In the matter of Bailey Roberts Group Pty Ltd (in liq)

[2025] NSWSC 227

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

In the matter of Bailey Roberts Group Pty Ltd (in liq) [2025] NSWSC 227

Hearing dates:

4-7, 11-13, 21 February 2025

Date of orders:

20 March 2025

Decision date:

20 March 2025

Jurisdiction:

Equity - Corporations List

Before:

Black J

Decision:

Proceedings dismissed.

Catchwords:

CONTRACT – adviser’s exit from financial services business – whether breach of contract established – whether loss established.

OPPRESSION – Whether oppression established – whether compensable loss established.

Legislation Cited:

- Civil Procedure Act 2005 (NSW), ss 100, 101

- Corporations Act 2001 (Cth), ss 53, 180-182, 232, 233(1), 233(1)(d), 912A, 1322

- Evidence Act 2005 (NSW), ss 136, 140

Cases Cited:

- Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310

- Armagas Ltd v Mundogas SA [1985] 1 Ll R 1

- Bell v Burton (1993) 12 ACSR 325; 12 ACLC 1037

- Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34

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

- Central Coast Council v Norcross Pictorial Calendars Pty Ltd (2021) 391 ALR 157; [2021] NSWCA 75

- Chaudhary v Bandicoot Group Pty Ltd [2017] FCA 517

- CIP Group Pty Ltd v So (2022) 164 ACSR 566; [2022] FCA 1490

- Eastern Resources of Aust Ltd v Glass Reinforced Products (GRP) Pty Ltd [1987] 2 Qd R 31; (1986) 10 ACLR 496

- ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24

- Firmtech Aluminium Pty Ltd v Xie; Zhang v Xu; Xie v Auschn Conveyancing & Associates Pty Ltd [2024] NSWSC 1293

- Haiye Developments Pty Ltd v Commercial Business Centre Pty Ltd [2022] NSWSC 937

- Interactive Technology Corporation Limited v Ferster [2016] EWHC 2896 (Ch)

- JLW (Vic) Pty Ltd v Tsiloglou [1994] 1 VR 237

- K&A Laird (N.S.W.) Pty Ltd (in liq) v Aidzan Pty Ltd (in liq) [2023] NSWSC 603

- Lewis v Estate of Martinez [2025] NSWCA 2

- LPD Holdings (Aust) Pty Ltd v Phillips (2013) 281 FLR 227; [2013] QSC 225

- McCrohan v Harith [2010] NSWCA 67

- Mitropoulos v Greek Orthodox Church and Community of Marrickville and District Ltd (1993) 10 ACSR 134; 11 ACLC 277

- Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692

- Munstermann v Rayward [2017] NSWSC 133

- Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449; [1992] HCA 66

- New South Wales v Moss (2000) 54 NSWLR 536; [2000] NSWCA 133

- Noranda Australia Ltd v Lachlan Resources NL (1988) 14 NSWLR 1

- Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 77 ALJR 768; [2003] HCA 10

- Rankine v Rankine (1995) 18 ACSR 725

- Re 1derful Pty Ltd [2024] NSWSC 1414

- Realestate.com.au Pty Ltd v Hardingham (2022) 277 CLR 115

- Re Alora Davies Developments 104 Pty Ltd (in liq) & Ors v Raphael & Anor [2024] NSWSC 547

- Re Anna Bay Resort Pty Ltd [2022] NSWSC 331

- Re Bicher & Son Pty Ltd (2020) 147 ACSR 108; [2020] NSWSC 711

- Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789

- Re Global Mortgage Equity Corporation Pty Ltd (2013) 97 ACSR 30; [2013] NSWSC 1586

- Re Gunyahweh Pty Ltd [2023] NSWSC 1133

- Re Hair Industrie Penrith Pty Ltd, Hair Industrie Merrylands Pty Ltd [2015] NSWSC 1578

- Re Homer District Consolidated Gold Mines; Ex parte Smith (1888) 39 Ch D 546

- Re ICB Medical Distributors Pty Ltd [2018] NSWSC 1315

- Re Imperium Projects Pty Ltd [2017] NSWSC 141

- Re JGS Investment Holdings Pty Ltd [2014] NSWSC 1532

- Re Ledir Enterprises Pty Ltd (2013) 96 ACSR 1; [2013] NSWSC 1332

- Re London School of Electronics Ltd [1986] Ch 211

- Re Pure Nature Sydney Pty Ltd [2018] NSWSC 914

- Re QB Foods Pty Ltd [2021] NSWSC 1227

- Re Scientific Management Associates Pty Ltd (2019) 141 ACSR 115; [2019] NSWSC 1643

- Re Skytraders Pty Ltd [2022] VSC 416

- Sangha v Baxter [2009] NSWCA 78

- Schindler Lifts Australia Pty Ltd v Debelak (1989) 89 ALR 275

- Scottish Co-operative Wholesale Society Ltd v Meyer [1959] AC 324

- Sevilleja v Marex Financial Ltd [2020] UKSC 31

- Shanahan v Jatese Pty Ltd [2019] NSWCA 113

- Talacko v Talacko (2021) 272 CLR 478; [2021] HCA 15

- Tomanovic v Argyle HQ Pty Ltd [2010] NSWSC 152

- Tomanovic v Global Mortgage Equity Corporation Pty Ltd (2011) 288 ALR 310; (2011) 84 ACSR 121; [2011] NSWCA 104

- Troulis v Vamvoukakis [1998] NSWCA 237

- Tyco Australia Pty Ltd v Optus Networks Pty Ltd [2004] NSWCA 333

- United Rural Enterprises Pty Ltd v Lopmand Pty Ltd (2003) 47 ACSR 514; [2003] NSWSC 910

- Vadori v AAV Plumbing (2010) 77 ACSR 616; [2010] NSWSC 274

- Varma v Varma [2010] NSWSC 786

- Watson v Foxman (1995) 49 NSWLR 315

- Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459; [1985] HCA 68

Category:

Principal judgment

Parties:

Proceedings 2021/238607
Financialstrategy.com.au Pty Ltd) formerly known as Bailey Roberts Financial Pty Limited (Plaintiff)
Bailey Roberts Group Pty Limited (First Defendant)
Bailey Roberts Financial Management Pty Limited (Second Defendant)
LAT Wealth Holdings Pty Limited (Third Defendant)
Bailey Wealth Management Pty Ltd (Fourth Defendant)
Fumar Pty Ltd (Fifth Defendant)
Sustain Holdings Pty Ltd (Sixth Defendant)

Proceedings 2023/163417
Financialstrategy.com.au Pty Ltd (Plaintiff)
Ian Roy Bailey (First Defendant)
Leith Anthony Thomas (Second Defendant)

Representation:

Counsel:

Proceedings 2021/238607
S Hartford-Davis/B Dziubinski (Plaintiff)
A R Zahra SC/R D Turnbull (Second – Sixth Defendants)

Proceedings 2023/163417
S Hartford-Davis/B Dziubinski (Plaintiff)
E Hyde (First Defendant)
A R Zahra SC/R D Turnbull (Second Defendant)

Solicitors:

Proceedings 2021/238607
HWL Ebsworth (Plaintiff)
Watson Webb (Second – Sixth Defendants)

Proceedings 2023/163417
HWL Ebsworth (Plaintiff)
Addisons (First Defendant)
Watson Webb (Second Defendant)

File Number(s):

2021/238607
2023/163417

Judgment

Nature of the claims

1. In these two proceedings, heard together with evidence in one to be evidence in the other, Financialstrategy Pty Ltd (“FPL”) brings claims of breach of contract and oppression in relation to the affairs of Bailey Roberts Group Pty Ltd (in liq) (“BRG”). The two proceedings address successive time periods. The earlier proceedings (“2021 Proceedings”) are brought by FPL with leave against BRG, which is in liquidation; Bailey Financial Management Ltd (“BFM”); LAT Wealth Holdings Pty Ltd (“LAT”); Bailey Wealth Management Pty Ltd (“BWM”); Fumar Pty Ltd (“Fumar”) and Sustain Holdings Pty Ltd (“SHL”). Claims brought against two individuals, Mr Bailey and Mr Thomas, in the 2021 Proceedings were previously dismissed, although they are now the Defendants to the later proceedings (“2023 Proceedings”) which I address below.

2. Turning now to the parties to the proceedings, it is broadly common ground (Further Amended Points of Claim (“FAPC”) [1]-[2], Amended Defence [1]-[2]), that FPL was formerly known as, inter alia, Ad Astra Pty Ltd and is an incorporated financial adviser; it owns 40% of the ordinary shares issued in BRG, being 400,000 out of 1,000,000 shares; and also owns shares in two companies related to BRG, Super Advisor Pty Limited (“Super Advisor”) and Brite NSW Pty Limited (“Brite NSW”). Mr Michael Roberts is the sole director of FPL and, from 14 March 2001 until 1 October 2020, he was also a director of BRG.

3. It is common ground (FAPC [3], Amended Defence [3]) that the BRG held an Australian financial services licence; I will refer in this judgment to an Australian financial services licence as an “AFSL” and the holder of that licence as an “AFS licensee” or AFSL holder”. BRG was in the business of providing financial services to clients and administrative support to its Authorised Representatives, who were appointed on the terms of Corporate Authorised Representative (“CAR”) agreements that I address below. A voluntary administrator was appointed to BRG on 24 October 2022 and BRG transitioned from voluntary administration to liquidation on 28 November 2022. I will address aspects of BRG’s business further below.

4. It is broadly common ground (FAPC [4], Amended Defence [4]) that, at relevant times, BFM held its own AFSL and provided financial services through authorised representatives; and until 1 February 2022, BFM owned 400,000 out of 1,000,000 issued shares of BRG and also owned shares in Super Advisor and in Brite NSW. Mr Bailey was the sole director and shareholder in BFM. Mr Bailey was also a director of BRG at relevant times and, between about December 2000 and 1 February 2020, the Managing Director of BRG.

5. It is also common ground (FAPC [5], Amended Defence [5]) that, until 16 March 2022, LAT (which is a company controlled by Mr Thomas) owned 200,000 out of 1,000,000 shares in BRG and, until 7 February 2022, also owned shares in Brite NSW; and, since 16 March 2022, Sustain (of which Mr Thomas is also the sole director and shareholder) has owned those BRG shares. Mr Thomas was, since 15 December 2008, a director of BRG and has been its Managing Director since 1 February 2020.

6. It is common ground (FAPC [7A]-[7B], Amended Defence [7A]-[7B]) that, between 1 February 2022 and 8 April 2022, BWM also owned 10,000 of the issues shares in BRG and its also held shares in Brite NSW and in Super Advisor; Mr Bailey and his wife are the only directors and shareholders in BWM; from 16 until 21 March 2022, Mr Bailey owned 390,000 of the issued shares in BRG and (FAPC [7B], Amended Defence [7B]); and, since 21 March 2022, Fumar (of which Mr Bailey is the sole shareholder and director) has owned those shares.

