In the matter of Anit Australia Pty Ltd

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2020 03178

IN THE MATTER of ANIT AUSTRALIA PTY LTD (ACN 614 122 360)

BETWEEN:

SM NAZMUS SHADAT	Plaintiff
and
MD IMTIAJ RAHMAN (and others according to the Schedule attached)	Defendants
AND BETWEEN:
ANIT AUSTRALIA PTY LTD	Plaintiff by Counterclaim
and
SM NAZMUS SHADAT (and others according to the Schedule attached)	Defendants by Counterclaim

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JUDGE:	M Osborne J
WHERE HELD:	Melbourne
DATE OF HEARING:	19, 21-23, 26-30 August 2024
DATE OF JUDGMENT:	14 November 2024
CASE MAY BE CITED AS:	In the matter of ANIT Australia Pty Ltd
MEDIUM NEUTRAL CITATION:	[2024] VSC 705

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CORPORATIONS - Oppression proceeding – Whether affairs of company have been conducted in an oppressive manner – Removal of director – Whether legitimate expectation of participation in management – Whether unreasonable denial of access to company records - Understanding of the parties when they commenced a quasi-partnership in the form of a company – Whether conduct was unfairly prejudicial to a member – Commercial unfairness - Oppression made out - Corporations Act 2001 (Cth) ss 180, 198F(2)(b), 232(b) and (e), 233(1)(a) and (d), 293, 461(1)(k), 1317H, 1317R, 1317S, 1318.

CORPORATIONS – Relief on oppression proceeding – Appropriate remedies - Whether minority or majority should be able to buy the other out – Whether winding up on just and equitable ground justified – Winding up as a remedy of last resort - Whether ‘some other remedy’ available that is less intrusive – Valuation of shares – Direction of buy-out order – Date of assessment – Appointment of expert pursuant to s 65M of the Civil Procedure Act 2010 (Vic).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff and for the First, Second and Third Defendants by Counterclaim	SM Nazmus Shadat appeared in person and with leave on behalf of the Second and Third Defendants by Counterclaim	Not applicable
For the Defendants and Plaintiff by Counterclaim	Dr O Bigos KC with J Kohn and R Turnbull of counsel	Watson Webb
For the Fourth Defendant by Counterclaim	SM Nazmus Sohan appeared in person	Not applicable

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

The oppression allegations.............................................................................................................. 5

The counterclaim brought by ANIT against Mr Shadat, PTE Brisbane, PTE Sydney, and Mr Sohan.......................................................................................................................................................... 6

Witnesses and some notable features of the trial........................................................................ 8

Some notable features of the activities of ANIT and the PTE companies............................ 11

Relevant evidence in connection with the oppression allegations........................................ 15

Mr Shadat signs forms re-appointing Mr Rahman and Mr Huraira as directors of ANIT 15
The Lamborghini purchase........................................................................................................ 16
Withdrawals by Mr Huraira...................................................................................................... 19
Mr Rahman’s 13 January 2020 email........................................................................................ 20
Mr Rahman’s 16 January 2020 email – the final decision...................................................... 22
Mr Shadat withdraws $69,000 from ANIT’s bank account................................................... 24
The establishment of ANIT Aus by Mr Rahman and Mr Huraira...................................... 25
The 20 January 2020 board meeting and follow up events................................................... 25
Mr Rahman’s email of 2 March 2020 – the Probable Solution.............................................. 32
The engagement of solicitors and the 31 March 2020 board meeting removing Mr Shadat as a director................................................................................................................................ 33
Requests for information by Mr Shadat................................................................................... 34
Proceedings commenced and the 3 September 2020 Court orders...................................... 35
Financial statements for FY 2019 and FY 2020........................................................................ 37
The Financial Investment Schedule.......................................................................................... 38
The Substantiation Spreadsheets.............................................................................................. 40
ANIT Aus..................................................................................................................................... 41
Growth in ANIT’s business....................................................................................................... 43
Audited financial statements for FY 2021, FY 2022, and FY 2023........................................ 43

Relevant evidence in connection with the counterclaim......................................................... 45

The Equipment Finance Claims................................................................................................ 45
The Sohan Payments................................................................................................................... 49
The Ferrari Claims...................................................................................................................... 50
The SGL Claim............................................................................................................................. 54

The Financial Investment Schedule – in more detail............................................................... 55

FY 2017.......................................................................................................................................... 57
FY 2018.......................................................................................................................................... 59
FY 2019.......................................................................................................................................... 60
FY 2020.......................................................................................................................................... 62
FY 2021.......................................................................................................................................... 64

Chinese PTE...................................................................................................................................... 64

The PTE Study Centre businesses – in more detail................................................................ 67

Further observations about the evidence of Mr Huraira and Mr Rahman........................... 72

Mr Huraira................................................................................................................................... 72
Mr Rahman.................................................................................................................................. 77

Key factual findings........................................................................................................................ 84

Legal principles................................................................................................................................ 90

Conclusion – the oppression claim............................................................................................... 95

Conclusion - the Counterclaim.................................................................................................... 105

Relieving the oppression.............................................................................................................. 111

Forms of relief sought by Mr Shadat......................................................................................... 111

Relevant principles - relief....................................................................................................... 112

Appropriate relief.......................................................................................................................... 116

Conclusion and orders.................................................................................................................. 116

Mr Shadat’s proposed relief.................................................................................................... 117
Defendants’ submissions......................................................................................................... 120
Buy out by the majority is the most appropriate form of relief......................................... 120
Assessment of fair value.......................................................................................................... 127
Appointment of an expert under s 65M of the Civil Procedure Act 2010 (Vic).................. 137
Relief to address the Financial Statements Inaccuracy........................................................ 139

Conclusion and orders.................................................................................................................. 144

HIS HONOUR:

Introduction

The plaintiff and first defendant by counterclaim, SM Nazmus Shadat (‘Mr Shadat’), is the owner of 38 of the 100 issued shares in the third defendant and plaintiff by counterclaim, ANIT Australia Pty Ltd (‘ANIT’). The first defendant, MD Imtiaj Rahman (‘Mr Rahman’), also owns 38 shares. The remaining 24 shares are owned by the second defendant, MD Abu Huraira (‘Mr Huraira’).

ANIT was incorporated on 8 August 2016. It provides education services to foreign students under the trading name ‘Albright Institute of Business and Language’ (‘Albright’).

At a shareholders’ meeting held on 31 March 2020, Mr Rahman and Mr Huraira, voted to remove Mr Shadat as a director of ANIT. The relevant resolution was in the following terms:

Due to various unethical, unfair and unexpected transactions carried out by SM Nazmus Shadat, a vote shall be cast in order to determine whether Mr Shadat shall remain as a Director. Both Md Abu Huraira and Md Imtiaj Rahman voted in favour of SM Nazmus Shadat being removed as a Director. Since they hold the majority of shares (62% in total) an ordinary resolution was passed where the outcome is the removal of SM Nazmus Shadat as a Company Director. Mr Shadat was reluctant to sign the minutes and disagreed with the whole outcome.

The removal of Mr Shadat as a director of ANIT and associated events lie at the heart of this proceeding.

The three men were formerly friends. They shared a cultural background, having immigrated from Bangladesh. Mr Shadat arrived in Australia and moved to Melbourne in 2009, and obtained a Certificate IV in Accounting from Swinburne University in 2012. He later graduated with a Bachelor of Business from the Kaplan Business School in 2014. Mr Rahman came to Australia in 2012, and obtained professional accountancy qualifications from the Charles Stuart University, Melbourne Campus in 2014.

In 2014, the Australian Government introduced the Pearson Test of English (PTE) which is an English language test which must be completed as a pre-requisite to obtaining permanent residency. Both Mr Shadat and Mr Rahman completed the PTE successfully in late 2014, and obtained permanent residency in Australia. From about 27 January 2015 onwards, Mr Shadat and Mr Rahman started operating a private coaching business known as PTE Study Centre, which provided English language training to students with the aim of enabling them to achieve good results in the PTE.

