- Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd

Judgment 1By application filed on 17 July 2012, the Plaintiff, Mr Edward Lakis seeks an order pursuant to s 461(1)(k) of the Corporations Act 2001 (Cth) that the First Defendant, Amazon Pest Control Pty Limited ("Company") be wound up and that a nominated person be appointed as liquidator of the Company. He also seeks orders that another shareholder in the Company, the Second Defendant, Mr Michael Lardis and the Third Defendant, Amazon Pest Management Pty Limited ("Amazon Pest Management"), pay his costs of the proceedings. The parties' evidence 2There are numerous disputes between the parties as to the events in issue in the proceedings, most of which will not need to be resolved in order to decide the proceedings. Mr Lakis and Mr Lardis each gave affidavit evidence supporting their different account of events. Mr Lakis was cross-examined at some length and was a somewhat argumentative witness. Mr Lardis was also cross-examined at length and I have significant reservations as to his evidence, and particularly his evidence in relation to personal expenses paid from the Company's accounts, to which I will refer below. 3Mr Lakis is a director and 50% shareholder of the Company. Mr Lakis contends that, in the period from 1995 or 1996, he assisted Mr Lardis with the preparation of tenders for Mr Lardis' earlier pest control business and, in late 1999, Mr Lardis invited him to enter a partnership in the pest control business, to which he contributed $20,000 and into which Mr Lardis' earlier business was merged. Mr Lakis' evidence is that his efforts and contacts led the Company to obtain a contract to carry out a pest control audit for the Sydney Harbour Foreshore Authority in March 2000 and that, from March 2000, Mr Lardis' earlier pest control business ceased to trade and the business traded through the Company. There is a dispute as to the circumstances in which Mr Lakis acquired his interest in the Company, and Mr Lardis' evidence is that Mr Lakis not Mr Lardis initiated his involvement with the Company and, in substance, that he had a more limited role when he joined the Company. Little turns on that dispute, since, in any event, Mr Lardis and Mr Lakis were the Company's two directors and shareholders when it was incorporated. 4Mr Lakis' evidence is that he had "complete trust" in Mr Lardis and that he was involved in both development of clients for the business and physical aspects of the business including spraying and treating properties for pest control and obtained a number of government contracts for the Company and took various other steps in respect of the business. In 2002, Mr Lakis and Mr Lardis together purchased a property at Rosebery in equal shares as tenants-in-common, with the Company paying the deposit and stamp duty; he and Mr Lardis took out a loan to pay the balance of the purchase price for the property and the Company leased the property from them and established its office there. 5In 2008, Mr Lakis and Mr Lardis agreed to cause the Company to invest in a gym at Kensington together with two of Mr Lakis' school friends. The Company paid an amount in respect of that investment and Mr Lakis and Mr Lardis borrowed monies and lent them to the Company for that purpose. It appears that Mr Lakis, rather than the Company, was recorded as a one-third shareholder in the company that operated the Kensington gym; his evidence is that this was incorrect and the Company should have been the one-third shareholder, and this was apparently rectified prior to July 2012. I have reservations as to Mr Lakis' evidence as to the circumstances in which the share in the gym was registered in his name rather than the Company's name, but it is not necessary to reach a determination as to that matter for the purposes of these proceedings. From September 2009, Mr Lakis worked at a second gym at Coogee but continued to receive remuneration from the Company. Mr Lakis personally invested in the Coogee gym, rather than the Company or Mr Lardis doing so, and that gym did not succeed. 6It appears that, from a time in 2011, Mr Lakis suffered from depression. Mr Lakis' evidence is that his depression began in February 2011 and he first received medical treatment for it in about October 2011, and he was hospitalised in April 2012. His evidence was that he continued "turning up at work to try and get something done in Amazon". 7Mr Lakis complains as to the circumstances in which payments to the CBA in respect of the Rosebery property ceased from January 2012, whereas Mr Lardis' evidence is that this took place by agreement between the parties. In February 2012, Mr Lakis and Mr Lardis reached an agreement that the Company would be repaid $100,000 that was described as representing payment for Mr Lardis' contribution to the Kensington gym, on the basis that Mr Lardis would then transfer the Company's shares to the other persons interested in that gym. There was an ambiguity in that conversation, as set out in Mr Lakis' evidence, as to whether the payment of $100,000 would be for the benefit of Mr Lardis or the benefit of the Company and that matter is in turn in dispute between the parties. Mr Lardis' evidence was that the other partners in the Kensington gym paid back $55,000 of his original investment by instalments starting in March 2012 and ceasing in July 2012 when the gym closed. He gives evidence of an