Chief Disruption Officer Pty Ltd as Trustee for the McDonald Family Trust v Michel, in the matter of Laava ID Pty Ltd

Registry: New South Wales

National Practice Area: Commercial and Corporations

Sub-area: Corporations and Corporate Insolvency

Number of paragraphs: 330

Date of last submission/s: 16 May 2022

Date of hearing: 8-11, 21-25 March and 26 April 2022

Counsel for the Plaintiffs: Mr M Condon SC and Mr D Delaney

Solicitor for the Plaintiffs: Webb Henderson

Counsel for the First, Second, Third and Fourth Defendants: Mr D W Rayment SC and Mr M Collins

Solicitor for the First, Second, Third and Fourth Defendants: J Stephens & Associates

Counsel for the Fifth Defendant: Mr A Smorchevsky

Solicitor for the Fifth Defendant: Automic Legal

Counsel for the Sixth and Seventh Defendants: Mr L W Judd

Solicitor for the Sixth and Seventh Defendants: Peterson Haines

Counsel for the Eighth Defendant: Mr C L W Street

Solicitor for the Eighth Defendant: Garland Hawthorn Brahe

Counsel for the Ninth Defendant: Mr D B Studdy SC

Solicitor for the Ninth Defendant: Peterson Haines

ORDERS NSD 1153 of 2021 IN THE MATTER OF LAAVA ID PTY LTD ACN 617 775 578 BETWEEN: CHIEF DISRUPTION OFFICER PTY LTD AS TRUSTEE FOR THE MCDONALD FAMILY TRUST ACN 609 702 776 First Plaintiff

IAIN JAMES MCDONALD Second Plaintiff

AND: PATRICK MICHEL First Defendant

ANTHONY SURTEES Second Defendant

WILEMICH PTY LTD AS TRUSTEE FOR THE PATH FAMILY TRUST ACN 160 437 730 (and others named in the Schedule) Third Defendant

order made by: GOODMAN J DATE OF ORDER: 3 November 2022

By 18 November 2022, the parties are to confer as to the appropriate orders for relief to give effect to these reasons for judgment and are to provide to the Court: (1) a joint set of orders which may be made by consent; (2) to the extent that agreement has not been reached: (i) competing sets of proposed orders; and (ii) an agreed proposed timetable for the filing of any further submissions concerning those competing orders. 2. The proceeding be listed for a case management hearing on a day after 18 November 2022, such date to be arranged in consultation with the Associate to Goodman J. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

A. INTRODUCTION [1] The context in which the proceeding arises [1] Overview of the claims made by the McDonald Interests [8] Summary of the key findings [11] B. RELEVANT LEGAL PRINCIPLES - OPPRESSION AND FRAUD UPON THE POWER TO ISSUE SHARES [21] Oppression [22] Fraud on the power to issue shares [36] C. APPROACH TAKEN TO THE EVIDENCE [38] D. THE ONGOING EQUALITY UNDERSTANDING [42] The alleged Understanding [43] The shifting basis for the Ongoing Equality Understanding [48] The evidence concerning the alleged Ongoing Equality Understanding [54] (1) Conversation of 20 February 2017 between Mr McDonald and Mr Michel [55] (2) 20 February 2017 email [58] (3) 6 March 2017 email [59] (4) 19 April 2017 email [60] (5) 15 September 2017 email [61] (6) 19 September 2017 email [62] (7) 26 September 2017 email [63] (8) 8 December 2017 emails [64] (9) Failure of Mr Michel and Mr Surtees to invest personally following Mr McDonald's 8 December 2017 email [67] (10) March 2018 conversation [68] (11) 15 June 2018 email [70] (12) Mr Ger's evidence in cross-examination [71] Consideration [72] Any Ongoing Equality Understanding did not survive entry into the Shareholders' Deed [81] (1) The Ongoing Equality Understanding yields to a contrary agreement and the Shareholders Deed is a contrary agreement [82] (2) The entire agreement clause [89] Conclusion on the Ongoing Equality Understanding [94] E. CONDUCT PRIOR TO MR MCDONALD'S RESIGNATION AS ACTING CEO [95] Relevant conduct [96] Consideration [151] The pleaded case [151] The commissioning of the Butcher report [156] Hiring of, and announcement of, Mr Peters as acting CTO [158] Cancellation of projects [159] Mr Peters's Slack message [160] Was Mr McDonald forced out as the acting CEO of Laava? [161] F. CONDUCT PRIOR TO MR MCDONALD'S RESIGNATION AS A DIRECTOR OF LAAVA [164] Relevant conduct [164] Consideration [187] G. CONDUCT AFTER MR MCDONALD'S RESIGNATION AS A DIRECTOR [192] Identification of the impugned conduct [192] The question of notice [194] Clause 5.1 of the Shareholders' Deed [195] Does "Shares" include options? [199] The operation of the phrase "approved by the Founder Shareholders" [208] Conclusion [212] Is there an implied term that the Founder Shareholders would not do anything which destroyed or diminished the rights of the Founder Shareholders conferred by the Deed to insist upon their remaining equal shareholders in Laava, otherwise subject to the terms of cl 5? [213] Consideration of the impugned conduct [218] 1. Second Share Issue [219] 1.1 Issue of shares to Wilemich and MCA in June 2020 [219] 1.2 Offer of options to Mr Ger in November 2020 [236] 2. Fitzpatrick Options Issue [255] 3. First Directors' Options Issue [262] 4. Third Share Issue [273] 5. Second Directors' Options Issue [281] 6. Further Attempted Loan Conversion [309] H. UNCONSCIONABLE CONDUCT CASE [320] I. DIRECTORS' DUTIES CASE [321] J. BREACH OF CONTRACT CASE [322] K. RELIEF [324]

The context in which the proceeding arises 1 Laava ID Pty Ltd (the fifth defendant) is a company in which other parties to this proceeding hold shares. It was incorporated in March 2017 for use by Mr Iain McDonald (the second plaintiff), Mr Patrick Michel (the first defendant) and Mr Tony Surtees (the second defendant) to commercialise a product then under development. 2 Following the incorporation of Laava, its shares were held equally by companies associated with Mr McDonald, Mr Michel and Mr Surtees, being Chief Disruption Officer Pty Ltd (the first plaintiff, CDO), Wilemich Pty Ltd (the third defendant) and Mortgage Company of Australia Pty Limited (the fourth defendant, MCA), respectively. Mr McDonald and Mr Michel were the initial directors of Laava. 3 I will refer below to: (1) the Founders, being Mr McDonald, Mr Michel and Mr Surtees; (2) the Founder Shareholders, being CDO, Wilemich and MCA; (3) the McDonald Interests (being Mr McDonald and CDO), the Michel Interests (being Mr Michel and Wilemich) and the Surtees Interests (being Mr Surtees and MCA); and (4) the Majority Interests, being the Michel Interests and the Surtees Interests together. 4 From 20 July 2017, the date of Laava's first board meeting, Mr McDonald acted as Laava's Chief Executive Officer (CEO) and Mr Surtees was the third director of Laava. 5 In November 2017, a Shareholders' Deed was executed by the McDonald Interests, the Majority Interests and a Mr Kirschenpfadt, who became a minor shareholder. 6 By December 2017, the relationship between Mr McDonald and Mr Michel had deteriorated significantly and in April 2019, Mr McDonald resigned as the acting CEO of Laava. In January 2020, Mr McDonald resigned as a director of Laava. CDO did not nominate anyone to replace him as a director of Laava. 7 Thereafter, the McDonald Interests had essentially no involvement in Laava and Mr Michel and Mr Surtees, as the directors of Laava, made a number of decisions concerning its operations, including decisions to issue further shares in Laava and options over shares in Laava, which had the effect of diluting, or the potential to dilute, CDO's interest in Laava. Some of those shares and options were issued to Mr Gavin Ger (the sixth defendant); Wyargine Pty Ltd (the seventh defendant), a company associated with Mr Ger; and Mr Robert Fitzpatrick (the ninth defendant).

Overview of the claims made by the McDonald Interests 8 In November 2021, the McDonald Interests commenced this proceeding. In December 2021 they filed Points of Claim and in February 2022 they filed Amended Points of Claim. The claims made in the Amended Points of Claim were wide-ranging and not all of those claims have been addressed in the closing submissions made by the McDonald Interests. These reasons address the claims that were pressed in the closing submissions. 9 The case brought by the McDonald Interests may be summarised as follows: (1) the venture between the McDonald Interests and the Majority Interests to commercialise the product under development was in the nature of a quasi-partnership and based upon a Foundational Understanding; (2) the central feature of the Foundational Understanding was an understanding that the Founders or their associates would receive equal shares in any corporate vehicle used to commercialise the product and - subject to any agreement to the contrary - would remain equal shareholders in that vehicle; and to the extent that any dilution in equity occurred, such dilution would be equal as between the Founders or their associates (Ongoing Equality Understanding); (3) the execution of the Shareholders' Deed did not affect the Ongoing Equality Understanding; (4) the breakdown in the relationship between Mr McDonald and Mr Michel was due to the failure of Mr Michel to invest his own funds in Laava (as opposed to funds from the eighth defendant, Lufrapa Pty Ltd, a company associated with Mr Michel and his family and which is a trustee of a trust of which Mr Michel is a beneficiary) and to work in Laava's business with sufficient intensity; (5) following that breakdown in the relationship between Mr McDonald and Mr Michel, the latter embarked upon a course of conduct which was designed to, and did, result in the former resigning as acting CEO of Laava in April 2019 and as a director of Laava in January 2020; (6) that conduct was "oppressive to, unfairly prejudicial to, or unfairly discriminatory against" CDO within the meaning of s 232(e) of the Corporations Act 2001 (Cth); (7) the issues of shares and options which occurred after Mr McDonald resigned as a director of Laava: (a) occurred without the knowledge of Mr McDonald; (b) were contrary to: (i) the Ongoing Equality Understanding; (ii) cl 5 of the Shareholders' Deed which, subject to exceptions, provided each Founder Shareholder the right to have notice of and participate in, any issue of new shares in Laava; and (iii) implied terms of the Shareholders' Deed; (8) the conduct in issuing the shares and options was conduct that: (a) satisfied s 232(e) of the Corporations Act (oppressive conduct); (b) satisfied s 12CB(1) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) (unconscionable conduct); (c) constituted a breach of the Shareholders' Deed; and (9) the issues of shares were undertaken for an improper purpose and constituted a fraud on the power to issue shares. 10 The proceeding settled as against Lufrapa and an order dismissing the proceeding against Lufrapa was made.

Summary of the key findings 11 The key findings in these reasons for judgment are summarised below. 12 First, I am not satisfied on the evidence that the Ongoing Equality Understanding, being the central plank to the Foundational Understanding, was ever reached. 13 Secondly, in any event, any Ongoing Equality Understanding cannot co-exist with the Shareholders' Deed, in circumstances where the former is alleged to be subject to any contrary understanding reached and the latter expressly contemplated that the respective shareholdings of the Founder Shareholders may differ. Further, any Ongoing Equality Understanding was superseded by the Shareholders' Deed by dint of the operation of an entire agreement clause in that Deed. 14 Thirdly, I am not satisfied that the impugned conduct which preceded Mr McDonald's resignation as the acting CEO of Laava in April 2019, or as a director of Laava in January 2020, was oppressive to CDO, for the following reasons: (1) the impugned conduct has to be considered by reference to its effect upon CDO not by reference to its impact upon Mr McDonald qua former acting CEO or director of Laava; (2) I am not satisfied that there was oppressive conduct in circumstances where: (a) CDO had no entitlement to insist upon Mr McDonald being the acting CEO of Laava; (b) CDO was entitled, pursuant to the Shareholders' Deed, to have a director on the board of Laava but following the resignation of Mr McDonald did not exercise its right to do so. Thus, CDO continued to enjoy a right to participate in the management of Laava, which it chose not to exercise; and (c) in any event I am not satisfied that Mr McDonald was "forced out" of the acting CEO position or as a director by the impugned conduct or that the impugned conduct itself was oppressive. 15 Fourthly, I am satisfied that the affairs of Laava were conducted in a manner which satisfied s 232(e) of the Corporations Act with respect to some, but not all, of the conduct which occurred after Mr McDonald resigned as a director in January 2020. 16 Fifthly, I am not satisfied that any of the issues of shares involved a fraud on the power to issue shares. 17 Sixthly, the unconscionable conduct case was not developed so as to extend beyond the oppression case with the consequence that it is unnecessary to consider it separately. 18 Seventhly, I am not satisfied that a case for breach of directors' duties has been established. 19 Eighthly, I am not satisfied that any case for breach of contract has been established, or if it has been, that any loss has been suffered. 20 Finally, there are several options available for relief. In circumstances where the parties addressed relief at a general level and without the benefit of findings as to the extent to which the McDonald Interests had established the various cases that they pursued, it is appropriate to allow the parties an opportunity to make any further submissions on the question of relief.

B. RELEVANT LEGAL PRINCIPLES - OPPRESSION AND FRAUD UPON THE POWER TO ISSUE SHARES 21 It is convenient at this point to consider the legal principles applicable to an assessment of whether the impugned conduct is oppressive or involves a fraud upon the power to issue shares.

Oppression 22 Part 2F.1 of the Corporations Act deals with oppressive conduct of the affairs of companies. Within Pt 2F.1, s 234 deals with standing to apply for an order under s 233. It provides relevantly that a member, as defined in s 231, has standing. Thus CDO, but not Mr McDonald, has standing to seek relief. 23 Section 232 of the Corporations Act sets out the circumstances in which the Court's discretion to make an order under s 233 may be enlivened. It provides: 232 Grounds for Court order The Court may make an order under section 233 if: (a) the conduct of a company's affairs; or (b) an actual or proposed act or omission by or on behalf of a company; or (c) a resolution, or a proposed resolution, of members or a class of members of a company; is either: (d) contrary to the interests of the members as a whole; or (e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity. For the purposes of this Part, a person to whom a share in the company has been transmitted by will or by operation of law is taken to be a member of the company. 24 Section 232(a) relates to the conduct of a company's affairs. The "affairs" of a company for the purposes of ss 232 to 234 are defined broadly in s 53 of the Corporations Act, and there is no dispute that the impugned conduct in the present case involved the "affairs" of Laava. 25 Section 232(d) and (e) require that the conduct in (a), the actual or proposed act or omission in (b), or the resolution or proposed resolution in (c) be either "contrary to the interests of the members as a whole" or "oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity". In the present case, the McDonald Interests have not pleaded that any conduct was contrary to the interests of the members of Laava as a whole (s 232(d)). The McDonald Interests have however pleaded that the impugned conduct is oppressive to, unfairly prejudicial to, or unfairly discriminatory against CDO (s 232(e)). Thus, the impugned conduct must be considered by reference to whether it was oppressive to, unfairly prejudicial to, or unfairly discriminatory against CDO. 26 Section 232 is concerned with whether there has been commercial unfairness in the conduct of the affairs of a company. In Wayde v New South Wales Rugby League Ltd [1985] HCA 68; (1985) 180 CLR 459, Brennan J (as his Honour then was) stated at 472-473 ([5] to [6]) with respect to a predecessor of s 232 (namely s 320 of the Companies (New South Wales Code)) in an oft-cited passage: Section 320 requires proof of oppression or proof of unfairness: proof of mere prejudice to or discrimination against a member is insufficient to attract the court's jurisdiction to intervene. In the case of some discretionary powers, any prejudice to a member or any discrimination against him may be a badge of unfairness in the exercise of the power, but not when the discretionary power contemplates the effecting of prejudice or discrimination. It is not necessary now to decide whether "oppressive" carries in the context of s 320 the meaning which it carried in the context of the statutory precursors of s 320. At a minimum, oppression imports unfairness and that is the critical question in the present case. It is not necessarily unfair for directors in good faith to advance one of the objects of the company to the prejudice of a member where the advancement of the object necessarily entails prejudice to that member or discrimination against him. Prima facie, it is for the directors and not for the Court to decide whether the furthering of a corporate object which is inimical to a member's interests should prevail over those interests or whether some balance should be struck between them. The directors' view is not conclusive, but an element in assessing unfairness to a member is the agreement of all members to repose the power to affect their interests in the directors: see s 78 of the Code. Nevertheless, if the directors exercise a power - albeit in good faith and for a purpose within the power - so as to impose a disadvantage, disability or burden on a member that, according to ordinary standards of reasonableness and fair dealing is unfair, the court may intervene under s 320. The question of unfairness is one of fact and degree which s 320 requires the court to determine, but not without regard to the view which the directors themselves have formed and not without allowing for any special skill, knowledge and acumen possessed by the directors. The operation of s 320 may be attracted to a decision made by directors which is made in good faith for a purpose within the directors' power but which reasonable directors would think to be unfair. The test of unfairness is objective and it is necessary, though difficult, to postulate a standard of reasonable directors possessed of any special skill, knowledge or acumen possessed by the directors. The test assumes (whether it be the fact or not) that reasonable directors weigh the furthering of the corporate object against the disadvantage, disability or burden which their decision will impose, and address their minds to the question whether a proposed decision is unfair. The court must determine whether reasonable directors, possessing any special skill, knowledge or acumen possessed by the directors and having in mind the importance of furthering the corporate object on the one hand and the disadvantage, disability or burden which their decision will impose on a member on the other, would have decided that it was unfair to make that decision. 27 In Morgan v 45 Flers Ave Pty Ltd (1986) 10 ACLR 692 at 704, Young J (as his Honour then was) explained: … it has been accepted that one no longer looks at the word 'oppressive' in isolation but rather asks whether objectively in the eyes of a commercial bystander, there has been unfairness, namely conduct that is so unfair that reasonable directors who consider the matter would not have thought the decision fair: see Wayde's case. … In my view a court now looks at [the phrase "oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member"] as a composite whole and the individual elements mentioned in the section should be considered merely as different aspects of the essential criterion, namely commercial unfairness. … 28 In Catalano v Managing Australia Destinations Pty Ltd [2014] FCAFC 55; (2014) 314 ALR 62 at 66 [9], the Full Court (Siopis, Rares and Davies JJ) stated: The test of unfairness requires an objective assessment of the conduct in question with regard to the particular context in which the conduct occurs. The question is whether objectively in the eyes of the commercial bystander there has been unfairness, namely conduct that is so unfair that reasonable directors who consider the matter would not have thought the conduct or decision fair. As the test is objective, whether or not the conduct is oppressive will not depend upon the motives for what was done. It is the effect of the acts that is material: Wayde 180 CLR at 472-473; Campbell 238 CLR at 360 [176]. 29 In Mackay Sugar Ltd v Wilmar Sugar Australia Ltd [2016] FCAFC 133; (2016) 338 ALR 374 at 377 [12] Gilmour, Jagot and White JJ referred to these observations and, at 378 [14], to the following observations of the Victorian Court of Appeal (Nettle, Ashley and Neave JJA) in Joint v Stephens [2008] VSCA 210; (2008) 26 ACLC 1467 at [136]: … the task of deciding whether there has been commercial unfairness is to be undertaken in the context of the particular relationship which is in issue. As is observed in Ford [Austin and Ramsay, Ford's Principles of Corporations Law, 13th Ed [11.450].], the assessment of commercial unfairness will not infrequently involve a balancing exercise between competing considerations. In turn that may involve an examination of the conduct of the applicant. … 30 The conduct of the applicant may be such as to render conduct which is prejudicial, nevertheless not unfair. In Morgan, Young J at 706 endorsed the following statement of Nourse J in Re London School of Electronics Ltd [1986] Ch 211 at 222: The conduct of the petitioner may be material in a number of ways, of which the two most obvious are these. First, it may render the conduct on the other side, even if it is prejudicial, not unfair: cf.: In re R. A. Noble & Sons (Clothing) Ltd. [1983] B.C.L.C. 273. Secondly, even if the conduct on the other side is both prejudicial and unfair, the petitioner's conduct may nevertheless affect the relief which the court thinks fit to grant under subsection (3). In my view there is no independent or overriding requirement that it should be just and equitable to grant relief or that the petitioner should come to the court with clean hands. 31 R A Noble & Sons (Clothing) Ltd [1983] BCLC 273, to which Nourse J refers, was a case in which the petitioner effectively abandoned the company in which he was a shareholder and a director. I gratefully adopt the following summary of that case from the judgment of Rees J in Re Scientific Management Associates Pty Ltd [2019] NSWSC 1643; (2019) 141 ACSR 115 at 181 [280]: In R.A. Noble & Sons, the prejudicial conduct consisted in one director running a quasi-partnership company virtually as his own. The principal complaints were that the alleged oppressor continually failed to provided stock records, refused to execute a loan agreement; failed to provide financial accounts and failed to agree to a 50% share split. Nourse J held that the conduct was not unfair because the applicant had not shown any interest in being involved in management or decision making: at 292. It was submitted that the plaintiff's conduct in that case resembled the informal steps taken by Mr Glatis. 32 Consideration of the fairness or otherwise of particular conduct does not involve the Court re-assessing the commercial wisdom of decisions made by directors. As Jagot J explained in RBC Investor Services Australia Nominees Pty Limited v Brickworks Limited [2017] FCA 756; (2017) 348 ALR 605 at 616 [42]: The touchstone of oppression, that conduct be so unfair that reasonable directors who consider the matter would not have thought the conduct or decision fair, may appear circular but is designed to reinforce that the role of the court is not to step into the shoes of the directors and unilaterally decide what it thinks to be in the best interests of the company as a whole. The courts recognise that it is the responsibility of the directors to weigh the competing considerations with which they will be routinely confronted and determine what is in the best interests of the company as whole. They recognise also that as the task of the directors is evaluative it is necessarily one about which reasonable minds may differ. In performing its own evaluation, accordingly, the courts do not merely substitute what appears to them to be the preferable commercial decision. As Mansfield J summarised in Territory Realty Pty Ltd v Garraway [2009] FCA 292 at [312]: The authorities indicate that the Court should not readily find either s 232(d) or (e) is made out: Edwards v Idaville Pty Ltd (1996) 22 ACSR 1. Such a finding requires consideration of all the circumstances, viewed cumulatively, but not with a hypercritical approach, as the measure is the standard of reasonable directors: De Tocqueville Private Equity Pty Ltd v Linden & Conway Ltd (2006) 59 ACSR 587. It is not a finding to be made because the Court may, on the information available, disagree with the decision of the directors, or because the wisdom of hindsight may show that the decision of the directors was unwise and perhaps grossly so, or because the directors or management did not conduct the affairs of the company as well as the Court considers they may have: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1998) 28 ACSR 688. As Murray J said in Re Spargos Mining NL (1990) 3 ACSR 1 at 44, the Court should not in substance adopt an approach to those provisions without clear justification, so that it does not simply take "over the management of the company". 33 Instances of conduct, when considered individually may not constitute oppressive conduct but when considered together, their cumulative effect may be oppressive: Hylepin Pty Ltd v Doshay Pty Ltd [2021] FCAFC 201; (2021) 288 FCR 104 at 129-130 ([132] to [136]) per Markovic, Banks-Smith and Anderson JJ. 34 In the context of the power to allot shares, it is necessary to bear in mind that such a power is fiduciary in nature. In In the matter of Anna Bay Resort Pty Ltd [2022] NSWSC 331, Rees J explained at [192] to [193]: 192 The power of the director to allot shares is a fiduciary power: Ngurli Ltd v McCann (1953) 90 CLR 425; (1953) 27 ALJR 349 at 439; Howard Smith Ltd v Ampol Petroleum Ltd [1974] 1 NSWLR 68 at 76; [1974] AC 821 at 834B per Lord Wilberforce (PC); Whitehouse v Carlton Hotel at 289-290 (per Mason, Deane and Dawson JJ). The power to allot new shares is conferred primarily to enable capital to be raised when required. In ascertaining the purpose for which the power was in fact exercised, the court is concerned with the state of mind of the director and is informed by the surrounding circumstances. As the Privy Council explained in Howard Smith Ltd v Ampol Petroleum at 77 (NSWLR); at 834B (PC) (citing what Viscount Finlay had said in Hindle v John Cotton Ltd (1919) 56 Sc LR 625 at 630-631): Where the question is one of abuse of powers, the state of mind of those who acted, and the motive on which they acted, are all important, and you may go into the question of what their intention was, collecting from the surrounding circumstances all the materials which genuinely throw light upon that question of the state of mind of the directors so as to show whether they were honestly acting in discharge of their powers in the interests of the company or were acting from some bye-motive, possibly of personal advantage, or for any other reason. 193 Directors of a company cannot ordinarily exercise a fiduciary power to allot shares for the purpose of defeating the voting power of existing shareholders by creating a new majority: see Ngurli Ltd v McCann at 440; Ashburton Oil NL v Alpha Minerals NL (1971) 45 ALJR 162; (1971) 123 CLR 614 at 640 (per Gibbs J); Howard Smith Ltd v Ampol Petroleum Ltd at 79 (NSWLR); at 827D (AC); Whitehouse v Carlton Hotel at 289 (per Mason, Deane and Dawson JJ); HNA Irish Nominees Ltd v Kinghorn (No 2) (2012) 290 ALR 372; [2012] FCA 228 at [639] (per Emmett J). As the plurality (Mason, Deane and Dawson JJ) stated in Whitehouse v Carlton Hotel at 290: It is simply no part of the function of the directors as such to favour one shareholder or group of shareholders by exercising a fiduciary power to allot shares for the purpose of diluting the voting power attaching to the issued shares held by some other shareholder or group of shareholders. 35 The test under s 232 of the Corporations Act is objective and thus the requisite commercial unfairness is capable of proof without reference to the purpose or motive of the persons alleged to have created the commercial unfairness: Catalano at [9], citing Wayde at 472-473 and Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 at 360 [176]. However, proof of the existence of an improper purpose or ulterior motive may mean that a conclusion of commercial unfairness is more readily reached: Wilmar Sugar Australia Ltd v Mackay Sugar Ltd [2017] FCAFC 40; (2017) 345 ALR 174 at 195 [73] (Dowsett, Jagot and White JJ).

