Mr Qin, copied to Mr McArdle and Ms Tadros, titled "Dissolution of company", asking him to send all correspondence to their solicitors so they could "discuss [the matter] professionally". He concluded: "[u]ntil this matter is resolved the only emails I need to see from you is [sic] for payments that are necessary". 4. On 3 June 2022 at 2:01pm, Mr McArdle sent an email to Mr Muscat and Mr Qin, copied to Ms Tadros, reporting that he and Ms Tadros had had a very useful conversation, that Mr Qin was going to produce a balance sheet, and that if they were not satisfied with that, both sides would appoint one independent auditor paid for from the funds of the company. The email also stated: In the meantime, Dina and I agree to advise each of our clients (ie, you two guys) to not send any more emails that suggest the dispute is in existence, which include any employees. Should not fight in front of the staff. Emails between the two of you should be restricted to business matters and be brief. They should not include staff. 1. On 3 June 2022 at 2:56pm, Mr McArdle sent an email to Ms Tadros, copied to Mr Qin and Mr Muscat, referring to the fact that Mr Qin had either cancelled or put on hold the work credit card used by Mr Muscat, which, he said, impeded the conduct of the business. Mr McArdle asked whether that could be "lifted today". On 3 June 2022 at 4:29pm, Ms Tadros sent an email to Mr McArdle, copied to Mr Qin and Mr Muscat, advising that it was her understanding that Mr Qin had cancelled the actual credit facility that included all company credit cards, and that "[o]nce cancelled it [could not] be lifted or reinstated as such". 6–17 June 2022: Mr Muscat's requests for passwords and threatened legal proceedings 1. On 6 June 2022 at 8:37am, Mr McArdle sent an email to Ms Tadros, copied to Mr Qin and Mr Muscat, titled "Passwords" which stated: There is something that can be done with no inconvenience at all, and which is entirely within the power of Bill. That is the passwords. Bill (we are instructed) refuses to give them to Andrew. That can be cleared up by them being immediately (and confidentially of course) given to you. You can pass them on to me, and I can give them to Andrew. That way no problem with "security" or any other reluctance will arise. This is not a matter for negotiation, though. It is a breach of the shareholders agreement for it not to be done. The main one is "GALFIN" […] which is the accounting software. Both equal shareholders and directors should have access to that. Then there are the bank accounts, the email accounts etc. No fixed list, really. If it has a password, then both directors/shareholders must have it. AND must not change it. That needs to be today. Credit cards: they should not have been cancelled. Expenses will now have to go on personal credit cards. It is Andrew who incurs such expenses, since he is the one on the road etc, so we need an undertaking that Bill will not purport to exercise some "power" or other to "decline" to reimburse. If Bill incurs an expense, then Andrew should be informed in the same way Andrew informs Bill when he incurs and [sic] expense. To be clear from now on, about another matter: Andrew does not agree to Bill injecting his own money into the company, and then repaying it with interest. If that ever occurs in the future, it must be agreed in writing before it is done – on each occasion. 1. On 6 June 2022 at 8:49am, Ms Tadros sent an email to Mr McArdle acknowledging receipt of his email and saying she would take instructions from her client and respond in due course. She also suggested that all correspondence should be between their offices, with each of them relaying relevant information to their respective clients. She expressed the view that it was not wise for all emails and responses to have their clients copied in as it exposed them to communicating with and inviting their clients to engage in the correspondence. 2. On 6 June 2022 at 9:15am, Mr McArdle responded to Ms Tadros that he would correspond with just Ms Tadros from now on. He also said: Andrew has commented on the email, btw. He said he wants the ATO log in. Apparently Bill won't give it to him. Andrew fears that there is a large tax shortfall. 1. On 6 June 2022 at 3:01pm, Ms Tadros sent an email to Mr McArdle regarding the passwords. She stated that she had been instructed that there had been no change to how things had operated since the commencement of the business in January 2017, with the operations, finance and tax managed by Mr Qin (who had access to the ASIC and ATO logins) and at no point during the past five-and-a-half years had Mr Muscat had the need for or made a request to be provided with that information. Ms Tadros then stated that Mr Qin was willing to provide undertakings that ASIC would not be logged into without prior notification and consent of Mr Muscat via Mr McArdle; that Mr Qin was willing to provide Mr Muscat with a snapshot of the ATO portal whenever required by Mr Muscat; that each of the directors would have full access to the company's bank accounts; that all payments would be duly signed by both of them with their own login and passwords; and that Mr Qin would reimburse Mr Muscat for any work-related expense for which a receipt was produced. 2. On 7 June 2022 at 4:57pm, Mr McArdle sent an email to Ms Tadros saying that Mr Muscat was quite happy to sign the undertaking so long as there was no misunderstanding and that they did not believe that it undermined the Shareholder Agreement. Mr McArdle repeated Mr Muscat's request for passwords and access keys to be provided to him. 3. On 10 June 2022 at 4:45pm, Mr McArdle sent an email to Ms Tadros advising that a letter "foreshadowing legal proceedings" would be sent forthwith and stating that if Mr Qin handed over the passwords, legal proceedings would not be necessary. 4. On 14 June 2022 at 9:41am, Mr McArdle sent an email to Ms Tadros attaching a letter from Mr McArdle to Ms Tadros asserting that Mr Qin was in ongoing breach of the Shareholder Agreement by his refusal to provide passwords and other access devices to enable Mr Muscat to be aware of the records of TA Tools, so that he could properly comply with his fiduciary duties as a director. 5. Mr McArdle cited as an example Mr Muscat's belief that tax had not been paid in the past when it fell due, and his inability to inform himself prudently one way or the other because of Mr Qin's refusal to give him the information. 6. It was asserted that Mr Qin had breached the Shareholder Agreement in numerous respects by his refusal to provide passwords and access keys, by depositing his own money in the accounts of TA Tools and repaying himself with interest, and by preventing Mr Muscat from having access to company records. The letter concluded by stating that all passwords, access keys, and other devices to enable Mr Muscat to electronically examine the records of the company, and physical access to the paper records of TA Tools, were required to be provided by 5pm on 17 June 2022, failing which Mr Muscat would approach the Supreme Court for an appropriate remedy. 7. On 17 June 2022 at 12:08pm, Mr McArdle sent an email to Ms Tadros stating that Mr Muscat would commence urgent action in the court from next Monday if Mr Qin did not hand over the passwords and other information. 8. On 17 June 2022 at 5.10pm, Ms Tadros sent an email to Mr McArdle attaching a letter responding to his letter of 14 June 2022. Ms Tadros stated that Mr Qin strenuously rejected the assertion of any ongoing breach of the Shareholder Agreement and that she was instructed that all company records, including financial records, are and have always been available for Mr Muscat to examine at the company's principal office at all reasonable times. The letter stated that she was instructed that Mr Muscat was welcome to inspect any hardcopy or electronic records of the companies at a reasonable time, and that Mr Qin had proposed an independent audit of the company records. It also asserted that Mr Muscat was not, however, entitled to the passwords and access keys of the company's systems, either pursuant to the Shareholders Agreement or the Corporations Act. The letter then set out a response to each of the individual allegations made by Mr Muscat. 9. The letter concludes by alleging that Mr Muscat had breached his obligations to TA Tools and acted in a manner contrary to the best interests of the company by disclosing financial records to third parties without Mr Qin's consent, using company funds for improper purposes and personal benefit, using his power as a director to reduce the purchase of trading stock and delay payments to suppliers, demanding extra payments from the company for personal benefit, abusing his power as director to evade tax and reduce child support payments, involving employees in the current dispute between the parties, disclosing and involving third parties in the dispute and using the dispute to slow down the operation of the company. 10. On 17 June 2022 at 5:35pm, Mr McArdle sent an email to Ms Tadros asking whether she had instructions to accept service by email or whether they would have to serve Mr Qin personally. 20 June 2022: TTHQ becomes involved in the dispute 1. On 20 June 2022 at 10:53am, Mr Qin sent an email to Mr Han of TTHQ providing him with an update on the current situation and attaching the lawyers' letters of 14 and 17 June 2022. Mr Qin said that he had been trying to resolve the dispute with Mr Muscat through peaceful negotiations, but agreement had not been possible due to "his emotional and aggressive actions" and that the dispute was going to court which would make it public and negatively impact customer confidence and TaeguTec's brand name. Mr Qin said: I acknowledge the 5-year long partnership with Andrew has now come to an end. A plan is needed for the future operation of Taegutec brand in the local market. I am open to your advice, ready to discuss with you and with anyone who you think should be part of the conversation, at any time. 1. On 20 June 2022 at 6:38pm, Mr Muscat sent an email to Mr McArdle forwarding a letter that had been received by Mr Muscat from TTHQ requesting that TA Tools cease using GALFIN, change their company name, and remove TaeguTec from their business name. 20­–24 June 2022: Attempt to resolve dispute, Mr Muscat's access to ATO portal and TTHQ's threats 1. On 20 June 2022 at 12:35pm, Mr McArdle sent an email to Ms Tadros replying to her letter of 17 June 2022 and stating that there was little to be achieved by replying to each of her contentions, but that they were legally unsustainable and not based in fact. He asserted that Mr Muscat relocated to Queensland some time ago and was not ordinarily present in Sydney to physically examine the records that Mr Qin was purportedly prepared to disclose from time to time. The email stated that they were prepared to make one last attempt to resolve the dispute between the parties prior to taking the matter to court and ended by suggesting a meeting between Mr Qin, Ms Tadros, Mr Muscat and Mr McArdle before the end of that week. 2. On 20 June 2022 at 6:41pm, Ms Tadros sent an email to Mr McArdle agreeing to a meeting proposed to be held on 24 June 2022 and proposing that "the parties bring a conciliatory approach to the mediation, with a view to resolving the dispute". 3. In his affidavit, Mr Muscat admitted that he had access to the ATO portal for TA Tools in June 2022, which is likely to have been around 20 June 2022 when he accessed and downloaded documents on that portal. It appears that Mr Muscat had unfettered access to that portal and all of the documents contained on it from this time up until he sold his shares to Mr Qin on 30 August 2022. 4. On 21 June 2022 at 10:25am, Mr McArdle sent an email to Ms Tadros, copied to Mr Muscat, stating that the "principal company […] has become alarmed by this matter" and that they would withdraw access to the proprietary software if the dispute was not resolved, which "[could] well cripple [TA Tools]." Mr McArdle felt that the meeting would have to be held much earlier and proposed that they attend Ms Tadros' offices at midday the following day, asking her to confirm that this was suitable. 5. On 21 June 2022 at 12:53pm and 1:23pm, Mr McArdle and Ms Tadros then exchanged emails to confirm a meeting to occur at 2:30pm on 22 June 2022. 6. On 21 June 2022 at 2:44pm, Mr McArdle emailed Ms Tadros forwarding the email that had been received from TTHQ, which he described as "alarming" and capable of inflicting "extreme damage […] to the trading ability of the company if […] not cleared up", commenting that it was "entirely within the capacity of [Mr Qin] to solve the problem immediately". Mr McArdle suggested that it was absurd that Mr Muscat could only view the company records under the supervision of Mr Qin at Castle Hill. 7. On 21 June 2022 at 3:16pm, Mr Qin sent an email to Ran Tamam of TTHQ quoting from the email received from Mr McArdle about the proposed withdrawal of access to proprietary software if the dispute was not resolved. Mr Qin said he was surprised by the message and thought that, if there was a decision made by TTHQ, he would have been informed so that he could properly consider the impact on their business. Mr Qin said that he and Mr Muscat were trying to resolve their dispute in a peaceful way, with his ultimate purpose being the protection of the brand name, business reputation and all stakeholders. 8. On 21 June 2022 at 3:46pm, Ms Tadros sent an email to Mr McArdle asking for him to send the emails from Mr Muscat and Mr McArdle referred to in the correspondence with Mr Tamam. 9. On 21 June 2022 at 4:03pm, Mr Qin sent an email to Mr Tamam asking him to forward to him the formal notice advising that TTHQ would withdraw the use of TaeguTec in their company name. 10. On 22 June 2022, Ms Tadros sent a letter to Mr McArdle expressed to be "without prejudice save as to costs" stating that Mr Qin agreed that the position with respect to the principal company had become urgent and noting that Mr Muscat had declined to provide copies of his correspondence with them. The letter also stated that Mr Muscat had always had access to the bank account records; was entitled to obtain his own access and password to the ATO portal; was entitled to obtain his own access and password to the ASIC portal; and that the financial records were available at the company's principal address for Mr Muscat to inspect. The letter raised potential outcomes to resolve the dispute, including the purchase by Mr Qin of Mr Muscat's shares; the purchase by Mr Muscat of Mr Qin's shares; and the company being wound up. 11. On 22 June 2022 at 7:54am, Mr McArdle sent an email to Ms Tadros saying that the correspondence with the parent company would be annexed to an affidavit and that they would expect to see all correspondence to any third parties from Mr Qin if the matter did not settle, observing that "[i]t is obvious that it is in the interests of both parties for this to be settled at todays [sic] meeting". 12. On 22 June 2022 at 7:58am, Mr Tamam sent an email to Mr Muscat and Mr Qin, copied to others including Michael Han and Mr McArdle, on the subject of "TaeguTec In Australia", stating their discomfort over the unresolved dispute between Mr Muscat and Mr Qin, emphasising their position to remain completely uninvolved in the conflict, and expressing their concern regarding the TaeguTec business in Australia. The email stated that to secure their integrity and business, TA Tools should cease using TTHQ's systems and rename themselves. 13. On 22 June 2022 at 8:04am, Mr Qin responded to Mr Tamam stating that he hoped that the meeting that afternoon would achieve some positive progress and that he would provide an update in due course. 14. On 22 June 2022 at 8:04am, Mr McArdle sent an email to Mr Tamam, Mr Muscat and Mr Qin stating that they were meeting that day and it was their aim to resolve the dispute and do nothing to compromise the good name of TaeguTec. 15. On 22 June 2022 at 9:36am, Mr Tamam responded by saying that he had hopes for an immediate and responsible solution to "safeguard TaeguTec's integrity and position TaeguTec in the leading position it deserves". 16. On 24 June 2022 at 4:45pm, Ms Tadros sent an email to Mr McArdle attaching a letter asking for Mr Muscat's consent to provide Mr Tamam with an update in relation to the dispute, to the effect that the parties were unable to reach a resolution on the day but were currently working to resolve the outstanding issues. 27–28 June 2022: Mr Muscat's access to GALFIN 1. On 27 June 2022 at 2:39pm, Mr McArdle sent an email to Ms Tadros which stated that Mr Muscat had approached TTHQ directly and had been granted access to GALFIN, and that over the weekend Mr Muscat and Paul Corra (a former employee of TA Tools) had been researching the accounts, and that Mr Qin needed to explain the use of the company's money to subscribe to MYOB for KA Supplies and Snowrock International Pty Ltd. The email also stated that Mr Qin had then "blocked access", and that Mr Muscat was considering approaching the court to wind the company up and required an immediate irrevocable undertaking from Mr Qin that access to GALFIN would not be blocked again as well as an agreement by midday the following day for a forensic accountant to be appointed to examine the company's records. 2. On 28 June 2022 at 6:43am, Mr Qin wrote to Mr Tamam to inform him that Mr Qin had tried every avenue to get the issue resolved without legal proceedings but that their mediation the previous week did not produce a solution. Mr Qin raised as an easy solution one shareholder buying out the other and queried whether, if this were done, the Distribution Agreement between TTHQ and TA Tools would be affected. 3. On 28 June 2022 at 10:24am, Mr Muscat sent an email to Mr McArdle stating that he had noticed, upon looking further into GALFIN, that Mr Qin had "changed 'a lot' of data trying to cover his tracks and make it look like GALFIN is being used and is actually correct." Mr Muscat asked Mr McArdle to urgently write to Ms Tadros and ask for the MYOB invoices, saying he knew how Mr Qin was doing this and that it was just a matter of time, noting that all the data entries were traceable. Mr Muscat concluded that in one day alone in one account for DHL, Mr Qin made 175 updates to transactions, stating: I will simply need to see 'everything'. And as I know how he is doing this (I won't say because his [sic] probably reading this email, which is fine) but I have more data then [sic] he would even believe! 1. Mr Muscat also asked whether it was 'legal' to use security footage as evidence in the court proceedings. 2. On 28 June 2022 at 10:53am, Mr McArdle sent an email to Ms Tadros attaching a screenshot from GALFIN that, he asserted, indicated that Mr Qin had made alterations to GALFIN "over several hundred times in the last week or so" and demonstrated that Mr Qin was transferring the transactions from another accountancy platform (which Mr McArdle contended was "in all certainty the MYOB service"). Mr McArdle demanded the immediate provision of the password and other access necessities to the MYOB account. 3. On 28 June 2022 at 11:23am, Ms Tadros sent an email to Mr McArdle attaching a letter which referred to his email of 27 June 2022. In it, she stated that Mr Qin agreed to the appointment of a forensic accountant from Grant Thornton to conduct an audit and prepare a valuation of the company. She noted that as there was no local system administrator authority available, neither Mr Qin nor Mr Muscat could block the other's access to GALFIN. In relation to Mr Corra reviewing the company's confidential accounts, the letter stated that while Mr Muscat was a director of the company and entitled to review its financial records, he was not entitled to unilaterally appoint a third party to review them and asked Mr Muscat to confirm that he would immediately stop disclosing the company's confidential information to any third party, including Mr Corra. 4. The letter also stated that KA Supplies was a side business of Mr Muscat and Mr Qin, of which Mr Muscat had full knowledge. In relation to Snowrock, the letter stated that this was a family business of Mr Qin and his wife, that Mr Qin's myGovID was registered using the Snowrock email address, and that there had been no dealings or transactions between Snowrock and TA Tools. The letter asserted that there was only one MYOB account registered and paid for by KA Supplies, not Snowrock. The letter concluded that Mr Qin maintained that Mr Muscat had acted contrary to the interests of the company and the shareholders as a whole and that Ms Tadros intended to write to Mr McArdle in respect of this separately. 5. In cross-examination, Mr Qin maintained that he has never changed his Snowrock email address as the login for his personal myGovID (which gave him access to the ATO portal for TA Tools) and that there is no separate password login for TA Tools as access is personal to each director (T55-56). 