A Pty Ltd as Trustee for the Storrer Family Trust & N Pty Ltd - [2023] FedCFamC1F 1124

FEDERAL CIRCUIT AND FAMILY COURT OF
AUSTRALIA (DIVISION 1)
A Pty Ltd as Trustee for the Storrer Family Trust & N Pty Ltd [2023] FedCFamC1F 1124

File number(s): BRC 7225 of 2009

Judgment of: HOGAN J

Date of judgment: 22 December 2023

Catchwords: FAMILY LAW – Corporations Law – Where the price of shares is fixed following findings of oppression – Where the date of the valuation of the shares is to be determined – Where consideration is given to the appropriate multiple to value the company – Where it is considered whether fairness and justice requires a discount or adjustment of the price to be paid for the applicant’s interest

Legislation:
Corporations Act 2001 (Cth)

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth),

Cases cited:
Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd and Another [2018] HCA 43; (2018) 265 CLR 1

Campbell & Anor v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25

Foody v Horewood & Ors [2007] VSCA 184

Harding Investments Pty Ltd v PMP Shareholding Pty Ltd (No 3) (2011) 285 ALR 297; [2011] FCA 1370

In re London School of Electronics Ltd [1985] Ch 211

Mallett & Mallett (1984) 156 CLR 605; [1984] HCA 212

N Pty Ltd & A Pty Ltd (2021) FLC 94-039; [2021] FamCAFC 134

O’Neill v Phillips [1999] 1 WLR 1092

Re Bodaibo Pty Ltd (1992) 6 ASCR 509

Tomanovic & Anr v Global Mortgage Equity Corporation Pty Ltd & Anor (2011) 288 ALR 310; [2011] NSWCA 104

Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18

Division: First Instance

Number of paragraphs: 84

Date of last submission/s: 24 March 2023

Date of hearing: 7, 8, & 9 February 2023; 14 March 2023.

Place: Brisbane

Counsel for the Applicant: Mr Hodge KC with Mr Green on 7, 8 & 9 February 2023
Mr Green on 14 March 2023

Solicitor for the Applicant: Bridge Brideaux Solicitors

Counsel for the Respondents: Mr Dunning KC with Ms Ahern

Solicitor for the Respondents: McCullough Robertson Lawyers
ORDERS

BRC 7225 of 2009

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:
A PTY LTD AS TRUSTEE FOR THE STORRER FAMILY TRUST

First Applicant

MR STORRER

Second Applicant

AND:
N PTY LTD

First Respondent

N INVESTMENTS PTY LTD AS TRUSTEE FOR THE N PROPERTY TRUST

Second Respondent

R PTY LTD AS TRUSTEE FOR THE O FAMILY TRUST

Third Respondent

And: Others named in the Schedule

ORDER MADE BY:

HOGAN J

DATE OF ORDER:

22 DECEMBER 2023

THE COURT ORDERS THAT:
1.The First Respondent, and/or alternatively any one or more of the Third, Fourth, Fifth and/or Sixth Respondents, shall purchase the shares held by the First Applicant in the First Respondent, for a purchase price of $25,496,305.
2.The capital of the First Respondent shall be reduced to the extent of any shares purchased by the First Respondent pursuant to paragraph 1 of these orders.
3.The First Respondent declare and pay to the First Applicant a fully franked dividend on the C class shares held by the First Applicant, comprising:
(a)a cash distribution of $8,860,551.98; and
(b)franking credits of $3,797,379.42.

4.Any one or more of:
(a)the Fifth, Sixth, Eleventh and/or Twelfth Respondents shall purchase the units held by the First Applicant in the N Property Trust; and
(b)the Second Respondent, and/or alternatively the Seventh, Eighth, Ninth and/or Tenth Respondents, shall purchase the shares held by the Second Applicant in the Second Respondent,

for a total purchase price of $2,202,342.00.
5.The capital of the Second Respondent shall be reduced to the extent of any shares purchased by the Second Respondent pursuant to paragraph 4(b) of these orders.
6.The parties are to exchange written submissions regarding:
(a)interest; and
(b)costs; and
(c)any relief that may be sought consequent upon the automatic discharge pursuant to r.5.01 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), of the interlocutory injunction issued on 30 September 2016,

by no later than 4.00pm on 17 January 2024 and shall exchange any written submissions in reply by no later than 4.00pm on 24 January 2024.
7.The parties have liberty to apply on three (3) business days’ notice in relation to any matter concerning the implementation of these orders.

IT IS NOTED THAT:
A.There is no Court known by the name “Federal Circuit and Family Court of Australia”.
B.The design of the seal affixed to this order issued by the Federal Circuit and Family Court of Australia (Division 1) has been determined by the Attorney-General pursuant to the undated Federal Circuit and Family Court of Australia (Seal) Determination 2021 signed by the Attorney-General.

Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym A Pty Ltd & N Pty Ltd has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HOGAN J:

Findings have already been made in these proceedings about the oppressive conduct to which the First Applicant (A Pty Ltd) and the Second Applicant (Mr Storrer) have been subjected.
The Applicants seek orders for the purchase of A Pty Ltd’s shares in N Pty Ltd and for the purchase of its units in the N Property Trust (the Property Trust) and Mr Storrer’s shares in N Investments Pty Ltd.
Whilst the Respondents do not oppose orders being made to facilitate this, the parties differ in relation to:
(a)the date at which A Pty Ltd’s shares in N Pty Ltd should be valued for the purpose of determining a fair price for the same; and
(b)the value which should be ascribed to N Pty Ltd at whatever date is determined to be the appropriate date to be used for the purpose of determining, in all the circumstances, a fair price for A Pty Ltd’s shares in it; and
(c)whether there should be any discount applied to the amount otherwise determined to be the price which should be paid to A Pty Ltd for its shares in N Pty Ltd; and
(d)the quantum of dividends (if any) which should be paid by N Pty Ltd to A Pty Ltd – which will depend on the determination of the date at which the shares and units should be valued and how the fact that some of the dividends paid to shareholders other than A Pty Ltd were paid by way of remuneration should be taken into account; and
(e)whether N Pty Ltd should pay A Pty Ltd a sum equal to that USD amount paid by way of dividend to the other shareholders in July 2017 – which will depend on the determination of the date at which the shares and units should be valued.
Detailed submissions have been filed on behalf of all of the parties.[1] Various calculations have also been provided. The parties’ disagreements are reflected in the calculations. In arriving at my decisions about the issues summarised broadly above (and those associated with the same, as discussed in these Reasons), I have had close regard to the same, the outlines filed on behalf of the parties, the transcript of the proceedings, the submissions made orally at the conclusion of the hearing (and when I heard the parties again following the receipt of the written submissions) and the documents which accompanied the various calculations provided to the court.
[1]By the Applicants on: 31 October 2019, 23 December 2022 and 27 January 2023; by the Respondents on: 23 December 2022 and 27 January 2023.
I accept that the Court is required to select the date at which the Applicant’s interests should be valued and then to value them as at that date and fix a price for their purchase; I also accept that, whilst the court may be assisted by the evidence given by the single expert witnesses in fixing the price for the purchase of the interests, it is not bound to accept such evidence – the task, which involves multiple instances of the exercise of discretion about which reasonable minds may differ, is to perform the actual valuation exercise.
SOME APPLICABLE PRINCIPLES
It is clear, having regard to relevant authority[2] and the relevant statutory provisions, that:
[2]Including: In re London School of Electronics Ltd [1985] Ch 211; Foody v Horewood & Ors 62 ASCR 576; Campbell & Anor v Backoffice Investments Pty Ltd (2009) 238 CLR 304; Re Bodaibo Pty Ltd (1992) 6 ASCR 509; Harding Investments Pty Ltd v PMP Shareholding Pty Ltd (No 3) (2011) 285 ALR 297; Tomanovic & Anr v Global Mortgage Equity Corporation Pty Ltd & Anor (2011) 288 ALR 310.
(a)the power prescribed in ss 232 and 233 of the Corporations Act 2001 (Cth) (the Act) to order the compulsory acquisition of A Pty Ltd’s shares in N Pty Ltd is not hedged about by limitations; and
(b)the object of this power and the fundamental requirement is to identify a remedy which is fair to overcome the oppression found in the case and put an end to it; and
(c)the Court’s discretion to determine the price of the shares ordered to be purchased from an oppressed shareholder (here, A Pty Ltd) is wide and absolute – the exercise of the same in any case is to be informed by the justice and fairness of the particular circumstances in that case; and
(d)the purpose of a buy-out order is not to compensate the oppressed party for loss, but to separate the oppressed and the oppressor – the court seeks to put the oppressed party in the same position as nearly as can be as if there had been no oppression and to take away the effect of the oppression, erring (if necessary) on the side of the oppressed; and
(e)the requirement imposed on the Court is to fix a price for A Pty Ltd’s shares that represents a fair value in all the circumstances of the particular case; and
(f)an “orthodox” approach requires the Court to determine when to value shares, for the purpose of determining the price that represents fair value for the same, based on a consideration of the circumstances of the case and recognising that the overarching requirement is to do fairness and justice to all parties in the case; and
(g)the assessment of a fair price for shares is not to be determined in a manner that includes a component akin to punitive or exemplary damages; and
(h)in determining the fair price for A Pty Ltd’s shares, the court may take the development of the business operated by N Pty Ltd after Mr Storrer ceased to provide services to it in July 2013 into account but is not required to do so.
When should A Pty Ltd’s shares in N Pty Ltd be valued for the purpose of determining the price to be paid for the same?
Authority[3] also establishes that the only “rule” in exercising the discretion to determine the date at which it is appropriate to value A Pty Ltd’s shares in N Pty Ltd is that there is no hard and fast rule; rather, the exercise of the wide discretion reposed in the Court requires that consideration be given to the relevant circumstances in each particular case and that the discretion be exercised judicially – the overriding requirement is that the date of valuation should be fair to all of the parties in the particular circumstances of the case.
[3] Including that to which reference has already been made.
An appreciation of at least some aspects of the particular circumstances of this case may be found by having regard to the findings of oppression made in the Applicants’ favour and also to the circumstances in which the oppressive conduct occurred.
In determining the previous appeals, the Full Court helpfully summarised the findings of oppressive conduct (which withstood challenge on appeal)[4] as follows:[5]
[4] The first two findings not being the subject of appeal.
[5] N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [87].
(a)withholding $25,000 from dividends payable to A Pty Ltd as a provision for legal fees that might be incurred by N Pty Ltd in Mr Storrer’s family law proceedings; and
(b)determining not to pay Mr Storrer accrued leave of $9,986.86 on the basis he was a contractor and not an employee; and
(c)acting as if A Pty Ltd was obliged to sell its shares in N Pty Ltd; and
(d)acting on the basis that A Pty Ltd’s entitlement to receive dividends was conditional on it continuing to provide services to N Pty Ltd; and
(e)ceasing to pay dividends on ordinary class shares but declaring dividends on certain special class shares: that is, paying dividends to all shareholders other than A Pty Ltd; and
(f)paying dividends to the remaining shareholders in proportions determined as if A Pty Ltd was no longer a member of N Pty Ltd; and
(g)lending funds to the Thirteenth Respondent (N Property Pty Ltd as trustee for the N Investments Trust) to purchase 3 F Street; and
(h)removing Mr Storrer as a director of N Investments Pty Ltd; and
(i)failing to disclose to Mr Storrer that the other unitholders of the Property Trust had called for repayment of their loans and beneficiary entitlements on 1 October 2015; and
(j)resolving on 2 August 2016 to transfer 1 F Street to The N Investment Trust in exchange for $7.4 million.
The Full Court also helpfully noted the following:
(a)on 2 August 2013, the Seventh Respondent (Mr O) informed Mr Storrer that he was happy to meet with him to discuss an appropriate settlement contract, including a payment to cover A Pty Ltd’s interests fully;[6] and
[6]           N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [116].
(b)on 19 September 2013, Mr L, acting on instructions from Mr Storrer, valued the Applicants’ interests in N Pty Ltd, N Investments Pty Ltd and the Property Trust at $737,772;[7] and
[7]           N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [36]; [117].
(c)on 27 September 2013, Mr FF, acting on instructions from Ms Storrer, [8] valued A Pty Ltd’s interests in N Pty Ltd at $2.9 million and the interest in the Property Trust at $116,874, in addition to the beneficiary loan account of $341,921 (giving a total, therefore, of $3,358,795);[9] and
[8]The Respondent in final property settlement proceedings between Mr and Ms Storrer.
[9]           N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [36]; [117].
(d)on 4 October 2013, Mr O wrote to Mr FF to advise, amongst other things, that he wanted to provide him with additional information that would “materially change” Mr FF’s conclusion about the value of A Pty Ltd’s interest in N Pty Ltd(this being, in essence, that A Pty Ltd would receive no further income stream from N Pty Ltd, including dividends from the share classes it holds) and asked that he adjust his valuation given that “a significant portion of the valuation that you have determined is based on future revenue stream and there will be no future revenue stream” – which was “a clear indication that there would be no further payment of dividends to [A Pty Ltd] regardless of the financial position of [N Pty Ltd]”;[10] and
[10]          N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [37]; [118]; [119]; [120].
(e)it was “plain” from the contents of the 4 October 2013 correspondence that Mr O’s notion of what was an appropriate amount to pay A Pty Ltd for its shares in N Pty Ltd was very much lower than the figure proposed by Mr FF and it was “also plain that the price [Mr O] envisaged paying for [A Pty Ltd’s] shares was not based on it receiving an equivalent proportion of the total issued share capital”;[11] and
[11]          N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [120].
(f)on 14 October 2013, Mr O wrote to Mr L in terms identical to those addressed to Mr FF on 4 October 2013;[12] and
[12]          N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [38]; [121].
(g)on 31 October 2013, Mr L prepared a further report in which he valued A Pty Ltd’s interest in N Pty Ltd at $1,585,300 and opined that the interest in the Property Trust was $130,000 in addition to the sum of $341,921 which was owed (giving a total of $2,057.221);[13] and
[13]          N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [39]; [122].
(h)on 1 November 2013, Mr L’s 31 October 2013 report was sent to N Pty Ltd, together with an invitation to meet to discuss the purchase of the Applicants’ interests;[14] and
[14]          N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [40]; [123].
(i)on 6 November 2013, the Applicants gave notice of their intention to commence proceedings and A Pty Ltd offered to dispose of its interests in N Pty Ltd for $1,585,300 and there was an offer to dispose of the interest in the Property Trust for $471,921 – that is, for a total of $2,057,221;[15] and
[15]          N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [41]; [124].
(j)on 7 November 2013, the Respondents rejected the Applicants’ offer that A Pty Ltd sell its shareholding for $1,585,300 and that $471,921 be paid for the interest in the Property Trust;[16] and
(k)the proceedings commenced on 27 November 2013;[17] and
(l)by Response to Initiating Application filed 3 December 2013, the Respondents sought the dismissal of the proceedings – the Response contained no proposal for the acquisition of the Applicants’ respective interests at fair value or otherwise;[18] and
(m)on 26 August 2014, the shareholder Respondents offered to purchase the interests held by the Applicants at “fair value” – however, the correspondence conveying this did not identify how that fair value would be determined;[19] and
(n)on 28 August 2014, the Applicants replied to invite the provision of “sufficient details” of the proposed offer for fair value or otherwise;[20] and
(o)on 27 April 2015, the shareholder Respondents offered to purchase A Pty Ltd’s interest in N Pty Ltd for $1,585,300 and the interest in the Property Trust for $471,921 – being the valuations given by Mr L some 18 months earlier (even though, in the correspondence, they expressly disavowed his opinion); [21] and
(p)by their written submissions filed on 2 December 2015 (in support of an application for summary orders filed 3 September 2015), [22] the Respondents asserted that the most the Applicants could have reasonably anticipated being paid by the Respondents was $1,594,413.04[23] and that, as payments of $38,091.67 had already been made in the 2014 financial year, the sum of $1,556,321.37 was nominally payable[24] – which the Full Court regarded as amounting to an instance of the Respondents “themselves asserting a value for the shares as opposed to acquiring them at an independently arrived at fair value”, noting also that they had not sought to support this valuation by calling evidence to show that it was a fair valuation;[25] and
(q)on 6 February 2017, the Respondents filed a Defence to the Second Further Amended Statement of Claim in which they denied that the Applicants were entitled to any relief at all and said that, if they were found to have been oppressed, the appropriate relief was for the purchase of their interests, with the valuation of the same to occur as at 31 July 2013 or, alternatively, 26 November 2013;[26] and
(r)even if it was the case (which, given the pleadings and the offers outlined above, was not the case) that the only issue as between the Applicants and the Respondents was the price at which A Pty Ltd’s shares were to be acquired, the failure to make an offer to acquire them at a fair, independently arrived at valuation could be a key component of oppression and the Respondents really wished to have it both ways: that is, to not make such an offer, but to exclude A Pty Ltd from the benefit of its shares;[27] and
(s)that it was oppressive of N Pty Ltd not to pay dividends to A Pty Ltd and at the same time not to offer to acquire its shares in N Pty Ltd at a price which included future dividends to the date at which the valuation of the same was to occur.[28]
[16]          N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [124] and [125].
[17]          N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [126].
[18]          N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [132].
[19]          N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [127].
[20]          N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [128].
[21]          N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [129].
[22]Which I note required that the court find the existence of oppression (which remained denied) in order to found jurisdiction.
[23]Being the total of: $737,772 for their interest in N Pty Ltd and $471,291 for their interest in the Property Trust and $25,000 withheld from dividends in 2012 and $84,000 in management fees net of GST to 30 June 2014 and $27,300 in fully franked dividends on the ordinary shareholding and $249,050.04 in fully franked dividends on the special class share.
[24]          N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [134].
[25]          N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [136].
[26]          N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [133].
[27]          N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [140].
[28]          N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [167].