understanding that that payment would be adjusted in the directors' loan accounts of the Company for the 2012 financial year when the Company's accountants prepare them, but there is no evidence of any communications with the accountants to give effect to such an adjustment. Payment of personal expenses from the Company's accounts 8Mr Lakis gives evidence of a discussion with Mr Lardis in about 2001-2002 which contemplated payment of incidental personal liabilities by each of them using Company credit cards, on the basis that Mr Lardis would first get Mr Lakis' approval and there would then be a reconciliation of those expenses. I do not accept Mr Lakis' evidence of this discussion, at least so far as it contemplated that either of Mr Lakis or Mr Lardis would specifically obtain the other's permission prior to incurring an expenditure in this manner. Mr Lakis acknowledged in cross-examination that the more likely position was that he and Mr Lardis agreed in 2001 that they could each use the Company credit cards or debit cards for personal expenses as long as they were honest with each other and the expenses were reconciled between the two of them. Mr Lardis' evidence is that: "It was always agreed by us that both directors would use company funds for personal expenses on the basis that those personal expenses would be identified and reconciled by Amazon's accountants ... each year and the accountants would then classify those expenses as either loans to directors and/or shareholders, wages or dividends and adjust the accounts ie our respective directors' loan accounts and wages accordingly". Mr Lardis also gives evidence of a conversation with Mr Lakis in which, he claims, consent was given to his use of Company funds for personal expenses, on the basis that "[t]he accountants can sort it out at the end of the year". 9Mr Lakis gave evidence, which was admitted as evidence of his understanding only, that various personal expenses of Mr Lardis had been paid from the Company's accounts totalling $76,370.49 and that there had been no reconciliation of those expenditures. On the other hand, Mr Lardis gave evidence that all payments for personal expenses were fully disclosed to the Company's accountants. I cannot accept that evidence, given the extent to which such expenses were misdescribed as disclosed by the evidence to which I will refer below. Mr Lardis also gave evidence of his understanding that the Company's accountants have reconciled all personal expenses. Again, it is clear from Mr Lardis' cross-examination that that is not the case. 10Mr Lardis accepted in cross-examination that, for an honest and open reconciliation to be undertaken, the Company's accountants would have to be given sufficient information to understand which payments were actually made for personal expenses, and that the accountants could not otherwise undertake that task. Mr Lardis also accepted that it would not be appropriate to put misleading entries into the Company's books to disguise personal payments. However, there are numerous examples of personal expenses incurred by Mr Lardis which are misdescribed in the Company's financial records. For example, the Company made payments to Mr Lardis' personal credit card account that were recorded in its accounting system as relating to "expenses-materials", suggesting that they were a corporate expenditure. Mr Lardis' evidence on cross-examination was that he did not instruct the bookkeeper to record that expense in that way. Another cheque in payment of Mr Lardis' personal credit card is recorded in the Company's books as for a training course. A cheque was drawn by the Company for Mr Lardis' daughter's school fees in a substantial amount and described in the Company's accounts as for "pesticides". Mr Lardis accepted that that was not a proper expenditure of the Company. His explanation was that he would have told the Company's bookkeeper that it was a personal expense and "she's probably tried to allocate it somewhere where it's of benefit to the Company". Another cheque for Mr Lardis' daughter's school fees is described in the Company's accounts as advertising. Mr Lardis offered an explanation, in cross-examination, that this may have been because the bookkeeper was Mr Lakis' cousin's girlfriend, apparently implying an elaborate attempt to establish a case for the winding up orchestrated by Mr Lakis. I do not accept that evidence. A payment in respect of Mr Lardis' son's school fees is described in the Company's accounts as advertising. A cheque in payment of fees for Mr Lardis' childrens' orthodontist is shown in Amazon's general ledger as referable to "website" and Mr Lardis' explanation for that matter is that the bookkeeper "tries to allocate it where she thinks fit". A further payment to Mr Lardis' childrens' orthodontist is described as "medical expense - work related" and Mr Lardis accepted in cross-examination that the Company was not incurring work-related medical expenses for an orthodontist. 