Mr Rahman had already obtained an ABN in his own name on 30 April 2013. Initially, when the business started operating under the ‘Melbourne PTE Study Centre’ name, it used Mr Rahman’s personal ABN and operated from Mr Rahman’s house in Sunshine.

On about 6 March 2015, Mr Shadat and Mr Rahman opened a new PTE branch in Parramatta and then a second branch later in December 2015 in Surry Hills, which they referred to collectively as ‘Sydney PTE Study Centre’. The Sydney branches were managed by Mohammed Rashedul Alam Khan (‘Mr Khan’).

On 22 April 2015, PTE Study Centre Pty Ltd was incorporated and obtained its own ABN. Its 100 issued shares were owned in equal parts by Mr Shadat and Mr Rahman, who were appointed as the company’s directors. PTE Study Centre Pty Ltd started operating the PTE businesses. On 17 December 2015, Mr Shadat resigned as a director of PTE Study Centre Pty Ltd and transferred his shares in the company to Mr Rahman. The circumstances of Mr Shadat’s resignation and transfer are disputed and are subject to further consideration below.

Despite his resignation as a director, Mr Shadat remained involved (to use a neutral term) with the PTE Study Centre businesses.

In about April 2016, Mohammed Nahid Karnal Tonmoy (‘Mr Tonmoy’), a friend of Mr Rahman, was appointed as the manager of a new PTE branch in Brisbane, which operated under the business name, ‘Brisbane PTE Study Centre’. The Brisbane branch used Mr Rahman’s existing ABN.

In about January 2017, the Adelaide PTE branch was established and operated out of premises in Hindley Street, Adelaide. Mr Shadat’s brother, Nazmus Sohan (Mr Sohan) who is the fourth defendant by counterclaim, was appointed as its centre manager.

In about August 2016, Mr Shadat, Mr Rahman, Mr Huraira, and another friend Tanvir Ahmed (‘Mr Ahmed’), discussed establishing a new company which would also obtain RTO accreditation. The name of the company ‘ANIT’ was chosen because it represented the first letter of each of their first names (Abu Huraira, Nazmus Shadat, Imtiaj Rahman, and Tanvir Ahmed).

In late 2016, ANIT was recognised by the Australian Skills Quality Authority (‘ASQA’) as an RTO. ANIT commenced trading under the business name ‘Albright’ in January 2018, operating out of levels 2 and 8, 341–345 Queen Street, Melbourne, pursuant to a lease entered into by ANIT. It started receiving tuition fees from students from 29 January 2018. ANIT also carried on business in Adelaide, Brisbane, and Sydney from premises which it occupied variously as lessee or licensee — opening in Adelaide from January 2018, Brisbane from September 2018, and Sydney from July 2020. It is not in dispute that PTE Study Centre also operated from the Queen Street, Melbourne premises.

ANIT’s initial shareholders were Mr Shadat, 40 shares; Mr Rahman, 30 shares; Mr Huraira, 20 shares; and Mr Ahmed, 10 shares. It is common ground that this was an error and the records should have shown that Mr Shadat and Mr Rahman each held 35 shares. Each of the four shareholders were appointed as co-directors. There is some dispute about how ANIT was to be funded; according to Mr Shadat, the majority of the proposed initial funding was to be provided by PTE Study Centre which would lend ANIT $260,000, whilst Mr Huraira would advance $50,000. Mr Rahman and Mr Huraira both say that each of Mr Shadat and Mr Rahman was to lend $130,000 and Mr Huraira $50,000. The difference may arguably not matter much as Mr Shadat agrees that the $260,000 in total to be lent by PTE Study Centre was to be treated as if it was advanced as to $130,000 by each of Mr Shadat and Mr Rahman. It is also common ground that Mr Shadat and Mr Rahman did not have any operational role in the business and concentrated on the PTE businesses. In contrast, Mr Huraira was to be the Chief Executive Officer of the business and responsible for its operations and strategy.

On 15 August 2017, PTE Study Centre Adelaide Pty Ltd (‘PTE Adelaide’) was incorporated, with Mr Rahman registered as its sole director and shareholder. On the next day, PTE Study Centre Brisbane Pty Ltd (‘PTE Brisbane’) and PTE Study Centre Sydney Pty Ltd (‘PTE Sydney’) were both incorporated with Mr Shadat registered as the sole director and shareholder. PTE Brisbane and PTE Sydney are the second and third defendants by counterclaim. These entities operated the PTE businesses in those cities. It is also not in dispute that PTE Adelaide, PTE Brisbane, and PTE Sydney operated from the same premises as ANIT in those cities. Nor is it in dispute that PTE Study Centre Pty Ltd (which for convenience from this point is referred to as ‘PTE Melbourne’) continued to operate the PTE business in Melbourne from the Queen Street, Melbourne premises leased by ANIT.

The circumstances relating to the establishment of PTE Adelaide, PTE Brisbane, and PTE Sydney, and the reason why Mr Rahman was the sole director and shareholder of PTE Melbourne and PTE Adelaide and Mr Shadat the sole director and shareholder of PTE Brisbane and PTE Sydney are disputed. According to Mr Shadat, it was Mr Huraira’s idea who said it would be simpler administratively given Mr Rahman was still recorded as the sole director of PTE Melbourne. Mr Shadat said he agreed to this, but only after being told that it did not affect the underlying effective ownership of the PTE businesses, which he said were owned 50:50 by he and Mr Rahman. Mr Rahman in contrast said that he owned 100% of PTE Melbourne and PTE Adelaide, whilst Mr Shadat owned 100% of PTE Brisbane and PTE Sydney. In Mr Rahman’s witness statement, he says that Mr Shadat’s ownership of PTE Brisbane and PTE Sydney was subject to an agreement that Mr Shadat was to pay Mr Rahman a royalty of 20% of the sales from the operation of the PTE Sydney and PTE Brisbane businesses. This is denied by Mr Shadat.

The oppression allegations

As noted above, the removal of Mr Shadat as a director of ANIT by resolution passed on 31 March 2020 lies at the heart of Mr Shadat’s claim.

The allegations of oppressive conduct encompass events which precede and post-date, but are nevertheless related to that key event.

First, Mr Shadat complains of an unreasonable denial of access to company records by Mr Rahman and Mr Huraira with respect to certain withdrawals effected by Mr Huraira from ANIT’s bank account during December 2019.

Secondly, Mr Shadat complains of his exclusion from the management of ANIT as and from 16 January 2020, by Mr Rahman and Mr Huraira which extended to being denied access to financial resources and information.

Thirdly, Mr Shadat complains of his removal by Mr Rahman and Mr Huraira as a director of ANIT at the meeting on 31 March 2020.

Fourthly, Mr Shadat complains of being refused access to the financial records of ANIT by Mr Rahman and Mr Huraira prior to orders being made by the Court on 3 September 2020.

Fifthly, Mr Shadat complains of the incorporation by Mr Rahman and Mr Huraira of a company called ANIT Aus Pty Ltd on 16 January 2020 (‘ANIT Aus’) and the diversion of funds from ANIT to ANIT Aus from 16 January 2020 onwards.

Sixthly, Mr Shadat complains of the additional diversion of ANIT’s funds by Mr Huraira to his personal account during the period February 2018 to December 2019, and during the period September 2017 to December 2019.

Seventhly, Mr Shadat complains of the misleading recording of loan funds provided by him and the purported repayment of those loans in what purport to be financial statements of ANIT for the financial years ending 30 June 2019 (‘FY 2019 Financial Statements’) and 30 June 2020 (‘FY 2020 Financial Statements’). In particular, he contends that his loan account is based on a flawed investment summary document prepared by Mr Rahman and Mr Huraira and provided to Mr Shadat on or about 25 September 2020, which understates Mr Shadat’s loan account.