28­–29 June 2022: Proposed application to wind up and appointment of Grant Thornton 1. On 28 June 2022 at 11:28am, Mr McArdle sent an email to Ms Tadros indicating that Mr Muscat was prepared to make a joint application to wind the company up and for distributions to be made based on the forensic accountant's report. 2. Across 28 and 29 June 2022, Mr McArdle sought to engage Grant Thornton to provide the forensic accountant's report, which would audit and value TA Tools. This proposal ultimately did not proceed after Mr Qin withdrew his consent to the appointment on 12 July 2022. 29 June–11 July 2022: TTHQ's termination of Distribution Agreement and more skirmishes over expenses and salaries 1. On 29 June 2022 at 2:43pm, Mr Han of TTHQ sent an email to Mr Muscat and Mr Qin, copied to Mr McArdle, Ms Tadros and Mr Tamam amongst others, which attached a notice of termination of the Distribution Agreement to take effect within 90 days from the date of the notice. 2. On 29 June 2022 at 3:20pm, Mr McArdle sent an email to Ms Tadros which attached the notice of termination from TTHQ stating: This has the potential of undoing many years of hard work on the part of Mr Muscat. The apparent conduct with respect to multiple MYOB accounts, "backfilling" records late at night, running another company despite the shareholder obligation to devote all of the person's time to this company, and so on, have all culminated in this loss. We reserve our rights. We repeat, however, that we will cooperate fully with Grant Thornton in their conduct of their brief. 1. On 30 June 2022 at 7:22am, Mr Qin sent an email to Mr Han, copied to Mr Tamam and others, stating that recent negotiations between Mr Qin and Mr Muscat included an option of one shareholder buying out the other and asked whether TTHQ would consider withdrawing the termination notice if a solution could be reached before 5pm the following day. 2. On 30 June 2022 at 9:58am, Mr Qin sent an email to Mr Muscat, copied to Ms Tadros, informing him that he would get an email in his KA Supplies mailbox with a link to get access to the MYOB system used by KA Supplies. Mr Qin said he was still concerned about Mr Muscat disclosing data to a third party without his consent but, under the current circumstances, would grant him access so he could check all sales, inventory and accounts, in the hope that it would accelerate the resolution of the dispute so the business could move on. 3. On 30 June 2022 at 2:04pm, Mr Muscat sent an email to Mr McArdle attaching his signed notice of termination of the Distribution Agreement from TTHQ. 4. On 30 June 2022 at 3:24pm, Mr McArdle sent an email to Ms Tadros attaching the signed notice, saying that it was his understanding that TTHQ required both directors' signatures. 5. On 30 June 2022 at 3:41pm, Mr Qin emailed Mr Muscat, copying in Ms Tadros, saying that he had reposted the payment for his June expense claim, noting that Mr Muscat had rejected this twice already. Mr Qin said that he would have to stop buying office supplies using his personal money if Mr Muscat refused to reimburse the expense, emphasising that at that moment the office was running out of printing paper and office essentials. 6. On 30 June 2022 at 3:46pm, Mr Muscat emailed Mr McArdle asking him how to respond to Mr Qin, who he said had not paid Mr Muscat's own expenses from his Sydney trip. 7. On 30 June 2022 at 3:57pm, Mr McArdle sent an email to Ms Tadros, copied to Mr Muscat and Mr Qin, stating that it would be best if the parties could set the expense claim issues aside for the time being, and proposing that each approve the other's claims going forward (within reason). He suggested that each could declare how much they were owed and why and then they could be paid, and if one did not want to authorise payment they could provide a reason. 8. On 30 June 2022 at 4:06pm, Mr Qin sent an email to Mr McArdle and Ms Tadros, copied to Mr Muscat, stating that Mr Muscat would only need to send Mr Qin his hotel booking confirmation and split his expenses based on the time he actually spent at the exhibition and for other personal matters. Mr Qin said that for his expense claim, he had already sent the itemised invoices to Mr Muscat. 9. On 1 July 2022 at 3:27pm, Mr McArdle sent an email to Ms Tadros referring to the acknowledgement of the notice of termination of the Distribution Agreement, noting that the reinstatement of it would not be possible if the acknowledgement was not signed and returned. Mr McArdle asked that Ms Tadros arrange for Mr Qin to add his signature so that it could be sent off that day. 10. On 7 July 2022 at 9:09am, Mr Muscat sent an email to Ms Eldridge and Mr Qin, copied to TTHQ, stating that as of that day, he would be taking over the purchase of all future orders from TTHQ and asking that they acknowledge that no more orders would be sent to TTHQ unless he had authorised and processed them himself. 11. On 7 July 2022 at 9:16am, Mr Qin sent an email to Mr Muscat stating that Mr Muscat had not communicated with him about the orders to TTHQ and asking if there was a valid reason for the change. 12. On 7 July 2022 at 10:56am, Mr Muscat replied via email to Mr Qin, copied to TTHQ, saying he was "[j]ust making sure that orders don't get mixed up with the other company you have been running deceitfully behind my back for five years call [sic] 'Snowrock International'." 13. On 7 July 2022 at 11:13am, Mr Qin emailed Mr Muscat asking him what orders from TTHQ had to do with Snowrock, a family printing business operated by his wife since 2009, in what way the purchase process could "get mixed up", demanding that Mr Muscat provide evidence of the same. Mr Qin said that the accusation was totally groundless and had "gone beyond a joke", before apologising to those at TTHQ (copied in) who had been bothered with the internal dispute. 14. On 7 July 2022 at 11:22am, Mr Muscat sent an email to Mr Qin, copied to TTHQ, attaching a company extract for Snowrock International Pty Ltd and stating: Your misleading information and false statement is just another sign of the lies. Please see attached ASICS [sic] extract where Bill Qin was clearly the Director up until cease date clearly stated as 01/06/2022. Also says appointed date of 2009. Yes I do agree let's not bother others in a personal business dispute that will soon be over. 1. On 7 July 2020 to 11:44am, Mr Qin sent an email to Mr Muscat, copied to TTHQ, in which he thanked Mr Muscat for explaining this to everyone, stating that the extract clearly showed that Snowrock is a family business with no formal office address, owned by Mr Qin and his wife and set up in 2009 (eight years before TA Tools started). Mr Qin also stated that the business supplies printing materials, which has nothing to do with the metalworking industry. Mr Qin concluded by saying that at the end of the day, it was all about the Shareholder Agreement and that they should leave it to the lawyers to discuss. 2. On 7 July 2022 at 12:02pm, Mr Qin sent a further email to Mr Muscat explaining that before TA Tools started, Mr Qin's wife had operated the printing business for eight years, which was how Mr Qin was always in a position to use personal money to fund TA Tools' operations, and why he was not "money thirsty" and never demanded excessive payment from the company for personal use. Mr Qin concluded by saying: As a matter of fact, without using my personal funds, Taegutec Tools would not survive its infancy stage. Even a few months ago, the business still needed me to inject cash into it. 1. On 11 July 2022 at 9am, Mr Muscat sent an email to Mr Qin requesting that, before the salaries were to be paid on 15 July 2022, Mr Qin make certain as per the Shareholder Agreement that Mr Muscat's salary was exactly the same as Mr Qin's salary. Mr Muscat noted that his salary was not paid in full last month and requested that he be reimbursed for the amount that was not paid to him. 2. On 11 July 2022 9:58am, Mr Muscat sent an email to Mr Qin, copied to Mr McArdle and Ms Tadros, further to his earlier email about salaries, saying that he was certain that Mr Qin could "read [that email] without an interpreter" and that what he was asking was "[v]ery clear and concise". 3. On 11 July 2022 at 10:03am, Mr Qin replied to Mr Muscat (via email copied to Ms Tadros and Mr McArdle), saying that as he had informed Mr Muscat on 8 July 2022, such matters should proceed through their solicitors and their own communications limited to the day-to-day operation of the business. 11–13 July 2022: Mutual allegations of repudiation of Shareholder Agreement and Mr Qin's offer to acquire Mr Muscat's shares 1. On 11 July 2022 at 11:17am, Mr McArdle sent an email to Ms Tadros attaching a letter to Ms Tadros, asserting that Mr Qin had "rendered [the] company completely unable to operate, due to the culmination of actions over a long period, and due to current conduct". The letter referred to Mr McArdle's earlier letter of 14 June 2022 (which was also attached to the email), stating that none of the issues raised in that previous correspondence had been remedied and that new matters had arisen, including Mr Qin's failure to sign and return the Grant Thornton retainer agreement; Mr Muscat uncovering a comprehensive list of unexplained entries in the accounting software; Mr Qin refusing to approve expense claims by Mr Muscat; TTHQ cancelling the 90 day credit on the supply of goods; and Mr Qin cancelling orders. 2. It was alleged that Mr Qin had "comprehensively repudiated the Shareholders Agreement" and that Mr Muscat had accepted this repudiation such that he was no longer bound by the Agreement but did not release Mr Qin from his obligations under it. In conclusion, the letter stated that Mr Muscat reserved his rights and "may have no alternative to apply to the Supreme Court for an order winding up TA Tools." Mr McArdle requested an urgent reply by 10am on 13 July 2022. 3. On 11 July 2022 at 6:27pm, Ms Tadros sent an email to Mr McArdle attaching a letter responding to his letter of earlier that day by denying that Mr Qin had committed any breach of the Shareholder Agreement. The letter asserted that it was Mr Muscat who had repudiated it, and that Mr Qin did not accept that repudiation and elected for the Shareholder Agreement to remain in place. The letter then set out Mr Qin's responses to each of the allegations made against him. Those responses included a request for specifics regarding the allegations concerning entries on the accounting software. 4. The letter also stated: 7. Alleged lack of access to relevant financial books and records of the company and/or passwords. As your own open letter of 11 July makes clear, your client now has access to the relevant accounting software of the business. If your client requires any further access to the books and records of the company: a. We unequivocally agree that as a director and shareholder he is entitled to such access; b. We will facilitate any and all requests for such material as expeditiously as possible. For practical purposes, and to ensure nothing is missed, we encourage any such requests to be made through the legal representatives of the client. As stated above, in relation to the Grant Thornton issue, we confirm we will facilitate such access for any account your client wishes to retain, in the event he does not consent to Grant Thornton being retained on the basis we have outlined; c. We note our client is aware of instances of your client sharing such information with customers and/or third parties who are not as agents or legal representatives retained for valuation or auditing purposes. We reserve our rights in relation to such matters and reiterate the confidentiality obligations we trust you will advise your client to uphold. d. We further note that, given some financial records of the company only exist in hard copy and the time it will take if such material is requested, to be scanned and sent electronically to you may take some time (particularly if what is requested is voluminous in nature), then, in light also of your client being inter-state, it may be best for someone from your office (or from the accountant's office) to attend the company's office and make such copies as are needed. If you wish to avail yourself of that course, please do so and just let us know. 1. The letter also presented an open offer for Mr Muscat to transfer all his shares in TA Tools to Mr Qin and resign from his roles as director of sales and marketing manager at TA Tools, in return for satisfaction of Mr Muscat's outstanding loan of $74,357.54 and leave entitlements of $48,487.31 as at 30 June 2022, as well as Mr Qin paying Mr Muscat the amount of $227,000 within 14 days. The offer was said to be open until 5pm on 13 July 2022. 2. The letter concluded by stating that Mr Qin opposed the application to wind up TA Tools. 3. On 12 July 2022 at 10:16am, Mr McArdle sent an email to Ms Tadros stating that he would get instructions and asking that she provide the valuation on which they had relied in making the offer to Mr Muscat. 4. On 12 July 2022 at 1:26pm, Ms Tadros sent an email to Mr McArdle attaching the financial reports for January – December 2021 and January – June 2022, which had been generated by Mr Qin using GALFIN and which, Ms Tadros observed, Mr Muscat could access to verify. The email also attached the TA Tools tax return for the 2020/2021 financial year which had been downloaded from the ATO portal and to which, Ms Tadros noted, Mr Muscat also had access. 5. On 12 July 2022 at 2:44pm, Mr McArdle sent an email to Ms Tadros asking her whether they would be supplying a valuation from an accredited valuer so they could obtain instructions on Mr Qin's offer for the shares. 6. On 13 July 2022, David McCourt of BDO Corporate Finance sent an engagement letter to Mr Qin for them to prepare a valuation of TA Tools on the assumption that the Distribution Agreement was in place and continuing and another valuation on the assumption that the Distribution Agreement was not continuing past 26 September 2022. 14–15 July 2022: Previous Proceedings commenced by Mr Qin and reported to TTHQ 1. On 14 July 2022, Mr Qin filed the originating process in court to commence the Previous Proceedings against Mr Muscat, to which TA Tools was named as the second defendant, pursuant to ss 232(d) and 233(1)(d) of the Corporations Act (Cth) for the forced sale of Mr Muscat's shares in TA Tools to Mr Qin in circumstances when the management and affairs of TA Tools was deadlocked. Mr Qin obtained orders from the court abridging service of the originating process and his affidavit in support to 6pm that day, with the originating process returnable on 18 July 2022. 2. In cross-examination, Mr Muscat agreed that before Mr Qin commenced the Previous Proceedings, Mr Muscat through his lawyers had been threatening to sue Mr Qin but Mr Qin "beat [him] to the courthouse" (T33). 3. On 15 July 2022, BDO and Mr Qin entered into a Non Disclosure Agreement in relation to the provision of confidential information by Mr Qin to BDO for the purposes of the valuation of the business of TA Tools. 4. On 15 July 2022 at 8:52am, Mr McArdle sent an email to Ms Tadros, Mr Tamam and Mr Han of TTHQ informing them that Mr Qin had commenced the Previous Proceedings and that the timetable would be set by the court on the following Monday. Mr McArdle said that they would be opposing the action and advancing their own position but that they would remain available to settle the dispute by reasonable compromise. He said that they had hoped to have acquired a joint valuation report from Grant Thornton but, in the absence of agreement, it had not gone ahead. 5. On 15 July 2022 at 3:18pm, Ms Tadros sent an email to Messrs Tamam and Han, copied to Mr McArdle, attaching a letter providing an update on the dispute. The letter stated that because Mr Muscat had not accepted Mr Qin's open offer the previous day, he had commenced urgent expedited proceedings to force Mr Muscat's sale of shares to Mr Qin in the Supreme Court of New South Wales, and that they hoped to "speedily determine control of [TA Tools]" to end the dispute. The letter referred to the fact that Mr Qin had his access to the GAL software disabled for much of the previous day, that staff at TTHQ had enabled his access again in the afternoon, and that they trusted it was not caused by any direct action taken by TTHQ. 6. On 15 July 2022 at 7:51pm, Ms Tadros sent an email to Mr Qin attaching a copy of the letter that had been sent to TTHQ. 18–21 July 2022: Directions in Previous Proceedings, instructions to BDO to prepare valuations, and further disputes over expenses 1. On 18 July 2022, the Previous Proceedings came before the court for directions. Orders were made by consent, stipulating that the parties' solicitors were to jointly agree on a joint letter of instruction to BDO by 22 July 2022; the parties were to file and serve any joint expert evidence from BDO by 1 August 2022; Mr Muscat was to file and serve his lay evidence by 16 August 2022; Mr Qin was to file and serve any reply lay evidence by 19 August 2022; and the matter was to be fixed and set down for hearing on 29 August 2022. 2. On 18 July 2022 at 1:31pm, Mr McArdle sent an email to Ms Tadros noting that they were required to reach agreement on the brief to BDO to obtain the valuation by 22 July 2022 so that BDO could provide its evidence by 1 August 2022, and asking that they provide a draft of a proposed joint letter and access to any documents or other item of information provided to BDO. 3. On 18 July 2022 at 4:49pm, Mr Qin sent an email to Mr Muscat saying that he had approved payments for office supplies and that he was now awaiting Mr Muscat's approval. 4. On 19 July 2022 at 9:26am, Mr Muscat sent an email to Mr Qin, copied to Mr McArdle, saying that he was still waiting for payment of his Sydney expenses. He noted that Mr Qin's reason for not paying, as communicated by him to Mr McArdle via email, was that visiting his solicitor was personal in nature. Mr Muscat then stated that he had been staying "literally 250 metres" from McArdle Legal while attending the AUSTECH machine exhibition. Mr Muscat also stated that he had made additional trips related to "saving our company" which he believed most certainly fell under "business". Mr Muscat said that he would revert to his legal team for instructions if Mr Qin refused to pay the expense again. 5. On 19 July 2022 at 9:42am, Ms Tadros sent a follow-up email to Mr McArdle in relation to BDO, stating that they had not prepared a letter of engagement themselves but rather proposed that the parties adopt the letter of engagement that had been issued to Mr Qin by BDO on 13 July 2022. She said that if they wanted any alterations or amendments, they should let her know so that they could negotiate those between them, noting that the only thing she saw that needed changing was that the letter should be addressed to both Mr Qin and Mr Muscat. She confirmed that in terms of the information provided to BDO since their retainer, they had received a brief description of the business, financial statements for the last three years, management accounts for the period ending June 2022, and clarification of matters raised in emails from BDO on 13–15 July 2022, all of which she attached to the email. 6. On 19 July 2022 at 10:03am, Mr Qin sent an email to Mr Muscat regarding the latter's Sydney expenses. Mr Qin referred to his email of 30 June 2022 in which he had requested that Mr Muscat provide his booking confirmation for his accommodation, noting that he had not yet done so. Mr Qin said that Mr Muscat had cancelled his Ibis booking (which was much closer to the AUSTECH exhibition) and proceeded to re-book a hotel closer to his lawyer's office. Mr Qin remarked, further, that someone who had been at the exhibition had told Mr Qin that he hadn't seen Mr Muscat at the exhibition. Mr Qin then asked for Mr Muscat's reasons for not approving his expense claim when he had provided itemised invoices for all items which were for business use. 7. On 19 July 2022 at 10:19am, Mr McArdle sent an email to Ms Tadros concerning BDO, suggesting that they might need to write to BTO separately, that the dispute was largely to do with Mr Qin's refusal to give Mr Muscat full and unfettered access to the company's financial records, and that they could not possibly verify as accurate the records Ms Tadros had attached. Mr McArdle said that BDO would therefore also need to verify the accuracy of the financial information provided. He then asked how realistic it was, based on the information available to Mr Qin, to expect the Distribution Agreement to be reinstated. 