Reported Decision: 76 ACSR 286 New South Wales Court of Appeal CITATION: Crawley v Short [2009] NSWCA 410 HEARING DATE(S): 19-21 October 2009 JUDGMENT DATE: 16 December 2009 JUDGMENT OF: Allsop P at [1]; Macfarlan JA at [5]; Young JA at [8] DECISION: Appeal allowed in part. Cross appeal allowed in part. Parties to bring in short minutes of order in accordance with the reasons (to deal with calculations of adjustments). CATCHWORDS: CORPORATIONS - oppression- numerous instances of oppression by director of companies- remedies- appropriate remedy a compulsory purchase order- valuation of shares. CORPORATIONS - oppression- remedies- compulsory buy-out order- valuation of shares- company's assets solely land and business- relevance of capital gains tax (CGT) liability when sold- whether CGT deducted from value-whether selling costs to be deducted from gross proceeds. EQUITY - general principles- equitable defences- laches and delay- elements of laches- degree of knowledge of wrongdoing required depends on facts in all the circumstances- applicability of defence to oppression suit. EQUITY - fiduciary duties- directors' duties to shareholders- when owed to shareholders. REAL PROPERTY - valuation of land- highest and best use- special value irrelevant in prevailing circumstances. Civil Procedure Act 2005, ss 56, 57, 58, 59, 60 LEGISLATION CITED: Corporations Act 2001 (Cth), ss 140, 233 Corporations Law (Cth), s 260 Evidence Act 1995, s 81 CATEGORY: Principal judgment Ansett v Butler Air Transport Ltd (No 1) (1957) 75 WN (NSW) 299 Auxil Pty Ltd v Terranova [2009] WASCA 163 Baburin v Baburin (No 2) [1991] 2 Qd R 240 Baiyai Pty Ltd v Guy [2009] NSWCA 65 Brunninghausen v Glavanics (1999) 46 NSWLR 538 Buhrer v Tweedie [1973] 1 NZLR 517 Campbell v Backoffice Investments Pty Ltd [2008] NSWCA 95; 66 ACSR 359 Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; 238 CLR 304 Charlton v Baber (2003) 47 ACSR 31 Clegg v Edmondson (1857) 8 De GM & G 787 ; 44 ER 593 Coleman v Myers [1977] 2 NZLR 225 CVC/Opportunity Equity Partners Ltd v Demarco Almeida [2002] 2 BCLC 108 Erlanger v The New Sombrero Phosphate Co (1878) 3 App Cas 1218 Fedorovitch v St Aubins Pty Ltd (No 2) (1999) 17 ACLC 1558 Fisher v Brooker [2009] 1 WLR 1764 Fysh v Page [1956] HCA 13; 96 CLR 233 Glandon Pty Ltd v Strata Consolidated Pty Ltd (No 3) (NSWSC, Young J, 4 June 1990, unreported) (BC9002364) Glandon Pty Ltd v Strata Consolidated Pty Ltd (1993) 11 ACSR 543 Goold v Commonwealth of Australia (1993) 42 FCR 51 Haas Timber & Trading Company Pty Ltd v Wade [1954] HCA 39; 94 CLR 593 Hart v Clarke (1854) 19 Beav 349; 52 ER 385 Hatch v Hatch (1804) 9 Ves 292; 32 ER 615 Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; 156 CLR 41 CASES CITED: In re Gold Company (1879) 11 Ch D 701 In re London School of Electronics Ltd [1986] 1 Ch 211 Inland Revenue Commissioners v Clay [1914] 3 KB 466 Jesner v Jarrad Properties Ltd [1993] BCLC 1032 Law v Law [1905] 1 Ch 140 Macquarie Generation v CNA Resources Ltd [2001] NSWSC 1040 MMAL Rentals Pty Ltd v Bruning (2004) 63 NSWLR 167 Norway v Rowe (1812) 19 Ves 144; 34 ER 472 Oak Investment Partners XII v Boughtwood [2009] EWHC 176 (Cth); [2009] Bus LR D99 Orr v Ford [1989] HCA 4; 167 CLR 316 Pastoral Finance Association Ltd v The Minister [1914] AC 1083 Percival v Wright [1902] 2 Ch 421 Perens v Johnson (1857) 3 Sm & Giff 419; 65 ER 720 Re RA Noble & Sons (Clothing) Ltd [1983] BCLC 273 Russo v Resource Developments International Pty Ltd [2003] NSWSC 239 Savage v Lunn (NSW Court of Appeal, 9 March 1998, unreported) (BC9800548); [1998] NSWCA 203 Senhouse v Christian (1795) 19 Beav 356n; 52 ER 387 Shermer v Baker (1970) 472 P (2d) 589 The Lindsay Petroleum Company v Hurd (1874) LR 5 PC 221 United Rural Enterprises Pty Ltd v Lopmand Pty Ltd (2004) 47 ACSR 514 Warman International Ltd v Dwyer [1995] HCA 18; 182 CLR 544 Winthrop Investments Ltd v Winns Ltd [1975] 2 NSWLR 666 Woods v Cann (1963) 80 WN (NSW) 1583 Wright v Union Fidelity Trustee Co of Aust Ltd (NSWSC, Hodgson J, 1 October 1985, unreported) (BC8500504) Christopher Crawley (First Appellant) Marsico Holdings Pty Limited (Second Appellant) J & J O'Brien Pty Limited (Third Appellant) Vensel Pty Limited (Fourth Appellant) Trudale Pty Limited (Fifth Appellant) PARTIES: Judith Kiralyhidi Crawley (Sixth Appellant) Aldonet Pty Ltd (Seventh Appellant) Springsley Holdings Pty Ltd (Eighth Appellant) Gladewood Enterprises Pty Ltd (Ninth Appellant) Roslyn Short as Executrix of the Estate of the late Warwick Gordon Short (First Respondent) Nabatu Pty Ltd (Second Respondent) FILE NUMBER(S): CA 40022/08 COUNSEL: W G Muddle SC and J A Arnott (Appellants) J Gleeson SC, T M Thawley and J Watson (Respondents) SOLICITORS: Bruce Stewart Dimarco (Appellants) Freehills (Respondents) LOWER COURT JURISDICTION: Supreme Court - Equity Division LOWER COURT FILE NUMBER(S): SC 2824/98 LOWER COURT JUDICIAL OFFICER: White J LOWER COURT DATE OF DECISION: 26/11/07; 5/9/08 LOWER COURT MEDIUM NEUTRAL CITATION: Short v Crawley (No 30) [2007] NSWSC 1322 Short v Crawley (No 38) [2008] NSWSC 917 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40022 of 2008 ALLSOP P MACFARLAN JA YOUNG JA Wednesday 16 December 2009 CRAWLEY V SHORT Headnote [This headnote does not form part of the judgment of the Court.] These proceedings involved the shareholdings in two companies, Marsico Holdings Pty Ltd and J & J O'Brien Pty Ltd, that owned and operated hotels in and around Sydney. The shareholding structure of each company was that each company had three shares held by the first appellant's, the first respondent's and Mr Davis' interests respectively. The first appellant's interests acquired Mr Davis' interests in each of the companies. The respondents brought corporate oppression proceedings against the appellants. The primary judge found that the first appellant's interests acquired Mr Davis' interests in each of the two companies deceitfully using another company, Springsley Holdings Pty Ltd, to acquire Davis' shares and therefore engaged in corporate oppression of the respondents' interests in the two companies. The primary judge ordered that the appellants purchase the respondents' shares in the two companies. The appellants appealed from parts of the findings of the primary judge in relation to liability and valuation. The respondents/cross appellants also appealed from parts of the primary judge's findings. The appellants challenged the primary judge's findings on liability on the basis that his Honour erred in failing to consider a claim for just allowance made by the first appellant's interests in respect of loans to the companies facilitated by his interests' efforts. They submitted that the primary judge should have allowed for just allowances and deducted such allowances from the liability in respect of the breach of fiduciary obligations and consequently from the value of the companies and the amounts ordered to be paid by way of compulsory share purchases. Held per Young JA (Allsop P and Macfarlan JA agreeing) that the matter was not sufficiently raised before the primary judge to find that his Honour erred in not dealing with it. The respondents challenged the primary judge's rejection of their claim that their shares in the companies should have been treated as if they constituted one half of the issued capital in each of the companies rather than one-third. The primary judge found that they had not established that they could have acquired half of Davis' shares and further, the claim was defeated by laches. The primary judge found that the first appellant did not owe the first respondent a fiduciary duty. The respondents/cross appellants challenge the finding that the breaches of duties in relation to the provision of finance were breaches of duties owed to the companies, not the shareholders as individuals. The primary judge refused relief in relation to the issue of Crawley's fiduciary obligations to Short because the respondents had not demonstrated that they could have taken up the opportunity to acquire Davis' interests, or a half-interest in them, had the shares been offered for sale in accordance with the articles of association of each company, nor was this merely due to the oppression and breaches of duty which had occurred up to that time; and laches. The question arose also whether Mr Crawley owed fiduciary duties to other shareholders. Held per Young JA (Allsop P and Macfarlan JA agreeing) that the primary judge ought to have found a fiduciary duty to the respondents which was breached by Mr Crawley's behaviour. However, the finding as to breach is not a ground for equitable compensation but might, in an appropriate case, lead to a court valuing the second respondent's shares as one half of the issued capital in the two companies rather than one third. Held per Young JA (Allsop P and Macfarlan JA agreeing) that the primary judge was correct in finding that the respondents had not demonstrated that they could have taken up the opportunity to acquire Davis' shares. The primary judge found that the defence of laches had succeeded because the respondents were aware of the facts that gave them the right to challenge Springsley's purchase of Davis' interests and which formed the basis of their claim to half of the benefits attaching to the shares transferred from Athann (Davis' company) to Springsley in 1997 but did not seek to pursue the first appellant for them until 2004. The primary judge held all three elements of laches in favour of the appellants: i) knowledge of the wrong; ii) delay; iii) prejudice to the opponent caused by the delay. Young JA (Allsop P and Macfarlan JA agreeing) considered that as oppression had been conceded it was not necessary to consider laches. However, Young JA dealt with submissions made on the issue. Held per Young JA (Allsop P and Macfarlan JA agreeing) that the degree of knowledge required is a question of fact and circumstances in each case. Young JA (Allsop P and Macfarlan JA agreeing) held that the cross appeal in relation to laches failed. The primary judge's liability findings required him to value the assets of the two companies to effect the Court-ordered purchase of the respondents' interests in the companies. The appellants appeal the primary judge's findings in relation to the valuation of the major asset of one of the companies, a hotel in Sydney. The primary judge rejected both sides' expert valuations and found that the value of the hotel was higher than both valuations. The primary judge relied on a letter containing an "offer" by a company located in an adjoining building to purchase the site for $30m. The primary judge held that that offer indicated a "special value" of the land. His Honour, using this figure as a "floor" to land value and adding the value of transferable licences, permits and entitlements, thus came to a figure of $36.5m. Held per Young JA (Allsop P and Macfarlan JA agreeing) that the letter was not, in law, an offer, therefore was of no value in fixing the value of the hotel except as an indication that the adjoining owner was a probable purchaser. The appellants submitted that it was wrong for the primary judge to equate a neighbouring owner's perceived value of the land to the market price. Held per Young JA (Allsop P and Macfarlan JA agreeing) that, as it was common ground that the highest and best use of the site was for a hotel, the primary judge erred in valuing the hotel with its "special value" to the adjoining owner as probable purchaser. The primary judge's finding of a 7.5% capitalisation rate for Jacksons on George was challenged. Held per Young JA (Allsop P and Macfarlan JA agreeing) that it was open on the facts for the primary judge to make such a finding. The respondents/cross appellants challenged the primary judge's finding that it was appropriate to deduct estimated costs of selling the assets from the value of the shares because: there was no evidence that the appellants intended to sell the assets, the selling costs were personal to the first appellant's interests and it was incorrect for the primary judge to examine the value on a liquidation basis. Held per Allsop P and Macfarlan JA that the primary judge erred in taking selling costs into account. Held per Young JA that the primary judge was justified in taking selling costs into account. The respondents/cross appellants submitted that the primary judge erred in taking into account the capital gains tax (CGT) liability to the companies should the hotels be sold. Held per Allsop P and Macfarlan JA the primary judge erred in taking CGT into account. Held per Young JA that the primary judge was correct in taking CGT into account. The appellants submitted that the primary judge had erred in his calculation of Gaming Device Duty. The respondents conceded this miscalculation. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40022 of 2008 ALLSOP P MACFARLAN JA YOUNG JA Wednesday 16 December 2009 CRAWLEY V SHORT Judgment 1 ALLSOP P: I have had the advantage of reading the reasons of Young JA and Macfarlan JA. Like Macfarlan JA, I respectfully disagree with Young JA on the questions of selling costs and capital gains tax liability. I otherwise agree with the reasons of Young JA, though I would add some short comments of my own on just allowances. 2 As to just allowances, I only wish to say that I agree strongly with Young JA's conclusions as to the insufficiency of the raising of the matter below. The primary judge was faced with a controversy of massive proportions with a plethora of interconnected detail. In such circumstances, parties, in order to fulfil their duties under the Civil Procedure Act 2005 (NSW), s 56, are required to play their part in the clear identification and propounding of issues. If they do not, obscure and less than clearly propounded issues may not be dealt with. If this occurs because, as here, a diligent trial judge does not have the matter displayed before him for disposition in a clear manner, the party cannot complain. It is, of course, a matter to be decided in each case on the facts and justice of the case. Here, it would be in the teeth of efficient curial disposition to tax the judge or another judge (thereby depriving another litigant of a timely hearing) with the task of a fact laden enquiry as to just allowances, which, if it had been tendered to the judge as an issue at trial with requisite clarity he could have dealt with it with the care that he dealt with the balance of the case. 3 As to the selling costs and capital gains tax, I agree with Macfarlan JA. The valuation of the hotels on the basis of a notional sale between knowledgeable and willing but not anxious parties is the mechanism to fix the fair price to pay. That does not mean, however, if there is no likely sale, that Mr Crawley should obtain complete control of the hotels without paying for Mr Short's interest that he is effectively acquiring. To do so, on the evidence, gives him a monetary advantage to which he is not entitled. There is no actual sale. The setting of the price is part of the exercise of a power to remedy an oppression. There is no reason, in order to remedy the oppression, for Mr Crawley to obtain a benefit paid for by Mr Short on the hypothesis of a sale that there is no evidence will occur. 4 The parties should bring in orders. 5 MACFARLAN JA: Subject to the following, I agree with the judgment of Young JA. 6 I respectfully differ from his Honour's view that in valuing the Jacksons on George Hotel, selling costs and capital gains tax liability should be deducted. In my view, the approach taken by Campbell J (as he then was) in United Rural Enterprises Pty Ltd v Lopmand Pty Ltd (2004) 47 ACSR 514, to which Young JA refers, is appropriate to be applied in the present case. As in United Rural, there is here no evidence suggesting that the property is likely to be sold in the near future, or indeed in the foreseeable future. In these circumstances, the benefit of the relevant deductions would enure to Mr Crawley's interests without those interests facing any realistic prospect of incurring the liabilities to which the discounts are intended to relate. As pointed out in CVC/Opportunity Equity Partners Pty Ltd v Demarco Almeida [2002] 2 BCLC 108, to which Young JA also refers, in an oppression suit, valuation of a company as a going concern is one basis upon which the valuation of a plaintiff's shares in the company may be undertaken. Where, as in the present case, the company's business is a going concern and there are no plans for sale of the asset in question, a going concern, rather than a liquidation, basis, is the appropriate approach to valuation. The effect of making discounts for selling costs and capital gains tax would be to hypothesise a sale of the hotel and thus to proceed, at least in that respect, upon a liquidation basis. 