Affidavit and expert evidence

7. I now turn to the affidavit evidence and cross-examination. In addressing that evidence, I have regard to the fallibility of human memory which increases with the passage of time, particularly where disputes or litigation intervene: Watson v Foxman (1995) 49 NSWLR 315 at 318-319; Varma v Varma [2010] NSWSC 786 at [424]-[425]. I also have regard to the fact that objective evidence, where available, is likely to be the most reliable basis for determining matters of credit that arise as to the affidavit evidence: Armagas Ltd v Mundogas SA [1985] 1 Ll R 1 at 57; Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789 at [10]. I also bear in mind the observations of Bell P (as the Chief Justice then was, with whom Bathurst CJ agreed) in ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24 at [27]-[28]:

“Whilst the quality and accuracy of oral recollection of actual conversations should be treated with care and caution given the fallibility of human memory (of which there has been a growing appreciation within the judiciary in recent decades), oral testimony may still be of value and importance, as was recognised in the nuanced observations of Leggatt J (as his Lordship then was) in Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC (Comm) 3560 at [22] (Gestmin):

“the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.” [emphasis added]

Documents and events have to be understood in their context, and evidence of context will often be furnished by witnesses in their oral evidence. Documents, moreover, will not always present a complete picture of events. Indeed it would be rare that they do. Nor do contemporaneous documents necessarily or invariably convey or record the background or context in which events took place. That background or context will be familiar to the actors at the time of those events but may not always emerge from documents.”

8. I have here drawn on my summary of the applicable principles in K&A Laird (N.S.W.) Pty Ltd (in liq) v Aidzan Pty Ltd (in liq) [2023] NSWSC 603 at [40]ff, Re Alora Davies Developments 104 Pty Ltd (in liq) & Ors v Raphael & Anor [2024] NSWSC 547 at [49]ff and Re 1derful Pty Ltd [2024] NSWSC 1414 at [7]ff. I have also borne in mind the cautionary observations of Basten JA (Handley JA agreeing) in Sangha v Baxter [2009] NSWCA 78 at [155], applied by Nixon J in Firmtech Aluminium Pty Ltd v Xie; Zhang v Xu; Xie v Auschn Conveyancing & Associates Pty Ltd [2024] NSWSC 1293 at [42], that:

“Because a witness has not told the truth with respect to a particular matter does not mean that other parts of his or her evidence are untruthful. Where possible, an assessment should be made of the reasons for the untruthfulness in order to see if other aspects of the evidence are likely to be infected by the same concern. Further, evidence may be rejected because it is apparently unreliable, possibly mistaken or deliberately untruthful or capable of being categorised in a variety of ways which are unlikely to be capable of clear delineation in some cases.

Further, findings of credibility are not usually findings with respect to factual issues in the case, but are rather subsidiary findings on the way to determination of issues. Like many aspects of the evidence in a trial, the evidence of a witness who is believed to have lied in a particular respect, will nevertheless be able to bear some weight and should be placed into a balance, with other material evidence, before a conclusion is reached in relation to a critical fact. The rejection of a witness in total, absent corroboration is likely to mean that, even where corroborated, little attention will be paid to the evidence of the witness and less to the possible consequences which might flow from the fact that particular evidence is shown to be truthful: see generally, R v Collins [2007] NSWCA 122 at [44].”

9. Mr Hyde, who appears for Mr Bailey, and Mr Zahra with whom Mr Turnbull appears for the Second – Sixth Defendants submit and I accept, that the allegations made against the Defendants in both proceedings - and particularly the allegations of contravention of directors’ duties, which have civil penalty and criminal consequences, made in the 2023 Proceedings - are such the Court ought to apply the standards set out in Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 and its equivalent under s 140 of the Evidence Act 1995 (NSW) (“Evidence Act”). I also bear in mind in that respect that Messrs Bailey and Thomas are also subject to conduct and character obligations under Pt 7.6 of the Corporations Act 2001 (Cth) (“Act”), and that adverse findings as to their conduct and character may impact on their continued ability to provide financial services. Where a party advances allegations of impropriety, the Court must take account of the gravity of the matters alleged in deciding whether the inference should be drawn and, although the standard of proof remains proof on the balance of probabilities, the strength of the evidence necessary to establish a given fact to the civil standard may vary according to the nature of what it is sought to be proved. In Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 at 449 –450; [1992] HCA 66, the plurality observed that:

“The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involves criminal conduct or fraud. On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary ‘where so serious a matter as fraud is to be found’. Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct.” [citations omitted]

10. Section 140 of the Evidence Act similarly provides that, in a civil proceeding, the Court must find the case of a party proved if it is so satisfied on the balance of probabilities and that, without limiting the matters that the Court may take into account in deciding whether it is so satisfied, it is to take into account the nature of the cause of action or defence, the nature of the subject matter of the proceeding and the gravity of the matters alleged. I approach the evidence in FPL’s claim on that basis.

11. FPL read several affidavits of Mr Roberts, who is a certified financial planner and adviser, and he was cross-examined at some length. In his first affidavit dated 4 November 2021 (filed in the 2021 Proceedings), Mr Roberts referred (Roberts 4.11.24 [14]-[15]) to his meeting Mr Bailey in the mid-1980s and to the incorporation of BRG in July 2000 to provide financial advice and insurer portfolio management services. Mr Roberts outlined (Roberts 4.11.24 [22], admitted by consent with a limiting order under s 136 of the Evidence Act 2005 (NSW) as to his understanding) the manner in which BRG operated between 2001 and 2006 and expressed the view that the servicing rights to all clients “belonged” to BRG. He also referred (Roberts 4.11.24 [23]-[24]) to the subsequent incorporation of other entities, including Brite NSW and Super Advisor and to a subsequent change to structure of the “Group” in December 2006 and expressed the view (Roberts 4.11.24 [25]-26], admitted by consent with a limiting order under s 136 of the Evidence Act as to his understanding) that, after the restructure:

“as financial advisers, we provided advice to our own clients and paid the Group for support services. By “our own clients”, I mean the clients of [FPL] and [BFM].”

As the evidence developed, each of Mr Bailey and Mr Thomas also accepted that proposition, with a limited exception for certain retail and insurance clients which were regarded as BRG’s clients rather than an authorised representative’s clients. I return to that matter below.

12. Mr Roberts also referred (Roberts 4.11.24 [27]) to the entry into agreements between BRG and corporate authorised representatives, which he contended (also in evidence admitted with a limiting order under s 136 of the Evidence Act as his understanding) provided financial advice “to (their) own clients”. Mr Roberts also addressed (Roberts 4.11.24 [31]-[34]) the purchase of shares in BRG by LAT in 2008 and noted that Mr Thomas left BRG in about 2014 to set up his own firm dealing with managed discretionary account (“MDA”) clients. Mr Roberts then outlined (Roberts 4.11.24 [35]ff) the operation of BRG’s “Minerva” software which was a workflow management, customer relationship management and document management program and its “Pluto” program which was a proprietary portfolio management platform. Mr Roberts also described (Roberts 4.11.24 [43]ff) the clients of FPL and BRG, which fell into categories of MDA clients and personal superannuation and insurance clients and described differences in the revenue streams generated by those clients.

13. Mr Roberts also addressed (Roberts 4.11.24 [60]ff) negotiations between 2017 and mid-2020 between himself, Mr Thomas and Mr Bailey regarding the purchase and sale of their respective interests in BRG or their respective client books and he referred to communications with, in particular, Mr Thomas concerning that matter during 2020. He addressed the circumstances in which a review was undertaken of his files in August 2020 (Roberts 4.11.24 [64]) and concerns that were raised as to aspects of those files. It is not necessary to determine the dispute as to the validity of those concerns in order to determine these proceedings. Mr Roberts also addressed (Roberts 4.11.24 [73]-[74]) subsequent correspondence between himself and Mr Thomas in which differing views were expressed as to who “owned” retail brokerage clients. Mr Roberts also addressed claims that were then made concerning his preparations to move his clients to third parties, and his affidavit evidence as to those matters omitted any reference to the extent of the steps which he had taken in that regard in a manner that made it, in my view, profoundly misleading and, in substance false. Mr Roberts also referred (Roberts 4.11.24 [77]ff) to the circumstances in which FPL was “shut out of” the Minerva and Pluto systems on 1 September 2020 and referred to the effect of FPL being “locked out” of those systems. He did not there disclose the extent to which he and FPL had, prior to that date, copied information relating to clients that he serviced to a Google Drive and also to third party systems associated another AFSL holder, Advice Evolution, in anticipation of moving those clients with FPL to that entity.

12. Mr Roberts also gave evidence (Roberts 4.11.21 [87]-[88]) that:

“Works [sic] in progress, or WIP, refers to fee-paying jobs that I had been engaged by clients to undertake. The adviser (for example, myself) sets up the job and manages the job until it is completed and invoiced. In addition to WIP, there are also significant follow-up tasks required to service a client, by way of example, arranging meetings with clients, reviewing the client’s [MDA] program and creating a file note as a record, advising clients of change in super rules or change to their product that requires action. Pluto and Minerva are the platforms upon which all of this work is saved and progressed. When I lost access to those systems, I was totally unable to progress this work.

[FPL’s] business was effectively brought to a halt on the evening of 1 September 2020.”

15. That evidence was so misleading as to be, in substance, false where, at that time, although Mr Roberts lost access to the Pluto and Minerva systems, he had copied a significant amount of client information and client contact details and there was no reason that Mr Roberts could not continue to and he did continue to contact his clients using the information which he had copied. Mr Roberts also gave evidence (Roberts 4.11.24 [101]), which I am comfortably satisfied was also false, as to the reason that he had sought access to client information for a Ms Barit, at a time that she was associated with a third party provider of services and also with Advice Evolution.

16. Mr Roberts referred (Roberts 4.11.21 [106]-[107]) to the circumstances in which access to his email account with BRG was cut off and gave evidence that:

“In addition to being unable to service [FPL’s] clients as a result of the Defendants suspending its access to the Pluto and Minerva systems, on an from 6 September 2020 the I [sic] have been unable to correspond with [FPL’s] clients via the email account I have used since 2000. Similarly, [FPL’s] clients were unable to contact me. I had no contingency plans in place to correspond with clients.”

17. That evidence was also misleading and, in substance, false. As I noted above, although Mr Roberts was deprived of access to the Pluto and Minerva systems, he and persons assisting him had by then copied a significant amount of client information prior to that occurring, and he had the ability to, and did, correspond with the many clients whose contact information he had copied, together with significant portions of their records, after his access to the Pluto and Minerva systems was cut off. The proposition that Mr Roberts had no contingency plans “in place to correspond with clients” radically misstated the true position, where he in fact communicated with clients promptly after the relevant events occurred, by use of the information he had copied to Advice Evolution’s systems.

18. Mr Roberts also observed (Roberts 4.11.21 [110]-[111]) that:

“As at the date of swearing this affidavit, I am unaware as to the status of works in progress, and important information relating to client matters. Lack of access to Minerva has prevented me from contacting or providing services to [FPL’s] clients.

[FPL] has no client files and records or advice documents other than the client records sent by [an employee of BRG] to me since I was denied access on 4 September 2020. For example, I have not, and I am still currently unable to view deadlines and current matter statuses because such matters are recorded in the Minerva system. Further, if a client instructs me to withdraw funds, I need to see which accounts have available funds and, if there are insufficient funds, I need to advise the client which of their investments should be sold in order to make the fund available. This can only be done on the Pluto system.”

