Consideration of whether there was an unreasonable director-related transaction and, if so, the appropriate remedy to follow
402 I suppose there is nothing wrong with the analytical method invariably chosen, as it was here, by which the contending parties, through dissecting the legislative provisions into elements or integers, considered those integers by reference to the contending characterisations of the facts. But, this kind of taxonomy tends to obscure an understanding of the quality of the conduct complained of, especially where the conduct is dissected as if it is to be looked at on a slide under a microscope. The question inherent in s 588FDA of the Act is: what was wrong about the conduct as manifest by the transaction or transactions concerned? That question is to be answered at the time the transaction occurs, because s 588FDA uses the transaction as the trigger for potential remedial action. However, that does not mean that the antecedence to the transaction is irrelevant, indeed s 588FDA(1)(c)(iv) expressly states that the Court may take "any other relevant matter" into account when assessing the reasonableness of the impugned transaction. The question, therefore, as to whether the transaction was unreasonable in the sense defined in s 588FDA cannot, in my view, be answered as if at the time the transaction occurred nothing had come before. Nor does the section require foreseeable future consequences at the time of the transaction to be ignored. Indeed, quite the opposite considering that s 588FDA is an anti-avoidance provision.
403 If my analysis is correct that the transaction while the transaction should be considered at the time in occurred, but that antecedent events and/or relationships are also relevant to consider, then it seems to me that in this case, an antecedent fact which has a significant bearing on whether the transaction was an unreasonable director-related transaction, and the remedy to be fashioned if it is, is the contribution made to the company by Mr Lao and Mr Khay Suong Taing. In saying that, I should not be understood to suggest that the March 2016 Share Issue was a form of 'quid pro quo', or that the Lao Defendants did not receive any "benefits" whatsoever from Aviation 3030 over time. The Plaintiffs contend that those defendants enjoyed various benefits from the company
404 However, if the Plaintiffs' submissions were accepted; namely, that each of the 10 March 2016 and 17 March 2016 Share Resolutions be void ab initio, the Lao Defendants would, as submitted by the Third and Seventh Defendants, receive comparatively "nothing" in terms of the benefit or reward from the realisation of the opportunity they created. The "benefits" the Lao Defendants were said to have enjoyed, which were payments of the kind referable to either remuneration for the Lao Defendants performing their roles as directors or other anticipated disbursements which were disclosed in the Information Memoranda, have no material bearing in the present case, in relation to a remedy which would equitably balance the competing interests.
405 It follows from what I have just said that I do not agree with the Plaintiffs' submission that as the Third and Seventh Defendants themselves did not do any work or create any opportunity, there should be no "just allowance" made for those parties. I reject this contention having regard to the interrelated nature of the parties and the fact that Mr Lao, who it must be accepted did "do the work" and did "create the opportunity", is a discretionary object of the Lao Holdings Trust. In my view that structure is immaterial to the analysis. Mr Lao's mother, Ms Ou, was nominated by Mr Lao as the optional holder under the Option Agreement. I infer that the interposition of Lao Holdings as the direct beneficiary in relation to the options merely reflects Mr Lao's decision to so structure the receipt of any benefits. I draw that inference having regard to the facts that Mr Lao is a director of Lao Holdings, that the other director is his mother, Ms Ou, and that Lao Holdings is appointed trustee of a trust of which Mr Lao is a discretionary object. This structure is commonplace in relation to the holding of intra-family related interests.
406 It was Mr Lao's (and Mr Khay Suong Taing's) contribution that led to the successful acquisition of the land and its later resale, including town planning approvals and the like. Indeed, one is entitled to ask, if it was not the Founding Shareholders, then who made all of that happen? It seems to me that the success of the entire venture first emanated from the opportunity identified by Mr Lao to acquire the land. In other words, the opportunity to acquire the land and later sell it at an extremely high return was the product of the work, ingenuity and entrepreneurship of the Founding Shareholders, Mr Lao and Mr Khay Suong Taing. The Early Investors, on the other hand, were passive investors.
407 The only two groups who stand to either win or lose from this proceeding are the Early Investors, on the one hand, and the Founding Shareholders, on the other. Therefore, in my view, once the conclusion is reached that the transaction meets the definition of an unreasonable director-related transaction within the meaning of s 588FDA of the Corporations Act, s 588FF(4) mandates a remedy. This remedy can be fashioned to satisfy the objective of that subsection by an analysis of what may be called the competing equities. In my view, such approach is consistent with the assessment mandated by s 588FF(4) of the Corporations Act. I shall return to this issue below in the context of the remedies I propose to grant in this case.
