Supreme Court New South Wales Medium Neutral Citation: Denis Cassegrain & Ors v Gerard Cassegrain & Co. Pty Ltd & Ors [2012] NSWSC 403 Hearing dates: 10, 11, 12, 13 and 14 October 2011; 7 December 2011 Decision date: 27 April 2012 Jurisdiction: Equity Division - Corporations List Before: Bergin CJ in Eq Decision: Plaintiffs entitled to relief. Cross-Claim to be dismissed Catchwords: [CORPORATIONS] - whether the transfer of shares of the corporation in two other corporations by directors to wife and daughter respectively amounted to oppression against the minority shareholders - whether notice was given - whether consent or acquiescence - whether shares transferred at undervalue. [DIRECTORS] - Obligations in circumstances where transfer of corporation's assets are to be transferred to a family member - whether consent obtained - whether breach of statutory duties and breach of fiduciary duties. [KNOWING RECEIPT] - where wife/daughter to whom shares transferred aware of circumstances which would indicate the facts to an honest and reasonable person - where admission that transfer was to avoid litigation and/or appointment of provisional liquidator. [CONVEYANCING] - Conveyancing Act 1919 (NSW) - s 37A - whether alienation of shares to delay hinder or defraud creditors - where admissions that transfer was made to avoid the appointment of a provisional liquidator. [EVIDENCE] - where plaintiffs did not give evidence - "rule" in Jones v Dunkel - whether necessity to give evidence to prove oppression under s 232 of the Corporations Act 2001 (Cth) - and/or to prove prejudice under s 37A of the Conveyancing Act 1919 (NSW) Legislation Cited: Conveyancing Act 1919 (NSW) Corporations Act 2001 (Cth) Evidence Act 1995 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Agricultural & Rural Finance Pty Limited v Gardiner [2008] HCA 57; 238 CLR 570 Atkinson v Australian Rural Group Ltd [2002] NSWSC 1232; 44 ACSR 152 Baden Delvaux & Lecuit v Societe Generale pour Favoriser le Development du Commerce [1992] 4 All ER 16 Bank of Credit & Commerce International (Overseas) Ltd v Akindele [2001] Ch 437 Barnes v Addy (1874) 9 Ch App 244 Belmont Finance Corporation v Williams Furniture Ltd (No 2) [1980] 1 All ER 393 Cassegrain v Cassegrain [1998] FCA 811; BC9803240 Cassegrain v Cassegrain [1999] NSWSC 1165 Cassegrain & Anor v CTK Engineering Pty Limited & Anor [2004] NSWSC 1068 Cassegrain & 1 Or v CTK Engineering Pty Ltd & 1 Or [2005] NSWSC 495; 54 ACSR 249 Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 Denis Cassegrain v Gerard Cassegrain & Co Pty Ltd [2008] NSWSC 976; 68 ACSR 132 Dunn v CTK Engineering Pty Ltd [2002] NSWSC 365 Ebrahimi v Westbourne Galleries [1973] AC 360 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89 Fexuto Pty Limited v Bosnjak Holdings Pty Limited [2001] NSWCA 97; 37 ACSR 672 Gerard Cassegrain & Co Pty Limited v Cassegrain [2011] NSWSC 1156 Housing Commission of NSW v Falconer & Anor [1981] 1 NSWLR 547 Jones v Dunkel (1959) 101 CLR 298 Marcolongo v Chen [2011] HCA 3; 242 CLR 546 Morgan v 45 Flers Avenue Pty Limited (1986) 10 ACLR 692 Minister for the Army v Parbury Henty & Co Pty Ltd (1945) 70 CLR 459 Re George Newman & Co [1895] 1 Ch 674 Robins v Incentive Dynamics Pty Ltd (in liq) (2003) NSWCA 71 Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) (2008) 70 ASCR 1; (2008) WASC 239 Tomanovic v Argyle Hq Pty Ltd; Tomanovic v Global Mortgage Equity Corporation Pty Ltd; Sayer v Tomanovic [2010] NSWSC 152 Category: Principal judgment Parties: Denis Cassegrain (1st Plaintiff/2nd Cross Defendant) Catherine Dunn (2nd Plaintiff/3rd Cross Defendant) Patrick Cassegrain (3rd Plaintiff/5th Cross Defendant) John Cassegrain (4th Plainitff/4th Cross Defendant) Gerard Cassegrain & Co. Pty Limited ACN 000 342 174 (1st Defendant) Claude Cassegrain (2nd Defendant/Cross Claimant) Felicity Cassegrain (3rd Defendant) Anthony Blake Sarks (4th Defendant) Expressway Spares Pty Ltd (1st Cross Defendant) Anne Marie Cameron (6th Cross Defendant) Representation: M A Ashhurst SC/ G Colyer (Plaintiffs/2nd to 5th Cross Defendants) G C Lindsay SC/ G McGrath SC/ P Bolster (2nd and 4th Defendants/ Cross Claimant) J J Garnsey QC/P J Gormly (3rd Defendant) D Stack (1st Cross Defendant) McCabe Terrill Lawyers (Plaintiff/2nd to 5th Cross Defendants) Oliveri Lawyers (1st, 2nd, 4th Defendants/Cross Claimant) Peter Condon & Associates (3rd Defendant) Thomsons Lawyers (1st Cross Defendant) File Number(s): 2008/281625 Publication restriction: Nil Judgment 1The members of the Cassegrain family have been litigating against each other for years. This litigation arises out of yet another dispute in the family. The plaintiffs, Denis Cassegrain (Denis), Catherine Dunn (Catherine), Patrick Cassegrain (Patrick) and John Cassegarain (John), who are siblings, seek a declaration and consequential orders that the transfer in January 2005 of the shares of Gerard Cassegrain & Co Pty Limited (GCC), the 1st defendant, in Cassegrain Tea Tree Oil Pty Ltd (formerly Endwise Holdings Pty Ltd) (TTO) and Oceania Agriculture Pty Ltd (OAL), to Felicity Cassegrain (Felicity), the 3rd defendant, the wife of the 2nd defendant, Claude Cassegrain (Claude) (a sibling of the plaintiffs) and daughter of the 4th defendant, Anthony Sarks (Mr Sarks), was oppressive to, unfairly prejudicial to, or unfairly discriminatory against them. Although there were claims under s 37A of the Conveyancing Act 1919 (NSW) in respect of these share transactions, the plaintiffs limited this claim to only the OAL share transaction. The plaintiffs seek declarations that Felicity holds her shares in TTO and OAL on trust for GCC. 2In a derivative action brought by Denis on behalf of GCC, there are claims that Claude and Mr Sarks were in breach of their fiduciary and statutory duties as directors of GCC in causing the transfer of the shares to Felicity without obtaining an up to date market appraisal of the value of the shares and in selling the shares to Felicity at an undervalue. It is claimed that Felicity was knowingly involved in these breaches. 3There is a Cross Claim brought by Claude against Expressway Spares Pty Ltd (Expressway) (1st cross defendant), Denis, Catherine, John and Patrick (2nd to 5th cross defendants respectively) and Anne Marie Cameron (Anne Marie), another sibling (6th cross defendant). Each of the siblings is a shareholder of Expressway. Claude claims, inter alia, that his siblings have conducted the affairs of Expressway and its wholly owned corporations, Cassegrain Wines Pty Ltd (Wines) and Cassegrain Tradition Pty Ltd (Tradition), to their advantage and to his disadvantage. Claude also claims that the plaintiffs have brought these proceedings for the predominant purpose of exerting pressure on him or GCC to surrender their rights. He claims oppression and seeks an order that Expressway be wound up on just and equitable grounds. 4The proceedings were heard on 10, 11, 12, 13 and 14 October 2011. The matter was then adjourned by consent to 7 December 2011 when final oral submissions were made in addition to the written submissions that had been filed in the interim. Mr M A Ashhurst SC, leading Mr G Colyer, of counsel, appeared for the plaintiffs. Mr G C Lindsay SC and Mr G McGrath SC, leading Mr P Bolster, of counsel, appeared for Claude and Mr Sarks. Mr JJ Garnsey QC leading Ms P J Gormly, of counsel, appeared for Felicity. Mr D Stack, of counsel, appeared for Expressway. The Corporations 5There are a number of corporations involved in the events, the subject of the disputes between the parties, the structure of which it is appropriate to refer at this point. Gerard Cassegrain & Co Pty Ltd (GCC) 6GCC was incorporated in 1960. It was the company through which the late Gerard Cassegrain (who died on 29 October 1993) carried on his logging business. Over time GCC acquired extensive landholdings in the Port Macquarie area. 7At the times relevant to the issues in these proceedings Claude was a director and shareholder and Mr Sarks was a director. Claude held all of the 20 Ordinary shares, 10 A Class shares in his own right and another 40 A Class shares jointly with Felicity. Denis, Catherine, Patrick, John and Anne-Marie each held 10 A Class shares. The 20 Ordinary shares entitled Claude, as the holder of not less than fifteen percent of the paid up capital of GCC, to demand a poll at any general meeting of GCC and to command a majority of votes on a poll at any general meeting of GCC. 8On 15 June 1999 the Commonwealth Bank of Australia (CBA) appointed receivers and managers to GCC pursuant to a facility provided to GCC in respect of which it was in arrears. Cassegrain Tea Tree Oil Pty Ltd (TTO) 9Cassegrain Tea Tree Oil Pty Ltd (TTO) (referred to in some of the documents as CaTTO), formerly Endwise Holdings Pty Ltd (Endwise) was incorporated in November 1989. At the relevant time Claude was a director and shareholder and Mr Sarks was a director. Claude held one Ordinary Share and GCC held the other. Since 12 February 1990 TTO has been the registered proprietor of what has been referred to in the proceedings as the "Wynne Property" (and sometimes referred to as "Minnamurra") at Bill Hill Road, The Hatch, New South Wales. A tea tree plantation was operated on the Wynne Property that is the subject of later analysis. 10On 15 June 1999 the CBA appointed receivers and managers to the assets of TTO pursuant to a facility provided to TTO in respect of which it was in arrears. Oceania Agriculture Pty Ltd (OAL) 11Oceania Agriculture Limited was incorporated on 18 November 1996 as an unlisted public company. On 24 July 2003 it changed its status to a proprietary company and became known as Oceania Agriculture Pty Ltd (OAL). It is a wholly owned subsidiary of GCC. Claude has been a director of OAL since 27 September 2002 and its sole director since 23 October 2003. It was involved in the tea tree Projects described later. Agricultural & Rural Finance Pty Limited (ARF) 12Agricultural & Rural Finance Pty Limited (ARF) was incorporated in 1997. Between 27 March 1997 and 15 February 2005, Mr Sarks was a director. ARF was involved in the provision of loans to investors in the tea tree Projects as described later. CTK Engineering Pty Limited (CTK) 13Barrett J (as his Honour then was) described CTK Engineering Pty Limited (CTK) as follows in Dunn v CTK Engineering Pty Ltd [2002] NSWSC 365: [2] CTK was formed in March 1966 by Gerard Rene Jean Francois Cassegrain, Joseph Roy Terp and Nedo Kundicevic. It became their successor in a business of carrying timber in the Wauchope area. The name of the company was derived from the first letter of each surname. The initial share capital consisted of three fully paid A class voting shares, one held by each of the founders. B class non-voting shares were later issued to members of the founders' families. Certain of these shares were afterwards transferred to other persons. Further B class shares were subsequently issued in circumstances which it is not relevant to relate. ... [4] After its formation, CTK carried on a logging business for several years. It then became involved in civil engineering works, sand mining and restoration works. CTK no longer pursues any of these activities but is the owner of several parcels of land in the Sancrox area lying between Port Macquarie to the east and Wauchope to the west. GC&Co has land holdings in the same locality. All relevant land carries a rural zoning under the planning scheme administered by Hastings Council. In about 1988, a proposal was conceived under which the land of both CTK and GC&Co might become the subject of a major development. Steps were taken in that direction and expenditures were incurred by GC&Co. In the end, the plans came to nothing. CTK has sold two parcels of land in recent years to produce funds required for particular purposes. At this stage, its assets consist virtually exclusively of the residue of the land and the balance of the sale proceeds. 14CTK operated the tea tree plantation at a time after the Projects were terminated. A provisional liquidator was appointed to CTK on 12 November 2004: Cassegrain & Anor v CTK Engineering Pty Limited & Anor [2004] NSWSC 1068. Expressway Spares Pty Ltd 15Expressway Spares Pty Limited (Expressway) was registered in New South Wales on 10 December 1964. Its main business is acquiring machinery and selling it off as spare parts. 16Claude holds 15 (13.89%) of the ordinary shares in Expressway. Denis holds 15 shares (13.89%); Catherine holds 20 shares (18.52%); John holds 3 shares (2.8%); Patrick holds 20 shares (18.52%); and of Anne-Marie holds 35 shares (32.4%). 17Expressway is the sole beneficial owner of Cassegrain Vineyards Pty Limited (now Wines) and Tradition. The Tea Tree Project 18From 1995 Claude and others developed two Projects to establish a tea tree plantation on the Wynne Property that would be financed by public investment (the Scheme). Shortly described TTO leased the Wynne Property to the Project Trustee, Australian Rural Group Limited (ARG). ARG subleased the Wynne Property to OAL. OAL licensed identified portions of the Wynne Property to investors. OAL acted as manager of the Scheme and was responsible for planting, maintaining and harvesting tea trees on the Wynne Property. ARF offered investors a loan to pay for part of the initial licence and management fees. ARF in turn borrowed from OAL in order to lend to the investors. OAL entered into Indemnity Agreements with investors who borrowed from ARF under which, in certain circumstances, OAL agreed to indemnify investors against any amount owing to ARF on the investor's loan. 19On 1 April 1997 TTO, as landowner, entered into a Project Deed for the Port Macquarie Tea Tree Plantation to be operated on the Wynne Property. OAL also entered into this Deed, as manager of the Tea Tree Plantation. TTO was obliged to use its best endeavours to register a lease to ARG as Trustee of the Project Deeds and also a sublease to OAL. The Project Deed also provided that if the Trustees' office became vacant and a new Trustee was not appointed within 60 days the Projects would terminate. 20On 27 May 1997 OAL and ARF entered into an agreement pursuant to which OAL would loan funds to ARF who would in turn make loans to investors, referred to as "Farmers". On 30 June 1997 TTO, as lessor, entered into a lease with ARG, as lessee, of the Wynne Property. It also consented to a sublease to OAL. A second Project Deed was entered into on 11 February 1998 between TTO as landowner and OAL as manager. 21Between April 1997 and June 1999 ARF entered into loan agreements with approximately 230 investors for $24,000 per farm allotment. Each of the investors entered into an Indemnity Agreement with OAL at the same time that they entered into the loan agreement with ARF. As at 30 June 2000 ARF was indebted to OAL in the amount of $9,875,000. 22In the Prospectus for the Projects of 1 June 1999 a price of $45-$55 per kilo of tea tree oil had been anticipated. By May 2001, the market price had fallen to between $12 and $20 per kilo. On 20 June 2001 OAL sent a letter to the investors advising that OAL and ARG believed that there was no alternative but to wind up the Projects. At this time most of the tea tree plantation had not been harvested, although it was bearing a crop that was ready to be harvested. 23In September 2002, one of the investors, John Atkinson, commenced proceedings against ARG, OAL and ARF seeking a declaration that no grounds had arisen to justify termination of the Projects. Mr Atkinson also sought a declaration that the Indemnity given by OAL remained effective. 24On 27 September 2002 ARG was placed into voluntary administration. On 5 November 2002 the administrators advised OAL that ARG had retired as Project Trustee of the Projects with effect from 27 October 2002. 25On 12 November 2002 OAL wrote to the investors informing them that the effect of the retirement and non-replacement of ARG was that the Projects would terminate on 26 December 2002. 26By 4 January 2003 the amount payable to ARF from the investors in the Project was $11,605,832.33. On 6 January 2003 ARF made written demands on the investors for repayment of their loans. In early 2003 many of the investors in the Projects who had received a demand from ARF claimed an indemnity from OAL pursuant to the terms of the Indemnity Agreements for the amount demanded by ARF. 27On 17 February 2003 Claude received a letter of advice from his solicitors that the Indemnity Agreements were not enforceable by the investors. On 24 May 2003 Claude received advice from Senior Counsel that the Indemnity Agreements were enforceable so long as the investors had made payments punctually in accordance with the Indemnity Agreements. 28In mid-2003 Claude developed a proposal for CTK to harvest the tea tree crop by leasing machinery from OAL. On 20 July 2003 Claude sent a handwritten proposal to his co-director Troy Terp for CTK to harvest the crop. Mr Terp agreed to this proposal and CTK began harvesting the tea tree crop in early November 2003. Mr Terp resigned as a director of CTK in February 2004 after which Claude remained as sole director. 29In August 2004 two of Claude's cousins (Thomas Jean Cassegrain and Emilie Cassegrain) who were shareholders of CTK, commenced proceedings against CTK and Claude seeking a declaration that the affairs of CTK were being conducted in a manner oppressive to them and also seeking an order that CTK be wound up (the CTK proceedings). The evidence that the plaintiffs relied upon in those proceedings relevantly included that of an expert accountant, Robin Geoffrey Humphreys, who expressed the view that the tea tree oil business was not viable. 30Claude received correspondence from the solicitors for the plaintiffs in the CTK proceedings advising him that the plaintiffs would seek leave to bring proceedings in the name of CTK against him personally. The letter advised that there would be allegations that included: (a) that the tea tree business was highly speculative and had potential to incur substantial losses for CTK; (b) that OAL had made substantial losses from conducting the tea tree business on TTO's land; and (c) the tea tree business had resulted in CTK incurring losses. 31A provisional liquidator was appointed to CTK on 12 November 2004. Although harvesting was continued until around 13 December 2004 it ceased by direction of the provisional liquidator who concluded that its continuation would be to the detriment of shareholders. The provisional liquidator determined that CTK should cease trading and at around this time Claude decided to drop his opposition to the winding up of CTK. The Tea Tree Litigation 32In about June 2003 Claude, on behalf of OAL, decided that ARF should commence proceedings against the investors. On 18 June 2003 ARF, with the consent of OAL, commenced proceedings in this Court against 206 investors seeking to recover outstanding amounts under loans of approximately $10 million. On 19 March 2004 an order was made that the issues raised by ARF's claims against one of the defendants, Bruce Gardiner, be determined separately to all other investors claims subject to undertakings by the investors to be bound on common questions arising in those proceedings (the Gardiner proceedings). 33On 26 November 2004 Mr Gardiner filed an Amended Cross Claim against OAL claiming an indemnity from OAL pursuant to the Indemnity Agreement in relation to the amount being claimed by ARF. OAL filed a Defence to the Cross Claim in which it relied on the defaults in punctual payment by Mr Gardiner to invalidate the Indemnity Agreement. 34As at late 2004 the Gardiner proceedings included a serious question as to whether the Indemnity Agreements were enforceable, and if so whether OAL would be liable to indemnify the investors for their debts to ARF of approximately $10 million. The Impugned Share Transactions 35On 7 September 2004 the receivers and managers of GCC (the Receivers) wrote to Claude referring to their recent discussions regarding his "proposed refinance of the remaining debts" due to the CBA at the time of completion of the sale of the property of Claude's late mother, Francois Cassegrain, on 15 October 2004. The Receivers advised Claude that the CBA would require payment in full of all outstanding debts including their costs, legal costs and any other expenses incurred or expected to be incurred until the date of completion of the sale. The estimate of the outstanding debt provided at that time was $357,492.11. The Receivers had previously advised that if Claude could not refinance the residual debt then the CBA would expect them to commence the sale of "any residual assets" under their control, "the most valuable of which is the tea tree land". 36On 9 September 2004 Claude's solicitor, Christopher McCarron of Priest McCarron, Solicitors, wrote to the Receivers confirming that he was instructed that simultaneously with the settlement of the late Mrs Cassegrain's property Claude would provide the balance of the moneys required to discharge the obligations to the CBA and to retire the Receivers. 37On 15 September 2004 Mr Humphreys' affidavit was filed in the CTK proceedings. It included his opinion that the tea tree business was incurring such losses that it could not reasonably be considered a beneficial investment opportunity for the shareholders. Mr Humphreys expressed the view that the losses to which he referred in his affidavit could only have the effect of dissipating shareholder value. 38On 17 September 2004 Claude had a discussion with Mr McCarron whose note of the conversation included instructions from Claude that he had engaged in discussions with the Receivers about paying them out. Mr McCarron noted "through LAW FUND - Felicity lends money and GC & Co and gets a MTGE and company charge". 39As at 22 September 2004 the Cassegrain Family Trust (CFT) was indebted to GCC in the amount of $721,892. On 22 September 2004 Claude wrote to Mr McCarron in terms that included the following: 1. During the period that CG. Co (sic) were appointed I have incurred costs and (sic) lost wages on behalf of the company. I have not calculated the costs of the disbursements and lost wages/salary. More the (sic) less it is substantial. The cost I refer to relate to funding the case against the CBA or CDB and the receivers. The cost of the Appeal to the trial judge decision. Interest cost I paid on behalf of the company. Time spent without paid compensation relating to matters of the company between 15 June 1999 to date. Approx. $324,000 of the above mentioned costs were paid by Felicity with Borrowings she made with CTK Engineering. 2 Cassegrain Family Trust Trustees have agreed in Principle to repay by way of a Bank cheque payable to the CBA/CBD - $200,000 on 15 October or alternative settlement date as may be advised by the purchaser of lots 4 and 5. 3 Felicity has agreed to provide another Bank Cheque to the sum of $157,492.11 as adjusted to the exact sum as advised to you by the Bank. ... 5 Documents are to be prepared and executed but only to take effect upon the discharge of the Bank's mortgages and floating charges were by (sic) Felicity is to have a fixed and floating charge over the companies (sic) assets - Registered 1st Mortgage over the companies (sic) land 40On 29 September 2004 the CFT paid $215,000 on behalf of GCC to the CBA. 41There was a delay in reaching a final settlement to pay out the Receivers and in the meantime the CTK proceedings continued until 12 November 2004 when Windeyer J appointed a provisional liquidator to CTK: Cassegrain & Anor v CTK Engineering Pty Limited & Anor. 42There is in evidence a document dated 29 November 2004 headed "Gerard Cassegrain & Co Pty Limited". It is in the following terms: Notice is hereby given - A meeting of Directors of Gerard Cassegrain & Co Pty Ltd is to be held on Tuesday 21 December 2004 at 9.00am at Sancrox Park, 482 Sancrox Road, Wauchope. AGENDA ITEMS * RETIREMENT OF RECEIVERS * LOAN FROM FELICITY CASSEGRAIN TO GERARD CASSEGRAIN & CO PTY LTD * SALE OF GERARD CASSEGRAIN & CO PTY LTD'S SHARE IN ENDWISE HOLDINGS PTY LTD * SALE OF GERARD CASSEGRAIN & CO PTY LTD'S SHARES IN OCEANIA AGRICULTURE PTY LTD * OTHER BUSINESS - ANY OTHER MATTERS THE DIRECTORS DEEM APPROPRIATE TO BE DEALT WITH * * If you are unable to attend would you kindly provide your proxy 43On 15 December 2004 Claude and Felicity signed a document entitled "Loan Agreement" which is in the following terms: We confirm that Gerard Cassegrain & Co Pty Ltd needs to retain lawyers, accountants and management services to act for it in the legal proceedings against the ATO disputing the amended assessment issued for the 30 June 1994 period. We confirm the Receivers and Administrators of GC&Co authorised Claude Cassegrain to take whatever action is necessary to object to the ATO's amended assessment. We confirm that the company needs funds to pay such lawyers, accountants and Claude Cassegrain in this dispute and that the company has requested that we lend moneys to it to pay for such costs from time to time. This letter is to confirm that we agree to lend moneys to GC&Co for the payment of such costs from time to time on the following terms: 1 Any moneys advanced by us to GC&Co will accrue simple interest as the bank reference rate plus a margin of 7% per annum which will be calculated daily on the balance of our loan accounts provided that the margin will reduce to 4% per annum if GC&Co is not in default of its obligations to us under this or any other agreement. 2 All or any part of the loans including interest accrued will be repayable on call on 14 days notice. 3 Any advances to GC&Co under this agreement will be made at our absolute discretion as we consider appropriate. 4 Any advances by us to GC&Co may be made to GC&Co or as requested to any third party to whom GC&Co owes money. 44On 16 December 2004 Claude wrote to the provisional liquidator of CTK consenting to the liquidation of that corporation. That letter included the claim that it "was now not possible to trade out of the current situation" which it was claimed had been brought about by the appointment of the provisional liquidator. 45On 16 December 2004 the Receivers of GCC notified Claude that the payout figure for them to retire was $194,249.19. 46At about this time Claude had another conversation with Mr McCarron in which he informed Mr McCarron that he was trying to convince the ATO to agree that if GCC were wound up the payment out of the Receivers would be a secured loan. Mr McCarron advised that counsel's advice was "negative" on this particular topic. 47On 20 December 2004 Ms Winifred Gibson, accountant with NorthCorp Accountants, wrote to Katherine Yager, a solicitor with Priest McCarron in the following terms: Re Oceania Agriculture Pty Ltd Further to our telephone conversation I advise the following information - SALE AND PURCHASE OF SHARES * Felicity Cassegrain wishes to enter into an agreement with GC&Co to purchase at a future date the shares GC&Co hold in Oceania Agriculture Pty Ltd ("OAL"). * On signing the agreement she will pay 1 cent per share with the balance to be paid if and/or when she exercises her option to purchase (which will be at her discretion). * The number of shares held by GC&Co in OAL is 100,000. * The final price for the shares to be the value of the company as per the balance sheet as at 30 June 2004. * * OAL WANTS A LEASE AGREEMENT WITH ENDWISE HOLDINGS PTY LTD * * The lease of the Tea Tree property for a period of 5 years (unless otherwise agreed). * OAL will have the right to use any fixtures and fittings on the land but must maintain same. * OAL to maintain the property, harvest and market the crop and is entitled to the income. * OAL responsible for land rates. * 48On 20 December 2004 Mr McCarron wrote to Ms Gibson referring to the telephone advice that there was a requirement for an option and a lease. That letter enclosed a draft Deed of Option and included advice that the draft Lease would be sent under separate cover. Mr McCarron noted that there were several matters that needed to be considered such as the grantor (GCC) being in receivership. The draft Deed of Option provided that in consideration of the payment of the option fee GCC granted to Felicity an option to purchase the shares in OAL and that such option was exercisable only by Felicity or her nominee on or before 5pm on 30 June 2005. 