8. On 19 July 2022 at 3:34pm, Mr Muscat sent an email to Mr Qin, copied to Mr McArdle, attaching his expense claim for the meeting they had attended with their lawyers, which he said was surely "100% business related", noting that he did not claim for any accommodation or meals but only the flight and the cab fare. 9. On 19 July 2022 at 3:41pm, Ms Tadros sent an email to Mr McArdle responding to the issues he had raised concerning BDO. Ms Tadros stated that as had been made abundantly clear in her letter of 11 July 2022, there was "no refusal in any way to Mr Muscat having access" to the books and records he wished to see, and that since that correspondence, Mr Muscat had not availed himself of any opportunity to request documents from Mr Qin or herself, nor made any arrangements to visit the business' offices to review any records. The balance of the email provided detailed points in relation to the form of wording to be contained in BDO's retainer, and included a reminder that if Mr McArdle was preparing a written letter of instruction to send to BDO, it should be provided to her for settling. She concluded by stating that if Mr Muscat wanted an audit or verification of the financials, he could arrange that himself. 10. On 20 July 2022 at 2:02pm, Mr Qin sent an email to Mr Muscat saying that he would not approve the latter's expense claim of the previous day because it appeared (on Mr Muscat's own admission) that the sole cause for the flight and cab fare was for Mr Muscat to meet his lawyers and attend the mediation of the dispute, which was a personal shareholder dispute. Mr Qin explained that these expenses were in the same nature as legal fees that Mr Muscat was personally paying to his lawyer and were not expenses incurred in the course of carrying out the company's business. Mr Qin invited Mr Muscat to state whether the flight to Sydney was necessary in order to carry out some form of company business. 11. On 20 July 2022 at 2:10pm, Mr Muscat sent Mr Qin an email, copied to Mr McArdle and François Salama (counsel for Mr Muscat), which curtly stated: I also visited customers so please pay. Thanks buddy. 1. On 20 July 2022 at 4:08pm, Ms Tadros sent an email to Ishan Chopra of BDO. The email attached a joint letter to BDO signed by both Mr McArdle and Ms Tadros, confirming that the terms of the engagement letter of 13 July 2022 signed by Mr Qin were accepted by Mr Muscat, along with the two valuation scenarios on which they would proceed to provide a valuation of TA Tools to be submitted to the court on or before 1 August 2022. The letter stated that each of Mr Muscat and Mr Quinn had agreed between themselves that they would facilitate and cooperate with BDO in the conduct of the valuation. It also envisaged the possible provision of separate information to BDO by each of Mr Muscat and Mr Qin which would result in two opinions as to valuation for each of the scenarios in the engagement letter. 2. On 20 July 2022 at 4:26pm, Mr McArdle sent an email to Ms Tadros and Mr Chopra thanking Ms Tadros for forwarding the joint letter and confirming their agreement to it. Mr McArdle said that Mr Muscat and his accountancy advisor would be attending the company's office on 22 July 2022 and that they hoped to provide material to Mr Chopra that day or the following Monday. 3. On 21 July 2022, BDO sent the engagement letter to Mr Qin and Mr Muscat stating that they would be providing the valuation of TA Tools on two scenarios, being the assumption that the Distribution Agreement was in place and continuing and the assumption that the Distribution Agreement was not continuing past 26 September 2022. 4. On 21 July 2022 at 10:28am, Mr Chopra sent an email to Mr McArdle and Ms Tadros stating that BDO was progressing well with their valuation analysis and that they would wait for Mr Muscat's responses on the questions they had raised so far. He said that once they had received comments from both parties, they would proceed to finalise their draft valuations. 21 July 2022: Arrangements for Mr Muscat and Mr Corra to visit the offices of TA Tools 1. On 21 July 2022 at 2:25pm, Ms Tadros sent an email to Mr McArdle attaching a letter concerning the indication that Mr Muscat and his "accountancy advisor" would be attending the company office the following day. She stated that it was understood that the adviser was Paul Corra, an ex-employee of TA Tools who was neither a shareholder or a director of the company, nor an accountant. Ms Tadros asked for the legal basis on which they asserted that Mr Corra was entitled to access the books and records of the company and what written confidentiality agreements have been entered into to protect Mr Muscat's decision to give access to the company books and records to an individual who was neither a legal representative nor a retained expert in the proceedings. She said that if there were no such agreements, they should indicate what steps had been taken to preserve the confidentiality of the company books and records if shown to Mr Corra, and the legal basis on which Mr Corra would be attending the office and viewing the books and records. 2. In the letter, Ms Tadros asked for confirmation by 4pm that day if Mr Corra still intended to attend the office with Mr Muscat, what times and length of time they envisaged he would attend the office (Ms Eldridge having indicated that due to previous disputes with Mr Corra, she did not wish to be physically present when Mr Corra attended) and whether there was any particular material Mr Corra or Mr Muscat wished to view (as they would endeavour to have that material ready to facilitate Mr Muscat's inspection). 3. On 21 July 2022 at 2:31pm, Ms Tadros sent an email to Mr McArdle with a further letter attached. This letter referred to her letter of 11 July 2022 which set out Mr Qin's open offer to buy Mr Muscat's shares in the company. Ms Tadros stated that although the offer had closed, and as reflected in the originating process, Mr Qin still wished to buy Mr Muscat's shares and remained ready, willing, and able to do so, subject to agreement on price. She noted that Mr Muscat had never articulated why he was opposing the application and on what basis, what he was seeking if he was resisting the buyout order, and whether Mr Muscat was resisting the buyout order solely because he considered that his shares were worth more than the amount specified in the open offer. She concluded by encouraging Mr McArdle to explain their position and indicate what price Mr Muscat considered should be paid to him. 4. On 21 July 2022 at 4:28pm, Mr McArdle sent an email to Ms Tadros stating that she must not obstruct Mr Muscat's capacity to inspect the records. He also queried whether Mr Qin had directed Ms Eldridge not to be present and how Mr Muscat would know where to look for particular records if Ms Eldridge was not there. He asked, further, whether anything would be locked so as to prevent Mr Muscat from accessing any part of "his property". In relation to Mr Corra, the email referred to the provision in the Shareholder Agreement that "[s]uch records shall be open for inspections and examination by each of them, or their duly authorised representative, at all reasonable times" and asserted that Mr Muscat duly authorised Mr Corra to inspect and examine the records and that Mr Corra would accompany Mr Muscat the following day. 5. On 21 July 2022 at 4:34pm, Mr McArdle sent an email to Ms Tadros saying that Mr Muscat's response to the letter wherein Ms Tadros indicated that his examination of the records would be obstructed had already been given, that the "unhelpful 'washing dirty linen' with the Korean company" had been commented on, and that the answers to the questions she had raised were a matter for evidence and submissions. 6. On 21 July 2022 at 4:50pm, Mr McArdle sent an email to Mr Chopra and Ms Tadros stating that they needed to get the BDO retainer letter for Mr Muscat to sign and requesting that it be re-issued. Mr McArdle confirmed that Mr Muscat and his adviser would attend the premises the next day and that they hoped to have information and comments to Mr Chopra by the following day or on 25 July 2022. 7. On 21 July 2022 at 6:52pm, Ms Tadros sent an email to Mr McArdle stating that her letter had made it abundantly clear that they were not obstructing Mr Muscat's capacity to inspect the records, that they had not directed Ms Eldridge to not be present but that she herself refused to be present if Mr Corra attended due to a previous dispute with him, and that nothing would be locked. She asked for answers to the balance of the information that had been requested. 22 July 2022: Mr Muscat and Mr Corra visit the offices of TA Tools 1. On 22 July 2022, Mr Qin and Mr Awadalla were present at the offices of TA Tools in Castle Hill from 8:30am onwards. At 10:20am Mr Muscat and Mr Corra arrived at TA Tools' offices to inspect the records of TA Tools. Also present was a young man named Jayden, who Mr Qin understood to be Mr Muscat's stepson but was referred to by Mr McArdle in email correspondence as Mr Muscat's nephew. During the course of the day, using his mobile phone camera, Jayden was observed by Mr Awadalla filming discussions that took place between Mr Muscat and Mr Qin. 2. At that time, the TA Tools offices were in an industrial unit over two floors, with the main floor being warehouse-like in appearance and the second, smaller upper floor consisting of a kitchen and office space. The office space had an open-plan layout. Mr Qin's office was situated in the office space on the upper floor. 3. TA Tools' physical records were stored in four filing cabinets about 1.3 m in height, each with four drawers. Only eight of those 16 drawers actually contained any records. Those four filing cabinets were stored on the main (downstairs) floor of TA Tools' offices. 4. In cross-examination, Mr Qin said that each drawer of the filing cabinet contained the records for one year, in 12 soft-cover manila folders, each folder containing one month's worth of documents (around 100 pages per folder), totalling roughly 1,200 pages per year for each of the five years they were in business (T51–52). Mr Qin said that the filing cabinets contained invoices and receipts (T53). 5. In cross-examination, Mr Qin said that prior to 22 July 2022, Mr Muscat did not have access to the documents contained in the filing cabinets because Mr Muscat had never asked to see them and Mr Qin had not shown them to him (T51). Mr Qin also agreed that prior to 22 July 2022, he had never sat down with Mr Muscat and showed him the documents in the filing cabinets or source documents, and the only source documents Mr Qin had provided to Mr Muscat were those he sent to Mr Muscat for the purpose of approving payments to suppliers (T53–54). 6. It appears that during the course of the day, Mr Qin and Mr Muscat traded accusations with each other, often speaking loudly and animatedly. 7. At one stage during the day, Mr Corra requested that he be permitted to use the office computer he had previously used while he had been an employee of TA Tools, but Mr Qin denied this request. From that point onwards, Mr Corra was observed by Mr Awadalla using his own laptop computer. Mr Awadalla also observed Mr Muscat and Mr Corra having access to a printer and a scanner/photocopier during the course of the day. 8. Mr Qin did not engage very much with Mr Muscat and Mr Corra, saying to them words to the effect that they were there to inspect the records and if they needed anything else, they should communicate through the lawyers. 9. Mr Awadalla observed Mr Qin showing Mr Muscat, Mr Corra and Jayden how the filing cabinets were organised and where they could find records for each year. 10. During cross-examination, Mr Qin said that he recalled that once or twice during the visit, Mr Muscat came from the lower level up the stairs to Mr Qin's office and asked him some questions about a document he had in his hands, but that most of the questions Mr Muscat asked were not related to the documents (T52). 11. The best contemporaneous record of what is alleged to have taken place during the day is contained in the successive emails that were sent during the course of it. 12. On 22 July 2022 at 10:53am, Mr McArdle sent an email to Ms Tadros stating that Mr Muscat had called in from the site and advised that Mr Qin had refused to show him records, emails, and other communications with the ATO, with Mr Qin allegedly stating "[t]hat is under my Snowrock email account, so you can't have it". The email concluded by asking that Ms Tadros urgently advise Mr Qin to produce all records, including those relating to the ATO. Mr Awadalla read out this email at the request of Mr Muscat, following which Mr Qin and Mr Muscat had a conversation wherein Mr Qin said that if Mr Muscat wished to access the ATO records, he would need to use his own myGovID as the Snowrock email corresponded with Mr Qin's personal myGovID. 13. On 22 July 2022 at 11:48am, Ms Tadros sent an email to Mr Awadalla asking him whether Mr Muscat and Mr Corra looked like they were going to be at the TA Tools office all day. 14. On 22 July 2022 at 11:51am, Mr Awadalla replied via email to Ms Tadros, saying that he had no idea and that Mr Muscat and Mr Corra kept "coming in and causing trouble". He said that Mr Qin was currently on the phone and that he would call Ms Tadros once Mr Qin finished, assuming there was no new dispute. 15. On 22 July 2022 at 11:52am, Ms Tadros emailed Mr Awadalla asking whether Mr Qin wanted her to write to Mr McArdle to say that Mr Muscat and Mr Corra were there to access and inspect and not to make accusations. 16. On 22 July 2022 at 12pm, Mr Awadalla replied to Ms Tadros, stating that he wanted to say as much to Mr Muscat himself but was only supposed to observe. He said that he would greatly appreciate it if Ms Tadros could send a note to Mr McArdle to the effect that the reason why Mr Muscat was in attendance was to "access the physical records which he could not otherwise access", with minimal interruptions to the company operations as Mr Qin was currently working on his own, and that despite this, Mr Muscat was continuously entering Mr Qin's office, making accusations against Mr Qin, and requesting he supply Mr Muscat with documents and other items. Mr Awadalla also proposed that they ask Mr Muscat to "keep with their agreement" that all matters concerning the dispute be relayed through solicitors to prevent impediment to company operations, and remind Mr Muscat that the sole purpose of the visit was to physically inspect company records and that his request for any other documents could be written up as a list and passed on to his solicitor to be supplied to Mr Qin outside of company hours. 17. On 22 July 2022 at 12:04pm, Mr Awadalla sent an email to himself recording events that had occurred at the offices of TA Tools that day. The matters he recorded can be summarised as follows: 1. Mr Corra wanted to use the office computer which was under Debra Parkinson's profile. Mr Qin asked Mr Corra if he had bought his own computer and Mr Corra confirmed that was the case and was observed using his own laptop after this conversation. 2. Mr Awadalla was then taken downstairs and introduced to the parties. 3. At around 10:55am, Mr Muscat approached Mr Awadalla and Mr Qin and asked Mr Awadalla to read out an email Mr McArdle had sent to Ms Tadros (being the email of that day time-stamped 10:53am, referred to above). Mr Muscat then insisted that Mr Qin provide him with emails to and from the ATO. Mr Qin replied that he had received no communications from the ATO. Mr Muscat claimed that Mr Qin knew what he was talking about and then left. Mr Qin replied that he did not know what Mr Muscat was talking about. 4. Mr Awadalla disagreed with the contents of Mr McArdle's email and disagreed that Mr Qin had refused to provide Mr Muscat with access to ATO records. 5. Mr Muscat entered the office again and requested that Mr Qin give him access to the TA Tools MYOB account. Mr Qin explained to him that there was nothing on it. Mr Muscat asked Mr Qin if he used GALFIN 100% of the time with no second set of books and Mr Qin answered in the affirmative. Mr Muscat was not willing to accept Mr Qin's answer and continued to pose the question. 6. Mr Corra said that in his opinion, the profit and loss sheet was off by about $130,000. Mr Qin asked for evidence of this or which year's profit and loss it applied to. Mr Muscat replied, "all of them". 7. Mr Muscat asked Mr Qin about some journal entries which he had opened on his iPad. Mr Qin requested to review them so that he could answer the question. Mr Muscat continued to argue and change the subject and Mr Qin did not get a chance to review what was being shown to him. 8. Mr Muscat and Mr Qin continued to discuss these matters without any progress. Whenever Mr Qin asked Mr Muscat to be more specific, Mr Muscat would accuse him of not wanting to answer the question and move on to the next subject. Mr Qin asked Mr Muscat to place each question on a list to be sent to his solicitor. Mr Muscat continued to accuse Mr Qin of hiding something. 9. Mr Muscat entered the room and asked for passwords to all TA Tools emails, and asked if Mr Qin was reading his emails, which Mr Qin denied. Mr Qin told Mr Muscat that he could not access his email, that Mr Muscat had his own password and Mr Qin had his password. Mr Muscat became frustrated and continued to ask the question while Mr Qin continued to give him the same answer. 10. Mr Muscat asked if the KA Supplies agreement was in the filing cabinet. Mr Qin said that he had sent it to him and that Mr Muscat had never returned it. 11. Mr Muscat entered the room while Mr Qin was on the phone and wrote a note for Mr Awadalla to request from Mr Qin "all directors minutes for all meetings". 1. On 22 July 2022 at 12:32pm, Mr Awadalla emailed Ms Tadros advising that he had just spoken with Mr Qin who had confirmed that he "100%" had never received any emails from the ATO to his Snowrock email, and that the only thing linked with Snowrock was his myGovID, with all business emails and correspondence going to TA Tools. 2. On 22 July 2022 at 12:37pm, Ms Tadros sent an email to Mr McArdle stating that Snowrock was a different corporate entity, that Mr Muscat was not entitled to access its books and records, that Mr Muscat was entitled to any records of the ATO in relation to TA Tools, and that Mr Muscat had already gained access to those via the ATO portal. Ms Tadros stated that they were instructed categorically that "all ATO communications in relation to TA Tools [had] gone to either TA Tools' registered office or email address and/or [were] accessible via the portal [to which Mr Muscat] already [had] access". She explained that Mr Qin's myGovID contained a reference to Snowrock, which was the only reason a reference to that entity might appear in TA Tools' ATO records. She also denied that Mr Qin had said that ATO records relating to TA Tools were contained within his Snowrock email account, and it was only in that case that Mr Muscat could access that material. 3. On 22 July 2022 at 12:55pm, Ms Tadros sent an email to Mr McArdle which attached a letter responding to Mr McArdle's email of 21 July 2022 at 4:34pm. She said that her correspondence had asked for Mr Muscat's position in response to Mr Qin's application and that they simply wanted to know, given that the existence of a deadlock was common ground, what were the real issues in dispute. She said that this was not a matter for evidence or submission but rather something they were entitled to know as a matter of procedural fairness. She said it was in Mr Muscat's interests to provide a response so that they could engage in any further settlement negotiations, and she trusted that once they had instructions on Mr Muscat's position they would respond substantively to the correspondence. 4. On 22 July 2022 at 12:59pm, Mr McArdle sent an email to Ms Tadros stating that it was "a simple fact that the 'email address' of TA Tools with the ATO [was Mr Qin's Snowrock email address]" and that if Mr Muscat was to brief BDO or obtain information, he would be required to have an awareness of all communications with the ATO. Mr McArdle asserted that it was no defence that Mr Qin had chosen to breach the Shareholder Agreement by simultaneously conducting another company without Mr Muscat's knowledge and intermingling it with TA Tools. He declared that full access to all communications with the ATO needed to be provided. 5. At around 1:18pm on 22 July 2022, Mr Muscat, Mr Corra and Jayden left the TA Tools' offices and did not return. They were present at TA Tools' offices for approximately 3 hours that day. 6. On 22 July 2022 at 1:33pm, Mr Awadalla sent an email to Ms Tadros saying: He has checked the ATO website thoroughly in front of me and the [TA Tools] email is on everything except for the login which he does with his MyGovID. 