408 Allied to the contribution made by the Founding Shareholders, is the fact that far from any Early Investors suffering a loss, they have, as I have alluded to several times, won the lottery. If the fact that the Founding Shareholders were the progenitors of this gain is to be ignored, or given little weight, because they are also wrongdoers, then their loss would be significant. From the perspective of the Founding Shareholders, the consequences for them of the primary order sought by the Plaintiffs (namely, that each of the impugned transactions be set aside as void ab initio) would be punitive, though that is not the aim of a remedial order such as the present. Indeed, such an order would be very far from achieving the minimum equity. Rather, it would confer a windfall gain on the Early Investors at the cost of no one, save the Founding Shareholders.
409 Other than in a situation where I was compelled to rescind the impugned transactions, the considerations I have just mentioned would be germane to fashioning a remedy which is not as blunt as 'all-or-nothing'. In relation to any discretion to fashion a remedy that would be equitable as between the Early Investors and the Founding Shareholders, it would be necessary to ask: how does shifting the entire gain that would have been made by the Founding Shareholders to the Early Investors achieve that objective? I shall refer to the question of whether there is such a discretion and how it might be exercised in this case below.
410 I propose to approach my consideration by explaining how I analyse the questions which arise in respect of the Plaintiffs' principal claim. Insofar as arguments have been advanced by either of the contending parties that are inconsistent with my analysis, needless to say I reject them. Insofar as they are not, I neither reject nor embrace them. I do not propose to address the parties' respective contentions seriatim in that maddening fashion for author and reader alike. However, where a contention has been advanced which must be met if my analysis is to be accepted, I shall address it. If in due course it should be found that my analysis is not correct, the various contentions I have either not addressed, or disagreed with, respectfully will remain available to be chosen.
411 As a preliminary matter, and in respect of the three impugned transactions, I note that the 10 March 2016 Resolutions and the 17 March 2016 Resolutions are, in my view, 'spent', for the same reasons as the Plaintiffs submit, and I accept, the Option Agreement is 'spent' for present purposes. Accordingly, it is unnecessary to decide whether those resolutions were transactions within the meaning of s 588FDA of the Corporations Act.
412 I will first address the question of whether the solvency of Aviation 3030 precludes the Plaintiffs from making a claim pursuant to s 558FDA of the Corporations Act. I accept the Plaintiffs' analysis that s 588FDA does not require a liquidator to prove that a company was insolvent at the time the transaction was entered into. I agree with the Plaintiffs that the words in the Part's title "insolvent company" should not have the effect of overriding the purpose of s 588FDA, particularly having regard to: (1) the Explanatory Memorandum which expressly states insolvency is not a precondition necessary for s 588FDA to apply; and, (2) the fundamental purpose of the provision being "self-evidently an anti-avoidance provision aimed at preventing errant directors from stripping benefits out of companies to their own advantage": see Vasudevan at [19]. I also accept that the Plaintiffs as liquidators have brought their application for relief pursuant to s 588FF(1) within the time prescribed by s 588F(3) of the Corporations Act.
413 It follows that the analysis of whether the transaction is an unreasonable director-related transaction pursuant to s 588FDA of the Corporations Act must commence with identifying the relevant transaction or transactions. There is no question that the March 2016 Share issue was a transaction within the meaning of s 588FDA(1)(a) of the Corporations Act. I accept the Plaintiffs' analysis on this element; namely, that the March 2016 Share Issue is the transaction for which there may be work to do for some form of remedial order. I also accept that the recipient of the shares in the March 2016 Share Issue, Lao Holdings as trustee of the Lao Holdings Trust for the benefit of Ms Ou and Mr Lao, being discretionary objects of that trust, satisfies s 588FDA(1)(b) of the Corporations Act.
414 In my view, the reason as to why the March 2016 Share Issue is an unreasonable director-related transaction may be stated briefly. That reason is essentially that, the effect of the March 2016 Share Issue was to substantially dilute the value of the existing shareholders' proportionate interest in Aviation 3030 because of the price at which the options were to be exercised pursuant to the Option Agreement, in circumstances where the existing shareholders had not been properly informed that this was to occur before they acquired their shareholdings. The transaction is unreasonable essentially because of the inadequacy of the disclosure at the relevant time; namely, prior to the Early Investors acquiring their shares.