This evidence was also so misleading as to be false, by its omission of reference to the client information which Mr Roberts had by then copied.

19. Mr Roberts there noted (Roberts 4.11.21 [125]ff) that he (or, I interpolate, FPL) had subsequently become an authorised representative under the AFSL of Waterfall Way Associates (“WWA”) on a “temporary basis” on 5 December 2020 and referred to later difficulties in transitioning from WWA to another AFSL holder. He also referred (Roberts 4.11.21 [143]-[144]) to the conduct which he alleged on the part of BRG and contended that:

“Because of this conduct, [FPL] was completely isolated and shut off from existing clients and has been unable to gain new clients.”

That evidence was also false, by omission, by its failure to disclose Mr Robert’s ability at all times to maintain contact with clients and the fact that he retained a significant number of clients.

20. By a second affidavit dated 9 May 2022, also filed in the 2021 Proceedings, Mr Roberts pointed to aspects of evidence led by Mr Thomas in the 2021 Proceedings. It is largely not necessary to address the dispute there raised as to the extent of Mr Roberts’ involvement in BRG’s business or the manner in which he conducted work, where I will find below that BRG’s conduct was oppressive on other grounds. In response to the disclosure by the Defendants’ evidence of the extent to which he and FPL had accessed (and copied) client files, Mr Roberts there implicitly acknowledged that access and sought to justify it on the basis that it was not uncommon to access client files “for the purposes of undertaking certain administrative tasks for clients on behalf of [FPL]” and that he did not believe that it was unlawful for him and his wife to access “our client data”, regardless of frequency or means of access (Roberts 9.5.22 [26]-[27]). It is not necessary to determine whether it was unlawful for Mr Roberts or his wife to access those client files, given the findings that I have reached on other grounds. It is, however, important to note that that Mr Roberts first acknowledged that access in his second affidavit after it had emerged from the Defendants’ evidence, and then did not fully or fairly disclose the extent of that access or the copying of those files. The extent of that access and copying could not be described, on any view, as undertaken for the purposes of either “undertaking certain administrative tasks for clients” or as for ordinary business purposes, and was plainly directed to preparing for FPL’s and Mr Roberts’ intended exit from BRG. Mr Roberts also there addressed, in a general way, discussions with other AFS licensees that were directed to moving FPL’s business to those licenses, which he had also not disclosed in his first affidavit, and which he also disclosed only after those matters had emerged from the Defendants’ evidence.

21. By a third affidavit dated 24 April 2024, filed in the 2023 Proceedings, Mr Roberts referred to events in 2022, including the voluntary administration and subsequent liquidation of BRG and the entry into a deed of settlement and release between BRG and its liquidator and several of the Defendants, by which BRG compromised its claims against those Defendants in respect of the 2021 Proceedings, which were subsequently dismissed as against Mr Bailey and Mr Thomas. Mr Roberts also there referred to steps which he characterised as the “winding down” of BRG and referred to BRG’s incurring legal costs in the 2021 Proceedings and to subsequent transactions by which BRG sold shares in other entities and, Mr Roberts contended, Sustain Capital Pty Ltd (“Sustain Capital”) (a company associated with Mr Thomas) took up the same (or, I interpolate, a similar) business as had previously been conducted by BRG.

22. By a fourth affidavit dated 26 November 2024, also filed in the 2023 Proceedings, Mr Roberts responded to evidence led by Mr Bailey and Mr Thomas in those proceedings. He addressed the manner in which BRG and its authorised representatives operated MDA services and the establishment and restructure of BRG and responded to criticisms made by Mr Bailey of his conduct. Mr Roberts also addressed, in response to Mr Thomas’ evidence, the extent to which FPL or he personally was subsequently authorised to provide financial services by licensees including AD Advisory and Fiducian Financial Services (“Fiducian”).

23. Mr Zahra advances a lengthy attack on Mr Roberts’ credit in submissions and his submissions identify many occasions on which Mr Roberts is said to have told lies in his evidence. It is not necessary to address all of those matters, where I am comfortably satisfied that Mr Roberts was not an honest witness, and I accept that his evidence should not be accepted unless corroborated by contemporaneous documentary evidence. I accept that, as Mr Zahra points out, Mr Roberts at least gave false evidence in his affidavits and in cross-examination as to why he sought to engage Ms Barit to access client information maintained on BRG’s systems (T182-184), and as to why he did not use BRG’s staff to undertake the suggested work, where that engagement was in fact directed to copying information from Mr Roberts’ Google Drive to Advice Evolution’s Worksorted system. He gave false affidavit evidence as to the effect of the loss of client information and access to BRG’s email system on his ability to contact clients, and his limited admissions in cross-examination as to those matters do not seem to me to have been a full or frank account of the position. He also gave false affidavit evidence and false evidence in cross-examination as to the extent to which he lacked access to client information after 4 September 2020 (T201ff, T209). I accept that Mr Roberts was evasive in cross-examination, particularly in relation to his suggested lack of access to client information and the question of those clients which he continued to service after the cessation of his relationship with BRG.

24. It seems to me that the material omissions in Mr Roberts' first affidavit as to his copying of client record held by BRG relating to clients service by FPL, his false evidence as to the nature of Ms Barit’s role and his false evidence overstating the effect of the suggested loss of access to client records (which he had copied in large part) and email (where he had access to another licensee’s email system) were not incidentally or inadvertently false, but involved a deliberate, calculated and dishonest attempt to deceive the Court. The deliberate character of that deceit undermines Mr Roberts’ credit generally and not only as to that issue and is such that Mr Roberts’ evidence should not be accepted as a whole, unless corroborated by contemporaneous records.

25. Turning now to the Defendants’ lay evidence, Mr Bailey is no longer party to the 2021 Proceedings, in which the claim against him was previously dismissed. Mr Bailey read one affidavit dated 29 October 2024 in the 2023 Proceedings, which overlapped with his affidavit evidence previously filed but not now read in the 2021 Proceedings. Mr Bailey provided a broad account of the manner in which AFS licensees conducted their business and also described the nature of MDAs (Bailey 29.10.24 [19]ff). He referred (Bailey 29.10.24 [25]ff) to the circumstances in which he, Mr Roberts and Mr Roberts’ wife commenced business within BRG; to other companies in which he, Mr Roberts and Mrs Roberts had an interest; to BRG’s business model and information technology systems (Bailey 29.10.24 [41]ff); and to the restructuring of BRG in about 2006 (Bailey 29.10.24 [49]ff). Mr Bailey also addressed (Bailey 29.10.24 [62]ff) the CAR agreement between BRG and FSPL and a similar arrangement between BRG and BFM.

26. Mr Bailey then addressed (Bailey 29.10.24 [75]ff) health issues which he had experienced since 2016 or 2017, which continued at the time of the hearing; discussions with Mr Thomas as to the possibility of sale of BFM’s clients and Mr Bailey’s shares in BRG to Mr Thomas; discussions between Mr Roberts and Mr Thomas concerning a sale of Mr Roberts’ shares in BRG to Mr Thomas, where Mr Roberts would remain with the business, but that arrangement did not proceed; and (Bailey 29.10.24 [83]) discussions with Mr Roberts concerning a sale of his interest in the business to Mr Roberts and the reason that proposal did not proceed. Mr Bailey addressed (Bailey 29.10.24 [84]ff) the circumstances in which Mr Thomas became managing director of BRG and in which Mr Thomas and a former adviser with BRG, Mr Tidswell, set up another entity, Sustained Capital; BRG entered into a CAR agreement with Sustained Capital; and BFM entered into a Business Sale Agreement with Sustained Capital for the sale of all of its rights and revenues arising from clients which it serviced. Mr Bailey also addressed (Bailey 29.10.24 [93]) BRG’s financial position as at July 2020.

27. Mr Bailey also referred (Bailey 29.10.24 [94], admitted with a limiting order under s 136 of the Evidence Act as to his understanding) to BRG’s expectations of client service by its authorised representatives. He addressed (Bailey 29.10.24 [98]ff) concerns which had been raised as to BFM’s client files in the second half of 2020, and he referred to industry rumours from late August 2020 that suggested that Mr Roberts would be leaving BRG and to subsequent correspondence between Mr Bailey, Mr Thomas and Mr Roberts concerning those matters. He also addressed (Bailey 29.10.24 [112]) the circumstances in which concerns were raised as to “suspicious action” on BRG’s Minerva platform and noted his then concern that a third party had obtained access to BRG’s IT system from an outside source such as email. I accept that was a plausible concern and a possible explanation of subsequent events; it is also possible that his concerns related more directly to Mr Roberts’ activities; but it is not necessary to determine which is the case, where it is plain enough that Mr Roberts had then been engaged, with the assistance of third parties, in an extensive exercise of copying client files from BRG’s systems which would have raised legitimate concerns as to the third party access that Mr Roberts had permitted to those systems.

28. Mr Bailey there referred (Bailey 29.10.24 [115]ff) to a purported meeting of BRG’s directors on 4 September 2020, to subsequent developments and to the commencement of correspondence between BRG’s and Mr Roberts’ solicitors at that time. I find below that the meeting between Mr Bailey and Mr Thomas on that date, and subsequent meetings between them of which Mr Roberts was given no notice and from which he was excluded, did not constitute valid or effective directors’ meetings of BRG. Mr Bailey also referred to Mr Roberts’ subsequent resignation as a director of BRG and to the fact that both BRG and FPL each exercised the right to terminate the CAR agreement between BRG and FPL for convenience. Mr Bailey also addressed (Bailey 29.10.24 [133]ff) the subsequent entry by clients which had previously been serviced by FPL into arrangements with BRG or Super Advisor and also addressed to attempts subsequently made by the Defendants to seek to resolve the proceedings with FPL.

29. Mr Bailey’s evidence (Bailey 29.10.24 [138]) was that, at about August 2021, BRG was trading negatively, in that its monthly revenue had fallen behind its monthly expenses, although he did not then believe that BRG was unable to pay its debts and was hopeful that Sustain Capital would grow the business and increase BRG’s revenue. Mr Bailey also referred (Bailey 29.10.24 [139]ff) to commencement of the 2021 Proceedings and to subsequent events in those proceedings. He noted that, by orders made by the Court on 10 November 2021, the 2021 Proceedings were dismissed against Mr Thomas and Mr Bailey, although their respective corporate vehicles, LAT and BFM, remained as Defendants to those proceedings. Mr Bailey addressed subsequent correspondence (Bailey 29.10.24 [146]ff) between the solicitors for the parties as to whether BRG should be paying the legal costs of defending the 2021 Proceedings and the steps which were subsequently taken by BRG, Mr Bailey and Mr Thomas in respect of the corporate structure and assets of BRG and the entities associated with Mr Bailey and Mr Thomas, in evidence which is primarily relevant to the 2023 Proceedings.

30. Mr Hartford-Davis, with whom Mr Dziubinski appears for FPL, submits that Mr Bailey was capable of dishonesty and gives one example of his suggested dishonesty in closing submissions, which does not seem to me to establish that proposition. Mr Hyde responded, in closing submissions, to criticisms of Mr Bailey’s credit. It seemed to me that Mr Bailey was generally an honest witness, often making concessions against interest including as to the parties’ understanding of the “ownership” of clients, although it is possible that he was less than frank as to the meaning of the term “Fumar” which he later used for a company name.

