In the Matter of Bagot Well Pastoral Co Pty Ltd: Colleen MacDonald Reid (Respondent) v Bagot Well Pastoral Company Pty Ltd James MacDonald Shannon v Colleen MacDonald Reid Nos. SCGRG3455 of 1985 and 2787 of 1991...

[1993] SASC 4323

COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA KING CJ(2), MILLHOUSE(3) AND DEBELLE(1) JJ

CWDS
Corporations - companies - Oppression - Action by minority shareholder - Family pastoral company - Dispute between brother and sister - Brother holds life governor's share - Whether brother acted in his own interest - Sister held to beentitled to relief and to have her shares acquired - Valuation of shares to be made in accordance with directions of trial judge - Appeal dismissed. The Companies Code (South Australia). Ngurli Ltd v McCann (1953) 90 CLR 425; Whitehouse v Carlton Hotel Ltd (1987) 162 CLR 285; Hannes v NJH Pty Ltd (1992) 7 ACSR 8; Greenhalgh v Arderne Cinemas Ltd (1951) Ch 286; Re Bright Pine Mills Pty Ltd (1969) VR 1002; Re Spargos Mining NL (1990) 3 ACSR
1; Wayde v NSW Rugby League Ltd (1985) 59 ALJR 798; Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692; Re Dalkeith Investments Pty Ltd (1984) 9 ACLR 247 and Thomas v H.W. Thomas Limited (1984) 1 NZLR 686, applied.

HRNG ADELAIDE, 6 October 1993 #DATE 10:12:1993
Counsel for appellant:     Mr D Clayton QC with
   Mr N Kandelaars
Solicitors for appellant:    Adams Kandelaars
Counsel for respondent:     Mr R Evans
Solicitors for respondent: Nyland Haines

ORDER
Appeals and cross appeal dismissed.

JUDGE1 DEBELLE J These are two appeals from a judgment concerning two actions heard consecutively. 2. In the first action, Mrs C.M. Reid, a shareholder in Bagot Well Pastoral Co Pty Ltd had petitioned this Court for certain orders including an order that her brother, Mr J.M. Shannon, the life governing director of Bagot Well Pastoral Co Pty Ltd purchase her shares in the company, on the ground that the affairs of the company had been and are being conducted in a manner that is oppressive, and unfairly prejudicial to and unfairly discriminatory against Mrs Reid. The trial judge held that, throughout the relevant period, the affairs of the company had been conducted in a manner that was oppressive and unfairly prejudicial to and unfairly discriminatory against Mrs Reid and contrary to the interests of the members of the company as a whole. He, therefore, ordered that Mr Shannon purchase the shares of Mrs Reid at a price to be assessed by the Court. He referred the assessment to a Master having first indicated certain enquiries which were to be made by the Master for the purpose of making the assessment. Mr Shannon appeals from those orders. There is a cross-appeal by Mrs Reid in respect of certain findings made in the action. 3. In the second action, which was heard immediately after the action just mentioned, Mr Shannon sought a declaration that he had validly exercised the powers vested in him by the Articles of Association of the company to acquire compulsorily the shares of Mrs Reid in the company and for such consequential relief as the Court thought fit. The parties had agreed that evidence in one action should be evidence in the other. The claim in that action was dismissed. Mr Shannon appeals from that order. These actions are the culmination of an unfortunate family dispute concerning a family pastoral company. In her action, Mrs Reid had initially sought an order winding up the company and in the alternative an order that Mr Shannon purchase her shares at a price to be determined by the Court. Other relief specified in s.320(2) of the Companies Code was also claimed in the alternative. In the course of the trial, Mrs Reid abandoned her claim for winding up and pressed for an order that Mr Shannon be ordered to purchase her shares at a price to be determined by the Court. Thus, both Mrs Reid and Mr Shannon seek orders that Mr Shannon should acquire her shares in the company. However, they are unable to agree the price to be paid for the shares or the basis upon which the value of the shares should be assessed. The Incorporation of Bagot Well Pastoral Co Pty Ltd The following narrative of the facts is largely taken from the reasons of the learned trial judge. A farm property named Cambusdoon was owned at one time by Mr J.K. Shannon. On his death, it passed to his daughter and his younger son Mr E L Shannon. Mr E L Shannon bought his sister's interest and ran the farming property himself. Mr Shannon married Margaret Ruth Mould. They had three children, James McDonald, Deirdre McDonald and Colleen McDonald. From the time he left school, Mr James Shannon assisted his father and it was obviously intended that he would take over the management of the property at some future time. The farming and pastoral business at Cambusdoon was conducted by a partnership trading as Cambusdoon Proprietors. From 1952 the partners were Mr and Mrs E L Shannon and the three children. 4. In 1961 Bagot Well Pastoral Co Pty Ltd ("Bagot Well") was incorporated. The company acquired the farm property Cambusdoon from Mr E L Shannon. The partnership Cambusdoon Proprietors continued to operate the farming and pastoral business on the company's land. 5. Bagot Well was a typical family company but with the controlling power firmly in the hands of Mr E L Shannon as governing director. The original memorandum of association provided that, while he held the governing director's share, he should be governing director for so long as he chose or until he was unfit to do so. The powers attached to the governing director's shares included: (i) that he should have three fourths of the votes in the company and (ii) that he might appoint any other person to be governing director with such powers, authorities and directions that he chose. 6. Soon after incorporation, Bagot Well made an issue of 1,000 ordinary shares to Mrs M.R Shannon and 3,000 ordinary shares to each of the three children. In 1962 Mr J.M. Shannon was appointed a director of the company and until 1969 the directors were E L Shannon, M.R. Shannon and J.M. Shannon. The Creation of Life Governor's Shares At a meeting of shareholders on 24 July 1964, a special resolution was carried amending the rights and privileges attaching to the governing director's share and adopting new Articles of Association. Instead of the office of governing director, the new Articles provided for what was called the office of life governor. There were two life governors, the first life governor and the second life governor. Article 2 defined the first life governor to mean Mr E L Shannon and the second life governor to mean Mr J.M. Shannon. Article 5 provided that the first life governor's share held by Mr E.L.S. Shannon was to remain a life governor's share so long as he was the registered holder of or entitled to such share or until his death. Upon his death the share was to cease to be a life governor's share and thereafter was to become an A Class share. Article 5 further provided that upon the first life governor share becoming an A Class share, the second life governor's share held by Mr J.M. Shannon was to become a life governor's share and was to remain as such so long as Mr J.M. Shannon was the registered holder or entitled to such share or until his death whereupon it was to become a D Class share. Thus, the control the company was firmly placed successively in the hands of Mr E L Shannon and Mr J.M. Shannon. The rights and privileges attaching to a life governor's share included:
     (i) the right to be Chairman of the Board and to exercise all
    the powers, authorities and discretions vested in the directors
    generally and that all the other directors for the time being
    should be under his control and bound to conform to his
    directions: Article 5(a);
     (ii) the right at any time to appoint any other persons to be
    directors of the company and to define, limit and restrict their
    powers and at any time to remove any director so appointed:
    Article 5(b);
