Johnson, J.M. v Australia-China Development and Trading P/L ACN 050 158 711
[1993] FCA 307
•14 MAY 1993
Re: JAMIE MICHAEL JOHNSON
And: AUSTRALIA-CHINA DEVELOPMENT AND TRADING PTY LTD; GAO ZHEN GENG; TIMOTHY
JOHN JOHNSON and MARGARET MARY JOHNSON
No. WAG128 OF 1991
FED No. 307
Number of pages - 12
Corporations
COURT
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
French J(1)
CATCHWORDS
Corporations - oppression action - long interlocutory history - valuation of shares of company - motion for specific discovery - motion for adoption of valuation and for compulsory sale of applicant's share - power of Court to order such sale.
Corporations Law s.260
HEARING
PERTH, 10 May 1993
#DATE 14:5:1993
Counsel for the Applicant: Mr C. Sanderson
Solicitors for the Applicant: Wilson and Rogers
Counsel for the Respondents: Mr D. Vilensky
Solicitors for the Respondents: Bowen Buchbinder Vilensky
ORDER
The court orders that:
On the applicant's motion filed 1 April 1993:
1. The motion is dismissed.
2. The applicant is to pay the respondents' costs of the motion. On the respondents' motion filed 29 March 1993:
1. The valuation of the shares in the first respondent by the independent accountant dated 19 August 1992 pursuant to para.3 of the orders made by Sweeney J on 9 June 1992 be adopted for the purposes of these proceedings as representing the valuation of the shares in the first respondent as at 30 June 1992.
2. The motion be otherwise dismissed.
3. The costs of the motion be reserved.
Note: Settlement and entry of Orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
Introduction
FRENCH J The present application is brought by Jamie Michael Johnson a shareholder in Australia-China Development and Trading Company Pty Ltd (ACDT). Mr Johnson seeks orders under s.260 of the Corporations Law requiring, inter alia, the acquisition by other shareholders in the company of his share. The application is made on the grounds that the affairs of the company are being conducted in a manner that is oppressive or unfairly prejudicial to or unfairly discriminatory against him. The application which was commenced on 13 December 1991 has an excessively long interlocutory history. For determination today is a motion on the part of the applicant for specific discovery and a motion on the part of the respondents in relation to the valuation of the shares and for their sale. The matters relied upon in support of these motions and the history of the action generally indicate that the time has arrived for the final disposition of this matter one way or the other.
Background and History of the Proceedings
2. ACDT was incorporated in Australia in October 1990 with the object of trading with and investing in the Peoples Republic of China. In 1991 it entered into a joint venture agreement with a Chinese company to operate a restaurant in Beijing. The Chinese company was Beijing Agriculture Industrial and Commercial Development and Trading Co. (BAI). The joint venture agreement involved the formation of a company in China in which ACDT would hold 70% of the shares and BAI 30%. The restaurant established pursuant to the agreement was known as Beijing Pasta and the joint venture company as Beijing Pasta Fast Food Co Ltd (BPF). The shareholders in ACDT were the applicant, Jamie Michael Johnson, his brother, Timothy John Johnson, and Gao Zhen Geng. Each held one of three issued shares. Until 11 November 1991 all three shareholders were also the directors of the company.
According to an affidavit sworn by the applicant in support of the application it was agreed at the time ACDT was formed that the shareholders would meet the company's expenses themselves or lend money to it for that purpose. There would be equal contributions. Gao would not contribute money while he was in Australia. He would however make available his knowledge of business opportunities in China and would assist with contacts. It is not necessary to go into the detail of the events and arguments that followed the establishment of the restaurant business. It is sufficient to say that there has been a complete breakdown of working relationships between Jamie Johnson and his brother, Timothy, and Timothy's wife, Margaret May Johnson, who is now an alternate director. The dissension between the company's stakeholders appears to have centred largely upon the question of their respective financial contributions to the establishment and operation of the restaurant. According to the applicant, his brother's solicitors endeavoured to prevent him from exercising his functions as a director of ACDT. By a letter dated 20 November 1991 the solicitors asserted that there had been an agreement made in about August 1991 that each of the shareholders would contribute certain funds to BPF by 1 November 1991. Any shareholder who failed to contribute would not have "any lawful or beneficial entitlement in Beijing Pasta". The agreement is said to have been reached at a series of meetings of the shareholders and directors of a company called Archfield Investments Pty Ltd which had been formed to raise capital for the joint venture. According to the solicitors, the applicant had contributed nothing by 1 November and therefore no longer had any lawful or beneficial interest in the business. Archfield Investments Pty Ltd, they said, was to be wound up. There was evidence of a resolution carried at a meeting of directors of ACDT held on 11 November 1991. Only Timothy Johnson and his wife were present. The resolution purported to remove the applicant as a director of the company. In his affidavit in support of the application, the applicant expressed concern that an attempt might be made to transfer from ACDT its interest in BPF. He said that it is clear that the relationship between himself and the other shareholders has broken down and that they would be unable to work together in the future. He considered that the best way out of the impasse would be to have the remaining shareholders of ACDT buy out his interest. On 13 December 1991 he instituted the present proceedings under s.260 of the Corporations Law naming as respondents, ACDT and its directors, Messrs. Gao and Johnson and Mrs Margaret Johnson.
The first directions hearing was on 18 December 1991 before Lee J. Orders were made that the respondents permit the applicant to inspect and take copies of all documents in their possession, custody or power relating to:
(a) The financial affairs of ACDT and/or Beijing Pasta.
(b) The appointment and removal of directors of ACDT and/or Beijing Pasta.
(c) Any and all contracts, agreements and/or arrangements made by or on behalf of ACDT with any other person or entity.
(d) Correspondence, notes of telephone conversations and facsimiles between Messrs Gao and T.J. Johnson and between Mr T.J. Johnson and BAI from 1 September 1991 up to and including the hearing of the application.
(e) All documents relating to the other ventures of ACDT.
The directions hearing was adjourned to 7 February 1992. On 7 February 1992 orders were made for the filing of affidavits to be relied upon at the hearing. An order was also made that an affidavit of discovery be filed by the respondents in relation to the classes of documents specified in the order made on 18 December 1991. Points of claim and response were to be filed by 6 March and 12 March respectively. The matter was adjourned for further directions on 13 March 1992. The respondents filed an affidavit of discovery on 28 February 1992.
On 13 March 1992 the directions made on 7 February were varied to extend the time for filing points of claim and response. The applicant was directed to apply by 25 March 1992 for an appointment to set the matter down for hearing. The applicant gave discovery on the day of that directions hearing. Particulars of the alleged oppressive conduct were filed on 17 March. Reliance was placed upon the purported removal of the applicant as a director of the company which was said to have been done at a meeting of which he had insufficient notice. The applicant also complained that he was given no opportunity to be heard at the meeting or to give reasons why he should not be removed as a director. He alleged also that ACDT had either failed to keep proper accounting records in relation to its operations in China and Australia or had failed to disclose them in its discovery. The failure to keep such accounts or to refer to them in the list of documents was said to be unfairly prejudicial to or discriminatory against the applicant. How the alleged failure to give discovery constituted a ground of oppressive conduct was not clear. A further particular of oppression related to ACDT's alleged failure to pay out an overdraft with the ANZ Bank. The applicant, being the only director to provide a guarantee of that debt, said that he thereby bore a loss not suffered by any of the other shareholders or directors. Other complaints related to financing arrangements for BPF and what amounted to demands for greater contributions from the applicant than from other shareholders. An alleged concession that his contribution would be delayed until after March 1992 was not honoured and the contribution demanded of him did not make allowance for the indebtedness of ACDT to the applicant or his past contributions to the company. The conduct of the affairs of BPF in relation to the removal of the applicant as executive director and failure by ACDT to follow up on other transactions negotiated by the applicant were also set out.
Supplementary discovery was given by the respondents on 28 May 1992. On 9 June 1992 the matter came on for hearing before Sweeney J but did not proceed to a trial. Instead his Honour made the following orders:
"1. The Australia-China Development and Trading Company Pty Ltd seek and obtain from Beijing Pasta Fast Food Company Pty Ltd, within 30 days, all relevant information in relation to the Balance Sheet and Profit and Loss Account of Beijing Pasta Fast Food Company Pty Ltd as at 30th June 1992.
2. Within 7 days thereafter, the Respondents do provide the Applicant with certified copies of all such documents.
3. An independent accountant shall be appointed by the parties, and in default of agreement, the President of the West Australian Institute of Chartered Accountants shall nominate an accountant to make a valuation of a share in Australia-China Development and Trading Company Pty Ltd.
4. The costs of such valuation is to be borne equally by the Applicant and the Respondents.
5. Such valuation is subject to any Appeal which would be available under the West Australian Commercial Arbitration Act 1985 as amended.
6. Costs reserved."
The orders were made in the context of a question raised by his Honour at the outset about the wisdom of having a trial extending over some days and possibly resulting in an order that the applicant's share be acquired when there was no guarantee that the share was of any value. A perusal of the transcript of the proceedings before his Honour indicates that both parties accepted that the valuation would be binding subject to a right of appeal as though it were an award to which the Commercial Arbitration Act 1983 (WA) applied.
The next step on the Court file was the filing of a motion by the applicant on 8 October 1992 seeking an order that Mr Timothy Johnson appear before the Registrar for the purpose of being examined on oath as to the dealings and financial state of ACDT and BPF. An order was also sought that an independent accountant travel to China at the respondents' expense to verify answers supplied by Mr Timothy Johnson and there to inspect and take copies of all such documents as he might consider relevant or of assistance in determining the present financial status and future prospects of BPF and ACDT. In a supporting affidavit the applicant claimed to have received no documents from the respondents until 28 July 1992. He was unable from those documents to ascertain the true financial position of BPF and ACDT. He also claimed to have had a conversation with Mr Gao following the adjournment of the trial on 9 June. Mr Gao, he said, had told him that the restaurant was going well, although it had started later than anticipated.
A motion rather unnecessarily seeking the dismissal of the applicant's motion, was filed by the respondents on 22 October. It was supported by an affidavit of Timothy Johnson sworn 21 October. According to his affidavit ACDT had, pursuant to the order made on 9 June 1992, sought and obtained from BPF all relevant information in relation to the balance sheet and profit and loss account as at 30 June 1992. Obtaining the information was said to be "a difficult and politically sensitive task". It was imperative that the Chinese joint venture partner not be alerted to any internal dispute among shareholders of ACDT. The orders 1 and 2 made on 9 June 1992 were complied with by the respondents on 28 July 1992.
Pursuant to order 3 of the Order made on 9 June 1992, Mr R.E. Ledger, an independent accountant, was appointed to make a valuation of the shares in ACDT. He was appointed by the Institute of Chartered Accountants (WA Branch). He was provided by the respondents' solicitors with all the information obtained from BPF by ACDT. After the provision of certain additional information and meetings between ACDT's solicitors and accountant and Mr Ledger, a valuation was received dated 19 August 1992. It annexed the balance sheets of BPF and ACDT as at 30 June 1992. Mr Ledger's opinion was that the shares in ACDT were of no value as at that date. He based the assessment upon the finding, which is not in issue, that the only asset of any significance was ACDT's 70% interest in BPF. He noted that the figures and documents that came from China were not easy to follow. They were, however, the best source of financial information available and after studying them and discussing them with the people involved he had accepted them as the basis for his valuation. Mr Ledger was confident he had reached a reasonably fair position on the balance sheet of BPF. Although he had met with ACDT's accountant and Mr Timothy Johnson, the applicant had declined to meet with him. He had also viewed photographs of the exterior and interior of the restaurant premises. Among factors adversely affecting the value of the business was uncertainty about the security of tenure of the leased premises which it occupied. Rent had not been paid as due and a default notice had issued from the owner. Sales figures necessary to cover overhead costs were not being achieved. Losses from the opening of the restaurant in January 1992 to 30 June 1992 amounted to $A144,984. There was no evidence to indicate any prospect of a substantial increase in turnover. Mr Ledger could attribute no goodwill to the business. The net assets valued at $244,429 on the balance sheet included substantial amounts of pre-paid expenses, construction costs, preliminary expenses and other fixed asset costs which it would be difficult to realise in full. And if the business were forced to leave the premises, there would be substantial write-downs of those assets. Mr Ledger valued the assets of BPF at $A167,047. Seventy per cent of that figure applicable to ACDT was $A116,933 as at 30 June 1992 and prior to any adjustment by Mr Ledger, ACDT had a deficiency on its balance sheet of $120,730 and a book value of $242,188 on its seventy per cent investment in BPF. When the value of the investment was adjusted down to the calculated value of $116,933, the ACDT deficiency increased to $245,985. Mr Ledger concluded that:
"Taking the most optimistic view, if Australia-China Development and Trading Co. Ltd recover the $A116,933 from its investment in the Chinese Joint Venture it would still be a long way short of repaying the liabilities of some $364,201 advanced by the various shareholders, their Associates and the ANZ Banking Group Ltd. This being the case each of the three issued shares in my view have no value." (sic)
Mr Timothy Johnson said in his affidavit that the business is not going well. This has put enormous pressure on the Australian investors in the business whose best hope now is to realise their capital and forego any benefits. He opposed the applicant's attempt to have an independent accountant go to Beijing saying that there was "absolutely no information, record or fact in relation to BPF that has not already been fully disclosed by the respondents to the applicant and to Mr Ledger including the record of an on-site inspection of the premises done by the Australian Trade Commission in Beijing". ACDT's accountant, Mr Mason, also swore an affidavit of 21 October 1992 in which he expressed the view that Mr Ledger's valuation fairly and accurately reflected the valuation of the shares in ACDT. An affidavit was also filed by Mr Ledger verifying his valuation.
On 2 November 1992, Lee J made an order in the following terms:
"1. If the Applicant intends to avail himself of the provisions of Order 34 Rule 6 as to expert valuation of the shareholding of the First Respondent, he must do so and provide a report to the Court and to the Respondents' solicitors by 4th December 1992.
2. The First Respondent shall provide to the Applicant's expert all information provided to Mr R E Ledger which covers written and oral material in response to enquiries by the agent.
3. If the Applicant's expert requests inspection of the property of Beijing Pasta and makes enquiries in Beijing relevant to the valuation of the interest of the First Respondent in Beijing Pasta, the nature of those enquiries is to be advised to the First Respondent in order that the First Respondent may assist if it can do so or notify of any areas of enquiry to be handled with sensitivity, and if it requests, it may have the Respondent accompany the expert whenever those enquiries are made in those areas.
4. By 11th December 1992, the parties shall attend upon the Registrar to obtain an appointment to re-list the matter for hearing.
5. There shall be no order on the motion of 8th October 1992. Costs on that motion are reserved.
6. The Respondents' Notice of Motion filed 22nd October 1992 is dismissed with costs reserved."
On 11 December 1992 on the applicant's motion, Lee J extended the time for compliance with his orders 1 and 4 to 20 and 27 January 1993 respectively. On 20 January 1993 a report prepared by Duesburys, Chartered Accountants, was filed. The report concluded that the ACDT shares could not be valued because of:
(a) A change in the operation of Beijing Pasta since 30 June 1992.
(b) The absence of any financial management accounts of Beijing Pasta since 30 June 1992.
(c) The absence of any explanation for the continued operation of Beijing Pasta since 30 June 1992.
A report of an "in confidence" inspection and review of the restaurant which had been commissioned by Duesburys at the request of the applicant was also filed. It indicated that there had been a redirection of activities at the restaurant by the introduction of Cantonese cuisine to supplement or reduce the reliance on pasta. A karaoke bar had also been reopened. It was pointed out that Mr Gao is a director of both ACDT and BPF. He should have had no practical difficulty, according to Duesburys, in obtaining information on the financial situation of BPF despite the stated reluctance of the Chinese joint venture to provide such details.
The Present Motions
16. On 29 March 1993, the respondents filed a motion seeking orders in the following terms:
"1. That the date for the purpose of determining the value of the shares in the First Respondent be the 30th June, 1992, or such other date as shall be ordered by this Honourable Court.
2. That the expert valuation of the shares in the First Respondent dated the 11th January, 1993 and obtained by the Applicant pursuant to Order 1 of the Orders of this Honourable Court dated the 2nd November, 1992 be dismissed.
3. That the valuation of the shares in the First Respondent by the independent accountant dated the 19th August, 1992 pursuant to Order 3 of the Orders of this Honourable Court dated the 9th June, 1992 be accepted as representing the valuation of the shares in the First Respondent as at the 30th June, 1992 and the Applicant be bound by this valuation.
4. That the Applicant sell his share in the First Respondent to the Second Respondent or the first named Third Respondent or their respective nominees for $1.00.
5. That, if appropriate, on the 6th May, 1993 the matter be relisted for hearing by the Registrar.
6. That the Applicant pay the costs of and incidental to this Application.
7. Such other or further Orders and directions as this Honourable Court thinks fit."
This was supported by an affidavit sworn by Timothy Johnson who referred to his earlier affidavit of 21 October 1992, the orders made on 2 November 1992 by Lee J and the extension of time granted on 11 December 1992. He exhibited the Duesburys' report and said that it related to the period after 30 June 1992 and made no reference to the value of the shares as at that date. Referring to para.3 of the orders made by Lee J on 2 November, he pointed out that no communication or request had been received from the applicant pursuant to that order. Much of the affidavit was argumentative rather than evidentiary. The point was made however that the applicant had not paid one half of the costs of Mr Ledger as required by para.4 of the order made on 9 June 1992 by Sweeney J Mr Ledger has evidently commenced proceedings against the applicant in the Local Court. Mr Timothy Johnson went on to say that ACDT is losing money on a monthly basis, with interest on invested capital running at $3,000 per month. ACDT is being funded entirely from his personal funds and no financial contribution was ever made by the applicant. In relation to alleged changes to the restaurant operation referred to by Duesburys, he said that a small increase in turnover had resulted from the introduction of Cantonese cuisine between lunch and tea times. The karaoke bar had been reintroduced at night time only and was not successful. The restaurant venture is still not profitable due to its heavy debt load and every avenue is being explored by management in an attempt to reduce its trading losses.
On 1 April 1993, a motion was filed by the applicant seeking specific discovery pursuant to O.15 r.8. Twenty one classes of documents were sought by the motion. The classes were widely expressed, e.g.:
"(a) All minutes of directors and shareholders meetings of the First Respondent, Archfield Investments Pty Ltd since 11 November 1991.
(b) All notes of meetings between the first named Third Respondent and the directors and/or shareholders of Beijing Pasta since 11 November 1991."
In an affidavit in support of the motion the applicant said that the respondents had never given him proper discovery of all relevant documents and had therefore prevented him and his advisors from making an accurate assessment of the value of BPF and hence of his interest in ACDT. He referred to accounting regulations made pursuant to the Accounting Law of the Peoples Republic of China for joint ventures using Chinese and foreign capital. He submitted that if BPF had complied with the Chinese law then the respondents, as majority shareholders or directors, must have various relevant financial records in their possession, custody or power. Like his brother's affidavit, some elements of the applicant's affidavit were argumentative.
In opposition to the motion for specific discovery there were two further affidavits filed, one by Timothy Johnson, the other by Gao Zhen Geng. Mr Johnson's affidavit denied that the respondents had failed to give proper discovery of all relevant documents. He accepted that under Chinese law joint ventures such as BPF have to maintain "complete original records" and are subject to audit of such records by independent auditors appointed by the Government of the Peoples Republic of China. He exhibited to his affidavit a report dated 29 October 1992 from Zhong-chen, Certified Public Accountants, appointed by the Chinese Government to confirm that both parties to the joint venture had contributed the capital required by the joint venture contract which had been negotiated with the Chinese Government. An audit report prepared by the same accountants was also exhibited to the affidavit and this disclosed a trading loss for BPF for the year ended 31 December 1992 in an amount of $264,900. An audited balance sheet for the same date showed, inter alia, that BPF had a net tangible asset value of $23,039. Also exhibited were financial statements of ACDT for the year ended 30 June 1992 prepared by Advanced Taxation Consultants. No financial statements of ACDT had been completed since 30 June 1992. ACDT had not traded and its only asset is its seventy per cent share in BPF. This is shown in the balance sheet as $242,188 representing the contribution to BPF. Current liabilities are $62,210 and non-current liabilities, $301,991. ACDT had an operating loss of $109,706 and total accumulated losses of $120,803. The financial position of ACDT has since deteriorated further and more losses have accumulated. Total liabilities have increased to $430,000 as at 31 December 1992 representing loans from directors and outside investors. Such contributions as have not been paid to BPF have been used as working capital to fund, inter alia, legal fees and general business expenses. The anticipated operating loss of ACDT for the year ended 30 June 1993 is in excess of $200,000. There is unlikely to be any dividend or benefit to shareholders in the foreseeable future. The accounting records to be held under Chinese law are to be kept in the possession of the Chinese joint venture partner although in special circumstances ACDT can get access to them. They must, however, be kept in China. Mr Johnson contended that the records are not therefore in the possession, custody or power of ACDT or the other respondents.
An affidavit sworn by Mr Gao on 20 April, confirmed the content of Mr Timothy Johnson's affidavit and in particular that representatives of Zhong-chen had attended at the premises of BPF and for more than a week had carried out an audit of every accounting document there. He denied telling the applicant on 9 June 1992 that the venture was going well. He also confirmed that he had received no request for information from the applicant or his advisors.