49On 20 December 2004 and 21 December 2004 Claude had a number of conversations with Mr McCarron in relation to the payment out of the receivers. The notes of those conversations record that there was to be a fixed and floating charge dated 21 December 2004 in respect of "all moneys owing". 50On 21 December 2004 Claude wrote to the Receivers advising that: We propose to deposit a bank cheque at the CBA Port Macquarie for the amount of $194,249.19 in exchange for documentary proof of your notice of resignation and documentary proof of the CBA discharge of mortgages. 51On 21 December 2004 Felicity wrote to Westpac Banking Corporation (Westpac) requesting a bank cheque in the amount of $194,249.19 to be collected by Priest McCarron. That cheque was made available and paid to the CBA. 52On 21 December 2004 the Receivers wrote to Claude confirming the transaction and advising that they would shortly return any company records that had been received from Claude with copies of receivership transactions. 53On 21 December 2004, Claude signed a letter as a director of GCC addressed to Felicity in the following terms: The company hereby provides a charge in favour of yourself to secure all moneys advanced to the company and it is agreed to provide you with formal company charges to be registered with ASIC. 54There are in evidence Minutes purporting to be a record of meetings on 21 December 2004 of GCC, Endwise, OAL, Le Cros Sancrox Pty Ltd and Clos Farming Estates Pty Ltd. Those Minutes are in identical terms save for some small differences. The Minutes of GCC, Endwise, Le Cros Sancrox Pty Ltd and Clos Farming Estates Pty Ltd record that present at the meetings were Claude and Mr Sarks. The Minutes of OAL record that Claude was present at the meeting. Each of the Minutes includes the following: Retirement of Receivers It is noted that the receivers have advised that the bank requires an amount of $194,249.19 in order that the Receivers of Gerard Cassegrain Co Pty Ltd (GC&Co), Endwise Holdings Pty Ltd, Le Clos Sancrox Pty Ltd and Clos Farming Estates Pty Ltd to be retired from the companies. It is also noted that the directors have formed the opinion the Receivers ought to be retired as early as possible in order to avoid ongoing penalty interest, administration and receivership costs, which would continue to diminish the future value of the companies. It is recorded that Felicity Mary Cassegrain has offered to provide $194,249.19 to retire the Receivers. For the provision of these funds; It was agreed GC & Co will sell its shares in Endwise Holdings Pty Ltd to Felicity Mary Cassegrain for $60,423. Felicity will deposit this amount to the GC & Co's account at the Commonwealth Bank. That amount being the value of the shares disclosed in Endwise Holdings Pty Limited Special Purpose Financial Report for the year ended 30 June 2004. It was agreed GC & Co will sell its share in Oceania Agriculture Pty Ltd to Felicity Mary Cassegrain for $71,450. Felicity will deposit this amount to the GC & Co's account at the Commonwealth Bank. That amount being the value of the shares disclosed in Oceania Agriculture Pty Ltd Special Purpose Financial Report for the year ended 30 June 2004. It was agreed GC & Co would borrow an amount of $62,376.19 from Felicity Mary Cassegrain to be paid to the Commonwealth Bank of Australia and this loan by Felicity to be secured by way of registered first mortgage over land whereby the exposure is not greater than 50% of the land value. This loan to attract interest at the rate of 1% per month and interest is to be capitalised and calculated on a compounding balance. The term of this loan is 12 months. These proposed transactions are subject to the deposit of funds to the Commonwealth Bank as outlined above and the subsequent retirement of the Receivers. The above proposed transaction should occur simultaneously. The transactions are to be adjusted if there is any significant alteration in values when an up to date market appraisal is obtained for purposes of deriving current values. The directors propose to request NorthCorp Accountants to arrange the transfer of the shares upon the receipt of the written confirmation from the Receivers and Managers of the retirement. The directors also recognise that upon retirement of the receivers and the resultant return of the company records, that all expenditure incurred whilst in receivership by related parties be identified and quantified. Preparation of Documents The secretary was requested to complete the documents required to reflect the change to details of the company. Closure There being no further business the meeting was closed 55The OAL Minutes included the following additional paragraph: Recognition of Contingent Liability It was noted that Oceania Agriculture Pty Limited is currently being sued by investors in the Port Macquarie Tree Plantation Prescribed Interest Scheme and there is uncertainty as to the outcome. 56There is in evidence a document entitled "Memorandum of Resolutions of the Director(s)" of GCC. It records the Resolutions for GCC to sell its share in Endwise and its shares in OAL to Felicity for $60,423 and $71,450 respectively in identical terms to that which is referred to in the Minutes as the agreements to sell the shares. It also contained the following: Loan-Felicity Cassegrain It was resolved that the balance of the funds being $62,376.19 received from Felicity Mary Cassegrain to enable the retirement the receivers would be borrowed by Gerard Cassegrain & Co Pty Ltd under the following terms. The amount of $62,376.19 from Felicity Mary Cassegrain would be paid to the Commonwealth Bank of Australia and this loan from Felicity Mary Cassegrain is to be secured by way of registered first mortgage over land whereby the exposure is not more than 50% of the land value. This loan to attract interest at the rate of 1% per month and interest is to be capitalised and calculated on a compounding balance. The term of this loan is 12 months. 57The GCC Memorandum of Resolutions bears Claude's signature with the date 12 January 2005. It also bears Mr Sarks' signature without a date. 58There is also in evidence a "Memorandum of Resolutions of the Director(s)" of Endwise in the following terms: Transfers of Shares It was resolved to approve the following transfers of shares: From: Gerard Cassegrain & Co Pty Ltd To: Cassegrain, Felicity Mary No of Shares: 1 $1.00 Ordinary Shares Fully Paid Preparation of Documents The secretary was requested to complete the documents required to reflect the change to members of the company. It was also resolved to complete the new share certificates pursuant to the rules that govern the execution of documents by the company and to cancel any certificates that are no longer required. 59The Endwise Memorandum of Resolutions bears the signatures of Claude and Mr Sarks both with the date 19 January 2005. 60On 6 January 2005 Claude wrote to the trustees of the CFT referring to their offer of 28 September 2004 and his reply of the same date. That letter included the following: The proposal for the trust to settle its debt to the company in full by transfer of all remaining assets and investments of the trust is accepted. Any amount owed to the company in excess of the value of the trust assets will be written off by the company on completion of the transfer of the remaining assets of the trust. I understand that an agreement has been drawn up by your solicitors for signature by this company will be forthcoming. 61A Deed of Agreement was entered into by GCC, as lender, and CFT, as borrower, although the date of such entry is unclear, whereby the CFT transferred its interest in various parcels of land to GCC. 62On 7 January 2005 the trustees of the CFT wrote to OAL advising that the whole of the interest of the CFT in the loan from CFT to OAL of $207,835.62 including interest had been assigned to GCC and that all future payments were to be made directly to GCC. A similar letter was sent to Felicity advising that the loan to her in the amount of $92,434.51 had been assigned to GCC and that all future payments were to be made directly to GCC. 63On 15 January 2005 Claude wrote to Ms Gibson in relation to the balance sheets and profit and loss of ARF and OAL in terms that included the following: Endwise Holding P/L has requested OAL and ARG to remove their respective lease and sub-lease (sic) registered on Endwise Land. Endwise and OAL would like to determine which entity is the one that ought to manage the plantation. Your respective verbal opinion would be greatly appreciated considering tax, simplicity etc. My current thoughts is (sic) that the business should be undertaken by Endwise Holdings Pty Ltd and Endwise ought to change its name to "Port Macquarie Tea Tree Plantation Pty Ltd" or "'Minnamurra' Tea Tree Plantation Pty Ltd" or "Oceania Agriculture Pty Ltd" or "Cassegrain Tea Tree Oil Pty Ltd" or "Claude Cassegrain & Co Tea Tree Oil Pty Ltd" or "Australian Tea Tree Oil Pty Ltd" or "Oceania Tea Tree Oil Pty Ltd" ????? . 64On 18 January 2005 the Administrative Appeals Tribunal (AAT) dismissed GCC's objections to the amended tax assessments for GCC for the years 1994 ($1,904,292.25 plus interest and penalties) and 1996 ($230,423.08 plus interest and penalties). 65On 18 January 2005 Mr McCarron made a file note of the telephone conversation he had with Claude. The note is on the following terms: Claude said he wants to transfer GC&Co's one share in Endwise P/L to Felicity (Claude owns the other share) He said Endwise has a nil book value - He said Felicity could probably pay $50,000 for the share. 66On 19 January 2005 Ms Gibson wrote by email to Ms Patricia Webber, Ms Bronwyn Edwards and Mr Graham White, members of her staff, in the following terms: GERARD CASSEGRAIN & CO PTY LTD Can you prepare minutes and a resolution whereby Claude and Tony resolve to sell the share owned by GC&Co in Endwise Pty Ltd to Felicity Cassegrain today for 50% of the book value at 30 June 2004 of Endwise which is $60,423 (100% is $120,846). The amount Felicity is paying for the share ($60,423) will reduce the amount GC&Co owes Felicity. (Felicity paid to get GC&Co out of receivership) ENDWISE HOLDINGS PTY LTD Can you prepare the documentation required to transfer the share from GC&Co to Felicity and the stamp duty requirements etc necessary. Can this be completed today please. We will have to send them to Claude & Felicity for signing. Can you attach a copy of the Articles of Association with Felicity's letter please. Any queries let me know 67The Share Transfer form by which GCC transferred its share in Endwise/TTO to Felicity for $60,423 is signed by Claude and Mr Sarks and is dated 19 January 2005. 68On 20 January 2005 Bronwyn Edwards sent an email to Patricia Webber in the following terms: Subject: Company Minutes Patricia 1. Felicity Cassegrain is purchasing shares in Oceania Agriculture Pty Ltd (OAL) and Cassegrain Tea Tree Oil Pty Ltd (CTTO) (formerly Endwise Holdings Pty Ltd) at book value. Please prepare the following minutes of directors meetings held on 21 December 2004: In GERARD CASSEGRAIN & CO PTY LTD "It was agreed that as a condition of Felicity Cassegrain loaning funds to Gerard Cassegrain & Co Pty Ltd (GC&C) to enable the receivers to be retired that Gerard Cassegrain & Co Pty Ltd would sell to Felicity Cassegrain its shares in Cassegrain Tea Tree Oil Pty Ltd and Oceania Agriculture Pty Ltd and that any balance of money owed by GC&C to Felicity be secured against any property GC&C owns as a result of the retirement of the receivers." In OAL "It was noted for the record that as a condition of Felicity Cassegrain loaning funds to Gerard Cassegrain & Co Pty Ltd (GC&C) to enable the receivers to be retired that Gerard Cassegrain & Co Pty Ltd would sell to Felicity Cassegrain its shares in Cassegrain Tea Tree Oil Ltd and Oceania Agriculture Pty Ltd and that any balance of money owed by GC&Co to Felicity be secured against any property GC&C owns as a result of the retirement of the receivers." "It was noted that OAL is currently being sued by investors in the Port Macquarie Tea Tree Plantation Prescribed Interest Scheme and there is uncertainty as to the outcome." In CTTO "It was noted for the record that as a condition of Felicity Cassegrain loaning funds to Gerard Cassegrain & Co Pty Ltd (GC&C) to enable the receivers to be retired that Gerard Cassegrain & Co Pty Ltd would sell to Felicity Cassegrain its shares in Cassegrain Tea Tree Oil Pty Ltd and Oceania Agriculture Pty Ltd and that any balance of money owed by GC&C to Felicity be secured against any property GC&C owns as a result of the retirement of the receivers." 2. OAL please print a copy of the annual return recently sent to Claude Cassegrain and send it to Anthony Sarks for him to sign where applicable. 3. Where not already prepared please prepare the necessary share transfer documents etc in relation to 1 above. 69The Share Transfer form by which GCC transferred its shares in OAL to Felicity for $71,450 is signed by Claude and Mr Sarks and is dated 20 January 2005. Subsequent Events 70On 4 February 2005 Ms Gibson wrote to Claude enclosing Minutes of a meeting of directors of GCC on 3 February 2005 recording that Claude and Mr Sarks were present and that a resolution was passed to open a trading account at the ANZ bank, the signatories of which were to be either Claude or Felicity. 71On 6 February 2005 Claude wrote a Memorandum on GCC letterhead addressed to the plaintiffs and Anne-Marie, in the following terms: On 21st December 2004 the Receivers and Managers of Gerard Cassegrain & Co retired as external managers. The consequence of their appointment and management is the company incurred substantial losses each year and all easily realisable assets have been sold. The company's remaining assets consist of some land affected by 3rd parties and loans. Against the assets the company has creditors and borrowings. The net effect is the company has no value. Other than the appeal against the ATO assessment of the companies (sic) tax liability, resulting from the CSIRO payment, there are not other tax issues. The company's, carried forward, tax losses have yet to be determined - they may have some value. On 4 February 2005 we received a box of documents from the receivers containing the company's files and records generated during the receivers 5 ½ year administration. These files and records have to be studied and put into order in order to finalise the company's position. 72On 8 February 2005 Mr McCarron made a file note of a conversation with Claude, which included the following: Claude + Northcorp Felicity purchased Endwise and OAL shares Claude to send us copies and we are to delete previous corresponds 73On 8 February 2005 Claude wrote to Mr McCarron by facsimile referring to his phone conversation and enclosing the Minutes of 21 December 2004 of GCC and the other companies in receivership "for your record and file". 74On 28 February 2005 NorthCorp forwarded a tax invoice to GCC in which the following appeared: Our fee for professional services rendered in relation to: ... Interview with Ms W Gibson in relation to shares. Preparation of Company minute dated 21 December 2004 in relation to retirement of receivers and recognition of contingent liability. Preparation and lodgement of Company documents due to Company minute dated 21 December 2004. Telephone calls in relation to taxation matters. 75On 14, 15 and 16 February 2005 Claude, as second defendant, was represented before White J in the CTK proceedings. The plaintiffs sought costs of the application before Windeyer J for the appointment of the provisional liquidator and the subsequent winding up of CTK in December 2004. It appears that White J was probably not advised of the share transactions with Felicity because his Honour referred in his judgment to the two issued shares in Endwise being held by Claude and GCC. His Honour also referred to OAL as a company wholly owned by GCC and controlled by Claude: Cassegrain & 1 Or v CTK Engineering Pty Ltd & 1 Or 54 ACSR 249; [2005] NSWSC 495 at [21]-[22]. 76In March 2005 Claude prepared a document entitled "Business Plan" for TTO, referred to in more detail later in this judgment. 77On 28 June 2005 Denis wrote to Claude (with a copy to Mr Sarks and Ms Gibson) noting that there had been no Annual General Meeting (AGM) for GCC. Denis asked Claude to advise him if an AGM had taken place and if so when and where it took place and why he was not informed of it. Denis also asked that if an AGM had not taken place, that Claude explain why that was so. Denis complained about "oppression" and his extreme concern about the current status of GCC. The letter included the following: I must remind you that Northcorp records the financial position of the company with the information supplied by the directors, who must control the affairs with the interests of all of the shareholders been taken into account fairly. Consequently I request that you provide answers to the following questions:- 1. What were the assets of GC&Co when the receivers and managers took control of GC&Co? 2. What assets of GC&Co did the receivers and managers liquidate? Please also provide the details of purchases and purchase price. 3. What assets did GC&Co possess when the directors took control from the receivers and managers? For example: GC&Co has 50% interest in Endwise Holdings P/L please advise on the present position of Tea Tree Land Holdings & any Endwise Holdings P/L activities. OAL is a fully owned subsidiary of GC&Co please advise shareholders of the state of affairs re: lease agreement with Tea Tree Farms & farmers & current situation of the interests that GC&Co holds in that company. 78Claude responded to Denis by letter of 12 July 2005, which included the following: You are fully aware your allegation of suffering oppression as a shareholder of GCC and CTK is false and the persons who have suffered oppression are myself, Anne-Marie, our late mother and subsequently the Estate, at the instigation of yourself, Catherine, Patrick and John with the assistance of others you had recruited to the evil cause. As to each numbered paragraph:- 1 & 2 I am awaiting the accountant's report. 3. I repeat my response to 1 & 2 above and add that GCC has no interest in either Endwise Holdings or OAL. Its interests were sold in order to retire the Receivers and Managers. Felicity purchased the GCC interests in both companies, after appropriate advice was taken. 79On 22 July 2005 Denis wrote to Claude in terms that included the following: I refer to your answer "... that GCC has no interest in either Endwise Holdings or OAL ... Felicity purchased the GCC interests in both companies ..". Your answer does not surprise me at all. This is the behaviour that I have come to expect from you and confirms my fear that you, along with Anthony B Sarks, have conducted the company in a manner which is oppressive and unfairly prejudicial to myself and other members of the company. Please provide a copy of the following:- 1. Transfer of GCC's interest in Endwise Holdings to Felicity Cassegrain, including the purchase price and date of transfer. 2. Transfer of GCC's interest in OAL to Felicity Cassegrain, including the purchase price and date of transfer. 80On 10 September 2005 Denis wrote again to Claude noting that he had not received a reply to his letter of 22 July 2005. That letter referred to Claude's Memorandum of 6 February 2005 and his letter to Denis of 12 July 2005. It also referred to paragraphs [21] and [22] of White J's judgment in Cassegrain & 1 Or v CTK Engineering Pty Ltd & 1 Or referred to above in which his Honour described the share structure of GCC and Endwise. The letter continued: Claude, if the shares of OAL and EH were sold to Felicity to retire the Receivers & Managers who retired in December 2004 why would White J's judgment, and at this stage I remind you that the hearing dates were 14-16 February 2005, refer the above share structure? 81Denis again requested copies of the transfers of GCC's interests in Endwise and OAL to Felicity. He also requested a copy of the "appropriate advice" to which Claude had referred in his letter of 12 July 2005. 82On 10 September 2005 Denis wrote to Mr Sarks advising him that Claude had failed to provide the information requested in the letter of 22 July 2005, a copy of which had been previously sent to Mr Sarks. Denis asked Mr Sarks as a director of GCC to ensure that the company responded in an appropriate manner to his request. He also enclosed a copy of his letter to Claude dated 10 September 2005. 83Claude replied to Denis by a handwritten undated letter (probably received by Denis on 22 September 2005) in terms that included the following: In regards to Justice White's comments you refer to. His Honour relied upon the evidence that was submitted before Justice Windeyer J prior to 5 November 2005. Justice Windeyer declared that CTK was losing money in operating the tea tree plantation and in order to avoid further losses appointed a provisional liquidator to CTK. Justice White was determining the issue of costs. I have filed an objection to Justice White's determination. The issue you raise does not form part of the objection simply because of relevance. 84On 30 November 2005 the plaintiffs' solicitors, McCabe Terrill, wrote to Claude seeking amongst other things copies of the Transfer Forms in relation to GCC's shares in TTO and OAL and a copy of the "appropriate advice". The solicitors also sought copies of any Notices, Agendas and Resolutions at meetings at which GCC resolved to sell the shares to Felicity. It was not until 20 January 2006 (under cover of a letter wrongly dated 20 January 2005), that the defendants' solicitors provided to the plaintiffs' solicitors the requested documents. 85Between January 2006 and September 2008 the parties' legal representatives communicated about documents and preliminary discovery and Denis brought proceedings for preliminary discovery. In September 2008 Sackville AJ granted leave to Denis to bring proceedings on behalf of GCC: Denis Cassegrain v Gerard Cassegrain & Co Pty Ltd [2008] NSWSC 976; 68 ACSR 132. These proceedings were commenced in 2008. 86There is in evidence a letter dated 28 September 2010 signed by Felicity addressed to the directors of GCC in the following terms: Re: Charge to secure monies advanced to Gerard Cassegrain & Co Pty Ltd You will be aware that on 22 December 2004, I advanced the amount of $194,219.19 to the company. In a letter dated 21 December 2004, the company agreed to provide me with a charge that would be registered with ASIC. To date, that charge has not been registered. Would you please make the appropriate arrangements as soon as possible to have this charge registered. 87There is also in evidence a Form 309 "Notification of details of a charge" dated 12 October 2010 filed with ASIC. Under the heading "Charge details" in the section "Briefly describe the liability (whether present or prospective) secured by this charge" there appears in handwriting the entry, "Present loan principal and interest of $139,407.22". In the section "The maximum prospective liability (if applicable; see s 282)" there appears in handwriting "$194,249.19", and under the heading "Briefly describe the property charged" there appears in handwriting "Assets of the company". Felicity is identified as the "chargee/trustee" and there is a cross in the box "I verify the Annexure marked A of 3 pages is a true copy of the instrument(s) creating or evidencing the charge and the instrument(s) has (have) been executed". The Annexure A consisted of the Minutes of a Meeting of Directors of GCC held on 28 September 2010 and a Loan Agreement. The Minutes recorded that present at the meeting were Claude and Thomas Cassegrain. The Minutes are in the following terms: 1. Charge in favor of Felicity Cassegrain It was noted the Directors were in receipt of the letter from Felicity Cassegrain dated 28.09.10, requesting that the charge favoring her for moneys advanced to the Company be registered with ASIC in accordance with the agreement of 21.12. 2004. Claude Cassegrain tabled: the letter to Felicity dated 21.12.2004; the letter from Felicity to Westpac Bank Corporation dated 21.12.2004 authorising $194,249.19 to be made available, payable to the Commonwealth Bank; The Minutes of Meeting of Directors of GC&Co dated 21.12.2004 were read and confirmed; Memorandum of Resolution of Directors signed on 12.01.2005; the letter from the Commonwealth Bank dated 21.12.2004 to Claude Cassegrain confirming the receipt by the bank of $194,249.19; Letter from McGrathNicol to Claude Cassegrain dated 21.12.2004 confirming the retirement of M.C.Smith as Receiver and Manager of GC&Co, LCS, CFE and EH. The Directors acknowledge that the registration of the charge had been overlooked. 2 Resolution It was resolved that Mr Peter Condon, Solicitor, be instructed to register the charge with ASIC forthwith and the cost of registering the charge to be invoiced to GC&Co. 88The Loan Agreement is between Felicity as Lender and GCC as Borrower and includes the following: 1. PROMISE TO PAY Within twelve (12) months from the date of this agreement the Borrower promises to pay to the Lender the sum of $62,376.19 principal plus interest and other charges stated below. 2. BORROWER'S LIABILITY The Borrower accepts liability for full repayment of the loan and interest. 3. COMPOSITION OF LOAN Amount of Principal: $62,376.19 Interest One (1)% per month which (sic) interest to be capitalised and calculated on a compounding balance for the purposes of calculating repayments. Term of Loan Twelve (12) months 4.REPAYMENTS The Borrower will repay the amount of $62,376.19 plus interest in twelve (12) equal monthly instalments commencing on 21 January 2005 and ending on 21 December 2005. The plaintiffs' contentions 89The plaintiffs submitted that, from a review of the documentary material referred to above, it is clear that Claude instructed Ms Gibson on 19 January 2005 to prepare Minutes and the Resolutions for GCC whereby he and Mr Sarks would resolve to sell GCC's share in TTO to Felicity for the "book value" of $60,423. The plaintiffs also submitted that at the same time Claude instructed Ms Gibson that "the amount Felicity is paying for the share will reduce the amount" GCC "owes Felicity" and that "Felicity paid to get "GCC "out of receivership". 90The plaintiffs submitted that the December Minutes are "false". They contend that although the Minutes record an agreement made on 21 December 2004 between GCC and Felicity for the sale by GCC of its share in Endwise/TTO to Felicity for $60,423, no such agreement existed as at 21 December 2004, nor at any time prior to 19 January 2005. The plaintiffs also contend that although the December Minutes record an agreement made on 21 December 2004 for the sale by GCC of its share in OAL to Felicity for $71,450, no such agreement existed as at 21 December 2004, nor at any time prior to 20 January 2005. 91The plaintiffs also contend that although the December Minutes record a loan agreement between GCC and Felicity as at 21 December 2004 in the amount of $62,376.19, the loan agreement that existed between those parties at that time was for $194,249.19. It is further contended that although the December Minutes record that the advance of $194,249.19 by Felicity to the CBA on behalf of GCC should occur simultaneously with the sale of GCC's shares in Endwise/TTO and OAL to Felicity, no such agreement was made prior to 19 and 20 January 2005 respectively. 92The plaintiffs further contend that although the December Minutes recorded a resolution by the directors of GCC that they proposed to request NorthCorp to arrange the transfer of GCC's shares in Endwise/TTO and OAL to Felicity upon receipt of written confirmation of the receivers retirement, no such resolution was made at any time prior to 19 January 2005. 93The plaintiffs allege that Claude signed the December Minutes with knowledge that they were false. 94The plaintiffs claim that Claude signed the GCC Resolutions Document knowing it to be false because, inter alia, the loan agreement between Felicity and GCC as at 21 December 2004 was $194,249.19 and not $60,423. It is alleged that Claude signed the Resolutions Document after 20 January 2005 and wrote the "false date" of 12 January 2005 on the document. The plaintiffs contend that the December Minutes and the Resolutions Document were created to give the false impressions: (a) that the agreement to sell the shares occurred prior to the AAT decision dismissing GCC's objections to its 1994 and 1996 tax assessments; and (b) that the sales of the shares were made for the business purpose of paying out GCC's debt to the CBA, whereas the debt had already been discharged as at 21 December 2004. 