Eighthly, Mr Shadat complains about the accuracy of the FY 2019 and FY 2020 Financial Statements. This complaint picks up the inaccuracy in Mr Shadat’s loan account, but also extends to complaints about the understatement of revenue and overstatement of the rental expenses in those years.

It is convenient to group Mr Shadat’s oppression complaints into five main categories – his removal as a director and exclusion from management (‘the Exclusion Conduct’); the inaccuracy of the investment summary schedule and financial statements (‘the Financial Statements Inaccuracy’); the establishment of ANIT Aus (‘the ANIT Aus Establishment’); the denial of information and access to company records (‘the Denial of Information’); and the transactions effected by Mr Huraira and the absence of satisfactory explanations by him concerning those transactions (‘the Huraira Transactions’).

The counterclaim brought by ANIT against Mr Shadat, PTE Brisbane, PTE Sydney, and Mr Sohan

First, ANIT’s counterclaim alleges breaches of fiduciary and statutory duties owed by Mr Shadat as a director arising from him causing ANIT to guarantee the performance of the obligations of PTE Brisbane in respect of an equipment finance agreement entered into by PTE Brisbane with the Bank of Queensland Equipment Finance Limited (‘BoQ’) dated 13 December 2018 (‘the PTE Brisbane-BoQ Agreement’) and by reason of Mr Shadat causing ANIT to make equipment rental payments in the total sum of $75,512.91 from ANIT’s bank accounts for the benefit of PTE Brisbane in respect of PTE Brisbane’s obligations under the PTE Brisbane-BoQ Agreement.

Secondly, ANIT complains of an analogous breach of duty by Mr Shadat as a result of him causing ANIT to guarantee the performance of the obligations of PTE Brisbane under an equpiment finance rental agreement entered into by PTE Brisbane with Capital Finance Australia Pty Ltd (‘Capital Finance’) on 23 November 2018 (‘the PTE Brisbane-Capital Finance Agreement’).

Thirdly, ANIT makes analogous allegations of breach of duty on the part of Mr Shadat in causing ANIT to make five equipment rental payments in the total sum of $70,075.00 from ANIT’s bank accounts for the benefit of PTE Sydney in respect of an equipment finance rental agreement entered into by PTE Sydney with BoQ dated 1 October 2019 (‘the PTE Sydney-BoQ Agreement’).

It is convenient to consider these three claims, the ‘Equipment Finance Claims’, together.

Fourthly, ANIT submits that Mr Shadat is liable for $491,551.20 in an action for moneys had and received by reason of Mr Shadat causing sums totalling this amount to be transferred from ANIT to accounts held or controlled by Mr Shadat, PTE Brisbane, PTE Sydney, Mr Sohan, or their agents or creditors, whether directly or by payments routed through the personal bank accounts of Mr Huraira during the period between 2 July 2018 and 15 January 2020 (‘the Unauthorised Transactions’).

Fifthly, ANIT contends that Mr Shadat breached his fiduciary and statutory duties by effecting payments totalling $69,000 from ANIT’s bank account to his own personal account on 16 January 2020 (‘the 16 January 2020 Withdrawals’).

Sixthly, ANIT complains that on or around 17 May 2018 and on or around 3 June 2018, Mr Shadat breached his fiduciary and statutory duties by causing payments totalling $17,600 to be paid from ANIT’s bank account for the benefit of Mr Sohan (‘the Sohan Payments’). Mr Sohan is also alleged to be directly liable for the Sohan Payments.

Seventhly, ANIT contends that Mr Shadat is liable for damages for the tort of conversion and/or detinue arising from his failure to return a Ferrari motor vehicle registered in ANIT’s name, despite several demands made by ANIT for Mr Shadat to give over possession of the Ferrari (‘the Ferrari Damages Claim’).

Eighthly, ANIT contends that Mr Shadat is liable to pay equitable compensation or compensation pursuant to s 1317H of the Corporations Act2001 (Cth) (‘the CA’) with respect to ANIT’s liability for fringe benefits tax (‘FBT’) in the amount of $51,763 by reason of Mr Shadat’s personal use of the Ferrari (‘the FBT Liability’).

It is convenient to consider the FBT Liability and the Ferrari Damages Claim together (‘the Ferrari Claims’).

Lastly, ANIT contends that Mr Shadat breached his director’s duties by causing ANIT to breach its superannuation guarantee liability obligations (‘SGL’) for the period 1 April 2018 to 31 December 2020 (‘the SGL Claim’).

For completeness, there are various claims of ancillary liability on the part of PTE Brisbane and PTE Sydney. These claims only need to be considered if the claims of primary liability against Mr Shadat are made out.

Witnesses and some notable features of the trial

During the lead up to the trial, Mr Shadat was represented by a number of different law firms. This proceeding was fixed for trial on a date to be fixed by orders made 15 September 2023. On 9 October 2023, the trial date of 19 August 2024 was confirmed and conveyed to the parties by email.

On 30 May 2024, I heard an application by Mr Shadat for leave to amend his statement of claim and for further discovery. The application was refused on the basis, among other things, that it was too late and involved a substantial expansion of the issues in the proceeding. Subsequent to the determination of that application, on 12 July 2024, Mr Shadat’s then solicitors obtained leave to file a notice of ceasing to act. Following the filing of the notice of ceasing to act, Mr Shadat was self-represented, as was his brother Mr Sohan, the fourth defendant by counterclaim. On 16 August 2024, I made orders giving Mr Shadat leave to appear on behalf of PTE Brisbane and PTE Sydney.

In the lead up to the trial, Mr Shadat issued various subpoenas, including a subpoena to give evidence and produce documents served on the former accountant for ANIT and the PTE companies, Md Russell Rahman[1] (‘Russell Rahman’) from Russell & Partners Chartered Accountants and the current accountant for ANIT, Lutful Baki (‘Mr Baki’) from Edge Advisory Services Pty Ltd.
[1]Russell Rahman and MD Imtiaj Rahman are not related. For ease of understanding, Russell Rahman is referred to in these reasons as Russell Rahman whilst MD Imtiaj Rahman is referred to as Mr Rahman.

In addition, Mr Shadat served a subpoena to give evidence on Mr Daniel Heywood (‘Mr Heywood’). Mr Heywood is a chartered accountant and former partner at PWC Australia. Mr Heywood had previously prepared an expert’s report on the instruction of the solicitors of Mr Rahman and Mr Huraira.

Mr Shadat also served a subpoena on Paul Waterhouse (‘Mr Waterhouse’), who had earlier prepared an independent business valuation of ANIT pursuant to orders of the Court made 3 September 2020. In the result, Mr Shadat chose to not call on that subpoena. Accordingly, Mr Waterhouse did not give evidence.

Aside from Mr Heywood, whose evidence-in-chief was given by way of the tender of his expert report, and those witnesses who gave evidence after being subpoenaed by Mr Shadat, the remaining three witnesses, Mr Shadat, Mr Huraira, and Mr Rahman, all gave evidence-in-chief by way of the tender of lengthy witness statements.

The orders for the service of witness statements provided for the statements to be served on a staggered basis, with Mr Shadat’s witness statement being served on 28 October 2022, followed by the statements in response from Mr Huraira and Mr Rahman on 23 January 2023, and a subsequent reply witness statement from Mr Shadat on 6 April 2023. In the reply witness statement, Mr Shadat set out in some detail those aspects of the evidence of Mr Huraira and Mr Rahman with which he agreed and those with which he took issue.