1. On 22 July 2022 at 1:44pm, Ms Tadros sent an email to Mr McArdle asserting that the reason Mr Muscat was in attendance at the office that day was to access whatever books and records were on site that he wished to view and that Mr Muscat was frequently interrupting Mr Qin's work to either make accusations or demand he locate certain things for him. She said that she was instructed that upon Mr Muscat's arrival on site, he was shown and directed to the filing cabinets in which all relevant information was kept. She said that there was little to be gained (for either party) from levelling accusations at each other, and requested that Mr McArdle ask Mr Muscat to desist from making allegations and instead direct such matters through him. She said it was not Mr Qin's job to give up his work day in order to find things for Mr Muscat, and that Mr Muscat had unlimited access to everything in the office and could find whatever he needed. She requested that Mr McArdle ask his client to desist from making demands as it was interrupting Mr Qin's ability to work for TA Tools, such interruptions being to the detriment of TA Tools. 2. On 22 July 2022 at 2:11pm, Mr McArdle sent an email to Ms Tadros attaching a letter responding to her letter of 21 July 2022 regarding Mr Qin's open offer. Mr McArdle stated that they were attempting to provide financial material to enable BDO to provide their valuation by 1 August 2022. He also stated that Mr Muscat had only had unobstructed access to the records since 14 July 2022, that he had come down from Toowoomba on 21 July 2022 for the purpose of visiting the premises and accessing the full books and records, that this had taken place that day in the company of his duly appointed representative, Mr Corra, and that Mr Muscat might go back if he needed further information. Mr McArdle noted that Mr Qin had been present with a lawyer colleague of Ms Tadros, and that Mr Muscat had not himself arrived with a lawyer. He stated that any material obtained from that and any subsequent visit and from electronic access would form the basis of information that he intended to put before BDO to inform them in their task of valuing the company. Mr McArdle said that depending on the value of the company, Mr Muscat might choose to file an interlocutory process seeking that Mr Qin be ordered to sell to him, stating that they reserved their rights in this respect but were hopeful the parties could reach a sensible solution. 3. Importantly, Mr McArdle also stated: Arising from what he discovers at his examination, added to serious issues he has already discovered, he may or may not take other action in addition to, or in lieu of an Interlocutory Process. We will advise him when we have the facts. We cannot advise him until then. 1. Mr McArdle mentioned that Mr Muscat was concerned at the "hurry" in Mr Qin's approach, with the matter before the court on 29 August 2022 and the valuation due in 10 days. He stated that they did not understand why it was important to Mr Qin for an answer to be given prior to the full facts being disclosed, and said that any decision Mr Muscat made regarding the shares or the status of the company would be made in his capacity as a knowledgeable, willing, but not anxious buyer; a knowledgeable, willing, but not anxious seller; or a knowledgeable and responsible company officer, having regard to his obligations under the Corporations Act. 2. The letter concluded by stating: That is our client's position. He seeks the facts after all this time, before deciding anything. We hope that we have now addressed all your queries to date. 1. On 22 July 2022 at 2:18pm, Mr McArdle sent an email to Ms Tadros attaching a photograph of a text message that he had received from Mr Muscat an hour earlier. The text message read (grammatical errors preserved): Chris I have been impeded in the below as Bill said to me "add it to a list and send to Dina lawyers". I asked for all the "tax penalty notices" that I never knew about and all the "Failure to pay notices" and all "interest charge notices" from 2017 until 2021. I also asked for login details for the secondary MYOB account I found (sic) about but Bill declined to send and he also denied it existed at first. I mentioned I knew about it as I spoke with MYOB and they verified there was a TAEGUTEC Tools MYOB account. Bill then said oh yes there is but it has never been used. I also asked the question to see the secondary books that must be used as it isn't and wasn't GALFIN. Paul Corra mentioned the P&L reports are not generated from GALFIN and 2019 had discrepancies of two areas of $130,000 each. So one year was out $260,000. I also asked why there was two cars under Bill Qin for fuel cards so I can have the full itemised invoice. Bill said add it to the list. I mentioned your wife must have a fuel card. Bill said that's just a directors extra that he can have. However I do not have two cards! 1. In the email, Mr McArdle said that if they were unable to inform BDO according to a reasonable standard, they reserved their rights. He then concluded: Having said that, it is our wish for this matter to be resolved. If a full flow of information is given to BDO on an 'open book' basis, it will be possible to confer with full knowledge. In that way both clients will be able to get on with their careers whilst mitigating the damage to date. That will not be possible in the absence of full information. 1. On 22 July 2022 at 2:38pm, Mr McArdle sent a letter to Ms Tadros responding to the letter attached to her email of 22 July 2022 at 12:55pm. He said that they had sent their letter on this point prior to seeing her letter and that they did not expand on their letter which had been emailed at 2:11pm that day, emphasising that they would act on instructions once the full facts were known. 2. On 22 July 2022 at 3:07pm, Mr McArdle sent an email to Ms Tadros which again attached the text message that had been attached to Mr McArdle's email that day at 2:18pm. He mentioned that Mr Muscat's nephew had "taped proceedings with his camera", that Mr Qin had claimed it was illegal when it was not, which "sat oddly with [Mr Qin] deploying […] a camera […] without seeking permission from [Mr Muscat]". Mr McArdle commented that the most worrying thing about Ms Tadros' message was that it assumed that a 50% shareholder and one of two directors could not come and go as he wished and speak to whomever he chose, stating that it was unacceptable to assume that Mr Qin had "some sort of determinative say in where information [was] stored". Mr McArdle said that Mr Muscat could look where he chose, and that Mr Qin was obliged to provide him with any information he sought. He said it was actually part of Mr Qin's "day working for the company" to provide Mr Muscat with information sought and not a disruption to his duties. 3. On 22 July 2022 at 4:32pm, Mr McArdle sent an email to Ms Tadros asking that Mr Qin provide the passwords to the company's email account and to the newly-discovered second MYOB account titled "TT TAEGUTEC Tools", asserting that both had been refused by Mr Qin in further breach of the Shareholder Agreement, which would cause delay in the information they were putting before BDO. 4. On 22 July 2022 at 7:34pm, Ms Tadros emailed Mr McArdle attaching numerous documents that were said to be evidence that the contact details for communications between the ATO and TA Tools consisted of TA Tools' email only and had nothing to do with Snowrock. Also attached were some emails from the ATO that TA Tools had received between 2017 and 2022 which, Ms Tadros stated, proved that the email address that Mr Qin had registered with the ATO had always been his TA Tools email address. She asserted that there had been no intermingling and that there was no basis for Mr Muscat to persist with such defamatory comments. 5. Ms Tadros said that she was instructed that the only mention of the Snowrock email address was under the Relationships Authorisation Manager, separate from the ATO and ABR which used myGovID for login. Ms Tadros stated that the reason the Snowrock email address appeared was because it was Mr Qin's myGovID email, which represented him in a personal capacity and did not in any way function as the contact email for TA Tools. The email concluded by providing Mr McArdle with instructions as to how Mr Muscat could obtain all ATO communications relating to TA Tools. 6. On 22 July 2022 at 7:54pm, Ms Tadros sent an email to Mr McArdle responding to his email of that day, time-stamped 2:18pm. She made the following points: 1. All tax penalty notices, failure to pay notices, and interest charge notices from 2017–2021 were accessible via the ATO portal. They did not understand why Mr Muscat needed to provide those to BDO for valuation purposes but if Mr Muscat wished to look at them he could do so. 2. There was no second MYOB for which Mr Qin could provide login details. TA Tools only used GAL/GALFIN, with the monthly invoice from MYOB (attached) showing it was billed to KA Supplies. 3. Her instructions were that Mr Qin never denied the existence of an MYOB account but rather denied that there was such an account being used for TA Tools, and that Mr Muscat had been provided with access to MYOB on 30 June 2022. 4. Mr Qin had repeatedly stated that there was no second set of books. Mr Muscat should cease and desist from making such defamatory allegations. 5. The P&L reports were generated on GALFIN. 6. They did not understand what discrepancy Mr McArdle or Mr Corra were referring to but invited them to be more specific. 7. She was instructed that Mr Qin had never had two fuel cards and that if Mr Muscat had a specific document or invoice that he wished to raise for Mr Qin's review and consideration, he was welcome to forward it to her. 1. On 22 July 2022 at 7:57pm, Ms Tadros sent an email to Mr McArdle noting that Mr Muscat had now left the office and it seemed that the inspection had proceeded successfully. Ms Tadros said that while there was little utility in substantively responding to his correspondence other than to note that there was no obstruction to Mr Muscat's access to the books and records, in no way did her correspondence suggest that Mr Muscat could not come and go as he wished, nor did it assert that Mr Qin had a determinative say on where things were stored. She asserted that the right to inspect did not include a duty upon Mr Qin to suspend all his work and assist or cooperate with Mr Muscat. She noted that in the context of a deadlock, such requests by Mr McArdle or Mr Muscat were unlikely to be fruitful, which is why it would be best for Mr Muscat to search for and inspect material in the office unimpeded, as he could (and which she understood he did) do. 23 July–3 August 2022: Mr Muscat's requests for passwords for email accounts, work for BDO valuation report, and answers to questions raised by Paul Corra 1. On 23 July 2022 at 3:12pm, Mr Muscat sent an email to Mr McArdle asking him to send an AON tax invoice and AIG management liability insurance document to Ms Tadros and ask Mr Qin to send him the new policy details in full, noting that it had been taken out five days after he sent his original email to Mr Qin advising that he would be taking the matter to a solicitor. Mr Muscat said he questioned the policy then and that it ended in a dispute. 2. On 25 July 2022 at 10:07am, Mr McArdle sent an email to Ms Tadros saying that he had left the office at 5:30pm on 22 July 2022 and had not received three of the six emails she had sent to him that day. He said he would get instructions on them. 3. On 25 July 2022 at 12:11pm, Mr McArdle sent an email to Ms Tadros forwarding the email of 23 July 2022 at 3:12pm from Mr Muscat and asking her whether she could supply an answer to Mr Muscat's question, stating that Mr Muscat did not authorise the policy and was not aware of why it was taken out. Mr McArdle stated that when Mr Muscat asked what it was for, Mr Qin had said "look up google" and that in order to be cautious, Mr Muscat had ultimately authorised it but had not seen it and did not know what it covered. 4. On 25 July 2022 at 12:36pm, Mr Qin sent an email to Mr Muscat, copied to Ms Tadros, stating that further to his emails of 19 and 21 July 2022, he was sending a reminder about the Weir Minerals deal. He noted that he had requested an urgent briefing on the current status of the negotiations with Weir and had asked for Mr Muscat to forward him all correspondence from 23 May 2022 to date, and asserted that because the matter was about the company's day-to-day operations, there was no need to go through their lawyers. 5. On 25 July 2022 at 1:17pm, Mr Qin sent an email to Mr Muscat, copied to Ms Tadros, concerning Mr Muscat's expense claim for his visit to Sydney between 22 and 25 June 2022. Mr Qin asked Mr Muscat to advise which customer(s) he had visited during his Sydney trip and to provide his e-ticket/invoice for his flight from Toowoomba to Sydney. 6. On 25 July 2022 at 5:15pm, Ms Tadros sent an email to Mr McArdle stating that the multitude of emails she had sent was the result of Mr McArdle's many separate emails alleging different instances of various materials being denied to Mr Muscat. She said that she understood that she had responded to all of the various matters that had been raised by Mr McArdle except for his request for the passwords of the company email account which was raised in his email of 22 July 2022 at 4:32pm. She asked Mr McArdle to let her know if she was in error or if there was anything else aside from the passwords that he wished to request or considered he did not have access to. 7. In relation to the passwords to the company email account, Ms Tadros said that she and Mr Qin did not understand the request. She said that she was instructed that there was no generic company email account but rather each employer had their own email account and they were therefore at a loss as to what they were seeking. She said that if they wished for copies of emails which they believed had been sent to Mr Qin's TA Tools email inbox, then they should let her know the subject matter and they would conduct some searches and endeavour to extract and provide the relevant material. 8. She concluded by saying that much of the correspondence that she had sent to Mr McArdle was in reply to emails he himself had sent with claims made by Mr Muscat that Mr McArdle had not seemed to have verified, substantiated or explained with sufficient detail prior to demanding explanations from Mr Qin. She gave as examples the request for details of the second MYOB account, a company email account and a second fuel card, none of which (on her instructions) existed. She asked that in future, some steps of verification be undertaken by Mr McArdle before he forwarded on text messages from Mr Muscat demanding answers. 9. On 25 July 2022 at 5:18pm, Ms Tadros sent an email to Mr McArdle saying that she was instructed that Mr Qin denied ever telling Mr Muscat to "look up google"; that it was apparent that Mr Muscat had authorised payment and accepted the policy; and that in light of that, they did not see the need for Mr Qin to now verify it. Ms Tadros attached a copy of the policy which, she said, had already been sent to Mr Muscat on 29 April 2022. 10. On 26 July 2022 at 9:28am, Mr McArdle sent an email to Mr Chopra and Mr McCourt (both of BDO), copied to Ms Tadros, stating that Mr Muscat had attended the premises with Mr Corra the previous Friday and explaining that Mr Corra was a former financial employee of TA Tools holding degrees in commerce and accounting and that Mr Muscat relied on him as his duly authorised representative for the purposes of the Shareholder Agreement. The email attached a report authored by Mr Corra, on which Mr McArdle commented: This report discloses significant dispute as to the status of the accounts. We seek your views on what steps you propose for the directors/shareholders to take to reconcile their disagreement, so that agreed figures can be considered for the valuation. If that can be done in a way that does not disrupt your procedures, we would welcome it. 1. The report attached to Mr McArdle's email to BDO is dated 25 July 2022 and addressed to Mr Muscat. The report notes that Mr Corra was asked to examine material to give to BDO for valuation purposes and that it was very difficult to obtain all the information, with just one day of going through the information themselves and Mr Qin's lack of assistance making it hard. The report states that Mr Corra had found items of concern and that he would like another opportunity to look through the records. He said that "[a]t the moment, the accounts appear to be not correct" and listed the following concerns: 1. Tax: the report recites that Mr Muscat's assertion that he had only had access to the tax record since about June, when he discovered fines and penalties for non-payment of tax. Mr Corra notes that they could not find the full list of tax records and that neither he nor Mr Muscat actually knew how much tax was due and payable at that time, or how much had been left unpaid. 2. Backfilled transactions: the report mentions that there had been transactions up to three years old all being entered late at night and all at once in April, May and June 2022, and that this "bolstering [of] the books" would generate a false impression of the company's performance, cash on hand and value. 3. KA Supplies: the report states that in 2019, TA Tools decided to stop selling products purchased from JJ Tools and start a new company called KA Supplies to market that product line. Mr Corra states his concern that the product then owned by TA Tools was written off and added to KA stock when the product should have been invoiced from TA Tools to KA. He states that to facilitate the calculation of the value of the transfer, he needed a report from the MYOB system from KA but that they had not been able to get access to it. He also mentions the presence of invoices in the TA Tools accounts which had been expensed for import duty on freight, when (from November to 2019) those import costs were not the responsibility of TA Tools. He said that they had been unable to check that all purchase invoices from JJ Tools since 2019 had been recorded in the correct company and all the charges invoiced to TA Tools. 4. Timing of entries: the report states that there appeared to have been no attempt to reconcile supplier receipts with invoices received and processed, which was a timing difference discrepancy and affected yearly figures. 5. Superannuation: the report states that they needed an explanation about the amount of the superannuation guarantee levy that was being paid to each director, and that Mr Corra believed that amounts had been paid in favour of one director/shareholder (not Mr Muscat). Mr Corra said that resolving this would require a payroll analysis report for the fiscal years commencing 2017 to the present, and would require Mr Muscat and Mr Qin to disclose the payments they were receiving and in what form. 6. Fringe benefits tax: Mr Corra states that he believes that TA Tools may have a liability for FBT for payments made to directors/employees for bonus payments and some salary components. He gave the example of having discovered on 22 July 2022 that there had been a fuel card issued by the company from Fleet Partners to Mr Qin's wife without Mr Muscat's knowledge or consent. He said that they required a copy of the monthly invoice issued to TA Tools for the fuel card and that the card should be cancelled immediately. He stated that the fleet card records showed that Mr Qin used more petrol than Mr Muscat or any of the sales staff, and since his only use of the car was to go to and from work (whereas Mr Muscat's usage necessarily involved ranging all over the states assigned), an explanation was required. 7. Directors minutes: the report states that they asked for copies of directors minutes and were advised that there were none. 1. On 26 July 2022 at 9:36am, Mr McArdle sent an email to Messrs Chopra and McCourt, copied to Ms Tadros, which attached screenshots of various journal entries for April–July 2022 for TA Tools, stating that if they needed to discuss those attachments with Mr Corra or Mr Muscat, they would facilitate contact. Mr McArdle noted the potential utility of all the parties conferring to go through areas of disagreement on the records. 2. On 26 July 2022 at 12:03pm, Ms Tadros sent an email to Messrs Chopra and McCourt, copied to Mr McArdle, attaching a letter addressed to BDO concerning the correspondence received from Mr McArdle that morning (being the email of 26 July 2022 at 9:28am with the attached report from Mr Corra), which, she said, had been sent without any advance notification or warning. Ms Tadros said that they did not agree with the contents of the allegations contained in the report and did not agree that BDO's retainer extended to providing their views on how to reconcile any disagreement between the directors about the accounts and accuracy of figures, stating that if an individual wished BDO to opine on value based on different financials it was for that individual to provide them. She noted that they had not received any request from Mr Muscat's lawyers since the inspection on 22 July 2022 for any documents or further books and records. Ms Tadros concluded by asking BDO to confirm the status of the draft report and whether they required anything further from either party and reminded BDO and Mr Muscat's solicitors that no correspondence should be occurring directly with Mr Muscat, Mr Corra or Mr Qin without at least legal representatives from the other side also being present. 