95The plaintiffs contend that at the time Claude executed the Share Transfer forms he knew: (1) that the shares were worth significantly more than the amount for which they were transferred; (2) that if the shares were not transferred, there was a significant risk that the shares may be sold by a liquidator of GCC and the proceeds distributed to GCC's creditors; (3) that no independent valuations of the shares had been obtained; and (4) that the minority shareholders of GCC had not been advised of any proposal to sell the shares to Felicity and had not consented to such sales. 96The plaintiffs claim that Claude's decisions to execute the Share Transfer forms were not made for the benefit of GCC but were made for Felicity's benefit. They allege that these decisions were contrary to the interests of the GCC minority shareholders and were made with the intention of removing the shares from the possible reach of creditors. 97The plaintiffs make similar allegations against Mr Sarks. They claim that as at 19 January 2005 Mr Sarks knew that GCC had discharged its liability to the CBA on 21 December 2004 and that the Receivers had retired on that date. It is alleged that Mr Sarks knew that GCC was indebted to Felicity in the amount of $194,249.19 and that the loan term was for 12 months. It is also alleged that Mr Sarks knew that CFT had assigned to GCC real property at Kew in Victoria and South Kempsey in New South Wales to the value of $354,250. It is also alleged that Mr Sarks knew that the AAT had dismissed GCC's tax objections on 18 January 2005 and that the effect of that decision was that GCC was indebted to the Australian Tax Office (ATO) for over $2 million. 98The plaintiffs allege that at the time Mr Sarks (and Claude) executed the December Minutes and the Resolutions Documents he knew that the GCC minority shareholders had not been advised of the proposal to sell the shares to Felicity and had not consented to the sale of the shares. It is alleged that Mr Sarks knew at the time he signed the December Minutes and the Resolutions Document that they were false in the respects outlined earlier. 99The plaintiffs allege that as at 19 January 2005 Felicity was aware of the dismissal of the tax objections by the AAT. It is also alleged that at the time Felicity executed the Share Transfers she knew that she had loaned GCC $194,249.19, which was not due to be repaid until 20 December 2005 and was secured by a charge over GCC's assets. It is also alleged that Felicity knew that it was not a condition of the loan that GCC had to transfer any of its shares or other assets to her. It is alleged that Felicity made no enquiries as to whether the minority shareholders had been advised of the proposal to sell the shares to her or whether they had consented to the share transfers. It is also alleged that Felicity made no enquiry as to how the price of the shares had been determined or whether there had been an independent valuation. 100There is an alternative claim that Felicity appointed Claude to advise her on the appropriate purchase price of the shares and that she had the imputed knowledge of the true value of the shares that Claude, as her agent had, that the share prices were at a substantial undervalue. 101Denis brings a claim as a creditor of GCC who was prejudiced by the share transactions. As I have already said, although it was originally alleged that both share transactions were alienations of property with intent to defraud creditors within the meaning of s 37A of the Conveyancing Act, the claim was ultimately limited to the OAL share transaction. 102It is alleged that in causing the shares to be sold to Felicity, Claude and Mr Sarks were in positions of conflict between duty and interest and failed to obtain the fully informed consent of the GCC shareholders. Consideration 103The plaintiffs claim that the Minutes dated 21 December 2004 are a "subsequent fabrication". That submission involves the proposition that there was no meeting of directors held on 21 December 2004 at which Claude and Mr Sarks reached agreement on behalf of GCC as recorded in the Minutes. The plaintiffs accept that Felicity did make a payment of $194,249.19 to the CBA for the retirement of the Receivers from GCC and the other companies. However they contend that this payment was in reality a loan to GCC repayable in 12 months, with Felicity having security in the form of a fixed and floating charge over the assets of GCC. 104The plaintiffs claim that irrespective of when the share transactions occurred, both Claude and Mr Sarks were in breach of their fiduciary duties to GCC in that such transactions were for the benefit of Felicity and not for the benefit of GCC. It is also claimed that the sale of the shares by Claude to his wife and by Mr Sarks to his daughter were not disclosed to the minority shareholders, who were therefore unable in the circumstances to provide their informed consent. In that respect it does not matter whether the share transactions took place in December 2004 or January 2005 because the timing will not change the character of the transactions in so far as a breach of fiduciary duty is concerned. However the plaintiffs make the submission that the concealment by Claude and Mr Sarks of the reality of what occurred is relevant in assessing their true intention in relation to those transactions. Was there a meeting of GCC Directors on 21 December 2004? 105Claude was asked by Interrogatory whether at any time between 1 October 2004 and 19 January 2005 he notified any of the shareholders in GCC of the proposed sale of GCC shares in TTO and OAL to Felicity. He answered that Interrogatory, "not that I recall". He was also asked by Interrogatory whether any shareholders of GCC ever advised him that they consented to the share sales to Felicity. He answered that Interrogatory "not that I recall". Claude was cross-examined about these answers to the Interrogatories and it was suggested to him that he had "no doubt" that he did not notify the minority shareholders of the intention to transfer GCC's shares to Felicity. In answer to that question he said, "I do have doubts" (tr 66). When asked why he said that he had doubts, he said (tr 66): Because I had asked for an AGM notice to be given and circulated by my accountants and I have no idea if it was or wasn't circulated. 106Claude was cross-examined further in relation to this matter as follows (tr 66): Q. And you have no doubts that you never received any consent from any of the minority shareholders to the sale of these assets to your wife, correct? A. I can't recall any discussions. I have no doubts I had no discussions, but I can't really recall. Q. You know that you never got any consent from the minority shareholders to these transfers, don't you? A. Yes. Q. And you could have simply answered this interrogatory "No", couldn't you? A. Yes. 107Claude was then cross-examined about his claim that he had asked the accountants to circulate a notice for an AGM. His attention was drawn to the Notice dated 29 November 2004 referred to earlier in this judgment and he gave the following evidence (tr 67-71): Q. Now, Mr Cassegrain, if you could please go to tab 80 in volume 4 of exhibit A, is that the document that you are referring to when you are answering my questions about possible notification to the minority shareholders? A. Yes. Q. That is notification of a directors' meeting, isn't it? A. Yes. Q. Which of the minority shareholders were directors of GC&Co as at 29 November 2004, Mr Cassegrain? A. None of them. Q. You never, to your recollection, caused any notification to be sent to the minority shareholders in relation to the intended transfer of the shares in Endwise or OAL to your wife, did you? A. I don't know. Q. You have no recollection of any such document ever being provided to the minority shareholders, do you? A. I don't know. Q. You do know whether you have got a recollection or not, don't you, Mr Cassegrain? A. Yes. Q. And you don't have a recollection of any document ever being provided to the minority shareholders about this topic, do you? A. My recollection is that the intention at the time of creation of this document, and my instructions, were that an AGM be called. HER HONOUR Q. Just say that again for me. A. At the time that this document was created, I asked my accountant to call for a meeting giving 21 days' notice. ASHHURST Q. So you are saying, are you - or do you accept, Mr Cassegrain, that there's no mention of that at all in any of your affidavits? Firstly, do you accept that? A. I'll accept it if you say so. Q. And is your evidence now that you claim that you instructed Miss Gibson to send out notification for an AGM, do you? A. Yes. Q. And when do you claim you gave Ms Gibson those instructions? A. I'm a little bit confused, because I can't accurately recall but I - looking at the date, I suspect it was on that day. Q. And where do you say that you instructed Miss Gibson that this AGM was supposed to take place? A. I cannot recall. Q. And do you say that you checked with Win Gibson to see if indeed she had followed your instructions and given notice of this intended annual general meeting? A. I don't recall. Q. When do you say that you instructed Miss Gibson that the date of this annual general meeting would be? A. 21 December. Q. The same date as you intended to have the directors' meeting? A. Yes. Q. And do you claim that you ever saw a copy of this notice of an intended annual general meeting? A. The notice I refer to is actually this document (witness indicated), and Miss Gibson got it wrong and it was addressed to "directors' meeting", but it was really supposed to be to the members. I signed and overlooked it and let it go and after that I didn't worry about it. Q. Sorry, are you now saying that when you signed the document that is at tab 80, you overlooked the fact that it was a reference to a directors' meeting? A. Yes. Q. And were you responsible for serving this notice of meeting that you thought was a notice of annual general meeting? A. No. Q. Who do you say was responsible for that? A. Normally when notices of meeting were sent, they have always been sent by the accountants. Q. And so you say you instructed Win Gibson to serve this notice on the minority shareholders, do you? A. No. Q. Then did you give instructions to anybody to serve this notice on the minority shareholders? A. No. ... Q. I just want to see if I understand your evidence, Mr Cassegrain. You now say that you had intended for the document that is at tab 80 to be a notice to the shareholders, rather than a notice to the directors about an annual general meeting? A. I had intended it to be a notice to both the directors and to the members. ... Q. When I asked you about whether you had any doubt as to whether or not you had notified the minority shareholders of this intended transfer, you raised as a basis for your doubt the document that is at tab 80, correct? A. Yes. Q. And do I now understand you to say that you never in fact instructed anybody to send the document that is at tab 80 to the minority shareholders? A. Yes. Q. And you don't say yourself you ever provided this document to the minority shareholders, correct? A. Yes. Q. In which case, why would the existence of this document, if never sent to the minority shareholders, cause you to have any doubt about whether or not they had in fact been informed about the intended transfer of these shares to your wife? A. Only that that was the intention of the minutes, of the notice and I then had no idea if Northcorp had circulated them or not. It definitely wasn't withheld from them. Q. You say yourself, don't you, that you never instructed Northcorp to send this letter to the minority shareholders? A. Yes. Q. And the notice is not addressed to the minority shareholders, is it? A. No. ... Q. Indeed you cannot recall any conversation with the minority shareholders about this transaction before you arranged for the transfer of the OAL shares to your wife, correct? A. Correct. Q. And neither do you have any recollection of even notifying any of the minority shareholders of the intended transfer of these OAL shares to your wife, correct? A. Correct. Sorry, before or after? Q. Before the transfer took place? A. No. Q. Indeed, you've never asked the minority shareholders for their retrospective consent after the transfers took place either, have you? A. No. 108Ms Gibson was not asked any questions in chief in relation to the Notice and the only question in cross-examination in relation to it was whether she knew who prepared it. She said she did not know (tr 209). 109Claude claimed that the meeting referred to in the Minutes took place on 21 December 2004 and that he and Mr Sarks were present with Ms Gibson on the telephone (tr 138). 110Ms Gibson recalled a meeting in early December 2004 with Claude in his office when he asked her what she thought of Felicity providing the funds to retire the Receivers "in exchange for security". Ms Gibson asked Claude what security could be used and he advised her that they could look at the shares in OAL and Endwise/TTO held by GCC. In this respect Ms Gibson said that there were discussions about the value of the shares and how much the companies were worth. She claimed that she advised Claude that they would have to see if the value of the shares represented enough security to cover the funds needed to retire the Receivers. 111Ms Gibson also recalled that on one particular occasion Claude asked NorthCorp to do a valuation of the shares. She claimed that she informed Claude that she would rather he get someone else to do it because she was aware of the dissatisfaction between the siblings and preferred an "uninvolved" party to do the valuation. There was discussion as to whether the shares were worth the value stated in the Balance Sheets and Ms Gibson claimed that Claude said he was of the view that the shares were not worth anything. She claimed that he asked her what was wrong with selling the shares "at the balance sheet price". Ms Gibson claimed that she advised Claude that if the shares were not worth "book value" then he could not be criticised if he sold them at book value and paid the stamp duty on that figure for the transfer. 112Ms Gibson referred to the facsimile from Mr McCarron dated 20 December 2004 in which he referred to Ms Gibson's "telephone advice" that she required an Option and a Lease. Ms Gibson said that she did not recall the conversation with Mr McCarron and that to the best of her recollection the Option Agreement did not proceed further. She claimed to clearly recall that the plan about how Felicity was to be protected changed in the period after Mr McCarron's facsimile was sent on 20 December 2004 and before Christmas 2004. 113Ms Gibson's affidavit evidence was that on 21 December 2004 she received a telephone call from Claude from his office. She claimed that Claude informed her that he was on loud-speaker and that Mr Sarks was with him. She also claimed that Claude said that he and Mr Sarks had decided that it was best for Felicity to purchase the shares in Endwise/TTO and OAL at the book value of the shares. Her affidavit evidence was that Claude asked her whether she could do all the documentation required and "make sure it is all done properly and I don't have to worry anymore about it". Ms Gibson asked Mr Sarks whether he was "right with all that" and Mr Sarks advised her that he was. Ms Gibson asked Claude whether he was sure about the value of the shares to which Claude responded, "what do you mean, you know they're not worth anything. Of course it's okay at book value. You know it's not worth that". Ms Gibson claimed that she advised Claude that she would sort it out and get the documentation to him. 114Ms Gibson said that a conversation then occurred concerning the particular arrangement between Felicity and GCC and the terms under which Felicity was prepared to fund the retirement of the receivers. Ms Gibson's affidavit evidence summarised those terms as being: (1) the receivers required $194,249.19 to be retired and payment by Felicity had been arranged on that day; (2) the receivers would be retired from the companies to which they had been appointed, being Endwise, GCC, Le Clos Sancrox Pty Ltd and Clos Farming Estates Pty Ltd; (3) the money was to come from Felicity; (4) GCC would sell its shares in Endwise (TTO) to Felicity for $60,423; (5) GCC would sell its share in OAL to Felicity for $71,450; (6) GCC would borrow the difference from Felicity and this amount would be secured by way of a mortgage over land; (7) the funds would be deposited or paid to the CBA that day and Ms Gibson would receive notification from the receivers that the money had been paid; (8) there was room for the transactions to be varied if there was to be any alteration in values once an up-to-date market appraisal was obtained; (9) NorthCorp was to arrange for the relevant share transfers upon receipt of confirmation that the receivers had been retired. 115Ms Gibson's affidavit evidence was that during the telephone conversation with Claude and Mr Sarks on 21 December 2004 she had the Balance Sheets of Endwise/TTO and OAL on her desk and she was able to refer to the values of the shares. Ms Gibson claimed that she wrote a summary of the agreement and resolutions that had been reached in an A4 spiral notebook. However she claimed that the notebook has since been destroyed because her practice was to keep the notebooks for no more than a couple of years. 116Ms Gibson said there was no discussion whatsoever during the course of the meeting on 21 December 2004, or later in January 2005, about the impact that a decision of the AAT might have on GCC. She was satisfied that the resolutions that were made on that day and subsequently recorded had nothing to do with the tax position of GCC. Indeed her affidavit evidence was that Claude did not raise GCC's tax position with her in the context of the share transactions. 117Ms Gibson referred in her affidavit to her email to Patricia Webber on 19 January 2005 in which she asked her staff to prepare the Minutes and the Resolutions Document. She claimed that after she sent that email, she spoke with Ms Webber, Ms Edwards and Mr White and advised them of what was required by using her notes that she had taken in the A4 notebook during the conversation with Claude and Mr Sarks on 21 December 2004. Her affidavit evidence was that she spelt out to her staff in considerable detail what had transpired at the meeting that needed to be included in the documents. 118Ms Gibson's affidavit evidence was that the Minutes, the Resolutions Documents and the Share Transfers, prepared in January 2005 to reflect what was discussed at the meeting on 21 December 2004, were all prepared using the BGL Corporate Register system which only Ms Webber was authorised to use. She said that the decision to transfer the shares held by GCC in Endwise (TTO) and OAL to Felicity was made before Christmas. Her evidence was that the circumstances of the transaction did not change thereafter and the only reason the transactions were not documented sooner was the intervention of the Christmas holidays and the fact that Ms Webber was away from the office until 17 January 2005. 119Ms Gibson was cross-examined in relation to the timesheets produced by NorthCorp for the period December 2004 to February 2005 (Ex H). Those timesheets included an entry for Ms Gibson on 20 December 2004 for one hour as "Special" with an entry "RE FELICITY PCHSE SHARES ETC - AGREES ETC". It was suggested to Ms Gibson in cross-examination that a further detailed entry in relation to 20 December 2004 for work on GCC business for 30 minutes, recorded as "TTEL CC RE OAL/CC/FELICITY/ETC", related to the telephone conversation she had with Claude in respect of the facsimile of 20 December 2004 from Mr McCarron. Ms Gibson said that she could not remember when she spoke to Claude about the facsimile but agreed that this entry in the timesheet "could suggest" that she did so on 20 December 2004. Ms Gibson agreed that there is nothing in the timesheets recording any work done by her on 21 December 2004. It was suggested to her that this was because she did not perform any relevant work on that date. Ms Gibson said that this was "not correct" (tr 214). 120Ms Gibson was also cross-examined about the email to her work colleagues on 19 January 2005. She said that when she sent the email she realised it was inadequate and she waited until Ms Edwards and Mr White were available and had a meeting with them (tr 217). It was suggested to Ms Gibson that what actually happened was that she was not in attendance by telephone at any meeting of the directors of GCC on 21 December 2004. She was cross-examined as follows (tr 219-221): Q. On your version of events, you say you send an email which is incorrect. You then gather the team and have them produce minutes which are correct and have them produce share transfers, correct? A. That's correct. ... Q. On your version of events, the email of 20 January 2005 is where your instructions are being given to the various entities to go ahead, produce the minutes and produce the share transfers? A. That's correct. Q. But you are aware, aren't you, Ms Gibson, that one of the share transfers, that is the share transfer involving the Endwise share, is in fact executed not on 20 January 2005 but rather on 19 January 2005? Would you like to look at document 105? A. It's dated the 19th of January 2005. Q. You are not suggesting that it has been backdated, are you? And if you would like to look at the share transfer from the OAL shares, that is behind tab 109. Have a look at that one? A. Yes. Q. That one is dated 20 January 2005. A. Yep. Q. So I suggest to you, Ms Gibson, what happened - what really happened - is that Mr Claude Cassegrain contacted you on 19 January 2005 and gave you instructions in accordance with your email to Ms Webber of 19 January 2005. I suggest to you that is what happened. Is that right? A. No, that's not right. Q. And I want to suggest to you that in accordance with your instructions, a share transfer was drawn up and, indeed, it was executed by both Mr Mr Sarks and Mr Claude Cassegrain on 19 January 2005, do you agree with that? A. This is signed here with the date 19th of January 2005. I - I don't know whether Claude and Mr Mr Sarks knew what the date was the date they signed it. Q. Wouldn't they have signed the two share transfers, on your version of events, at the same time? A. You would think so but I would have to talk to my staff. 121There was debate between the parties as to whether the word "today" in Ms Gibson's email of 19 January 2005 should be understood as an instruction to prepare minutes that contained a resolution that GCC sold its share in Endwise/TTO to Felicity on that day, or whether it was an instruction to prepare the resolution on that day. On balance it seems to me that the instruction should be understood as one that required a resolution for the transfer of the share on that day, 19 January 2005. There was no suggestion in the email that the date of the transfer or the resolution was to be 21 December 2004. The only temporal element relating to the transfer was the use of the word "today". 122Ms Gibson was also cross-examined about correspondence from Denis in July 2005 in which he sought copies of the share transfers. She agreed that at this time she knew that Denis was seeking information regarding GCC, but said that she did not recall attention being given to the share transfers. Rather, she recalled attention being given to the financial statements (tr 226). The purpose of this cross-examination was to suggest to Ms Gibson that by mid 2005 she must have been aware that Denis was interested in knowing about the share transfers to Felicity and she would have appreciated that the A4 notebook in which she claimed she made notes of the meeting of 21 December 2004 would be pertinent to that matter. She agreed that she knew it was possible that Claude's siblings may impugn the share transactions (tr 223). She was not certain when the A4 notebook in which she claimed to have written the notes of the 21 December 2004 meeting was destroyed. She accepted she received the correspondence from Denis in July 2005, less than 8 months after the relevant meeting took place. She gave the following further evidence in cross-examination (tr 225-226): Q. And as I understand what you say, your usual practice is you normally keep these records for about two years, don't you? A. It can - sometimes it can be four (sic) years. Sometimes it can be six months. Q. You don't say that in your affidavit, do you? A. No. As a rule, its probably about two years that I retain them. Q. Firstly, you knew at the time you took these minutes that this particular transaction might be controversial so far as the siblings were concerned, didn't you? A. Yes. Q. And you would have been concerned, wouldn't you, that any primary source records of this transaction would be or may be very important if there was any challenge to this transaction? A. I didn't have any concern at the time that I needed to keep those original documents that I wrote in the spiral notebook. Q. Well, you were made aware by at least July 2005 that Denis Cassegrain was asking for the records involving this particular transaction, weren't you? A. I can't recall. Q. Might the witness please be shown folder 5 of exhibit A? You may still have it in front of you. If you could please turn to the document that is behind tab 119. Now, you received a copy of this letter by about 22 July 2005, didn't you? A. I don't recall it. Q. You will see that your name appears, as a document being cc'ed to you, at the end of the letter? A. Yes. Q. Would you like to take the opportunity to read the letter to see if it comes back to you? A. Its obvious I received the letter, but I don't recall it. ... Q. And do you say that what you claim is your notes in the spiral bound notepad were destroyed after July 2005 or you can't say? A. I can't say. 123It is very odd that there is no record in the NorthCorp timesheets of any time being spent by Ms Gibson for a telephone attendance at a directors meeting of GCC on 21 December 2004, particularly a meeting she agreed could have taken 30 minutes or more (tr 214). Ms Gibson agreed that the purpose of the timesheets was to keep an accurate record of the work performed, so that the client could be billed appropriately (tr 211). Ms Gibson was then asked (tr 214-215): Q. Just before I take you to a particular document in tender bundle 5. If indeed you had performed the telephone attendance that you claim in your evidence, one would have expected that there would be time entries for you not only in GC&Co's records but also in OAL's records and, indeed, in the records of Cassegrain Tea Tree Oil Pty Ltd, wouldn't you? A. Not necessarily. Q. If you were following the time recording procedures of your firm, that is what one would expect to see, is it not? A. On the face of it, you would expect that -- Q. Thank you. A. But I - right, okay. Yeah, on the face of it it would look that but it isn't necessarily correct. 124There was no further explanation as to why the records were not "necessarily correct". I infer from Ms Gibson's answers that on occasions the time spent on a particular client's work is either intentionally or by inadvertence, not recorded. However this was a very significant meeting in which decisions were being made to transfer GCC's assets to Claude's wife/Mr Sarks' daughter. It is very difficult to accept that such a detailed meeting and amount of work could simply not be recorded in the timesheets. The entries in relation to 20 December 2004 suggest that what Ms Gibson was doing on that date was taking instructions and speaking to Mr McCarron about what documents were necessary (the Option and the Lease) and attending to the documents referred to by Mr McCarron in his facsimile to her of that date. 125There is an entry in the NorthCorp timesheets for Ms Gibson on 21 January 2005 for an "INTERVIEW" for 30 minutes described as "CC RE SHARES ETC". The NorthCorp Tax Invoice to GCC dated 28 February 2005 does not refer to any attendance at a meeting on 21 December 2004. Rather it refers to preparation of company Minutes "dated" 21 December 2004. It also refers to an "Interview with Ms Gibson in relation to shares" without reference to any date. When the timesheets are compared to the Tax Invoice, the irresistible conclusion is that the interview with Ms Gibson referred to in the Tax Invoice is that which is recorded in the timesheets on 21 January 2005. 