415 If the shares had been issued to the Founding Shareholders at the option price at or about the time Aviation 3030 was formed, the Early Investors would have known of the existence of 152 million 'founder' shares and there would have been nothing unreasonable about the transaction. At that point in time there were no third party investors and the land had not yet been acquired. Accordingly, there would have been no cause for complaint in relation to the price at which the Founding Shareholders' may have been issued shares at that time, as any third party investors would have been on notice, or could have ascertained, the existence of the shares. In those circumstances, third party investors would have been able to make their own assessment of the effect of those shares on their proportionate interest in the share capital of Aviation 3030. As I have mentioned above, a similar course of action was raised with Mr Lao, whereby all 240 million shares would be issued to the Founding Shareholders upfront and then sold on to third party investors, but that course was ultimately not pursued. It is unnecessary to determine why the Founding Shareholders did not issue their shares at the outset of Aviation 3030 embarking on its enterprise, but it is probable that the alternative course was taken to avoid adverse tax consequences, specifically the crystallisation of capital gains that would occur if the Founding Shareholders were to have on sold some proportion of their shares to third party investors.
416 The effect of the March 2016 Share Issue was to retrospectively dilute the interests of the Early Investors. It is for this reason, as I have said, that the transaction was an unreasonable director-related transaction. The question becomes what, if any, remedy will cure the harm done to the Early Investors by the diluting effect of the issuing of shares under the Option Agreement. In my view, the minimum equity is to notionally impose as the option exercise price that price which was paid most frequently by Early Investors (in mathematical terms, the median price).
417 The remedy I propose to order in this case will have the effect of serving as a proxy, in an approximate way, of putting the Founding Shareholders in the position they would have been in had they taken the course of issuing their 'founder' shares at the outset and later on-selling a proportion of those shares to third party investors, had they chosen to do so, adjusted to allow for the fact that the Founding Shareholders took the course they did. It also approximates the position that the Early Investors would have been in had the Founding Shareholders issued themselves shares at the outset, save that they are better off because the relevant founder, Mr Lao, via his related company, Lao Holdings, shall have to notionally pay $0.12 per share. It seems to me that this remedy will represent a cure for the element of the impugned transactions that was wrong; namely, the inadequacy of the disclosure, while recognising that Aviation 3030's highly successful enterprise could not have occurred without the Founding Shareholders who initiated it. I mention the remedy I propose at this stage so that my analysis that follows may be understood with advance notice of my conclusion and hopefully thereby assist in an understanding of my reasoning.
418 The Plaintiffs contend that in addition to the dilution of the value of the existing shareholdings of the Early Investors, there are other characteristics of the impugned transaction that coloured it unreasonable; namely, that the transaction exposed Aviation 3030 to civil litigation, regulatory action and liquidation, and deprived Aviation 3030 of the opportunity to sell those shares for commercial consideration. Indeed, these characteristics are given priority in the Plaintiffs' submissions. I do not agree with the Plaintiffs' characterisations of these matters for the following reasons.
419 In my view, the "reasonable person" referred to in s 588FDA(1)(c) of the Corporations Act would open the aperture of the lens sufficiently to see the landscape in which the transaction took place. Relevantly, in this case, that landscape is contoured by:
(1) the competing economic interests of the persons affected by the impugned transaction, the Founding Shareholders and the Early Investors; and
(2) the anterior relationships between those competing parties, insofar as those relationships have a bearing on whether the transaction, assessed at the time it occurred, was coloured by unreasonableness; and if so, in what respects and to what extent.
420 In other words, the assessment of whether the transaction is unreasonable must, in my view, be undertaken by standing back from the impugned transaction itself and considering it in the context I have described. That cannot be achieved without considering who wins and who loses, so to speak, and whether that is equitable in all the circumstances. It is trite to observe that the law of fiduciaries is the law of equity. But perhaps it is worth expressly noting that the "reasonable person" referred to in s 588FDA(1)(c) of the Corporations Act is the reasonable person in equity; that is to say, as equity conceives what is reasonable. In my opinion, wherever the Corporations Act addresses fiduciary obligations and standards, the cognate or related equitable doctrines inform the meaning to be given to the language of the Corporations Act, unless to do so would contradict the language, or a scheme established under the Corporations Act, or is in any other way inimical to a robustly plain reading of the Corporations Act. This is simply because fiduciary obligations and the standards to which the fiduciaries are to be held were created by, and evolved from, the Court of Chancery.