Fraud on the power to issue shares 36 As noted above, the power to issue shares is a fiduciary power and is conferred primarily to enable capital to be raised when required. In contrast to the position when considering whether there has been oppression, it is necessary to consider the purpose or motive behind the issue because the power to issue shares is not to be used for an ulterior purpose. In Ngurli Ltd v McCann [1953] HCA 39; (1953) 90 CLR 425 at 438 [24], Williams ACJ, Fullagher and Kitto JJ explained: But the powers conferred on shareholders in general meeting and on directors by the articles of association of companies can be exceeded although there is a literal compliance with their terms. These powers must not be used for an ulterior purpose. "The term fraud in connection with frauds on a power does not necessarily denote any conduct on the part of the appointor amounting to fraud in the common law meaning of the term or any conduct which could be properly termed dishonest or immoral. It merely means that the power has been exercised for a purpose, or with an intention, beyond the scope of or not justified by the instrument creating the power", per Lord Parker in Vatcher v. Paull …" "The Court will not allow him" (that is the appointor) "to interpret the donor's intention in any other sense than the Court itself holds to be the true construction of the instrument creating the power; and a literal execution of the power, with a purpose which it does not sanction, is regarded as a fraud on the power", per Hatherley L.C. in Topham v. Duke of Portland…Voting powers conferred on shareholders and powers conferred on directors by the articles of association of companies must be used bona fide for the benefit of the company as a whole. … 37 The power to issue shares might be exercised for more than one purpose and thus might involve a mixture of permissible and impermissible purposes. In Whitehouse v Carlton Hotel Pty Ltd [1987] HCA 11; (1987) 162 CLR 285 at 294 [10], Mason, Deane and Dawson JJ explained that in such circumstances a "but for" test is appropriate: It should be mentioned that one finds in some statements of the vitiating effect of a purpose of diluting the voting power of one or more existing shareholders a qualification to the effect that the allotment will be invalid if it is "merely" or "purely" or "solely" for that purpose (see, e.g., Piercy v. S.M. Mills and Company, at p 84; Grant v. John Grant & Sons Pty. Ltd. (1950) 82 CLR 1, at p 32; Howard Smith v. Ampol, at pp 837-838). The introduction of such a qualification is intended to put to one side cases in which there are present both permissible and impermissible purposes. In such cases of competing purposes, practical considerations have prevented the law from treating the mere existence of the impermissible purpose as sufficient to render voidable the exercise of the fiduciary power to allot shares (see Mills v. Mills (1938) 60 CLR 150, at pp 185-186 and note, as to Dixon J's apparently inadvertent use of the word "void", Richard Brady Franks Ltd. v. Price (1937) 58 CLR 112, at p 142). In this Court, the preponderant view has tended to be that the allotment will be invalidated only if the impermissible purpose or a combination of impermissible purposes can be seen to have been dominant - "the substantial object" (per Williams ACJ., Fullagar and Kitto JJ., Ngurli Ltd. v. McCann, at p 445 quoting Dixon J. in Mills v. Mills, at p 186 and see Harlowe's Nominees, at p 493); "the moving cause" (per Latham C.J., Mills v. Mills, at p 165). The cases in which that view has been indicated have not, however, required a determination of the question whether the impermissible purpose must be "the" substantial object or moving cause or whether it may suffice to invalidate the allotment that it be one of a number of such objects or causes. As a matter of logic and principle, the preferable view would seem to be that, regardless of whether the impermissible purpose was the dominant one or but one of a number of significantly contributing causes, the allotment will be invalidated if the impermissible purpose was causative in the sense that, but for its presence, "the power would not have been exercised" (per Dixon J., Mills v. Mills, at p 186).

C. APPROACH TAKEN TO THE EVIDENCE 38 This is largely a documentary case. There are many thousands of pages of contemporaneous documentary evidence. These documents, for the most part, reveal what has happened, and given their inherent reliability, have been the primary resource from which I have made the findings of fact set out below. 39 I have, of course, also considered the affidavit and oral evidence of the witnesses. In this regard, the central witnesses were the Founders. The impression that I formed of each of them was that each was recounting his recollection of events to the best of his ability, but under the (understandable) influence that the restraints of human memory, the passage of time and self-interest placed upon his ability to recall particular events. In this regard, the oft-cited observations of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 319 are apposite: … human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. 40 I did not form the view that any of the Founders (or indeed any witness) was seeking to give false evidence. 41 The nature of this proceeding has required little resort to credit in making factual findings. The impugned transactions are recorded in the multitudinous documents and there are few disputed conversations of any moment. The McDonald Interests invited me to disbelieve the evidence of Mr Michel and Mr Surtees as to their subjective purposes and to infer that: (1) Mr Michel acted so as to remove Mr McDonald as acting CEO and later as director. I am not persuaded. This contention is not supported by the contemporaneous evidence considered as a whole and relies upon the drawing of inferences as to Mr Michel's conduct, which I do not regard as available on the evidence; and (2) Mr Michel and Mr Surtees acted with an improper purpose of seeking to dilute the McDonald Interests' stake in Laava after Mr McDonald ceased to be a director of Laava. Again, I am not persuaded. Whilst such dilution or potential dilution was a consequence or potential consequence of the transactions and resolutions, I do not accept that it was the purpose, or (where relevant) a purpose but for which the transactions would not have occurred or been proposed. The contemporaneous documents, on the whole, suggest that after Mr McDonald ceased to be a director of Laava, the Majority Interests were seeking to sustain a business which required regular injections of cash whilst seeking to both reward and incentivise those who were contributing to its continuance, in circumstances where the McDonald Interests had effectively abandoned Laava.

D. THE ONGOING EQUALITY UNDERSTANDING 42 A central and recurring theme in the McDonald Interests' case is that the Founders reached the Foundational Understanding, and in particular the Ongoing Equality Understanding from which the Majority Interests subsequently departed. Thus it is appropriate to consider this issue before considering the impugned conduct.

The alleged Understanding 43 The McDonald Interests contend, by their Amended Points of Claim, that the Foundational Understanding was reached between the Founders between February and August 2017. They do not contend that it has contractual force. 44 The McDonald Interests contend that the Foundational Understanding included the following elements: (1) Mr McDonald contributed sweat equity (having devoted approximately seven months of his time developing Laava's business for no compensation); (2) Mr Michel would provide initial funding for the business in the range of $250,000 - $300,000 and would raise capital for the business to fund the commercialisation of the "Authentication System" - being the technology that enabled users thereof to identify and authenticate objects, persons or documents in physical or digital form and would utilise his network to secure deal flow and partners, including the CSIRO, to assist with the generation of clients and revenue - from sophisticated investors; (3) Mr Surtees would assist with the commercialisation of the Authentication System; (4) Mr Michel's and Mr Surtees's shareholdings in the business would be all of the compensation for their contributions and work in the business as founders; (5) each of the Founders or their respective nominees would receive and hold equal shares in any company registered to commercialise the Authentication System; (6) subject to the terms of any agreement between them, each of the Founders or their respective nominees would remain equal shareholders in any company, and to the extent that any dilution of their equity occurred, it would be equal; (7) the affairs of any company would be conducted on the basis of mutual trust and confidence; (8) each of the Founders or their respective nominees would have equal voting rights; (9) each of the Founders would be a director of Laava or have a right to appoint a director of Laava; and (10) each of the Founders would own and/or control Laava or the greater part of its share capital. 45 The Majority Interests admit that by about 6 March 2017 the Founders had reached an understanding. However, they contend that the effect of the understanding was that: (1) the Founders would incorporate a company; (2) Mr Michel and Mr Surtees would each supply $20,000 as the seed capital of the business; (3) Mr McDonald's "sweat equity" was worth $20,000 in lieu of contributing $20,000 cash towards the business's seed capital; (4) the Founders would each hold one third of the company on incorporation; (5) Mr Michel would act as part time Chief Financial Officer of the company and provide administrative support; and (6) Mr Surtees's shares would vest over three years. 46 The Majority Interests admit that Mr Michel and Mr Surtees agreed that directors would not receive remuneration, but deny that this extended to services, work, or time performed or provided other than as directors, and say that it was mutually understood and agreed that work carried out for the Company other than as a director would be paid. They also contend (as was the case) that subsequently each of the Founders at various times paid (including by way of cash payment or amounts accrued as a loan payable by the Company) for that time in accordance with that agreement or understanding. The Majority Interests otherwise dispute the existence of the alleged Foundational Understanding. 47 The central plank of the Foundational Understanding is the Ongoing Equality Understanding (which is reflected in [44(5) and (6)] above). I turn now to consider whether such an understanding was ever reached, and if so, whether it survived the Shareholders' Deed.

The shifting basis for the Ongoing Equality Understanding 48 The McDonald Interests invite the Court to infer the existence of the Ongoing Equality Understanding from a miscellany of events. However, the contents of that miscellany of events changed considerably between the time that the case was pleaded and the time that closing submissions were made. 49 The particulars to the pleading of the Foundational Understanding in the Amended Points of Claim are as follows: i. Meeting on 16 February 2017 between McDonald and Surtees. ii. Meeting on 27 February 2017 between McDonald and Surtees. iii. Meeting on 17 March 2017 between Michel and McDonald. iv. Meeting on 21 April 2017 between McDonald and Surtees. v. Meeting on 10 May 2017 between McDonald and Surtees. vi. Meeting on 16 May 2017 between McDonald and Surtees. vii. Meeting on 18 May 2017 between McDonald and Surtees. viii. Meeting on 29 May 2017 between Michel and McDonald. ix. Meeting between Michel, Surtees, McDonald and Peter Dunne of Herbert Smith Freehills on 23 June 2017. x. Laava board meeting on 20 July 2017. xi. Discussions between McDonald, Surtees and Michel in the period from February to August 2017. xii. Further particulars may be provided. 50 The evidence relied upon by the McDonald Interests in their closing submissions to establish the Ongoing Equality Understanding is: (1) a conversation between Mr McDonald and Mr Michel on 20 February 2017; (2) an email from Mr McDonald to Mr Michel of the same date; (3) an email from Mr Michel to Mr McDonald dated 6 March 2017; (4) an email from Mr Michel to Mr McDonald and Mr Surtees dated 19 April 2017; (5) an email from Mr Michel to Mr McDonald dated 15 September 2017, which attached a draft Shareholders' Deed; (6) an email from Mr Michel to Mr McDonald and Mr Surtees dated 19 September 2017 concerning Mr Kirschenpfadt; (7) an email from Mr Michel to Mr McDonald, Mr Surtees and Mr Dunne of Freehills dated 26 September 2017; (8) an email from Mr Michel dated 8 December 2017; (9) an email from Mr McDonald dated 8 December 2017; (10) an email from Mr Michel to Mr Kirschenpfadt dated 12 December 2017; (11) the failure of Mr Michel and Mr Surtees to invest personally in Laava following Mr McDonald's 8 December 2017 email; (12) a conversation between Mr McDonald and Mr Surtees in March 2018; (13) an email from Mr Michel to Mr McDonald dated 15 June 2018; and (14) an answer by Mr Ger in cross-examination: Q: And that's not, in your view, an unusual idea, that founders of a company should have relative to each other the same amount of equity, is it? A: I don't think it's unusual, no 51 Before considering that evidence, I note that the contrast between the case as pleaded and particularised and the case in closing submissions is stark. Critically: (1) none of the particularised meetings in particulars i. to x. is referred to as evidence upon which the McDonald Interests rely in their closing submissions; (2) whilst particular xi. refers to discussions between the Founders in the period from February to August 2017, the only item of evidence relied upon which falls within this (very general) description is the conversation of 20 February 2017 between Mr McDonald and Mr Surtees (and not Mr Michel); (3) the particulars do not refer to any emails, but the closing submissions refer to emails dated 20 February 2017, 6 March 2017, 19 April 2017, 19 September 2017, 26 September 2017, 8 December 2017, 12 December 2017 and 15 June 2018; and (4) the conversation of March 2018, which is submitted to be a piece of key evidence, is not particularised. 52 Further: (1) the concept of an Ongoing Equality Understanding was not mentioned in: (a) the letter of demand sent by the solicitors for the McDonald Interests on 1 November 2021 just prior to the commencement of this proceeding. Whilst that letter referred to an intention to share equally the equity in Laava, this is done by reference to the Shareholders' Deed, rather than any understanding which pre-dated the Shareholders' Deed; (b) Mr McDonald's first affidavit affirmed on 5 November 2021 (in which he dealt with the formation of Laava and with complaints about the conduct of Laava's affairs), his second affidavit affirmed on 8 November 2021, or his third affidavit affirmed on 16 November 2021. It was not until Mr McDonald's fourth affidavit affirmed on 9 February 2022 that the Foundational Understanding was addressed; (2) an allegation that there was an Ongoing Equality Understanding, despite its centrality to the case brought by the McDonald Interests and its suggested centrality to the relationship between the Founders and between the Founder Shareholders, was not included in the Points of Claim filed on 10 December 2021, and was not included until the Amended Points of Claim were filed on 15 February 2022; and (3) many of the particulars provided are not the subject of evidence, or of submissions. 53 The marked shift in the identification of the events alleged to give rise to the Ongoing Equality Understanding and the manner in which it emerged as part of the McDonald Interests' case does not engender confidence that such an understanding ever came into existence.

The evidence concerning the alleged Ongoing Equality Understanding 54 The evidence which has been referred to in the McDonald Interests' closing submissions as supporting the proposition that there was an Ongoing Equality Understanding and is listed at [50] above is considered below. Where the McDonald Interests have identified particular parts of an email as being of particular significance, those parts have bold emphasis.

(1) Conversation of 20 February 2017 between Mr McDonald and Mr Michel 55 The conversation of 20 February 2017 is recounted by Mr McDonald as follows: McDonald: Having met Tony, I think the value he could bring would be significant to this project. Michel: I think he should get 5 to 10%. McDonald: I strongly believe that good partnerships are based on the ground being level. In my last business, having equal equity with my partner for 10 years meant the ground was always level. Michel: What are you thinking? McDonald: I think we should all be equal. 33%. You're providing capital and some investors, I'm bringing the sweat and production know-how to build the business, and Tony has commercial and development partners which could accelerate this project. Michel: It seems too much to me. McDonald: I once had a partner who had less equity, and they became disinterested very quickly. If Tony is able to open doors, which he says he can, I think it will be worth it. He can also help you with raising capital. Normally, someone in my position would have a much larger part of the equity, like 70%, because the ID of things is a concept I came up with and I also have the know how in building teams and business systems. Even though this is a new idea and I came up with it, I respect our original 50/50 deal and your promise to fund. So, I'm suggesting that if we all make our agreed contributions and are fairly contributing to the business, even though it's a lot more than I have to give, I will give you and Tony a third of the equity in the business. That is, all things being equal, we will all be happier and more productive, even if it means I am getting a lot less equity than I would normally. Michel: OK, I see what you are saying. I'll speak to Tony. 56 Mr Michel denied that such a conversation occurred. His evidence was as follows:: I refer to paragraph 39 of the IJM Affidavit. A conversation to the effect set out in that paragraph did not occur. Iain and I had various conversations during that period about Tony's involvement, including discussions about whether we wanted Tony involved, in what capacity, and for what shareholding. At first we discussed issuing Tony a small stake, then a vesting stake, then about keeping the Lofo idea to ourselves (me and Iain), but having a "holdco" for all other matters. Eventually we agreed that we should just go one third each for $20,000, with Iain's contribution over the previous months as his $20,000. In none of those conversations did Iain or I say words to the effect set out in that paragraph. We did not discuss nor did we agree that: (a) Tony was getting his third for good contacts and no cash; (b) my third was going to cost me $200,000-$300,000. 57 For the reasons set out at [73] below, it is not necessary to decide which version (if any) to accept.

(2) 20 February 2017 email 58 The 20 February 2017 email from Mr Michel to Mr McDonald is in the following terms: I'm going to chat to Tony about whether it's a good idea to set up a company now, here in Oz. It may be best to put it all in the US and wait a few weeks for that. An early stage VC might just pass if he sees Australian based company, with Australian tax, Australian shareholders agreement etc, and put it in the too hard basket (where 99% of deals go). Bob could do it all in the US. Regarding our deal, I prefer a handshake than a legal doc, but we might be quickly moving beyond that now, and I appreciate you've been screwed before by people you trusted. We should write it down but in general terms, so we don't trip each other on detail. I really don't want a 50 page agreement with negotiated terms where we could in the future rely on technicalities etc. I want a true partnership based on our friendship. How about: - Iain / Patrick to approach this as 50:50 partners. - agree that unless one of us becomes CEO and gets a bunch of shares/options as remuneration, we will maintain 50:50. - if money needs to go in and one of us has more than the other, might use a preferred debt instrument, i.e. loan the money at x% instead of shares, to avoid dilution. - we agree that regardless of the fact that we will contribute different levels of IP, time, ideas, chutzpah, brilliance, good looks, network, relationships, money etc, we will not try to revisit our 50:50 agreement. - everything we generate / contribute regarding lofo belongs to lofo. Something like that. Another idea: perhaps you and I should hold all our joint shares in Lofo via 1 separate company (with 1 share each, 1 directorship each). We could call it Fowilembocha Pty Ltd or Lofoco Pty Ltd (I'm pretty sure name's not taken). So that we always vote as one and have to agree ahead of time. From an investor perspective, it gives them comfort that we can sort out any issues we may have separately AND it gives us comfort that no investor can try to manipulate us in the future to get us to vote against one another. What do you think?

(3) 6 March 2017 email 59 The email from Mr Michel to Mr McDonald on 6 March 2017 is in the following terms: I met with Tony. Important meeting decisions worthy of written summary. Tony is officially a Laava partner. We shook hands on the following: 1/3 each. Ours has vested, Tony will vest over 3 years. We'll have the usual drag along/tag along rights to ensure if things go super quick, he's not dudded. We're all signing up to our communist model, apart from vesting above, we're now all equal pigs. Tony and I will put in $20k each in the very near future. We both agree your input/work over the last few months is your $20k worth. We'll all do what's required, but recognise that we do not want to reinvent wheels or step on each others' toes. Couple of other things we discussed in our excitement: Like Fight Club, "the first rule about Laava is that we do not talk about Laava" in unprotected/non-NOA environment/email. Phone is fine. Encrypted communication coming soon. We've both had a multitude of conversations with friends /acquaintances etc about lofo. We need to stop for now. Let's remove the stuff you did last week from "online" and from G:drive as well as the demo lofo stuff. We will see how far our own money takes us (not very) but we might try to avoid or delay a "friends and family" round for now. I think we know it's there, but let's see what other options we have for a more "value add" semi-strategic investors when we have more tangible value "under out (sic) belts". That's it.

(4) 19 April 2017 email 60 The 19 April 2017 email from Mr Michel to Mr McDonald and Mr Surtees provided: Tony What we'd broadly agreed re your shares is that the three of us are equal partners with the only exception being that Iain and I are already 50:50 partners with issued shares, whereas your 1/3 is effectively conditional upon you continuing to be involved and contributing over the next 3 years. Effectively reflecting how things evolved in the first place. We've got 30 shares each at $1, you get the right to buy 3x 10 shares at $1, subject to the above. Because the option over shareholding is greater than 10%, it's not a traditional ESOP (wouldn't qualify under ATO rules), and I wouldn't want it to have negative tax implications on any of us. Have you got a particular way in which you'd like this done. At this point in time, getting legal / tax advice is not really something I want us to spend much money on. Any ideas, old templates floating around that could avoid that? Maybe we issue you 30 partly paid shares to $0.01 with no voting / dividend rights until fully paid today, and the company invites you to pay up $0.99/share upon your annual contribution event. That could be very simple and probably taxed fairly normally. You'd get an accelerated right to pay up upon share offer / exit. Would that work?

(5) 15 September 2017 email 61 The email from Mr Michel to Mr McDonald and Mr Surtees dated 15 September 2017 is in the following terms: Here's the draft Shareholders Agreement and CK's share offer letter. I've tried to KISS. SHA 3 directors. CK in due course, if we all feel we need you to become director and you want to be, we can discuss. Tag along trigger at 40%, drag along at 50%. Right of first refusal extends to all shareholders No share sale allowed for first 3 years unless exit Non compete for us 4 CK offer letter No vesting, but the forced sale provisions achieve the same thing in the first 3 years, i.e. leaves for any reason in first 2 years, then we buy them back at $1, good leaver in 3rd year, then 15% discount to fair market value. I'm conscious that this is the last thing you'll want to do not only on the week-end, or at any time. The quicker we do it, the quicker I can give it to Christian. Let's discuss when ready.

(6) 19 September 2017 email 62 The email from Mr Michel to Mr McDonald and Mr Surtees dated 19 September 2017 concerning Mr Kirschenpfadt is in the following terms: Ok I'll go back to him on that. The important thing for us 3 is that our shares are fully owned fully paid. If we die or stop working on Laava tough luck, that's our communist ideal from day dot. In the shareholders agreement we have also enshrined a right to a board seat. This is because the board has certain powers to make decisions (offering jobs, entering into major contracts etc) which we want a say in. For CK I think it's more about being treated as part of the gang. I think I'll clearly express that he is but we've known each other a long time and yes Tony had to wait to be one of us despite us knowing each other a long time.

(7) 26 September 2017 email 63 The email from Mr Michel to Mr McDonald, Mr Surtees and Mr Dunne dated 26 September 2017 is in the following terms: Iain, Tony, Peter CK and I had a pleasant and never heated nor challenging discussion about his board seat. CK has a personal, emotional need for this. "Show me I'm part of the gang. I want to belong. I want my gang colours." Acknowledges it may be a tad needy, but that's his view. We discussed the different viewpoint about what the role of the board is, shareholders agreement, exec vs board vs shareholder decisions etc, the whole "are you sure you want to be exposed etc". Won't bore you with that. I explained OUR (not Patrick) perspective: • this isn't a power play, we're thinking about pros/cons from the company's perspective • positives of giving a board seat to CK NOW: keeps him happy • negatives (or potential) 1. Peter indicated it would look odd to have 4 exec directors for 1 year old company and is unlikely to last. CK doesn't share that opinion (that's all it is) and doesn't think it's a strong argument. Fair enough. 2. We all feel it would look strange to give a directorship to a new guy who's not CEO and to do so in week 2. CK gets that, but wants to know whether there's a hurdle we can set where he gets it. 3. There is no point doing it from a vote perspective. Currently we have an odd # of directors. If we have 4 directors, we'd need a casting vote. I said, and he totally accepted that it would not be him, and that personally (this time not the company), I had an issue with rocking our equal-pigs communist paradise. My solution therefore would be to say "in a hung vote, the side with 2 founders wins". That would mean that his vote would always loose and therefore what's the point. He said he didn't care about losing a vote, he wanted to be part of it. He was still concerned there was an underlying motive we hadn't told him about. I said not but since the logic says there's one benefit (keeping him happy) vs. a few issues (listed above) we thought it was best to try to reason through it. I said that personally, we all [one way or another] felt it was a tiny bit bolshy to demand a board seat without having done anything after we'd already gone above and beyond in including him AND that he hadn't put in any money. He indicated he at first hadn't fully appreciated what the founder shares meant to us and that he totally appreciated them, and accepted the idea that perhaps he needed to prove himself first. He didn't understand or accept the point that investors could find it odd or question our judgement, but acknowledge that it could be the case. On how he'd react if investors asked us to shrink the board (and he would be the first one asked to leave), he said he'd deal with that if/when it happened. I said no, that was exactly proving the point that overall it would be negative to give him a board seat if it meant he'd hold a gun to our head at the time of a capital raising. He accepted my point. He totally gets that we are three equal pigs with 3 equal shares, zero vesting, and founder rights to board seats enshrined in our SHA. He has less shares and vesting. He's fully ok with that. So it all went well and everybody could see the other's point of view and we left is at this: "PM, I've heard what you said, I get it, you've heard what I had to say, you get it. Let's stop now and I'm comfortable with the following solution: I'll leave it to you guys to consider and get back to me with your answer. I will accept it either way and not hold a grudge, but I would like a board seat. No need to speak to Peter or anything like that." So he's obviously a smart negotiator, which I really like, because he's left us with the choice of a win-win or win-lose position, he wasn't overly emotional (or if he was a bit, not aggressively so) and open-minded. One of the things I was worried about after his first email of "non negotiable" was that we were dealing with a macho hot-head. We're not. My recommendation is that the best solution is this: • Acknowledge his position. • Grant him a board observer right starting tomorrow, and a board seat subject to the following conditions o If he proves himself in the next 6 months by • signing up 3 pilots, • dealing successfully with CSIRO, • executing on 3 pilots, • building a cohesive team with proper systems and • being a super cobber we all want to partner with. o His board seat is offered for surrender as part of the capital raising, i.e. we acknowledge you might prefer a smaller board. No tanties, no negotiations, no ifs no buts. o Hung board decision won by 2 founder directors. It costs us and the company nothing, no risk of him getting pissed off, motivates him to achieve, we avoid the potential capital raising downsides. All those in favour?