     (iii) the right to convene a general meeting: Article 5(d);
     (iv) the right in respect of the life governor's share at every
    general meeting and on every poll to 76 votes out of every 100
    votes cast: Article 5(e);
     (v) the right at any time to take up any unissued shares:
    Article 5(f) and
     (vi) the right in a winding up to all surplus assets: Article 5(g). 7. Unlike the old Articles, the new Articles did not contain an express right to appoint another life governor to succeed Mr J.M. Shannon. Unless the right is to be found in Article 5(b), the only means by which Mr J.M. Shannon could appoint a life governor is by an exercise of his right to cast 76 out of every 100 votes at a special general meeting called to alter the Articles. 8. Articles 35 to 52 created the familiar restriction on the transfer of shares. Shares could be only be transferred to a person other than a person nominated by the life governor or, in the absence of the life governor, to a person nominated by the directors, or to another registered shareholder only if the nominated purchaser was not prepared to purchase the same at the fair value: Article 35. The intending transferor was required to give written notice to the company of his intention to sell: Article 37. Article 38 provided that the auditor should determine fair value in the case of dispute between the transferor and intending purchaser. There was no definition of "auditor" in the Articles. It was accepted by the parties that the auditor referred to in Article 38 was the auditor of the company appointed at the annual general meeting pursuant to Article 146. Article 41 provided that the shares specified in any transfer notice given to the company should be offered in the first place to the holder of the life governor's share. Article 42 provided that a member could transfer his shares to any member of his family or to any company in which a member or any member of his family held a controlling interest. This power was not subject to the restrictions on transfer. The only constraint was that such a transfer should not reduce the number of members below two: Article 48. Article 42 also provided a power of compulsory acquisition of shares, the acquisition to be at the fair value. The power of compulsory acquisition could be exercised by the life governor or the directors on giving notice to the member or his representative and the whole of the shares was thereupon required to transfer the shares to the person named in the notice. 9. Another important Article is Article 156. It provides:
    "If the Company shall be wound up and the assets available
    for distribution among the members as such shall be insufficient
    to repay the whole of the paid up capital, such assets shall be
    distributed so that as nearly as may be the losses shall be borne
    by the members in proportion to the capital paid up or which
    ought to have been paid up at the commencement of the winding up
    on the shares held by them respectively. And if in a winding up
    the assets available for distribution among the members shall be
    more than sufficient to repay the whole of the capital paid up at
    the commencement of the winding up the excessive shall be
    distributed amongst the members in proportion to the capital at
    the commencement of the winding up paid up or which ought to have
    been paid up on the shares held by them respectively. But this
    Article is to be subject to and without prejudice to the rights
    of the holders of shares issued upon special terms and
conditions." 10. The precise intention of the last sentence of Article 156 is not clear. The reference to "the holders of shares issued upon special terms and conditions" could refer only to holders of shares which are issued on special terms, or it could refer to the right of the life governor in a winding up to all surplus assets in the company as provided in Article 5(9), or both. The Activities of Bagot Well The Articles as amended in 1964 divided the nominal capital company ( 70,000) into 70,000 shares of 1 each. Shares 1 and 7,003 were the life governor's shares. There were four classes of shares as well as ordinary shares but, apart from the life governor's shares, no special privileges attached to any class of share. 11. As mentioned, after the incorporation of Bagot Well, Cambusdoon Proprietors continued to operate the farming business on the company's land. The partners paid rent to the company. In 1965, at the insistence of their father, the two daughters, Deirdre and Colleen, retired from the partnership. They had by then left home. At that time, Mr E L Shannon was living in semi-retirement with his wife in Adelaide and Mr J.M. Shannon was managing Cambusdoon. Mr E L Shannon died in 1969. Since his father's death Mr J.M. Shannon has managed the company. He is also the active partner of Cambusdoon Proprietors. 12. In November 1978 Mrs P.M. Shannon, the wife of Mr J.M. Shannon, was appointed a director of Bagot Well. In March 1979, Mrs M.R. Shannon ceased to be a director. Since that time, Mr J.M. Shannon and his wife have been the sole directors of the company. The trial judge held that the dominant force in the company is Mr J.M. Shannon, as the holder of the life governor's share and that Mrs Shannon concurred in all decisions reached by him.At all relevant times, Mr and Mrs Shannon have also been the principals of Cambusdoon Proprietors and Gloaming Proprietors, both of which carry on business as farmers. 13. Mrs Shannon concurred in all the decisions reached by Mr Shannon and expressed in the resolutions of the directors of Bagot Well. The trial judge held that it was therefore realistic as well as convenient not to discriminate between the actions and purposes of Mr Shannon and the actions and purposes of the Board of Directors. That finding has not been challenged and I also proceed on that footing. Neither of the daughters took any part in the management of Bagot Well. Deirdre (now Mrs McKay) left home about 1960. She took no active interest in the company and in 1976 she sold her shares to her brother for $2.60 a share. Colleen (now Mrs Reid) moved to Sydney in 1963. After her marriage in 1972 she showed considerable interest in the affairs of the company in which she held an important stake. That interest has culminated in these proceedings. 14. As already mentioned, soon after its incorporation, Bagot Well issued 1,000 shares to Mrs M.R. Shannon and 3,000 shares each to three children. When Mrs McKay sold her shares to her brother in 1976, the two major shareholders in Bagot Well were Mr J.M. Shannon who held 6,000 shares in addition to his life governor's share and Mrs Reid who held 3,000 shares. The only other shareholder at that time was Mrs M.R. Shannon who held 1,000 shares. 15. Two issues of shares were made to all shareholders in 1978 and 1981. In 1978 the company made an issue to existing shareholders of one share for every two shares then held. Mr Shannon and Mrs Reid each took up their entitlement of 3,000 and 1,500 shares respectively. Mrs M.R. Shannon had sold 500 shares held by her to Mrs P.M. Shannon and Mrs P.M. Shannon also took up her entitlement. The issue made in 1981 was again to existing shareholders, a renounceable issue of two shares for every one share held. Again, Mr Shannon and Mrs Reid each took up their entitlement. After this issue, Mr Shannon then held 27,000 shares and Mrs Reid 13,500 shares. Mr Shannon expressed surprise that Mrs Reid took up her entitlement. In this action, Mrs Reid attacked the propriety of the 1981 issue but not the 1978 issue. 