Appeal Outcome: Special leave granted by the High Court - 26 August 2008 New South Wales Court of Appeal CITATION: Campbell v BackOffice Investments Pty Ltd [2008] NSWCA 95 HEARING DATE(S): 8 August, 2 October 2007 JUDGMENT DATE: 19 May 2008 JUDGMENT OF: Giles JA at 1; Basten JA at 172; Young CJ in Eq at 224 DECISION: (1) Appeal allowed and cross-appeal allowed in part; (2) Set aside the declaration and orders (1), (2) and (3) made on 29 March 2007 and the judgment for the first plaintiff against the first defendant in the amount of $853,000 given on 13 April 2007; (3) In lieu thereof, order that there be judgment for the first plaintiff against the first defendant in the amount of $850,000 taking effect on 13 April 2007; (4) Appellant pay 90 per cent of respondents' costs in this Court. CATCHWORDS: CORPORATIONS- Oppression- Sections 232-233 Corporations Act 2001 (Cth)- Share Sale Agreement/Shareholders Agreement/Services Agreement- Whether vendor's conduct in excluding the purchaser of a 50% share in company from the management of the company amounted to oppression- Whether necessary for the oppressive conduct to be continuing at the time of hearing- Whether the trial judge's order of a share buy-out appropriate in light of a provisional liquidator being appointed- (By majority) No order should be made. - MISLEADING OR DECEPTIVE CONDUCT- Whether the vendor's giving of contractual warranty misleading or deceptive- Whether purchaser relied on the alleged misrepresentations- (By majority) Yes- Consideration of proper amount of damages. LEGISLATION CITED: Corporations Act 2001 (Cth) ss 232, 233 Fair Trading Act 1987 ss 42, 72 CATEGORY: Principal judgment Abrahams v Federal Commissioner of Taxation (1944) 70 CLR 23 Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 Alati v Kruger (1955) 94 CLR 216 Allianz Australia Insurance Ltd v GSF Australia Pty Ltd (2005) 221 CLR 568 Aloridge Pty Ltd v West Australian Gem Explorers Pty Ltd (1995) 127 ALR 410 Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104 Bessounian v Australian Wholesale Mortgages Pty Ltd [2007] NSWSC 35 Bwllfa and Merthyr Dare Steam Collieries (1891) Ltd v Pontypridd Waterworks Co [1903] AC 426 Cassegrain v CTK Engineering Pty Ltd (2005) 54 ACSR 249 Castlemaine Tooheys Ltd v Carlton & United Breweries (1987) 10 NSWLR 468 Club Hotels Operations Pty Ltd v CHG Australila Pty Ltd [2005] NSWSC 998 Colly Cotton Marketing Pty Ltd v Simmons [2006] NSWCA 134 Concrete Constructions Group Ltd v Litevale Pty Ltd [2002] NSWSC 670 Coombs v Dynasty Pty Ltd (1994) 14 ACSR 60 CSR Ltd v Della Maddalena [2006] HCA 1; (2006) 80 ALJR 458 Daandine Pastoral Co Pty Ltd v Commissioner of Land Tax (1943) The Valuer vol vii 299 De Tocqueville Private Equity Pty Ltd v Linden & Conway Ltd; Re Linden & Conway Ltd (2006) 59 ACSR 587 E S Gordon Pty Ltd v Idameneo (No 123) Pty Ltd (1994) 15 ACSR 536 E W Blanch Pty Ltd v Cooper [2005] NSWCA 217 Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672 Fitzgerald v Penn (1954) 91 CLR 268 Fox v Percy (2003) 214 CLR 118 Gamlestaden Fastigheter AB v Baltic Partners Ltd [2007] 4 All ER 164 Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 Gould v Vaggelas (1985) 157 CLR 215 H T W Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 Henville v Walker (2001) 206 CLR 459 Hewlett Packard Australia Pty Ltd v Siltek Holdilngs Pty Ltd [2005] NSWSC 672 Ho v Powell (2001) 51 NSWLR 572 Hogg v Dymock (1993) 11 ACSR 14 House v The King (1936) 55 CLR 499 Irish Press plc v Ingersoll Irish Publications Ltd [1995] 2 ILRM 270 Jenkins v Supscaf Pty Ltd [2006] 3 NZLR 264 Kent v Commissioner of Taxation (1945) 3 Aust Property LJ 65 Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281 Lam v Ausintel Investments Australia Pty Ltd (1989) 12 ATPR 40-990 Manning Shire Council v Caernarvon Pty Ltd [1977] 1 NSWLR 202 March v E & M H Stramare Pty Ltd (1991) 171 CLR 506 Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 McCathie v Federal Commissioner of Taxation (1944) 69 CLR 1 McWilliams Wines Pty Ltd v LS Booth Wine Transport Pty Ltd (1992) 25 NSWLR 723 Minister for Immigration, Local Government and Ethnic Affairs v Dela Cruz (1992) 34 FCR 348 CASES CITED: Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 Munchies Management Pty Ltd v Belperio (1988) 58 FCR 274 Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 Music Sales Ltd v Shapiro Bornsdtein & Co Inc [2006] 1 BCLC 371 O'Neill v Phillips [1999] 1 WLR 1092 Re a Company [1987] BCLC 562 Re a Company (No 002567 of 1982) [1983] 1 WLR 927 Re a Company (No 00477 of 1986) [1986] BCLC 376 Re a Company (No 008126 of 1989) [1992] BCC 542 Re a Company (No 3017 of 1987); Ex parte Broadhurst [1990] BCLC 384 Re Anti-Corrosive Treatments Ltd [1980] ACLC 40-625 Re Astec (BSR) plc [1998] 2 BCLC 556 Re Baumler (UK) Ltd [2005] 1 BCLC 92 Re Brenfield Squash Racquets Club Ltd [1996] 2 BCLC 184 Re Broadcasting Station 2GB Pty Ltd [1964-5] NSWR 1648 Re Campbell Tube Products Ltd [1976] 1 NZLR 64 Re Charnley Davies Ltd (No 2) [1990] BCLC 760 Re Chime Corporation Ltd; Nina Kung v Tan Man Kou (2004) 7 HKCFAR 546 Re Dalkeith Investments Pty Ltd (1984) 9 ACLR 247 Re Dernacourt Investments Pty Ltd (1990) 20 NSWLR 588 Re H R Harmer Ltd [1959] 1 WLR 62 Re Hailey Group [1993] BCLC 459 Re Jermyn Street Turkish Baths Ltd [1971] 1 WLR 1042 Re London School of Electronics Ltd [1986] Ch 211 Re Meyer Douglas Pty Ltd [1965] VR 638 Re Polyresins Pty Ltd [1999] 1 Qd R 599 Re Richard Pitt & Sons Pty Ltd (1979) 4 ACLR 459 Re Spargos Mining NL (1990) 3 ACSR 1 Re Tivoli Freeholds Ltd [1972] VR 445 Re Westbourne Galleries Ltd [1971] 2 WLR 618 Reid v Bagot Well Pastoral Co Pty Ltd (1993) 12 ACSR 197 Ross v White [1894] 3 Ch 326 Scottish Cooperative Wholesale Society Pty Ltd v Meyer [1959] AC 324 Smith v Moloney (2005) 92 SASR 498 South Australia Asset Management Corporation v York Montague Ltd [1997] AC 191 Taylor v Anstis [1940] VLR 300 Thomas v H W Thomas Ltd [1984] 1 NZLR 686 Transglobal Capital Pty Ltd v Yolarno Pty Ltd [2005] NSWCA 68 Turnbull v National Roads and Motorists' Association Ltd (2004) 50 ACSR 44 Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514 Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459 Webb v Stanfield [1991] 1 Qd R 593 Yazbek v Aldora Holdings Pty Ltd (2003) 45 ACSR 53 Zempilas v J N Taylor Holdings Ltd (No 6) (1991) 5 ACSR 28 Douglas Ronald Campbell (First Appellant) PARTIES: Sentinel Construction Managers Pty Ltd (Second Appellant) BackOffice Investments Pty Ltd (First Respondent) Timothy Andrew Weeks (Second Respondent) FILE NUMBER(S): CA 40201/07 COUNSEL: A J L Bannon SC and J T G Gibson (A) J B Simpkins SC and T L Wong (R) SOLICITORS: Rodd Peters Lawyers (A) Watson Mangioni (R) LOWER COURT JURISDICTION: Supreme Court - Equity Division LOWER COURT FILE NUMBER(S): SC 50047/05 LOWER COURT JUDICIAL OFFICER: Bergin J LOWER COURT DATE OF DECISION: 8 March 2007 LOWER COURT MEDIUM NEUTRAL CITATION: Backoffice Investments v Campbell [2007] NSWSC 161 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40201/07 GILES JA BASTEN JA YOUNG CJ in EQ Monday 19 May 2008 CAMPBELL v BACKOFFICE INVESTMENTS PTY LTD Judgment 1 GILES JA: Healthy Water (NSW) Pty Ltd ("the Company") carried on the business of selling and maintaining water filtration systems to and for corporate and private customers. The business was established in 1993 by Mr Douglas Campbell, who in 1994-5 incorporated the Company which thereafter carried on the business. As at January 2005 Mr Campbell held the two issued shares in the Company and was its sole director. 2 On 24 January 2005 contracts were signed ("the contracts") whereby Backoffice Investments Pty Ltd ("Backoffice"), of which Mr Timothy Weeks was shareholder and director, became an equal shareholder in the Company and Mr Weeks became co-director and joint managing director with Mr Campbell. By the share sale agreement Backoffice purchased from Mr Campbell one of the issued shares in the Company for $850,000. By the shareholders agreement Mr Campbell and Mr Weeks "for and on behalf of Backoffice" were to be directors with equal voting power, and were as joint managing directors to have the day-to-day conduct and management of the Company and its business. Two services agreements were signed, one between the Company and Mr Campbell's company Sentinel Construction Managers Pty Ltd ("Sentinel") and the other between the Company and Backoffice, by which the two companies were to provide the services of Messrs Campbell and Weeks respectively as joint managing directors in return for fees and other reward payable by the Company. 3 Unless there is reason to do otherwise, I will refer to Mr Campbell and Backoffice intending where appropriate to include Sentinel acting through Mr Campbell and Mr Weeks acting for and together with Backoffice. 4 There had been some rather tempestuous meetings between Mr Campbell and Mr Weeks in the week or so prior to 24 January 2005, and within days thereafter there were conflicts between them which continued and escalated. Solicitors became involved on behalf of Mr Weeks early in February 2005, and by mid-February 2005 solicitors were trading letters in addition to the constant acrimonious communications between Messrs Campbell and Weeks. 5 On 1 April 2005 Backoffice and Mr Weeks began proceedings against Mr Campbell, Sentinel and the Company, in which amongst other relief there was claimed - (a) on the ground of conduct within s 232 of the Corporations Act 2001, an order that the Company be wound up, or alternatively an order that Mr Campbell repurchase Backoffice's share at a value to be determined by the Court; (b) on the ground of misleading or deceptive conduct inducing entry into the contracts, an order declaring the contracts void and for return of the $850,000, or alternatively damages; and (c) as damages for breach of contract, damages for breaches of the share sale agreement and the shareholders agreement. 6 On 7 April 2005 an order was made in the proceedings, by consent, whereby a provisional liquidator was appointed to the Company. The Company remained in provisional liquidation until the trial, and for all that appears the provisional liquidator still holds office. 7 The proceedings were heard in November-December 2006, and judgment was delivered on 8 March 2007: Backoffice Investments Pty Ltd v Campbell [2007] NSWSC 161. 8 The trial judge held that there had been conduct within s 232 of the Corporations Act, and ordered that Mr Campbell repurchase Backoffice's share for $853,000 ("the buy-out order"). The order later became an order that Mr Campbell pay $853,000 to Backoffice, without provision for transfer of the share to him. It is not clear why this occurred, but it need not be explored. 9 Without fully finding whether there had been the incorrect representations said to constitute the misleading or deceptive conduct, the trial judge found that Backoffice did not rely on the representations. Her Honour did not consider whether, if there had been the misleading or deceptive conduct inducing entry into the contracts, avoidance of the contracts was an appropriate remedy. Damages on the ground of misleading or deceptive conduct did not arise and was not considered. 10 The trial judge held that there had been breaches of the share sale agreement and the shareholders agreement in certain respects, but considered that damages should not be awarded for the breaches because damages in addition to the $853,000 to be paid for the repurchase of the share would over-compensate Backoffice. 11 Mr Campbell appealed against the order for payment of $853,000, and Backoffice cross-appealed against the failure of the claims on the ground of misleading or deceptive conduct and to damages for breach of contract. Almost everything in issue at the trial was reprised on appeal. 12 Backoffice said that it was content with the order for payment of $853,000, and only maintained the cross-appeal if the appeal was successful. I consider that the appeal should succeed, but in any event the first question should be avoidance of the contracts on the ground of misleading or deceptive conduct. If they are avoided, the claims to an order for repurchase of Backoffice's share on the ground of conduct within s 232 of the Corporations Act and to damages for breach of contract do not arise. If the contracts are not avoided, the next question should be repurchase of the share. Either in addition to repurchase of the share or if an order for repurchase is not made, the claims to damages for misleading or deceptive conduct and/or for breach of contract then arise. Misleading or deceptive conduct – avoidance of the contracts 13 Section 42 of the Fair Trading Act 1987 provides that a person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive. I refer to this simply as misleading or deceptive conduct. Section 68 provides that a person who suffers loss or damage "by" conduct of another person in contravention of s 42 may recover the amount of the loss or damage from the other person. By s 72, there may be made in favour of a person who has sustained loss or damage by the contravening conduct such order or orders against the other person as the Court thinks appropriate if the Court considers that the order or orders will compensate the person wholly or in part for the loss or damage. The orders which may be made include one or more of a variety of orders stated in s 72(3), amongst which are an order declaring a contract between the persons void and an order directing the other person to refund money or return property to the person who suffered the loss or damage. 14 In order to obtain an order declaring the contracts void and return of the $850,000, or to obtain damages, it was necessary that Backoffice had suffered loss or damage by conduct of Mr Campbell in contravention of s 42. 15 Backoffice pleaded that there had been misleading or deceptive conduct by making representations. The making of the representations was alleged to have been by - (a) providing Schedule 3 of the share sale agreement, which comprised a balance sheet for the Company as at 30 November 2004 and a statement of profit and loss for the five months ending 30 November 2004 and was the subject of warranties in the share sale agreement; (b) providing on or before 11 December 2004 a document stating non-recurring expenses for the period July to November 2004 and operating results for the five months to 30 November 2004; and (c) providing on or before 11 December 2004 a sales revenue report estimating sales revenue and earnings before income tax (EBIT) for December 2004 and sales revenue for the financial year ending 30 June 2005. 16 The representations alleged to have been made by providing these documents were - (a) although not directly so pleaded, that the balance sheet and profit and loss account in Schedule 3 were correct (the pleading was that Mr Campbell "represented to Backoffice the contents of Schedule 3"); (b) (i) that non-recurring expenses of $96,100 for the five months ending 30 November 2004 had been incurred; (ii) that the Company's EBIT for the five months to 30 November 2004 was $163,590; (c) (i) that the Company's estimated sales revenue and EBIT for December 2004 were $100,000 and $37,500 respectively; (ii) that the Company's estimated sales revenue for the financial year ended 30 June 2005 was $1,289,582; (iii) that the estimates were reliable predictions, suitable to be used for estimating the value of the Company; (iv) that there was no information known to Mr Campbell material to the accuracy of the estimates and which showed or tended to show that they were wrong; and (v) that the estimates represented Mr Campbell's belief and there was a reasonable basis for the belief. 17 Adopting some of the shorthand used by the parties, I will refer to the representation in (a) as the Schedule 3 representation; to the representations in (b) as the add-backs representation (the non-recurring expenses were added back in arriving at operating results) and the EBIT representation; and to the representations in (c) as the December 2004 estimates representations. 18 The add-backs representation, the EBIT representation and the December 2004 estimates representations were alleged to be continuing representations. It was alleged in substance that the various representations were incorrect and were not corrected or qualified, in the case of the Schedule 3 representation because of the many matters which were said to be breaches of the warranties in the share sale agreement upon which Backoffice in part relied for its claim to damages for breach of that agreement. These breaches were described in the pleading as the Schedule 3 Deficiencies, and included that the non-recurring expenses of $96,100 and the EBIT of $163,590 in the profit and loss account were incorrect. 19 It was alleged that making the representations constituted engaging in misleading or deceptive conduct in contravention of s 42 of the Fair Trading Act, and that Backoffice entered into the share sale agreement, the shareholders agreement and its services agreement, and paid $850,000 to Mr Campbell, in reliance on Schedule 3 and on the truth of the other representations and induced thereby. Backoffice's case was that but for the misleading or deceptive conduct, it would not have purchased the share at all. 20 A detailed account of the negotiations leading to the purchase of the share can be found in the trial judge's reasons, and I will not repeat it. The following is a summary. 21 In the latter part of 2004 Mr Campbell engaged Mr Horn of Bato Partners, a merchant bank, with a view to sale of or finding an equity investor for the Company. Mr Horn prepared an information memorandum. It included financial summaries in relation to gross sales and EBIT for 2001-2004 and budgeted gross sales and EBIT for 2005, and proposed a value of the business "for 'asking price purposes'" of $2,250,000. 22 Mr Weeks was provided with a copy of the information memorandum. He undertook a due diligence process, assisted by a chartered accountant, Mr Phil Raby. The process did not enable complete substantiation. Mr Weeks asked Mr Horn for the profit and loss accounts for July to November 2004 and the November 2004 balance sheet. From this came the provision in early December 2004, amongst other financial information, of the documents in (b) and (c) earlier referred to. There were various discussions between Mr Weeks and Mr Horn. 23 On 14 December 2004 Mr Weeks made an offer to purchase the share in the Company. It was based on EBIT and expressly upon "the operational results provided for the Company as tabled above (adjusted but unsupported)", and the table calculated three and four times EBIT for the years 2001 to 2004 and as estimates for 2005. The four times EBIT for 2005 was $1,600,000, and the offer said that "the value of 100% of the Company is around $1.6M - $1.7M tops". The offer was $850,000 with a performance bonus to be paid to Mr Campbell if the forecast level of profitability was exceeded. 24 Mr Campbell wanted the bonus payable earlier, and Mr Weeks produced a revised offer on 16 December 2004 of the same amount but with a different performance bonus regime. The offer was again said to be "[b]ased upon the operational results provided for Healthy Water, which form part of this offer" and said that the value of the Company was estimated to be $1,700,000. 25 On 22 December 2004 Mr Weeks sent to Mr Horn a "P & L Forecast" as a "summary of the various information provided". Mr Weeks advised that "these numbers are the basis" of the offer he had made to purchase the 50 per cent share in the Company, and said: "Somehow these results need to be warranted as being true and correct and representative of the Company's performance to date during the current financial year. They also represent the 'budget' for the remainder of the current year. I will also be asking my solicitor how these results can be incorporated and warranted in the purchase agreement … so we can adopt some appropriate wording." 26 The share sale agreement when prepared included warranties as to the Schedule 3 documents. 27 For the moment I pass over the trial judge's consideration of the Schedule 3 representation. Her Honour's findings as to the other representations were as follows. 28 The trial judge was not satisfied that the add-backs representation had been made. Her Honour found that Mr Weeks was told that the relevant part of the document was Mr Campbell's estimate, and that there was not the firm statement of a specific amount as pleaded. She found that in any event Mr Weeks did not rely on the representation, expressing her conclusion - "237 I am satisfied that Weeks was, as he said, "concerned" about these estimates. He did not rely upon them but went about trying to obtain documentary support for them. When that proved futile he decided that rather than rely upon them, he would rely upon a statement of warranty by Campbell in the Share Sale Agreement. ... That is why Weeks abandoned his quest to arrive at a conclusion that he could rely upon them and opted instead for the contractual warranty. 238 I have referred to Weeks' evidence in relation to the way in which he structured his offer to purchase the share in the Company in the section of this judgment below dealing with the Sales Revenue Report. The observations I have made in relation to that offer apply equally to this alleged representation. Weeks did not rely upon these estimates. He structured his offer to ensure that if the estimates turned out to be wrong, he was, as he put it, 'protected' from having to pay an extra $300,000 to Campbell by way of performance bonus." 29 The trial judge then considered the December 2004 estimates representations. Her Honour found that Mr Campbell knew prior to 24 January 2005 that the actual results for December 2004 were less than the estimates, the management accounts showing sales revenue for December 2004 at $92,000 when the estimate was $100,000, and that he knew that Mr Weeks did not know of that difference. She did not, however, come to a concluded view as to the representations, saying - "260 There are real issues in relation to the representations that are alleged to have been made by the provision of the Sales Revenue Report to Weeks in December 2004. There is also the issue of whether the representations were continuing up to the date of execution of the Agreements on 24 January 2005. I will assume for the purposes of this analysis that there was a representation that Campbell knew of no information that was material to the accuracy of the estimates in the Sales Revenue Report, which tended to show that they were false, misleading or deceptive. I will assume for the purposes of this analysis that the representation was false." 30 The trial judge was not satisfied that Mr Weeks had relied on the representation so assumed, concluding a lengthy consideration - "269 Weeks is a sophisticated businessman with the capacity to review financial records and make judgments about the prospects of a business, using his commercial common sense to his own advantage. That is what he did in making his offer to purchase the share in the Company. I am satisfied that the evidence extracted above establishes that Weeks did not rely upon the estimated sales figures in the Sales Revenue Report. Rather, it establishes that Weeks doubted those figures to the point that he built in a protection for himself if the figures were not achieved. That was a "protection" that was included in clause 6.2 of Sentinel's Service Agreement, that provided for a "Performance Bonus based upon the Company's profitability, of up to $300,000" to be paid to Sentinel only if there was "Available Profit". I am not satisfied that Weeks relied upon the representation as pleaded." 31 The trial judge then returned to the EBIT representation, and said - "270 The plaintiffs also claimed that in providing the financial documents to Weeks in December 2004, Campbell represented that the Company had an EBIT (after adjustment for the add-backs) for the 5 months to 30 November 2004 of $163,590. Without deciding on whether the representation was made, the observations I have made in relation to the Add Backs document and the Sales Revenue Report and the structure of Weeks' offer, also apply to this alleged representation." 32 The trial judge concluded this part of her reasons - "271 I am satisfied that Weeks and/or Backoffice did not rely upon the representations. The plaintiffs' claim of misleading or deceptive conduct fails." 33 The trial judge gave extensive reasons for her conclusions that Mr Weeks had not relied on the add-back representation, the EBIT representation and the December 2004 estimates representations, with reference to evidence given by Mr Weeks. On a reading of the reasons as a whole, and culminating in the reliance on contractual warranty and built-in protection, she came to the conclusions because - (i) Mr Weeks had the academic qualifications and business experience by which he could review financial records, including their weaknesses, and assess for himself the prospects of success of a business; (ii) the financial information initially provided to Mr Weeks in the information memorandum contained disclaimers of accuracy and reliability; (iii) the non-recurring expenses figure was understood by Mr Weeks to be an estimate and he abandoned the quest to be satisfied; (iv) the sales revenue figures the subject of the December 2004 estimates representations were also estimates, and Mr Weeks was "not happy to rely on" them (at [264]) without checking but was unable to check them; (v) Mr Weeks was optimistic about the Company's prospects; (vi) in cl 7.4 of the share sale agreement Backoffice acknowledged that it had availed itself of the opportunity of inspecting "the Company and its Assets" and that it had "relied upon its own conclusions as to the Company and its Assets arising out of those inspections"; (vii) Mr Weeks had conducted an extensive due diligence with the assistance of his accountant, albeit without obtaining satisfaction as to the non-recurring expenses estimate or being able to check the sales revenue estimates; (viii) in those circumstances, Mr Weeks - · built in protection for himself if the forecast level of profitability was not achieved, by the bonus provision in Sentinel's services agreement; and · initiated discussions leading to the warranties in the share sale agreement. 34 Amongst the evidence recited by the trial judge was, in relation to the non-recurring expenses figure, that Mr Weeks said that he needed "some kind of comfort level" and thought "If I can't have an accounting comfort level or a documentary comfort level, I need some other kind of comfort level and initiated the warranty discussion". In relation to the protection, the evidence recited was that in making his offer with a performance bonus to be paid to Mr Campbell (through Sentinel) only if there was available profit, Mr Weeks said - "Q. What this was, was a recognition that you and perhaps Mr Campbell had a different view of the value of the company? A. Yes. Q. And what you were there proposing was a mechanism recognising that that may be so and that mechanism was to remunerate or compensate Mr Campbell for the additional value if it turned out that was the position? A. Yes. Q. And you understood by making that offer you were getting the benefit of any doubt, namely that if the company did not transpire to have the additional value Mr Campbell wouldn't get it, correct? A. Correct, just making the point that that bonus ranked behind other bonuses, yep. Q. So the fact of the matter is that the substance of this proposition that you are putting in dot point five is that Mr Campbell will not get his consideration, the additional consideration for what he thinks is the value of the share if it turns out that the company doesn't make the expected additional money? A. Yes. Q. So that is a protection for you, isn't it, if the company does make the money he gets it, if it doesn't the price is lower? A. Yes, although I would put it the reverse of that, I felt the price was only worth X amount and I was giving the option that if I am wrong, I think I used words to that effect, that if it proved to deliver a higher figure than I thought or exceeded my expectations then there was a potential up side but I didn't think there was. Q. Put it how you like Mr Weeks, the sophisticated thinking behind this dot point was that if the company turned out to be worth more which was contemplation Mr Campbell would get it and if it didn't, he wouldn't? A. Correct. Q. That was part of the bargain, as you saw it, that you were going to pay a certain amount, you were going to not give an undertaking to pay that by way of initial purchase price but leave it conditional upon the company performing in a subsequent period, correct? A. Yes." 35 Backoffice submitted that, on a proper understanding of his evidence, Mr Weeks obtained the warranty principally to ensure that he could continue to rely on the estimates provided to him, and that the estimates remained material to him notwithstanding that he sought to protect himself against the possibility that they were inaccurate. There was no inconsistency, it submitted, between obtaining a warranty of correctness and belief that the information is correct. It referred in particular to Mr Weeks' evidence, given in relation to the non-recurring expenses, that the estimate mattered to Mr Weeks because it represented more than 50 per cent of the profitability of the Company and he did not believe that the estimate was "out"; and Mr Weeks' evidence concerning relying on the warranty was in fact - "Q. You told her Honour you couldn't verify it and you made a decision, based on the proposition that you were getting a warranty, that what you were going to do was rely on the warranty; correct? A. Yes, I was prepared to accept that the non-recurring expenses, which I wasn't able to verify, were as warranted and that was important because it represented more than 50 per cent of the profitability of the company upon which I was basing the purchase price." 36 As to the protection by the bonus provision, Backoffice pointed out that the estimated sales revenue and EBIT figures for December 2004 were incorporated into calculations Mr Weeks made when coming to the price he was prepared to pay for the share in the Company. It said that the protection was against failure to achieve the level of profitability forecast in the original information memorandum, which was higher than that in the December 2004 estimates, not because of doubt about the later figures incorporated in the calculations; and that the fact that Mr Weeks could not obtain documentary support for the latter figures did not mean that he did not rely on them in determining whether to proceed with the purchase. 37 The statutory test of causation in s 68 of the Fair Trading Act is embodied in the word "by". In Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514 at 525 Mason CJ and Dawson, Gaudron and McHugh JJ said of the equivalent s 82 of the Trade Practices Act 1974 (C'th) - "The statutory cause of action arises when the plaintiff suffers loss or damage 'by' contravening conduct of another person. 'By' is a curious word to use. One might have expected 'by means of', 'by reason of', 'in consequence of' or 'as a result of'. But the word clearly expresses the notion of causation without defining or elucidating it. In this situation, s 82(1) should be understood as taking up the common law practical or common-sense concept of causation recently discussed by this Court in March v Stramare (E & M H) Pty Ltd , except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act. Had Parliament intended to say something else, it would have been natural and easy to have said so." 38 Reliance on a representation is a commonly expressed way of inquiring into loss or damage by conduct contravening the proscription on engaging in misleading or deceptive conduct. In Wardley Australia Ltd v The State of Western Australia their Honours went on to say, at 525, that when concerned with contravention in the form of misleading or deceptive conduct constituted by misrepresentation - "In this situation, as at common law, acts done by the representee in reliance upon the misrepresentation constitute a sufficient connexion to satisfy the concept of causation." 39 It should nonetheless not be forgotten, in determining reliance, that the essential question is causation. Causation in law is not a scientific matter, but was said in March v E & M H Stramare Pty Ltd (1991) 171 CLR 506 at 515, repeating from Fitzgerald v Penn (1954) 91 CLR 268 at 277-8, to be "ultimately a matter of common sense". 40 Causation in a statutory context must be determined in the light of the subject, scope and objects of the statute, see for example Allianz Australia Insurance Ltd v GSF Australia Pty Ltd (2005) HCA 26; 221 CLR 568 at [41] per McHugh J; [99]-[100] per Gummow, Hayne and Heydon JJ, and with identification of the purpose of the enquiry into causation (ibid at [97] per Gummow, Hayne and Heydon JJ). In Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 at [135] McHugh J observed, in connection with causation when determining the loss or damage suffered by conduct contravening the Trade Practices Act, that "[t]he purposes of the Act include promoting fair trading and protecting customers from contraventions of the Act". 41 Those purposes are material in determining reliance as the enquiry into causation. In a passage since frequently applied, Wilson J said in Gould v Vaggelas (1985) 157 CLR 215 at 236 that if a material misrepresentation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract, there arises a fair inference of fact that the person was induced to do so by the representation; his Honour said that the representation need not be the sole inducement, and it is sufficient so long as it plays some part even if only a minor part in contributing to the formation of the contract. Wilson J exemplified as circumstances rebutting the inference that the person knew the true facts and that they were true, or "made it plain that whether he knew the true facts or not he did not rely on the representation". He spoke at 238 of the plaintiff "either by his words or conduct disavow[ing] any reliance on the fraudulent representation". 42 However, lack of reliance can be found beyond overt words or conduct. An illustration is Lam v Ausintel Investments Australia Pty Ltd (1989) 12 ATPR 40-990, where it was found that the plaintiff did not enter into a subordination agreement in consequence of misleading or deceptive representations, but because he saw it as in his own interests to do so dictated by the pressure he was under from his creditors. The plaintiff was regarded as an unreliable and unsatisfactory witness, and his assertion of reliance was rejected. He could avert forced sale of his hotel only if he entered into the subordination agreement, he regarded himself as having no practical choice in the matter, and the judge found that "the precise arithmetical arguments now urged on me were of no significance to Lam at the time". 43 On the other hand, there may be reliance notwithstanding doubt about the representation. An illustration is Transglobal Capital Pty Ltd v Yolarno Pty Ltd [2005] NSWCA 68. Transglobal represented that there were good prospects in a capital raising. The directors and shareholders of Yolarno were family members. They decided to go ahead with the capital raising. Yolarno's founder and ultimate controlling shareholder, Mr J R McDonald, distrusted the representation, having a "gut feeling", but felt "out of his league" and while voicing that "it would be Disneyland time" let the other family members go ahead. Brownie AJA, with whose reasons Handley and Hodgson JJA agreed, said - "13 That is, JR did not know the true position, namely that the fact that the respondent's business was meat processing was an important, if not very important factor for the consideration of potential investors, and others necessarily involved in the proposed IPO. He distrusted the representation, but that was all, and assuming for the moment that his state of mind represented the respondent's state of mind, this is an insufficient basis for the appellant to succeed, in resisting the claim under the Trade Practices Act : Haas Timber and Trading Company Pty Ltd v Wade (1954) 94 CLR 593, 601 and Gould v Vaggelas (1984) 157 CLR 215, 228. … 17 … The representation in question was calculated or objectively likely to induce the respondent to act, and it did act; and furthermore, the evidence of JR, AJ and Mrs Belbeck concerning the process by which the family made a collective decision, in substance to rely upon the representation, leads me to the view that no error is to be detected in his Honour's finding." 44 Reliance can itself be a difficult concept, and is not a substitute for the essential question of causation. It may be artificial to speak of reliance in determining what action or inaction would have occurred if the true position had been known: see Smith v Maloney (2005) 92 SASR 498 at 514-5 and Colly Cotton Marketing Pty Ltd v Simmons [2006] NSWCA 134 at [161]. Of particular significance to the present case, causation may be found notwithstanding that any belief in a representation is qualified by doubt, and even when the representee seeks to protect itself against the possibility that the doubt is justified. If the representation still operates on the representee's action or inaction which occasions loss or damage, the loss or damage is suffered by the misleading or deceptive conduct, notwithstanding that the label of reliance may not appropriately describe what occurred. 45 That Mr Weeks was concerned about the estimates which included the add-backs representation, and sought to obtain documentary support for them, did not mean that they played no part in Backoffice's purchase of the share. Concern to the point of disregarding the estimates may have had that consequence. But they were not disregarded, they were part of arriving at profitability and EBIT, and when documentary support could not be obtained a warranty was obtained. When Mr Weeks said that he "initiated the warranty discussion" when he could not have "an accounting comfort level or a documentary comfort level" and needed "some other kind of comfort level", that did not exclude regard to (in that case) the add-backs figures as represented, albeit without the accounting or documentary comfort. Obtaining the warranty suggested reliance, if that language be used, in that when the estimates could not be objectively verified Mr Weeks wanted the assurance of a warranty in addition to Mr Campbell's say-so; but it would not be likely that he went ahead in the expectation of an action claiming damages for breach of the warranty. Similarly as to the EBIT representation. I respectfully have difficulty with the trial judge's statement at [237] that Mr Weeks decided to rely on the warranty rather than rely on the representations. While in some fact situations reliance may be on the one rather than the other, they are not mutually exclusive, and I do not think the evidence warranted a finding of exclusive or dominant reliance on the warranty. 46 The protection which the trial judge considered Mr Weeks had built in is also, in my view, not destructive of reliance, and left the representation causally operative in Backoffice's purchase of the share. Protection if the various representations were not borne out was consistent with the representations contributing to Backoffice's purchase. The dot point referred to in the passage from Mr Weeks' evidence earlier set out, which the trial judge considered significant, was concerned with a performance bonus if performance exceeded the then forecast profitability. It was really not protection in the event that the Company turned out to be worth less than if the representations were borne out; rather, Mr Campbell would receive more by way of a bonus paid to Sentinel if profitability exceeded the then forecast profitability. It may be that Backoffice would receive less in dividends, and in that way pay more, because a bonus was paid to Sentinel, but that would be consistent with the representations being borne out. As Mr Weeks said, if the Company exceeded his expectations "then there was a potential up side but I didn't think there was". Even if the bonus provision suggested that Mr Weeks had general doubt about the reliability of the figures, particularly for estimated sales revenue and earnings, the figures as represented were still material to his decision that Backoffice would purchase the share. 