The Full Court also noted that: the essence of the finding of commercial unfairness in relation to N Pty Ltd was the exclusion of A Pty Ltd from the benefits of its shareholding, implicit in which was a finding that this was coupled with the refusal to acquire its shares for a fair value – there was never an offer to acquire A Pty Ltd’s shares at a fair value in the sense that phrase was used by Lord Hoffman in O’Neill, [29] nor was a reasonable exit mechanism proposed; there had been no offer prior to the commencement of the proceedings to acquire A Pty Ltd’s interests at a fair value by an independent expert, with all the parties having appropriate access to the necessary information;[30] the Respondents had not adduced any evidence to show “that either of the offers made to acquire [Mr Storrer’s] and [A Pty Ltd’s] interests at an identified price (in November 2013 and April 2015) was such a reasonable offer that it justified the subsequent treatment of [A Pty Ltd]”.[31]
[29]          O’Neill v Phillips [1999] 1 WLR 1092, as referred to by the Full Court at [94], [95], [107], [111], [114].
[30]          N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [130].
[31]          N Pty Ltd & A Pty Ltd [2021] FamCAFC 134 at [131].
Whilst clearly relevant to the determination of the date at which A Pty Ltd’s shares in N Pty Ltd should be valued, I accept, as the Full Court noted, that the continuation of the oppressive conduct in essentially refusing to pay dividends on the shares (given that N Pty Ltd has not made any payment of dividends to A Pty Ltd after two payments were made in 2014), is not the only relevant consideration.
Broad summary of the Applicants’ contentions
The Applicants contended that a value which is relatively contemporaneous with the order for the compulsory acquisition of A Pty Ltd’s shares would ensure that the court discharges its obligation of determining the price for the shares that represents fair value of the same in all the circumstances of this case.
It was submitted that, by seeking a valuation date of July 2013, the Respondents sought to perpetuate the oppression found against them – if A Pty Ltd’s shares were valued as at July 2013, this would ignore the oppression found to have been committed by the failure or refusal to make a reasonable offer, at that time, to purchase A Pty Ltd’s shares in N Pty Ltd and the units in the Property Trust.
In summary and essence, the Applicants contended that, in determining the date at which it is appropriate to value A Pty Ltd’s shares in N Pty Ltd and the units in the Property Trust for the purpose of determining the price of the former and the value of the latter, the Court should be persuaded that, given that the shares and units remain the assets of A Pty Ltd:
(a)valuing the interests as at 31 July 2013 (as contended for by the Respondents or, alternatively, 2015 or 2016) – or any date other than that which is relatively contemporaneous with the making of the order for compulsory acquisition of the same – would have the effect that the asset would be accorded a value which is much less than its current value and the Applicants would be deprived of the value of their ongoing economic interest in N Pty Ltd; and
(b)valuing the interests at any of the dates contended for by the Respondents would, in essence:
(i)amount to a furtherance, via judicial fiat, of the oppression which has previously been found – namely, that, in a manner that was oppressive to A Pty Ltd, it was treated it as if it lost its property rights to its shares (and, similarly, in relation to the units) when Mr Storrer ceased to provide services to N Pty Ltd; and
(ii)perpetuate the oppression inflicted upon A Pty Ltd because it would mean that the court valued the shares as if they had been sold at a fair price many years ago (for example, 31 July 2013) notwithstanding the finding that the oppressive conduct continued over many years thereafter; and
(iii)provide an imprimatur for the decision not to pay A Pty Ltd dividends on its shares on an ongoing basis and to take the “deemed disposal” approach to A Pty Ltd’s shareholding that was found to have been taken.
(c)it would not be fair to value the interest at a date other than one which is relatively contemporaneous given that there is nothing that would persuade that the Applicants delayed or stymied the attempts to resolve the matter earlier – further, no finding has been made that Mr Storrer had a role in the oppression the Respondents have been found to have perpetrated against A Pty Ltd or that he contributed to it in any way; and
(d)the absence in the Shareholder Agreement of a mechanism providing for the buyout of a shareholder such as A Pty Ltd does not provide a reason to support a decision to value the interests as at the date the proceedings were commenced; and
(e)it is not fair to the Applicants to value their interests as if a suitable agreement had been arrived at between them and the Respondents by either 2015 or 2016 or any date earlier than relatively contemporaneously; and
(f)fairness requires the fixing of a price that reflects the findings of oppression – which included that A Pty Ltd’s right as a shareholder did not depend on Mr Storrer providing his services to the business operated by N Pty Ltd and that it remains entitled to the benefits of being a shareholder in N Pty Ltd irrespective of the cessation of his services - and there is nothing unfair about a shareholder (such as A Pty Ltd) with 12 per cent of the shares in a company receiving payments representing 12 per cent of the value of that company: it could not be regarded as a “windfall” for a shareholder to be paid the value of its shareholding; and
(g)the remedy which best overcomes the oppression foisted upon A Pty Ltd is that which fully recognises the ongoing nature of its rights as a shareholder in N Pty Ltd to share in the profits and value of that entity; and
(h)any suggestion that a date other than relatively contemporaneously is fair because Messrs O, J and C and Ms Z continued to provide their services to N Pty Ltd whilst Mr Storrer did not is refuted by appreciating that:
(i)the payments made to those persons for their services will be taken into account in the valuation of N Pty Ltd; and
(ii)the evidence before the court does not establish that their efforts contributed to any specific or significant increase in N Pty Ltd’s value or that such increase was due to their skill, individual efforts or ingenuity – rather, the evidence suggested that the increase in N Pty Ltd’s value since July 2013 has been due to a range of factors other than the individual efforts made by them: for example, the efforts of the employed sales people who are not shareholders in N Pty Ltd; the efforts of the staff engaged in product design and development who are not shareholders in N Pty Ltd; and
(iii)even if the court found that they had, by their skill, individual effort and ingenuity, contributed to the growth in N Pty Ltd since July 2013, the impact of their efforts remains unquantified; and
(iv)the key factors in N Pty Ltd’s growth appeared to be a combination of its increase in workforce, the areas into which its products are sold and the development of products by an employed production engineer who is not a shareholder in N Pty Ltd; and
(v)a significant portion of N Pty Ltd’s revenue since July 2013 appears to have been generated by the efforts of persons other than Messrs O, J and C and Ms Z; and
(vi)there is no reason why A Pty Ltd should be treated as the only shareholder which should not benefit from the intellectual property developed and owned by N Pty Ltd as a consequence of the efforts of its employees – noting that the other shareholders take the benefit of the same without making any personal contribution to it creation; and
(vii)the improvement in N Pty Ltd’s value after July 2013 was not due “solely” or “entirely” to the efforts of Messrs O, J and C and Ms Z, who have, in any event, been compensated for the same by their receipt of payments (whether by way of management fees or dividends or a combination of the same) which will be taken into account in determining N Pty Ltd’s value; and
(viii)the business operated through N Pty Ltd has not been reconstructed or significantly changed since July 2013 - the evidence does not establish that it has undergone a “sea change’ since then or that it has a new economic identity: rather, it has continued to develop products (via its employment of production engineers and ohers) to meet markets which include those in which it traded before July 2013 and to supply purchasers with whom it previously traded and it has simply developed, via the skills of its employees, a more advanced way of providing the same type of products it previously provided.
(i)valuing the interests other than relatively contemporaneously would mean, in essence, that despite resisting the Applicants’ overtures in 2013 to divest themselves of their interests, the Respondents should be accorded the benefit of being able to, in one sense, go back in time and take the benefit of purchasing the shares at the price that they would, in 2013, have been prepared to be paid for them - the payment of interest on that amount would not place A Pty Ltd in the position it would have been in but for the oppression to which it has been subjected.
Broad summary of the Respondents’ contentions
In contrast, the Respondents’ primary position was that the price which represents fair value for A Pty Ltd’s shares in the circumstances of this case is that arrived at by valuing them as at 31 July 2013. In the event that this primary submission did not find favour, it was submitted that valuing the shares as at 2015/2016 – and not relatively contemporaneously – would best accord fairness to the parties.
In summary, it was submitted, in essence, that the dates advocated for by the Respondents would best enable the best fashioning of relief which most closely ensured that the Applicants received all that they are entitled to out of the claim for oppression they vindicated – but not more, even accepting that if there is an area of grey, it might be resolved against the Respondents.
The Respondents also submitted, in essence, that it would be fair to value N Pty Ltd as at 2013 and fix a price for A Pty Ltd’s interests based on this value because:
(a)valuing the shares as at July 2013 and determining the amount of dividends unpaid and calculating interest on the same would place A Pty Ltd in the same position in which it would have been but for the oppression and, thus, would accord fairness to all the parties – it would see the price fixed as at July 2013, when the Applicants sought to have their claim vindicated, and would also then recognise the time – value of the unpaid monies via the award of interest; and
(b)given the relief sought by the Applicants in the Amended Originating Initiating Application filed 30 April 2014,[32] it was clearly demonstrated that, if there was oppressive conduct (as has been found), the only thing the Applicants sought was the compulsory purchase by the Respondents of their economic interests such that it would be fair to value them as at July 2013 or, failing that, as at 2015 or 2016; and
(c)the interests should be valued as at July 2013 because, in succeeding on their claim for oppression, in circumstances where the relief sought was that its shares be purchased for a price then nominated or as determined by the court, A Pty Ltd vindicated its claim that its interests should be bought out in 2013; and
(d)not all of the acts of oppression found by the court were of an ongoing nature – the ongoing act of oppression was the failure to pay dividends and the extent of this turns on the date selected for the valuation and subsequent fixing of the price to be paid for the interests; and
(e)the finding that oppressive conduct continues is not the only factor that weighs upon the selection of the valuation date – the court should consider the fortune or misfortune of N Pty Ltd and whether the business had improved so dramatically after Mr Storrer ceased to provide services to it that it would be unfair for A Pty Ltd to share in that benefit, even allowing for the oppressive conduct; and
(f)valuing the Applicants’ interests after July 2013 would result in them receiving a windfall given the amazing increase in N Pty Ltd’s value after that date which it was submitted was due entirely to the Respondents’ entrepreneurship and ingenuity; and
(g)the business operated by N Pty Ltd changed very significantly after July 2013 in terms of the products sold and its expansion into overseas markets, which led to the increase in its value.
Conclusions as to the date at which the interests should be valued for the purpose of determining the price at which they are to be purchased
[32]Namely: that N Pty Ltd pay A Pty Ltd the sum of $25,000 which had been withheld from the dividends payable on 9 July 2012 together with interest thereon; that the A Pty Ltd shares be purchased for $1,585,300 or at another price the court determines; that pending the purchase of the shares N Pty Ltd declare and pay to A Pty Ltd all proper dividends and be restrained from refusing to pay to it all proper dividends; that the Second Respondent be wound up or alternatively the Property Trust be wound up and that the units in it be purchased or redeemed for a total price of $471,921 or such other price as the court determines; that the Respondents pay its cost of and incidental to the proceedings; that the shares in N Investments Pty Ltd be purchased for $12 and such other order as may be just.
I accept that the fact that the Court found that an aspect of the oppression to which A Pty Ltd was subjected is of an ongoing nature does not mandate the valuation of the shares contemporaneously and that there are other considerations which should properly be taken into account in deciding the answer to the question. As noted earlier, the requirement in determining the date at which it is appropriate to value the interests is to take into consideration all of the circumstances (not only the oppressive conduct as found) so as to do fairness and justice to the parties. However, I also consider that one of a shareholder’s main rights is the right to share in dividends and it is in respect of this right, amongst other things, that A Pty Ltd was oppressed – and remains oppressed.
The nature of the oppression found was that N Pty Ltd, in essence, determined to treat A Pty Ltd as if it ceased to be a shareholder after Mr Storrer ceased working in the business – this permeates the consideration of the date at which it is fair to value the interests for the purpose of determining the price at which the same are to be purchased. Whilst Mr Storrer ceased to provide his services to N Pty Ltd in July 2013, this does not persuade that it is fair to A Pty Ltd to be treated as if it is not the shareholder that it remains; despite the finding of oppression which withstood appellate scrutiny, the nonpayment of dividends to A Pty Ltd has continued unabated.
I do not accept the contention the A Pty Ltd had “chosen” to depart from N Pty Ltd or that all but one of the acts of oppression found against the Respondents occurred after A Pty Ltd “departed” from the N Group – this is because, despite this clear demonstration of the Respondent’s views, A Pty Ltd has not departed: it remains a shareholder in N Pty Ltd and one of the acts of oppression found was the decision to treat it as if it had disposed of its shares in N Pty Ltd when it has not.
I do not accept that the fact that Mr Storrer ceased to provide services to N Pty Ltd in July 2013 persuades that the only fair or just result as between the parties would be for N Pty Ltd to be valued as at July 2013 (or even 2014/2015) and a price fixed for A Pty Ltd’s shares based upon the same.
I consider that to value A Pty Ltd’s shares in N Pty Ltd as at July 2013 would, in effect, sanction the oppressive conduct constituted by determining to cease paying A Pty Ltd dividends (other than on two occasions) after Mr Storrer ceased providing services to the business – that is, it would sanction A Pty Ltd being treated as though it had disposed of its shares when that is not the case; it would sanction the oppression found to have been perpetrated when the Respondent determined to treat A Pty Ltd as though it is not a shareholder in N Pty Ltd and determined to act to enable it to pay dividends to the shareholders other than A Pty Ltd; it would give judicial imprimatur to conduct which has already been found to have been oppressive and would mean that, despite such findings, A Pty Ltd was excluded from the benefits of its ownership of the shares.
Here, there was no offer, prior to the commencement of proceedings, to acquire A Pty Ltd’s interests in N Pty Ltd at a fair value, arrived at by an independent expert with all the parties having appropriate access to the necessary information; here, the Respondents denied that the Applicants were entitled to any relief at all. Given that N Pty Ltd maintained to and at trial that it had not acted oppressively toward A Pty Ltd in any way, I am not persuaded that previous offers to purchase A Pty Ltd’s shares in it for fair value or its application in September 2015 for orders on a summary basis for the compulsory purchase of those shares are circumstances that persuade of a conclusion that it is fair that the date for valuing A Pty Ltd’s shares in N Pty Ltd is either 31 July 2013 or 30 June 2014, or a date earlier than that sought by A Pty Ltd. Similarly, given the oppressive conduct found, I do not consider that Mr Storrer’s asserted expectations about the disposition of A Pty Ltd’s shares if he left the business operated by N Pty Ltd persuades of a conclusion that it is fair that the date for valuing A Pty Ltd’s shares in N Pty Ltd is either 31 July 2013 or 30 June 2014 or a date earlier than that sought by A Pty Ltd.
Whilst A Pty Ltd sought a buyout order in 2013, it also sought that, pending the purchase of its shares, N Pty Ltd declare and pay all proper dividends and that N Pty Ltd be restrained from refusing to pay existing and future dividends. Clearly, the payment of dividends did not happen. Given this fact, the submission to the effect that because A Pty Ltd was ultimately vindicated in its 2013 claim to have its shares acquired it would be fair amongst the parties to value the shares as at July 2013 is unpersuasive.
I am not persuaded that the increase in the value of N Pty Ltd from July 2013 onwards is due solely or entirely to the efforts or significant entrepreneurship of Messrs O, J and C and Ms Z or that it owes nothing to A Pty Ltd. I accept the submissions made by the Applicants as summarised in paragraph 15(h) above and I also consider that:
(a)Mr NN’s report persuades that the increase in sales which contributed significantly to the increase in N Pty Ltd’s value were the result of the efforts of employees; and
(b)N Pty Ltd was not reconstructed after July 2013 to the extent that it took on a new economic identity: rather, it continued along a trajectory of continuing to develop new products and intellectual property as it had previously done and to expand into new markets as it had also previously done; and
(c)the development of new products after July 2013 relied on the efforts of N Pty Ltd’s employees and not, for example, on the skills or entrepreneurship of Ms Z (a Group director) or Mr C (a director), whose entities nevertheless shared in the benefits associated with the development of these new products as a consequence of their shareholdings in N Pty Ltd; and
(d)increases in N Pty Ltd’s profitability and revenue have been, at various times, impacted by changes in the exchange rate as between the AUD and the USD, which changes are not the result of any particular skill or entrepreneurship on the part of Messrs O, J and C and Ms Z; and
(e)the evidence relied on by the Respondents does not establish a link between the efforts of Messrs O, J and C and Ms Z (for which they have been compensated via payments made pursuant to the IP Deed and the declaration of dividends on the special class shares) and the increased value of N Pty Ltd – if I am wrong in this conclusion, there is nothing in the evidence to enable me to quantify the impact of their efforts on the value of N Pty Ltd vis-à-vis the impact on the same of the efforts made by N Pty Ltd’s employees; and
(f)the failure to pay A Pty Ltd the dividends that were paid to all shareholders other than it has meant that N Pty Ltd has retained the benefit of funds otherwise properly payable to it and, in this sense, A Pty Ltd has contributed to N Pty Ltd’s growth, development of new products and intellectual property and current financial position.

