In the matter of Azzurri Group Holdings Pty Ltd (No 2) - [2025] NSWSC 1064

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Azzurri Group Holdings Pty Ltd (No 2) [2025] NSWSC 1064
Hearing dates: 22-24, 29 and 31 July 2025
Date of orders: 18 September 2025
Decision date: 18 September 2025
Jurisdiction: Equity - Corporations List
Before: Nixon J
Decision:
1. Direct that the parties are to bring in short minutes of order by 5pm on 1 October 2025 to give effect to the reasons for judgment.
2. Direct that, in the event the parties are unable to agree on orders to give effect to the reasons for judgment (including orders as to interest and costs), the parties are to exchange and provide to the Associate to Nixon J, by 5pm on 1 October 2025, the orders which each party proposes, submissions (limited to 5 pages) on those orders, and any evidence in respect of interest and costs, indicating whether, and if so why, an oral hearing is requested to deal with the matters in dispute.

Catchwords:
CORPORATIONS – Members’ rights and remedies – Oppression – where breakdown in relationship between shareholders – where first plaintiff received a notice alleging breaches of shareholders agreement – where shareholders agreement provided that if, following receipt of such notice, breaches were not remedied, the shareholder was deemed to have issued a transfer notice, triggering a compulsory sale process – whether first plaintiff breached shareholders agreement – whether breach notice was valid – whether first plaintiff remedied any such breaches – whether first plaintiff issued a dispute notice – whether a valuer was validly appointed in accordance with the shareholders agreement – whether the valuer’s valuation complied with the terms of the shareholders agreement – whether compulsory sale of first plaintiff’s shares was in breach of the shareholders agreement – whether there was oppressive conduct – whether the price paid to the first plaintiff was less than the fair value, or market value, for his shares.

Legislation Cited:
Corporations Act 2001 (Cth) ss 232, 233

Cases Cited:
AGL Victoria Pty Ltd v SPI Networks (Gas) Pty Ltd [2006] VSCA 173
Australian Vintage Ltd v Belvino Investments (No 2) Pty Ltd (2015) 90 NSWLR 367; [2015] NSWCA 275
B. & G. Properties Pty Limited v Fayad [2021] NSWSC 1382
Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25
Catalano v Managing Australia Destinations Pty Ltd [2014] FCAFC 55
Earl Cadogan v Pitts [2010] 1 AC 226
Fayad v B & G Properties Pty Ltd [2022] NSWCA 129
Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1988) 28 ACSR 688
Fox v Percy (2003) 214 CLR 118; [2003] HCA 22
Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46
In the matter of Mobius Distilling Pty Ltd (in liq) [2025] NSWSC 539
Kanivah Holdings Pty Ltd v Holdsworth Properties Pty Ltd [2002] NSWCA 180
Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314
MMAL Rentals Pty Ltd v Bruning (2004) 63 NSWLR 167; [2004] NSWCA 451
Northern Territory v Mr A. Griffiths (deceased) and Lorraine Jones on behalf of the Ngaliwurru and Nungali Peoples (2019) 269 CLR 1; [2019] HCA 7
Re Global Mortgage Equity Corporation Pty Ltd [2013] NSWSC 1586
Re North Coast Transit Pty Ltd [2013] NSWSC 1119
Re Norvabron Pty Ltd (No 2) (1986) 11 ACLR 279
Spence v Rigging Rentals WA Pty Ltd [2015] FCA 1158
Strategic Management Australia AFL Pty Ltd v Precision Sports & Entertainment Group Pty Ltd [2016] VSC 303
Strike Australia Pty Ltd v Data Base Corporate Pty Ltd [2019] NSWCA 205

Category: Principal judgment
Parties:
Peter Martino (First Plaintiff)
2B6 Enterprises Pty Ltd (Second Plaintiff)
Azzurri Group Holdings Pty Ltd (First Defendant)
Azzurri Concrete Group Pty Ltd (Second Defendant)
MPD Developments Pty Ltd (Third Defendant)
Mr Donato D’Angola (Fourth Defendant)
Sogase Pty Ltd (Fifth Defendant)
Mr Mario D’Angola (Sixth Defendant)
Balli Constructions Pty Ltd (Seventh Defendant)
Azzurri Concrete Enterprises Pty Ltd (Eighth Defendant)
Azzurri Concrete Pty Ltd (Ninth Defendant)
Representation:
Counsel:
A P Cheshire SC / J Cook (Plaintiffs/Cross Defendants)
E A J Hyde (Defendants/Cross Claimants)
Solicitors:
AJL Legal (Plaintiffs)
Paradise Charnock Hing (Defendants)

File Number(s): 2023/00151182
Publication restriction: Nil

JUDGMENT

This proceeding concerns a dispute between shareholders in the Azzurri Group of companies.
The Azzurri Group comprises:

the First Defendant, Azzurri Group Holdings Pty Ltd (AGH);

the Second Defendant, Azzurri Concrete Group Pty Ltd;

the Third Defendant, MPD Developments Pty Ltd;

the Seventh Defendant, Balli Constructions Pty Ltd;

the Eighth Defendant, Azzurri Concrete Enterprises Pty Ltd; and

the Ninth Defendant, Azzurri Concrete Pty Ltd (ACPL).

Azzurri Concrete is the main operating entity in the Azzurri Group, and carries on a business of providing concreting services.
The First Plaintiff, Mr Peter Martino, previously owned approximately 13.89% of the shares in Azzurri Concrete.
On 9 August 2023, Mr Martino’s shares in Azzurri Concrete were transferred to, and split equally between, two other existing shareholders, namely, the Fourth Defendant, Mr Donato D’Angola and the Sixth Defendant, Mr Mario D’Angola. Mr Donato D’Angola and Mr Mario D’Angola are brothers and are the founders of the business of the Azzurri Group.
As a result of this transaction, the shareholding of each of Mr Donato D’Angola and Mr Mario D’Angola in Azzurri Concrete increased from around 33.33% to around 40.28%.
The remaining 19.44% of the shares in Azzurri Concrete are held by AGH. The shares in AGH are owned:

as to 41%, by Mr Mario D’Angola;

as to 41%, by the Fifth Defendant, Sogase Pty Ltd (which is wholly owned by Mr Donato D’Angola); and

as to 18%, by the Second Plaintiff, 2B6 Enterprises Pty Ltd as trustee for the 2B6 Enterprises Trust. Mr Martino holds 100% of the shares in 2B6 Enterprises and 100% of the units in the 2B6 Enterprises Trust.

As regards the other corporate defendants:

ACPL is wholly owned by Azzurri Concrete and is the trustee of a unit trust which owns the plant and equipment used by the business;

Concrete Enterprises is a special purpose vehicle established for the purpose of receiving rebates paid by concrete suppliers; and

MPD Developments and Balli Constructions are investment vehicles, and do not operate any part of the Azzurri Group’s business.

There are two main disputes to be resolved in this proceeding.
The first dispute concerns the compulsory sale process which led to Mr Martino’s shares in Azzurri Concrete being transferred to Mr Donato D’Angola and Mr Mario D’Angola.
The Defendants contend that this compulsory sale process took place pursuant to, and in accordance with, the terms of a Shareholders Agreement dated 20 October 2015.
The Plaintiffs contend that this compulsory sale process did not comply with the Shareholders Agreement, and that the affairs of Azzurri Concrete (in particular, so far as concerns this process) were conducted in a manner that was oppressive to Mr Martino within the meaning of s 232 of the Corporations Act 2001 (Cth) (the Act).
The second dispute concerns the price for which Mr Martino’s shares were sold to Mr Donato D’Angola and Mr Mario D’Angola.
The Defendants contend that the shares were sold at a price which was determined by an independent valuer appointed under the Shareholders Agreement, and that no basis has been established (in accordance with the principles in Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314) for setting aside that determination.
The Plaintiffs contend that the valuer’s appointment did not comply with the terms of the Shareholders Agreement, and that the valuer was provided with incomplete information regarding the financial position of Azzurri Concrete. Further, the Plaintiffs contend that Mr Martino’s shares were transferred at a price significantly below their fair value.
The parties led expert evidence regarding the “fair value” (and the “market value”) of Mr Martino’s shares in Azzurri Concrete as at June 2023. This evidence is central to the determination of Mr Martino’s claim, as the only remedy which is sought in respect of each of his various causes of action is the difference between the price he was paid for his shares and their “fair price” or their “true market value”.
A number of other issues were resolved either prior to, or in the course of, the hearing. In particular:

the Plaintiffs confirmed, in their opening address, that Mr Martino did not press any claim for loss of dividends, salary or superannuation;

the parties agreed that the Plaintiffs were entitled to the sum of $124,292.50 in relation to the sale of certain properties owned by Balli Constructions (the Court was informed, on the last day of the hearing, that this sum was being transferred to the Plaintiffs); and

the parties agreed that Azzurri Concrete, Mr Donato D’Angola and Mr Mario D’Angola were entitled to judgment in the sum of $300,000 in respect of their cross claim against Mr Martino (which is referred to at paragraphs [104]-[105] below).

Factual Background

Preliminary comments

Each of Mr Martino, Mr Donato D’Angola and Mr Mario D’Angola gave evidence and was cross-examined at length. Submissions were made by each set of parties regarding the credit of the other’s witnesses.
However, the number of factual issues to which this lay evidence is relevant, and which need to be determined in order to resolve the real issues in dispute in the proceeding, is relatively limited. That is because various issues fell away during the course of the hearing (such as the issues raised by the cross claim) and also because, as explained below, the Plaintiffs’ case focussed primarily on whether the compulsory sale process complied with the Shareholders Agreement and whether the sale price was below the fair value (or market value) of the shares.
Some of the key aspects of the lay evidence which were relevant to those issues, and which were a focus of cross-examination, concerned whether Mr Martino was authorised to use the credit cards of Azzurri Concrete for personal expenses, and the extent of any such authority; whether Mr Donato D’Angola and Mr Mario D’Angola were acting in good faith when issuing the breach notice and subsequently taking steps to effect the compulsory sale process; and whether certain financial records, which were referred to as the Bespoke Documents, contain accurate and reliable information regarding Azzurri Concrete’s financial position and performance.
I deal with those particular matters of contention, and the associated issues of credit, when considering whether the Plaintiffs’ claims of breach of contract and oppression are established. In addressing those and other disputed issues of fact, the Court is to reason to its conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events: Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [31] per Gleeson CJ, Gummow and Kirby JJ. This does not eliminate the established principles about witness credibility, but it tends to reduce the occasions where those principles are seen as critical: ibid.
Before addressing those matters, I have set out a summary of the factual background, drawn primarily from the contemporaneous documents of the Azzurri Group (and also, as noted below, from matters which were conceded in cross-examination).