47 Mr Weeks had the ability both to review financial records and to assess the prospects of success of a business, but it is plain from the evidence that his primary regard in assessing the prospects of the Company's business, and more particularly the value of the business for the purchase of a share in the Company, was to financial information. It stands out in the evidence that he was a numbers man. He was optimistic about the Company's prospects, and saw ways in which he thought the profitability of the business could be increased, but on my reading of the evidence there is no basis for concluding that his enthusiasm was such that he paid no regard to the financial information provided to him. On the contrary, he was calculating (in a literal sense) in the offers made to purchase the share. 48 On the evidence as a whole, in my opinion the representations remained causally operative. Backoffice was paying for a share in the Company, not for a cause of action against Mr Campbell for breach of warranty. The non-recurring expenses went to profitability, and the revenue and EBIT figures were directly important to Mr Weeks' calculations of the value of the Company. The representations were calculated, in the sense used by Wilson J, to induce Mr Weeks to purchase the share. Respectfully differing from the trial judge, I do not think that the inference thus arising was displaced, and I consider that the representations played a material part in Backoffice's purchase of the share. 49 It is then necessary to return to the making of the representations and whether they were incorrect, and to whether there was causation in that the share would not have been purchased at all or would have been purchased for a lesser price if Mr Weeks had known the true position. 50 It is unclear whether the trial judge was not satisfied that the EBIT representation had been made, as well as not being satisfied that the add-back representation had been made. Both representations were through the same document, and the EBIT figure was affected by the non-recurring expenses which Mr Weeks was told was Mr Campbell's estimate ("you know, plus or minus a few thousand dollars"), and so I conclude that the lack of satisfaction was as to both representations. 51 But it does not seem to me that, other than at a pleading level, being told that the figures were estimates negated misleading or deceptive conduct by their provision. That they were estimates was relevant, but representations were still made. Pleading points were not overlooked in the trial, but as a pleading point I do not think this was of substance when the document spoke for itself and the qualification as an estimate was relatively slight. Again respectfully differing from the trial judge, I consider that representations were made on which it was open to Backoffice to rely in the proceedings. 52 The trial judge dealt with the non-recurring expenses in her consideration of damages for breach of the warranties in the share sale agreement. The profit and loss statement in Schedule 3 arrived at an adjusted operating profit of $163,078.99 for the five months ending 30 November 2004 after adding back non-recurring expenses of $96,100. The non-recurring expenses were as in the document provided in December 2004, and the question for breach of warranty was whether "to the best of [Mr Campbell's] knowledge" the $96,100 was "materially accurate and complete and not misleading" (cl 10.2 in Schedule 1). 53 The document provided in December 2004 relevantly read - Non-recurring expenses: Obsolete inventories Rental stocks included in books as inventory at original cost, although for accounting/tax purposes, they are written off at replacement cost at the expiration of the rental periods. Replacement cost averages 20% higher than original cost $2,000 Consulting fees Balto Partners $16,000 Doug Campbell Current annual salary 120,000 Motor vehicle allowance 16,000 General expense allowance 10,000 "Business" expense allowance 60,000 Credit card reimbursement ($5,000/$6,500 pmth) 65,000 (All of the above are paid monthly) 271,000 Estimated salary for general manager/$1 million turnover business 85,000 Excess per annum 186,000 5 months to 30/11/05 $77,500 54 Backoffice alleged breach of warranty in that the estimate of non-recurring expenses included - (i) obsolete inventories; (ii) the general expense allowance; (iii) the business expense allowance; and (iv) the amount for credit card reimbursement. 55 The trial judge accepted that the item for obsolete inventories in the estimate "suffers from … flaws of description" (at [198]), and that what it referred to was the utilisation of stock otherwise written off. She said (at [198]) that this "falls more appropriately into the category of the usual operations of the Company rather than of a non-recurring expense" and that she was "satisfied that the item for obsolete inventories was not accurately described as a 'non-recurring expense'." 56 On the basis that the general expense allowance was for telephone and travel reimbursements to Mr Campbell, the trial judge said of the views of two expert accountants - "201 Mr Gower expressed the view that there should be no amount added back for general expenses. He identified the expense as one relating to telephone and travel reimbursements to Campbell. He expressed the opinion that the payment of such expenses of business executives is usual business practice. He considered it was reasonable to assume that such reimbursements would continue to be paid in the ordinary course of business. 202 Mr Russell expressed the view that $4,778 (and not $4,167, as included in the schedule) should be added back as a non-recurring expense. Mr Russell's conclusion was based on the instruction that the amount of $4,778 represented undocumented telephone and travel claims paid to Campbell. Mr Russell's reasoning to characterise this item as a non-recurring expense seems to have been based solely on the fact that Campbell had not provided any substantiation or supporting documentation for these claims. The sloppiness of Campbell's approach to these claims does not mean that they were not incurred for travel and telephone expenses. I understand that Mr Russell formed the view that such expenses, if unsubstantiated, should not be allowed, but on the methodology adopted it does not mean that such expenses (properly substantiated) would not recur. However, it seems to me that Mr Russell's approach to these particular amounts as properly added back should be preferred." 57 The trial judge found unsatisfactory Mr Campbell's evidence of what the business expense allowance was. She resolved the matter - "207 Mr Gower conducted a detailed review of all of the expenses posted in the Company's MYOB system for the five months to 30 November 2004. Mr Gower was unable to identify any payments amounting to $25,000 paid to Campbell which could be regarded as a 'business' expense allowance. Mr Gower did identify 'financing costs' amounting to $25,000 paid to Campbell in that period. Both Mr Gower and Mr Russell agreed that it would be incorrect to allow for an add back adjustment for $25,000 of 'financing costs' paid to Campbell, because it was not reflected as an expense in the warranted profit and loss statement. Mr Gower concluded that the expenses listed by Campbell largely reflected ordinary business expenses and were not appropriate to be characterised as non-recurring expenses required to be added back. 208 Mr Russell accepted that the $25,000 was a 'business' allowance. He reviewed the amounts listed in Campbell's affidavit and whilst he was of the view that some of that expenditure would be likely to be recurring, the amount of $25,000 appeared conservative out of a total of $49,730. It is very difficult to assess the true nature of these amounts in light of the very unsatisfactory evidence given by Campbell. The experts each have reasoned views in light of this very unsatisfactory evidence. I am of the view that the better view is that these amounts would not recur in a more rigorous and disciplined business environment and thus were added back appropriately." 58 Going finally to credit card reimbursement, on reviews of Mr Campbell's credit card expenditure Messrs Gower and Russell identified private expenditure which should be added back because non-recurring expenditure; in Mr Gower's case $22,937 out of the $65,000 and in Mr Russell's case $25,720. The trial judge said (at [210]) - "What is clear from the experts' evidence is that some part of the amount for this item should not have been added back, however it is not necessary to decide the specific amount because of the conclusion I have reached as to whether Campbell committed a breach in this instance." 59 As to that conclusion the trial judge said, it seems referring to all four items in issue in the estimate of non-recurring expenses and not just credit card reimbursement - "213 The question for decision in relation to the estimates of the add-backs or non-recurring expenses is whether the plaintiffs have proved Campbell breached clause 10.2, that is, whether the plaintiffs have proved that Campbell knew that the estimates in the add-backs document were inaccurate, incomplete and/or misleading." 60 Her Honour's ultimate conclusion was - "217 The warranted items were said to be the "Proprietor's estimate of non-recurring expenses for the 5 months ended 30/11/04". The defendants submitted that if one takes all of the matters raised by Mr Gower in the plaintiffs' favour, the difference between the parties as to what was permissible as add-backs is $35,162. An "estimate" is "an approximate calculation or judgment of the value, number, quantity, or extent of something": The New Oxford Dictionary of English, Clarendon Press, Oxford, 1998. The add backs were warranted as Campbell's judgment of the value of the non-recurring expenses. There is an added difficulty for the plaintiffs. An "estimate" is not appropriately characterised as "complete". An approximation may be appropriately characterised as "accurate" or "misleading" but that would depend upon the circumstances of each case. In this case, the experts have endeavoured to express their opinions as to whether certain of the expenses should not have been added back. The experts' opinions have been described earlier and it can be seen that the divergence between them is not great. 218 The evidence establishes that Campbell made the estimates in a less than disciplined manner, but that does not equate to knowledge that the estimates were inaccurate or incomplete and/or misleading. Campbell's evidence in relation to the preparation of these estimates was unsatisfactory in the respects identified above, but I am not satisfied that the plaintiffs have discharged the onus of proving that Campbell knew the estimates were inaccurate or incomplete and/or misleading. The plaintiffs' claim that Campbell breached the warranty in clause 10.2 in relation to the add-backs fails." 61 The trial judge's ultimate conclusion turned on Mr Campbell's knowledge, an ingredient in the warranty. It is an ingredient in misleading or deceptive conduct so far as the figures were estimates, but if the figures were incorrect as estimates there was misleading or deceptive conduct; the ultimate conclusion as to breach of the warranty does not govern a finding as to conduct in contravention of s 42. 62 On the trial judge's findings, the figures were incorrect in relation to obsolete inventories ($2,600), and credit card reimbursement (circa $40,000), but not the general expense allowance or the business expense allowance. On the findings, there was misleading or deceptive conduct; the obsolete inventories figure was not a non-recurring expense at all, and the figure for credit card reimbursement was excessive well beyond an allowance for estimation. 63 Mr Campbell did not directly challenge on appeal the underlying findings that the obsolete inventories figure was not a non-recurring expense and that the figure for credit card reimbursement was excessive. He submitted, however, that minds could differ as to reasonable add-backs (instancing the differences of opinion of Messrs Gower and Russell), and that both experts considered that there should have been a "negative add-back" of $14,500 because of the sale of a motor vehicle, the income from which had been otherwise disclosed in the accounts. It was said that total add-backs going close to the $96,100 could reasonably be seen, and that in his calculations for earlier years Mr Weeks had arrived at add-backs in broadly comparable figures. I do not think that the first is correct or that calculating for earlier years answers the incorrectness found by the trial judge. 64 Backoffice challenged on appeal the trial judge's conclusions in relation to the general expense allowance, the business expense allowance and (as to amount) the credit card reimbursement. 65 As to the general expense allowance, it said that Mr Campbell had not given evidence that telephone and travel expenses were incurred through the Company for non-business purposes, so that Mr Russell's instructions were unsupported, and that the expenses would recur even if not substantiated by documentation, so that Mr Russell's reasoning was incorrect. In my opinion there is substance in this, and evidence from Mr Campbell was necessary to explain why the general expense allowance of $10,000 was not something which would recur as part of usual business practice. 66 As to the business expense allowance, Backoffice's submissions came down to saying that Mr Gower's opinion was the better one. The trial judge did not choose between the opinions, but considered that the unsatisfactorily explained add-back would not recur when Mr Campbell was not in sole control, at least in part it seems because of the absence of satisfactory explanation. It was for Backoffice to establish that the figure was an incorrect estimate, and the trial judge's conclusion was in substance that it had not done so. The detail of Backoffice's submissions does not persuade me that such a conclusion was wrong. 67 As to credit card reimbursement, Backoffice submitted that Mr Russell's figure for private expenditure was founded on an unreliable classification of credit card debits made by Mr Campbell. The reasons for unreliability, apart from Mr Campbell's general credibility, were quite petty, and the difference between Mr Gower and Mr Russell was not of great significance. I do not regard them as material to an estimation. 68 To the trial judge's findings there should be added that the figures were incorrect in relation to the general expense allowance ($10,000). The total misrepresentation was of the order of $52,000 for the five month period, or $37,500 if account be taken of the $14,500. 69 The EBIT for the five months to 30 November 2004 was not dealt with as such in the consideration of damages for breach of warranties in the share sale agreement. The EBIT of $163,590 was the figure for operating results "as per Management Accounts" plus the added-back $96,100. It was pleaded that it was incorrect because of the adding-back and failure to disclose the $14,500 from the sale of the motor vehicle. The EBIT representation was therefore incorrect in the same manner as the add-backs representation. 70 I go then to the December 2004 estimates representations. The trial judge at [260] assumed a representation that Mr Campbell knew of no information "that was material to the accuracy of the estimates … which tended to show that they were false, misleading or deceptive", and that the representation was false. 71 The trial judge referred to "real issues" in relation to the December 2004 estimates representations, apparently their nature as estimates. The representations were made by provision of documents. They were plainly enough estimates, because round numbers were used and line items were pro rata figures obtained by applying a derived percentage for the past to the round figures. This certainly gave point to estimation, but it remained that the figures were put forward as estimates for which there was a sound basis. 72 By 24 January 2005 Mr Campbell knew that actual results were less than those estimated. While the trial judge noted "the issue of whether the representations were continuing up to the date of execution of the Agreements on 24 January 2005", there does not seem any reason why they were not continued when left uncorrected by Mr Campbell although he came to know that the actual result was less than the estimate. The question is not continuance, but whether there was misleading or deceptive conduct, and in my opinion, there was misleading or deceptive conduct. 73 On the findings made by the trial judge, her assumptions were justified. Mr Campbell knew that Mr Weeks would be interested in the actual sales revenue for December 2004; the trial judge noted that he volunteered that the comparison would be material to a purchaser. Mr Campbell said he gave the information to Mr Horn to be passed on to Mr Weeks, but this evidence was not accepted. Leaving the estimated sales revenue for December 2004 uncorrected, knowing that Mr Weeks did not know that the actual sales revenue was less, would leave Mr Weeks with an incorrect understanding of the Company's trading. The difference of about $8,000 when extended beyond the one month was not trivial. In my opinion, there was misleading or deceptive conduct in this respect in providing the documents and leaving them to stand as estimates. 74 By the misleading or deceptive conduct, then, the Company's earnings for the five months to 30 November 2004 were represented to be estimated at about $37,500 or $52,000 more than a correct estimate, and the representation of EBIT for December 2004 was consequently falsified. As to future earnings, the estimates for December 2004 and to July 2005 were falsified and put in doubt to the extent of about eight per cent of the estimate. This would markedly impact on the EBIT on which the offer to purchase the share was based. 75 Mr Weeks detailed in his affidavit evidence how he came to the offered $850,000, and what difference it would have made to him had he known of various matters including those the subject of the representations this far considered. The thrust was that the various matters would each have caused him not to purchase the share because reduced profitability of the Company or less net tangible asset value would have meant that it could not meet its expenses or liabilities. Mr Weeks was not cross-examined to any extent on these assertions – the cross-examination was at the more general level of lack of reliance apparent from what I have said earlier in these reasons. Neither Mr Campbell nor Backoffice presented on appeal a critique of this evidence. 76 The evidence included that Mr Weeks would not have purchased the share if add-backs of approximately $20,000 or more were erroneous, and that he would not have purchased the share if he had known that the estimated December 2004 sales revenue and EBIT were overstated as in substance they were. I have departed from the trial judge's finding as to reliance and, consider that I can pay regard to this evidence; I should say that having so departed, I do not see in the trial judge's reasons occasion for the appellate deference to credibility-based findings considered in cases such as Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 and CSR Ltd v Della Maddalena [2006] HCA 1; (2006) 80 ALJR 458. In my opinion, there was causation in the misleading or deceptive conduct thus far considered in that the share would not have been purchased at all if Mr Weeks had known the true position. If Backoffice suffered loss or damage in its purchase of the share, the loss or damage was suffered by conduct of Mr Campbell in contravention of s 42 of the Fair Trading Act. 77 I return to the Schedule 3 representation. 78 The trial judge did not deal expressly with misleading or deceptive conduct in relation to the Schedule 3 representation. It was touched upon when, in considering the EBIT representation, her Honour observed at [234] that Backoffice "repeated the claims made about this document that were made in the breach of warranty claims", and continued - "235 In written submissions (27 November 2006), the plaintiffs submitted that they are not precluded from seeking relief in relation to this representation by reason of its "inclusion in the Share Sale Agreement as a contractual warranty". In support of this submission, the plaintiffs relied upon Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470, a case in which three particular warranties had been made in a written contract as to the sole beneficial ownership of copyright in a certain accounting product, the entitlement to assign it and the absence of any claims in relation to that copyright. The primary judge was asked to answer the question as to whether the giving of the warranties, or any of them was, as a matter of law, capable of constituting misleading conduct within the meaning of s 52 of the Trade Practices Act 1974. The primary judge answered that question in the affirmative. That answer was held to be correct (Lockhart and Gummow JJ, Northrop J dissenting). The allegation was that the relevant "conduct" that was misleading or deceptive was the making of the contract itself and not any conduct that had occurred before the contract was made (Per Northrop J (dissenting) at 492). 236 The present case is quite different. Here the plaintiffs do not claim that the contractual warranties given by Campbell in the Share Sale Agreement were misleading or deceptive in breach of the Fair Trading Act 1987. They claim that the representation alleged to have been made by Campbell before entry into the Share Sale Agreement was misleading or deceptive. … " 79 Backoffice submitted in its written submissions that the trial judge was in error in stating that it was not claimed that the warranties given by Mr Campbell in the share sale agreement were misleading or deceptive, and that the evidence supported that Mr Weeks had relied upon "the representations made in the warranted profit and loss statement and warranted balance sheet". It said that the add-backs representation and the EBIT representation "were continued and not abated by the inclusion of the same representations in the warranted profit and loss statement and warranted balance sheet", and that the profit and loss statement and balance sheet comprising Schedule 3 were also misleading and deceptive by reason of the Schedule 3 Deficiencies. 80 Mr Campbell did not respond to the submission that the trial judge had omitted to deal with Backoffice's case of misleading or deceptive conduct through the provision of Schedule 3. The written submissions made to the trial judge were not before us. Transcript containing oral submissions speaking to them was before us, but was not particularly informative on this point. On my reading, it tends to support that Backoffice maintained a case of misleading or deceptive conduct through the provision of Schedule 3; in particular, its counsel said, after speaking to the breaches of warranty (T573) - "That is our case essentially on breach of warranty. As your Honour will appreciate we also have a misleading and deceptive conduct case where these elements also figure, but as representation in relation to what the particular faults might be of the statement. … In addition to the documents which were the subject of the warranty and in relation to which I have already put submissions, there were other documents which were provided ... " 81 However, it may be that the case so maintained by Backoffice was limited. Backoffice's written submissions on appeal asserted, as the basis for the trial judge's error in stating that it was not claimed that the warranties given by Mr Campbell in the share sale agreement were misleading or deceptive, that - "121 The Respondents were seeking to rely upon a course of conduct, which commenced with the provision of the 2004 Add-Backs and the 30 November 2004 Results, and culminated in the same representations being made in the warranted profit and loss statement and the warranted balance sheet. 122. For the reasons demonstrated in the context of the breach of warranty claims, both the 2004 Add-Backs and the 30 November 2004 Results were misleading and deceptive, which conduct continued and was not abated by the inclusion of those same representations in the warranted profit and loss statement and the warranted balance sheet." 82 If this was the case put to the trial judge, the Schedule 3 representation was confined to repetition of the add-backs representation and the EBIT representation, and did not extend to any other of the Schedule 3 Deficiencies. 83 There is a difficulty in what is said in [235]-[236] of the trial judge's reasons set out above. It was relevant to Mr Weeks' reliance on the EBIT representation that the EBIT of $163,590 was in the warranted profit and loss account, because Mr Campbell could argue (and did argue successfully at trial) that Mr Weeks so doubted the figure that he "abandoned his quest to arrive at a conclusion that he could rely upon [it] and opted instead for the contractual warranty" (at [237]). But the support sought from Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 had to be a different matter, not truly support for misleading or deceptive conduct through provision of the document stating non-recurring expenses for the period July to November 2004 but rather concerned with an occasion of independent misleading or deceptive conduct through giving the warranties. 84 In Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd it was held by the majority that giving a contractual warranty could constitute engaging in misleading or deceptive conduct. Their Honours pointed out that "conduct" was not confined to representation, and that by s 4(2) of the Trade Practices Act conduct included making or giving effect to the provision of a contract: s 4(4) of the Fair Trading Act is to the same effect. That is, if giving a warranty was misleading or deceptive – which is not necessarily the same as the warranty being breached – there could be conduct contravening s 52 of the Trade Practices Act or s 42 of the Fair Trading Act. But a contractual promise does not necessarily constitute misleading or deceptive conduct, see McWilliams Wines Pty Ltd v LS Booth Wine Transport Pty Ltd (1992) 25 NSWLR 723 and Concrete Constructions Group Ltd v Litevale Pty Ltd [2002] NSWSC 670. 85 The support sought may have been intended to answer an argument that reliance on the EBIT representation was precluded by the inclusion of the EBIT figure in the warranted profit and loss account. If so, the answer was by assertion that a like representation was made as part of the Schedule 3 representation. From the last sentence in [236], in particular, it may be that the trial judge was not fully apprised of the case Backoffice intended to put. If it was put as in the written submissions on appeal earlier set out, it is understandable that her Honour's attention was focussed on the add-back representation and the EBIT representation, without seeing independent significance in like representations as part of the Schedule 3 representation. 86 However, I do not think that any misunderstanding there may have been matters for the cross-appeal. 87 The pleading rather inelegantly alleged that Mr Campbell "represented to Backoffice the contents of Schedule 3 of the Share Sale Agreement". The pleading was not that giving the warranties in the share sale agreement in relation to the balance sheet and profit and loss account in Schedule 3 was contravening conduct, but that providing Schedule 3 was the contravening conduct. 88 If Mr Weeks relied on the add-back representation, the EBIT representation or the December 2004 estimates representation, the repetition of the add-back representation and the EBIT representation through the provision of the profit and loss account part of Schedule 3 did not detract from the causal effect of that misleading or deceptive conduct. The repetition confirmed the material on which Mr Weeks was already relying; so far as the provision of the profit and loss account represented the correctness of the relevant figures, estimation took second place, and there was to be the added support of a warranty. The repetition by the Schedule 3 representation was not necessary in order that conduct contravening s 42 of the Fair Trading Act be established, even if it equally gave rise to contravening conduct, and would not add to Backoffice's position thus far in the cross-appeal. 89 Further misleading or deceptive conduct because of other matters said to be breaches of the warranties in the share sale agreement, being the remainder of the Schedule 3 Deficiencies, also would not in the light of my conclusion in [76] above add to Backoffice's position thus far in the cross-appeal. There is no occasion to go into it. 90 As I have said, Backoffice claimed an order avoiding the contracts and return of the $850,000. The trial judge did not consider whether, if misleading or deceptive conduct had been established causally operative upon entry by Backoffice into the contracts, it would be appropriate so to order. That must now be considered. 91 An order pursuant to s 72 of the Fair Trading Act may be made if the court finds that a person "has sustained, or is likely to sustain, loss or damage" by contravening conduct, and can be made only if the court considers that the order "will compensate … wholly or in part for the loss or damage or will prevent or reduce the loss or damage" (s 72(1)). Prevention or reduction of future loss or damage did not arise in the present case. What was Backoffice's suffered loss or damage? 92 If the loss or damage was the difference between the value of the share and what Backoffice paid for it, on the valuation of the share in the Company at which the trial judge arrived for the buy-out order, Backoffice did not suffer loss or damage. The trial judge valued the share as at 24 January 2005 at $853,000, some $3,000 more than Backoffice paid for it, and Backoffice received full value for what it paid. Mr Campbell challenged the trial judge's valuation in his appeal, but for obvious reasons Backoffice stood by it. 93 Backoffice submitted that its loss or damage was not the difference between the value of the share and what it paid for it, but the complete loss of its investment of $850,000. I come to that, and to the value of the share, later in these reasons. For the present, it is sufficient that I consider that Backoffice did suffer loss or damage; but for the reasons now given I do not think an order should be made avoiding the contracts and for return of the $850,000. 94 It is necessary to say more of the provisional liquidation and the sale of the Company's business and assets. 95 On 31 March 2005 Mr Campbell's solicitors wrote to Mr Weeks' solicitors saying that there had "occurred a loggerheads in the management of the company" and that senior counsel had advised that the Company should be placed into voluntary administration. The letter enclosed proposed minutes of a meeting of directors of the Company, signed by Mr Campbell, resolving that in the opinion of the directors the company "is insolvent, or is likely to become insolvent at some future time" and that it should be placed into voluntary administration. The solicitors said that if they did not receive the minutes signed by Mr Weeks by 1 April 2005 they held instructions to approach the Court to seek the urgent appointment of a provisional liquidator. 96 Mr Weeks' solicitors replied, also on 31 March 2005, saying that Mr Weeks knew of no reason why the Company should be considered to be insolvent or likely to become insolvent in the future, but offering to review its solvency if access to the Company's financial records was restored. They said that if Mr Weeks came to that view, he would agree to the necessary resolution. 97 Mr Campbell's solicitors responded on 1 April 2005, saying that Mr Campbell did not contend that the Company was then insolvent "but it is his contention that it will soon become so as a result of the frozen bank overdraft facility and the general inability of the two directors to agree on any matter including the signing of cheques". They said that they had instructions to apply for an order appointing a liquidator "on just and equitable grounds" as soon as possible, and urged reconsideration of appointment of a provisional liquidator. 98 As earlier noted, Backoffice and Mr Weeks began their proceedings against Mr Campbell, Sentinel and the Company on 1 April 2005. The claims included an order that the Company be wound up, as an alternative to a buy-out order. 99 On 2 April 2005 Mr Campbell's solicitors sent an e-mail to Mr Weeks' solicitors stating - "I confirm you will be seeking the appointment of a provisional liquidator on Monday morning and that this can be done by consent. Further, I confirm you will forward to us draft orders to be made on Monday and that we will be available to attend court with you on Monday morning. We await your advices as to when you are ready to attend the Court and also we await a copy of the draft consent orders." 100 The order appointing the provisional liquidator was made on 7 April 2005. 101 On 10 May 2005 the provisional liquidator advertised the business and assets of the Company for sale. On 31 May 2005 the provisional liquidator sold the business and assets of the Company to Healthy Water International Pty Ltd, a company controlled by Mr Campbell, for $196,815. Beyond the fact of the sale, the evidence did not reveal how or why it came about. Ordinarily a provisional liquidator would not dispose of the company's entire undertaking, and the sale must have been with the consent of Backoffice. 102 The money paid to the Company was eaten up in meeting its liabilities and the provisional liquidator's fees and expenses. Thus within months of the commencement of the proceedings there was no business of the Company to be conducted, and well before the trial in late 2006 the Company was an empty shell and the shares were worthless. 103 Mr Weeks agreed that he gave instructions to his solicitors that a provisional liquidator should be appointed. He gave the evidence - "Q. And you understood that once a provisional liquidator was appointed one of the things that might occur that the business would be sold? A. No, I didn't. Q. Had no idea about that? A. No. Q. What did you think would happen if a provisional liquidator was appointed? A. Well, that he would come in, that he would look at the company, at the financial state of the company and then make a determination whether it could continue operating or whether it didn't have the resources to continue operating and that when the provisional liquidator came in that he would take the decision making process from the board of directors. Q. Did you contemplate the possibility that as a consequence of the appointment of a provisional liquidator the business would be sold? A. As a possibility, yes. … Q. You had made a proposal as early as 24 February 2004 that you engage a broker to find a potential buyer for your shares and your position was you could do that at any time and you rejected the proposal? A. Yes. Q. And instead of that you went ahead and put a provisional liquidator into the company. What do you say about that? A. Yes. Q. And part of your thinking, Mr Weeks, with your knowledge and experience, by putting a provisional liquidator into this company, you would be able to thereby recoup in some way or other the investment you had made in this company? A. I was hopeful that the provisional liquidator would take over the administration and decision-making process of the company and that that could lead to a resolution of the financial situation." 104 Beyond this and the correspondence to which I have referred, the evidence did not disclose why the parties came to agree upon the appointment of the provisional liquidator and the sale of the Company's business and assets. The agreement upon the appointment of the provisional liquidator was for practical purposes contemporaneous with the commencement of the proceedings. Mr Weeks agreed that he saw as a possibility that the Company's business would be sold as a consequence of the appointment of a provisional liquidator, and I understand the resolution of the financial situation to which he referred to have been recoupment of his investment. That was not the way it turned out. 105 In considering an order avoiding a contract under s 87 of the Trade Practices Act or s 72 of the Fair Trading Act "the equitable principles concerning rescission give safe, if not necessarily exclusive, guidance": Munchies Management Pty Ltd v Belperio (1988) 58 FCR 274 at 288 per Fisher, Gummow and Lee JJ. One of those principles is concerned with restitutio in integrum, of which Dixon CJ and Webb, Kitto and Taylor JJ said in Alati v Kruger (1955) 94 CLR 216 at 243-4 - "If the case had to be decided according to the principles of the common law, it might have been argued that at the date when the respondent issued his writ he was not entitled to rescind the purchase, because he was not then in a position to return to the appellant in specie that which he had received under the contract, in the same plight as that in which he had received it: Clarke v. Dickson . But it is necessary here to apply the doctrines of equity, and equity has always regarded as valid the disaffirmance of a contract induced by fraud even though precise restitutio in integrum is not possible, if the situation is such that, by the exercise of its powers, including the power to take accounts of profits and to direct inquiries as to allowances proper to be made for deterioration, it can do what is practically just between the parties, and by so doing restore them substantially to the status quo: Erlanger v. New Sombrero Phosphate Co ; Brown v. Smitt ; Spence v. Crawford . It is not that equity asserts a power by its decree to avoid a contract which the defrauded party himself has no right to disaffirm, and to revest property the title to which the party cannot affect. Rescission for misrepresentation is always the act of the party himself: Reese River Silver Mining Co. v. Smith . The function of a court in which proceedings for rescission are taken is to adjudicate upon the validity of a purported disaffirmance as an act avoiding the transaction ab initio, and, if it is valid, to give effect to it and make appropriate consequential orders: see Abram Steamship Co. Ltd. v. Westville Shipping Co. Ltd . The difference between the legal and the equitable rules on the subject simply was that equity, having means which the common law lacked to ascertain and provide for the adjustments necessary to be made between the parties in cases where a simple handing back of property or repayment of money would not put them in as good a position as before they entered into their transaction, was able to see the possibility of restitutio in integrum, and therefore to concede the right of a defrauded party to rescind, in a much wider variety of cases than those which the common law could recognize as admitting of rescission." (citations omitted) 106 What is "practically just between the parties" depends not only on the availability of equity's powers, but also on the conduct of the parties. In Alati v Kruger, for example, the purchase of a business and assignment of the lease of the premises where it was conducted was induced by fraudulent representations as to the takings. One question was whether the purchaser should not have rescission because he had discontinued the business and left the premises and thereby "acted unconscientiously … as by causing the loss of a valuable leasehold and goodwill … without giving the [vendor] a reasonable opportunity to take them back" (at 225). It was held, however, that the facts did not support any unfairness on the purchaser's part, in particular because the vendor had had ample opportunity to protect his interests. 