31. The Second–Sixth Defendants read several affidavits of Mr Thomas. By his first affidavit dated 18 December 2021, filed in the 2021 Proceedings, Mr Thomas, like Mr Roberts and Mr Bailey, addressed the nature of BRG’s business (Thomas 18.12.21 [8], [20]ff) and the nature of his, Mr Bailey’s and Mr Roberts’ involvement in BRG. Mr Thomas commented about the quality of financial advice provided by Mr Roberts (Thomas 18.12.21 [40]ff); addressed (Thomas 18.12.21 [64]ff) events in the period from 1 July 2020, after he commenced as managing director of BRG; and referred (Thomas 18.12.21 [93]ff) to a concern that Mr Roberts had given “formulaic advice” to several clients, by raising the possibility of their investing in an unidentified product, which was not an approved product of BRG, in place of existing self-managed fund arrangements. The question whether Mr Roberts’ interaction with clients as to that matter amounted to the giving of “advice” was addressed in cross-examination, but it is not necessary to determine that question or reach any wider assessment of the quality of advice given by FPL or Mr Roberts in order to determine the proceedings. Mr Thomas also addressed an “investigation” concerning Mr Roberts that commenced on 4 September 2020 (Thomas 18.12.21 [97]ff) and referred to a “board meeting” of the directors of BRG held on that date (Thomas 18.12.21 [102]). I will find below that, where notice of that meeting was not given to Mr Roberts, it did not constitute a valid or effective board meeting of BRG.

32. Mr Thomas also addressed the matters which had led him to form the view that Mr Roberts planned to transfer clients that were “owned” by BRG to a third party without his or Mr Bailey’s knowledge (Thomas 18.12.21 [109]ff). I address the question whether those clients can properly be characterised as “owned by BRG”, or indeed by FPL, below. That question turns in part on whether they were MDA clients with an advisory relationship with FPL, which each of Messrs Roberts, Bailey and Thomas now recognise would be expected to move with FPL to a new AFS licensee if FPL ceased to be an authorised representative of BRG; or, possibly, were in a small group of retail and insurance clients which appear to have been regarded as clients of BRG rather than as clients of the CARs. It is plain enough that Mr Roberts had by that time formed, and substantially progressed, a plan to transfer at least the MDA and other clients serviced by FPL to another AFS licensee and had taken substantial steps to copy information from BRG’s computer system to his personal Google Drive and from it to Advice Evolution’s client management system in order to implement that transfer.

33. Mr Thomas also addressed (Thomas 18.12.21 [111]ff) information provided by Mr Roberts to BRG, in seeking access for Mr Barit to BRG’s client management systems. Mr Thomas characterised that information as misleading (I interpolate, at best), where Mr Roberts failed to disclosed Ms Barit’s role with Advice Evolution, to which Mr Roberts was then seeking to transfer the clients serviced by FPL and develops an allegation of breach of client confidentiality in that regard which I address below. Mr Thomas also develops other allegations of misleading conduct against Mr Roberts (Thomas 18.12.21 [145]ff) and refers to events following the termination of the CAR Agreement between FPL and BRG. I recognise that there is no issue as to the efficacy of that termination, where FPL had itself invoked its right to terminate those agreements for convenience, irrespective of the validity of BRG’s termination of those agreements for convenience. Mr Thomas also responded to aspects of Mr Roberts’ earlier affidavit.

20. By a second affidavit dated 22 March 2022, Mr Thomas addressed (by way of assertion) LAT’s lack of revenue or assets, in its own capacity or as trustee of the LAT family trust, and contended it did not then have financial resources to continue to engage legal representation. Notwithstanding that evidence, LAT is in fact represented in the proceedings, although it is not apparent whether Mr Thomas personally, or other companies associated with him, are paying the costs of its legal representation.

21. By a third affidavit dated 22 December 2023, Mr Roberts expanded on the circumstances of his appointment as BRG’s managing director (Thomas 22.12.23 [12]ff) and referred to his communications with Mr Bailey in the period following that appointment (Thomas 22.12.23 [17]ff) and to issues which had arisen in respect of access using Mr Roberts’ wife’s login to BRG’s computer and client management systems and had been identified in early September 2020 (Thomas 21.12.23 [21]ff). Mr Thomas also referred to subsequent events, including the appointment of Mr Roberts or FPL as an authorised representative of WWA from December 2000; the appointment of Super Advisor to those clients which had previously been serviced by FPL and remained with BRG after the termination of the CAR between BRG and FPL, rather than electing to transfer to the new Australian AFS appointed for which Mr Roberts or FPL was an authorised representative; the sale of advice clients by BFM to Sustain Capital; and several events which adversely affected BRG’s continuing business in late 2021 and 2022, including other CARs’ termination of their arrangements with BRG.

22. By a fourth affidavit dated 29 October 2024, filed in the 2023 Proceedings, Mr Thomas again addressed the nature of BRG’s business and identified BRG’s vulnerability to the departure of its authorised representatives; led evidence (Thomas 29.10.24 [65]ff) as to consultancy arrangements between BRG and entities associated with Mr Thomas; and expanded on events from 2021 which had adversely affected BRG’s business. It will not be necessary to address those matters in detail, since they are primarily relevant to the 2023 Proceedings brought by FPL, and FPL cannot obtain the relief that it seeks in those proceedings for the reasons noted below. Mr Thomas also there addresses aspects of his conduct and provides a further response to Mr Roberts’ evidence.

23. Although Mr Hartford-Davis pointed to one aspect of Mr Thomas’ evidence which he had challenged in the course of cross-examination, it seemed to me that Mr Thomas was generally an honest witness, who frankly acknowledged the steps the Defendants had taken, although he did not then or now see a basis for challenge to them.

24. FPL and the Defendants also relied on expert evidence which I will address in dealing with the claims to which it was relevant below.

Chronology relevant to the 2021 Proceedings

39. I now turn to aspects of BRG’s business and the chronology of events, as relevant to the 2021 Proceedings. I have here drawn on the pleadings, the parties’ chronologies and the wider evidence led at the hearing.

40. Before the events that are in issue in these proceedings took place, Messrs Bailey and Roberts had been in business for many years, and they and their families had also socialised together. Mr Thomas had also been involved with BRG for a significant, although lesser, period. FPL pleads (FAPC [7D]-[7F], partly admitted, partly not admitted and partly denied in Amended Defence [7D]-[7F]) the manner in which BRG conducted its business until 2006 and that, in about 2006, BRG changed its client serving and remuneration structure to provide financial advisory services to clients through CARs of BRG and that:

“By providing services through corporate authorised representatives, BRG operated in the following way:

a   each corporate authorised representatives provided advice to their clients;

b   each corporate authorised representatives paid BRG for support services; and

c   the servicing rights to clients belonged to each corporate authorised representatives accordingly.”

41. Here and throughout the proceedings, FPL (and other parties) adopted language (“their clients”, “belonged”) which assumed that BRG or advisers “owned” clients. I understand that proposition to refer to the expectation, at least between BRG and advisers, that one or other of BRG or the adviser had a continued expectation of providing services to those clients. I return to that matter below.

42. It appears to be largely common ground that, at relevant times, BRG provided services to two main categories of client. The first category of clients were MDA clients, including self-managed superannuation fund clients. It appears to be common ground that an MDA was established for a client based on financial advice given by a financial adviser; BRG’s portfolio administration team would then execute a specified strategy for that account; BRG and its CARs earned higher fees from MDA clients than other retail or risk clients; and MDA clients would sign a contract with BRG as the “operator” and the CAR as the “portfolio manager” (Roberts 4.11.21 [44], [48], [51]). The second category of clients were personal superannuation and insurance clients, referred to as “retail” clients or “retail and brokerage clients” or “risk” clients, who acquired third-party insurance products, or “superannuation” clients who acquired third-party superannuation products (Roberts 4.11.21 [47]).

43. It is also common ground (FAPC [9]-[10], Amended Defence [9]-[10]) that the CARs of BRG have included its shareholders, including FPL, BFM and, since about 2008, LAT. The CAR Agreement dated 1 December 2006 between FPL and BRG (FAPC [11], Amended Defence [11]; Ex J1, 73) relevantly provided (cl 2.1) that BRG would be entitled to brokerage payable in relation to all products distributed and services provided to clients, and BRG would remunerate FPL in accordance with a specified commission scale. Clause 3.1 of the CAR Agreement set out BRG’s obligations which included (cl 3.1(b)) that BRG would provide day-to-day practical support to FPL by providing, among other things, access and use of the BRG’s client and investment systems. FPL pleads (FAPC [15]) that, for the purposes of cl 3.1(b) of the CAR Agreement, the client and investment systems of the BRG included the “Minerva”, and “Pluto” systems (to which I referred above) and Mr Roberts’ email account. By cl 3.2 of the CAR Agreement, BRG appointed FPL as its authorised representative subject to the terms of the agreement.

44. Clause 4 of the CAR Agreement set out FPL’s obligations which include that FPL would provide products and services in accordance with, among other things, any limitations or directions imposed by BRG from time to time (cl 4.1); FPL would observe and comply with BRG’s Compliance Manual and all reasonable directions, work practices and policies of BRG (cl 4.3(s)); FPL would maintain files and client records, and permit BRG to audit its books and records as to its activities under the CAR Agreement (cl 4.3(n)); and FPL would deliver any specified client files and records to BRG on demand (cl 4.3(w)), a provision that plainly assumed that FPL rather than BRG would have custody of those files and records.

45. Clause 5 dealt with “intellectual property” and, by cl 5.1, FPL acknowledged and agreed that information disclosed to it by BRG under the CAR Agreement was confidential and was the “property” of BRG. I put aside the question whether information can properly be characterised as “property” and note that that provision did not extend to information provided by clients (as distinct from BRG) to FPL. By cl 7.1, FPL agreed to indemnify BRG and its related bodies corporate and officers and employees against claims and other matters arising out of or in connection with or incidental to any breach of the CAR Agreement, or otherwise resulting from any act, omission, negligence, fraud or wilful default of FPL.

46. Clause 9 of the CAR Agreement dealt with termination and provided (cl 9.1) that BRG or FPL could terminate the CAR Agreement in writing on 90 days’ prior written notice. Clause 9.2 provided that BRG could terminate or suspend the CAR Agreement immediately on specified grounds. Clause 9.3 provided for the consequence of termination under either cll 9.1 or 9.2.

47. By the first sentence in cl 9.6 of the CAR Agreement, BRG acknowledged that, upon termination, it “has no continuing proprietary interest in clients serviced by” FPL. Mr Hartford-Davis submits that:

“The first sentence of cl 9.6 is an acknowledgement that BRG “has no continuing proprietary interest in clients serviced by BRG Authorised Representatives” (cl 9.6, first sentence). Because the termination of the CAR Agreement will not result in the termination of the client agreement, BRG’s “acknowledgement” prevents BRG from relying upon its ongoing contractual relationship with the client to seek to retain that client after termination. Moreover, the first sentence of cl 9.6 operates as a release, waiver, or qualification upon any other duty that the CAR or the individual standing behind it might otherwise owe to BRG in respect of the clients. The clause confirms, for example, that it would not be a breach of fiduciary duty for a director of a CAR of BRG to transfer that CAR’s clients away from BRG - even though this might not be in BRG’s best interests.”