3. On 26 July 2022 at 12:28pm, Mr McArdle sent an email to Ms Tadros and Messrs Chopra and McCourt expressing agreement that no correspondence should flow between the valuers and either director/shareholder unless the lawyers for the other were copied in. Mr McArdle mentioned that Mr Muscat was at a major disadvantage due to the difficulty he had encountered in providing a comprehensive assessment of the company's records. Mr McArdle also stated: We must clear this up. To do that, I suggest that: 1. All correspondence between the Tax Office and the company over the past, say, five years, be provided to the valuer. 2. An explanation be provided for the adding of invoices and other reporting instruments several years old, to the accounting records of the company since April or so. 3. Generally, Mr Qin can comment on the matters Mr Corra brings up. The controversy is set out, and can be remarked on. 1. On 26 July 2022 at 2:22pm, Ms Tadros sent an email to Mr McArdle, copied to Messrs Chopra and McCourt, which stated that all correspondence between the Tax Office and TA Tools was accessible to Mr Muscat via the online ATO portal to which he had access and which he could provide to BDO if he wished. She said that they would respond to Mr McArdle's points 2 and 3 separately, not including the expert, because they concerned the dispute between the parties which the expert did not need to be included upon. She reiterated that the scope of the joint expert's retainer was not to mediate on any such disputes but to opine based on information provided to them by the respective parties. 2. On 26 July 2022 at 2:27pm, Ms Tadros emailed Mr McArdle in relation to points 2 and 3 in his email of that day at 12:28pm. She said they did not understand what allegations he was making and/or those allegations were ridiculously broad. She asked, in relation to point 2, what invoices were said to have been added, what breach of accounting standard was alleged, and what actual allegation they were making. She asked that Mr McArdle take the time to articulate under his own letterhead, not via a text message from Mr Muscat or a random document from Mr Corra, the questions he was asking and considered to have been unanswered, particularly as many of the matters raised by Mr Corra had already been addressed by her email correspondence the previous day. She said she had no idea whether Mr Corra had been apprised of those explanations. 3. Ms Tadros noted that Mr Corra had raised questions as to KA Supplies and the level of superannuation received by Mr Muscat and said that although those allegations were still vague in nature, she suggested that Mr McArdle seek instructions on those matters and confirm whether they truly wanted a response from Mr Qin. She said that they were surprised that Mr Muscat wished them to address those matters, but would do so on affidavit if they persisted in raising them in the proceedings. She noted that such a course would expose Mr Muscat to cross-examination on matters that might self-incriminate him. 4. On 26 July 2022 at 3:01pm, Mr McCourt sent an email to Ms Tadros and Mr McArdle, copied to Mr Chopra, stating that they had "prepared a draft valuation report based on the information provided by Mr Qin". He said he would review the report the following day and would likely be in a position to release the report later that week, subject to their instructions. 5. On 26 July 2022 at 4:58pm, Mr McArdle sent an email to Mr McCourt and Ms Tadros, copied to Mr Chopra, which stated that they would like BDO to have regard to material supplied by Mr Muscat. 6. On 27 July 2022 at 10:28am, Ms Tadros sent an email to Mr McCourt, copied to Mr Chopra and Mr McArdle, thanking him for the update and asking whether it was possible, prior to the report's finalisation, for them to provide the draft report to both parties so that there would be an opportunity to ensure that it did not have any admissibility issues. 7. On 27 July 2020 to 11:46am, Mr McArdle sent an email to Ms Tadros and Mr McCourt, copied to Mr Chopra, saying he did not object to that course and that the draft would allow both lawyers to get instructions based on it. They could then let BDO know their respective standpoints on whether they should finalise it on the basis of the draft, or whether one or the other advocated for additional work. 8. On 27 July 2022 at 12:20pm, Ms Tadros sent an email to Mr McArdle and Mr McCourt, copied to Mr Chopra, stating that they did not agree that the purpose of providing a draft report would be for either side to advocate for further work as referred to by Mr McArdle. Rather, she said, it was solely in order that both legal parties could identify any admissibility problems with the report, and to provide an opportunity for the expert to re-craft any sections of the report to remedy those issues. She said that anything else would be inappropriate interference with an expert witness. She stated that neither party could oppose or delay finalisation by an expert if the expert was of the view that they had answered the questions asked. She said such conduct would be interfering with the expert's obligations to the court to provide a report by 1 August 2022, and noted that if parts of the report answered the questions based on Mr Muscat's material, but the report as a whole was not finalised or ready to be issued in draft or final form, then they were content for publication of the report in two tranches with either tranche to be issued in draft and then finalised as suited the expert. 9. On 27 July 2022 at 1:21pm, Mr McArdle sent an email to Ms Tadros and Mr McCourt, copied to Mr Chopra, which attached extracts from the BDO retainer letter and the joint letter of 20 July 2022 to BDO. Mr McArdle stated that they had made it clear that they had reservations about the accuracy of much of the material BDO had been provided with by Mr Qin, and that it would not be possible for BDO to produce a report that rightly attributed an opinion to them that such material was accurate. Mr McArdle said it would be in the interests of both sides and the disposition of the matter for the parties to see the draft, and that this would not constitute pressuring the expert witness but would allow them to determine whether or not they wanted to supply further information. 10. On 28 July 2022 at 10:46am, Mr McArdle emailed Ms Tadros responding to her email of 25 July 2022 at 5:15pm, in which she had asked whether access was being sought to Mr Qin's entire email inbox. He said that Mr Muscat sought access to his property, that Mr Qin had the relevant access, and that "what [Mr Muscat] want[ed] it for" was an aspect of accountability that Mr Muscat did not feel compelled to explain. Mr McArdle said that much of the dispute arose from Mr Muscat only discovering things after he went to the trouble of doing so, but that he should automatically know everything to do with the company and that it was Mr Qin's obligation to provide full disclosure. He said that Mr Muscat wanted the same level of access to the entire email box that Mr Qin had, and that refusal of this request would constitute an additional breach of the Shareholder Agreement. 11. On 29 July 2022 at 11:06am, Ms Tadros sent an email to Mr McArdle stating that they now understood that Mr Muscat wanted access to the entirety of Mr Qin's company email account, and confirmed that they had obtained the login details and passwords from Mr Qin which would be provided to Mr Muscat upon the provision of an undertaking by him to the effect that he would not delete, destroy, edit, or tamper in any way with anything within that email account. Ms Tadros then requested, on behalf of Mr Qin, Mr Muscat's login details and passwords to his company email account, noting that Mr Qin would provide an undertaking in identical terms so as to avoid delay in the provision of it. 12. On 29 July 2022 at 11:31am, Mr McCourt sent an email to Ms Tadros and Mr McArdle, copied to Mr Chopra, attaching the draft valuation report. The draft valuation report provided valuations across the two scenarios, being: 1. Scenario 1: on the assumption that the Distribution Agreement would continue (valuation range — low $634,000, mid $681,000, high $727,000); and 2. Scenario 2: on the assumption that the Distribution Agreement would not continue beyond 26 September 2022 (valuation range — nil to about $206,000). 1. On 1 August 2022 at 8:53am, Mr McArdle sent an email to Ms Tadros responding to her email of 29 July 2022 at 11:06am in which she had requested Mr Muscat's login details and passwords. Mr McArdle said, "[w]ill arrange". 2. On 1 August 2022 at 1:05pm, Mr McArdle sent an email to Mr McCourt, copied to Ms Tadros, saying that they did not seek to influence what Mr McCourt put to the court, had provided material based on their own inspection, and had provided comments to Mr McCourt's email of the previous week based on that material. He asked Mr McCourt to clarify whether or not he had or would rely on the additional and alternative information they had provided. He concluded by stating that Mr Muscat did not accept responsibility for the accuracy of any document provided by Mr Qin. 3. On 1 August 2022 at 1:40pm, Mr McCourt sent an email to Mr McArdle and Ms Tadros, copied to Mr Chopra, clarifying that the BDO valuation report had been prepared on the information provided by Mr Qin and that Mr Muscat had not provided financial statements for BDO to consider in the valuation. He stated that they had reviewed the information provided by Mr Muscat and his representative but were unable to determine the impact (if any) of the questions raised by Mr Muscat on the financial statements. He said that if both parties did not agree with the financial statements used in the valuation, he could introduce the parties to Mr Pyne and Mr Monk to assist with this process. 4. On 1 August 2022 at 2:43pm, Ms Tadros sent an email to Mr McCourt, copied to Mr Chopra and Mr McArdle, stating that based on Mr McCourt's response, they did not understand there to be any outstanding issues between Mr McCourt and Mr Muscat's legal representatives and that even if there were, it did not warrant any hold-up in the issuance of the final reports. She said that if Mr Muscat's legal representatives wished for Mr McCourt to look at any further information or financial data, they could do so, and any impact on his opinion could then be expressed. She concluded by saying that they looked forward to receipt of BDO's final signed report. 5. On 1 August 2022 at 3pm, Mr McArdle sent an email to Ms Tadros and Mr McCourt, copied to Mr Chopra, saying that the entire dispute between the parties had arisen from their contention that Mr Qin had comprehensively denied Mr Muscat access to company records, despite him being a co-director and joint shareholder. He said that the direct result was that any financial data was restricted to that provided by Mr Qin and that they did not have sufficient access to the records to confirm the accuracy or otherwise. Mr McArdle concluded by saying they were in the process of obtaining instructions on whether or not they wished to retain the services of BDO to actually examine the records so as to verify or add to the information already provided. 6. On 1 August 2022 at 4:48pm, Ms Tadros sent an email to Mr McCourt, copied to Mr Chopra and Mr McArdle, saying that while Mr McArdle sought the instructions he referred to, there was no reason for BDO to not issue its report, due to be filed that day. She said that if a supplementary report became necessary, it could be attended to at the appropriate stage. 7. On 2 August 2022 at 12:56pm, Mr Qin sent an email to Mr Muscat asking him to approve payments for superannuation, tax and DHL. 8. On 2 August 2022 at 1:56pm, Mr Muscat sent an email to Mr McArdle requesting that he ask Ms Tadros to get Mr Qin to explain the payments. Mr Muscat said he was also waiting for a superannuation payment report for the last five and half years. Mr Muscat said that he required further information before approval could be granted, including as to why the $37,000 payment to the ATO was showing as a new payment and whether this was the first time TA Tools had lodged a tax return, a copy of the lodged assessment notice and tax return. He also sought a copy of the directors minutes for approval for the tax return, an explanation as to why the directors' superannuation amounts were different, and whether the DHL payment included payments for JJA Tools products for KA Supplies. 9. On 2 August 2022 at 2:03pm, Ms Tadros sent an email to Mr McCourt, copied to Mr Chopra and Mr McArdle, noting that she had not received a response to her email of 1 August 2022 at 4:48pm and that the court had ordered for the report be filed the previous day. She requested that Mr McCourt update their office with respect to the issuance of the reports as a matter of urgency. 10. On 2 August 2022 at 2:11pm, Mr McCourt sent an email to Ms Tadros, copied to Mr Chopra and Mr McArdle, saying that the valuation was now a joint appointment, and that he understood that he needed instructions from both parties to finalise the report. He noted that he had not received instructions from Mr McArdle. 11. On 2 August 2022 at 2:23pm, Ms Tadros sent an email to Mr McArdle saying that given Mr Muscat's previous conviction that he required urgent access to Mr Qin's emails, her office had forwarded him correspondence confirming they had obtained the login details and passwords from Mr Qin to be given to Mr Muscat once the latter's undertaking was received. She said that she had also provided Mr McArdle with an undertaking prepared by Mr Qin for his receipt of the same, and did not understand what reason there could be for the delay in the receipt of Mr Muscat's undertaking and login details in response. She repeated their request that Mr McArdle provide her office with confirmation of Mr Muscat's undertaking and the relevant passwords immediately. 12. On 2 August 2022 at 2:23pm, Ms Tadros sent an email to Mr Muscat attaching a notice to produce for inspection addressed to Mr Muscat for the production of the documents sent and received between Mr Muscat and Mr Corra between April 2022 and the present in relation to: 1. Mr Corra's appointment as authorised representative; and 2. the financials or financial position of TA Tools. 1. On 2 August 2022 at 2:45pm, Mr McArdle sent an email to Ms Tadros asking her whether she could refer on the questions asked by Mr Muscat in his email of 1:56pm that day in relation to the approval of the payments. 2. On 2 August 2022 at 2:54pm, Mr McArdle sent an email to Ms Tadros commenting that it was extraordinary that a person who generated the entirety of the income of the company, owned 50% of it and was one of its two directors had to give Mr Qin an undertaking about accessing his own property; however, as soon as they saw the signed undertaking from Mr Qin, they would advise Mr Muscat to provide one to Mr Qin. 3. On 2 August 2022 at 3:41pm, Ms Tadros sent an email to Mr McCourt, copied to Mr Chopra and Mr McArdle, responding to Mr McCourt's email of that day at 2:11pm. She said that Mr McCourt's understanding was incorrect and that, as an expert subject to the code of conduct, his duty to the court required compliance with the court orders. She said that the joint letter of instruction expressly envisaged two different sets of opinions based on two different sets of materials being provided to the expert, and that there could be no suggestion that the parties needed to reach agreement on the financials for Mr McCourt to finalise his report. She asserted that there was no reason for delaying finalisation of the report and if Mr McArdle wanted to provide further information, he could do so and that could be reflected in a supplementary report. She said it was not for Mr McArdle to state that there was no prejudice or to say a breach by the expert did not matter if in essence he would take the blame. She said there would be significant prejudice in the continued accrual of legal expenses in preparation for the hearing while they awaited the report. She requested an urgent and immediate telephone conference with Mr McCourt and Mr McArdle. 4. On 2 August 2022 at 4:27pm, Ms Tadros sent an email to Mr McArdle stating that they had confirmed that Mr Qin agreed to the undertaking, and that they had not understood that the cause of the delay was Mr McArdle's wish to see it signed. She suggested that the expeditious resolution of things would be assisted if Mr McArdle articulated such requirements instead of waiting for her to chase a response. She confirmed that she was obtaining a signed undertaking forthwith and would revert as soon as possible. She noted further that she had repeatedly raised in her correspondence her concerns with respect to Mr McArdle's inflammatory comments and unnecessary remarks and asked that they cease. 5. On 2 August 2022 at 5:40pm, Mr McCourt sent an email to Ms Tadros, copied to Mr Chopra and Mr McArdle, attaching an updated valuation report which he believed correctly represented the positions of both parties and drew attention to the fact that he had amended the valuation to be a "limited scope valuation engagement" as there were unresolved questions regarding the financial information. He asked for any comments on the report. 6. On 3 August 2022 at 9:31am, Mr McCourt sent an email to Mr McArdle and Ms Tadros, copied to Mr Chopra, which attached the signed report. The cover letter to the report stated: We have considered and relied upon information provided by Mr Qin and Mr Muscat. The financial information has been provided by Mr Qin. Mr Muscat has raised questions in relation to the financial information. We have been unable to assess the impact (if any) of Mr Muscat's questions on the financial information. While our work has involved analysis of financial information and accounting records, it has not included an audit or review in accordance with generally accepted auditing and assurance standards. Accordingly, we assume no responsibility for and make no representations with respect to the accuracy or completeness of any information provided to us. This engagement is a Limited Scope Valuation Engagement as defined by the Accounting Professional & Ethical Standards Board Limited professional standard APES 225 'Valuation Services' […]. The scope is limited as Mr Muscat has expressed doubt as to whether the financial information reflects a true representation of the performance of the Company. We have been provided with insufficient information to assess whether the financial information is a true representation of the performance of the Company. Mr Qin and Mr Muscat have reviewed a draft version of this Report. Mr Qin has confirmed that the information provided to us and as presented in this Report is accurate, and that no significant information essential to our Report has been withheld. Mr Muscat is unable to opine on the information included in this report. 1. The valuation report provided the same valuations for each of the two scenarios as that set out in BDO's draft report (see above at [315]). 2. On 3 August 2022 at 9:47am, Mr McArdle sent an email to Ms Tadros in which he said that he believed the protocol was that she would file the valuation report and serve it on Mr McArdle. 3. On 3 August 2022 at 4:52pm, Ms Tadros sent an email to Mr McArdle attaching Mr Qin's signed undertaking concerning the use of and access to Mr Muscat's company email account. 4. On 3 August 2022 at 5:56pm, Ms Tadros sent an email to Mr McArdle which attached a letter asking him to formulate requests with some degree of specificity and not just forward on generic communications from Mr Muscat. She said that Mr Muscat was now making requests for materials which, with a small amount of time and effort, he was and had been able to access himself for some time now, much of which was material that he was already well informed of, that he already had access to, and that had already been discussed in correspondence. 5. Ms Tadros set out responses from Mr Qin to what they understood Mr Muscat to be requesting as follows: 1. Explaining attached payments: Mr Qin instructed that all invoices and supporting documents for the payments were already contained within the same attachment that Mr Muscat had forwarded to Mr McArdle. 2. Superannuation payment report for the last five-and-a-half years: Mr Qin instructed that payroll reports were always generated monthly and kept in the filing cabinet, and that when Mr Muscat and Mr Corra attended the office to examine accounting records, Mr Muscat had asked about this, and Mr Qin had pointed out the filing cabinet where they were located. Ms Tadros attached a payroll analysis report for January 2017–July 2022 along with proof of the amounts that Mr Qin instructed Mr Muscat demanded be deducted from his payroll and paid to his family members in the form of receipts. 