In the matter of Quantra Group Limited

[2025] NSWSC 1123

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of Quantra Group Limited [2025] NSWSC 1123

Hearing dates:

2-4 September 2025

Date of orders:

26 September 2025

Decision date:

26 September 2025

Jurisdiction:

Equity - Corporations List

Before:

Nixon J

Decision:

In proceeding 2025/248384:

1. The proceeding is dismissed.

2. Provisionally order that the Plaintiffs pay the costs of the First Defendant, as agreed or assessed. This order will solidify seven days after the date of this judgment unless any party notifies the other parties and the Associate to Nixon J in writing that some other order is sought, specifies the order and provides a brief statement of the grounds for it, in which event the order will not take effect and directions will be made to deal with costs.

In proceeding 2024/106618

1. List the Notice of Motion filed by the Defendants on 14 August 2025 for directions before Nixon J at 9:15am on 2 October 2025.

Catchwords:

CORPORATIONS – members’ rights and remedies – oppression – where company raised capital by the issue of shares to the Plaintiffs pursuant to an Information Memorandum – where shares were issued by the company to a trust controlled by the company’s founder and to various other persons associated with the company at a price well below the price paid by the Plaintiffs – where the company subsequently issued options to various persons to acquire shares at a price well below the price paid by the Plaintiffs – whether the issues of the shares by the company at a price below the price paid by the Plaintiffs amounted to oppressive conduct – whether there is continuing oppression – whether relief should be granted

Legislation Cited:

Corporations Act 2001 (Cth) ss 232, 233

Supreme Court (Corporations) Rules 1999 (NSW) r 2.13

Cases Cited:

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

Crawley v Short [2009] NSWCA 155

Exton v Extons Pty Ltd (2017) 53 VR 520; [2017] VSC 14

Falkingham v Peninsula Kingswood Country Golf Club [2015] VSCA 16

Goozee v Graphic World Group Holdings Pty Ltd [2002] NSWSC 640

Lawns Australia Pty Ltd (No 6) [2014] WASC 278

Turnbull v National Roads and Motorists’ Association Ltd [2004] NSWSC 577

Munsterman v Tayward; Rayward v Munstermann [2017] NSWSC 133

Pacific Dairies Limited v Orican Pty Ltd [2019] VSC 647

Re Norvabron Pty Ltd (No 2) (1986) 11 ACLR 279

Spence v Rigging Rentals WA Pty Ltd [2015] FCA 1158

Strategic Management Australia AFL Pty Ltd v Precision Sports & Entertainment Group Pty Ltd [2016] VSC 303

Trafalgar West Investments Pty Ltd v Superior

Tzavaras v Tzavaras & Sons Pty Ltd [2023] NSWCA 168

Texts Cited:

Principal judgment

Category:

Principal judgment

Parties:

Counsel:
S M Golledge SC / E L Phelan (Plaintiffs)
R Dick SC / S Scott (First Defendant)
D W Rayment SC / M S Collins (Aspromonte Pty
Ltd – appearing with leave)
Catherine O’Toole (self-represented)

Solicitors:
Shaba and Thomas Lawyers (Plaintiffs)
Wotton Kearney (First Defendant)
Bridges Lawyers (Aspromonte Pty Ltd)

Representation:

2025/00248384

File Number(s):

Nil

JUDGMENT

1. This case concerns the issue of shares by the First Defendant, Quantra Group Limited, which was formerly known as Homes.com.au Limited (the Company). Each of the other parties is a shareholder of the Company.

2. The Company was established by the late Mr Pasquale (Pat) Carbone with a view to developing a real estate listing and advertising business to compete with realestate.com.au and domain.com.au. In February 2018, Mr Carbone acquired the domain name of “homes.com.au” (Homes Domain Name) through a related entity that he controlled, Aspromonte Pty Ltd, for the purpose of pursuing this business opportunity.

3. Each of the Plaintiffs is a person who subscribed for shares in the Company at a price of $0.6667 per share pursuant to a document called the “First Share Offer” which was dated 18 May 2018.

4. Each of the Defendants, other than the Company, is a person to whom shares in the Company were issued at a price well below the price paid by the Plaintiffs. The relevant share issues fall into three main categories:

1. first, the issue of 99,999,999 shares to the Second Defendant, Homes Holdings Pty Ltd (which was controlled by Mr Carbone) at a price of $0.001 per share (the Holdings Share Issues);

2. secondly, the issue of 6,250,000 shares to nine of the Defendants and one of the Plaintiffs, being persons who provided various services to the Company or the associates of such persons, at a price of either $0.001 or $0.02 per share (the Director & Consultant Share Issues); and

3. thirdly, the issue of 11,100,000 shares to nineteen of the Defendants and two of the Plaintiffs at a price of $0.001 per share, pursuant to options granted by the Company to those persons (the Option Share Issues).

5. The Plaintiffs contend that these share issues (described in the pleadings as the “Undervalued Share Issues”) were either:

1. contrary to the interests of the members of the Company as a whole; or

2. oppressive to, unfairly prejudicial to, or unfairly discriminatory against the Plaintiffs;

3. within the meaning of s 232 of the Corporations Act 2001 (Cth) (Act).

6. In addition to joining the persons to whom shares had been issued at prices below $0.6667 per share, the Plaintiffs joined each of the other shareholders of the Company to the proceeding, on the basis that the relief sought by the Plaintiffs would affect the value of their respective shareholdings.

7. With the exception of one Defendant, to whom I will return below, none of the Defendants other than the Company took an active role in the proceeding.

8. The primary relief sought by the Plaintiffs is as follows:

1. a declaration that the various “Undervalued Share Issues” were invalid;

2. an order that the Company rectify its register of members by removing the shareholdings issued pursuant to the “Undervalued Share Issues”, and causing to be lodged with the Australian Securities and Investments Commission (ASIC) a notice of correction of the Company’s register; and

3. an order that the consideration paid for the shares impacted by orders (1) and (2) constitutes a debt by the Company to those shareholders who received shares under the “Undervalued Share Issues”, such debt being payable within 14 days of demand being made in writing to the Company.

Preliminary Matters

9. Before setting out the relevant factual background, it is necessary to address a few preliminary matters.

10. First, other proceedings have been brought by the Plaintiffs in the Commercial List of this Court against the Company and the estate of Mr Carbone (Commercial List Proceedings). In those other proceedings, the Plaintiffs allege that the Company and Mr Carbone made various misleading or deceptive representations to the Plaintiffs prior to their investment in the Company.

11. On 14 August 2025, the Defendants in the Commercial List Proceedings filed an application to stay those proceedings until I had made a determination in this proceeding concerning the Plaintiffs’ oppression case. At the parties’ request, I adjourned this stay application to a date to be fixed. This was on the basis that, if the oppression proceeding were able to be heard and determined in a short space of time, the stay application would likely fall away.

12. Secondly, at the commencement of the hearing, I granted leave to Aspromonte to appear as an interested person, pursuant to r 2.13 of the Supreme Court (Corporations) Rules 1999 (NSW). Aspromonte sought this leave in order to raise a discrete issue in respect of the consequences of the relief sought by the Plaintiffs. Aspromonte served written submissions in respect of this issue in advance of the hearing.

13. Given the narrow compass of the issue raised by Aspromonte, I excused its Counsel from attendance at the remainder of the hearing and granted leave for written submissions to be provided by the Plaintiffs in response to Aspromonte, with Aspromonte having leave to put on any submissions in reply. I address the matters raised by Aspromonte when dealing below with the relief sought by the Plaintiffs.

14. Thirdly, on 2 July 2025, this matter was set down for hearing on an expedited basis. It was listed for 2 September 2025, on an estimate of two days. During the luncheon adjournment on the second day of the hearing, my Chambers received an email from the Twenty-Fourth Defendant, Ms Catherine O’Toole, stating that she sought a further three weeks to file evidence in this proceeding. She proposed that she file and serve her evidence by 23 September 2025, and that the Plaintiffs have until 30 September 2025 to file any evidence in reply.

15. Ms O’Toole had been served, on 11 August 2025, with a copy of the Originating Process, the Plaintiffs’ Points of Claim and the orders made by Brereton J on 2 July 2025 listing the matter for final hearing before me and providing for evidence to be filed in advance of the hearing. She did not file any evidence, or approach the Court seeking any variation of those orders, or take any other active step in the proceeding prior to the commencement of the hearing.

16. On the first day of the hearing, the matter was called outside and there was no appearance by Ms O’Toole.

17. When the second day of the hearing resumed at 2:00 pm, following the receipt of Ms O’Toole’s email, I inquired as to whether Ms O’Toole was present in Court. There was no appearance by her at that time.

18. At the conclusion of the second day of the hearing, the evidence had been completed, without any appearance by Ms O’Toole. The hearing, which had originally been set down on a two-day estimate, was adjourned to the following day, 4 September 2025, at 2:00 pm for closing submissions. I indicated that the hearing would conclude on that day, subject to any application that Ms O’Toole might make.

19. Following the adjournment, my Associate sent an email to Ms O’Toole, advising her as follows:

“I note that the hearing of this matter commenced on 2 September 2025, and has proceeded in Court 7A of the Queens Square Law Courts Building.

The hearing will continue in Court 7A tomorrow. This will be the last day of the hearing.

If you seek to make an application of the type referred to in your email, you must attend Court in person to make this application.

Subject to any application you might make at the hearing and the Court’s determination of your application, the hearing will conclude tomorrow afternoon.”

20. On the resumption of the hearing on the following day, I again inquired as to whether Ms O’Toole was present in Court, at which time Ms O’Toole announced her appearance and made an application for an extension of time to file evidence in the proceeding. The application was opposed by the Plaintiffs and the Company.

21. I refused that application, for the following reasons. First, there was no affidavit evidence in support of the application. Secondly, there was no adequate explanation for the delay in bringing the application. Thirdly, the proposed extension would involve a significant increase in the expense and time required to resolve the proceeding, which was otherwise ready to proceed to closing addresses. Fourthly, the proceeding was being conducted on an expedited basis, in particular, because the Company had given undertakings, on 2 July 2025, not to pay or declare any dividend from the substantial funds which it had received from the sale of the Homes Domain Name pending the determination, in this proceeding, of the issues regarding the Company’s register. Accordingly, any delay in resolving those issues had the potential to cause real prejudice to the shareholders of the Company.

22. I indicated to Ms O’Toole that she would be given an opportunity to tender documents, subject to any objection by the other parties. One of the documents which Ms O’Toole tendered was a document headed “Application to Wind Up Homes.com.au Limited… Notes Prepared by Cathy O’Toole”. I informed Ms O’Toole that I would receive the document as a submission, and the other parties did not object to the document being received on that basis. I have had regard to its contents insofar as they are relevant to the matters in issue and are supported by material that is in evidence.

23. In addition, Ms O’Toole was provided with the opportunity, in closing address, to respond to the submissions advanced by the Plaintiffs and the Company.

Factual Background

24. The material in this section of the judgment is largely drawn from the contemporaneous documents and from matters admitted in the pleadings. I have not addressed any disputed issues of fact in this section of the judgment, which are instead addressed below when dealing with the Plaintiffs’ claims of oppression.

Acquisition of Homes Domain Name and establishment of the Company

25. On 30 November 1995, Aspromonte was incorporated by Mr Carbone. From that time until Mr Carbone’s death on 13 November 2021, Mr Carbone and his wife, Ms Caterina Carbone, were the shareholders and directors of Aspromonte. Ms Carbone is now its sole director.