48. It seems to me that the first sentence of cl 9.6 must be read so as to give it practical effect, rather than a statement of the obvious that a corporate entity cannot “own” other persons, whether its own clients or the clients of its representatives. Here, I understand that clause to disclaim any continuing expectation that BRG, as distinct from FPL, would service those clients. While I do not accept that clause operated as a release or waiver, I accept that it was one aspect of the parties’ understanding that narrowed the duties of a director of BRG when his associated CAR was exiting BRG. I return to that matter below. In closing submissions, Mr Zahra contends that cl 9.6 of the CAR Agreement is only concerned with events “upon termination” of the CAR Agreement, after 4 December 2020, and not steps taken to prevent FPL having access to the relevant systems prior to termination of FPL’s engagement with BRG. The first sentence of that clause is directed to an acknowledgement as to the position upon termination. However, as Mr Zahra rightly accepted in oral closing submissions, conduct prior to the date of termination which undermined the position which BRG had acknowledged after termination could breach that clause.

49. This aspect of cl 9.6 of the CAR Agreement overlaps with the wider question whether FPL “own[ed]” the clients its serviced, to which the parties gave significant attention. In closing submissions, Mr Hartford-Davis, submitted that:

“The language used in the CAR Agreement is of ownership or property in clients. Although it is juridically awkward to speak of property or ownership in people, the legal meaning of those terms as they are used in the CAR Agreement is clear. In the circumstances of this case, the expressions “proprietary interest in” or “ownership of” clients are synonymous. They are both metaphors used by the parties to express the notion that each of them had the right (or more accurately collocation of rights), as between themselves and BRG, (a) to provide the relevant financial services to the clients that they introduced to BRG (b) to receive remuneration from the provision of such financial services and (c) to take those clients with them if they left BRG even if so doing might otherwise have been a breach of duty to BRG. …

50. The parties plainly understood that each CAR “owned” its clients, in the sense of having a right, as against BRG, to take them with it on a move to a new AFS licensee and Mr Bailey accepted in cross-examination that CARs “owned” the right to service their clients CARs and could leave BRG and take “their” clients away from BRG at any time, even if the person sub-authorised by the CAR was a director of BRG (T278-279); that FPL and Mr Roberts were free to terminate their CAR Agreement and take the clients serviced by FPL outside BRG, as long as the clients agreed to that course (T279); and that some of the risk and personal superannuation clients of BRG were “owned” by FPL (T282) and that new clients added to FPL’s “client book” after 2012 would be its clients (T286).

51. Mr Hartford-Davis also submitted that FPL’s “ownership” of its clients had the consequence that it had a “right” to sell its client book to third parties, notwithstanding any duties owed by Mr Roberts as a director of BRG. I accept that it is likely that any director’s duties of Mr Roberts were narrowed to permit a “sale” of his client book to a third party, consequential upon the terms of the CAR Agreement and the parties’ common understanding as to “ownership” of the clients: Noranda Australia Ltd v Lachlan Resources NL (1988) 14 NSWLR 1 at 17; Lewis v Estate of Martinez [2025] NSWCA 2 at [23]. However, obviously enough, the fact that a sale of FPL’s client book to a third party was permitted did not have the consequence that FPL or Mr Roberts could disclose information that was confidential to their clients to give effect to that sale, without the clients’ consent; or that FPL or Mr Roberts could cause third parties to access BRG’s client management systems without BRG’s consent to promote that sale; or that FPL or Mr Roberts could provide false or misleading information to BRG in order to seek to procure third party access to those systems. The findings that I have reached above indicate that FPL and Mr Roberts likely breached their duties to their clients by causing a significant amount of the clients’ confidential information to uploaded from his Google Drive to Advice Evolution’s client management software without the clients’ consent; and that he also acted in the second and third ways noted above.

52. Mr Hartford-Davis also contended that FPL “owned” the information concerning the clients that it serviced. I recognise that Mr Bailey appears to have held that view (Ex P6, 58) in respect of client information relating to clients serviced by BFM. It seems to me that that view was incorrect. Putting aside the question whether information is capable of being owned, as distinct from being protected by duties of confidentiality, FPL’s ability to access or use that information was significantly qualified by the client’s right to withdraw consent to use of its confidential information by BRG or FPL. To the extent that cl 9.6 of the CAR Agreement assumed BRG’s ability to make available client files and records to FPL without expressly recognising the need for client consent to the use of the client’s confidential information in that manner, it did not confer any “ownership” of client information on BRG or FPL or displace the need for client consent for the use of their confidential information by BRG, FPL or a third party to which that information was provided.

53. Returning to the CAR Agreement, cl 9.6 of that Agreement further provides that:

“BRG will not as a consequence of termination seek to hinder or prevent those clients being advised by [1] another Authorised Representative of the Business or [2] a Authorised Representative of another [AFS] licensee or [3] another person legally entitled to do so after termination. BRG will make available all files and records to which those clients are entitled to their adviser (excepting the files and records of any client who notifies BRG within 28 days of BRG advising them of its intention to make such files and records available that this should not occur”. [numbers added]

54. Mr Hartford-Davis submits, and I broadly accept that, that:

“As to the obligation imposed by the second sentence of cl 9.6, two matters of construction should be noted. First, the content of the obligation not to “hinder or prevent” the client from being “advised by” extends to any act by BRG which is calculated to, or has the effect of interrupting, retarding or impeding the transition of the CAR’s clients to a new home or keeping that from occurring. That is the ordinary meaning of “hinder” and “prevent”: see Macquarie Dictionary, definitions of “hinder” (items 1 and 2) and “prevent” (items 1 and 2). This sentence should be read together with cl 9.8, which provides that it is the responsibility of the AR “to transfer their clients to their new [AFS] Licensee”, and obliges BRG to “supply letters consenting to this transfer upon request”. Together, these clauses oblige BRG to facilitate the free departure of clients after termination as the A[uthorised] R[epresentative] migrates to a different AFSL …

As to the third sentence of cl 9.6, the process required by that sentence is that BRG is to notify clients that BRG will give the client files to their adviser unless the client objects. That opportunity to object satisfies any privacy requirements. In the absence of objection, BRG must provide the client data to their advisor.”

55. I do not accept Mr Hartford-Davis’ further submission that unless FPL had a “right” to access client information:

“Post-termination [CAR] would be seriously inhibited in transitioning its client book to a new AFS [licensee] because it would need to inconvenience each of its client[s] by having to reobtain all of the information maintained by the CAR and BRG.”

First, any transition of FPL to a new AFS licensee must take place in accordance with the law, including BRG’s and FPL’s obligations of confidentiality owed to clients; and, second it was open to FPL, or a new AFS licensee to which it sought to transfer its clients, to seek client consent to BRG’s transfer of information to that new licensee, without any need to obtain that information again, and the evidence suggests it was common practice for such consent to be sought. It appears that FPL did not take that course here because, first, it wished to transfer its client information to Advice Evolution without first giving notice to BRG or the clients that it was doing so and, second, it wished to effect that transfer before and not after it had terminated its relationship with BRG.

56. I accept that BRG had committed itself to take the course set out in the third sentence of cl 9.6, by contract; however, it was not lawfully open to it to do so, nor would it have been consistent with its “efficiently, honestly and fairly” duty under s 912A of the Act to do so, where that would not recognise the client’s right to confidentiality in client information and would seek to require a client to object to the use of information, as to which its affirmative consent was required. Mr Hartford-Davis also addresses additional issues of construction as to cll 9.6 and 9.7 of the CAR Agreement in closing submissions, but it is largely not necessary to address those questions given the conclusions that I have reached on other grounds.

57. I recognise that cl 9.6 of the CAR Agreement is limited by cl 9.7 which provides that, notwithstanding that clause, in the event of termination under cl 9.2 of the CAR Agreement on specified grounds, FPL acknowledges that BRG reserves the right to provide “the necessary services and advice” to “its clients”. This clause is obscure, both because the concept of “necessary services and advice” is not defined and because the reference to “its clients” is also obscure, and may refer either to persons who were serviced by authorised representatives of BRG or to persons not treated as clients of the authorised representatives. In any event, that qualification has no application here, because BRG did not terminate the CAR Agreement under cl 9.2 of that agreement, and I need not address it further.

58. Clause 9.8 of the CAR in turn provides that:

“Upon termination of this agreement, it is the responsibility of the Authorised Representative to transfer their clients to their new Authorised Financial Services Licensee. BRG will supply letters consenting to this transfer upon request.”

Consistent with the first sentence of cl 9.6, that clause plainly contemplated that, upon termination of the CAR on any basis, clients serviced by an authorised representative would continue to be serviced by that authorised representative, rather than BRG, under an authority granted by a new AFS licensee to that representative.

59. Clause 9.9 in turn dealt with the consequences of suspension under cl 9.2 of the CAR Agreement, namely that:

“If the [CAR Agreement] is suspended the Authorised Representative shall not be entitled to submit any new business on behalf of clients or otherwise as an Authorised Representative of BRG during the period of suspension, but the Authorised Representative shall be entitled to receive brokerage in accordance with the current commission scale provided BRG continues to be entitled to receive brokerage from the Product Provider.”

60. FPL in turn pleads (FAPC [14], denied Amended Defence [14]) that:

“It was an implied term of the [CAR Agreement] (“Implied Term”) that:

(a)   [BRG] will do all such things as are necessary on its part to enable [FPL] to have the benefit of the Agreement; and

(b)   [BRG] will not:

(i)   hinder or prevent the fulfilment of the express promises made under the [CAR Agreement]; or

(ii)   act in relation to the [CAR Agreement] in a manner which substantially nullifies the bargained-for benefits.”

The Defendants rely on an entire contract clause in response to that implied term, but that clause does not exclude a term of the kind on which FPL relies, and otherwise deny the paragraph.

61. Mr Hartford-Davis submits that:

“It is a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have the benefit of the contract: Butt v M’Donald (1896) 7 QLJ 68 at 70-71, Secured Income Real Estate (Aust) Limited v St Martin Investment Pty Ltd (1979) 144 CLR 597 at 607 (Mason J).”

62. Mr Zahra responds that:

“The Defendants accept that, as a matter of law, the implied term in 2021 PoC at [14(a)] and [14(b)(i)] is implied as a matter of law into commercial contracts … See also Peters (WA) Ltd v Petersville Ltd (2001) 205 CLR 126, [36].

However, [FPL] ha[s] cited no authority to indicate that the implied term pleaded at 2021 PoC [14(b)(ii)] is to be implied as a matter of law. That being so, [FPL] must fall back on the five-fold test articulated in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, 283 [(“BP Refinery”)], namely that the term must be (i) reasonable and equitable, (ii) be necessary to give business efficacy to the contract, (iii) be so obvious that it goes without saying, (iv) be capable of clear expression, and (v) not contradict an express term. The term pleaded in 2021 PoC at [14(b)(ii)] is not necessary to give business efficacy to the contract. The ‘gap’ articulated in PS [59] about the period between a notice of termination being given, and termination taking effect is more perceived that real. The contract sets out the consequences of termination, and provides for the parties’ obligations before termination. There is no need to imply such a term.”