3. When TA Tools had lodged a tax return for the first time: Mr Qin instructed that the first income tax return (attached) was lodged with the ATO in August 2018. Ms Tadros suggested that Mr Muscat access the ATO portal himself to check details such as this. 4. Why an ATO $37,000 payment was showing as a "new" payment: Mr Qin instructed that this was the first time that the company had paid the ATO for income tax liability, and suggested that if Mr Muscat required further information, he could access the ATO portal to verify the payment details. 5. Copies of the assessment notice and tax returns: Mr Muscat already had access to all of these. Copies of them were attached. 6. Copies of the directors' meetings minutes for approval for the tax returns: Mr Qin instructed that Mr Muscat was already aware that there were no directors' meetings for approving tax returns and that neither of the parties had ever made such a motion. Mr Qin prepared the income tax returns based on the company's financials and lodged them with the ATO. 7. Explanation of why the directors' superannuation amounts were different and whether the DHL payment included any payments for JJ Tools products for KA Supplies: Ms Tadros stated that each of these requests would be responded to once Mr McArdle responded to her email of 26 July 2022 at 2:26pm. 4–22 August 2023: Mr Muscat files interlocutory process, disputes over Mr Muscat's expenses and Mr Muscat's failure to provide passwords to his email account 1. On 4 August 2022 at 11:27am, Mr McArdle sent an email to Ms Tadros commenting that she wrote long letters and that he would get instructions. Mr McArdle said that the comprehensive breaches of the Shareholders Agreement by Mr Qin would be a matter for evidence from Mr Muscat due on 16 August 2022. 2. On 4 August 2022 at 12:47pm, BDO sent Mr McArdle an invoice by email addressed to Mr Muscat for his 50% share of the fees for their valuation report in the amount of $6,600. 3. On 4 August 2022 at 1:42pm, Mr McArdle sent an email to Ms Tadros stating that they would not object to the BDO invoice being paid out of company funds and asking them for their position. 4. On 4 August 2022 at 2:13pm, Ms Tadros sent an email to Mr McArdle stating that they did object to the payment being met out of company funds. She stated that the retainer was not with the company but with two individuals, meaning that the expense needed to be met out of the private resources of the two individuals. She stated that Mr Qin was meeting his share of the cost out of his personal resources. She asserted that it was inappropriate for the company to pay for the two directors' expenses relating to the dispute. 5. On 5 August 2022 at 9:16am, Mr Muscat filed an interlocutory process in the Previous Proceedings making an application under ss 232(d) and 233(1)(d) of the Corporations Act for the forced sale of Mr Qin's shares in TA Tools to Mr Muscat in circumstances where the management and affairs of TA Tools were deadlocked. 6. In cross-examination, Mr Muscat said that what he wanted to get out of the Previous Proceedings was control of TA Tools, affirming the belief he stated in his affidavit that Mr Qin could not run the company without him, but that Mr Muscat could run the company without Mr Qin (T34). Mr Muscat resisted the suggestion that he also wanted to get a lot of money out of the Previous Proceedings (T33–34). 7. On 5 August 2022, Ms Tadros sent a letter to Mr McArdle stating that the high range for the present value of TA Tools in the expert report was the same basis upon which Mr Qin's open offer had been made on 11 July 2022, being "a value of the company of $206,000 with 50% of the shares valued at $103,000". She wrote that they were very confident that such a valuation reflected the best possible outcome for Mr Muscat at the final hearing. 8. In light of this, Mr Qin made an offer on terms that Mr Muscat transfer all his shares in TA Tools to Mr Qin, resign from his roles as director and manager of sales and marketing at TA Tools, and grant full releases for any and all disputes he had with Mr Qin in relation to TA Tools, in return for satisfaction of Mr Muscat's outstanding loan of $74,357.54 and leave entitlements of $49,000 as at 30 June 2022, and Mr Qin paying Mr Muscat the amount of $227,000 within 14 days. In addition, in the event that a distribution agreement was formally entered into between TA Tools and TTHQ before 26 December 2022, Mr Qin agreed to pay Mr Muscat a further sum of $7,500 per month for 36 months. The offer was said to be open until 5pm on 12 August 2022. 9. The letter then explained how the additional payment to Mr Muscat had been calculated. 10. On 5 August 2022 at 11:30am, Ms Tadros sent an email to Mr McArdle stating that they had provided Mr Qin's signed undertaking but had still not been provided with access to Mr Muscat's emails. She said that the failure to explain the cause for the delay in providing access meant that it appeared that Mr Muscat was obstructing access to company records and that such conduct was oppressive. She demanded that access to Mr Muscat's emails be provided that day, or an explanation as to why the provision of such a straightforward undertaking was taking so long. 11. On 5 August 2022 at 11:33am, Mr McArdle sent an email to Ms Tadros stating that he would get instructions. 12. On 5 August 2022 at 4:32pm, Ms Tadros sent an email to Mr McArdle listing a number of outstanding queries on which Mr McArdle had said that he was obtaining Mr Muscat's instructions and would respond. These queries concerned Mr Muscat's expenses in June 2020 for 3 e-TAGs linked to his account when he only had one company car; Mr Muscat's claim for a two-night stay between 3–5 July 2020 at the Potters Toowoomba Hotel; bonus payments to Mr Muscat by TA Tools of $10,000 for 2021 and an additional $5,000 in January 2022 and February 2022; and whether Mr Muscat would object to Mr Qin including those bonus amounts as part of the August payroll process on 12 August 2022 (in accordance with the Shareholder Agreement). 13. She also stated that she was instructed that Mr Qin had on several occasions requested that Mr Muscat provide supporting documents for business credit card transactions between April 2021 and April 2022, being tax invoices and booking confirmations for flights and hotel bookings, tax invoices for rental car bookings, and an explanation of transactions between 22 December 2021 and 6 January 2022 when TA Tools was closed for the holidays. 14. She also stated that she was instructed that Mr Qin was yet to receive an update regarding the state of negotiations with Weir Minerals. 15. On 5 August 2022 at 4:51pm, Mr McArdle emailed Ms Tadros stating that Mr Qin was "oppressively purporting to exercise direction and control over Mr Muscat", in comprehensive breach of the Shareholder Agreement, and that Mr Qin's refusal to reimburse expenses had actually rendered the normal business of the company impossible. He said that in contrast, Mr Muscat had never seen an expense claim by Mr Qin and referred to Mr Qin's wife's petrol card, which had only been discovered when Mr Muscat was finally given access after making an appointment at his own premises. 16. On 8 August 2022 at 11:45am, Ms Tadros replied to Mr McArdle asking him to make particularised allegations and requests so that they could respond. She said that if Mr McArdle did not properly identify what he was talking about, they could not meaningfully respond and that they did not understand why Mr McArdle continued to repeat allegations which had been substantially responded to rather than engaging with the substantive responses given. She noted that they still had not received any substantive response to their correspondence relating to email logins and the provision of an undertaking from Mr Muscat, or their letter of 3 August 2022 regarding company payments. 17. On 12 August 2022, Mr McArdle sent a letter to Ms Tadros on behalf of Mr Muscat making an offer to purchase Mr Qin's shares in TA Tools, which was stated to reflect a greater value to Mr Qin than that contemplated by BDO in their valuation. 18. The terms of the offer were that Mr Muscat would pay Mr Qin $230,000 within 14 days of agreement, in exchange for Mr Qin transferring all his shares in TA Tools to Mr Muscat; Mr Qin resigning as a director and employee of TA Tools; and Mr Qin providing full releases to TA Tools and Mr Muscat. The offer was stated to be open until 5pm on 16 August 2022. 19. On 18 August 2022 at 11:13am, Ms Tadros sent an email to Mr McArdle which attached a letter to Mr McArdle referring to the notices to produce dated 2 and 10 August 2022, which had been served but not yet responded to. She asked when production would be provided, noting that the matter was listed for an expedited hearing. 20. On 18 August 2022 at 2:10pm, Mr McArdle sent an email to Ms Tadros stating that he would get instructions. 23 August–6 October 2022: Settlement reached, TTHQ extends date for termination of Distribution Agreement and Previous Proceedings dismissed 1. On 23 August 2022, Ms Tadros sent a letter to Mr Tamam of TTHQ stating that the parties had reached a binding settlement agreement that morning. She said that they were happy to note that the agreement was reached prior to any public hearing of the dispute, meaning reference to TaeguTec's name and branding in a publicly litigated forum had been avoided. 2. On 23 August 2022 at 7:13am, Mr Qin sent an email to Messrs Han and Tamam to inform them that a settlement agreement had been achieved between himself and Mr Muscat for Mr Qin to buy him out. Mr Qin then referred to the termination notice and advanced a number of suggestions for their consideration regarding the continued use of the TaeguTec brand-name, domain name, and GAL/GALFIN system, and suggested that they allow the current 90-day payment term to continue with an increased bank guarantee of $300,000. 3. On 23 August 2022 at 8:45am, Mr McArdle sent an email to Ms Tadros, copied to Mr Salama and Ms Hall (counsel for Mr Muscat and Mr Qin respectively, although Ms Hall's email address was incorrect), stating: We understand the settlement to be: 1. Mr Qin to pay Mr Muscat $450,000 within 14 days of agreement, in exchange for 2. Mr Muscat transferring all of his shares in the Company to Mr Qin, and 3. Mr Muscat resigning as a director, and employee of the Company at the same time that he transfers his shares, and 4. Mr Muscat fully releasing the Company and Mr Qin from all or any entitlement he has or may have arising from his shareholding, his directorship, or his employment, including but not limited to his accrued but untaken leave, any other unpaid employment entitlements (whether statutory or contractual), and any entitlement to be re-paid any loan amount or paid any interest amount, 5. Each committing to the other that they will not disparage the other in the trade or in the community, and 6. The current proceedings before the Court being discontinued with each side paying their own costs. 1. It seems that this apparent statement of the terms of the settlement reached was mistaken as it was restated in a slightly different form just over 30 minutes later. 2. On 23 August 2022 at 9:19am, Mr McArdle sent an email to Ms Tadros, copied to Mr Salama and Ms Hall (albeit still to the wrong email address), stating that there was an error in paragraph 4 of the settlement terms which exceeded instructions because the release was only to do with the value of the shares, Mr Muscat's employee entitlements, and the loan amount. Mr McArdle stated: So, the understanding is: 1. Mr Qin to pay Mr Muscat $450,000 within 14 days of agreement, in exchange for 2. Mr Muscat transferring all of his shares in the Company to Mr Qin, and 3. Mr Muscat resigning as a director, and employee of the Company at the same time that he transfers his shares, and 4. Mr Muscat fully settling with the Company and Mr Qin as to the value of his shareholding, his entitlement to payment for accrued but untaken leave, and any entitlement to be re-paid any loan amount or paid any interest amount of such a loan, 5. Each committing to the other that they will not disparage the other in the trade or in the community, and 6. The current proceedings before the Court being discontinued with each side paying their own costs. 1. Ms Tadros did not accept that Mr McArdle's expression of the settlement was correct. 2. On 23 August 2022 at 10:54am, Ms Tadros sent an email to Mr McArdle, copied to Mr Salama and Ms Hall, stating as follows: I understand the agreement, as was always negotiated between counsel and was agreed yesterday was to the 'five points' previously emailed with an additional sixth point as to non-disparagement. Accordingly, I note the binding agreement between the parties, as was agreed with the authority of counsel yesterday is as follows: 1. Mr Muscat do all things necessary to transfer his shares in Taegutec Tools to Mr Bill Qin within 7 days. 2. Mr Bill Qin pay Mr Muscat $450,000 within 7 days to his nominated bank account. 3. Both parties do all things necessary to effect the voluntary winding up of KA supplies. 4. Upon receipt of the money in 2 and transferal [sic] of the shares in 1, the proceedings be dismissed with no order as to costs. 5. The parties note that Mr Muscat's entitlements and any outstanding loans to Taegutec Tools are all repaid and settled by payment of the amount in 2 above to him. 6. Both parties agree to not disparage the other. 1. Mr Tadros asked Mr McArdle to confirm that he agreed as soon as possible so that they could prepare a communication for Mr McArdle to consent to, which was to go to the court vacating the hearing. 2. On 23 August 2022 at 11:21am, Mr McArdle sent an email to Ms Tadros, copied to Mr Salama and Ms Hall, which stated that her wording reflected the agreement and was confirmed to be the agreement between the parties, expressing that he looked forward to the proposed joint communication to the court advising of the settlement. 3. As a result, the settlement agreement was comprised in the exchange of emails between Ms Tadros and Mr McArdle of 23 August 2023 at 10.54am and 11.21am. 4. During cross-examination, Mr Qin stated that by August 2022, when Mr Muscat was exiting TA Tools, the company owed approximately $100,000 to the ATO (T58). 5. In cross-examination, Mr Muscat agreed that he thought he should have received more money out of the settlement than he got, and that it should have been as much as $800,000 rather than $450,000 (although Mr Muscat also stated in his affidavit that he believed that he should have received $1.6 million (T35)). Mr Muscat also agreed that he regretted settling for $450,000 because he thought he should have got as much as $800,000, but then sought to resile from that answer, saying that he did not regret missing out on money "[b]ecause money is not important to me" and "I don't value life on money" (T40–41). 6. I do not believe Mr Muscat's evidence to the effect that money is not important to him (T41). It runs completely contrary to Mr Muscat's repeated behaviour during 2022 when he made consistent demands of Mr Qin for money to be paid to him and for his credit card limit to be lifted. It also runs contrary to an exchange of emails dated 2 March 2023 which Mr Muscat sent to Mr McArdle (dealt with in more detail below) in which Mr Muscat complained about solicitors' letters, stating: We just keep going back and forth wasting money and time? 1. Mr Muscat considered his own time to be worth money and said as much in multiple answers given during his cross-examination (T39). Further, Mr Muscat conceded that he brought this application to get documents so he could sue Mr Qin for money (T41). 2. In my assessment of his evidence, Mr Muscat should not be believed when he says that he did not regret settling for a sum, when he thinks that he should have received more. 3. On 24 August 2022 at 7:01pm, Mr Han sent an email to Mr Qin, copied to Mr Tamam, thanking him for the update and stating that they were pleased to learn that the dispute between Mr Qin and Mr Muscat had been legally resolved. He said that based on Mr Qin's reporting and given the past events, they should ensure that TTHQ's business in Australia remained stable, growing, and undisturbed and that they would therefore be willing to extend the termination notice until 31 December 2022 alongside an increased bank guarantee of $300,000, as Mr Qin had suggested. Mr Han concluded by saying that TTHQ wished to remain completely uninvolved in the dispute and its aftermath. 4. On 30 August 2022, Mr Muscat signed a document stating: I hereby resign as a Director of TaeguTec Tools Pty Ltd […] with immediate effect. I accept $450,000 in full settlement of my shareholding in the company, and of any loans made by me to the company, and of any entitlements I have as an employee of the company. 1. On 30 August 2022, Mr Muscat also signed a transfer of shares form transferring his shares in TA Tools to Mr Qin, with the transfer price expressed to be $103,000 and the date of the transfer as 25 August 2022. 2. On 30 August 2022, Mr Muscat signed a form removing him as an authorised signatory to the Westpac bank account of TA Tools. In cross-examination, Mr Muscat agreed that in the Previous Proceedings, he had had access to the bank statements of TA Tools, had opened them, had viewed them and could see the values contained in them (T28–30). During this exchange in cross-examination, Mr Muscat at first stated that he did not look at the bank statements but then admitted that he had "looked at the value on the bank statements, correct". 3. On 5 September 2022, the Previous Proceedings were listed for directions, at which time they were stood over to 19 September 2022. 4. On 15 September 2022 at 4:51pm, Mr Awadalla sent an email to the court, copied to Mr McArdle and Ms Tadros, stating that it was sent with the consent of the parties, that the terms of the settlement agreement had been specified and mutually agreed to, but that it was possible that not all actions would be carried out and completed before 3 October 2022. On that basis, he asked that the matter be adjourned for 14 days by consent. 5. On 16 September 2022, orders were made by consent in chambers in the Previous Proceedings vacating the listing on 19 September 2022 and relisting the proceedings on 10 October 2022. 6. On 6 October 2022, the Previous Proceedings were dismissed by consent with no order as to costs. 31 October 2022–3 February 2023: communications concerning preliminary discovery, termination of Distribution Agreement and preliminary discovery application made 1. On 31 October 2022 at 9:36am, Mr McArdle sent an email to Ms Tadros attaching a letter to her. The letter commenced: We refer to past dealings between the parties. As you recall, our client Andrew Muscat is firmly of the view that Mr Qin has kept financial and commercial information from him, since the incorporation of [TA Tools] … Mr Muscat reasonably apprehends that Mr Qin, in breach of the Shareholders Agreement … that governed their relationship, thereby caused loss and damage to Mr Muscat. 1. The letter then expressed an intention to apply for preliminary discovery pursuant to r 5.3 of the UCPR, stating: That will be done, so that Mr Muscat can determine whether his bone fide suspicions are accurate. If they are, he will then commence proceedings for recovery of any identifiable loss, and seek the appropriate remedy open to him. 1. The letter included an invitation for Mr Qin and TA Tools to produce documents within nine nominated categories, observing that: Since Mr Qin has held all the information concerned under his own management during the time nominated below, the task sought will be neither expensive nor onerous. 1. The letter stated that Mr Qin had until 5pm on 18 November 2022 to produce the documents (a period of 18 days), failing which a court application would be made. 2. Within the nine categories of documents are each of the four categories which are now sought as preliminary discovery pursuant to the summons. 3. In cross-examination, Mr Muscat agreed that he deliberately waited for the Previous Proceedings to be dismissed before he instructed Mr McArdle to write this letter seeking further documents from Mr Qin which are the subject of this application (T35–36). 4. On 2 November 2022 at 9:46am, Ms Tadros sent an email to Mr McArdle attaching a letter to him rejecting the proposal for informal discovery of nine categories of documents on the basis that Mr Qin was not in possession of the documents sought as they were the books and records of TA Tools and not him personally; that Mr Muscat did not appear to have standing to bring the application; and that there was no specificity of the possible claim against Mr Qin. It was also asserted that Mr Muscat was estopped from bringing any such application due to the allegations of breaches of the Shareholder Agreement he had raised in the court proceedings, which was the subject of settlement and dismissal. 