The overarching obligation is to fashion a remedy that remediates the damage caused by the oppression found. I am not persuaded that valuing the shares as at July 2013 achieves this because, in my view, to do so would mean that I was proceeding as if A Pty Ltd had divested itself of its interest at that time when that is not the case; it would also mean that only the oppressed would be denied from sharing in the growth and profit achieved by N Pty Ltd since July 2013; it would also mean A Pty Ltd was treated as though the value of its shares in N Pty Ltd was dependent on Mr Storrer’s continued engagement in the business rather than, given the finding that its status as a shareholder was not dependent on this, it being entitled to the benefits of being a shareholder in N Pty Ltd on an ongoing basis.
I do not accept that valuing N Pty Ltd at a date later than July 2013 and fixing the price for A Pty Ltd’s shares in it based on this value would result in A Pty Ltd receiving a “windfall” – rather, I consider that it would simply reflect a proper and just assessment of the economic benefit to which A Pty Ltd is entitled by virtue of its continued ownership of its shares in N Pty Ltd.
I consider that doing other than valuing A Pty Ltd’s interests on a relatively contemporaneous basis would, in essence, ignore the findings made about the oppressive conduct – including that it was found to be of an ongoing nature. Here, the essence of the finding of commercial unfairness was the exclusion of A Pty Ltd from the benefits of its shareholding. I consider that there is no reason to treat A Pty Ltd as if it has not been a shareholder and unitholder over the previous nine and one-half years.
In the exercise of the broad discretion about which minds may differ, I consider that nature of the oppression found – namely, that A Pty Ltd was treated, (other than in respect of two dividend payments in 2014) as though it was no longer a shareholder in N Pty Ltd after Mr Storrer ceased to supply management services to it – is such that, even taking into account all of the matters advanced on behalf of the Respondents, the required fairness is best achieved by valuing its interests relatively contemporaneously with the order to be made for their acquisition. Given the findings of the oppressive conduct toward A Pty Ltd, the appropriate remedy in the circumstances discussed– and that which accords fairness in overcoming the oppression found – is that which recognises that A Pty Ltd remains entitled to share in the value of N Pty Ltd in the same way as the other shareholders. Valuing its shareholding in N Pty Ltd relatively contemporaneously with the making of orders for the acquisition of the same will, I consider, give effect to this conclusion and will better place A Pty Ltd in the position it would have been in but for the oppression than does valuing its interests at any of the dates propounded by the Respondents.
For the reasons expressed above, I consider that 30 June 2022 is the appropriate date at which A Pty Ltd’s shares in N Pty Ltd should be valued.
What value should be ascribed to N Pty Ltd?
I accept it is for the court to determine the price of A Pty Ltd’s interests in N Pty Ltd and the units in the Property Trust. It is obvious that, in order to determine the price A Pty Ltd is to be paid for its shares in N Pty Ltd, it is first necessary to ascribe a value to N Pty Ltd.
In carrying out that exercise, I have been assisted by the evidence given by Mr OO[33] (who gave evidence about the value of real property), Ms PP[34] (who gave evidence about the Respondents’ remuneration and whose evidence I accept) and Mr NN[35], who gave evidence about the value of N Pty Ltd and the Property Trust and the Applicants’ interests in the same, and about the dividends and associated franking credits that would have been paid to A Pty Ltd on its shareholding in N Pty Ltd had it received dividends in accordance with its shareholding.
[33]          Who was not required for cross-examination.
[34]          Who was cross-examined on behalf of the Applicants and the Respondents.
[35]          Who was cross-examined on behalf of the Applicants and the Respondents.
Consideration and assessment of the appropriate multiple
Perhaps unsurprisingly given the history of this matter, the Applicants and the Respondents did not agree about the multiple which it was appropriate to use to value N Pty Ltd.
The Applicants adopted the multiple used by Mr NN (relevantly, nine); in contrast, the Respondents submitted that the appropriate multiple to be used differed from that used by Mr NN and suggested that the appropriate multiple was 5.85.
It is trite to remark that, in determining the appropriate multiple to be applied for the purposes of determining the value of N Pty Ltd (and, consequently, the value of A Pty Ltd’s interest in it), I am not bound to accept Mr NN’s evidence. However, as was submitted on behalf of the Applicants, there is no countervailing expert evidence before the court to assist in the determination of the appropriate multiple to be applied for the purposes of valuing N Pty Ltd and, consequently, the value of A Pty Ltd’s interest in it and the price to be paid for the acquisition of the same; similarly, there is no admissible evidence adduced by the Respondents to seek to impeach Mr NN’s opinion or to undermine the facts relied upon by him in arriving at the same.
I accept, as Mr NN said in his report[36]:
The determination of the earnings multiple is not an exact science and is highly subjective. The subjectivity arises as there is no formula or mathematical approach to determining an exact figure.
[36] Single Expert Report of Mr NN dated 29 November 2022 at [186].
Such opinion echoes comments such as those made by Coleman J in Sacamano & Sacamano,[37] where his Honour noted that the valuation of property by a court is a matter of estimation, not precise mathematical calculation, and involves value judgements.
[37] [2008] FamCA 1073.
I also accept, as a general principle, that the capitalization of future maintainable earnings of any entity takes into account that entity’s future potential.[38]I accept that, in arriving at his opinion about the multiple which appropriately reflects his assessment of the business operated by N Pty Ltd, Mr NN undertook a detailed analysis of the business and its financial performance over time and that he also considered those matters discussed under the “key developments” and “industry outlook” headings in his report. I accept, as he said, in essence, when cross-examined, that in providing an opinion about the fair value of N Pty Ltd, he brought his professional judgement to arrive at a number (the multiple) that is, in part, comparison and, in part, judgement.
[38] Mallett & Mallett (1984) 156 CLR 605 at page 649.
I am not remotely persuaded that Mr NN approached the task for which he was engaged with any kind of impermissibly pre-determined view about the multiple that would appropriately reflect the business operated by N Pty Ltd or that he approached his valuation with preconceived ideas about the value of the business.
There was no specific challenge to Mr NN’s methodology, or his approach to considering the likely rates of return an investor would require in the same industry, or to his decision to consider the information that he did, including that set out under the various headings in his report, in arriving at his opinion about the appropriate factor by which to multiply N Pty Ltd’s future maintainable earnings to arrive at a value for it.
I accept that, in arriving at his opinion about the appropriate multiple, Mr NN applied what I accept is his considerable experience in valuing businesses and that he did so after carefully considering those matters discussed in detail in his report, including those which he described as being integral to the determination of the multiple – namely: the future prospects of the business; the history of the business, its earnings and capital requirements; rates being achieved from virtually risk-free investments; the nature of the businesses operations including the level of competition within the geographical area serviced by it; the business location; the personal contacts of the proprietor in reliance on key personnel; the structure in which the business trades insofar as it impacts on the marketability; liquidity of issued capital; sophistication of management and access to funding and the current economic climate. I accept his evidence about these matters and the manner in which he considered them in arriving at his opinion about the appropriate multiple to use to value N Pty Ltd.
Some of the Respondents’ criticisms, at least as I appreciated them, of Mr NN’s determination of the multiple at which he arrived included that:
(a)having identified the various listed companies whose trading multiples he reviewed as being “not directly comparable” to N Pty Ltd given their “size and operating structure”, he erred in using them, simply because they operated in the same industry as N Pty Ltd, as an appropriate basis for his assessment of a capitalisation rate; and
(b)the comparators he used were not proper or appropriate comparators in terms of the trading multiples because of the differences between them and N Pty Ltd (that is, it was submitted that N Pty Ltd is significantly different to the entities chosen by Mr NN as comparators) because:
(i)of their scale in comparison to N Pty Ltd and all are listed companies and large multinationals and none appeared to be “Australian companies”; and
(ii)the level of sales each reported was far higher than the sales achieved by N Pty Ltd (for example: the entity closest in sales to the sales reported by N Pty Ltd– QQ Ltd – reported sales five times that achieved by N Pty Ltd); and
(iii)their EBITDA is significantly greater than that of N Pty Ltd (for example, the closest in scale was three times the $7 million that N Pty Ltd achieved in 2013 and the next closest comparator had EBITDA that was more than 100 times that achieved by N Pty Ltd).
(c)the transactions multiples comparators he used were not proper or appropriate because N Pty Ltd is significantly different to these comparatives because it is, in all, a “vastly smaller” company in that, for example: its level of sales is far lower; its EBITDA is much lower; they all appear to be overseas listed companies, a number of which are large multinationals; and
(d)whilst, after undertaking the review of the trading and transaction multiples he referred to in his report, Mr NN had reached an overall conclusion that the multiple he had adopted was reasonable, N Pty Ltd is a company that is significantly different to the entries he chose as the comparators for the purpose of his reasonableness review.
The Respondent submitted, in essence, that the court should reject Mr NN’s opinions about the appropriate multiple to apply because the entities he chose as comparators were not in fact comparable with N Pty Ltd. In countering this submission, the Applicants submitted that, when regard is had to his report, Mr NN did not in fact use the comparables to arrive at his determination of the appropriate multiple (and only used them to review the reasonableness of the same after he had already applied his experience to the determination of this) such that any issues with his choice of comparables are rendered irrelevant or, at the very least, of lesser relevance than the Respondents suggested.
Mr NN’s report follows the same format for each of the dates at which he was asked to value N Pty Ltd and the Property Trust and A Pty Ltd’s interests in them. He approached this task by considering “Key Developments”, then “Industry Outlook”, then “Financial Analysis” (during which he considered income, gross profit, R&D and employee costs, net profit and outlook), then “Calculation of Future Maintainable Earnings”; then “Earnings Multiple (during which he considered: the future prospects of the business; the history of the business, its earnings and capital requirements; rates being achieved from virtually risk-free investments; the nature of the business operations including the level of competition within the geographical area serviced by the business; the business location; the personal contacts of the proprietor and reliance on key personnel; the structure in which the business trades; and the current economic climate) before expressing his opinion about what he considered the appropriate multiple to be applied.
After arriving at the multiple he considered appropriate, Mr NN then turned to consider the issue of the “reasonableness” of the same. In doing so he said, in his report: [39]
In forming my opinion as to the appropriate capitalisation rate I have reviewed it for reasonableness by comparing my adopted capitalisation rate to the trading multiples and transaction multiples of entities operating in the same industry.
[39]Single Expert Report of Mr NN dated 29 November 2022 at [188]; [289]; at [351] relating to the assessment of value as at 31 January 2016 Mr NN said that “consistent with my assessment at the previous valuation dates, I have reviewed my adopted earnings multiple for reasonableness.”
Following his consideration of the “Reasonableness of Multiple” (during which he considered trading multiples and transactional multiples before expressing an “overall conclusion”), Mr NN then considered: “Capitalised Value of the Business”; and then “Comparison to Net Business Assets”; and then “Calculation of Goodwill”; and then (relevantly) “Net assets of the [N Pty Ltd]” before finally expressing what I will term his ultimate conclusion about the multiple which, in his opinion, it is appropriate to apply.
Further, during his discussion about the entities he chose for the purpose of the “trading multiples of comparable entities” aspect of his check for reasonableness of the multiple that he had, by then, expressed to be appropriate, Mr NN noted, amongst other things, that: the multiple he had assessed was not directly comparable to the trading multiples of the “comparable listed companies” referred to in his report because, as his valuation of N Pty Ltd valued the business enterprise as a whole, it inherently included a premium for control;[40] and whilst the listed companies he referred to were not, given their size and operating structure, directly comparable to N Pty Ltd, he considered that they were operating in the same industry as it did and therefore considered them to be an “appropriate basis” for his assessment of a capitalisation rate;[41]and he had reviewed the particularised listed companies “in my reasonableness check”.[42] Mr NN also said that “in making my determination of an appropriate earnings multiple”, he had also considered the transaction multiples discussed in his report. [43]
[40] Single Expert Report of Mr NN dated 29 November 2022 at [189].
[41] Single Expert Report of Mr NN dated 29 November 2022 at [190].
[42] Single Expert Report of Mr NN dated 29 November 2022 at [191].
[43]Single Expert Report of Mr NN dated 29 November 2022 at [195]; [289]; [295]; [438]; [501].
I generally accept the submissions made on behalf of the Applicants in responding to the criticisms of Mr NN’s opinion as to the appropriate multiple to apply in valuing N Pty Ltd. It seems to me to be more likely than not that, having arrived at his opinion about the appropriate multiple which, based on his experience and judgement, reflected his overall assessment and consideration of those matters discussed in his report, Mr NN used the comparables particularised in his report to cross-check for the “reasonableness” of his assessment – that is, having determined a multiple for each of the dates at which he was asked to value N Pty Ltd, Mr NN then reviewed his opinion about the same for reasonableness by having regard to the trading multiples of those listed companies particularised in his report and the transaction multiples derived from transactions involving entities which operate in the same industry as that within which N Pty Ltd operates.
Whilst Mr NN accepted, when cross-examined, that:
(a)N Pty Ltd competes in a seriously contested market; and
(b)N Pty Ltd competes against entities that are of vastly larger scale than it and which are more established than it; and
(c)N Pty Ltd also competes against new players emerging in the market; and
(d)entities which are significantly larger than N Pty Ltd, with which it is in competition, have much greater capacity than it to sit out lean times; and
(e)the risk faced by N Pty Ltd in relation to new competitors into its markets is that they may be “a little leaner and hungrier and more innovative” than it is; and
(f)whilst utility companies which are N Pty Ltd’s customers require generators, transformer and power automation products, N Pty Ltd really only supplies into the power automation segment of the market, whereas many of its competitors supply all three of the products used by the utility entities and, in doing so, are able to spread risk in a way that N Pty Ltd is unable to do; and
(g)N Pty Ltd cannot spread its risk as much as the larger, broader players with which it competes in the market,
such acceptance did not alter his opinion about the multiple at which he had arrived following the application of his experience and judgement.
If I am wrong in the conclusions expressed in paragraph 49, I am not persuaded, given his significant experience and expertise, that Mr NN was unduly influenced by the comparators he particularised in his report in arriving at his opinion about the multiple – particularly given that his evidence when cross-examined (which I accept) was that:
(a)during the course of his engagement, he had gained a significant appreciation about N Pty Ltd and the type of business it is; and
(b)he regarded N Pty Ltd as an excellent business run by excellent people which had achieved outstanding financial results over and above most of the companies in the comparables he had used to cross-check for the reasonableness of his assessment of the appropriate multiple to be used to value it; and
(c)N Pty Ltd is a business that would be considered a prize asset.
Despite the valiant efforts of Mr Dunning KC, Mr NN remained unshaken in his opinion and assessment of the multiple which he considered appropriate to reflect the actuality of the business operated by N Pty Ltd. Unless I have indicated to the contrary, I accept his evidence, including his explanation of the means by which he arrived at his opinion about the multiple.
I also accept the submissions made on behalf of the Applicants to the effect that the multiple advanced on behalf of the Respondents is not supported by expert opinion or really established on the evidence; there was, I consider, something in the submission to the effect that it rests on assumptions that are unsupported by evidence.
Doing the best that I can and noting:
(a)the comments recorded elsewhere in these Reasons about the various discretions inherent in this exercise; and
(b)the task of a court faced with this role; and
(c)my acceptance of Mr NN’s opinion, methodology and his evidence generally, including that given in support of his opinion and methodology,
I consider that the multiple which best reflects that N Pty Ltd is an excellent business - with experienced operators and which has runs on the board, including proof of its ability to continue to adapt to take advantage of market opportunities and remain relevant within the markets it supplies and to leverage from past gains - and which is reasonable, particularly given the evidence summarised in paragraph 51 above, is nine.
The appropriate remuneration to be used for the purpose of determining N Pty Ltd’s future maintainable earnings