63. I recognise that the High Court has subsequently addressed the implication of terms, in an informal contract, in Realestate.com.au Pty Ltd v Hardingham (2022) 277 CLR 115; [2022] HCA 39, where Kiefel CJ and Gageler J (at [18]) summarised the BP Refinery factors and observed that:

“Apart from being reasonable and equitable, capable of clear expression and non-contradictory of the express terms of the contract, to be implied a term must be necessary to give business efficacy to the contract (which will not be satisfied if the contract is effective without it), and it must be so obvious that ‘it goes without saying’”.

64. Their Honours also noted authority that a term may be implied if it is “necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case” and pointed to a reconciliation of any difference in the two approaches, that a term which fails to meet the obviousness criterion would likely not be necessary for the reasonable or effective operation of the contract. Gordon J took a possibly different approach (at [50]) observing that “there is now little, if any, distinction between the latter case of an “implied” term by reference to the obvious presumed or imputed intention of the parties, and the identification of the “express” terms of an agreement by reference to the objective intention of the parties”, and that the approach taken in earlier cases no longer applied. Edelman and Steward JJ there observed (at [114]-[116]) that the BP Refinery criteria are not applied in an over-rigid way in informal contracts.

65. I am not persuaded that the more specific term for which FPL contends should be implied, where it is not apparent that it would add anything to the express obligation of BRG, under cl 9.6 of the CAR Agreement, not to “hinder” or “prevent” clients serviced by FPL being transitioned to another AFS licensee. There is no relevant “gap” to be filled by an implied term here, where the express term in cl 9.6 of the CAR Agreement is at least capable of being breached by conduct prior to termination which has the prohibited effect after termination, and the second aspect of the implied term is neither necessary to give business efficacy to the CAR Agreement nor so obvious it goes without saying.

66. Returning now to the chronology of events, on 8 December 2008, a share sale agreement was executed between Mr Roberts and Mr Thomas (Ex J1, 89; Bailey 29.10.24 [54]-[58]) and, on 15 December 2008, Mr Thomas became a director of BRG and acquired 100,000 of BRG’s ordinary shares. On 13 October 2009, Australian Financial Freedom Pty Ltd (“AFF”), a company associated with Mr Thomas, became an authorised representative of BRG (Ex J1, 168). On 27 April 2011, BRG entered into a CAR Agreement with Rocco Financial Planners Pty Ltd (“Rocco”) (Ex J1, 124; Bailey 29.10.24 [65]) and, on 3 June 2011, BRG entered into a CAR agreement with AFF, with Mr Thomas as the individual adviser (Ex J1, 146; Bailey 29.10.24 [66]). On 31 October 2011, Mr Thomas exercised an option to acquire an additional 10% of the shares in BRG (Bailey 29.10.24 [59]). Correspondence between the parties in late 2011 recognised that at least some clients were treated as “BRG owned”, apparently including clients previously introduced by Mr and Mrs Roberts that were “part of the merger” (Ex J1, 190, 192).

67. On 19 January 2016, Super Advisor became a CAR of BRG, but it did not then enter into a written CAR agreement with BRG (Bailey 29.10.24 [67]). On 31 March 2016, Rocco terminated its CAR agreement with BRG and took its clients and funds with it (Bailey [68]). On 2 June 2016, AFF obtained an AFS licence which permitted it, inter alia, to deal in MDAs (Ex J1, 4760). On 18 July 2016, BRG entered into a CAR agreement with Greetham & Associates Pty Ltd (“Greetham Associates”), as to which Mr Greetham acted as the individual adviser (Bailey 29.10.24 [69]); the later termination of that agreement contributed to BRG’s subsequent financial decline. In late 2016 or 2017, Mr Bailey started to develop symptoms of a neurological disorder, which was not fully diagnosed until 2020 (Bailey 2910.24 [73]).

68. On 9 and 10 August 2019, Mr Roberts and Mr Thomas, and Mr Roberts and Mr Bailey, exchanged correspondence concerning a possible demerger of the shareholders’ interests in BRG. On 10 August 2019, Mr Bailey advised Mr Roberts (Ex P6, 5) that:

“By the way Michael, your BRG shares ARE WORTH 6 times EBIT, WHICH on current figures is 1.2 mil which your share is $480K. BRG will never sell for your numbers unless all adv[i]ser fees are tipped back in which you rejected a year ago as unacceptable. I think he suggested course of action is equitable.”

Whether or not Mr Bailey’s view of the value of BRG shares was justified at that time, it is plain that subsequent events including FPL’s intent to exit BRG and take some or all of its clients with it, and the loss of revenue associated with FPL’s and later other advisers’ exit from BRG, significantly devalued the shares in BRG.

69. Further discussions as to the sale of Mr Roberts’ shares in BRG took place in early 2020, in which (for example, Ex J1, 1027) Mr Bailey and Mr Roberts both proceeded on the apparent basis that BFM “owns the clients” except certain retail clients, which were implicitly treated as owned by BRG, as follows:

“Michael all my client data belongs to BFM. My last email asked for a proposal. I am not prepared to share any data until I have a proposal, I am not going to spend time and expense until I understand your prop[o]sition. …

BFM current revenues are currently around $440,000.

If your proposal is of interest then I will be happy to supply info, My [sic] decisions will be based on what is good for BRG Staff, Good for BFM Clients, Good for Michael and Alex and good for my family and good for shareholders.”

70. That proposal did not then proceed and Mr Thomas informed Mr Bailey that, for that reason, he would no longer purchase his interest in BRG (Bailey 29.10.24 [78]-[80]).

71. Also by April 2020, Mr Roberts commenced extended discussions with another Australian financial adviser, Beresfords Financial Planning (“Beresfords”), concerning the possibility of his joining that business or, possibly, Beresfords merging with BRG, although there is no suggestion that proposal had been exposed to or was supported by other shareholders in BRG. Mr Roberts had plainly disclosed a significant amount of information to Beresfords which was recorded in a detailed paper provided by Mr Beresford to Mr Roberts on 14 April 2020 (Ex J1, 1035), although it is not necessary to determine whether that information was “confidential” in any strict sense. By an email dated 17 April 2020 Ex J1, 1095), Mr Roberts advised Mr Beresford that he had engaged a third party, Forte Asset Solutions (“Forte”), to undertake a “fair market valuation of BRG so as to identify the risks of the sale of Mr Bailey’s shares and client service revenues, the risks to the business” and “set a benchmark by which we can measure future progress”.

72. In May 2020, Mr Bailey caused Forte to prepare a “fair market valuation” for BRG   (Ex J1, 1052). On 6 May 2020, Mr Roberts advised Mr Beresford, under the heading “Update on BR-Exit” (which plainly referred to his proposed exit from BRG) that Mr Bailey had sold “his client servicing rights” to Mr Tidswell but was staying on as 40% shareholder and director of BRG and that Mr Thomas was continuing to act as managing director, on a specified basis; shared the result of the valuation that Mr Roberts had obtained from Forte with Mr Beresford; and observed that he and Mr Greetham “might need to find a new ‘home’” and asked Mr Beresford if he was interested in taking the discussions further (Ex J1, 1095). On 11 May 2020, Mr Roberts provided information as to asset allocations, in respect of clients advised by FPL, to Mr Beresford (Ex J1, 1097); it is again not necessary to determine whether that information was strictly confidential. By 21 May 2020, Mr Roberts was providing (Ex J1, 1101) apparently confidential information to Mr Beresford, by uploading it to a Google Drive that was apparently accessible by Mr Beresford, including a list of MDA clients by funds under management (“FUM”), age and location; an adviser’s statement for MDA fees for April; and market value reports for four clients illustrating their portfolios, which was at least confidential to the clients, whether or not confidential to BRG. Mr Beresford then requested (Ex J1, 1103) further client information, including “portfolios of each of the 4 clients for the past 3 years … to see movement in both the underlying investments and the weightings” and, on 26 May 2020, Mr Roberts uploaded further information apparently referable to those clients to his Google Drive (Ex J, 1105).

73. By 21 May 2020, Mr Roberts had also initiated contact with another AFS licensee, Advice Evolution, concerning becoming an authorised representative of that entity and, on that date, Advice Evolution sent him a “new adviser pack” for his assessment (Ex J1, 1102).

74. By email dated 1 June 2020 (Ex J1, 1112), Mr Roberts updated Mr Beresford as to BRG’s corporate plans, outlining a decision made by BRG’s directors at a board meeting made on that day to limit the scope of BRG’s business and focus on its discretionary asset management activities. On 17 June 2020, Mr Roberts provided Mr Beresford with further information concerning BRG, although he indicated that he had “deleted any information that could be considered sensitive or confidential – mainly the last 3 years’ financials”. The attachment was described as a “profile” of BRG, although it appears to have been drawn in significant part from Forte’s valuation. It disclosed past and forecast financial information for BRG and costs incurred by BRG in respect of particular aspects of its activities, including technology costs, and contained an assessment of the overall strengths and weaknesses of BRG’s business. Again, it is not necessary to determine whether any of that information was strictly confidential, although it was plainly of a commercially sensitive character. On 23 June 2020, Mr Beresford provided an “offer” (Ex J1, 1160) outlining potential terms for Mr Roberts’ engagement with Beresfords, and a document which appears to have been directed to the position if a client of BRG transferred its portfolio to Beresfords. On 24 June 2020, Mr Roberts responded to that “offer” by an email (Ex J1, 1176) indicating his preliminary comments.

75. Mr Roberts continued communications with Advice Evolution as to a potential transition to that licensee, possibly associated with a transition of FPL’s MDA clients to another entity, Wealth O2, into July 2020 (Ex J1, 1298, 1302) and, by about that time, was in discussion with Advice Evolution as to hiring a member of Advice Evolution’s administrative team, ultimately Ms Barit, to assist with the administrative steps “to execute the transfer” (implicitly, of his client information and clients) to Advice Evolution (Ex J1, 1302). Mr Roberts also advised that Advice Evolution would receive a telephone call from Mr Greetham (who was, as I noted above an adviser authorised by BRG) who had expressed an interest in Mr Roberts’ discussions with Advice Evolution. Further correspondence with Advice Evolution (Ex J1, 1304-1305) referred to the engagement of Ms Barit to provide assistance, implicitly with the copying of client information relating to FPL’s clients, and the possibility of dual licensing between Advice Evolution and another entity in respect of MDA clients.