126The plaintiffs rely upon the absence of any record in the timesheets for 21 December 2004 in support of their submission that such a meeting did not take place. The plaintiffs submitted that there was a need to explain this absence of any reference in the timesheets. In this regard it was submitted that both Ms Webber and Ms Edwards were available to give evidence but that the defendants failed to call them. It was submitted that they were the persons to whom Ms Gibson gave the instructions allegedly consistently with notes that she took. It was submitted that in the circumstances an adverse inference should be drawn in relation to the absence of evidence from them. I am satisfied that it is appropriate to conclude, in the circumstances of the matters that I have outlined above, that the evidence of Ms Webber and Ms Edwards would not have assisted the defendants' case. 127In the circumstances it is appropriate to consider Mr McCarron's evidence in relation to his involvement in the events of December 2004 and January 2005. Mr McCarron agreed that he sent the facsimile to Ms Gibson on 20 December 2004 although at the time of swearing his affidavits he did not have any specific recollection of the transaction. He recalled preparing the Deed of Option and gave evidence that he received no further instructions regarding it nor was he asked to make any amendments to it or to arrange for its execution. He had no recollection of preparing the draft Lease referred to in his facsimile. 128Claude wrote to Mr McCarron on the morning of 21 December 2004 instructing him to arrange for someone to collect the cheque book and the bank cheque at Westpac and asking that someone from Priest McCarron attend on settlement of the payment out of the receivers. Mr McCarron also received a copy of a letter from Claude to the receivers and from Felicity to the Westpac Banking Corporation authorising collection of the bank cheque payable to the CBA in the amount of $194,249.19. Mr McCarron's recollection was that his firm was instructed to attend upon the settlement at the CBA and to deliver the bank cheque for the retirement of the receivers. 129Mr McCarron was also asked about an undated file note that recorded a time of "10.40" and a time period of "10 mins". That file note referred to Claude and included the words "collect cheque" and "Minutes". Mr McCarron thought that this note reflected a discussion with Claude. It also records that Mr McCarron was to prepare a fixed and floating charge in respect of all monies owing, with a note "Felicity [takes] OPT in OAL" and "charge over Endwise". 130Mr McCarron was asked about the file note of 8 February 2005 in which he recorded a conversation with Claude and the words "we are to delete previous corresponds". Mr McCarron said that he interpreted this as being Claude asking him to delete some "previous letter or whatever" from his file. 131The file notes and correspondence in Mr McCarron's file suggest that as at 21 December 2004 he had been instructed to prepare an Option for Felicity to purchase shares in OAL and also to prepare a Lease. Those instructions had not changed by the time that Mr McCarron's firm attended settlement to make the payment for the retirement of the receivers, or thereafter, until Claude telephoned him on 18 January 2005 with the suggestion that Felicity may purchase GCC's share in Endwise for $50,000. 132There is no contemporaneous record of the directors meeting on 21 December 2004. The only documentary evidence relating to the agreement to transfer the shares to Felicity that is still in existence was created in mid January 2005 when the Minutes were prepared. 133It was submitted on Claude's behalf that the most "commercially plausible" explanation for the conversation between Claude and Mr McCarron on 18 January 2005 (contained in McCarron's file note of that date) was that Claude was "focused upon ensuring" that the TTO transfer achieved "some priority and/or emphasis given that decisions were then being made about which entity would carry on the tea tree oil business". The terms of the file note do not accommodate such a conclusion. Claude was indicating that he wanted to transfer the share to Felicity and that she was willing to pay $50,000 for it. The conversation is totally inconsistent with there having already been a meeting of GCC directors a month earlier at which a resolution was passed that the Endwise share be sold to Felicity for $60,423. If that decision had already been made on 21 December 2004, along with the decision to transfer GCC's share in OAL to Felicity, there is no rational justification or explanation for this conversation with Mr McCarron on 18 January 2005. Claude denied that this conversation occurred. Mr McCarron was a witness called in Claude's case. His file note of this conversation with Claude has not been challenged. I am satisfied that the conversation did take place. 134I am satisfied that as at 21 December 2004 Felicity had agreed to loan GCC $194,249.19, that she was to have as "security" an option to purchase shares in OAL to be exercised by 30 June 2005 and that she was also to be granted a charge over GCC's assets. I am satisfied that on 18 January 2005 when Claude telephoned Mr McCarron he had formed the view that he wished to transfer the share in Endwise/TTO to Felicity. 135The defendants submitted that the plaintiffs made no challenge to Ms Gibson's veracity. That submission cannot be accepted. It was suggested to Ms Gibson that the email that she sent to her work colleagues on 19 January 2005 in fact reflected what Claude had asked her to do on that day (tr 216). It is true that Mr Ashhurst did not suggest to Ms Gibson that her evidence was untrue. However in a more sophisticated cross-examination Mr Ashhurst aligned the documents chronologically to give Ms Gibson the opportunity to accede to the cross-examiner's suggestion that her stated position was not accurate. In those circumstances it cannot be suggested that the plaintiffs did not test the veracity of Ms Gibson. 136There is no doubt that Ms Gibson was attending to a number of matters for Claude and the various Cassegrain companies during the later half of 2004 and through 2005. Her affidavit in these proceedings was not sworn until approximately seven years after the relevant events. I am satisfied that Ms Gibson was convinced that she attended a telephone discussion with Claude and Mr Sarks as reflected in the Minutes dated 21 December 2004. However I am satisfied that such a meeting did not take place and that the contemporaneous documents that still exist in January 2005 lead to the irresistible conclusion that any conversation that Ms Gibson had with Claude and Mr Sarks as recounted in her evidence occurred on either 18 or 19 January 2005, and probably included further discussion on 21 January 2005. The content of the NorthCorp internal email of 19 January 2005 is consistent with the conversation that Claude had with Mr McCarron on 18 January 2005. I am satisfied that after he spoke to Mr McCarron Claude spoke with Ms Gibson and his instructions are reflected in her email of 19 January 2005. I am also satisfied that the more detailed instructions from Claude, and probably Mr Sarks, are reflected in the email of 20 January 2005 from Ms Edwards to Ms Webber. 137I am satisfied that there was no GCC Directors Meeting held on 21 December 2004 as recorded in the Minutes. 138The plaintiffs submitted that Claude created the "false" Notice of the Meeting dated 29 November 2004 or caused it to be created. I am not satisfied that it has been proved that NorthCorp had any involvement in the creation of this Notice, albeit that Claude made such a suggestion in his evidence. I am satisfied that the Notice was created at some later date than 29 November 2004. Reasons for transferring the shares to Felicity 139Claude wanted to retire the Receivers from GCC and needed funding to do so. One reason propounded by both Claude and Felicity for transferring GCC's shares in TTO and OAL to her was that she wanted security or real assets for the money that she was borrowing to pay to GCC. However both Claude and Felicity gave evidence that another reason for the transfer of the shares was to avoid further litigation with Claude's siblings, in particular to avoid the appointment of a provisional liquidator to GCC. 140In his affidavit sworn on 23 July 2010 Claude's evidence was that by 2004 he had formed the view that the Receivers had "sold all of the easily saleable assets" of GCC and the other companies in receivership and that he was "concerned" that their "ongoing costs would exhaust the companies' remaining assets" (par 104). Claude deposed to a conversation with Felicity in October 2004 in which he exposed this concern when he informed her that the Receivers would "continue to charge fees and incur costs until the company is liquidated" (par 107). Indeed the Minutes dated 21 December 2004 refer to the motivation for the retirement of the Receivers as follows: It is also noted that the directors have formed the opinion the Receivers ought to be retired as early as possible in order to avoid ongoing penalty interest, administration and receivership costs, which would continue to diminish the future value of the companies. 141However Claude also gave affidavit evidence of a conversation "sometime later" than October 2004 in which he claimed that he informed Felicity that he had been "attacked" because he allowed CTK to operate the plantation. He claimed that he informed Felicity that GCC owned half the plantation with him and that OAL owned all the plant and equipment. His affidavit evidence was that he said to Felicity "they are of no use to GC&Co, you could buy GC&Co's shares in them" (par 110). 142Claude also claimed that one reason he suggested the Endwise/TTO and OAL shares be sold to Felicity was that in the CTK proceedings other members of the family had alleged that the tea tree business was not commercially viable and had successfully applied to have a provisional liquidator appointed to CTK. His evidence was that he thought that there was "no prospect" of the plantation or the plantation machinery ever being used profitably while Endwise/TTO and OAL were owned or part-owned by GCC. He said that he believed that it may be possible to manage the tea tree plantation profitably but that any attempt for GCC to do so would be "met with the same response that had occurred in the CTK proceedings" (par 111). I infer that Claude was saying in this part of his affidavit that if GCC attempted to operate the tea tree business after the Receivers were retired, his siblings would seek to appoint a provisional liquidator to GCC. 143Claude described his reasoning on this topic in his cross-examination as follows (tr 90): Justice Windeyer had appointed a provisional liquidator to operate CTK's activities of harvesting the tea tree plantation, based on an application by my siblings that the operation of the tea tree business was depleting the value of the shareholders' wealth in CTK. In the event that we were able to retire the receivers and GC&Co continued to have an interest in the tea tree plantation, bearing in mind that I owned 50% of Endwise, I reasoned that there would be an immediate application on the same basis slapped on GC&Co to have a provisional liquidator appointed. 144This was tested in cross-examination as follows (tr 90-92): Q. Is this what you are telling the court: That because you had seen how a provisional liquidator had been appointed to CTK, you were concerned that a provisional liquidator might be appointed to GC&Co? A. Yes. Q. And you were concerned that if a provisional liquidator was appointed to GC&Co, that would take the control of the Wynne property out of your hands? A. My concern was that it would be the death knell of GC&Co and there was no point thereafter in retiring the receivers. Q. And when you say the death knell of GC&Co, the only businesses that GC&Co had an interest in, in December 2004, was the business that was conducted on the Wynne property and any litigation that was currently being conducted for the benefit of OAL, correct? A. No. ... Q. So, so far as you are aware, the only possible businesses that may have been left in GC&Co were the tea tree operation on the Wynne property and any litigation that OAL might benefit from? A. GC&Co's interest in the tea tree activity was via its shareholding in Endwise Holding and OAL. ... Q. Mr Cassegrain, I thought you said earlier that you wanted to protect GC&Co's business by transferring out the assets in Endwise and OAL, that is, protect GC&Co's business from the provisional liquidator. Did I correctly understand you? A. No, you have not. I wanted to protect GC&Co so that it could continue to survive. Q. So, by getting the assets, transferring the assets out of GC&Co, you were going to protect GC&Co so that it could continue to survive, is that what you're saying? A. In that case, yes. Q. If the assets were transferred out of GC&Co, what was the point in GC& Co continuing to survive, Mr Cassegrain? A. GC&Co had other assets and I had aspirations to revitalise Gerard Cassegrain & Co once the receivers had been retired. Q. What were the other assets that you say GC&Co had, other than the share in Endwise and OAL? A. As at? Q. As at December 2004? A. I was not sure. Q. I thought you just said then that you had intentions to try and revitalise GC&Co in respect of these other assets after the OAL and Endwise shares were transferred out? A. In 2004 I believed GC&Co had the ability to recover monies owed to it. I believed that GC&Co was entitled to damages from my siblings. I was not sure as to what land assets had been left after the--- I was not sure as to what land assets GC&Co would have until after the receivers had been retired and I received a report. ... Q. *In any event, do I understand you correctly to say that the reason you say that you arranged for the share in Endwise and the shares in OAL to be transferred to your wife was, firstly, because you were concerned that if you didn't do that, the minority shareholders would appoint a provisional liquidator to GC&Co? A. I was of the belief that in the event that OAL completed the CTK's harvest after the retirement of the receivers and the provisional liquidator had made his decision, that - may I start again? HER HONOUR: Yes. QUESTION MARKED * READ BACK A. My answer is yes. 145He was cross-examined further about his claim that the reason he transferred the shares to Felicity was to avoid the appointment of a provisional liquidator to GCC. He gave the following evidence (tr 93-96): Q. How do you say you were going to be able to avoid the appointment of a provisional liquidator to GC&Co by transferring the Endwise share and the OAL share to your wife? A. There was - there would be no excuse for further litigation from my siblings. Q. So as I understand what you're saying is that the only business that GC&Co could be said to be operating would be any business run by either the Endwise share or the OAL shares, and that if you removed those businesses from the company, then there could be no excuse to appoint a provisional liquidator. Is that what you're saying? A. Yes. ... Q. And you say that that decision was made at some date prior to 29 November 2004, don't you? A. The proposal had been made shortly after as I said before the Humphries report and the appointment of the provisional liquidator by Justice Windeyer. As to the exact date I can't recall. Q. The date of 29 November 2004 was the date of the notice to directors that I asked you some questions about? A. Yes. Q. You say do you not that the decision had already been made to transfer these assets to your wife by that date, don't you? A. As far as I was concerned that is correct. Q. What I'm asking you as at the date that you made the decision to transfer these assets to your wife do you say that the desire to protect GC & Co from the appointment of a provisional liquidator was a motivating factor in your decision? A. Yes. Q. Was it a significant motivating factor? A. It was - the answer is yes. 146I do not accept that Claude decided to transfer the shares to Felicity as early as November 2004. I am satisfied that in December 2004 and certainly as at 21 December 2004 there had been no agreement to transfer the shares to Felicity. I am satisfied that it had been agreed between Felicity and Claude that Felicity would loan to GCC the amount of $194,249.19 for a period of 12 months and that Felicity would be granted a Charge over GCC's assets and an Option to purchase GCC's shares in OAL to be exercised before 30 June 2005. 147The facsimile Ms Gibson sent to Mr McCarron's firm (directed to Ms Yager) on 20 December 2004 was confirmation of discussions earlier that day in which Ms Gibson asked that the solicitors prepare the Deed of Option and a Lease. Mr McCarron prepared the draft Deed of Option before he received Ms Gibson's facsimile. The draft Deed of Option listed the Purchase Price at $10.00. When Mr McCarron sent the draft Deed of Option to Ms Gibson he noted that the price would change to $10,000 because of the advice in Ms Gibson's facsimile that there were 100,000 shares. Although Ms Gibson had advised that the "final price for the shares" in OAL would be the "value of the company as per the balance sheet as at 30 June 2004", Mr McCarron asked if the shares could be valued. There was no valuation of the shares. 148There was no mention in these communications of GCC's shares in Endwise/TTO. The only mention of Endwise was the request for a Lease from Endwise to OAL for 5 years. These communications are inconsistent with Claude's claim in his cross-examination that he had made the decision to transfer GCC's shares in Endwise/TTO and OAL to Felicity prior to November 2004. These communications are consistent with Felicity loaning the $194,249.19 to GCC and in exchange receiving the "security" of the fixed and floating charge and the Option to purchase only the OAL shares. 149It was on 18 January 2005 that the AAT decision was delivered rejecting GCC's tax objections. Claude was asked about this decision in cross-examination as follows (tr 142-143): Q. And you understood that the Commissioner was claiming that the 1994 return of GC&Co had understated its taxable income by something in the order of $400,000? A. 4.2 million. Q. I was going to suggest to you that the 4.2 million was what the Commissioner was asking when all penalties and interest were taken into account? A. No. The Commissioner re-adjusted Gerard Cassegrain & Co's taxable income by adding to its income 4.2 million. Q. And the effect of the adjustment when you added interest and penalty was the Commissioner now claimed further tax of something in the order of $2 million? A. No, about four or five million I think. Q. Four or five million? And you were aware in January 2005 that the decision on your objection to that assessment was pending? A. Yes. Q. And you were notified either on 18 January 2005 or shortly before, that the decision was about to be handed down? A. No. Q. When do you claim you were first notified that that decision from the Administrative Appeals Tribunal was about to be handed down? A. I received a phone call shortly before they sent me the decision to say that they wanted me to go to Sydney to pick up - before I received the fax - to pick up the decision and that they had been trying to contact me, because I had no lawyers and I was able to convince them that they fax it to me, which they did in half an hour of the phone call. HER HONOUR Q. Who is "they"? A. The AAT secretariat, your Honour. ASHHURST Q. In any event, by 19 January 2005 you were certainly aware of the results of the decision of the Administrative Appeals Tribunal? A. I know that I received the fax around about 1 o'clock pm on the 19th. I don't know if I immediately - but I would have to assume that I would have had an anxious look at it once I received it, but I have no recollection of when I first read the decision. Q. And when you first did read the decision, you saw that you lost or, more accurately, GC&Co had lost? A. Yes. Q. And that that now meant that unless that decision could be effectively appealed, that the Australian Taxation Office would be claiming a very large sum of money against GC&Co? A. Yes. Q. And indeed you went to see your solicitor, Chris McCarron, regarding this decision on 20 January 2005, didn't you? A. Did I see him? Q. Yes, on 20 January 2005. A. I don't recall it. I might have spoken to him, but I don't think I would have gone to see him. Q. Might you have had a telephone conversation with Chris McCarron on 20 January 2005? A. Yes. 150Mr McCarron made a note of a 16 minute discussion with Claude on 20 January 2005 in which Claude advised that he wished to lodge an appeal in respect of the AAT decision. 151The Transfer Form transferring GCC's share in Endwise/TTO to Felicity was signed by Claude and Mr Sarks and was dated 19 January 2005. The Transfer Form transferring GCC's shares in OAL was signed by Claude and Mr Sarks and was dated 20 January 2005. 152I have no doubt that Claude only decided to sell the share in Endwise/TTO to Felicity in mid January 2005. I am satisfied that Claude advised Mr McCarron on 18 January 2005 that he wanted to transfer GCC's one share in Endwise/TTO to Felicity and that Felicity could probably pay $50,000 for that share. 153Claude's evidence that as at 21 December 2004 he and Felicity were motivated to transfer the shares to avoid litigation with Claude's siblings, and that Felicity would purchase GCC's shares in TTO and OAL and make a loan to GCC on that day, is rejected. I am satisfied that the intention to transfer the shares was not formed until 18 January 2005. 154I am satisfied that the reason Claude decided to transfer GCC's shares in OAL and TTO to Felicity in January 2005 was to take them out of the reach of any potential liquidator appointed to GCC, either by his siblings or by anyone else. I am satisfied that Mr Sarks was advised by Claude of his motive and agreed to the transfer. Valuation of the Shares 155It is not in issue that an independent valuation of the shares was not obtained at the time of the share transactions. 156The experts valued the shares as at 21 December 2004 and 19 January 2005. Ultimately the difference in dates will not matter a great deal in light of the way the experts have approached their valuations. 157The two areas of expert assistance to the Court in this process were the valuation of the Wynne Property and the valuation of the TTO and OAL shares. Apart from the opinions provided by the expert valuers, it is necessary to refer to the two documents that were prepared in 2005 upon which the expert valuers commented. 158The first document is the "market appraisal" of the Wynne Property prepared by John Cutcliffe in 2005. Mr Cutcliffe was careful to point out that this market appraisal was not to be regarded as a "valuation" but a "genuine market appraisal, taking into account the likelihood of attracting a suitable purchaser in a position to complete a sale of the property". Mr Cutcliffe expressed the view that a likely sale price for the Wynne Property was in the order of $600,000 on the assumption that the Lease in favour of ARG would be removed from the title. Mr Cutcliffe's assessment of the marketability of the Wynne Property was based on the possibility of restructuring it and converting it into a viable cattle holding taking into account the overall condition of the Property and the need to install re-fencing, water supply and stockyards and to perform a large amount of clearing of the Tea Tree Plantation. 159The second document is the "Business Plan" for TTO prepared by Claude in 2005 and sent to a prospective financier HCCU at Port Macquarie in support of an application for finance. The Plan recorded that in excess of $10 million had been spent in developing the Tea Tree Plantation on the Wynne Property and in purchasing machinery. It claimed that the Distillery was recognised as one of the more efficient facilities in the industry. It included the following: At present Cassegrain Tea Tree Oil Pty Ltd has no pharmaceutical or cosmetic or an executed agreement with a manufacture (sic) and/or distributor of pharmaceutical or cosmetic products. The short-term objective is to sell the bulk of its oil into the existing market at the competitive prices ranging between $12-$15/Kg. Because of competitive pressure lengthy trade terms of 60 to 75 days, from Bill of Lading date, are the current terms of trade. The long-term objective of the company is to develop a pharmaceutical market. The company's North American agents have been able to sell all the oil the plantation has produced at prices ranging between $13/kg to $15/kg and have expressed confidence of being able to sell all of the plantation's projected production. They do not have an exclusive arrangement to all of the plantation's production but do have an exclusive arrangement with us for the North American and Middle East markets. We have been recently approached by another agent representing a medical products manufacturer based in London with a potential demand of eight tonnes of oil per annum. We have provided samples that are currently being analysed by the London based manufacturer. Besides the above we have over a period of some 5 years been sending small amounts of oil on an irregular basis to a Japanese customer. The Japanese customer advised that if we are able to register "Cassegrain" as a trademark in Japan they will produce and market product under our brand name, supported by Television advertising at their expense and risk. The customer advised their research has shown that "Cassegrain" is an effective 'brand' in the Japanese market. This opportunity is to be thoroughly investigated during the course of 2005. In addition to the above we are in the process of developing an association with a TGA approved contract manufacturer and laboratories located in 'Narrellan' south west of Sydney. ... A number of pharmacists, strategically located, have agreed to participate in the launching of our proposed brand named products in order to create the demand required to interest the distributors of pharmaceutical products. The detail (sic) plan has yet to be properly documented and costed. 160The Business Plan also referred to the "Tea Tree Mulch Market" and the fact that tea tree mulch was competing with woodchip, bark and hay mulch. It referred to the advantages of the tea tree mulch attributes and included the following: Cassegrain Tea Tree Oil Pty Ltd currently has a gentleman's agreement to provide all of its mulch to MI Organics Pty Ltd and MI organics to source all its tea tree mulch from Cassegrain Tea Tree Oil Pty Ltd. MI Organics have a fleet of trucks and trailers they use to supply major nurseries and landscape suppliers between Coffs Harbour to the north, Central Coast to the south and Tamworth to the west. 161The Business Plan also referred to the operation of the Tea Tree Plantation and included the following: The plantation was established between 1997 and 1999 and managed by Oceania Agriculture Limited up until July 2003. From August 2003 to 21 December 2003 CTK Engineering managed the plantation as sub-contractor of Oceania Agriculture Pty Ltd. The owner of the plantation, Cassegrain Tea Tree Oil Pty Ltd (previously Endwise Holdings Pty Ltd), took over operation from 21 December 2004. 162The Business Plan also included a "Gross Profit Budget" for the period 1 January 2005 to 31 December 2005 and 1 January 2006 to 31 December 2006. The predicted available amount for "stock, capital, depreciation, interest, profit & tax" for the 2005 period was $433,400 and for the 2006 period $602,500. The Tax Invoices that were attached to the Business Plan included invoices to MI Organics for $27,637.50 dated 18 February 2005 and to Glencoe Products dated 31 January 2005 in the amounts of $76,960 and $22,200. There was also an invoice to Glencoe Products dated 4 March 2005 in the amount of $28,992.42. Valuation of the Wynne Property 163An important question to be decided in relation to the valuation of the Wynne Property is whether or not the ARG Lease and the OAL Sub-Lease of the Property are enforceable. The two expert valuers, Michael John Reid and Jeffrey Rogers, have agreed that if they are enforceable the value of the Property is $1,175,000 and if not the value of the Property is $2,430,000. Although there is also a valuation by the Valuer General of $1.83 million, the real focus of the parties was between the two valuations provided by the expert valuers. 