26. On 20 February 2018, the Homes Domain Name was acquired by Aspromonte for a price of $35,000. On 10 March 2018, the Homes Domain Name was registered to Aspromonte.

27. On 10 April 2018, the Company was incorporated, with a single issued share which was held by Mr Carbone. Mr Carbone was the sole director of the Company from the time of its incorporation until 1 July 2018. Mr Carbone’s accountant, Mr Frank Bruzzano, registered the Company for Mr Carbone.

Issue of 19,999,999 shares in the Company to Holdings

28. On 26 April 2018, Holdings was incorporated, with Mr Carbone as its sole director and shareholder. Holdings is the trustee of the Homes Holdings Unit Trust.

29. On 27 April 2018, Mr Carbone:

1. transferred his one share in the Company to Holdings; and

2. caused the Company to issue a further 19,999,999 shares to Holdings at a price of $0.001 per share.

30. As a result, Holdings became the sole shareholder of the Company, owning 20 million shares. The “Change to company details” form recording these transactions was lodged with the Australian Securities and Investments Commission (ASIC) on 30 April 2018.

31. The issue of 19,999,999 shares at a price of $0.001 per share equates to a total amount of $20,000 payable in respect of such shares. According to the bank statements of the Company’s account with the Commonwealth Bank of Australia (CBA), an amount of $20,000 was deposited into this account by Aspromonte on behalf of Holdings on 5 July 2018. Mr Bruzzano gave evidence, in cross-examination, that Mr Carbone caused this amount of $20,000 to be paid by Aspromonte because “[t]hat’s where [Mr Carbone] held his money”.

The FSO

32. On around 18 May 2018, the Company issued a document entitled “First Share Offer May 2018” (FSO).

33. The FSO included a “Letter from the Chairman”, signed by Mr Carbone. The text of this letter was as follows:

“Dear Sir/Madam,

This document is an offer of shares from and in Homes.com.au Pty Ltd (ACN 625 496 139) to professional and sophisticated investors.

This offer seeks to raise $20 million through the sale of 30 million ordinary shares. The minimum investment per investor is $500,000 payable in instalments as follows:

$100,000 payable on or before 15 June 2018

$200,000 payable on or before 25 March 2019

$200,000 payable on or before 25 September 2019.

Homes.com.au Pty Ltd proposes to establish a ‘real estate internet portal’ similar to and in competition with realestate.com.au and domain.com.au.

The funds raised by this offer will primarily be used to develop computer software for the portal website and mobile apps. This task will be contracted out to reputable firms with substantial experience and expertise, as opposed to undertaking these tasks ‘in house’.

At the completion of this offer there will be a total of 140 million shares issued, 100 million of which will be held by the first investor, Homes Holdings Pty Ltd (ACN 625 795 459) as trustee for the Homes.com.au Unit Trust. I own a substantial interest in the trust and am the sole director of the trustee.

Over the next two years we expect to undertake a separate share issue to raise a further $50,000,000 which will primarily be used to fund a TV, radio, internet and billboard advertising campaign.

It is important that you read all of this document carefully and that you undertake your own due diligence and obtain your own independent professional advice about this offer.”

34. The Chairman’s Letter was followed by a section commencing “Market Overview”, which set out information regarding the size of the market for online real estate advertising and the opportunity for a “Third Major Competitor” to take market share from realestate.com.au and domain.com.au. The “Conclusion” at the end of the section of the FSO dealing with this business opportunity included the following statements:

“There is a real opportunity for a third major player in the industry. Especially one that has a clear point of difference, such as a flat fee structure for real estate agents.

We do not need to match, or even come close to matching, [Real Estate Australia] or Domain in terms of sales to be successful. If we can secure 20% of Australia’s 13,000 real estate agents as customers, this would generate over $30 million in revenue, more than enough to cover operating costs and an extensive annual advertising campaign.

As our brand becomes established in the market we can reduce expenditure on advertising and return a growing profit accordingly. This will create a highly valuable company – both to investors and our competitors.

There are essentially three ways that the value of homes.com.au can be realised for investors. The first is to float on the stock exchange. The second is to be bought out by one of our competitors. The third is to be acquired by private equity, hedge fund or a large corporation, e.g. a U.S real estate advertising portal.”

35. A section of the FSO headed “Disclaimers” included the following statements:

“Investors should read the Offer Document carefully and assess whether the information is appropriate for them in respect of their objectives, financial situation and needs.

This Offer Document does not purport to contain all the information that a prospective investor may require. In all cases, interested parties should conduct their own investigation and analysis of the Company and the date contained in this Offer Document.

The Company does not make any representation or warranty as to the accuracy or completeness of the information contained in this Offer Document. Furthermore, the Company shall not have any liability to the recipient or any person resulting from the reliance upon this Offer Document in determining to make an application to apply for shares in the Company.

The Company considers that the financial and non-financial information contained in this Offer Document has been prepared to the best of its reasonable knowledge and belief. However, recipients must rely on their own investigation of all information (including financial information) and no representations or warranties are or will be made by the Company as to the accuracy or completeness of such information.

The Company makes no representation about the underlying value of the securities on offer. Prospective investors must make their own assessment about whether the price of the securities being offered represents fair value.”

36. The FSO also included a section headed “Investor Warning”, which stated as follows:

“Investment in a new business carries high risk. It is highly speculative and before investing in any project about which information is given, prospective investors are strongly advised to take appropriate professional advice.

The information contained in this publication has been prepared by or on behalf of the Company.

The information contained in this publication about the proposed business opportunity and the securities is not intended to be the only information on which the investment decision is made and is not a substitute for a disclosure document, Product Disclosure Statement or any other notice that may be required under the Corporations Act, as the Corporations Act may apply to the investment. Detailed information may be needed to make a decision, for example: financial statements, a business plan or expert opinions including valuations or auditors’ reports.

Prospective investors should be aware that no established market exists for the trading of any securities that may be offered.

A prospective investor is strongly advised to take appropriate professional advice before accepting an offer for issue or sale of any securities.”

37. The FSO stated that the offer was only being made to sophisticated or professional investors, and further stated that:

“If you are a sophisticated investor pursuant to section 708(8)(c) or (d) of the Corporations Act, you will need your accountant to complete the sophisticated investor certificate with your application (both located at the back of this document.”

38. The FSO set out the following information under the headings “Shareholder Structure” and “Financials”:

39. The FSO named Mr Carbone as the person who should be contacted about the FSO, and provided his business address, mobile phone number and email address.

40. The FSO included an “Application for Ordinary Shares” (Application Form) which was required to be completed by persons applying for shares pursuant to the FSO. The Application Form commenced with the following statement:

“This Application Form relates to the Application for Ordinary Shares by homes.com.au Pty Ltd (homes.com.au) under the terms of the Information Memorandum dated 18 May 2018 (Offer). The Minimum Investment is $500,000 and then in increments of $500,000.”

41. At the end of the Application Form was a section headed “Declaration and Signature”, under which the word “Important” appeared in large, bold font. The declarations which the applicant made by signing the Application Form included the following (emphasis added):

“I/We acknowledge that investments in [the Company] are subject to investment risk, including loss of principal invested.

I/We further acknowledge that neither the Company nor any other parties related to the Company guarantee the performance of the investment, or any particular rate of return.

I/We declare that I/we have read the Offer [being the FSO – see paragraph [40] above].

I/We agree to be bound by the terms outlined in the Company’s Constitution.”

Issue of shares pursuant to the FSO

42. Each of the Plaintiffs executed an Application Form. Each of the Plaintiffs thereby gave the declarations and made the acknowledgements set out in that form.

43. Each of the Plaintiffs made subscription payments to the Company, by instalments, and was issued with shares in the Company at a price of $0.6667 per share. According to the Company’s share register, the Company issued:

1. 1,500,000 shares to the First Plaintiff, MG Investment Holdings (Aust) Pty Ltd, on 17 June 2019, and received payments of $600,000 in June 2019 and $400,000 in July 2020;

2. 750,000 shares to the Second Plaintiff, Anderson Property Group Pty Ltd, on 15 November 2018, and received payments of $100,000 in November 2018, $200,000 in April 2019 and $200,000 in October 2019;

3. 750,000 shares to the Third Plaintiff, Mr Michael Gerace, and his wife, Ms Melissa Gerace (the Fourth Plaintiff), as trustees for the M & M Gerace Superannuation Fund on 7 May 2019, and received payments of $300,000 in May 2019 and $200,000 in October 2019;

4. 750,000 shares to the Fifth Plaintiff, Mikmel Pty Ltd (of which Ms Melissa Gerace is the sole director), on 15 November 2018, and received payments of $100,000 in November 2018, $200,000 in April 2019 and $200,000 in September 2020;

5. 750,000 shares to the Sixth Plaintiff, STM Capital Pty Ltd, on 30 May 2019, and received payments of $280,000 in May 2019 and $220,000 in August 2020;

6. 750,000 shares to the Seventh Plaintiff, North Western Holdings Pty Ltd, on 29 October 2018, and received payments of $100,000 in July 2018, $200,000 in April 2019 and $200,000 in October 2019;

7. 750,000 shares to the Eighth Plaintiff, Mr Raffaele (Ralph) Gerace (who is Mr Michael Gerace’s brother), and the Ninth Plaintiff, Ms Cinzia Gerace (who is Mr Ralph Gerace’s wife), as trustees for the R & C Gerace Superannuation Fund on 29 October 2018, and received payments of $100,000 in July 2018, $200,000 in April 2019 and $200,000 in November 2019;

8. 750,000 shares to the Tenth Plaintiff, R & K Developments Pty Ltd, on 29 October 2018, and received payments of $100,000 in July 2018, $200,000 in April 2019 and $200,000 in October 2019;

9. 750,000 shares to the Eleventh Plaintiff, JRCASA Pty Ltd as trustee for the JRCASA Unit Trust, on 29 October 2018, and received payments of $100,000 in July 2018, $200,000 in April 2019 and $200,000 in October 2019;

10. 750,000 shares to the Twelfth Plaintiff, Mr Tony Siciliano, and the Thirteenth Plaintiff, Ms Laureen Siciliano (who is Mr Tony Siciliano’s wife), on 29 October 2018, and received payments of $100,000 in July 2018, $200,000 in April 2019 and $200,000 in October 2019;

11. 750,000 shares to the Fourteenth Plaintiff, Papallo Investments Pty Ltd, on 15 November 2018, and received payments of $100,000 in November 2018, $200,000 in April 2019 and $200,000 in October 2019;

12. 750,000 shares to the Fifteenth Plaintiff, Mr Nick Papallo, and the Sixteenth Plaintiff, Ms Katrina (Cathy) Papallo (who is Mr Michael Gerace’s sister), as trustees for the N & C Papallo Superannuation Fund on 16 April 2019, and received payments of $300,000 in April 2019 and $200,000 in October 2019;

13. 750,000 shares to the Seventeenth Plaintiff, Lomandra Grove Pty Ltd, on 8 March 2019, and received payments of $100,000 in March 2019 and $200,000 in June 2019 (on 15 September 2020, 450,000 of these shares were forfeited, by reason of Lomandra’s failure to pay the balance of the subscription moneys that were due); and

14. 750,000 shares to the Eighteenth Plaintiff, SVVID Pty Ltd, on 19 March 2019, and received payments of $100,000 in March 2019 and $200,000 in July 2019 (on 15 September 2020, 450,000 of these shares were forfeited, by reason of SVVID’s failure to pay the balance of the subscription moneys that were due).