11Mr Lardis' submission that he and Mr Lakis "regularly accounted for these expenses to [the Company's] bookkeeper, by providing receipts, and then the bookkeeper would reconcile these expenses to the Company accounts" is undermined by the incorrect descriptions of those expenses. It is ultimately not necessary to determine whether Mr Lardis authorised the Company's bookkeeper to misdescribe personal expenditures in the Company's financial records, or whether she did so of her own initiative, because in either case the Company's financial records would not permit the reconciliation of personal expenditures by the accountants, unless they were to go back to verify cheque butts so as to identify the incorrect descriptions contained in the Company's accounting system. Mr Lardis' evidence in cross-examination was that the accountants would, each year, review every transaction and go through the cheque butts in order to identify personal expenses. I am unable to accept that evidence, both because it is apparent that the last reconciliation was undertaken in 2010, and because there is no evidence that the accountants in fact engaged in a process of reviewing cheque butts so as to identify systematic misdescriptions of expenditures in the Company's financial records. A schedule prepared by the accountants to reconcile expenditures identified a number of items which the accountants were then unable to allocate without further information, and it appears that no further information was provided to them to permit such an allocation to be completed. The reconciliations undertaken by the Company's accountant, to the extent they have been undertaken in the period to 2010, were incomplete because they have not adjusted for those incorrect descriptions. Mr Lardis' interests in other businesses 12Mr Lakis' evidence is that Mr Lardis caused another company, Amazon Pest Management, to be incorporated, which Mr Lakis learned about in December 2011. Mr Lardis' evidence is that Amazon Pest Management is dormant and was set up with Mr Lakis' knowledge to undertake consulting. On balance, I think it unlikely that Amazon Pest Management was set up for that purpose, having regard to the other evidence of the dispute between the shareholders in the Company by the relevant time. 13Another company was incorporated on 19 June 2012 on Mr Lardis' instructions named Amazon Asset Management Pty Limited ("Amazon Asset Management"), with his son's godfather as a director and shareholder. Mr Lardis' evidence was that he incorporated that entity with the intent that he could work there in the future if the Company was liquidated, but his solicitor advised that that course was not open and that entity has not operated. That evidence had the difficulty that, at that time, only Mr Lardis and not Mr Lakis had raised the prospect of liquidation. The name of Amazon Asset Management was subsequently changed to Pest Help, when Mr Lardis was planning to acquire another business trading under that name. Mr Lardis' evidence is that he borrowed to buy that business, which was based on the northern beaches of Sydney, so that he has a job to fall back on if Mr Lakis is successful in this application. It appears that an employee of the Company has resigned and commenced employment with that business. 14It appears that Mr Lardis has also transferred a mobile phone number which was, for some time, in the Company's name to his personal name. Mr Lardis' evidence, in cross-examination, was that the transfer of the mobile phone reflected a meeting with the accountants in July 2012 where a decision was made that Mr Lakis and Mr Lardis would each pay their personal expenses, rather than the Company doing so, although he then corrected that evidence to refer to a meeting in December 2011. That corrected evidence was in turn inconsistent with evidence that Mr Lardis had drawn a cheque for his solicitors' fees in respect of these proceedings on the Company's account in February 2012. Mr Lardis' evidence was that after-hours calls were diverted from the office number to that mobile, rather than clients ringing that mobile directly; if that evidence were correct, the change in respect of that mobile phone may be of lesser practical significance. Nonetheless, Mr Lardis' transfer of the mobile phone to himself is consistent with other steps to which I refer below which would position him to transfer the Company's work to himself or another entity under his control. 15Mr Lardis has also ceased booking jobs in the Company's service system and instead now records those jobs in his personal diary, purportedly because the Company no longer has a secretary. Mr Lardis also took steps, from August 2012 to arrange for work orders to be sent to a private email address; while Mr Lardis' evidence was that this was done because the Company had no administrative staff at the office, it would also have facilitated the diversion of business to another entity if Mr Lardis chose to take that course. 16In my view, the steps taken by Mr Lardis to acquire another business, take control of the mobile phone number previously used by the Company and take control of bookings of work are such that an inference must be drawn that there is a significant probability that work which would otherwise be performed by the Company has been or will be diverted to other entities if no relief is ordered in these proceedings. Whether it is just and equitable that the Company be wound up 17As I noted above, a winding up order is sought under s 461(1)(k) of the Corporations Act. That section permits the Court to make a winding up order where it is of the opinion that it is just and equitable that a company be wound up. Although the circumstances in which such an order can be made are not closed or rigid, they include circumstances where a company was formed on the basis of a personal relationship involving mutual confidence and that confidence has broken down so that continuation of that association would be futile: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [2001] NSWCA 97; (2001) 37 ACSR 672; Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd [2008] VSCA 86; (2008) 66 ACSR 325 at [119]; Nassar v Innovative Precasters Group Pty Ltd [2009] NSWSC 342; (2009) 71 ACSR 343 at [90], [96], [117]. 