Mr Martino joins Azzurri Concrete

Azzurri Concrete was incorporated on 15 August 2008. At that time, the shares were equally held by Mr Mario D’Angola, Mr Donato D’Angola and Mr Gaetano (Gary) Lamanna, with each holding 12 of the 36 shares on issue. In addition, each of those shareholders was appointed as a director.
In around 2009, Mr Martino was employed as a business consultant by Azzurri Concrete.
In June 2013, Mr Martino became a shareholder in Azzurri Concrete. This occurred by means of Mr Lamanna transferring 5 of his 12 shares to Mr Martino, such that Mr Lamanna subsequently held 7/36 (or 19.44%), and Mr Martino 5/36 (or 13.89%), of the shares in Azzurri Concrete, with each of Mr Donato D’Angola and Mr Mario D’Angola maintaining his 12/36 (or 33.33%) shareholding.
In around April 2014, Mr Martino was appointed Chief Executive Officer (CEO) of the business.
On 20 October 2015, the Shareholders Agreement was executed by Azzurri Concrete, Mr Mario D’Angola, Mr Donato D’Angola, Mr Lamanna and Mr Martino. (An issue was raised in Mr Martino’s affidavit regarding the circumstances in which, and purpose for which, this agreement was executed. It is unnecessary to address this issue, as Mr Martino accepted, in opening submissions, that the Shareholders Agreement was validly executed and was binding on the shareholders of Azzurri Concrete.)
I will deal with particular terms of the Shareholders Agreement when considering the complaints raised by Mr Martino in respect of the compulsory sale process that led to the transfer of his shares to Mr Donato D’Angola and Mr Mario D’Angola. At this stage, it is sufficient to note the following matters:

clause 4.2 imposed various obligations on the shareholders in respect of their dealings with each other, including obligations to co-operate and use the shareholder’s best endeavours to ensure that Azzurri Concrete successfully carries on its business, and to be just and faithful, and act honestly and fairly, in their dealings with each other in relation to Azzurri Concrete;

clauses 12 and 13 set out the procedure to be adopted where a transfer notice was issued (or deemed to be issued), including making provision for the valuation of the shares by an independent valuer; and

clause 19.1.1 provided that, if a shareholder breached the agreement and failed to rectify that breach within 30 days of receiving a breach notice from another shareholder, the defaulting shareholder will have “all rights attaching” to his shares suspended and will be deemed to have issued a transfer notice in respect of his shares.

Mr Lamanna leaves the business

From around September 2019, Mr Mario D’Angola, Mr Donato D’Angola and Mr Martino had discussions with Mr Lamanna about buying him out as a shareholder in Azzurri Concrete.
In November 2019, Mr Donato D’Angola and Mr Mario D’Angola offered to buy Mr Lamanna’s 19.44% shareholding in Azzurri Concrete for $1.4m. This offer was based on a valuation which had been obtained from a valuer, Mr Peter Rayner, in August 2019. Mr Rayner valued the whole of the business at $7.2m (the First Rayner Valuation). Mr Lamanna did not accept this offer.
In January 2020, Mr Lamanna’s employment with the Azzurri Group was terminated.
In May 2020, following the departure of Mr Lamanna, there was a restructure of the Azzurri Group which resulted in Mr Martino assuming the role of Director of Finance and Commercial at Azzurri Concrete.
In August 2020, Mr Lamanna commenced proceedings in this Court against Mr Mario D’Angola, Mr Donato D’Angola, Mr Martino, Azzurri Concrete and other companies in the Azzurri Group, claiming oppression and breach of his employment contract (the Lamanna Proceeding).
In November 2020, Mr Lamanna obtained a valuation from Ms Jacqueline Woods of BRI Ferrier. Ms Woods valued the equity of Azzurri Concrete in the range of $16.9m to $20.5m, such that Mr Lamanna’s 19.44% interest was valued at between $3.3m and $4.0m.
In April 2021, Mr Rayner provided a further valuation of the Azzurri Concrete Group, which increased its value to be $16.5m (the Second Rayner Valuation).
In June 2021, the Lamanna Proceeding was resolved on the basis that Mr Lamanna agreed to sell all of his shares in Azzurri Concrete and the whole of his interest in the Azzurri Group for $3.725m.
In June 2021, Mr Lamanna’s shares in Azzurri Concrete were transferred to AGH, which was established for the purpose of holding those shares. (As noted at paragraph [7] above, each of Mr Donato D’Angola and Mr Mario D’Angola beneficially owns 41% of the shares in AGH, with Mr Martino holding the other 18% through 2B6 Enterprises.)

Information Memorandum and offers from Hanson

In 2022, the Azzurri Group retained KPMG to prepare an information memorandum with a view to seeking interest from potential purchasers of Azzurri Concrete.
A document headed “Project Fusion – Information Memorandum” was produced by KPMG in July 2022. The Information Memorandum contained:

historical financial information for the financial years ending 30 June 2019 (FY19), 30 June 2020 (FY20) and 30 June 2021 (FY21), recording:

revenue of $48.4m and Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) of $3.4m for FY19;

revenue of $78.2m and EBITDA of $3.6m for FY20; and

revenue of $103.2m and EBITDA of $7.7m for FY21;

two sets of figures for the financial year ending 30 June 2022 (FY22), based on nine months of management accounts plus three months forecast, showing:

revenue of $75.7m and EBITDA of $6.1m; and

on a “weather-adjusted” basis, revenue of $110.1m and EBITDA of $8.7m;

forecast figures for each of the financial years ending 30 June 2023 (FY23) and 30 June 2024 (FY24), showing:

for FY23, revenue of $154.3m and EBITDA of $11.7m (or, on a “weather-adjusted” basis, revenue of $119.9m and EBITDA of $9.1m); and

for FY24, revenue of $161.8m and EBITDA of $12.5m.

The reason for the “weather-adjusted” figures was that “extraordinary weather events” in FY22 had meant that various projects which would otherwise have been completed in FY22 had been delayed and completed in FY23.
The Information Memorandum expressed the view, based on this material, that the business had “demonstrated a strong historical revenue growth”, which was supported by “robust gross profit (GP) margins”, and had a “robust project pipeline”.
When Mr Donato D’Angola was taken to the Information Memorandum in cross-examination, he accepted that by July 2022 the business had, with Mr Martino’s involvement, developed from humble beginnings into one of the main concreting companies in Australia. He also agreed that the forecast figures for FY23 and FY24 in the Information Memorandum represented, at that time, the best estimates of both the directors and KPMG for those financial years.
On 11 July 2022, Mr Donato D’Angola sent a letter to KPMG, on behalf of Azzurri Concrete, confirming that, “to the best of our knowledge”, the financial information in the Information Memorandum was “materially true, complete and accurate” and that “there are no further material matters or information which we know of that should be in the [Information Memorandum]”.
On 26 August 2022, the Azzurri Group received a “non-binding indicative offer” from Hanson Holdings Australia Pty Ltd for the purchase of a 50.1% interest in the Azzurri Group for an amount of $17.535m (implying a valuation for the Azzurri Group of $35m). The proposed transaction was subject to various conditions, including “Hanson completing satisfactory financial, commercial, technical, legal and general due diligence on the Business to its satisfaction, prior to execution of the transaction documents”.
On 30 August 2022, KPMG prepared an agenda and discussion points for a meeting with Hanson, which were provided to Mr Mario D’Angola, Mr Donato D’Angola and Mr Martino. This email stated that the “messaging conveyed to Hanson … to date” included the following points:

“• Azzurri shareholders disappointed with offer
• Significantly below shareholders price expectations / borderline offensive
• Don’t understand valuation given growth historical and future growth profile and quantum of work-in-hand plus order book.”

One of the main matters which KPMG highlighted in this document was that any consideration of future maintainable earnings should be limited to FY21 and FY22, and should disregard FY20:

“• FY20 is no[t] relevant when assessing maintainable EBITDA, as the business has fundamentally changed in scale, operations, corporate governance, size of projects, (OTHERS)

• At a minimum, historical EBITDA should be limited to FY21-FY22 actuals when assessing historical EBITDA performance.”

This email also appears to indicate that the figures for FY22 had improved since the issue of the Information Memorandum. In particular, this email indicated that while the “FY22(IM)” figure for EBITDA was $6.1m, the “FY22 (Stat)” figure was $7.4m.
On 31 August 2022, Mr Donato D’Angola replied to this email, stating that the shareholders “as a collective want you and Hanson to understand that unless we are talking over the 53 million mark”, then the shareholders “won’t be proceeding” (emphasis in original).
On 1 September 2022, KPMG sent Mr Donato D’Angola, Mr Mario D’Angola and Mr Martino a list of “key action items”, including the following:

“Operational changes between FY20 and FY21 … - critical to remove FY20 from the EBITDA calculations.”

On 5 September 2022, there was a meeting between the shareholders of Azzurri Concrete, Hanson and KPMG, at which there was discussion of the “Valuation methodology applied” and “Future maintainable EBITDA”. Mr Donato D’Angola agreed in cross-examination that the purpose of the meeting was to persuade Hanson to exclude the FY20 figures when valuing the business, with a view to persuading Hanson to increase its offer.
In October 2022, the Azzurri Group received a revised non-binding indicative offer from Hanson to purchase a 50.1% interest in the Azzurri Group for $19.996m (implying a valuation for the Azzurri Group of approximately $40m). This offer was subject to the same conditions as the previous offer.
The revised offer figure was described by KPMG on 10 October 2022 as representing “5.3x the average of FY21 and FY22 EBITDA of $7.55m”. It therefore appears that Hanson accepted the contention that FY20 should be excluded in determining the sale price, or at least framed its increased offer on that basis.
Mr Donato D’Angola remained of the view that this increased offer was “not realistic”.
On 1 November 2022, Mr Donato D’Angola sent an email to Mr Mario D’Angola, Mr Martino and KPMG, reporting that he had received a call from the Hanson representative who had indicated that Hanson had “decided to put this on hold till after the first quarter of next year”. Accordingly, it appears that negotiations did not proceed further at that point in time.

Mr Martino decides to leave the business

In September 2022, Mr Donato D’Angola and Mr Mario D’Angola hired a new Chief Financial Officer for the business. Mr Donato D’Angola accepted in cross-examination that he was aware that Mr Martino was unhappy about this appointment, and that he and Mr Mario D’Angola effectively “pushed through this idea over the objection of Mr Martino”. Mr Donato D’Angola also agreed that around this time, he formed the view that he and Mr Mario D’Angola would decide on the future of Azzurri Concrete, and that “Mr Martino either got on board and did what [they] said, or left”.
It was common ground that Mr Martino’s relationship with Mr Donato D’Angola and Mr Mario D’Angola deteriorated from that point in time.
There was unchallenged affidavit evidence from Mr Antonio Sassano, who is an employee of Azzurri Concrete, that Mr Martino said on a number of occasions in October 2022 that he was “finishing up” with Azzurri Concrete and “moving on”, and that he did not “see eye to eye on a number of issues” with Mr Donato D’Angola and Mr Mario D’Angola. On 7 November 2022, Mr Martino sent an email to his solicitor, Mr Stefano Laface, asking to meet “to discuss closure and progression to leaving this business”. Mr Martino stated in cross-examination that, as at November 2022: “I wanted to work a strategy to remove myself from the business”. It appears that steps were subsequently taken by Mr Laface to assist with progressing Mr Martino’s departure from the business as, on 6 January 2023, Mr Martino sent a further email to Mr Laface, asking “if the letter is ready to review as I would like to proceed and leave”.
On 25 January 2023, Mr Martino met with Mr Donato D’Angola and Mr Mario D’Angola. On the previous day, Mr Martino had sent them a draft email which he proposed sending to all staff after their meeting, which commenced as follows: “I am writing to inform you that I have decided to step down as the Director Finance and Commercial in our business”. The subject line of this email stated that Mr Martino was seeking their “thoughts” on this email, “as I would like to do (i.e. send) something before I leave tomorrow”.
It is clear, from the draft letter, that Mr Martino intended to leave his position with the business on 25 January 2023. That is reinforced by the following matters:

Mr Martino sent out an invitation for the “Shareholder Meeting” on 25 January 2023, with the subject line stating “Peter Martino last day 25.1.23”;

on 24 January 2023, Mr Martino sent an email to a manager at KPMG, Ms Nadia Saad, stating that: “Tomorrow is my last day at azzurri”; and

Mr Sassano gave unchallenged evidence that, on the morning of 25 January 2023, Mr Martino said to him: “Today is my last day. I won’t be coming back here.”