7 The evidence as to valuation to which Young JA refers in [270] is not in my view determinative, as the basis upon which the valuation should proceed is a matter for the court. The evidence to which his Honour refers considered valuation of the hotel upon the basis of an assumed sale. As I have indicated, an assumption of sale is not an appropriate one. 8 YOUNG JA: This is an appeal and cross appeal from a decision of White J given in what essentially was a corporate oppression suit brought by the respondents against the appellants relating to the affairs of J & J O'Brien Pty Ltd ("J & J O'Brien") and Marsico Holdings Pty Ltd. 9 The primary judge found oppression (indeed, it was eventually conceded) and ordered that the appellants purchase the respondents' shares in various companies in accordance with the formula the judge set out. 10 The proceedings occupied about 60 hearing days and the material before the primary judge was vast. The primary judge delivered a number of reasoned judgments and rulings. However, for the purpose of this appeal and cross appeal, only two of these are material, namely Short v Crawley (No 30) [2007] NSWSC 1322 of 26 November 2007 (to which I shall refer as the "liability judgment) and Short v Crawley (No 38) [2008] NSWSC 917 (the "valuation judgment") delivered on 5 September 2008. 11 There were originally a large number of grounds of appeal. There is also a cross appeal and a notice of contention. Together these raised 75 issues. However, in the course of preparation for the hearing of the appeal and, indeed, during the hearing of the appeal, these were reduced to the following: So far as concerns the liability judgment: (a) Revised appeal ground 37A referring to a small part of the liability judgment dealing with the account of profits on the Aldonet Loan; (b) Alleged errors regarding section 9 of the liability judgment, that is, the section dealing with the Springsley Share Purchase and Aldonet Loan, in particular the application of the principle of laches. So far as concerns the valuation judgment: (a) The valuation of the Jacksons on George Hotel; (b) Other problems: (i) Appeal grounds 57 and 58 relate to the capitalisation rate that was applied for the purpose of valuing Jacksons on George; (ii) Cross appeal grounds 8 and 10: accounting for 2% selling costs in the valuation of hotels which might be incurred if the Marlborough Hotel and Jacksons on George were sold by the appellants; (iii) Cross appeal grounds 7 and 9: whether the trial judge erred in making adjustments in the balance sheets for liability for capital gains tax; (iv) Other issues. 12 The fact that the result of a very complex case at first instance, with reasons for judgment exceeding 600 pages, is only challenged on appeal in such a limited way itself pays tribute to the learned primary judge. 13 I believe that the most practical manner in which I can deal with the matters arising on this appeal and cross appeal is first to consider the background facts and give an overview and then to consider each of the issues I have identified in turn and finally state my conclusions and proposed orders. 14 The appeal was heard on 19 to 21 October 2009, Mr W G Muddle SC and Mr J A Arnott appearing for the appellants and Mr Justin Gleeson SC, Mr T Thawley and Mr J Watson appearing for the respondents. 1. Background Facts 15 The proceedings were commenced by statement of claim filed 16 June 1998. The latest version of the plaintiffs' (respondents') pleading is the third amended statement of claim filed on 12 May 2006. 16 As might be expected, that pleading is a lengthy document setting out a multiplicity of facts. In addition to orders neutralising oppression pursuant to the relevant predecessor of s 233 of the Corporations Act 2001 (Cth), the respondents sought equitable relief for accounts of profits and equitable compensation. 17 Eventually, the primary remedy sought by the second respondent was an order for the winding up of Marsico Holdings Pty Ltd and J & J O'Brien, such an order being sought because of oppression by Mr Crawley and associates. The primary judge rejected that remedy, but ordered that Mr Crawley purchase the second respondent's share in each of those companies at a price to be determined in accordance with the formula contained in the valuation judgment. 18 There were two plaintiffs who are now the respondents. The first respondent is Mrs Roslyn Short who is the executrix of the late Warwick Short who died on 14 February 2004. The second respondent is Nabatu Pty Ltd ("Nabatu"), a company whose directors were Mr and Mrs Short and whose role was as the trustee of the Short family settlement trust. 19 There were ten defendants. All, except the tenth defendant (Athann Pty Ltd), are appellants. In the interests of clarity, I will refer to the corporate entities, in any subsequent reference to the first, by their initial name. 20 It should be noted that, at the trial, the first six defendants were represented by a different set of counsel and solicitors to the remaining defendants. 21 The principal appellant is the first appellant, Christopher Crawley. He is a solicitor practising in Sydney and was a former long time friend and associate of Mr Short. 22 The second appellant is Marsico Holdings Pty Ltd. There are three issued shares in that company, one held by Nabatu, one by Mr Crawley and the third by the eighth appellant, Springsley Holdings Pty Ltd. 23 The third appellant, J & J O'Brien Pty Ltd has three issued shares held in the same way as the shareholding in Marsico. 24 It is unnecessary at this point to describe the other appellants except for the seventh, Aldonet Pty Ltd and the eighth, Springsley. 25 Aldonet was a shelf company purchased by Mr Crawley on 26 June 1995. Its shares were owned by Mr Crawley or a company he controlled (Vensel Pty Ltd, the fourth appellant). Its directors were Mr Crawley and his wife (the sixth appellant). 26 Springsley was a shelf company which was incorporated on 15 October 1996 and was utilized as a trustee company. Initially, there were various classes of beneficiaries. There were two classes of primary beneficiaries, Class 1 being Mr Athol Davis and family, Class 2 being Mr Crawley and family. Essentially, Mr Davis and a company he controlled, Athann, were vendors and dropped out of the picture once the then contemplated transaction was accomplished. Thus, Springsley was used as a vehicle for the control of property to pass from the Davis interests to the Crawley interests. 27 Mr Short and Mr Davis were publicans. Although Mr Crawley is a solicitor, he is also interested in operating hotels. Most of the transactions referred to in the primary judge's reasons concerned the buying, selling and operating of licensed hotels in the Sydney area. 28 Messrs Short, Crawley and Davis had been involved in many transactions together, the first being in November 1982 when Nabatu contracted to purchase the Australian Youth Hotel in Glebe. 29 The consortium acquired numerous hotels and this usually occurred through the medium of a corporation set up for the specific purpose of owning and operating that hotel. 30 For the purpose of this appeal, it should be noted that the main asset of J & J O'Brien is the Marlborough Hotel at Newtown and the main asset of Marsico is the Jacksons on George hotel in the city of Sydney. 31 Stripping the facts to the bare essentials, one might commence the survey of material facts at January 1995. I do not ignore the reality that there is much significant background before 1995. However, it is essential to focus on the key facts and not to be diverted by too much background. 32 In 1995-6, Westpac Bank, which had taken over a former financier to the group, made it clear that it would prefer that the group refinance and pay it out. 33 It would seem that this caused Mr Davis considerable worry. His health was not the best and he indicated that he wished to be bought out of the companies. 34 Mr Short at that stage also appeared to be willing to exit the companies and it was proposed that Messrs Davis and Short be bought out for a total of $3,000,000. 35 In 1995, various offers and counter offers were made with respect to Messrs Short and Davis leaving the group and Mr Crawley assuming sole control. 36 An arrangement was made that Mr Davis would exit the companies for $1,000,000 and a release from his liabilities to Westpac. 37 A scheme, not initiated by Mr Crawley, but rather by Mr Wiseman, Mr Davis' solicitor, to avoid problems with pre-emption articles and to obtain tax advantages was devised. Essentially, instead of there being a transfer of Mr Davis' interests in the hotels or the companies operating them, a new trustee company would be formed which would hold the Davis interests in the relevant properties or companies and then the equitable interests of the Davis family would cease and corresponding interests in the Crawley family would spring up. 38 Springsley was acquired to be the corporate vehicle for the transaction. 39 Negotiations for Mr Crawley to acquire the Short interests did not conclude in any transfer agreement. 40 Mr Crawley set about raising finance seemingly both to refinance existing loans for the group of companies and also to be able to acquire Mr Davis' and Nabatu's interests in those companies. 41 A result of this activity was that Aldonet obtained a finance facility from QIDC with respect to $17,000,000 and a further $4,000,000 from the ANZ Bank. 42 On 26 March 1997, Mr Crawley, on behalf of Aldonet, sent a communication to the company secretary of J & J O'Brien and Marsico and also to Mr and Mrs Short offering finance in the total amount of $19,400,000 split into three facilities. 43 Unbeknown to the directors other than Mr Crawley, when Aldonet onlent the funds it had borrowed it added an extra margin of interest for itself. 44 At each of the board meetings of J & J O'Brien and Marsico which were held on 27 March 1997, the directors of the relevant company voted to: (a) accept an offer of finance from Aldonet; and (b) approve the transfer of Athann's shares in the companies to Springsley. 45 The finance provided by Aldonet enabled the Westpac finance facilities to be discharged. 46 The evidence showed that there was an alternative proposal for refinance through a company named Prudential Portfolio Managers Ltd. Although the Short interests pressed on the appeal that this was the more appropriate way of effecting the refinancing, there was a problem with the Prudential offer in that Prudential required personal guarantees from the directors which, it would appear, Mr Short was unwilling to provide. 47 On 16 May 1997, the beneficial interests in Springsley changed with the Davis family bowing out and the Crawley family taking the whole of those interests. 48 On the same day, Mr Davis ceased to be a director of J & J O'Brien and Marsico and Mrs Crawley took his place. 49 On 25 July 1997, extraordinary general meetings of each of J & J O'Brien and Marsico were held. At each meeting resolutions to remove Mr Short as a director of each of the group companies were passed, Mr and Mrs Crawley voting in favour and Mr Linden, Nabatu's proxy, voting against. 50 From that date, Mr Crawley was in full managerial control of the companies. 51 On 14 May 1998, the boards of J & J O'Brien and Marsico (constituted by Mr and Mrs Crawley) resolved to accept a new loan facility offered to the group by Aldonet which was in similar terms to the earlier offer. 52 The primary judge concluded at [1267] and [1272] of the liability judgment that Mr Crawley obtained majority control and excluded Mr Short from participation in the companies' affairs, without buying Nabatu's shares, in a deceitful way. 53 His Honour thus made an order for compulsory purchase of those shares. 54 It is important to note that although each of these matters was in strong dispute between the parties at the trial and indeed at an early stage of this appeal, there is no longer any dispute that the following orders made below stand: (a) That a compulsory purchase order rather than a winding up order was appropriate; (b) The shares to be compulsorily acquired should be valued as at the time of making the order (actually 1 August 2008); (c) That there was to be no discount for a minority shareholding; (d) That, in relation to the refusal to grant relief on the Elizabeth Street Centre transactions, the appellants do not challenge the finding of breaches by Mr Crawley. 55 This brief summary of essential facts may give a misleading impression. There were many activities of Mr Crawley affecting the Short interests which the primary judge considered, when taken together, justified the concession that there had been oppression of the Short interests. 56 I will now deal with the grounds of appeal and cross appeal, first as regards the liability judgment (heading 2), then as regards the valuation judgment (heading 3), then consequential matters and the orders that should be made on the appeals (heading 4). 2. Appeal and Cross Appeal - Liability Judgment 57 The matters to consider are: (a) Revised appeal ground 37A; (b) Alleged errors re section 9 of the liability judgment dealing with the Springsley Share Purchase and Aldonet Loan. Point (b) raises several particular matters and I will consider it under the following sub-heads: (i) Overview and background facts; (ii) The pre-emption articles; (iii) Did Mr Crawley owe Mr Short a fiduciary duty? (iv) Would the Short interests have been able to buy Davis' shares? (v) The primary judge's view on laches; (vi) Liability of the Crawley interests. 2(a) - Revised Ground 37A 58 Ground 37A, as outlined at Orange 48, is as follows: "37A The primary Judge erred in failing to consider the First, Sixth and Seventh Appellants' claim for a just allowance in respect of the liability to account for the profit derived from the Aldonet loans, which liability the Seventh Appellant was found to have as a knowing participant in the breaches of fiduciary duty committed by the First and Sixth Appellants. The primary Judge ought to have considered that claim and made a just allowance which was deducted from the said liability and consequently from the value of the Second and Third Appellants, and the amounts ordered to be paid by the First Appellant by way of compulsory share purchases (with further consequential amendments to interest paid)." 59 This ground replaced former grounds 37-39. However, those grounds by no means covered the same territory as the new ground. 60 The appellants merely point to what they say is the fact that the primary judge did not deal with the matter. 61 The respondents say that the matter was not before the primary judge. They note that the claim is made purely as arising in the Aldonet Loan matter. The only order for accounting was made against Aldonet, not the Crawleys. Aldonet never sought a just allowance in those terms though it did say that the plaintiffs should not be unjustly enriched by any decree for accounting. 62 The appellants' riposte is that if one looks at the pleadings and looks carefully at the closing submissions, one will see the references to this matter. However, it was acknowledged that the references were not as "fulsome" (presumably used in its modern rather than traditional sense) as they could have been. 63 Mr Muddle says that paragraph 121A of the second further amended defence filed by the first to sixth defendants (see 1 Red 181) puts that if there was any entitlement to relief for breach of duty such entitlement is to be reduced by just allowances to the total value of such entitlement. 64 Further, the defence filed by Aldonet (and the other remaining defendants) is more specific, putting that as Marsico and J & J O'Brien were on their last legs at the time of the transaction and that the efforts of Aldonet and the risks taken by Aldonet made them into valuable entities, the plaintiffs would be unjustly enriched unless just allowances for that effort and risk were made. 65 It may be that within the vast amount of paper in this case there are a few lines in which this matter was raised. However, that is insufficient for this Court to send the issue back to the trial court for further consideration. 66 In a long, complex case, it is understandable if the judge and/or the opponent may not perceive that subsidiary matters which are not highlighted or emphasised are still current and these may thus slip through the cracks. 