In determining the value at the various dates, Mr NN proceeded on the basis of a number of conditions and assumptions[44] which included that he account for the reasonable market salaries for Messrs O, J and C and Ms Z as assessed by Ms PP (the remuneration expert engaged by the parties) as an expense of N Pty Ltd. Whilst he did this, he was asked during his cross‑examination to prepare further calculations based on those parties’ total remuneration as assessed by Ms PP – these calculations ae found in Exhibit 4.
[44]summarised at paragraph 3 of the Executive Summary to his report and as particularised at order 6 of the Orders made on 11 February 2022.
On the basis of my findings that the appropriate time to determine the value of N Pty Ltd is 30 June 2022 and that the appropriate multiple is nine, I value N Pty Ltd at $234,540,592. However, this amount needs to be reduced to take account of its liability to A Pty Ltd for those dividends not paid to it (A Pty Ltd) since July 2013.
Underpayment of franked dividends and franking credits
Mr NN assessed the dividends and associated franking credits that would have been paid to A Pty Ltd on its ordinary class shareholding in N Pty Ltd if it had received dividends in accordance with its shareholding to be franked dividends of $855,646 and franking credits of $366,705. Given that A Pty Ltd received franked dividends of $815,942, his evidence included that there had been an underpayment of franked dividends of $39,704 and franking credits of $17,016.
There was no challenge to either the assertion of underpayment or the assessment of the quantum of the same.
It is, I consider, fair and does justice as between the parties in this case that the price to be paid for the acquisition of the A Pty Ltd’s shares in N Pty Ltd incorporates this underpayment.
The undeclared franked dividends and franking credits
It is uncontroversial that A Pty Ltd has not received any dividends on its “C” class shares from N Pty Ltd since 31 July 2013, nor any dividends on its ordinary class shares since 30 September 2014.
The USD dividends
I do not accept the Respondents’ position in relation to the USD dividends; I prefer the submissions made on behalf of the Applicants in support of orders being made for the payment of equivalent amounts to A Pty Ltd. Given that the aim is to put A Pty Ltd in the same position as it would have been but for the oppressive conduct of the Respondent’s failure to pay dividends, it is, in my view, appropriate and fair that A Pty Ltd should receive the payment of the same, together with the franking credits which would have accompanied that payment, as was the case when the payment was made to the other shareholders. I am not persuaded that the use to which the shareholders other than A Pty Ltd put the USD dividends paid to them alters this position.
Adjusting the dividends to be paid to A Pty Ltd to account for the fact that some of the dividends paid to the other shareholders included remuneration for work done
Mr NN’s evidence[45] was that, on the basis that dividends would have been declared on A Pty Ltd’s “C” class share in the same amounts as the non-recurrent dividends which have been declared on the “B” and “E” class shares (being the shares owned by the corporate vehicles associated with Ms Z and Mr C) in the period between 31 July 2013 and 30 June 2022, A Pty Ltd would have received the following:
(a)AUD9,185,010 franked dividends and AUD3,936,433 franking credits; and
(b)USD584,489 (being AUD848,438)[46] franked dividends and USD250,495 (being AUD363,564)[47] franking credits.
[45]          Single Expert Report of Mr NN dated 29 November 2022 at [63] – [65]
[46]          On the basis of the exchange rate used by the Applicants, to which there was no specific challenge.
[47]          On the basis of the exchange rate used by the Applicants, to which there was no specific challenge.
Whilst the Applicants initially adopted the figures calculated by Mr NN, they subsequently accepted the Respondents’ contention that part of the dividends paid since July 2013 reflected commercial remuneration for work done by Messrs O, J and C and Ms Z in the business.
Entirely predictably, the parties were unable to agree about the methodology to be applied by the court to appropriately and fairly account for this issue in its quantification of the price of A Pty Ltd’s shares. Instead, each side advanced the methodology set out in the various written documents including those provided in support of the various calculations that each provided.[48]
[48]See, in particular: the Applicants’ notes on calculations provided 20 February 2023; the Applicants’ notes on calculations provided 24 March 2023; the Respondents’ “Principal differences between the parties’ calculations” provided 14 March 2023.
Whilst others may well disagree and may well prefer the approach taken by the Respondents, I prefer the methodology the Applicants advanced (in the documents entitled “Applicants’ note on calculations” provided 20 February 2023 and “Applicants’ note on calculations” provided 24 March 2023) to:
(a)take into account that some of the dividends paid to the entities associated with Messrs O, J and C and Ms Z contained an element of remuneration; and
(b)quantify the same for the purpose of accounting for such payments in the calculation of the quantum of those dividends (and the associated franking credits) unpaid to A Pty Ltd.
I do so because I accept the submissions made on behalf of the Applicants in support of that methodology and consider that this approach best meets the overarching obligation to place A Pty Ltd in the position it would have been in but for the oppression meted out to it.
On this basis, the total amount owing by way of unpaid dividends (including the unpaid USD dividends) is, I accept, $8,860,551.98 and the associated franking credits is $3,797,379.42.
Adjustment to N Pty Ltd valuation for liability to A Pty Ltd for the undeclared franked dividends
Mr NN made it clear that his valuation of N Pty Ltd, as contained in his 29 November 2022 report, did not incorporate a liability for undeclared franked dividends to A Pty Ltd and that his assessment of value would need to be reduced to the extent of any liability for undeclared dividends.[49]
[49] Single Expert Report of Mr NN dated 29 November 2022 at [21]; [66]; [552].
The Respondents adopted this course. Whilst the Applicants contended, in essence, that N Pty Ltd’s liability to pay the unpaid dividends should be taken into account if it was the purchaser of A Pty Ltd’s shares in it[50] but should not be taken into account if the shares were purchased by any of the Respondents, I am not persuaded that such an approach will best achieve justice between the parties, particularly given that the orders to be made will require N Pty Ltd to pay A Pty Ltd amounts to account for unpaid dividends and the franking credits associated with the same.
[50] Such that its value needed to be reduced to reflect its liability for the unpaid dividends.
Given this conclusion, I consider it appropriate to deduct N Pty Ltd’s liability to A Pty Ltd for unpaid dividends (namely, $8,860,552) from the value found at paragraph 56 (namely, $234,540,592) – this gives an amount of $225,680,040 which I find to be N Pty Ltd’s value for the purpose of determining the value of A Pty Ltd’s 12 per cent interest in it, which I calculate to be $27,081,605.[51]
[51] Rounding up to the nearest dollar.
Given my acceptance and preference of the Applicants’ position on all issues other than, in part, whether the value of N Pty Ltd needs to be reduced to the extent of any liability for undeclared dividends and for the reasons already expressed, I consider that the price for A Pty Ltd’s 12 per cent shareholding in N Pty Ltd which is fair in all the circumstances – save in relation to the consideration of whether there should be a discount to the same because of the efforts made by Messrs O, J, and C and Ms Z in the business since July 2013 (about which more is said below) – is $27,081,605.
Does fairness and justice persuade of a discount or adjustment to the price to be paid for the Applicants’ interests because of the contributions made by the Respondents to N Pty Ltdafter 31 July 2013?
A already alluded to, albeit in the context of the determination of the date at which to value A Pty Ltd’s interests in N Pty Ltd and the units in the Property Trust, the Respondents’ position was that N Pty Ltd’s fortunes are relevant to the overall discretion involved in fixing a price for A Pty Ltd’s interests: that is, the court should consider whether the business operated through N Pty Ltd has improved so dramatically after M.S.’s departure that it would be unfair for A Pty Ltd to share in that benefit, even allowing for the oppressive conduct which has been found.