Mr Martino deposed that, at the meeting on 25 January 2023, he indicated that he wanted to cease being a shareholder, and Mr Donato D’Angola replied that they did not have the funds available, but “when we sell to Hanson, you can take your funds”. The understanding at this time appears to have been that, if the sale of a 50.1% interest in the Azzurri Group to Hanson sale went through, Mr Martino would transfer all of his shares in Azzurri Concrete to Hanson and would be paid the price per share that was agreed with Hanson. However, no sale to Hanson subsequently proceeded.
Although Mr Martino had provided Mr Donato D’Angola and Mr Mario D’Angola with a draft letter which suggested that he would be leaving on 25 January 2023, he appears to have changed his position at the meeting with them on that day. Mr Donato D’Angola agreed in cross-examination that Mr Martino indicated at the meeting that he “wanted to stay a part of the business until the issue of the buyout of his shares had been agreed”.
However, in February 2023, Mr Donato D’Angola instructed Mr Martino that he should not come onto the business’s premises and, from around that time, Mr Donato D’Angola ceased to provide him with any further information in relation to the business. Mr Mario D’Angola agreed that, by this time, he had decided that Mr Martino “had to leave the business”, adding: “I did not want him to be shareholder in our business no more”.
There was a factual dispute as to whether Mr Martino chose to leave the business or was, in effect, pushed out by Mr Donato D’Angola and Mr Mario D’Angola. However, it is unnecessary to resolve this dispute since, in opening written submissions, the Plaintiffs accepted that “probably nothing turns on this”.

Redemption of Reward Points

On 7 February 2023, Mr Martino sent an email to Mr Donato D’Angola and Mr Mario D’Angola regarding the reward points on Azzurri Concrete’s credit card account with ANZ. In this email, Mr Martino noted that there were currently 15.3m business reward points, “which equates to 60K”. He made the following request:

“You fine if I move this to the black card as I would like to use my position of the 20K, and you can both use your 20K each.
Let me know if I have your blessing to do this as it take three days to roll onto the card?”

By this email, Mr Martino was seeking the consent of his fellow shareholders to take one-third of Azzurri Concrete’s reward points, with Mr Donato D’Angola and Mr Mario D’Angola also receiving one-third each.
There appears to have been a discussion on the same day, at which Mr Donato D’Angola rejected this request. On the following day, 8 February 2023, Mr Donato D’Angola sent an email to Mr Martino, stating as follows:

“Peter,
As discussed yesterday.
This facility will remain as is untouched until such time it is closed out. We’ll advise you.”

Despite these communications, Mr Martino subsequently redeemed the entire balance of Azzurri Concrete’s reward points for his personal benefit. On 14 March 2023, Mr Martino received an email from ANZ Business rewards confirming that 19,643,078 reward points on Azzurri Concrete’s account had been redeemed for 9,821,539 Qantas frequent flyer points, which had been credited to Mr Martino’s personal account.

Breach Notice

On 5 May 2023, a letter was sent to Mr Martino which was headed “Clause 19.1.1(b) Breach Notice – Shareholders Agreement of Azzurri Concrete Group Pty Limited (Company)” (Breach Notice). The Breach Notice was signed by each of Mr Donato D’Angola and Mr Mario D’Angola as a “Company Shareholder”.
The Breach Notice stated that Mr Martino had breached various provisions of the Shareholders Agreement, including clauses 4.2.1 and 4.2.6. The matters relied upon included the following:

“(a) the Company has identified a total of $398,286.39 that you incurred on Company credit cards and accounts since 6 May 2021 without the approval or authorisation of the Company for personal expenses. These expenses are annexed to this letter, for which the Company has made due enquiries to determine that they are not related to, or authorised by, the Company;
…
(e) on 14 March 2023, you redeemed 19,643,078 points from the Company's bank reward redeemer scheme without the authorisation or approval from the Company…”

In relation to item (a) above, the Breach Notice attached a schedule detailing the 292 individual transactions which were said to comprise unauthorised personal expenditure totalling $398,286.39.
The Breach Notice concluded as follows:

“We request that you provide us with full details of any remedy for the breaches outlined in this letter, and supporting evidence of any steps taken to remedy your breaches, by 5:00pm on 5 June 2023. If all breaches are not remedied by that time, a transfer notice is deemed to be issued to the Board of the Company to commence the process to acquire your shares in the Company in accordance with clause 12 of the Shareholders Agreement.”

Proceeding is commenced

On 11 May 2023, the Plaintiffs commenced this proceeding.
The Statement of Claim sought various relief, including declarations as to oppressive conduct, orders for Mr Martino’s shares in Azzurri Concrete to be purchased by Mr Donato D’Angola and Mr Mario D’Angola “at their fair value”, and an order “that the Purported Breach Notice dated 5 May 2023 is void and of no effect”.

Breach Notice Response

On 30 May 2023, Mr Martino’s solicitor sent a response to the Breach Notice, which was addressed to Mr Donato D’Angola and Mr Mario D’Angola, care of their solicitors, Paradise Charnock O’Brien (Breach Notice Response).
The Breach Notice Response stated that Mr Martino “disputes the assertions made in the Purported Breach Notice” and, specifically, “disputed having acted in breach of” the clauses specified in the Breach Notice, including clauses 4.2.1 and 4.2.6 of the Shareholders Agreement.
The Breach Notice Response included the following responses regarding the allegations made in the Breach Notice concerning unauthorised personal expenditure on Azzurri Concrete’s credit cards and the misappropriation of reward points from Azzurri Concrete’s account:

“Specifically in response to paragraph 2.1 (a) - Mr Martino denies the assertion that he has incurred a total of $398,286.39 on Company credit cards and accounts since 6 May 2021 without the approval or authorisation of the Company for personal expenses. Each of the expenses set out in the annexure to the Purported Breach Notice was authorised by the Company either as an ordinary business related expense or otherwise approved by the directors.
…
Specifically in response to paragraph 2.1 (e) – We are instructed that all of Mr Martino's bank access and cards were cancelled by Donato D'Angola. The card in question was in the name of Mr Martino, and he transferred the points from that card to his QANTAS card. This was with the express authorisation of Mario D'Angola and Donato D'Angola, and in accordance with establish[ed] practice of the Company.”

In addition, the Breach Notice Response stated as follows: “This letter also constitutes a dispute notice within clause 16.2 of the Shareholders Agreement.”

Appointment of Mr Martino as a director

In the period up to the start of June 2023, Mr Donato D’Angola was the sole director of Azzurri Concrete.
Clause 5 of the Shareholders Agreement provided as follows:

“5. Board of Directors
5.1   The number of Directors (excluding alternate directors) must be equal to the number of Shareholders, unless the Shareholders unanimously determine otherwise.
5.2   The Company must procure that, on the date this Agreement takes effect, the Board comprises the Shareholders or their nominees.
5.3   The Company and each Shareholder shall on a continuing basis ensure the due and proper appointment of each Shareholder's nominated Director.
…
5.5   Every appointment and removal of a Director takes effect when the written notice of appointment or removal is received at the office or, in the case of an appointment, when the written consent to act as a Director is received at the office if that is later than the receipt of the notice of appointment.
…
5.8   A quorum for Board meetings is constituted by the attendance (in person or by alternate) of a Director appointed by each Shareholder that is entitled to appoint a Director under clause 5.2).”

On 22 May 2023, Mr Donato D’Angola sent an email to Mr Martino and Mr Mario D’Angola which referred to clause 5 of the Shareholders Agreement and asked whether each of them wished to appoint a director to the board of Azzurri Concrete.
Mr Martino subsequently indicated that he did wish to be appointed as a director.
On 2 June 2023, Mr Donato D’Angola, as sole director of Azzurri Concrete, passed a resolution appointing each of Mr Mario D’Angola and Mr Martino as an additional director of Azzurri Concrete.

Resolution of interlocutory application

In the Breach Notice Response, Mr Martino had demanded that Mr Donato D’Angola and Mr Mario D’Angola provide a written undertaking, by 1 June 2023, that they “will not take any steps under clause 12 or 13 of the Shareholders Agreement [that is, the clauses regarding the transfer of shares] in reliance on the Purported Breach notice in relation to [Mr Martino’s] shares”.
On 2 June 2023, Mr Martino commenced another proceeding against Mr Donato D’Angola and Mr Mario D’Angola, in which he sought the following interlocutory relief:

“Upon the plaintiff, by counsel, giving to the Court the usual undertaking as to damages, the Court Orders that:
6   Each of the defendants by themselves, their servants and agents be restrained until further order from taking any steps purportedly in reliance on the notice styled ‘Clause 19.1.1(b) Breach Notice Shareholders Agreement of Azzurri Concrete Group Pty Ltd (Company)’ dated 5 May 2023 and signed by the Defendants (Breach Notice), including but not limited to:
a.   making any entry in any register of the Company to reflect any transfer or sale of the plaintiff’s shares in the Company;
b.   effecting any notification to the Australian Securities and Investments Commission which reflects any transfer or sale of the plaintiff’s shares in the Company;
c.   purporting to exclude the plaintiff from exercising his rights to the office of director and his rights as a director of the Company;
d.   instructing any valuer pursuant to clause 13.1 in respect of any transfer or sale of the plaintiff’s shares in the Company; and
e.   taking any steps purporting to have the effect of suspending any of the rights attaching to the plaintiff’s shares in the Company.”

On 5 June 2023, this proceeding was listed before Hammerschlag CJ in Eq for the hearing of Mr Martino’s application for an interlocutory injunction.
The application was dismissed on the basis of certain undertakings being given, as recorded in the Court’s orders of 5 June 2023 (the June 2023 Orders):

“upon the plaintiff to the Court giving the usual undertaking as to damages and upon the defendants, through their counsel, giving an undertaking to the Court that if the plaintiff establishes, whether by reason of any breach of the Shareholder's Agreement, any entitlement in equity, any entitlement arising out of the voidness of any provision of the Shareholder's Agreement or any finding by the Court of oppression, resulting in the plaintiff having or having had an entitlement to receive in excess of any amount paid by the defendants or the company to him for the acquisition of his shares, the defendants will pay the plaintiff any shortfall (plus interest at the Court's rate), the application for interlocutory relief in accordance with paragraph 6 of Summons filed 2 June 2023 is dismissed.”

Appointment of Bizval as Valuer

On 7 June 2023, Mr Donato D’Angola sent a letter to Mr Martino which was stated to be “[o]n behalf of the Board”. This letter referred to the Breach Notice and Breach Notice Response, and stated that Mr Martino had failed to remedy, within 30 days, the breaches set out in the Breach Notice. The letter further stated that, as a result, the rights attaching to Mr Martino’s shares had been suspended “and there has been a deemed transfer of your shares”. The letter continued as follows:

“A meeting of the Board of the Company will be held at 11:30 am on Thursday, 8 June 2023, via audiovisual link, the details of which are provided in the calendar invitation sent in conjunction with this notice.
The purpose of the meeting is to consider the following business:
1.   a resolution dispensing with the 10-Business Day notice of Board meeting required by clause 5.7.3 of the Shareholders Agreement;
2.   a resolution removing Peter Martino as a director of the Company with immediate effect pursuant to clauses 19.1.1, 11.5, 12 and 13 of the Shareholders Agreement; and
3.   any other business agreed between the directors which is incidental and ancillary to the business.”

On 8 June 2023, Mr Martino attempted, without success, to attend this meeting via the audiovisual link provided to him. He sent an email to his solicitor on that day, in which he stated that he had “tried to log on” and that “know body [sic] [nobody] was there at 11.30am”.
The minutes of the meeting of the Board on 8 June 2023 record that this meeting proceeded with Mr Donato D’Angola and Mr Mario D’Angola present, and Mr Martino absent. The minutes record that Mr Donato D’Angola and Mr Mario D’Angola were satisfied that they comprised a quorum and that they:

“resolved to dispense with the 10-Business Day notice period for the Board meeting and to accept delivery of the Notice of Board Meeting dated 7 June 2023 to all Directors as sufficient notice”; and

“resolved that Mr Peter Martino is removed as a Director of the Company with immediate effect”.