(8) 8 December 2017 emails 64 The email dated 8 December 2017 from Mr Michel is in the following terms: I've attached the Peter Dunne capital raising email below as a follow on. Here's what we discussed today: • If we try to raise $3-4m today, we're going to write off the ability to get Commercialisation Australia free $1m, We're also heading into a dead zone of Dec-Jan • We can easily pass the hat around for $500-600k now: Around the table we found $500-600k, between mum, my sister, me, Tony, CK. Offer to Iain/Ingo/Brad also. All in convertible notes. • We then go hard core, CK/TS/PM in putting together a [$700k-1m] application to CA to have that ready ASAP and possibly submitted to Feb/Mar meeting. • We then proceed with cap raising: o 1-3 corner stone high-profile investors for $1.5-3.0m to sign term sheet underwrite cap raising of convertible notes. o Grok / Quantium / CSIRO / Kin o Ebay / Amazon • $1.0-1.5m F&F round on same terms with high hurdle of value add Is that accurately reflecting what we decided? 65 Mr McDonald's response of the same date is in the following terms: Just picking up this thread of one of us putting in cash... when we agreed to 'communist model' - part of this idea was the three of us had the same shares ongoing. Equality front and centre. I'd be very unhappy if there were a change to any equality through personal investment. My reasoning: Making this business viable is not just about cash contributions as we all know. Speaking personally, I feel like I'm funding this thing every day, and my bank balance certainly reflects that; 11 months, (the vast majority unpaid). Not sure what state Laava would be in today if I had done otherwise. If we end up going down this route of one of us personally investing money to get more equity (yet my time investment/costs +IP generation = no equitable value) then I'm better off quitting Laava tomorrow, going back to getting a stupendous salary and buying more Laava stock. Probably the only way I'd feel happy with one of us investing own money is if that investment bought stock that was distributed equally to the three of us. - to keep it in line with the spirit we all entered into this. Personally I want to see external strategic investment, not one of us buying more stock and creating differences in shareholding between TS, IM, PM. Make sense? 66 Mr Michel's 12 December 2017 email to Mr Kirschenpfadt is in the following terms: When do you plan to have something we can discuss. As you know, Iain is putting a lot of pressure on the three of us to come up with money now…and not from us. That's fine, the issue is that Tony and I both know what we need to put ourselves in front of investors asking for money. The model is not an issue, the business plan is: who we ware (sic) what we do what problem do we solve How we're going to make money How we're going to protect our assets How you're going to make money from us making money I've got 12 things do to tonight, one of which is to send out the CA form. I'll do that today (and your invoice)

(9) Failure of Mr Michel and Mr Surtees to invest personally following Mr McDonald's 8 December 2017 email 67 The McDonald Interests rely upon the fact that Mr Michel and Mr Surtees did not, following Mr McDonald's 8 December 2017 email, invest funds in Laava, as had been foreshadowed in Mr Michel's email of earlier that day.

(10) March 2018 conversation 68 The March 2018 conversation is recounted by Mr McDonald as follows: McDonald: That excel spreadsheet is the final nail in the coffin for me. I have said for a long time now that I have real problems with parity. Patrick has a growing conflict of interest with his mother's investment. This is an issue. He is making suggestions that are clearly not in the best interests of the other founders. The communist model is not working. Nothing is equal at present. In addition, various commitments, milestones and promises were made by Patrick to me personally about this venture that have not panned out. My contribution to this business has not been fairly recognised at all. I have absorbed ongoing costs, had to make loans, my IP, my time. I am CEO, absorbing all the business stress, employee issues, finding talent, finding clients. 100% of product development is on my shoulders and pretty much everything else. I am working round the clock and have been paid 60k, when Patrick continues to run Watt Solutions. It's all take, no give and right now, I'm pretty much over it. Surtees: Patrick has admitted quite emotionally that he does not think he is capable of performing within the company or raising the money required and is ready to leave. I spent a couple of hours talking him off the cliff. I have convinced Patrick to stay and raise the money. I have agreed to help him and will take him under my wing and coach him. There are many issues outstanding and in my role as Chairman, I think I can fix them and get Patrick performing, so please stay. McDonald: Ok, but we really need to address these issues though Tony. Surtees: I promise you I will address them, but for me to do that you must leave it to me and not speak to Patrick about these issues anymore. If you have issues with Patrick, don't get into them with him, come to me. McDonald: Ok, I won't, but you need to understand that I need you to address them. Surtees: I will do my best. 69 Mr Surtees's evidence was that he recalled a conversation to that effect at some point but he could not be precise about when it occurred.

(11) 15 June 2018 email 70 The email from Mr Michel to Mr McDonald dated 15 June 2018 was in the following terms: Iain I can see you're about to go on another one of your intense sessions, about me again (Christian or somebody else), because in this particular case, I haven't spent the last 2 weeks doing the 12 tasks you decided to assign to me in ASANA without discussing it ahead of time. DON'T. Focus your energies more positively. Also, don't use Tony as your messenger because it's not his job. How about sitting down with me, having a meal or a drink, talking etc. That's what partners / friends do. Some people, react well to being given tasks like that, usually by their managers. I react better to being your friend, partner, co-founder. I semi understand why you thought that should go on my plate, because in the imaginary job definitions we've assigned each other, these would sort of be "shit admin", therefore CFO, therefore me. Raising capital is my first priority BY MILES. I have been going at it 100% for 3 months, we are just about to reach $2.3-2.4m in commitments, $1m funded. It's bloody hard work and requires my full focus, calls, emails, meetings, travel, coffees, meetings, calls, emails, meetings, calls etc. Every time I have somebody pull out for whatever reason, I have to go and have another 2-3 meetings. When ADVNCR pulled out, I have to find another 20 interested parties etc. So I like you, I love what we're doing, we're making great progress, we've all got a part to play and yes, I will try to make progress this week-end on some of these shit tasks. In the mean time, relax AND don't go complaining to Tony about me..... Have a great week-end.

(12) Mr Ger's evidence in cross-examination 71 As noted above, Mr Ger's evidence in cross-examination was: Q: And that's not, in your view, an unusual idea, that founders of a company should have relative to each other the same amount of equity, is it? A: I don't think it's unusual, no

Consideration 72 I am not satisfied that there ever was an Ongoing Equality Understanding, for the following reasons. 73 First, Mr McDonald's affidavits (as he accepted) do not set out any discussions with Mr Michel or Mr Surtees (or both) in which they agreed that the shareholdings of the Founder Shareholders would remain equal. The 20 February 2017 conversation, even on Mr McDonald's version, does not evidence such an agreement between him and Mr Michel (much less Mr Surtees). 74 Secondly, there is no single email exchange recording such an agreement or understanding. 75 Thirdly, the parts of the emails upon which the McDonald Interests rely are disparate and were written in a variety of contexts and no individual part of those emails evinces a mutual understanding that there would be ongoing equality of shareholdings as between the Founder Shareholders. In particular: (1) whilst the emails contain references to the "communist model", there is no evidence of a mutuality of understanding as to what that phrase meant. Similarly the references to "equal pigs" and like phrases. In an email sent by Mr McDonald to Mr Surtees on 19 March 2018, Mr McDonald wrote in terms which suggested that the "communist model" reflected equality of contributions to Laava's business: It's unclear to me under the 'communist model' how the balance of work done, responsibility, stress, strategy, clients, partnerships, time investment, personal energy, sacrifice has anything to do with a communist model. Whilst the clear promise of entering business as 'communists' was that there would be some kind of "like for like" input (money instead of IP or time, IP instead of time or money, Time instead of IP or money) the balance isn't there at all. It is not to the point that Mr McDonald now says that he thought that "the equal pig communist conversation" meant that the Founders would forever have equal shareholdings in Laava (T163.7) absent evidence from which it could be concluded that this understanding was mutual; (2) the email of 8 December 2017, which is the high point of this evidence, is an assertion by Mr McDonald (after entry into the Shareholders' Deed) that there was such an understanding. It does not rise any higher than the level of assertion. The fact that Mr Michel and Mr Surtees did not then go ahead and invest in convertible notes as foreshadowed in Mr Michel's 8 December 2017 email (see [64] above) is not a recognition by them of the veracity of Mr McDonald's assertion as much as it is an appeasement of Mr McDonald. Mr Michel remembered well that this email left him confused and perplexed by Mr McDonald's position that a cash investment by Mr Michel, his mother's or his sister's investment entities, or by Mr Surtees's investment entity, would not be acceptable to Mr McDonald unless "that investment bought stock that was distributed equally to the three of us", whereas the same investment by any third party would be totally acceptable . Similarly, Mr Surtees's evidence was that Mr McDonald's email took him by surprise and he could not understand how Mr McDonald's "proposition would actually work and how it would not contemplate a circumstance where, if the company needed money, that the founders were somehow or another prevented from doing so without causing a problem". 76 Fourthly, the March 2018 conversation does not assist the McDonald Interests. It does not establish any (prior) understanding that shareholdings in Laava as between the Founders would always be equal. 77 Fifthly, Mr Ger's answer in cross-examination is of no moment. He was not a party to the alleged understanding and the question he answered does not suggest that such equality would endure. 78 Sixthly, if such an understanding had been reached, and noting that it is alleged to have been reached between February and August 2017, then in light of its contended centrality to the relationship between the Founders, it is probable that it would have been included in the Shareholders' Deed entered into in November 2017. Instead, the Shareholders' Deed not only includes no reference to any Ongoing Equality Understanding but expressly contemplates inequality of shareholdings between the Founder Shareholders (see [82] to [88] below). 79 Seventhly, it is inherently unlikely that experienced businessmen such as the Founders would have exposed their venture to the possibility that if the corporate vehicle needed to raise capital and one Founder was unable, or chose not, to contribute then the other Founders would be precluded from providing that capital. The evidence of Mr Michel and Mr Surtees of their reaction to Mr McDonald's 8 December 2017 email is testament to this. 80 Finally, as discussed at [48] to [53] above, the manner in which the Ongoing Equality Understanding emerged and changed during this proceeding does not engender confidence that it was ever reached.

Any Ongoing Equality Understanding did not survive entry into the Shareholders' Deed 81 For the above reasons, I am not persuaded that there was an Ongoing Equality Understanding as alleged. If I had been persuaded that such an understanding had been reached, I would not have been persuaded that it survived the execution of the Shareholders' Deed, for the following two reasons.

(1) The Ongoing Equality Understanding yields to a contrary agreement and the Shareholders Deed is a contrary agreement 82 The first reason is that the alleged Ongoing Equality Understanding is pleaded as one that was subject to the terms of any agreement between the Founders. As the Shareholders' Deed is such an agreement, any terms of the Shareholders' Deed which contemplate unequal shareholdings as between the Founder Shareholders must prevail. In this regard, cl 5 of the Shareholders' Deed, which deals with further capital raising, is pertinent. Clause 5.1 provides: 5.1 Right of first refusal (a) Subject to clause 5.4, if the Company proposes to issue Shares to any person, the Company must first comply with this clause 5.1, except to the extent a Shareholder gives the Company a notice waiving its entitlement to participate in such opportunity. (b) If the Company proposes to issue Shares, it must serve a notice (the Notice of Issue) on each Shareholder specifying: (1) the terms of issue of the New Shares; (2) the total number of New Shares available for subscription and the issue price per Share; (3) any other material terms of the proposed issue; and (4) a statement to the effect that each Shareholder has an option to subscribe for the New Shares on the terms set out in the Notice of Issue if the relevant Shareholders complies with this clause 5.1. (c) A Shareholder may offer to subscribe for the New Shares by giving notice to the Company of the number of New Shares it wants to acquire within one month after the date of service of the Notice of Issue. (d) If a Shareholder offers to subscribe for New Shares then the Company must, subject to receipt of the relevant subscription amount, issue to that Shareholder the number of New Shares allocated to that Founder Shareholder under clause 5.2. 83 Thus, where Laava proposes to issue New Shares (defined to mean the Shares that Laava wishes to issue, as specified in the Notice of Issue), cl 5.1(c) confers upon each Shareholder (defined to mean a shareholder of the company from time to time) the right to offer to subscribe for a particular number of New Shares, in a number of the Shareholder's choosing. The Founder Shareholders (as with other Shareholders) may each choose to offer to subscribe for no shares or for a particular non-zero number of shares. 84 If a Founder Shareholder offers to subscribe for New Shares then Laava must, subject to receipt of the relevant subscription amount, issue to that Founder Shareholder the number of New Shares allocated to that Founder Shareholder under clause 5.2. That clause provides formulae for the calculation of the number of shares to be allotted. To the extent that an issue of New Shares is not fully subscribed for, Laava may issue those Shares to any person(s) determined by its board in accordance with cl 5.3. 85 Thus, the number of shares held in Laava by each Founder Shareholder after an issue of New Shares will be a function of the number of New Shares for which that Founder Shareholder chooses to offer to subscribe. Ongoing equality as between the Founder Shareholders is a possible outcome, but such an outcome would only occur if each Founder Shareholder offered to subscribe for the same number of New Shares, which is possible, but is not required by the Shareholders' Deed. 86 This may be illustrated by a simple example. Let it be assumed that each Founder Shareholder held 30,000 issued shares in Laava and another 4,000 shares were held by a fourth shareholder, making a total of 94,000 shares. This was the position at or around the time of entry into the Shareholders' Deed in November 2017. Let it be further assumed that: Laava proposes an issue of 100,000 New Shares and serves a Notice of Issue on each Shareholder; the Founder Shareholders offer to subscribe for 20,000, 30,000 and 35,000 New Shares respectively; the fourth shareholder offers to subscribe for 5,000 New Shares; and the board determines to issue the remaining 10,000 New Shares to another person. 87 By operation of cll 5.1(d) and 5.2 of the Shareholders' Deed, each offer to subscribe will be met in full and by operation of cl 5.3 of that Deed the remaining 10,000 New Shares will be issued to the new shareholder. Laava would then have 194,000 shares on issue. The shareholdings of the Founder Shareholders would then be 50,000/194,000, 60,000/194,000 and 65,000/194,000 respectively, the fourth shareholder would then hold 9,000/194,000 shares and the new shareholder would hold the remaining 10,000/194,000 shares. Many other examples are available to illustrate that ongoing equality of shareholdings as between the Founder Shareholders was not contemplated by the Shareholder Deed but the basal proposition remains: if there is an allocation of New Shares under cl 5.1, then the number of shares held by the Founder Shareholders will not remain equal unless each Founder Shareholder subscribes for the same number of such shares. 88 The Shareholders' Deed also contains no requirement that the Founder Shareholders maintain a particular number (whether in absolute or relative terms) of shares.

(2) The entire agreement clause 89 The second reason why any Ongoing Equality Understanding would not have survived the Shareholders' Deed is that the Shareholders' Deed superseded any Ongoing Equality Understanding. Clause 14.13 of the Shareholders' Deed provided: 14.13 Entire agreement This deed and the Constitution supersede all previous agreements between the parties or any of them in respect of their subject matter and embody the entire agreement between the parties in respect of that subject matter. 90 Thus, the Shareholders' Deed and the Constitution (which, it is common ground, was not brought into existence) "supersede all previous agreements between the parties or any of them in respect of their subject matter" and "embody the entire agreement between the parties in respect of that subject matter". The expression "subject matter" is used twice in cl 14.13. It is a reference to the subject matter of "the deed and the Constitution". The effect of cl 14.13 is that if (relevantly) the Deed deals with a "subject matter", then the Deed supersedes all previous agreements between the parties or any of them in respect of that "subject matter" and it embodies the entire agreement between the parties in respect of that "subject matter". 91 The Shareholders' Deed deals with the terms on which the relationship between the shareholders of Laava is to operate. In this regard the Recital provides: The parties wish to regulate the operation of their investment in the Company, and to provide for the operation and administration of the Company Group, on the terms of this deed. 92 More specifically, the Shareholders' Deed addresses: (1) Laava's equity structure as at commencement of the Shareholders' Deed (cl 2); (2) the issue of new shares (cl 5, as discussed above); and (3) the transfer of shares (cl 8). 93 It follows that the subject matter of the relative shareholdings between the Founder Shareholders is dealt with in the Shareholders' Deed and the Shareholders' Deed supersedes any Ongoing Equality Understanding and embodies the entire agreement with respect to that subject matter.

Conclusion on the Ongoing Equality Understanding 94 For the above reasons, I am not satisfied that the Founders ever reached the Ongoing Equality Understanding. If I had been so satisfied, I would not have been satisfied that such an understanding survived the Shareholders' Deed.

E. CONDUCT PRIOR TO MR MCDONALD'S RESIGNATION AS ACTING CEO 95 I turn now to consider the impugned conduct prior to Mr McDonald's resignation from his position as CEO of Laava.