44. The FSO was oversubscribed, with the Company issuing some 34.6 million shares pursuant to the FSO to forty-five subscribers at a price of $0.6667 per share, thereby raising more than $23 million in capital.

Issue of a further 80 million shares to Holdings

45. On 1 July 2018, Mr Carbone, as sole director of the Company, resolved to approve the increase of the Company’s share capital from 20 million ordinary shares to 100 million ordinary shares. The share register of the Company records 80 million shares being issued to Holdings on that date at a price of $0.001 per share.

46. Also on 1 July 2018, the Company entered into an agreement with Aspromonte for the sale of the Homes Domain Name (Sale Agreement). The Sale Agreement was executed by Mr Carbone as the director of each of Aspromonte and the Company. The Sale Agreement provided that, on “Completion” (which was to take place on the date of the Agreement), Aspromonte “shall sell or assign”, and the Company “shall purchase or take an assignment of” the Homes Domain Name for the “Purchase Price”, being an amount of $80,000. Clause 4 of the Sale Agreement provided as follows:

“4.1   [The Company] must pay the Purchase Price to [Aspromonte] on Completion for the Assets.

4.2   [Aspromonte] accepts 80,000,000 fully paid ordinary shares in the capital of [the Company] issued in the name of Homes Holdings Pty Limited as full payment of the Purchase Price.”

47. Also on 1 July 2018, Mr Bruzzano was appointed as a director of the Company.

48. At this time, Holdings was the sole shareholder of the Company. However, in June 2018, the Company had commenced receiving moneys from investors which represented the first instalment of moneys paid under the FSO. In particular, between 14 and 21 June 2018, the Company received payments totalling $400,000 from three investors. Those were the only transactions on the Company’s bank account by 1 July 2018 (such that the Company had a bank balance of $400,000 as at that date). As noted at paragraph [31] above, the amount of $20,000 which was paid by Aspromonte in respect of the initial share issue to Holdings was not deposited into the Company’s bank account until 5 July 2018.

49. The Homes Domain Name was not registered in the name of the Company until 15 February 2019.

Director & Consultant Share Issues

50. The FSO stated that the “Current Shareholding” comprised 100,000,000 shares held by Holdings, and 10,000,000 shares held by “Directors, Consultants & Founders”. The FSO further stated that: “[Holdings] and founding consultants and directors retain 110,000,000 shares for the contribution of considerable money, time, effort, research and development of the Homes.com.au intellectual property etc.” (see paragraph [38] above).

51. In fact, as at the date of the FSO, only 20,000,000 shares were on issue, all of which were held by Holdings.

52. Subsequent to the issue of the FSO, a total of 6.25m shares in the Company were issued to various persons, including directors and employees of the Company, and their associates, as set out below.

53. On 2 October 2018, the Company issued:

1. 1,000,000 shares to the Twelfth Defendant, NLGA Pty Ltd, at a price of $0.001 per share (that is, for a total amount of $1,000). This entity is controlled by Mr Gregory Vale, who was engaged by the Company in May 2018 to provide legal services in relation to the preparation of the FSO and who subsequently became a director of the Company on 24 August 2020;

2. 2,000,000 shares to the Eighteenth Defendant, Ms Vasiliki (Vicky) Bruzzano as trustee for the Queen Bee Trust, at a price of $0.001 per share (that is, for a total amount of $2,000). Ms Vicky Bruzzano is the wife of Mr Bruzzano;

3. 1,000,000 shares to the Twenty-Fourth Defendant, Ms O’Toole, at a price of $0.001 per share (that is, for a total amount of $1,000). At this time, Ms O’Toole was an employee of the Company; and

4. 250,000 shares to the Tenth Defendant, Lotus Family Investments Pty Ltd as trustee for the Lotus Trust, at a price of $0.001 per share (that is, for a total amount of $250). This company is associated with Ms Kitty Lo, who is a partner of Mr Bruzzano’s accountancy firm, Bruzzano & Associates. 200,000 of these shares were subsequently bought back by the Company for $200.

54. On 4 October 2018, the Company issued:

1. 250,000 shares to the Fourth Defendant, Mr Antonio Carbone, the Third Defendant, Mr Adrian Atelj, and Mr Angelo Esposito (who is now deceased) (the Triple-A Syndicate), at a price of $0.001 per share (that is, for a total amount of $250). Mr Antonio Carbone is Mr Carbone’s son and Mr Adrian Atelj is Mr Carbone’s son-in-law; and

2. 50,000 shares to the Thirty-Ninth Defendant, Ms Maria Bruzzano, at a price of $0.001 per share (that is, for a total amount of $50). Ms Maria Bruzzano is the sister of Mr Frank Bruzzano.

55. On 16 October 2018, the Company issued:

1. 750,000 shares to the Twenty-Third Defendant, Bella Vetrina Pty Ltd as trustee for the Jacqueline Israel Family Trust, at a price of $0.02 per share (that is, for a total amount of $15,000). Bella Vetrina is an entity associated with Mr Alan Israel, who was a business associate of Mr Carbone and who subsequently became a director of the Company on 7 December 2020; and

2. 750,000 shares to the Seventeenth Plaintiff, Lomandra, at a price of $0.02 per share (that is, for a total amount of $15,000). Lomandra is an entity associated with Mr Biagio Marra, who was called as a witness by the Plaintiffs. Mr Marra deposed that he was offered these additional shares by Mr Carbone in August 2018 as payment for financial services provided by him to the Company.

56. On 17 June 2019, the Company issued 200,000 shares to the Nineteenth Defendant, Mr Victor (Vic) Lorusso, at a price of $0.001 per share (that is, for a total amount of $200). Mr Lorusso was an employee of the Company, who subsequently became a director on 7 December 2020.

Option Share Issues

57. On 27 November 2020, the Company converted to an unlisted public company and changed its name from “Homes.com.au Pty Ltd” to “Homes.com.au Limited”.

58. In late 2020, Mr Carbone instructed Mr Vale (who was, by that time, a director of the Company) to draft option agreements between the Company and various persons. Mr Vale deposed that Mr Carbone said words to the effect that: “The auditors want the option agreements in writing”. Mr Carbone informed Mr Vale of the persons in whose favour these agreements were to be drafted. Mr Vale deposed as follows:

“I did not know the identity of every person and entity that [Mr Carbone] asked me to issue Option Agreements to, and I was not necessarily privy to their relationship with [Mr Carbone], Homes, or any of the other related parties.”

59. There are a number of factual issues regarding the circumstances in which, the purposes for which, and the time at which, Mr Carbone offered these options to the various counterparties. These matters are addressed below, when dealing with Ground 3 of the oppression claim.

60. On 7 December 2020, Mr Vale sent copies of the executed option deeds to the Company’s external accountants, DLK Advisory, copied to Mr Carbone and Mr Bruzzano (Option Deeds).

61. Each of the Option Deeds was stated to be “made on 2 October 2018”. However, the “Option Commencement Date” was defined as “1 July 2020”, with the “Option Period” being defined as “the period commencing on the Option Commencement Date and ending on the date being one hundred and eighty (180) days after the Option Commencement Date”. The “Subscription Price” specified in each of the Option Agreements was $0.001 per share.

62. Clause 2 of each of the Option Deeds provided as follows:

“2.1   The Company grants to the Grantee an exclusive option exercisable during the Option Period for the Grantee to subscribe for the Shares.

2.2   The Call Option may only be exercised by the Grantee delivering to the Company during the Option Period a Notice of Exercise of Call Option together with the Subscription Price for the Shares.

2.3   On the due exercise of the Option, the Company agrees to issue to the Grantee the Shares at the Subscription Price.

2.4   Within thirty (30) days of the date of the Notice of Exercise of Option, the Company must deliver to the Grantee a share certificate related to the Shares.”

63. Mr Vale, when sending the Option Deeds to DLK Advisory, also attached a “Notice to Exercise Call Option” executed by each of the counterparties.

64. On 10 December 2020, Mr Ben Melin of DLK Advisory responded to Mr Vale’s email attaching the Option Deeds, raising “a couple of quick issues / points”, as follows:

“1)   From our previous discussions, David and my understanding is that these options were granted in October 2018. These deeds are dated 2 October 2018, however, the commencement date per clause 1.1 is 1 July 2020. Is this date correct? If this date is correct, there will be a significant share based payment issue for these investors on the effective grant date (1 July 2020). If you could confirm, that would be great. This is a material issue for the audit and the investor.

2)   The Options Period per clause 1.1 is 180 days from Commencement Date. If these options were granted in July or October 2018, then they have expired without exercising. We understood these to be 2-3 year options.”

65. Mr Vale gave evidence, in cross-examination, that after this email was received, Mr Carbone gave him instructions to amend the Option Deeds in order to address the issues raised by DLK Advisory.

66. On 15 January 2021, Mr Vale sent an email to Ms Maria Bruzzano, copied to Mr Bruzzano, attaching an amended form of the Option Deeds (Amended Option Deeds). This email was forwarded, on the same day, by Mr Bruzzano to Mr Peter Jones (who is the husband of Ms O’Toole).

67. Each of the Amended Option Deeds continued to state that the Deed was “made on 2 October 2018”. However, in each Amended Option Deed, the following changes were made to the definitions on the first page of the document:

1. the “Option Commencement Date”, which was previously 1 July 2020, was changed to “the date of this Deed” (being 2 October 2018);

2. the “Option Period”, which was previously a period of 180 days from the Option Commencement Date (that is, from 2 July 2020 to 27 December 2020), was changed to “the period commencing on the Option Commencement Date and ending on the date being three (3) years after the Option Commencement Date” (that is, from 2 October 2018 to 2 October 2021).

68. Mr Vale gave evidence, in cross-examination, that when these changes were made, none of the Amended Option Deeds was re-executed. Instead, the amended first page, which contained the altered definitions set out above, was inserted as a replacement in the Option Deeds which had already been executed by the Company and the option holders. (Consistently with this evidence, the executed “Notice to Exercise Call Option” which is attached to each of the Amended Option Deeds bears the same date as the corresponding document attached to the Option Deeds which were sent with Mr Vale’s email to DLK Advisory dated 7 December 2020.)

69. According to the Company’s share register, a total of 11,100,000 shares were issued between 14 September 2020 and 4 February 2021 as a result of the exercise of options which had been granted by the Company. Each of the following transactions is recorded as having occurred at a price of $0.001 per share, with the “Transaction Type” being “Option Exercise”.

1. On 14 September 2020:

1. 1,000,000 shares were issued to Mr Michael Gerace and Ms Melissa Gerace as trustees for the M & M Gerace Superannuation Fund, in respect of which an amount of $1,000 was paid;

2. 100,000 shares were issued to Lotus as trustee for the Lotus Trust, in respect of which an amount of $100 was paid;

3. 1,000,000 shares were issued to NLGA, in respect of which an amount of $1,000 was paid;

4. 1,400,000 shares were issued to Ms Vicki Bruzzano as trustee for the Queen Bee Trust, in respect of which an amount of $1,400 was paid;

5. 200,000 shares were issued to Mr Lorusso, in respect of which an amount of $200 was paid; and

6. 450,000 shares were issued to the Triple A Syndicate, in respect of which an amount of $450 was paid; and

7. 1,000,000 shares were issued to the Sixteenth Defendant, Lockerworx Pty Ltd as trustee for the Top-Knot Trust, in respect of which an amount of $1,000 was paid.