67 Particularly in large cases, it is a growing practice, which has a lot to commend it, that judges publish reasons and stand the proceedings over for a few weeks for short minutes to be brought in with an invitation for counsel to address any issue that has not been considered or any error or misunderstanding which ought to be corrected. 68 That procedure was not followed in the instant case. There was, however, a month's gap between the delivery of judgment and the making of formal orders. 69 Especially in a case of this length, this Court expects that any matters in this category will be brought to the trial judge's attention within the 14 days that the rules allow for amendment of orders. 70 In the light of the statutory commands in ss 56 and following of the Civil Procedure Act 2005 and good case management practice and also because the interests of justice demand it, this Court is unlikely to allow an appeal and remit matters for further hearing at first instance where an alleged omission to deal with a point has not been identified and the subject of protest within the 14 days allowed by the rules or the date fixed for short minutes of order to be considered. 71 The point about Aldonet being the only party directly affected by any allowance being made for just allowances is correct, though Mr Muddle may be right that there is an indirect flow on effect to other parties. 72 It seems to me that in the light of the way in which this issue was referred to below, the fact that it was not brought up at a time when the judge could deal with it before final orders were made, all of which is exacerbated by the additional fact that the complaint was not even made in the original versions of the notice of appeal and the fact that, if remitted, the matter would involve further significant fact-finding by the judge, this Court should not allow the appeal on this ground. 73 I am not satisfied that the matter now being raised was raised before the primary judge in a sufficient way for this Court to say that he was in error in not dealing with it. 2(b) - Alleged errors re section 9 of the liability judgment dealing with the Springsley Share Purchase and Aldonet Loan 74 This section needs to be split into sub-sections, viz: (i) Overview and background facts; (ii) The pre-emption articles; (iii) Did Mr Crawley owe Mr Short a fiduciary duty? (iv) Would the Short interests have been able to buy Davis' shares? (v) The primary judge's view on laches; (vi) Liability of the Crawley interests. 2(b)(i) - Overview and background facts 75 The respondents say that Mr Crawley obtained the majority shares in J & J O'Brien and Marsico, through the Springsley Share Purchase, dishonestly, in breach of rights of pre-emption and in breach of duty and ought to account on the basis that they are deemed to hold 50% of those shares. 76 I need to take in some of the primary judge's findings of fact on the Springsley Share Purchase in order to understand the issues presented on appeal. 77 In the following account of the facts, Mr Wiseman is the solicitor for Mr Davis, Mr Leddin was a partner of the companies' auditors and Mr Linden was Mr Short's solicitor. 78 Essentially, the Short interests say that, but for Mr Crawley's breach of fiduciary duty, they would have had 50% of the shares of Marsico and J & J O'Brien and that when the court ordered the buyout of the shares presently held by the Short interests, it should have treated those shares as if they constituted one half of the issued capital, not merely one-third. 79 The primary judge declined to go this far. Basically, his Honour said that it had not been established that the Short interests could have acquired half of Davis' shares and further, the claim was defeated by laches. 80 I will set out the key parts of his Honour's reasoning on this aspect of the case. 81 His Honour concluded his paragraph [942] by saying that the plaintiffs "sought an order that in the distribution of any surplus proceeds to members in the winding-up of J & J O'Brien and Marsico, upon Nabatu paying to Mr Crawley and Springsley the sum of $500,000 plus interest at Supreme Court rates from 16 May 1997, Nabatu be entitled to elect to receive half of any surplus payable to members in lieu of its entitlement otherwise to receive one-third of any such surplus." If an order was made for the compulsory purchase of Nabatu's shares rather than a winding-up order then orders to the same effect were sought. 82 His Honour continued at [943] and [944]: "[943] Notwithstanding my conclusions that the share transfers were made in breach of the articles of Marsico and J & J O'Brien, and that the resolution of 27 March 1997 approving the transfers was passed after deliberate false representations were made by Mr Crawley and Mr Wiseman about the transaction, and Mr Crawley's interest in it was not disclosed, there are two substantial hurdles to the plaintiffs' obtaining any relief in respect of the transaction. The first is the absence of proof that, had the provisions of the articles been complied with, Nabatu could and would have offered to purchase, with Mr Crawley or with Springsley, Athann's shares and paid $500,000 to Athann. The second hurdle is the delay in seeking relief in respect of the transaction. [944] The plaintiffs did not advance a case that, had the articles been complied with, Nabatu would have sought to purchase Athann's shares. The plaintiffs submitted that it was not necessary for Nabatu to prove that if it had been given the opportunity to share equally in the purchase of Athann's shares, it would have taken up such an opportunity. They submitted that Nabatu's ability and willingness to do so would have been affected by the oppression and breaches of duty which had occurred up to that time. In any event, they submitted that the share transfer was procured by a breach of fiduciary duty on the part of Mr Crawley, being a duty he owed to Nabatu as a shareholder. The plaintiffs submitted that Springsley was involved in that breach of fiduciary duty. They submitted that Mr Crawley and Springsley are liable to disgorge the profit obtained by Springsley by reason of its acquisition of Athann's shares. Where a fiduciary is required to account for a profit derived in breach of his fiduciary duty, it is no answer for the fiduciary to say that the principal was unwilling, unlikely, or unable to have made the profits for which the fiduciary is required to account." 83 The respondents put their case on the basis that when valuing the Nabatu shares in an oppression suit, the valuation should be on the basis of a one half interest in the totality of the shares rather than a one-third interest. The extant claim was not for equitable compensation for breach of fiduciary duty. 84 Again, it should be noted that there was no claim made for breach of the statutory contract imposed by s 140 of the Corporations Act 2001 (Cth). Thus, I do not have to consider whether that statutory contract contains an implied term of mutual good faith nor how far a court may award damages or compensation for breach (see Farrar's Company Law, 4th ed (Butterworths, London, 1998) at 119-120). 85 I will deal with the basic matters raised under sub-heading 2(b)(iii). In the meantime I need to consider the pre-emption articles. 2(b)(ii) - The pre-emption articles 86 Article 20 of the Articles of Association of J & J O'Brien adopted on 18 November 1993, as set out by the primary judge at [926] of the liability judgment, provided relevantly as follows: "20.A Subject to these regulations any member may transfer all or any of his shares by instrument in writing in any usual or common form or in any other form which the directors may approve. The instrument shall be executed by or on behalf of both the transferor and the transferee; and the transferor shall remain the holder of the shares transferred until the transfer is registered and the name of the transferee is entered in the register of members in respect thereof. 20.B Subject to article 22 hereof any share may be transferred by a member (or other person entitled to transfer) to any member selected by the transferor (or to any person approved by the directors as one whom it is desirable to admit to membership) but save as aforesaid and save as hereinafter provided no share shall be transferred to any person who is not a member so long as any member (or person approved as aforesaid) is willing to purchase the same at the fair value, which matters shall be ascertained and determined in the mode and manner hereinafter provided. 20.C A share may be transferred by a member or other person entitled to transfer to any member who prior to such proposed transfer holds at least one share of the same class as the share proposed to be transferred. Except as is provided in Article 20.J hereof no share shall be transferred to a person who is not prior to such proposed transfer, the holder of at least one share of the same class as the share proposed to be transferred so long as any member who prior to such proposed transfer holds at least one share of the same class as the share proposed to be transferred is prepared to purchase the share or shares to be transferred on the same terms and conditions as a proposed purchaser thereof. 20.D If the holder of any share in the company receives an offer to purchase any such share (the purchase price of which must be expressed in cash) from any person not at that time the holder of at least one share of the same class as the share offered to be purchased, then the person proposing to transfer such share shall give notice in writing (hereinafter called 'a transfer notice') to all members holding at that time shares of the same class as the share proposed to be transferred and to all members holding at that time shares of any other class than that proposed to be transferred and shall also give such transfer notice to the directors of the company. Such transfer notice shall specify the number and class of shares proposed to be transferred, the proposed transfer price in cash, the manner in which such transfer price is to be paid and the name of the proposed transferor and transferee. 20.E If within the space of twenty eight days after receipt of such transfer notice, a member entitled to receive such notice elects by notice in writing to the proposed transferor and the directors to purchase the shares referred to in such transfer notice on the same terms and conditions as are set out in such transfer notice subject to the provisions provided in Article 20.K then the directors shall register a transfer of such shares in favour of the member so electing. A member entitled to receive such notice being a holder of the class of shares to which the notice relates shall be deemed entitled to the transfer of the shares in priority to any other members being the holders of any other class of shares or persons approved aforesaid. 20.F If no member elects pursuant to Article 20.E hereof, then the proposed transferor may proceed and complete the sale details of which are set out in the said transfer notice, provided that if the transfer to be executed pursuant to such transfer notice is not lodged within thirty one days of the date of such transfer notice or if the said transfer differs from the provisions of the said transfer notice then the proposed transferor shall again be required to comply with the provisions of Articles 20.D and 20.E hereof. ... 20.H If pursuant to Articles 20.D, 20.E, 20.F and 20.G hereof more than one person becomes entitled to a transfer of shares, then the shares to be transferred shall be transferred to such persons in the proportion of their respective shareholdings in the class of shares to be transferred ... 20.I If the shares to be transferred are incapable of division in the manner specified in Article 20.H hereof, then the directors shall register a transfer thereof in favour of all the members giving notice of election to the directors pursuant to Article 20.E hereof. 20.J (a) Any share may be transferred by a member which is a corporation to any related corporation as defined by the Corporations Law. (b) Any share may be transferred by a member to any corporation in which the transferring member:- (i) Beneficially owns at least half the issued share capital of that corporation; and (ii) Is able to exercise a majority of the voting power of that corporation; and (iii) Is able to control the composition of the Board of Directors (including the right to appoint or remove all or a majority of the directors of that corporation) of that corporation through powers exercisable by virtue of the shares in that corporation beneficially owned by the transferring member or through any other power exercisable by the transferring member. (c) Any share may be transferred by a member to any child or other issue, son-in-law, daughter-in-law, father, mother, brother, sister, nephew, niece, wife or husband of such member, and any share of a deceased member may be transferred by his executors or administrators to any child or other issue, son-in-law, daughter-in-law, father, mother, brother, sister, nephew, niece, widow or widower of such deceased member (to whom such deceased member may have specifically bequeathed the same) and shares standing in the name of the trustees of the will of any deceased member may be transferred upon any change of trustees to the trustees for the time being of such will. (d) The restriction in Article 20.C hereof shall not apply to any transfer authorised by Article 20.J(a), 20.J(b) or 20.J(c) and Article 20.K hereof. 20.K In furnishing a transfer notice referred to in Article 20.D hereof, and in the event that a member elects pursuant to Article 20.E hereof to purchase the shares referred to in such transfer notice, subject only however to an objection in respect of the transfer price, the Auditor for the time being of the company shall upon the application of either the proposing transferor and/or the purchasing member certify in writing the sum which is in his opinion the fair value (as referred to in Article 20.B hereof) and such sum shall be deemed to be the fair value and in so certifying the Auditor shall be considered to be acting as an expert and not as an arbitrator. Notwithstanding the provisions of Article 20.F, the proposing transferor shall after certification of fair value by the Auditor be bound upon payment by the transferee of the sum equivalent to the fair value to transfer the shares to the purchasing member." 87 As the primary judge found at [927], "except as otherwise provided in Article 20, Athann was not entitled to transfer its share in J & J O'Brien to any person who was not a member, so long as there was any member who was willing to purchase the same at fair value (Article 20B). [Further,] Athann was required to give notice of an offer for purchase of its share if the offer came from a person who was not also a shareholder (Article 20D). Springsley was not a member of J & J O'Brien." 88 At the trial, the defendants submitted that these requirements were inapplicable because the transfer was effected in the manner permitted by Article 20J. They submitted that Springsley was a related corporation to Athann "as defined by the Corporations Law" on 27 March 1997. 89 It might be noted that, notwithstanding the resolution of directors of 27 March 1997, the transfer from Athann to Springsley was not registered. At the date of the hearing, Athann was still recorded as a member on J & J O'Brien's register of members. 90 The primary judge held at [931] that at the time the equitable ownership of the share was transferred, Springsley was unquestionably not a subsidiary of Athann. 91 The primary judge ruled at [932] that "Athann breached Article 20D by not giving notice of Springsley's offer of purchase. Article 20B prohibited a transfer to a person who was not a member so long as any member was willing to purchase the share at fair value". 92 The primary judge noted that the defendants contended before him that: "Nabatu was not willing to purchase Athann's shares at fair value. However, Article 20B expressly provided that whether a member was so willing to purchase was to be determined by the mechanism provided by the Articles. That involved the giving notice of the offer of purchase (Article 20D) and the proposed transfer price, so that all members could elect to take a transfer on the same terms (Article 20E). If both Mr Crawley and Athann had so elected the directors would have been required to register the transfer in favour of both Athann and Mr Crawley (Article 20I). Athann could have transferred its share in J & J O'Brien to Mr Crawley under Article 20C, but that was not the transaction proposed." 