The Applicants accepted that, as a general proposition, the issue of contributions made by Messrs O, J, and C and Ms Z to N Pty Ltd’s business may be relevant to determining whether, in the circumstances of the case, the requirement to do fairness and justice to all of the parties persuades of the making of an adjustment to the price at which A Pty Ltd’s shares and the units in the Property Trust should be acquired, so as to reflect any special contributions made by those persons to N Pty Ltd and to ensure that A Pty Ltd does not unfairly benefit from the same. That is, it was accepted that the court may, in the exercise of its discretion, conclude that fairness requires an adjustment to the price to be paid to acquire A Pty Ltd’s interests in N Pty Ltd if persuaded that a significant proportion of an increase in N Pty Ltd’s value and profits has been generated by the skill, efforts, property and resources of Messrs O, J, and C and Ms Z, the capital they have introduced and the risks they have taken (provided that such risks are not risks to which A Pty Ltd’s property has been exposed) after A Pty Ltd ceased providing management services to it in July 2013. Insofar as this aspect is concerned, it was accepted that the focus should be on ensuring that A Pty Ltd is not unjustly enriched by the price fixed for the acquisition of it interest in N Pty Ltd.[52]
[52]See for example Warman International Ltd v Dwyer [1994-1995] 182 CLR 544 at 561; Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd and Another [2018] HCA 43; 360 ALR 1 at [13], [16]; [94]; [96] – albeit expressed in the context of discussions about fiduciaries and whether it is appropriate to allow errant fiduciaries to retain a proportion of profits or to make an allowance in respect of that person’s skill, expertise and expenses.
Whilst the Applicants accepted the general principle that, in fixing the price to be paid for an applicant’s interests in a company, the court may take into account the company’s development and growth after the applicant left it, they emphasised that, in this case, A Pty Ltd has not left N Pty Ltd but remains a shareholder, despite the oppressive conduct of determining to treat it as though it no longer is.
The Applicants accepted that, if:
(a)the Respondents had cogent evidence to establish that, after Mr Storrer’s departure from the business, Messrs O, J, and C and Ms Z had contributed something to the growth of N Pty Ltd that was identifiable and that was responsible for its growth – as opposed to there being general growth based on past activities and decisions; and
(b)such contributions could be valued,
this may be relevant to the determination of the price for A Pty Ltd’s shareholding which is fair.
However, they did not accept that the evidence met these requirements. They submitted that all that had been said in the Respondents’ case was, in essence, that N Pty Ltd had grown substantially in value (which of itself would not persuade the court to discount the price to be paid for A Pty Ltd’s shareholding); they also submitted that the evidence did not establish that Messrs O, J and C and Ms Z had made special contributions which had been quantified in terms of the value the same contributed to N Pty Ltd’s value.
I am not persuaded that there should be a discount to the price A Pty Ltd is to be paid for its 12 per cent interest in N Pty Ltd because Messrs O, J, and C and Ms Z continued to work in the business after July 2013 and Mr Storrer ceased to do so. I am not persuaded on the evidence that they made special contributions to N Pty Ltd’s growth that contributed in a quantified way to its growth and which have not otherwise been recognised in the process of determining the price A Pty Ltd is to be paid for its shareholding.
Whilst others may disagree, in the exercise of the broad discretion about which minds may differ, I consider that the following matters, together with the conclusions I have already expressed in paragraph 26, support this conclusion:
(a)Mr Storrer worked in the N Pty Ltd business for about 10 years before he ceased to provide his services in July 2013; and
(b)whilst N Pty Ltd’s growth since July 2013 has been strong, much of this appears to have had its genesis in its expansion into Region RR market – which started in 2012 and which may in my view, be seen as analogous to the “springboard” spoken of so often in proceedings under the Family Law Act 1975 (Cth); and
(c)the Respondents’ ongoing decision to refrain from paying A Pty Ltd the dividends to which it would have been entitled but for the found oppression has meant that, since no later than 2014, those funds have been retained for N Pty Ltd’s use and, therefore, for its benefit and the benefit of those shareholders to whom dividends have been paid – it has also meant, in my view, that A Pty Ltd has, in one sense, reinvested the funds which should have been received via dividends payments into the business and, by doing so, has contributed to the growth of the business after July 2013; and
(d)whilst N Pty Ltd has undergone changes in increasing staff numbers and the development of products and an important strategic change in direction in terms of what it was marketing since July 2013, this alone does not provide a reason why all of the shareholders other than A Pty Ltd should share in the financial consequences of these changes and developments – especially given that I accept it has not been established by the evidence before me that Messrs O, J, and C and Ms Z have been solely responsible for the increases in its profits or that they have done so without recompense (whether by way of remuneration or the payment of dividends in amounts which greatly exceed those paid prior to July 2013) such that it could be argued that they have sacrificed their financial entitlements for the benefit of N Pty Ltd and in that way have been responsible for its growth to the exclusion of A Pty Ltd.
Value of A Pty Ltd’s interests in the Property Trust
The parties ultimately accepted Mr NN’s assessment of the value of the Property Trust and of the value of the A Pty Ltd’s unitholding and unpaid entitlements in the same. Consequently, the amount to be paid, given the findings about the date at which the same is to be calculated, is $2,202,342.[53]
[53] Being $1,570,453 for the units and $631,889 for the unpaid entitlements.
CONCLUSIONS
To the extent that any submissions made on behalf of the parties have not been the subject of specific discussion in these Reasons, I record that, where such submissions conflict, I prefer those advanced on behalf of the Applicants because I consider that they better illuminate the path to the discharge of the overarching obligation to fashion a remedy that best undoes the damage caused by the oppression which has been found.
The approach I have taken to discharge the obligation to fix a price for A Pty Ltd’s shares in N Pty Ltd and the units in the Property Trust - as informed by the expert evidence before me and an assessment of the relevant circumstances and my acceptance of the submissions made on behalf of the Applicants (other than as indicated) and noting that the overarching requirement is to do fairness and justice as between and to the parties in the case - is as shown in the reasons expressed above.
For those reasons, I have concluded that:
(a)the appropriate date at which to value A Pty Ltd’s shareholding in N Pty Ltd and the units in the Property Trust is as at 30 June 2022; and
(a)having regard to the value of N Pty Ltd arrived at by using a multiple of nine and making the adjustments referred to above in the manner contended for on behalf of the Applicants (other than in relation to how N Pty Ltd’s liability for unpaid dividends is to be taken into account), the fair price to be paid for A Pty Ltd’s shares in N Pty Ltd and the price that I fix is $27,081,605[54]; and
(b)the total amounts of underpaid dividends and franking credits owing to A Pty Ltd by virtue of its ownership of ordinary shares in N Pty Ltd and the dividends and franking credits (inclusive of the USD dividend and associated franking credits, converted into AUD using the exchange rate proposed by the Applicants) that would have been paid to A Pty Ltd by N Pty Ltd but for the oppressive conduct of treating it as though it was no longer a shareholder in N Pty Ltd are:
(i)$8,860,551.98 – dividends; and
(ii)$3,797,379.42 – franking credits; and
(c)the value of the A Pty Ltd’s interests in the Property Trust is $2,202,342.
[54] Rounded up to the nearest dollar.
Amounts already paid to A Pty Ltd
Whilst the Respondents earlier submissions advanced that a number of amounts paid to A Pty Ltd should be deducted from the amount to be paid for the acquisition of its interests in N Pty Ltd and the units in the Property Trust, [55] the calculations ultimately provided did not maintain that position.
[55]Namely: the $9,986.86 paid following the finding that A Pty Ltd had been oppressed by N Pty Ltd’s failure to pay unpaid leave entitlements to it in the same way that it had paid such entitlements to the other shareholders and the $489,762.70 beneficiary loan account payment – the Applicant’s had submitted, in essence, that these amount should not be deduced from the amount otherwise calculated as being the appropriate price to be paid for the acquisition of the A Pty Ltd’s shares and units because the sum did not relate to the valuation of either performed by Mr NN and the payment out of the unpaid leave entitlements did not affect the value to be accorded to N Pty Ltd.
However, the parties accepted that the $1,585,300 previously paid to A Pty Ltd as a capital payment on account of its shareholding in N Pty Ltd must be deducted from the amount ultimately ordered to be paid for the acquisition of the A Pty Ltd’s shares in N Pty Ltd and its interest in the Property and the orders to be made reflect this.