5. In the letter, Ms Tadros made the further point that Mr Muscat could not establish that he had been unable to obtain sufficient information after reasonable enquiries, in circumstances where all of the documents requested had, to the extent they existed, been previously requested and provided to him in the Previous Proceedings. She also said that Mr Muscat could not assert that he presently had insufficient information to decide whether or not to commence proceedings given that he had already made specific allegations of wrongdoing in the Previous Proceedings. 6. On 9 November 2022 at 5:52pm, Mr McArdle sent an email to Ms Tadros which attached a letter responding to her letter of 2 November 2022. Mr McArdle maintained the stance that as Mr Qin was the day-to-day controller, guiding director, and sole shareholder of TA Tools, he would be in possession of the records they sought and therefore both he and TA Tools were prospective defendants. Mr McArdle asserted that the purpose of the preliminary discovery sought was to identify and quantify the loss and damage suffered by Mr Muscat. Mr McArdle said that the claims that Mr Muscat may have against TA Tools and Mr Qin were breaches of the Shareholder Agreement, consisting in breaches of Mr Qin's duties as a director, and claims in equity such as misappropriation of funds or the failure to keep proper books and records. 7. Mr McArdle, in particular, denied that there was any estoppel precluding Mr Muscat from seeking to recover from Mr Qin any loss and damage because the settlement did not involve any releases in relation to Mr Muscat's rights as a former co-director and co-shareholder. Mr McArdle asserted that because Mr Qin's originating process did not seek to deal with matters on their merits, nor were there were findings of fact. The letter concluded by offering a narrower scope for each of the nine categories (as they then were) of the documents sought and stating that if the information was not satisfactorily supplied by 5pm on 23 November 2022, Mr Muscat would seek an order for preliminary discovery. 8. On 10 November 2022, Ms Tadros sent a letter to Mr McArdle confirming that DINA Lawyers also acted for TA Tools and stating that their position in relation to preliminary discovery sought against Mr Qin remained the same for the reasons set out in her previous correspondence. She then set out, on a without admission basis, comments on six categories of documents sought by way of preliminary discovery. 9. On 18 November 2022 at 4:45pm, Pyeong Gil Park of TTHQ sent an email to Mr Qin, copied to Messrs Han and Tamam, stating that the Distribution Agreement would expire on 31 December 2022 and setting out the consequential actions required of TA Tools in relation to changing its name and ceasing use of any trademark or tradename, as well as the domain name, of TTHQ. Mr Park advised that the IMC Group was in the process of forming a new fully owned subsidiary in Australia, due to commence operations on 1 January 2023, and that after that time, TA Tools would be contractually authorised to purchase for resale TaeguTec products on a non-exclusive basis. 10. On 18 November 2022 at 8:53am, Mr Qin sent an email to Jacob Harpaz expressing his shock at having received the email from TTHQ, but stating that he understood that there must have been good reasons for the decision. Mr Qin requested a call or video meeting with Mr Harpaz so he could know more about TTHQ's plan for the future operation of the TaeguTec brand in Australia. 11. On 19 November 2022, Mr Harpaz sent an email to Mr Qin saying that TTHQ's notification reflected its plan to establish its fully owned subsidiary and that Mr Qin's full cooperation was expected to complete the name change and domain usage. 12. On 21 November 2022 at 6:05pm, Mr McArdle sent an email to Ms Tadros which attached a letter responding to her letter of 10 November 2022. In his letter, Mr McArdle provided responses to the comments on each of the categories that had been made by Ms Tadros. The letter concluded by stating that if a satisfactory response was not received by 5pm on 2 December 2022, Mr Muscat would seek an order for preliminary discovery. 13. On 28 November 2022 at 4:20pm, Ms Tadros sent an email to Mr McArdle attaching a letter responding to his letter of 21 November 2022. In the letter, Ms Tadros provided further comments in relation to the proposed categories of preliminary discovery on a without admission basis. 14. On 22 November 2022 at 3:50pm, Mr Qin sent an email to Mr Han referring to their discussion over the telephone and his expectation of being able to achieve 15% plus growth in the next 12 months. Mr Qin asked whether Mr Han would consider converting TA Tools to a subsidiary rather than setting up a new company. 15. On 26 December 2022 at 6:26pm, Mr Han sent an email to Mr Qin stating that the new subsidiary, TaeguTec Australia, had been set up officially and was preparing to commence operations. Mr Han also said that TTHQ was prepared to allow TA Tools to continue to use the marketing GAL and GALFIN as a local distributor and hoped that it would cooperate with TaeguTec Australia. 16. On 3 February 2023, the summons commencing these proceedings was filed. Post 3 February 2023: further accusations and Mr Muscat's credit undermined 1. It is not necessary for me to refer to all of the detail of the communications between the legal representatives for the parties subsequent to the commencement of the proceedings, save to say that they continue the theme of trading accusation and counteraccusation, directed to each other about numerous matters, including MYOB passwords, allegedly illegal sound and video recordings, the evidence served, notices to produce, and subpoenas. Almost all of it is not relevant to the determination I have to make. 2. There is, however, an exchange of emails which occurred on 2 March 2023 which must be mentioned because it formed part of a significant issue during the cross-examination of Mr Muscat that substantially undermined his credit as a witness. 3. On 2 March 2023 at 12:55pm, Ms Tadros sent an email to Mr McArdle attaching a letter to him stating that the Distribution Agreement with TTHQ had been terminated on 31 December 2022, and that it had come to the attention of TA Tools that prior to that date, Mr Muscat's representatives had been communicating directly or indirectly with IMC Group and TTHQ in relation to TA Tools and Mr Qin. Ms Tadros said that she was instructed that TA Tools was concerned — given the history between Mr Muscat, TA Tools and Mr Qin, Mr Muscat's tendency to make and repeat to third parties false and/or misleading or deceptive communications in relation to TA Tools and its officers, and the time at which Mr Muscat's communications appeared to have been made — that Mr Muscat had made false or misleading and deceptive comments to TTHQ that caused the termination and gave rise to a cause of action against Mr Muscat. 4. Ms Tadros outlined potential causes of action including injurious falsehood, deceit, misleading or deceptive conduct, and/or breach of the contractual obligation not to disparage Mr Qin. She foreshadowed an application for preliminary discovery if Mr Muscat failed to provide within 14 days copies of any documents referring or relating to TA Tools and/or Mr Qin sent from Mr Muscat to TTHQ and IMC Group between 24 August 2022 and 31 December 2022. 5. On 2 March 2023 at 1:32pm, Mr McArdle sent an email to Mr Muscat forwarding Ms Tadros' letter of 2 March 2023. Referring to the timetable for evidence in the present application for preliminary discovery brought by Mr Muscat, Mr McArdle said "[w]e get a right of reply by 24 April. I would like to think that this fellow will role [sic] over and pay us more money by then". 6. Mr McArdle also referred to the letter from Ms Tadros and said: This is "using our medicine" on us. They are making the same demands. We have not been in contact with the Koreans or Ram or Jacob, since August? If not, good. If we have, let me look at what we have sent/received. This looks like a late snarl. It means they feel manoeuvred, and know they have to cough up. 1. Pausing there, the expressions used by Mr McArdle suggesting the use of the present application for preliminary discovery to get Mr Qin to "pay us more money" and "cough up" are particularly troubling. 2. On 2 March 2023 at 2:39pm, Mr Muscat responded by email to Mr McArdle, saying: All his info will be crap so THEN WHAT?! We just keep going back and forth wasting money and time? 1. On 2 March 2023 at 3:42pm, Mr McArdle sent an email to Ms Tadros in which he said that Mr Muscat had advised that he had no such records to produce, that he had not been in touch with any of the companies since August 2022 when he departed TA Tools, and that they would provide a statutory declaration to that effect. 2. Mr Muscat was cross-examined at length about this exchange. Mr Muscat agreed that he wanted to sue Mr Qin to get more money and that he believed that Mr Qin was quite wealthy (T36). As I have stated above, Mr Muscat agreed that he believes that he should have received more money as part of the settlement (T41) and I consider that he did regret settling below the amount he thinks he should have received despite his protests to the contrary (T40–41). 3. During the cross-examination, counsel for Mr Qin called for any document recording any conversation between Mr Muscat and Mr McArdle between 1:32pm and 3:42pm on 2 March 2023 (T43), but Mr Muscat's answer to that call was that there was nothing to produce (T63). 4. In the course of the cross-examination, Mr Muscat denied each of the following propositions: 1. He brought the preliminary discovery application because he thought if he did, Mr Qin would roll over and pay more money or "cough up some more money" (T36). 2. Irrespective of the outcome of the application for preliminary discovery, he intended to sue Mr Qin (T37). 3. He thinks that the whole preliminary discovery application is a waste of time and money (T37). 4. He just wants to get on and sue Mr Qin for the actual breaches of the Shareholder Agreement he thinks he has done (T37). 5. He does not care what information Mr Qin or TA Tools gives him in order to decide whether to sue Mr Qin in another set of proceedings (T37). 6. The reason he wrote "[a]ll his information will be crap" in his email of 2 March 2023 is because he believes that nothing Mr Qin gives him by way of court order in these proceedings will change his mind as to what he wants to do (T39). 7. He wants to frustrate Mr Qin's running of TA Tools' business by bringing these proceedings (T41–42). 8. He already intends to sue Mr Qin after these proceedings raising the same allegations that he raised in the Previous Proceedings (T42). 9. He is just looking for more documents to prove his case (T42). 1. Mr Muscat said that each of these propositions was incorrect, reasoning "... I won't know until I see all the evidence" (T40), "[s]o I can look at the evidence beforehand" (T41), "I would like to see the evidence so I can see what the company is worth" (T41), and "I need to see the evidence" (T42). 2. Having given all of this evidence, Mr Muscat was then asked to read paragraph 88(a) of his affidavit affirmed 2 February 2023 where he stated: I reasonably believe that Mr Qin has breached the Shareholders Agreement by excluding me from financial information, with the result that he has prevented me from obtaining my reasonable share of the proceeds of [TA Tools] in the years I was 50% joint shareholder with him. If the information is provided, I intend to sue Mr Qin for loss and damage that is disclosed. 1. The cross-examination of Mr Muscat then proceeded as follows (T44): Q. So the truth is you think this application before his Honour is a waste of time and money and you just want to get on with suing Mr Qin for breaching the shareholder's agreement, correct? A. Correct. 1. This answer by itself is devastating to Mr Muscat's credibility in denying, on cross-examination, that he has not yet decided to sue Mr Qin. But his credibility was further damaged in the subsequent evidence that he gave as the cross-examination continued (T44–45): Q. So you agree with me that irrespective of the outcome of this proceeding, you just want to get on and sue Mr Qin for breaching the shareholder's agreement? A. No, it's getting the financial information. Q. And you wrote in your affidavit, "If the information is provided I intend to sue Mr Qin for loss and damage that is disclosed". You see those words there? A. Correct. Q. And you wrote that because none of the information Mr Qin provides will change your mind as to what you intend to do, correct? A. It depends on the financial information. Q. The financial information you refer to, Mr Muscat, you looked at in the previous proceedings, didn't you? A. Incorrect. Q. You were just trying to look for more information to try and find a better way to bolster your case against Mr Qin? A. No, I have not seen no financials, that's incorrect. Q. You say you haven't received any financials? A. I've received nothing. Q. When you say that, Mr Muscat, "nothing", do you honestly mean that? A. No financials. Q. When you say "financials", what are you referring to? A. For the company's turnover and all of the expenses and expenditures and the financials that I wasn't privy to. Q. Mr Muscat, you agree that you have seen the company's bank statements, don't you? A. Bank statements, correct. Q. You agree that you saw all of the financial data recorded on GALFIN last year, correct? A. No, incorrect. Q. It is the case that from 24 June 2022 you had access to GALFIN, correct? A. Correct. Q. You had Mr Corra assist you in looking at that information, correct? A. Correct. Q. You also had the ability to access communications with the ATO on an ATO portal, correct? A. No, that's incorrect. Q. When you say to his Honour that you need the financials and you've seen nothing, that is a lie, Mr Muscat? A. That is not a lie, no. That's incorrect. 1. In my opinion, the evidence that Mr Muscat gave that he had not received "any financials" was false. He had received those "financials" in the form of access to: 1. the Westpac bank accounts of TA Tools as an administrator of those accounts, to which he had continual access while a director and shareholder of TA Tools; 2. the ATO portal of TA Tools from 20 June 2022; 3. GALFIN granted by TTHQ from 24 June 2022; 4. financial reports for January–December 2021 and January–June 2022 generated from GALFIN on 12 July 2022; 5. the provision of the 2020/2021 tax return on 12 July 2022; 6. the financial statements of TA Tools for the last 3 years on 19 July 2022; 7. the management accounts of TA Tools to June 2022 on 19 July 2022; 8. numerous hard copy documents held at the offices of TA Tools on 22 July 2022; 9. the payroll analysis report for January 2017–July 2022, a notice of assessment lodged with the ATO in August 2018, and tax returns on 3 August 2022; and 10. the valuation report provided by BDO on 3 August 2022. 1. All of these matters lead me to the conclusion that Mr Muscat does not need to see the "financials" before deciding whether to sue Mr Qin and I reject his evidence to the contrary. In my opinion Mr Muscat was an unsatisfactory witness whose evidence cannot be relied upon to form conclusions as to his state of mind. SUBMISSIONS Submissions of Mr Muscat 1. Mr Muscat emphasised that r 5.3(1) of the UCPR is a very low threshold test arising from the use of the word "may", requiring only that he may have a claim. 2. Mr Muscat alleges that during the period in which he was a shareholder and director of TA Tools, Mr Qin denied him access to the books and records of TA Tools, intentionally deceiving him and depriving him of profits arising from his 50% shareholding in TA Tools. Mr Muscat also alleges that Mr Qin has been operating and conducting another business using the time and resources of TA Tools. All of those matters are said to be breaches of the Shareholder Agreement in respect of which Mr Muscat says that he wants to obtain sufficient information to make a decision whether to bring a claim in damages and/or restitution. 3. Mr Muscat also alleges that the valuation amount paid to him during the buyout of his shares in TA Tools was at an undervalue, meaning that he sold his shares for an inadequate amount. 4. The potential claims that Mr Muscat says that he has are for breaches of the Corporations Act, the Shareholder Agreement, contract and fiduciary duties. 5. Mr Muscat says that the terms on which the Previous Proceedings were settled were ones that did not include any release from future proceedings, with the parties adopting a regime of seeking to keep the Distribution Agreement in place, and that he therefore approached the settlement on a "buy now, litigate later" basis. 6. Mr Muscat submits that he has made reasonable enquiries about documents and things in the possession, custody and control of Mr Qin and TA Tools through verbal requests made by him and Mr Corra as well as written requests on each of the following dates: 1. 28–30 April 2022: Repeated email requests by Mr Muscat to Mr Qin for company login details and passwords to access anything and everything to do with TA Tools, anything to do with the ASIC login and the ATO, all logins for company email accounts, phones, computer systems, with Mr Qin's responding that the login was locked with his personal ID and that he would check if he could grant access, and questioning whether Mr Muscat was using a third party to look at the finances. 2. 11 May 2022: Letter from Mr McArdle to Mr Qin requiring full and open access for Mr Muscat to all aspects of TA Tools within 24 hours, including but not limited to all bank accounts, all electronic devices and records, all material physically stored, and passwords. 3. 6–7 June 2022: Repeated email requests from Mr McArdle to Ms Tadros for all passwords, including to GALFIN, bank accounts, emails accounts, ATO, and Ms Tadros' refusal to give passwords for ASIC or ATO and suggestion that Mr Muscat should have his own login and password for bank accounts. 4. 10 June 2022: Email from Mr McArdle to Ms Tadros saying that if Mr Qin handed over passwords, legal proceedings would not be necessary. 5. 14 June 2022: Letter from Mr McArdle to Ms Tadros alleging ongoing breach of the Shareholder Agreement by Mr Qin's refusal to hand over passwords and other access devices of TA Tools and demanding that Mr Qin provide to Mr Muscat all passwords, access keys, other devices to electronically examine the records of TA Tools and undertake that physical access will be provided to the paper records of TA Tools to Mr Muscat or his nominated representative at all reasonable times by 17 June 2022, failing which they would approach this court. 6. 17 June 2022: Email from Mr McArdle to Ms Tadros saying that they would commence urgent court action from 20 June 2022 unless Mr Qin handed over passwords and other information. 7. 28 June 2022: Email from Mr McArdle to Ms Tadros requiring immediate provision of the password and other access necessities to an MYOB account. 8. 21 July 2022: Email from Mr McArdle to Ms Tadros stating that she must not obstruct Mr Muscat's capacity to inspect the records of TA Tools and confirming Mr Muscat's authorisation of Mr Corra to inspect and examine the records. 9. 22 July 2022: Email from Mr McArdle to Ms Tadros requesting full access to all communications with the ATO. 10. 28 July 2022: Email from Mr McArdle to Ms Tadros seeking the same level of access for Mr Muscat to the entire email inbox of TA Tools as that of Mr Qin. 11. 31 October 2022: Letter from Mr McArdle to Ms Tadros requesting preliminary discovery of documents within nine specified categories. 12. 9 November 2022: Letter from Mr McArdle to Ms Tadros requesting preliminary discovery of revised nine specified categories. 13. 21 November 2022: Letter from Mr McArdle to Ms Tadros requesting preliminary discovery of six specified categories. 1. Mr Muscat says that it is obvious that TA Tools has the documents of which he requests discovery and that they would assist Mr Muscat in determining whether or not to commence proceedings. 2. Mr Muscat agrees that, through legal representatives, he was offered the opportunity to inspect documents and things on 22 July 2022. He maintains that this inspection was inadequate to enable him time to uplift the necessary documents and things that would have been essential to provide to an independent auditor for the purposes of identifying anomalies in the financial records. Mr Muscat complains that the inspection on 22 July 2022 was structured in a manner to effectively mean that he was searching for "needles in a haystack" because the physical files to which he was given access in the filing cabinets were not marked or sorted into any meticulous order. Mr Muscat says that the inspection became an aggressive exchange of words with Mr Qin as Mr Muscat became frustrated with Mr Qin's refusal to meet his requests for documents and things. 