93 The primary judge said at [933] that "Nabatu's willingness to purchase was never put to the test. The plaintiffs do not now propound a case that Nabatu could and would have purchased Athann's shares had the Articles been complied with. But that does not mean the Articles were not breached, even though no claim for damages for breach of the Articles had been brought. Mr Crawley and Springsley were participants in Athann's breach of J & J O'Brien's Articles." 94 Article 48 of Marsico's Articles as set out at [934] of the liability judgment, provided as follows: "(1) Subject to the provisions of Article 45 and clause (2) hereof, any member shall be entitled to sell or transfer any of the shares held by him in the capital of the Company to members of his family (which shall include the wife husband father mother brother sister children and other lineal ancestors and descendants of the seller adopted children nephews and nieces) and also to a company in which the member or any other member of his family or all the members of the family taken collectively holds or hold more than 50% of the voting shares but except as aforesaid no member shall be entitled to sell or transfer any shares otherwise than in accordance with the following provisions:- (a) A member desirous of selling his shares (hereinafter called 'the selling member') shall give notice (hereinafter called 'the notice of sale') to the Secretary of the Company containing an offer to sell the same and stating the number of shares which he desires to sell and the price which he is willing to accept for such shares. Upon receipt of such notice the Secretary shall thereupon send to each of the other members of the Company a circular containing the same particulars and naming the day (being not less than thirty days nor more than sixty days after the receipt by him of the notice of sale) on or before which offers to purchase the same will be received. (b) If on or before the day so named offers to purchase all or any of the shares referred to in the notice of sale at the price named shall be received from members of the Company by the Secretary he shall as agent for the selling member and the proposing purchaser or purchasers declare a contract of sale to be concluded and shall give notice thereof to the selling member and the purchaser or purchasers. (c) If the offers to purchase shall together constitute offers to purchase a greater number of shares than those offered for sale the shares offered for sale shall be divided among the proposing purchasers in the proportion as nearly as possible in which they already hold shares in the Company but no proposing purchasers shall be liable to take more shares than those he shall have offered to purchase. Any shares which cannot be so divided as aforesaid without creating fractions shall be apportioned by ballot among the proposing purchasers. (d) Should the offers to purchase received by the Secretary be for a lessor (sic) number of shares than those offered for sale the Secretary shall give notice to the selling member of the number of shares for which offers to purchase have been received and the selling member may thereupon by notice in writing to the Secretary accept such offers and dispose of the balance of the shares offered by him for sale as hereinafter provided or he may refuse such offers provided that in the event of such refusal he shall not be entitled to sell the shares or any of them as hereinafter provided. (e) The selling member and the members declared to be the purchasers of shares shall give effect to the contract or contracts so made as aforesaid by the execution of proper transfers and the payment of the purchase price. (f) If within six weeks after service of the notice of sale on the Secretary the selling member shall not receive notice that his offer to sell is accepted on behalf of some members or member of the Company he may subject to paragraph (d) hereof within three calendar months from the date of serving the notice of sale sell or dispose of the shares referred to in such notice of sale or so many of them as shall not have been agreed to be purchased by a member of members of the Company to any other person provided that such sale or disposal be at a price not less than that named in the notice of sale. (g) A notice of sale may be renewed from time to time but the offer therein contained shall not be withdrawn until the expiration of two months from the time of service thereof on the Secretary. (2) The provisions of clause (1) hereof shall apply only if all the members have agreed in writing to such provisions and if all the members have not so agreed in writing then such provision shall not apply." 95 The appellants denied that there was a breach of Article 48 of Marsico's Articles of Association. It was submitted that Article 48 was inapplicable because there was no agreement in writing by all of the members of Marsico that the Article should apply, as required by Article 48(2). 96 However, the primary judge at [936] accepted the respondents' submissions that "the shareholders had conducted themselves to their detriment on the common assumption and with the intention that Article 48(1) was operative and legally binding, such that it would be unconscionable for Mr Crawley and Athann to be allowed to depart from that assumption. In other words, they are estopped from denying that the provisions of Article 48(1) were applicable." 97 On the appeal, the appellants conceded that there had been a breach of the pre-emption articles. However, no action had been taken about that for over six years which would mean that there was no extant claim at law or in equity in respect of such breach. 98 What follows from this? The answer is that there are no damages claims made. The breach of the pre-emption articles and the mis-information that they were inapplicable are simply part of the overall oppressive conduct subject to a consideration of what, if any, prejudice flowed and what is the effect of delay. 2(b)(iii) - Did Mr Crawley owe Mr Short a fiduciary duty? 99 The primary judge answered this question negatively. 100 His Honour said, at [946] that, "as a general proposition, a director owes fiduciary duties to the company and not to each shareholder (Percival v Wright [1902] 2 Ch 421; Winthrop Investments Ltd v Winns Ltd [1975] 2 NSWLR 666 at 680; Brunninghausen v Glavanics (1999) 46 NSWLR 538 at 546-547, 549)." There can be no quarrel with that statement. 101 The primary judge then correctly pointed out that particular factual circumstances may give rise to a fiduciary relationship between a director and an individual shareholder: (Brunninghausen v Glavanics). 102 Again it would not seem that anyone today would dispute this. 103 His Honour quoted and discussed key passages from the leading cases in this area of the law including Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; 156 CLR 41, per Mason J at 96-97; Coleman v Myers [1977] 2 NZLR 225 and Charlton v Baber (2003) 47 ACSR 31 at [17] per Barrett J. 104 However, the primary judge considered that the breaches of fiduciary duty in relation to the provision of finance were breaches of duties owed to the companies. He relied on what Handley JA said in Brunninghausen v Glavanics (at 549-550 [58]): "Where a director's fiduciary duties are owed to the company this prevents the recognition of concurrent and identical duties to its shareholders covering the same subject matter. However this should not preclude the recognition of a fiduciary duty to shareholders in relation to dealings in their shares where this would not compete with any duty owed to the company." 105 The respondents challenge the way the primary judge applied Brunninghausen. Mr Gleeson put that the error in the primary judge's approach was that he had wrongly said that because the breaches to the company were so pervasive there was no room for there being a wronged shareholder. What he did not do is advert to the personal interests of the shareholder which had been harmed by the conduct done by the person who happened also to be a director of the company. 106 The submission is that the correct way of looking at the situation is that it was a three way partnership using a corporate vehicle. However, within the vehicle the critical factor was that there was a three way sharing of power. The purpose of the pre-emption articles was to reinforce this. On the other hand, the whole purpose of the Springsley transaction was to destroy that tripartite power sharing. 107 Mr Gleeson cited my decision in Glandon Pty Ltd v Strata Consolidated Pty Ltd (No 3) (4 June 1990, unreported) (BC9002364). That was a judgment in which I analysed the authorities to that date on the principle in Percival v Wright. Whilst that decision was never reported, the decision of the Court of Appeal which dismissed the appeal is reported as Glandon Pty Ltd v Strata Consolidated Pty Ltd (1993) 11 ACSR 543. 108 Mr Gleeson accepted the six points that I made as a summary of the authorities up to 1990 viz: 1. Merely because a person is a director of a company will not necessarily mean that he or she will owe fiduciary obligations to the members of the company as such. 2. Proposition 1 must not be read as indicating that a person who is a director may never have a fiduciary obligation to a member. 3. Where there are special circumstances arising on the facts of any particular case, a director may owe a fiduciary duty to a member. 4. Without attempting to state an exhaustive list, the duty will arise where the member has expressly or impliedly sought the director's assistance and the director has expressly or impliedly undertaken to act on the member's behalf, where the director occupies a place of influence in the family, of which family the member is also associated. These matters may be exacerbated if associated with other factors. (See eg Coleman v Myers (supra) at 330). 5. If the Court considers that the corporate entity is sufficiently closely held to be akin to a partnership it may consider that it is appropriate to hold that the directors have the same obligations to their co-members as a partner would have had. Under the principle of Law v Law [1905] 1 Ch 140, this would be to put the vendor in possession of all material facts with reference to the partnership assets and not to conceal what the purchaser alone knows. 6. Where there is a fiduciary duty it will encompass two things: (a) The negative obligation not to make a profit at the vendor's expense; and (b) the positive obligation to make full disclosure of all material facts. In this connection a material fact is a fact to which a reasonable person would attach importance in determining his or her choice of action in the transaction in question ( Shermer v Baker (1970) 472 P (2d) 589 at 594-5). 109 The Court of Appeal in Glandon considered that it was unnecessary to consider the problem in depth, though comments of both Mahoney and Cripps JJA appear to be supportive. 110 Mr Gleeson puts that, apart from some adjustment to proposition 6(b), which is not necessary to consider in the instant case, the six propositions stand as the law in 2009. 111 Mr Gleeson puts particular emphasis on proposition 5, and points also to the number of cases in this area of the law where the court has recognised the special nature of quasi partnership companies. 112 Mr Gleeson puts that Handley JA in Brunninghausen said that there were good legal and commercial reasons for not permitting a shareholder to sue where the shareholder sues for breach of an alleged fiduciary duty which is the same duty as the director owes to the company. That proposition is commonly accepted. The question in Brunninghausen and here is how far that proposition operates to deny a fiduciary duty when a director is buying or selling shares from or to another shareholder. 113 Perhaps the question should be, "Why should it?" Especially in a closely held corporation there will even be a duty on a non director substantial shareholder not to act unconscionably to his or her fellow shareholders; see eg Oak Investment Partners XII v Boughtwood [2009] EWHC 176 (Ch); [2009] Bus LR D99, why should the fact that that person is also a director make a difference? 114 In Brunninghausen, Handley JA said at [58]: "Any statement that the defendant owed a duty to the company in relation to his dealings with the plaintiff over his shares is meaningless. Such a duty would lack all practical content. The company could not suffer any loss from the breach of such a duty, and had no interest in its loyal and disinterested performance. Where a director's fiduciary duties are owed to the company this prevents the recognition of concurrent and identical duties to its shareholders covering the same subject matter. However this should not preclude the recognition of a fiduciary duty to shareholders in relation to dealings in their shares where this would not compete with any duty owed to the company." 115 As I have indicated, the primary judge accepted much of what I have set out above. Yet he rejected the claim. He said at [955]-[963]: "[955] It was submitted for the plaintiffs that Mr Crawley was in a peculiar position of advantage by reason of the following matters: '(a) he knew the true financial position of the companies and was in control of the management and financial information. His companies provided all of the accounting services and the financial information was physically located either at or adjacent to his offices; (b) the true financial position of the companies was better than represented in the balance sheets, which recorded a loss for J & J O'Brien when that loss was caused by reason of payments made by J & J O'Brien to related (to Mr Crawley) parties and for the benefit of Mr Crawley's other business interests; (c) he was seeking financial accommodation for himself rather than for the companies and Mr Short and Mr Davis were at considerable disadvantage in seeking to refinance the companies borrowings by reason of their lack of information; (d) Mr Crawley was not pursuing finance for the companies, and for a considerable period was aware that Mr Hannan was not pursuing finance for the companies because he thought Mr Crawley was and Mr Hannan did not want there to be doubling up of applications; (e) Mr Davis had contractually bound himself to sell his shares, to vote in favour of finance offers tabled by Mr Crawley and not to pursue finance for the companies. He did not want further involvement with the companies; (f) Mr Short did not have all of the relevant financial information, did not know that Mr Davis had agreed to sell his shares and did not know that Mr Davis was being required to vote in accordance with Mr Crawley's directions.'" [956] The plaintiffs submitted that Mr Crawley's strategy was to put Mr Short in a very invidious position as a minority shareholder. Mr Crawley contemplated that he would be able to acquire Nabatu's shares on terms satisfactory to Mr Crawley. The plaintiffs submitted that Mr Crawley took advantage of the matters summarised above in arranging for Springsley to acquire Athann's shares and acted in breach of a proper standard of conduct which Nabatu was entitled to expect. [957] I accept each of the factual propositions in the subparas (a)-(f) above which I have quoted from the plaintiffs' submissions. However, it does not follow that Mr Crawley owed a fiduciary duty to Nabatu in relation to his procuring the purchase of Athann's shares. [958] Mr Crawley did use his position as a director of J & J O'Brien and Marsico, and information about the companies which he acquired as a director, in the purchase of Athann's shares. He used his position and the information derived from it to obtain finance for himself and for Aldonet which was used to pay the purchase price of Athann's shares and to secure the release of Mr and Mrs Davis from their guarantees to Westpac. In obtaining that finance, Mr Crawley breached fiduciary duties which he owed to the companies. The pursuit of finance for himself rather than for the companies, where he was in the best position to obtain finance for the companies by reason of his control of the financial information, was itself a breach of fiduciary duty. Mr Crawley further breached his fiduciary duty by seeking to hinder Mr Hannan and Mr Short in pursuing applications for