16. Mrs Reid also attacked two subsequent allotments of shares to Mr Shannon. On 16 September 1982 the Board resolved to allot Mr Shannon 13,000 shares at par. No offer was made to Mrs Reid or other shareholders. The allotment was made in response to a request from Mr Shannon to take up unissued shares in the company in exercise of his power as the holder of the life governor's share pursuance to Article 5(f) of the company's Articles by which he was as life governor entitled to take up any unissued shares in the company. As a result of the allotment Mrs Reid's percentage of the issued shares in Bagot Well was reduced from 30.5 to 23.6. On 20 January 1984 the Board resolved to issue a further 7,500 shares at par to Mr Shannon. As with the 1982 allotment, this allotment was made in response to a request Mr Shannon had made pursuant to Article 5(f). Again no offer was made to Mrs Reid and her proportion of the issued shares fell to 20.8 per cent. Mrs Reid complained that these issues, if they were to be made at all, should have been made at a premium, that they were discriminatory and that they were in any case unnecessary. The learned trial judge dismissed these complaints. I will return to these share issues. 17. After the death of Mr E L Shannon, Bagot Well was in a very fragile state. However, by careful management, the assets of the company have been built up and, as the trial judge found, it is now in a relatively sound financial position. It remains a holding company with the farming operations being conducted by Cambusdoon Proprietors. It has also had dealings with Gloaming Proprietors, another partnership business in which the principals are Mr J.M. Shannon and his wife. Bagot Well has engaged in profitable land subdivision and share trading activities. It has bought and sold land. The most important sale and purchase of land was the purchase in 1977 of the Old Anlaby homestead and some parcels of surrounding land. The Old Anlaby homestead is in the same district as Cambusdoon. The transaction was financed by the sale of the Cambusdoon land holdings and a bank loan. Mrs Reid challenged the propriety of the purchase of Old Anlaby and I will return to that issue. 18. As the trial judge put it, Mr Shannon and Mrs Reid were and remain poles apart in respect of what is perceived to be the proper management of the company. By his will, made in 1968, Mr E L Shannon gave the bulk of his estate to his sons subject to a life interest to his widow. Apart from a certain provision for his daughter Mrs Reid while she remained unmarried, he made no provision for his daughters in his will "for the reason that I have made sufficient provision for them during my lifetime". There is no explanation in his will as to what that provision was. Mrs Reid has interpreted that provision as a reference to the allotment of 30 per cent each of the issued shares in Bagot Well to her and her sister. She perceived this to be her "inheritance". As the trial judge concluded, while it cannot affect her legal position as shareholder, that fact goes a long way towards explaining the stand she has taken against her brother's management of Bagot Well since her father's death. She acknowledges his special position as the holder of the life governor's share but believes she has a substantial interest in the company the value of which should be related, at least as a starting point, to 30 per cent of the assets. Mr Shannon has always considered this to be a completely wrong-headed view. He perceived Mrs Reid to be powerless as shareholder and that the value of her shares was very modest indeed. 19. In addition to the financial aspects of her interest in the company, since her marriage in 1972, Mrs Reid has complained of the lack of financial information and the delay in the proper provision of information concerning the affairs of the company. She did not receive notice of annual meetings until 1979 and annual meetings were usually held at times when it would be difficult for her to attend. Bulky correspondence has been conducted between Mrs Reid and her brother which was admitted in evidence. Mrs Reid was not satisfied with the responses she received and ultimately instituted this action. 20. The only witnesses at the trial were Mrs Reid for the plaintiff and Mr Shannon and Mr Flood for the defendant. Mr Flood is the company secretary as well as the accountant and auditor of the company. Mrs Shannon did not give evidence. There was a large amount of documentary evidence comprising the financial records of the company, the financial records of Cambusdoon Proprietors and Gloaming Proprietors as well as large extracts from other records of the company. Mrs Reid did not call an accountant or any other witness to explain and analyse the documents or to interpret them in a way which would explain the effect of what has transpired. The evidence covered the whole of Mr Shannon's direction and management of Bagot Well both before and after the petition was lodged. In finding that the affairs of the company were conducted in a manner that was oppressive and unfairly prejudicial to and unfairly discriminatory against Mrs Reid and in a manner contrary to the interests of the company as a whole, the trial judge had regard only to the period prior to October 1985, the date of the petition. He had regard to the evidence relating to the period between the petition and the trial for the purpose of determining whether there was proper case for making an order under sub-section (2). 21. The reasons for His Honour's conclusions were first, what he called the unsatisfactory financial arrangements with Cambusdoon Proprietors which, he found, worked seriously to the disadvantage of the shareholders of Bagot Well and, secondly, all the other manifestations of Mr Shannon's single minded policy of building up the assets of the company for the benefit of his family and not for the benefit of the shareholders generally. The Operation of s.320 The expression "oppressive or unfairly prejudicial to or unfairly discriminatory against a member or members, or in a manner that is contrary to the interests of the members as a whole" in s.320(1)(a) has frequently been considered and its meaning is well settled. The redrafting of s.320 in 1983 broadened the grounds of intervention to provide a greater measure of curial protection to members of the company, especially if they be in a minority, than the protection afforded under the earlier Companies Acts: per Brennan J in Wayde v NSW Rugby League Limited (1985) 59 ALJR 798 at 803, Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692, 704 and Re Dalkeith Investments Pty Ltd (1984) 9 ACLR 247, 253. 22. Section 320 identifies four separate grounds on which a petitioner may seek the intervention of the court. As Richardson J observed in Thomas v H.W. Thomas Limited (1984) 1 NZLR 687 at 693, there is an overlap in the three expressions "oppressive, unfairly discriminatory, or unfairly prejudicial", each in a sense helps to explain the other, and read together they reflect the underlying concern of the sub-section that conduct of the company which is unjustly detrimental to any member of a company in whatever form it takes and whether it adversely affects all members alike or discriminates against some only is a legitimate foundation for a complaint. The expression "or in a manner that is contrary to the interests of the members as a whole" does not find its place in the equivalent New Zealand provision. It is but another ground on which the Court may intervene: re Spargos Mining NL (1990) 3 ACSR1, 42. In Morgan v 45 Flers Avenue Pty Ltd (supra) at 704 Young J said: "In my view a court now looks at sub-section 2(a) as a composite whole and the individual elements mentioned in the section should be considered merely as different aspects of the essential criterion, namely commercial unfairness." 23. In re Spargos Mining NL (supra) at 42, Murray J questioned, but did not find it necessary to decide, whether those remarks stated the correct approach to s.320(2)(a). It is unnecessary in this case also to determine that question. Commercial unfairness is, of course, one example of conduct which may be unfairly prejudicial or unfairly discriminatory for the purposes of s.320. There may be others. Section 320 is directed to instances or courses of conduct amounting to an unjust detriment to the interests of a member or members of the company. A petitioner will, therefore, be entitled to an order if he satisfies the Court that at least one of the four kinds of prescribed conduct have occurred. As McPherson J noted in Re Dalkeith Investments Pty Ltd (supra) at 253: "It is enough that there is action, which if not `oppressive' is at least `unfairly prejudicial to' or `unfairly discriminatory against' a particular member." 24. Further, it is no longer necessary that the conduct complained of is continuing at the date of the petition: Re Dalkeith Investments Pty Ltd (supra) at 253. 25. The question whether the conduct is oppressive, unfairly discriminatory, unfairly prejudicial or contrary to the interests of the members as a whole will be determined objectively: Wayde's Case (supra) at 803; Morgan v 45 Flers Avenue Pty Ltd (supra) at 704. When determining that question it may often be necessary to weigh conflicting interests of different groups within the company. As Richardson J said in Thomas v H.W. Thomas Limited (supra) at 694:

    "Fairness cannot be assessed in a vacuum or simply from
    one member's point of view. It will often depend on weighing
    conflicting interests of different groups within the company. It
    is a matter of balancing all the interests involved in terms of
    the policies underlying the company's legislation in general and
    (s.320) in particular..." The Plan to Benefit One Interest 26. This case is perhaps unusual in that there is direct evidence of a plan to benefit a group of shareholders. It does not have to be inferred from conduct. There was compelling evidence of what the trial judge called Mr Shannon's single- minded policy of building up assets for the benefit of his family and not for the benefit of the shareholders generally. On 23 September 1981, before these proceedings had commenced but at a time when Mrs Reid was pressing for further information as to the affairs of the company, Mr Shannon clearly expressed his views as to the manner in which he would run the affairs of Bagot Well:
    "I have never drawn Director's fees for any of the involved
    financial arrangements and work I have done for the company in
    over ten years; in fact even when I have expenses in Adelaide I
    pay them out of my own account or Gloaming Props. in most cases.
    I do not see that I will ever make any big money out of the
    company as my whole plan is to slowly build it up to pass on the
    rural land to Andrew and Lincoln who both want to go onto the
    land. This is what our Father intended, as Mother will confirm
    if you ask her. It is typical of rural properties where large
    capital values return practically nothing after running costs...
    You can be absolutely assured that there will be no big bonanza
    pay-out to any shareholder. Even at my death the company will be
    carried on and no land sold and unless the whole company was
    liquidated there would be no spare cash to distribute." 27. On 20 December 1983 he effectively reminded Mrs Reid of those views in a letter expressing surprise that she had taken up the 1981 issue of shares.
    "In your second letter you said you thought there was no
    unanswered questions regarding the company. As I recall the only
    question that was raised was the question David Flood and I
    pondered and that was `why did you take up the new share issue
    entitlement costing you many thousands of dollars about two years
    ago' when you actually want to withdraw your money. Once money
    is subscribed to shares it is virtually tied up. As I have
    pointed out to you in many letters there is no prospect of a
    dividend or capital return either while I am running the company
    or later when it is being run by my sons. That is why David
    Flood and I asked the question `why did you subscribe to the new
issue'." 28. The learned trial judge found that Mr Shannon ran Bagot Well as though he were the sole proprietor from the time he took control after the death of his father. The views expressed in the two letters, the first of which was written when Mr Shannon had been life governing director for 12 years, amply justify the trial judge's conclusion that Mr Shannon not only saw himself as the sole proprietor but that he had a single-minded objective to build up the company to the advancement of the interests of his own sons to whom he intended to let control of the company pass. He did not believe it necessary to consider the interests of other shareholders. 29. Voting powers conferred on shareholders and powers conferred on directors must be used bona fide and for the benefit of the company as a whole: Ngurli Ltd v Mc Cann (1953) 90 CLR 425, 438; Whitehouse v Carlton Hotel Ltd (1987) 162 CLR 285. Those duties are no less applicable in the case of a life governing director with extensive powers and who has three quarters of the voting power, a power sufficient to alter the Articles of Association: Ngurli Ltd v McCann (supra) at 439; Hannes v NJH Pty Ltd (1992) 7 ACSR 8. The phrase "the company as a whole" does not mean the company as a commercial entity as distinct from its shareholders; it means its shareholders as a whole: Greenhalgh v Arderne Cinemas Ltd (1951) Ch 286. That is to say, the case may be taken of an individual hypothetical member and it may be asked whether what is proposed is, in the honest opinion of those who have voted in its favour, for that person's benefit: Greenhalgh v Arderne Cinemas Ltd (supra) at 291 and Ngurli Ltd v McCann (supra) at 438. 30. Mr Shannon's plan was not to act for the benefit of the company as a whole but to benefit a particular group of shareholders, that is to say his family. It was, therefore, a plan which unfairly discriminated against Mrs Reid, a person who held a substantial number of shares in the company, the more so because Mr Shannon's sons did not become shareholders until about 1982. The preferment by the directors of their own interests over another group of shareholders is unfair discrimination, if not oppression in the sense it was used before s.302 was amended: re Bright Pine Mills Pty Ltd (1969) VR
1002, 1011; re Spargos Mining NL (1990) 3 ACSR 1, 45-46. It is not necessary to determine whether Mr Shannon's plan constituted an improper conduct in his office as a director of the company. It is sufficient to note that it constituted unfair discrimination. 31. As a life governor with a substantial array of powers and influence in the affairs of Bagot Well, Mr Shannon might well have believed that he could manage the company in a way which would benefit his sons. This kind of arrangement is not uncommon in families in rural areas where it is intended that land should be passed down through the eldest son. But the shareholding of the company may be structured so as to require the life governing director to have regard to the interests of more than one group of shareholders. I agree with the analysis made by the learned trial judge:
    "It may be that many, particularly country people, would
    sympathize with Mr Shannon in the position in which he found
    himself. This was a common form of financial arrangement in its
    time, with a company owning the land and a partnership running
    the business, no doubt designed to lessen the impact of the
    taxation and succession duty laws but at the same time keeping
    the de facto control of the whole enterprise securely in the hands
    of the family head who created it. It is possible that E L
    Shannon intended that he, and after him his son, should continue
    to be the effective owner of the enterprise, as well as its
    all-powerful director, but the allocation of 60 per cent of the
    issued shares to his daughters was (whether he realized it or
    not) inconsistent with that view. Perhaps he expected that his
    children would always agree among themselves or that the
    daughters would be willing at all times to defer to the views of
    their brother. I can imagine that many family members in a