107 In my opinion, there could not be practical justice between the parties if an order were made avoiding the contracts and for return of the $850,000. Mr Campbell would get back the share sold to Backoffice, but it would be worthless. It is of course necessary to look beyond the share. Mr Campbell in fact got back the Company's business, by the purchase from the provisional liquidator through Healthy Water International Pty Ltd, but from the purchase price of $196,815 it was a much less valuable business and from the evidence as a whole one which had deteriorated in value as at 1 April 2005 when Backoffice first claimed to have the contracts undone (although it was not shown that the Company was insolvent). Mr Campbell's expert in the proceedings valued Backoffice's share as at 24 January 2005 at $410,000, compared to the $853,000 of Backoffice's expert, but even on that valuation the deterioration by the time of sale was of the order of $200,000. Repayment of $850,000 in return for a worthless share, even taking into account having got back the much deteriorated business, would not restore the parties to anything like their pre-contracts positions, quite apart from any ancillary matters such as taking account of dealings in the months of March and April 2005, which the bald order sought by Backoffice did not do. 108 If the breakdown in the relationship between Messrs Campbell and Weeks had an effect on the Company's profitable functioning, the evidence did not warrant attributing the deterioration in the business wholly or even substantially to that effect. The appointment of the provisional liquidator may have adversely affected the value of the business, but the appointment was consensual, as was the sale of the Company's business and assets crystallising the value of the shares and ultimately resulting in the shares having no value. From Mr Weeks' evidence set out above, I conclude that he instructed his solicitors to have a provisional liquidator appointed and agreed to the sale at least in part with a view to thereby recovering his investment, although in the result the Company's business and assets realised insufficient money. The imbalance in the repayment of $850,000 would in part be occasioned by Backoffice's conduct in these respects. 109 While the equitable principles provide a guide, the question is that directed by s 72(1) of the Fair Trading Act. It provides that the court may make "such order or orders as it thinks appropriate". In my opinion, in these circumstances it is not appropriate to undo the contracts and effectively thrust upon Mr Campbell the consequences of the subsequent breakdown of the relationship between him and Mr Weeks and the ultimately consensual cessation of carrying on the Company's business. The order that Mr Campbell purchase Backoffice's share 110 Section 232 of the Corporations Act provides - " 232 Grounds for Court order The Court may make an order under section 233 if: (a) the conduct of a company's affairs; or (b) an actual or proposed act or omission by or on behalf of a company; or (c) a resolution, or a proposed resolution, of members or a class of members of a company; is either: (d) contrary to the interests of the members as a whole; or (e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity. For the purposes of this Part, a person to whom a share in the company has been transmitted by will or by operation of law is taken to be a member of the company." 111 If there is conduct as referred to in s 232, still commonly called oppression although the description no longer reflects the conduct described, s 233 provides for the orders which may be made - " 233 Orders the Court can make (1) The Court can make any order under this section that it considers appropriate in relation to the company, including an order: (a) that the company be wound up; (b) that the company's existing constitution be modified or repealed; (c) regulating the conduct of the company's affairs in the future; (d) for the purchase of any shares by any member or person to whom a share in the company has been transmitted by will or by operation of law; (e) for the purchase of shares with an appropriate reduction of the company's share capital; (f) for the company to institute, prosecute, defend or discontinue specified proceedings; (g) authorising a member, or a person to whom a share in the company has been transmitted by will or by operation of law, to institute, prosecute, defend or discontinue specified proceedings in the name and on behalf of the company; (h) appointing a receiver or a receiver and manager of any or all of the company's property; (i) restraining a person from engaging in specified conduct or from doing a specified act; (j) requiring a person to do a specified act. (2) If an order that a company be wound up is made under this section, the provisions of this Act relating to the winding up of companies apply: (a) as if the order were made under section 461; and (b) with such changes as are necessary. (3) If an order made under this section repeals or modifies a company's constitution, or requires the company to adopt a constitution, the company does not have the power under section 136 to change or repeal the constitution if that change or repeal would be inconsistent with the provisions of the order, unless: (a) the order states that the company does have the power to make such a change or repeal; or (b) the company first obtains the leave of the Court." 112 The trial judge began her consideration of the claim to a buy-out order - "88 The plaintiffs' oppression claims are contained in paragraphs 14 to 20 of the Further Amended Summons/ Commercial List Statement [FAS]. That claim is headed "Exclusion from Management of the Company's Business". The plaintiffs claim that on 10 January 2005 Weeks began to attend the Company's offices to participate in the management of the Company's business [FAS 14]. It is claimed that Campbell removed the financial and administrative functions from Weeks and returned them to Ms Hunt [FAS 15] and that on 7 February 2005 Campbell advised Weeks that he wanted him out of the business [FAS 16]. The plaintiffs claim that Campbell prevented Weeks from participating in the management of the Company's business as a joint managing director and that he prevented Weeks from undertaking the financial and administrative functions agreed to prior to the entry into the Share Sale Agreement [FAS 17]. It is claimed that between 24 January 2005 and 30 March 2005, Campbell caused Weeks' access rights to the computer network and financial accounting records of the Company to be withdrawn and that Campbell refused to attend a director's meeting scheduled to be held on 3 March 2005 or any future meetings of directors of the Company [FAS 18-19]. The plaintiffs also claim that at all material times from 24 January 2005 Campbell prevented the Company from making any payments to Weeks pursuant to the Services Agreement or otherwise. 89 The plaintiffs claim that Campbell's conduct by or on behalf of the Company was both contrary to the interests of the members as a whole and oppressive to, unfairly prejudicial to and unfairly discriminatory against Backoffice, within the meaning of s 232 of the Act." 113 As I have said, the trial judge held that there had been oppression. She stated her findings in terms of oppression, not conduct contrary to the interests of members of the company as a whole or conduct unfairly prejudicial to or unfairly discriminatory against a member, and did not consider the extent to which the words formed compound expressions. She addressed oppression in conduct of five kinds. 114 The first was Mr Campbell's exclusion of Mr Weeks from the agreed day to day management of the Company, of which prevention of payment under Backoffice's services agreement was part. After extensive reference to the evidence, her Honour said - "110 It is clear that Campbell decided not to pay Backoffice because Weeks would not agree with what appears to me to be a totally unreasonable demand in Campbell's letter of 6 February 2005, attempting to effect a change to Backoffice's and Weeks' rights under the Share Sale Agreement and Service Agreement. Campbell's conduct in refusing to pay Backoffice's 31 January 2005 amended invoice or any other invoice unless the terms of his letter of 6 February 2005 were agreed to by Weeks would satisfy an objective commercial bystander that Weeks and Backoffice were unfairly and improperly excluded from the day-to-day management of the Company that had been agreed to prior to and in the execution of the Shareholders Agreement and Services Agreement. I am satisfied that Campbell's conduct in this regard was oppressive to Backoffice." 115 The second was preclusion of Mr Weeks from access to the MYOB accounting system by changing the password. Her Honour found - "116 I am satisfied that Campbell's intention in changing the password was as he recorded in his email of 28 February 2005 to prevent what he saw as "interference" from his Joint Managing Director, whose services had been procured by Backoffice. I am satisfied that this conduct was oppressive to Backoffice." 116 The third was conduct which Backoffice had submitted showed that Mr Campbell was behaving in an obstructive manner towards all reasonable attempts by Mr Weeks to hold a board meeting with Mr Campbell. Her Honour concluded - "121 If this correspondence and conduct in relation to the board meeting was the only evidence of alleged unfairness, I may have had some doubts about characterising it as oppressive. However when this conduct is viewed with Campbell's other conduct referred to above and later in this judgment, I am comfortably satisfied that it was part of Campbell's plan to keep Weeks and thus Backoffice from having any true management involvement with the Company. I am satisfied that the excuses Campbell gave to Weeks that he was "busy" on the dates proposed for the board meetings was part of Campbell's concerted efforts to exclude Weeks from the management of the Company. I am satisfied that Campbell's conduct amounted to a refusal to attend a Board Meeting and that it was oppressive." 117 Fourthly, her Honour declined to find oppression in Mr Campbell authorising the Company to pay an account said in part to be for services personal to Mr Campbell, saying at [122] that it was "very difficult to characterise this conduct, on its own, as oppressive" and that "[a]t its highest it is some evidence of Campbell continuing to operate the business of the Company without consultation with Weeks". 118 Fifthly, and without expressly labelling it at oppressive, she said of Mr Campbell continuing to receive an automatic $750 per week to his personal credit card, contrary to his understanding that when Mr Weeks was involved personal expenses would "no longer be run through the Company", that it was inappropriate and inconsistent with their agreement and - "The fact that Campbell was receiving these payments whilst at the same time denying Weeks' claims for payment and refusing to pay Weeks or Backoffice any money, except for a laptop computer, is further evidence of Campbell's unfair and rather highhanded treatment of Weeks and Backoffice." 119 The precise conduct, and whether it amounted to oppression (as I will call for convenience conduct within the collection of words in s 232), was challenged in the appeal. I am content to proceed upon the trial judge's findings, and to regard them as sufficient to make out oppression, without entering upon those challenges. 120 Many orders are instanced in s 233, and the court's power extends to making "any order under this section that it considers appropriate in relation to the company". The order presently in question is that in s 233(1)(d). Other than by the preconditions in s 232 no criteria are stated for the exercise of the discretion inherent in "may" in s 232. The discretion must be exercised with regard to the statutory purpose to be found in the provisions. 121 The predecessors to ss 232 and 233 were introduced in the United Kingdom as s 210 of the Companies Act 1948 (UK), as a means of giving an aggrieved shareholder a remedy when winding-up on the just and equitable ground would be too harsh. They enabled orders by which the oppression came to an end with the shareholder remaining a shareholder (as in re H R Harmer Ltd (1959) 1 WLR 62) or came to an end through the shareholder being bought out as a shareholder (as in Scottish Cooperative Wholesale Society Ltd v Meyer (1959) AC 324). That legislation was adopted in Australia, and has since been significantly amended to the form earlier set out. There are more widely available statutory remedies, but historically the point of granting a remedy is to bring an end to the oppression - as Powell J said in re Dernacourt Investments Pty Ltd (1990) 20 NSWLR 588 at 620, "if it be possible, to bring the 'oppression' to an end without recourse to a cure the effects of which would, in many cases, be worse than the disease". 122 Apart from history, under the current provisions the statutory purpose is gained from the opening words in s 232, that the Court "may make an order under s 233 if … ". The "if" does not simply indicate the precondition to making an order, but is an indicator of why an order should be made. At its widest, the order is to provide a remedy for the oppression, and in relation to s 233(1)(d) it is to do so through the shareholder being bought out. Whatever the position when an order other than an order for the purchase of shares is claimed (as, for example, an order that damages be paid to the company: re Chime Corporation Ltd (2004) 7 HKCFAR 546; Gamlestaden Fastigheter AB v Baltic Partners Ltd (2007) 4 All ER 164), the exercise of the discretion should be with a view to ending the oppression. A buy-out order is not to compensate for the shareholder's loss (although it may have that effect), but to separate the oppressor and the oppressed, and so albeit unusually, can be an order that the oppressor sell to the oppressed: re a Company (No 00789 of 1987); ex parte Shooter (1990) BCLC 384; re Brenfield Squash Racquets Club Ltd (1996) 2 BCLC 184. 123 Thus there will ordinarily be no occasion for making a buy-out order under s 233(1)(d) if the oppression has otherwise been brought to an end, at least provided that the bringing to an end was not itself a consequence of the conduct complained of, such as by oppression "carried to the extent of destruction of the business of the company" (Scottish Cooperative Wholesale Society Ltd v Meyer at 364 per Lord Keith). 124 Mr Campbell submitted that the trial judge erred inordering him to repurchase Backoffice's share because the oppression (which, as I have said, it challenged in the appeal) was at an end well before her Honour came to make the order. The submission was put in two ways, but both were founded on the appointment of the provisional liquidator on 7 April 2005 and the sale of the Company's business and assets on 31 May 2005, and the result that the Company was a shell and the shares had no value. That they had no value was common ground, and may be the explanation for the translation of the buy-out order to an order that Mr Campbell pay $853,000 to Backoffice. Common to the two ways was that the oppression found by the trial judge had come to an end with the appointment of the provisional liquidator, who thereafter had the conduct of the Company's affairs; and that, the Company being a shell and the parties agreeing that its shares were worthless, the oppression could not and would not re-emerge. 125 First, Mr Campbell submitted that it could not be found that the conduct of the Company's affairs or other conduct in s 232(a), (b) and (c) "is" oppressive within s 232(d) or (e). The present tense in s 232, it was said, meant that the conduct had to be continuing at the time the court made an order under s 233, and it was not. This submission went to the court's power, not to the exercise of the discretion inherent in "may" in s 232, but it was submitted that it was in line with the purpose guiding the exercise of the discretion. 126 In some cases it has been said that the oppression must be continuing at the commencement of the proceedings (in re Westbourne Galleries Ltd (1970) 1 WLR 1378 at 1390; re Jermyn Street Turkish Baths Ltd (1971) 1 WLR 1042 at 1060; re Tivoli Freeholds Ltd (1972) VR 445 at 453; re Dernacourt Investments Pty Ltd at 615) or at the time of the hearing (re Richard Pitt & Sons Pty Ltd (1979) 4 ACLR 459 at 465, referring also to re Fildes Bros Ltd although that case was on the just and equitable ground; re Campbell Tube Products Ltd (1976) 1 NZLR 65 at 71; re Anti-Corrosive Treatments Ltd (1980) ACLC 40-625 at 34,170; perhaps Webb v Stanfield (1991) 1 Qd R 593 at 598). These were cases on predecessors to s 232, in the terms that the company's affairs "are being conducted" oppressively (in re Fildes Bros Ltd, that it "is" just and equitable that the company be wound up). In Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672, a case on s 260 of the Corporations Law in like terms, Spigelman CJ said at [159], without adverse comment, that the case was argued "on the common basis that the time at which the court must formulate the opinion about oppression or unfair prejudice is the date of institution of the proceedings", contrasting that with "the issue of relief … determined as at the date that the statutory discretion falls to be exercised". 127 In these cases the statutes used the continuous present of "are being conducted". In Bessounian v Australian Wholesale Mortgages Pty Ltd [2007] NSWSC 35 Hamilton J adopted as correct for s 232, which is in different terms, the view expressed in re Richard Pitt & Sons Pty Ltd, saying at [7] - "Section 232 of the CA provides that "the Court may make an order under section 233 if … the conduct of a company's affairs … is oppressive to … a member …". The language of the provisions considered in Richard Pitt was even more explicit in requiring a state of affairs existent at the time of order. But, in my view, the sense of contemporaneity in the language I have quoted is sufficient to lead to the conclusion. Furthermore, it would make little sense if an order could be made if the oppression were established to exist at the time of the commencement of proceedings, but had ceased to exist when the order came to be made. The logicality of this view was commented on by Heath J in Supscaf at [103]. It is not necessary to decide in this case whether the oppression must be established to have existed also at the commencement of the proceedings, although I rather incline to the view that that is not necessary, if oppression at the time of order is established. No submission was made to the contrary of the propositions that I have accepted." 128 The logicality to which his Honour referred, from Jenkins v Supscaf Pty Ltd (2006) 3 NZLR 264 at [103] a case of winding-up on the just and equitable ground, was - "Logically, it seems sensible to determine an application to put a company into liquidation on the basis of information available at the time of the hearing. Such information might qualify information available at the time the application was filed or emphasise aspects of the evidence on which one or other party might rely." 129 Other cases are to the contrary. In re Spargos Mining NL (1990) 3 ACSR 1, a case on s 320 of the Companies (WA) Code also in the terms that the company's affairs "are being conducted" oppressively, it was said at 44 that it was "clear … from the section itself that it is not necessary that the unfairness be continuing at the time of the petition or at the time when the court comes to consider the matter", but that in the exercise of the discretion it may be thought that there is no present requirement for the grant of relief in relation to past oppression. A number of previous decisions were distinguished on the ground of "the broader formulation of s 320" since they were decided. To the same effect are re Dalkeith Investments Pty Ltd (1984) 9 ACLR 247 at 253 and Reid v Bagot Well Pastoral Co Pty Ltd (1993) 12 ACSR 197 at 205, on an equivalent s 320. In De Tocqueville Private Equity Pty Ltd v Linden & Conway Ltd, re Linden & Conway Ltd (2006) 59 ACSR 587, a case on s 232, it was said at [25] - "Finally, it is not necessary that the conduct of which the plaintiffs complain be continuing at the time of the application or at the time when the court comes to consider the matter. However, that question may well be relevant as to whether relief is granted at all or what is the appropriate relief: Re Spargos Mining NL (1990) 3 WAR 166 ; 3 ACSR 1." 130 Section 232 departs significantly from its predecessors. The word "is" in s 232 is not the continuous present. It may refer to the temporal happening of the conduct in s 232(a), (b) or (c), or it may refer to the nature of the conduct as conduct past or present which meets one of the descriptions in s 232(d) and (e). 131 As a textual indicator, one would not ordinarily say that a proposed act or omission, or a proposed resolution, is presently oppressive, but it can be said to be oppressive in nature. Similarly, to say of an actual act or omission that it is oppressive does not naturally refer to its continuance, but to its nature. Further, the relief available under s 233 suggests that the conduct need not always be continuing when the proceedings are commenced or when the court comes to consider whether relief should be granted. Modification of the constitution (s 233(1)(b)), or an order regulating the conduct of the company's affairs in the future (s 233(1)(c)), may be appropriate if it is thought that the conduct will be repeated, although it has temporarily come to an end. Unless necessitated by its words, s 232 should not be given a construction which would let the entitlement to claim relief be taken away at the last moment, after it has been claimed. 132 In my opinion, it is not necessary that the conduct complained of be continuing at the time the court considers making an order. Rather, claimed relief founded on conduct which is no longer continuing may be refused, but will not always be refused, in the exercise of the discretion, and the discretion adequately allows for the logicality to which Hamilton J referred. I do not accept the first way in which Mr Campbell put his submission. 133 Secondly, Mr Campbell submitted that in the circumstances described above the trial judge erred in the exercise of her discretion, and should have refused an order under s 233(1)(d). The oppression found by the trial judge ceased from the time the Company came under the control of the provisional liquidator, and could not re-arise after the sale of the Company's business and assets. While the Company continued in existence as a shell, the shares were of no value, and a buy-out order was not only unnecessary but, it was said, would also operate unjustly against Mr Campbell. 134 Mr Campbell relied in particular on Webb v Stanfield. Webb and Stanfield were equal shareholders in the company. Webb applied under s 320 of the Companies (Queensland) Code for an order that Stanfield purchase his shares, complaining that Stanfield had taken over the management of the company and appropriated its business to himself. The company had ceased to carry on business, and on the application of Stanfield had been wound up on the ground of insolvency. McPherson J, with whom Demack and Williams JJ agreed, considered that the relief claimed "ceased in the circumstances of this case to be appropriate once the company was ordered to be wound up as insolvent" (at 600). 135 One basis for that conclusion was that it could not be thought that the liquidator was conducting the affairs of the company in a manner oppressive to the shareholder, and that if he was doing so the appropriate remedy was to apply for directions addressed to the liquidator. This may have turned on the continuous present in s 320. There was a wider basis, reflected in the language that the relief claimed ceased to be appropriate. His Honour said that if Stanfield's conduct had caused loss to the company the liquidator could bring proceedings against him to recover that loss, that creditors and the costs of the winding up would have first claim on the proceeds of any restitutionary relief against him, and that Webb as shareholder would in due course receive in the winding up an equal share of any surplus; and said (at 600) - "To countenance the claim that he now makes to be paid his share measured by the value that the corporate assets should but do not bear would be to confound the fundamental principle on which the statutory scheme for winding up of insolvent companies is intended to proceed. On the other hand, if the winding up runs its designed course, he will in the end receive the full measure of his entitlement without resort to s 320." 136 Webb v Stanfield was decided on different facts, not just because the company was in liquidation but also because Stanfield's conduct was thought to be open to a full remedy at the suit of the liquidator. It broadly supports that an order under (now) s 233(1)(d) will not be made if the oppression is otherwise appropriately remedied, but beyond that the guidance for the present case is remote. 137 In my opinion, the buy-out order was not an appropriate order. The provisional liquidation may have in part been a mutually recognised necessity when the relationship between Mr Campbell and Mr Weeks thoroughly broke down. But the inability of the Company to function as a jointly owned and managed entity was plainly enough due to more than the particular conduct found to have been oppressive, and a breakdown in relationship in a 50/50 entity is not the same as oppression. The provisional liquidation was also in part, so far as Mr Weeks was concerned, with a view to recovery of his investment. The Company did not continue with the provisional liquidator holding the status quo until the Court came to consider what relief, if any, should be granted. The sale of its business and assets was consensual. In the absence of evidence to establish that it was forced on the parties, their agreement made a buy-out order unnecessary in order to bring the oppression to an end. 138 A buy-out order would impose on Mr Campbell the consequential nil value of Backoffice's share. What I have said in relation to an order avoiding the contracts and for return of the $850,000 again operates. When Backoffice concurred in not only the appointment of the provisional liquidator, but also the sale of the Company's business and assets, in my opinion it would not be just to require Mr Campbell to repurchase Backoffice's worthless share. 139 The present case has some similarities with re a Company No 008126 of 1989 (1992) BCC 542 (also reported as re Hailey Group (1993) BCLC 459). The petitioner was a minority shareholder. He claimed an order that the majority shareholders sell their shares to him. An administrative receiver was then appointed. The claim changed to an order that an order that the majority shareholders buy his shares. It was held that there had been oppressive conduct, but the buyout order was refused. Richard Sykes QC, sitting as a deputy High Court judge, said at 554 that the relief "need not be directed solely towards remedying the particular things that have happened", but - "The fact is that the appointment of an administrative receiver has enabled the company to be properly run, so far as it is running at all, and there is no necessity to appoint anyone to supervise the operations of the administrative receivers, if anybody could be found to perform that task gratuitously. Paradoxically, the appointment means that there now is no order which is appropriate for giving relief in respect of the matters complained of. I certainly take the view that sec 461(1) requires me to consider what order is appropriate at the time of the hearing and not, for example, what order would have been appropriate at the date of presentation of the petition. It is very common that the order made on petitions under sec 459 is for one warring faction to purchase the shares of the other. In the case of a company which is continuing in business it certainly gives relief in respect of the matters complained of. The petitioner is no longer the bedfellow of the wrongdoer; he is either in control of the company because he has bought the wrongdoer's shares or he is free from the company for a fair price, often adjusted for the damage done to the company by the wrongdoer. Such relief might well have been appropriate in the present case at the date of the presentation of the petition and so long as it continued as a going concern. To impose on some of the respondents an obligation to purchase the petitioner's shares in the events which have happened is tantamount to imposing a fine on them: there is nothing of any value for them to purchase. Nor does the petitioner need to dispose of his shares in order to obtain relief in respect of the matters complained of: the administrative receiver has provided that relief." 140 His Lordship said that the buy-out order would be appropriate if the oppression had prevented the petitioner from selling his shares at a proper price prior to the onset of insolvency, but there was no evidence of that; and that it might have been appropriate if the buy-out order had been originally sought when the company was solvent, although that appears to be contrary to considering what order is appropriate at the time of the hearing. These possible qualifications do not detract from his Lordship's central reasoning. 141 Since s 233 involves an exercise of discretion, it is not enough that in my opinion the proper exercise of discretion was to refuse an order under s 233(1)(d). The trial judge's exercise of discretion must have miscarried in one of the ways for which House v The King (1936) 55 CLR 499 is customarily cited. 142 The trial judge referred to a submission by Mr Campbell founded on the appointment of the provisional liquidator, that in seeking an order that he purchase Backoffice's share "when the consequences of the plaintiffs' own actions (in appointing a provisional liquidator) is to obtain relief involving the 'destruction of the underlying subject-matter (the Company's business) and the erosion of its value'", Backoffice was unjustifiably approbating and reprobating. Her Honour also referred to two submissions which required that the Company be treated as a company in liquidation. One, relying on Zempilas v JN Taylor Holdings Ltd (in liquidation)(No 6) (1991) 5 ACSR 28, was that Backoffice was "not entitled to bring this action" (at [126]) because a minority shareholder's action will not lie if a company is in liquidation. The other, relying on Webb v Stanfield, was that a court will not order a compulsory purchase of shares after a company has been wound up. 143 The trial judge did not directly explain why she did not accept the provisional liquidator submission. She appears to have accepted Backoffice's response to the two company in liquidation submissions, that a provisional liquidator was not in the same position as a liquidator his primary function being to maintain the status quo. Her Honour said - "131 I am not satisfied that the appointment of the provisional liquidator precludes the plaintiffs from seeking an order under s 233(d) [sic] of the Act for the purchase of Backoffice's share. 132 The defendants also submitted that the plaintiffs should not be granted any relief under s 233(1)(d) of the Act by reason of the fact that Weeks/Backoffice had received an offer for the purchase of Backoffice's share and had refused such offer. In an email to Weeks dated 23 February 2005, Campbell claimed that 'an offer was put to buy you out'. Weeks responded by email dated 24 February 2005 that he had not received such an offer but that if he were to receive one he would give it due consideration. There is no evidence of the nature of the alleged offer and there is no evidence upon which a judgment can be made as to the reasonableness or otherwise of the offer, if made, or its rejection. The fact that there may have been an offer that was rejected is not an impediment to the exercise of my discretion in the plaintiffs' favour." 144 The trial judge was exercising a discretion, see the last sentence of [132], but her references to the appointment of the provisional liquidator were not as a discretionary matter. As summed up in [131], they were to a matter which was said to preclude Backoffice from seeking an order under s 233(1)(d). Nor, save perhaps in relation to the approbation and reprobation, was the consequential sale of the Company's business and assets referred to, and it was not treated as a matter going to the exercise of the discretion. 145 In her reasons coming to the price to be paid for Backoffice's share, the trial judge said - "137 The defendants' submissions in relation to the availability of the cause of action included a submission that the plaintiffs should not be able to pursue the oppression suit by reason of Weeks' conduct in appointing a provisional liquidator, with the consequence of causing the value of the shares in the Company to become worthless. It seems appropriate that I should take that submission into account on this aspect of the matter. The appointment of the provisional liquidator was made by consent between the parties to the litigation. It was not, as the defendants put it, Weeks' conduct that caused such appointment. These proceedings were commenced on 1 April 2005 by Summons that included a claim for the compulsory purchase of Backoffice's share. The consent order appointing the provisional liquidator was not made until 7 April 2005. It was open to Campbell before consenting to the appointment of the provisional liquidator to purchase Backoffice's share." 146 This again did not refer to the appointment of the provisional liquidator and its consequences as a discretionary matter in the grant of relief, but to a submission "in relation to the availability of the cause of action" that Backoffice "should not be able to pursue the oppression suit". 147 In coming to her satisfaction that a buy-out was the appropriate remedy, in my respectful opinion the trial judge did not take into account the important matters to which I have referred. That the order should not be made because of the circumstances in which any oppression had come to an end was a fundamental issue between the parties. Although the submissions to her Honour may not have been fully directed to the exercise of the discretion, I consider that the matters were sufficiently exposed, and that there was appealable error within the House v The King principles. The buy-out order should be set aside. Misleading or deceptive conduct - damages 148 Backoffice submitted that it should have damages of $850,000 as compensation for the loss of its investment. It said that its share was now worthless, and that where it would not have purchased the share in the Company but for the misleading or deceptive conduct its loss or damage was not just the difference between the value of the share and what it paid for it, but extended to the loss suffered when, upon the provisional liquidation and the sale of the Company's business and assets, the share became of no value. 149 Mr Campbell submitted that the representations were "relatively minor" and that it should be found that Backoffice would nonetheless have purchased the share. The submission was no more than that, and was not developed. I have earlier found to the contrary. Accordingly, arriving at Backoffice's loss or damage should be on the basis that Backoffice would not have purchased the share. 150 Damages in tort where the purchase of property has been induced by misrepresentations are commonly the difference between the price paid for the property and its value at the time of purchase. In H T W Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; (2004) 217 CLR 640 the High Court said of this - "[35] The approach of subtracting value from price is commonly employed where the acquisition of land, chattels, businesses or shares is induced by deceit. It has also been commonly employed under s 82 of the Act [ Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 at 6-7 per Gibbs CJ; at 12 per Mason, Wilson and Dawson JJ; Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281 at 291 per Brennan, Deane, Dawson, Gaudron and McHugh JJ]. It is sometimes described as the rule in Potts v Miller [(1940) 64 CLR 282]. Even in the areas in which that approach is often applied, and even apart from cases in which consequential losses have been recovered, the "rule" is not universal or inflexible or rigid. This perception is not novel [cf Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254]. It has existed at least since the judgment of Dixon J in Potts v Miller and has been quite plain since that of Gibbs CJ in Gould v Vaggelas [(1985) 157 CLR 215 at 220-221]. Even Jordan CJ, who called the rule "well settled", acknowledged that it was only a "rule of practice" [ McAllister v Richmond Brewing Co (NSW) Pty Ltd (1942) 42 SR (NSW) 187 at 192]. [footnotes inserted] 151 If Backoffice's loss or damage be assessed according to the rule in Potts v Miller, on the valuation of the share in the Company at which the trial judge arrived for the by-out order damages would not be awarded. Although Backoffice sought to uphold the valuation made for that purpose, Mr Campbell contested it, and I do not think that the Court should ignore the contest when arriving at Backoffice's loss or damage. For the reasons given by Basten JA, the valuation can not be sustained on appeal. I agree with his Honour that the value of the share purchased by Backoffice as at 24 January 2005 should be assessed at $410,000. 152 While the measure of damages in tort may be a guide in determining an award of damages under s 82 of the Trade Practices Act and s 68 of the Fair Trading Act, the relief under those provisions is not to be confined by analogy with damages for breach of contract or in tort: Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 at 14; Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281 at 290; Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at [17], [38], [103], [152]; Henville v Walker at [66], [130]. In Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 216 CLR 388 it was said at [44] that to begin with an analogy with common law damages "distracts attention from the primary task of construing the relevant provisions of the Act". 153 Sections 82 and 68 call for finding the loss or damage suffered by the contravening conduct. In business sale cases, for example, the purchaser can if causation is made out recover damages to compensate for trading losses and loss on resale. The essential question is one of causation. Harking back to causation in the light of the subject, scope and objects of the Fair Trading Act, the more full remarks of McHugh J in Henville v Walker at [135] were - "The purposes of the Act include promoting fair trading and protecting consumers from contraventions of the Act. Those purposes are more readily achieved by ensuring that consumers recover the actual losses they have suffered as the result of contraventions of the Act. Where a person contravenes the Act and induces a person to enter upon a course of conduct that results in loss or damage, an award of damages that compensates for the actual losses incurred in embarking on that course of conduct best serves the purposes of the Act and should ordinarily be awarded." 