finance. He breached his fiduciary duty by obtaining Mr Davis' contractual promise to vote in favour of the finance facilities offered by Aldonet and against the offer of finance from Prudential. That agreement involved the improper fettering by Mr Davis of his carrying out his functions as a director to decide which was the better proposal in the interests of the companies. The pursuit of the finance for himself and for Aldonet, and the offer of finance made by Aldonet to the companies, placed Mr Crawley in a position of conflict between his duties as a director and his personal interests. [959] However, the breaches of fiduciary duty in relation to the provision of finance were breaches of duties owed to the companies. As Handley JA said in Brunninghausen v Glavanics (at 549-550 [58]): 'Where a director's fiduciary duties are owed to the company this prevents the recognition of concurrent and identical duties to its shareholders covering the same subject matter. However this should not preclude the recognition of a fiduciary duty to shareholders in relation to dealings in their shares where this would not compete with any duty owed to the company.' [960] Mr Crawley also misused his position as a director in voting to approve the registration of the transfer of shares from Athann to Springsley without disclosing his interest, without correcting the misrepresentations about the purpose of the transfer made by Mr Wiseman, and by misrepresenting the consideration for the transfer. However, Mr Crawley owed a fiduciary duty to the companies in exercising his functions as a director in deciding whether the transfer should be registered. He was required to act in accordance with what he bona fide considered to be the best interests of the companies. No different duty was owed to Nabatu as a shareholder, and the existence of the duty owed to the company precludes the recognition of a duty of identical content owed to Nabatu as a shareholder. [961] Otherwise, the position of ascendency which Mr Crawley enjoyed arose not from his position as a director but from his procuring the contract between Springsley and Athann for the purchase of Athann's shares. As a shareholder, and de facto director of the purchaser, Mr Crawley did not owe fiduciary duties to Nabatu. [962] Mr Crawley may well have owed fiduciary duties to Athann in the transaction for much of the same reasons as the directors in Coleman v Myers and Brunninghausen v Glavanics owed a fiduciary duty to the vendor shareholder. If Mr Crawley misrepresented or failed to disclose to Athann facts which were material to its decision to sell or to the value of its shares, whereby he acquired its shares at an undervalue, Mr Crawley may have breached his fiduciary duty owed to Athann not to benefit from his position. However, that is of no avail to Nabatu and such a duty was not owed to it. [963] In summary, whilst I accept that Mr Crawley breached fiduciary duties he owed to Marsico and J & J O'Brien in arranging the finance which was used in the acquisition of Athann's shares, and in arranging for the approval of the registration of the transfer of the shares, I do not accept that a separate fiduciary duty of different content was owed to Nabatu." 116 The primary judge then finished this part of his reasons by saying at [964]: "[964] It does not follow that Nabatu would have been without remedy. Had it been in a position to seek to prove that it suffered loss as a result of the breach of the articles or the misrepresentations, it would have been entitled to recover such loss. However, it did not seek to make out such a case. Instead it sought to avail itself of principles designed to ensure the fidelity of a fiduciary to his or her principal by requiring an account of profits made in breach of fiduciary duty whether or not the profits could or would have been earned by the principal. There was no trust or confidence placed in fact upon Mr Crawley by Nabatu. Such a relationship in fact is not a necessary prerequisite for a finding that a fiduciary relationship exists. But I see no reason to stretch the conception of the fiduciary relationship to protect the position of a shareholder who is at risk of having control of the company passed to another shareholder where it would be entitled to relief in contract or in tort if it could establish that it would have taken up the opportunity to acquire Athann's shares (or a half-interest in them) had that opportunity been offered." 117 Mr Gleeson challenges the way the primary judge tackled this part of the case. He submits that his Honour has really reverted to a pure Percival v Wright approach because he said that because there are breaches of fiduciary duty to the company we cannot concede that there can be any other fiduciary arrangement. 118 Mr Gleeson submits that by simply cataloguing the wholesale list of breaches and noting that there were breaches of duty to the company, the primary judge did not ask himself, nor answer, the critical question as to whether, in all the circumstances, there was a special opportunity for Mr Crawley to act to the detriment of the other shareholders so that he owed a duty to them. 119 The primary judge acknowledged that there were cases where a director who was also a shareholder could owe a duty to another shareholder, but considered that Brunninghausen told against it when the same acts constituted a breach of the fiduciary duty to the company. 120 With respect, this is too narrow a reading of Brunninghausen and is out of line with other authorities. 121 There will be a variety of situations where a shareholder or director/shareholder holds a special position where he or she may owe duties to another shareholder. 122 Without being an exhaustive list, this will occur where: one shareholder undertakes to act on behalf of another shareholder; where one shareholder is in a position to have special knowledge and knows that another shareholder is relying on her to use that knowledge for the advantage of another shareholder as well as herself; and where the company is in reality a partnership in corporate guise, nowadays termed a quasi partnership. 123 In a pure partnership, a partner has a clear fiduciary duty not to take a personal advantage when dealing with the share of another partner. 124 An extreme example of this duty is provided by Perens v Johnson (1857) 3 Sm & Giff 419; 65 ER 720 where a partner had deliberately concealed the fact that the partnership's mine was about to hit a rich seam of coal so that he could purchase an insolvent partner's share at auction for an undervalue. The sale was set aside. 125 Of course there may be closely held corporations where the interests of the shareholders are diverse so that no such duty can be implied. The prime illustration is a home unit company where each shareholder is only interested in his or her own home unit; see eg Woods v Cann (1963) 80 WN (NSW) 1583. 126 In my view, the respondents' submissions are correct. The primary judge ought to have found a fiduciary duty which was breached by Mr Crawley's behaviour. 127 However, as I have mentioned earlier, this is not to be the ground for equitable compensation, but it may lead to the consequence that, in valuing the Nabatu shares, they should be taken as one half of the issued capital rather than one third. For reasons set out below that does not follow in this case. 128 Indeed, I should remark that I was disturbed at the general approach of treating the application for relief under the Corporations Act as an analogue to a suit for breach of fiduciary duty. In equity, it is often vital to place a claim in a particular category because even closely related equities have different characteristics. It is a fortiori the case when what is claimed is statutory relief. 129 The argument by analogy with a breach of fiduciary duty suit is valid, but only up to a point. The two claims are not completely analogous and one must be careful to differentiate when appropriate. 130 It must be noted that, even had the primary judge found a duty, he still would have denied a valuation on this basis. 131 The primary judge said at [965]-[967]: "[965] The conduct of the affairs of Marsico and J & J O'Brien in relation to their agreement to borrow moneys from Aldonet, and in relation to the approval of the transfer of shares from Athann to Springsley, was oppressive and unfairly prejudicial to Nabatu. I accept that in relation to those matters Mr Crawley engaged in oppressive conduct; that he deliberately misled Mr Short as to the effect and purpose of the transfer from Athann to Springsley in such a way as to deprive Mr Short of the opportunity to restrain the transaction prior to its completion; that the transfer of the equitable interest in Athann's share in J & J O'Brien and the transfer of its share in Marsico was contrary to the restrictions on transfer contained in their Articles; and that Mr Crawley breached his duties as a director of the companies in failing to disclose his interests in the share sale transactions, in voting on the relevant resolutions without such disclosure, and in procuring Mr Davis to vote on the resolutions without disclosure of Mr Davis' interests in the share sale transaction. [966] In order for the share sale transaction to proceed, Mr Crawley needed to procure the companies' consent to the loans from Aldonet. In procuring that consent, Mr Crawley engaged in oppressive conduct, deliberately misled Mr Short as to the terms upon which the primary lenders to Aldonet were prepared to lend (by representing that the primary lenders had agreed to release the guarantees of Mrs Short and Mrs Davis and by representing that the establishment fee charged by the primary lenders was $150,000), and breached his duties as a director in the ways indicated in para [958] above. [967] The plaintiffs submitted that whether or not a fiduciary duty was owed by Mr Crawley to Nabatu, the Court could and should make the order sought under s 233(1) of the Corporations Act (or s 260(2) of the Corporations Law ) to avoid the effects of such oppressive conduct. I do not consider the orders sought are appropriate for two reasons." 132 The two reasons the primary judge would have refused relief were: (a)(i) the respondents had not demonstrated that they could have taken up the opportunity to acquire Athann's shares, or a half-interest in them, had the shares been offered for sale in accordance with the articles of association of each company; (ii) nor was this merely due to the oppression and breaches of duty which had occurred up to that time; and (b) laches. I will deal with these under the following two sub-headings. 2(b)(iv) - Would the Short interests have been able to buy Davis' shares? 133 At [967] of his reasons, the primary judge gave details as to why he considered that the Shorts would not have bought the Davis shares. 134 I have already set out the commencement of para [967]. The balance is as follows: "… the plaintiffs have not demonstrated that they could have taken up the opportunity to acquire Athann's shares, or a half-interest in them, had the shares been offered for sale in accordance with the articles of association of each company. Nor is this merely due to the oppression and breaches of duty which had occurred up to that time. If Athann's shares had been offered for sale in accordance with the articles of association of each company, and Nabatu had taken up the offer as to at least half of the shares, then finance from Prudential would have been required in order to pay out the Westpac debt. Mr Crawley could not have provided the finance through Aldonet because it was a condition of the loans to be made to Aldonet and to Mr Crawley that he obtain control of the group. But in order to borrow from Prudential, Nabatu and Mr Short would have had to provide the Cremorne property as security for the guarantees for Prudential's loan. Although the cash position of the group would have been improved had excessive fees for accounting and management services not been extracted, there would still have been the need to refinance, and the Cremorne property would have been required as security. The plaintiffs did not seek to prove that, in that event, they could have raised another $500,000, or presumably more, had the acts of oppression and breach of duty, which must have had a depressing effect on the price Mr Davis asked for his shares, not been committed. To make the orders now sought in relation to Springsley's shares would go further than to put the parties in the position in which they would have been had there been no oppression." 135 Mr Gleeson says that there are a number of answers to the primary judge's first disqualifying statement. First, there is no onus on the oppressed to demonstrate that they would have taken up the shares but for the oppression. Secondly, if the matter is relevant, the onus is on Mr Crawley. Thirdly, as was almost inevitable, the discussion at [967] does not take account of all relevant factors. 136 The primary judge accepted at [944] that in relation to a claim for an account of profits for breach of fiduciary duty, it is no answer for the person owing the fiduciary duty to say that the other party was unwilling or unable to take up the relevant opportunity: see Warman International Ltd v Dwyer [1995] HCA 18; 182 CLR 544 at 558. 137 The primary judge did not follow this thought through as he ruled that there was no fiduciary duty owed in this respect by Mr Crawley to the Short interests as opposed to the companies. 138 In my view, there is no analogy between the present case and an account of profits situation. Not only is it Aldonet, if anyone, that would account for profits, not Mr Crawley, the present case is one where the court has to consider what is the appropriate relief when it is conceded that there has been oppression. 139 In my view, the onus is on the plaintiff in an oppression suit to show that he or she has been unfairly treated. It is not enough to demonstrate that the defendant has been "naughty", the plaintiff must usually show that that "naughtiness" has been the cause of some loss. I say "usually" as there are some cases where, in a quasi partnership, justifiable loss of confidence may be sufficient without demonstrating pecuniary loss. 140 I agree with the submissions of the appellants that the respondents never sought to put up any evidence as to what they might have done in and about purchasing the Davis shares had the pre-emption articles been observed. I agree with the submission that the inference to be drawn is that they would not have made the purchase. 141 Thus, I would uphold the primary judge's finding. 2(b)(v) - Laches 142 The primary judge considered that the respondents were aware of Mr Crawley's breaches in 1997, but it was not until 2004 that they sought to pursue him for them. The delay had prejudiced Mr Crawley in the manner the primary judge set out so that the defence of laches succeeded. 143 The primary judge ruled at [922] that "prior to 16 May 1997, the plaintiffs did not know that a binding agreement had been reached between Mr Crawley and Mr Davis for the purchase of Athann's shares. Mr and Mrs Short and Mr Hannan suspected that a deal may have been done between Mr Crawley and Mr Davis as a result of what they had been told by Mr Leddin. However, their suspicions were contradicted by the information Mr Wiseman gave Mr Linden. That information was deliberately misleading. Prior to 16 May 1997 the plaintiffs were in no position to take any action to seek to restrain any transfer of shares from Athann to Mr Crawley or a party associated with him. They did not know that such a transfer had already been effected. They were misled as to the nature of the transfer from Athann to Springsley approved at the directors' meeting of 27 March 1997." 144 The judge said at [923], however, "from 16 May 1997, the plaintiffs did know all of the material facts upon which their present claim to half of the benefits attaching to the shares transferred from Athann to Springsley is based. From 16 May 1997 they were aware that interests associated with Mr Crawley had acquired the beneficial interests in the trusts on which the shares were held. They were aware of the facts which showed that Mr Wiseman and Mr Crawley had lied about the transfer when the transfer was approved at the directors' meeting of 27 March 1997. They were aware that the Articles of Association of J & J O'Brien had been amended to include the articles restricting the rights of members to transfer shares. They had the same information as to whether the restrictions in Article 48 of Marsico's Articles of Association were applicable as they had at the commencement of the hearing." 