76. On 1 July 2020, BRG entered a Contractor Service Agreement with AFF (Ex J1, 1194) which provided that AFF provide specified services to BRG, largely related to management. It appears that the entry into that Contractor Service Agreement and its terms were not authorised by BRG’s board, and the contract price of $90,000 for services over six months and monthly payments of $15,000 per month plainly exceeded the authority limit of the BRG employee who had executed the contract. On the same date, Sustain Capital entered into a CAR agreement with BRG (Ex J1, 1241); BFM sold all of its rights and revenues from its clients to Sustain Capital under a Business Sale Agreement (Ex J1, 1267); BFM ceased to be an authorised representative of BRG and Mr Bailey commenced as an authorised representative of BRG; Mr Thomas was appointed as Managing Director of BRG; and Mr Bailey retired from full-time work as a financial planning and investment adviser, although he remained as a director of BRG and worked with Sustain Capital for 2 years, performing tasks to maintain client relationships and introduce Sustain Capital and its advisers to his former clients (Bailey 29.10.24 [7], [92]).

77. On 15 July 2020, Mr Roberts advised Ms Barit (Ex J1, 1309) that he was arranging a login for her to BRG’s Minerva client management system as his “marketing assistant” (a description which he placed in inverted commas, implicitly recognising that it was false) “so that you can help with the transfer of client information to Worksorted”, which was the third party client relationship software used by Advice Evolution, and he requested an Advice Evolution email and an account on Advice Evolution’s client relationship software for himself, which was subsequently provided. By that date, BRG’s staff were expressing understandable concerns to providing a Minerva login to Ms Barit, on the basis that it would give her access to all clients on BRG’s client relationship software, all contact notes and personal client information, and would also allow access to information relating to Super Advisor’s clients, which was contained in the same system. BRG then requested further information concerning Ms Barit’s role from Mr Roberts, to which he responded with false or seriously misleading information that Ms Barit was his “executive assistant cum marketing manager”, which again did not disclose her relationship with Advice Evolution (Ex J1, 1312-1316). Correspondence in which Mr Roberts pressed for Ms Barit to have access to BRG’s Minerva system continued over a significant period, with BRG staff expressing continued concerns as to privacy issues in relation to client information, which were justified in those circumstances.

78. On or about 16 July 2020, Mr Thomas told Mr Bailey that Mr Roberts had asked BRG’s office manager, Ms Dimitrievski, to grant access to BRG’s Minerva system to a person (Ms Barit) who Ms Dimitrievski believed was located overseas, and BRG did not permit that access (Bailey 29.10.24 [98]).

79. Mr Roberts’ discussions with Advice Evolution continued into mid-July 2020 (Ex J1, 1325) and, by that time, Advice Evolution sent its individual and corporate representative agreements to Mr Roberts (Ex J1, 1330). By late July 2020, Ms Barit, in her role with Advice Evolution, had taken steps to set up a client relationship management profile for Mr Roberts under Advice Evolution, within that firm’s Worksorted system (Ex J1, 1330A). By that time, Mr Roberts had also uploaded client contact details for BRG’s clients serviced by FPL into a Google Drive folder from which that information could be transferred to Advice Evolution’s Worksorted account. Mr Roberts’ communications with Ms Barit concerning her access to that Google Drive and his access to a Worksorted profile under Advice Evolution continued into mid-July 2020 (Ex J1, 1349).

80. By early August 2020 Mr Roberts had obtained access to Advice Evolution’s Worksorted system (Ex J1, 1352) and had also established an email address not associated with BRG (Ex J1, 1367). By 6 August 2020, Mr Roberts had requested (Ex J1, 1308) BRG to provide access for Ms Barit to BRG’s Minerva system, without disclosing her connection with Advice Evolution to BRG. Mr Roberts continued to press BRG for access for Ms Barit to BRG’s client records and information into mid-August 2020 and continued to provide misleading information to BRG as to the purpose of that access, by non-disclosure of Ms Barit’s relationship with Advice Evolution and the intended use of that access to copy information to Advice Evolution’s client files.

81. In cross-examination Mr Roberts characterised these discussions (T113) as a “Plan B” if something happened and he was forced out of BRG, and appeared to suggest that these those discussions were tentative, preliminary, exploratory or not substantially advanced; he subsequently accepted that discussions with Mr Thomas and Mr Bailey were not going well and, ultimately, also accepted that his ultimate objective was to move to one of the other organisations with which he was in discussion. While I accept that the transfer of clients to another AFS licensee was plainly an alternative to a negotiated separation of the parties’ interests, any suggestion that the discussions with Advice Evolution were anything short of fully advanced is inconsistent with Mr Roberts’ making a substantial amount of client information available to Advice Evolution, albeit without client consent, where he plainly would not have taken that course unless he was well-advanced in a proposed transfer of his business to Advice Evolution.

268. This claim culminates in the allegation (2023 POC [43], denied Bailey Defence [43], Thomas Defence [43]) that the oppressive conduct has caused FPL loss, particularised, first, as:

“The consequence of the Defendant[s’] conduct was to deprive FPL of the chance to recover damages against BRG for breach of the [CAR Agreement].

[FPL] has suffered loss of clients, with at least 29 clients serviced by [FPL] being engaged by [Mr Bailey], representing a value estimated to be approximately $1,118,805 when sold as a “client book”.”

275. FPL particularises this loss on the basis that the alleged oppressive conduct has:

“rendered [FPL] unable to recover its loss against BRG, including by reason of;

i   the Proceedings Costs;

ii   the Consulting Fees;

iii   the dispositions of property described at paragraph 30 above;

iv   provision of the Confidential Information to Sustain Capital and/or Australian Financial Freedom;

v   diversion of the business and clients of BRG; and

vi   dissipation of the assets and other valuable commercial rights and opportunities of BRG.

276. The essential premise of this claim is, obviously enough, that FPL would have recovered loss against BRG, but for the conduct pleaded in the 2023 Proceedings and referred to in these particulars. That premise is not established for the reasons which I now address. FPL did not have a “chance” of any value to recover damages against BRG for breach of the CAR Agreement because it has not established that it suffered substantive loss as a result of any such breach. FPL has also not established that, if it lost the relevant 29 clients that were serviced by it, Mr Bailey acquired them, and the evidence is inconsistent with his doing so. I have explained above why FPL’s quantification of the “value” of those clients is also not established. FPL did not press a claim for expenses incurred as a result of being locked out of BRG’s Computer Systems (as defined).

A first unpleaded counter-factual

277. In closing submissions in the 2023 Proceedings, Mr Hartford-Davis initially sought to develop an unpleaded counter-factual to determine the quantification of any loss established by FPL, as follows:

“… the Defendants’ evidence was that, merely because of the threat of the litigation, Sustain decided to terminate its CAR Agreement and at that point (if not before) BRG’s business would become non-viable. If that evidence be accepted, voluntary administration (but without oppressive conduct dissipating assets) is part of the counter-factual. For [FPL’s] purposes, it is sufficient to assume that BRG went into voluntary administration in October 2022 with the same net asset position, but adding back the outflows from oppressive conduct. The task for the Court is to estimate the significance upon BRG’s net asset position at voluntary administration of Bailey and Thomas’ oppressive conduct, which would not have occurred in the counter-factual.”

278. The first difficulty with this claim is that FPL must plead and establish the material facts on which it relies to establish its claim for damages in the 2023 Proceedings, including any allegation that BRG should have appointed a voluntary administrator in October 2022, and cannot proceed on the basis of an unpleaded and unproved assumption as to that matter. The material facts of this “counter-factual”, and in particular the allegation that BRG should have been placed in voluntary administration in October 2022, were here not pleaded. Mr Hartford-Davis submits that the Defendants do not plead a defence that BRG was never going to pay any amount to FPL, but that does not assist FPL where, in order to establish its claim for loss and damage, FPL must show that there was a real chance that it would recover against BRG but for the conduct that is alleged to constitute oppression in the 2023 Proceedings. FPL has not established that matter on its first counter-factual.

279. The second difficulty with this claim is that, even if this “counter-factual” was available, it is not possible to establish BRG’s loss by assuming a voluntary administration in October 2022 and then simply adding back later expenditures by BRG, where that calculation takes no account of the extent of BRG’s other creditors in October 2022 or the higher ranking costs and disbursements that would be incurred by a voluntary administrator or liquidator in a voluntary administration that commenced in October 2022 and subsequent liquidation. BRG’s assets as at October 2022 would have been first applied in a liquidation to meet those costs and disbursements of the voluntary administrator and liquidator and only then to creditor claims including FPL’s claim as a contingent creditor. The result is that, on FPL’s first counter-factual, the persons who suffered any loss by expenditures out of BRG after October 2022 would be, first, the voluntary administrator and liquidator of BRG; FPL would only have a claim against BRG’s assets with other unsecured creditors after their claims were met; and FPL would have suffered no loss unless its claim would otherwise have been recoverable in whole or in part in a liquidation of BRG. In its first counter-factual, FPL did not establish the likelihood of, still less the amount of, assets that would have been available to meet FPL’s claim on that basis. Whether reflexive in character or not, FPL’s loss cannot exceed the amount that would properly have been distributed to it on a liquidation of BRG, but for the alleged conduct, and that amount was not established on that first counter-factual.

FPL’s application to reopen and FPL’s second unpleaded counter-factual

280. In closing submissions, Mr Hartford-Davis sought to address the difficulties which I have noted above by developing a second counter-factual which addressed the availability of recovery to FPL in a liquidation of BRG. By consent of the parties, I allowed supplementary submissions as to that matter, which the parties agreed were to be no more than three pages in length, and which were to identify any further documents proposed to be relied on in support of those submissions. FPL’s supplementary submissions as to the matter exceeded the length agreed between the parties, and Counsel for FPL subsequently advised that they had forgotten the page limit agreed between the parties and reflected in the Court’s order for supplementary submissions. Counsel for the Defendants took objection to the length of FPL’s submission and Counsel for FPL offered to provide abridged submissions. I did not considered it necessary to require FPL to provide abridged submissions, where the length of FPL’s submissions would ultimately cause no prejudice to the Defendants.

281. FPL contends, by its second counter-factual that, having regard to two Form 5602 Annual Administration Returns lodged with the Australian Securities and Investments Commission on 22 January 2024 and 13 January 2025 (MFI 22) and several other assumptions, a liquidator of BRG would have recovered between $458,182.17 and $604,032.21 in a hypothetical liquidation, by contrast with the liquidator’s estimated actual gross realisations in the actual liquidation of $27,380, and FPL would have received the large part of a consequential distribution to BRG’s creditors.

282. In support of this second counter-factual, FPL seeks to tender those two Form 5602 Annual Administration Returns and seeks leave to reopen to the extent necessary to do so. Mr Hartford-Davis submits that leave to reopen to tender those returns should be granted, because FPL’s previous failure to tender them was a “mistake” where:

“It became apparent during an exchange with the bench [in closing submissions] that the modelling undertaken in [FPL’s] written submissions were mistakenly premised on the wrong scenario (ie an administration and not a liquidation), the latter being the point of recovery for [FPL].”

283. The Defendants objected to the reopening and the tender of those documents and contended that the tender of those documents would give rise to unfair prejudice to them for the purposes of s 135 of the Evidence Act. Mr Hyde submits that the second counter-factual put by FPL involves a significant departure from the case which was opened by FPL, on the basis that BRG should have been placed in administration shortly after the 2021 Proceedings were commenced, and that Mr Bailey would be prejudiced where he has not had the opportunity to cross-examine Mr Roberts as to the assumptions underpinning that second counter-factual. Mr Hyde also submits that there is “substantial prejudice” to Mr Bailey, which could not properly be alleviated unless he was given the opportunity to respond to assumptions that the Court was being asked to make, most likely by way of expert evidence or calling the liquidator to give evidence.