Relevant conduct 96 The impugned conduct is considered below (together with other events that provide context). 97 By April 2017, Mr McDonald was working approximately 30 to 40 hours per week for Laava. From about July 2017, when he began as acting CEO of Laava, this increased to approximately 50 to 60 hours per week. He was paid $15,000 per month, of which he received $10,000 in cash, with the remainder accruing as a loan. 98 By December 2017 (and continuing and escalating thereafter) Mr McDonald's relationship with Mr Michel had deteriorated significantly. In particular, Mr McDonald took issue with: (1) Mr Michel not having contributed approximately $250,000 to Laava personally, but instead having that amount invested by Lufrapa; (2) the amount of time that Mr Michel was devoting to Laava relative to the time he was devoting to his business, Watt Solutions Pty Ltd; and (3) Mr Michel's general competence and demeanour. 99 These grievances manifested themselves in several ways: (1) there was a deterioration in the relationship between Mr McDonald and Mr Michel, such that they were effectively not on speaking terms from about September 2018; (2) Mr McDonald raised his grievances with Mr Surtees, in many telephone calls and emails, including several lengthy emails; and (3) Mr McDonald offered to resign as acting CEO on 15 June 2018 and threatened to do so a number of times during 2018. 100 On 17 November 2017, the Shareholders' Deed was executed. It made no provision with respect to the position of CEO (save to define it as the Chief Executive Officer, "as appointed in accordance with the Constitution") and in particular it did not provide the McDonald Interests with any entitlement to occupy that position. On the same day, the board of Laava adopted rules governing its employee share option plan (ESOP). Those rules (ESOP Rules) conferred broad discretions upon the board of Laava as to the term of issue of such options, including as to the number of options. 101 By December 2017, there was particular tension between Mr McDonald and Mr Michel concerning the extent of time that the latter was devoting to Watt Solutions instead of Laava. 102 In 2018, Mr Glenn Butcher, an experienced specialist consultant in technology team structure, joined the Laava advisory board. 103 By March 2018, Mr McDonald had had a number of conversations with Mr Surtees about his concerns with Mr Michel. As at 19 March 2018, Mr McDonald felt that those issues had not been addressed, so he sent a lengthy email to Mr Surtees. Whilst the email is lengthy, it is appropriate to set it out in full (without alteration) to display Mr McDonald's state of mind at that time: Not an exhaustive list but I think there's already enough points: 1. Business - We're behind schedule and development in all areas. The plans I provided last march (funding>people>production) have not been adhered to at all. I don't feel like the information I supplied was listened to, understood or acted on with any urgency or conviction. It's left a lot of people having to band aid things. It's not professional. - The ongoing finances have not been managed and/or communicated. - No burn rates, nothing mapped out, no reporting, no P&L. It left the team unable to figure out what could or couldnt be spent. - Due to inadequate support in some key areas the team have had to take shortcuts and in doing so created risks (off shore teams with source code etc). - There's a lack of understanding on how the business works, what is required to solve problems to get us from a to b. - General lack of experience on how startups operate. - Complete lack of experience in technology. No concerted effort made to integrate into team and learn on daily basis. This puts additional strains on the team re-explaining, correcting etc. - Failure to deliver on commitments (eg: coming into office). - Late deliveries (CA application was initially due in Sept) - Non delivery (Various CFO duties, P&L, Burn rate forcasts) - Changing mind on what commitments are and not informing or explaining. - Failure to manage Laava staff needs (functional/admin) has been an ongoing issue. I have fielded various complaints from all team members about various issues relating to employment, contracts, shares etc. Inaction has resulted in everyone feeling uncertain and created a very nervous workplace on multiple occasions. - No evidence that key strategies for finance operations (costing models, billing systems) in relationship to the product can be provided in the future. - Business development. Seems to be adhoc suggestions rather than strategic or from. - Resignations between companies - I don't understand this last batch and why is it not being explained to everyone? Said Christian asked for it but he says he did not. 2. Business Culture - As a result of having to run like a garage band on a tight budget, everyone has been stretched to the max. There has been close to ZERO appreciation shown. - What has been achieved by the team does not get recognised or even understood. - Need for playing correct role in meetings with external parties. Inaccurate product descriptions have been stated to other parties which is a concern. - Meeting etiquette not observed. Despite flags being raised, this behaviour of speaking over others, including clients, continues. - "I know better" mantra. There seems to be an ongoing theme of there being only one way to do anything. - Lack of respect/courtesy. When I explicitly ask for investors (who I have brought in) NOT to be called on a matter, I expect that to be respected implicitly. There is no situation where it is appropriate for anyone to undermine this and do the opposite. - Communications etiquette. Several staff have been upset by unnecessary and abrupt emails on several occasions. 5. Shareholding - communist model is broken - It's unclear to me under the 'communist model' how the balance of work done, responsibility, stress, strategy, clients, partnerships, time investment, personal energy, sacrifice has anything to do with a communist model. Whilst the clear promise of entering business as 'communists' was that there would be some kind of "like for like" input (money instead of IP or time, IP instead of time or money, Time instead of IP or money) the balance isn't there at all. - There's a conflict between founding shareholding and family investments in con notes. Very unhappy about this latest 'amendment' which is not in founders interests. Story changes between "My investment" and "Family investment". Concerns this is a breach of directorship duties. - Normal situation for getting equity is to contribute either/or/and 1) Money 2) Time 3) IP. I'm unclear how this has been contributed in fair proportion for the equity allocated based on initial agreements. - The nature of the business has changed already and is entering key phases in growth. This places more responsibility and pressure on key contributors. The pattern so far is that continued success means more work and effort but this goes unrecognised, yet others contributing less continue to reap all rewards. 4. My role - I'm spread way too thin. I'm in almost every meeting, but also trying to build/run a team of people. Yet I still have to design, build and deliver a product. Because we haven't hired various positions in time, I spend a lot of my days doing junior but necessary work. Now I'm expected to take on a frontman/CEO role (which of course I've been doing as defacto most days anyway). Yes I could do it, but the fact is with others not playing adhering to the communist model, and there being no upside for even more work, I have no desire or motivation currently to act as CEO. 5. Personal - I have reached the point where working at Laava is not sustainable. - Situation has created significant stress at home. Despite me explaining this on several occasions it seems to have fallen on deaf ears. - I am funding Laava on a daily basis having to survive by taking money out of the kids educational savings funds. In the 9 months I have been working at Laava, my bank balance is -$110k. - I have stated from the start what my position was financially and what I needed. I have been paid 60k gross since starting to work on this project in Sept 2016. My break even is 240k net. - Invoices that I have put in have been paid late, and required several reminders. In addition it should be noted: - I sacrificed my other Antimatter opportunities to work at Laava (on the premise it would be run and funded properly) - I resigned other lucrative easy contracting work paying $2500-$3000 per day. - Laava has cost me more money having to break term deposits - just to pay school fees. - My lost opportunity is significantly more than that being at the prime of my career for earnings potential. 6. Key delivery / responsibilities: I believe I have delivered so far: - Product concept. - Multiple patents claims + documentation - Design Trademarks - Several Key Investors - Client introductions (Blackmores, JVC + various in pipeline) - Product timeline and future developments - Various business partnerships - Key Laava Staff: Production, Tech, design, ux, management. - Visual brand id and many business assets / presentations - Working proof of concept - Close to delivering MVP - Team ethos, morale, work ethic, culture. Conclusions/Suggestions A) I move into a more executive role in Laava. That way I can earn an income elsewhere that will pay school fees whilst still providing some time (1 to 1.5 days a week) to Laava. This I feel would be very much in line with the current communist model. OR B) There is an overhaul and complete re-evaluation of the current situation. One where I feel that there is respect, equality and fairness in terms of reflecting all contributions past, present, and future. (italicised emphasis added) 104 Mr McDonald agreed in cross-examination that by this time he was thinking of resigning as acting CEO of Laava. 105 In late March 2018, there was a conversation between Mr McDonald and Mr Surtees: McDonald: That excel spreadsheet is the final nail in the coffin for me. I have said for a long time now that I have real problems with parity. Patrick has a growing conflict of interest with his mother's investment. This is an issue. He is making suggestions that are clearly not in the best interests of the other founders. The communist model is not working. Nothing is equal at present. In addition, various commitments, milestones and promises were made by Patrick to me personally about this venture that have not panned out. My contribution to this business has not been fairly recognised at all. I have absorbed ongoing costs, had to make loans, my IP, my time. I am CEO, absorbing all the business stress, employee issues, finding talent, finding clients. 100% of product development is on my shoulders and pretty much everything else. I am working round the clock and have been paid 60k, when Patrick continues to run Watt Solutions. It's all take, no give and right now, I'm pretty much over it. Surtees: Patrick has admitted quite emotionally that he does not think he is capable of performing within the company or raising the money required and is ready to leave. I spent a couple of hours talking him off the cliff. I have convinced Patrick to stay and raise the money. I have agreed to help him and will take him under my wing and coach him. There are many issues outstanding and in my role as Chairman, I think I can fix them and get Patrick performing, so please stay. McDonald: Ok, but we really need to address these issues though Tony. Surtees: I promise you I will address them, but for me to do that you must leave it to me and not speak to Patrick about these issues anymore. If you have issues with Patrick, don't get into them with him, come to me. McDonald: Ok, I won't, but you need to understand that I need you to address them. Surtees: I will do my best. 106 Mr McDonald also explained that he considered that Mr Michel was unable to use a project management program (Asana) as well as others in the Laava team and that this led to further tension. 107 In May or June 2018, Mr Ger started working at Laava as a commercial adviser on an informal basis. 108 In June 2018, there were further email exchanges which reflected the level of tension between Mr McDonald and Mr Michel: (1) on 15 June 2018, Mr Michel sent an email to Mr McDonald: I can see you're about to go on another one of your intense sessions, about me again (Christian or somebody else), because in this particular case, I haven't spent the last 2 weeks doing the 12 tasks you decided to assign to me in ASANA without discussing it ahead of time. DON'T. Focus your energies more positively. Also, don't use Tony as your messenger because it's not his job. How about sitting down with me, having a meal or a drink, talking etc. That's what partners / friends do. Some people, react well to being given tasks like that, usually by their managers. I react better to being your friend, partner, co-founder. I semi understand why you thought that should go on my plate, because in the imaginary job definitions we've assigned each other, these would sort of be "shit admin", therefore CFO, therefore me. Raising capital is my first priority BY MILES. I have been going at it 100% for 3 months, we are just about to reach $2.3-2.4m in commitments, $1m funded. It's bloody hard work and requires my full focus, calls, emails, meetings, travel, coffees, meetings, calls, emails, meetings, calls etc. Every time I have somebody pull out for whatever reason, I have to go and have another 2-3 meetings. When ADVNCR pulled out, I have to find another 20 interested parties etc. So I like you, I love what we're doing, we're making great progress, we've all got a part to play and yes, I will try to make progress this week-end on some of these shit tasks. In the mean time, relax AND don't go complaining to Tony about me..... Have a great week-end. (2) Mr McDonald forwarded that message to Mr Surtees under cover of an email: FYI I'm not replying to this. At the point where it's so immature I switch off. 109 Mr McDonald then had a conversation with Mr Surtees. Mr McDonald's account of that conversation is: McDonald: Tony, Patrick is continually disrespectful. He is not performing, and he will not listen to me. All the founder issues remain unresolved. I do not think I can carry on working this way. I think it is better if I leave the business and the company finds a new CEO. Surtees: I agree that Patrick's email was rude and disrespectful, especially given the great work you are doing, and how much you have brought to Laava. This needs to be sorted out with Patrick. McDonald: I do not want to deal with Patrick anymore, I have had enough, I am going to offer my resignation from Laava. Surtees: Let me try to sort it out first, don't do that. (emphasis added) 110 Mr McDonald then responded to Mr Michel's 15 June 2018 email: After taking time to think about your email, I have spoken to Tony and I have offered to step aside / resign from the business. I've given all my feedback to Tony so going forward you can work it out with him. (emphasis added) 111 Mr Surtees convinced Mr McDonald not to resign. Mr Michel agreed in cross-examination that his (Mr Michel's) response to Mr McDonald's proposed resignation was not to encourage him to leave. 112 Mr McDonald's evidence was that at this time Laava's office environment was very uncomfortable when Mr Michel was present, that it was not conducive to a good working relationship, and that he felt demoralised. On 25 June 2018, there was a further text exchange between Mr McDonald and Mr Surtees: McDonald: The Patrick situation is not good. But I'm just getting on with the work. Surtees: There's been movement. ..I'll tell you tomorrow. 113 The next day Mr McDonald and Mr Surtees had a conversation which Mr McDonald recounts as follows: McDonald: What's the progress? Surtees: I think I am finally getting through to Patrick. I think he is starting to understand the issues which relate to our agreement, everything you have put into the business and what his own contribution has been. I am going to try to address the contributions and will get a proposal together. McDonald: How long is this going to take, as I need to understand when this will be resolved, if it can be? Surtees: As soon as possible. McDonald: Ok, I will stay on the basis that you are going to sort this out once and for all. 114 Despite those discussions, tensions remained, including over matters such as Mr Michel's use of Laava's boardroom for Watts Solutions's business and Mr Michel changing the layout of Laava's office. 115 Mr Michel's evidence was that by early September 2018, Mr McDonald did not speak to him save for perfunctory communications. Whilst Mr McDonald denied this, the only conversation to which he referred as a counter to Mr Michel's evidence was one which occurred in early September 2018. 116 By mid-October 2018, Mr Ger had been appointed as the Commercial Strategy Director of Laava and had raised with Mr Michel his desire for an increase in his remuneration, including equity in Laava. 117 From 1 November 2018, Mr Sven Peters was appointed as a contractor to Laava, as a Senior Developer. 118 Mr McDonald's evidence was that as at November 2018: I decided it was untenable for me to stay working in Laava's business in circumstances where I was being treated badly and none of the fundamental issues I had raised since December 2017 had been addressed. Accordingly, in my exchange of emails with Patrick … I indicated that, whilst there were a number of minor issues that had arisen, the core problem was that Patrick had not honoured his founder commitments and I intended to leave Laava or change my role. 119 In November 2018, further emails were sent which evidence the tensions between Mr McDonald and Mr Michel. On 1 November 2018, Mr McDonald re-sent to Mr Surtees his email of 19 March 2018, together with a covering email. Again, despite its length, it is appropriate to set out in full the covering email: I'm sending you my list of concerns from March. Having read through, it's principally the same stuff. But quick updated summary as I see it. My current view is that I do not want to work with Patrick any longer. His performance is not good enough. His commitment and attitude and contribution to the wider team is simply not good enough especially as a "founder". Key points: - I am well and truly over it. We have to tiptoe around his needs just to get him to do the bare minimum in terms of expectations. His bare minimum is always late, and has caused huge issues as below. My issues which are were flagged at the start of the year are as yet completely unresolved. - Broken commitment re: Watt Solutions. BIG and SERIOUS ISSUE. - Please see important 'shareholding' concerns list from below. This needs addressing now and long before any series A round if I am to continue in my current capacity. Otherwise my suggestion is that Laava finds a new leader for the business, and I will advise consult to the business on a part time basis as Patrick has chosen to do for the last 18 months. My expectation is the shareholding falls in line with what has been delivered, effort, Ip contributions, and effort/commitment/value delivered required for the future. Additional key points: - What he has delivered in the last year has been delivered too late and placed the business at risk on several occasions. - Least qualified member of the team for the business we are building, has shown limited effort to learn what is needed - Consistently does what HE WANTS, does not listen or respect the needs of business or people who are more experienced. We have no place for rogue behaviour and I will not work like this. - Continues to flaunt business needs/rules (eg using word documents, despite company mandate not to) - Does not act like Founder of a business. Big ticket items include not inspiring or motivating staff, down to simple things like poor meeting etiquette, Yawning in front of others, chewing pens. - Leaves other founders to do pull the weight in so many areas - Lack of respect in general. eg: Undermining what is agreed in front of staff (like office situation yesterday) - The list from March below has created an ongoing liability for the business and me personally. PS: I am happy for Patrick to read this. (emphasis added) 120 Mr McDonald agreed that this email reflected a burning frustration held by Mr McDonald concerning Mr Michel not working full-time in Laava's business. 121 On 2 November 2018, Mr Michel and Mr McDonald exchanged the following emails: (1) Mr Michel: I hadn't appreciated that you didn't want me to move until we resolved fully what we wanted to happen with the 3 front desks. It was certainly not intended as an affront or sign of disrespect. Tony and I have moved back to our respective desks. (2) Mr McDonald: Patrick for me it's part of a year long pattern of behaviour where your actions (small and large) are continually centered around what suits you - without thinking about the big picture or taking into fair consideration the impact of your decisions have on others. You can keep filing these things under misunderstandings but there is a limit of goodwill as to how far those excuses extend. For instance your commitment (to Tony and I) to be out of Watt Solutions over a year ago. Everyone else came to the party in spades as promised, but you have not, and the impact has took a big toll in the business and for me, the majority of the last year has been ridiculously stressful and often miserable. In addition I have had to constantly tiptoe around everything to do with you, and the only way things get done is by gently coercing you into tasks (eg; it took 8 months for you to start coming into the office regularly). We have had to employ other people to take on things you don't want to do. Rather than listen to constructive feedback, you pull gems like the passive aggressive card to deflect it away from being about you. For a year these kinds of issues have been compounding. Lots of small things like yesterday all add up. At the centre of everything is the issue of your communist model aka "equal founders" which has turned out to be complete BS in my view. For over a year there's been a total imbalance of founder commitment, timely delivery, effort, contribution and sacrifice. There's been no attempt to balance this or acknowledge it. Quite the opposite. So I'm over it. I've given a final notice to Tony that I can't continue to work like this. From my perspective the first change that needs to happen is fairly addressing the balance of founder equity which needs to reflect both the contribution made both in the past and the future demands on founders as we enter the next phase. I know what high demands are still to come and the burden on me will just grow from here on in. Alternatively I'm happy to start addressing the imbalance by changing my role and working as you do in a less visible part time role. The business can hire other people to carry the bulk of the 5 or 6 roles I'm currently covering. I suggest that you have a more thorough sit down with Tony and consider where we are all at over the weekend. I've documented all the issues I have. Whilst I know Gavin and Series A need to be addressed asap, for the first time in 18 months I'm putting myself first. These other things can wait until there's a proper resolution between founders, and a more open honest fair reflection for past present and future. I'll leave it up to you if you want to share this email with Tony. 122 Mr Michel agreed in cross-examination, that despite having received this email, he did not encourage Mr McDonald to leave Laava. 123 On 5 November 2018, Mr Surtees sent a text to Mr McDonald saying: "think we have a bit able to work [sic] out a plan to clean up a bit of a mess. And please call me when you get a chance later on this afternoon". They then had a telephone conversation which Mr McDonald recounts as: Surtees: This has gone on too long, we need to sort it out. Let's put a proposal to Patrick to address the issues. McDonald: I think the proposal needs to come from Patrick, not me because that will show me that he understands the issues and is respectful of the original agreements. Surtees: That is not ideal, but I respect your decision. 124 Later that night Mr Surtees sent a further text to Mr McDonald: "I think what's going to be helpful is to develop objective options and proposals that will resolve the issues". 125 As at February 2019, Mr Michel had doubts concerning Mr McDonald as acting CEO but denied having a plan to remove him from that position. From mid-February 2019, in the circumstances discussed below, Mr Michel felt that Laava's technology team was imploding and that there may need to be a different way of running Laava. However, there was no plan to replace Mr McDonald as acting CEO. 126 On 15 February 2019: (1) Mr Peters told Mr Michel that he would not renew his contract because of concerns he held as to the development of the technology; and (2) Mr Michel spoke to Mr Surtees, expressing concern as to the loss of key personnel. 127 At around this time, Mr Butcher told Mr Surtees that Mr Delwin Best, Laava's Director of Engineering, had expressed "real concerns about the technology and the team". Mr Surtees told Mr Butcher that he should discuss this with Mr Michel and possibly prepare a recommendation. Mr Surtees then informed Mr Michel of that discussion. Their conversation, as recounted by Mr Michel, was: Michel: Tony. We have a major problem. We're losing all our key tech people. Sven says everything needs to be re-coded and he doesn't want to be involved because he does not think he would have Iain's support to get it done. Morgan wants to talk to us about some of his concerns too, and if we lose him, we are toast. Surtees: Let me ask Glenn Butcher to come in, speak to the team and make his own assessment. Right now, he's the best person to give us the feedback we need to make the right decision. Michel: That's a great idea. Let me know how you go. 128 On 15 February 2019, Mr Best resigned. On 16 February 2019, Mr Michel, Mr Surtees and Mr Morgan Lean, a Laava employee, had a discussion in which Mr Lean expressed various concerns about Laava. On the same day, Mr Surtees sent to Mr Michel an email containing notes of that discussion: Discussion regarding multiple team failures and problems with morale, productivity and wheel spinning. Too many short run priorities being pursued and real possible breakthroughs that directly address core requirements of both speed and accuracy of scanning are being ignored. Individual initiatives undertaken in unpaid-for private time by Markus and Morgan in particular could be quickly tested and if successful could be implemented to production ready in a short period of time. These could be in place for a the Blackmores implementation. These need to be assessed asap. Patrick and I have requested that a report be written for delivery to the Board asap that would identify 1. The current people, process & technical problems being experienced by the team 2. Hypothesis of new technologies and processes that have been identified and need to be tested 3. Identification of current work objectives, expected deliverables that need to prioritised now and reasons why 4. Identification of external services and contractors that are required to undertake these & expected term of engagement 5. Identification of current work objectives, that need to be de-prioiritised or put on hold and reasons why 6. Identification of external and internal services that are now not required (specifically app related resources) 7. Summary of outstanding issues as identified by Delwin, Markus, Morgan and Sven 8. Proposal for streamlined new management and operational process being sought or recommended 9. Identification of counterproductive interactions between design and engineering and make recommendations This work will be supported by Glenn Butcher as independent Board advisor and shareholder and Patrick. This is not an exercise in attribution of fault but a response by two directors of the Board and a request made by us for written and considered recommendations. This includes a plan to remedy the multiple, ongoing, separate requests by staff for change, remove the counter-productive processes and other blockers being encountered. The objective is to transform current engineering processes from concept exploration & ideation support to the delivery of a functioning Proof of Concept operating platform with immediate effect. We need to support the engineering team to deliver core mission-critical set of functions and then scaled these confidently so larger POC's can be delivered to customers in market within agreed timeframes. (emphasis added) 129 Mr Michel responded: Thanks Tony That's great. Hope you had a good flight. I think we need to add an element of culture / protocol that needs to be followed: - product road-map to be approved by board, assigned to CTO to deliver - no changes to be made to the roadmap without full team buy-in and board approval (until such time as we have a CEO) - team resources should not be diverted from their task by anybody other than their manager. 130 Mr Michel then forwarded Mr Surtees's notes, together with his comments to Mr Lean. 131 Between about 17 February and 4 March 2019, Mr McDonald and Mr Surtees were in the United States of America, to meet potential investors and partners. 132 On 18 February 2019, Mr Michel sent an email to Mr Surtees: Had a long chat with Morgan, Delwin and Glen today, and just updated Sven too. I've also given Gavin some background info. For what it's worth, Morgan has a new lease on life. He's pumped after the week-end. Glen is pretty clear on what needs to be done tomorrow. His first key question though is "what do we need to prioritise first", i.e. what are we going to build by when, what do we need to build first. Gavin, Glen and I are going to sit down first at 9AM to go through that, then he will be driving the session with Delwin/Morgan and possibly Sven. Any news at your end? 133 On 19 February 2019: (1) Mr Butcher met with Mr Michel, Mr Ger and Mr Best. Following that meeting, Mr Michel sent an email to Mr Surtees: Glenn came in at 9AM. First meeting with Delwin, Gavin and I. These are the notes. He let the cat out of the bag about Delwin leaving to Gavin. A bit unfortunate but Gavin's ok. This is a quick summary of this first meeting. Laava Roadmap - Glenn He's now just come back from the coffee shop with Sven, Delwin, Morgan and they've jumped into their 11AM stand-up but appear happy. Call with ADVNCR went from 8.00PM to 10.45PM Generally went well and gave them more clarity. They're strange cats. They take 35 days to respond to 1 email but then kind of hint that we don't interact enough. A bit of CXO envy (how come they got a deal we didn't). They're fine with the update but made the comment that Laava seems to lack focus. I'll send a proper update in Assana soon. CXO's lawyer seems very reasonable. Peter Dunne and he had a chat this morning. I've left a message to introduce and offer to answer any questions. He's been given a brief to do this quickly and briefly, but he asked Peter to check employment contracts all have IP protection. Since we're 100% dd ready, that's all fine. Do we need to discuss preparation for tomorrow's CXO call. I'll be in at 6.30AM which is fine, but is there a proper agenda / presentation or just chatting. (2) Mr Michel met with Mr Peters, following which he sent an email to Mr Surtees: Tony It's been a big day so far. Just sat down with Sven. He's super happy that changes are afoot. He's agreed to extend his contract for three months to make sure we do what we say we're going to do (i.e. he's very impressed so far...). Then to come on as a permanent. I've told him that if he stays, we'd date his ESOP start date at 1 Nov 18, when he started with us. 134 On 21 February 2019, Mr Butcher sent an email to Mr Surtees: Hi Tony, I have attached my findings form (sic) the first two days at Laava, with recommendations. The first three recommendation need to implemented urgently, so I intend to announce to the Laava team here in the office Monday morning and have them be engaged in completing the plan and beginning execution. Any questions, let me know. 135 On 22 or 23 February 2019, Mr Michel and Mr Surtees agreed that Mr Butcher's paper should be approved "as is" and that Mr Butcher should be asked to start moving ahead to implementation. Mr Michel, in an email to Mr Surtees stated: "you are tasked with easing Iain onto it", to which Mr Surtees responded: "Ok but have Glenn send it Monday his time". 136 On 24 February 2019, Mr Michel sent an email to Mr Surtees which included: "I'd love an update from you re discussions with Iain. Glenn is taking the team through his changes tomorrow morning". On the same day and into 25 February 2019, Mr Michel and Mr Surtees had an email exchange: (1) Mr Michel: I hope you're having a nice Sunday in NYC. Just checking on to see what you've said to Iain so far. (2) Mr Surtees: No update since our last discussion (3) Mr Michel: You have to have a discussion with Iain. I'm very concerned that Glenn's going in all guns blazing on the back of you and I asking for his input and asking for change. He is suggesting major changes and some of which we know Iain's not going to like at all. Morgan, Delwin, Glenn, Gavin, Erin and Sven are already informed beyond the point of no return. Glenn announced last Wednesday "we're making changes, more info coming soon" and will take the team through these tomorrow. If you guys come back pretending nothing has happened, it'll blow up. Either Iain will have a massive tanty OR Morgan/Sven/Delwin will leave straight away. 137 On 25 February 2019, Mr Butcher sent an email to Mr Michel and Mr Surtees: Hi Patrick and Tony. The new focus for the next 3 months was presented to the team today, along with guidelines of new ways of working to increase focus and reinforcing the message of last week that re-tasking must come via the direct manager. It went over well. with lots of smiles along with some anxiety about if this will stick. Overall, more positive than I thought. The key will be building enough of a feeling around the office that this is the new way of working, to be resistant to be changed adversely later. The leaders started working on the more detailed plan, with an emphasis on reducing anxiety of anyone with a project being shelved. The conclusion was in line with the existing plan except the prototyping and LMMP work will continue as these are almost entirely self-contained work that is already paid for, and therefore the cost to stop them would exceed the benefit in stopping them. There is also a significant amount (6-8 weeks) of app work in flight which needs to be worked out what can be cleanly halted. The schedule and sequencing is still under development but can now progress with the rest of the team informed. Delwin will drive that to completion over the next few days. Additionally, I have started engaging Sandor in meetings as the effective design team lead, and he has been contributing at that level so far. he is handling the design team workload and can see how the design team can contribute to the goals. This team was my main concern so it is great he is stepping up. Early steps in the change, but well received by the team here. 138 On 27 February 2019, Mr Surtees sent an email to Mr Michel and Mr Butcher in response to Mr Butcher's 25 February 2019 email: Excellent. Thank you for leading this and the comprehensive report. I think that the next step is to prepare a debrief for all the three of us for say next Monday. I think it is absolutely essential that lain knows that nothing has been done beyond what we, with Iain's support two weeks back, have discussed. You have a mandate to define the problem, assess the issues, identify the risk of remaining as is and have developed a plan. In this plan you have now achieved both a clear path, buy-in from the team who have committed to the process and the outcome. We have had have a spectacular week and tomorrow we are meeting the No 1 rated VC in the US, ... 139 Toward the end of their trip to the United States of America, Mr Surtees mentioned to Mr McDonald that Mr Butcher was putting a report together containing recommendations. 140 On 3 March 2019, Mr Butcher sent an email attaching his report to the Founders. His covering email stated: Attached is a board report on findings, recommendations, and actions. Laava is at a key junction and needs to focus energies on delivery of the core value proposition of the product, and on building an organisation capable of delivering on that promise. Some progress has been made in these fronts over the last few weeks - it will be critical to follow through and ensure the recommendations are completed. I'll be in the Laava office Tuesday until 2. See you all then. 141 On 4 March 2019, Mr McDonald responded: Thanks Glenn, Concerning stuff. Thanks for the detail. I think it would be good to drill into this more and understand who you interviewed and what the context of the feedback was made in etc. I spoke to Brady who I trust implicitly for honest feedback about the status quo, and he had a very different opinion on a few of the main issues you highlighted. The one piece of information I'd like to see is whether we have a team that is capable of getting us to where we need to be. The bulk of any teams' morale is born on being able to achieve outcomes. 142 On the same day, Mr Butcher responded: Let's go over this first thing Tuesday morning. Say 9am? Note while I interviewed people, this is my opinion, not theirs. So I can relate who I interviewed but you should it coming from me, not them. There are concerning issues, but nothing that isn't fixable. All startups are inherently screwed up in something - it is the nature of startups - but we can improve. 143 On 18 March 2019, Mr Butcher sent an email to Mr Michel and Mr Surtees: I've told Sven he has the authority to act as acting CTO. I'll tell Morgan today, and ask Erin to draft a letter to this effect. 144 On 22 March 2019, Mr Michel sent an email to "Employees": It's been an awfully busy few weeks and I'd like to think we've made some really positive progress towards being more focused and production ready. Big thanks to Glenn for his input through this We've got so much to do but it definitely feels like we're on the right track. We're really glad to announce that Sven has been appointed as our acting CTO. His experience, focus and discipline will be extremely valuable to us in that role. I could write his CV in this email and tell you all about his background, but that wouldn't be efficient (and so he wouldn't like that). Morgan will continue to lead our research efforts and come up with amazing solutions to difficult problems. He and Sven will work closely together to ensure research and engineering dovetail together smoothly. I know we were all surprised and sorry to hear Delwin's news (and happy for him obviously), but when that dream job lands on your lap well it just does. We'll celebrate Delwin and Marek's contribution to the team at our end of quarter lunch in a few days (which we moved to Wed to have as many of us together as possible). I think much of this email was already obvious and possibly not news to you all, but more communications better than less. Have a great week-end. (emphasis added) 145 Mr McDonald's evidence was that he felt undermined as the acting CEO of Laava because Mr Peters had been appointed as Laava's acting CTO, rather then Mr Justin Baird, whom Mr McDonald regarded as a superior candidate for that position. 146 Mr Michel's unchallenged evidence was that he believed that the decision to appoint a new CTO (or lead engineer) had been delegated to Mr Michel, Mr Butcher and Ms Erin Husband (who was responsible for Human Resources within Laava) before Mr McDonald and Mr Surtees left the United States of America. 147 On 4 April 2019, there was an exchange of messages on Laava's "Slack" messaging system. Mr McDonald's evidence in chief was that the effect of the messages sent by Mr Peters was that Laava staff had been directed to no longer work on projects that Mr McDonald had promoted. In cross-examination, after being shown the Slack messages, Mr McDonald agreed that they were not to the effect that he had suggested. 148 On the same day, there was a discussion between the Founders. There are differing recollections as to what was said, however, it is common ground that Mr McDonald resigned and that Mr Surtees did not accept that resignation. Later that day: (1) Mr Surtees again asked Mr McDonald not to resign as CEO; and (2) Mr McDonald sent an email to Mr Surtees: Taking this off the Laava email. I get that you want me to take more time to think about what is going on. I appreciate that you might think it's repairable. But I need you to be prepared to understand that it went past the point of no return today. When being personally compromised turns into being professionally compromised I'm out. I think let's not waste any energy on trying to fix the unfixable. Let's focus on the best way I can exit which will leave you (and the staff who came in specifically to work for me) in the best position possible to thrive. Working with you has been an honour and a pleasure and I would do it again 1000 times over. 149 Mr Surtees declined to accept Mr McDonald's resignation and implored him not to. 150 On 5 April 2019, Mr McDonald sent an email to himself titled "Concerns", which he says set out his reasons for resigning as acting CEO and which he says he delivered to Mr Surtees by hand. Mr Surtees does not recall receiving it. That email is again lengthy but again it is appropriate to reproduce it in full: This is for your records so that there is no confusion regarding the circumstances of my departure and my observations regarding the circumstances / history. There are three key areas I wish to point out. 1) Patrick's performance as Founder/Employee 2) Recent events coordinated by Patrick leading to... 3) My enforced role change and subsequent resignation Re: Patrick and my related issues (last 18 months) - Over the last 12 months I offered my resignation / alternatives three times (March 19 2018 June 18 2018 and Nov 2 2018) re: issues primarily relating to Patrick, impact on business and his impact on me personally. - No resolution was achieved with regards to Patrick and an extensive list of Partner/Founder performance issues. - Only minor issues have been resolved (like attendance) but did as you can see from my notes that external work (Watt Solutions) was still occurring as late as Nov 2018. - Patricks role, responsibilities, performance metrics, measurable contributions are still not and have never been defined. - Patrick is not well networked in the Investor / VC space or the brand or Client space. He has no prior startup experience. He has never built and exited a business successfully. It is unclear to me where his value lies beyond back office tasks. - Patrick states in his email below his primary role is to fund raise, yet it was me who was called on for the fund raising tour in the US this year. - To date I have seen no evidence or presentation of his plans to fund raise. I have severe concerns regarding Series A which was supposed to kick off last November. Patrick - failure to find a resolution (last 13 months) - Patrick finally acknowledged my raised issues late last year with a brief verbal statement made to me "I get it" - Patrick admitted (verbally) to breaking promises and commitments made in August 2017 in a board meeting to you and I. - Despite initial progress, Patrick withdrew an offer (which you and I agreed was not substantial enough) to place a amount of his equity into a pool that could be used to attract needed talent. - Patrick rejected an objective exercise to document and access performance and business contributions in our meeting on 4/4/2019 - You gave me a verbal assessment that Patrick had 'made up for earlier mistakes'. I'm not sure what or how that has been qualified. On inspection of the list below, few meaningful issues have been resolved. I disagree with that assessment and offer an alternative view that a more calculated series of events and actions initiated by Patrick have been unfolding to deliberately benefit his own agenda and perception. - Concern that conflict of interest issues (below emails) that are still outstanding below. My Role(s), reluctance - As I made clear in writing several times (below), I had no desire to lead the company as CEO. This role was taken on reluctantly without any option or alternative. - I have done what I can to lead in that position, but been restricted, and I have had to tackle serious product issues, often being undermined or advice not actioned. Some significant issues stem from the list of issues written in prior emails below. - I haven't' been able to perform in any dedicated focussed capacity, and have been spread thin across a ridiculous number of roles covering - Founder, CEO, Creative Director, Product Lead, Technical Support, Research, Investor Relations, Sales, IP generation, designer, video editor. You name it I've had to do it in the last year. - I've worked hard as I possibly can. I had only two days off between Jan and Dec last year. - Leading a growing company when you are spread so thinly can only work when you have cover from an exceptional team with time on their hands. I have not had the benefit of this. Removal of my responsibilities / decision making capability. Organisation restructuring, without input, consent or knowledge. - During my time in the US, the only way I can describe Patrick's actions is as a Coup d'etat to undermine my role, and promote his own agenda. I will clarify: - It appears following Delwins resignation that information was collected regarding the state of the technical team. - Some unspecified individual tech team members were interviewed by Glenn Butcher (which I note was only partially completed and not exhaustive). - Notably, most team members who were interviewed had known performance issues, and despite requests for these to be addressed with respective managers no action had been taken. I have no doubt that each of these people were aware of my concerns about them. I doubt feedback was completely objective in this case. - In addition Erin has stated her view privately to me that Delwin did not deal with known performance issues in his team adequately. I had spoken weekly to Delwin about the team and my suspicions of serious and possibly neglectful underperformance. - Conclusion of the investigation was: Team motivation, morale, focus and culture issues were identified - and attributed directly to me. - I have since spoken to several members of the technical team who do not agree with the conclusion made with respect to the above. They expressed frustration that they were not included in the process. - I was not informed of feedback verbally or in writing during or after this process. - I was not given any specifics, and have only heard generalisations delivered verbally on 4/4/2019. - I was not given any opportunity to address any feedback. - I was not asked to explain what I may or may not have asked to be done by the technical team. - I was not given any examples of where things might have gone wrong and what could have been done differently. - Patrick used partial information from the above to inform others, it seems with an agenda to improve his own position and certainly to undermine mine. - It appears that decisions were then made by certain parties within the business without my input or knowledge as to how things would now run, and what my role would become (or not). - An acting CTO was appointed without my input or feedback. (I note that I have never had a single meeting in person with the acting CTO before his appointment, who's contracting role related to servers and security). - The acting CTO was given instruction NOT to report to me or follow any of my instructions or recommendations by Patrick. - Patrick instigated new management processes, without consultation with the board, apparently with an agenda to remove me from being able to perform in my current role. - It is apparent that other team members appear to have been given similar 'permission' to avoid interactions with me. - None of the above was documented, board approved, consulted or constitutional with respect to the company and my role. - No feedback or communications was supplied. I was not given notice or a right of reply. My discovery of apparent restructure. | Observations on 'Acting CTO' performance. - Whilst initially I just thought people were acting proactively to make changes, I became aware of unusual behaviour towards me by staff whilst trying to resolve product issues. - I discovered early issues with the Acting CTO's quality assurance when it appears that during his own maintenance, brought down several key pieces of infrastructure including the live web scanner, on the day we had investor meetings. - Engineering processes currently in place (by Delwin) for reporting critical failures to management on these kind of issues were not followed. I was rudely spoken to when questioning these events by the acting cto. - I discovered that key features for the product roadmap had been omitted by the acting CTO and I was unable to address these, and again rudely spoken to. - I had concerns raised by me by Sandor regarding the acting CTO's decisions regarding the API and was called in to help. - I witnessed rude and abrupt treatment by the acting CTO towards Sandor in a meeting who was interrupted on several occasions. At one point telling Sandor to "Stop" in a loud voice and raising a palm whilst Sandor was mid sentence. - I discovered that during my questioning on the above and key issues and several other small matters that it was clear that he had been given instruction NOT to deal with me. It was clear this instruction had been given by Patrick. - It was very clear at this point that my role had been compromised. Outcomes - My core responsibilities and decision making capability were removed without my knowledge or explanation. - Employees who were supposed to report to me were informed. I was not. - It affected several key events and critical issues. - I have been told this was instigated by Patrick - Patrick did not follow a due process or one which involved consultation or feedback. - Patrick appears by actions to have assumed self appointed responsibilities of a CEO at some point / and made board level decisions without me present, which effectively amounted to removal of my duties. - Tony stated in a the meeting with Patrick regarding the above "You are not CEO" (to me) and "Neither are you" (to Patrick). - Whilst I never wanted the CEO role, I consider the removal the title and subsequent responsibilities announced in that meeting to have been handled inappropriately. - I consider Patricks actions above to be a violation of the Shareholders Agreements - I consider the actions by Patrick as a deliberate and intentional, self serving and that he effectively engineered a situation - I see the events engineered by Patrick as constructive dismissal. - I consider in respect to the above and my written complaints dating >12 months of waiting for resolutions that I was left with no other choice than to resign from the business completely. - I consider Patricks actions and manipulation which resulted in staff having a different view on my position and capability to be clear evidence of corporate bullying towards me. Response to specific remarks made by Patrick - Patrick stated in the last meeting that feedback I supplied to Tony regarding his performance ...was bullying him. I refute this fully. I note that I conducted all my feedback on Patrick through Tony in writing, and that when I passed on my feedback Tony agreed with my concerns. Tony conducted multiple meetings with Patrick in person. Tony elected and chose what feedback to give him and how, and I gave Tony permission to share my feedback at his discretion. I declined to meet Patrick directly or one on one regarding his performance matters. I wholly and absolutely reject that the feedback I gave or the process I followed with Tony above constitutes bullying. - Patrick made other references to bullying. I wholly refute this too. I have managed hundreds of people in my career. I have a direct, open and honest, constructive approach to employee feedback. Equally I always accept feedback and criticism from staff provided and encourage it to be given to me. My style of feedback is to provide honesty, transparency and a rationale or supporting evidence which is required inside a high performance culture and I offer those around me to give the same to me. I always take time to explain this to those who work with me and have always had feedback that this employees to improve. It is not ever pleasant to provide honest feedback to underperforming staff and I only reserve it for the occasions it is required, but accurate substantiated feedback should not be confused with intimidation / bullying. I am completely confident that this would be supported by my team at Laava upon closer examination and that the feedback I give is always for the self-improvement of the employee and the needs of the company, not my own benefit. I am confident that if ever there has been 'constructive conflict' which is commonplace in high performance cultures, that it was followed up by myself to ensure matters were resolved and not misunderstood. For serious matters I always consult with others and put in writing with a plan. - Examples Patrick provided were without full context, merit and none were documented. - Christian was also mentioned by Patrick as someone he thought I had "bullied". I find this not only inaccurate but wholly ironic - I attach an email for reference which Patrick was about to send to Christian (I intercepted via email and a phone call to Patrick to prevent this particular email being sent). My assessment is that Patrick in fact has a very low EQ and his aspersions are not qualified especially given his own past behaviour. - I consider Patricks accusations of bullying was formed from out of context information, cynically exaggerated, contrived and propagated out of correct forums for these matters as part of his own self- promotional campaign and I would challenge these to be investigated directly. - I consider myself wholly accountable if I have in fact ever wronged any staff member or been inconsistent with the way I deliver feedback. My parting recommendations The business needs to exclusively employ people who have past experience and depth of knowledge/expertise. The business needs a full time CEO The business needs a full time CTO ( I do not recommend the acting CTO for a FT position) The business needs a Creative Director The business needs to replace 3-4 members of the engineering team. Engineering team has not been strategic at all, has let important functionality slip, and has been overwhelmingly executional, operating in silo without questioning key elements and rationale. This is the heart of that teams issue. I do not regard the acting CTO as capable of strategic thinking at all. I hope Elicia's appointment will address this.