164The plaintiffs contend that the Lease and Sub-Lease are not enforceable because the Scheme and Projects have come to an end by reason of the retirement and non-replacement of the Trustee. ARG had acted as Trustee for the Scheme. Clause 46.4 of the Deeds governing the Projects provided that "If the office of the Trustee of the Project becomes vacant and a new Trustee or Trustee (sic) is not appointed within 60 days of the vacancy occurring the project shall terminate". 165On 17 December 2002 Campbell J (as his Honour then was) declared that the retirement of the Trustee was effective from 5 November 2002: Atkinson v Australian Rural Group Ltd 44 ACSR 152; [2002] NSWSC 1232 at [58]. A new Trustee was not appointed. Accordingly the plaintiffs submitted that the Projects were terminated 60 days thereafter in January 2003. 166Clause 2 of the Lease provided that the Lessee, ARG, had entered into the Lease only in its capacity as Trustee under the Project Deed. Clause 15 of the Lease provided that it commenced on 30 June 1997 and terminated on 1 July 2015 "unless it is determined earlier by the Lessee without cost to it upon the determination of the Project Deed". There is no evidence that the Lessee formally "determined" the Lease. There is a reference to the Lease to OAL being "cancelled" before CTK took over the operations (Ex A Vol 6 p 1642). 167I am satisfied that the Project was terminated and consequently the Project Deed was determined. ARG was no longer Trustee under the Project Deed. I am satisfied in those circumstances that the Lease was not enforceable. There were similar provisions in the Sub-Lease and for the same reasons I am satisfied that it was not enforceable. Accordingly the valuation of the Wynne Property is at the higher figure as agreed between the experts of $2.43 million. Valuation of the Shares 168The defendants relied upon the expert opinion of Warwick Richard Finney, Chartered Accountant, as to the value of GCC's share in TTO as at 21 December 2004 and 19 January 2005 and GCC's shares in OAL on those same dates. Mr Finney provided two Reports dated 27 August 2010, one in relation to the value of GCC's share in TTO (Ex E) and the other in relation to the value of GCC's shares in OAL (Ex F). The plaintiff relied upon the expert opinion of Jennifer Ann Exner, Chartered Accountant, who provided a report dated 29 November 2010 "critiquing" Mr Finney's two reports (Ex K). Mr Finney and Ms Exner held a joint conference and produced a Joint Statement dated 17 May 2011 based on a document entitled "Statement of issues for expert assistance" (Ex C). 169The Joint Statement addresses two issues. The first is the value of GCC's share in TTO as at 21 December 2004 and 19 January 2005. In dealing with this issue the experts were asked to deal with two matters. The first was the value of the assets owned by TTO at the two dates. For this purpose the experts were requested to express their opinion of the highest value and the best use of the Wynne Property and the value of the Tea Tree Plantation on the assumption that TTO conducted that business on the two dates. The second matter was the amount of TTO's liabilities as at 21 December 2004. 170The second issue on which the experts were asked to express an opinion in the Joint Statement was the value of GCC's shares in OAL as at 20 January 2005. In dealing with this issue the experts were asked to deal with two matters. The first was whether, and if so why, any value should be attributed to the cause of action OAL had to recover moneys it lent to ARF. The second was the amount of OAL's liabilities as at 20 January 2005. The TTO Share 171The experts agreed that if the Leases were enforceable, the value of the TTO share would be $157,556. Ms Exner valued the TTO business whereas Mr Finney did not. Ms Exner valued the share on the basis of the Leases not being enforceable whereas Mr Finney did not. If the value of the business is to be taken into account on the basis of the Leases not being enforceable Ms Exner valued the share at $848,681 (Ex C; par 4). 172The experts disagree on the value to be attributed to the GCC share in TTO on the relevant dates because of their differences in opinion as to: (a) whether and by how much the value of TTO should be increased by the present value of the future cash flows expected to be earned from the Tea Tree Plantation and tea tree oil business at the relevant dates; and (b) the market value of the Wynne Property. That second issue is no longer alive because I have decided that the appropriate value in the circumstances is that agreed between the land valuers in circumstances where the Lease and Sub-Lease and not enforceable, being $2.43 million. 173One significant matter of difference between the experts is whether it is appropriate to take into account the contents of the Business Plan in the process of valuing the TTO share. It was submitted by the defendants that one of Ms Exner's critical assumptions - that TTO could be valued by reference to the Business Plan prepared by Claude in March 2005 - is fundamentally incorrect. It was submitted that this approach seeks to adapt a document, created after the valuation date and in respect of a different business, for a purpose other than an objective valuation of the business presumed to have been extant on the valuation date. 174Claude accepted in cross-examination that prior to 21 December 2004 he was aware of "most of the information" in the Business Plan (tr 73). Although the Business Plan included the statement that TTO took over the operation of the plantation from 21 December 2004, Claude's affidavit evidence on this topic was that it was OAL that took over the harvest on 28 December 2004. Claude reiterated this statement in cross-examination (tr 77; 81). Claude was cross-examined about his Statement of Financial Position prepared in July 2006 in support of an application for funding in which he claimed that his share in TTO was worth $3 million. He was asked how it was that the value of the share had increased from approximately $60,000 to $3 million in such a short space of time. The only explanation he could proffer without having access to "files" was that there had been a doubling of production in the distillery (tr 162). 175The statement made by Claude in the Business Plan as to who was operating the Tea Tree plantation was made very much closer to the actual events and is consistent with his explanation as to how it was that the value of his TTO share had increased from approximately $60,000 to $3 million. The claim in the affidavit that it was OAL that took over the operation of the Tea Tree Plantation was made on 10 May 2011, six years after the events. It seems to me more probable that it was TTO that took over the operation of the Plantation. 176Mr Finney concluded that TTO was not operating a business on either 21 December 2004 or 19 January 2005. Ms Exner concluded that the factors identified in the Business Plan (including the "recent" approach for the 8 tonnes of oil per annum for the medical products manufacturer in London; the Japanese negotiations; the "gentleman's agreement" with MI Organics; planned revenue of $406,000 for 2005 and $988,000 for 2006; and planned increase in gross profit for 2005 of $433,400 and $602,500 for 2006) indicated that in or around January 2005 there appeared to have been both activity and plans being developed in relation to the future prospects of the Tea Tree Plantation business that had been taken over by TTO in December 2004 (Ex K; pars 4.11-4.12). Ms Exner accepted that the business had only been recently taken over by TTO and there were no long-term cash flow forecasts available. However she concluded that in view of the activities that were being undertaken by TTO, referred to above, and because the necessary infrastructure was in place, it was appropriate that "some account should be made for this" in determining the value of the share. Ms Exner concluded that a "rational investor" would expect to receive more for their share in TTO in January 2005 "than if these activities were not being undertaken". Ms Exner put an "estimate" on this at $200,000. 177I am not satisfied that Ms Exner's approach of taking into account the statement in the Business Plan was a flaw in her analysis. Rather it was appropriate to have regard to the fact that TTO intended to and did operate the Tea Tree Plantation and the tea tree oil business. I am satisfied that it was not unreasonable to make an assessment that the value of TTO would be increased by its operation of the tea tree business. The estimate of $200,00 represents the net present value of the net cash inflows in the Business Plan (Ex K; par 4.30). 178The experts are in agreement that the amount of TTO's liabilities on the relevant dates was $843,478. 179Having regard to the conclusion I have reached about the enforceability of the Lease and the Sub-Lease, and having regard to the conclusion that I have reached that it was reasonable for Ms Exner to include the value of the business at $200,000, I am satisfied that the value of the TTO share was $848,681 at December 2004 and/or January 2005. The OAL shares 180The competing position between the experts as to the value of the OAL shares is summarised in the joint report (Ex C). Mr Finney values the shares at $52,265 based on zero percentage prospects of OAL recovering any of the $10 million debt owing by ARF. Ms Exner values the shares at between $10,274,157 and $18,725,216, based on a 50% to 100% prospect of OAL recovering any of the $10 million debt owing by ARF 181The defendants submitted that Ms Exner's valuation of GCC's shares in OAL at between $10,274,157 and $18,725,216 should not be accepted because it is driven by the artificial assumptions upon which the opinion is based. It was submitted that the "facts" Ms Exner was instructed to assume included events that occurred after the valuation date, without any recognition of the constraints upon which such events can be taken into account for the purpose of a formal valuation. It was submitted that Ms Exner's opinion was not based upon any investigation of the individual cases of investors or an assessment of their insolvency. It was contended that she was in no position to make any judgment about the prospects of an actual recovery of moneys in the Gardiner Proceedings. It was also submitted that her opinion made no allowance for the costs of obtaining or enforcing judgments against investors, and was based upon an assumption that proceedings against the investors had substantially come to an end with publication of the High Court's judgment in Agricultural & Rural Finance Pty Limited v Gardiner [2008] HCA 57; 238 CLR 570, whereas the proceedings continued to be hotly contested after that date and remain unresolved with proceedings pending in the Court of Appeal. 182It was also submitted that Ms Exner took no account of any information relating to actual recoveries and that her opinion was essentially speculative. It was submitted that the broad range of values attributable to the shares is indicative of the unreliability of the valuation. It was also submitted that Ms Exner's opinion was flawed by her alleged failure to take into account various other factors, including the multiplicity of borrowers, the fact that borrowers were well resourced and capable of exhausting all legal avenues to defend the proceedings, the likelihood that some borrowers would be forced into bankruptcy and the advice given by senior counsel that there would have been a significant exposure to costs had ARF/OAL been unsuccessful in the litigation. 183The differences between the experts is based on their respective assessments of the prospects of OAL recovering the moneys owed to it by ARF, which in turn was based on the prospects of ARF and OAL being successful in the Gardiner Proceedings. Mr Finney did not place any value on that debt because of the "uncertainties" surrounding the claims and counter claims as to the effectiveness of the indemnities provided by OAL and consequently the ability of ARF to repay the indebtedness of OAL. 184Ms Exner's assumptions regarding the prospects of the successful recovery of the debt contained in her report (Ex K) include reference to the Agreement between OAL and ARF pursuant to which OAL loaned money to ARF to enable it to lend money to the borrowers (Farmers) (Assumption 1). Ms Exner also referred to the Projects and various Loan Agreements and in particular the Indemnity Agreements whereby OAL would provide indemnity to the investors to cover their potential liability under the Loan Agreements (Assumptions 2 to 4). Ms Exner also referred to the assumptions that the Projects collapsed and the Farmers ceased to carry on business (Assumption 7) and that the investors "were not punctual in their repayments" (Assumption 8). There was also the assumption that OAL disclosed in its accounts a debt from ARF of $9,875,158 and a doubtful debt provision of $9,809,295 (Assumption 9). Ms Exner made a further assumption that during the year ended 30 June 2001, OAL appeared to have written off the amount of $9,875,158 and thereby "made obsolete" the corresponding provision for the doubtful debt of $9,809,295 (Assumption 10). 185There was also the assumption that OAL recorded in its accounts of 30 June 2002 that the company was likely to cease its principal activities and recover over time the deposits it made with ARF to meet liabilities and make a distribution to its shareholders after tax (Assumption 11). Ms Exner also referred to the demand that was made on 12 November 2002 on the Farmers to repay their loans (Assumption 12). There was also a reference to Senior Counsel's advice of May 2003 to ARF that it "has a very strong case" on the question of recovering the monies due to it under the Loan Agreements and the advice to OAL that if any of the Farmers had ever failed to pay their interest or principal on the due date, the Indemnity Agreements "would not be effective and enforceable" (Assumption 13). Ms Exner then noted that OAL "subsequently succeeded in the litigation by relying on multiple failures to pay punctually during the period 1998 to 2000". 186Ms Exner then referred to the commencement of the Gardiner Proceedings, the pleadings, the order for Separate Determination, and the agreement by 179 of the 216 persons sued to be bound by the findings made on a Separate Determination (Assumptions 15 to 19). Ms Exner then assumed that on 21 December 2004 Claude and Mr Sarks resolved to sell GCCs shares in OAL to Felicity "at a price that did not attribute any value to OAL's prospects of recovering the substantial sums of money which it had lent to ARF" (Assumption 20). The balance of the assumptions refer to the various judgments at first instance and on appeal (Assumptions 21 to 25); that on 4 January 2003 the amount payable by the borrowers to ARF was $11,605,832.33 with interest; and the amount payable by ARF to OAL was $9,912,979.37 with interest (Assumptions 26 and 27). 187The defendants criticised Assumptions 8 and 13 made by Ms Exner. However the plaintiffs relied upon the judgment of Hope JA in Housing Commission of NSW v Falconer & Anor [1981] 1 NSWLR 547 at 558 in which his Honour, citing Minister for the Army v Parbury Henty & Co Pty Ltd (1945) 70 CLR 459, said that "evidence of future events is admissible not to prove a hindsight, but to confirm a foresight". The plaintiff submitted that, as she explained in her report (Ex K), Ms Exner took into account the advice that OAL had a "very strong case" if there had been a failure by the investors to make loan payments punctually and that OAL was in a position as at the date of the share transfers to ascertain whether there had been any failures to pay punctually. Ms Exner took into account the fact that there were 216 investors involved in the recovery proceedings which would have "spread the credit risk" associated with insolvent investors. 188The plaintiffs submitted that Ms Exner's valuation should be preferred over Mr Finney's because it takes into account the sum of $1,025,315 shown in ARF's accounts as a current liability owing to OAL, whereas Mr Finney does not. Further it takes into account the fact that OAL would have known the extent of any default of the investors by 20 January 2005, whereas Mr Finney was of the view that nothing that occurred after the sale of the shares could be taken into account. Further it is submitted that Ms Exner's opinion was consistent with the actual evidence of what was in fact recovered from the investors. 189Mr Finney was critical of Ms Exner's inclusion of assumptions that post dated January 2005. I agree with Mr Finney's criticism in this regard. The objective valuation of the OAL shares as at January 2005 should not take into account the events post dating the transfer of the shares, in particular the lengthy and detailed aspects of the litigation. This is a different situation to taking into account the contents of the Business Plan that was prepared in March 2005 for the purposes of valuing the TTO share. Although that document post-dated the transfer of the TTO share, it referred to matters that were extant as at December 2004. 190There is no doubt that there was complexity to the Gardiner Proceedings at the time of the transfer of the shares in January 2005. However it does not follow that no value should be placed on the prospects of success, particularly when there was advice from Senior Counsel in respect of those prospects. Ms Exner has valued the prospect as a contingent asset whereas Mr Finney has refused to value it at all. It seems to me that it is appropriate to give some value to the contingent asset, having regard to the legal advice at the time and the ability to ascertain whether the payments had been made punctually as at January 2005. However it is important to take into account the vagaries and uncertainties of complex multi-party litigation. 191In all the circumstances I am satisfied that it is appropriate to put a value on the contingent asset. However I do not agree that the robust approach adopted by Ms Exner is justified. Rather as at January 2005 a fair and reasonable objective assessment would be to apply a 52% likelihood of success in the litigation. Accordingly I am satisfied that the appropriate assessment of the value of the shares in OAL on a net asset basis is as identified by Ms Exner at a probability of success in the litigation at 50%, being $6,234,397. Were the shares transferred at undervalue? 192I am satisfied that GCC's share in TTO was transferred to Felicity at a price well under its true value. I am also satisfied that GCC's shares in OAL were transferred at a price well under their true value. The "rule" in Jones v Dunkel (1959) 101 CLR 298 193The plaintiffs chose not to give any affidavit or oral evidence and to rely only on documentary material in their case in chief. Notwithstanding this forensic decision the defendants chose to go into evidence and the plaintiffs are, of course, entitled to rely on that evidence where it assists them. Plaintiffs who choose not to give evidence may be at risk of adverse inferences being drawn against them by reason of the absence of evidence on particular matters, but not unless they are required to "explain or contradict" something or provide an "answer" to certain facts: Jones v Dunkel (1959) 101 CLR 298 per Windeyer J at 321-322. 194The defendants have complained that the plaintiffs have failed to go into the witness box to be cross-examined and that therefore there are matters that could have been before the Court that are not before it. That is no doubt true. However the relevant issue is whether there are matters that the plaintiffs should have and yet did not put into evidence. The "rule" in Jones v Dunkel is a rule of evidence as described above. It needs to be distinguished from a circumstance where there is a failure to call evidence to prove an essential element of a case. If a case can be proved from documents, there is no requirement for a party to call oral evidence to prove the same thing. However it will depend on the particular claim that is made as to whether it is necessary for a party to give affidavit or oral evidence of particular matters. An example that comes to mind is a claim that a party relied upon the particular conduct of another to change their position. It may be possible to prove reliance from documents or an admission from another party, but in the vast majority of cases it would seem, prima facie, to be necessary for the person claiming reliance to give oral evidence of that reliance. 195The plaintiffs claim that the defendants' conduct is oppressive within the meaning of s 232 of the Corporations Act 2001 (Cth). That section provides: The Court may make an order under section 233 if: (a) the conduct of a company's affairs; or (b) an actual or proposed act or omission by or on behalf of a company; or (c) a resolution, or a proposed resolution, of members or a class of members of a company; is either (d) contrary to the interests of the members as a whole; or (e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity. 196A judgment by the Court as to whether the affairs of a company have been conducted in a manner that is oppressive to, unfairly prejudicial to, or unfairly discriminatory against the plaintiffs must be made having regard to all the circumstances. Each case will depend on the particular circumstances and it is not appropriate to lay down a rule for every case. The requisite conduct may be proved by documentary and/or oral evidence. There is nothing within s 233 that requires a claimant to give oral evidence if the case can be proved by documents and/or the evidence of other parties. 197There is also a claim under s 37A of the Conveyancing Act that provides: 37A Voluntary alienation to defraud creditors voidable (1) Save as provided in this section, every alienation of property, made whether before or after the commencement of the Conveyancing (Amendment) Act 1930, with intent to defraud creditors, shall be voidable at the instance of any person thereby prejudiced. (2) This section does not affect the law of bankruptcy for the time being in force. (3) This section does not extend to any estate or interest in property alienated to a purchaser in good faith not having, at the time of the alienation, notice of the intent to defraud creditors. 198Obviously a claimant under this section will have to establish that they are relevantly "prejudiced", but that does not mean that they must do so by giving oral evidence. Once again it will depend on the particular circumstances of the case and the evidence that may be otherwise available to prove each element of the claim. 199The defendants' complaints about the plaintiffs' failure to go into the witness box need to be considered in the light of these observations. 200The defendants also objected to the plaintiffs' tender of the answers to Interrogatories in relation to whether they ever sought shareholder approval for the sale of the shares to Felicity, or whether the shareholders ever advised them that they consented to the sale of the shares to Felicity. The defendants' objection was that the administration of the Interrogatories and admission into evidence of the answer, in the absence of such evidence from the plaintiffs and other shareholders of GCC, was prejudicial to the conduct of a fair trial. It was submitted therefore that if the plaintiffs did not go into evidence to claim that they had not received any notice of the intention to transfer the shares to Felicity and had not provided consent to such transfer, it would be unfair to the defendants to allow the answer to the interrogatory to be tendered in evidence. 201In support of the submissions the defendants relied upon s 135 of the Evidence Act 1995 (NSW) that provides relevantly: 135 General discretion to exclude evidence The court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might: (a) be unfairly prejudicial to a party, ... 202The fact that the defendants failed to obtain the consent of the plaintiffs for the sale of the shares to their wife and daughter respectively is of course a fact that is not helpful to the defendants' case. Indeed it may be described as prejudicial to the defendants' case. However I do not regard it as unfairly prejudicial to the defendants where here there is other evidence that otherwise overwhelmingly establishes that no consent was sought from the plaintiffs for the transfer of the shares to Felicity. As I have said above the plaintiffs are entitled not to call oral evidence if they are able to establish facts by other means. In the circumstances of this case it would be inappropriate to prohibit the tender of the answers to the Interrogatories because the plaintiffs have not given oral evidence. Accordingly I reject the submission that it is prejudicial to the conduct of a fair trial to admit the answers into evidence. Was there consent to the share transactions? 203The defendants made written submissions under the heading, "The Plaintiffs' knowledge of, or acquiescence in, the impugned transactions". They submitted that had the plaintiffs chosen to give evidence their position on a number of matters might have been before the Court. The matters to which reference was made were: (a) the attitude that they as minority shareholders of GCC would have had to GCC carrying out the very same tea tree business that led to the appointment of a provisional liquidator to CTK, and the winding up of CTK; (b) whether they knew the harvest was continuing and, if so, why they did nothing about it; and (c) their receipt of the notice, any knowledge of the meeting, or knowledge of the business under consideration at the meeting. 204Claude did not personally notify the plaintiffs of his intention, and that of Mr Sarks, to transfer GCC's share in Endwise/TTO and GCC's shares in OAL to Felicity. Even though Denis was seeking information in relation to the share transactions in mid-2005 in the correspondence referred to earlier in this judgment, it is abundantly clear that Claude had decided not to inform the plaintiffs of the true position until it was no longer possible to keep the truth from them. The letter that was written to the plaintiffs on 6 February 2005 in which Claude advised that, "all easily realisable assets have been sold", was a most misleading communication. The share transactions with Felicity had occurred only three weeks prior to this letter and no mention was made of them. 205Claude's suggestion in the earlier part of his cross-examination that he had doubts about whether notice was given to the plaintiffs of the share transactions with Felicity cannot be accepted. If Claude's claim that the reason he transferred the shares to Felicity was because he was concerned that the plaintiffs would seek to appoint a provisional liquidator to GCC is accepted, it is hardly surprising that he would not be informing the plaintiffs of his plan to transfer the shares to his wife. Even if that were not Claude's motivation, I have no doubt that Claude did not intend to notify the plaintiffs of his plan to transfer the shares to Felicity. The letter that he wrote to the plaintiffs on 6 February 2005 was a very good opportunity for him to inform them of the transactions and he chose not to do so. 206If there were a doubt about whether the plaintiffs were notified of the intention to transfer the shares or of the actual transfer of the shares, then a failure to give evidence may give rise to an inference that their evidence would not have assisted them on this issue. The plaintiffs were not required to explain or contradict any claim that they had been notified. There was no positive claim that they had been notified and certainly no evidence that they had. The evidence is in my view overwhelming that the directors, Claude and Mr Sarks, intended to and did keep their plan to transfer the shares to Felicity quite secret from the plaintiffs. 