145 The primary judge then pointed out that "when proceedings were commenced on 16 June 1998, no claim was made challenging the validity of the transfer of Athann's shares to Springsley, or claiming relief to the effect of that presently sought. No such claim was advanced until amendments to the statement of claim were made in 2004. This was notwithstanding that Springsley's acquisition of Athann's shares was one of the instances of oppressive conduct pleaded in the statement of claim filed in 1998." 146 The primary judge inferred at [924] that "the plaintiffs made a considered decision not to challenge the transfer of shares from Athann to Springsley in the statement of claim filed on 16 June 1998. He said that it was clear from a letter written by Mr Short (but drafted for him by Mr Linden) to Mr Crawley on 4 July 1997 that he sought and obtained legal advice in relation to the transfer. In that letter Mr Short complained that, although he had been advised that the transfer of shares from Athann to Springsley had been made for personal reasons, it had since transpired that the transfer had been done to ensure that Mr Crawley would control two-thirds of the shareholding in the group in a secret manner." 147 The primary judge said later in his reasons at [968]-[971]: "[968] The second reason it is not appropriate to make the orders sought under s 233 or s 260 in relation to Springsley's shares is the plaintiffs' delay in challenging the share purchase transaction. The delay is such as would also disentitle the plaintiffs from equitable relief in respect of the transaction. A conscious decision must have been made in June 1998 not to challenge Springsley's purchase of Athann's shares. In the statement of claim filed on 16 June 1998 the plaintiffs alleged, as the tenth instance of oppression, that Mr Crawley caused Springsley to acquire Athann's shares for the purpose of gaining control of the assets and future income of J & J O'Brien and Marsico to the exclusion of Mr Short and Nabatu. The plaintiffs did not then seek orders setting aside the share purchase. Nor did they seek orders of the kind presently sought which would in effect strip Springsley of half of the difference between the value of its shares and the purchase price plus interest. [969] The fact that no such challenge was made, although the plaintiffs then complained of various acts of oppressive conduct on the part of Mr Crawley, also indicates that, at that time, Nabatu would not have been prepared to purchase a half-interest in Athann's shares even if relief was given against the oppression complained of. [970] A plaintiff 'may not stand by and permit the defendant to make profits and then claim entitlement to those profits' ( Warman International Ltd v Dwyer at 559; Re Jarvis (decd); Edge v Jarvis [1958] 2 All ER 336 at 341, citing Clegg v Edmondson (1857) 8 De GM & G 787 at 814). Between May 1997 and August 2004 (when the share purchase by Springsley was first challenged), Mr and Mrs Crawley, as the only directors of J & J O'Brien and Marsico, made decisions in relation to the refurbishment and operation of the hotels and in relation to borrowings from Aldonet in the belief that Mr Crawley and Springsley between them had a two-thirds shareholding in the group. Moneys were borrowed by Mr Crawley and by Aldonet from the ANZ Bank from 1998 to fund the continued operation of the hotels. On 9 October 1998, the ANZ Bank offered an increase in facilities to Aldonet of $2,025,000 which was on-lent by Aldonet to the group to allow J & J O'Brien and Marsico to purchase forty-five poker machine entitlements. Whilst this was a highly profitable investment, it involved a commercial risk for the group, and for Aldonet as a lender to the group, and for Mr Crawley as provider of security for the loans. [971] In 1999, building works were carried out to Jacksons on George to construct a new restaurant, bar, kitchen and cool-room facilities. A new bar was constructed on the second floor of the premises. Air-conditioning plant and equipment was replaced throughout the hotel. The works were carried out and paid for using funds generated by trading in the group rather than those funds being used to reduce the group's indebtedness. In about 2000, substantial building work was carried out to the Marlborough Hotel. A new bar on the first floor of the hotel was installed and a separate pool room to accommodate three pool tables was constructed. Simultaneously with that development, new air-conditioning was installed. The costs of the renovations were met from cash flow and from overdraft facilities. In 2001, the overdraft provided by ANZ to J & J O'Brien was increased from $400,000 to $600,000 to assist in the refurbishments. A temporary overdraft facility of $300,000 was provided in December 2001 to assist refurbishments. A new lease facility of $200,000 for air-conditioning, plant and equipment was entered into in 2002 for the Marlborough Hotel." 148 The primary judge then said at [972] that "all such decisions involved commercial risk to Mr Crawley who provided the security to support the facilities made available from 1998 by the ANZ Bank to Aldonet for on-lending to the group, or by way of direct facilities to the group." 149 The respondents challenge that, but it was open to the primary judge to so find. 150 The primary judge continued in that paragraph to find that "from 16 May 1997, the plaintiffs were aware of the facts which gave them the right to challenge Springsley's purchase of Athann's shares. They took legal advice in relation to their rights. Even if the plaintiffs' claims to have the right to elect to take a half-share of the capital profit derived by Springsley from its share purchase had otherwise been made good, the plaintiffs would be barred by laches. They would also be barred by acquiescence, that is, that Nabatu saw that its rights had been violated and acquiesced in that violation. The same considerations also preclude the relief sought under s 233 of the Corporations Act (or s 260 of the Corporations Law) in relation to that transaction." 151 The appellants say that, in addition, when one looks at the whole of the evidence, it is clear that the Short interests were unwilling to provide security over their residential property and, although one might speculate as the respondents' submissions now do, there is no reliable material to suggest that the Shorts could have received finance for buying out Davis as well as financing their other hotel acquisitions. The evidence shows that, at the relevant time, the Short interests in fact used the security of their residential property to finance other acquisitions. 152 Before dealing with this finding of requisite knowledge, one must ask oneself, "Why is laches relevant when considering a statutory remedy under the Corporations Act?" Normally, laches is only a defence against a purely equitable claim. 153 An answer may be that the oppression relied upon is an analogue of breach of equitable fiduciary duties so that, if one looks to equity for the duty, one looks to equity for the defence. 154 As far as my researches go, there has never been a case in Australia or England where laches has been raised as a defence to an oppression suit. 155 There are at least two explanations for this. First, laches only applies as a defence to an equitable claim. Secondly, if there is acquiescence in a course of conduct then it is difficult to maintain that that conduct is oppressive; see eg Jesner v Jarrad Properties Ltd [1993] BCLC 1032 (Court of Session). Even lack of interest by the plaintiff over a period may have this effect: Re RA Noble & Sons (Clothing) Ltd [1983] BCLC 273 and In re London School of Electronics Ltd [1986] 1 Ch 211 at 222. 156 By analogy of reasoning, if, in a case of oppression based on breach of fiduciary duty, the claim for breach of fiduciary duty would fail because of laches, it could not be said that at the date of hearing the court could find that the plaintiffs were being oppressed. 157 As I said in Campbell v Backoffice Investments Pty Ltd [2008] NSWCA 95; 66 ASCR 359 and the High Court affirmed on appeal (Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; 238 CLR 304 at 362 [182]), the thrust of the oppression remedy is to remedy oppression that exists at the date of hearing. 158 This is because the purpose of the legislation is to release a person from having his or her capital locked up in a corporate enterprise under unfair conditions. The section is not there to compensate for legal or equitable wrongs done to the plaintiff. 159 That is however, irrelevant in the instant case as oppression was conceded. 160 I thus have difficulty in seeing how laches can be a real issue in the case. 161 In re Gold Company (1879) 11 Ch D 701 is authority for the proposition that a delay may lead to dismissal of a suit to wind a company up on the just and equitable ground. However, Callaway in his Winding Up on the Just and Equitable Ground (Law Book Co, Sydney, 1978) notes that there is no reported case of delay ever leading to dismissal of a petition. 162 However, as the issue was raised and, in the light of what is relevant on a just and equitable winding up, and further the fact that both sets of counsel made submissions on the basis that laches was relevant, I must deal with the argument. 163 The elements of the defence of laches are: (i) knowledge of the wrong; (ii) delay; and (iii) unconscionable prejudice caused to the opponent by the delay. 164 The key element is whether, in all the circumstances, "it would be practically unjust to give a remedy" (per Lord Selborne LC in The Lindsay Petroleum Company v Hurd (1874) LR 5 PC 221 at 239-240). Normally, that means that the defendant must show both delay and detriment suffered by the delay, Fisher v Brooker [2009] 1 WLR 1764 at 1781 [64] per Lord Neuberger with whom Lord Hope, Lord Walker, Baroness Hale and Lord Mance agreed. 165 It is sometimes said that the essential nature of the defence is that the claim of the plaintiff is released in equity. This is often, but not always the case. Sometimes laches operates as an estoppel, see Fisher v Brooker and Ashburner's Principles of Equity 2nd ed (Butterworth & Co, London, 1933) at 520. The result of a successful plea of laches is that the plaintiff's equitable claim is dismissed. 166 In the instant case, the primary judge found all three elements in favour of the appellants. The second and third elements were clearly matters of fact and the first may also be. However, the first element throws up the question, "What degree of knowledge of the wrongdoing must a plaintiff have before he or she may be held guilty of laches?" 167 There is no doubt on the findings of the primary judge that as at July 1997 the respondents had some awareness that Mr Crawley had done some secret deal with the Davis interests. There is also little doubt that the full extent of Mr Crawley's machinations were not known to the respondents until about 2004. 168 The authorities give little guidance on the extent of the knowledge required. One of the leading statements is in Lord Blackburn's speech in Erlanger v The New Sombrero Phosphate Company (1878) 3 App Cas 1218 at 1279 that the plaintiff must be shown to have "such notice or knowledge as to make it inequitable to lie by". That statement was approved by this Court in Savage v Lunn (9 March 1998, also available as [1998] NSWCA 203 on the Court's Caselaw website) (BC9800548). Lord Blackburn acknowledged that his statement was very general, but said that he had "looked in vain" for any more distinct rule. 169 That general statement does not, of itself, assist in fixing the degree of knowledge required, but points to it being a question of fact and degree in each case to be taken together with all the other facts of the particular case. 170 Indeed, in most of the treatments of laches, the element of knowledge was clear, many cases involve a person who signed away her rights under improper pressure. Apart from an indication in an unreported decision of Hodgson J (as his Honour then was) in Wright v Union Fidelity Trustee Co of Aust Ltd (1 October 1985) (BC8500504) and this Court's remarks in Savage v Lunn that a plaintiff must have knowledge of the facts as well as his or her rights, I have found no assistance in the authorities on the point. 171 Where the equity sought is rectification, the cases digested in Pomeroy's Equity Jurisprudence 5th ed (1941) Vol iii at [856d] indicate that if there is no reason for the plaintiff to have looked for a mistake, the fact that the document on the face of it contains an error is insufficient to bar a claim by reason of laches. 172 In Orr v Ford [1989] HCA 4; 167 CLR 316, the majority in the High Court were looking to see if the plaintiff's inactivity in the face of knowing that the opponent wrongly held a particular belief amounted to a release of a claim in equity. The majority held, "No": however, Mason CJ and Deane J dissented, the latter delivering what has been held to be the leading analysis of the principle of laches. 173 Deane J said that in any case where laches is raised, one must identify with precision the substantive nature of the claim to which laches is said to constitute a defence (at 342). 174 As Deane J said, at 343, there was no debate about the degree of knowledge in Orr v Ford thus that case is not of direct assistance here, save that it tells us to focus on the claim for relief against oppression or, perhaps, breach of fiduciary duty. 175 The authorities show that in considering the defence of laches, all three elements must be taken together and the ultimate question asked as to whether, in all the circumstances, the plaintiff has impliedly, in equity, released the defendant from his or her claim or has so acted as to make it unfair that the claim should now succeed. 176 In cases of equities to set aside invalid allotments of shares, a very strict line is taken with respect to the delay factor; see eg Haas Timber & Trading Company Pty Ltd v Wade [1954] HCA 39; 94 CLR 593 and Ansett v Butler Air Transport Ltd (No 1) (1957) 75 WN (NSW) 299. 177 There have been a series of cases where former partners in a mining partnership had acted unconscionably, but action was not taken until after the former partners had, at great expense, made the mine prosperous. Examples are Senhouse v Christian (1795) 19 Beav 356n; 52 ER 387; Norway v Rowe (1812) 19 Ves 144; 34 ER 472 and Hart v Clarke (1854) 19 Beav 349; 52 ER 385. Such claims were barred by laches. This was even the result where the mine did not require large sums to be spent on it, but the plaintiffs had protested for many years but took no action, Clegg v Edmondson (1857) 8 De GM & G 787; 44 ER 593. Such cases are factually close to the present. 178 The philosophy considered in those cases has been applied in modern times; see eg Fysh v Page [1956] HCA 13; 96 CLR 233 and Baburin v Baburin (No 2) [1991] 2 Qd R 240. 179 In other cases, where there was no volatile commercial property involved, equity has been more tolerant of delay, the classic case being Hatch v Hatch (1804) 9 Ves 292; 32 ER 615 where 20 years' delay with respect to a grant of an advowson was excused. 180 Thus the degree of knowledge, the type of transaction and the prejudice to the defendant caused by the delay are all matters which need to be evaluated when assessing whether the defence of laches has been made out and it is an unrewarding task to search for some formula as to just what degree of knowledge must exist in any particular case. 181 Mr Gleeson submits that, because of the strictures against commencing or prosecuting proceedings alleging fraud without fully detailed and precise pleadings and the plaintiff and its lawyers having confidence that they can prove the case, equity should not allow the defence to succeed when the plaintiff has some, but incomplete, knowledge of its cause of action. 182 I consider that there is validity in that submission. However, it must be set off against fairness to the defendant. If a person strongly suspects that there has been unconscionable conduct perpetrated against him or her and does nothing either to obtain more detail nor to prevent the defendant going ahead on the basis that there is no challenge to his or her rights, then one is in the very territory that laches was designed to govern. 