On 8 June 2023, Mr Martino’s solicitor wrote to Paradise Charnock O’Brien (the solicitors for the Defendants), asking for details of the person appointed to value Mr Martino’s shares and “details of all documents to be provided to the appointed valuer, including copies of the [Information Memorandum] and offers made by Hanson Group”.
On the same day, Paradise Charnock O’Brien responded that their clients were not required to provide this information, in particular, because the following matters flowed from Mr Martino being a Defaulting Shareholder:

“3. Under the Shareholders Agreement, upon the Event occurring and the issue of a transfer notice: (a) the transfer notice appointed the Board as your client's agent for the sale (clause 12.2); and (b) all of your client's rights attaching to his shares were suspended, and remain suspended until the defaults have been remedied (clause 19 .1.1 (a)).
4. Your client's rights as shareholder have been suspended since 5:00 pm on Monday 5 June 2023. This includes the right to appoint a Director of the company.

5. Consequently, the quorum for Board meetings provided for in clause 5.8 is constituted by the attendance of the Directors appointed by our clients, being the only Directors appointed by shareholders who remain entitled to appoint Directors.”

On 9 June 2023, each of Mr Donato D’Angola and Mr Mario D’Angola signed a document headed “Circulating Resolution of Directors pursuant to Section 248A of the Corporations Act”, which referred to the Breach Notice and the terms of the Shareholders Agreement, and stated that:

“It is resolved that the fee proposal of BizVal Pty Ltd be accepted and that the Board engages BizVal Pty Ltd to value Mr Peter Martino’s shares in accordance with clause 13.1 of the Shareholders Agreement.”

Events in July and August 2023

On 18 July 2023, Mr Martino’s solicitor sent a further letter in response to the Breach Notice, which attached a schedule setting out an “Explanation of Expenses” in respect of each of the 292 transactions (totalling $398,286.39) that had been itemised in the Annexure to the Breach Notice. Some $395,138.94 (or 99.2%) of those expenses were said by Mr Martino to be “Business Expenses”, with an amount of only $3,147.45 being “Personal Expenses”.
Also on 18 July 2023, Mr Martino issued breach notices to each of Mr Donato D’Angola and Mr Mario D’Angola, alleging various breaches of the Shareholders Agreement.
On 23 July 2023, Mr Donato D’Angola signed the consolidated annual financial report for Azzurri Concrete and its subsidiaries for FY22. This financial report was accompanied by a compilation report signed by KPMG and dated 22 July 2023. Whereas the Information Memorandum had included figures for FY22 (based on nine months of management accounts plus three months forecast), showing EBITDA of $6.1m (see paragraph [39] above), the finalised financial report for FY22 recorded actual EBITDA of $1.778m.
On 27 July 2023, Mr Martino’s solicitor sent a further letter to Mr Donato D’Angola and Mr Mario D’Angola, stating that “a dispute notice was issued dated 30 May 2023, which precludes your client from undertaking any deemed transfer unless that [sic] dispute mechanisms are resolved in accordance with the terms of the Shareholders Agreement”. No steps were taken pursuant to the “Dispute Resolution” procedure in clause 16 of the Shareholders Agreement after this letter was sent.
On 31 July 2023, Bizval Pty Ltd issued its valuation of Mr Martino’s shares. This valuation was stated to be prepared on the basis of “fair market value”.
Bizval concluded that the value of 100% of the equity in Azzurri Concrete was $2,900,000. This resulted in Mr Martino’s 13.89% shareholding having a value of $402,778 on a “simple pro-rata basis”. Bizval then applied two further discounts, being a discount of 20% for “Lack of Control”, and a further discount of 20% for “Lack of Marketability”. The application of these discounts resulted in a valuation of $260,000 for “13.89% of the company on an illiquid non-controlling basis” (the Bizval Valuation).
Bizval noted that it had not included “the 10% discount which may be applicable under clause 13.6 of the Shareholders Agreement”. This clause provides for a discount of 10% to be applied to the sale price determined by the Valuer appointed pursuant to clause 13, in circumstances where the sale is triggered by clause 19 of the Shareholders Agreement.
On 1 August 2023, Mr Donato D’Angola and Mr Mario D’Angola resolved to adopt the Bizval Valuation for Mr Martino’s shares ($260,000) and to apply the further 10% discount referred to in clause 13.6 of the Shareholders Agreement ($26,000), resulting in a sale price of $234,000.
On 7 and 8 August 2023, Mr Martino’s solicitor sent letters to the Defendants’ solicitors, raising issues regarding the process which had been adopted in respect of Mr Martino’s shares and regarding the Bizval Valuation.
Clause 12.3 of the Shareholders Agreement provided that, within five days of the sale price being determined pursuant to clause 13, the Board must offer for sale to each shareholder (other than the seller) a number of the sale shares proportionate to their shareholding in Azzurri Concrete. Clause 12.5 provided that if all of the sale shares were not accepted under this “Round 1” offer, then the Board must re-offer the sale shares to those shareholders who accepted the “Round 1” offer (proportionate to the number of the shares held by each accepting shareholder divided by the number of shares held by all accepting shareholders). Mr Donato D’Angola and Mr Mario D’Angola (but not AGH) accepted the sale shares offered to them, resulting in half of the shares that were previously held by Mr Martino being transferred to each of them.
On 9 August 2023, the Defendants’ solicitors wrote to the Plaintiffs’ solicitor, stating that the shares previously held by Mr Martino had been transferred to Mr Donato D’Angola (as to 50%) and Mr Mario D’Angola (as to 50%), with each paying $117,000, and that this amount was being held by their solicitors on trust for Mr Martino.

Cross Claim

On 20 September 2023, Azzurri Concrete, Mr Donato D’Angola and Mr Mario D’Angola brought a cross claim against Mr Martino.
The Amended Cross Claim, which was filed on 8 February 2024, alleges that Mr Martino breached his duties to Azzurri Concrete by, inter alia, purchasing goods and services totalling $398,286.39 using Azzurri Concrete’s credit cards (being those personal expenses referred to in the Annexure to the Breach Notice) and by redeeming some 19.643m reward points from Azzurri Concrete’s ANZ account for approximately 9.82m Qantas frequent flyer points, which were credited to Mr Martino’s personal account.

Issues for Determination

In the Second Further Amended Statement of Claim (which, as noted at paragraph [207] below, was filed in Court on the first day of the hearing), the Plaintiffs pleaded a number of causes of action, including various breaches of the Shareholders Agreement, oppressive conduct, and relief against forfeiture.
In opening written submissions, the Plaintiffs stated as follows (emphasis added):

“The defendants have acquired [Mr Martino’s] shares in [Azzurri Concrete]. The real dispute is whether the process under the Shareholders Agreement was followed.”

The Plaintiffs then summarised their contentions in respect of this issue as follows:

“The Plaintiffs contend that:
(a) Mario and Donato were not entitled to engage the process under the Shareholders Agreement to acquire those shares since [Mr Martino] was not in breach of the Shareholders Agreement as alleged;
(b) The sale process was not validly undertaken, including:
(i)   The Breach Notice was invalid;
(ii)   If [Mr Martino] was in breach (which is denied), those breaches were remedied during the relevant notice period;
(iii)   The steps that were then required to be taken by the Board of [Azzurri Concrete] (including the appointment of Bizval and the subsequent offer of [Mr Martino’s] shares) were not valid since they were effected by circular resolution of Mario and Donato alone and [Mr Martino], who was also a director, was excluded from that process. The Defendants’ assertion that [Mr Martino’s] rights under the Shareholders Agreement were suspended (even if correct) did not affect his position as a director;
(iv)   Bizval was not instructed in accordance with the Shareholders Agreement;
(v)   The Bizval Valuation is not a valid valuation for the purposes of the Shareholders Agreement.

If the process for purchasing [Mr Martino’s] shares under the Shareholders Agreement was not strictly followed, then he has been unjustly deprived of those shares and he is now entitled to their fair value.”

Having regard to the manner in which the Plaintiffs’ case was put, it is necessary, in order to resolve the Plaintiffs’ claims, to address two main issues:

first, whether the compulsory transfer of Mr Martino’s shares was in breach of the Shareholders Agreement, or was otherwise oppressive, and, in particular:

whether the Breach Notice was valid;

whether any breaches by Mr Martino were remedied;

whether there was a failure by the Defendants to comply with the dispute resolution procedure set out in the Shareholders Agreement;

whether Bizval was validly appointed as Valuer pursuant to the Shareholders Agreement;

whether the Bizval Valuation complied with the terms of the Shareholders Agreement; and

secondly, whether Mr Martino’s shares were purchased at a price below their “fair value”.

Validity of Breach Notice

The Plaintiffs contended that the Breach Notice was invalid because Mr Martino was not in breach of the Shareholders Agreement when the Breach Notice was issued and, further or alternatively, because the Breach Notice did not provide sufficient particulars of any alleged breach so as to enable Mr Martino to respond to the Breach Notice or to remedy any breach.
Clause 19.1 of the Shareholders Agreement relevantly provided as follows:

“19.1   If any of the events specified in clause 19.1.1 (b) occurs in relation to a Shareholder (Defaulting Shareholder), then the Defaulting Shareholder;
19.1.1   is deemed to have issued a transfer notice in accordance with clause 11.5 for all its shares, and clause 12 applies to the sale of those shares; and
(a)   will have all rights attaching to the shares held by the defaulting Shareholder suspended until the difference is remedied.
(b)   The events referred to in clause 19.1.1 are:
(i) if a Shareholder breaches any provision of this Agreement and fails to rectify that breach within 30 days after a notice of that beach from another Shareholder requesting that breach be remedied…”

The Breach Notice was issued on 5 May 2023. It alleged, inter alia, that Mr Martino had breached clauses 4.2.1 and 4.2.6 of the Shareholders Agreement.
Clauses 4.1 and 4.2 of the Shareholders Agreement relevantly provided as follows:

“4.1   The objectives of the Shareholders in establishing the Company is to have the Company carry on the Business in accordance with the terms of this Agreement.
4.2   In order to fulfil the objectives listed in clause 4.1, each Shareholder must:
4.2.1   cooperate and use the Shareholder's best endeavours to ensure that the Company successfully carries on the Business;
…
4.2.6   act honestly and fairly in relation to each other in relation to the affairs of the Company…”

As outlined at paragraph [69] above, the Breach Notice alleged that these clauses had been breached by, inter alia, Mr Martino’s use of Azzurri Concrete’s credit cards for unauthorised personal expenses and Mr Martino’s misappropriation of reward points which belonged to Azzurri Concrete.
Mr Martino submitted that he did not, in fact, breach the Shareholders Agreement in the manner alleged in the Breach Notice, and that the Breach Notice was “a contrivance” by Mr Donato D’Angola and Mr Mario D’Angola “to facilitate [Mr Martino’s] exit from the business”. This conclusion was said to flow, in particular, from the fact that complaints were raised about Mr Martino’s use of Azzurri Concrete’s credit cards for personal expenses in circumstances where each of the shareholders had, to the others’ knowledge, been engaging in similar behaviour.

Unauthorised expenses?