207The fact is the plaintiffs did not receive notice that the shares were to be transferred or that they were transferred. The first time there was any notice given to the plaintiffs was when Claude had to respond to Denis' letter in July 2005 that had been copied to Ms Gibson and Mr Sarks. There was no consent or acquiescence. Mr Sarks 208The defendants sought to read the affidavit of Mr Sarks sworn on 20 July 2010 notwithstanding that he was not to be made available for cross-examination. Part 35.2(3) of the Uniform Civil Procedure Rules 2005 (NSW) provides that if reasonable notice requiring a deponent for cross-examination has been given (which in this case it was) and the deponent does not attend for examination, the affidavit may not be used unless the deponent is dead or unless the Court orders otherwise. 209The defendants relied upon some medical evidence in support of an application to be permitted to rely on Mr Sarks' affidavit. That evidence did not establish that Mr Sarks would be unable to be cross-examined by video link or some other method that would not require him to travel away from his home on the North Coast of New South Wales. There were no steps taken in this regard. Accordingly the defendants were not permitted to rely on Mr Sarks affidavit. 210There was no explanation by Mr Sarks as to why the plaintiffs were not given notice of the intention to transfer the shares to Felicity. The Minutes dated 21 December 2004 certainly called for an explanation as to why he, as a director of GCC, would sign a Minute that did not reflect the true position. The true position was that the decision to sell the shares to Felicity was not made until mid January 2005. In these circumstances I am satisfied that, in accordance with the principles in Jones v Dunkel, I should draw an inference that Mr Sarks' evidence would not have assisted him in relation to the allegations that he was in breach of his fiduciary duty in causing the sale of the shares to his daughter. 211Claude gave evidence that he informed Mr Sarks that if GCC did not transfer the shares to Felicity the minority shareholders might try to appoint a provisional liquidator to GCC, and that Mr Sarks agreed that there was a risk to GCC in holding on to the shares (tr 150). There was no restriction on the admission of this evidence and no objection was raised to its reception on Mr Sarks' behalf. In the circumstances I conclude that Mr Sarks agreed to the transfer of the shares either wholly or partly to ensure that the assets were not available to any liquidator who may be appointed to GCC. Breach of Fiduciary Duty 212The defendants relied upon GCC's Articles of Association to submit that the content of any fiduciary duty owed by the directors of GCC was circumscribed by their terms. Article 90 provides that a director will not be disqualified because he contracts with GCC either as vendor, purchaser or otherwise, provided that the director discloses his interest in the contract at a meeting of directors at which such contract is considered. Article 90 excuses directors from having a personal interest in a contract with the company so long as there is appropriate disclosure but it is not an endorsement of directors selling the company's assets to a member of their family without obtaining a valuation of the assets and without notice to the shareholders and without the consent of the shareholders. 213Both Claude and Mr Sarks owed fiduciary duties to GCC and were bound to protect the interests of GCC and to subordinate their own interests: Gerard Cassegrain & Co Pty Limited v Cassegrain [2011] NSWSC 1156 at [126]. GCC, as the beneficiary of the fiduciary duties owed by Claude and Mr Sarks, did not give its fully informed consent to the directors' actions so as to excuse them in advance. Claude and Mr Sarks placed themselves in a position of conflict when they authorised the sale of the assets to their wife and daughter respectively in the absence of such consent: Fexuto Pty Limited v Bosnjak Holdings Pty Limited [2001] NSWCA 97; 37 ACSR 672 at [118]-[136]. A general meeting of shareholders to whom a proper and full disclosure of all relevant facts has been made may give advance authority for the giving and receipt of financial benefits where a director would otherwise be in breach of the director's fiduciary duty: Re George Newman & Co [1895] 1 Ch 674; Gerard Cassegrain & Co Pty Limtied v Cassegrain at [130]-[131]. This was not done. There was no consent sought or given for these transactions. 214Even if Article 90 were read to circumscribe the fiduciary duties owed to GCC by Claude and Mr Sarks, and on the assumption that they were not in breach of their fiduciary duty to GCC in entering into the transaction to sell the assets to Felicity so long as they disclosed their "interest" at the meeting of directors at which the transaction was to be considered, their difficulty is that the meeting did not take place on 21 December 2004. Although Article 87 provides that the signed Minutes of the directors meetings of GCC are "receivable as prima facie evidence of the matters stated in such minutes", I have found that on the whole of the evidence, that such meeting did not take place. 215The fiduciary duty owed to GCC required that Claude and Mr Sarks prefer the interests of the company to their own interests. The removal of assets from the company at a time when on Claude's admission he was not aware of the real financial position of the company on the retirement of the Receivers, is hardly in the best interests of the company. Claude's evidence about his purpose in transferring the shares to Felicity was in part illogical. On the one hand he claimed he wanted to cocoon the company from the appointment of a provisional liquidator, and yet on the other he was depleting the company's assets and reducing its financial wherewithal to meet its ongoing financial obligations, thus making it more rather than less vulnerable to the appointment of a provisional liquidator. 216Claude claimed that the transfer of the shares to Felicity would also cocoon him from further litigation at the suit of his siblings (tr 93). This was of course a matter of deep personal interest to Claude, reflected in part in the written submissions filed on his behalf that claimed that he had "tired" of the litigious life that he had been forced by his siblings to lead over the years since his father's death. If Claude's evidence in this regard is accepted it is clear evidence of a preference of a personal interest over the best interests of the company. GCC had the prospect of sharing in any success of the Gardiner Proceedings and any profits from the operation of the tea tree plantation and/or tea tree oil business. It faced the prospect of an adverse ruling by the AAT in respect of its tax objections and the removal of its assets would make it all the more difficult for it to pay any liability it may have been found to have to the ATO. It is difficult to understand how Claude could have possibly thought that the transfer of assets of potentially significant value to his wife could have avoided further litigation with his siblings. 217It was also submitted on Claude's behalf that the transfer of the assets to avoid the appointment of a provisional liquidator does not mean that the transactions were not in the best interests of the company or were for an improper purpose. Claude claimed that if the risk of the appointment of a provisional liquidator was removed he could "revitalise" the company (tr 91). It is not easy to understand how the removal of assets of potentially significant value from a company that has just emerged from long years of receivership, without any proper valuation of those assets, could reasonably be described as the revitalisation of the company. Claude's evidence in relation to how such a revitalisation would occur exposed further incongruity and inconsistency in his claims. He gave evidence that in December 2004 he was "not sure" what assets GCC had, other than the shares in Endwise/TTO and OAL, and he was not sure what land assets remained after the Receivers were retired (tr 91). However when pressed as to how he would "revitalise" GCC after the shares were transferred to Felicity, he said that he believed that GCC was entitled to "damages" from his siblings (tr 91). Thus he was suggesting that one of the reasons he propounded for the transfer of the shares to Felicity - the avoidance of litigation with his siblings - was in fact the very process that he would cause GCC to adopt for its so-called "revitalisation". I do not accept that these transfers were for the revitalisation of the company or for any proper purpose of the company. These transactions were to enable Claude and Felicity to operate the tea tree business free from the involvement of Claude's siblings and to share in any fruits of the Gardiner Proceedings free from any obligation to share that with shareholders of GCC. 218I am satisfied that Claude and Mr Sarks were in breach of their fiduciary duty to GCC in failing to obtain an independent valuation of GCC's shares in TTO and OAL prior to the transfer of the shares to their wife and daughter respectively. I am also satisfied that Claude and Mr Sarks transferred the shares to Felicity for the illegitimate purpose of Claude and Felicity gaining control of the assets necessary to conduct a tea tree business and gaining control of OAL's capacity to prosper from the outcome of the Gardiner Proceedings. On Claude's own evidence there was also the improper purpose of removing the risk of the minority shareholders appointing a provisional liquidator to GCC in any circumstances whatsoever, even if such appointment was a legitimate one. Oppression 219In Fexuto Pty Limited v Bosnjak Holdings Pty Limited Spigelman CJ speaking of the provisions of s 232 of the Corporations Act said at [4]: The statutory formulation has been extended over the years to confer on the Court a wide-ranging remedial jurisdiction. The addition of the words "unfairly prejudicial to" and "unfairly discriminate against", to the original statutory reference to "oppressive", indicates an intention that the jurisdiction should not be confined by technical distinctions: see eg Re Saul D Harrison & Sons Plc [1995] 1 BCLC 14 at 17-20; Re a Company (No. 00709 of 1992); O'Neill v Phillips [1999] 2 All ER 961; [1999] 1 WLR 1092 at 1098-1101. 220In Dunn v CTK Barrett J, as his Honour then was, referred to the decision of Young J, as his Honour then was, in Morgan v 45 Flers Avenue Pty Limited (1986) 10 ACLR 692 where it was said that the provisions are looked at as a "composite whole" with the individual elements seen as "merely different aspects of the essential criterion, namely commercial unfairness": [56]. 221In this case Claude and Mr Sarks caused GCC's shares in TTO and OAL to be transferred without the consent of the minority shareholders and at a significant under value. They did so without obtaining an independent valuation of the shares. There was no commercial imperative for this to occur because Felicity had previously agreed to loan the company the whole of the moneys to retire the Receivers in exchange for a charge over the assets of GCC. There was no real commercial benefit to GCC in transferring the shares to Felicity. Indeed GCC lost its contingent asset in the entitlement to damages against the investors in the Scheme. This became a contingent asset then shared only between Claude and his wife. 222GCC also had land and other assets available to it to provide Felicity with security for the moneys that she was able to loan the company to retire the Receivers. Conducting the affairs of GCC in this fashion, that is, passing a resolution in January 2005 to transfer GCC shares in OAL and Endwise/TTO, was contrary to the interests of the members as a whole because it depleted the asset pool of the company at a significant under value for the benefit of the directors' respective wife and daughter. This conduct was classically the type of conduct that amounts to commercial unfairness and was oppressive, unfairly prejudicial to, and unfairly discriminatory against the minority shareholders, the plaintiffs. 223In all the circumstances I am satisfied that the conduct of Claude and Mr Sarks was oppressive within the meaning of s 232 of the Corporations Act. Statutory Duties 224The defendants' conceded "as an abstract proposition" that they owed statutory duties to GCC for which sections 180, 181 and 182 of the Corporations Act provide. It was submitted however that the scope and content of each of the duties depends upon the facts of the particular case, and is not "absolute". That is not controversial. The statutory duties imposed by these sections include exercising the directors' powers with a degree of care and diligence of a "reasonable person" in the position of a director of a corporation in the corporation's circumstances. In applying that degree of care and diligence a director is obliged when making a business judgment not to have a material personal interest in the subject matter of the judgment (s 180(2)(b)). A director is required to exercise powers and discharge duties in good faith in the best interests of the corporation and for a proper purpose (s 181). A director must not improperly use their position to gain an advantage for themselves or cause detriment to the corporation (s 182). 225Although not conceding a breach of these sections of the Corporations Act, the defendants submitted that it is necessary to give consideration to all the circumstances and pressures that were present at the time of the impugned share transactions to decide whether the defendants breached these sections of the Corporations Act. 226It was submitted that Felicity was the only practical prospect the directors had of raising funds to discharge the Receivers. It was also submitted that Claude and GCC were beset by litigation on several fronts to which reference has already been made. 227The corporate life in GCC was not free from complexity. However there was no need to sell the company's assets to Felicity in exchange for her loan to discharge the Receivers. As I have said elsewhere the real property assets of GCC, including the real property that was to be transferred to it by the CFT, could have been utilised to provide security and/or repayment to Felicity. There was a real prospect that the Gardiner Proceedings would result in the capacity to recover funds from the investors, although that prospect had elements of uncertainty. As a result of the transfer, that contingent asset was lost to GCC and was to be shared only by Claude and his wife. 228Taking all the matters to which the defendants have referred into account, including their submissions with which I have dealt later in respect of s 1318 relief, I am satisfied that in transferring the shares to his wife Claude has breached the provisions of s 180, 181 and 182 of the Corporations Act. I am also satisfied that in transferring the shares to his daughter Mr Sarks was in breach of those sections of the Corporations Act. The Case against Felicity 229The plaintiffs' case against Felicity is that she received trust property with actual notice of a constructive trust or with constructive notice of a constructive trust said to arise out of Claude's alleged breach of fiduciary duty as a director of GCC under the first limb of Barnes v Addy (1874) 9 Ch App 244 at 251 - 252. It is also claimed that the transfer of GCC's shares in OAL is voidable because it was made with intent to defraud creditors within s 37A of the Conveyancing Act and Felicity was not a purchaser in good faith of those shares. It is also alleged that the sale of GCC's shares in TTO and OAL is oppressive within s 232 of the Corporations Act in so far as relief may be sought which affects Felicity. 230Felicity's affidavit evidence was that she was not directly involved in the share transactions and dealings and that she relied upon the defences of Claude and her father, Mr Sarks, which she said she believed to be correct and which she said she had no reason to doubt. She recalled that in the second half of 2004 Claude complained about the receivers selling assets and continuing to charge fees. She claimed that he asked her whether she would borrow money to pay out or retire the receivers and get them out of GCC. 231Felicity said she was reluctant to agree to Claude's request because she had already borrowed and advanced a "considerable sum of money" to GCC to enable it to pay the costs of the CBA and the ATO in relation to GCC's tax proceedings and possibly other costs that she could not remember. She claimed she advised Claude that she would not borrow more money for GCC unless GCC could repay her "as soon as the receivers are out". Felicity also said to Claude, "I want assets or repayment". 232Felicity also claimed she had further conversations with Claude in which he said that she could buy GCC's shares in TTO and OAL. She claimed that she asked Claude what the shares were worth and that he said, "I will find out". She also recalled Claude mentioning some land owned by GCC. She said she was concerned to find out what the shares were worth because she wanted to obtain assets in place of the money she was to borrow to pay out the Receivers. She said she also wanted the money that she was to borrow to be used for the benefit of GCC to get it "back on track" so that it would be "protected from attack" by Claude's siblings until she got the money back. 233Felicity recalled a further conversation with Claude towards the end of December 2004, in which he advised her that the value of the shares amounted to about $130,000 and that this was not enough to retire the Receivers because the total amount was approximately $194,000. Felicity claimed that she and Claude then discussed that the additional amount needed would be loaned to GCC for which it would provide security. Felicity claimed she informed Claude that she would borrow the money to pay out the Receivers by purchase of the shares and by loan of the balance to GCC. 234Felicity gave affidavit evidence that as far as she was concerned she was paying a fair price for GCC's shares in TTO and OAL and did not consider that there was any question of the price being at an undervalue. Felicity also gave evidence that she regarded the payment and loan to GCC to be for the benefit of GCC to pay out the Receivers. She said that she had no reason to doubt or investigate the decision of Claude and her father to sell the shares to her and she did not consider doing so at any stage. She said that so far as she was concerned she purchased and received the shares as valuable assets paid for with the major part of the moneys that she had borrowed. 235Felicity said that she did not recall when she first heard of the decision of the AAT handed down on 18 January 2005. She did recall being informed of it by Claude, but could not recall precisely when that was. She claimed that there was never any mention of the decision or the application in the course of her conversations with Claude dealing with the share transactions. She did not give any consideration to the case or the AAT decision at the time that she signed the Transfers Forms for the shares. 236In cross-examination Felicity agreed that she signed the letter dated 28 September 2010 addressed to the Directors of GCC, in which she reminded them that she had "advanced the amount of $194,219.19 to the company" and requested them to "make the appropriate arrangements as soon as possible" to have a charge registered with ASIC. However she claimed she did not "actually advance" the amount of $194,219.19 and "only advanced" $63,000, with the remaining money being used to purchase some shares (tr 256). She was cross-examined as follows (tr 257): Q. ...I am suggesting to you that in about September 2004, you and your husband agreed that if you gave the necessary advance to GC&Co to discharge the receivers, GC&Co would give you a charge over its assets? A. Yes. Q. That did happen? A. Yes. Q. Indeed, you did in fact advance $194,000 to GC&CO on 21 December 2004, didn't you? A. I advanced 63,000 and I paid - purchased some shares with the remaining amount. Q. I want to suggest to you that the acquisition of those shares didn't in fact take place until January 2005 and as at 21 December 2004, all that you and your husband were discussing was you loaning money to the company and the company giving you a charge to you? A. No, that's not correct. 237Felicity agreed that she instructed her solicitor Mr Peter Condon in October 2010 to register a Charge over GCC's property. She was then cross-examined as follows (tr 258-259): Q. What I want to suggest to you, Mrs Cassegrain, that on 18 January 2005, your husband told you that he was very concerned that his siblings might try and appoint a provisional liquidator to GC&Co. Did that happen? A. No. Q. Did your husband ever tell you that he was very concerned that his siblings might try and appoint a provisional liquidator to GC&Co? A. Yes. Q. When do you say he told you that? A. Well, I don't recall. We had talked about it. Q. So it might have been in January 2005? A. No, because we had talked about it before. Q. Before what? A. I am sorry, the latter part of 2004. Q. ...How can you be so sure that it was in the latter part of 2004 and not January 2005? A. Because I was approached by my husband to borrow money so that we could - sorry, to - I was approached by my husband to buy shares. Q. I thought you were approached by your husband to borrow money. A. I am sorry, yes, I am. I am sorry, I am getting confused. I know it was early in because that was - that was why. Q. Mrs Cassegrain -- A. I am sorry. Q. What I suggest to you happened, your husband approached you to borrow money, you loaned him the money, the loan was done, then in January 2005 he came and asked you about you buying the shares; that is how it happened, isn't it? A. No, that's exactly not how it happened. I disagree. Q. In any event, you do say that your husband did come and talk to you at some point in time about his siblings appointing a provisional liquidator to GC&Co - that he was concerned about that? A. Yes. ... Q. Put aside the date. At some time, your husband came to you and said that by transferring the shares to you, that would protect GC&Co from attack by his siblings. A. That was one of the reasons. Q. And I am suggesting to you that is what he said to you in January 2005 but you say it was earlier? A. I disagree. It was - we talked about it in the latter half of 2004. 238Felicity was further cross examined as follows (tr 261): Q. And in particular you were concerned that the tea tree plantation might be affected by the appointment of a provisional liquidator, weren't you? A. Yes. Q. And you thought one way to protect the tea tree plantation was if the Endwise share was transferred to you? A. Yes. Q. And that's what your husband suggested to you? A. Amongst other things, yes. Q. And you agreed to that? A. Yes. Q. And you did that at the time that you knew that your husband's siblings had been complaining about the way your husband conducted the various family companies? A. Yes. Q. And you knew that your husband's siblings claimed that your husband conducted these family companies and treated them as if the assets in those companies were his own. That's the claim they were making, wasn't it? A. Well, I couldn't say exactly. Q. But you knew something to that effect? A. Yes. 239Felicity claimed in her cross-examination that it did not occur to her that Claude might be in breach of his duty as a director. She claimed that she did not give any thought to how Claude's siblings might react to having company assets transferred to her. She said "I just trusted Claude. I had no reason to doubt his proposition" (tr 262). Felicity claimed that it never occurred to her that perhaps it might be a good idea to have an independent valuation done on the shares before they were transferred to her. She said that she was "happy with the book value" (tr 263). She said that it did not occur to her that Claude's siblings might not be happy with the "book value" (tr 263). 240In re-examination, Felicity was asked how it was that she came to put her signature on the Loan Agreement lodged with ASIC in late 2010 as an Annexure to the Form Notifying the Charge over GCC's assets. The only explanation Felicity gave was that she received it from her solicitor (tr 267). 241It was submitted for Felicity in order to "protect her position on any appeal", that the first limb of Barnes v Addy does not apply in respect of property received as the result of a breach of fiduciary duty by non-trustee fiduciaries. The question of whether Claude or Mr Sarks fell into this category in their roles as directors of GCC was not debated. However, it was conceded that I am bound to reject the submission in view of the decisions and remarks of appellate Courts who have observed and held to the contrary: Belmont Finance Corporation v Williams Furniture Ltd (No 2) [1980] 1 All ER 393; Robins v Incentive Dynamics Pty Ltd (in liq) (2003) NSWCA 71 at [60] - [64]; see also Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89 at 113. That submission is therefore rejected. 242The principles relating to the 'knowing receipt' limb of Barnes v Addy, including the 'knowledge' element appropriate to trigger a personal or proprietary remedy against the recipient, have been in considerable flux: Robins v Incentive Dynamics Pty Ltd (in liq) 45 ACSR 244; [2003] NSWCA 71 at [57] per Mason P (with whom Giles and Stein JJA agreed). In Baden Delvaux & Lecuit v Societe Generale pour Favoriser le Development du Commerce [1992] 4 All ER 161, Gibson J at 235 identified the following five categories of knowledge (the Baden Categories): (1)actual knowledge (2)wilfully shutting one's eyes to the obvious (3)wilfully and recklessly failing to make such inquiries as an honest and reasonable person would make (4)knowledge of circumstances which would indicate the facts to an honest and reasonable person; and (5)knowledge of circumstances which would put a reasonable person on inquiry. 243As Nourse LJ observed in Bank of Credit & Commerce International (Overseas) Ltd v Akindele [2001] Ch 437 at 454, the first three categories have been taken to constitute actual knowledge (or its equivalent) and the last two constructive knowledge. The view in Australia is that any of the categories (1) through to (4), but not including (5), are sufficient for this purpose: Consul Development at 398 per Gibbs J, 412 per Stephen J; The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) (2008) 70 ASCR 1; (2008) WASC 239 at 4748 per Owen J. 244It was submitted for Felicity that she did not have actual knowledge that the TTO and OAL shares transferred to her were "trust property", that is, transferred to her by GCC in breach of the fiduciary duty of her husband and father. The plaintiffs relied upon Felicity's evidence that she understood the transaction was to protect the assets from a provisional liquidator (tr 261). In this regard it was submitted for Felicity that she was not referring to the fact of an existing provisional liquidator, but to the apprehension that the siblings, the plaintiffs, might endeavour to have one appointed to GCC. It was submitted that this is not knowledge of an "improper purpose". I have already dealt with this submission (with which I disagree) at paragraph [217]. 245It was also submitted for Felicity that her actual knowledge and belief at all relevant times was that the TTO and OAL shares were being sold to her by GCC at a fair and proper value, that is, the value in the books of GCC in part satisfaction of the monies paid by her to GCC. It was also submitted that Felicity knew that Claude considered that the shares were worth less than the book value and that there is no evidence that Felicity had any dealings or discussions or contact with her father, Mr Sarks, other than to trust him. Felicity was not cross- examined in relation to her father. It was submitted therefore that the plaintiffs have failed to prove actual knowledge. 