I certify that the preceding eighty-four (84) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hogan.
Associate:
Dated: 22 December 2023
SCHEDULE OF PARTIES

BRC 7225 of 2009

Respondents

Fourth Respondent:

T PTY LTD AS TRUSTEE FOR THE Z FAMILY TRUST

Fifth Respondent:

M PTY LTD AS TRUSTEE FOR THE S FAMILY TRUST

Sixth Respondent:

B PTY LTD AS TRUSTEE FOR THE C FAMILY TRUST

Seventh Respondent:

MR O

Eighth Respondent:

MS Z

Ninth Respondent:

MR J

Tenth Respondent:

MR C

Eleventh Respondent:

MR O AND MS O AS TRUSTEE FOR THE O PROPERTY TRUST

Twelfth Respondent:

MS Z AND MR D AS TRUSTEE FOR THE E PROPERTY TRUST

Thirteenth Respondent:

N PROPERTY PTY LTD AS TRUSTEE FOR THE N INVESTMENTS TRUST

File number(s):	BRC 7225 of 2009
Judgment of:	HOGAN J
Date of judgment:	22 December 2023
Catchwords:	FAMILY LAW – Corporations Law – Where the price of shares is fixed following findings of oppression – Where the date of the valuation of the shares is to be determined – Where consideration is given to the appropriate multiple to value the company – Where it is considered whether fairness and justice requires a discount or adjustment of the price to be paid for the applicant’s interest
Legislation:	Corporations Act 2001 (Cth) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth),
Cases cited:	Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd and Another [2018] HCA 43; (2018) 265 CLR 1 Campbell & Anor v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 Foody v Horewood & Ors [2007] VSCA 184 Harding Investments Pty Ltd v PMP Shareholding Pty Ltd (No 3) (2011) 285 ALR 297; [2011] FCA 1370 In re London School of Electronics Ltd [1985] Ch 211 Mallett & Mallett (1984) 156 CLR 605; [1984] HCA 212 N Pty Ltd & A Pty Ltd (2021) FLC 94-039; [2021] FamCAFC 134 O’Neill v Phillips [1999] 1 WLR 1092 Re Bodaibo Pty Ltd (1992) 6 ASCR 509 Tomanovic & Anr v Global Mortgage Equity Corporation Pty Ltd & Anor (2011) 288 ALR 310; [2011] NSWCA 104 Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18
Division:	First Instance
Number of paragraphs:	84
Date of last submission/s:	24 March 2023
Date of hearing:	7, 8, & 9 February 2023; 14 March 2023.
Place:	Brisbane
Counsel for the Applicant:	Mr Hodge KC with Mr Green on 7, 8 & 9 February 2023 Mr Green on 14 March 2023
Solicitor for the Applicant:	Bridge Brideaux Solicitors
Counsel for the Respondents:	Mr Dunning KC with Ms Ahern
Solicitor for the Respondents:	McCullough Robertson Lawyers

BRC 7225 of 2009
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:	A PTY LTD AS TRUSTEE FOR THE STORRER FAMILY TRUST First Applicant MR STORRER Second Applicant
AND:	N PTY LTD First Respondent N INVESTMENTS PTY LTD AS TRUSTEE FOR THE N PROPERTY TRUST Second Respondent R PTY LTD AS TRUSTEE FOR THE O FAMILY TRUST Third Respondent And: Others named in the Schedule

ORDER MADE BY:	HOGAN J
DATE OF ORDER:	22 DECEMBER 2023

BRC 7225 of 2009
Respondents
Fourth Respondent:	T PTY LTD AS TRUSTEE FOR THE Z FAMILY TRUST
Fifth Respondent:	M PTY LTD AS TRUSTEE FOR THE S FAMILY TRUST
Sixth Respondent:	B PTY LTD AS TRUSTEE FOR THE C FAMILY TRUST
Seventh Respondent:	MR O
Eighth Respondent:	MS Z
Ninth Respondent:	MR J
Tenth Respondent:	MR C
Eleventh Respondent:	MR O AND MS O AS TRUSTEE FOR THE O PROPERTY TRUST
Twelfth Respondent:	MS Z AND MR D AS TRUSTEE FOR THE E PROPERTY TRUST
Thirteenth Respondent:	N PROPERTY PTY LTD AS TRUSTEE FOR THE N INVESTMENTS TRUST