2. On 18 September 2020, 1,000,000 shares were issued to the Eleventh Defendant, Mthree Pty Ltd, in respect of which an amount of $1,000 was paid.

3. On 4 February 2021:

1. 800,000 shares were issued to Mr Adrian Atelj, in respect of which an amount of $800 was paid;

2. 800,000 shares were issued to Mr Antonio Carbone, in respect of which an amount of $800 was paid;

3. 500,000 shares were issued to the Fifth Defendant, Cattalini Investments Pty Ltd, in respect of which an amount of $500 was paid;

4. 50,000 shares were issued to the Sixth Defendant, Ms Joanne Tabone, and the Seventh Defendant, Mr Mario Tabone, in respect of which an amount of $50 was paid;

5. 250,000 shares were issued to the Eighth Defendant, Joielle Pty Ltd, in respect of which an amount of $250 was paid;

6. 100,000 shares were issued to the Ninth Defendant, Mr Licio Mallia, in respect of which an amount of $100 was paid;

7. 100,000 shares were issued to the Thirteenth Defendant, Nurse Pty Ltd, in respect of which an amount of $100 was paid;

8. 100,000 shares were issued to the Fourteenth Defendant, Oakdale Superannuation Pty Ltd, in respect of which an amount of $100 was paid;

9. 100,000 shares were issued to the Fifteenth Defendant Mr Rocco Granata, in respect of which an amount of $100 was paid;

10. 700,000 shares were issued to the Seventeenth Defendant, Mr Ugo Morvillo, in respect of which an amount of $700 was paid;

11. 200,000 shares were issued to the Twentieth Defendant, Aljuva Pty Ltd, in respect of which an amount of $200 was paid;

12. 400,000 shares were issued to the Twenty First Defendant, Wanda Holdings Pty Ltd, in respect of which an amount of $400 was paid; and

13. 850,000 shares were issued to the Twenty Second Defendant, Alera Pty Ltd, in respect of which an amount of $850 was paid.

70. As discussed below, when dealing with Ground 3 of the oppression case, there was a dearth of evidence regarding the nature of any relationship between a number of these counterparties and the Company.

Mr Carbone dies

71. On 13 November 2021, Mr Carbone died.

72. On 1 December 2021, Ms Daniela Atelj, Mr Carbone’s daughter, was appointed as a director of the Company.

Whistleblower Complaint and AGM

73. In 2022, a whistleblower complaint was made to the Company’s auditors, Stannards Accountants and Advisers (Whistleblower Complaint). Ms O’Toole stated, in the course of oral submissions, that she and her husband, Mr Peter Jones, made this complaint. The Whistleblower Complaint related to the options, the shares which had been issued pursuant to those options (Option Shares), and the integrity of the Company’s register.

74. On 16 March 2022 and 17 March 2022 respectively, Mr Bruzzano and Mr Vale signed the financial statements of the Company for the year ended 30 June 2021 (FY21 Accounts), thereby declaring that the FY21 Accounts gave a true and fair view of the financial position of the Company as at 30 June 2021 and of its performance for the year ended on that date.

75. The FY21 Accounts recorded that, in FY21, 11,100,000 shares in the Company had been issued as a result of “Options Exercised”, with an amount of $11,100 being paid in respect of those shares. Relevantly, Note 10(c) to the FY21 Accounts stated as follows:

“Options

On 2 October 2018, the Company issued the following options to some existing shareholders:

11,100,000 options to convert for fully paid shares at $0,001 per share.

Option exercise period – 2 October 2019 [sic] to 1 October 2021.

At reporting date, all options had been exercised.”

76. On 26 July 2022, Stannards issued their audit report in respect of the FY21 Accounts, expressing a qualified audit opinion in respect of the Company’s financial statements. The “Basis for Qualified Opinion” was stated to be as follows:

“A complaint has been made against the Company under the Whistleblower provisions of the Corporations Act 2001. We note that the key issue in the complaint entails whether the current register of members/shareholders/option holders of the Company as at 30 June 2021 is accurate and whether options to take up shares in the Company have been properly issued or properly exercised. We have audited the amounts received and banked in respect of share capital and options issued by the Company to its banking records and the corporate registers maintained by the Company for the 2021 financial year as provided to us by its directors and have not detected any anomalies between those records. We have not yet undertaken further audit or investigative procedures to address the complaint. We cannot do so without the provision of information from the Company. Until this occurs and we are in a position to reach a view on the complaint, there is potential uncertainty as to the identity of the Company’s shareholders and option-holders at the date of this report. We are informed that this matter is currently being addressed by the Company and the view reached by the Company is that the Whistleblower complaint is unsubstantiated. We have not however been provided with any information or report from the Company which supports that conclusion.”

77. On 27 July 2022, DLK Advisory sent an email to shareholders of the Company, copied to the directors of the Company. The email was stated to be sent on behalf of the Company Secretary, Mr Vale, and described the material attached to the email as being “information from the Board of Directors of [the Company] pertaining to this evening’s AGM”. The attachments were:

1. a letter to shareholders which was signed by Mr Vale and dated 27 July 2022;

2. a copy of Stannards audit report of 26 July 2022;

3. a copy of the FY21 Accounts; and

4. a copy of the Company’s share register.

78. The letter to shareholders was in three parts.

79. The first part was headed “Whistleblower Disclosure” and stated as follows:

“As you may know, a whistleblower disclosure was made to the Company’s auditor, Stannards Accountants and Advisors (Stannards), regarding the validity of the members’ register and the issuing and exercise of certain share options (Disclosure). The Company’s view is all options (and all shares issued pursuant to the exercise of those options) were validly issued. The Company has not received any notification from any option holders to indicate there are concerns about options issued.

The purpose of this communication is to provide you with an update regarding the Disclosure. The Company recently became aware that the Disclosure made to ASIC and Stannards alleges some form of fraudulent conduct in respect of option agreements executed by the Company. The Company has not had sight of the Disclosure made to ASIC or Stannards and has not been provided with any further details. The Company has reviewed its records and is liaising with Stannards to investigate the Disclosure, and the validity of share options issued by the Company and exercised by option holders.

At this time, the Company has not identified any irregularity following its review of the option agreements and subsequent issue of shares. The Company is of the view that the current register of members (enclosed – Private and Confidential) is accurate.

However, given the uncertainty about the nature of the allegations the subject of the Disclosure, the Company is writing to you, and every shareholder, to invite you to examine the enclosed members’ register and:

Confirm, as far as you are aware, the members’ register is accurate, and your shareholding is properly reflected in the register; or

Provide the Company with details if you identify any inaccuracy in the register or if you think there is any other issue the Company should investigate further.

Please send any responses to [email protected] by 10 August 2022.”

80. It appears that the Company did not receive, as a result of this request, a response from any member indicating that there was any inaccuracy in the Company’s register (see paragraph [87] below).

81. The second part of the letter was headed “Audit Report”. In this section, Mr Vale noted that, due to the Whistleblower Complaint, there had been a delay in receiving the audit report on the FY21 Accounts, and identified that Stannards had, as a result of the Whistleblower Complaint, issued a qualified audit opinion (which was quoted in part). This section of the letter concluded with the following request:

“By way of this correspondence, the Company seeks the shareholders’ views regarding the [Whistleblower Complaint] and will provide that information to Stannards in order to request an unqualified audit report be issued as soon as possible to facilitate the Company’s anticipated capital raising.”

82. The final section of the letter was headed “Homes Holdings Unit Trust Shareholding” and read as follows:

“Following the passing of Pasquale Carbone, the Homes Holdings Unit Trust has decided to reduce its shareholding in the Company by the number of options issued as a gesture of goodwill. A shareholders’ meeting of the Company is required to give effect to this decision. The Company will issue a notice calling a meeting of shareholders to vote on the appropriate resolutions.”

Selective Capital Reduction

83. On 29 November 2022, Ms Daniela Atelj sent an email to the shareholders of the Company, copied to its directors, attaching a notice of the Annual General Meeting of the Company, which was to be held on 21 December 2022 (the 2022 AGM).

84. This email attached a letter to shareholders from the Company Secretary, Mr Vale, which was dated 29 November 2022. This letter referred to the forthcoming 2022 AGM and included, under the heading “Items of Business”, the following statements:

“As a gesture of goodwill and to honour Pasquale Carbone’s memory, Homes Holdings Pty Ltd as trustee for the Homes Holdings Unit Trust (Homes Holdings Pty Limited), in consultation with the Board, proposes to reduce its shareholding in the Company by 11,100,000 shares for nil consideration, which will result in the percentage of Shares held in the Company by the other Shareholders increasing. This will be given effect by the Company through a selective capital reduction and the cancellation of the relevant Shares (Selective Capital Reduction) which requires the following approvals:

• approval from Homes Holdings Pty Limited; and

• approval from the Shareholders at a meeting of Shareholders to the Selective Capital Reduction.

Accordingly, the Company invites the members to pass these resolutions as part of the AGM proceedings.”

85. The Notice of the 2022 AGM set out the text of two resolutions relating to the “Selective Capital Reduction” that was described in Mr Vale’s letter, as follows:

“Resolution 1 – Approval for cancellation of Shares

The purpose of this Resolution is to seek approval from Homes Holdings Pty Limited (ACN 625 795 459) as trustee for Homes Holdings Unit Trust, as required by the Corporations Act, for the cancellation of some of the Shares it holds in the Company as part of the Selective Capital Reduction being undertaken by the Company.

To consider and if thought fit, to pass, the following resolution as a special resolution:

‘That, subject to approval by Shareholders, in accordance with section 256C(2) of the Corporations Act and for all other purposes, approval is given by Homes Holdings Pty Limited as trustee for Homes Holdings Unit Trust to cancel a total of 11,100,000 Shares in the Company held by it for nil consideration’.

Resolution 2 – Approval for a selective capital reduction of Homes Holdings Pty Limited shareholding

To consider, and if thought fit, to pass, with or without amendment, the following resolution as a special resolution:

‘That, in accordance with section 256C(2) of the Corporations Act and for all other purposes, approval is given to the Company to make a selective reduction of capital for nil consideration by cancelling 11,100,000 Shares held by Homes Holdings Pty Limited (ACN 625 795 459) as trustee for Homes Holdings Unit Trust’.”

86. The Notice of the 2022 AGM was accompanied by an Explanatory Statement in relation to the proposed Resolutions. This document repeated statements that Holdings had, in consultation with the directors of the Company, “decided, as a gesture of goodwill, to reduce its shareholding in the Company by 11,100,000 Shares for nil consideration, which will result in the percentage of shares held in the Company by the other Shareholders increasing”. The Explanatory Statement did not contain any reference to the options, or the shares issued on the exercise of the options, or the Whistleblower Complaint.

87. On 17 December 2022, the Company sent a letter to shareholders, advising them that, due to “the time of year, proximity to the holiday period, and difficulties in attendance”, the 2022 AGM was being postponed from 21 December 2022 to 25 January 2023.

88. On 20 December 2022, Ms Daniela Atelj signed the financial statements of the Company for the year ended 30 June 2022 (FY22 Accounts), thereby declaring that the FY22 Accounts gave a true and fair view of the financial position of the Company as at 30 June 2022 and of its performance for the year ended on that date.

89. The Notes to the FY22 Accounts contained reference to:

1. the issue of 11.1m shares in FY21 as the result of “Options Exercised”, in return for payment of $11,100 (Note 11(a));

2. the “Whistleblower Complaint” (Note 23), in respect of which the following statements were made (emphasis added):

“In 2022, the Company was subject to a complaint under the Whistleblower provisions of the Corporations Act 2001. The key issue in the complaint entailed whether the register of members/shareholders/option holders of the Company as at 30 June 2021 was accurate and whether call options to take up shares in the Company had been properly issued or properly exercised. In July, 2022, the Company wrote to all members requesting they advise the Company by no later than 10 August 2022 whether the Members Register was accurate and each member’s respective shareholding was properly reflected in the register, or if details in the Members Register concerning each member’s shareholding were inaccurate, and if so, in what way. As at the date of this report, the Company has not received any responses from the members which suggests that the Members Register is inaccurate or that member’s respective shareholdings are not properly reflected in that register.”

3. the proposed Selective Capital Reduction, with the following statements being made under the heading “Subsequent Events” (Note 20):

“At the Company’s next annual general meeting scheduled for 21 December 2022, it is proposed that shares held by Homes Holdings Pty Ltd as trustee for the Homes Holdings Unit Trust, be reduced by 11,100,000 for $nil consideration, by a selective capital reduction via cancellation of shares. This will result in a reduction of shares on issue from 150,000,000 shares to 138,900,000 shares. It will reduce the shareholding of Homes Holdings Unit Trust from 100,000,000 shares to 88,900,000 shares.”

90. On 20 December 2022, being the same day as Ms Atelj signed the FY22 Accounts, Stannard issued their audit report in respect of the FY22 Accounts, which provided an unqualified audit opinion. This report included the following statements under the heading “Whistleblower Complaint”:

“Without making qualification to this report, we refer to Note 23 of the financial report which sets out the steps undertaken by the Company’s directors to address a complaint made against the Company under the Whistleblower provisions of the Corporations Act 2001. The key issue in the complaint entailed whether the register of members/shareholders/optionholders of the Company as at 30 June 2021 was accurate and whether call options to take up shares in the Company had been properly issued and/or properly exercised. We have audited the amounts received and banked in respect of share capital and options issued by the Company to its banking records and the corporate registers maintained by the Company. We did not detect any anomalies in the register and amounts received and banked. We believe the procedures undertaken by the Company as set out in Note 23 to the financial report are appropriate in terms of dealing with the Whistleblower complaint.”

91. On 25 January 2023, the 2022 AGM was held. The minutes of this meeting record that when the Chairperson (Ms Daniela Atelj) proposed the resolutions for the Selective Capital Reduction, Mr Peter Jones “requested answers to questions relevant to the resolutions he had provided to the Company prior to resolutions being put to the vote” and that Mr Vale “provided answers to those questions”. The minutes also record that a “disruption then occurred as it was discovered that Mr Jones had been recording the Meeting on his mobile device” and that Mr Jones was requested to leave the meeting, which he did. The resolutions were then put to a vote.

92. The first resolution was passed by Holdings, and the second resolution was passed by more than 75% of the shareholders of the Company.

93. As a result, on 25 January 2023, the shareholding of Holdings in the Company was reduced from 100,000,000 shares to 88,900,000 shares.

Further capital reduction

94. On 20 November 2023, Ms Atelj sent an email to shareholders of the Company, attaching a Notice of the Annual General Meeting to be held on 14 December 2023 (2023 AGM). The Notice was signed by Mr Vale on behalf of the directors of the Company.

95. The Notice identified that the business of the 2023 AGM included the following matters (emphasis in original):

“3. Resolutions

Shareholders to vote on the following resolutions in respect of the proposed Selective Capital Reduction of the Company and the cancellation of the relevant shares currently held by Homes Holdings Pty Limited (ACN 625 795 459) as trustee for Homes Holdings Unit Trust (Homes Holdings Pty Limited).

Resolution 1 – Approval for cancellation of Shares

The purpose of this Resolution is to seek approval from Homes Holdings Pty Limited, as required by the Corporations Act, for the cancellation of some of the Shares it holds in the Company as part of the Selective Capital Reduction being undertaken by the Company.

To consider and if thought fit, to pass, the following resolution as a special resolution:

‘That, subject to approval by Shareholders, in accordance with section 256C(2) of the Corporations Act and for all other purposes, approval is given by Homes Holdings Pty Limited (ACN 625 795 459) as trustee for Homes Holdings Unit Trust to cancel a total of 70,000,000 Shares in the Company held by it for nil consideration.’

Resolution 2 – Approval for a selective capital reduction of Homes Holdings Pty Limited shareholding

To consider and if thought fit, to pass, with or without amendment, the following resolution as a special resolution:

‘That, in accordance with section 256C(2) of the Corporations Act and for all other purposes, approval is given to the Company to make a selective reduction of capital for nil consideration by cancelling 70000,00 [sic] Shares held by Homes Holdings Pty Limited (ACN 625 795 459) as trustee for Homes Holdings Unit Trust’.”

96. The Notice of the 2023 AGM was accompanied by an Explanatory Statement, which provided the following explanation for this further proposed capital reduction:

“[The Company] is currently in an exciting phase of its startup growth journey, actively pursuing a potential capital raise in the short term. However, the current start-up market presents challenges to [the Company’s] growth trajectory. The share market has recently seen a 12 month low, with technology startups facing an 80% to 90% valuation reduction. Investors, influenced by economic and interest rate pressures, have become more discerning and cautious, making it increasingly challenging for shareholders to secure support.

To help facilitate a capital raise by increasing the attractiveness of [the Company] to potential investors, Homes Holdings Pty Limited has offered to reduce its shareholding in the Company (namely the shares held by the Carbone Family) by 70,000,000 Shares for nil consideration and the Board proposes to accept that offer. This will result in the percentage of Shares held in the Company by the other Shareholders increasing and be given effect by the Company through a selective capital reduction and cancellation of some of Homes Holdings Pty Limited’s Shares (Selective Capital Reduction).”

97. The directors of the Company unanimously recommended that shareholders vote in favour of the resolutions. The Explanatory Statement recorded that:

“The Directors believe that the Selective Capital Reduction as proposed is fair and reasonable to Shareholders for the following reasons:

the Selective Capital Reduction will only result in the cancellation of some of the Shares held by Homes Holdings Pty Limited;

the Selective Capital Reduction will not have a negative financial impact on the Company as no consideration is payable to Homes Holdings Pty Limited; and

the respective shareholding of each Shareholder will increase as a result of the Selective Capital Reduction.

The Directors do not consider that there are any material disadvantages to the Company undertaking the Selective Capital Reduction.”

98. The 2023 AGM was held on 14 December 2023 and both resolutions were passed, with Holdings voting in favour of the first resolution, and more than 75% of the shareholders of the Company voting in favour of the second resolution.

99. As a result, on 14 December 2023, the shareholding of Holdings in the Company was further reduced from 88,900,000 shares to 18,900,000 shares.

Sale of the Homes Domain and Change of Name

100. On 16 May 2025, the Company issued a Notice of an Extraordinary General Meeting to be held on 10 June 2025 at 11:00am (2025 EGM).

101. The Notice of the 2025 EGM stated that:

1. “The Company has entered into an agreement with CoStar UK Limited on 12 May 2025 (Agreement) to sell the domain names ‘homes.com.au’ and ‘homes.au’ and the Australian registered trade mark number 1958436”;

2. “Under the Agreement, the Company will be paid A$22,800,000 (Purchase Price) for the domain names and trade mark”; and

3. “Subject to satisfaction of certain conditions, completion of the Agreement is currently scheduled for 26 June 2025.”

102. The Notice described the business of the 2025 EGM as follows (emphasis in original):

“1.   Resolution 1 – Change of Company name

To consider, and if thought fit, to pass, with or without amendment, the following resolution as a special resolution:

‘That, for the purposes of section 157(1)(a) of the Corporations Act 2001 (Cth) and for all other purposes, to adopt the Company’s name change from ‘Homes.com.au Limited’ to ‘Quantra Group Limited’, effective from when ASIC alters the details of the Company’s registration.’

2.   Resolution 2 – Amendments to the Company’s Constitution

To consider, and if thought fit, to pass, with or without amendment, the following resolution as a special resolution:

‘That, for the purposes of section 136(2) of the Corporations Act 2001 (Cth) and for all other purposes, the Constitution of the Company be amended to reflect the change of name of the Company to ‘Quantra Group Limited’ by changing all references to the name of the Company to Quantra Group Limited, effective from when ASIC alters the details of the Company’s registration’.”

103. The 2025 EGM was held on 10 June 2025. Each of the resolutions was put to a vote and 100% of shareholders voted in favour of both resolutions.

104. There was a factual dispute in the affidavit evidence regarding what was said at the 2025 EGM and, in particular, whether certain statements were made regarding a proposal for the Company to invest in a “fintech” venture. It is unnecessary to address this dispute because, as noted below, the Plaintiffs confirmed in closing address that they did not press the ground of oppressive conduct relating to the 2025 EGM.

105. On 11 June 2025, the Company changed its name from “Homes.com.au Limited” to “Quantra Group Limited”.

Proceeding is commenced

106. This proceeding was commenced on 30 June 2025, when the Originating Process was filed in Court and orders were made by Black J for short service.

107. On 2 July 2025, orders were made by Brereton J for the matter to be heard on an expedited basis over two days on 2 and 3 September 2025, and the Company gave the following undertaking to the Court:

“Upon the Plaintiffs, by their counsel, each giving to the Court the usual undertaking as to damages, the First Defendant, by its counsel, undertakes to the Court, until 4pm on Friday, 5 September 2025, on a without admissions basis:

a.   the First Defendant, without the written consent of the Plaintiffs (which consent may be provided by the Plaintiffs’ solicitors) will not:

i.   issue any further shares or options to acquire shares or take any steps to cancel, forfeit, distribute or return or otherwise reduce or alter the existing share capital in the First Defendant;

ii.   declare or pay any dividend to its shareholders;

iii. pay any loans owed to a closely related party of any member of the key management personnel of Homes as those terms are defined by section 9 of the Corporations Act 2001 (Cth) or a related party within the meaning of section 228 of the Corporations Act 2001 (Cth); or

iv.   make any payment that exceeds $100,000 in a single amount or by way of multiple payments totalling $100,000 in a period of less than 30 days to the same beneficiary.”

108. In addition, an order was made, by consent, for the Company to provide a copy of its register of members to the Plaintiffs’ solicitors by 4pm on 7 July 2025. This was done.

Issues for Determination

109. The Plaintiffs identified, in opening submissions, five grounds of oppressive conduct as follows:

1. Ground 1: the issuing of two tranches (totalling approximately 100 million) of shares in the Company to Holdings for inadequate consideration;

2. Ground 2: the issuing of 6,250,000 shares in the Company to directors and associates of the Company for inadequate consideration;

3. Ground 3: the issuing of 11,100,000 shares in the Company to various option holders who were associated with the Company or its directors for inadequate consideration;

4. Ground 4: a proposal by the Company to undertake a future type of business inconsistent with the stated purpose for which the Company was founded; and

5. Ground 5: the Company failing to provide its register of members to the Plaintiffs despite their requests.

110. In opening submissions, the Plaintiffs acknowledged that, following the commencement of the proceedings, a copy of the Company’s share register had been provided to them, such that the only remaining issue in respect of Ground 5 was an issue of costs.

111. In closing address, the Plaintiffs confirmed that Ground 4 was not pressed.

112. Accordingly, the only substantive issues remaining for determination are Grounds 1 to 3, each of which relates to the various “Undervalued Share Issues”.

113. Those grounds do not raise, and the Amended Points of Claim do not make, any allegation that the Company engaged in misleading or deceptive conduct by reason of any statements made in the FSO or any statements made by Mr Carbone to the Plaintiffs, or that the Plaintiffs had relied on any such statements in subscribing for shares in the Company. Allegations to that effect are made in the Commercial List Proceedings.

114. The Amended Points of Claim do include (at paragraphs [87(c)] and [88(b)]) allegations that the Holdings Share Issues were contrary to the interests of members of the Company as a whole, or oppressive to, or unfairly prejudicial to, or unfairly discriminatory against, the Plaintiffs, including because the Holdings Share Issues:

“were not disclosed to the plaintiffs by the FSO (in so far as the price at which the shares would be issued to [Holdings] would be or was $0.001 per share)”.

115. In the Defence to the Amended Points of Claim (at paragraph [20(b)]), the Company pleaded as follows in response to allegation of non-disclosure regarding the Holdings Share Issues:

“[the Company] says that at the time investors were asked to subscribe for shares in [the Company] they were informed that at the completion of the offer there would be a total of 140 million shares issued, 100 million of which would be held by [Holdings].”

116. In addition, the Company pleaded as follows (at paragraph [27(a)]) in response to the Plaintiffs’ allegations concerning the Director & Consultant Share Issues:

“[the Company] says that at the time investors were asked to subscribe for shares in [the Company] they were informed that 10,000,000 shares would be issued to directors, consultants and founders.”

117. In closing address, I raised with Senior Counsel for the Plaintiffs whether it was necessary to determine any issue as to whether misrepresentations were made (either by the FSO or by Mr Carbone on behalf of the Company) prior to their investment in the Company. I have set the exchange out below, at some length, in order to indicate how the case was put and the issues that the Court was called upon to resolve:

“[SENIOR COUNSEL FOR PLAINTIFFS]: If everybody was putting in on the same basis, [.001] cent per share, Mr Carbone could give them to whoever he likes because there'd be no discrimination between any class or member in those circumstances.  But ‑ this is the nub of the case, your Honour ‑ where what's being done is that share issues are being made on different terms between the founder or others, and there's not full and adequate disclosure of that, that's what makes it unfair.  …

…

HIS HONOUR: The other issue I just wanted to raise at the start, just so I understand it, because I'm conscious of the other litigation, is when you say whether it's disclosed, do I need to determine questions of the adequacy of the information memorandum?  It seems to be the other case [namely, the Commercial List Proceeding].  Your complaint's all about the conduct that occurs after the share issues.  Your case isn't that the company engaged in oppressive conduct by the representations that it made to prospective shareholders.

[SENIOR COUNSEL FOR PLAINTIFFS]: That's correct, your Honour, and I anticipated that would be put against me because it underpinned a number of the objections that were made in cross‑examination.

HIS HONOUR: It's really I just want to understand what I need to resolve‑‑

[SENIOR COUNSEL FOR PLAINTIFFS]: It is relevant, your Honour, for this reason:  because true, we complain about the share distributions, one, two and three, whatever they are.  In response to that, the defence that is raised, or the response that is raised, is that certain conduct cannot be described as oppressive, or if it is, your Honour would otherwise not grant relief in respect of it because the plaintiffs should be taken to have consented to the very transactions about which we complain and to the unfairness of which we now complain by reason of disclosures in the FSO or subsequently conduct at EGMs with a cancellation.

HIS HONOUR: It probably goes instead to that other issue that you were addressing and I was raising, which is whether the plaintiffs were objectively ‑ because that's the test in terms of oppressiveness ‑ whether objectively the material they were provided with gave them sufficient information regarding what the structure was going to be.

[SENIOR COUNSEL FOR PLAINTIFFS]: It goes both to whether there's oppressive conduct, because if somebody had written, for instance, in the FSO, ‘By the way, everyone, whilst you're being asked to put in at 66 cents a share, please note the 80 million or 100 million or 110 million shares that have been issued to the insiders were issued at .001 cent per share’ if that was in black and white, that would be a disclosure which would have some bearing both on the characterisation of the conduct as whether oppressive or not, or whether any relief should be granted.  Your Honour will, unfortunately or fortunately, need to grapple with the evidence about the terms of the FSO and, in particular, those two pages where the shareholding and the pro forma balance sheets to assess whether‑‑

HIS HONOUR: Sorry, that's separate from any issue, and I don't know to what extent this is pleaded in the other proceeding.  It doesn't seem that there's any issue you relying on of any oral representations made.  It's really what the‑‑

[SENIOR COUNSEL FOR PLAINTIFFS]: No, that's correct, your Honour.

HIS HONOUR: ‑‑document conveys‑‑

[SENIOR COUNSEL FOR PLAINTIFFS]: What the document says‑‑

HIS HONOUR: ‑‑separate from what was said at any meeting.

[SENIOR COUNSEL FOR PLAINTIFFS]: Because the defendant says the plaintiffs ‑ and there was cross‑examination about this ‑ were told that that's the price at which the shares were being offered and, accordingly, they're unable to complain.”

118. It is undesirable that, unless necessary to resolve this matter, I express any view regarding factual matters which are in dispute in the Commercial List Proceedings.

119. For those reasons, I have focussed below on the pleaded allegations concerning the “Undervalued Share Issues” and have, in determining those allegations, considered the extent of the disclosure made in the FSO regarding those share issues.

120. I have not, however, addressed various other factual issues which arose on the affidavit evidence regarding the dealings by the Plaintiffs with Mr Carbone prior to their investment in the FSO, or regarding the matters upon which the Plaintiffs relied in deciding to subscribe for shares in the Company on the terms of the FSO.

121. In respect of the Option Share Issues, the Company did not advance an allegation that there was any disclosure to shareholders, either in the FSO or at any time prior to the exercise of the options, of the existence of the options. However, the Company pleaded the steps which were taken following the receipt of the Whistleblower Complaint, including the resolutions for the Selective Capital Reduction, which were proposed by the Company and approved by its shareholders, and pleaded that:

“any purported dilution or preferential treatment of Option Holders was negated by reason of the subsequent cancellation of 11,100,000 shares held by [Holdings].”

122. In opening written submissions, the Company referred to the events leading up to the Selective Capital Reduction and submitted that:

“It follows that the plaintiffs have acquiesced in the approach taken by the Company in connection with the options, that is to accept the offer of Homes Holdings to reduce its interest in proportion to the options to ensure that each shareholder is placed back in ‘the same equity position just prior to the share issue via options’. The effect of their acquiescence is that it is now not open to them to complain of oppression…”

123. It is therefore necessary, when addressing the issue of shares pursuant to the exercise of options and, in particular, the question of relief for any such oppressive conduct, to deal with the steps taken by the Company following the Whistleblower Complaint, the disclosures made to shareholders, and the resolutions passed by the shareholders to reduce the Company’s capital by cancelling 11,100,000 of the shares held by Holdings.

Relevant Principles

124. Section 232 of the Act provides as follows:

The Court may make an order under section 233 if:

(a) the conduct of a company’s affairs; or

(b) an actual or proposed act or omission by or on behalf of a company; or

(c) a resolution, or a proposed resolution, of members or a class of members of a company;

is either:

(d) contrary to the interests of the members as a whole; or

(e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity.

For the purposes of this Part, a person to whom a share in the company has been transmitted by will or by operation of law is taken to be a member of the company

125. The language and history of ss 232 and 233 indicate that these provisions are to be read broadly, and any judge-made limitations are to be approached with caution: Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 at [72] per French CJ.

126. A member is entitled to rely on conduct engaged in prior to their becoming a member. Being a member at the commencement of the oppression proceeding is sufficient to establish standing: Strategic Management Australia AFL Pty Limited v Precision Sports & Entertainment Group Pty Ltd [2016] VSC 303 at [153] (Sifris J); Trafalgar West Investments Pty Ltd v Superior Lawns Australia Pty Ltd (No 6) [2014] WASC 278 at [58]-[86] (Kenneth Martin J).

Section 232(d)

127. In New South Wales Rugby League Ltd v Wayde (1985) 1 NSWLR 86 at 96, the Court of Appeal (Street CJ, Kirby P, Hope JA) observed, in relation to the predecessor provision of s 232, that:

“it seems difficult to place any meaning on ‘the interests of the
members as a whole’ that differs from ‘the benefit of the company as a
whole’. The only legitimate interests of the members would be their interests
as corporators. As corporators, considered as a whole, their legitimate
interests must be circumscribed by, and found within, the constituting
documents of the company.”

128. Their Honours cautioned (at 102) that:

“Whilst it is true that the Code should be given a beneficial construction and not unduly narrowed by judicial decisions, the terms of s 320 must not lead courts into assuming the management of corporations, substituting their decisions and assessments for those of directors, who can be expected to have much greater knowledge and more time and expertise at their disposal to evaluate the best interests of the members of the corporation as a whole.”

129. In Australian Institute of Fitness Pty Ltd v Australian Institute of Fitness (Vic/Tas) Pty Ltd (No 3) [2015] NSWSC 1639 at [84], Sackar J observed (citing Goozee v Graphic World Group Holdings Pty Ltd [2002] NSWSC 640 at [41]-[44] per Barrett J) that:

1. the test whether conduct is contrary to the interests of members as a whole is objective, and is to be determined by reference to whether the conduct adheres to accepted standards of corporate behaviour or is in accordance with how reasonable directors would act in attending to the affairs of the company; and

2. the decision of what is contrary to the interests of the members as a whole directs attention not to the interests of the persons who are, in fact, the members for the time being, but rather on the interests of an individual hypothetical member.

130. In Exton v Extons Pty Ltd (2017) 53 VR 520; [2017] VSC 14 at [39], Sifris J observed, from a review of the authorities, that “the better view is that s 232(d) is separate and distinct from s 232(e) and that a breach may not necessarily involve commercial unfairness” (see also Turnbull v National Roads and Motorists’ Association Ltd [2004] NSWSC 577 at [32] per Campbell J).

Section 232(e)

131. In Tzavaras v Tzavaras & Sons Pty Ltd [2023] NSWCA 168 at [74], the Court of Appeal (Gleeson and Adamson JJA, Griffiths AJA) adopted the following summary of the relevant principles by Stevenson J in Munsterman v Tayward; Rayward v Munstermann [2017] NSWSC 133 at [22] (citations omitted):

“(1) The test of oppression is an objective one of unfairness …

(2) The court must look to determine whether on the balance of probabilities the objective commercial bystander would be satisfied that the affairs of the company were being conducted unfairly …

(3) A director may act oppressively in the sense relevant to the operation of s 232 and yet not breach any fiduciary or other duty owed as a director …

(4) Conduct of a company’s affairs may be oppressive even though the conduct is otherwise lawful …

(5) Conduct that has the effect of paralysing a company in the operation of its business is properly characterised as conduct contrary to the interests of the members as a whole …

(6) A shareholder of 50 per cent of the shares in a company can seek relief for oppressive conduct because they do not have control in the form of power to prevent the oppression, particularly where individual strong arm tactics are used …

(7) The court must formulate an opinion about oppression or unfair prejudice as at the date of the institution of proceedings and the issue of relief under s 233 must be determined as at the date of the hearing …

(8) The discretion under s 233 is wide as to the appropriate remedy …

(9) The nature of the remedy chosen by the court under s 233 will be dependent upon the conclusions drawn by the court as to the type of oppression with which the court is dealing and the court will choose the remedy which is least intrusive …

(10) The aim of any order under s 233 must be to put an end to the oppression …

(11) The court should only look to wind up an otherwise solvent company as a ‘last resort’ …

(12) As a remedy for oppression, an oppressor can be ordered to sell their shares to the oppressed party …

(13) If an order is to be made for the purchase of shares under s 233 the task of the court is to fix a price that represents a fair value in all the circumstances …”

132. The Plaintiffs acknowledged that they bear the onus of establishing unfairness (citing Shelton v National Roads and Motorists Association Ltd [2004] FCA 1393 at [24] (Tamberlin J)).

133. In BBHF Pty Ltd v SleepingDuck Pty Ltd & Ors [2024] VSC 320 at [446], Delany J said that:

“As stated by Young JA, with whom Allsop P and Macfarlan JA relevantly agreed in Crawley v Short ([2009] NSWCA 410 at [155]), if there is acquiescence in a course of conduct, it is difficult to maintain that conduct was oppressive. That is because the thrust of the oppression remedy is to remedy oppression that exists at the date of the hearing.”

134. In Falkingham v Peninsula Kingswood Country Golf Club [2015] VSCA 16 at [86]-[88], Whelan JA (with whom Warren CJ and Beach JA agreed) made the following observations regarding Young JA’s reasoning in Crawley v Short [2009] NSWCA 155:

247. Thirdly, Mr Michael Gerace deposed that Mr Carbone “offer[ed] me an option to acquire shares at $0.001 sometime around my appointment as a director for my services as a director, in lieu of remuneration and I accepted that offer”. Mr Michael Gerace was appointed a director of the Company in 2020. It was put to him in cross-examination that there was an oral option agreement in around 2018, which preceded the written agreement, but he denied that this was the case:

“Q.  You understand, don't you, that this option deed, whilst it was executed [in] 2020, was in respect of an offer of options that was made to you by Mr Pat Carbone back in 2018; correct?

A.  It wasn't 2018, no.

Q.  I want to suggest to you that that was when it was suggested to you that you could have these options; do you agree with that?

A.  This offer was based on, wholly and solely, that I become a director on the board and I was asked in 2020, on numerous occasions by Mr Carbone.  At the time I refused to become a director on the board because I didn't have the time, and eventually he wore me down and convinced me, ‘I need you on the board’ and I agreed, and at the time he'd mentioned that option, it was never offered to me.  It was a monetary value of 10,000, and later on he changed it to options.

Q.  And you agreed to that?

A.  I did.

Q.  I want to suggest to you that part of the reason why you thought it was appropriate was because you were providing some services and some assistance to [Homes] and this was the way in which you were going to be recognised or rewarded; do you agree with that?

A.  At the time, yes.”

249. There was no evidence regarding Mr Carbone’s discussions with any of the other persons who received options, including regarding the reason for the issue of those options. There was no evidence as to any relationship between the following option holders and the Company who, instead, appear to have had a personal relationship with Mr Carbone:

1. Mr Adrian Atelj (who is Mr Carbone’s son-in-law);

2. Mr Antonio Carbone (who is Mr Carbone’s son);

3. Cattalini Investments Pty Ltd – this entity is associated with Ms Anna Cattalini, who is Mr Carbone’s sister;

4. Alera Pty Ltd – Mr Bruzzano gave evidence that the director of this entity is Mr Frank Cutri, who was Mr Carbone’s solicitor;

5. Joielle Pty Ltd – the directors of this entity are Mr Frank Carbone (who is Mr Carbone’s brother) and Mr Georgina Carbone;

6. Mthree Pty Ltd – the director of this entity is Mr Michael Miroshnik. Mr Bruzzano gave evidence that he introduced Mr Miroshnik to Mr Carbone for the purpose of investment in some of Mr Carbone’s property developments;

7. Aljuva Pty Ltd – Mr Bruzzano gave evidence that the director of this entity, Mr Robert Canceri, was Mr Carbone’s surveyor and was involved in property developments with Mr Carbone;

8. Wanda Holdings Pty Ltd – the director of this entity is Mr Anthony Doumit. Mr Bruzzano gave evidence that he could not recall whether he had been introduced to Mr Doumit by Mr Carbone, but that he “may have” spoken with him;

9. Mr Ugo Morvillo – Mr Bruzzano gave evidence that Mr Morvillo worked at a real estate firm called Citywide Commercial, which had a role in projects undertaken by Mr Carbone;

10. Nurse Pty Ltd – neither Mr Bruzzano nor Mr Vale could recall any dealings with this entity. The Plaintiffs pleaded, and the Company admitted, that the director of this entity was Mr Roy Spagnolo, who was a personal friend of Mr Carbone;

11. Oakdale Superannuation Pty Ltd – the directors of this entity are Mr Pasquale (Pat) Sergi and Ms Anna Sergi. Neither Mr Bruzzano nor Mr Vale could recall meeting Mr Sergi. The Plaintiffs pleaded, and the Company admitted, that Mr Pat Sergi and Ms Anna Sergi were personal friends of Mr Carbone; and

12. Ms Joanne Tabone, Mr Mario Tabone, Mr Licio Millia and Mr Rocco Granata – neither Mr Bruzzano nor Mr Vale could recall meeting any of these persons. The Plaintiffs pleaded, and the Company admitted, that each of them was a personal friend of Mr Carbone.

250. In cross-examination, Mr Bruzzano gave the following evidence regarding the process by which the identity of the option holders was determined:

“Q.  In any event, did the board ever meet and formally resolve for the issue of options in the company to all of the parties that you have identified?

A.  Well, the board is [Mr Carbone] and I at the time.  [Mr Carbone] would make decisions, and if I agreed with him, he'd simply proceed with it, and he would have conversations with [Mr Vale], and they'd get the paperwork in order.

…

Q.  Before [Mr Vale] was instructed, did you and [Mr Carbone] have any discussion in which the two of you considered the identity of each of these persons to whom options were going to be granted, and the justification or explanation that was being relied upon by the company to justify the grant of options?  Did you go through each of these persons with this‑‑

A.  We didn't come up with these people together.  [Mr Carbone] had provided this list.  He had decided that these were the people that required options, and he advised me of it, and we simply agreed.”

251. Mr Bruzzano acknowledged that there was no document recording any discussion by the Board regarding the respective entitlements or qualifications for entitlements of the option grantees.

Authenticity of option agreements?

252. Given Mr Michael Gerace’s evidence that Mr Carbone did not offer him any options until 2020, and given that there is no written evidence of any option agreement prior to late 2020, there is good reason to doubt that the option agreements were entered in October 2018 (as stated in the Option Deeds), even if there had been some discussions between Mr Carbone and each of Mr Bruzzano and Mr Vale by that date.

253. Further, according to Mr Bruzzano’s and Mr Vale’s accounts in their affidavits of their conversations with Mr Carbone regarding these options, there was no discussion regarding the terms of such options. It is difficult to see how, in those circumstances, there could have been any binding agreement until the written deeds were executed in late 2020.

254. Additional irregularities about the Option Deeds which were identified in the Plaintiffs’ opening written submissions, and were not addressed by the Company in its submissions or evidence, include that:

1. there is an Option Deed with the Eleventh Defendant, Mthree Pty Ltd, which is purportedly dated 2 October 2018, but this entity was only incorporated on 12 March 2020; and

2. there is an Option Deed with Mr Angelo Esposito, which appears on its face to be signed by Mr Esposito in September 2020, but Mr Esposito had died on 31 August 2019.

255. Those matters give rise to significant doubt as to whether the Option Deeds record, as they purport, the terms of arrangements that had been reached in 2018 and were subsequently documented two years later.

256. It is unnecessary to resolve these issues, given the findings made below.

Is oppression established?

257. Even if those issues regarding the authenticity of the Amended Option Deeds were put to one side, it is difficult to discern, from the terms of those agreements, the commercial rationale for the Company to enter into a raft of option agreements for the issue of 11,100,000 shares at $0.001 per share, in circumstances where the Company’s offer of 30,000,000 shares at $0.6667 per share had been oversubscribed.

258. The Amended Option Deeds do not contain, as one would expect, any terms requiring the option holder to provide services to the Company for a certain period of time, or any performance hurdles, or any other conditions for the exercise of the options (other than that the option be exercised by the provision of a notice of exercise within the defined Option Period, together with the payment of the Subscription Price of $0.001 per share).

259. According to the terms of the Amended Option Deeds (and assuming their authenticity), each of the option holders was, on 2 October 2018, provided with an option, which could be exercised any time in the three-year period commencing on that date, by proffering a payment of $0.001 per share, without any obligation on the grantee to provide any services to the Company, of any type, for any period of time.

260. Further, whereas there was disclosure in the FSO regarding the issue of shares to directors and consultants for their services (and disclosure, via the Statement of Financial Position in the FSO, of the amount of capital paid in return for the issue of shares to those persons and Holdings), there was no disclosure in the FSO that any options would or might be issued, let alone regarding the number of shares for which options would be issued, or the strike price, or the persons (or types of person) to whom those options would be issued, or the rationale for the issue of options.

261. Having regard to those matters, I am satisfied that the issue of the 11,100,000 Option Shares at a price of $0.001 per share was oppressive to, unfairly prejudicial to, or unfairly discriminatory against the Plaintiffs, each of whom subscribed for shares in the Company pursuant to the FSO at a price of $0.6667 per share. In particular, I am satisfied that this conduct involved commercial unfairness, given that the issue of the Option Shares:

1. diluted the value of the Plaintiffs’ shareholding in the Company;

2. provided preferential treatment to the option holders (a number of whom appear to be related to or associates of Mr Carbone) who were able to acquire shares at a price 1/666^th of the amount paid by the Plaintiffs;

3. did not result in any discernible benefit to the Company or have any reasonable commercial justification; and

4. was not the subject of any disclosure to shareholders (until after the Whistleblower Complaint was made).

262. In circumstances where I have determined that the pleaded claim for oppression has been established in respect of the Option Shares, it is unnecessary to consider any of the other various factual matters raised by Ms O’Toole regarding the circumstances in which those shares were issued (particularly since, as noted above, those matters were not put, in cross-examination, to the directors of the Company who gave evidence in the proceeding, namely, Mr Michael Gerace, Mr Vale and Mr Bruzzano).

Continuing Effect?

263. The Company contended that, by reason of the Selective Capital Reduction, any oppressive conduct in issuing the Option Shares did not have any continuing effect.

264. A single instance of oppression is sufficient to constitute a basis for relief: Spence v Rigging Rentals WA Pty Ltd [2015] FCA 1158 at [137] (Gilmour J). Further, it is not necessary that the oppressive conduct continue to exist at the time of the trial: Strategic Management Australia AFL at [147] (Sifris J). However, in order to invoke the exercise of the court's discretion, the single past act would need to be so serious as to equate to a continuing present state of affairs: Re Norvabron Pty Ltd (No 2) (1986) 11 ACLR 279 at 289 (Derrington J).

265. Consistent with the principle that the purpose of relief is to terminate the effects of oppression, relief will generally be inappropriate as a matter of discretion if there is no continuing oppression: see, for example, Backoffice Investments at [182].