The staggering of witness statements in this way had the effect of ensuring that the three lay witnesses, Mr Shadat, Mr Huraira, and Mr Rahman, were or ought to have been on notice of the material parts of their evidence which was in contest. In those circumstances, the assertion made by Mr Rahman, Mr Huraira, and ANIT (together ‘the defendants’) in closing submissions that Mr Shadat’s failure to cross-examine Mr Huraira and Mr Rahman on various matters breached the rule in Browne v Dunn is of little consequence. Browne v Dunn is a rule of procedural fairness which ensures that a party has notice of and the opportunity to respond to factual matters alleged against it. Where the party against whom an allegation is made is denied such opportunity, it may result in a denial of procedural fairness such that it is unsafe or inappropriate for the fact-finder to make findings against the party denied procedural fairness. That is not the case here, where the service of detailed witness statements on a staggered basis made clear the key factual controversies. Any failure to put matters to a witness in those circumstances only goes to the weight to be attributed to the evidence relied upon.[2] For completeness, there were just as many (if not more) occasions where the defendants did not put certain matters to Mr Shadat, most particularly those contained in new aspects of their evidence given by way of amendments to their respective witness statements which were made when Mr Huraira and Mr Rahman stepped into the witness box.
[2]See, inter alia, Bugeja v R (2010) 30 VR 493; R v Morrow (2009) 26 VR 526.

Mr Shadat was cross-examined for a little over one day by senior counsel for Mr Huraira and Mr Rahman. He was cross-examined fairly, but vigorously. He made few concessions in cross-examination, aside from those that he had earlier made in his reply witness statement. Mr Shadat presented as an intelligent and measured witness. Overall, I formed a favourable view of Mr Shadat’s evidence.

The second witness called by Mr Shadat was Russell Rahman. Russell Rahman had ceased providing accountancy services for ANIT in September 2020. He presented as an honest witness, but one who had little independent recollection of relevant matters. The gist of Russell Rahman’s evidence was to the effect that he or others in his office reviewed and prepared various documents on the basis of instructions provided to him or them, for the most part, by Mr Huraira. Russell Rahman was not cross-examined.

The third witness called by Mr Shadat was Mr Heywood. Mr Heywood’s evidence-in-chief was given by way of the tender of his expert report. Mr Heywood was not cross-examined.

The fourth witness called by Mr Shadat was Mr Baki, who has been ANIT’s tax accountant since March 2021. Mr Shadat adduced evidence from Mr Baki in relation to various matters concerning his preparation of business activity statements (‘BAS’) and financial statements for ANIT from the date of his appointment, which included, relevantly, his preparation of a company tax return for ANIT for the period ending 30 June 2019, which was prepared by Mr Baki’s firm on or about 12 May 2021.

Mr Baki was briefly cross-examined by senior counsel for Mr Rahman and Mr Huraira. The principal purpose of the cross-examination was to tender through Mr Baki, BAS for ANIT Aus for the quarter 1 January 2020 to 31 March 2020 and for ANIT for the quarter 1 April 2020 to 30 June 2020, and ANIT Aus’s company tax return for the period ending 30 June 2020. Mr Baki presented as an honest witness.

Mr Huraira was the first witness called by the first and second defendants. His evidence-in-chief was given by way of the tender of an 89-page witness statement, which included reference to numerous documents and various tables detailing bank payments and student enrolment capacity in ANIT during different years.

Mr Huraira’s witness statement, upon challenge, presented as an incomplete and, in large part, inaccurate version of events. Mr Huraira at least showed sufficient awareness to be embarrassed as he sheepishly sought to maintain a narrative which was obviously false, as became apparent to Mr Huraira during the course of cross-examination. Overall, I found Mr Huraira’s evidence unreliable.

As was the case with Mr Huraira, Mr Rahman’s evidence-in-chief was given by way of the tender of a lengthy 52-page witness statement.

I formed a most unsatisfactory view of Mr Rahman’s evidence. He gave new accounts of critical events for the first time variously in oral evidence-in-chief or when cross-examined, sometimes in gratuitous and arguably offensive terms. His evidence in a number of key respects was untrue or highly improbable. Mr Rahman was a most unsatisfactory witness.

Some notable features of the activities of ANIT and the PTE companies

The directorships and shareholdings in ANIT changed frequently due to the personal and business reasons of its directors. As noted above, each of Mr Shadat, Mr Rahman, Mr Huraira, and Mr Ahmed were initially appointed as co-directors, and each held shares in the proportions set out earlier (noting that all parties accept that it was an error to record Mr Shadat as a 40% shareholder and Mr Rahman as a 30% shareholder, and that both should in fact have been shown as 35% shareholders).

It is also common ground that, in about mid-2017, Mr Ahmed ceased all involvement with ANIT due to personal reasons and agreed to give up his shareholding. Although there was no clear explanation, his departure from ANIT was not reflected in the change of shareholdings or directorships until some time later. It is nevertheless common ground that Mr Shadat, Mr Rahman, and Mr Huraira agreed that Mr Ahmed’s shareholding would be divided among them, such that Mr Shadat and Mr Rahman would each hold 38.5% of the shares and Mr Huraira 23%. Mr Huraira emailed Russell Rahman on 8 August 2017 and 9 September 2017, requesting that Mr Ahmed be removed as a director and that the shareholdings be changed such that Mr Shadat and Mr Rahman each hold 38% of the shares and Mr Huraira 24%. For reasons unexplained, Russell Rahman did not lodge the relevant forms with ASIC until 4 April 2018, at which time the records with ASIC were updated to record Mr Ahmed’s resignation as a director. A change was also effected to Mr Ahmed’s shareholding at that same time, which differed from the instruction sent to Russell Rahman on 8 August 2017.

The reason for this is that it is accepted that on 7 February 2018, Mr Huraira requested that he be removed as a director of ANIT and that his shares be transferred to Mr Shadat because Mr Huraira was applying for a home loan, and he considered that it would increase his prospects of getting his home loan application approved if he was not shown as a director and shareholder of ANIT because ANIT was still a start-up company. Mr Shadat agreed that he would transfer Mr Huraira’s shares back to him at a later stage on request. In the result, on 8 February 2018, Russell Rahman lodged forms with ASIC recording Mr Huraira’s resignation as a director and the transfer of Mr Huraira’s 20% shareholding to Mr Shadat. At that time, the ASIC records showed that Mr Shadat held 60% of the shares in ANIT, Mr Rahman 30%, and Mr Ahmed 10%, and that the three directors were Mr Shadat, Mr Rahman, and Mr Ahmed.

As noted above, the transfer of Mr Ahmed’s shares to Mr Rahman and the resignation of Mr Ahmed as a director was effected by forms lodged with ASIC on 4 April 2018. As at that date, the ASIC database showed that Mr Shadat held 60% of the shares in ANIT and Mr Rahman 40%, and that the two directors were Mr Shadat and Mr Rahman.

On 23 May 2018, Mr Rahman resigned as a director of ANIT and transferred all of his shares to Mr Shadat, with the result that Mr Shadat was now shown as the sole director and sole shareholder. It is common ground between Mr Shadat and Mr Rahman that this occurred so as to assist Mr Shadat’s prospects of obtaining finance for his home loan application in order to acquire a block of land for a house in Melbourne. It is also common ground that Mr Shadat agreed that he would transfer the shares back to Mr Rahman whenever Mr Rahman wanted, and that Mr Rahman would be reinstated as a director of ANIT on request.

Mr Rahman and Mr Huraira say that subsequently, Mr Shadat refused to transfer the shares back and re-appoint them as directors. Mr Shadat denies this and says that despite the changes in the ASIC records, nothing had changed and that all three acted exactly as they had done from the time ANIT was established. Mr Shadat says that Mr Rahman or Mr Huraira did not ever raise the question of the transfer back of the shares or their re-appointment as directors until 28 November 2019. He says that if they had asked him, he would have done so.

In any case, it is common ground that on 28 November 2019, Mr Shadat signed and Russell Rahman lodged various forms with ASIC, which recorded that Mr Rahman and Mr Huraira be appointed as directors and that Mr Shadat transfer 38 shares to Mr Rahman and 24 shares to Mr Huraira.