183 Some of the submissions in this case seemed to equate the defence of laches and the defence of release in equity of equitable rights. I believe that the two are distinct. The former is within the discretion of a judge in equity to decline to give relief; the latter has a more proprietary flavour about it. 184 The learned primary judge weighed up the issues and found for the appellants. I do not consider that there is any ground for this Court to interfere with his Honour's determination. 185 It follows that this ground of the cross appeal must fail. 2(b)(vi) - Liability of the Crawley interests 186 In view of my reasons on this section, I uphold the primary judge's decision and the cross appeal fails on this ground. 3. The Valuation Judgment 187 This matter needs to be approached under the following sub-headings: (a) The valuation of Jacksons on George Hotel (b) Other problems (i) Capitalisation rates; (ii) Possible deduction for selling costs; (iii) Capital Gains Tax implications; (iv) Other issues. 3(a) - Jacksons on George 188 Expert valuation evidence was given for the respondents by Mr Tony Owen of Owen Property Valuations and for the appellants by Mr Stuart Robertson of Robertson & Robertson. 189 Both valuers, and, seemingly, the primary judge found that the valuation should be on the highest and best use of the land and held that that use was as a hotel. 190 There was substantial disagreement between the parties as to the value of Jacksons on George. The value of Jacksons on George needed to be calculated for the purpose of calculating Marsico's net assets for the Court ordered purchase of Nabatu's share. 191 The parties' valuers valued this hotel as a going concern at $26.02 million (Mr Robertson) and $28.1 million (Mr Owen). 192 The primary judge rejected both valuations. He found at [96]-[97] of the valuation judgment that Jacksons on George (including all licenses and all other property) should be valued at $30.9 million, unless a higher value should be adopted to reflect its special value to a particular purchaser. 193 The primary judge noted that both valuers were highly experienced and that both adopted the same general approach, that is, to assess a figure for annual maintainable earnings before interest, tax, depreciation and amortisation ("EBITDA") and dividing that figure by a percentage yield or capitalisation rate. The higher the capitalisation rate, the lower the calculated valuation. 194 The following, taken directly from the primary judge's reasons, demonstrates why the valuers' ultimate figures differed. 195 At [6], his Honour said: "Mr Robertson … said that he applied a direct comparison method of valuation, but the relevant comparison was of yields, not aggregate values. The valuers were not valuing the real estate independently of the businesses. Their valuations for each hotel covered the freehold land, the business carried on that land, the licence, poker machine permits, and poker machine entitlements used in the business." 196 The EBITDA figures used by each valuer differed. Both valuers, to a certain degree, used "normalised" earnings. "In his first valuation, Mr Owen, with one qualification, used annualised actual revenues. His report was made on 12 May 2008 and he used revenue and expense figures for six months to 31 December 2007 which were multiplied by two (or 'annualised') to derive annual earnings. The only qualification to Mr Owen's adoption of the actual revenues for the six months to 31 December 2007 was that he used figures for gaming revenue for 12 months from 1 January 2007 to 31 December 2007": valuation judgment at [7]. 197 His Honour continued at [8] and following: "On the other hand, Mr Robertson used what he said were actual figures for the period of nine months to 31 March 2008, except for gaming revenue for the Marlborough Hotel where he based his assessment of maintainable gaming revenue figure on four quarter gaming results rather than 39 weeks. Both valuers relied on gaming revenue figures produced by a division of Tattersalls Ltd called Data Monitoring Services which operates a centralised monitoring system. Mr Robertson made a significant upwards adjustment to the recorded nine months' gaming revenue for Jacksons on George calculated on a per week basis purportedly by reference to the CMS invoices. It ultimately emerged in re-examination that in so doing, he had made a transposition error which had resulted in a mistaken calculation. Mr Robertson also made upwards adjustments to the revenue of both Jacksons on George and the Marlborough Hotel to reflect findings which he said had been made by Pitcher Partners, a firm of chartered accountants engaged by the plaintiffs to conduct an audit of both hotels. The audit covered the period for the six months to 31 December 2007. The audit report of Pitcher Partners was not tendered. It appears from Mr Robertson's valuations, supplemented by his oral evidence, that Pitcher Partners reported that meals and alcohol had been 'sold' to managers and staff but these sales had not been recorded as revenue in the general ledger of Marsico and J & J O'Brien. Mr Robertson made an upwards adjustment to the revenue of both hotels in respect of these so-called 'sales'. Mr Owen did not. The next stage in the valuation exercise was the determination of the gross profit to be derived from the sales. In respect of gaming and 'sundry' revenue, both valuers applied a 100 percent margin. In the case of bar sales, bottle sales and the sales of food through the hotels, Mr Robertson adopted the actual margins of the hotels. Mr Owen adopted a slightly higher margin as part of his assessment of 'normalised' earnings. Neither valuer stated explicitly which costs were to be deducted in calculating the margins in order to determine gross profit, but it was common ground that the relevant costs were the costs of purchasing the liquor and food. Both valuers made substantial downward adjustments to the other expenses of the hotels to derive a figure for maintainable earnings. [They also made] numerous adjustments … to the statement of actual expenses". 198 The primary judge then discussed the valuers' figures for the various items that led to their fixing of the EBITDA, generally preferring Mr Robertson's approach. 199 The primary judge noted that there was no significant difference between the valuers' assessment of the ongoing costs for repairs and maintenance once regard was had to the fact that Mr Robertson made a separate allowance for repairs and maintenance for gaming machines. 200 His Honour's assessment of maintainable expenses was $4,603,556 as shown in the table at [77] of the valuation judgment. This gives an EBITDA figure of $2,261,664: see also para [88] of his Honour's valuation judgment. 201 His Honour then remarked at [88] that "the percentage of EBITDA to turnover is 25.9 percent, which is at the bottom of the expected range of profitability, notwithstanding the high contribution of gaming profit. Wages and expenses are 52.7 percent of turnover, whereas Mr Robertson accepted that they should be no more than 45 percent of turnover if the hotel were run as efficiently as the Orient Hotel. That suggests that there are further potential annual savings of about $665,000 which could be achieved. If these were assumed and capitalised at 8.25 percent the valuation would be increased by about $8 million." 202 His Honour then concluded at [89] that "if EBITDA of $2,261,664 is capitalised at 8.25 percent, the resulting value is $27,414,109. [However] this would not take account of the potential for savings from a more efficient operation of the hotel." 203 After further discussion, the primary judge held at [96]: "In my view, the appropriate capitalisation rate to adopt is not 8.25 percent but 7.5 percent to reflect the potential for additional savings through more efficient operation of the hotel. To this should be added the figure of $735,000 representing the surplus value of the poker machine permits. This gives a figure of $30,890,520 which can be rounded to $30.9 million. In my view, that represents the current market value of the hotel, excluding any special value it may have to the adjoining landowner". 204 The primary judge then continued on to what he termed "special value". 205 This came about because of the facts stated by the primary judge early in his judgment at [5] that Jacksons on George is located at 176 George Street and is in a prime location on Circular Quay. It adjoins Gold Fields House at 1 Alfred Street, Sydney. Gold Fields House was acquired in June 2006 by Valad Commercial Management Ltd, a company in a group of companies known as the Valad Property Group ("Valad"). 206 On 28 May 2008, a company in the Valad Group, Valad Funds Management Ltd, made what it called an offer to purchase the site at 176 George Street for $30 million. 207 The so-called "offer" as set out at [99] of his Honour's valuation judgment, was materially as follows: " We understand that the property is not for sale and we are making an undertaking on our behalf via Mr Ben Parkinson of CB Richard Ellis [sic]. Property: 100% of the vendor's interest in the subject property, including all fixtures, fittings, software and associated warranties, plans and any other items considered necessary to maintain the effective ownership of the property. Purchaser: Valad Funds Management Limited (VFML) ... Price: Thirty Million Dollars ($30,000,000) plus stock at valuation This offer is NOT conditional upon a capital raising. Valad will be utilising its existing debt and equity capacity to complete the transaction. Due Diligence: Due Diligence period 8 weeks from the receipt of the due diligence information. Exchange to be at the expiry of the due diligence period. Settlement Structure: Settlement to be 60 days from exchange of contracts ... Exclusive Due Diligence Period: The Vendor must allow the Purchaser full access to the property, together with all records, files and agreements relating to the property. ... Conditions: The transaction is subject to: – § Valad Property Group's board approval § Due diligence to the satisfaction of the purchaser § Satisfactory sale documentation § The other terms set out in this letter … Valad is well known in the market place for its ability to transact expediently and complete on transactions once in due diligence. We have a proven track record, which has been demonstrated by recent acquisitions and we are happy to provide references if required. We are prepared to mobilise resources immediately in order to execute on this transaction. " 208 Mr Crawley replied to this letter on 26 June 2008 as follows: " RE: OFFER TO PURCHASE – JACKSON ON GEORGE PROPERTY: 174-176A GEORGE STREET SYDNEY We are in receipt of your letter dated 28 May 2008. We refer to the first paragraph of your letter under reply and confirm that your understanding as expressed therein is correct and the situation has not changed. " 209 On the face of the proposal, the "offer" did not extend to the acquisition of Marsico's hotel licence, poker machine permits or poker machine entitlements, all of which are transferable and were valued at between $6.5 million and $7.5 million. 210 The primary judge held at [102] that the total value of the property at this offer would have been $36.5 million. 211 The primary judge found at [122] that it could and should be inferred from the letter of 28 May 2008 that the site of Jacksons on George was of special interest to Valad. 212 His Honour also held at [125] that "Mr Crawley's failure to respond to the offer should be taken as an admission by him, by conduct, that the property without the hotel license, poker machine permits and entitlements was worth more than $30 million." 213 The primary judge took the view at [102] that as the offer in the letter of 28 May 2008 was a first offer, "there may have been scope for it to have been increased." More likely, had Mr Crawley indicated that he was content with $30,000,000 that would have put a cap on the price, not a floor. Of course, he could have put a counter offer, but that would not have assisted the valuation process. 214 Although this is rather tangential to the point now being discussed, the primary judge said at [103] that Mr Crawley was obliged to act in the interests of all shareholders in responding to the offer from Valad. His Honour continued that, on the face of the letter, there would be an opportunity for Mr Crawley to realize the assets for at least $36,500,000. There was no evidence from Mr Crawley as to his reasons for responding in the way he did. His response appears to have foreclosed discussion, at least for the time being. 215 The respondents put that the fact that someone is prepared to pay more than market value for land itself affects market value. 216 The appellants say that there is no authority for such a proposition and that the proposition conflates a number of distinct concepts critical to the appeal. 217 As Cozens-Hardy MR said in Inland Revenue Commissioners v Clay [1914] 3 KB 466 at 472, it is absurd to value a piece of land disregarding the known fact that a particular person is probably willing to pay above market value for it. 218 This Court in MMAL Rentals Pty Ltd v Bruning (2004) 63 NSWLR 167 at 184 [97] adopted the proposition that where a specific purchaser is known to be interested in a property and has made an offer to buy it, evidence is receivable of such an offer and, indeed, may set the floor when determining market value. 219 This view has been applied thereafter; see eg Baiyai Pty Ltd v Guy [2009] NSWCA 65 and Auxil Pty Ltd v Terranova [2009] WASCA 163 at [42]-[52]. 220 However, as I have indicated, the so-called "offer" in the present case may have set a ceiling rather than a floor. 221 The appellants say that the primary judge erred in treating the Valad letter as an offer. The primary judge erred in treating it as a formal offer: it was not in law an offer, but even if it were such, the suggested conditions such as a period of due diligence, satisfactory sale documentation and approval by the Valad board showed that it was hardly a firm offer. 222 In my view, the so-called "offer" was not, in law, an offer at all. It was merely an invitation to treat, perhaps also aimed at fixing a ceiling price for the hotel. 223 Buhrer v Tweedie [1973] 1 NZLR 517; Macquarie Generation v CNA Resources Ltd [2001] NSWSC 1040 per Palmer J (noted (2001) 75 ALJ 747) and my own decision in Russo v Resource Developments International Pty Ltd [2003] NSWSC 239 at [171] are authority for the proposition that an offer subject to the offeror's own board's approval is no offer at all in law. That proposition has never been doubted. 224 That conclusion is actually reinforced in the present case by the due diligence provision. 225 The issues discussed in the submissions in chief of the parties centre on whether the Valad letter could be a basis for attributing special value to the Jacksons on George Hotel based on the principles in Goold v Commonwealth of Australia (1993) 42 FCR 51 in particular: whether the Valad letter could be considered an "offer"; whether there was evidence that the Valad letter was genuine; whether an expression of interest had any relevance to the value of the land to the Valad Group; whether the Valad letter could be used as direct evidence of value; whether Mr Crawley's response could be treated as an admission of value (including discussion of the Evidence Act , s 81); whether the letter, properly construed, excluded the hotel and gaming licences and entitlements (ie the scope of the expression of interest). 226 In my view, because of what I have already said, it is unnecessary to discuss these issues. 227 Accepting that cases like MMAL Rentals Pty Ltd v Bruning allow offers to be taken into account in appropriate circumstances, this "'offer"' was not in that class and was of no value in fixing the value of Jacksons on George except as an indication that the adjoining owner was a probable purchaser. 228 However, even here, the "offer" was of little value. The valuers had proceeded on the basis that the highest and best use of the subject property was as a hotel. The primary judge had accepted that basis. What an adjoining owner might have paid because it wanted to expand its own site probably for a mixed commercial and residential development was irrelevant to the valuation of the property on its agreed highest and best use. 229 However, even assuming that the above propositions are wrong, the appellants submit that the primary judge misused the concept of special value. 