When Mr Martino was appointed as CEO of Azzurri Concrete, he executed a Contract of Employment dated 14 April 2014, which included the following terms:

“6. COMPANY CREDIT CARDS
6.1 The Employee may be provided with a Company credit card. This credit card is strictly to be used for work related purchases only. You are prohibited from utilising the Company credit card to purchase personal goods or services.
…
7. EXPENSES
The Company will reimburse the Employee for any prior approved and reasonable out of pocket expenses. The Employee must provide receipts for all such out of pocket expenses to the Company within seven days of the expense being incurred.”

I am not satisfied that this Contract of Employment governed Mr Martino’s use of a corporate credit card throughout the relevant period, for two main reasons.
First, this contract related to Mr Martino’s position as CEO, which he subsequently ceased to hold. Mr Martino gave evidence that when he was appointed Director of Finance of Azzurri Concrete, the terms of his employment were not reduced to writing.
Secondly, on 20 October 2016, there was a meeting of the shareholders of Azzurri Concrete (including Mr Martino), at which there was discussion and agreement between the shareholders regarding their use of corporate credit cards. In particular, the minutes record that “Actions arising from meeting”, include the following item:

“Credit Cards: Can be used personally as long [as] its for good use and is not excessive. If you think it is an excessive amount but you have no option but to use your card please let Peter [Martino] Know about it.”

When taken to this document in cross-examination, Mr Donato D’Angola accepted that the shareholders agreed that each of them could use the company credit card for personal expenses so long as it was “not excessive”.
He explained that the “intention behind the agreement about ‘excessive amounts’ was that we would discuss the payment and agree how it would be dealt with in the Azzurri Concrete Group’s accounts”. Mr Donato D’Angola acknowledged in cross-examination that he charged significant personal expenses to the corporate credit cards. These included, by way of example, substantial expenses relating to his personal residence (including furniture, a barbecue, landscaping, and an interior designer), tickets to an Elton John concert, and a family trip to Singapore.
Mr Mario D’Angola acknowledged, in cross-examination that each of the shareholders “used the company credit card for personal items that were of maybe up to a few hundred dollars, on a very regular occasion”. He also acknowledged that he had used company funds to pay his personal tax assessment.
There was in evidence a document headed “Shareholding Disbursements Rec[onciliatio]n”, which was dated 12 December 2022 (the Reconciliation Document). This document recorded substantial expenses of each of Mr Martino, Mr Donato D’Angola and Mr Mario D’Angola (including a number of the expenses which, as noted above, Mr Donato D’Angola accepted to be personal expenses). The Reconciliation Document appears to have been prepared in order to keep track of the comparative level of personal spending by shareholders, so that any disparity could be addressed. However, it appears to have been a matter for individual shareholders as to whether they included items of personal expenditure on the Reconciliation Document. Each of Mr Donato D’Angola, Mr Mario D’Angola and Mr Martino accepted that the Reconciliation Document did not record all items of personal expenditure.
Mr Donato D’Angola agreed in cross-examination that, if there was an item of personal expenditure which he did not regard as a “large” item, he would use the corporate credit cards to pay for that item, without notifying the other shareholders. He also agreed that, “as to whether something was a large item or not”, it was up to each of the shareholders “to use their judgment as to what they thought was fair”.
In addition, he agreed that only those expenses which appeared on the Reconciliation Document were discussed with the other shareholders, and that there was never any reconciliation of those expenses which did not appear on the Reconciliation Document.
Mr Donato D’Angola agreed that he had not reimbursed Azzurri Concrete for the personal expenses which he had paid using company funds, and also agreed with the following propositions:

“Q. And you understood that in the same way as you had incurred personal expenses, so had Mr Mario D’Angola and so had Peter; correct?
A. Yes.
Q. And that wasn't a matter, that at least up until the beginning of 2023, of any concern to you; correct?
A. No.
Q. You agree with me.
A. That wasn't a concern to‑‑
Q. Yes.
A. Well, if we ‑ no, it wasn't a concern.”

Given those matters, there is some force in Mr Martino’s submission that the allegations raised against him in the Breach Notice regarding the use of company funds for personal expenses were complaints regarding conduct of a type that was engaged in, and approved by, the same shareholders who issued the Breach Notice.
However, this does not answer the Defendants’ complaint that Mr Martino’s use of company funds was excessive and that numerous large items of expenditure had been made using company funds without any knowledge or approval of the other shareholders.
I do not need to determine those matters given:

the parties’ agreement that, in respect of the Amended Cross Claim which seeks (inter alia) recovery of the expenses specified in the Annexure to the Breach Notice, there should be judgment for the Cross Claimants in the amount of $300,000; and

the findings I have made below regarding other allegations in the Breach Notice.

Unauthorised redemption of reward points?

The Breach Notice alleged that Mr Martino breached his duties to his fellow shareholders under clause 4.2 of the Shareholders Agreement by his redemption, on 14 March 2023, of 19,643,078 reward points from Azzurri Concrete’s credit card account with ANZ, without Azzurri Concrete’s authorisation or approval.
Mr Martino was, in cross-examination, taken to the documents concerning the redemption of Azzurri Concrete’s reward points, which are set out at paragraphs [64]-[67] above. (It should be noted that, in those documents, Mr Martino had valued 15m reward points as being worth $60,000. It follows that 19.643m reward points were likely worth around $80,000.)
Mr Martino accepted that he understood, at the time of this transfer, that he was entitled to only a third of those reward points, and he also understood that Mr Donato D’Angola and Mr Mario D’Angola had not given him any authority to redeem any points, but that he nonetheless proceeded to redeem the whole balance of those points for his own benefit. In this regard, he made a number of significant concessions in the course of cross-examination, including as follows:

“Q. And notwithstanding your view at 7 February that at its highest you're entitled to a third, and notwithstanding over the page, at 2590, that Donato didn't agree to redeeming the points, or any of them‑‑
A. I agree, yep.
Q. ‑‑you unilaterally redeemed what were then close to 19 and a half million points on 14 March, didn't you?
A. Correct.
Q. And insofar as it's suggested in the response to the breach notice that that transfer was with the express authority of Mario and Donato, that's just a lie isn't it?
A. No, we discussed it verbally. You can laugh at me, but that email is there, and - sorry, yeah, I agree. Let's move on.
Q. You agree that it's absolute false and a lie‑‑
A. To take the whole amount.
Q. Yes.
A. That's a mistake on my behalf, correct.
Q. Well it's more than a mistake, isn't it?
A. Well, yes.
Q. It's complete fabrication.
A. I agree.
Q. And you've kept, and no doubt used the Qantas frequent flyer points.
A. I have.
Q. And you failed to return them when asked.
A. I did.
Q. Why?
A. I believe that was - I was just frustrated. Being removed from my business and so I took the wrong stance. I made that mistake.”

I am satisfied that the conduct of Mr Martino in relation to the reward points which is outlined above constituted a breach of his obligations under clause 4.2 of the Shareholders Agreement and, in particular, his obligation to cooperate and use his best endeavours to ensure that Azzurri Concrete successfully carried on the business and his obligation to act honestly and fairly in relation to the other shareholders regarding the affairs of Azzurri Concrete.
I am also satisfied that the Breach Notice provided sufficient particulars for Mr Martino in order to understand the allegations of breach made in respect of the reward points, and in order to respond to (or remedy), this breach. The Breach Notice specifically referred to the amount of points redeemed, the account from which they had been redeemed, and the date of redemption. Mr Martino could not have been in any doubt about the transaction to which reference was made, or the basis on which it was impugned (namely, the absence of authority).

Mr Donato D’Angola accepted, in cross-examination, that he was seeking, by the issue of the Breach Notice, to find a way for Mr Martino’s shares to be compulsorily acquired. However, he rejected any suggestion that the complaints in the Breach Notice were “invented” for this purpose.
Given the matters outlined above, I reject any contention that the complaint regarding the unauthorised redemption of reward points was “invented” or that Mr Donato D’Angola and Mr Mario D’Angola did not have proper grounds for making this complaint.
By this transaction, Mr Martino took property of Azzurri Concrete worth around $80,000 for his own benefit, in circumstances where he was aware that he did not have any entitlement or authority to do so, and where the other shareholders had expressly told him that the reward points should be left “untouched”. Irrespective of any issue raised regarding the complaints made about personal expenses, I am satisfied that this conduct on the part of Mr Martino constituted a sufficient and proper basis upon which to issue the Breach Notice.

Breach Notice Response

The Plaintiffs contended that “if [Mr Martino] was in breach at the time the [Breach Notice] was issued (which is denied), the breach had been remedied by 30 May 2023”, that is, by the date that Mr Martino issued his Breach Notice Response.

Response to Unauthorised Expenses

The Breach Notice Response stated as follows: “Each of the expenses set out in the Annexure to the Purported Breach Notice was authorised by the Company either as an ordinary business expense or otherwise approved by the directors.”
The Breach Notice Response did not include any detailed response to the itemised list of transactions which was set out in the Annexure to the Breach Notice. The Breach Notice Response did not, for example, identify which of those transactions were said to be “ordinary business expenses” (or the basis on which they were said to be such), or identify the basis on which it was alleged that the remaining expenses had been “approved by the directors”.
A detailed response of that type was only provided on 18 July 2023, when Mr Martino provided an “Explanation of Expenses”, which addressed each of the transactions set out in the Annexure to the Breach Notice. In this document, Mr Martino claimed that, of the hundreds of transactions listed in that Annexure totalling $398,286.39, the vast majority ($395,138.94, or 99.2% of the total amount) were “Business Expenses”, with the “Personal Expenses” only amounting to $3,147.45.
In cross-examination, Mr Martino was taken to various entries in the schedule to the letter of 18 July 2023 which were designated as “Business Expenses”, and acknowledged, when presented with the relevant documentation for those transactions, that they were in fact personal expenses. By way of example only:

an expense of $190.00 which was described by him as a “Client gift” was, in fact, a purchase for his wife;

an expense of $643.50 which was described by him as “Safety Clothing require[d] for sites – approved by Directors” was, in fact, a purchase of lingerie; and

a purchase of $298.00 which was described by him as “Clothing Required for Work – staff” was, in fact, a purchase of swimwear.

As noted above, Mr Martino accepted, at the conclusion of the hearing, that the Cross Claimants are entitled to judgment against him in the amount of $300,000. That amounts, in substance, to an acceptance that the majority of the expenses which he claimed, in the Breach Notice Response, to be “ordinary business expenses” of Azzurri Concrete were, in fact, personal expenses for which he is liable to reimburse Azzurri Concrete.
Having regard to those matters, Mr Martino’s assertions, in response to the Breach Notice, that more than 99% of the transactions in the Annexure to the Breach Notice were “ordinary business expenses” appear to have been made without any sound foundation.

Response to Transfer of reward points

The Breach Notice Response made the following statements in answer to the allegation that Mr Martino had misappropriated reward points belonging to Azzurri Concrete:

“The card in question was in the name of Mr Martino, and he transferred the points from that card to his QANTAS card. This was with the express authorisation of Mario D’Angola and Donato D’Angola, and in accordance with established practice of [Azzurri Concrete].”

These statements were false. Mr Martino acknowledged in cross-examination that the account in question was “owned by the business”, and that Mr Donato D’Angola and Mr Mario D’Angola did not expressly authorise the transfer of the reward points to his Qantas frequent flyer account. In fact, as outlined above, Mr Martino had been expressly instructed by Mr Donato D’Angola to leave the reward points account “untouched until such time it is closed out” (see paragraph [66] above).
Further, Mr Martino acknowledged in cross-examination that he still, as at the time of the hearing of this proceeding, had not remedied this matter (see paragraph [132] above).
In his defence to the Amended Cross Claim, Mr Martino (despite being aware of the matters outlined above) denied the following allegations:

“On or about 14 March 2023, Peter Martino … caused 19,643,078 Reward Points held in the [Azzurri Concrete account with ANZ] to be redeemed and/or transferred to his personal Qantas Frequent Flyer account (‘the Points Transfer’)”; and

“The Points Transfer was made without the knowledge, authorisation or approval of [Azzurri Concrete] and the other shareholders of [Azzurri Concrete]”.