    situation similar to Mrs Reid's would have acknowledged the
    holder of the Life Governor's Share as the virtual owner of the
    company and at liberty to manage it as he chose and to
    concentrate on building up an asset to hand on to his sons, as
    his own father had handed the property on to him, and entitled
    when it suited him to acquire the shares in the company of anyone
outside his immediate household at something like par value." 32. But, as His Honour concluded, that is not the way Mrs Reid saw it nor is it the way the law will necessarily view an arrangement of this kind. 33. As Young CJ said in Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 at 695: "So long as the law permits people to erect structures which have meaningful legal consequences then if a person elects to erect such a structure he must take the consequences of such erection for better, for worse, for richer or poorer, in commercial sickness or commercial health." 34. When Mr J.M. Shannon assumed control of Bagot Well in 1969, he and his two sisters effectively held a one-third interest each in the company. The direction and management of the company had to be conducted so that there was no preferment of one interest over another. The duties imposed upon Mr Shannon as a director to act bona fide and in the interests of the company as a whole was not diminished by the extensive powers and privileges available to him as the holder of the life governor's share: Whitehouse v Carlton Hotel Pty Ltd (supra). There was, of course, nothing to prevent Mr Shannon from purchasing his sisters' shareholding at a fair value and then running the company as he chose for the benefit of his children. But unless and until he did so, his duty was to manage the company for the benefit of all shareholders and not to advance the interests of his family to the detriment of any shareholder or group of shareholders. The Dividend Policy The learned trial judge could have simply relied on Mr Shannon's letters to establish that Mrs Reid had been unfairly prejudiced or unfairly discriminated against. However, he also had regard to other evidence which in his view demonstrated conduct which attracted the operation of s.320(2). He found that the directors of Bagot Well never properly considered the question whether dividends should be paid and that the financial relations between Bagot Well and Cambusdoon Proprietors were very unsatisfactory for Bagot Well. I turn first to the question of the dividend policy of the directors. The trial judge found that paying dividends was never part of Mr Shannon's strategy. It was inimical to his plan to build up the company's land holding in order to pass it on to his sons. The company paid only one dividend, a dividend of 10 cents per share declared on 23 April 1987. The total amount of the dividend was $6,475. The company had made a profit in its share trading activities of $173,059 and an overall operating profit in that year of $65,164. In that year, the company paid Mr and Mrs Shannon director's fees totalling $32,000. As will be seen those fees were by far the highest paid by the company to Mr and Mrs Shannon. By contrast the dividend was very modest. 35. As the trial judge noted, the company generally made a loss but, he observed, the profit in any particular year was dependent to a large extent upon whether the company chose to recover all the charges it was entitled to levy and the way income expenses were shared between the company and the partnership. These things depended to a substantial degree upon the discretionary judgment of the directors. The trial judge concluded:
    "There was also the dominant policy of building up the
    assets for the future benefit of the directors' sons. It was
    proper for the directors to preserve the assets of the company
    and to promote their reasonable enhancement, but a balance had to
    be maintained which acknowledged the legitimate interests of the
    shareholders generally. One may fairly conclude that, except in
    1987, the question of declaring a dividend was never seriously
    considered by the directors, even in the best years. The policy
    of self-interest that Mr Shannon pursued in this respect was
    legally indefensible, and the failure of the directors to declare
    more dividends amounted, in my opinion, both before and after
    1985, to unfair discrimination against Mrs Reid. Cf. Re City
Meat Co. Pty Ltd (1983) 8 ACLR 673." 36. Mr Evans submitted that there was no evidence as to what dividends ought to have been paid or indeed whether the company was in a position to have paid dividends on a regular or frequent basis. The dividend policy was, he said, a matter for the Board and Mrs Reid knew that dividends were not being paid when she took up her entitlements in 1978 and 1981. All of what Mr Evans submitted is true but I think his submission fails to address the finding of self interest made by the trial judge. A failure to pay dividends or the fact that the directors do not determine dividends as high as the profits of the company fairly allow does not in itself constitute unfairness: re G. Jeffery (Mens Store) Pty Ltd (1984) 9 ACLR 193, Thomas v H.W. Thomas Ltd (1984) 1 NZLR 686. But that is not the criticism which the trial judge made. His criticism is directed at the self interest which prevented serious consideration of the question whether or not a dividend should be paid. 37. The trial judge did not hold that dividends should have been declared in each year. He expressly acknowledged that in many years the company made a loss. His Honour could hardly have failed to notice that since 1969, Bagot Well has made a trading profit in six years only, 1976, 1977, 1981, 1982, 1985 and 1987. It should be added in parenthesis that it also made substantial capital profits in a number of years. The capital profits reserve increased gradually. In 1972 it totalled $8,124. At 30 June 1985 it stood at $212,138. Substantial capital profits were made in at least 1975 ($28,561), 1978 ($46,535), 1979 ($78,047) and 1982 ($17,416). All of those profits were made from the sale of land owned by Bagot Well. The realisation of assets in which Mrs Reid could have fairly believed she had a substantial interest was applied to building up assets in a reserve in which she was denied an opportunity to participate and which would not be of any benefit to her. The fact that the question whether a dividend should be paid in respect of these profits was never considered was, therefore, commercially unfair. As the learned trial judge has found, self interest has again prevailed to the extent that the question of the payment of dividend was never seriously considered and never could be considered because of the policy of the Board concerning the charges it was entitled to levy and which were never seriously considered. It may be that the occasions when a dividend might have been payable were relatively few but the Board did not consider the issue even on those occasions. The preference for one interest against another is evidenced by the payment in 1987 to Mr and Mrs Shannon of director's fees totalling $32,000. Between 1962 and 1969 director's fees amounted to only a few dollars in each year. No fees were paid between 1970 and 1981. In 1982 fees amounting to $1,750 were allowed and by 1985 they had grown to $7,425. The fees between 1982 and 1985 might be fairly described as modest. In 1986, however, they jumped to $17,000 for no obvious good reason. In 1987 and 1988 the fees were $32,000 and $10,000 respectively. No director's fees were paid in 1989 but $500 was paid in 1990 and $700 in 1991. The abnormally high fees paid in 1987 and 1988 are explained in part by the company's intensive and very successful share trading in those years. The fees paid in 1987 in particular demonstrated the desire on behalf of Mr and Mrs Shannon, the only directors, to apply profits earned in that year predominantly to their own financial advantage with lip service to any consideration of interests of other shareholders: cf. Roberts v Walter Developments Pty Ltd (1992) 10 ACLC 804. Financial Arrangements with Cambusdoon Proprietors I turn to the financial arrangements between Bagot Well and Cambusdoon Proprietors which the trial judge criticised. His Honour held that the financial relations between Bagot Well and Cambusdoon Proprietors were unsatisfactory, at least for Bagot Well in that the company was not getting a proper return on the land it was making available to the partnership and that Cambusdoon Proprietors had not paid interest on its loan account which had increased steadily over the years. 38. There was no expert evidence as to what a reasonable rent would have been for the years 1972 to 1991. The evidence was summarised by His Honour in these terms:
    "For the first twenty years or thereabouts Cambusdoon
    Proprietors paid Bagot Well a steady annual rent of $2,500. The
    relevant landholding fluctuated over that period, and the annual
    value of the land must have altered markedly, but the rent
    remained constant and, to say the least, modest. One may suppose
    that it suited those in charge, from a tax point of view, to keep
    the company's income down in this and other respects. In 1981,
    however, the rent was increased twelvefold to $29,600. In 1982
    it was $32,800 and for each year from 1983 to 1986 it was
    $24,000. It was cut back to $5,000 in 1987 and then it was
    reduced to nothing. Mr Shannon said that he was advised by the
    accountants to increase it in 1981 in view of Mrs Reid's
    activity. He thought that Mr Flood's office assessed the rent,
    but Mr Flood implied in his evidence that it was fixed by Mr
    Shannon. Mr Shannon would not agree that the revised rent was a
    commercial rent. He said he cut it back to nothing as a result
    of the court proceedings taken by Mrs Reid. He explained that,
    by way of set-off, he practically eliminated the payment of
    directors' fees to the two Bagot Well directors. Mr Flood's
    evidence was that the higher rent was causing enormous problems
    for Cambusdoon Proprietors, but it is clear that the directors of
    Bagot Well were not entitled to provide its tenant farmer with
    rent-free land if that was to be done at the expense of its own
    shareholders. Prime (sic) facie at least, that is what was
    happening, even taking all reasonable offsets into account.
    There is no expert evidence as to what a reasonable rent for the
    land in all these years would have been." 39. Mr Evans relied heavily on the absence of evidence as to a proper rent and suggested that as Cambusdoon Proprietors had only made a profit in two years (1974 and 1976) it was unlikely that a higher rent was obtainable. He sought to explain the rent charged in 1980 and 1981 as an accounting exercise to transfer unusable tax losses to Cambusdoon Proprietors. Again I think these submissions fail to address the real issue, namely, whether family interest or self interest has prevailed over the interests of the company as a whole. It was open for His Honour to conclude the company was not recovering a proper return on the land it was making available to Cambusdoon Proprietors, particularly given the evidence as to the higher rents which had been paid in some years. As His Honour said, the failure to recover a proper return would not have mattered had the interests of the company and those of the firm been identical. But that is not the case as was evidenced from Mrs Reid's dissent. The petulant attitude implicit in the decision in 1987 to reduce rent to nothing because Mrs Reid had instituted these proceedings only serves to reinforce the conclusion that self interest led to the failure to determine a proper rental. 40. The trial judge was critical of the fact that Cambusdoon Proprietors did not pay interest on its borrowings from Bagot Well. The amount of the loan account of Cambusdoon Proprietors had steadily increased from a debit of $21,646 in 1968 to $100,566 in 1980, reaching a peak of $308,130 in 1986. In 1991 it was $211,729. The debt is unsecured and no interest has ever been paid. Mr Evans submitted that the increase in the amount of the loan due by Cambusdoon Proprietors and the failure to charge interest was offset by the fact that throughout the relevant time Bagot Well itself was substantially indebted to the Shannon family. The loans by the Shannon family to Bagot Well almost entirely consisted of loans by the estate of Mr E L Shannon and a loan by Mr J.M. Shannon. Mr J.M. Shannon was entitled to the residuary estate subject to the life interest of his mother. Thus, the indebtedness of Bagot Well to the Shannon family is in effect an indebtedness to Mr J.M. Shannon. From 1969 to 1980 the amount of Bagot Well's indebtedness to members of the Shannon family substantially exceeded the amount due by Cambusdoon Proprietors to Bagot Well. Since 1982 the position has quite significantly reversed so that as at 30 June 1985 the loan to Cambusdoon Proprietors exceeded the loan from the Shannon family by some $185,000. The amount due by Cambusdoon Proprietors reached a peak in the year ending 30 June 1986 of $308,130. At 30 June 1991 (the latest figures available) Cambusdoon Proprietors owned Bagot Well $211,729. 41. The trial judge had regard to items which could be set off against any interest payable by Cambusdoon Proprietors. Items which he said should go into the balance were directors fees, the interest free loans by the Shannon family, and the amount of labour expended by Mr Shannon and his family on the affairs of Bagot Well. His Honour properly questioned the extent to which the Shannon family could be reimbursed for unpaid services, particularly given the fact that the overlapping activities of Bagot Well and Cambusdoon would lead to difficulty in determining what was properly payable by Bagot Well and what was payable by Cambusdoon Proprietors. I nevertheless understand His Honour's reasons to acknowledge that some offset for those services was reasonable although it was practically impossible to assess the overall position with anything approaching accuracy. Mr Evans attempted to demonstrate that, if the trial judge had given effect to all relevant offsets, the position of the company might be little different from that in which it now finds itself. His submission fails again to address the relevant issue. These unsatisfactory financial arrangements are but another instance of Mr Shannon's plan to put self interest or his family's interest to the forefront without regard to the interests of other shareholders. Apart from the fact that no attempt was made to determine a proper rent, the rent charged in each year was not paid by Cambusdoon Proprietors but was simply added to its loan account. In addition, in most of the years between 1971 and 1985 Bagot Well has advanced to Cambusdoon Proprietors amounts in addition to the advances to cover the liability for rent. Any benefit to the company from these advances could only be quite remote. The force of the argument that an allowance must be made for these offsets is severely diminished by this advancement of self interest. Cambusdoon Proprietors has made but minimal repayments. These are all benefit which prefer one group of shareholders over another. Further, it is simply not practicable now to attempt to reopen the affairs of the company and seek to determine what the position of both the company and the petitioner would have been had the directors had regard to the interests of Bagot Well as a whole and conducted its dealings with Cambusdoon Proprietors and other family interests on an arm's length basis. So much has occurred over so long a period tat it is quite an impossible task. 42. The conclusion is, I think, inescapable that the directors, themselves the principals of Cambusdoon Proprietors, were preferring their interests to the interests of other shareholders, at least in the later years. As Mr Clayton, who appeared for Mrs Reid put it: "Mr. Shannon had improperly confused the voting and other rights conferred on the Life Governor with a right to use the company and its assets exclusively for the benefit of himself and other members of his immediate family to the exclusion of the petitioner." 