18Such an order may more readily be made where a company is in the nature of a quasi-partnership and there has been a loss of trust and confidence in respect of the entities: Ebrahimi v Westbourne Galleries Ltd [1973] AC 360. It has been suggested that the language of "quasi-partnership" can be misleading and this issue is better approached by reference to whether the Company is "a majority controlled business requiring material cooperation and a level of trust": MMAL Rentals Pty Ltd v Bruning [2004] NSWCA 451; (2004) 63 NSWLR 167 at [71]; Nassar v Innovative Precasters Group Pty Ltd above at [77]-[79]. There are various indications of the fact that the Company was in the nature of a "quasi-partnership" including that each of Mr Lakis and Mr Lardis became directors and secretaries; each of them acquired one of the two issued shares in it; and each became a signatory to the Company's bank account. The arrangements for their acquisition of the Rosebery property are consistent with that characterisation, although they purchased it personally and it was then leased to the Company. 19A breakdown of relations or loss of confidence between a company's members may also support a winding up on the just and equitable ground where it frustrates the commercially sensible operations of the company in accordance with the incorporator's expectations and any loss of confidence is justified: Tomanovic v Argyle HQ Pty Ltd [2010] NSWSC 152 at [49]-[51], on appeal as Tomanovic v Global Mortgage Equity Corporation Pty Ltd [2011] NSWCA 104; (2011) ACSR 121. The Court may make a winding up order under s 461(1)(k) of the Corporations Act in circumstances that do not amount to oppression, although a person who is themselves responsible for the breakdown of the relationship is less likely to be afforded relief: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd above; Nassar v Innovative Precasters Group Pty Ltd above at [90], [96], [117]. A winding up order in these circumstances is not "lightly made" and must be "just and equitable not just for the applicant, but for all": Re G Jeffrey (Mens Store) Pty Ltd (1984) 9 ACLR 193; Byrne v AJ Byrne Pty Ltd [2012] NSWSC 667 at [81]. 20There is evidence of a breakdown of cooperation between the parties and exclusion of Mr Lakis from the business, although Mr Lardis seeks to give explanations of the various occasions on which that has occurred. Mr Lakis gives evidence of a change in the alarm codes to access the Rosebery property and the password for access to the Company's on-line bank account in November 2011, which he claims was made without his knowledge. Mr Lardis' evidence is that the alarm codes for the Rosebery property were changed by the company secretary after an employee left, and he gave Mr Lakis the new alarm codes the next day; and the password to the bank account was changed twice due to a fraud alert from the bank, and he gave Mr Lakis the new password. On balance, I would not accept Mr Lardis' evidence that these events were not directed to seeking to exclude Mr Lakis from the business. By letter dated 12 June 2012, Mr Lardis' solicitor advised Mr Lakis' solicitor that "[I]t is obvious that the management of the Company on critical issues is deadlocked", although attributing that matter, at least in part, to Mr Lakis' alleged unwillingness to meet and address critical issues. That letter also indicated that it may be necessary to approach the Court for the appointment of an administrator, and at the same time Mr Lardis' solicitors advised Mr Lakis that Mr Lardis would not buy him out. 21In my view, the extent of payment of personal expenses from the Company and the misdescription of those expenses in the Company's financial records are matters that frustrate the commercially sensible operations of the Company and would also warrant a lack of confidence in the conduct and management of its affairs. It may well be the case, as Mr Lardis contends, that the Company is still able to perform pest control work, since Mr Lakis has had only a limited involvement in that work for some years by reason of his involvement in the gyms and his subsequent depression. However, the matters to which I have referred above mean that there can be no expectation that Mr Lakis will receive dividends from the Company proportionate to his investment in it, since the Company's profitability would necessarily be affected by the disguised personal expenditures that Mr Lardis has been paying from the Company. Other relevant factors 22The Court may withhold a winding up order where the plaintiff lacks clean hands or has himself or herself been the primary contributor to the breakdown of the relationship: Re Yenidje Tobacco Company Ltd [1916] 2 Ch 426 at 430; Wondoflex Textiles Ltd [1951] VLR 458 at 465; Ruut v Head (1996) 20 ACSR 160; Argyle Concrete & Quarry Supplies Pty Ltd [2000] WASCA 170; (1999) 34 ACSR 469. However, even if a lack of clean hands were established, it is not an absolute bar to a winding up order because, as Santow J pointed out in Ruut v Head above at 162, otherwise neither party could obtain a winding up order where both were at fault. In Duc v PTS Australian Distributor Pty Ltd [2005] NSWSC 98 at [17], Barrett J referred to Ruut v Head and noted that the respective contributions to the breakdown should be assessed in determining what is just and equitable; and observed that a degree of fault on the part of the applicant in that case, viewed in the context of the fault of the other shareholder, should not deter the Court from making an order for winding up so as to address the deadlock in the Company's affairs. 