Mr Martino was taken, in cross-examination, to his denial of each of these allegations:

“Q. [In the defence to the cross-claim] that you verified as being true and accurate … you deny the transfer, … and you deny it was made without express authority. …
[Mr Martino was taken to the relevant paragraphs of the pleading]
… you deny that it was done without authority or approval. That’s just wrong isn’t it?
A. They’re well aware I – yeah, that’s wrong. That’s an error on my behalf.
Q. It’s just wrong, isn’t it?
A. It’s just wrong. It’s an error, yes.”

Mr Martino maintained his denials that the transfer of reward points was unauthorised until the point in time when he was presented, in cross-examination, with documents showing that this was (as he acknowledged) “a complete fabrication”. Similarly, he maintained his assertions that most of the expenses referred to in the Annexure to the Breach Notice were business expenses, until he was presented with documentation for various individual transactions showing that this was plainly incorrect. Those are matters that tell against his credit, and the reliability of his evidence more generally. In the light of those matters, I am not satisfied that any significant weight should be given to Mr Martino’s oral evidence, unless it was against interest or was supported by contemporaneous documents.

Mr Donato D’Angola’s failure to read the Breach Notice Response

The Plaintiffs relied on Mr Donato D’Angola’s acknowledgement, in cross-examination, that he did not read the Breach Notice Response at the time, and did not think that he had ever read it. Mr Donato D’Angola accepted that the “fair thing” to do would have been, first, to read what Mr Martino said and, secondly, to consider it, in order to see whether he raised matters which caused Mr Donato D’Angola and Mr Mario D’Angola to decide not to continue with the compulsory sale process under the Shareholders Agreement.
However, Mr Donato D’Angola did provide the Breach Notice Response to his lawyers for their consideration and advice.
Further, in the circumstances of this case, any failure on the part of Mr Donato D’Angola to read the Breach Notice Response is of limited significance. Mr Martino can hardly complain that Mr Donato D’Angola did not have regard to the contents of his Breach Notice Response, in circumstances where that document contained false statements regarding Mr Martino’s unauthorised transfer of Azzurri Concrete’s reward points, and did not indicate that Mr Martino had any intention to remedy this breach.

Breach Notice Response - Conclusion

Having regard to the matters set out above, I am satisfied that Mr Martino breached the Shareholders Agreement by his conduct in relation to, at least, the reward points, that he received a notice from the other shareholders of Azzurri Group requesting that this breach be remedied, and that he failed to rectify that breach within 30 days of such notice. It follows that the requirements of clause 19.1.1(b)(i) of the Shareholders Agreement were satisfied, such that Mr Martino was a Defaulting Shareholder within the meaning of clause 19.1.1.

Dispute Resolution Process

Mr Martino submitted that, by the Breach Notice Response, he had given notice to the other shareholders of a dispute under clause 16 of the Shareholders Agreement, and that, accordingly, “Mario and Donato were required to engage in the dispute resolution process under the Shareholders Agreement before they could progress the compulsory acquisition process”.
The Breach Notice Response included the following statement:

“This letter also constitutes a dispute notice within clause 16.2 of the Shareholders Agreement.”

Clause 16 of the Shareholders Agreement was headed “Dispute Resolution”. Clauses 16.1 to 16.2 provided as follows:

“16. Dispute Resolution
16.1 The parties must seek to resolve disputes arising out of this Agreement (Disputes) and must not start arbitration or court proceedings (except proceedings seeking interlocutory relief) in respect of such Disputes other than in accordance with the remainder of this clause.
16.2 A party claiming that a Dispute has arisen must notify the other party, giving details of the Dispute, and the parties will in good faith negotiate settlement of the Dispute for a period of 5 Business Days (initial period).”

Clause 16 provided, in summary, for a process of mediation to be undertaken after a dispute notice was issued.
Clause 16.9 provided that:

“For the avoidance of doubt, the existence of a Dispute does not alter either party’s respective other obligations under this Agreement.”

Mr Martino contended that Mr Donato D’Angola and Mr Mario D’Angola breached the Shareholders Agreement by failing to undertake the dispute resolution procedure set out in clause 16, prior to proceeding with the compulsory sale procedure under the Shareholders Agreement.
As a preliminary point, it should be noted that the Breach Notice Response was addressed to Mr Mario D’Angola and Mr Donato D’Angola, care of Paradise Charnock O’Brien. In correspondence in 2023, the Defendants disputed that this letter to their solicitors constituted a notice to Mr Mario D’Angola and Mr Donato D’Angola for the purposes of the Shareholder Agreement.
Clause 26.1 of the Shareholders Agreement provided as follows:

“Any notice given by a Shareholder under this Agreement must be in writing and addressed to the recipient at its address specified below or as otherwise notified to the other Shareholders in writing from time to time.”

On 8 February 2023, Paradise Charnock O’Brien sent a letter to Mr Martino’s solicitor, stating that they acted for Mr Donato D’Angola, Mr Mario D’Angola and Sogase, and adding:

“We would be grateful if you and your client would direct any further communication whether orally or in writing with respect to Azzurri Concrete Pty Ltd, Azzurri Concrete Group Pty Ltd or Azzurri Group Holdings Pty Ltd to our firm.”

I accept Mr Martino’s submission that, having regard to the terms of this letter, an address for the service of any notice under the Shareholder Agreement had been “otherwise notified to” Mr Martino, within the meaning of clause 26.1 of the Shareholders Agreement. It follows that any notice under the Shareholders Agreement that was sent by Mr Martino to Mr Donato D’Angola and Mr Mario D'Angola care of Paradise Charnock O’Brien was thereby given to Mr Donato D’Angola and Mr Mario D’Angola in accordance with the terms of the Shareholders Agreement.
The Defendants submitted that the Breach Notice Response did not, in any case, identify a “dispute”, as opposed to merely asserting that there was one. However, any reasonable reader would understand that the “dispute” referred to in the Breach Notice Response was a dispute, as outlined in that document, as to whether in fact Mr Martino had breached the Shareholders Agreement in the manner alleged in the Breach Notice.
Mr Donato D’Angola accepted, in cross-examination, that he became aware, soon after 30 May 2023, that Mr Martino had purported to serve a dispute notice; that, regardless of whether that notice was valid, he was not prepared to meet and attempt to resolve the dispute with Mr Martino; and that he intended to continue with the process of the compulsory sale of Mr Martino’s interest in Azzurri Concrete.
In the Second Further Amended Statement of Claim, the Plaintiffs pleaded that the failure of Mr Donato D’Angola and Mr Mario D’Angola to participate in the Dispute Resolution process required in clause 16 of the Shareholders Agreement meant that “any steps taken by Mario D’Angola and Donato D’Angola after 30 May 2023 or alternatively 10 August 2023 in relation to the dispute are invalid”.
The date 10 August 2023 can be put to one side since, by this date, Mr Martino’s shares in Azzurri Concrete had already been transferred to Mr Donato D’Angola and Mr Mario D’Angola. Focussing on 30 May 2023, the Plaintiffs did not, in their written or oral submissions, explain, by reference to the relevant provisions of the Shareholders Agreement, how any failure to comply with the dispute procedure in clause 16 meant that any steps taken after that date pursuant to clauses 12 and 13 were invalid.
Clause 16.1 provides that the parties must seek to resolve disputes arising out of the Shareholders Agreement “and must not start arbitration or court proceedings (except proceedings seeking interlocutory relief) in respect of such disputes other than in accordance with clause 16”.
Mr Donato D’Angola and Mr Mario D’Angola did not commence any proceedings in relation to the dispute notified by Mr Martino. Instead, it was Mr Martino who commenced proceedings on 11 May 2023, after the Breach Notice was served on 5 May 2023, and before his Breach Notice Response (including the dispute notice) was sent on 30 May 2023. The Statement of Claim filed on 11 May 2023 sought, as part of the relief claimed, “an order that the Purported Breach Notice dated 5 May 2023 is void and of no effect”.
It is difficult to see how clause 16 could operate to require the parties to undertake a process of negotiation and mediation before commencing any proceeding in respect of the validity of the Breach Notice in circumstances where the party serving the dispute notice had already commenced a proceeding in respect of that same issue.
Further, clause 16.9 provides that: “For the avoidance of doubt, the existence of a Dispute does not alter either party’s respective other obligations under this Agreement.” In circumstances where, as I have found, Mr Martino had in fact breached the Shareholders Agreement and had failed to rectify that breach within 30 days after a notice from another shareholder requesting that breach to be remedied, clause 19.1.1 applied, and Mr Martino was deemed to have issued a transfer notice in accordance with clause 11.5. This in turn gave rise to the procedure in clauses 12 and 13.
There is nothing in clause 16 which indicates an intention that the operation of clause 19.1.1 (or clauses 11.5, 12 and 13) be suspended in circumstances where a dispute notice was issued by Mr Martino.
Further, within one week of Mr Martino issuing his Breach Notice Response (and thereby giving notice of a dispute under the Shareholders Agreement), Mr Martino agreed to the June 2023 Orders, which dismissed his application for an interlocutory injunction restraining the compulsory sale process, on the basis of an undertaking by Mr Donato D’Angola and Mr Mario D’Angola that, if Mr Martino established his claims for breach of the Shareholders Agreement (including the invalidity of the Breach Notice) or for oppression, they would pay him any difference between the amount that was paid to him for his shares and the amount to which he was determined to be entitled for those shares (see paragraph [86] above).
For those reasons, I am not satisfied that the statement in the Breach Notice Response that Mr Martino was, by that document, giving notice of a dispute under clause 16 is of any consequence for the matters in dispute. In particular, given the matters outlined above, I do not consider that the issuing of any dispute notice meant that no steps could be taken under clauses 12 and 13 of the Shareholders Agreement until this dispute was resolved.

Appointment of Bizval

Mr Martino failed to remedy the breaches specified in the Breach Notice within 30 days after 5 May 2023 (that is, by 4 June 2023). It follows that he was, as at 5 June 2023, a “Defaulting Shareholder” within the meaning of clause 19.1.1 of the Shareholders Agreement, and was deemed to have issued a transfer notice in accordance with clause 11.5 for all of his shares.
Clause 11.5 of the Shareholders Agreement provided as follows:

“A deemed transfer of shares arises, and a transfer notice is deemed to be issued, by operation of clause 19, and clause 12 will apply to the sale of those shares and each Shareholder waives any rights it may have against the other Shareholder to claim relief from forfeiture or to claim that the operation of this clause or clause 19 is a penalty.”

Clause 12.1 relevantly provided as follows:

“A transfer notice:
12.1.1 is deemed to be issued, by operation of clause … 19, on the first date that a Director is aware of the circumstances that clause … 19 to operate [sic] in respect of a Shareholder …”

The first step in the sale process set out in clauses 12 and 13 of the Shareholders Agreement was the appointment of the “Valuer”, who was responsible for determining the sale price.
Clause 13.1 provided that, within five business days of a transfer notice being issued or being deemed to be issued, “the Board must agree on a person (Valuer) to value the sale shares, or failing Agreement, procure that the President of the Institute of Chartered Accountants of Australia nominates a valuer”.
The issue that arises for determination is whether, as required by clause 13, there was “Agreement” by “the Board” to the appointment of Bizval.
The Defendants contended that Bizval was appointed pursuant to a circulating resolution which Mr Donato D’Angola and Mr Mario D’Angola signed on 9 June 2023 (see paragraph [92] above).
The Plaintiffs contended that this resolution was invalid and of no effect.
Article 42(a) of the Constitution of Azzurri Concrete provided as follows:

“If all the directors have signed a document containing a statement that they are in favour of a resolution of the directors in terms set out in the document, a resolution in those terms is taken to have been passed at a meeting of the directors held on the day on which the document was signed and at the time at which the document was last signed by a director or, if the directors signed the document on different days, on the day on which, and at the time at which, the document was last signed by a director.”