43. This conclusion is reinforced by evidence given by Mr Shannon as to guarantees provided to the principals of Cambusdoon Proprietors by Bagot Well. Since at least 1971, Bagot Well has provided guarantees of the bank overdraft of Cambusdoon Proprietors and Gloaming Proprietors. Mr Shannon said that when his father was alive, the Cambusdoon overdraft was linked to the land but acknowledge that the Gloaming overdraft was always quite separate. On 13 April 1971 the directors of Bagot Well resolved to execute a guarantee for an advance by the Bank of Adelaide to Mr Shannon and his mother for $18,000. The limit of those guarantees has gradually increased over the years. On 23 December 1981 it had increased to $48,000, in July 1982 to $55,000, in November 1982 to $65,000 and February 1983 to $75,000. There was no reference to these guarantees in the annual financial statements of the company until the financial statements for the year ending 30 June 1984. A note attached to those accounts records that on 11 October 1984 the company had executed guarantees supported by a registered mortgage for an advance to Cambusdoon Proprietors limited to $110,000 and to Gloaming Proprietors limited to a sum of $32,000, making a total sum guaranteed of $142,000. In 1985 the limit of the two guarantees had increased to $160,000 and it has continued to increase thereafter. In 1991 the limit of the two guarantees was $520,000. 44. Despite the closeness of the relationship between Bagot Well and Cambusdoon Proprietors and the interaction of their commercial interests, I do not think that the interests of Bagot Well could legitimately be served by guaranteeing the borrowing arrangements of its tenant Cambusdoon Proprietors over such a long time. While there might be some advantage in the company providing financial assistance to its tenant for a short time, it is not possible to identify any advantage in providing guarantees for steadily increasing amounts for as long a period some twenty years particularly having regard to the fact that at the same time the liabilities of Cambusdoon Proprietors to Bagot Well continually increased and Cambusdoon Proprietors did not trade at a profit, except in 1974 and 1976. No matter how close the relationship between Bagot Well and Cambusdoon Proprietors, it could not justify continuing to furnish the guarantees over such a long time to what was an unprofitable trading entity. The provision of a guarantee for the borrowings of Gloaming Proprietors has even less justification. Not only was the provision of these guarantees for such a long time not in the interests of Bagot Well but it also unfairly discriminated in favour of the group of shareholders to the disadvantage of another. Further, given the level of borrowings of Bagot Well, the existence of guarantees had the capacity to inhibit its ability to borrow should the occasion arise. 45. When considering whether a petitioner has demonstrated conduct to attract the operation of s.320, the conduct complained of must be viewed as a whole. Section 320 invites attention not to events considered in isolation but to events considered as part of a consecutive story: cf. re H.R. Harmer Ltd

(1958) 3 All ER 689, 704-5. As Young J noted in McWilliam v LJ.R. McWilliam Estates Pty Ltd (1990) 2 ACSR 757 at 764, the danger in dealing with events one by one is that the cumulative effect of the various pieces of unfairness might be overlooked. When viewed in its totality, the evidence wholly justified the conclusions of the learned trial judge. The Cross Appeal The trial judge rejected Mrs Reid's allegation first that the allotments of shares made by the company in 1978, 1981 and 1982 were made for improper purpose and, second, that the purchase by Bagot Well of Anlaby Station and sale of Cambusdoon was not in the best interests of the company. In her cross-appeal, Mrs Reid complained of these findings. For the reasons which follow, I do not think the Court should interfere with the findings on these questions. 46. I deal first with the purchase of Anlaby Station. There is no evidence that the acquisition of this property was not for the benefit of the company. It is a well known and substantial property of considerable historic interest. It may be, as Mr Shannon admitted, that he had long cherished the desire to acquire it. It may be too that the Anlaby homestead is a much grander building that the homestead at Cambusdoon. But there is no direct evidence that the company did not acquire an asset of at least equal value to Cambusdoon. There is no evidence, for example, to compare the value of each property or the farming potential of each. There is no evidence to show whether Bagot Well has received a benefit or a burden in consequence of the sale of Cambusdoon and the purchase of Anlaby. Given the state of the evidence, it is not possible to identify any impropriety in relation to the purchase of Anlaby Station. The trial judge accepted Mr Shannon's evidence that the purchase of Anlaby was a sound commercial transaction and that the homestead added nothing to the cost of Anlaby. There was no evidence to the contrary and I do not think there is any basis upon which this Court could interfere with His Honour's finding. The only issue in relation to the Anlaby property was whether Cambusdoon Proprietors way paying a proper rent. 47. Mrs Reid alleged that the share issues made in 1978, 1981, 1982 and 1984 were all made for an improper purpose. Pro rata allotments had been made in 1978 and in 1981 to all shareholders and Mrs Reid took up her entitlement and maintained the percentage of her shareholdings. The trial judge found that, although some criticism could be made of the directors with respect to the 1978 and 1981 allotments, these were not important and there was no ground to interfere with the allotments. Mr Clayton QC, who appeared for Mrs Reid, submitted that the issues were not made for the declared purpose of increasing the working capital of the company. He contended that the purpose was to dilute the interest of Mrs Reid. That argument must fail as Mrs Reid had the same percentage as shares after the allotment as before. Mr Clayton also suggested that the allotment made to Mr Shannon in 1978 might have been in breach of s.67 of the Companies Act, 1962 which was then in operation. The allegation was not pressed at the trial and the evidence is somewhat inconclusive. I do not think there is any sufficient evidence on which to uphold that submission which was but faintly pressed. 48. The allotments in 1982 and 1984 were made in similar circumstances. In each case, Mr Shannon had written to the company applying to take up a parcel of unissued shares pursuant to his entitlement to do so in Article 5(f). On each occasion the directors, Mr and Mrs Shannon, resolved to make an issue in order that Mr Shannon could exercise his right as life governor. No shares were offered to any other shareholder. In consequence Mrs Reid's proportion of issued shares fell from approximately one-third to approximately one- fifth. Mrs Reid complained that the issues, if they were to be made at all, should have been made at a premium, that they were discriminatory and were in any case unnecessary. The trial judge dismissed these complaints. The trial judge also considered whether the allotments made in 1982 and 1984 were made in breach of the fiduciary duties of the directors. He held that they were not. Having referred to Ngurli Ltd v McCann (1953) 90 CLR 425; Whitehouse v Carlton Hotel Pty Ltd (1987) 162 CLR 285 and J.D. Hannes v N.J.H. Pty Ltd
(1992) 7 ACSR 8, His Honour continued:
    "The company records show that the formal initiative, if
    not the inspiration, for these allotments came from Mr Shannon.