The result of these transactions was to leave Mr Shadat as the owner of 38% of the shares in ANIT, Mr Rahman 38%, and Mr Huraira 24%, with the three shown as directors of ANIT.

Unknown to Mr Shadat, on the next day, Mr Huraira resigned as a director and transferred his 24 shares to Mr Rahman, apparently because Mr Huraira was concerned his appointment as a director and shareholder of ANIT would complicate a new loan application by him for finance that he was seeking to obtain to build a house. According to Mr Huraira, he wished to avoid disrupting this process.

In any case, on 7 February 2020, Mr Huraira was once again appointed as a director of the company, and Mr Rahman transferred 24 shares back to Mr Huraira. The ASIC records were accordingly updated by Russell Rahman on the instruction of Mr Huraira.

Moneys earned by ANIT from its business activities were banked into a series of bank accounts. ANIT had separate bank accounts for its offices in each State in which it carried on business. This is unremarkable; what is less orthodox is that some of the revenues earned by ANIT were banked into a bank account in Mr Huraira’s name, as well as in a further bank account in the name of Mr Huraira and his wife. It seems that Mr Huraira made withdrawals or effected transfers from those accounts to pay various expenses of ANIT. In addition, it is not in dispute that ANIT received cash payments which were held either in a safe at the company’s Melbourne offices or in a locked drawer in the manager’s office, and then used to pay expenses. Mr Huraira accepted somewhat sheepishly that the reason that moneys were banked into his personal account and the joint account with his wife was because of ‘tax’.

The PTE companies adopted similarly unorthodox practices. Revenue earned by PTE Adelaide and PTE Brisbane was apparently deposited into a bank account held in the name of Mr Huraira’s brother-in-law, Abdullah Ah Mahmud (‘Mahmud’). In addition to moneys earned by PTE Brisbane being banked into Mahmud’s bank account, other revenues received by PTE Brisbane were also banked into a personal account in the name of Mr Rahman and a joint account held in the name of Mr Rahman and Mr Tonmoy. Moneys earned by PTE Adelaide were banked into Mahmud’s bank account at Mr Huraira’s direction. The most likely inference is that the reason for this approach again had something to do with obtaining tax advantages.

In addition, PTE staff also undertook work for ANIT and vice versa.

Another unusual feature of the dealings between PTE Melbourne and ANIT is that some of PTE Melbourne’s fee income was banked into ANIT’s bank account and according to ANIT’s defence, accounted for as both an entry in ANIT’s balance sheet as a ‘loan’ from PTE Melbourne and as ‘income’ in ANIT’s BAS.[3] Russell Rahman, ANIT’s accountant at the time, agreed that such accounting treatment was not correct.
[3]See para 15 (h) of ANIT’s defence.

Against the background of these rather unusual matters, it is convenient to return to the oppression allegations and to the more pertinent evidence that relates to them.

Relevant evidence in connection with the oppression allegations

Mr Shadat signs forms re-appointing Mr Rahman and Mr Huraira as directors of ANIT

As noted above, on 28 November 2019, Mr Shadat signed various ASIC forms which facilitated the re-appointment of Mr Rahman and Mr Huraira as directors of ANIT. Additionally, and by his transfer of shares to Mr Rahman and Mr Huraira, the ASIC register now recorded that Mr Rahman and Mr Huraira held the majority of shares in ANIT. On Mr Shadat’s account, his transfer of shares and re-appointment of Mr Rahman and Mr Huraira simply gave effect to their earlier agreement reached on or about 23 May 2018 when Mr Rahman had resigned.

Mr Rahman and Mr Huraira both gave similar evidence that, notwithstanding the agreement reached on or about 23 May 2018 to the effect that Mr Shadat would transfer the shares back to Mr Rahman whenever he wanted (and a similar agreement entered into with Mr Huraira in about February 2018), Mr Shadat subsequently refused to do so.

This account from Mr Rahman and Mr Huraira was generalised in nature and lacked all specificity. Mr Shadat, in contrast, floats a different theory; he says that Mr Rahman and Mr Huraira were never troubled by not being shown as directors or shareholders, and only sought to regularise the ASIC records in late November 2019 as part of a plan to assume control of ANIT to the exclusion of Mr Shadat. It is not necessary to decide that Mr Rahman and Mr Huraira initiated the change in directorships and shareholdings in late November 2019 for that purpose.

However, I do not accept that Mr Shadat ever refused to transfer the shares back to Mr Rahman and Mr Huraira during the period from 23 May 2018 to 28 November 2019. As noted above, Mr Huraira and Mr Rahman were most unsatisfactory witnesses. Their account of Mr Shadat’s refusal is not corroborated by any email or text and of course is entirely at odds with the fact that, on 28 November 2019, only 18 months after Mr Rahman had resigned as a director and his shares were transferred to Mr Shadat, Mr Shadat signed the forms that effectively gave rise to a return to the status quo ante at ANIT. Any refusal of the kind complained of by Mr Rahman and Mr Huraira must have been limited to a refusal over an 18 month period which came to an end by some unexplained change of heart by Mr Shadat. I reject their evidence.

Overall, the evidence as a whole reveals that Mr Shadat, Mr Rahman, and Mr Huraira altered the directorships and shareholdings regularly over the course of ANIT’s affairs to suit their own personal needs, without intending to alter the underlying ownership and control of ANIT. There is no credible evidence, that during the brief period when Mr Shadat was the sole director of ANIT, the roles of Mr Rahman and Mr Huraira changed in any way. Mr Shadat said they did not and his evidence in that respect is accepted. It is tolerably clear that whatever change was recorded at the ASIC register did not reflect the continued and unaltered involvement of each of Mr Shadat, Mr Rahman, and Mr Huraira in ANIT’s affairs.

The Lamborghini purchase

It is common ground, however, that another event occurred in early November 2019 which may have affected the relationship between the key protagonists. According to the accounts set out in both Mr Rahman and Mr Huraira’s witness statements, in around November 2019, Mr Rahman wanted to purchase a Lamborghini Huracan, and discussed the prospect of doing so with Mr Shadat who did not say anything in response at that time. According to Mr Rahman and Mr Huraira, the two of them participated in a conference call with Russell Rahman on 8 November 2019. They say that during the course of that telephone call, Russell Rahman warned them that Mr Shadat was not someone they should be in business with, or at least suggested that the three of them did not make good business partners. According to Mr Rahman and Mr Huraira, Russell Rahman told them that Mr Shadat had phoned him that morning complaining about Mr Rahman’s planned Lamborghini purchase and offered him $10,000 if he could stop the purchase from going ahead. According to them, Russell Rahman then called Mr Shadat on a second telephone call whilst muting his existing conference call with Mr Rahman and Mr Huraira so that Mr Shadat would not know that Mr Huraira and Mr Rahman were listening in. Mr Rahman and Mr Huraira say that they heard Mr Shadat asking Russell Rahman to not proceed with Mr Rahman’s application for finance for the acquisition of the Lamborghini, saying that there was an internal problem in his family and that his wife did not want Mr Rahman to have a Lamborghini. This time, apparently, Mr Shadat offered to pay Russell Rahman double ($20,000) if Russell Rahman ensured that the Lamborghini was not acquired.

In senior counsel’s cross-examination of Mr Shadat, he put to Mr Shadat the essence of this conversation, also putting to him a further matter not set out in the witness statements of Mr Rahman or Mr Huraira that Mr Shadat’s wife was the one who wanted to acquire a Lamborghini. Mr Shadat dismissed the account, among other things, saying that it was ridiculous and that his wife did not even have her driver’s licence at that point.

When Mr Shadat then called Russell Rahman as a witness, he did not ask any questions of Russell Rahman about this conversation. Nor did senior counsel for Mr Rahman and Mr Huraira ask any questions of Russell Rahman about this in cross-examination.

When Mr Shadat cross-examined Mr Rahman and Mr Huraira, he did not raise the matter either. However, in Mr Shadat’s reply witness statement, which was tendered as part of his evidence, he dealt with his call to Russell Rahman about the prospective acquisition of the Lamborghini in some detail. In his reply witness statement, he said he did not know Mr Huraira and Mr Rahman were ever listening in to the telephone call, saying that as far as he was aware, it was only between him and Russell Rahman.

According to Mr Shadat, during the course of a telephone call with Russell Rahman, he raised concerns about the accounts for the PTE entities and the tax that the PTE entities might owe. He said that he asked Russell Rahman how much it would cost for Russell Rahman to go through the accounts for the PTE entities and reconcile them, to which Russell Rahman responded by saying it would cost about $15,000 to $20,000 in accounting fees. According to Mr Shadat, he then discussed the acquisition by Mr Rahman of the Lamborghini, saying that Mr Rahman wanted to use PTE Adelaide to acquire a Lamborghini and that Mr Shadat did not support this because of his concerns around the financial position of PTE Adelaide. On Mr Shadat’s account, Russell Rahman said he would have a conversation with Mr Rahman about fixing the accounts for the PTE entities first, but that as far as he was aware, Mr Rahman was in the process of arranging finance for the acquisition of the Lamborghini.

In Mr Shadat’s reply witness statement, he also said that Mr Rahman already had a Range Rover SDV8 which was the subject of a finance agreement entered into by PTE Melbourne in February 2019 and that this had come up in discussions between the two when Mr Rahman proposed purchasing the Lamborghini.

It is not in dispute that Mr Rahman later went ahead and entered into a similar finance agreement with PTE Adelaide and procured the Lamborghini for personal use.

On Mr Rahman’s account, the vehicle was sold on or around 27 January 2021. Although the date of disposal only affects Mr Rahman’s credit, I do not accept that he only disposed of the Lamborghini then. Rather, I accept that he sold the vehicle on about 12 April 2022, which date is verified by Mr Rahman posting a video to his Facebook page, stating ‘final cold start in cold morning. Farewell to the beast’ featuring the Lamborghini.

To the extent that it matters, I do not accept the evidence of Mr Rahman and Mr Huraira about the conversations between Russell Rahman and Mr Shadat. It was not corroborated by any other account or any other document. Given my overall concerns with their evidence and my general preference for Mr Shadat’s evidence where there is a conflict, I accept Mr Shadat’s account, which is more detailed and logical, and consistent with the PTE entities having some tax issues at the time which was the case. Further, having observed both Mr Shadat and Russell Rahman in the witness box, Mr Shadat did not come across as someone who would either offer Russell Rahman a bribe of between $10,000 and $20,000 in exchange for taking some unspecified step which somehow would produce the result that Mr Rahman would not acquire a Lamborghini or as someone who would think that Russell Rahman would take such a bribe. Russell Rahman presented as a rational and respectable chartered accountant. The account proffered by Mr Rahman and Mr Huraira had a cartoonish quality, which is consistent with other aspects of Mr Rahman’s evidence, but inconsistent with the overall impression I formed of both Mr Shadat and Russell Rahman.

Withdrawals by Mr Huraira

Between 4 December 2019 and 30 December 2019, Mr Shadat travelled overseas on a holiday.

According to Mr Shadat, during this period Mr Huraira withdrew $79,415.92 from ANIT’s bank account by way of the following six payments:

(a)$9,018.20 on 8 December 2019;
(b)$15,000 on 8 December 2019;
(c)$15,352.15 on 10 December 2019;
(d)$5,045.57 on 15 December 2019;
(e)$20,000 on 18 December 2019;
(f)$15,000 on 21 December 2019.

Mr Shadat said he did not authorise these payments and was not aware of any reasonable basis for them occurring.

Mr Shadat said that when he returned from overseas in about early January 2020, he noticed the payments when he looked at ANIT’s online banking system and raised it with Mr Huraira straight away. He said that Mr Huraira refused to provide an explanation, and said that it was not anything that Mr Shadat needed to worry about.

Mr Huraira acknowledges that he made the transfers of $15,000 on 8 December 2019 and $20,000 on 18 December 2019, as well as a further transfer of $20,000 on 2 January 2020. According to Mr Huraira, the transfers from the company’s bank account to his personal bank account on 8 December 2019 and 18 December 2019 were accounted for by the company as a ‘decrease’ in his shareholder loan, although the transfer from his personal bank account to the company’s bank account of the $20,000 on 2 January 2020 was not accounted for by the company, as it was only a ‘short term loan’.

Mr Rahman’s 13 January 2020 email

On 13 January 2020, Mr Rahman emailed the various managers of the PTE businesses and copied Mr Shadat into the email, with the subject line ‘Vision 2020 from 01 February 2020’. In his email, he noted that the businesses had struggled during the last part of the year because of ‘the overall immigration scenario’ and ‘as per my analysis — my failure to take part in the business operation effectively’. He expressed his doubts as to whether the PTE business would remain sustainable in their current state, and stated that it was necessary to cut down significantly on variable operating costs and, also if possible, fixed operating costs. He noted that the businesses needed immediate cash flow to pay off liabilities as soon as possible, especially those owing to the ATO. He then wrote the following:

Keeping the above factors and other below outlined factors in mind, including my current and future vision of the business which is usually not aligned with other managers and stake holders, I have decided to STEP DOWN from the management role of TWO states and relinquishing stake holding; and taking up the whole management and whole stake holding of the other TWO states, only at this point. In other words, I will no longer look after two states of PTE Study Centre and Solely look after and own two other states of PTE Study Centre. Which two, it will be finalized after discussion with everyone involved in the business decision making and it will be implemented from 01 February 2020 Saturday.

The email continued with Mr Rahman posing a series of questions which he then answered in the same email. In response to the question, ‘Will I open any branches in other states/cities?’, he answered, ‘No. Where there is current PTE Study Centre, I will not open any branches in that city’. In relation to the question, ‘What will be the relationship between PTE and Albright as some managers are working for Albright?’, he answered, ‘There is no existing relationship between PTE and Albright other than rent and premise sharing. All PTE branches will be under sublease from Albright in written agreement within February 2020. I will leave the process of how the managers will work for Albright to the discretions of the managers. If they can manage their extra time for the work of Albright apart from PTE, it will be decided on the nature of the required tasks of the particular time’.

Although the 13 January 2020 email made no reference to, and is inconsistent with Mr Rahman having chosen the two states, in his witness statement, he said that he intended at the time to retain PTE Melbourne and PTE Adelaide which were geographically closer and of which he was already the sole director and shareholder.

According to Mr Shadat, he had not received any prior notice from Mr Rahman about his intentions as set out in the 13 January 2020 email and was shocked when he came to know Mr Rahman’s decision regarding the change to the ownership and management structure of the PTE entities.

On the same day that Mr Rahman sent his email, Mr Huraira emailed Mr Shadat and Mr Rahman at 5:40pm, with the subject line, ‘Cash — ANIT PTE’ attaching an Excel spreadsheet headed, ‘Cash Transaction — PTE ANIT — Final 13.01.2019’. The enclosed spreadsheet was a cash reconciliation in respect of expenditures that Mr Huraira said he incurred for Mr Shadat in relation to the bank accounts of ANIT and the PTE business. In his covering email to Mr Shadat and Mr Rahman, Mr Huraira wrote that he had attached his final calculation for cash transactions relating to the ANIT, PTE, and Mahmud accounts. He requested that this be finalised by 17 January 2019, and otherwise that Mr Shadat pay $13,089.42 to his account on 18 January 2019. Mr Huraira’s Excel spreadsheet set out a list of transactions passing between PTE entities, ANIT, Mr Huraira’s wife Sumana, Mr Sohan and others, the net effect of which, according to Mr Huraira, was a debt owed by Mr Shadat to Mr Huraira of $13,089.42.

It is common ground that Mr Shadat and Mr Rahman met face-to-face on 15 January 2020 to discuss Mr Rahman’s 13 January 2020 email.

According to Mr Shadat, he told Mr Rahman that the proposed division of the PTE businesses could not proceed and would happen over his dead body. Mr Shadat said that Mr Rahman told him that he did not want to be in business with Mr Shadat any longer. Mr Shadat said he wanted to be involved in the day-to-day operation of ANIT’s business and the PTE entities’ businesses.

According to Mr Rahman, he said that the PTE businesses were in serious financial decline, that Mr Shadat was not making any meaningful contribution to the PTE businesses, was failing to manage the PTE Brisbane and PTE Sydney franchises, and was charging personal expenditures to PTE Brisbane and PTE Sydney, which ‘was affecting (his) royalty payments’. Given that Mr Rahman earlier set out in his witness statement that he was entitled to a 20% commission on sales from the two PTE businesses, it is unclear how excessive expenses which would affect profits but not sales would reduce his ‘royalty’ payments.

Mr Rahman’s 16 January 2020 email – the final decision

On 16 January 2020 at 3:14pm, Mr Rahman sent a text message to Mr Shadat in which he referred to a conversation that Mr Rahman had with another PTE employee who had told him that Mr Shadat wished to be more involved in Albright (ANIT) because Mr Huraira had created some problems with money and was allegedly stealing. Mr Rahman was critical of Mr Shadat for discussing the matter with the other employee, and said that Mr Shadat had done something similar with him at an earlier time making false accusations. Mr Rahman said that he did not want to discuss anything with Mr Shadat, and that Mr Rahman had his decision in the email.

A minute or so later, Mr Rahman sent an email to Mr Shadat and the other managers of the PTE businesses with the subject line ‘Urgent Meeting for Restructuring of PTE Study Centre from February 01, 2020’ which set out his ‘final business decision’. He informed the recipients that if they agreed with him, they were ‘more than welcome to make PTE Study Centre the largest PTE Coaching [centre] in Australia’, but that if they did not, they could either decide to manage a State on their own without Mr Rahman’s involvement or without the aid of any services like the PTE portal or the website, or they could look elsewhere ‘for other options than PTE Study Centre.’

In the email, he advised the recipients that he would ‘continue to be the sole managing director of the PTE Study Centre’, and that Mr Shadat would ‘no longer be taking any part in any Management decision of the PTE Study Centre, but [would] remain in the business for [an] honorary post to enjoy a part of the profit from [the] overall existing business.’ He said that Mr Shadat would receive an honorary profit share of 20% from the existing States, whilst Mr Rahman would derive 25% of the existing States. 10% of the profits would go into reserve until it reached a certain level. Management would get 10% of the profit, and every full-time employee would get 1% of the profit to be paid quarterly, up to a maximum limit of 5%. Profits from newly created PTE States or online would go as to 10% by way of honorary profit to Mr Shadat, with 1% to charity, and other profit to be distributed as per the discretion of the managing partners of that State or online.

In the concluding parts of his email, under the sub-heading ‘Involvement of S M Nazmus Shadat in other business’, Mr Rahman stated that as per his conversation with Mr Shadat on 15 January 2020, Mr Shadat wished to be involved in the day-to-day operations of any business but that as he no longer is working in PTE, Mr Shadat’s focus would be on the business of Meridian. Mr Rahman’s email advised that, ‘As per my communication with Albright management team and their decision, there is no significant role to fit him (that is Mr Shadat) there’.

The reference to Meridian related to a business that was being conducted by Raina Poddar called Meridian Migration and Education Consultancy, which subleased offices in the Queen Street building also occupied by ANIT.

Mr Shadat withdraws $69,000 from ANIT’s bank account

According to Mr Shadat, after receiving Mr Rahman’s email, he became concerned that he was being unfairly cut out of ANIT and the PTE entities’ operations. He became worried that ANIT would not repay Mr Shadat’s share of the loans made to ANIT by the PTE entities, and that ANIT would not pay him his share of profits. As a result, on 16 January 2020 between 3:37pm and 3:39pm he made the 16 January 2020 Withdrawals by way of the following transfers:

(a)$30,000 from the bank account used for ANIT’s Melbourne business;
(b)$15,000 from the bank account used for ANIT’s Adelaide business;
(c)$15,000 from the bank account used for ANIT’s Brisbane business;
(d)$9,000 from the bank account used for ANIT’s Sydney business.

The effect of Mr Shadat’s withdrawals was to reduce the balances held in those accounts to a total of $8,023.51.

On 17 January 2020 at 12:34am, Mr Rahman emailed Mr Shadat and Mr Huraira (blind carbon copy to Russell Rahman). In that email, he complained about the four unsolicited withdrawals from the various ANIT bank accounts, saying that the withdrawals were ‘unethical, unexpected [and] unplanned’, and advising that the amount of money in those accounts was for paying rent, regular bills, and other expenses. His email concluded:

On my calculations and having regard to the findings I have made, the balance of Mr Shadat’s loan account as at 30 June 2020 is $597,373 less $99,146 which is $497,867.227.

Conclusion and orders

Mr Rahman and Mr Huraira were not compelled to remain in business with Mr Shadat. The vice with their conduct is that they removed Mr Shadat as a director of a company of which he was a co-founder, excluded him from its management and affairs, ceased payment of salary and superannuation to him and his wife and at the same time kept Mr Shadat’s capital trapped in the company.

Mr Rahman and Mr Huraira’s entrapment of Mr Shadat’s capital understates things. By a combination of reducing the balance of Mr Shadat’s loan account to trivial levels via a series of unjustified reductions, and assertions that Mr Shadat’s 38% shareholding was near worthless despite the company now turning over just under $30 million and repaying its debt to Mr Rahman by circa $600,000 over three years, Mr Rahman and Mr Huraira sought to extirpate Mr Shadat’s debt and equity investment in ANIT. Having prepared financial statements which reflected the desultory debt said to be owing by ANIT to Mr Shadat, Mr Rahman and Mr Huraira then procured the bringing of a counterclaim against Mr Shadat by ANIT in which it sought to recover the very same amounts that the company had already appropriated without any proper basis as reductions in the loan account.

The subsequent prosecution by Mr Shadat of his oppression claim has not been without difficulty. He has changed solicitors on a number of occasions and in the end represented himself at trial, where he was opposed to three members of counsel including Senior Counsel, who were assisted by experienced and well-organised solicitors.

Notwithstanding the imbalance in resources, Mr Shadat has substantially succeeded in his oppression claim and the counterclaim has failed save in a very minor respect.

Despite Mr Shadat’s preference that he should be allowed to purchase the shares of the 62% majority at a price which reflects current value, I have determined that the appropriate remedy is for the majority to buy out Mr Shadat’s shares at a price to be fixed, after the Court has the benefit of a valuation of ANIT, its business and Mr Shadat’s shares as at 30 June 2023, which is the most recent date of the audited financial statements of the company in evidence.

Subject to hearing from the parties as to the precise form of orders and declarations, the declarations and orders that I propose to make are to the following effect:

1. Declare that the conduct of the affairs of ANIT Australia Pty Ltd (‘ANIT’) by its directors and shareholders, MD Imtiaj Rahman (‘Mr Rahman’) and MD Abu Huraira (‘Mr Huraira’), has been oppressive to, unfairly prejudicial to and unfairly discriminatory against SM Nazmus Shadat (‘Mr Shadat’) within the meaning of s 232(e) of the Corporations Act 2001 (Cth) by reason of:

(a) the establishment and operation of ANIT Aus Pty Ltd in the period from 16 January 2020 to about September 2022;

(b) the exclusion of Mr Shadat from participation in the management and affairs of ANIT and in particular:

(i) from 31 March 2020 by removing him as a director of ANIT;

(ii) from January 2020 by ceasing the payment of salary and superannuation to him and to his wife, Papia Afrin (‘Ms Afrin’);

(iii) preparing and adopting financial statements for ANIT including from 30 June 2020 and each financial year thereafter which wrongly understated the extent of ANIT’s liability to Mr Shadat by effecting reductions of Mr Shadat’s loan account so as to reduce the amount owing by ANIT to him without a proper basis by:

(y) treating as repayments of loan funds advanced by Mr Shadat, payments of salary and superannuation to Mr Shadat and to Ms Afrin and PAYG tax instalments notwithstanding that each of those expenses had been expensed in ANIT’s profit and loss statement;

(z) alleged cash withdrawals and other amounts improperly taken by Mr Shadat from ANIT more particularly identified in paragraph 40 of the defendants’ counterclaim dated 16 July 2021.