The pleaded case 151 The case as pleaded is as follows: 29A. From February 2019 to April 2019, Michel engaged in conduct that was oppressive to McDonald, or which marginalised him, in that he did, caused or acquiesced in the following: a. In February 2019, whilst McDonald was overseas with Surtees for Laava, and without notice or consultation with McDonald, Michel commissioned a consultant (Glenn Butcher) to undertake an assessment of Laava and produce a board report dated 1 March 2019. b. In March 2019, Michel hired Sven Peters (Mr Peters) as acting chief technology officer (CTO) without notice to or consultation with McDonald in circumstances where McDonald was CEO, leading product development and would have to interact and instruct Mr Peters. c. On 22 March 2019, and without notice to or consultation with McDonald, Michel notified Laava's employees that Mr Peters had been appointed as acting CTO. d. In or about March 2019, two projects that McDonald was undertaking and in respect of which he had made significant contributions, being Laava's app and client dashboard development, were cancelled or postponed without notice or consultation with McDonald. e. On 5 April 2019, Mr Peters, in Laava's "Slack" internal messaging forum (which was viewed by the majority of Laava employees), represented that McDonald no longer had any authority in respect of technological product development when hitherto McDonald had overseen such development. f. On 5 April 2019, in a meeting between McDonald, Mr Peters and certain Laava staff, Mr Peters informed McDonald that he reported to Michel, not McDonald, thereby undermining McDonald in front of Laava staff and prejudicing his ability to lead product development and otherwise perform his role as CEO. g. On 5 April 2019, following the meeting pleaded above, Surtees, Michel and McDonald met to discuss Mr Peters' appointment, during which: (1) Michel asserted he had saved Laava, thereby implying that McDonald was inept or ineffective; (2) McDonald reiterated (as was the case) that he had sacrificed extensive time and effort without pay for extended periods, such that McDonald's wife had to change jobs to earn more income; and (3) Michel refused to acknowledge McDonald's sacrifices. h. Michel did not or did not adequately respond to communications from McDonald in respect of Mr Peters' appointment. i. In or about April 2019, Michel caused Laava to enter into a fulltime employment agreement with Mr Peters for CTO without notice or consultation with McDonald, which contract provided for Mr Peters' remuneration to be $225,000. 29B. Michel undertook the said conduct: a. in the knowledge that, in so doing, he was undermining McDonald's status within Laava; and b. for the purpose of forcing McDonald, inter alia, to resign as CEO in circumstances where McDonald had competently and professionally performed his role. 152 That conduct is pleaded as being individually and collectively unfairly prejudicial to, or unfairly discriminatory against, CDO in that it forced Mr McDonald to cease to have any role in the management of CDO's affairs. However: (1) CDO had no claim to the position of acting CEO or CEO. Such a claim is not alleged to form part of the Foundational Understanding and it finds no expression in the Shareholders' Deed; and (2) CDO retained its ability to participate in the management of Laava. Its right to appoint a director was unaffected, and Mr McDonald continued to occupy that position for CDO. 153 In these circumstances, I am not persuaded, assuming the impugned conduct is proven, that its effect was oppressive to, unfairly prejudicial to, or unfairly discriminatory against CDO. 154 In any event, for the reasons developed below I am not satisfied that the impugned conduct would have been oppressive to CDO even if it had a claim to participate in management beyond its ability to appoint a director to Laava. 155 The impugned conduct, to the extent it was pressed in closing submissions, is discussed below. In considering that conduct, it must be noted that the case as pleaded is that the impugned conduct was engaged in, caused, or acquiesced in, by Mr Michel. In closing submissions, references were made by the McDonald Interests to Mr Surtees having engaged in, caused or acquiesced in such conduct. In circumstances where such allegations were not pleaded, and the Surtees Interests have submitted that their case was prepared on the basis that the pleaded case did not include such allegations, I consider these allegations solely by reference to the case as pleaded. I note for completeness that it is difficult to reconcile the unpleaded proposition that Mr Surtees worked to "force out" Mr McDonald with the evidence of both Mr McDonald and Mr Surtees, that Mr Surtees refused to accept Mr McDonald's resignation when it was offered.

The commissioning of the Butcher report 156 The evidence suggests that in February 2019, concerns expressed by various staff came to the attention of Mr Michel and Mr Surtees, who then suggested that a report be prepared by Mr Butcher as an independent board advisor (see [125] to [128] above). It is apparent from Mr Surtees's 16 February 2019 email that the report was commissioned with the best interests of Laava in mind. In this regard, I accept that Mr McDonald was not informed of the commissioning of the report prior to its completion, however it does not follow that such conduct met the requirements of s 232(e), particularly when regard is had to the fact that the subject matter of the investigation was an area of Laava's business for which Mr McDonald was responsible. In this regard, Mr Michel explained that some of the emails sent in connection with Mr Butcher related to Mr McDonald's performance as CEO. 157 Further, it is clear from Mr Michel's various emails to Mr Surtees (see [135] to [136] above) that once the draft report had been prepared Mr Michel was actively encouraging Mr Surtees to raise it with Mr McDonald (who were together in the United States of America); and Mr McDonald was provided with the report on 2 March 2019.

Hiring of, and announcement of, Mr Peters as acting CTO 158 It is common ground that on 22 March 2019, Mr Peters was appointed as acting CTO of Laava and that this appointment was announced by Mr Michel to Laava's employees. I am not satisfied that Mr Michel did this for the purpose of undermining Mr McDonald, when his unchallenged evidence was that he understood that the task of appointing a replacement CTO had been delegated to Mr Michel, Mr Butcher and Ms Husband prior to departure of Mr McDonald and Mr Surtees for the United States of America.

Cancellation of projects 159 The allegation in paragraph 29d. of the Amended Points of Claim is expressed in the passive voice. The person who cancelled or postponed the projects is not identified, nor is there any identification of any acts of causation or acquiescence. In their closing submissions, the McDonald Interests did not address a cancellation of projects that Mr McDonald had been promoting and instead referred to the promotion of a project which Mr McDonald had previously put on hold. Further, the actors are Mr Butcher and Mr Ger, not Mr Michel. The allegation in paragraph 29d. is not made out.

Mr Peters's Slack message 160 For the reasons set out at [147] above, I do not accept that there were Slack messages to the effect particularised. In any event, if there were, there is no evidence that it was conduct of Mr Michel or with which he was involved.

Was Mr McDonald forced out as the acting CEO of Laava? 161 I am satisfied that Mr McDonald's decision to resign as acting CEO of Laava was influenced, in part, by his perception of events which had occurred from mid-February to early April 2019. So much is clear from the document that he prepared on 5 April 2019 which is set out at [150] above. However, I am not satisfied that Mr McDonald was "forced out" by the impugned conduct in circumstances where: (1) he had been threatening to resign for a considerable time due to a longstanding conflict between himself and Mr Michel; (2) he chose to resign and his employment was not terminated; and (3) Mr Michel did not encourage Mr McDonald to resign when he had previously offered to resign and Mr Surtees declined to accept his resignation when it was proffered on in early April 2019. 162 Further, the evidence does not establish that Mr Michel acted with the purpose of forcing Mr McDonald to resign. 163 Whilst there are aspects of the impugned conduct which are open to criticism, I am not satisfied that the impugned conduct, individually or collectively, amounts to conduct that is so unfair that reasonable directors would not have considered it fair.

F. CONDUCT PRIOR TO MR MCDONALD'S RESIGNATION AS A DIRECTOR OF LAAVA

Relevant conduct 164 I turn now to consider the impugned conduct following Mr McDonald's resignation as the acting CEO of Laava in early April 2019 and prior to his resignation as a director of Laava in early January 2020. The impugned conduct is considered below (together with other events that provide context). 165 In or about April 2019, a new CEO, Mr Michael Buckley, was appointed to Laava with the consent of each of the Founders. He commenced on 11 June 2019. 166 On 24 April 2019, Mr Michel sent an email to Mr McDonald and Mr Surtees attaching a proposed circular resolution to "summarise and record the decisions made over the past 2-3 weeks". The terms of the circular resolution included: Company needs to recognise the huge sacrifice made by Gavin, the immense contribution and dedication / attitude. He will soon be involved with Laava for over 9 months acting like an owner, with little recognition from our side. The board ratifies the issue ordinary shares in a similar way we did for Morgan and Christian. 3,000 new shares with 1,500 now and 1,500 vesting in 1 year, i.e.. Gavin needs to be here in 1 year otherwise company can buy them all back for 1.00… 167 Mr Surtees responded: "Agreed by me", to which Mr Michel replied saying "And me". Later that day, Mr McDonald responded: My feedback. 1. Until I have been sacked as CEO (or my resignation is accepted), then someone need to explain to me what this Leadership Committee is and what my role has become or is intended to be going forwards. The purpose of this new leadership team which seems to have been put in place seems to be explicitly to my undermine my decision making ability. Right now I have been left compromised by these actions. So I'm not supporting any changes to leadership format until my role has been resolved. 2. Erin's salary is far too high. 3. Sven should not be appointed without a full and thorough interview process against other candidates. Everything else is ok. 168 There is a contest between the McDonald Interests and the Majority Interests as to whether, by this email, Mr McDonald agreed to the issue of 3,000 shares to Mr Ger. It is not necessary to resolve that issue. 169 On 29 May 2019, Laava issued 3,000 ordinary shares to Wyargine. It is common ground between the McDonald Interests and the Majority Interests that this was effected by Mr Michel and Mr Surtees without the knowledge of Mr McDonald. 170 On 12 June 2019, Mr Michel sent an email to Mr McDonald and Mr Surtees with the subject "Board - Sven ESOP": Board Sven moved from contractor to employee, as CTO, from 28/5/19 He has accepted a total package of $225k (inc super) in exchange for more equity. He can get a much higher salary elsewhere. He wants a meaningful stake and rejected the idea of 1,100 grant now (vesting over 4 years), and possibly more later. He is happy with normal vesting and "if I'm not good enough, I get fired" but doesn't want to beg for more every year. Tony, Patrick and Erin have discussed and agreed on a total grant of 4,000 options under the following ESOP terms: • Vesting over 4 years • 1 year cliff from date of commencement. Under his circumstances, the 1 year cliff kicked off in Nov 18. • We discussed the possibility of adding hurdles but agreed that we may use other short term incentives as part of his performance review. Hurdles and ESOP don't work well presently as we don't have sufficient visibility on our future. From Erin: "This is actually a 'good deal' for Laava for a CTO. ESOP aside, we will set key performance deliverable's for Sven, covering the areas discussed by Tony. I'll work on this as a part of the performance review roll out. Sven is very key to the current stability and driving the product roadmap with Elicia. If we don't look after our key team members Like Sven we are really putting ourselves at too much unnecessary risk here." Board Resolution: • approve grant of 4,000 ESOP options to Sven Peters as CTO • 4 year vesting, 1 year cliff then quarterly vesting • issue date is Nov 18, as agreed with him when he agreed to stay on as acting CTO Board votes: PM Yes, TS Yes, IM ? 171 "Erin" is a reference to Ms Husband. On the same day, Mr McDonald responded: No I'm not supporting this. l. Sven is a lead engineer not a CTO. He's not even close to meeting CTO criteria. 2. Laava needs a proper forwards facing CTO to succeed. Sven is not forwards facing at all. He will end up doing more harm to the business if he is put in that role FT. The CTO role is critical and it needs a proper search, jd, KPIS and assessment. Hire should be based on merit, attitude aptitude, not convenience. We can find way way better people. He was a stop gap for Delwin. "Acting" That's as far as it should have gone. If he's not happy reverting from acting cto to lead engineer there are plenty more like him out there. I'll back a proper, experiences and qualified CTO with equity. But that person is not Sven. 4000 options should buy an A- grade cto. 172 On 12 June 2019, minutes of a meeting of the board of Laava were created. The minutes of the meeting record that the meeting occurred by "email". The minutes also record: 3 Sven Peters ESOP Sven moved from contractor to employee, as CTO, from 28/5/19 He has accepted a total package of $225k (inc super) in exchange for more equity. He can get a much higher salary elsewhere. He wants a meaningful stake and rejected the idea of 1,100 grant now (vesting over 4 years), and possibly more later. He is happy with normal vesting and "if I'm not good enough, I get fired" but doesn't want to beg for more every year. Tony, Patrick and Erin have discussed and agreed on a total grant of 4,000 options under the following ESOP terms: • Vesting over 4 years • 1 year cliff from date of commencement. Under his circumstances, the 1 year cliff kicked off in Nov 18. • We discussed the possibility of adding hurdles but agreed that we may use • other short term incentives as part of his performance review. Hurdles and ESOP don't work well presently as we don't have sufficient visibility on our future. From Erin: "This is actually a 'good deal' for Laava for a CTO. ESOP aside, we will set key performance deliverable's for Sven, covering the areas discussed by Tony. I'll work on this as a part of the performance review roll out. Sven is very key to the current stability and driving the product roadmap with Elicia. If we don't look after our key team members Like Sven we are really putting ourselves at too much unnecessary risk here." Board Resolution • approve grant of 4,000 ESOP options to Sven Peters as CTO • 4 year vesting, 1 year cliff then quarterly vesting • issue date is Nov 18, as agreed with him when he agreed to stay on as acting CTO Board Votes PM Yes, TS Yes, IM No 173 As is recorded in the minutes, Mr McDonald voted against the resolution to issue options to Mr Peters. 174 On 9 July 2019, Mr Buckley entered into a contract to act as acting CEO of Laava, with effect from 11 June 2019. The contract had a duration of "[U]p to 12 weeks over a period of 4 months". Thus, it was due to expire by 11 October 2019. However, it seems that Mr McDonald and Mr Surtees, at least, were operating on the basis that the contract ran until the end of 2019. 175 On 11 November 2019, the board of Laava met. Mr Buckley was also in attendance. The minutes of that meeting include: 3 BRIDGING ROUND WITH EXISTING INVESTORS ... A proposal to approach existing investors for a bridging round was discussed, for up to $1m at a $12m pre money valuation, to be underwritten by TS & PM by up to $150K. Board Resolutions ° That the prospects of capital raising remain sufficiently positive to allow the company to continue to operate as a going concern. ° That the company is solvent at this time. ° To approve the bridging round ln concept, however a further Board meeting would be required to give final approval ° To keep staff informed and issue a 30 day notice of redundancy on 13th November 2019 to all staff, to be effective 13th December 2019. Board Votes PM Yes, TS Yes, IM Yes (italicised emphasis added) 176 As Mr Buckley explained, Laava was likely to run out of money in about 30 days and it was decided to notify Laava's staff of the position. 177 On 13 November 2019, at the initiative of Mr Michel, he and Mr Surtees (and without notifying Mr McDonald) decided to reverse the decision to send the 30 day redundancy notices to Laava's staff. Mr Michel took this step because in his view the issue of such notices would "kill the company" and he saw the situation as one of urgency. Mr Michel then sent an email to Mr McDonald, Mr Surtees and Mr Buckley: Guys This is what Tony and I discussed this morning. As per the "plan" (once you read it) I've run it past Rachel and Peter Dunne who both agree it is the right decision. Let's set up a daily or maybe two-daily board meeting call maybe in the morning to review and minute our position. 178 On 19 November 2019, the board of Laava met. At that meeting Mr McDonald protested that the 13 November 2019 board meeting had occurred without notice to him. The minutes of that meeting record: 3 ONGOING BOARD COMMUNICATIONS It was noted by IM that the meeting held by phone on 13 November 2019 to revoke the resolution to offer formal notice to employees did not include himself. The Board agreed all efforts would be made to ensure that all directors be included in all director level discussions and if not possible, MB indicated he would take responsibility to fill in the gaps. 179 In late November 2019, Mr Michel, Mr Surtees and Mr Ger each agreed that Mr Buckley's contract ought not be renewed. Mr Michel's evidence was that he chose not to involve Mr McDonald in the decision not to renew Mr Buckley's contract. That evidence was: All right. But in all events, you chose not to involve Mr McDonald in the decision not to renew Mr Buckley's contract, correct? Correct. You didn't involve Mr McDonald, did you? Correct. And you didn't know if Mr Surtees had involved Mr McDonald in reaching a decision on this topic, did you? I probably did assume that he hadn't. And you understood that Mr Buckley was the most senior employee of the - I withdraw that? He was not an employee, he was acting CEO. Yes, I'm sorry. He was a very senior company representative at the time, be it employee or contractor? Mmm. And the reason you didn't want to involve Mr McDonald is because you wanted to freeze him out of decision making? Not - yes and no, Mr Condon. I felt that it took six months - the Sven Peters disagreement took a long, long time, and Mr Buckley was already out of contract. And we needed to make changes expediently so that we didn't keep this dragging on. And you didn't involve Mr McDonald because you wanted to convey a message to him that you did not want him involved in the company any more? No, Mr Condon, because the board was not making decisions at the right speed and because of the friction between us. Yes. You weren't permitting decisions to be remitted to the board, were you? You were making decisions unilaterally, weren't you? With Tony. Right. And not the whole board? Correct. And you understood by doing so you would probably cause Mr McDonald to resign as a director, that was your view at the time? No. My view at the time was that given the events of 2019 and the frustration of operating the board, this decision needed to be made fast. And I felt that I wasn't up for another six month discussion on this matter. Right? And that - that's why this happened that way. 180 On 16 December 2019, Mr Surtees travelled to Mr McDonald's house and told him that Mr Buckley had "lost the support of the team". By that time, Mr Surtees had formed the view, based on discussions with Ms Husband, that Mr Buckley's position was untenable. Mr McDonald's evidence is that they agreed that Mr Buckley "will need to be given the chance to address any issues fairly" but Mr Surtees denies that this occurred. 181 On 24 December 2019, Mr Surtees sent an email to Mr Buckley (copied to Mr Michel and Mr McDonald) which included: I am sorry to confirm that we will not extend your contract further, or appoint you as full time CEO of Laava. We greatly value the contribution you have made to Laava over the past few months but I believe that offering you this CEO role is not right for us as a company going forward. This is definitely not the outcome that any of us would have wanted and I apologise profusely and sincerely for the uncertainty and confusion caused by this decision, it was an extremely difficult one for us to make. It was not helped by my circumstances. … I would like to personally continue to work you, in some capacity, even though it won't be in this CEO role. I think there are a number of opportunities which I would like to support you for, should this be of interest to you. Given the time of year and the personal circumstances that I find myself in at the moment, might I ask for your forbearance and suggest that we speak face-to-face in a couple of days time. Please let me know if you would like to meet. 182 On the same day, Mr McDonald sent an email to Mr Surtees which included: Tony you promised you would not make important company decisions without consulting me. This is crazy. On Xmas Eve! 183 On 26 December 2019, Mr McDonald sent an email to Mr Surtees in the following terms: I am so unhappy about your email to Bux, I find it difficult to even know where to start. You are in mourning. It's also Christmas (personally that email ruined Xmas for me too). How this is happening at this time is beyond any logic. Let me get to the point. This is a formal request: I would like you to withdraw your letter to Bux pending a proper review of the situation and his performance with regards to the role, with Erin and myself present. Here are some things I need to point out with regards to your email: 1. You asked me to listen to Erins feedback on Bux. - I went to see Erin last week in person. - Her feedback to me on Bux was NOT reflective of what you told me. - You agreed with me at my house to follow a proper process of review. You appear to have reneged on this agreement you made with me regarding this. You appear to have deliberately kept me out of the loop (I imagine Patrick pushed you into this). This is not the fair, it is not professional or the correct procedure. - Erin was going to speak to you about OTHER issues in the business. Bux is not the biggest concern by a long way. - Patrick's behaviour and role in the company is a serious issue for Laava in Erin's opinion and she was waiting to talk to you in person. 2. Patrick and Bux - Bux brought a bullying complaint against Patrick to Erin and myself. It is credible and real. - Patrick confronted Bux last week (Thurs I think). I doubt you have heard the full story of what happened but you should know that Patricks behaviour towards Bux was completely unprofessional and without warrant. - You need to listen to what Bux said happened during this conversation. - It appears Patrick has since approached you (during a time we were all giving you needed space) and fed you information that appears to have driven your thinking around Bux. Patrick has played you and he again has asked you to do something whilst avoiding me, and cut me out of the process, breaching our shareholders agreement AGAIN. 3. Giving notice to Bux. - I'm sorry, but sending that email to Bux on Xmas eve was outrageous and WRONG. It was heartless, insensitive. You should not have done this Tony. You are better than that. - I don't think you are aware of a number of factors which will hurt Laava by removing Bux. Turnbull, GS1, AustCyber. They all love Bux. You have not thought this through. 4. Patrick - This is the last straw. He is a bully. He is a coward. He is a liar (We will speak about this with Erin present so you can hear the full truth). - He has manipulated and taken advantage of your better nature. He has failed the company in so many ways. He has not performed. He has not met his KPIs. He is not liked or regarded by the Laava team. - He has taken advantage of you, to get what he wants, in your time of grief. - I will be bringing a formal bullying complaint against Patrick to Erin regarding his behaviour towards me over the past year. Enough is enough. Tony the right thing to do is to withdraw that email to Bux pending a proper considered review of the situation, involving the full board and HR. You should be allowed to grieve. I do not want to be sending this but have no choice. (emphasis in original) 184 The reference to Mr Surtees's grief is a reference to the passing of his father on or about 19 December 2019. This was in addition to Mr Surtees's wife being seriously ill. 185 On or about 3 January 2020, Mr McDonald resigned as a director of Laava. His resignation email, sent to Mr Surtees and Ms Husband, with a blind copy to Mr Buckley (but not Mr Michel), was in the following form: As Chairman of Laava, I am giving you notice that I am resigning as a Director of Laava with immediate effect (3/1/2020). I simply cannot uphold my duties as a director when information is deliberately obfuscated, withheld, or partial, and emails not replied to, and decisions made without my input or knowledge which affects the business. This has been an ongoing issue for the past 10 months. I have been excluded without any valid reason on at least four occasions for critical decisions and despite multiple reassurances that this behaviour would change in board meetings, it has not. The firing of Michael Buckley, CEO without any notice or involvement of all board members and major shareholders is totally unacceptable. The only way I have been able to partially navigate the above behaviour is via Michael Buckley. He was removed by you on 24/12/19 via email and neither directors have replied to my emails regarding this matter. Having spoken to some senior Laava staff directly over the last few days there is serious disappointment in the team both with the decision, the handling and the timing. Michael Buckley was the only reliable and consistent person to provide me updates and insight into the business. I am suspicious that his honest, transparent approach to communications and the fact that he raised important matters and also issues concerning my exclusion on critical decisions and other inappropriate behaviour by board members has contributed to his removal. This is highly concerning to me. I am also concerned given the state of the Laava's finances that advice Michael supplied the board (which I agreed with) was on at least one occasion overlooked, ignored / overturned. Directors advised me that Laava had obtained a legal opinion in order to overturn a board decision. The board was unable to provide me with a legal opinion, which transpired to be 'off the record' advice. This was very misleading. Michael has since alerted me to several other similar concerns. In addition, Michael had raised concerns of bullying by a director/staff member to both you and I. These are consistent with my own experiences. He has since raised this formally with Erin so a process must now take place to evaluate this. The pattern of behaviour which affected me I have brought up repeatedly verbally, in email and in board meetings and on one occasion with Peter Dunne (Laava's lawyer) present. They include clear breaches of our shareholders agreement and under no circumstances is any of this acceptable. I would also like to note (and this has been acknowledged by the previous CEO Michael Buckley) that the minutes from board meetings have not documented my concerns on these and other important matters. Advice I have given the business has been ignored on a consistent basis regarding staff hires, investment, product development. One example where I provided specific advice which was ignored recently lead to me receiving a verbal complaint from GS1 regarding Laava providing false information to the marketplace. I cannot be attached to a business that acts in such an unprofessional manner, and that will not listen or wilfully ignores my advice. I will follow up with Erin separately regarding the circumstances leading to my resignation as director and ceo. As the founder and creator of Laava, I am very unhappy at the treatment I have received in the past 12 months. It has been distressing and hurtful on many levels and affected my capacity to live a normal life. My deliberate exclusion with regards to firing Michael and the lack of any follow up is the last straw. It was not my wish to resign either as CEO or director, but the inappropriate actions of the company has forced my decision on each occasion. 186 Mr McDonald's affidavit evidence concerning his resignation is: In view of the events which transpired in November 2019 and prior, I did not consider that I could fulfil my obligations as a director of Laava, as I was being excluded from decisions, decisions were being made without consultation with me and there was a lack of transparency. Accordingly, on 2 January 2020 I tendered my resignation as director to Tony ...

Consideration 187 The case as pleaded concerning the resignation of Mr McDonald as a director of Laava is as follows: 33A On an ongoing basis up to and including January 2020, Michel engaged in oppressive conduct in the course of the business of Laava towards McDonald, in that he did, caused or acquiesced in (in addition to the matters pleaded in paragraph 29A): a. excluding McDonald from critical matters concerning the business and management of Laava; b. making decisions concerning the business of Laava without any or any adequate notice or consultation with McDonald; c. causing minutes of meetings of Laava's board to not properly reflect what occurred at such meetings; and d. failing or refusing to provide critical information concerning the business of Laava to McDonald, notwithstanding McDonald was a member of the Laava Board. Particulars The said conduct included the following: a. (as pleaded in paragraphs 30A to 31A, on 29 May 2019, without any adequate consultation or approval from McDonald and in breach the understanding pleaded in paragraph 30A, Michel caused Laava to purportedly issue Ger 3,000 Laava shares (approximately 3% of Laava's then equity). b. On 13 June 2019, and without any or any adequate consultation or approval from McDonald, Michel offered Mr Peters 4,000 Laava options (approximately 4% of Laava's then equity), in addition to Mr Peters' renumeration pleaded at paragraph 29A i. c. On 13 November 2019, Surtees and Michel purportedly convened a board meeting, without notice to or consultation with McDonald, and purported to resolve to undertake material steps in Laava's business, as referred to in the minutes of that meeting, including to reverse Buckley's recommendation to make redundancies. d. McDonald was not provided with information he sought concerning that purported board meeting, including the legal advice provided to the company and financial information. e. Further, McDonald was not provided with necessary information in advance of the board meeting to be held on 19 November 2019, notwithstanding he was then requested to vote on material matters affecting Laava's business. f. The Laava board minutes of 19 November 2019 did not properly record the objections communicated by McDonald at the meeting on 19 November 2019, nor the fact of his abstaining from voting on the basis of the lack of information. g. On 24 December 2019, Buckley was dismissed without prior notice or consultation with McDonald, and the plaintiffs repeat paragraphs 32 and 32A hereof. h. Michel did not or did not adequately address McDonald's communications, including in relation to the hiring of Mr Peters as CTO and the dismissal of Buckley. i. On 1 January 2020, Ger was purportedly appointed joint CEO of Laava with Michel, without notice to or consultation with McDonald. 33B Michel undertook the said conduct in the knowledge that, in so doing, he was: a. further undermining McDonald's status within Laava; and b. for the purpose of forcing McDonald, inter alia, to resign as a director of Laava and cease to involve himself in the affairs of Laava. 33C As a result of the conduct pleaded in paragraphs 29A and 33A, McDonald was unwilling to cause CDO to exercise its rights under the Deed and formed the view there was no utility in his involving himself in the affairs of Laava. 33D As a further result of the conduct pleaded in paragraphs 29A and 33A, McDonald was deprived of such opportunity as there was to: a. influence Laava's business; and b. obtain additional shares in Laava, to the extent that they were issued in conformity with clause 5 of the Deed. 188 The impugned conduct is pleaded as being individually and collectively unfairly prejudicial to, or unfairly discriminatory against CDO in that it forced Mr McDonald to cease to have any role in the management of CDO's affairs. I am not persuaded, even if Mr McDonald had been "forced" to resign by the conduct impugned, that s 232(e) would be engaged when: (1) as previously noted, the impugned conduct must be considered by reference to its impact upon CDO and not by reference to its impact upon Mr McDonald qua former director of Laava; (2) CDO retained its ability to appoint a director of Laava. It chose not to do so. CDO called no evidence in support of the proposition that Mr McDonald was the only person capable of representing its interests on the board of Laava or why it chose not to appoint another person (such as Mr Buckley, for example) to the board. 189 Thus, I will deal briefly with the impugned conduct. I am not satisfied that the conduct itself (individually or collectively) satisfied s 232(e) and in particular in circumstances where: (1) the proposed issue of shares to the benefit of Mr Ger was notified to Mr McDonald (albeit that the proposal was to issue 1,500 shares immediately and the remainder in one year, whereas all 3,000 were issued in May 2019); (2) Mr McDonald was consulted concerning the issue of 4,000 options to Mr Peters; (3) the reversal by Mr Michel and Mr Surtees on 13 November 2019 of the decision made on 11 November 2019 to send redundancy notices was made in circumstances where Mr Michel perceived that the situation was urgent because the sending of those notices may have "killed" Laava. Further, the minutes of the 19 November 2019 board meeting recorded an agreement to ensure that all directors were included in future board discussions; (4) Mr Buckley's contract had already expired, albeit it appears that an assumption had been made that it expired in December 2019. Thus, there was no requirement for the board to do anything. Whilst Mr Michel decided not to include Mr McDonald in the decision not to renew Mr Buckley's contract, it is clear that Mr Surtees informed Mr McDonald of the decision that had been or was about to be taken by a majority of the board. There is no evidence that Mr McDonald was pro-active concerning the renewal prior to 16 December 2019. He was then reactive to steps taken by Mr Surtees to manage the departure of Mr Buckley. It may be that Mr Surtees could have done more to consult with Mr McDonald, but I do not regard his conduct as deserving of criticism, particularly given his difficult personal circumstances at the time, much less as satisfying s 232(e) of the Corporations Act; (5) Mr Ger was not appointed as joint CEO of Laava until after Mr McDonald had resigned as a director; (6) the evidence does not establish that there was any pre-meditated plan on the part of Mr Michel (or Mr Surtees) to have Mr McDonald resign as a director; and (7) nor does it establish that Mr McDonald was "forced" to resign. It is clear that he chose to do so. 190 Undoubtedly, and particularly with the benefit of hindsight, Mr Michel could have been more accommodating of Mr McDonald and provided him with more information, but this needs to be considered in a context in which Mr McDonald's animus toward Mr Michel had been apparent for a considerable time, and they were no longer on speaking terms. Mr Michel's conduct in choosing not to involve Mr McDonald in the decision to renew Mr Buckley's contract was poor, but ultimately of little to no effect in circumstances where Mr Surtees met with Mr McDonald on 16 December 2019. 191 Again, whilst there are aspects of the impugned conduct which are open to criticism, I am not satisfied that the impugned conduct, individually or collectively amounts to conduct that is so unfair that reasonable directors would not have considered it fair.

G. CONDUCT AFTER MR MCDONALD'S RESIGNATION AS A DIRECTOR

Identification of the impugned conduct 192 The impugned conduct which occurred after Mr McDonald's resignation as a director of Laava - as identified in the Amended Points of Claim and pressed in closing submissions - involves the following transactions or resolutions (adopting the nomenclature used in the Amended Points of Claim): (1) the issue of: (a) 3,527 shares to Wilemich and 3,524 shares to MCA in June 2020, in conversion of loans owed by Laava to Mr Michel and Mr Surtees respectively; (b) 9,000 options to Wyargine in November 2020 (together, the Second Share Issue); (2) the issue of 4,500 options to Mr Fitzpatrick in February 2021 (Fitzpatrick Options); (3) the issue of 9,000 and 1,800 options to Wilemich and MCA respectively in February 2021 (First Directors' Option Issue); (4) the issue of 2,500 and 500 shares to Wilemich and MCA respectively in July 2021, in conversion of loans owed by Laava to Mr Michel and Mr Surtees respectively (Third Share Issue); (5) a resolution on 22 October 2021, for the making of, inter alia, the following offers of options in Laava: (a) 24,333 options to Wilemich; (b) 7,300 options to MCA; (c) 36,500 options to Wyargine; and (d) 3,042 options to Mr Fitzpatrick (Second Directors' Options Issue); and (6) a resolution on 26 October 2021 for the issue of, inter alia, 5,381 shares to Wilemich, and 2,836 shares to MCA in conversion of loans owed by Laava to Mr Michel and Mr Surtees respectively (Further Attempted Loan Conversion). 193 The McDonald Interests allege that the conduct of the affairs of Laava in effecting each of the above transactions or resolutions, individually and collectively, was contrary to s 232(e) of the Corporations Act in that such conduct resulted, inter alia, in: (1) the reduction of CDO's shareholding as a proportion of the share capital of Laava unfairly; (2) the reduction of the value of CDO's shareholding unfairly; and (3) the removal of the McDonald Interests' rights under the Shareholders' Deed.

The question of notice 194 The McDonald Interests were not given prior notice of any of the impugned conduct which occurred after Mr McDonald's resignation as a director of Laava. The McDonald Interests contend, and the Majority Interests deny, that such notice was required by dint of cl 5.1 of the Shareholders' Deed or by terms to be implied into that Deed. I note, for completeness, that the McDonald Interests did not rely upon s 254D of the Corporations Act.

Clause 5.1 of the Shareholders' Deed 195 Clause 5.1 provides: 5.1 Right of first refusal (a) Subject to clause 5.4, if the Company proposes to issue Shares to any person, the Company must first comply with this clause 5.1, except to the extent a Shareholder gives the Company a notice waiving its entitlement to participate in such opportunity. (b) If the Company proposes to issue Shares, it must serve a notice (the Notice of Issue) on each Shareholder specifying: (1) the terms of issue of the New Shares; (2) the total number of New Shares available for subscription and the issue price per Share; (3) any other material terms of the proposed issue; and (4) a statement to the effect that each Shareholder has an option to subscribe for the New Shares on the terms set out in the Notice of Issue if the relevant Shareholders complies with this clause 5.1. (c) A Shareholder may offer to subscribe for the New Shares by giving notice to the Company of the number of New Shares it wants to acquire within one month after the date of service of the Notice of Issue. (d) If a Shareholder offers to subscribe for New Shares then the Company must, subject to receipt of the relevant subscription amount, issue to that Shareholder the number of New Shares allocated to that Founder Shareholder under clause 5.2. 196 The effect of cl 5.1 is that if Laava proposes to issues Shares to any person, it is required to serve a Notice of Issue on each Shareholder other than Shareholders who have given Laava a notice waiving their entitlement to participate in the proposed share issue. However, this obligation is subject to cl 5.4, which provides in so far as is presently relevant: Exceptions (a) Subject to clause 5.4(b), clauses 5.1, 5.2 and 5.3 do not apply to an issue of Shares: (1) that is approved by the Founder Shareholders; (2) under the Employee Share Option Plan; … 197 Thus, Laava was not required to serve a Notice of Issue for any issue of Shares that was approved by the Founder Shareholders or was made under the ESOP. 198 The McDonald Interests and the Majority Interests are at issue as to two aspects of cl 5.4(a) - whether "Shares" includes options; and the operation of the phrase "approved by the Founder Shareholders".

Does "Shares" include options? 199 I note at the outset that cl 5.4(a)(2) expressly provides that cl 5.1 does not apply to an issue of Shares under the ESOP. It follows that if "Shares" does include options, then an issue of options under the ESOP would be an issue to which cl 5.1 is not applicable. Thus, the utility of the argument that "Shares" includes options is limited to an issue of options otherwise than pursuant to the ESOP. As each of the impugned issues and offers of options was pursuant to the ESOP the argument goes nowhere. 200 In any event, the preferable construction is that cl 5.1 does not apply to any issue of options by Laava for the following reasons. 201 First, "Shares" is defined in Sch 1 to the Shareholders' Deed as "an issued share of any class in the capital of the Company". Thus, the text of cll 5.1 and 5.4, when read with Sch 1, suggests that the expression "Shares" is limited to issued shares in Laava. 202 Secondly, the broader context of the Shareholders' Deed also suggests that the word "Shares" was not intended to include options over shares. A distinction is made in the Shareholders' Deed between: (1) "Shares" (referred to extensively elsewhere in the Shareholders' Deed, for example in cll 2, 4.9, 5.2(b), 5.5, 5.6, 8, 9, 10, 13.1, 14.6(a), 14.7, 14.9, 14.20, Sch 1 (in various definitions) and Sch 4); and (2) "Securities" (referred to in cl 10.3(a)(3)). "Securities" is defined in Sch 1 to mean "Shares, debentures, convertible notes, or other instruments convertible into Shares or debentures, options or other equity or debt securities" (emphasis added). This suggests an intention to use the word "Shares" in a manner which did not include an option. 203 Further, cl 4.4(a)(j) concerns the "issuance of Shares or options to employees …", which also suggests that "Shares" does not include options. 204 Thirdly, no party has submitted that there is anything in the circumstances surrounding entry into the Shareholders' Deed which bears upon this question. 205 Fourthly, I do not accept the McDonald Interests' submission that: (1) cl 5.4(a)(2) contemplates the existence of "an issue of Shares … under the Employee Share Option Plan"; (2) the term "Employee Share Option Plan" was defined in cl 1.1 as the "Company's employee share option plan to which Options may be issued"; (3) although "Options" is not defined, cl 5.4(a)(2) contemplated that the issue of an option would be the issue of a share; and (4) such a construction accords with commercial realities in that the exercise of an option generates a share. 206 In particular, I see no basis for the third proposition, that cl 5.4(a)(2) contemplated that the issue of an option would be the issue of a share. That clause contemplated that a share might be issued "under" the ESOP. However, such options might (or might not) be converted to shares. 207 Finally, I do not accept the McDonald Interests' submission that if cl 5.4(a)(1) did not apply to options, then the clause would lack business efficacy (citing BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266) because, by the issue of a vast number of options to directors or others who were not employees of the company, the board of Laava could completely change the composition of the share register of Laava without seeking the approval of the Founder Shareholders under cl 5.4(a)(1), even if those options were issued on the basis that they would immediately vest - that is, they were, in all other respects, ordinary shares. They submitted that this would denude the right granted in cl 5.4(a)(1) to Founder Shareholders of all meaningful content and could not have been what the parties to the Shareholders Deed objectively intended. The McDonald Interests submitted that this is particularly so because, at the time of the Shareholders Deed, Mr Michel, Mr Surtees and Mr McDonald saw themselves as "three equal pigs" who had (according to Mr Michel's email dated 26 September 2017) "3 equal shares, zero vesting, and founder rights to board seats enshrined in our SHA". That submission is rejected for the following reasons: (1) I do not accept that cl 5.4(a)(1) lacks business efficacy unless "Shares" is construed as including options. For example, it would clearly apply to shares, including those issued upon the exercise of the options not issued under the ESOP; (2) if business efficacy did require that the word "Shares" be construed as including options this would mean only that one of the five necessary conditions described in BP Refinery would be satisfied (see [216] below). Satisfaction of that condition, whilst necessary, is not sufficient. The submission does not address the other conditions; (3) to the extent that the submission might be regarded as in substance a submission that such a construction is necessary in order to avoid an absurd result, it is also rejected. That is not to say that conduct of the kind presaged - the issue of a vast number of options to directors or non-employees on the basis that they would immediately vest - is conduct for which there is no remedy. For example, it may be that such circumstances would amount to oppressive conduct; and (4) I do not accept that the reference to "three equal pigs" in the 26 September 2017 email provides a basis for a different construction, when as noted above, I am not satisfied that each of Mr Michel and Mr Surtees agreed that the Founder Shareholders would continue to have equal shareholdings throughout the life of the company.

The operation of the phrase "approved by the Founder Shareholders" 208 In order for the exception in cl 5.4(a)(1) to apply, the proposed issue must have been "approved by the Founder Shareholders". The McDonald Interests accept that cl 5.4(a)(1) requires approval by a majority of the Founder Shareholders and that unanimity of the Founder Shareholders is not required. 209 However, the McDonald Interests contend that for cl 5.4(a)(1) to operate, all Founder Shareholders need to at least be notified of a meeting for the approval of the proposed share issue. In other words, it is implicit in cl 5.4(a)(1) that such notification is to occur. 210 In support of this contention, the McDonald Interests submitted, in summary, that: (1) absent such a requirement, Laava could issue shares once a majority of the Founder Shareholders agreed. Thus, a majority of the Founder Shareholders could simply circumvent the right of first refusal provision in cl 5.1 and dilute the other Founder Shareholder without first telling it; (2) this would work a substantial injustice; a fortiori when, at the time of entering into the Shareholders' Deed, Mr Michel, Mr Surtees and Mr McDonald saw themselves as "three equal pigs" who had (according to Mr Michel's email dated 26 September 2017 sent at about the time the Shareholders Deed was being drafted) "3 equal shares, zero vesting, and founder rights to board seats enshrined in our SHA"; and (3) this shared understanding, which looked to the future, can properly be taken into account in determining how to construe the requirement of "approval" in cl 5.4(a)(1). 211 I do not accept these submissions. I see no reason to imply an additional requirement -- that the approval occur at a meeting to which all Founder Shareholders have been invited -- when, as is common ground, a majority vote is sufficient, and such approval can be obtained without such a meeting. Further, to the extent that these submissions rely upon the proposition that there is an Ongoing Equality Understanding, I have previously rejected that proposition.

Conclusion 212 For the above reasons, I do not accept that Laava was contractually obliged to notify CDO of the impugned share and option issues. However, this does not render irrelevant the lack of such notice when considering causes of action which involve considerations extending beyond contractual obligations. The absence of notice of particular events is taken into account in my assessment of the impugned conduct below.

Is there an implied term that the Founder Shareholders would not do anything which destroyed or diminished the rights of the Founder Shareholders conferred by the Deed to insist upon their remaining equal shareholders in Laava, otherwise subject to the terms of cl 5? 213 The McDonald Interests contended that there was an implied term of the Shareholders' Deed that the Founder Shareholders would not do anything which destroyed or diminished the rights of the Founder Shareholders conferred by the Deed to insist upon their remaining equal shareholders in Laava, otherwise subject to the terms of cl 5. The McDonald Interests submitted, in summary, that: (1) such a term is akin to the implied terms recognised in Mackay v Dick (1881) 6 App Cas 251 at 263 (that where parties to a contract have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to what is necessary to be done on its part for the doing of what the contract said had to be done); and in Ansett Transport Industries (Operations) Pty Ltd v Commonwealth [1977] HCA 71; (1977) 139 CLR 54 at 61 (that: "a party to a contract made on the footing of the continuance of a state of things may not by any act within its power or control do anything to destroy or relevantly to diminish that situation"); (2) the effect of the term is that unless the terms of cl 5 of the Shareholders' Deed is complied with, then the Founder Shareholders would remain equal shareholders; (3) such a term is aptly described as one that is so obvious that it goes without saying (citing BP Refinery); (4) at the time the Shareholders' Deed was drafted, each of the Founder Shareholders were "three equal pigs" who held the same amount of shares; (5) by cl 5 of the Shareholders' Deed, the Founder Shareholders and the parties to the Shareholders' Deed set out a number of ways by which shares could be issued; and (6) the effect of the term contended for is simply that those methods were the limit of the ways in which more shares could be issued and that, but for that clause, the Founder Shareholders would remain equal shareholders. So much is obvious from the fact that each Founder Shareholder started with the same number of shares under the Shareholders' Deed. 214 It may be accepted that terms of the kinds described in Mackay and Ansett are implied into the Shareholders' Deed. However, such terms assume the existence of a particular right or obligation. Here the posited right is a right to "insist upon their remaining equal shareholders in Laava". As noted above, I do not accept that there is such a right. 215 Further, the McDonald Interests have not identified how the Shareholders' Deed confers such a right. Whilst the McDonald Interests have submitted that but for cl 5 they would have equal shareholding, that submission is problematic: it assumes that equality is a default position, an assumption which is difficult to reconcile with the express provisions of the Shareholders' Deed which enable there to be unequal shareholdings as between the Founder Shareholders (as to which, see [82] to [88] above). It is also not correct that but for cl 5 there would have been equal shareholdings. The true position is that the board of Laava had power to issue such further shares as it wished (within the boundaries imposed by matters such as directors' duties, the prohibition upon oppressive conduct and upon acting in fraud of the power to issue shares). The exercise of that power is conditioned by cl 5 and cl 5 itself is subject to exceptions. Critically, the power to issue shares was not limited to a power to issue shares only to the Founder Shareholders. Instead, it was a power to issue shares generally, subject to the conditions described above. 216 The McDonald Interests also submitted this term should be implied to give business efficacy to the Shareholders' Deed "in accordance with the principles in BP Refinery". However, it is not sufficient that a term, if implied, would provide business efficacy to a contract - the contract must otherwise lack business efficacy; and there are other necessary conditions to be satisfied before a term will be implied on this basis. The position is explained in the following passage from Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 51; (1982) 149 CLR 337 at 346-347 per Mason J (as his Honour then was): Accordingly, the courts have been at pains to emphasize that it is not enough that it is reasonable to imply a term; it must be necessary to do so to give business efficacy to the contract. So in Heimann v. The Commonwealth Jordan C.J., citing Bell v. Lever Brothers Ltd., stressed that in order to justify the importation of an implied term it is "not sufficient that it would be reasonable to imply the term. . . . It must be clearly necessary". To the same effect are the comments of Bowen L.J. in The Moorcock; Lord Esher M.R. in Hamlyn & Co. v. Wood & Co.; Lord Wilberforce in Irwin; Scrutton L.J. in Reigate v. Union Manufacturing Co. (Ramsbottom). The basis on which the courts act in implying a term was expressed by MacKinnon L.J. in Shirlaw v. Southern Foundries (1926) Ltd. in terms that have been universally accepted: "Prima facie that which in any contract is left to be implied and need not be expressed is something so obvious that it goes without saying ... " The conditions necessary to ground the implication of a term were summarized by the majority in B.P. Refinery (Westernport) Pty. Ltd v. Hastings Shire Council: "(l) it must be reasonable and equitable ; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract." 217 Thus, the McDonald Interests submission concerning BP Refinery fails for two reasons. First, the Shareholders' Deed is effective without the implied term and thus it is not necessary to give business efficacy to the Shareholders' Deed. Secondly, in any event, that submission does not address the remaining four necessary conditions.

Consideration of the impugned conduct 218 I turn now to consider the impugned conduct. Before doing so, I reiterate the importance of the following matters in considering that conduct. First, the Court's role is not to assess the wisdom of commercial decisions made by directors, which will often involve the balancing of competing considerations (including, relevantly, the need for capital, the need to retain employees and the dilution of existing shareholders) on which reasonable minds may differ. Secondly, it is necessary to have regard to the context within which the particular conduct occurs and decisions are made. In this regard, it is relevant that: (1) Laava was at the time of the impugned conduct a start-up company in need of injections of capital on a regular basis; (2) it was in Laava's interests to retain key staff members and to attract external investment; (3) the McDonald Interests had made no contributions of capital to Laava and had declined invitations to do so. I note that it formed no part of the McDonald Interests' case that they had the inclination to contribute capital or that CDO suffered a loss because it was deprived of an opportunity to subscribe for shares; and (4) CDO chose not to exercise its right to have a director on the board of Laava and thus surrendered the opportunity to participate in board deliberations.

1.1 Issue of shares to Wilemich and MCA in June 2020 219 As at May 2020, Laava owed the following amounts to the Founders: (1) $44,431 to Mr McDonald; (2) $249,959 to Mr Michel; and (3) $250,000 to Mr Surtees. 220 The amounts due to Mr Michel and Mr Surtees each included amounts due to them for work performed by them for Laava for the period March 2018 to December 2019. The amount due to Mr McDonald was also for unpaid work done for Laava, but was in a lesser amount because of payments that Laava had made to Mr McDonald. 221 The Founders treated the amounts outstanding for such work as (undocumented) loans from themselves to Laava and during the hearing these loans (and later loans of the same ilk) were described as "wage loans". I shall adopt that terminology. 222 On 1 April 2020, Mr Michel raised with Mr Surtees the idea of converting their wage loans to equity. He raised this again on 26 April 2020. 223 On 13 May 2020, Mr Michel wrote to the Department of Industry, Science, Energy and Resources in connection with Laava's application for an Accelerating Commercialisation Grant. He described the wage loans in the following way: Founder Loans Our Interim Accounts dated March 20 note loans to founders (namely lain McDonald $44,431; Michel $249,959; Loan - Tony Surtees Family Trust $250,000). … The agreed terms are that the loans are interest free, unsecured, and not repayable until at the earliest, after Series A funding if Series A investors demand repayment, or at exit. 224 The "agreed terms" had been agreed several years earlier. 225 On 4 and 6 May 2020, Mr Michel and Mr Surtees sought legal advice about the potential conversion of their wage loans into equity and on 18 May 2020, Mr Michel and Mr Surtees received that legal advice. By early June 2020, Mr Michel and Mr Surtees had agreed in principle to resolve to convert their wage loans into shares issued to Wilemich and MCA respectively. 226 On 5 June 2020, Mr Michel and Mr Surtees wrote to the solicitors for the McDonald Interests in response to a request for information concerning the remuneration of Laava's directors: The Directors of Laava ID Pty Ltd, being Patrick Michel and Tony Surtees, are not currently remunerated by the Company in their roles as Directors. The Company has been accruing $10,000 per month for each of Tony and Patrick since March 18. Neither has received any payment to date. but made no mention of the proposed resolution to convert the accruing wage loans owed to Mr Michel and Mr Surtees into equity. 227 On 10 or 11 June 2020, resolutions for the conversion of the wage loans owed by Laava to Mr Michel and Mr Surtees into equity in Laava for Wilemich and MCA respectively were passed by Mr Michel and Mr Surtees, as the board of Laava. Those resolutions, inter alia: (1) identified the wage loans to Laava from each of the Founders and stated the desirability of seeking "to convert some or all of these outstanding undocumented loans to equity"; and (2) recorded that Mr Michel and Mr Surtees had considered the effect of s 232 of the Corporations Act and would ensure that the same offer would be made to the McDonald Interests. Mr Michel agreed in cross-examination that this reflected the legal advice that had been received and that at the time of the resolution he intended that the same offer would be made to the McDonald Interests. 228 On 11 June 2020, Mr Michel prepared the documentation required for the shares to issue to Wilemich and MCA. He did not do so for CDO despite it having been obvious to him that such a letter should have been drafted. Later that day, Mr Michel and Mr Surtees met again as the board of Laava, noted that the necessary steps had been taken and resolved "the matter finalised". 229 On 12 June 2020, 3,524 shares were issued to Wilemich and 3,527 shares were issued to MCA. The effect of this issue of shares was to dilute CDO's interest in Laava in a manner which was unfairly prejudicial to and unfairly discriminatory against CDO. The unfairness arises from the opportunity to subscribe for further shares having been made available to Wilemich and MCA, but not to CDO, in circumstances where all the Founders were owed moneys by Laava and the failure to provide the same opportunity to CDO was contrary to the first resolution that was passed on 10 or 11 June 2020 and the legal advice that Mr Michel and Mr Surtees had received. 230 No satisfactory explanation has been proffered for the failure to provide the McDonald Interests with that opportunity. 231 Mr Michel's affidavit evidence contained no explanation. In cross-examination his initial explanation - that a discussion with Mr McDonald would be "fraught" because Mr McDonald refused to speak with him - was hollow, when such a communication had been foreshadowed in the resolution to convert the loans, and could have been made in writing (and as recently as 5 June 2020, Mr Michel and Mr Surtees had written to the solicitor for the McDonald Interests concerning the remuneration of the directors of Laava). Further, as Mr Michel conceded, he could have delegated to someone else the task of communicating with the McDonald Interests. Mr Michel then suggested that the failure to extend the same opportunity to CDO was an omission. I do not accept that explanation given the short time from the passing of the initial resolutions on 10 or 11 June 2020 (which noted the intention to make the same offer to CDO) and the issue of shares to Wilemich and CDO on 12 June 2020. Further, between those two events, Mr Michel prepared the relevant paperwork for Wilemich and MCA, but not CDO, and participated in the second board meeting held on 11 June 2020. It is inherently improbable that during that process it did not occur to Mr Michel (or Mr Surtees) that an invitation to participate should be extended to the McDonald Interests. 232 Mr Surtees's affidavit evidence did not contain an explanation for the failure to extend the same opportunity to CDO. In cross-examination, he explained that he thought that Mr Michel had notified Mr McDonald, but he made no inquiries of Mr Michel as to whether this had occurred. 233 Mr Michel and Mr Surtees each provided evidence as to why the resolution to convert the wage loans to shares was passed. It is not necessary, for the purposes of considering the application of s 232(e) of the Corporations Act to consider that evidence. This is because that evidence addresses why the resolution was passed but, critically, does not address why that resolution was not implemented as passed and instead was implemented in a manner which was unfairly prejudicial to and discriminatory against CDO. I note that such evidence is potentially relevant to the McDonald Interests' claim that the shares were issued pursuant to a fraud on the power to issue shares, but in light of my finding below that s 232(e) is engaged it is not necessary to consider that claim. 234 The Majority Interests submitted that the only alternatives to conversion were: (1) repayment or; (2) the loans remaining unpaid and on Laava's balance sheet indefinitely; that only the latter of these two options was available; and that this option would have been unfair to Mr Michel and Mr Surtees. This submission overlooks the terms of the loans, namely that the loans were not repayable until "at the earliest, after Series A funding if Series A investors demand repayment, or at exit". It also overlooks that the same argument would apply in respect of Mr McDonald's wage loan. 235 For all of the above reasons, the issue of shares as part of the Second Share Issue involved conduct satisfying the description in s 232(e) of the Corporations Act. It is conduct that is so unfair that reasonable directors could not have considered it fair.

1.2 Offer of options to Mr Ger in November 2020 236 In mid-July 2018, Mr Ger agreed to take on a more formal role at Laava at a rate of $1,000 per day, with that amount to be re-evaluated later. 237 By March 2019, Mr Ger was devoting around 50 hours per week to Laava and he had a series of conversations with Mr Michel and Mr Surtees in which he sought an increase in his remuneration. Mr Michel and Mr Surtees agreed that he should have an equity position and indicated that they were in the process of seeking Mr McDonald's agreement to that course. 238 On 25 November 2019, Mr Ger sent an email to Mr Michel which included: 1. Fact: PM / GG have been running the business since JAN 2019, and our combined leadership is the reason we are getting the commercial and investor traction we are now… 2. The current and former CEOs have both proven unsuited to role, divisive, destructive, ego-driven, and very poor at managing people - and have made some very poor decisions… 3. The current board has proven incapable of sound and rational decision making. It has made two very poor CEO appointments, has presided over chronic waste of shareholder funds and opportunities, as well as serious delays, rework, ignoring adviser advice and failing to control errant CEOs. Plan Going Forward: 1. Management structure and equity arrangements to be aligned with the realities of #1 a. PM to take on CEO role; GG deputy CEO and CCO roles. Or joint CEOs if PM prefers. Review at Series A/global scale up. b. Elevates Rachel's and Erin's CFO profile and management, to enable PM to focus on CEO and investor mgt roles. c. GG equity to be set at a minimum of 10%, with 5% immediately vested and the remaining 5% to vest in monthly increments, in full by DEC 31 2020. Instant full vesting if insolvency or board changes mgt structure without GG agreement d. Revisit the staff equity plan to ensure Elicia and other key team members retained & motivated. e. Resourcing hotspots to be addressed as soon as budget allows: GG with sales resources incl. reinstating TK plus Client Success Mgr to relieve Elicia. Beef up design team. Sven on demand Eng Lead on con notes (or other tech support). 2. Board to be reformed to address #3 a. GG to join the Board, with full voting rights. b. Iain to go, or if he stays, GG will vote with TS/PM bloc. c. Tony to become fully non-executive (i.e. no more direct client or invest or contact except for intros and relationship building). 3. Remuneration a. GG rem moves to $300k as soon as bridging achieved / budget allows. b. PM rem to commence as soon as bridging achieved/ budget allows. c. Market review/rates at Series A. 239 From November 2019 onwards, Mr Ger regularly mentioned to Mr Michel that he considered his equity interest in Laava to be insufficient. 240 In April 2020, Mr Michel and Mr Surtees discussed the provision of shares or options to Mr Ger. 241 On 11 June 2020, as noted above, Mr Michel and Mr Surtees met as the board of Laava several times. One of the resolutions passed on that day was: 1.4 Issue of Shares to Gavin Ger Gavin took on the role of joint CEO with Patrick Michel from January 2020, with the remuneration, but seeking an increased equity stake in the business. Desired Outcome The board has evaluated Gavin's capabilities, KPIs, current achievements, the current financial position of the company and resolved to offer Gavin a grant of 9,000 additional shares, with an initial grant date of 1 January 2020 and a four year vesting period. ESOP/Share Loan The board resolved to review the above share and loan agreement instead of the ESOP for these shares and to make a decision and respective issue within 2 weeks of this meeting. 242 On 17 June 2020, Mr Michel and Mr Surtees again met as the board of Laava. The minutes record that they: "resolved to Issue 9000 ESOP options to Gavin Ger". 243 On 18 October 2020, Mr Ger wrote to Mr Michel seeking to change his remuneration package: As discussed last week can we please implement the following changes: • Vest my 12% options immediately, and update the document for Marianna. This document is needed so we can roll-over our mortgage, and is overdue. This week please. • Appoint me as a Director - inline with the new governance model agreed Friday for implementation with the other governance changes in the coming weeks. • Amend my rem package, which is unchanged since my role change: - My package value to be recognised at $375k PA, backdated to January 2020 - If still required, I will immediately lower my monthly retainer to $200k PA / 12 = $16,666/month + GST based on the feedback from Allan - If the business' cashflow supports it, I will invoice Laava quarterly in-arrears for a further $18,750 + GST in cash per quarter, totalling $75k PA + GST. - If it does not, I will accrue this amount, plus the remaining $100k PA value in options, all of which vest immediately each quarter - A 3 month severance arrangement to be included in a revised contract. Let me know if you wish to go through any of the above. Thanks. (emphasis added) 244 On 19 October 2020, Mr Michel prepared a draft response, which was discussed with Mr Surtees and Ms Husband. On or about 26 October 2020, Mr Michel, Mr Surtees and Ms Husband met with Mr Ger to discuss his remuneration. Mr Michel read from prepared notes. On 12 November 2020, Mr Michel sent the settled response to Mr Ger: Thank you for your patience. In follow up from our meeting, I've outlined the board's response to your requests. The below represents the company's position. Accelerated Vesting • You have 3,000 shares, and 9,000 ESOP vesting over 3 years. The latter were granted earlier this year as a result of you becoming joint CEO, with a start-date of 1/1/20 and a one year cliff. As a result, 3,000 of those should therefore vest on 1 January 2021, and the balance monthly until 1/1/23. • Laava greatly appreciates and values your commitment and have recognised this through the remuneration changes earlier this year and your healthy compensation package. • We discussed your desire to accelerate the vesting and the reasons why you felt this was important, including how you feel the options may not tie you down sufficiently. Options are designed to do that and that is how the whole market looks at them, i.e. we want you to stay and deliver for 3 years, and the value of your options should encourage you to do that. • A multi-year vesting options package represents a mutually agreed multi-year commitment to deliver value both ways. The terms of Laava's ESOP plan are very fair for all current and future option holders. • We have considered it at length, and discussed it further after our discussion last night. In light of your commitment, both personal and professional, the board feels it is appropriate to accelerate part of this vesting period by having 50% vest after the first year, and the remainder over the next two. • We feel this decision aligns your interest with those of the company, and therefore in the best interest of the company. Directorship • Tony is working this week on the shareholders agreement. • We have put together a director check-list and began discussions with Glenn, Ibrahim Hamza, Rob Fitzpatrick, possibly Alex James, Stu Spiteri, and others. • The board will make this happen. The shareholders agreement is going to be replaced, and the new shareholders agreement will contemplate a 5 member board to reflect a well balanced level of representation between the founders, management, investors, and brings on independent governance. • The next steps will be to formally invite you to join the board and for you to consent, as soon as the SHA is completed. Changed Remuneration • There is no concern with a 3 month's severance for redundancy. We can write this up in the contract. • Your current remuneration is at the top end of a start-up and will attract attention, as Allan has pointed out. We have reviewed the industry VC remuneration survey and in a company like Laava raising $4m, a compensation of $250k and 12,000 options is certainly on the highest end of the market. • We believe you are fairly compensated. And understand that 12,000 shares and options would be roughly worth $1.3m at a pre-money valuation of $20m ($104/share). While the company understands this doesn't meet all your initial demands, I hope we'll all agree it is a fair, balanced and objective response, and that we'll all be glad to move forward on this basis. 245 On 16 November 2020, Mr Ger responded: Thank you for your consideration of my request and the very professional and sensitive manner in which you have handled this entire process. I appreciate the Board's counterproposal on this. and am comfortable with most of it, however I have a few responses for you to consider. 1. Accelerated vesting: The intent of my request was that the Board consider that my efforts and commitment to date have already been 'earned' through exceptional effort and commitment. While it's arguable 1 January is only a matter of weeks away, the impact of it is not minor to me - hence my request. I therefore ask for the operable date for the 50% vesting milestone to take immediately, with the balance to vest as per your proposal. 2. Directorship: I am comfortable with the proposal and the process underway, and am operating on the assumption that I will participate fully and equally with yourself and Tony in the evaluation and appointment of the independent Board member. 3. Remuneration: On the subject of the notice period - I appreciate the gesture, and look forward to seeing this provision added to my contract. It is very much appreciated. With regard to the aggregate remuneration itself. I feel there is inevitably some subjectivity here. Other factors also need to be considered. like cost of living pressures which can develop over almost 2.5 years: or the staff costs Laava would almost certainly have been required to hire had I not traded almost all my personal time for the benefit of Laava this year so we could be in the stronger position we are now for capital raising; and finally the need to have some kind of mechanism to promote ongoing outperform activity. However; I also accept that my [accelerated] options package is material. I propose: (i) I work with Patrick and Erin to agree a very modest adjustment to the cash component to ameliorate the cost of living pressures mentioned, cognisant of the many factors at play. The last thing I want is to jeopardise capital raising. (ii) Once we have passed the cap raise milestone and have a pathway to reliable growing revenue, we bring in an independent salary benchmarking specialist to review all team member remuneration against baselined job descriptions and a current assessment of the market. I trust the above will be considered in the spirit in which it is intended, and look forward to hopefully resolving things so we can all move forward very positively together. 246 On or about 27 November 2020, Mr Michel and Mr Surtees signed a letter on behalf of Laava which was provided to Mr Ger. Mr Ger signed an acceptance of that offer on 4 January 2021. The letter offered Mr Ger 9,000 options in the ESOP at an exercise price of $1 per option. One-half of the options were to vest on 1 December 2020 and the remaining options were to vest "on a quarterly basis over the next 2 years". 247 I accept that the issue of options had the potential to dilute CDO's interest in Laava and that CDO was not informed of it. However, I do not consider that when that conduct is considered in context that it amounted to conduct satisfying of s 232(e) of the Corporations Act, for the following reasons. 248 First, Mr Ger was the joint CEO of Laava, and had been since early January 2020 following the non-renewal of Mr Buckley's contract. 249 Secondly, the remuneration of a CEO is quintessentially a matter of commercial judgment for the directors of a company. In this regard, differing boards may hold different views as to whether Mr Ger's remuneration should have included such options. Mr Michel's evidence was that: (1) he considered that it was in Laava's best interests to address Mr Ger's equity and that it would be appropriate to reward Mr Ger's contribution and commitment, which included working closely with Mr Michel as joint CEO to create a new company culture; and agreeing to provide a personal loan of $93,333 to Laava if required so that it could meet the Accelerating Commercialisation Grant funding matching requirement; and (2) in or around April 2020, Mr Michel and Mr Surtees discussed the need to issue shares or options to Mr Ger. Mr Michel considered that 9,000 shares or options was appropriate because: (a) Mr Ger had asked for a significant increase in his stake in Laava, and had told Mr Michel that his 3,000 shares was inadequate, and had asked for a fully diluted equity position of at least 10 per cent and 9,000 shares or options would go some way to achieving that result, even though it would in fact be less than 10 per cent once convertible notes then on issue were taken into account; (b) it recognised Mr Ger's new role as Joint CEO of Laava; (c) it helped address the concerns that Mr Michel understood had been raised by Mr Aaron (a Commercialisation Adviser with the Department's Accelerating Commercialisation Program) that Mr Ger's lack of equity could cause concern to the Accelerating Commercialisation Grant Investment Committee and potential future investors; (d) it helped address Mr Michel's concerns that future investors would find the relatively small amount of equity held by Mr Ger as Joint CEO relative to the Founders concerning; (e) it would alleviate potential friction between Mr Ger and Mr Michel, which would be a distraction from their effective running of Laava, in circumstances where Mr Ger had been pressing for more equity for some time and Mr Michel was concerned that Mr Ger would leave Laava; and (f) if Mr Ger were to leave Laava at this time, the fact that a person with his importance to the performance of Laava had left due to a lack of incentivisation, would potentially destabilise Laava and be seriously harmful to its capital raising and grant funding prospects. 250 In cross-examination Mr Michel explained that as at June 2020, Laava was running short of cash and needed to raise funds and he saw Mr Ger as very important to that process. He also stated that the options to be issued to Mr Ger would be of little to no value if such funds were not raised. Whilst this view was expressed to be as at June 2020, there is no reason to believe that it changed between June and November 2020. 251 Mr Surtees's evidence was that, based on his extensive experience in investing in start-up companies, the offer of 9,000 shares to Mr Ger was a commercially competitive offer for someone undertaking the role of CEO. Again, whilst this view was expressed to be as at June 2020, there is no reason to believe that it changed between June and November 2020. 252 The McDonald Interests submitted that: (1) there was no evidence as at June or November 2020 that Mr Aaron held any concerns about Mr Ger's remuneration absent an issue of options, and that the evidence suggested that Mr Aaron considered that Mr Ger's remuneration was excessive. I note that this is a different point to the concern expressed by Mr Aaron to Mr Michel, namely that Mr Ger's lack of equity could cause concern to the Accelerating Commercialisation Grant Investment Committee and potential future investors; and (2) the Majority Interests had failed to adduce persuasive independent evidence of Mr Ger's value, such as to justify the issue of the options to him. That submission impermissibly reverses the onus of proof, and addresses the wrong question. The onus is upon the McDonald Interests and they need to establish that the decision involved conduct satisfying s 232(e) of the Corporations Act. 253 Thirdly, the decision to offer the options to Mr Ger was made in a context which included: (1) Mr Ger's position as the joint CEO of Laava; (2) Mr Ger's repeated attempts to secure a better remuneration package; (3) the fact that although the resolution to issue the options was passed in June 2021 it was not until late November 2021, and following an arms-length negotiation between Mr Ger on the one hand and Mr Michel and Mr Surtees on the other, over various parts of his remuneration package, that the offer was made; and (4) CDO having surrendered the opportunity to participate in deliberations concerning the decision. 254 Finally, taking all of the above into account, it is not apparent that the issue of the options to Mr Ger was anything other than a commercial decision of the kind that the Court should be loath to second-guess. In this regard, the McDonald Interests submitted that the options were issued to Mr Ger for the improper purpose of ensuring that a person aligned with Mr Michel and Mr Surtees was granted options. The evidence does not establish that this was a motivation for the issue of the options. Further, it is not apparent that the Majority Interests needed Mr Ger to be aligned with their interests. Wilemich and MCA held approximately two-thirds of the shares in Laava and Mr Michel and Mr Surtees comprised its whole board in the absence of a CDO nominee. In these circumstances, it is difficult to understand what an alignment could have offered the Majority Interests and the McDonald Interests did not explain how such an alignment would have benefitted the Majority Interests. Further, an issue of options to Mr Ger would also have affected Wilemich and MCA, in that their interests in Laava stood to be diluted in the same manner as CDO's would be.