246The alternative claim by the plaintiffs is that Felicity had constructive notice or knowledge of Claude's breach of duty for the purposes of the first limb of Barnes v Addy. It was submitted that Felicity had knowledge of circumstances that would indicate the "facts" to an honest and reasonable person. In this instance the "facts" are the trust or fiduciary relationship and the misapplication of property subject to the trust or fiduciary relationship. Although it was submitted on Felicity's behalf that the plaintiffs had applied the impermissible test of "knowledge of circumstances which would put an honest and reasonable person on enquiry": Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 398 per Gibbs J and at 412 per Stephen J; I am not satisfied that this is so. 247It was submitted for Felicity that assuming she had knowledge of the fiduciary relationship, she did not have knowledge of the fact of misapplication or of circumstances which would have made the transfer of the shares a breach of fiduciary duty, namely, the sale of the shares to her at undervalue. 248The plaintiffs contend that Felicity had actual knowledge that the shares were the property of GCC; that her husband and father were directors of GCC and as such owed duties to it; that the minority shareholders had not consented to the transfers; that no independent valuation had been carried out; and that the shares were being transferred to her for the purpose of protecting them from the possible appointment of a provisional liquidator. 249The plaintiffs submitted that obtaining control of the assets for themselves was in Claude's and Felicity's and not in the interests of GCC. It was submitted that Felicity's claim that she believed the shares were being sold at a fair and proper value, even if accepted, does not defeat the plaintiffs' claim that Felicity had the requisite actual knowledge. It was submitted that the plaintiffs do not have to establish that in addition to the knowledge of the elements that comprise the breach of fiduciary duty, Felicity was also aware that such acts in fact constituted a breach of fiduciary duty by her husband and father. 250In any event the plaintiffs submitted that Felicity knew that the shares had not been independently valued and had no reasonable basis for the belief that she was paying proper value. In this regard the plaintiffs relied upon Felicity's evidence in cross-examination that her understanding of "book value" was "well as far as I know, the book value, it's what's in the books, it's a document. That's the value" (tr 263). 251The matters relied upon by the plaintiffs in support of their submission that Felicity had constructive knowledge of the fact of the trust and of the misapplication include that the minority shareholders had not consented to the transfer of shares to her and that she knew that they had not consented. A further matter relied upon was that a solicitor had not provided any advice in relation to the proposed transaction and that no independent valuation had been obtained of the shares. The plaintiffs also submitted that the share transfer was not in the ordinary course of the company's business and that at the time of the transfer Felicity was a secured creditor of GCC expecting to have her loan to GCC repaid when the real property asset transferred from the CFT to GCC was completed. 252It was submitted on Felicity's behalf that it is appropriate to characterise her as a "sometime reluctant lender" to the Cassegrain companies at the request of her husband. I do not agree with this characterisation. Felicity maintained a position in her evidence that was quite untenable. Her claim that she entered into an agreement with her husband in late 2004 is rejected. There was no arrangement reached on 21 December 2004 for the sale of these shares. I am satisfied that at the time Felicity advanced the $194,249.19 to GCC she did so on the basis that it was a loan for a period of 12 months and that she was to receive security of a fixed and floating charge over the assets of GCC. 253It was not until mid January 2005 that the arrangements in relation to the share transfers were put in place. Felicity admitted that she knew her husband wished to prevent his siblings from commencing further litigation against him and she knew that the purpose of the transfer was to prevent them from appointing a provisional liquidator to GCC. This was a tactic in a long history of litigation between the warring siblings of which Felicity was well aware. I do not accept that Felicity believed that she was paying "proper value" for the shares. I am satisfied that Felicity had knowledge of circumstances that would indicate the facts to an honest and reasonable person. 254I am satisfied that Felicity was in knowing receipt of the shares and is liable under the first limb of Barnes v Addy. S 37A Claim 255Section 37A of the Conveyancing Act provides that every alienation of property made with "intent to defraud creditors" shall be voidable at the instance of any person thereby prejudiced. Denis is a creditor of GCC having obtained judgment against it in 2009 for approximately $82,000. The expression "intent to defraud creditors" in s 37A of the Conveyancing Act is to be given a liberal construction. In this regard a creditor can prove an intention to delay, hinder or defeat creditors: Marcolongo v Chen [2011] HCA 3; 242 CLR 546 at [19]-[20] per French CJ, Gummow, Crennan and Bell JJ. 256The plaintiffs submitted that it is sufficient that Claude intended to remove the assets from GCC at a time when the company had liabilities that it could not meet. The plaintiffs emphasised that the AAT decision was delivered on 18 January 2005 and Claude became aware of that decision by no later than 19 January 2005. It was submitted that the AAT decision raised the imminent spectre of GCC being wound up, irrespective of any action that the plaintiffs may have taken. 257I have rejected Claude's claims that the share transfers were agreed to on 21 December 2004. I am satisfied that Claude did not move to have the OAL shares transferred to Felicity until the day of the AAT decision. This was not a coincidence. I am satisfied that Claude transferred the OAL shares to Felicity to ensure that they were out of the reach of a provisional liquidator and to hinder, delay or defeat creditors, whether the ATO or any other creditor. The transfer of assets of the company at undervalue results in prejudice to the plaintiff as a creditor of the company, particularly in the light of the AAT decision and the burden of the tax debt on GCC without the benefit of those assets. 258It was contended for Felicity that she was a purchaser in good faith and that she did not have notice at the time of the alienation of the intent to defraud creditors: s 37A(3) of the Conveyancing Act. 259The plaintiffs submitted that Felicity has failed to prove the separate requirement that she was a purchaser in good faith because she knew that she was acquiring the shares to remove them from the reach of a provisional liquidator that may be appointed by Claude's siblings. It was submitted that she has attempted to conceal the true nature of the transactions after the event, including by falsely claiming that she only ever agreed to lend the money to GCC to retire the Receivers in return for a promise from it to transfer to her its shares in OAL. 260I am satisfied that Felicity knew that on 21 December 2004 she agreed to loan $194,249.19 to GCC with the security of a fixed and floating charge over the assets of GCC and an Option to purchase the shares in OAL. I do not accept Felicity's affidavit evidence that she reached agreement with Claude in December 2004 that in exchange for the payment of $194,249.19, she would receive the shares in OAL and TTO for the book value of the shares and the balance would be treated as a loan to GCC. Felicity's oral evidence was most unconvincing. I am satisfied that her nervousness in the witness box, particularly when she claimed she was "confused" (as extracted in the cross-examination above), stemmed in part from her concern that she had said something inconsistent with the maintenance of a version of events that she knew to be inaccurate. Felicity knew that her husband wanted to avoid the appointment of a provisional liquidator and wanted to take steps to get the GCC assets beyond the reach of his siblings. I am satisfied that Felicity was well aware that those steps were not taken until mid-January 2005. Felicity has not established that she was a bona fide purchaser without notice. Relief under s 1318 261The defendants submitted that relief should be granted pursuant to s 1318 of the Corporations Act because they acted honestly and, having regard to all of the circumstances of the case, they ought fairly to be excused. Section 1318 provides relevantly: (1) If, in any civil proceeding against a person to whom this section applies for negligence, default, breach of trust or breach of duty in a capacity as such a person, it appears to the court before which the proceedings are taken that the person is or may be liable in respect of the negligence, default or breach but that the person has acted honestly and that, having regard to all the circumstances of the case, including those connected with the person's appointment, the person ought fairly to be excused for the negligence, default or breach, the court may relieve the person either wholly or partly from liability on such terms as the court thinks fit. 262In support of this claim it was submitted that the defendants entered into the impugned share transactions as part of a "commercial arrangement" designed to discharge the Receivers from GCC. I accept that the impugned transactions were entered into to discharge the Receivers. However that step had to be taken in any event before any shares could be transferred to Felicity. There was absolutely no need to transfer the shares to Felicity in this "commercial arrangement". Indeed Claude accepted in his cross-examination that there were two "sources" from which Felicity's loan to GCC could be repaid. Those sources were the real property owned by GCC (although the extent of the holdings was not known in December 2004) and the real property that was to be transferred to GCC by the CTF (tr 112-113). The "commercial arrangement" that had been reached on 21 December 2004 was to treat Felicity's advance of the monies to GCC as a loan for 12 months with the provision of the fixed and floating charge over the assets of GCC. 263Reliance was placed upon the fact that the plaintiffs had contended in the CTK proceedings that the Tea Tree Plantation was not viable and at that time great uncertainty attached to the value of the land upon which the plantation was physically located. In this regard reference was made to the Gardiner Proceedings. There is no doubt that at this time there was quite a deal of litigation surrounding the Tea Tree Plantation. There is also no doubt that the question of the enforceability of the lease and the sublease was under consideration. However sensible steps had been taken to obtain both legal advice and a valuation of the property. It must be remembered that GCC was owed nearly three quarters of a million dollars by the CFT, and CFT had agreed to advance $200,000 to it with the promise to transfer the real property in due course. 264The defendants also referred to the financial pressure under which GCC found itself, and submitted that "all contemporaneous evidence" points to Claude holding a genuine belief that objectively GCC's shareholding in TTO and OAL had no greater value than the "book value" recorded in the accounts of GCC. It was also contended that the evidence demonstrates that before inviting Felicity to purchase the shares Claude had attempted to find funding elsewhere. There is no doubt that Claude claimed to both Ms Gibson and Mr McCarron that there was either no value in the shares or that they should be transferred at "book value". However this claim was made in the face of advice from Ms Gibson that Claude should obtain independent valuation of the shares. He did not do so. Claude attempted to obtain funding from elsewhere but this was for the purpose of funding the litigation rather than for the retirement of the Receivers. 265It was also contended that the decisions the defendants had to make about how to proceed towards retiring the Receivers had to be made in "real time" under threats of litigation connected with the CTK winding up proceedings, the existence of a tea tree crop half-harvested and the possibility that an ongoing receivership would further weaken GCC's financial position. The fact that the decisions had to be made in "real time" amounts to a submission that the Court should give consideration to all the circumstances that existed at the time the defendants breached their obligations to GCC. It is expected that when directors are put under pressure by reason of financial or other circumstances they will nonetheless adhere to their fiduciary obligations to the company of which they are directors, and not enter into related party transactions without notice and then rely upon Minutes of meetings that do not reflect the reality of the transaction. 266I am not satisfied that any relief should be granted to either Claude or Mr Sarks under s 1318 of the Corporations Act. 267It was also submitted on Felicity's behalf that she should be excused from any personal liability and that her ownership of the TTO and OAL shares should not be disturbed. It was submitted that Felicity acted honestly and that she did not have any understanding or knowledge of the falsity of Minutes of a meeting of 21 December 2004 or the claim that the transactions occurred at that time. It was further submitted that it is appropriate to characterise her as a reluctant lender who tried to assist her husband in circumstances where she had provided financial assistance to GCC in the past without security but on this occasion required such security. 268The only way in which the impugned share transactions could have been concluded was with the assistance and consent of Felicity. I do not accept her evidence that she had the discussions in relation to the sale of shares in December 2004 as she claimed in her evidence. This was not a case in which Felicity claimed that she agreed to the share transactions in January 2005, when they were actually completed. Rather Felicity maintained consistently with the case of her husband that the discussions and the share transactions were agreed to on 21 December 2004. She maintained that position throughout her evidence. The transactions did not occur in December 2004 and I am not satisfied that relief should be granted to Felicity under s 1318 of the Corporations Act. Cross-Claim against Expressway 269By Cross-Claim filed on 22 July 2011, Claude seeks an order under s 233, or alternatively s 461, of the Corporations Act that Expressway be wound up. In the alternative Claude seeks an order for Expressway to sell its assets and undertakings on the open market and, thereafter, be wound up. He also seeks an alternative order that the plaintiffs sell their shares in Expressway to him at the price of $120,000 per share. 270Expressway was established on 10 December 1964. Until his death on 29 October 1993, the late Mr Cassegrain appears to have managed and controlled Expressway without disputation amongst his children in relation to its operation. At the time of his death, the late Mr Cassegrain held 15 ordinary shares in Expressway which passed to the late Mrs Cassegrain so that she then held 30 ordinary shares. At that time each of the plaintiffs and Claude held 15 ordinary shares and Anne-Marie held 35 ordinary shares. GCC had funded the establishment of Tradition and Wines. Thereafter Expressway funded and supported Wines and by June 1994 both Tradition and Wines were wholly owned subsidiaries of Expressway. 271It appears that after the late Mr Cassegrain died, the siblings commenced their long years of litigation against each other. It was in 1996 that the present plaintiffs brought proceedings in the Federal Court of Australia against Claude, Anne-Marie, the late Mrs Cassegrain (who died during the proceedings on 18 March 1998) and a number of Cassegrain corporations. The allegations in those proceedings included claims that Claude, having been appointed the Chairman of the Board of Expressway by virtue of a majority-share voting block (by himself, Anne-Marie and the late Mrs Cassegrain), was exercising his powers against the wishes and interests of the shareholders of the company, particularly those of the plaintiffs. It appears that the primary concern of the plaintiffs was the continued flow of funds from Expressway to Wines. A decision had been made to cease the flow of funds from Expressway to Wines because, although it operated an award-winning vineyard, it was apparently unprofitable. 272On 15 July 1998 the Federal Court of Australia held that certain of Claude's conduct of the affairs of GCC amounted to oppression: Cassegrain v Cassegrain [1998] FCA 811; BC9803240. Davies J held that Claude's appointment as Chairman of Directors and his subsequent conduct, although described variously as "provocative", "manipulative", "outrageous", and "inappropriate", was simply an expression of the will of the majority shareholders and did not constitute oppressive conduct. His Honour's observations included the following: ...I do not see oppression in the fact that the majority shareholders have control of Expressway Spares and have a different view about how the affairs of that company should be run than do the applicants. Provided that the majority shareholders run the affairs of Expressway Spares for the benefit of all the shareholders, I think that there would be no relevant oppression: [30]. In my view, the continuing application of the profits of Expressway Spares to fund the losses of Vineyards [Wines] was wrong and Claude and Anne-Marie had a justifiable interest in taking steps to bring an end to that course of action: [39]. The applicants complain that the election of Claude to the Board of Expressway Spares by the majority shareholders was oppressive of themselves for they cannot work with Claude and Claude will, sooner or later, undermine the authority of Patrick at Expressway Spares and of John at Cassegrain Vineyards ... In my opinion, the applicants had no right to expect and ought not to have expected the affairs of Expressway Spares to be conducted in the manner which occurred during Gerard's lifetime: [39]. This Court cannot assist the minority shareholders to oppress the majority by ordering that that which the majority legitimately wished to occur should not occur: [40]. It was submitted that there was an element of oppression in that GC&Co has mortgaged some of its land for the benefit of Endwise Holdings Pty Limited ("Endwise"), which is a company involved in the development of tea tree plantations and the production of tea tree oil. There is very little evidence on this matter. Such evidence as has been given has led me to the view that this is not a matter on which it is worth spending words. I shall not discuss it: [43]. 273However, Davies J was satisfied that Claude's actions in drawing up and using a loan account of $4.25 million with GCC (to avoid capital gains tax implications for GCC upon a settlement with CSIRO in relation to an unsuccessful joint-venture) as he saw fit, and in causing the passing of a resolution of directors allowing for the payment of retrospective interest thereon, were actions that were oppressive of, and unfairly prejudicial to the members of GCC. Each party was ordered to pay their own costs on the basis that all parties had contributed to the problems that had occurred. 274The late Mrs Cassegrain died on 18 May 1998 and Claude and Anne-Marie were appointed as her executors and trustees. Mrs Cassegrain left her land at Wauchope upon which Expressway conducted its operations to Anne-Marie. Mrs Cassegrain left her 30 ordinary shares in Expressway to a residuary trust as to capital and income until the year 2015 with Claude and Anne-Marie having absolute discretionary power to distribute the capital and income to the beneficiaries, and with whatever the assets the trust had in the year 2015 being distributed equally among 19 named beneficiaries, being the late Mrs Cassegrain's children and grandchildren. 275There were contested proceedings in this Court brought by the present plaintiffs for provision out of the estate of the late Mrs Cassegrain. After analysing the circumstances of each of the plaintiffs, Bryson J, as his Honour then was, concluded that the provision made for each of the plaintiffs had left each of them without adequate provision for their proper maintenance and advancement in life. The inadequacy was the "practically unchallenged discretionary control" that Claude and Anne-Marie would hold over the residuary trust to the detriment of the other beneficiaries. His Honour ordered that any act of the trustees, including any casting of votes, had to be in accordance with the written direction of the majority of the children: Cassegrain v Cassegrain [1999] NSWSC 1165. Claude contends that by reason of the outcome of those proceedings the plaintiffs were able to have the control of the affairs of Expressway by the exercise of a majority shareholding (53.7%). 276Claude claims that the plaintiffs' oppressive conduct includes excluding him from the management of the affairs of Expressway and conducting the affairs of Expressway and its wholly owned subsidiaries, Wines and Tradition, to the advantage of the plaintiffs and to his disadvantage. Other aspects of the plaintiffs' conduct alleged to be oppressive include that they have caused Expressway to retain profits rather than to make larger dividend payments that might otherwise have been provided to him or other members of the company. He also claims that the plaintiffs have caused Expressway to settle proceedings against Anne-Marie concerning, inter alia, the title of the land at Wauchope upon which Expressway conducts its affairs, on conditions that excluded Claude from any knowledge of the terms of the settlement. 277Claude also claims that the plaintiffs caused Expressway to adopt and implement share buy-back policies and change its share structure without any reference to any of his views or interest. It is further claimed that the plaintiffs caused or permitted Expressway to provide remunerative employment or other benefits to the plaintiffs or members of their families, employment or benefits which have been denied to Claude and his family. 278Finally Claude claims that since about 1996 there has been an extensive and costly history of litigious proceedings between one or more of the plaintiffs or other parties on the one hand and himself and GCC on the other, and that the plaintiffs' "predominant purpose" in instituting and maintaining the present proceedings is to "exert pressure on him" or GCC to surrender rights which he or GCC have or might have in respect of the plaintiffs or Expressway. 279Claude claims that in view of the breakdown of the personal relationship with the plaintiffs, the affairs of Expressway have been and will continue to be conducted in a manner that is oppressive to, unfairly prejudicial to, or unfairly discriminatory against him or other members. Claude also claims that the plaintiffs and James Thomas Dunn (Catherine's husband), in their capacities as directors of Expressway, have acted and continue to act in the affairs of Expressway in their own interests and in a manner that is or appears to be unfair or unjust to Claude and to other members. Claude contends that Expressway should be wound up on just and equitable grounds. 280Peter John Wardman has been the Chairman of the Board of Expressway since 3 March 2000. He is a practising solicitor in New South Wales and has practised from Coffs Harbour continuously since 1973. He has been semi-retired from practising law since 30 June 2004. 281In his affidavit sworn on 10 October 2011 Mr Wardman gave evidence that Expressway currently employs 151 employees and is one of the largest private employers on the North Coast of New South Wales. Expressway currently operates from three sites with its head office in Wauchope consisting of approximately 11,000 square metres of covered storage and workspace and a 19 hectare machinery display and storage area. It also operates from one other site in New South Wales (Mount Thorley) and from an office and workshop in Queensland (Paget). 282Mr Wardman's unchallenged evidence was that Expressway has steadily grown its assets and turnover over the past decade, increased profitability and reduced its debt owing to financiers. That revenue has grown from $17.7 million in 1999 to $48.5 million in 2011. The debt owing to the bank has decreased from $9.96 million in 1999 to $7.9 million in 2011. The value of the property, plant and equipment has grown from $1.23 million in 1999 to $11.7 million in 2011. 283Mr Wardman is remunerated as a director of Expressway. He has never been a shareholder of Expressway. The current directors of Expressway are John, Patrick, Denis, James Dunn, Christopher Mark Browning and Mr Wardman. The current secretary of Expressway is Stuart Anthony Crofts appointed on 23 February 2009. Mr Browning became a director of Expressway on 6 October 2006. Mr Wardman gave evidence that Mr Browning is an accountant who brings with him a significant amount of experience in providing financial management services. Andrew Hugh Campbell became a director of Expressway on 10 March 2007. Mr Campbell had property experience in the development and re-zoning of land. He died on 5 October 2011. The vacancy created by Mr Campbell's death had yet to be filled at the time of trial. Mr Browning, Mr Wardman and Mr Campbell were known collectively as "the independent directors" of Expressway. Other independent directors of the Board have included Michael Faulkner (from 3 March 2000 until 28 February 2003) and Brian Milton (from 21 December 2001 until 3 June 2005). 284The present shareholding (107 issued shares) of Expressway is: Claude 15 shares; Anne-Marie 35 shares; Patrick 20 shares; Katherine 20 shares and Denis 17 shares. Wines 285Mr Wardman gave affidavit evidence in relation to both Wines and Tradition. He recounted the unprofitable operation of the Winery by Wines from 1994 to 2000. On 3 March 2000 the Board of Expressway resolved that the assets of Wines, being the Winery, be sold. John and his wife (Eva) made an offer to purchase Wines that was opposed by Anne-Marie and queried by Claude. The executors of the estate of the late Mrs Cassegrain also opposed the sale. On 25 August 2000 the Board of Expressway resolved to defer the sale of the Winery. However on 6 September 2000 the Board resolved to offer to John and Eva an option to buy the Winery for $4.25 million on conditions. Anne-Marie, Claude and the estate of the late Mrs Cassegrain were advised of this resolution. However John and Eva did not take up the option. 286On 1 December 2000 the Board of Expressway resolved that the Winery be offered for sale on the open market. On 22 December 2000 Expressway received a letter from Claude demanding that it be withdrawn from sale and suggesting that he may be interested in purchasing it. Mr Wardman responded to Claude on that day and invited him to make an offer to purchase the Winery. No offer was received by Expressway from Claude or Anne-Marie to purchase the Winery. 287On 12 January 2001 Expressway agreed to sell the Winery to Chilead Pty Ltd, of which John was a director and shareholder, at an agreed price of $4.25 million. No other offers had been received. Tradition 288Tradition was formed to carry on the manufacture of smallgoods in a factory that had been constructed for that purpose. It was unsuccessful and was wound down in about 1992. In 1994 it commenced operation of a restaurant at the Winery but that business was also unsuccessful and was closed in about June 1996. For a time Tradition earned income from the lease of its factory to a smallgoods manufacturer. 289When Mr Wardman was appointed as a director of Expressway he became aware of a letter dated 14 November 1996 from GCC claiming that Tradition owed GCC a debt of $1,154,705.26 together with Tradition's response dated 13 December 1996. Mr Wardman reviewed the Minutes of meetings of directors and other documentation concerning the claim made by GCC in respect of this alleged debt. On 4 February 2000 the Board of Expressway resolved that Denis would obtain further information about this claim and a letter was sent to NorthCorp accountants to ascertain further details. 