When the applicant's motion for discovery and the respondents' motion came on for hearing on 23 April, counsel for the applicant intimated that the matter might be able to be resolved if the Chinese audit report could be verified. Both motions were adjourned to 10 May 1993 to enable inquiries to be made. On 6 May, Mr Ledger filed an affidavit in which he said that he had requested the Senior Trade Commissioner at the Australian Embassy in Beijing to provide information about the reputation of Zhong-chen. In response, the Commissioner advised that the firm is a legal and registered accounting firm in Beijing with "strong connections and a good reputation". The applicant's counsel however advised that his client was not satisfied about the credibility of the firm. No basis for this lack of satisfaction was proffered. Argument on the motions then proceeded on 10 May and the decision was reserved until today.
Dealing first with the motion for specific discovery which is brought under O.15 r.8, in my opinion there is nothing in the affidavit in support of the motion to indicate why it should not have been brought a good deal earlier in these proceedings. The classes of documents sought are unacceptably wide and, in my opinion, reflect what amounts to an attempt to ransack the files of the company in the hope of turning up a case. Discovery and supplementary discovery have been given and the question of their completeness addressed in the respondents' affidavits. The accounting records of BPF are evidently not within the power or possession of ACDT. In my opinion a case has not been made out which would warrant the making of an order at this stage and as a matter of discretion, having regard to the width of the orders sought and the late stage at which they are sought, I would decline it in any event. The applicant's motion for discovery will be dismissed with costs.
On the respondents' motion, I am prepared to accept that the valuation carried out by Mr Ledger binds the parties pursuant to their consent to the orders made on 9 June 1992 and should be adopted for the purposes of these proceedings as setting out the value of the shares in ACDT as at 30 June 1992. It has not been impugned by the Duesburys' report or otherwise. Having said that, I do not consider that I have power to direct, as proposed by the respondents, "that the date for the purpose of determining the value of the shares in the First Respondent be 30 June 1992" or any other date at this stage. An order that the Duesburys' report be "dismissed" is meaningless. The report is able to be relied upon as evidence for what it is worth, although given its speculative nature and with no disrespect to the authors, that may not be very much in an evidential sense.
The respondents also seek an order that I direct the applicant to sell his share in ACDT to Mr Gao or Mr Timothy Johnson or their respective nominees for $1. Such an order, it is said, can be made under s.260(2)(e). That is so, but the power to make the order is conditioned, relevantly to this case, on the Court being of the opinion that the affairs of the company are being conducted in a manner that is oppressive or unfairly prejudicial to or unfairly discriminatory against a member or members or in a manner that is contrary to the interests of the members as a whole. The Court cannot be so satisfied without a finding of such conduct which is an issue that has not yet been heard and determined. It has been suggested by the respondents that I could find now that the affairs of the company are being conducted in a manner contrary to the interests of the members as a whole. It is submitted that the main activity in which ACDT is presently engaged is this litigation which has been on foot for eighteen months at considerable expense to the company. The word "conduct" in s.260(2) can refer, it was said, to the manner and general direction in which the affairs of the company are being conducted without the necessity of a finding of oppression by one or other shareholder or a group of shareholders. Whatever the proper construction of that limb of s.260(2) I am not satisfied that it encompasses a situation in which the conduct relied upon is the company's reasonable defence of litigation commenced against it. I am not satisfied that the section authorises the exercise of the power which is sought.
The evidence in this case so far before me points to the conclusion that whatever long term prospects there may be in the BPF restaurant, the present value of ACDT's shares, having regard to that "asset" and the company accounts generally, is nil. It seems unlikely that a "successful" outcome of the litigation from the applicant's point of view would serve any useful purpose. If the matter proceeds to trial and the applicant proves oppression but is not able to demonstrate that the company has any present value then, while a sale order might be made, it would in all probability be in the nominal amount of $1. In that event the applicant will be at risk of bearing at least some part of the respondents' costs of the action. I express no concluded view on that question. One option at this stage would be for a consent order for the sale of the shares at a nominal value with no order as to costs up to the time of the filing of the valuation. An acceptance of that disposition by the respondents would obviate the risk that they might otherwise face of costs up to the filing of Mr Ledger's valuation if oppression were able to be established. The question of costs thereafter could be debated. If the case cannot now be disposed of consensually, then it should proceed to trial and I would propose to make dates available within the next two or three weeks for that purpose.
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