284. Mr Zahra also submits that the second counter-factual put by FPL cannot be proved by reference to evidence put before the Court. He submits that it was not pleaded and arose only in oral submissions when FPL departed from its earlier, also unpleaded, counter-factual that BRG should have been placed in voluntary administration. He also submits that the re-opening “causes the [D]efendants prejudice because they are deprived of a proper opportunity to adduce lay and expert evidence to respond to the evidence sought to be now relied upon by (FPL]”. Mr Zahra also submits that the costs, recoveries, the liquidator’s remuneration and potential outcome of the counter-factual have no evidentiary basis and involve “unsubstantiated and unsafe speculation” and that expert evidence would be required to prove what would have occurred in the relevant circumstances. I accept that there would be real prejudice to the Defendants in permitting FPL to advance this counter-factual, unsupported by any pleading of the material facts upon which it is based, which would have allowed the Defendants notice of, or an opportunity to address those material facts or to lead evidence in response to them.

285. Turning now to the applicable case law, I allowed the parties the opportunity to make additional submissions as to the applicable principles as considered in Hindmarsh Medical Clinic v Hindmarsh Family Practice Pty Ltd (1997) 38 IPR 616 (“Hindmarsh”) and Re SBL Solutions Pty Ltd (2021) NSWSC 1003 (“SBL”). I recognise that, in Urban Transport Authority of New South Wales v Nweiser (1992) 28 NSWLR 471 at 475-476, Clarke JA observed that, where, a short time after a case was closed, Counsel sought leave to reopen because he or she realised he or she had made a mistake, it is difficult to discern how the interests of justice would be furthered by disallowing an application to reopen to call evidence that was relevant to and may have had a significant impact on the issues in the case. His Honour also there referred to the difference between tactical decisions and inadvertence and emphasised, as I obviously bear in mind, the fact that the rules are directed to the furtherance of the interests of justice. I also bear in mind that the Court must act in accordance with ss 56-58 of the CPA in dealing with a reopening application of this character.

286. In Bailey v Palombo [2020] NSWSC 1209, Hallen J dealt with the scope of reopening under rr 2.1 and 29.5 of the Uniform Civil Procedure Rules 2005 (NSW) and observed (at [28]) that any decision to grant leave to reopen is one that involves the exercise of discretion, and the question whether the interests of justice are better served by allowing or rejecting the application. His Honour also there referred to relevant matters, including prejudice to the other party; the reasons why the evidence was not led in the first place; whether there had been a deliberate or tactical decision made not to call the evidence during the hearing; any delay in making the application; and the importance, relevance and probative value of the proposed new evidence to the issues in the case.

287. In several cases, including Hindmarsh and Spotlight Pty Ltd v NCON Australia [2011] VSCA 267, the Courts have considered whether leave to reopen to lead further evidence should be given after judgment is reserved or where judges have expressed preliminary views. In Hindmarsh, the applicant applied for leave to re-open its case solely to adduce evidence of a particular matter shortly before judgment, and Mansfield J rejected that application, observing that:

“It is plain that it was within my discretion to grant it: Betts v Whittingslowe (No 1) [1944] SASR 163, although it would generally be unwise to do so simply to allow the fortification of evidence by further evidence which might readily have been adduced at trial. See also Home Management Maintenance Pty Ltd v Doyle (1992) 107 FLR 225.”

I also declined to grant leave to reopen in a matter of that character in SBL.

288. Here, I had, in submissions, raised matters that were troubling me as to FPL’s first counter-factual to allow Mr Hartford-Davis the opportunity to make submissions about them, and that appears to have prompted FPL’s change of direction toward its second counter-factual, so as to seek to put their case on a different basis to that which had been put and addressed in the first counter-factual at the hearing. So far as the reasons why the evidence was not led in the first place, I do not accept that was a “mistake” on Mr Hartford-Davis’ part, involving any element of inadvertence, as distinct from an informed decision to put FPL’s case in a particular way, from which FPL now seeks to depart as the difficulties with that case emerge. I accept there has been no significant delay in making the application, after these issues arose, and it was made promptly once FPL's intention to change its position arose. It seems to me that the proposed new evidence in MFI 22 has importance, relevance and probative value, at least in the sense that it provides the starting point for the second counter-factual that FPPL now seeks to develop. However, it also seems to me that here there would be a real prejudice to the Defendants of permitting reopening by FPL to tender MFI 22, where they will be deprived of the opportunity to lead the liquidator’s or expert evidence as to that second counter-factual, unless they accept the costs and delay involved in doing so where the hearing is otherwise complete. FPL does not offer to compensate the Defendants for the costs thrown away in doing so and it is not apparent that it would have the financial capacity to do so. Balancing these matters, I am not satisfied that I should grant leave to FPL to reopen to tender MFI 22.

289. FPL cannot establish the basis of its second counter-factual, without reliance on the Annual Administration Returns in MFI 22, and that is fatal to its claim on this basis. I will, however, now turn to several other difficulties with that second counter-factual.

290. First, aspects of the second counter-factual are obscure. Mr Zahra points out that this second counter-factual does not identify when or how a liquidation would have occurred, whether as a voluntary winding up instead of a voluntary administration, or as a creditor’s winding up or, possibly, a winding up on the just and equitable ground. I recognise that there is here no particular reason to assume that the parties would have cooperated, for example, in respect of a voluntary winding up or a winding up on the just and equitable ground, given the extent to which other issues have been contested between them.

291. Second, FPL’s second counter-factual assumes that that the “impugned” conduct of the Defendants had not occurred and would not have to be investigated by a liquidator for the purpose of that second counter-factual. I recognise that, in principle, a counter-factual can disregard conduct which in fact occurred; however, FPL has not established the basis to assume that the sale of BRG’s plant and equipment or the sale of BRG’s risk business or the transactions in respect of CSUT would not have occurred, where it has not established a breach of duty by the Defendants in respect of those transactions. Where those transactions could have occurred without breach of duty, then a liquidator would likely have investigated them and incurred costs in doing so, although he should then have concluded that they did not warrant any challenge. Mr Zahra also points out and I accept that FPL’s calculation in the counter-factual assumes that consulting fees would not be incurred but does not address how BRG would have acquired the necessary services, a matter which I have addressed above, or the costs of premises to trade if they were not obtained from CSUT.

292. Third, that second counter-factual assumes that the costs of the counter-factual liquidation would correspond to the high end of the voluntary administrator’s estimate of the costs of a voluntary administration, of approximately $50,000 plus GST. I do not consider that assumption is well-founded, where a voluntary administration contemplates a time-limited and lesser level of investigation than a liquidation, and the liquidator appointed in the counter-factual liquidation would have been obliged to conduct a more extensive investigation than a voluntary administrator, likely extending to the conduct of Mr Roberts and FPL as well as the conduct of the Defendants. There is every reason to think that the costs of the hypothetical liquidation would have significantly exceeded those assumed in the second counter-factual.

293. Fourth, FPL’s second counter-factual assumes that the liquidator’s investigations would not extend to the conduct of Mr Roberts or FPL. Mr Hyde responds that FPL’s contention that the costs of the liquidation would have been lower in this counter-factual than were actually incurred ignores the steps that a liquidator may have taken had he or she been aware of Mr Roberts’ dealings with BRG’s information. Mr Zahra points out that it cannot be assumed that there would have been no statutory investigations within the second counter-factual. It seems to me that this assumption cannot be accepted, where Mr Roberts’ conduct which I have addressed above would have warranted a liquidator’s further investigation, although the liquidator might well have ultimately concluded that the costs of further action against Mr Roberts or FPL would likely have been disproportionate to any benefit that was likely to be obtained from it.

294. Fifth, FPL’s second counter-factual assumes that the liquidator would not have had to address a proof of debt lodged by Mr Roberts or FPL, claiming an amount of $60,692.25, because that claim was abandoned at this hearing. Mr Zahra points out that the Court cannot assume that FPL would not have pressed its proof of debt in a liquidation, where it did not abandon it until this hearing in February 2025. It seems to me there is no basis for FPL’s assumption, where the late abandonment of that claim in the course of this hearing does not indicate that it would have been abandoned at any prior point, and tends to indicate the contrary. FPL’s treatment of that second counter-factual makes no allowance for the costs that would be incurred in the liquidator’s dealing with that proof of debt.

295. Sixth, FPL’s second counter-factual excludes a recovery made by the liquidator under a deed of settlement of BRG’s claims against the Defendants and FPL contends that the liquidator would have incurred lower professional costs and legal expenses in the counter-factual in investigating those claims. I have not accepted the latter assumption above. FPL points out that there was no increase in the Company’s assets as a result of the settlement, because that payment was applied to the administrator’s and liquidator’s prior ranking costs rather than the benefit of unsecured creditors, and again contends that those costs would not have been incurred in the counter-factual. I have not accepted the latter assumption above.

296. Seventh, FPL also assumes, in its second counter-factual, that the administrator and the liquidator would have incurred no recoverable legal fees. Mr Hyde contests the proposition that legal expenses would have been less in the second counter-factual and challenges FPL’s implicit assumption in that counter-factual that “Mr Roberts would have simply stood by and let [BRG] be placed into administration and subsequently liquidation.” I accept that Mr Roberts could have been cross-examined as to that matter, had the second counter-factual been raised at an earlier point. In any event, this assumption is also not established, where a voluntary administrator would likely have been required to undertake some investigations and the liquidator would have been required to undertake fuller investigations, including in respect of Mr Roberts’, FPL’s and the Defendants’ conduct and would likely have incurred legal fees in doing so.

288. Eighth, Mr Hyde and Mr Zahra submit, with some force, that there is a double-counting in the counter-factual, because BRG received the full amount of the sale of its risk book, but the counter-factual adds the value of that risk book, resulting in a double-counting.

289. Ninth, FPL’s second counter-factual assumes that the Court accepts Mr Goodyer’s evidence of its loss, so that the value of its claim against BRG was $761,143.28, with the consequence that total creditor claims against BRG in a liquidation would be $844,862 and FPL would represent a large part of BRG’s unsecured debt. Mr Zahra points out that FPL’s counter-factual relies on Mr Goodyer’s evidence, and points to the difficulties with that evidence. I also cannot accept this assumption, which is fundamental to that counter-factual, given the conclusions that I have reached as to Mr Goodyer’s report above.

290. For all of these reasons, quite apart from the fact that the counter-factual depends on the grant of leave to reopen and tender MFI 22, which I have not granted, its basis is not established in any event. This second counter-factual also does not support the loss claimed by FPL in the 2023 Proceedings.

Determination as to 2023 Proceedings

300. For these reasons, BRG’s claim in the 2023 Proceedings also fails.

Orders

301. For these reasons, the 2021 Proceedings and the 2023 Proceedings are each dismissed. I will hear the parties as to costs

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Amendments

17 July 2025 - Amendment made to para 24 to change "Bailey's" to "Roberts'" in the first line.

Decision last updated: 17 July 2025