230 The appellants' submissions in reply then discuss in detail the concept of "special value" and "special potentiality" of land to adjoining properties. They say that "special value" is an expression which unfortunately has been employed in the authorities with two distinct meanings. 231 They submit that, first, and more correctly, it is used to describe the additional value of a parcel of land accruing to its owner and measured by what the owner would be prepared to pay, rather than lose it. 232 Secondly, less correctly, the expression is sometimes used to describe the fact that an adjoining landowner may be prepared to pay more than others because of some efficiency arising from the combined utilisation of the sites which is available only to it. The concept is better termed "special potentiality" as was done in MMAL Rentals Pty Ltd v Bruning. 233 The appellants submit that it is quite wrong to equate a neighbouring owner's perceived value to it with market price. 234 Here, the primary judge determined that the market value of the property on its best and highest use was $30,900,000. Even if a neighbouring owner considered that the property was worth $36,000,000 to it, that was of no value in determining the market value. 235 Thus, in resumption cases, when it is necessary to calculate the value of the land to its owner, one can take into account its special value; see eg Pastoral Finance Association Ltd v The Minister [1914] AC 1083. However, that is a different exercise from determining the property's market value. 236 I agree with those submissions which seem to me to be clearly established by authority. 237 There was also discussion before the primary judge and before us on the significance of the fact that discovery of the Valad offer was only made the Friday before the commencement of the hearing of the valuation matters. 238 The debate covered matters as to whether the respondents should have sought an adjournment to investigate the "offer": did they know about it already; on whom was the onus of showing it was or was not genuine; what, if any Jones v Dunkel inferences might or might not be drawn; and whether the late discovery led to the inference that Mr Crawley knew that disclosure of the "offer" would inflate the valuation. 239 The primary judge did draw the lastmentioned inference. 240 However, all this debate and its result could not affect the valuation of Jacksons on George. 241 The valuation made on the basis of the highest and best use of the hotel was $30,900,000 and the primary judge was in error in taking its value at $36,500,000. 3(b)(i) - Capitalisation Rates 242 Mr Owen adopted a capitalisation rate of 7% for Jacksons on George and 8.5% for the Marlborough Hotel. Mr Robertson adopted the capitalisation rates of 8.25% and 8.75% respectively. 243 Both valuers adopted their capitalisation rate taking into account the assumption that there would be a "solution" to the smoking ban problem which had had an adverse effect on revenue. 244 The primary judge did not adopt either valuer's opinion. It was, of course, open to him to do so. At first blush, there would appear to be little by way of explanation as to why the primary judge chose a capitalisation rate for Jacksons on George of 7.5% 245 The appellants say that this was an arbitrary unreasoned determination contrary to the reasoned opinions of both experts and should not be permitted to stand. 246 The respondents put that the above submission is unfair to the primary judge. If one looks at the detailed evidence of the valuers and the judge's discussion of their evidence in the valuation judgement at [24], [25], [71], [73], [88] and [89], the primary judge has appropriately disclosed his reasons for choosing the rate he did. The respondents say that the primary judge correctly concluded that the higher capitalisation rate failed to take into consideration potential savings from more efficient operation of the hotels: (Orange 199). 247 When one reads the valuation judgment as a whole, the respondents' submissions are seen to be correct. 248 At [89] of the valuation judgment the primary judge said that for the reasons he had already given, he did not consider that such potential has been taken into account by either valuer in the capitalisation rate. He further said that he did not "consider that there should be an adjustment to the capitalisation rate to bring the potential savings of about $665,000 per annum immediately to account as if the potential for making such savings had already been realised. To make such an allowance in the capitalisation rate would require reducing the yield from 8.25 percent to about 6.4 percent. Nonetheless, the potential for making such savings warrants a substantial adjustment to the capitalisation rate." 249 After further discussion, his Honour concluded at [96] that the appropriate capitalisation rate to adopt was 7.5 percent "to reflect the potential for additional savings through more efficient operation of the hotel." 250 This conclusion was well within the mandate of the primary judge to determine the question of valuation as a matter of fact. 251 Accordingly, this branch of the appeal ground is not made out. 3(b)(ii) – Possible deduction for selling costs: Relevance of the costs of selling (2%) which might be incurred if the Marlborough Hotel and Jacksons on George were sold by the appellants 252 The issue here is that if the Crawley interests were to realize the hotels and other assets they would necessarily incur costs. Is it appropriate to deduct those estimated costs when arriving at a value of the shares? 253 The primary judge agreed with the appellants that it was so appropriate. 254 The respondents (cross appellants) say that the primary judge erred for three reasons. First, there is no evidence that the appellants intend to sell the hotels. Indeed, this has been confirmed by their conduct after White J's decisions. Secondly, that these expenses were personal to the Crawley interests. Thirdly, it was a wrong approach to look at the value on a liquidation basis. 255 The primary judge said at [182]-[183]: "[182] On an actual liquidation, Nabatu would be entitled to one-third of the value of the surplus of assets over liabilities. The value of its interest would not be depressed by its being a minority holding. I have found that it is fair that its shares be valued without discount for its being a minority holding. Short of a liquidation, that is achieved only by a notional realisation of assets. Hence, I ordered that Nabatu's share be purchased at a valuation of one-third of the net assets of the company without discount for its being a minority parcel, with the companies' assets to be valued on the basis of current market values assuming willing but not anxious vendors and purchasers. Nabatu cannot take the benefit of that approach to valuation without accepting the consequences. The question is what would Nabatu receive on a realisation of the companies' assets? For that question to be properly answered, account must be taken of selling costs and liability for capital gains tax. [183] It is not to the point that the shareholders of J & J O'Brien might sell their shares rather than causing the company to sell the hotel. As a matter of principle, one would expect a prospective purchaser of shares to discount the price to be paid for the capital gains tax that would be payable when the property is sold." 256 The primary judge thus allowed a deduction of 2% for selling costs. 257 The respondents challenge this ruling. They say that the effect is that the wrongdoers have acquired the Short's shares at a discount as they may never sell the assets or shares and so never incur selling costs and Capital Gains Tax ("CGT"). 258 The submissions put as to why the primary judge's approach was wrong as a matter of principle is that the remedial focus must be on reversing the oppression. This may often mean that shares need to be valued on a basis involving some fictitious factors. The judge in such cases often has to ask himself or herself, what would have occurred but for the wrongdoing and value the shares as if that fictional event had occurred. 259 In the instant case, the primary judge stopped short. He valued the shares as if they were to be conveyed at market value. He needed to take the extra step of working out what adjustments needed to be made to give effect to the purpose of the section. 260 Counsel for the respondents cited the decision of the Privy Council on appeal from the Cayman Islands Court of Appeal in CVC/Opportunity Equity Partners Ltd v Demarco Almeida [2002] 2 BCLC 108. 261 Counsel focused on p 118 [37] of the judgment of Lord Millett who delivered the opinion of the Board. 262 In that paragraph, his Lordship noted that there are three possible and permissible methods of valuing the plaintiff's shares in an oppression suit: (1) as a rateable proportion of the total value of the company as a going concern without any deduction; (2) as before, but with a discount; and (3) as a rateable proportion of the value of the company on a liquidation basis. 263 However, Lord Millett pointed out at p 119 [41]-[42] that on a dissolution of a partnership there was a sale of the entire partnership business and that if some of the existing partners wished to acquire the business, they had to pay for the whole. Thus, the minority share was given the same value as the majority shares. In the case of a quasi partnership under a corporate vehicle, although neither the company nor its business is sold, by denying a discount for the fact that the plaintiff has only a minority share, the same result is achieved. 264 Respondents' counsel endeavoured to use the passage at [37] to say that, not only does a court not apply a discount for minority holding, but also, it does not apply any other discounts from the market value of the company's assets. 265 I find this submission a little difficult as the passage, when read with [41], merely points to a good historical reason for disregarding the fact that the shares to be purchased are minority shares. 266 Indeed, their Lordships reject the proposition that the purchase price should be anything other than a fair price; see eg [44]. 267 Counsel then point to the judgment of Campbell J (as his Honour then was) in United Rural Enterprises Pty Ltd v Lopmand Pty Ltd (2004) 47 ACSR 514, especially at 524 [57] and 524-525 [60]. 268 In that case, the general principle applied in Fedorovitch v St Aubins Pty Ltd (No 2) (1999) 17 ACLC 1558 (a decision of mine) - that it is only matters which affect the value of a share which should be taken into account in fixing a price for a compulsory buy-out order was followed by Campbell J and can and should be applied here. 269 On the evidence before him in that case, Campbell J determined that there should be no discount for the sort of matters with which I am here concerned. 270 However, the evidence in the present case which the primary judge accepted is that any skilled valuer would include in the valuation a discounting factor for selling expenses and CGT because either the buyer will have to pay those expenses itself or any sub-purchaser will only buy at a price calculated on such a deduction being made. 271 In the light of this evidence, the primary judge was justified in taking these expenses into consideration. 3(b)(iii) - Capital Gains Tax implications 272 A similar argument was put in relation to CGT liability if the hotels were realized. 273 On this matter the primary judge said that Mr Crawley, Athann and Nabatu acquired the shares in J & J O'Brien prior to the introduction of CGT. The company was already the owner of the Marlborough Hotel. CGT would not be payable by J & J O'Brien on the sale of the Marlborough Hotel, except insofar as the sale involved the sale of assets which, for CGT purposes, are to be treated as separate assets acquired after 20 September 1985. 274 The judge identified at [171] the chief of these assets as the 15 poker machine permits acquired by J & J O'Brien in about October 1998 at a cost of $750,000. The judge adopted a value of $240,000 per permit. The capital gain on the poker machine permits, after indexation of the cost base was identified as $2,768,775 giving rise to CGT of $830,633. 275 In addition, there was the acquisition between 1988 and 1991 of land and buildings adjacent to the hotel which have subsequently been incorporated into the hotel. Mr Carter said that this land comprises about 20 percent of the total hotel site and is a separate asset for CGT purposes. 276 The primary judge concluded at [176] that if the hotel were sold, J & J O'Brien would face a liability for CGT of $1,156,819. 277 The respondents submitted both before the primary judge and before us that it was not appropriate to include as a notional liability of the company in adjusting the balance sheet, the fees and taxes that would be payable if the underlying real estate were sold. In this respect they relied upon United Rural Enterprises Pty Ltd v Lopmand Pty Ltd especially at [57] and [60]. 278 However, the judge rejected the respondents' submissions. 279 After discussion, the primary judge referred, at [187]-[190], to accounting standards that provided that if assets in the books of a reporting entity are revalued to their fair value, then the entity should include the likely CGT as a deferred liability. The primary judge said that, although the relevant companies were not reporting entities, the significance of those standards is the recognition by those responsible for establishing accounting standards. He held at [190] that "consistency requires that if assets are revalued to fair value, based on their market value if the asset were sold, the company should recognise the taxation liability which would accrue were the asset to be realised. That is so irrespective of whether it is intended that the asset be sold. In my view, the same principle applies in the present case." 280 The primary judge thus ruled at [191] that "the balance sheet of J & J O'Brien should be further adjusted by recognition of a liability for capital gains tax of $1,156,819. For the same reason, the value of the Marlborough Hotel should be brought to account after allowing for two percent selling costs, namely, at a figure of $18,865,000." 281 The respondents challenge this ruling. 282 The argument presented on this issue is virtually the same as that presented on the previous matter. The result must be the same, namely that the primary judge's decision is upheld. 283 Thus, the cross appeal on the previous two points must fail. 3(b)(iv) - Other issues 284 The appellants complained that the primary judge miscalculated the Gaming Device Duty. The respondents have now conceded that the primary judge was in error in adopting a figure of $411,708 for Gaming Device Duty for the Marlborough Hotel and that the proper expense is $462,120 (see Yellow 1013). 285 A document was handed up in court dealing with the consequences of this error. 286 Various issues appeared to be alive at the commencement of the hearing of the appeal, but were abandoned. The appellants abandoned their appeal with respect to the interest judgment ([2008] NSWSC 1353). When this occurred, Mr Gleeson asked for the costs thrown away. 287 Later, the cross appeal concerning the Elizabeth Street development was abandoned. I assume that the same cost considerations arise with this abandonment. 4. Conclusions And Orders 288 It is clear from the issue of Gaming Device Duty alone, that there must be some recalculation of the value of the shares in the second and third appellant companies and that, at least to that extent, the appeal must be allowed. 289 Otherwise, the appeal has succeeded: (a) unanimously on the valuation of Jacksons on George which has the effect of reducing the value of the assets of the Marsico company by 5.6 million dollars; and (b) by majority as to the relevance of the alleged discounting factor for selling costs and CGT liability. 290 The cross appeal has succeeded, but only for a relatively small amount. 291 The adjustments necessary to reflect the views of this Court will need to be calculated by the appellants and, if possible, agreed. 292 Thus, the proceedings should stand over for short minutes to be brought in. We will set a timetable for the submission of drafts and comments thereon. 293 The question of costs should be dealt with after the final form of orders have been considered and counsel have had the opportunity to address, preferably in writing, on what are the appropriate orders to be made. **************************** 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.