290On 25 February 2000 Expressway received a letter from the receiver of GCC, Mr Smith, who sought confirmation about the loan and Expressway's intention to repay the loan. By letter dated 3 March 2000 Tradition responded to Mr Smith denying the alleged debt and informing him that the monies lent to Tradition was by way of a non-recourse loan. In particular Mr Smith's attention was drawn to the fact that Claude had indicated in his own funding proposal that the loan was a non-recourse loan. 291In about May 2002, the Board of Expressway resolved to appoint Lawler Partners to provide advice about the appropriate steps to liquidate and deregister Tradition. On about 4 June 2002 the Board received advice from solicitors, McCabe Terrill, in relation to the alleged debt. On 2 August 2002 the Board considered the legal advice and resolved that the alleged debt was not owing to GCC and also resolved to continue with the orderly winding up of Tradition. 292On 4 July 2003 the Board of Expressway resolved that Tradition be wound up and the company was formally deregistered on 1 October 2003. 293In cross-examination Mr Wardman was asked to explain the expression "non-recourse loan". He said that it "seemed to occur a few times in the history of Cassegrain accounts where money was shuffled from one company to another" and on his interpretation, it was never intended that the money be repaid (tr 294). It was not suggested to Mr Wardman in his cross-examination that the conclusion reached by the Board of Expressway that there was no debt due to GCC was erroneous or unjustified. Dividends 294Between 1964 and the mid 1990's Expressway did not declare or distribute dividends. In 1997 a substantial dividend of $1.1 million was declared but because Expressway did not have the funds to pay it, it was paid off between 2001 and 2003. The payment of dividends had to be approved by Expressway's bankers until about 2003. 295Mr Wardman explained that since about 2003 the Board of Expressway has taken the view that the unusual nature of Expressway's business is such that it needs to grow its capital reserves by holding on to profit in order to expand its business and take advantage of commercial opportunities, for example, buying heavy machinery to salvage its parts. Mr Wardman also explained his goal of achieving regular and consistent payment of dividends as a counter to the 1997 dividend that took years to pay. 296Expressway relied upon the annual financial accounts since 2003 to show that significant dividends have been declared since that time. By way of example, the financial records for the year ending 30 June 2010 show that in 2009 the profit of Expressway was $1,382,433 and the total dividend declared was $423,500, being 31% of the profits. Those financial records also show that in 2010 Expressway's profit was $1,424.638 and the total dividend declared was $423,500, being 30% of the profits. Expressway emphasised that since 2003 Claude has received dividends from Expressway that exceed in total $500,000. It was submitted that there is no basis for Claude to contend that the dividends declared were oppressive. 297Claude has not demonstrated that any conduct of Expressway in respect of the declaration or payment of dividends was oppressive. Buy-back offers 298The complaint that Claude makes in respect of the buy-back policies of Expressway is that they were adopted and implemented without any reference to his views or interests. 299Mr Wardman gave evidence that in late September 2005 Expressway entered into a deed of agreement with the estate of the late Mrs Cassegrain for the sale of 20 shares. The solicitors for the estate put that offer to Expressway on 2 August 2004 and the price for the sale was nominated by the estate, not by Expressway. That offer was accepted. 300At a meeting of the Board of Directors of Expressway on 1 June 2007 it was resolved that consideration be given to a share buy-back policy and that Mr Browning and Mr Wardman prepare a draft policy for the directors. Mr Browning and Mr Wardman prepared the policy that was accepted by all directors in a circular resolution in June 2007. 301Expressway then wrote to each of its shareholders including an offer to treat with respect to the possible buy-back of their shares for an offer price of $100,000 per share on the condition that the member offered their entire parcel of shares. That offer was expressed to expire on 30 September 2007. Mr Wardman gave evidence that the valuation methodology used and accepted by the Board of Expressway was based on a capitalisation of future maintainable earnings before interest and tax. No shareholder accepted the offer. 302On 7 November 2008 the Board of Expressway resolved to approve a further share buy-back policy. The offer price remained at $100,000 per share (determined on the same basis as the previous offer) but the member was able to offer less that the entire parcel of shares. That offer was expressed to expire on 28 February 2009. No shareholder accepted the offer. 303On 28 April 2010 the Board of Expressway resolved to approve a further share buy-back policy under which the offer price was $115,000 per share (determined on the same basis as the previous offers) with the members once again being able to sell less than their entire shareholding. That offer was expressed to expire on 30 June 2010. No shareholder accepted that offer. 304On 20 April 2011 Board of Expressway resolved to approve a further buy-back policy. The offer price was $120,000 per share (determined on the same basis as the previous offers) with the ability to sell less than the member's entire shareholding. That offer was expressed to expire on 30 June 2011. John accepted the offer and sold 3 shares to Expressway at the offer price of $120,000 for each share. Those shares have since been cancelled by Expressway. 305It was submitted that John's willingness to accept that offer undermines any challenge that these offers were oppressive. They were made to all shareholders and all shareholders were able to decide for themselves whether to take up the offers. 306The idea for the making of the buy-back offers originated with Mr Wardman who explained in some detail the reasons that led to this idea. He said that he thought that the Board expressing its views as to the value of its shares would be helpful especially as there was no pubic market for these private company shares. He noted that whilst one of the motivating factors was the conflict between shareholders, other advantages were that it enabled the shareholders to cash out their shares for superannuation, property or other forms of investment. Mr Wardman explained that the share buy-back price was determined by applying the financial information in the audited accounts with an allowance for CPI and in accordance with usual valuation practice, a deduction of about 40% to take into account that all shareholders were minority shareholders and the fact that there was no marketability for the minority shares. 307On 17 June 2011 Claude wrote to the directors of Expressway in relation to the offer of 20 April 2011. One of the questions he asked was whether the Board had obtained a "formal valuation or valuations in aid of its nomination" of the share price. He asked for a copy of "each valuation". Expressway responded by letter dated 23 June 2011 advising that it had received and considered a "confidential (to the Board) valuation, using the same methodology, for each of the four buyback policies". Expressway advised that because it was confidential, a copy would not be provided. In cross-examination, Mr Wardman gave evidence that no "formal valuation" was obtained but rather he and Mr Browning "took the balance sheets and our annual reports and also factored in CPI increases to land values and things like that to try to come to a realistic sort of figure as to what the value of the company was" (tr 306). I am satisfied that it was this process that was referred to in Expressway's correspondence as the "confidential" valuation. 308In cross-examination Mr Wardman gave evidence that the buy-back offer made on 20 April 2011 was based upon the non-audited figures of Expressway to 31 December 2010. However since that date Expressway has improved its earnings and there would be an adjustment "in upward sense" in terms of any new policy that Expressway may decide upon (tr 306). However that evidence does not affect the propriety or reasonableness of the 20 April 2011 buy-back offer. 309It was submitted on Claude's behalf that each of the buy-back offers were made by the Board, the composition of which included the plaintiffs but not Claude. There is nothing oppressive in this conduct. It was a consideration of a buyback offer by the directors of Expressway of which Claude is not one. He had been the Managing Director until about 2000 when he 'left' that position (tr 296). 310There is no basis for a finding that the management of the affairs of Expressway in relation to the buy-back offers was in any way oppressive. Exclusion from Management 311The late Mr Cassegrain determined that Patrick, not Claude, should be the managing director of Expressway. It is not in issue that Claude has not been invited into the management of Expressway and indeed it is to be assumed that he has been excluded from its management. However it is submitted that his exclusion could not be characterised as improper. It was submitted that the litigious history between these parties establishes that Claude cannot work with Patrick and the other plaintiffs. The Board of Expressway is entitled to decide the most appropriate method by which the management of the affairs of the company are to be conducted. There was no imperative and there is no imperative that Claude should be invited into the management of this company. 312There is no proper basis to claim that Claude's exclusion from the management of Expressway is oppressive. Settlement of Proceedings 313Mr Wardman gave affidavit evidence that on 3 March 2000 Anne-Marie commenced proceedings in this Court seeking possession of the land upon which the Expressway business was located in Wauchope. Expressway defended the claim and brought a Cross-Claim seeking an order permanently restraining Anne-Marie from interfering with its occupation of the land and a declaration that it held an equitable charge over the land in an amount equivalent to the value of the various improvements and maintenance of the buildings located on the land. The Cross-Claim also joined Claude and the former solicitor of Expressway who arranged for the transfer of the land to Anne-Marie notwithstanding Expressway's occupation and equitable interest in the land. 314The parties to that litigation, except Claude, agreed to attend a mediation that occurred on 25 and 26 July 2002. Although Claude refused to go to mediation he attended for a short time and spoke with the mediator and with Anne-Marie. A resolution was reached at the mediation between Expressway, Anne-Marie and the former solicitor. The terms of the settlement were recorded in a confidential Deed signed by each of those parties. 315Claude claimed that Expressway settled the proceedings with Anne-Marie in respect of the title to the land at Wauchope without his knowledge of the terms of the settlement. Mr Wardman's evidence in relation to this litigation was not challenged. Claude had every opportunity to attend the mediation of the proceedings and chose not to do so. When parties attend mediation and reach a confidential resolution of their disputes, it cannot be suggested that any failure to inform another person who was not party to the mediation of the details of the settlement reached at the mediation is inappropriate. Claude's claim in this regard is without foundation. 316There is no oppression in the conduct of Expressway or the plaintiffs, in failing to inform Claude of the compromise reached with Anne-Marie. Employment Opportunities 317Mr Wardman gave affidavit evidence that since the 1970s various members of the Cassegrain family have played a crucial and significant role in the business affairs of Expressway. Various members of the family are still employed and are considered to be valuable employees. Mr Wardman gave unchallenged evidence that he believes that there is no employee of Expressway who receives an income without providing a valuable service to Expressway. 318Mr Browning and Mr Wardman and (until his death last October) Mr Campbell, constituted Expressway's Remuneration and Nomination Committee. That Committee oversees and assists the Board of Expressway concerning remuneration of directors and executives, including remuneration to directors and executives who are Cassegrain family members. 319Mr Wardman described the employment of each of Patrick (currently employed as Managing Director answering directly to the Board of Expressway), Catherine (currently employed as receptionist and Collections Officer reporting directly to Patrick), Stephane, Patrick's son, (currently employed as a Company Representative reporting to the Marketing Manager), Denis (co-ordinating and managing properties reporting directly to Patrick) and James Dunn (consulting on core and non-core property assets and facilities and an active member of the Board). It is true that no member of Claude's family has been employed by Expressway since 2000. There is no evidence of any application for employment by any members of Claude's family and thus no evidence of a rejection of any employment application that could be seen to be oppressive. 320There is no justification for a finding that the conduct of the affairs of Expressway in this regard is oppressive. Purpose to exert pressure 321Claude claims that the plaintiffs' "predominant purpose" in instituting and maintaining the present proceedings is to "exert pressure on him" and or GCC to surrender rights which he or GCC have or might have in respect of the plaintiffs or Expressway. Claude submitted that this predominant purpose is "laid bare" by a consideration of the contents, timing and terms of "global offers" made by the plaintiffs to Claude on or about 16 April 2007 (with Claude's response of 25 April 2007) and 24 September 2009 (with Claude's response of 8 October 2009). 322The plaintiffs objected to the tender of this correspondence on the basis that such tender offended s 131 of the Evidence Act. I deferred ruling on this objection until delivery of these reasons. Section 131 provides relevantly: 131 Exclusion of evidence of settlement negotiations (1) Evidence is not to be adduced of: (a) a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute, or (b) a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute. (2) Subsection (1) does not apply if: ... (k) one of the persons in dispute, or an employee or agent of such a person, knew or ought reasonably to have known that the communication was made, or the document was prepared, in furtherance of a deliberate abuse of a power. ... (4) For the purposes of subsection (2) (k), if: (a) the abuse of power is a fact in issue, and (b) there are reasonable grounds for finding that a communication was made or document prepared in furtherance of the abuse of power, the court may find that the communication was so made or the document was so prepared 323The reasons for the tender of these documents were to demonstrate that: (1) for some time there has been broad agreement between the parties that they need to separate; (2) the plaintiffs have sought to obtain Claude's interest in Expressway; and (3) there has been a pattern of conduct which ties in with the buy-back proposals that emanated from Expressway (tr 276-277). It was submitted that the documents were prepared in furtherance of the deliberate abuse of power and therefore, pursuant to s 131(2)(k), the plaintiffs are unable to rely upon s 131(1) of the Evidence Act. 324The first reason for the tender was obviated by the plaintiffs' concession that the parties are in agreement that they want to separate and, by inference, that they were of that view at the time of the correspondence in 2007 and 2009 (tr 281). The second reason for the tender was also obviated by the plaintiffs' concession that they offered to purchase Claude's shares in Expressway and by inference that they did so in 2007 and 2009 (tr 282). In those circumstances I intend to take into account those two matters in relation to Claude's submission that this conduct formed part of a pattern when combined with the buy-back offers that were made. 325It is therefore unnecessary to consider whether these documents were prepared in furtherance of an abuse of power as that term is understood within s 131(2)(k) and s 131(4) of the Evidence Act. In any event it has not been established what the relevant "power" was that has allegedly been abused in these communications nor has it been established how the communication was such an abuse. Having regard to the concessions made by the plaintiffs that obviated the need for this consideration, the correspondence will not be admitted into evidence. 326Claude also relies upon the content, timing and terms of the four buy-back proposals advanced by the Board of Expressway between September 2007 and April 2011. It is submitted that the primary object, if not the only object, of those buy-back proposals could only have been to induce Claude to divest himself of his shares in Expressway at "a substantial discount". Claude also relied on the fact that the 2011 buy-back proposal was published between the original hearing date for the trial of the proceedings on 12 April 2011 and the adjourned date when it finally came on for trial on 10 October 2011. 327Claude also relied upon the timing of the plaintiffs' institution of these proceedings in 2008. It was submitted that the timing of the proceedings needs to be viewed in the context of Claude having pressed the Board of Expressway that year for information concerning the conduct of its financial affairs and two offers having been made that year to acquire his shares. He relies upon what seems to be a history throughout 2007 of his discontent with the provision, or lack thereof, of information by the Board, and the proximity of the commencement of the proceedings to that process, to submit that the plaintiffs' predominant purpose in bringing these proceedings is to force him to surrender his rights. He submitted that the plaintiffs have adopted a "winner take all" attitude in their conduct of the affairs of Expressway since they acquired control of Expressway by virtue of Bryson J's judgment in 1999 in respect of the estate of his late mother. 328Claude also relies upon the knowledge of each of the plaintiffs that both he and GCC were under financial pressure associated with the refusal of the Board of Expressway to provide any support to GCC or to recognise debts to GCC recorded in the accounts of companies under their control. In this regard Claude also contends that the plaintiffs knew that GCC was under the control of receivers, that he was under pressure by reason of the CTK litigation, that he (on behalf of GCC) was engaged in layers of litigation with the ATO arising out of a settlement with CSIRO and that his time was occupied in advancing litigation against investors in the Tea Tree Projects in the Gardiner Proceedings. It is not really in issue that the plaintiffs had knowledge of these matters. However the claimed significance of these matters is clearly diminished by Claude's own conduct in secretly transferring valuable assets of GCC to his wife and claiming that he did so at a time when he clearly did not. 329Claude also relied upon the "manner" in which the plaintiffs have conducted the present litigation, including that the proceedings were commenced originally only by Denis and it was only in about April 2011 that the other plaintiffs sought to be joined and collectively advanced allegations of fraud not only against himself but also against Felicity and her father. There is nothing oppressive in this conduct. 330Claude's claim that the plaintiffs have conducted previous proceedings and have commenced and maintained these proceedings for an improper and collateral purpose is untenable. The previous proceedings to which Claude referred include the proceedings before Davies J in the Federal Court and Bryson J in this Court and the CTK proceedings. It is contended that the present proceedings have been commenced for the purpose of exerting inappropriate pressure on Claude and GCC to give up their rights. I infer that what is contended is that the plaintiffs have illegitimately exerted litigious pressure without foundation. This claim is rejected. The plaintiffs have established that Claude and Mr Sarks have adopted false Minutes of directors meetings in which valuable assets were purportedly transferred to a close relative, Felicity, at a time when no such transfer of assets had occurred but rather a loan arrangement had been entered into to facilitate the retirement of the Receivers from GCC. This was not an illegitimate exertion of litigious pressure to force a party to give up a right. The plaintiffs were fully entitled to bring this action and it cannot be described as having been brought for a collateral or inappropriate purpose. 331Claude also claims that there has been a "resolute refusal" of the plaintiffs to support their allegations in the principal proceedings or in the cross claim with affidavits or any other evidence that would expose them to cross examination and that given GCC's prospective liability to the ATO they knew and know that there is no value in any of the shares held in GCC. It is submitted that the history of acrimonious litigation between the parties cannot be disregarded in a determination of the Cross-Claim either in assessing the jurisdiction of the Court to make orders or in an exercise of discretion by the Court in making of the orders. Claude once again made submissions that adverse inferences should be drawn against the plaintiffs in this regard pursuant to the principles referred to in Jones v Dunkel. I am not satisfied that such adverse inferences should be drawn in the circumstances of this case. 332Subsequent to the conclusion of the trial on 14 October 2011 the Deputy Commissioner of Taxation has issued an Amended Notice of Assessment dated 24 October 2011 against GCC for the year ended 30 June 1994. It was contended that the "net effect" of that assessment is that GCC now has a crystallised liability to the ATO for an amount in excess of $4.17 million, with interest continuing to accrue, and that it does not have sufficient resources to pay the debt. This was drawn to the Court's attention particularly having regard to other proceedings between the respective parties and to the possible grant of relief in these proceedings. However it was also contended that GCC's taxation liability casts doubt upon the existence of any value whatsoever in the shares held by the plaintiffs in GCC. This is a matter post the conclusion of evidence and has not been the subject of any detailed evidence or submissions. However there is evidence that suggest that approximately $4 million has been recovered from the investors in the Tea Tree Litigation. 333Claude's reliance upon the litigious history between the parties in support of his claim that these proceedings were brought for a collateral purpose does not improve his position. He claims that it would be appropriate for an order to be made whereby the plaintiffs sell him their shares at $120,000 per share, but that no order should be made requiring him to sell his shares to the plaintiffs. There is no justification for the adoption of such a position. It is important in this aspect of the claim to focus on the real issues in dispute between the parties on the cross-claim, rather than on broad-brush claims of conduct described as "winner take all". 334I am not satisfied that Claude has established that these proceedings were commenced for any collateral purpose. I am not satisfied that Claude has proved oppression under s 232 of the Corporations Act. Just and Equitable Ground 335Claude also relied upon s 461(1)(k) of the Corporations Act that Expressway be wound up on just and equitable grounds. It has been held that a breakdown or loss of confidence between incorporators can provide a sufficient foundation for a just and equitable liquidation: Ebrahimi v Westbourne Galleries [1973] AC 360. However simply because there has been a breakdown or a loss of confidence between shareholders does not automatically result in the exercise of the power to wind up a company on just and equitable grounds. 336While no single factor is determinative, a winding up order under s 461(1)(k) may be appropriate where the breakdown is such that it materially frustrates the commercially viable operations of the company (Tomanovic v Argyle Hq Pty Ltd; Tomanovic v Global Mortgage Equity Corporation Pty Ltd; Sayer v Tomanovic [2010] NSWSC 152 at [50]), or there is a restriction on the transfer of the shareholders interest (Ebrahimi v Westbourne Galleries [at 500]; Morgan v 45 Flers Avenue Pty Ltd; Tomanovic v Argyle at [50]). Neither of these circumstances exist in this instance. Indeed Expressway has been managed consistently with the desires of its originator, the late Mr Cassegrain. Since 2000 the Board of Expressway has included three independent directors and the dispute between Claude and the plaintiffs has not had an impact on the commercially viable and sensible operation of Expressway. It is a substantial, well-managed and profitable business. Expressway has made four buy-back offers that were open to Claude and which, if accepted would have returned to Claude between $1.5 and $1.8 million. 337It was contended in the defendants' written submissions that "so deep is the antipathy" of the plaintiffs towards Claude that Mr Wardman's evidence actually reinforces the existence of grounds upon which the relief sought by Claude in his Cross-Claim should be granted. A similar submission was made that there has been a "long-standing deliberate campaign" to acquire Claude's shares in Expressway and to "cloak the campaign with apparent legitimacy". Submissions were also made about Mr Wardman's "friendship" with various members of the Cassegrain family. It was not suggested to Mr Wardman in cross-examination that he had compromised his fiduciary duties or statutory obligations in any way by reason of any friendships that he maintains. Accordingly these submissions are of no real relevance. These broad-brush allegations cannot be sustained. It is Claude that moves on the Cross-Claim to wind up a company that seems to have been the most successful of the Cassegrain companies. Mr Wardman's evidence was impressive, careful and measured. Expressway has managed to grow as a profitable business notwithstanding sibling rivalry, litigation and the global financial crisis. This would appear to be in no small measure due to the professionalism of the independent directors and their commitment to their statutory and other obligations to Expressway. 338I am not satisfied that Expressway and/or the plaintiffs' conduct in the management of the affairs of Expressway amounts to oppression. There is no basis for a finding that it would be just and equitable that Expressway be wound up. 339The Cross-Claim is to be dismissed. Conclusion 340There was no meeting of Directors of GCC as recorded in Minutes purporting to be Minutes of a meeting of GCC dated 21 December 2004. The plaintiffs have proved that Claude and Mr Sarks were in breach of their fiduciary and statutory duties to GCC in transferring GCC's shares in TTO and OAL to their wife and daughter respectively at undervalue and without the consent of the minority shareholders. This conduct amounted to oppression within the meaning of s 232 of the Corporations Act. Felicity was in knowing receipt of the shares and is liable under the first limb of Barnes v Addy in respect of the share transactions. The first plaintiff has made out a case under s 37A of the Conveyancing Act in respect of the OAL share transaction and Felicity's defence under s 37A(3) has failed. I refuse relief under s 1318 of the Corporations Act in respect of all defendants. The Cross-Claim is to be dismissed. 341As requested I will list the matter for the purpose of the parties making submissions as to the appropriate relief. I will also hear submissions on costs if the parties are unable to agree on a costs order. The parties are to make contact with my Associate by no later than 24 May 2012, to fix a mutually convenient date for those submissions and any costs argument. ************************* DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 27 April 2012