23Mr Lardis submits that there is no evidence that he is responsible for any of the differences that he and Mr Lakis have had since late 2011 and the Court should find that Mr Lakis is the sole cause of any differences or loss of trust in the relationship. On any view, it seems to me that Mr Lakis can reasonably have lost confidence in Mr Lardis' management of the Company, had been by reason of the systematic incorrect descriptions of personal expenses paid on behalf of Mr Lardis in the Company's records and the failure to undertake any proper reconciliation of those expenses for a considerable time. 24Mr Lardis contended that Mr Lakis was, by these proceedings, seeking to force Mr Lardis to buy his shares or exchange those shares for the interest in the Rosebery property. Mr Lardis relies on a letter dated 29 June 2012 from Mr Lakis' solicitor, which he contends demanded that Mr Lardis pay Mr Lakis $250,000 or transfer his interest in the Rosebery property, or that proceedings would be commenced for the winding up of the Company. That letter was marked "without prejudice save and except for costs" (although it was admitted into evidence without objection) and was expressed as an offer prior to commencing proceedings to obtain the appointment of a liquidator. I would read that letter, in accordance with its terms, as an offer of an alternate means of resolution of the proceedings to the commencement of a winding up application, rather than as involving any inappropriate threat to wind up the Company if Mr Lakis' terms were not met. 25Mr Lardis' evidence is that he would be content for Mr Lakis to remain as a 50% shareholder and receive distributions of Company profits. However, the difficulty with that proposition is that the evidence before the Court indicates that those profits have not, in the past, reflected the Company's true position because personal expenses have been paid by Mr Lardis and misdescribed in the Company's records as business expenses, and there is no basis on which the Court can be satisfied that that will not continue to occur. Mr Lardis also gives evidence that he has performed a much larger number of pest control jobs than Mr Lakis, and that proposition appears to be consistent with job allocation records of the Company and with the evidence as to Mr Lakis' illness. However, I do not consider that the fact that Mr Lardis was making a substantial contribution to the Company's business provides an answer to, or justification of, the payment of personal expenses from the Company, disguised as business expenses, in a manner which could not be reconciled as between the shareholders in accordance with the agreement which Mr Lardis himself asserts. 26I have also had regard to s 467(4) of the Corporations Act which provides that: "(4) Where the application is made by members as contributories on the ground that it is just and equitable that the company should be wound up or that the directors have acted in a manner that appears to be unfair or unjust to other members, the Court, if it is of the opinion that: (a) the applicants are entitled to relief either by winding up the company or by some other means; and (b) in the absence of any other remedy it would be just and equitable that the company should be wound up; must make a winding up order unless it is also of the opinion that some other remedy is available to the applicants and that they are acting unreasonably in seeking to have the company wound up instead of pursuing that other remedy." This section requires the Court to make a winding up order in that situation, unless it is of the opinion that some other remedy is available to Mr Lakis and he is acting unreasonably in seeking to have the Company wound up instead of pursuing that other remedy. A winding up order may be more readily made, notwithstanding that relief for oppression was not sought under s 232 of the Corporations Act, where the feasibility of an order for the purchase of the other party's shares in the Company is uncertain: Johnny Oceans Restaurant Pty Ltd v Page [2003] NSWSC 952. 