421 In my view, equity does not conceive as reasonable an unearned windfall to one group of shareholders at the expense of a disproportionate loss to the other group, even if the latter be a wrongdoer. Equity will notice the unclean hands of the wrongdoer, but it will not allow them to be cut off. This is what might be called "just allowance" in legal taxonomy, if there be a need to put a label on it: see, eg, Western Areas Exploration v Streeter [2009] WASC 213; 234 FLR 265 at [459] (Heenan J). I would prefer to think of it in terms of the defining character of equity, good conscience. Thus, where good conscience demands a recognition of the contribution of a fiduciary who is also a wrongdoer, equity will recognise the contribution to the extent necessary to act in good conscience towards even the wrongdoer. That is the other side, as it were, of doing the minimum equity.
422 This, in my opinion, is the paramount reason that here, applying the standard of the reasonable person in equity, the remedy and its consequences are inseparable, as a matter of good conscience, from the wrong. There is nothing of which I am aware in any other relevant part of the Corporations Act which contradicts that proposition and I do not believe what I have said here is disrespectful to what was said by the High Court in Project Blue Sky.
423 The Plaintiffs contention that the March 2016 Share Issue was unreasonable because it deprived Aviation 3030 of the opportunity to issue the shares and sell them for a commercial value in March 2016, puts what I have just said into focus. It cannot be disputed that the March 2016 Share Issue had that effect. Though shares are but choses in action and more may be created, once issued and allotted, or sold, it is unlikely that a further equivalent number of shares could be issued for the same price as would have been achievable had the previously allotted shares for the nominal option price not been issued. This proposition of course assumes an informed buyer, which is where disclosure and unreasonableness intersect.
424 If what was wrong with the March 2016 Share Issue was that it deprived Aviation 3030 of the opportunity to allot the shares at a commercial price, then taking into account the value of the land at that time, the only cure for that detriment to the company is to set aside the March 2016 Share Issue and declare it to be void ab initio. This is the primary relief the Plaintiffs urge upon the Court. The difficulty with this analysis, as I see it, is that it ignores the relevant antecedent events, and in particular that Aviation 3030 was conceived and commenced, in effect, as a joint venture between the Lao interests and the Taing interests. It was the combination of their efforts or ingenuity, or risk taking, or howsoever it may be described, that seized and exploited the business opportunity for the benefit of Aviation 3030. At the time the Early Investors were introduced to that opportunity, it had advanced but had not matured into the profitable venture it had become by the time of the March 2016 Share Issue. To put it in slightly different terms, what was wrong with the March 2016 Share Issue, in the sense I have used that to mean, 'what was unreasonable about the transaction', was the retrospectivity of the option price. It was too little, too late, so to speak. It was an attempt to re-write the history of the shareholders in Aviation 3030. It was perhaps even a realisation on the part of the Founding Shareholders that that not having issued to themselves some shares there would be no benefit to them from Aviation 3030's highly profitable venture. In my view, it is by no means clear that the only remedy, much less the appropriate remedy, is rescission of the March 2016 Share Issue, nor that this must occur if there is to be any effective remedy for Aviation 3030.
425 I find that the March 2016 Share Issue was an unreasonable director-related transaction for the reasons I have given above. However, it does not follow from that finding that everything about the March 2016 Share Issue is tainted with unreasonableness and must therefore be expunged. While the shares have been issued to the option holder's nominee, Lao Holdings, there is no impediment to making orders as to rescission if that were appropriate. In other words, the transaction is not one which has put assets beyond the reach of the Plaintiffs as liquidators or beyond the reach of this Court. Indeed, it is possible to imagine a number of factual scenarios where the belated issue of options to directors, after success of the company's business venture is assured, could only be cured by making an order in the nature of rescission. But this is not such a case.
426 When thinking about whether the transaction is reasonable, analytically, the question of remedy keeps emerging. It does so because it is the character of the unreasonableness that, once identified, reveals what is required to remedy it; and conversely, what remedial action would not be remedial at all, but punitive so far as the wrongdoer is concerned. The unstated predicate of Aviation 3030 having been deprived of the opportunity to allot the shares at a commercial value is, in effect, that the Founding Shareholders could not have ever properly exercised their rights under and pursuant to the Option Agreement. That is the ex-ante equivalent to the primary relief urged upon me by the Plaintiffs. In the present factual context, I do not accept the Plaintiffs' analysis.
427 I pause at this point to say something about the factual context of this case that may put it into the category of the "unusual". This factual context has relevance to the question of whether the March 2016 Share Issue was unreasonable and it is especially relevant to the fashioning of any remedy. The unusual feature is that the facts of this case expose a useful worked example of the consequences for non-parties that arise from a proceeding brought pursuant to s 588FDA of the Corporations Act. The Early Investors are not parties to this proceeding, but the orders the Court may make will have a direct effect in relation to the economic value of their shares in Aviation 3030 and, accordingly, their interests in the property. The same proposition is true for the Founding Shareholders but they are (or were in the case of the Taing Defendants) parties to this proceeding. Mr Lao chose not to submit to the jurisdiction of the Court but that has no bearing on the present analysis.
428 The reason the facts of this case are a useful worked example is because the binary contest in terms of competing economic interests is, as I have said repeatedly, between the Founding Shareholders and the Early Investors respectively. Only one group is represented in this proceeding because only one group is a party to it. But the Plaintiffs as liquidators notionally represent the Early Investors, at least to a point. For example, the Plaintiffs' contention that the primary relief should be to rescind the March 2016 Share Issue, can only benefit the Early Investors. And that may be, as it should, given that the Founding Shareholders are represented and able to put a contrary construction on the events in question. However, a proceeding brought pursuant to s 588FDA of the Corporations Act may not always be a suitable vehicle within which to consider the question of whether the transaction was an unreasonable director-related transaction, and in particular what remedy should flow from that, without at some stage in the proceedings inviting third parties likely to be affected by any remedial order whether they wish to be heard.
429 If the facts of this case were slightly different, it may not have been possible to determine a remedy consistent with the analysis mandated by s 588FF(4) without the Early Investors becoming parties, or possibly by making a representative order in relation to them as a class; or, if the actual facts of this case were the same, save that there was a real contest on the part of the Founding Shareholders concerning the extent to which there had been disclosure of the shares to be issued under the Option Agreement. In the present case, if the character of the unreasonableness as I have described it is correct, but there is a significant factual question that turns upon individual reliance, the Early Investors (or their equivalent) should be parties to the proceeding in order to be bound by findings which will affect, beneficially or detrimentally, their interests. It is conceivable that in some circumstances, where there are several variations among the hypothetical 'early investor class' concerning what they were told or knew in advance about a proposed issue of shares under an option agreement for the benefit of the founders, it may not be practical to determine the question posed by s 588FDA, or fashion a just remedy, without the interests affected by the Court's determination being before the Court, especially if there is a high degree of individual idiosyncrasies, such that a proceeding pursuant to s 588FDA should be stayed pending the hearing of individual claims, or representative proceedings. That is, in substance, the opposite to the course followed here, where the Guildford Proceeding has been stayed pending the resolution of this proceeding. In such circumstances, the preferable course may be to give leave to proceed against the company in liquidation in respect of such claims, so that they may be resolve inter parties as between the parties with the relevant economic interests. Once that has occurred, there may or may not be any work left to do for a proceeding pursuant to s 588FDA, so far as remedial orders are concerned.
430 In this instance, I am satisfied that equity can be done as between the competing economic interests, notwithstanding that the Early Investors are not parties to the proceeding, because the remedy I have determined is, as I have said, equal to or better than the position those investors would have been in had shares been issued upfront to the founders as I have described.
431 I return then to a further characteristic of the Plaintiffs' submission that the Plaintiffs submit supports the conclusion that the March 2016 Share Issue was an unreasonable director-related transaction. That characteristic is that by the March 2016 Share Issue, Aviation 3030 became exposed to the risk, that was predicted by Aviation 3030's external advisers, that ASIC would expand its investigations, take regulatory action and that as well aggrieved existing shareholders would bring claims, particularly having regard to the inadequate disclosure made to the Early Investors. All of that may be accepted, but what were the Founding Shareholders to do? Having taken the course they did, that is not issuing themselves founder shares up front, as time went by and events occurred that had a dramatic effect on the value of the land, the shares on issue at the time became bloated with unrealised gains in real economic value, in line with the corresponding increase in the value of the land.
432 Mr Ribbands' first advice was correct and it was also pragmatic. The essence of his advice was that from the perspective of Aviation 3030 there were compelling external reasons why the options should not be exercised at that time. Those external reasons were twofold: first, ASIC's interest and potential for investigations; and, second, the grave risk that Early Investors would bring claims after being alerted of the diluting effect of the March 2016 Share Issue. These potential claims created a synergy with the ASIC investigations, leading to what Mr Ribbands described as potentially "catastrophic consequences". Broadly speaking, that is precisely what happened. However, Mr Ribbands did not suggest that the option holders should not at any time seek to exercise their rights, rather they should defer doing so and agree to extend the time in which the options may be exercised. I agree that is sound advice in the context in which it was given. That context also included the second advice given by Mr Ribbands on the assumption that the option holders intended to exercise their options, as in fact they did. Had the facts been slightly different, the option holders at that time, Ms Ou and Ms Taing, might have given the requisite notice and thereby exercised their options, but instead of those shares being issued, the Board of Aviation 3030 might have refused to accept the exercise of the options and issue the shares. At that point it would have been open to the option holders to bring a proceeding for the enforcement of their rights under the Option Agreement. That hypothetical proceeding would have likely involved ASIC and it is likely that, in one way or another, the Early Investors would become parties to this hypothetical proceeding, either individually or on some representative basis. There were a range of possible causes of action that would have been available to the Early Investors, including claims founded upon non-disclosure and quite likely also oppression. The Early Investors might also allege breach of directors' duties on the part of the Lao and Taing interests to the Board of Aviation 3030. This is a high level sketch (which I accept is somewhat speculative) of what the so-called counterfactual might have looked like so far as litigation against, or involving, Aviation 3030 is concerned.
433 While the forecast consequences of the March 2016 Share Issue were likely to, and did, ensue, the option holders were entitled prima facie to exercise their rights under the Option Agreement as a matter of contract, subject to extraneous reasons to rescind the agreement. It should also go without saying that as we are here concerned with an anti-avoidance provision (see Vasudevan at [19]), there was nothing in the March 2016 Share Issue that had the effect of dissipating any of the assets of the company externally.
434 In any event, I am not persuaded so far as litigation involving the Aviation 3030 is concerned, that the outcome would not have been materially the same had the Board refused to issue the shares under the March 2016 Share Issue. In my view, the main flaw in the Plaintiffs' analysis on this issue is that it elides the fact that on the state of affairs as they existed in March 2016, the option holders had contractual rights under the Option Agreement, or at a minimum the proper basis to come before a court and seek a determination of their legal rights under that agreement. That hypothetical proceeding would be likely to expand to include a consideration of the rights of the Early Investors, and ASIC would be interested as the regulator, at least in relation to the need to remedy any defective disclosure to the Early Investors and possibly also in relation to other matters.
435 As I have said above, the unstated predicate of the Plaintiffs' case on this point seems to be that the options could never be properly exercised, either because it deprived Aviation 3030 of the opportunity to issue them at a commercial value, or because avoidable litigation and regulatory action would ensue. That contention impliedly asserts that the Founding Shareholders were required to abandon, or vote against, the issue of shares pursuant to options granted to their nominees. That is materially the same, in terms of outcome, as an order in this case to rescind the March 2016 Share Issue. For these reasons, I am not persuaded that the collateral risk of an expanded ASIC investigation, or the Guildford Proceeding, or even hypothetically, a threatened representative group proceeding, would warrant the fiduciary having to abandon, ex ante, the impugned transaction.
436 In this respect, it is highly significant that the transaction in this case is not one that cannot be undone by a court of competent jurisdiction at this stage, and it is not a transaction which has the effect of dissipating the company's assets by moving them outside the jurisdiction. In short, in one way or another, the controversy about the relative rights and obligations of the two groups of shareholders was bound to require quelling by a proceeding before a court, unless it could be resolved otherwise (as the settlement between the Plaintiffs and the Taing Defendants demonstrates). Any claim that may have been brought by a dissatisfied Early Investor, like the Guildford Proceeding, would in substance be a contest as between the two groups of shareholders. Further, it should not be ignored that the ASIC investigation, and its expansion to include an investigation into the March 2016 Share Issue, was of assistance in making corrective disclosure to the Early Investors.
437 Finally, in the context of this case, and having regard to the nature of the proceedings which the Plaintiffs contend should not have arisen but for the March 2016 Share Issue, apart from that causal thesis being dubious for reasons I will explain, before this proceeding was commenced, it is difficult to see why proceedings of the kind anticipated would not have been necessary in one form or another, but for the present proceeding. Ironically, the present proceeding could not have been brought without there being a relevant transaction to impugn, and that transaction is the same one the Plaintiffs submit should not have occurred because of the likelihood that it would provoke litigation against Aviation 3030. In the circumstances of this case therefore, I do not accept the Plaintiffs' thesis that by inciting litigation, in the way they put it, the March 2016 Share Issue was coloured as an unreasonable director-related transaction within the meaning of s 588FDA. As to whether there would have been more or less of one kind of claim or investigation if the share issue had not occurred is, beyond what I have said, an arid question, because to take it further is too speculative.