154 Backoffice was effectively locked in as equal shareholder with Mr Campbell. It could not readily sell its share into a market and thereby escape from the position into which it had come as a result of the misleading or deceptive conduct, quite apart from the fact that it was some time before Mr Weeks had occasion to question the true worth of the Company's business - the difficulties between Mr Campbell and Mr Weeks became the dominant feature of the conduct of the business. The trial judge referred at [132], earlier set out, to an offer by Mr Campbell to purchase Backoffice's share, but was evidently not satisfied that an offer had been made and in any event said that there was no evidence on which a judgment could be made as to the reasonableness of the offer or its rejection. There can in my view be put aside that Backoffice had the opportunity to escape from its position as equal shareholder. 155 The breakdown in the relationship between Messrs Campbell and Weeks need not have been anybody's fault, and if it were to be regarded as Mr Campbell's fault there is no warrant for imposing on him, under the guise of loss or damage by misleading or deceptive conduct, damages for his fault. But their relationship did break down, perhaps never really became established, and led to the appointment of the provisional liquidator and the sale of the Company's business and assets. Only a short time passed. The need for a working relationship between Mr Campbell and Mr Weeks came with the contracts giving effect to the purchase of the share. Mr Weeks was effectively locked in as co-director and joint managing director, as well as equal shareholder, and so the feature of the relationship was part and parcel of the position into which Backoffice had come. 156 As a matter of causation rather than fault, in my opinion these events and their consequences for the value of Backoffice's share had such connection with the misleading or deceptive conduct that the loss or damage extended to them. Mr Campbell himself pressed for the appointment of the provisional liquidator, and concurred in the sale of the Company's business and assets. He took advantage of the sale, as purchaser through Healthy Water International Pty Ltd. Mr Weeks' concurrence, albeit it may have been in part with a view to recouping his investment, did not mean that the resulting nil value of Backoffice's share failed to flow sufficiently directly from the contravening conduct. 157 Backoffice's loss or damage was therefore not just $410,000, but the $850,000 it had paid for the share. Damages for breach of contract 158 Backoffice claimed damages for breach of contract first, in respect of a number of warranties in the share sale agreement and secondly, for breach of an implied obligation of co-operation in the share sale agreement and the shareholders agreement. The implied obligation of co-operation was partly admitted on the pleadings. Backoffice relied for its breach on the conduct relied on for oppression, and pleaded to the effect that as a result of the breach it lost the value of its share and also lost payments which should have been made to it under its services agreement. 159 Damages for breaches of the warranties need not be considered. If there were breaches of the warranties, the damages would be such as would put Backoffice in the position it would have been if the warranties were correct, by regard to the effect on the value of the share for which Backoffice paid $850,000: E W Blanch Pty Ltd v Cooper [2005] NSWCA 217. The recovery of damages of $850,000 for loss of Backoffice's investment swallows up any such damages. 160 Backoffice pleaded that the share sale agreement contained the implied terms - "(a) that the parties would do all such things as are necessary on their part to enable the other party to have the benefit of the Share Sale Agreement; and (b) that neither party would act in a manner calculated to deprive the other party of the benefit of the Share Sale Agreement." 161 Identical implied terms were pleaded in relation to the shareholders agreement. The terms were said to be implied as a matter of law. 162 Mr Campbell admitted implied term (a) but denied implied term (b). There appears to be a slip in [223] of the trial judge's reasons, in which it is said that implied term (b) was admitted; it was not suggested that this was material to the outcome. I will assume both terms. Whether the admission was entirely warranted in the light of the express terms of the agreements, including comprehensive "entire agreement" clauses, does not arise. 163 The trial judge considered the implied obligation of co-operation only as an avenue to recovery of fees payable to Backoffice under its services agreement. I should not be taken to accept that breach of the implied terms could carry the damages, but any damages for loss of the value of Backoffice's share would not add to the damages of $850,000 already dealt with. Only recovery of fees payable to Backoffice need be considered. 164 Noting that the services agreements were contained in a schedule to the shareholders agreement, and that cl 6.1 of the shareholders agreement provided that Messrs Campbell and Weeks "as Joint Managing Directors shall have the day-to-day conduct and management of the Business and the Company", the trial judge said - "224 The plaintiffs' claim is that Campbell breached his implied duty to co-operate with Weeks in the management of the business as Joint Managing Director, one aspect of which was his refusal to make payments to Backoffice under the Services Agreement. It is alleged that such refusal had the effect of depriving Backoffice and Weeks of all the benefits under the Shareholders Agreement that included the benefits under the Services Agreement." 165 Mr Campbell caused payments to be made to Sentinel under its services agreement, although the amount paid was not clear. He refused to make any payments to Backoffice under its services agreement. The trial judge concluded - "231 I am satisfied that Campbell caused the Company to fail to make the payments to Backoffice and that there was no proper basis for refusing to make those payments. One of the "benefits" to Backoffice of the Shareholders Agreement was the payment of the Fee it was entitled to for the provision of Weeks as Joint Managing Director in the Services Agreement attached to the Shareholders Agreement. Campbell was obliged to co-operate with Weeks and/or Backoffice to ensure that the Backoffice invoices were paid by the Company. Campbell breached the implied term of the duty of co-operation by failing to cause the Company to pay the Backoffice invoices." 166 The trial judge considered that if damages were to be awarded, they should be the total amount of the invoices rendered by Backoffice up to the time of appointment of the provisional liquidator, as to one amount that in an amended invoice. She did not find the total amount: the amount particularised in the pleadings was $45,751.41. As I have earlier indicated, however, she considered that damages should not be awarded. In the buy-out order the value of Backoffice's share was arrived at on the assumption of joint efforts by Messrs Campbell and Weeks, and her Honour considered that damages would over-compensate Backoffice. If correct, that no longer obtains. The fees were payable to Backoffice in addition to whatever reward it gained from its purchase of the share. If recoverable from Mr Campbell as damages, the damages are additional to compensation for loss of the value of the share. 167 Mr Campbell submitted that the trial judge erred in her application of the implied obligation of co-operation. Such an obligation is only to co-operate in bringing about something which the relevant contract requires to occur, because while a contract may contemplate that the parties will receive many benefits "each can only call on the other to provide, or co-operate in the providing of, benefits promised by that party": Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104 at 125. The contract providing for payment of the fees to Backoffice was between the Company and Backoffice. The services agreements were attachments to the shareholders agreement, but no term of the shareholders agreement obliged Mr Campbell to confer the benefit of Backoffice's services agreement on Backoffice; similarly, the share sale agreement had no such term. The implied terms of the share sale agreement and the shareholders agreement therefore did not require co-operation to ensure that the fees were paid to Backoffice. 168 Backoffice submitted in response that the contracts were "a suite of agreements entered into together that constituted the parties' arrangement", that Messrs Campbell and Weeks were made joint managing directors, and that there was an implied promise that Mr Campbell would cooperate with Mr Weeks in the joint management of the Company and - "Cooperation required the payment of the service fee unless there was financial incapacity. There was no established incapacity. The failure to pay the service fee was, accordingly, a breach of the implied term … ". 169 I do not think this answers Mr Campbell's submission. The implied terms were to do all things necessary to enable Backoffice "to have the benefit of the Shareholders Agreement" and not to act so as to deprive Backoffice of "the benefit of the Share Sale Agreement", and ditto as to the shareholders agreement. That meant what was promised by the respective agreements. The services agreements were referred to in the share sale agreement only in a clause providing that their execution was a condition precedent to that agreement, and not at all in the shareholders agreement: it was attached to the share sale agreement which was a schedule to that agreement although itself only referred to in a recital. The shareholders agreement provided for the joint managing directorship, but Mr Campbell made no promise about due performance of the joint managing directorship, let alone payment of the fee payable under Backoffice's service agreement. The implied obligation did not catch payment of the fees to Backoffice. 170 It is unnecessary to consider the submissions as to the damages to be awarded. The result 171 The trial judge's buyout order should be set aside. Backoffice is entitled to judgment for $850,000 as damages for misleading or deceptive conduct. 172 BASTEN JA: As explained by Giles JA, this case was resolved at trial by an order made pursuant to s 233 of the Corporations Act 2001 (Cth), based upon a finding that the conduct of Mr Campbell in the management of the affairs of Healthy Water (NSW) Pty Limited (In provisional liquidation) ("the company") had been oppressive: see Backoffice Investments Pty Ltd v Campbell [2007] NSWSC 161; 61 ACSR 144 at [116], [121] and [124]. Justice Bergin then turned to the remedy sought by Backoffice, namely that Mr Campbell should repurchase its share in the company pursuant to s 233(1)(d) of the Corporations Act: at [125]. Her Honour addressed and dismissed two related complaints by Mr Campbell, namely that Backoffice had been responsible for appointing a provisional liquidator to the company, thus destroying the underlying value of the share and that, because the company was in liquidation, no relief was available of the kind sought. Her Honour expressly found that relief was available in circumstances where the company was only in provisional liquidation and, at least implicitly, rejected the complaint in relation to the diminished value of the share on the basis that Backoffice should obtain the value of the share prior to the oppressive conduct, thus disregarding the diminution in value which may have resulted from the oppressive conduct itself. 173 As will be explained below, her Honour's factual findings in relation to the conduct of Mr Campbell should be accepted. That conclusion gives rise to a question as to how the conduct so found should be characterised, for the purposes of s 232 of the Corporations Act. Whilst challenging her Honour's findings of fact, and their characterisation, the appellants sought to raise a threshold issue as to whether, even if those findings were well made, relief was unavailable in any event. That submission was put on the basis that, the company being, by the time the orders were made, under the control of a provisional liquidator, the oppression was not continuing, nor could it continue. Accordingly, it was argued, either as a matter of law, or as a matter of the proper exercise of discretion, the order that Mr Campbell repurchase the share from Backoffice should not have been made. The purpose of the relief available under s 233 being to bring an end to the relevant oppression, no relief was properly available, once the oppressive conduct had terminated. That submission was said to have the support of a number of authorities, including Re Dernacourt Investments Pty Ltd and Companies (New South Wales) Code; Baker Davis Supply Co Pty Ltd v Dernacourt Investments Pty Ltd (1990) 20 NSWLR 588 at 620 (Powell J), a decision of the Queensland Full Court, namely Webb v Stanfield [1991] 1 Qd R 593 at 598-599 (McPherson J, Demack and Williams JJ agreeing); Re Richard Pitt & Sons Pty Ltd (1979) 4 ACLR 459 at 465-466 (Crawford J – Tas FCSC) and Bessounian v Australian Wholesale Mortgages Pty Ltd [2007] NSWSC 35 at [7] (Hamilton J). 174 This submission requires consideration of the terms of ss 232 and 233, which have been set out by Giles JA at [110] and [111] above and need not be repeated. However, it is important to note, as counsel for the appellants accepted, that there have been significant changes over the history of the so-called "oppression" provisions in company legislation, so that care must be taken in adopting the reasoning of courts addressing earlier forms of the legislation as necessarily relevant to the construction of the present provisions. 175 Part 2F.1 of the Corporations Act is headed "Oppressive conduct of affairs"; it contains four sections. Section 235 deals with lodgement of an order and is of no consequence in the present case. Section 234 identifies persons who can apply for an order under s 233, a class which broadly reflects the traditional requirement of membership of the company. Backoffice was, at the time of the conduct complained of, and remains, a member of the company: nothing turns for present purposes on any extended operation of s 234. The operative provisions appear in ss 232 and 233. Section 232 identifies the preconditions which must be fulfilled to engage the power to make an order. The orders which can be made "in relation to the company" are then set out in s 233(1). This division reflects a structural variation on earlier statutory provisions. 176 The internal structure of s 232 emphasises that the relevant preconditions each have three elements. The first element requires identification of the conduct complained of by reference to the company. Although the appellants complained that the trial judge had not identified the relevant conduct with sufficient particularity, there was no dispute that the relevant conduct in question involved the management of the company's affairs and therefore fell within paragraph (a) of s 232. 177 The second and third elements require joint consideration. The second element requires characterisation of the conduct and the third the identification of those who may be adversely affected by the conduct. These elements involve temporal issues which were obscured in early versions of the statutory schemes for relief. Thus the specific act or omission (which may include a course of conduct) may occur at a particular point in time or at least cease at a particular point in time, whereas its consequences for those affected may continue. Section 210 of the Companies Act 1948 (UK) ("the 1948 Act") (set out by Young CJ in Eq at [334] below) required that the court be of opinion that the company's affairs "are being conducted" in an oppressive manner and that any relief must be granted "with a view to bringing to an end the matters complained of": s 210(2). Understandably, the cases dealing with that provision tended to require continuation of the conduct; arguably, it would not have been sufficient, in order to obtain relief, to demonstrate that the consequences continued, where the conduct itself had ended. That provision was adopted in Australia and could be found in s 186(1) of the Companies Act 1961 (NSW) ("the 1961 Act"), as in force until 1981. 178 However, no arbitrary distinction was drawn in this regard, even under the original 1948 Act. Thus, in Scottish Co-operative Wholesale Society Pty Ltd v Meyer [1959] AC 324, the business of the subsidiary company had been reduced by the actions of the nominees of the parent company to a state where it had no future. Although the oppressive conduct might have been said to have achieved its purpose and thus come to an end, the House of Lords was not in doubt that relief was available under the Act, not merely for the winding up of the company, but for payment to the minority shareholders of the value of the shares at the date of commencement of the proceedings. 179 The original criterion required that the affairs of the company be conducted "in a manner oppressive" to one or more of the members. In the relevant Companies Codes (enacted in 1981) that language was expanded, permitting the conduct to be characterised as "oppressive or unfairly prejudicial to, or unfairly discriminatory against" a member or members. In addition, a further criterion was added, namely that the affairs were being conducted in a manner "that is contrary to the interests of" the members as a whole. To what extent the additional phraseology expanded the concept of oppressive conduct is unclear. The Scottish Co-operative Society case, involving the destruction of the business of the subsidiary, meant that the members as a whole, including the majority shareholding held by the Society, were adversely affected. No doubt the Society benefited because it took over the business of the subsidiary, but that benefit did not accrue through membership of the subsidiary. 180 One effect of the expanded language adopted in 1983 appears to have been the abandonment of the restrictive definition of oppression, adopted in Scottish Co-operative Society, as requiring conduct which was "burdensome, harsh and wrongful": at 342 (Viscount Simonds). It is now appropriate to ask whether the action was conduct available to the officer in accordance with the constitution of the company; whether it was exercised in good faith, for a proper purpose, on the basis of relevant conditions and without taking into account irrelevant considerations: see Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459 at 466 (Mason ACJ, Wilson, Deane and Dawson JJ) and at 469-470 (Brennan J). In Thomas v H W Thomas Ltd [1984] 1 NZLR 686 at 693, Richardson J noted that there was overlap between the various concepts identified by the terms "oppressive, unfairly discriminatory or unfairly prejudicial": "The three expressions overlap, each in a sense helps to explain the other, and read together they reflect the underlying concern of the subsection that conduct of the company which is unjustly detrimental to any member of the company whatever form it takes and whether it adversely affects all members alike or discriminates against some only is a legitimate foundation for complaint …. The statutory concern is directed to instances or courses of conduct amounting to an unjust detriment to the interests of a member or members of the company." 181 Richardson J was clearly seeking to emphasise the breadth of the preconditions, both in their terms and by reference to those whose interests might be affected. It is doubtful if his Honour intended to substitute the concept of "unjust detriment" for the statutory language. In Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 at 704, Young J held that the proper approach was to ask "whether objectively in the eyes of a commercial bystander, there has been unfairness, namely conduct that is so unfair that reasonable directors who consider the matter would not have thought the decision fair". His Honour proposed that the individual elements identified in the section should be considered "merely as different aspects of the essential criterion, namely commercial unfairness". 182 That approach left open the question of whether the sole criterion of "commercial unfairness" incorporated the fourth element in the definition, namely conduct "contrary to the interests of the members as a whole". In Re Polyresins Pty Limited [1999] 1 Qd R 599 at 604-605, Chesterman J concluded that all four expressions overlapped and therefore each constituted an element in the broad criterion of "commercial unfairness". However, as noted by Campbell J in Turnbull v National Roads and Motorists' Association Ltd [2004] NSWSC 577; 50 ACSR 44 at [32], the structural change which removed the fourth element from the paragraph as it originally appeared and placed it in a separate paragraph, as now appears in s 232(d) and (e), required a different approach. The "contrary to the interests" element, now contained in paragraph (d), should be given a separate and independent operation because it may well cover conduct which is outside the scope of commercial unfairness. 183 Arguably there are two points of distinction which explain the separation of paragraphs (d) and (e). Although paragraph (e), by the inclusion of conduct oppressive to members, may include conduct oppressive to members as a whole, one sphere of operation of paragraph (e), though not (d), is conduct which, either through intention or effect, operates prejudicially with respect to a member or class of members, as opposed to members as a whole. The second point of distinction is that the terminology of paragraph (d) characterising conduct "contrary to the interests of" the members would appear to extend not only beyond disparate treatment of members, but also beyond conduct oppressive to the members as a whole. It is in this sense that the example given by Campbell J of "pointlessly wasteful" conduct has force. 184 More broadly, there is a danger in seeking to reduce the statutory language to the criterion of "commercial unfairness". Not only does that terminology distract attention from the statutory language, but it tends to ignore important distinctions between different kinds of complaint and, if taken out of the context in which it was originally formulated, ignores the relatively strict test for judicial intervention. It is analogous to reducing to one criterion the various bases upon which it is open to an appellate court to intervene in relation to a discretionary determination of a trial judge, as set out in House v The King (1936) 55 CLR 499 at 505, or reducing the grounds of judicial review of administrative action to one composite criterion. These examples are not remote from the present issue: in Wayde, the High Court adopted language which was reminiscent of both legal principles. 185 The conduct identified by the primary judge as oppressive conduct involved attempts by Mr Campbell, as a director of the company, to exclude Mr Weeks from an effective role in the management of the company. Because the conduct had the effect of paralysing the company in the operation of its business, it was properly characterised as conduct contrary to the interests of the members as a whole. Although it was directed at the exclusion of Mr Weeks from management, rather than the destruction of value of the investment made by Backoffice, the effect was to destroy the value of the shareholding of Backoffice and the conduct was thus oppressive towards Backoffice in the sense that oppression was identified in Scottish Co-operative Society. Whether Mr Campbell obtained any financial benefit from his conduct is not material to a finding that the affairs of the company were conducted in a manner oppressive to the members. Accepting her Honour's findings as to the conduct in question, that conduct satisfied the preconditions for an order because it fell under paragraphs (a), (d) and (e) of s 232. Availability of relief 186 The next question is whether the circumstances justified the grant of relief under s 233(1), whether in the form ordered by her Honour or otherwise. 187 The primary judge ordered that Mr Campbell repurchase Backoffice's share in the company, pursuant to s 233(1)(d) of the Corporations Act. That form of order is identified in s 233 in the following terms: "(d) for the purchase of any shares by any member or person to whom a share in the company has been transmitted by will or by operation of law." 188 Relief was available under this provision because Mr Campbell was a member of the company, having retained one share and having sold one share to Backoffice. 189 The next question addressed by her Honour was the proper price at which the transfer should take place. Her Honour approached this question by reference to a passage in the opinion of Lord Denning in Scottish Co-operative Society at 369: "One of the most useful orders mentioned in the section – which will enable the court to do justice to the injured shareholders – is to order the oppressor to buy their shares at a fair price: and a fair price would be, I think, the value which the shares would have had at the date of the petition, if there had been no oppression. Once the oppressor has bought the shares, the company can survive. It can continue to operate. That is a matter for him. It is, no doubt, true that an order of this kind gives to the oppressed shareholders what is in effect money compensation for the injury done to them: but I see no objection to this. The section gives a large discretion to the court and it is well exercised in making an oppressor make compensation to those who have suffered at his hands." 190 Subject to one qualification, her Honour adopted this approach. The qualification was that she did not consider it necessary to value the share at the date of commencement of proceedings under s 233, noting that the appropriate date would depend upon the circumstances of the case. No challenge was made in respect of this issue, if an order for repurchase of the share were deemed appropriate. Her Honour concluded that the appropriate date for valuation was 24 January 2005; the effect of adopting that date was to exclude the financial effects of the oppressive conduct: see In re A Company [1983] 1 WLR 927 at 937, relied on by the primary judge at [138], and E S Gordon Pty Ltd v Idameneo (No. 123) Pty Ltd (1994-1995) 15 ACSR 536 at 540 (Young J), referred to by the primary judge at [136]. 191 This approach required rejection of the appellants' contentions that either it was not open to her Honour, as a matter of law, to order Mr Campbell to repurchase Backoffice's share, or, alternatively, that the order was an inappropriate exercise of discretion. 192 The basis of those submissions was that "the oppression found to have existed was not continuing nor could it continue in circumstances where the company was controlled by the provisional liquidator, the company had divested itself of the business which was the subject of the dispute and the company was not carrying on any other business": appellants' written submissions, 23 May 2007, par 24. 193 The factual premise to the submission must be accepted: the company was not carrying on business of any kind at the date of the order. No doubt the company will be wound up when the litigation is complete. However, it is necessary to address the underlying legal assumption that the company must be carrying on business at the time of the order. This assumption is based on the premise that the order must be directed to bringing an end to the oppressive conduct or, if it has come to an end, preventing its repetition. To address this issue, it is necessary to return to the authorities relied upon by the appellants, which have been identified but not discussed above. 194 The appellants also put the argument on an alternative basis, namely that Backoffice, by putting the company into provisional liquidation, had made an election which was inconsistent with obtaining an order for the repurchase of its share. That was because a repurchase order assumed the continuation of the business of the company, the question of oppression having been resolved. That argument may also be addressed by reference to the authorities relied upon. 195 There is nothing in the section which requires that relief only be available if the business of the company is continuing or is to continue. If the language of s 186(2) of the 1961 Act, requiring that an order may be made "with a view to bringing to an end the matters complained of", were to be relied upon, those words have long since gone. However, even when they were part of the statutory regime, they would not have had the effect relied upon by the appellants. Thus in Scottish Co-operative Society, Lord Keith of Avonholm remarked at 364: "It was said that appeal could not be made to section 210 unless the company had a continuing life ahead of it and here it was clear that the company would have to be wound up. But that means that if oppression is carried to the extent of destruction of the business of the company no recourse can be had to the remedies of the section. This would be to defeat the whole purpose of the section. The present position is due to the oppression and but for the oppression it must be assumed that the company would be an active and presumably flourishing concern. The section is, in my opinion, very apt to meet the situation which has arisen." 196 To similar effect, Lord Denning stated at 368-369: "It was said that section 210 only applies as an alternative to winding up and that an order can only be made under section 210 if the company is fit to be kept alive …. Now, I quite agree that the words of the section do suggest that the legislature had in mind some remedy whereby the company, instead of being wound up, might continue to operate. But it would be wrong to infer therefrom that the remedy under section 210 is limited to cases where the company is still in active business. The object of the remedy is to bring 'to an end the matters complained of,' that is, the oppression, and this can be done even though the business of the company has been brought to a standstill. If a remedy is available when the oppression is so moderate that it only inflicts wounds on the company, whilst leaving it active, so also it should be available when the oppression is so great as to put the company out of action altogether. Even though the oppressor by his oppression brings down the whole edifice – destroying the value of his own shares with those of everyone else – the injured shareholders have, I think, a remedy under section 210." Similar remarks were made by Viscount Simonds at 343. 197 Primary reliance was placed by counsel for the appellants on Webb v Stanfield (above at [173]), a case which was distinguishable on its facts from the present in two significant respects. First, the company, which had involved a joint venture between two insurance agents, had already been wound up: at 598(20). Secondly, the appellant's claim was based upon the alleged misappropriation of the assets of the company by his co-director and member, Mr Stanfield. Rather than seek to bring a derivative action on behalf of the company, or rely upon the liquidator to seek to recover the corporate assets, the appellant proceeded under the then equivalent of s 233, namely s 320 of the Companies (Queensland) Code. In those circumstances, McPherson J noted that it was "quite inconsistent with the statutory scheme for winding up to permit an individual shareholder to continue to vindicate corporate rights once a liquidator has been placed in charge of the company and its affairs": at 599. The inconsistency derived in part from the fact that, if correct, the appellant's claim would divert to himself, as a shareholder, such resources as might be available for recovery by the company from Mr Stanfield, thus potentially preferring the interests of the shareholder over those of creditors of the company. Accordingly, if there were no bar resulting from the statutory prohibition on transfer of shares after the commencement of winding up, there were strong discretionary reasons for not granting relief. 198 There is no doubting the force of the approach adopted by McPherson J in Webb v Stanfield; however, it operates with greatly diminished force in the present circumstances. First, the company being in provisional liquidation, the statutory prohibition on transfer of shares is not yet engaged. Secondly, the matter about which Backoffice complained is not the misappropriation of resources or even opportunities of the company to the personal benefit of Mr Campbell, such as might found a derivative action on behalf of the company. Thirdly, for that reason and because the winding up has not commenced and because there is no suggestion that the company has outstanding creditors, the relief provided by the primary judge would not subvert the proper course of the likely winding up. 199 It may be accepted that the potentially wide operation of s 232 and the wide range of orders available under s 233 should not be allowed to subvert established constraints on the availability of derivative actions brought by shareholders on behalf of a company. On the other hand, the mere fact that the conduct complained of involves misconduct actionable by the company does not preclude relief under s 233: see In the matter of Chime Corporation Ltd; Nina Kung v Tan Man Kou [2004] HKCFA 73; HKFAR 546 at [9]-[26] (Bokhary PJ) and [39]-[49] (Lord Scott of Foscote NPJ). 200 The availability of relief on a claim for oppression in circumstances where the shareholders were seeking to recover financial resources for an insolvent company is illustrated by a recent decision of the Privy Council, on appeal from the Court of Appeal of Jersey, in Gamlestaden Fastigheter AB v Baltic Partners Ltd [2007] UKPC 26; 4 All ER 164. The primary issue in that case was whether a shareholder could obtain relief for mismanagement of the company in circumstances where a payment of money to the company would benefit it not as a member, but as a creditor which had supplied working capital by way of a loan. The judgment of the Board upholding the jurisdiction of the Jersey court was delivered by Lord Scott of Foscote. His Lordship noted the primary question in the following terms at [27]: "The first question to be addressed, therefore, is whether an order for payment of damages to the company whose affairs have allegedly been conducted in an unfairly prejudicial manner can be sought and made in an unfair prejudice application. Another way of putting the question is whether a cause of action allegedly vested in the company can be prosecuted to judgment in an unfair prejudice application." 201 The answer to that question, his Lordship stated, was to be found in the language of the relevant statutory provision and the decision of the Hong Kong Court of Final Appeal in Chime. He stated at [28]: "There is nothing in the wide language of art 143(1) [the equivalent of s 233] to suggest a limitation that would exclude the seeking or making of such an order: the court 'may make such order as it thinks fit for giving relief in respect of the matters complained of'. The point was raised and considered by the Hong Kong Court of Final Appeal … in Re Chime Corp Ltd …. An unfair prejudice application had been made in respect of Chime and one of the issues was whether the court had power on such an application to make an order for the payment of damages or compensation to the company. The CFA held that the court did have power to make such an order …. No reason has been advanced to their Lordships on this appeal why the decision in Re Chime Corp should not be followed. Accordingly, no objection to Gamlestaden's prayer in its art 141 application for an order that the directors pay damages to Baltic for breach of duty can be taken at this strike-out stage." 202 His Lordship then considered the significance of Baltic's insolvency, it being accepted that, whilst Gamlestaden would obtain repayment at least in part of its outstanding loan from the company, the company would nevertheless remain insolvent. Gamlestaden's equity investment was relatively small, but its loss, primarily through the unrecoverability of its loan was estimated at DM 98m. Lord Scott stated at [30]: "If mismanagement by the directors of that corporate vehicle has led to loss it seems to their Lordships somewhat artificial to insist that the qualifying loss, for art 141 (or s 459) purposes, must be loss which has reduced the value of the investor's equity capital and that it is not sufficient to show that it has reduced the recoverability of the investor's loan capital." 203 It may be seen that Gamlestaden provides recent authority for the proposition that relief may be granted in an oppression proceeding, even though the company is insolvent and indeed will remain so if the order is made. It is further authority for the proposition that neither the occasion nor the purpose of an order under s 233 need involve continuing oppressive conduct. Although the form of s 233 differs from the generality of the Jersey provision considered in Gamlestaden, there is no constraint on the orders available under s 233, relevant for present purposes. The breadth of the orders available under the Jersey law would itself be constrained by the (relevantly identical) purposes of the provision. 204 The present case is not one in which Backoffice was seeking to pursue a cause of action vested in the company, nor was it seeking to obtain an order for payment of funds to the company. It is not contended that the company has a cause of action against Mr Campbell, nor that the order made would deprive the company of the opportunity to recoup losses it has suffered from Mr Campbell. Accordingly, there is no error of principle established in granting relief in the present case by way of an order under s 233(1)(d). Subject to the question of valuation, the challenges to the availability and appropriateness of her Honour's order should be rejected. Challenge to findings of oppression 205 The foregoing conclusion is dependent upon a rejection of the challenges to her Honour's findings of oppressive conduct on the part of Mr Campbell. It is appropriate to address those challenges, before turning to the question of valuation. 206 Her Honour noted the plaintiffs' claim that Mr Campbell's conduct "was both contrary to the interests of the members as a whole and oppressive to, unfairly prejudicial to and unfairly discriminatory against Backoffice", which she described as "the oppression claim": at [89] and [90]. She addressed at some length both the relationship between Mr Campbell and his manager, Ms Hunt (at [102]-[108] and [115]), and the extent that Mr Campbell's desire to keep Ms Hunt on-side led to Mr Campbell imposing restrictions on Mr Weeks with respect to the day-to-day management of the company: at [18]-[28], [38]-[51] and [98]-[108]. Her Honour also dealt at length with the evidence respecting the clashes between Mr Campbell and Mr Weeks and attempts by Mr Horn to negotiate a compromise between them: see [47]-[85]. Three bases upon which her Honour found oppression have been set out by Giles JA at [114]-[116] above. 207 The clashes between Messrs Campbell and Weeks rendered the company inoperable on a joint management basis. A breakdown in communications does not by itself give rise to an inference of oppressive conduct on the part of either of the joint directors. However, as is clear from the findings referred to above, the trial judge placed that responsibility at the feet of Mr Campbell. Although he tried to justify his conduct in numerous respects, she rejected his evidence and described him as "a most unreliable witness": eg at [115]. Further, after reviewing extensive correspondence and evidence concerning attempts to hold a board meeting, her Honour concluded at [121]: "If this correspondence and conduct in relation to the board meeting was the only evidence of alleged unfairness, I may have had some doubts about characterising it as oppressive. However when this conduct is viewed with Campbell's other conduct referred to above and later in this judgment, I am comfortably satisfied that it was part of Campbell's plan to keep Weeks and thus Backoffice from having any true management involvement with the Company. I am satisfied that the excuses Campbell gave to Weeks that he was 'busy' on the dates proposed for the board meetings was part of Campbell's concerted efforts to exclude Weeks from the management of the Company. I am satisfied that Campbell's conduct amounted to a refusal to attend a Board Meeting and that it was oppressive." 208 The first ground of challenge was that aspects of the factual findings made by her Honour against Mr Campbell were not the subject of specific pleadings in the statement of plaintiffs' contentions contained in the further amended summons. The pleading points generally were also taken below and were dealt with by her Honour at [93]-[96]. It is clear from the evidence addressed in the course of the judgment that witnesses were called, gave evidence and were cross-examined on matters which were the subject of subsequent findings. As her Honour noted at [96]: "The written and oral submissions went into precise detail as to how it is alleged Campbell's conduct was oppressive. In my view this so-called pleading point is of no real consequence." 209 That conclusion was not demonstrated to be wrong. 210 The second basis of complaint was somewhat obscure. In part it was a complaint that, consistently with the way the case had been run, there was no clear attempt in the judgment to identify which of paragraphs (a), (b) or (c) of s 232 were satisfied by specific aspects of the evidence. That may have been another way of stating the pleading point. On the other hand, to the extent that it was a separate complaint, it was somewhat inconsistent with the further complaint that her Honour characterised the conduct at some stage as covered by s 232(b), being conduct "by or on behalf of a company". On that alternative basis, it was said that Mr Campbell alone had no authority to act on behalf of the company and accordingly the matters complained of could not fall within paragraph (b). 211 A reading of the whole of the relevant portion of her Honour's judgment does not suggest that she sought to identify all the conduct complained of as falling within paragraph (b). Rather, as the pleading indicated, a substantial element of the case presented for Backoffice was that Mr Weeks was excluded from the management of the company's business. Subject to the third challenge, it was not contended that the conduct in question did not constitute conduct of the company's affairs for the purposes of paragraph (a). The second challenge should be rejected. 212 The third basis of challenge was that the conduct could not constitute conduct of the company's affairs because Mr Campbell, as a 50% shareholder and joint director, had no power to conduct the company's affairs. That appears to have been related to a fourth point of complaint, namely that a finding of 'deadlock' is not a finding of oppression. Oppression, it was contended, could only result from the exercise of power by majority shareholders or a majority of directors having sufficient voting power to control the company's affairs. 213 Relying upon the decision in In re Jermyn Street Turkish Baths Ltd [1971] 1 WLR 1042 at 1060, the appellant sought to argue that a distinction must be drawn between misfeasance on the part of a director and conduct constituting oppression. The importance of the distinction may be accepted; it does not follow, however, that conduct which constitutes misfeasance on the part of a director may not also amount to oppression. There is no requirement that the person responsible for oppressive conduct enjoy a majority voting power within the company, although in small companies, where the individuals concerned have involvement in decision-making, that may in practical terms eventuate. There remain ways in which an individual or group of individuals may exercise control without having majority voting power. 214 Amongst the duties of a director of a corporation is the obligation to exercise powers in good faith in the best interests of the corporation and for a proper purpose: s 181. There is a duty not to exercise a power so as to cause detriment to the corporation: ss 182 and 183. It is likely that conduct in contravention of these provisions could also constitute conduct contrary to the interests of the members as a whole, within s 232(d). It is not tenable that there be a bright line separating cases involving misfeasance by directors from cases involving oppression. Nor is it in dispute that there was an obligation of co-operation between the two joint directors, such co-operation being necessary to ensure that anticipated benefits enured to the company and its shareholders from the efficient operation of its business. In such a case, a failure to co-operate may be conduct of a company's affairs contrary to the interests of the members as a whole, or conduct oppressive to a member in whatever capacity, and may thus fall within s 232. It is true that a failure to co-operate may result in deadlock: but it is more than that. If it is conduct the legal responsibility for which can be sheeted home to one party rather than the other, it can (though it need not) constitute oppression in one of the senses reflected in s 232(d) and (e). 215 Her Honour's assessment of Mr Campbell's responsibility for the conduct depended significantly on an assessment of him in the witness box and the effect of his cross-examination. Those findings were open to her Honour, are not readily challenged on appeal, and were not directly put in issue by the appellants. The findings made by her Honour as to conduct falling within s 232 should be accepted. The cumulative effect of that conduct is sufficient to be regarded as oppression, particularly in circumstances where the effect was to exclude Mr Weeks from his entitlement to share in the management of the company and effectively to run down the business of the company, to the detriment of the interests of its members as a whole. The challenge to her Honour's findings of primary fact, and the characterisation of the available inferences, should be rejected. Valuation of share 216 In determining the repurchase price, her Honour was confronted with valuations by two experts, who, although they produced a joint report dated 23 November 2006, were unable to reach agreement. Backoffice relied upon evidence from Mr GCA Gower who valued the share at 24 January 2005 at $410,000. Mr Campbell relied upon the evidence of Mr PA Russell, who valued the share at $580,000, adopting an historical basis and annualising earnings up to the date identified. 217 Mr Russell also adopted an alternative approach based upon budgeted figures reflecting increased levels of trading from new and identified customers. On that approach, he reached a valuation of $853,000. There is some irony underlying the discrepancy, and her Honour's acceptance of the latter alternative valuation of Mr Campbell's valuer. In order to adopt Mr Russell's alternative approach, it was necessary for her Honour, in effect, to reject the complaints made by Backoffice that the budget contained misleading and deceptive figures and could not properly be relied upon. 218 For the reasons given by Giles JA, there is in my view substance in the alternative complaints raised by Backoffice concerning misleading and deceptive conduct. It follows that the budget provided an unacceptable basis for calculating the value of the share as at 24 January 2005. Accordingly, the value proposed by Backoffice's valuer, namely $410,000, should have been accepted. This conclusion requires consideration of the additional claim based on misleading or deceptive conduct. At least in principle, it was open to Backoffice to claim the difference between the two valuations on the basis of this alternative cause of action. 219 For reasons given by Giles JA, Mr Weeks' evidence that, if he had been aware of the misleading and deceptive representations made by Mr Campbell, he would not have bought the share, provides a basis upon which Mr Weeks is entitled to recover the full amount of the price paid for the share by way of damages: see [148]-[157] above. However, if it were concluded either that Backoffice would have purchased the share, but for a lesser value, or that the diminution in the value of the share resulting from the breakdown in the relationship between Messrs Campbell and Weeks should not properly be included in the damages, then the loss might be calculated by reference to the difference between the price paid for the share and its value once the misleading representations had been removed from the calculation. 220 As explained by the trial judge, each of Messrs Gower and Russell agreed that the appropriate methodology for valuing the share was by capitalising future maintainable earnings, adopting a multiple of three to four times earnings and basing the level of earnings on the historical and projected earnings of the business, after considering add-back adjustments and any other unusual variations in historical and forecast earnings. That approach is consistent with a reassessment of the earnings, without reference to the budget and the potential of the company (factors relied on by Mr Russell to reach his higher value), and without reference to inappropriate adjustments. This would allow adoption of Mr Gower's figure of $410,000 as the value of the share with the resultant difference between the value and the price paid being $440,000. 221 It may be seen that either approach will allow Backoffice to recover the full amount of the price paid for the share, namely $850,000. On the basis that the repurchase order stands, I would value the share at $410,000 and the loss suffered through the misleading and deceptive conduct at $440,000, giving a total recovery of $850,000. 222 If I am wrong in upholding her Honour's order for repurchase of the share under s 233(1)(d) of the Corporations Act, either because it was unavailable or because it was a wrong exercise of discretion, I would adopt the approach of Giles JA with respect to damages for breach of s 42 of the Fair Trading Act 1987 (NSW), and give judgment for Backoffice for the same amount by way of damages alone. 223 Except in relation to the matters dealt with above in relation to "the oppression claim", I agree with the reasons of Giles JA. 224 YOUNG CJ in EQ: This is an appeal from Bergin J who tried a dispute between two shareholders in a small proprietary company. 225 The learned primary judge's finding is attacked by the appellant and the respondent has filed a defensive cross-appeal which only becomes of significance if the appeal is allowed. 226 Up until 24 January 2005, the first appellant, Douglas Ronald Campbell (Campbell) held all the shares in Healthy Water (NSW) Pty Ltd (the Company). Campbell also controls a company by the name of Sentinel Construction Managers Pty Ltd (Sentinel), the second appellant in these proceedings. 227 Negotiations took place between Campbell and one Timothy Andrew Weeks (Weeks) with the intention that Weeks or a company he controlled, BackOffice Investments Pty Ltd (BackOffice), would become an equal "partner" in the Company. 228 On 24 January 2005, four agreements were signed, namely: (a) a Share Sale Agreement; (b) a Shareholders Agreement; and (c) two Executive Service Agreements. 229 The Agreements required BackOffice to pay the Campbell interests $850,000 for one of the two issued shares in the Company. That sum was duly paid. 230 All four agreements commenced operation on 25 January 2005. 231 On 1 April 2005, Weeks and BackOffice commenced these proceedings. 232 The parties were thus associated in business for a period of only about nine weeks. 233 The relief sought by Weeks and BackOffice at first instance was: (1) o rders under the oppression provisions (ss 232 and 233) of the Corporations Act 2001 (Cth) including the buyout of BackOffice's share; (2) a n order that the Company be wound up ; (3) r elief under the Fair Trading Act 1987 as a result of alleged misleading and deceptive conduct; (4) d amages for breach of contract ; (5) a declaration that Campbell had breached his duties as a director (a matter not relevant to this appeal) . 234 Her Honour found for Weeks and BackOffice on the oppression ground and ordered that Campbell repurchase the BackOffice share for $853,000 and that Campbell and Sentinel pay Week's and BackOffice's costs of the proceedings. 235 However, the formal order that was taken out after short minutes were brought in ordered payment to BackOffice of $853,000 without any consequential order that the share be retransferred to Campbell. 236 However, whilst I was concerned about this, neither set of counsel shared my concern on the basis that the share was now worthless. 237 Campbell and Sentinel appeal against the orders made against them. 238 BackOffice and Weeks cross-appeal over the contract aspect of the case. The learned primary judge found that there were breaches of warranty, but held, in essence, that to award damages as well as the repurchase order would be to overcompensate the Weeks' interests. 239 The riposte of Campbell and Sentinel was to file what they called a second cross-appeal complaining about certain findings by the primary judge of liability on the breach of warranty claim. 240 The appeal commenced before us on 8 August 2007 and continued on 2 October 2007 when we reserved our decision. Mr A Bannon SC and Mr J Gibson appeared for the appellants and Mr J Simpkins SC and Miss T Wong appeared for the respondents. 241 I should commence by setting out the material provisions of the four agreements. Share Sale Agreement 242 The Share Sale Agreement, dated 24 January 2005, provided for the purchase of the share in the Company by BackOffice for $850,000 (cl 5). It also provided: "7. WARRANTIES 7.1 Warranties by the Vendor The Vendor [Campbell] warrants to the Purchaser [Backoffice] in terms of the Warranties set out in the Schedules. Each warranty is given as at the date of this Agreement and subject to any disclosure made by or on behalf of the Vendor to the Purchaser or its advisers before the date of this Agreement. 7.2 A Warranty which refers to "the knowledge, information and belief" of the Vendor, or which refers to the Vendor's "knowledge", or contains words to that effect, or which refers to the Vendor being aware or not being aware of a matter, must be treated as including an additional Warranty that the Vendor has made due and careful enquiry as to the matter. 7.3 Notwithstanding any other provision of this Agreement; (a) the Vendor shall have no liability in respect of any claim under the Warranties unless the amount of such claim exceeds the sum of $15,000 for any one event or $25,000 in aggregate; (b) the Vendor shall have no liability in respect of any claim under the Warranties unless reasonable particulars are given of the claim to the Vendor within twenty four (24) months after the date of this Agreement save and accept for any Claim against the Company by the ATO or Office of State Revenue relating to liabilities arising from the period prior to the Execution Date; (c) the liability of the Vendor in respect of any claim under the Warranties shall be reduced or extinguished (as the case may be) to the extent that the claim has arisen as a result of any act or omission of the Purchaser. 7.4 The Purchaser acknowledges that: (a) in entering into this Agreement and undertaking any of the transactions contemplated in this Agreement, it has not relied on any warranty made by or on behalf of the Vendor other than the Warranties given in subclause 1 of Schedule 1; (b) it has been afforded the opportunity of inspecting (either directly or through its advisers) the Company and Assets, and it has availed itself of such opportunities and has relied upon its own conclusions as to the Company and the Assets arising out of such inspections; and (c) it is not aware of any fact or circumstance that would make any of the Warranties incorrect which have not been disclosed to the Vendor. 8. COSTS 8.1 Each party must bear its own costs in relation to the preparation and execution of this Agreement. 8.2 The Purchaser shall pay and bear all stamp duty and similar duties or charges payable on or in relation to this Agreement. 9. ENTIRE AGREEMENT 9.1 This Agreement: (a) constitutes the entire agreement between the parties; and (b) in relation to that subject matter, supersedes any prior understanding or agreement between the parties and any prior condition, warranty, indemnity or representation imposed, given or made by a party." 243 Schedule 1 of the Share Sale Agreement included the following: " 3. MATERIAL CONTRACTS AND LIABILITIES 3.1 (a) The Company has no Liabilities other than the Liabilities disclosed in Schedule 3 and Schedule 7, and the Company is not party to any contract or arrangement which has not been disclosed to the Purchaser. ... (g) The Company has not experienced any extraordinary expenses since the Balance Sheet Date and the business of the Company has been operated in the ordinary course and in good faith since the Balance Sheet Date. 4. FINANCIAL MATTERS 4.1 The Vendor warrants that: ... (3) Profits or Losses The profits or losses shown in the Balance Sheet have not to a material extent, been affected (except as therein disclosed) by any extraordinary or exceptional event or circumstance or by any other factor rendering them unusually high or low. ... 10. ACCURACY OF INFORMATION To the best of its knowledge, the Vendor warrants that: 10.1 Information Accurate All information given by or on behalf of the Company or its advisers to the Purchaser or its advisers material to the sale of the Shares and the Assets is substantially accurate and complete and not misleading. 10.2 Schedules The information in the Schedules is materially accurate and complete and not misleading." 244 Schedule 3 to Share Sale Agreement contained a one page document headed "Balance Sheet as at 30/11/04" which extracted relevant figures from five pages which followed being: a two page document headed "Balance Sheet as of 30 November 2004", two pages headed "Entitlement Balance [Detail] Lifetime" (the first setting out the leave entitlements for Campbell and the second setting out the leave entitlements for a Ms Hannah) and a one page document entitled "Healthy Water Asset Replacement Cost". These documents have been referred to in submissions as the "warranted balance sheet" and, like the learned primary judge, I will adopt that expression. 245 Schedule 3 to the Share Sale Agreement also contained a one page document headed "Profit and Loss Statement For the 5 Months Ended 30/11/04" which extracted figures from a two page document headed "Profit and Loss Statement 1/07/2004 through 30/11/2004". These documents have been referred to in submissions as the "warranted profit and loss statement" and again, as the primary judge did, I will adopt that expression. 246 The Shareholders Agreement recited that Campbell had agreed to sell 50% of the shares in the Company to BackOffice and that the "Shareholders wish to enter into this Agreement to regulate their rights and obligations among each other as Shareholders of the Company". The term of the Agreement was for the "Initial Term" of 24 months and then to continue until terminated pursuant to the Agreement (cl 2). The Agreement provided that, unless otherwise agreed by the shareholders, the directors "must" meet at least once every month (cl 5.7). Campbell and Weeks, as joint managing directors, were to have the day-to-day conduct and management of the business and the Company (cl 6.1). It was agreed that certain matters, including the identity of bank signatories had to be determined by resolution at a directors' meeting. The initial bank signatories were to be the two initial directors jointly for all financial transactions including electronic transfers. Any change to that arrangement had to be by resolution at a directors' meeting (cl 6.4(m)). It was agreed to adopt the budget and an initial business plan by 15 May 2005 (cl 9.1(a)). 247 The Shareholder's Agreement also provided: " 7. RESOLUTION OF BOARD DEADLOCKS 7.1 When a Deadlock Arises A deadlock arises between the Directors if: (a) the Directors cannot agree on a fundamental matter about operating the Company or the Business; and (b) the failure to agree materially and adversely affects the successful operation of the Business; and (c) the Directors cannot resolve the disagreement within 30 days of it first arising. 7.2 Voting Deadlock In the event of a Board Meeting voting deadlock the status quo shall remain and the Directors may: (a) appoint upon a unanimous decision a chairperson who shall have the casting vote; and (b) reconvene the Board Meeting at which the voting deadlock occurred within three (3) days." 248 I now pass to the Services Agreements. 249 Schedule 5 to the Shareholders Agreement contained two letters from the Company, each dated 24 January 2005. The first was to Sentinel retaining it to provide the services of Campbell as joint managing director of the Company and the second was to BackOffice retaining it to provide the services of Weeks as joint managing director of the Company (the Services Agreements). The commencement dates of the Agreements were 1 January 2005 and were to remain in force for the "Initial Term" of 24 months and as long as the Shareholders Agreement remained in force (cl 2.1). 250 Under their respective Services Agreements, Sentinel and BackOffice were each to receive a total fee of $150,000 plus GST gross per annum in consideration of providing the services. Clause 5.2 of each Agreement provided: "The Fee will be paid in equal monthly instalments by electronic funds transfer into BackOffice's/Sentinel's nominated bank account within seven (7) days of receipt of original invoice which shall be issued at the end of each calendar month." 251 The Services Agreements also provided for a bonus of $100,000 during each year of the term of the Agreements in various instalments over the period (cl 6.1). Clause 6.2 of the Sentinel Service Agreement provided for a "Performance Bonus" of $300,000 to be paid out of "Available Profit" after the other bonuses had been paid. Both Campbell and Weeks were to attend the premises between 8.30 am and 5.30 pm Monday to Friday (cl 4) and each was to be provided with a fully maintained motor vehicle, including finance lease payments, during the period of the Agreements (cl 7). 252 Schedule 1 to each of the Services Agreements provided as follows: "HEALTHY WATER (NSW) PTY LTD SERVICES AGREEMENT SCHEDULE 1 POSITION DESCRIPTION Joint Managing Director (JMD) SUMMARY The JMD has joint management and budget responsibility for the complete Business. The JMD is jointly responsible for every facet of the success of the Business; delivering the budgeted Profit; Managing the Business; managing and motivating the people employed by the Business. PRINCIPAL JOINT ACCOUNTABILITIES o Accountability for the smooth running of the Business. o Research, analyse, and monitor financial, technological, and demographic factors in order to capitalize on opportunities and minimize the effects of competitive activity; o Create and manage strategic objectives in line with Company policy; o Ensure acceptance and implementation of policies at each level; o Manage, train, direct and motivate the staff within the Company; o Provide regular and accurate reports to the Board of Directors on a planned and ad hoc basis; o Attend professional and social events relevant to the Business as necessary. PERFORMANCE EVALUATION Joint General Tasks Generate new business; Generate new concepts for the business; Liaise with new and existing clients; Develop client relationships; Capitalize on opportunities; Minimize effects of competitive activity; Prepare costings and proposals; Negotiate with suppliers. Joint Budget Tasks Control expenditure; Understand and prepare budgets; Check and account for budgets; Liaise with Management Accountant; Liaise with Management Accountant (sic); Determine progress and status in attaining objectives. Other Joint Tasks Implement new ideas; Represent the Company in professional and business-like manner; Attend internal and client meetings; Look after Company property; Utilize Company computer system; Maintain professional personal presentation which reflects the professionalism of the Company; Liaise with Company personnel; Provide regular reports to General Manager and Directors; Absorb training; Organize training as deemed necessary; Attend professional and social events; Maintain a team focus. SUPERVISORY RESPONSIBILITIES You are responsible for all employees within the Company." 253 Campbell and Weeks agreed to divide the managing directors' obligations so that Campbell was responsible for sales and marketing and Weeks was responsible for service and installation, finance, IT and accounts. Weeks prepared a chart setting out those areas that was used at a staff meeting on 25 January 2005. 254 These reasons are structured as follows: 1. The findings of fact ; 2. The claim for relief against oppression ; 3. The claim under the Fair Trading Act ; 4. The claim for damages for breach of contract; 5. General matters and conclusion. 255 I will, at the commencement of each section of these reasons, set out a set of sub-headings. At first sight, these might appear complicated. However, matters are slightly simplified because of two factors. First, it was made clear to us that, if the primary judge's decision on oppression is sustained, most of the other issues need not be considered. Secondly, it may be unnecessary to examine particular issues if the primary judge's views on other matters are affirmed. 256 I will now seek to deal with the issues listed above in turn. 257 1. It is first necessary briefly to set out the salient facts either as admitted or as found by her Honour insofar as they are relevant to the matters to be considered in this appeal. Her Honour was meticulous in setting out her finding of fact in great detail and with great clarity. It is not necessary on this appeal to go into great detail. However, as must be obvious, her clarity of expression has enabled me to summarise the basic facts by drawing on her Honour's exact words on the basic matters relevant to the appeal. 258 I note that, apart from the second cross-appeal, there is no challenge to her Honour's findings of fact. However, at the trial there was considerable conflict between Campbell and Weeks. Bergin J preferred Weeks' evidence, though she did accept Campbell's evidence on some of the contractual aspects of the case. 259 Weeks commenced with the Company on 25 January 2005. He had, however, attended the Company's premises commencing on 10 January 2005. 260 Apart from Campbell and Weeks, the key staff of the Company were Ms Penny Hunt, a close associate of Campbell who was in an intimate relationship with him and Mr Andrew Eustace, a bookkeeper. The judge found that Weeks was at all material times aware of the relationship between Campbell and Ms Hunt. 261 The judge found that the relationship between Ms Hunt and Weeks was not a happy one and she constantly complained to Campbell alleging that she had to shoulder work that Weeks should be doing. 262 The judge found at [108] that she had no doubt that Campbell's relationship with Ms Hunt; the need, as he saw it, to keep her happy; and Ms Hunt's constant complaints against Weeks, blinkered Campbell from dealing fairly with Weeks and ultimately with BackOffice. 263 The conflicts commenced in the last week of January 2005 when there were disagreements over the internet banking procedures. 264 Then, on 31 January 2005, Weeks presented two invoices. 265 There was an acute disagreement over these invoices, the principal point being made by Campbell was that Weeks only commenced with the Company on 25 January, yet he was charging for the period commencing on 1 January. 266 The broker who had brought the Campbell and Weeks interests together was Mr Horn. 267 Mr Horn arranged for a management meeting to occur on 4 February 2005, in part to attempt to deal with matters that were obviously in need of compromise. Mr Horn circulated an agenda prior to the meeting. 268 The meeting commenced at approximately 12.30pm and after some discussion about the employees and sales activities, Weeks claimed the following conversation then took place: "Campbell: We can no longer use internet banking because of you. You are deliberately trying to sabotage Healthy Water. All you want to do is get your hands on my money -- ; you just want to take control. I've been running this company for 12 years without you and I've always been able to do what I wanted to do. Weeks: The change in banking arrangements is nothing to do with me -- it is a consequence of the requirement for both of us to authorise transactions. This is what we agreed to in the share sale agreement. Campbell: You are only interested in controlling the cheque book. You've deliberately upset Penny and you're trying to take over her role. Penny is extremely upset about her job. She's got an offer from her mother to work elsewhere, and the Company will collapse if she leaves. You are just incompetent, you don't understand how small business works. You haven't brought in any new business and all you want to do is polish what is already a smooth running machine." 269 Weeks then claimed that he tried to explain what had happened with the internet banking arrangements by saying: "Listen and you might learn something, I'll try to explain what's happened. Can we concentrate on the solution and not personal abuse." 270 Campbell, Mr Horn and Ms Hunt did not agree with Weeks' account, but it was essentially accepted by the trial judge. 271 The next significant event is that, on 6 February 2005, Campbell wrote by email to Weeks in the following terms: "I refer to the Healthy Water management meeting held Last Friday 4th February 2005, 12.30 pm -- 4-45 pm at Bato and Partners, Loftus St, SYDNEY. Present; Alan Horne, [Chair] Tim Weeks and Doug Campbell. At the meeting several potential problems were highlighted, your request for an unconstitutional back dated service fee payment and other already sanctioned expenditure of approx $22,000, after only eleven days service at Healthy Water and without adding any income at all to the company is particularly concerning. I firmly believe you need more time to adjust to small business life as opposed to your considerable corporate experience. Subsequently on Saturday 5th Feb 05 I gave proper consideration to our short term projected income vs. Tax commitments, Salaries, consultants, fixed expenditure costs and supplier outstanding invoices due now, if this trend continued, by March 15th 2005 we will exceed the Company's $60,000 overdraft by $20,000. Please note; I would be totally responsible for the OVERDRAFT extension as you still have not executed documents to support 50% responsibility for the $60,000 overdraft. In consideration of all these circumstances, I believe it to be imprudent and financially unwise to continue with the current split of responsibilities for each Director and Staff member. These following changes can again be reviewed within 90 days with Alan Horn adjudicating. Therefore I feel compelled to bring to your attention the following solutions/changes to relieve the strain on the Company's financial recources [sic], I urge you to adopt all without hesitation to protect the company from future financial hardship. 1. Both Directors reduce their fist consultancy fee; due and payable 1ST March 2005 totalling $27500.00 including GST by 50% to $6875.00 each. 2. The laptop computer you have already committed to and purchased for $3511.00 I will concede be paid in full. 3. Your motor vehicle lease of $1400.00 you have requested by made payable back dated to the 1st January instead of pro rata from the 25th of January 2005 the day you consolidated your equity partnership and signed partnership documents, I will concede once only to be paid in full. 4. I ask you to please refrain from any further expenditure commitments without consultation to myself. As such, Healthy Water will not as a Company enter into any further extraordinary or abnormal expenditure outside normally required, at least until projected 60 day healthy cash flow can be guaranteed. 5. As a further act of prudent management, at this stage we will refrain from purchasing another motor vehicle van, Chris Campbell can relinquish his company motor vehicle which can be given to the new customer service person after his 1 month trial period if we are satisfied he can adequately fulfil the position we have planned for him. 6. I will loan a [sic] Chris my personal motor vehicle at his cost until he makes up his mind regarding full time study at TAFE Meadowbank. He will continue to work part time on Mondays and I have given him 14 days to make up his mind regarding a full time career as HW Service Manager. 7. As HW has been managed by myself successfully for the past 12 years, the Company's financial and administrative processing should return to being processed and managed by myself with assistance from Penny Hunt. Penny will continue in collections, also assisting you, Spiros and myself as marketing/telemarketing consultant. 8. When you return from unpaid leave in New Zealand it is imperative to the Company's profitable progress you concentrate on canvassing new and existing business customer opportunities with a view to convert as quickly as practicable to sales orders, I will continue to assist you every way possible to achieve this goal. Apart from the new premises negotiations sales should remain your primary function at Healthy Water until reviewed in 90 days as aforementioned. 9. My role as Sales Director at HW remains unchanged apart from the additional F & A duties. 10. I understand from 2 staff members you returned to the office Friday evening and announced the new Healthy Water East Chatswood premises offer we were still discussing at our meeting Friday afternoon had been accepted, I would appreciate the details of the acceptance be offered to both Alan Horn and I before any further announcement be made elsewhere. I am curious how an acceptance by the vendors could happen less than ½ an hour after our meeting finished, I for one would appreciate an immediate explanation. 11. We need to have a very hard look at the servicing dept labour resources due to some things which have been brought to my attention over this past weekend, it will require our immediate attention and decisive action." 272 Weeks received Campbell's letter of 6 February 2005 on that day as an attachment to an email. 273 On 7 February 2005, Weeks met with Campbell and Mr Horn at the Company's offices. Weeks gave evidence that the following conversation occurred at that meeting: "Weeks: You both know I have borrowed from the Bank to make this purchase and that I have an interest payment each month to service this debt. Now I'm being told that I'm not going to be paid and that Healthy Water does not have the funds to pay me. Campbell: If you want to be paid it's simple, just agree to everything I have set out in my letter and I'll pay you. Weeks: Doug, this isn't an employer/employee relationship; I'm a director and half owner. BackOffice's Services Agreement sets out how I should be paid and when. You can't blackmail me with refusing to pay me, knowing that I have made your commitments to the Bank, secured against my own home. Weeks (to Horn): Alan, we discussed this. I confirmed with you that my services agreement was to start on 1 January. You said that you would discuss it with Doug Did you Alan? Horn (to Campbell): Doug, you remember? I said that there were a couple of outstanding issues that Tim had raised and that I needed to discuss with you. Campbell: I don't give a fuck about any arrangements, as far as I'm concerned you can shove all of those agreements in the bottom drawer or better still tear them up. I've been running this business for 12 years and I know what to do and what you need to do is what I tell you. Leave the running of the business to me, and get out and get those sales that we need. If you want to be paid, then accept my letter. Forget all this service and administrative stuff, Penny and I can do all of that. Healthy Water needs sales and right now." 274 Weeks claimed that further conversation included the following: "Campbell: I know your type; you corporate guys have no idea what business is all about. You sit in your ivory towers and have people running around doing all your work. You just don't understand what is required in small business and find it all too hard; you can't take the hard work and the long hours. You don't know how to treat staff. All you want to do is stick your hand out for money and try and take over my company, well I'm not going to let that happen -- why don't you go back to where you came from, I don't want you here. Horn: Look, the solution is simple. All you have to do is agree with Doug's letter and you'll get paid. Campbell: Get him out of here. I don't want him in my business; he's a pest and I want him to go away. Find another buyer, I want him out. Find a way to get rid of him." 275 Weeks claimed that Campbell then walked out of the meeting and that he had a discussion with Mr Horn to the following effect: "Weeks: Alan, all I want to do is get on with my job, help Doug grow Healthy Water and get paid. As you know I have financial commitments and need to be paid. This was all discussed and agreed. What is going on -- Doug's telling me Healthy Water has no money? Horn: Tim it's simple: Doug just wants you to get out and sell. If you do that I'm sure that he will keep you whole financially. He knows you have debts to meet. It seems there is a need for cash and some urgent sales. Weeks: Alan, you know I'm in an impossible situation -- I have no choice but to meet my obligations to the Bank, but this wasn't the deal we discussed and agreed. Doug would be able to do this because he's just received $850,000 from me but I've got my home on the line." 276 Weeks claimed that at no stage during the meeting on that day did he agree with the proposal in Campbell's letter or accept a 50% reduction in the payments due to BackOffice under the Services Agreement. 277 Mr Horn gave a different version of the events of the meeting on 7 February 2005. However, the judge preferred Weeks' evidence. 278 On 8 February 2005, Weeks wrote to Campbell by email in relation to an insurance recommendation. That email was in the following terms: "Given your statement of the company's financial position, I don't think this is something to be pursued at this time or until such time as we can meet our other obligations. The monthly premium is $1,124 or annually $13,500 with additional legal costs to be incurred on top of the base premiums. This would obviously apply to other quotes in this regard." 279 On the same day Campbell responded to Weeks' email on the following terms: "What statement regarding the company's financial position? At the moment the company's financial position is healthy. My statement to you was we need to be financially prudent and manage our cash flow, not take out $22,000 over Christmas without providing income to support expenditure." 280 In the afternoon of 8 February 2005, Campbell sent a further email to Weeks in the following terms: "I understand during your fleeting visit to Healthy Water this afternoon you have downloaded the entire company records from the server: o I would like to know why you have done this as it always been company policy not to have any customer records off site. And as such it is a serious breach without consultation with me as your co-director. o Why are you refusing to sign the bank document to enable us to trade effectively? o Alan and I both knew you were struggling with your duties and personal financial problems. o At your request after hours Alan and I spent time with you to try to nut out a way to help you. o Now today you have once again refused to carry out your duties with senior members of the staff, claiming there are "bigger things afoot". What do you mean by this statement? o I take it your agreement Monday evening to the terms and revisions letter dated 6th February 2005 is no longer agreed? o In my view cashing the Company's Cheque for $3,511.00 during today's escapade is acceptance of my letter as above. Tim I think it is reasonable for me to ask for answers to these questions. Your behaviour in front of the staff today was at the very least unsettling at worst disrespectful to all concerned. I am afraid there is little more anyone can do to help you, if you continue acting in this way. I am so very disappointed in the current goings on after what initially looked to be so promising." 281 Just over two weeks after they had officially commenced business together, Weeks consulted his solicitors about the situation with Campbell and Ms Hunt. 282 On 9 February 2005, those solicitors wrote to Campbell in terms that included the following: "Prior to settlement, Mr Weeks was provided by you with certain financial information purporting to establish the profitability of Healthy Water over a number of prior years and the purchase price of $850,000 paid by Back Office for one share in Healthy Water was based upon a four times multiple of an average EBIT over a period of prior years and an express indication by you that the future profit forecast for Healthy Water in the next 12 months would be around 150 percent of the 2003/2004. Express assurances were provided by you to Mr Weeks and to Back Office indicating anticipated healthy, positive cash flows in the immediate and medium term future and a solid current asset base. Subsequent to settlement, there have been a number of management meetings involving yourself and Mr Weeks and on occasions, Alan Horne, in which you have made it abundantly clear that you will not accept equal participation in the management of the affairs of Healthy Water with Mr Weeks. You have told him in no uncertain terms that you are in control. On 7 February 2005, you sent Mr Weeks a letter attached to an email which gives Mr Weeks cause for grave concern. First, having accepted Mr Weeks' payment of $850,000 for an equal share in Healthy Water on the basis of buoyant financial predictions and a strong balance sheet you now assert that the company's financial resources are strained to the point that director's fees cannot be paid and that motor vehicle and other normal business expenses have to be curtailed. Secondly, you have purported to unilaterally change the agreed management structure which would effectively relegate Mr Weeks to being your subordinate. Further, yesterday, you endeavoured to have Mr Weeks sign certain bank authorities on an urgent basis without allowing him the opportunity to ascertain what they were. This whole situation is entirely untenable. Mr Weeks is entitled to participate equally in every sense with you and the management of the company as a director and to protect and uphold the interests of the shareholders. Whilst Mr Weeks is overseas until early next week, we have, on his instructions, sent the attached letter to the Commonwealth Bank. Should there be any urgent requirements for business expenses to be made in his absence, Mr weeks [sic] will authorise them by direct communication with the Bank. To obtain his authority, you should contact him on his mobile telephone (0412 xxx xxx) to make the necessary arrangements. Mr Weeks will not countenance any payments being made out of company funds without his joint authorisation with you. Upon his return, he will require a statement of all expenditures of company funds since settlement and will hold you accountable should there have been any inequitable distributions or payments. Mr Weeks expects: (a) that you scrupulously observe the terms of the shareholders agreement; (b) that you accord him equal status with you in the management of Healthy Water; (c) to be paid on equivalent terms with you under your respective service agreements. Any departure from these matters will be regarded as a fundamental breach of trust which will become litigious." 283 Prior to the settlement of the share purchase Weeks advised Campbell that he had booked a trip for his family to New Zealand. That trip occurred between 9 and 15 February 2005 during which time Weeks was not able to receive emails. Whilst Weeks was in New Zealand, Campbell wrote to him on 10 February 2005 by email in the following terms: " Subject: equity partnership I acknowledge your phone call at home Tuesday evening saying you are going to need a rest on holiday in New Zealand. Respectfully this is causing further disruption to the company's operations. We cannot trade effectively by cheque account without your signature on the joint signature document we ask (sic) you or (sic) last Tuesday. Your refusal to sign will without doubt damage our reputation with suppliers. Once again I ask you politely and urge you to please make urgent arrangements to remedy this situation. It has come to notice today certain pertinent HR Company and some of my personal hard files have been removed from my office, since our meeting on Monday Night do you have them? If so I urge you to return urgently them in tact. As I am unaware of your overall intentions, today I have been forced redeploy your duties to myself and other HW staff, it was impossible to wait any longer for attendance to your duties and your response to my letter." 284 On his return from New Zealand, Weeks wrote to Campbell by email on 15 February 2005 in the following terms: "I'm writing in response to your email of last Thursday, received upon my return from New Zealand. I believe my comment was that I felt it "best" to undertake to the trip to New Zealand as planned and greatly anticipated by both my wife and daughter and certainly as a family we were happy to have this opportunity. That said, it is not my desire or intention to cause any disruption to the operations of our company and if there are cheques or any other items that require my attention prior to my return to the office tomorrow, then I will be happy to review these (phone me on 0412 xxx xxx). With regard to the check signatories, I had investigated this with a particular view to the capabilities of our accounting software and proposed an appropriate system to address this while still complying with the terms of the sale agreement. This was set-out in my earlier email on this subject. With your agreement, this can be promptly implemented. With regard to your HR files or any other files for that matter, I do not have these. I have no company files in my possession and seldom, if ever, remove files from my workplace. Previously, certain files have been stated as "missing", however I believe that these have all turned-up again at the office. Hopefully your files will do the same. This comment similarly applies to information stored on the 'network', where with the sole exception of a MYOB file being used to test the new electronic payment system, I have no company information. Recognising our communications have crossed while I have been away, I understand you now have a response to your letter and arrangements for managing our business going forward." 285 On 15 February 2005, Campbell's solicitors communicated with Weeks' solicitors both by way of email and letter. The email referred to a discussion between the solicitors and advised that Campbell's solicitors had taken instructions to the following effect: 1. From today until any settlement discussions are concluded (as notified by one party to the other) your client will not be required to attend the work premises of Healthy Water to provide his services under the Consultancy Agreement and that there is not to be any adverse inference against your client for his non attendance during this period. 2. Your client will need to meet with our client at a mutually convenient time and location, perhaps on a weekly or bi-weekly basis, to sign cheques for the proper running of the business. Your client also needs to sign a bank signatory card or mandate to make him a joint signatory with our client ie. both parties must sign every cheque. If this is acceptable, our client will contact your client directly to arrange a meeting tomorrow for both the purposes set out in this paragraph. 286 Campbell's solicitor's letter to Weeks' solicitors of 15 February 2005 read as follows: "Our client denies all the allegations which you have made on behalf of your client. In particular our client a. denies that he has made any statements to the effect that he "will not accept equal participation in the management of the affairs of Healthy Water" with your client, or to the effect that our client is "in control"; b. denies that the company's financial resources are strained in any way; and c. denies that he has purported to unilaterally change the agreed management structure which would relegate your client to being our client's subordinate. We are further instructed that: 1. during January 2005 your client attended only 8 days at Healthy Water's office, generally arriving after 9.30 AM and leaving at 3-3.30 PM. In the period 10-24 January 2005 he was primarily involved in his due diligence investigation of the company, and reviewing the draft documents for his purchase of 50% of the company prior to settlement. He attended a further 5 days spending less than 1 hour in the office, or at most attending from 9.30 AM to 12.30 PM. In February he has so far attended 3 days in the office arriving about 9.30 AM and leaving at about 12.30 PM. Furthermore he has failed to attend from 9.30 AM to 12.30 PM on Saturday 22 January and 5 February 2005, as otherwise agreed orally with our client; 2. except for looking for new business premises, investigating a new fleet lease plan, attempting to restructure the company's banking arrangements, and familiarising himself with the IT systems, your client has failed to carry out any of the tasks that he has undertaken to carry out under the Services Agreement between Healthy Water and BackOffice; 3. when asked why he did not commence carrying out his tasks under the Services Agreement, he stated either that he did not have the time, or that he was not meant to physically perform the tasks listed in the Services Agreement. In response our client suggested on 7 February 2005 that certain tasks reverted to our client or to other staff on a temporary basis. Your client agreed on 7 February 2005 to the temporary new allocation of tasks suggested by our client; 4. your client has refused to sign the bank mandate in respect of the cheque account for the business which effectively prevents the company from paying its suppliers. Our client requires your client to rectify this situation by close of business today; 5. your client left suddenly on 8 February 2005 to go to New Zealand notifying our client only on 7 February 2005 late in the evening; and 6. your client has been guilty of serious misconduct in that he has removed, without our client's consent or consultation, the client data base and financial records of the company and has also removed some Mr Campbell's important financial records from his personal filing cabinet. Such behaviour would justify instant dismissal of your client and our client and the company reserves their rights in this regard. On this basis our client claims that your client has not observed the spirit and the wording of the Shareholders Agreement and the Services Agreement between Healthy Water and BackOffice, and that your client has been in substantial and repetitive breach of his obligations almost from the commencement of this co-venture. Despite your client's behaviour, which is a cause of grave concern to our client and causes additional workload for all Healthy Water staff, our client has observed, and will continue to observe, his obligations under the Shareholders Agreement and the Services Agreement which he has agreed with Healthy Water. In return our client urges and expects your client to do the same when he returns from New Zealand. If your client is still unable to or unwilling to carry out some of his tasks, our client suggest the implementation of the temporary arrangement mentioned under 3. We will write to you under separate cover (without prejudice) to propose a settlement of the dispute between the parties." 287 On 17 February 2005, Weeks and Campbell attended a coffee shop in Crows Nest for the purpose of signing a number of cheques. Weeks claimed that he signed cheques for the day to day running of the company at this meeting. Campbell's evidence was that Weeks refused to sign a number of cheques at this meeting and claimed that he did not have to sign what he believed to be unnecessary. 288 Weeks admitted that he declined to sign cheques for expenses that he did not believe were to pay for valid business expenses. 289 Weeks sent an email to Campbell on 2 March 2005 suggesting that Campbell should let him know if there were creditors that required payment so that cheques could be drawn and processed. That email also suggested that he could always be contacted on his mobile. 290 Between about 9 February 2005 and 17 February 2005 there were negotiations occurring between the parties which "stalled" on 17 February 2005. The respective lawyers made an arrangement that Weeks would not attend the office during the negotiations, but, after the negotiations failed, he recommenced attendance from 21 February 2005. 291 On his return to the office, Weeks received a letter from Campbell dated 18 February 2005 together with an attached letter dated 21 February 2005 addressed to Campbell from Mr Pusell of the Bank. The letter from Campbell referred to the "ongoing discussions" with Weeks regarding his "continued refusal to sign a joint and several personal guarantee in support of the $60,000 overdraft facility" available to the Company for the previous eight years. The letter went on to advise Weeks that he had seven days to sign the relevant documents otherwise it would be necessary for Campbell to withdraw his personal guarantee which was supporting the overdraft facility. The letter from the Bank advised Campbell that even though the Bank held a charge over the Company's assets it still required a guarantee from all directors and shareholders. 292 On 23 February 2005, Campbell sent an email to Weeks in which he claimed that Weeks had ignored his letter regarding the overdraft. That email also made a raft of other complaints against Weeks including: ignoring Campbell's "urgent plight" to find new business premises since late January; ignoring general invoicing duties; inappropriately burdening a staff member with his personal grievances against Campbell; and a failure to discuss with Campbell current business opportunities. Campbell alleged that he believed Weeks was deliberately putting him under severe work pressures while trying to undermine him to staff. 293 Campbell's email of 23 February 2005 prompted a lengthy email from Weeks on 24 February 2005. That email included a claim by Weeks that Campbell was "blocking" his remuneration under his service contract and that Campbell was advising him that the Company could not meet its financial commitments. In those circumstances Weeks advised that he was simply not in a position to expose either himself or his family further with the personal guarantees that would be required to purchase a suitable alternative property. That email included the following: "When the investment in Healthy Water was presented, I was told the Company was 'very' profitable and with a positive cash flow. You have indicated more than once that this is not the case, which is obviously a huge concern to me; as it should be. Doug, I bought into Healthy Water because it was presented to me as a profitable business with a unique market opportunity. My sole objective was, and continues to be, to grow the profitability of Healthy Water and to contribute personally to its success. It is preposterous to think that I would invest the money I have, with any intention other than to see Healthy Water successful. Clearly you view my every action with suspicion, make endless and erroneous assumptions and constantly accuse me of actions that you have interpreted as improper. Constantly repeating your 'suspicions' does not make them facts. I am keen to make the maximum contribution to Healthy Water that I can and this would be significantly greater and much faster if there was a spirit of cooperation rather than one of distrust, suspicion and accusations. Trying to force my compliance by obstructing my participation in the running of the business and by refusing to meet our agreed obligations is obviously not appropriate. While I am of course concerned that Healthy Water is not financially the Company it was represented to be, I would have preferred that we discuss this, understand the issues and agree mutually an appropriate course of action going forward. That's what partners do!" 294 On 24 February 2005, Weeks advised Campbell by email that he wished to call a board meeting for 3 March 2005 at 10am at the Company's offices, the agenda for which included: selection of new rental premises; bank signatories and authorisation of payments; director's guarantee for bank overdraft; car allowance and reimbursement of business expenses and directors' service agreements. 295 By this stage Campbell and Weeks were exchanging insults in emails: on the one hand Campbell was refusing to pay Weeks any money and on the other Weeks was not signing the guarantee for the overdraft. In respect of this guarantee, Weeks' evidence was that he rang Mr Pusell at the Bank and advised him that he was a director of the Company and that he had recently acquired the Company. Mr Pusell advised Weeks that the Bank's records did not reflect that position. Mr Pusell advised Weeks that the Bank would not be able to process any guarantee provided by Weeks until such time as the ASIC records reflected that Weeks was a director. 296 There was debate between Weeks and Campbell as to whether Mr Horn could be present at the proposed board meeting. Weeks initially accepted that Mr Horn could be present at the meeting but should not chair the meeting. Weeks then changed his mind and advised Campbell that he did not believe that the issues for discussion required Mr Horn's presence. Campbell suggested that the board meeting be postponed for a week and proposed additional items for discussion at the meeting including the letter that he had written to Weeks on 6 February 2005. 297 In an email of 8 March 2005, Weeks provided Campbell with a document entitled "Report to the Board of Healthy Water (Australia) P/L". In that document Weeks referred to operating losses and significant cash payments prior to January severely impacting on the Company's cash flow. This document also referred to Campbell's alleged obstruction of any payment to Weeks pursuant to his Service Agreement in the amount of $30,000. Weeks noted that Campbell had been paid. 298 The communications between Weeks and Campbell declined even further after this report and, in an email to Weeks dated 17 March 2005, Campbell advised that he had estimated that they would each need to provide a loan to the Company of approximately $30,000. Weeks' response was that he felt that the Company should be structured in such a way that it could fund its operations without the need for ongoing cash injections. Weeks advised Campbell that "given the current circumstances" it was unlikely that he would be investing further in the Company and that it would have to operate within the current resources. 299 By the end of March 2005, Weeks had sought access to the bank statements and cheque books of the Company, but was not provided with such access. By this stage Weeks had advised the Bank that cheques were being written without his signature, apparently causing the Bank to put a stop on the trading account of the Company. 300 On 31 March 2005, Campbell's solicitors wrote to Weeks advising that they had been kept abreast of developments that had transpired since the acquisition of the 50% share in the Company. That letter included the following: "It is abundantly clear from the correspondence between you and Mr Campbell, the actioning of stop orders with the Commonwealth Bank, the inability to hold directors meetings and to resolve day to day issues of the company and a number of other matters that there has occurred a loggerheads in the management of the company. In the circumstances, we have taken advice on behalf of our client from Senior Counsel who has advised that the company should be placed into voluntary administration." 301 Attached to the letter were proposed minutes of a meeting of directors of the Company, signed by Campbell and dated 31 March 2005 in which the following appeared: "Resolved: It is in the opinion of the Directors that the company is insolvent, or is likely to become insolvent at some future time. Resolved: That it is in the best interests of the company to voluntarily appoint an administrator, pursuant to Section 436A of the Corporations Act 2001 to oversee the affairs of the company in accordance with the provisions contained of Part 5.3A of the Corporations Act 2001." 302 Campbell's solicitors advised Weeks that if they had not received the minutes executed by Weeks by 1 April 2005 they held instructions to approach this Court to seek the urgent appointment of a provisional liquidator. 303 On 31 March 2005, Weeks' solicitors advised Campbell's solicitors that Weeks did not hold the view that the Company was insolvent or likely to become insolvent at some future time. However they also advised that Weeks had no detailed knowledge of the current financial state of affairs of the Company because Campbell had denied Weeks all access to such information. The letter continued: "Based on the representations and warranties made by your clients up to 24 January 2005, and his general understanding as to the subsequent levels of income and expenditure of the company, Mr Weeks knows of no reason why the company should be considered to be insolvent or likely to become insolvent in the future. If your clients will reinstate Mr Weeks' access to the Company's books and records, Mr Weeks undertakes to review the state of solvency of the company immediately and then, if he forms the view the company is or is likely to become insolvent, to agree to pass the necessary resolution enabling the appointment of an administrator pursuant to section 436A of the Corporations Act 2001." 304 As I have already noted, these proceedings commenced on 1 April 2005. 305 On 2 April 2005, Campbell's solicitors requested that Weeks consent to the appointment of the provisional liquidator. 306 On 7 April 2005, the following order was made by the Court: "BY CONSENT AND NOTING THAT THE DEFENDANT DID NOT REQUIRE THE PLAINTIFFS TO GIVE TO THE COURT AN UNDERTAKING AS TO DAMAGES, THE COURT ORDERS THAT: 1. Pursuant to s 472(2) of the Corporations Act 2001, Martin Green of GHK Green Krejci of Level 9, 179 Elizabeth Street, Sydney be appointed the liquidator of the Company provisionally." 307 The Company is still under provisional liquidation. However, presumably, by agreement, the provisional liquidator sold the business and assets of the Company to Healthy Water International Pty Ltd, a company controlled by Campbell on 31 May 2005. The purchase price appears to be $196,815. On about 18 August 2005, Campbell onsold the business to a third party. 308 The provisional liquidator's accounts are in evidence. However, with the costs of running the business until it was sold, the liquidator's fees and disbursements, all parties agree that the shares in the Company have no present value. 309 2. I now turn to the question of oppression. I will deal with this question under the following sub-headings: (a) Generally ; (b) Must the oppression continue at the date of hearing? (c) Can there be oppression in a 50/50 held company? (d) Were the following matters established: (i) That there was a removal of accounting functions from Weeks? (ii) That there was removal of access of Weeks to the accounts? (iii) That there was misconduct with credit card reimbursements? (iv) That there was a failure to hold Board meetings? (v) That there was a failure to pay fees due to Weeks or BackOffice? (e) Other matters; (f) Did the matters in (d) and (e) that were established cumulatively amount to oppression? (g) The discretionary element; (h) To what extent should an appellate court disturb a trial judge's views on oppression? (i) Was the remedy awarded appropriate? (j) What was an appropriate valuation of the BackOffice share in the Company? (k) What order, if any, should be made on this claim? (a) Generally 310 The plaintiffs' oppression claims are contained in paras 14 to 20 of the Further Amended Summons/Commercial List Statement [FAS]. That claim is headed "Exclusion from Management of the Company's Business". 311 The plaintiffs claim that, on 10 January 2005, Weeks began to attend the Company's offices to participate in the management of the Company's business [FAS 14]. It is claimed that Campbell removed the financial and administrative functions from Weeks and returned them to Ms Hunt [FAS 15] and that, on 7 February 2005, Campbell advised Weeks that he wanted him out of the business [FAS 16]. 312 The plaintiffs claim that Campbell prevented Weeks from participating in the management of the Company's business as a joint managing director and that he prevented Weeks from undertaking the financial and administrative functions agreed to prior to the entry into the Share Sale Agreement [FAS 17]. 313 It is claimed that between 24 January 2005 and 30 March 2005, Campbell caused Weeks' access rights to the computer network and financial accounting records of the Company to be withdrawn and that Campbell refused to attend a director's meeting scheduled to be held on 3 March 2005 or any future meetings of directors of the Company [FAS 18-19]. 314 The respondents also claimed that at all material times from 24 January 2005 Campbell prevented the Company from making any payments to Weeks pursuant to the Services Agreement or otherwise. 315 The respondents claimed that Campbell's conduct by or on behalf of the Company was both contrary to the interests of the members as a whole and oppressive to, unfairly prejudicial to and unfairly discriminatory against BackOffice, within the meaning of s 232 of the Corporations Act. 316 In final submissions the appellants submitted that the oppression claim was bound to fail for a number of reasons but in particular because the plaintiffs have failed to articulate the conduct complained of as falling within s 232 of the Act. 317 Section 232 of the Corporations Act provides as follows: " Part 2F.1 -- Oppressive conduct of affairs 232 Grounds for Court order The Court may make an order under section 233 if: (a) the conduct of a company's affairs; or (b) an actual or proposed act or omission by or on behalf of a company; or (c) a resolution, or a proposed resolution, of members or a class of members of a company; is either (d) contrary to the interests of the members as a whole; or (e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or whether in any other capacity. For the purposes of this Part, a person to whom a share in the company has been transmitted by will or by operation of law is taken to be a member of the company." 318 Although the Act deals with oppressive, unfair or discriminatory conduct, it is customary to use the word "oppression" to cover all these concepts and I will do so in these reasons. 319 The Act provides that the court may make any order under s 233 of the Act that it considers appropriate including: that the company be wound up (section 233(1)(a)); that there be a purchase of any shares of a member of the company (s 233(1)(d)); that there be a purchase of shares with an appropriate reduction of the company's share capital (s 233(1)(e)); appointing a receiver or receiver and manager of any or all of the company's property (s 233(1)(h)); or that a person do a specified act (s 233(1)(j)). 320 Courts must approach provisions of the Corporations Act in a purposive way. 321 The right that now appears in s 232 first appeared as s 210 in the English Companies Act 1948, though there were no contested applications under it decided until 1958. 322 The clear purpose of s 210 was to enable persons to extract money invested in a corporation where the affairs of the corporation were not being carried on as reasonably expected. 323 When a person invests money as capital in a corporate venture for good, sound, commercial reasons, one cannot withdraw that capital unless and until the purpose for which the corporation was formed is fulfilled or becomes frustrated and the corporation is wound up. 324 Where the shares of the corporation are quoted on a stock exchange, a shareholder can realise his or her investment by transferring the shares, a transaction which, at least in theory, does not affect the company's capital. 325 Section 210 was enacted to provide a method of escape for the minority who were caught in a situation where their capital was not being employed as reasonably expected and where winding up on the just and equitable ground might be available, but, if it was, it put the shareholder in a position of what might colloquially be said to be one of "cutting off the nose to spite the face". 326 The legislature thus provided a mechanism whereby the company could continue, by the court ordering the affairs of the company, or, if that were not reasonably practicable, by allowing the shareholder to extract his or her capital by a compulsory purchase or sale. 327 One of the first two reported cases on the section, Re H R Harmer Ltd [1959] 1 WLR 62, was what might be thought the perfect case for which the section was designed. 328 The company in that case was one of the most successful and then well known enterprises dealing in stamp collections in the world. Its founder, H R Harmer (the father), had, in his day, been a brilliant operator in the field. However, by 1957, he was 88 and had lost a lot of his magic, moreover, he had become more and more dictatorial and operated the business as if he alone had an interest in it as proprietor. His two sons, who were shareholders, could see that this attitude meant that the company was on its way to destruction with the loss of a valuable business as a result. They petitioned under the section. 329 Roxburgh J and the English Court of Appeal upheld the petition and ordered (see p 68 of the WLR) that the father be appointed president of the company for life, a mere nominal position, restrained him from decision making in the company and authorised his employment under contract as a consultant at a salary. The company could then continue in business as a successful enterprise. 330 The other early case was Scottish Co-op Wholesale Society Ltd v Meyer [1959] AC 324. 331 That was a case where the conduct of the majority was such that it would have been just and equitable to wind up the company. However, the acts of the majority in diverting business away from the company to another entity controlled by them meant that, unless the liquidator was prepared to be involved in expensive litigation, the return of capital would be far less than should have resulted on a winding up. 332 The House of Lords held that a winding up would operate unfairly towards the petitioners and that it was appropriate to make an order that the minority's shares be purchased at a fair price based on the value the shares would have had but for the oppressive behaviour. 333 Although the judgments in the two original cases on the section have been quoted and followed on many occasions since, it is important to appreciate that both the text of the section and the approach of the courts to the construction of the section have altered over the last 50 years. 334 The original text of s 210(1) and (2) of the English Companies Act 1948 read as follows: "(1) Any member of a company who complains that the affairs of the company are being conducted in a manner oppressive to some part of the members (including himself)… may make an application to the court, for an order under this section. (2) If on any such petition the court is of opinion - (a) that the company's affairs are being conducted as aforesaid; and (b) that to wind up the company would unfairly prejudice that part of the members, but otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up; the court may, with a view to bringing to an end the matters complained of, make such order as it thinks fit, whether for regulating the conduct of the company's affairs in future, or for the purchase of the shares of any members of the company by other members of the company or by the company and, in the case of a purchase by the company, for the reduction accordingly of the company's capital, or otherwise." 335 This text must be compared with the current text of s 232 of the 2001 Australian Act set out earlier. However, it is necessary to track the legislative changes and to see, if possible, the reasons for them. It is also necessary to evaluate the decided cases against the text of the section as it existed at the time they were decided rather than just applying the words of the judges on the assumption that their words apply equally to the current form of the section. 336 The English s 210 was translated across into the Victorian Companies Act 1958 which was the basis for the so called uniform Companies Act 1961. The NSW Act of that year was virtually identical with the legislation passed in each other state and territory. 337 Thus, s 186 of the Companies Act 1961 was in substantially similar terms (though it had added extra provisions to deal with the case of the relevant minister making an application under the section). 338 The next edition of the legislation, s 320 of the Companies Act 1981 expanded the section to cover also the case where directors had acted in their own interest, but otherwise left the scheme intact, with a possible exception. 339 The exception was that the 1981 section omitted the words "with a view to bringing an end the matters complained of". However, it may be that the legislature considered that in setting out the type of orders that could be made in more detail, the words omitted were just unnecessary. 340 This amendment aimed at directors acting in their own interest was significant because the received construction of the section was that it only operated where the oppressive conduct was continuing up to the hearing. However, where the oppression was the conduct of the directors, the plaintiff could succeed if the directors "have acted" (ie in the past, but not necessarily continuing) in an oppressive manner. 341 It was the Corporations and Securities Legislation (Miscellaneous Amendments) Act 1983, which changed the structure of the provision. This Act provided that s 320 be restructured as follows: "1. An application to the Court for an order under this section in relation to a company may be made: (a) by a member who believes (i) that affairs of the company are being conducted in a manner that is oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member or members, or in a manner that is contrary to the interests of the members as a whole; or (ii) that an act or omission, or a proposed act or omission, by or on behalf of a company, or a resolution, or a proposed resolution, of a class of members, was or would be oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member or members or was or would be contrary to the interests of the members as a whole; or (b) by the Commission, in a case where … 2. If the Court is of the opinion - (a) that affairs of a company are being conducted in a manner that is oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member or members (in this section referred to as the 'oppressed member or members') or in a manner that is contrary to the interest of the members as a whole; or (b) that an act or omission, or a proposed act or omission, by or on behalf of a company, or a resolution or proposed resolution of a class of members of a company, was or would be oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member or members (in this section also referred to as the 'oppressed member or members) or was or would be contrary to the interests of the members as a whole, the Court may, subject to sub-section (4), make such order or orders as it thinks fit, including, but without limiting the generality of the foregoing, one or more of the following orders: (c) an order that the company be wound up; (d) an order for regulating the conduct of affairs of the company in the future; (e) an order for the purchase of the shares of any member by other members; (f) an order for the purchase of the shares of any member by the company and for the reduction accordingly of the company's capital; (g) an order directing the company to institute, prosecute, defend or discontinue specified proceedings, or authorizing a member or members of the company to institute, prosecute, defend or discontinue specified proceedings in the name and on behalf of the company; (h) an order appointing a receiver or a receiver and manager of property of the company; (j) an order restraining a person from engaging in specified conduct or from doing a specified act or thing; (k) an order requiring a person to do a specified act or thing." 342 It will be observed that, while subsections 1(a)(i) and 2(a) use the present tense, 1(a)(ii) and 2(b) refer to the past. 343 The Corporations Act 1989 re-enacted the 1983 provisions without material change as s 260. By the Corporations Review Act 1998, s 260 was renumbered s 246AA. In the Corporations Act 2001, s 246AA became converted into the present ss 232-3. I have set these out above and it can be seen that there is little material change from the 1983 version. 344 The Explanatory Memorandum for the 1983 amendment simply directed attention to the fact that the operation of the section had been extended to cover the case of an isolated act of oppression as well as a course of conduct. 345 However, the Explanatory Paper on the exposure draft of the 1983 legislation contained the following paragraph: "195. At the present time, the petitioner when seeking a remedy, in a situation where the directors are not the oppressive party, must satisfy the Court that the affairs of the company are being conducted in a manner oppressive i.e. burdensome, harsh and wrongful to some part of the members (CA s. 320). This has been held to necessitate a course of conduct continuing up to the time of the petition involving invasion of legal rights, displaying lack of probity on the part of those conducting the company's affairs and affecting the petitioner in his capacity as a member. The remedy's effectiveness has been limited by the requirement that all of these elements must be in effect in operation at the time of the petition." 346 Notwithstanding this, the exposure draft and the final text of the 1983 amendment left in place the dichotomy between cases where the affairs of the company are being carried on oppressively and cases where a particular act was or would be oppressive. 347 I will take up this matter again under sub-heading 2(b). 348 It will also be noted that the words "oppressive to some part of the members (including himself)" in the original English s 210 of the 1948 Act have disappeared so that a plaintiff could now complain if he or she were not the oppressed. 349 There were a series of decisions on earlier versions of the section which held that the oppression complained of must be oppression against a member qua his or her rights as a member. Oppression which affected a person in the role of director was usually insufficient; see eg Re H R Harmer Ltd (supra); Re Broadcasting Station 2GB Pty Ltd [1964-5] NSWR 1648; Re Meyer Douglas Pty Ltd [1965] VR 638. 350 However, the present s 232(e) explicitly states that the operative oppression may be against the member "in that capacity or in any other capacity". 351 However, the two matters I have recently discussed are still relevant when the court is exercising its discretion as to whether or not to make an order. In particular, cases such as Gamlestaden Fastigheter AB v Baltic Partners Ltd [2007] Bus LR 1521; [2007] 4 All ER 164 (PC) indicate that the court expects that although it can look to the interests of a member in any other capacity, it normally expects that other capacity will have a close nexus with the membership, eg a person who is both a member and a debenture holder. 352 The matter is now dealt with as a discretionary aspect, which I will consider in sub-heading 2(f). 353 It is to be noted that Powell J in a 1990 decision, that is, after the 1983 amendments said (Re Dernacourt Investments Pty Ltd (1990) 20 NSWLR 588, 619-620): "While it is true that the original provisions have been amended from time to time, such amendments that have been made have not, I believe, altered the underlying purpose, which is, if it be possible, to bring the "oppression" to an end without recourse to a cure the effects of which would, in many cases, be worse than the disease." 354 Powell J noted in that case that the amendments principally concerned the scope of activities which were to be dealt with under the section. However, there was another principal adjustment that is specifying the remedies that might be given. 355 In this regard it is significant that: (1) the remedies listed bear out the purpose of the legislation that is to bring the oppression to an end; and (2) that there is no provision (cf the provisions of s 87 of the Trade Practices Act 1974 (Cth)) for the court to declare transactions void or to give rescission. 356 There does not appear on the face of the legislation to be jurisdiction to award damages or to make orders for compensation. However, the Privy Council in the Gamlestaden case followed the decision of the Hong Kong Court of Final Appeal in Re Chime Corporation Ltd; Nina Kung v Tan Man Kou (2004) 7 HKCFAR 546 that the legislation in the English form permitting courts to make whatever order they saw fit included a power to award damages or compensation to the company. 357 In the Hong Kong Court, Lord Scott said that the decision of Millett J (as his Lordship then was) in Re Charnley Davies Ltd (No 2) [1990] BCLC 760 supported this result, however, in that case, the judge was concerned that it was not appropriate to make such an order in an oppression suit, the proper remedy was a derivative action. Lord Scott agreed with that comment. 358 Lord Scott, however, held that while there was jurisdiction to make such an order, it was not appropriate to do so in the case before the court. 359 Permanent Judge Bokhary noted that the Supreme Court of Ireland had reached a different conclusion on the issue (see Irish Press plc v Ingersoll Irish Publications Ltd [1995] 2 ILRM 270). He agreed with Lord Scott that there was jurisdiction to make such an order. However, he said at [27] that the circumstances for exercising the jurisdiction, even if they can arise, would in any case of complexity be rare and exceptional. 360 The other three judges constituting the court agreed with both Bokhary PJ and Lord Scott. 361 Although the text of s 233 of the Australian Act is different, the reasoning of Lord Scott in the Chime case should be followed in Australia. 362 Turning now to the test of unfairness covered by the section, the court must look to determine whether on the balance of probabilities the objective commercial bystander would be satisfied that the affairs of the company were being conducted unfairly: Morgan v 45 Flers Ave Pty Ltd (1986) 10 ACLR 692, 704; Cassegrain v CTK Engineering Pty Ltd (2005) 54 ACSR 249 at [84]. 363 The operation of s 232 of the Corporations Act was recently considered by Campbell J in Turnbull v National Roads and Motorists' Assn Ltd (2004) 50 ACSR 44. In that case, his Honour had to consider whether the grounds in relation to the conduct set out in ss 232(d) and (e) provided two separate bases for the court's intervention, namely, being contrary to the interests of the members as a whole, or being oppressive to, or unfairly prejudicial to, or unfairly discriminatory against, a member or members in whatever capacity. 364 After reviewing authorities and considering the legislative history, his Honour came to the conclusion that the ground of being "contrary to the interest of members as a whole" in s 232(d) was intended to be independent to the ground of being "oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or any other capacity" in s 232(e). 365 There seems to be little challenge to these principles or the manner in which the primary judge applied them. (b) Must the oppression continue until the date of hearing? 366 The three principal matters argued under this sub-heading are: (i) whether the purpose of the section can be effected when the company concerned is no longer a going concern; (ii) the significance of the word "is" in s 232 of the 2001 Act; and (iii) whether, when a company is in liquidation, the court can or should make an order as the liquidator is almost certainly not an oppressor. 367 The crucial matter is the first of these propositions. However, its resolution depends on the view one takes of the purpose of the section. 368 I have already said under sub-heading (a) that the purpose of the section is to enable a person who has committed his or her money to a corporate enterprise which is not functioning as it should because of the unfair conduct of its controllers, either to reform the operation or release his or her capital from the enterprise. 369 This purpose seems to favour the view that, if the oppression has ceased, the purpose for making the order has almost certainly vanished. 370 The appellants put that it would make little sense to make an order under s 233 if the oppression has ceased at the time when the order was sought to be made. They cite in support the recent decision of Hamilton J in Bessounian v Australian Wholesale Mortgages Pty Ltd [2007] NSWSC 35 at [7]. 371 Indeed, there have been a number of decisions to the effect that the oppression must continue until the date of hearing as the principal purpose of the section is for the court to put an end to the oppression; see eg the decision of the Tasmanian Full Supreme Court in Re Richard Pitt & Sons Pty Ltd (1979) 4 ACLR 459, 465-6. 372 The use of the word "is" reinforces the point made in the first argument. Although the word can sometimes include "was" (see eg Taylor v Antsis [1940] VLR 300) it usually refers to a state of affairs now presently existing. 373 The third point is really a sub-set of the first, but I mention it separately as the submissions of the appellants tended to focus upon it. 374 The appellants submitted that where a company is in liquidation, an action by a minority shareholder "will not lie". In support of this submission they relied upon Zempilas v J N Taylor Holdings Ltd (No 6) (1991) 5 ACSR 28, 30 where Debelle J said in the Supreme Court of South Australia: "So, it follows that a minority shareholders' action will not lie if a company is in liquidation. The appropriate procedure in such a situation is for the liquidator to bring the action on behalf of the company or, if he refuses to do so, a contributory may apply to the court for an order authorising him to bring an action in the company's name or compelling the liquidator to do so on such terms as to indemnity as the court considers appropriate: see Fargo Ltd v Godfroy [1986] 3 All ER 279. ... Because of the nature of the claim against the former directors, any damages recovered should be recovered on behalf of the company. Now that a liquidator of the company has been appointed, it is appropriate that he should take over and conduct of action." 375 It may be that this decision will have to be re-examined in the light of the recent decision of the Privy Council in the Gamlestaden case. 376 The appellants submitted both on appeal and below that the plaintiffs' oppression suit must fail because the court will not order compulsory purchase of shares after a company has been wound up. 377 In support of this submission the appellants relied upon Webb v Stanfield (1990) 2 ACSR 283; [1991] 1 Qd R 593. That was a case in which there were cross-applications, one brought by Webb for orders, inter alia, that Stanfield purchase his shares in the subject company, and the other, later, application brought by Stanfield for an order that the company be wound up. 378 At first instance, Webb's application was dismissed and after a contested hearing the primary judge ordered that the company be wound up on the ground of insolvency. In dismissing the appeal, the Court (Demack, McPherson and Williams JJ) observed that, at 26 April 1989 "if not before, the company, was by all accounts, insolvent" and that to allow the application to "continue unabated is to ignore that fact that the company is presently in the process of being wound up under an order of this court that remains unchallenged". 379 The Court ruled that an order for compulsory purchase of the share "at once confronts the statutory prohibition in s 368(1) [in relevantly similar terms to s 468 of the Act] against share transfers after winding up has commenced". The Court then observed that even if that difficulty were to be overcome by an order of the Court under that subsection, Webb had difficulties bringing himself within the terms of s 320(1) of the Companies (Qld) Code (in relevantly similar terms to s 232 of the 2001 Act). 380 The plaintiffs emphasised the main distinguishing feature of that case namely that the company was in liquidation rather than "merely" provisional liquidation. The plaintiffs also submitted that there is no prohibition on the transfer of shares prior to a winding up order being made. In this regard the plaintiffs relied upon s 468(3) of the Act, which provides that a court may validate a disposition where an application for winding up has been filed but a winding up order has not been made. 381 It was further submitted that the remedy sought by BackOffice against Campbell cannot be pursued by means of a proof of debt, and will not result in any prejudice to the creditors of the Company: Hewlett Packard Australia Pty Ltd v Siltek Holdings Pty Ltd [2005] NSWSC 672 (Barrett J, 8 July 2005, unreported). 382 In my view, the authorities still require one to show continuing oppression at the date of hearing unless one is complaining about an act in the past of a director or other controller of the company which has a continuing effect. 383 Unless the past act has a continuing effect, there is no sense in giving a remedy to stop the deleterious effect of the conduct. 384 Whilst it might be true to say that the mere fact that a provisional liquidator has been appointed is, of itself, insufficient to show that the oppression has ceased, to my mind, once (as here) the company has been put into provisional liquidation and has ceased to trade, and its core business is sold and its shares are worthless, there is no longer any reason for applying ss 232-3 of the 2001 Act. The obvious remedy is to complete the winding up of the company. 385 Even if I were in error here, these matters are relevant to the exercise of the discretion as to whether or not to make any order under the sections. 386 If my above analysis is correct, no order should have been made under the section. (c) Can there be oppression in a 50/50 held company? 387 The present case differs from most cases brought under the section in that there is no minority. Each of the Campbell and Weeks interests has equal rights, hold 50% of the capital and are joint managing directors. Each has an equal right under Article 44 of the Articles of Association to call a meeting. Under such conditions, there can be no oppression using the administrative machinery of the company. 388 The only oppression that can exist is by a person overbearing a weaker individual. I use the word "overbearing" in a broad and loose sense. This is not oppression by a director as director and, thus, is a case where there must be continuing oppression at the date of hearing. 389 Mr Bannon was asked by me during argument whether he contended that one could not have a statutory oppression where the shareholders had an equal shareholding and were each directors. 390 Mr Bannon answered that he did not consider that he could do so on the authorities, saying that there might be a case where one person had such an overbearing personality that he could force everybody to bend to his will. 391 Although this part of the argument was not pursued, there is great doubt, based on cases such as Re Astec (BSR) plc [1998] 2 BCLC 556 whether "bullying" actions by majority shareholders outside formal meetings of directors or shareholders can constitute oppression in the affairs of the company. As Hollington says in his Minority Shareholders' Rights, 3rd ed (Sweet & Maxwell, London, 1999) this sort of conduct is dehors the company, it is the personal conduct of a person who happens to be a director and does not constitute corporate conduct. 392 However, it must be pointed out that at [129] of her reasons, the primary judge said: "In the present case the defendants have not claimed or suggested that Campbell's actions were on his own behalf. In any event I am satisfied that the conduct complained of was conduct by or on behalf of the Company". 393 The English position seems to be that there may be oppression in a company which is equally held and where the parties are each directors at least: (a) in the situation where a person blocks the holding of meetings by wilful absence (Music Sales Ltd v Shapiro Bornsdtein & Co Inc [2006] 1 BCLC 371); or (b) where the breaches of fiduciary duty by one party make for the situation that mutual confidence has been destroyed and that it is thus unjust that the quasi partnership continue; see eg Re Baumler (UK) Ltd [2005] 1 BCLC 92. 394 There does not seem to be much by the way of Australian authority on the point. Hogg v Dymock (1993) 11 ACSR 14 was a case decided under the Corporations Law in which a 50% shareholder complained of oppression by the conduct of the other shareholder in dismissing her from employment with the company, but there the other shareholder was a jointure of husband and wife who held the majority on the board. 395 I do not consider that much of consequence arises from this discussion. (d)(i) and (ii) Exclusion from management 396 The concept that exclusion of a member of a company from a management role could constitute unfair conduct seems to have stemmed from the judgment of Hoffmann J (as his Lordship then was) in Re a Company (No 00477 of 1986) [1986] BCLC 376 at 379 where he said: "The member's interests as a member who has ventured his capital in the company's business may include a legitimate expectation that he will continue to be employed as a director…" 397 I examined this doctrine in Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1998) 28 ACSR 688 which, for the most part, was affirmed by the Court of Appeal reported as Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672. I said at p 703: "The court thus looks at the constitution of the company to see if it founds a legitimate expectation such as relied on by the plaintiff. However, even if there is nothing in that constitution, the court will, in appropriate cases, look to the understandings of the parties when they entered into the corporate quasi-partnership." 398 In later cases, one of which is O'Neill v Phillips [1999] 1 WLR 1092 (HL), Lord Hoffmann noted that the term "legitimate expectation" was probably not a good choice of words, and this view was shared by the Court of Appeal in Fexuto. As Priestley JA pointed out in that case at 743-5, the concept by whatever name is valid and "legitimate expectation" may be used as a description of it so long as it is realised that the words are a mere tag. 399 In the instant case, the legitimate expectation that Weeks' or BackOffice's representative would be involved in management of the Company on an equal basis with Campbell is clear from the agreements which were executed on 24 January 2005. 400 Furthermore, as her Honour noted at [98] there is no doubt that BackOffice was entitled to the payment of the fee under the Services Agreement for the procurement of Weeks to provide day-to-day management of the Company. 401 There is no difficulty in accepting the general proposition in support of the submission that improper exclusion from a legitimate expectation to participate in the management of the Company may be oppressive. The respondents rely on Hogg v Dymock (1993) 11 ACSR 14 and Yazbek v Aldora Holdings Pty Ltd (2003) 45 ACSR 53, but there are many more illustrations of the principle. 402 Turning now to the facts, the respondents submitted that Campbell excluded Weeks from the management of the Company within a very short time of the execution of the various agreements on 24 January 2005. The appellants submitted below that the plaintiffs' complaint is really one of "relegation" rather than exclusion. That was not accepted by her Honour. 403 The respondents relied on the letter of 6 February 2005 to demonstrate that Campbell had decided to exclude Weeks unless he agreed to terms that were quite different to those that had been agreed two weeks earlier both in the agreements and the arrangements that had been made as to the division of duties pursuant to those agreements. 404 The trial judge found that that letter was in many respects quite extraordinary. Within less than two weeks of receiving $850,000 for the half share in the Company, Campbell was claiming that the Company needed to be relieved of the "strain" on its financial resources. To that end he "urged", although she was satisfied it was a demand, that Weeks/BackOffice accept a reduction in the consultancy fee that had been agreed to only two weeks previously. 405 On 28 February 2005, Campbell forwarded an email to Mr Horn in which, inter alia, Campbell recorded that "a password has now been put on the account to avoid further interference from Weeks". This was a reference to a password into the Company's MYOB software. In cross-examination Campbell agreed that at some stage he gave an instruction for the password on the MYOB system to be changed (Tr 453). This instruction appears to have resulted from the fact that Weeks accessed the MYOB system and entered the amounts of BackOffice's invoices as expenses of the Company. 406 When Weeks attended the Company's offices on 30 March 2005, Ms Hunt advised him that the Company's bank statements and cheque books were "not here". Weeks attempted to log-on to the Company's computer network and found that access was denied. When he attempted to verify his access and password on the computer server, he found that the server password had been changed from the password with which he had been provided. 407 Weeks wrote to Campbell on 31 March 2005 advising him of the problem with accessing the system and also the claim by Ms Hunt that the bank statements and chequebooks were not at the Company's premises. 408 Her Honour discussed the contrary evidence given by Campbell and declined to accept it. She ruled at [116] that she was satisfied that Campbell's intention in changing the password was as he recorded in his email of 28 February 2005 to prevent what he saw as "interference" from his joint managing director, whose services had been procured by BackOffice. She also ruled that she was satisfied that this conduct was oppressive to BackOffice. 409 However, as Mr Bannon has pointed out, the learned judge does not seem to have taken into account Mr Week's own failure to co-operate in the performance of his duties. He failed to provide a guarantee of the Company's overdraft, he was frequently absent from the office, he only signed the cheques that suited him and he made an approach to the Company's bankers which operated to the detriment of the Company. 410 However, "contributory negligence" or the like is not a defence to oppression. Indeed, it is common in this sort of case for one party to bait the other until the other steps over the bounds into oppression. Accordingly, Mr Bannon's point does not contribute to the overall consideration of the appeal on this ground. (d)(iii) The credit card reimbursements 411 In Campbell's affidavit of 3 November 2006 he claimed that he reached agreement with Weeks that once Weeks came on board, personal expenses would no longer be run through the Company. Weeks understood that to mean that there should no longer be any automatic payment of $750 to the credit card used by Campbell. Weeks claimed that, despite such agreement, the Company continued to make payments to Campbell's personal credit card of $750 per week. 412 The judge held that Campbell was aware that the Company was making those payments at the time they were being made and that she had little doubt that Campbell continued to receive these payments inappropriately and inconsistently with the agreements between the parties. 413 The judge held that the fact that Campbell was receiving these payments whilst at the same time denying Weeks' claims for payment and refusing to pay Weeks or BackOffice any money, except for a laptop computer, is further evidence of Campbell's unfair and rather high-handed treatment of Weeks and BackOffice. 414 She held that she was satisfied that Campbell's conduct was oppressive of BackOffice. 415 This conduct alone could not constitute oppression. However this finding is sound and must go into the final mix when assessing whether the totality of Campbell's conduct constituted oppression. (d)(iv) Failure to hold board meetings 416 It will be remembered that the Shareholders Agreement required that meetings of directors take place at least once every month (cl 5.7). 417 On 24 February 2005, Weeks suggested that a board meeting take place on 3 March 2005 at the offices of the Company. Campbell's initial response was: "You know exactly what is required to get the business and us working at full potential, so I do not get the point of another board meeting". 418 On 25 February 2005, Weeks responded advising that this was the first board meeting that had been called. It appears that Campbell may have thought that the meetings that had occurred between Weeks, himself and Mr Horn were board meetings. 419 On 28 February 2005, Campbell said that he would not attend any board or management meeting unless Mr Horn was chairman. Weeks initially agreed that Mr Horn could attend the board meeting but subsequently withdrew his agreement for such attendance. Campbell indicated that he was not going to be available on 3 March 2005 and when Weeks tried to reschedule the meeting, Campbell indicated that he was "busy then too". 420 Campbell subsequently advised Weeks that he was not willing to attend a board meeting with him unless Mr Horn was present. 421 It is clear that Article 44 of the Articles of Association of the Company authorise either director to convene a board meeting whenever he thinks it appropriate. 422 I put to respondents' counsel that the remedy about a complaint of there not being board meetings was in Weeks' own hands as he could have called one whenever he wished. The answer was that, whilst that was possible, it was useless to do so unless Campbell attended, which he had clearly said he would not. 423 Campbell's counsel also submitted that the Shareholders Agreement provided machinery in the event of a "deadlock" and that Weeks did not avail himself of that mechanism. Clause 7.1 of the Shareholders Agreement must be read with cl 7.2. The mechanism was clearly one to be used in the event of a "board meeting voting deadlock". 424 However, that point was never reached because Campbell made it clear that he would not attend any proposed board meeting except on his own terms. The resolution of deadlock by the appointment of a chairperson to have a casting vote was only to occur after a voting deadlock had been reached at a board meeting. 425 The judge ruled that the excuses Campbell gave to Weeks that he was "busy" on the dates proposed for the board meetings was part of Campbell's concerted efforts to exclude Weeks from the management of the Company. She was satisfied that Campbell's conduct amounted to a refusal to attend a board meeting and that it was oppressive. 426 The judge ruled that when Campbell's conduct in this respect is viewed with Campbell's other conduct referred to above and later in this judgment, she was comfortably satisfied that it was part of Campbell's plan to keep Weeks and thus BackOffice from having any true management involvement with the Company. 427 Again there is no reason not to accept this finding and this matter too must go into the final assessment. (d)(v) Failure to pay Weeks' fees 428 Campbell authorised the Company to pay the entire amount of a fees memorandum issued by his own solicitors on 3 February 2005 without seeking authorisation from Weeks. Campbell also ensured that payments due to his interests from the Company were duly made during February/March. 429 On the other hand, no corresponding payments were made to Weeks. 430 Campbell agreed in his oral evidence that he did not intend to pay any money to Weeks/BackOffice unless there was agreement to the terms of the 6 February 2005 letter. Indeed, Campbell refused to pay any of BackOffice's invoices for the fee, notwithstanding that Sentinel was being paid. 431 The judge held that it was clear that Campbell decided not to pay BackOffice because Weeks would not agree with a totally unreasonable demand in Campbell's letter of 6 February 2005, attempting to effect a change to BackOffice's and Weeks' rights under the Share Sale Agreement and Service Agreements. 432 Campbell's conduct in refusing to pay BackOffice's 31 January 2005 amended invoice or any other invoice unless the terms of his letter of 6 February 2005 were agreed to by Weeks would satisfy an objective commercial bystander that Weeks and BackOffice were unfairly and improperly excluded from the day-to-day management of the Company that had been agreed to prior to and in the execution of the Shareholders Agreement and Services Agreements. 433 The judge took this matter into account when she found oppression. However, Mr Bannon submits that she did not base her purchase order on a finding that the failure to pay was a matter of oppression; she merely took it into account as a factor in her finding of exclusion of Weeks from management. 434 Mr Bannon submits that this matter cannot constitute oppression. He submits, "the non-payment of money pursuant to a contract is not the stuff of oppression. A money claim against the company is not lost or unresolved absent an order under s 232 of the Corporations Act". 435 Further, he puts that even if non-payment of the invoices could amount to oppression, a buy out order would not be the way in which the court would bring that matter of oppression to an end. 436 I am in sympathy with these submissions. However, as everyone recognises, the court must deal with the whole gamut of nastiness not with individual acts one by one. (e) Other matters 437 The defendants also submitted that the plaintiffs should not be granted any relief under s 233(1)(d) of the Act by reason of the fact that Weeks/BackOffice had received an offer for the purchase of BackOffice's share and had refused such offer. 438 In an email to Weeks dated 23 February 2005, Campbell claimed that "an offer was put to buy you out". Weeks responded by email dated 24 February 2005 that he had not received such an offer but that if he were to receive one he would give it due consideration. 439 There are cases in England, such as Re a Company [1987] BCLC 562, 563, that suggest that, if a fair offer to purchase the minority shareholding is made, the oppression proceedings should be struck out. 440 However, none of those considerations are relevant here as her Honour found that there was no evidence of the nature of the alleged offer and no evidence upon which a judgment can be made as to the reasonableness or otherwise of the offer, if made, or its rejection. 441 Some minor matters were also urged as adding to the matters I have surveyed in sub-section (d) pointing to a finding of oppression. In the circumstances, there is no need to burden these reasons with those matters. 442 However, one matter that was debated was whether the evidence only pointed to there being a deadlock in the Company and whether a mere state of deadlock was not to be classed as oppression, even though, if established, it might lead to a winding up on the just and equitable ground. 443 As was noted in Re Baumler (UK) Ltd [2005] 1 BCLC 92, 131, the court does not have jurisdiction to make an order under s 233 merely on the grounds that there has been a breakdown in the relationship between the members of a company which can be termed a quasi-partnership. Oppression must be proved. 444 However, it should be noted that there have been cases where a deadlock situation has been held to be within the concept of oppression; see eg Music Sales Ltd v Shapiro Bornstein & Co Inc [2006] 1 BCLC 371, but this only occurs where the defendant conducts himself or herself so as to ensure that the deadlock resolution procedures cannot be implemented. However, on the facts, the present case is within this exception. (f) Do the matters established in (d) and (e) cumulatively amount to oppression? 445 It was recognised by all that what the respondent needed to show was that the cumulative effect of Campbell's individual acts constituted oppression. 446 The learned primary judge concluded that the respondent had demonstrated this. She reached her conclusion by preferring the evidence of Weeks to that of Campbell. I have not heard anything which makes me think that she fell into error in so doing. 447 Although the facts of each case will be different, I believe I have made the point in the comments I have made when dealing with the individual elements of what was claimed to be oppression, that each head fell within what has been held to be unfair conduct. 448 The only matter on which I have some doubt was whether it had been established that the oppression caused prejudice or loss to the company, which is usually considered a vital element: see Re Baumler (UK) Ltd [2005] 1 BCLC 92, 131. However, little was made of this point on the appeal. 449 As I have noted earlier, the fact that any oppression had ceased at the time of hearing and that no order that the Court might make could ameliorate that position, no order ought to have been made. 450 If that were wrong, the analysis in preceding paragraphs show that the nastiness between the principals was significant, but there were remedies within the corporate structure to deal with them which were not activated. 451 In my view the acts of nastiness detailed in the preceding paragraphs cumulatively would be insufficient to constitute oppression. (g) Matters of discretion 452 It is clear from the authorities that a court is not bound to make an order under the section even if the plaintiff demonstrates that there has been oppression. 453 In particular, the court may, in its discretion, decline to make an order under the section. Without wishing to limit the ambit of the discretion, it seems that it may properly refuse to make an order if it finds that the oppression has ceased, that the conduct of the plaintiff was even a causa sine qua non of the oppression, or if there is another adequate remedy available to the plaintiff. Indeed this principle was not challenged during the argument of the appeal. 454 The basal proposition put to us in this case was that the respondent was not guiltless in this scenario, any oppression had ceased by the time the case came on for hearing, there was no evidence that any of Campbell's conduct had detrimentally affected the Company or the value of the shares and that there were adequate remedies for any breach of the Fair Trading Act or breach of contract that might be established. (h) The judge's discretion 455 It was put that the primary judge considered whether she should make an order under s 233 of the Act and that, in her discretion, she decided to do so and that exercise of the discretion should not be interfered with on appeal. 456 I would agree with that proposition. However, the vice in what happened below was not in the exercise of any discretion, but in the making of any order under the section for the reasons summarised below. (i) What is the appropriate remedy? 457 BackOffice sought an order that Campbell purchase its share in the Company pursuant to s 233(1)(d) of the Act. Bergin J made that order. 458 The appellants submitted below that such an order was quite inappropriate. They maintained that attitude on appeal, though on different grounds. 459 The current grounds for resisting a buyout order are that the respondents made an election when seeking a provisional liquidator. That order was consented to by the appellants and put in train the business ceasing and being sold. It is incompatible with such an order that there be a sale of shares on the basis that the Company is a going concern. 460 As to this, the learned primary judge said at [127] that in the present case there has been no order winding up the Company: the only relevant order that has been made is for the appointment of a provisional liquidator. She considered a submission from the respondents that the appointment of a provisional liquidator serves an entirely different purpose to the appointment of a liquidator in a winding up, a submission which relied on words of Burchett J in Aloridge Pty Ltd v West Australian Gem Explorers Pty Ltd (1995) 127 ALR 410 at 415. 461 However, at the end of a discussion of the cases to which she was referred, her Honour merely said at [133]: "I am not satisfied that the appointment of the provisional liquidator precludes the plaintiffs from seeking an order under s 233(d) of the Act for the purchase of BackOffice's share." 462 That conclusion may well be technically correct as a matter of general approach and jurisdiction, however, it seems to me that where one has a provisional liquidation in which the parties have agreed that the core asset of the Company be sold, the Company no longer carries on any business and the shares are now worthless, there is a virtual complete liquidation. (j) The valuation of the share 463 I must now turn to the question of the valuation of the BackOffice share for the purpose of fixing a buyback price. 464 The price on the authorities must be a "fair price". A basic requirement for determining the price is that it must be fair on the facts of the particular case: see Re London School of Electronics Ltd [1986] Ch 211; Coombs v Dynasty Pty Ltd (1994) 14 ACSR 60,102 (on appeal (1995) 13 ACLC 1290). 465 What is a "fair price" has been discussed in the authorities, but is still a relatively flexible concept. In ES Gordon Pty Ltd v Idameneo (No 123) Pty Ltd (1994) 15 ACSR 536 at 540, I said: "The flavour of the judgments in the company oppression cases is that in looking to the fair value one must look at all the circumstances of the case and seek to put the oppressed in the same position as nearly as can be as if there had been no oppression, erring, if there is to be any erring, on the side of the oppressed." 466 As to the date at which the valuation should be made, her Honour upheld the respondent's submission that in the present case the appropriate date for valuation of the shares is 24 January 2005. She said that the unfair and discriminatory way that BackOffice was treated meant that not only was it kept out of the fee to which it was entitled from 1 January 2005 or alternatively 10 January 2005, but also all efforts made by it and its agent Weeks were rebuffed by reason of the disputation that had arisen. 467 The judge further said that she was satisfied that, at the date of acquisition, this Company had good potential for growth and success. Campbell was obviously a successful operator within the business. Weeks had the intelligence and wherewithal, if permitted to be part of this Company, to assist it to grow and profit from the combined efforts of the two co-directors. She had little doubt that but for the oppression, the relationship could have worked in a manner that fostered that growth. 468 Her Honour reviewed the evidence presented by the experts. I will set out in succeeding paragraphs her Honour's own words in summarising that evidence. 469 "[141] The question of the valuation of the share in the Company was the subject of discussion between the experts. The plaintiffs relied upon the evidence of Goodwin Cullimore Allen Gower, a director of and chartered accountant with the firm GCA Gower & Co, Chartered Accountants. The defendants relied upon the evidence of Paul Alexander Russell, a chartered accountant and partner of the firm Sims Partners. Mr Gower and Mr Russell produced a Joint Report dated 23 November 2006 (Ex PD). 470 [142] The experts approached the valuation of the share in the Company on different bases. Although they were not able to reach agreement on the value of the share, they were able to reach agreement on a number of related matters including that: (a) the most appropriate methodology to value one share in the Company is the capitalisation of future maintainable earnings (FMEs); (b) the valuation multiple of 3 to 4 times is an appropriate valuation multiple to adopt in valuing the share; and (c) in determining an appropriate level of FMEs it is necessary for the valuer to have regard to the historical and projected earnings of the business being sold after considering add-back adjustments and any other unusual variations in historical and forecast earnings. 471 [143] On the one hand Mr Gower valued the share at 30 November 2004 and at 24 January 2005 on an historical basis, annualising earnings up to those particular dates. Mr Russell also valued the share on that basis, but in addition considered the budget and the potential of the Company to 30 June 2005, the end of the financial year in which the acquisition was made. This latter valuation approach of Mr Russell's was referred to as the "potential" approach. 472 [144] Mr Gower valued the share as at 24 January 2005 as the mid-point between $300,000 and $520,000 at $410,000. Mr Russell valued the share on this basis as the mid-point between $496,404 and $661,872 at $579,138. Mr Russell's "potential" approach took into account the budget for the Company and concluded that the valuation was the midpoint between $731,085 and $974,780 at $852,933." 473 However, her Honour then noted that the budgeted figures reflected increased levels of trading from new and identified customers and that Mr Russell candidly conceded that he made no assessment of whether those levels of trading were justifiable. Indeed he was not instructed to do so. He however pointed to the $300,000 in annualised sales as a factor that he bore in mind in valuing the share on the "potential" basis. 474 Having made that analysis, her Honour said that she was satisfied that in all the circumstances the "fair price" should be fixed on the basis of Mr Russell's "potential" approach and that the fair purchase price of the share is $853,000. 475 The appellants criticised this approach on six principal grounds, namely: (1) There was no material to suggest oppression until the letter of 6 February. Even then, it would be reasonable to allow a month for the parties to adjust to each other. Thus 24 January was the wrong date to use to value the share. (2) Her Honour failed to pay due respect to Mr Gower's opinion that a midpoint of $410,000 was a more appropriate value to take. (3) Her Honour failed to realise that Mr Russell's calculations based on the potential of the business were assumed and unsustainable. (4) Her Honour failed to pay regard to Weeks' report to the Board of 8 March 2005 which contained material to show that her Honour's figure was not a fair figure. (5) Her Honour appears to have overlooked the fact that the oppression was never found to have caused loss to the Company. There was thus no ground for her using budgeted rather than actual figures. Any deterioration was due to poor trading rather than oppression. (6) Her Honour did not take into account the provisional liquidation of the Company and the depressing effect that had on its business. 476 In my view these criticisms have validity. The basal difference between the two valuers was Mr Russell's taking the potential approach which Mr Gower declined to take and Mr Russell on that potential approach taking into account budgets and projections which hindsight showed were unsustainable. 477 Even if the valuation was properly made as at 24 January 2005, when one is valuing a share as at that date in the year 2007, one does not confine oneself to the facts available as at 24 January 2005. However, the use of hindsight in valuations must be handled with care. 478 The House of Lords considered the problem in Bwllfa and Merthyr Dare Steam Collieries (1891) Ltd v Pontypridd Waterworks Co [1903] AC 426. Lord Robertson said at 432 that when one is making a valuation, one might rely on estimates and conjecture, but when the actual facts are known at the date of hearing, "then estimate and conjecture are superseded by facts as the proper media concludendi". 479 The High Court has considered the problem in its first instance jurisdiction on a number of occasions. In particular, Williams J has considered the problem at a deep level in Daandine Pastoral Co Pty Ltd v Commissioner of Land Tax (1943) The Valuer vol vii p 299; McCathie v Federal Commissioner of Taxation (1944) 69 CLR 1, 16-7; Abrahams v Federal Commissioner of Taxation (1944) 70 CLR 23 and Kent v Commissioner of Taxation (1945) 3 Aust Property LJ 65. Each case was brought about because wartime conditions played havoc with the traditional method of valuing private company shares on a future maintainable earnings basis. 480 In Daandine Williams J said that when valuing shares, whilst subsequent sales of shares were not comparable sales, if a valuation were made on the basis of an observable trend of an increase in business, subsequent knowledge that that trend was or was not fulfilled was admissible to decide whether it was appropriate to use the prediction of potential increase as a factor in the valuation. 481 In the present case, the true facts showed that it was not appropriate to value the share on the basis of potential increase. 482 Furthermore, it could not be said on the evidence that the fall in profits was solely a result of Campbell's misconduct. The probabilities were that it was due to a fall in sales, which fell off possibly because internecine wrangling meant that energy was not devoted to making sales. 483 It is a relevant fact that Weeks purchased BackOffice's share in January 2005 for $180,000. It may not be relevant as to why he paid so much. However, he was an astute business man so that it is fair to assume that he was a willing but not over-anxious buyer at arm's length. However, it must not be overlooked that: (a) there were side deals the consideration for which might be included in that figure; and (b) the price may have been influenced and inflated by reliance on the warranties referred to in heading 4 below. 484 In my view it is over simplistic just to say that as the price paid for the share was $850,000, that figure must be about its true value. 485 Accordingly, with respect, her Honour's valuation exercise proceeded on a false basis and cannot stand. 486 As, in my view, the claim for oppression fails, I do not need to fix a fair value for the BackOffice share. If I were to do so, I would think that, if one strips away Mr Russell's potential figure, one gets Mr Gower's midpoint assessment of $410,000 and Mr Russell's at $579,000, which would suggest a value of about $500,000. (k) What is the result on this claim? 487 It follows from what I have said above that the claim for oppression must fail for a number of reasons. It fails on the merits. If it had not failed on the merits it would fail on discretionary grounds. In particular, it fails because there has not been oppression because any act of nastiness by Campbell towards Weeks was a personal act not a corporate act, the nastiness has come to an end, the Company must be wound up, there is no point in any buyout and there is no ground for ordering rescission even if it were available as a remedy. 3. The Fair Trading Act claim 488 I will consider the claim under the Fair Trading Act, under the following sub-headings: (a) To what extent does one give relief under this statute for alleged misleading conduct where the parties are in a contractual relationship? (b) Do the matters of fact found re: (i) add backs; and (ii) representations as to sales revenue and profit amount to misleading and deceptive conduct? (c) If the answer to (b) is "Yes", was the judge correct in holding that the respondents had failed to establish reliance on that conduct? (d) If the respondent were to succeed on this count, what would be the appropriate remedy? 489 However, for simplicity, I will first assume that the answer to (b) is "Yes", because the argument for an affirmative answer to (c) was strong and, if my initial impression that that answer should be made is correct, consideration of (b) is otiose. I will thus consider this part of the case by considering the sub-headings in order (c), (b), (a) and (d). (c) Reliance 490 The claim under the Fair Trading Act was based on allegations that there were false and misleading statements made in and about the sales revenue report to Weeks in December 2004. There is also the issue of whether the representations were continuing up to the date of execution of the agreements on 24 January 2005. 491 I will assume for the purposes of this analysis that there was a representation that Campbell knew of no information that was material to the accuracy of the estimates in the sales revenue report, which tended to show that they were false, misleading or deceptive. I will assume for the purposes of this analysis that the representation was false. 492 The respondents also claimed that in providing the financial documents to Weeks in December 2004, Campbell represented that the Company had an EBIT (after adjustment for the add-backs) for the 5 months to 30 November 2004 of $163,590. Like the trial judge, I will make the assumption that this representation was made and also that it was false and misleading. 493 On these assumptions, the trial judge still rejected the claim on the basis that Weeks had not established that he relied on them. 494 The appellants referred, inter alia, to cl 7.4(b) of the Share Sale Agreement, which is an acknowledgment by BackOffice that it had been afforded the opportunity of inspecting the Company and the assets and had availed itself of that opportunity. They accepted that the presence of such an acknowledgment is not definitive, but submitted that its presence militates against reliance upon any of the alleged representations. It was submitted that this is particularly so where Weeks had carried out extensive due diligence with the assistance of his accountant, Mr Raby. 495 Furthermore, Weeks had the assistance of a solicitor, Mr McClure, from whom he sought advice in relation to the agreements executed on 24 January 2005, including the proposed warranties. An email from Mr McClure to Weeks dated 11 January 2005 that Weeks forwarded on to Mr Horn on 12 January 2005, included Mr McClure's notation of Weeks' "reliance on your own investigations, relying on your background over many years in corporate management and the due diligence conducted in respect to [the Company] carried out over some time by you and your accountant". Weeks confirmed in his cross-examination that he had informed Mr McClure of this reliance. 496 The primary judge said at [269] that Weeks is a sophisticated businessman with the capacity to review financial records and make judgments about the prospects of a business, using his commercial common sense to his own advantage. That is what he did in making his offer to purchase the share in the Company. 497 The judge was thus satisfied that the evidence established that Weeks did not rely upon the estimated sales figures in the sales revenue report. Rather, it establishes that Weeks doubted those figures to the point that he built in a protection for himself if the figures were not achieved. That was a "protection" that was included in cl 6.2 of Sentinel's Service Agreement that provided for a "performance bonus based upon the Company's profitability of up to $300,000" to be paid to Sentinel only if there was "available profit". 498 The appellants say that her Honour failed to take into consideration the fact that Weeks incorporated the sales revenue and EBIT estimates for December 2004 into his calculations without any alteration. 499 However, I cannot discern any error in her Honour's approach and she was quite entitled to reach the conclusion she did on this issue of fact. (b) Matters of fact 500 It follows that no factual matter can affect the result. (a) Fair Trading Act claims where there is a contract 501 A nice academic question was raised as to whether, when the parties enter into a contract after the pleaded representations. The question was considered by the Federal Court in Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 with the answer that the matter was irrelevant. 502 The answer to this question has no bearing on the result of the case, and there is no purpose in pursuing the matter. (d) The consequence 503 The respondents made it clear that the primary remedy they sought was rescission. 504 There were clearly difficulties in awarding such a remedy as even at the date of hearing, the parties could not be put back into the positions they occupied before the Share Sale Agreement was entered into. 505 The respondents put that cases such as Munchies Management Pty Ltd v Belperio (1988) 58 FCR 274 showed that there was no bar to avoidance that the value of the relevant property had diminished since the sale. 506 This is true, but only up to a point. All the Munchies case really holds is that, when the court is considering the remedy of rescission under the statutes, it applies the equitable rule of allowing rescission where substantial restitution is possible, rather than take the stricter common law rule. 507 If, on applying the equitable test, substantial rescission is not possible, no order for rescission is made under the statute. 508 As I have upheld the disallowance of this claim, nothing further need be said. 4. The claim for damages for breach of contract 509 The claim for damages for breach of contract needs to be considered under the following sub-headings: (a) Was the judge correct to find breaches of warranty: (i) under cl 3.1(a) of Schedule 1 to the Share Sale Agreement? (ii) under cll 10.1 and 10.2 in Schedule 2 to that Agreement? (iii) under cl 4(1)(3) of Schedule 1 to that Agreement? (iv) Under cll 10.2 and 7.2 thereof? (b) Did the judge correctly rule on the claim for breach of a promise (implied or express) to co-operate? (c) What damages flow. (a) The claims for breaches of warranty 510 The respondents claimed that Campbell breached warranties contained in the Share Sale Agreement in relation to the documents in cl 3 of Sch 1 to that Agreement, being the warranted balance sheet and the warranted profit and loss statement. 511 It was alleged that pursuant to cl 7.1 of the Share Sale Agreement, Campbell warranted to BackOffice in cl 3.1(a) of Sch 1 to the Agreement that the Company had no liabilities other than those disclosed in the warranted balance sheet and the warranted profit and loss statement. 512 The respondents claimed that in breach of that warranty, the warranted balance sheet understated the amounts owing to trade creditors by $12,360 and misdescribed a liability relating to Campbell's loan position with the Company as positive $3,760 instead of negative $74,507.24. 513 The respondents also claimed that pursuant to cl 10 of Sch 1 to the Share Sale Agreement, Campbell warranted that all information given by or on behalf of the Company or its advisers material to the sale of the share and the Company's assets was substantially accurate and complete and not misleading (cl 10.1); and that the information in the warranted balance sheet and the warranted profit and loss statement was materially accurate and not misleading (cl 10.2). 514 It is alleged that the content of the warranted balance sheet and the warranted profit and loss statement referred to above were in breach of the warranties in cll 10.1 and 10.2. It is alleged that in breach of that warranty, the warranted balance sheet overstated the Company's adjusted net assets and that the warranted profit and loss statement: overstated the Company's operating profit before tax and adjustments by $8,770 or 13%; overstated the estimate of non-recurring expenses by $45,331 or 47%; and as a result of these overstatements, overstated the Company's adjusted operating profit. 515 The respondents also claimed that pursuant to cl 4.1(3) of Sch 1 of the Share Sale Agreement, Campbell warranted that the profits and losses shown in the warranted profit and loss statement had not, except as disclosed therein, been affected by any extraordinary or exceptional event or circumstance or any other factor rendering them unusually high or low. 516 The warranted profit and loss statement also included income of $14,500 relating to the sale/trade of two motor vehicles. It is alleged that this income was "unusual and extraordinary" and was not disclosed to BackOffice or Weeks. It is alleged that this was in breach of the warranty in cl 4.1(3) of Sch 1 of the Share Sale Agreement. 517 The experts disagreed on only four areas of the non-recurring expenses, referred to in the evidence as the "add-backs": (1) obsolete inventories; (2) credit card reimbursement; (3) business expense allowance; and (4) general expenses. 518 Mr Russell concluded that Campbell had correctly identified the amounts for items (1) and (3) and added them back to the Company's income, because they were appropriately described as non-recurring expenses. Mr Russell concluded that item (4) was also correctly identified and added back, except that Campbell had been too conservative and a greater figure should have been added back ($4,778 instead of $4,167). Mr Russell and Mr Gower agreed that in respect of item (2), Campbell had added back a figure that was too high. Mr Russell concluded that the amount should have been $21,991. Mr Gower concluded that the amount should have been $19,207. 519 Mr Gower and Mr Russell were able to reach substantial agreement on the Company's December 2004 adjusted operating results. This relates to a claim by the plaintiffs that Campbell failed to inform Weeks in January 2005 that the operating results for December 2004 differed from the estimates for December 2004 in the sales revenue report provided to Weeks in December 2004. 520 Mr Gower and Mr Russell agreed that the sales revenue report overstated the sales revenue of the Company by $7,147 and the EBIT of the Company in the range of $15,318 to $20,022. The experts agreed that the amounts were "overstated", however, her Honour considered that it is more appropriate to describe the figures as "differing" from the estimates that were made in the sales revenue report. 521 As to trade creditors, the first complaint made by the respondents in respect of the warranted balance sheet is the alleged understatement of trade creditors. 522 The warranted balance sheet recorded the Company's liability to trade creditors as at 30 November 2004 as $51,388.27. Mr Eustace's second fax of 13 January 2005 to Mr Horn, referred to earlier in this judgment recorded the Company's liability to trade creditors as $63,625.75. 523 The judge held that, despite Campbell's evidence on this aspect of the matter, he was well aware that Mr Eustace was present in the office to make the adjustments to the accounts prior to the sale of the 50% shareholding in the Company to BackOffice. 524 Her Honour noted that in other evidence, Campbell claimed that he was reviewing the MYOB records because of the imminent sale of a 50% shareholding in the Company (Tr 328; 348). She said that although Campbell claimed that he was limiting his review of the MYOB records to ascertaining the amount of profit, she was satisfied that for such purpose he would have been aware of the figure for the liability to trade creditors. 525 The primary judge said that Mr Eustace was the Company's bookkeeper and if the entry for trade creditors that he recorded on 13 January 2005 was erroneous, or if it was a figure that was not discussed with Campbell, then Mr Eustace could have given that evidence. Mr Eustace was not called as a witness. I am satisfied that Campbell was aware of the nature of the adjustments that Mr Eustace made on 13 January 2005. 526 A balance sheet for the Company as at 30 November 2004 was printed out from the Company's records by the provisional liquidator in May 2005. In that balance sheet, trade creditors are recorded as $63,748.70. When that balance sheet was tendered as part of Mr Gower's report, an objection was raised. That document (Attachment 8 to Mr Gower's report, Ex B) was admitted on the agreed basis that it was to rise "no higher than the ultimate proof or lack of it of the underlying source materials" (Tr 17-18; 133-134). 527 The "underlying source materials" for the figure recorded for trade creditors in the balance sheet would include the invoices or similar records from trade creditors and the various entries in the MYOB documents of the Company, relating to the amounts outstanding as at 30 November 2004. Those documents are not in evidence. Although an officer from the liquidator's office, Thomas James Dawson, gave evidence in the plaintiffs' case that he printed the subject balance sheet out on 27 May 2005, there was no cross-examination of him in relation to the underlying documents. 528 The primary judge held that she was satisfied that she was able to take the figure recorded for trade creditors in that balance sheet as some support for the accuracy of the figure that Mr Eustace recorded in the balance sheet as at 13 January 2005. 529 The financial documentation provided to Weeks by Mr Horn in December 2004 recorded the Company's liabilities for trade creditors as at 30 November 2004 at $49,983. The figure in the warranted balance sheet was $51,388.27. The figure "adjusted" by Mr Eustace on 13 January 2005 was $63,625.75. 530 The judge found that the additional liability of $12,630 was in the circumstances of this Company's operations for the year to 30 November 2004 a matter of moment or significance and thus material. She relied on Minister for Immigration, Local Government and Ethnic Affairs v Dela Cruz (1992) 34 FCR 348, 352; Manning Shire Council v Caernarvon Pty Ltd [1977] 1 NSWLR 202, 204-205. 531 The primary judge held at [158] that she was satisfied that the entry in the warranted balance sheet of the amount for trade creditors of $51,388.27 was $12,360 less than the actual liability of $63,625.75. She was also satisfied that such entry was a breach of the warranty in cl 3.1(a) of Sch 1 of the Share Sale Agreement, that the Company had no liabilities other than the liabilities disclosed in Sch 3 of the Agreement. 532 Her Honour went on to say at [159] that an essential aspect to the plaintiffs' claim that this was also a breach of cl 10.1 and/or 10.2 of the Share Sale Agreement, was Campbell's knowledge that this figure was inaccurate or incomplete or misleading, which I will discuss later in this judgment. 533 She said that on this aspect of the warranted balance sheet, she was satisfied that Campbell did have the requisite knowledge that this figure was inaccurate and that she was satisfied that this was in breach of cll 10.1 and 10.2 of the Share Sale Agreement. 534 The judge then considered the matter she described as "Campbell's loan". The warranted balance sheet recorded under the heading "Non-current Liabilities", the entry "Doug Campbell Loan to HW $74,507.24". The next entry was recorded as "Total Non-Current Liabilities", with a negative figure of $74,507.24. Mr Gower's report (Ex B) referred to that entry as follows: "item is a negative liability in warranted balance sheet - ie Doug Campbell owed $74,507". 535 Weeks admitted in cross-examination that Mr Horn had advised him that Campbell claimed he did not owe the Company the amount in the loan account. He also admitted that Mr Horn advised him that Campbell had leave entitlements that would possibly allow an offset against the loan account amount. The balance sheet printed out by the provisional liquidator included the entry "Doug Campbell Loan to HW $3,759.76". 536 Weeks claimed that he did not receive any response to his email dated 13 January 2005 to Mr Horn, in which he sought a reconciliation of Campbell's loan and an agreement on the treatment to discharge the loan prior to completion. It was the work of Mr Eustace on 13 January 2005 that reversed the amounts stated in the accounts as owed by Campbell to the Company and converted it into a liability of the Company to Campbell of $3,759.76. 537 Mr Horn's evidence in relation to this reversal was that as at 13 January 2005 he did not believe that the matter had been properly reconciled or finalised. Mr Horn went so far as to suggest that Mr Eustace was "unsure of what he was doing" and that he really did not place "much reliance on what he had done" (Tr 279). This was an explanation provided after he agreed that he had not informed Weeks of the changes made by Mr Eustace. 538 Her Honour said that she considered that this observation was unfair to Mr Eustace. Mr Eustace was the Company's bookkeeper and at the time of trial was still providing services to Campbell. She said that if Mr Horn held that view, it is very odd that he would not communicate it to Campbell at that time. Mr Horn knew that Weeks wanted to finalise the matter of Campbell's loan account prior to the entry into the agreements. The only "response" to Weeks' query was the warranted balance sheet. 539 The judge then agreed with the submission of counsel for the respondents that the logical conclusion to be drawn from the evidence is that Campbell believed that he did not owe the Company any money and that he gave an instruction to Mr Eustace to reverse the entries in relation to his loan account. Further, that it is inconceivable that Mr Eustace acted "on a frolic of his own" and that Campbell was not aware on 13 January or thereabouts of what had been done. 540 Weeks gave evidence that at the time of entering into the Share Sale Agreement, he was not aware that the liability identified on the warranted balance sheet as "Doug Campbell loan to HW" had a balance of positive $3,760 instead of negative $74,507.24. The adjusted balance sheet prepared by Mr Eustace listed Campbell's leave entitlements under "payroll liabilities" and in this way adjusted the "loan" to a positive figure of $3,759.76. The warranted balance sheet did not include those entitlements in the payroll liabilities but listed them on a separate page entitled "entitlement balance". An "offsetting" of these figures against the loan figure would result in a positive figure of either $2,508.13 or $5,129.90, depending upon whether the figure for sick leave accrual is taken into account. 541 The judge held that the information contained in the warranted balance sheet in relation to Campbell's loan was in breach of the warranty in cl 3.1(a) of Sch 1 to the Share Sale Agreement in that the Company did have a liability other than that disclosed in the warranted balance sheet. It had a liability of $3,760 to Campbell. However, she also said that this seemed to be technical rather than a matter of real substance having regard to the fact that Weeks knew that it was probable that Campbell's leave entitlements would probably be set-off against the loan and that those figures were included in the warranted balance sheet. 542 The judge then considered the respondents' claim that the warranted balance sheet overstated the adjusted net assets. 543 The amount in the warranted balance sheet was $210,856.89 and the figure in the balance sheet adjusted by Mr Eustace on 13 January 2005 was $148,326.10. 544 The claim the respondents made in relation to this part of the warranted balance sheet is that it was a breach of the warranty in cl 10.2 of Sch 1 of the Share Sale Agreement. That was a warranty that "to the best of [the Vendor's] knowledge" the material in the Schedules was "materially accurate and complete and not misleading". 545 The warranty that the information in the warranted balance sheet was "materially accurate" means that there were no significant inaccuracies, or inaccuracies of moment, within it. The figure of $148,326.10 for net assets in Mr Eustace's adjusted balance sheet of 13 January 2005 is a figure reached in consequence of the other adjustments, including the increase in the figure for trade creditors. It could hardly be suggested, and in fact it was not, that the difference between those figures was not a material inaccuracy. Rather, the defendants focused upon the fact that the warranty was prefaced with the words, "to the best of [the Vendor's] knowledge". 546 The appellants' then counsel submitted that the respondents had failed to plead that Campbell had the knowledge that the figure for net assets was materially inaccurate or misleading and that the pleader had failed to make a claim that recognised the words "to the best of the Vendor's knowledge" in cl 10. Her Honour overruled that objection. 547 As we were reminded in submissions, most of the information that needed to be considered in the accounts was within the personal knowledge of Campbell and his associates, rather than the respondents. Thus, as she did, the judge was entitled to take this factor into consideration when drawing the appropriate inferences: Ho v Powell (2001) 51 NSWLR 572, 576-7. 548 Mr Bannon submits that her Honour's approach was flawed in a number of respects. In particular, whilst it was arguably correct that there were some errors in the compilations of the figures, there were counterbalancing errors which made the "bottom line" correct within acceptable tolerances. 549 The factual matters are complicated and doubtless they were all submitted to the primary judge. She was not bound to examine all minutiae. I cannot see any defect in her Honour's assessment of the facts which would justify this Court interfering with her findings of fact on the question of breach of warranty. 550 However, as appears subsequently, this matter is of little moment as the damages flowing from the breaches were only nominal. (b) The claim for breach of promise to co-operate 551 The respondents' claim was that Campbell breached his implied duty to co-operate with Weeks in the management of the business as joint managing director, one aspect of which was his refusal to make payments to BackOffice under the Services Agreement. 552 The judge said at [223] that the plaintiffs claimed and the defendants admitted that both the Shareholders Agreement and the Share Sale Agreement contained implied terms that: (a) the parties to the respective agreements would do all such things on their part to enable the other party to have the benefit of the agreements; and (b) neither party would act in a manner calculated to deprive the other party of the benefit of the agreements. This was described as the implied duty to co-operate. 553 There was no claim that the Services Agreements contained any implied duty to co-operate. 554 At [231] the learned primary judge held that there was a breach of the implied term to co-operate by failing to cause the Company to pay the BackOffice invoices. 555 However, her Honour declined to award any damages for this breach on the basis that to do so, if the buyback order stood based on Mr Russell's figures, would be to overcompensate the respondents. 556 There are considerable problems with this claim. Mr Bannon says that her Honour's approach goes against the way in which contractual obligations to co-operate are commonly construed. 557 Another problem is that where there is an express term in a contract, it is almost impossible for the court to imply a term that operates in the same area; see eg Castlemaine Tooheys Ltd v Carlton & United Breweries Ltd (1987) 10 NSWLR 468. 558 This Court analysed implied terms as to co-operation in Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104, 123-5. It made it clear that the duty must be to co-operate in bringing about something which the contract requires to bring about. 559 In the instant case, neither the Shareholders Agreement nor the Share Sales Agreement required the payment to Mr Weeks' company of its service fee. Moreover, although the Services Agreements were schedules to the other agreements, they specifically provided for the payment of the service fee. 560 It follows that there was no breach of any duty to co-operate in the failure to pay the service fees. 561 The trial judge approached this matter on the basis that the only pleaded claim was for loss of fees of $45,751.41. 562 Mr Simpkins puts that the learned primary judge overlooked the claim in the second part of paragraph 32C of his claim viz that as a result of BackOffice's inability to participate in the management of the company, the share dropped in value from $410,000 to the situation where the provisional liquidator sold its entire assets and goodwill for $196,815. 563 I do not consider that this claim is made out. However, even if it were, there is insufficient material on which a court could conclude that it was the internecine strife between the directors which was the cause or even a cause of any decline in value of the share. (c) Damages 564 As I have said, her Honour took the view that because of her conclusions in relation to the oppression suit, and the fact that she made an order for Campbell to purchase BackOffice's share in the Company, it was inappropriate to allow relief for breaches of warranty of the Agreement by which the share was acquired. 565 It may be that her Honour should have gone the other way round the problem, that is, to fix the damages for breach of contract and then considered the result of the oppression claim. However, that now is a mere matter of history. 566 Unfortunately, I cannot take the course her Honour took, because, in my view the oppression claim fails. 567 What then are the damages which naturally flow from the breaches which were established? Normally these would be the sum which would put the respondents in the same position as if the warranties were correct. 568 In the ordinary case, the assessment of damages for breach of warranty can be approached by finding that it was more probable than not that if the warranties were correct, the respondents would have paid less for the share than they did. On this approach, in the present case the respondents paid $850,000, they would only have paid $X had the warranties been correct, therefore the damages are $850,000 minus $X. The task is then to ascertain $X. However, obviously, the damages cannot exceed $850,000. 569 Mr Simpkins urges us to follow this procedure and reinforces his submissions by recourse to the decision of the Privy Council in South Australia Asset Management Corporation v York Montague Ltd [1997] AC 191. He also referred to EW Blanch Pty Ltd v Cooper [2005] NSWCA 217 at [118] and to the decision of Einstein J in Club Hotels Operations Pty Ltd v CHG Australia Pty Ltd [2005] NSWSC 998 at [188]. 570 If this was the correct approach, $X would seem to be in the range of the assessment of the true worth of the share at the time of purchase, $410,000-$455,000, say $435,000, so that the damages would be $415,000. 571 However, there is great doubt in this case as to whether the finding can be made that the warranties did affect the decision to buy the share. 572 Mr Weeks was an experienced businessman. The evidence strongly suggests that he did not approach the question as to what price he would pay for the shares on an assets approach at all, but rather what was the estimated earnings before income tax. Indeed the valuers also valued the shares on this sort of basis. 573 I cannot bring myself to find that in this case that, if the warranties were true, the respondents would have paid less for the share. 574 Mr Simpkins says that one does apply the general approach if a reasonable purchaser would have paid less in the light of the false warranties and it is a minor consideration, if any consideration, that the actual buyer did not address the question in that manner. 575 I do not accept that proposition, nor do I consider that it is supported by authority. 576 Mr Bannon illustrates the fallacy of applying the general approach to all situations by saying that if the true value of a car is $500, but a person paid $1,000 for it and there was a breach of warranty that the car had a full tank of petrol, when it only had half a tank full, it would be absurd to say that the damages for the breach of warranty were $500. 577 Mr Simpkins had great difficulty in endeavouring to meet that proposition. 578 Mr Bannon went on to say that the correct method of approaching the question of damages would be to note that Weeks' offer of $850,000 for the share was based on his calculation of 4 times estimated EBIT (earnings before interest and tax). The EBIT was estimated at $400,000, that sum times 4 gave $1,600,000, half of which was $800,000. 579 The estimate of $400,000 was based on a forecast for the 2005 year. The EBIT for the six months to the end of December, 2004 was $163,245. Had this figure been used, the share would have been valued at $650,000. 580 It is usual for valuers to look at the past three years' EBIT to see the sustainable EBIT. Mr Weeks, however, approached the matter on an estimation which produced a figure which had never been achieved by the Company. 581 The estimate was never achieved, indeed, there was a downturn in the Company's profits in 2005, a downturn which had nothing to do with the internecine disputes between the shareholders. The loss in value of the shares was thus in no way attributable to the breach of warranty. 582 In my view Mr Bannon's submissions make good sense and I will adopt them. 583 On the basis that there was some breaches of warranty as found by her Honour, Mr Bannon puts that the loss must be between nil and $37,446. 584 It is necessary to analyse the particular breaches of warranties found. Essentially, the breaches are with the warranty as to the liabilities of the business, the warranty as to the net assets of the business and its trade creditors. 585 In my view, Mr Bannon's submissions that none of the breaches materially affected EBIT. They thus had no bearing on any loss suffered by Mr Weeks. 586 Accordingly, it has not been shown that anything more than nominal damages flows from the breach of warranties. 5. General matters and conclusion 587 I believe that I need to make some general comments before summarising my conclusion and noting the result of the appeal and cross-appeal. 588 First, as to the provisional liquidation, there is not the slightest use leaving the Company in provisional liquidation. It would seem to me that the Company should now be wound up and the provisional liquidator, who has virtually done all that is necessary be appointed liquidator. 589 Secondly, it must be remembered that in the case of the winding up of a partnership, unless one partner has been guilty of relevant misconduct or has acted so as to impede the winding up or there are other special reasons, the costs of winding up are borne equally by the partners. The reasoning behind this is that the expenses of winding up are as much a business expense as the costs of establishing the business: Ross v White [1894] 3 Ch 326. 590 The effect of this rule, indeed whether it is applicable to this case was not traversed in argument either here or below and is not a formal matter to be considered on the appeal, but I believe the reminder may be of use. 591 Finally, it might be noted that whilst the result of the appeal is that the order against Mr Campbell and his interests must be set aside, this is not because the Court has in any way considered that the criticisms by the trial judge should in any whit be set aside or mollified. 592 Of course, there is also force in Mr Bannon's comments that one must not lay the entire blame for the strife at the feet of Mr Campbell. Mr Weeks' conduct in only signing cheques selectively and in approaching the company's bankers and other conduct certainly exacerbated the problems. 593 However, the basal reasons for my decision to allow the appeal and dismiss the cross-appeal is for technical reasons associated with s 232 of the Corporations Act and Mr Weeks' failure to show that his losses were caused by anything else than his own misjudgement of the value of the share he purchased. 594 It follows from the above that the appeal should be allowed and the orders of the primary judge set aside. I would have ordered the respondents to pay the costs here and below, with the grant of a certificate under the Suitors Funds Act 1951 if they are qualified to receive one and the cross-appeal should be dismissed with costs. 595 However in view of the reasons of my brethren, the orders must be otherwise. 596 GILES JA, BASTEN JA, YOUNG CJ in EQ: Although for different reasons, each of us considers that the order that Mr Campbell purchase BackOffice's share for $853,000 and the order that Mr Campbell pay BackOffice $853,000 should be set aside. 597 Giles and Basten JJA consider that BackOffice should have in lieu judgment against Mr Campbell for $850,000, as damages for misleading or deceptive conduct (Giles JA) or partly as the consideration for a re-purchase order and as to the balance as damages for misleading or deceptive conduct (Basten JA). Following the course taken by the parties below, the re-purchase order need not be made and can be subsumed within the order for payment of a money sum. Thus there is a majority for a substituted judgment for $850,000. 598 Appeals are against orders, not reasons. The judgment against Mr Campbell has been reduced by $3,000, a barely material sum. The trial judge's costs orders should stand, and Mr Campbell should pay 90% per cent of the respondents' costs in this Court. 599 In part by majority, the orders of the Court are: (1) Appeal allowed and cross-appeal allowed in part. (2) Set aside the declaration and orders (1), (2) and (3) made on 29 March 2007 and the judgment for the first plaintiff against the first defendant in the amount of $853,000 given on 13 April 2007. (3) In lieu thereof, order that there be judgment for the first plaintiff against the first defendant in the amount of $850,000 taking effect on 13 April 2007. (4) Appellant pay 90 per cent of respondents' costs in this Court. *************************** 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.