2. Declare that the balance of Mr Shadat’s loan account should be calculated on the basis that:

(a) 50% of the net investment made by PTE Study Centre Pty Ltd, PTE Study Centre Adelaide Pty Ltd, PTE Study Centre Brisbane Pty Ltd and PTE Study Centre Sydney Pty Ltd is treated as if it was a loan made by Mr Shadat;

(b) the balance of Mr Shadat’s loan account should not be calculated on the basis that the net investment by Chinese PTE constitutes investments made by Mr Shadat or investment funds returned to Mr Shadat, but rather should be accounted for as if they were investments made by or returns effected to PTE Study Centre Pty Ltd.

3. Declare that the balance of Mr Shadat’s loan account as at 30 June 2020 and thereafter is not $5,551, but is $497,867.

4. The 38 shares owned by Mr Shadat in ANIT (‘the Shadat shares’) shall be purchased by Mr Rahman and Mr Huraira in such proportion as may be agreed by Mr Rahman and Mr Huraira for a price to be fixed in accordance with these orders.

5. Mr Rahman and Mr Huraira shall pay the price for the Shadat shares within 30 days of the fixing of the price subject to Mr Shadat transferring the Shadat shares free of all encumbrances to them.

6. In the event that Mr Rahman and Mr Huraira do not pay the price as fixed within 30 days of the fixing of the price, ANIT shall be wound up and a liquidator shall be appointed.

7. For the purpose of assisting the Court in fixing the price of the Shadat shares, the Court appoints an independent person pursuant to s 65M of the Civil Procedure Act 2010 (Vic) as an independent expert (‘the Expert’) for the purpose of assisting the Court in enquiring into and reporting to the Court on the value of ANIT, the value of the business conducted by ANIT, and the value of the Shadat shares as at 30 June 2023 and otherwise according to the terms set out in a letter of instruction[133] (‘the instructions’).
130 A draft of the letter of instructions will be annexed to the orders made this day.

8. The appointment of the Expert will be subject to the Expert providing consent to the appointment pursuant to s 65M(4) of the Civil Procedure Act 2010 (Vic).

9. Once appointed, the Expert will confirm his or her acceptance of the appointment by notifying the parties and the Commercial Court Registry (by email to [email protected]) in writing.

10. Within 21 days of the date on which the Expert confirms his or her acceptance of the appointment (the ‘Acceptance Date’), the parties shall if so advised deliver to the Expert, a submission not exceeding 20 pages which sets out any matter that the parties consider is relevant to the Expert’s task.

11. During business hours on the giving of reasonable notice by the Expert, the parties must:

(a) permit the Expert to have full access to inspect all books and documents of ANIT; and

(b) comply with any reasonable requests of the Expert including for the provision of any information or documents (including copy documents).

12. The costs of the Expert shall, subject to further order, be paid by the first and second defendants.

13. The Expert shall deliver to each of the parties as soon as practicable a statement of proposed remuneration for the appointment with such statement setting out:

(a) the hourly rate; and

(b) the estimate of total fees or quote for work undertaken up to and including the valuation report (the ‘Estimate’).

14. Within 14 days of the Estimate, provided no party objects to the Expert’s estimate within 7 days of its receipt, the first and second defendant shall provide to the Associate Judge who is the Senior Master, by payment into Court, security for the Expert costs of appointment in the initial amount of the Expert’s estimate (‘the Expert’s security’).

15. The Expert’s security shall be provided by the first and second defendants.

16. No portion of the Expert’s security shall be disbursed otherwise than pursuant to an order of the Court.

17. The Expert has liberty to apply, if so advised, for:

(a) an order for payment of remuneration (or a portion thereof) from the Expert’s security;

(b) an order to increase the amount of the Expert’s security, including on account of any further instructions to assist the Court;

(c) for any other direction or matter that the Expert considers is necessary or desirable in order to finalise the report.

18. During business hours on the giving of reasonable notice by the Expert, Mr Shadat and the defendants must provide written answers to questions posed by the Expert.

19. Within 120 days of the Acceptance Date, or such other period as is ordered by the Court, the Expert shall make a report in writing to the Court with a copy to each of the parties stating the Expert’s opinion.

20. The moneys paid into Court pursuant to paragraph 6(e) of the orders made 15 September 2023 following the sale of the Ferrari together with any interest earned thereon shall be paid to the third defendant/plaintiff by counterclaim.

21. The counterclaim shall otherwise be dismissed.

22. The further hearing of the proceeding shall otherwise be adjourned to a date to be fixed after 31 March 2025.

23. Liberty to apply is reserved generally and to the Expert.

The parties will be given the opportunity to check the calculations which underpin the proposed declarations, the form of the directions, orders and instructions more generally and be heard as to the name of the appropriate expert. I shall also hear the parties on the question of costs, but my preliminary view is that Mr Shadat should be entitled to an order for payment of his standard costs to date.

The orders that I shall make today therefore are as follows:

(1) For the purpose of appointing an independent expert as proposed in these reasons, within 7 days of the date of these orders the plaintiff and the defendants shall:

(a) each submit to the Court the names and addresses of any person(s) not exceeding three in number, who they consider is an appropriate person to be appointed as the expert:

(b) inform the Court if they have any objection, and if so the basis of such objection, to the appointment of any of the following persons as the expert:

(i) Owain Stone of Alvarez and Marsal;

(ii) Dawna Wright of FTI Consulting;

(iii) Paul Lom of PKF Melbourne Corporate;

(c) provide any mark ups to the proposed letter of instructions to the Expert a copy of which is annexed hereto.

(d) provide any mark ups to the proposed orders and declarations referred to in these orders if so advised and any submissions in support.

(2) Following the receipt of the responses of the parties referred to in paragraph 1 hereof, the Court shall appoint the Expert at the further hearing in this matter fixed for a convenient date in November 2024, and otherwise make orders to the effect proposed in these reasons and as to costs to date.

(3) The further hearing of this proceeding is adjourned to the next convenient date in November 2024.

SCHEDULE OF PARTIES

S ECI 2020 03178
BETWEEN:
SM NAZMUS SHADAT	Plaintiff
- and -
MD IMITIAJ RAHMAN	First Defendant
MD ABU HURAIRA	Second Defendant
ANIT AUSTRALIA PTY LTD (ACN 614 122 360)	Third Defendant
AND BETWEEN:
ANIT AUSTRALIA PTY LTD (ACN 614 122 360)	Plaintiff by Counterclaim
- and -
SM NAZMUS SHADAT	First Defendant by Counterclaim
PTE STUDY CENTRE BRISBANE PTY LTD (ACN 621 116 612)	Second Defendant by Counterclaim
PTE STUDY CENTRE SYDNEY PTY LTD (ACN 621 118 312)	Third Defendant by Counterclaim
SM NAZMUS SOHAN	Fourth Defendant by Counterclaim

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Citations

In the matter of Anit Australia Pty Ltd [2024] VSC 705

Cases Citing This Decision

0

Cases Cited

3

Statutory Material Cited

0

Bugeja v The Queen [2010] VSCA 321

R v Morrow [2009] VSCA 291

R v Morrow [2009] NSWDC 78

[2024] VSC 705

14 November 2024