It follows that, in order for a circulating resolution to be valid and effective, it had to be signed by “all the directors” of Azzurri Concrete.
The circulating resolution which purported to appoint Bizval was not signed by Mr Martino, who was a director at the time.
The Defendants relied on clause 19.1.1(a) of the Shareholders Agreement, which provided that a Defaulting Shareholder “will have all rights attaching to the shares held by the Defaulting Shareholder suspended until the difference is remedied”. (It is plain, having regard to the context, that the reference to “the difference” is to be read as a reference to “the default”.)

I have determined that Mr Donato D’Angola and Mr Mario D’Angola breached clause 13 of the Shareholders Agreement. In particular, Mr Martino’s shares were not transferred for a sale price determined in accordance with the requirements of that clause, because Bizval was not a valuer whose appointment was agreed by the Board and Bizval’s valuation was not “based on the best information available at the time” (see paragraphs [179]-[192] and [287]-[295] above).
In determining the damages for this breach, it is necessary to consider what “sale price” would have been determined if the process in clause 13 had been followed. Clause 13 requires a valuation to be performed on the assumption of “a sale of the sale shares in the open market”, with the expert taking into account “the yield which an open market investor would reasonably require in an acquisition of the sale shares”.
In the Second Further Amended Statement of Claim, the Plaintiffs pleaded, variously, that the relief for their oppression claim should be determined by reference to the “true market value” of Mr Martino’s shares in Azzurri Concrete (paragraph [77(d)]), or the “fair price” for those shares (paragraph [78]), or the “fair market value” of those shares (Relief, paragraphs [8], [11]-[12]).
In Re North Coast Transit Pty Ltd [2013] NSWSC 1119 at [24], Brereton J made the following observations regarding the remedy for oppressive conduct:

“the fundamental principle in this area is that the remedy under s 233 is one that must be calculated to alleviate the consequences of the oppressive conduct and no more; that is to say, to place the oppressed minority in a position equivalent to that in which it would have been but for the oppression, but not to improve its position over and above that which would have prevailed but for the oppression.”

The appropriate remedy for the oppressive conduct which I have found is coextensive with the remedy for breach of the Shareholders Agreement.
Clause 13 of the Shareholders Agreement provided a mechanism for the determination of the price at which shares were to be offered for sale to the other shareholders. Leaving aside clause 13.6 (which I have found to be a penalty), that regime applied irrespective of whether the sale resulted from a transfer notice which was voluntarily issued by the shareholder or from a deemed transfer notice pursuant to clause 19. Having regard to the “fundamental principle” that the remedy for oppression should not improve the plaintiff’s position “over and above that which would have prevailed but for the oppression”, I consider that the appropriate remedy for the oppressive conduct which I have found is that Mr Martino receive the amount which, but for the oppressive conduct, he would have received under the sale process specified in the Shareholders Agreement.
Accordingly, the issue for determination is what value should be attributed to Mr Martino’s shares on the assumption of “a sale of the sale shares in the open market”.

Does the “open market” include persons who would attribute “special value” to the shares?

In MMAL Rentals Pty Ltd v Bruning (2004) 63 NSWLR 167; [2004] NSWCA 451, an issue arose regarding the meaning of a contractual term for the acquisition of the shares of a minority shareholder for “fair market value”.
The relevant facts were as follows. Mr Bruning was the managing director of a car rental business trading under the name “Thrifty”. The shares in the company which operated the business (“Kingmill”) were owned, as to 20%, by the United States company, Thrifty Inc, and as to 80%, by MMAL Rentals Pty Ltd. The shares in MMAL were owned, as to 81.25%, by Mitsubishi Motors Australia Ltd and as to 18.75%, by Mr Bruning. Pursuant to the terms of Mr Bruning’s management agreement with Kingmill, Mitsubishi had an option, upon the termination of Mr Bruning’s management agreement, to acquire Mr Bruning’s shares in MMAL for “fair market value”. Mitsubishi exercised this option and a dispute arose as to the “fair market value” of Mr Bruning’s minority shareholding.
Spigelman CJ, with whom Mason P and Hodgson JA agreed, observed (at [55]) that:

“A test of a ‘market value’, whether in a statutory or contractual context, usually invokes the test long established and frequently applied in Spencer v Commonwealth (1907) 5 CLR 418 especially at 432 and 440–441, of a willing but not anxious purchaser and vendor, bargaining with each other. This approach was most recently expressed in a joint judgment of three judges of the High Court in Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at 514 [49]: ‘… the value … is to be identified according to what price freely contracting, fully informed parties would have offered and accepted for it’.”

Spigelman CJ referred to this formulation as the “exchange value” test (adopting the expression used by Gleeson CJ in Boland v Yates Property Corporation Pty Ltd [1999] HCA 64 at [79]).
His Honour observed (at [60]) that the addition of the word “fair” to “market value”:

“…suggests that the valuation should proceed on the assumption, which may be contrary to the facts of a particular contractual relationship, that there is no impediment to the process of bargaining, whether in terms of availability of information or restraints arising from the characteristics of a particular vendor or purchaser or otherwise”.

His Honour added (at [61]) that:

“It is not possible to set out in abstract terms how a fair market value should be computed. It is necessary to focus on the particular issues which arise in
order to determine what the formulation requires in a particular case.”

Spigelman CJ described the circumstances of MMAL as follows (at [71]):

“The minority interest which must be valued in the present case was held by a person with direct involvement in a majority controlled business requiring
mutual co-operation and a level of trust. (I avoid the often misleading terminology of quasi partnership.) The sale is triggered, and triggered only, by
the termination of that involvement. The majority shareholder has an interest in ensuring that the minority holding is not acquired by someone who has no
relationship with the majority holder of mutual co-operation or trust. The ability of the majority holder to get the full advantage from its controlling
interest can be considerably attenuated by activities sometimes derogatively referred to as greenmail. In order to avoid the nuisance of such an investor, the majority holder will be prepared to pay more for the minority than another person.”

In MMAL, the appellants submitted that an assessment of “fair market value” did not permit consideration of any special value that the shares may have had to Mitsubishi. Instead, the focus had to be on the nature of the property itself, namely, a minority shareholding in a holding company with restrictive articles.
Spigelman CJ rejected this submission, stating as follows (at [73], citations omitted):

“In such a situation, valuation is not done on the basis of an estimate of what a third party would pay and then allowing the majority holder one more bid.
This is because a vendor in a market, including a ‘fair market’, would know that the majority holder was prepared to pay more and is well placed to
bargain for a higher price by refusing to sell. The minority holder would not part with the property unless the majority holder offered a price that was
substantially closer to the price the latter would be willing to go up to. The ‘one more bid’ approach does not describe a situation of a ‘willing but not
anxious vendor’ in the exchange bargain test.”

His Honour held (at [78]) that:

“In the present case a ‘fair market value’ must take into account the ‘special potentiality’ or ‘special value’ to Mitsubishi of acquiring 100 per cent of Rentals, thereby ensuring that it does not have to deal with a third party investor, with whom it has no relationship relating to the conduct of the business affairs of its partly owned subsidiary Kingmill.”

In the present case, the Defendants argued that, in determining “market value” the discounts identified by Ms Conoulty should be applied.
However, as Ms Conoulty acknowledged, the relevant market included Mr Donato D’Angola and Mr Mario D’Angola.
Mr Martino’s shares held a special value to Mr Donato D’Angola and Mr Mario D’Angola. The acquisition of those shares would consolidate control of the Azzurri Group in the hands of the two brothers, and would prevent this significant minority shareholding falling into the hands of an unrelated third party, with whom they did not have a relationship of mutual trust and confidence.
The valuation of Mr Martino’s shares either on the basis that they were acquired by an unrelated third party who would only pay a price that included a discount for lack of control and lack of marketability, or on the basis that they were acquired by Mr Donato D’Angola and Mr Mario D’Angola for “one more bid” above the amount that such a third party would offer, would not result in a fair market value, because it would fail to take into account the position of “a willing, but not anxious, vendor”. In particular, such an approach would fail to take into account that, in an open market which included Mr Donato D’Angola and Mr Mario D’Angola, “a willing, but not anxious, vendor” would refuse to sell the shares to Mr Donato D’Angola and Mr Mario D’Angola for a price which represented a substantial discount to the value of those shares in their hands.
In MMAL at [74]-[75], Spigelman CJ made the following observations:

“As Cozens-Hardy MR said in Inland Revenue Commissioners v Clay [1914] 3 KB 466 at 472:
‘… To say that a small farm in the middle of a wealthy landowner's estate is to be valued without reference to the fact that he will probably be willing to pay a large price, but solely with reference to its ordinary agricultural value, seems to me absurd. If the landowner does not at the moment buy, landbrokers or speculators will give more than its price agricultural value with a view to reselling it at a profit to the landowner.’
This represents the operation of a market and does so even if called greenmail. This is not an exception to the exchange bargain test established by Spencer. It is an application of the test involving the determination of how a willing vendor of a minority interest would behave.”

In the present case, the Shareholders Agreement did not, as in MMAL, use the term “fair market value”. However, as outlined above, Spigelman CJ regarded the term “fair” as conveying an assumption that “there is no impediment to the process of bargaining, whether in terms of availability of information or restraints arising from the characteristics of a particular vendor or purchaser or otherwise”.
I consider that a similar concept is conveyed by the reference, in clause 13 of the Shareholders Agreement, to the “open market”.
In Northern Territory v Mr A. Griffiths (deceased) and Lorraine Jones on behalf of the Ngaliwurru and Nungali Peoples (2019) 269 CLR 1; [2019] HCA 7 at [251], Edelman J referred to MMAL at [73]-[75] in observing that the principle enunciated by Cozens-Hardy MR in the passage quoted above is “now well established”. In making this observation, his Honour also referred to Earl Cadogan v Pitts [2010] 1 AC 226 at 266. In the cited passage, Lord Hoffman was considering the Leasehold Reform Act 1967, which provided that the price payable for a house should be the amount which, on certain specified assumptions, it would be expected to realise if sold on the open market. His Lordship made the following observations regarding the meaning of the phrase “the open market”:

“The open market means everyone who could reasonably be expected to be interested in buying. Among these potential purchasers there will sometimes be one or more to whom the property would be worth more than to others. In Inland Revenue Comrs v Clay [1914] 3 KB 466, 472, Sir Herbert Cozens-Hardy MR gave the example of a small farm in the middle of a wealthy landowner’s estate. Such potential purchasers are sometimes called ‘special purchasers’. It is well established that the additional value to a special purchaser must be taken into account in estimating what the property would fetch in the open market. …”

While these comments were directed at the phrase “open market” in a specific statutory context, I consider that the phrase “open market” in clause 13 of the Shareholders Agreement likewise directs attention to a market that consists of everyone who could reasonably be expected to be interested in buying Mr Martino’s shares, and therefore includes Mr Donato D’Angola and Mr Mario D’Angola. As noted above, Ms Conoulty acknowledged in her report that: “The pool of potential buyers includes three other shareholders (Mario D’Angola, Donato D’Angol[a] and AGH) and other market participants”.