    Paragraph (f) of Article 5 gave the holder of the Life Governor's
    Share `the right at any time to take up any unissued shares in
    the capital of the Company,' and in each case, in purported
    exercise of that right, Mr Shannon notified the company that he
    intended to exercise it and the board of directors made the
    allotment accordingly. It seems to me that it had no real choice
    in the matter. While the right to take up the unissued shares is
    attached under Article 5 to the holder of the Life Governor's
    Share, that person will not necessarily be a director - see
    par.(a) of Article 5 - and, even where he is, the right
    exercisable under par.(f) is not directorial in character. It
    seems more appropriate to regard it as a special right conferred
    by the Articles on a particular privileged shareholder and not
    itself affected by the fiduciary restraints applicable to persons
    acting as directors of a company. People usually apply for
    shares with only their own interests in mind and often with the
    object of increasing their own proportion of the issued capital
    at the expense of others. Generally speaking, a shareholder does
    not owe any fiduciary duty to the company or to his fellow
    shareholders. North-West Transportation Co Ltd v. Beatty (1887)
    12 App.Cas. 589, at 600-1; Peters' American Delicacy Co. Ltd v.
Heath (1939) 61 CLR 457, at 504. It is true that the application
    for shares by the Life Governor and their subsequent allotment by
    the directors are two different things, but I do not think that
    the Articles of Bagot Well can have been intended to make an
    application under par.(f) of Article 5 examinable by the
    directors by reason of the applicant's self-interest. That would
    limit the right conferred by the Article very severely if,
    indeed, it did not make it a dead letter. So for more than one
    reason this complaint must, in my opinion, fail." 49. I respectfully agree with His Honour's conclusion. There was evidence which suggested that Mr Shannon's purpose in exercising his ultimatum was to dilute the interests of Mrs Reid. But as His Honour held, one shareholder does not have a fiduciary duty to another at least where an exercise of voting power is not involved. What is under consideration is not whether the directors have acted in breach of their fiduciary duties or whether a majority of shareholders have misused their power as a majority but whether there is any limitation upon the entitlement of the life governing director to take up unissued shares. The power to do so is plainly expressed in the Article 5(f). It is reinforced in other Articles. Article 9 provides that the power of the directors to control the allotment of shares is subject to "the rights and restrictions attached to or conferred upon the whole of any shares or class of shares and to the provisions of Articles 5 and 55." Article 55 provides that, upon any increase in share capital, all new shares shall be offered in the first instance to the holder of the life governor's share and any shares not taken up by him shall be offered to other members in proportion to their existing shareholdings. Given the clear intention expressed in the Articles to enable the whole of the life governor's share to take up a pre-eminent shareholding position, I do not think it is possible to circumscribe that power in the way for which Mrs Reid contends. 50. For these reasons I dismiss the cross-appeal. The Remedy Granted 51. The trial judge held that Mrs Reid was not entitled to have her shares valued according to the net asset backing for that would be to ignore her disadvantageous position as a shareholder under the Articles, including Article 5 whereby the whole of the life governor share has the right in a winding up to all surplus assets. He further held that the shares not be valued as though Bagot Well was about to be wound up. The basis of the assessment of the value of the shares was expressed in his order in these terms:
    "2. That for the purposes of such assessment the following
    inquiries be made and taken that is to say:
     (a) an inquiry as to the revised annual accounts for the
    Company for the period from the date on which the said James
    MacDonald Shannon became sole life governor and up to the date of
    the presentation of the petition herein prepared on the
    assumption of proper commercial arrangements between the Company
    and those bodies or persons with whom it had relevant financial
    dealings including but not limited to:
        (i) the proper commercial rent that should have been paid to
    the Company for the use and enjoyment of its land and
    improvements;
        (ii) the interest that should have been received or payable
    by the Company calculated at proper commercial rates of interest
    in respect of all loans made by or to the Company;
        (iii) any offsetting benefits provided to the Company by the
    said James MacDonald Shannon or members of his family or the
    family partnerships;
     (b) an inquiry as to the assumed dividend history of the
    Company on the basis of such revised annual accounts that would
    have occurred had the directors consistently with the Articles of
    the Company maintained a fair and justifiable balance between
    capital growth and an immediate return to shareholders in the
    years when a dividend could prudently have been paid.
     3. That such inquiries be made by a Master reserving liberty
    to him if he shall think fit to appoint a Court expert to take
    and report on the findings of such inquiries.
     4. That the Master assess the reasonable price to be paid by
    the said James MacDonald Shannon for the petitioner's shares
    having regard to inter alia;
        (i) the advantage to the said James MacDonald Shannon of his
    owning all the shares of the Company; and
        (ii) the petitioner's loss of income by reason of the
    Company's failure to pay proper dividends in that period prior to
    and including 1985." 52. Mr Shannon's appeal was directed to the question whether he had been guilty of conduct attracting the operation of s.320. He did not adduce any argument on the manner of assessment of the value of the shares. Mrs Reid cross-appealed against the finding that she was not entitled to have her shares value according to net asset backing but no argument was addressed on that issue. I do not think any basis has been shown for interfering with the directions as to the assessment of the value of the shares. 53. For these reasons I would dismiss the appeal and the cross-appeal in action no. 3455 of 1985. Action No. 2787 of 1991 54. Mr Shannon also appealed from the judgment dismissing his claim that he validly exercised the powers vested in him to compulsorily acquire Mrs Reid's shares. As the finding of oppressive conduct made by the trial judge has been upheld, this appeal too must be dismissed.

JUDGE1 KING CJ In my opinion the appeal and cross appeal in action No. 3455 of 1985 should be dismissed. The appeal in action No. 2787 of 1991 should also be dismissed. 2. I agree with the reasons for judgment of the learned trial judge and the reasons of Debelle J on the appeals.

JUDGE1 MILLHOUSE J I agree with the conclusions of Debelle J in both appeals.