266. As set out at paragraphs [82]-[86] above, the Company informed shareholders, after the Whistleblower Complaint was made in respect of the 11,100,000 Option Shares, that Holdings had “decided to reduce its shareholding in the Company by the number of options issued as a gesture of goodwill”. Resolutions to cancel 11,100,000 of Holdings’ shares in the Company for nil consideration, and to reduce the capital of the Company by 11,100,000 shares, were subsequently passed by Holdings and by more than 75% of the Company’s shareholders.

267. The Company tendered signed proxies evidencing that most of the Plaintiffs voted in favour of the Selective Capital Reduction (and there was no evidence that any of the remainder voted against it).

268. The Plaintiffs submitted that there was no statement, in the Explanatory Statement which was provided to shareholders in relation to the resolutions, that the cancellation of 11,100,000 shares in the Company which were held by Holdings was proposed as a means of addressing concerns regarding the issue of the 11,100,000 Option Shares. The lack of any such express connection between those matters in the Explanatory Statement appears to have resulted from legal advice received by the Company. Mr Vale gave the following evidence in cross-examination concerning this Explanatory Statement:

“Q.  Do you know who drafted it?

A.  Hamilton Locke.

Q.  Did you read it before signing it?

A.  Yes.

Q.  Do you agree that in the explanatory statement, at least, there is no attempt to draw to the shareholders' attention any connection between the cancellation of shares and the controversy about the options?

A.  I agree with that other than the fact that it's for an identical number of shares and options.

Q.  If that connection between the two events, that is the cancellation of the shares and the existing controversy about the options, was what laid behind this proposal, is there any reason you can think of or recall as to why you did not take steps to ensure that explanation was given to the shareholders?  Why it wasn't included in that document?

A.  That was the outcome of the legal advice from Hamilton Locke.”

269. While no such express disclosure was made in the Explanatory Statement, I am satisfied that the Plaintiffs were aware, when voting in favour of the resolutions, that the cancellation of 11,100,000 shares held by Holdings was linked to, and proposed as a means of dealing with, the questions which had been raised regarding the 11,100,000 Option Shares, having regard to the following matters.

270. First, the proposal to reduce the number of shares held by Holdings was initially raised in a letter to shareholders dated 27 July 2022. This letter referred to the Whistleblower Complaint, and expressed the Company’s view that all options were “validly issued”, but stated that “as a gesture of goodwill”, Holdings had determined to reduce its shareholding in the Company “by the number of options issued” (emphasis added) (see paragraphs [77]-[82] above).

271. Accordingly, there was an exact correspondence, which was drawn to the shareholders’ attention, between the number of Option Shares which had been issued and the number of shares of Holdings which were to be cancelled. Further, the cancellation was proposed by Holdings in the context of, and as a response to, concerns being raised about the Option Shares.

272. Secondly, Mr Michael Gerace engaged in email correspondence with the directors of the Company, after he received the Notice of the 2022 AGM which was sent to shareholders on 29 November 2022, and which contained the resolutions for the Selective Capital Reduction and attached the Explanatory Statement (see paragraphs [83]-[86] above). In particular:

1. on 30 November 2022, Mr Michael Gerace wrote to Ms Atelj, copying Mr Bruzzano, stating that he had received a “few call[s] from Shareholders expressing concern regarding the Selective Capital Reduction”, because they “had a[n] understanding that the shares to be relinquished would be distributed on a pro-rata basis” and they “will take issue with a lot of smaller option holders receiving the benefit of this Capital Reduction”, such that they “likely … will be voting against it”;

2. on 1 December 2022, Mr Bruzzano replied that the “capital reduction (which is equivalent to the options issued) will place each shareholder back to the same equity position just prior to the share issue via options”; and

3. also on 1 December 2022, Mr Michael Gerace forwarded this email chain to Mr Rocco Papallo, who is the director of the Sixth Plaintiff, STM Capital Pty Ltd.

273. It is plain from the correspondence set out above that Mr Michael Gerace understood that there was a link between the Selective Capital Reduction and the issues which had been raised in respect of the Option Shares, and that he was informed that the Selective Capital Reduction, which was “equivalent to the options issued”, had been proposed so as to “place each shareholder back to the same equity position just prior to the share issue via options”. Mr Michael Gerace and Mr Papallo, having received this information, proceeded to vote the shares which they controlled in favour of the Selective Capital Reduction.

274. In particular, Mr Gerace confirmed, in cross-examination, that he and his wife (being the Third and Fourth Plaintiffs) voted in favour of the Selective Capital Reduction, and that he caused the First and Second Plaintiffs to vote in favour of the Selective Capital Reduction. He gave the following evidence:

“Q.  So your position at the time ‑ that is, in relation to the cancellation of the 11.1 million shares as a way of addressing any concerns about the issue of the options ‑ was to approve the capital reduction; correct?

A.  I suppose, yes.”

275. Thirdly, Mr Marra confirmed, in cross-examination, that he caused the Seventeenth Plaintiff, Lomandra, to vote in favour of the Selective Capital Reduction, because he considered it an appropriate way in which to redress the issues which had been raised in relation to the Option Shares:

“Q.  Do you remember that in connection with this exercise of the company addressing the whistleblower complaint, the company was also telling shareholders that Holdings Pty Ltd was going to cancel the corresponding number of shares that it held in the company, [Homes]?

A.  Yes, I recall that, yes.

Q.  You understood that two went together in the sense that the options were options for about 11.1 million and [Homes] Holdings was going to cancel 11.1 million shares?

A.  Correct.

Q.  Fast forwarding to, in that same volume, if you could, 1589.  There's an email there from Ms Atelj dated 29 November 2022 to the shareholders enclosing the notice of AGM?

A.  Yes.

Q.  Which, I know it's not a memory test, but you most likely received?

A.  Correct.

Q.  That was the meeting at which what was put before the shareholders was to approve the cancellation of Holdings as 11.1 million shares in the company for nil consideration; correct?

A.  Correct.

Q.  You thought that was a good idea; correct?

A.  Correct.

Q.  You thought it was a good idea because to the extent that there were concerns about the 11.1 million options that had been issued, the cancellation of the corresponding number of Holdings' shares would address that problem; correct?

A.  Correct.

…

Q.  You have voted in favour of both the resolutions referred to in step two.  Do you see that?

A.  Yes.

Q.  That includes, in item 2, the selective capital reduction of [Homes] Holdings, which is the cancellation of [Homes] Holdings 11.1 million shares in [the Company]; correct?

A.  Correct.

Q.  At the time that was a good idea because it was the company's way of seeking to address any issues that might have surrounded the issue of options in the company; correct?

A.  Correct.”

276. In their opening written submissions, the Plaintiffs disputed the Company’s contention that the effects of any oppressive conduct associated with the Option Share Issues had been addressed by the Selective Capital Reduction, and referred to the following matters:

1. “the Option Holders continue to hold the shares that they have, in effect, been gifted”; and

2. “the Option Holders have since [the Selective Capital Reduction] remained as shareholders with voting rights and the power to appoint directors to the Company”.

277. The principal effects of the issue of the Option Shares, so far as the Plaintiffs were concerned, were to diminish their voting power and to dilute the value of their shares by the issuing of 11,100,000 shares at $0.001 per share. These effects were addressed by the cancellation of the precise number of shares which had been issued pursuant to the options for nil consideration. As Mr Bruzzano explained to Mr Michael Gerace in his email of 1 December 2022, the effect of cancelling 11,100,000 shares in the Company held by Holdings was to put the other shareholders back in the same position as they were prior to the issue of any Option Shares.

277. It is the case that, following the implementation of the Selective Capital Reduction, the persons to whom the options were issued continued to hold the Option Shares. However, the outcome, as far as other shareholders was concerned, was the same as if the 11,100,000 shares held by the option holders had been cancelled, and Holdings had then distributed 11,100,000 of its own shares to the option holders in the same proportion as the Option Shares which they had previously held. This may explain why shareholders were informed that Holdings had decided to reduce its own shareholding in the Company by the number of the Option Shares in order “to honour Pasquale Carbone’s memory”. Holdings appears to have been of the view that Mr Carbone wanted the option holders to have the shares which had been issued to them and therefore, rather than cancelling those 11,100,000 shares, the appropriate response to the issues raised regarding the options was to cancel the same number of shares held by the trust which Mr Carbone had established.

278. This issue was raised with the Plaintiffs in closing address, as follows:

“HIS HONOUR: …  What appears to have happened is essentially the company could have said, well, we'll cancel all the shares that we issued to the option holders; but instead, and this is how I read the ‘honouring [Mr Carbone’s] memory’ point, they say, well, [Mr Carbone’s] company will wear the loss.  Of course, he wanted those people to have the shares so it's equivalent to the individuals having their shares cancelled but then Holdings [giving] 11.1 million of its shares to the individuals.

[SENIOR COUNSEL FOR PLAINTIFFS]: With respect, there's something in that, I'd have to accept, your Honour, in terms of ‑ you grant relief in an oppression case to remedy the oppression, not to deliver unjustified benefits.”

280. The position would obviously have been different if I had determined that, as the Plaintiffs contended, the issue of 99,999,999 shares to Holdings constituted oppressive conduct, and that those shares should be cancelled. In those circumstances, it would have been no answer to the claim regarding the Option Shares that 11,100,000 of the shares held by Holdings had previously been cancelled for nil consideration.

281. However, I have determined that the issue of 100 million shares to Holdings did not constitute oppressive conduct, and that none of Holdings’ remaining 18,900,000 shares should be cancelled. In circumstances where 11,100,000 of Holdings’ shares have previously been cancelled in order to address the concerns which had been raised about the validity of the 11,100,000 Option Shares, and the shareholders (including all or most the Plaintiffs) agreed to this course of conduct, there is no further step necessary to remedy the effects of the oppressive conduct on the Plaintiffs. If the Court were to order the cancellation of the 11,100,000 shares held by the option holders, this would, when combined with the Selective Capital Reduction, result in twice the number of shares being cancelled as were issued pursuant to the options, with the result that the Plaintiffs’ position was (in terms of, for example, voting power) better than it had been before any of the Option Shares was issued.

282. The conclusions set out above do not depend on any finding of acquiescence or delay. Instead, the critical point is that, by reason of the matters set out above, there is no continuing effect of oppressive conduct.

283. For those reasons, although I have found that the issue of the Option Shares amounted to oppressive conduct, I have determined that the relief sought by the Plaintiffs in respect of this conduct should not be granted.

conclusion and orders

284. The Plaintiffs have failed to establish any of their claims for relief.

285. It follows that the proceeding must be dismissed, with costs.

286. I will provisionally make an order that the Plaintiffs pay the Company’s costs, as agreed or assessed. (I will not make an order in respect of the costs of any other Defendant, given that the only other Defendant who played an active part was Ms O’Toole, who was self-represented.) This provisional order will take effect seven days after the date of this judgment unless any party notifies the other parties and my Associate in writing that some other order is sought, specifies the order and provides a brief statement of the grounds for it, in which event the order will not take effect and I will make directions to deal with costs.

287. Accordingly, I make the following orders:

In proceeding 2025/248384:

1. The proceeding is dismissed.

2. Provisionally order that the Plaintiffs pay the costs of the First Defendant, as agreed or assessed. This order will take effect seven days after the date of this judgment unless any party notifies the other parties and the Associate to Nixon J in writing that some other order is sought, specifies the order and provides a brief statement of the grounds for it, in which event the order will not take effect and directions will be made to deal with costs.

In proceeding 2024/106618

1. List the Notice of Motion filed by the Defendants on 14 August 2025 for directions before Nixon J at 9:15am on 2 October 2025.

**********

Decision last updated: 26 September 2025