Conclusion regarding discounts

Having regard to the circumstances of this case, and consistently with the reasoning in MMAL and the principles outlined above, a willing, but not anxious, vendor of a 13.89% shareholding in Azzurri Concrete as at the Valuation Date would recognise that this shareholding held special value to Mr Donato D’Angola and Mr Mario D’Angola, above the amount that a third party would pay for a minority shareholding in a privately held company. Such a seller would not part with the shareholding for the price that the unrelated third party would pay, but only for a price closer to the price that the existing shareholders would be prepared to pay in order to avoid the shareholding coming into the hands of an unrelated third party, with whom the existing shareholders did not have any relationship of trust and confidence.
For those reasons, I have determined that, when determining the value of the shares assuming “a sale of the sale shares in the open market”, there should be no discount for lack of control or lack of marketability.
In addition, for reasons given at paragraphs [302]-[309] above, I have determined that no discount should be applied pursuant to clause 13.6 of the Shareholders Agreement, as it is a penalty.

Conclusion – Relief

For the reasons set out above, I find that the value of Mr Martino’s 13.89% shareholding in Azzurri Concrete as at the Valuation Date, assuming a sale “in the open market”, was $1.397m.
When the compulsory sale of Mr Martino’s shareholding took place in August 2023, he did not receive this amount, but instead received $234,000.
Mr Martino is entitled, by way of damages for breach of the Shareholders Agreement and by way of relief for the oppressive conduct which I have found, to the difference between the value of his shares as at the Valuation Date and the amount which he received for those shares, being $1.163m.
I will not make any order for judgment at this time. It will be necessary for interest to be calculated from the date when Mr Martino’s shares were transferred to Mr Donato D’Angola and Mr Mario D’Angola (9 August 2023) to the date of judgment. In addition, I will give the parties an opportunity to review the calculations which I have performed above, in order to ensure their accuracy, before any judgment is entered for a particular sum.

Shares held by 2B6 Enterprises in AGH

As set out at paragraph [7] above:

the Second Plaintiff, 2B6 Enterprises as trustee for the 2B6 Enterprises Trust, holds 18% of the shares in the First Defendant, AGH, which in turn holds 19.44% of the shares in Azzurri Concrete; and

Mr Martino holds 100% of the shares in 2B6 Enterprises and 100% of the units in the 2B6 Enterprises Trust.

Accordingly, Mr Martino has an indirect interest, via 2B6 Enterprises’ shares in AGH, in a further 3.5% of Azzurri Concrete.
AGH’s only significant asset is its shareholding in Azzurri Concrete. Its only significant liability is a loan from Azzurri Concrete in the amount of $3,774,883. (The amount of this liability was the same as at 30 June 2023.)
I have determined that the fair value of 100% of the equity in Azzurri Concrete as at the Valuation Date was $10.056m (see paragraph [422] above). It follows that:

the fair value of the shares held by AGH in Azzurri Concrete as at the Valuation Date was around $1.955m (being 19.44% of $10.056m);

when the liability of AGH to Azzurri Concrete is taken into account ($3.775m), AGH had negative equity as at the end of June 2023; and

therefore, the shares held by 2B6 Enterprises in AGH had no value as at that date.

In closing address, Senior Counsel for the Plaintiffs was asked whether any claim was advanced in respect of the shares held by 2B6 Enterprises in AGH. He indicated that the answer depends on whether those shares have any value, which in turn depends upon the value put on Azzurri Concrete. (He also indicated that he did not disagree with the steps outlined above for determining the value of the shares held by 2B6 Enterprises, once the value of Azzurri Concrete is determined).
The following exchange then took place:

“HIS HONOUR: What relief do you seek in respect of [the shares owned by 2B6 Enterprises in AGH]? Because they're shares that your client still owns.
[SENIOR COUNSEL FOR PLAINTIFFS]: Correct. I say, your Honour, that effectively the appropriate remedy is, if there is any value, for there to be a buyout in relation to those as well.
HIS HONOUR: That depends on establishing an oppression case, does it?
[SENIOR COUNSEL FOR PLAINTIFFS]: It does, but I say that, bearing in mind Mr Martino, who has been effectively removed from all of the affairs of Group, and it's Group that has the value, leaving him in the same rationale for there being a buyout of his shares within Group, the rationale follows that his company should also be bought out of their indirect shareholding in Group that is held via Holdings. The alternative, in my submission, is unattractive. Mr Hyde put in a different context that Mr Martino is left with a minority shareholding in Holdings and therefore an indirect shareholding in Group, which is not a particularly attractive proposition.”

There are two main difficulties with the proposition that the Court should, by way of relief in the oppression case, order that Mr Donato D’Angola and Mr Mario D’Angola buy out the shares held by 2B6 Enterprises in AGH.
First, there is no evidence of the current value of the shares in AGH. That is because there is no evidence of the current value of the shares in Azzurri Concrete. The experts have not considered the value of Azzurri Concrete at any time since the Valuation Date (being 5 June 2023). It follows that there is no basis on which the Court could determine the fair value of the shares in AGH, as at the date of judgment, for the purposes of any buyout order.
Secondly, there is no allegation of oppression in respect of the conduct of the affairs of AGH. I have found oppression in respect of the conduct of the affairs of Azzurri Concrete, but this conduct related to the compulsory sale process adopted in relation to Mr Martino’s shareholding in Azzurri Concrete. This conduct did not affect AGH’s shareholding in Azzurri Concrete and thus did not affect 2B6 Enterprises’ shareholding in AGH. As set out above, Brereton J observed in North Coast Transit at [24] that “the fundamental principle in this area is that the remedy under s 233 is one that must be calculated to alleviate the consequences of the oppressive conduct and no more”. I am not satisfied that an order to buy out 2B6 Enterprises’ shares in AGH (at a price to be determined) would be a remedy that would alleviate the consequences of the oppressive conduct which I have found.
For those reasons, I am not satisfied that any basis has been established for making any buyout order in respect of the shares held by 2B6 Enterprises in AGH.

The Cross-Claim

By the Amended Cross Claim, ACG, Mr Donato D’Angola and Mr Mario D’Angola sought to recover from Mr Martino various amounts, including:

$398,286.39 in respect of personal expenses charged by Mr Martino to Azzurri Concrete’s credit cards (being the expenses set out in the Annexure to the Breach Notice); and

the value of the reward points which were transferred from Azzurri Concrete’s ANZ account to Mr Martino’s personal Qantas frequent flyer account.

On the final day of the hearing, I was informed that the parties had agreed that the cross-claimants should be awarded judgment in the sum of $300,000.

ORDERS

For reasons given above, I will give the parties an opportunity to confer regarding the form of orders to give effect to these reasons for judgment.
The parties also requested that the Court deal separately with the question of costs.
In the event that the parties are unable to agree on the form of orders, including with respect to interest and costs, I will give the parties an opportunity to make submissions on those matters and, unless any party requests an oral hearing, will deal with any such dispute on the papers.
Accordingly, I make the following orders.

Direct that the parties are to bring in short minutes of order by 5pm on 1 October 2025 to give effect to the reasons for judgment.

Direct that, in the event the parties are unable to agree on orders to give effect to the reasons for judgment (including orders as to interest and costs), the parties are to exchange and provide to the Associate to Nixon J, by 5pm on 1 October 2025, the orders which each party proposes, submissions (limited to 5 pages) on those orders, and any evidence in respect of interest and costs, indicating whether, and if so why, an oral hearing is requested to deal with the matters in dispute.

**********

Decision last updated: 18 September 2025

Medium Neutral Citation:	In the matter of Azzurri Group Holdings Pty Ltd (No 2) [2025] NSWSC 1064
Hearing dates:	22-24, 29 and 31 July 2025
Date of orders:	18 September 2025
Decision date:	18 September 2025
Jurisdiction:	Equity - Corporations List
Before:	Nixon J
Decision:	1. Direct that the parties are to bring in short minutes of order by 5pm on 1 October 2025 to give effect to the reasons for judgment. 2. Direct that, in the event the parties are unable to agree on orders to give effect to the reasons for judgment (including orders as to interest and costs), the parties are to exchange and provide to the Associate to Nixon J, by 5pm on 1 October 2025, the orders which each party proposes, submissions (limited to 5 pages) on those orders, and any evidence in respect of interest and costs, indicating whether, and if so why, an oral hearing is requested to deal with the matters in dispute.
Catchwords:	CORPORATIONS – Members’ rights and remedies – Oppression – where breakdown in relationship between shareholders – where first plaintiff received a notice alleging breaches of shareholders agreement – where shareholders agreement provided that if, following receipt of such notice, breaches were not remedied, the shareholder was deemed to have issued a transfer notice, triggering a compulsory sale process – whether first plaintiff breached shareholders agreement – whether breach notice was valid – whether first plaintiff remedied any such breaches – whether first plaintiff issued a dispute notice – whether a valuer was validly appointed in accordance with the shareholders agreement – whether the valuer’s valuation complied with the terms of the shareholders agreement – whether compulsory sale of first plaintiff’s shares was in breach of the shareholders agreement – whether there was oppressive conduct – whether the price paid to the first plaintiff was less than the fair value, or market value, for his shares.
Legislation Cited:	Corporations Act 2001 (Cth) ss 232, 233
Cases Cited:	AGL Victoria Pty Ltd v SPI Networks (Gas) Pty Ltd [2006] VSCA 173 Australian Vintage Ltd v Belvino Investments (No 2) Pty Ltd (2015) 90 NSWLR 367; [2015] NSWCA 275 B. & G. Properties Pty Limited v Fayad [2021] NSWSC 1382 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 Catalano v Managing Australia Destinations Pty Ltd [2014] FCAFC 55 Earl Cadogan v Pitts [2010] 1 AC 226 Fayad v B & G Properties Pty Ltd [2022] NSWCA 129 Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1988) 28 ACSR 688 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46 In the matter of Mobius Distilling Pty Ltd (in liq) [2025] NSWSC 539 Kanivah Holdings Pty Ltd v Holdsworth Properties Pty Ltd [2002] NSWCA 180 Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314 MMAL Rentals Pty Ltd v Bruning (2004) 63 NSWLR 167; [2004] NSWCA 451 Northern Territory v Mr A. Griffiths (deceased) and Lorraine Jones on behalf of the Ngaliwurru and Nungali Peoples (2019) 269 CLR 1; [2019] HCA 7 Re Global Mortgage Equity Corporation Pty Ltd [2013] NSWSC 1586 Re North Coast Transit Pty Ltd [2013] NSWSC 1119 Re Norvabron Pty Ltd (No 2) (1986) 11 ACLR 279 Spence v Rigging Rentals WA Pty Ltd [2015] FCA 1158 Strategic Management Australia AFL Pty Ltd v Precision Sports & Entertainment Group Pty Ltd [2016] VSC 303 Strike Australia Pty Ltd v Data Base Corporate Pty Ltd [2019] NSWCA 205
Category:	Principal judgment
Parties:	Peter Martino (First Plaintiff) 2B6 Enterprises Pty Ltd (Second Plaintiff) Azzurri Group Holdings Pty Ltd (First Defendant) Azzurri Concrete Group Pty Ltd (Second Defendant) MPD Developments Pty Ltd (Third Defendant) Mr Donato D’Angola (Fourth Defendant) Sogase Pty Ltd (Fifth Defendant) Mr Mario D’Angola (Sixth Defendant) Balli Constructions Pty Ltd (Seventh Defendant) Azzurri Concrete Enterprises Pty Ltd (Eighth Defendant) Azzurri Concrete Pty Ltd (Ninth Defendant)
Representation:	Counsel: A P Cheshire SC / J Cook (Plaintiffs/Cross Defendants) E A J Hyde (Defendants/Cross Claimants) Solicitors: AJL Legal (Plaintiffs) Paradise Charnock Hing (Defendants)
File Number(s):	2023/00151182
Publication restriction:	Nil