3. Mr Muscat resists the suggestion that he is attempting to relitigate issues that were dealt with in the Previous Proceedings (although there was no suggestion by Mr Qin in closing submissions that he was). In summary, he says: 1. The Previous Proceedings were brought by Mr Qin seeking to buyout Mr Muscat's shares and while they arose from the same facts and circumstances of the disputes between Mr Muscat and Mr Qin, the causes of action under ss 232 and 233 of the Corporations Act are entirely different to those which are the subject of the preliminary discovery application. 2. There was no judgment or reasons in the Previous Proceedings to give rise to any res judicata. There were merely consent orders dismissing the Previous Proceedings and a transfer of the ownership of Mr Muscat's shares in TA Tools to Mr Qin. Because no releases were provided, the parties knew that there was potential for further litigation. 3. This application is not a claim that could have been brought in the Previous Proceedings, and although Mr Muscat's apprehension of Mr Qin's improper conduct was set out in the affidavits in the Previous Proceedings, that was not an appropriate forum in which to ventilate those concerns or have them adjudicated. 4. There was no settlement agreement in relation to the Previous Proceedings but an agreement to transfer ownership of TA Tools to Mr Qin in order to keep the Distribution Agreement alive. 5. Mr Muscat alleges that the common understanding between the parties and their legal representatives was to deal with the buyout expeditiously, enter consent orders, and then "fight" at a later time. 1. Mr Muscat suggests that in the circumstances, the close relationship between this application and the Previous Proceedings does not make this application an abuse of process (citing Roberts v Walter Developments Pty Ltd (1995) 16 ACSR 544 at 558) and that the operation of an Anshun estoppel should not be lightly ordered (citing Port of Melbourne Authority v Anshun (1981) 147 CLR 589, as explained in Ekes v Commonwealth Bank of Australia [2014] NSWCA 336; 313 ALR 665). He submits that an Anshun estoppel does not arise on the present application to preclude Mr Muscat's application for production of documents and things he alleges were withheld from him during the valuation process before he sold his shares to Mr Qin. 2. These submissions about res judicata, Anshun estoppel and abuse of process all became irrelevant because Mr Qin made it clear in his submissions that no such arguments formed part of the case put by him. 3. Mr Muscat says that BDO's valuation of TA Tools was based only on the books and records supplied by Mr Qin, to which Mr Muscat did not have access. 4. Mr Muscat contends that the six categories of preliminary discovery sought are reasonable, covering the time period in which TA Tools has been trading, are documents Mr Muscat expects were maintained by Mr Qin, and do not cover any period in which any claim would be statute-barred. 5. I will deal with Mr Muscat's particular submissions on each of the individual categories that he seeks in my determination with respect to them below. 6. Mr Muscat contends that the arrangement between himself and Mr Qin was that he had little knowledge of the day-to-day management of the business and implicitly trusted Mr Qin whilst he attended to the sales. Mr Muscat contends that as a result, it was Mr Qin who controlled access to all documentation belonging to TA Tools to the exclusion of Mr Muscat and that Mr Qin's protectiveness, concealment and refusal to cooperate with requests for documents and things aroused Mr Muscat's suspicions and the tensions between them. 7. Mr Muscat says that only Mr Qin had a personal login and ID that enabled him to have electronic access to the documents of TA Tools, and that Mr Qin insisted on providing only supervised access to physical documents. Mr Muscat says that his physical access was also hampered by him not residing in Sydney where the offices of TA Tools are located. Mr Muscat says that because he is no longer a shareholder or director of TA Tools, he is not entitled to obtain access to the documents and things of TA Tools in that capacity. Mr Muscat points to this lack of access to the documents in support of his contention that he could not have obtained a valuation assessment from an independent auditor without first obtaining an order for preliminary discovery. 8. Mr Muscat asserts that during the course of the inspection on 22 July 2022, Mr Qin invited Mr Muscat to put together a list of the specifics of what he was asking and send it to his solicitor. Mr Muscat says that based on Mr Qin's alleged statement, Mr Qin invited this proceeding by his conduct and is estopped from resiling from it. 9. Mr Muscat also says that he has a statutory right pursuant to s 198F(2) of the Corporations Act to inspect the books of TA Tools at all reasonable times for the purposes of a legal proceeding in which Mr Muscat is a party, that Mr Muscat proposes in good faith to bring, or that Mr Muscat has reason to believe will be brought against him. He says that under s 198F(3) of the Corporations Act, as well as a right to conduct such an inspection, he also has a right to make and take his own copies of those books and records. 10. Mr Muscat alleges that TA Tools has a corresponding duty under s 198F(4) of the Corporations Act to allow Mr Muscat to exercise these statutory inspection and copying rights. 11. Mr Muscat says that the legal proceedings he is eligible to bring are for an order under s 233 of the Corporations Act (on the basis of s 234(c), relating to the circumstances in which he ceased to be a member of TA Tools) or, with leave, under s 237 of the Corporations Act to bring derivative proceedings on behalf of TA Tools under s 236. He further says that by virtue of his eligibility to apply for leave under s 237, he already has the option of applying to the court for an order authorising him, or any other person on his behalf, to inspect the books of TA Tools under s 247A of the Corporations Act, under which he or his delegate would also be authorised to make copies of any books inspected. Submissions of Mr Qin 1. Mr Qin submits that the application for preliminary discovery should be refused for the following reasons: 1. Mr Muscat has failed to identify any claim for relief against TA Tools such that there can be no order for preliminary discovery against it as a prospective defendant. 2. Mr Muscat has failed to establish that he may be entitled to bring a claim against Mr Qin because he is subject to a contractual obligation precluding him from bringing a claim that would disparage Mr Qin and also because mere assertion, suspicion and conjecture of a claim is insufficient to justify an order of preliminary discovery. Preliminary discovery cannot be ordered to allow Mr Muscat to conduct a Royal Commission into the finances of TA Tools over the entire life of its operation. The prospective claims of alleged breaches of fiduciary duty, alleged breaches of the Corporations Act, alleged actions that TA Tools might bring against Mr Qin, alleged actions for breaches of the Shareholder Agreement, alleged actions arising out of the terms of settlement of the Previous Proceedings, and alleged actions based on potential liability to the ATO are all hopeless. 3. Mr Muscat has not demonstrated that, having made reasonable enquiries, he is unable to obtain sufficient information to decide whether or not to commence proceedings. Mr Muscat was provided with access to, or the ability to access, all the documents now sought throughout the Previous Proceedings and armed with that information, decided to sue Mr Qin for the same allegations he complains of now. Mr Muscat received documents and answers to all of the requests he made. Mr Muscat had access to the bank accounts of TA Tools. Mr Muscat had access to GALFIN from at least June 2022 and was assisted in interpreting data stored there by Mr Corra. Mr Muscat had access to the ATO portal and was provided with notices of assessment and returns for TA Tools. Mr Muscat was provided with the superannuation reports and was given Mr Qin's explanation for alleged discrepancies in those reports. If, during the Previous Proceedings, Mr Muscat did not see something he now claims he wants, it was because he made a deliberate decision to not access or look at that material when he could have. In the circumstances, Mr Muscat has already obtained all the documents he seeks and any information he needs to decide whether or not to commence proceedings. 4. Mr Muscat has failed to demonstrate that inspection of the documents falling into the broad categories sought would assist him to decide whether or not to bring any prospective claim. Moreover, there are no submissions or evidence at all from Mr Muscat in relation to that critical element of his application. Mr Muscat has failed to identify any gaps in his knowledge or understanding that would be filled by the documents sought. This is critical, particularly in circumstances where Mr Muscat has already obtained large quantities of information and has the onus of proving this matter. It is not objectively apparent that Mr Muscat needs any of the information sought, to the extent that he does not have it already, to make his decision. 5. The application for preliminary discovery has not been brought with the appropriate subjective intentions of Mr Muscat as demonstrated by the evidence on which he was cross-examined. 6. Each of the categories pressed lack any, or any sufficient, nexus to Mr Muscat's decision whether to litigate the alleged claims, and are otherwise inappropriately expressed. I will deal with Mr Qin's particular submissions on each of the individual categories that Mr Muscat seeks in my determination with respect to them below. 7. The application should be refused on discretionary grounds because to the extent Mr Muscat now wishes to re-agitate the matters that were ventilated in the Previous Proceedings, he should not be permitted to do so through preliminary discovery and thereby place a further burden on Mr Qin and TA Tools. Mr Qin and TA Tools do not raise issues of Anshun or issue estoppel or abuse of process. Instead, the significance of what was the nature and scope of the dispute in the Previous Proceedings is relevant because it bears on how the court should objectively determine if Mr Muscat needs the information sought to decide whether to sue. In this connection, s 60 of the Civil Procedure Act 1995 (NSW) requires proportionality. It would be contrary to the overriding case management objectives to permit Mr Muscat to re-agitate the same matters as those agitated in the Previous Proceedings. 1. In relation to Mr Muscat's submissions that there is an alternative possible basis pursuant to which Mr Muscat has an entitlement to the documents under ss 198F and 247A of the Corporations Act, Mr Qin says that they are of no assistance to him in this application because they are fundamentally inconsistent with his assertion that in bringing the preliminary discovery application, he is yet to decide whether to bring proceedings. 2. Mr Qin says that none of the circumstances in s 198F(2) of the Corporations Act apply to allow Mr Muscat, as a former director of TA Tools, to access the books and records of TA Tools based on the following: 1. Sections 198F(2)(a) and (c) do not apply, and s 198F(2)(b) is of no assistance to Mr Muscat at it only applies to a person who proposes in good faith to bring a legal proceeding. 2. Mr Muscat entirely predicates his preliminary discovery application on the basis that he needs the documents sought to decide whether to bring proceedings. 3. Mr Muscat cannot consistently invoke s 198F as well as simultaneously apply for preliminary discovery if he has already decided to bring proceedings in good faith. 1. Mr Qin also challenges Mr Muscat's suggestion that he has the option of applying to the court for an order authorising him to inspect the books of TA Tools under s 247A(3) of the Corporations Act because he has not made such an application and even if he did (pursuant to a grant of leave under s 237 of the Corporations Act), the application would be a matter of discretion for the court. Mr Qin says that the only purpose that Mr Muscat has asserted in seeking documents pursuant to s 247A is to determine whether to commence proceedings, so if Mr Muscat was unsuccessful in his application for preliminary discovery, s 247A cannot be used as a backdoor to circumvent the failed requirements of a preliminary discovery application, because that would not be a proper purpose or use of s 247A. DETERMINATION 1. For the reasons set out below, I have determined that Mr Muscat should fail in his application for preliminary discovery. In essence, Mr Muscat has comprehensively failed to meet the onus upon him to prove multiple parts of the elements that are required to be demonstrated by an applicant for an order under r 5.3 of the UCPR. 2. I have addressed all of those elements below. 3. Addressing the first element in r 5.3 (that the applicant may be entitled to make a claim for relief from the court against the prospective defendant), Mr Muscat has objectively failed to identify any claim for relief he may be entitled to make against TA Tools. For that reason alone, his application against TA Tools must fail. 4. In relation to Mr Qin, nothing put forward by Mr Muscat demonstrates anything other than assertion, suspicion or conjecture that Mr Muscat may be entitled to make a claim for relief from the court against Mr Qin. While it is recognised that r 5.3 fixes a low threshold, Mr Muscat is well below even that low threshold. 5. Mr Muscat merely asserts that he has potential claims for breaches of the Corporations Act, the Shareholder Agreement, contract and fiduciary duties without in any way grappling with how any of those potential claims might be available to him for relief against Mr Qin. Any obligations owed by Mr Qin under the Corporations Act or by virtue of his fiduciary duties as a director of TA Tools were not owed to Mr Muscat — they were owed to TA Tools. They cannot be brought at the behest of Mr Muscat, who is neither a director nor even a shareholder of TA Tools. 6. Any entitlement to any claim for relief against Mr Qin asserted to be based on breaches of the Shareholder Agreement is also one which is bound to fail, principally because all of the "financials" said to have been kept from Mr Muscat were in fact provided to him. 7. This is particularly the case in relation to the categories of documents he seeks in this preliminary discovery application, being the bank statements to which he had continual access over the entire time he was a shareholder of TA Tools, full access to GALFIN (which he had for more than 2 months from 27 June 2022), full access to the ATO portal (which he had for more than 2 months from 20 June 2022), and the payroll analysis report for January 2017 to July 2022 (which he was provided with on 3 August 2022). In addition, he was given complete access to the physical documents held at the offices of TA Tools on 22 July 2022 and he chose to stay for only three hours. Throughout all of these endeavours, Mr Muscat had the assistance of Mr Corra, who was able to assist him as a former employee of TA Tools. 8. All of these events occurred prior to Mr Muscat making the decision, with the benefit of legal advice from Mr McArdle, that he was willing to sell his shares in TA Tools to Mr Qin as part of the settlement agreement which led to the consensual dismissal of the Previous Proceedings. 9. On any reasonable basis, Mr Muscat has not proved that he may be entitled to claim relief from the court against Mr Qin or TA Tools and he has failed to meet the first element in r 5.3 of the UCPR. 10. Addressing the second element in r 5.3 (that the applicant has made reasonable enquiries to obtain sufficient information to decide whether or not to commence proceedings), Mr Muscat has also failed objectively to demonstrate why all of his previous enquiries failed to yield sufficient information for him to decide whether or not to commence proceedings. The very information that he seeks has already been in his possession. He has made no attempt to indicate how that information is insufficient to enable him to make the relevant decision. 11. Addressing the third element in r 5.3 (that having made reasonable enquiries, the applicant is unable to obtain sufficient information to decide whether or not to commence proceedings), this is very similar to Mr Muscat's failure to satisfy the second element. Mr Muscat has failed to show why all of the information that he has and has had in his possession is insufficient to enable him to decide whether or not to commence proceedings. I have rejected Mr Muscat's evidence that he does not have sufficient information to decide whether or not to commence proceedings, so to the extent that this element involves a subjective consideration, Mr Muscat's case derives no assistance from that. 12. Addressing the fourth element in r 5.3 (that the prospective defendant may have or have had possession of a document or thing that could assist in determining whether the applicant is entitled to make a claim for relief), I consider that if ever an application was to be regarded as a wide-ranging "fishing expedition" which falls outside of that which is expressly contemplated by r 5.3, it is this application. In effect, the nature of the documents in the categories sought by Mr Muscat are so wide-ranging and cover such a long period of time (the entire life of TA Tools) that they amount to nothing more than a speculative trawl through the entirety of TA Tools' operations, all based on a flimsy foundation or a mere hunch that something might be found. The high-water mark illustrating this point is category 3, which seeks: All records to do with [TA Tools] made in the "GALFIN" software program between 1 January 2017 and 31 August 2022. 1. That is effectively every accounting entry ever made in the GALFIN software program. None of the other categories are much better. Mr Muscat does not favour me with any explanation as to why such a deep and wide search through the affairs of TA Tools should be permitted. It truly is so far outside of what the purpose and intent of r 5.3 plainly is that it must not be permitted. 2. Addressing the fifth element in r 5.3 (that inspection of such a document would assist the applicant to make the decision whether or not to commence proceedings), Mr Muscat clearly fails at this level as well. I consider that the cross-examination of Mr Muscat amply demonstrated that he has already decided that he could bring the proceedings he contemplates (notwithstanding that decision was misconceived, as I have indicated in relation to the first element above). He already considers that whatever Mr Qin might produce will be "crap", that on this application he is "wasting time and money", and that he "just want[s] to get on with suing Mr Qin for breaching the shareholder's agreement". 3. Mr Muscat is also fatally wounded on this element by his assertion that he has an alternative possible basis pursuant to which he has an entitlement to the very same categories of documents under s 198F of the Corporations Act. That involves an assertion that he proposes in good faith to bring legal proceedings against TA Tools, which is fundamentally inconsistent with his assertion that in bringing the preliminary discovery application, he is yet to decide whether to bring proceedings. 4. Finally, even if each of the five elements were satisfied, as a matter of discretion under r 5.3, I would refuse the application for preliminary discovery. That is because in the overall scheme of the events leading to Mr Muscat's decision to settle the Previous Proceedings by selling his shares in TA Tools to Mr Qin and otherwise sever all of his employment and financial connections with it, I consider that this application has been brought for the purpose of getting Mr Qin to pay Mr Muscat more money because: 1. he believes that Mr Qin is quite wealthy; 2. he believes that he should have received more money as part of the settlement; and 3. contrary to his denial, he does regret settling below the amount he thinks he should have received. 1. In my consideration, the court should not permit r 5.3 of the UCPR to be used for that extraneous purpose. CONCLUSION 1. The orders I propose to make are as follows: 1. Order that the summons filed 3 February 2023 be dismissed. 2. Order that the plaintiff pay the defendants' costs. 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: 15 February 2024