27I have given careful consideration to whether Mr Lakis is acting unreasonably in pursuing a winding up remedy, rather than, for example, a remedy in oppression, and I have not found that a simple question to resolve. On balance, however, I have concluded that it was not unreasonable for Mr Lakis to proceed to seek an order for winding up, given the likely complexity of an oppression action; the significant difficulties which would have been involved in any valuation of his shares in the Company, had he sought an order that Mr Lardis buy out those shares, given the extent to which the Company's financial records have been compromised by the transactions to which I have referred above; and Mr Lardis having made clear in correspondence (although he qualified his position in cross-examination) that he did not have any interest in acquiring Mr Lakis' shares in the Company. Whether a winding up order should be withheld on the basis that the Company is solvent 28Mr Lardis also gives evidence that the Company is not insolvent and is profitable and that it would damage the value of the business and his reputation to appoint a liquidator to the Company. Mr Lardis' evidence as to the strength of the Company's financial position is given in general terms and is notably inconsistent with the fact that, by letter dated 8 December 2011, his then solicitor advised Mr Lakis that Mr Lardis had advised that the Company was unable to pay its debts as they fell due; that $98,294 was then due to creditors including the Australian Taxation Office which was threatening legal action; and that the amount referred to was increasing daily. That letter also advised that Mr Lardis was not prepared to advance personal funds to assist the Company to pay its debts and that "he will appoint a trustee to be appointed to wind up the said Company". 29Mr Lardis accepted in cross-examination that his solicitor's letter dated 8 December 2011 was the first occasion on which a winding up of the Company was raised. That letter was written about a month after Mr Lardis had incorporated Amazon Pest Management, in the circumstances to which I have referred above. Mr Lardis also accepted in cross-examination that his review of the Company's then books and records had led him to the conclusion that the Company was unable to pay its debts as and when they fell due; there was no explanation in the evidence of why, if that was the case in December 2011, the position had substantially altered by the time Mr Lardis swore his affidavits in these proceedings. By letter dated 9 December 2011, Mr Lakis' then solicitor in turn wrote to Mr Lardis recording a conversation in which Mr Lardis had told Mr Lakis that he would wind up the Company and identifying Mr Lakis' concern that Mr Lardis intended to place the Company's business into a new corporate vehicle. 30The proposition that the Company is in a strong financial position is also inconsistent with evidence that its workers' compensation is often paid late, incurring late payment fees and an account from the workers' compensation insurer is presently overdue. There was a dispute as to the circumstances in which a vehicle registration was cancelled by reason of non-payment of the registration fee, with Mr Lardis contending that he had been told that Mr Lakis had cancelled the registration and that the vehicle was not presently used. It is not necessary to resolve that dispute to determine these proceedings. 31A winding up order is often recognised as being a remedy of last resort: Cumberland Holdings Ltd v Washington H Soul Pattinson & Co Ltd (1977) 13 ALR 561; 2 ACLR 307; Re Dalkeith Investments Pty Ltd (1984) 9 ACLR 247 at 252. However, this principle was articulated, in Cumberland Holdings Ltd v Washington H Soul Pattinson & Co Ltd above at 566-567, by reference to a "successful and prosperous" company that was "properly managed". The payments of private expenses, incorrectly recorded in the Company's financial records, to which I have referred above are not consistent with a properly managed company. In Belgiorno-Zegna v Exben Pty Ltd [2000] NSWSC 884; (2000) 35 ACSR 305, Hodgson CJ in Eq noted that s 467(4) of the Corporations Act, to which I have referred above, did not detract from the Court's reluctance to wind up a solvent company, particularly where that could lead, relevantly, to disruption of business. In Tomanovic v Argyle HQ Pty Ltd above at [237], Austin J also observed that: "... It would be unwise to order the winding up of the viable and now reasonably long-standing business, in circumstances where the breakdown in the shareholder relationship is not materially frustrating the commercially viable and sensible operations of the company." 32I recognise that the fact that an order to wind up a solvent company is an extreme step should be borne in mind in making such an order, and I have had regard to that fact in determining the relief that should be ordered in these proceedings. However, the Full Court of the Federal Court has emphasised in Hillam v Ample Source International Ltd (No 2) [2012] FCAFC 73; (2012) 202 FCR 336 that there is no principle or assumption that a winding up order of a solvent company is inappropriate, as distinct from a question whether a winding up order is appropriate to address the grounds of relief that have been established. Orders 33In the circumstances that I have set out above, I am satisfied that an order for winding up should be made. Where the Court is otherwise minded to wind up the Company on just and equitable grounds, it will often postpone a winding up order to allow the parties an opportunity to negotiate a buy-out: Ruut v Head above at 163; Tomanovic v Argyle HQ Pty Ltd above at [53]. I had directed the parties to participate in a Court-annexed mediation, which was ultimately unsuccessful. I will, however, stay the making of a winding up order for a further period, which I have extended having regard to the Christmas vacation, to allow the parties a final opportunity to resolve their differences in a manner which will avoid the liquidation of the Company. 34Accordingly, I make the following orders: