Supreme Court New South Wales Medium Neutral Citation: Edmund Ian John Hashman v Australian Medico-Legal Group Pty Limited [2016] NSWSC 1690 Hearing dates: Friday, 19 February 2016 Date of orders: 19 February 2016 Decision date: 19 February 2016 Jurisdiction: Equity Before: Brereton J Decision: Ordered production of audited accounts and reports in accordance with previous directions made Catchwords: PROCEDURE – case management – valuation of shares – no question of principle Category: Procedural and other rulings Parties: Edmund Ian John Hashman (plaintiff) Australian Medico-Legal Group Pty Ltd (first defendant) Mandy Dorothy Holland (second defendant) Representation: Counsel: NJ Beaumont w A Avery-Williams (plaintiff) T Marskell (defendants) Solicitors: Mills Oakley Lawyers (plaintiff) Beilby Poulden Costello (defendants) File Number(s): 2014/170226 Judgment (EX TEMPORE) 1. HIS HONOUR: On 27 November 2015, the Court by consent made orders and directions in accordance with the document entitled 'Minutes of Proposed Consent Orders' which provided inter alia as follows: 2. Each party's experts to confer in regard to further particulars and documentation required for preparation of valuation evidence by 11 December 2015. 3. In the event the experts are able to agree, the defendants to provide the further documents and information as agreed by the experts by 24 December 2015. 4. In the event that the experts are unable to agree, liberty to either party to apply on seven days' notice. 5. Subject to order 4 above, expert valuation evidence to be exchanged by 19 February 2016. 1. On 11 December 2015, the experts conferred as directed by email. The plaintiff's expert Ms Cusack sent to the defendant's expert Mr Katehos an email in which she said inter alia: In the meantime can I suggest that we both agree in the first instance to be provided with the audited accounts of the company for the five years ended 30 June 2015 so as a start we are both working off the same financial statements which are audited, and not management accounts which are possibly still subject to year-end adjustments. 1. Mr Katehos responded: I agree we should be provided with the audited accounts of the company for the four years ended 30 June 2014. We should also request the company's audited accounts for the year ended 30 June 2015, assuming that the audit has been completed. I assume upon receipt of the audited financial statements many of your questions set out in your letter of 6 November 2015 will not be necessary. 1. Despite that apparent agreement, correspondence by the plaintiff's solicitor to the defendant's solicitor requesting provision of the audited financial statements for the years ended 2011 through 2015, on 14 December 2015, 29 January 2016, 3 February 2016 and 8 February 2016, went unanswered. 2. Today, the defendant essentially contends that audited accounts are not necessary to permit the valuation process to proceed. Had the issue arisen before the directions to which I have referred were made, I might well have agreed that audited financial statements, though desirable, are unnecessary to permit the valuation process to go ahead. While audited financial statements provide an additional level of comfort, valuations are commonly, and perhaps more often than not as Mr Katehos suggests, undertaken on unaudited rather than audited accounts. 3. But this matter does not commence with a clean slate. The directions to which I have referred were made by consent in order to progress the matter, and essentially sought to remove from the dispute between the parties, and entrust to their valuers, the question of agreeing on what was required to permit the valuation process to proceed. The valuers – in the correspondence to which I have referred – agreed that audited financial statements should be provided. The fact that Mr Katehos now says that they are not essential does not detract from the circumstance that an agreement of the type referred to in the orders was, on the evidence, made. 4. Moreover, the shareholders deed of agreement of 14 June 2011 apparently creates an obligation on the company, and a legal right in its shareholders, to have audited accounts prepared annually. There is evidence that the accounts for the years 2012, 2013 and 2014 have been substantially prepared and are merely awaiting "sign-off" by the auditors. Those for 2015 may not have been prepared but, as it seems to me, there is a legal obligation to prepare them, and given the normal timeframe for annual general meetings, they ought to have been prepared by now, or at least be in a very advanced state of preparation. 5. It seems to me that given what has already happened in the matter, the best way to progress the matter is to adhere to the directions made on the last occasion, and insist on the provision of audited accounts. 6. The Court notes that: 1. Pursuant to order (2) of the orders made on 27 November 2015, the parties' experts agreed that they required audited accounts of the first defendant for the financial years ending 30 June 2011 to 30 June 2015. 2. Pursuant to order (3) of the orders made on 27 November 2015, the defendants were obliged to provide those documents by 24 December 2015, and have not done so. 1. The Court orders that: 1. By 18 March 2016, the defendants produce to the plaintiff audited accounts for the first defendant and the reports which accompany them, for the financial years ending 30 June 2011 to 30 June 2015; 2. Subject to the due provision of those accounts and reports by 18 March, time for compliance with order (5) of the orders made on 27 November 2015 be extended to 22 April 2016; 3. There be liberty to apply on seven days' notice in the event that the defendants are unable to provide accounts in accordance with order (1), and/or seek an extension of time in which to do so if the accounts are not provided in accordance with order (1); 4. The directions listing for 26 February 2016 be vacated; 5. The proceedings be adjourned to 29 April 2016 at 9.30am for further directions; and 6. The defendants pay the plaintiff's costs of today. ********** 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: 30 November 2016