Fitzpatrick Options Issue 255 On 27 January 2021, Mr Michel and Mr Surtees met as the board of Laava. The minutes of that meeting include: The Board has rejected a proposal from Rob Fitzpatrick as nominee for appointment as NED regarding issue of non-dilutive shares as part of a remuneration package. The Board has approved that the following offer be presented, being 3000 options over 3 years with quarterly vesting and $40k/yr accrual and requested that negotiations continue. 256 On 11 February 2021, Laava wrote to Mr Fitzpatrick inviting him to accept 4,500 options under the ESOP, with an exercise price of "15% discount to value set at Series A", vesting on a quarterly basis after 15 February 2021, over three years. There is no specific explanation in the evidence as to why the number of options offered increased from 3,000 to 4,500. There is evidence that there were negotiations with Mr Fitzpatrick concerning the terms on which he would join Laava and I infer that the increase was a result of those negotiations. In any event, no party submitted that the increase was of significance. 257 On 16 February 2021, Mr Fitzpatrick accepted the 11 February 2021 offer and entered into an Employment Agreement with Laava. 258 The McDonald Interests pleaded that Mr Michel and Mr Surtees, in causing Laava to offer the options to Mr Fitzpatrick, acted pursuant to various improper purposes, including the aim of increasing the shareholdings of persons aligned with their interests and diluting CDO's interest in Laava, in circumstances where there was no commercial justification for the offering of the options. However, in closing submissions, the McDonald Interests withdrew their contention that Mr Michel and Mr Surtees acted pursuant to improper purposes. Instead they restricted their case concerning this transaction to the proposition that it was contrary to s 232(e) because "it was in breach of the Shareholders' Deed, Mr McDonald (and CDO) were not told about it and it formed part of a broader improper use of Laava's ESOP pool and the agreed limit of 12% of the equity of the company". 259 I take the reference to the Shareholders' Deed to be a reference to cl 5.1 of that Deed. For the reasons previously noted, there was no requirement under that clause to notify the McDonald Interests of options issued under the ESOP. Nevertheless, the fact that the McDonald Interests were not told about the transaction remains a relevant consideration in determining whether conduct satisfies s 232(e) of the Corporations Act. However, this is but one consideration and it is necessary to consider the broader context. That context includes: Laava was still in a start-up phase; payment to Mr Fitzpatrick using cash would have affected Laava's cash position; remuneration by way of options is not unusual in companies in their start-up phase; Mr Fitzpatrick engaged in arm's length negotiations with Mr Michel and Mr Surtees regarding the consideration that he would receive as an employee of Laava; Mr Fitzpatrick's unchallenged evidence was that he would not have considered joining the Laava board without an offer to participate in equity, particularly in circumstances where he was not being fully compensated for his time; and Mr Fitzpatrick had substantial experience and skill that properly equipped him for the position. The context also includes that CDO had the opportunity to appoint a director to replace Mr McDonald and failed to do so. Had it done so, its views on the remuneration for Mr Fitzpatrick could have been expressed and taken into account. 260 Taking all of the above into account, whilst I accept that there may have been some prejudice to CDO in terms of potential dilution of its interest in Laava, I am not satisfied that such prejudice was unfair within the meaning of s 232(e) of the Corporations Act or that the transaction otherwise constituted conduct satisfying that section. It is, again, quintessentially a commercial decision for the directors of Laava and is not apparently beyond the range of decisions that might be reached by reasonable directors. The transaction is not one which was so unfair that reasonable directors would not have thought it fair. 261 As to the "broader improper use of Laava's ESOP pool and the agreed limit of 12% of the equity of the company", I take this to be a reference to the McDonald Interests' contention that the directors of Laava were unable to issue ESOP options which amounted to more than 12 per cent of the shares of Laava. In this regard, I accept that in July 2017, the Founders agreed to such a limit. However, I do not consider that such an agreement is binding on the board of Laava and the appropriate level of options is a matter within the discretion of the directors of Laava, consistent with the rules of the ESOP Rules adopted by Laava on 17 November 2020. Further, I do not understand the McDonald Interests to contend that there has been a breach of contract but rather that this is a matter to be weighed in the balance when considering whether the conduct in issuing options to Mr Fitzpatrick satisfied s 232(e) of the Corporations Act. When considered as part of the overall fairness of the transaction, I remain unconvinced that the issue of options to Mr Fitzpatrick was conduct satisfying s 232(e) of the Corporations Act.

First Directors' Options Issue 262 In December 2020, Mr Aaron expressed to Mr Michel the view that the shareholdings in Laava were a disincentive to investors; and in particular the relative shareholdings of CDO and Mr Ger. On 17 December 2020, Mr Michel and Mr Aaron exchanged the following emails: (1) Mr Michel wrote: I know you've been thinking of a number of alternatives to deal with our cap table, e.g. a) sell all assets to newco + offer CN holders / employees a stake in Newco + offer others a note or something (I'm sure that won't work) b) offer PM (and others a significant tranche of options for work done this year and possibly investment in cash to rebalance equation (and TS to a lesser extent) Would it be worthwhile the 3 of us having a session on this next week. (emphasis added) (2) Mr Aaron responded: I believe it would potentially unlock a few investors who may be in the fence if you could go in with a more market based valuation. I don't think (a) will fly and may be seen as oppression of a minority shareholder. But I think (b) is a real option that you ought to explore. Happy to discuss whenever you are free. 263 On 27 January 2021, Mr Michel and Mr Surtees met as the board of Laava and resolved: The Board has agreed to the proposed remuneration packages for the 2020 year for Patrick of $15,000 per month to be paid in shares plus 9000 options from ESOP with 50% vest in year 1 and remaining over 2 years and for Tony of $3,000 per month to be paid in shares plus 1800 options from ESOP with 50% vest in year 1 and remaining over 2 years. 264 It is common ground that the reference in the minute of the resolution to payment in shares was an error and that the agreement reached was that these amounts would accrue as wage loans. 265 On 23 February 2021, Laava issued 9,000 options to Mr Michel and 1,800 options to Mr Surtees. 266 The minute of the 27 January 2021 resolution records that such options were to be part of the remuneration packages for Mr Michel and Mr Surtees. The determination of remuneration packages is (again) quintessentially a commercial decision within the remit of the directors and it is not apparent that the decision to issue the options as part of that package travelled beyond that remit such that it could be considered to be conduct satisfying s 232(e) of the Corporations Act. The difference in views as to the wisdom of the decision is evident from the evidence of Mr Michel and Mr Surtees on the one hand and the submissions of the McDonald Interests on the other. 267 Mr Michel's affidavit evidence was that he considered the package (of accrued wages, plus options) to be fair and reasonable because: (1) both he and Mr Surtees had continued to work for Laava without any form of cash payment or remuneration for the whole of 2020; (2) Laava was not in a financial position to begin paying them cash; (3) Mr Michel was working full-time as Joint CEO, while Mr Surtees contributed about the equivalent of one-fifth of a full-time commitment; (4) Mr Ger was receiving a salary of $250,000 per annum in cash; (5) Mr Michel's annual salary equivalent under the resolution was the same amount that Mr McDonald had been paid in cash ($180,000) when he last worked full-time as Laava's CEO; (6) options of 9,000 had been negotiated and agreed with Mr Ger as part of his remuneration package as Joint CEO, and it was appropriate for Mr Michel to receive an equivalent option incentive package in his Joint CEO role; and (7) it was appropriate for Mr Surtees to receive one-fifth of that number of options, reflecting his proportionate contribution. 268 Mr Surtees's affidavit evidence was that he considered the issue (package of accrued wages, plus options) to be appropriate because: (1) he believed that it was appropriate for payments to Mr Michel and himself to be by way of shares and options because they were approaching the Series A capital raising, and this would ensure the liabilities of Laava on the balance sheet would not be a disincentive to investors; (2) he believed that the options were an appropriate form of remuneration because they vested over time and signalled to investors that the founders were committed to Laava over the long term; (3) he believed that the proposed remuneration for Mr Michel and himself was significantly less than the cost to Laava to have employed contractors to do the work that they were doing; and (4) of the reasons set out in the board papers. 269 The McDonald Interests submitted that the explanations provided by Mr Michel and Mr Surtees should not be accepted because: (1) the fact that Mr Ger had 9,000 options was not an appropriate benchmark because (it was submitted) the issue of such options to Mr Ger was not commercially justified. Similarly, the use of Mr Ger's salary as a benchmark; (2) the resolution already contemplated that Mr Michel would be paid $180,000 per annum (the same as Mr McDonald had been paid) and that Mr Surtees would be paid $36,000 per annum; (3) the options for Mr Surtees were not justifiable given the level of his work; and (4) there is nothing on the face of the 27 January 2021 board minutes which demonstrates why the resolution was passed. 270 These submissions again invite the Court to consider the commercial wisdom of the decision to issue the options. As noted previously, the Court should be loath to do so. 271 The McDonald Interests also submitted by reference to the 17 December 2020 email, that the issue of the options was carried out for the improper purpose of "rebalancing" Laava's capitalisation table and thereby diluting CDO. I am not satisfied that the issue of those options was carried out for the purpose of diluting CDO. Whilst that may have been a consequence, the thrust of the floated proposed "rebalancing" was to reward as well as incentivise those who were contributing to Laava's business. Inevitably, there may be dilution of the interests of shareholders not so rewarded (including CDO) however it does not follow that there is the requisite unfairness in so acting, particularly in a company in a start-up phase. 272 The decision to issue the options is not one which I am satisfied was a decision that reasonable directors would necessarily consider to be unfair. For the above reasons, I am not satisfied that the conduct involved in the First Directors' Options Issue satisfied s 232(e) of the Corporations Act.

Third Share Issue 273 As noted above, on 27 January 2021, Mr Michel and Mr Surtees resolved: The Board has agreed to the proposed remuneration packages for the 2020 year for Patrick of $15,000 per month to be paid in shares plus 9000 options from ESOP with 50% vest in year 1 and remaining over 2 years and for Tony of $3,000 per month to be paid in shares plus 1800 options from ESOP with 50% vest in year 1 and remaining over 2 years 274 The issue of the options has been considered above as the First Directors' Options Issue. The present issue is the other component of the remuneration package, namely the accrual of wage loans owed to Mr Michel and Mr Surtees and in particular the decision to convert those wage loans to shares in Laava. 275 This resolution recognised that the remuneration for Mr Michel and Mr Surtees for the year 2020 was $180,000 (12 months x $15,000/month) and $36,000 (12 months x $3,000/month) respectively. 276 On or about 21 July 2021, Mr Michel caused Laava to issue 2,500 shares to Wilemich and 500 shares to MCA in conversion of the wage loans for 2020. 277 Mr Michel's evidence is that he caused Laava to issue those shares for the same reasons as obtained with respect to the issue of shares in June 2020 and that he considered this transaction to be in essence the same transaction as the issue of shares under the Second Share Issue and justifiable for the same reasons. 278 Mr Surtees's evidence was that he believed that the issue of the shares accorded with the 27 January 2021 resolution but he did not otherwise deal with this issue in his affidavit evidence. 279 I do not regard this transaction (which concerns wage loans for 2020) as different, in any material way, to the issue of shares as part of the Second Share Issue (which concerns wage loans for the previous year, 2019). In each case: (1) there were wage loans due to the Founders (noting that in the present case Mr McDonald's wage loan remained extant in circumstances where the conversion opportunity which was part of the Second Share Issue was not provided to the McDonald Interests); (2) the wage loans owed by Laava to Mr Michel and Mr Surtees were converted into shares in Laava issued to Wilemich and MCA respectively; (3) the McDonald Interests were not notified either prior to, or after such conversions had occurred; and (4) the wage loan owed to Mr McDonald was not the subject of any invitation to convert it into shares to be issued to CDO. 280 Thus, I am satisfied that the Third Share Issue was unfairly prejudicial to and unfairly discriminatory against CDO. Again, it is not necessary to consider whether the issue of the shares also constituted a fraud on the power to allot shares.

Second Directors' Options Issue 281 The Second Directors' Option Issue has not yet occurred. The pleaded conduct culminates in letters of offer dated 27 October 2021 addressed to Wilemich, MCA, Wyargine and Mr Fitzpatrick concerning the issue of options to them (see [297] below). 282 In the months prior to 27 October 2021, Laava prepared for its Series A Capital Raising. It also engaged in negotiations with Intertek Group plc. 283 It is unnecessary to set out the detail of those negotiations. It is sufficient to record that during those negotiations Laava put forward a considerably large number as the price for Intertek to purchase Laava, but by the time that the Laava board resolved on 22 October 2021 to issue the letters of offer there was an offer on the table from Intertek dated 18 October 2021 which fell well short of that figure. 284 Set out below are some of the other events leading up to the 22 October 2021 resolution which are relevant to the McDonald Interests' claim with respect to the Second Directors' Options Issue. 285 On 24 August 2021, Mr Ger sent a message to Mr Michel: Below is the vision I had for a fair. contribution-based split of total equity between the core group of 4 key principals, staff & critical others. Naturally I expect con notes and new investment to dilute the holdings of this core group but it does so proportionally. Going forward I expect we will issue new options under a structured remuneration­ based model. As discussed it is high time to differentiate between the business establishment and experimentation phase and the true Founding of the business of which I believe you and I have played the critical roles. These roles need to be appropriately recognised -financially and symbolically. Look forward to working through with you and I do appreciate your efforts and attempts to create fairness and balance the complexities in this process. True contribution based equity splits (excluding investors pre A) PM 30-35% true co-founder and partner GG 20-25% true co-founder and partner TS: 15-20% IM: 10-15% (emphasis added) 286 This was one of many occasions on which Mr Ger suggested to Mr Michel that he needed more equity in Laava. 287 On 27 August 2021, Mr Michel provided a board paper to the Laava board, which included: 1.4 Team Incentive/Options • Ever since Commercialisation Australia grant DD with Allan Aaron, there are always ongoing questions with investors about the balance of our cap table and GG's shareholding relative to passive founders. • GG has been a driving force behind Laava for 3 years, and needs to be recognised as such (for reference much longer than one founder). • There is also not enough upside for existing core employees, few of which have meaningful equity, and currently little room for future ones. • Finally few potential investors see any logic in passive shareholders having 5x equity relative to GG. Similarly there is little logic in PM working for free, lending company money, taking on responsibilities as a director, investing personally and through family for minor equity difference to one founder who was paid and never invested in the business. • There isn't capital to buy-out passive shareholders, nor would it solve the employee and Gavin situation. • It is in be in the best interest (sic) of the company to seek to rectify this situation which has been overhanging Laava for too long. Recommendation: explore a significant issue of options skewed heavily towards key employees to achieve ahead of transaction. This would in the best interests of the company and address the above concerns. … Capital Raising • Plan A is $8m investment at highest possible valuation with exclusivity attached to a commitment to roll-out Laava aggressively in Intertek customer base and ongoing hurdles. • Plan C is big partner contract / customer commitment / minimum revenue over 2 years. (emphasis in original) 288 The "transaction" referred to in the final dot point in section 1.4 is the proposed capital raising, not a transaction with Intertek. 289 On 27 August 2021, Mr Michel and Mr Surtees met as the board of Laava. Mr Ger and Mr Fitzpatrick also attended. The minutes of that meeting include: 4 Cap raising update … • Confirmed the exploration of a significant number of options to address issued raised in PM's board paper. Meeting to discuss scheduled on 30/8/21. 290 On 4 September 2021, Mr Fitzpatrick sent an email to Mr Michel: Thanks Patrick, and congrats on rounding out the week so strongly. What a journey! Regarding the options, can I suggest that the Board consider the schedule of option holders and the question of accelerated vesting? It's makes sense to do this now when other aspects such as strike price etc is being determined. There's no way getting around the conflict of interests that all directors have in this case, so the principles should be about equitable treatment of all (not just Board) optionholders. Personally, it will make a massive difference to me to have certainty that my options will have accelerated vesting in defined circumstances. 291 On 6 September 2021, Mr Michel responded to Mr Fitzpatrick's 4 September 2021 email: I've looked at it. Everybody who currently has options should get accelerated vesting on a sale. We do have, as a board, full control of this right now. I'm happy to enshrine it in all docs from here on out, and to agree between ourselves that we will do it, but I'm not sure whether we want/need to communicate it now. I'm just wondering how doing that is in the best interest of the company and all stakeholders right now. A certain "non optioned shareholder" would argue that it was not ITBIOTC 292 On 24 September 2021, Mr Michel and Mr Surtees met as the board of Laava. Mr Ger and Mr Fitzpatrick were present. The papers prepared for the 24 September 2021 board meeting included the following: 1.2 Options New Options As per my notes during the month, the number of options is as follows. Gavin Ger 1 - CEOs 36,500 1.00 Patrick Michel 1 - CEOs 24,333 1.00 Markus Strazdt 2 - Team 9,125 1.00 Brady O'Halloran 2 - Team 9,125 1.00 Georgina Soiland 2 - Team 6,083 1.00 Morgan Lean 2 - Team 6,083 1.00 Craig Wright 2 - Team 6,083 1.00 Fotini Delgado 2 - Team 9,125 1.00 Rob Fitzpatrick 4 - Directors 3,042 1.00 Tony Surtees 4 - Directors 7,300 1.00

293 The minutes of the 24 September 2021 board meeting include: 3 Cap Raising Update PM gave brief update on capital raising as tabled. $1.5-2.0m round Board approved list of investors at $17.0m pre-money as final. Other interested investors invited to participate at $20.0m valuation. Board confirmed they'd be available to review documentation in the week beginning 27/9/21. … Cap Table Options Board approved final cap table as tabled. Board agreed to proceed with the ESOP options as tabled for employees at $1 exercise price, subject to advice letter from Greenwood Freehills. … Board consulted and agreed to minute that all options would benefit from accelerated vesting in the case of an exit. No announcement necessary for previous option holders but existing employees will be told their new options will benefit from accelerated vesting.

(emphasis added) 294 On 8 October 2021, Mr Ger informed Mr Michel that "another resolution from the board which needs to be agreed … is to recognise my role as a co-Founder - hence expectation of units". 295 On 22 October 2021, Mr Michel and Mr Surtees met as the Laava board. The papers prepared for that board meeting included an update on the proposed Series A capital raising, including a proposal to issue the Second Directors' Options. The draft board minutes of that meeting include: … 6 Options • Board noted TS/PM's decision re $72 options. • Board approved approach of keeping Craig Wright's initial allocation as "unallocated" options. • Board approved increasing the number of options offered to Advisors to compensate them for the fact that the Series A share price is lower than the price at which the number of options in their contract was based. • Board approved PM/GG to go ahead with team ESOP offers. • Board accepted Greenwood advice and approved issue of options to Executive Shareholders. • Board will review Loan/Option/Bonus documents when available. Gavin Ger The board formally acknowledged and recognised the key founder role Gavin has played in building Laava over the past three years. Gavin has acted, lived and breathed Laava as a founder, despite not being one of the original named founders, and the board acknowledged his role as a founder and thanked him for his contribution to date. (emphasis added) 296 On 26 October 2021, Mr Surtees sent an email to Mr McDonald attaching a draft amended Shareholders' Deed and a draft Constitution. The amendment to the Shareholders' Deed was proposed in connection with the proposed capital raising. There followed further correspondence, including correspondence between the solicitors for the McDonald Interests and other parties. This in turn led to the commencement of this proceeding on 5 November 2021. 297 On 27 October 2021, Mr Michel prepared letters offering the issue of the options. In those letters: (1) Wilemich is to be offered 24,333 options at an exercise price of $42.43 per option, with the options vesting immediately; (2) MCA is to be offered 7,300 options at an exercise price of $42.43 per option, with the options vesting immediately; (3) Wyargine is to be offered 36,500 options at an exercise price of $42.43 per option, with the options vesting immediately; and (4) Mr Fitzpatrick is to be offered 3,042 options at an exercise price of $1.00 per option, with: 25% of Options to vest 12 months after [9 January 2021] and the remaining 75% of Options vest on a quarterly basis over the next 3 years) which will apply if no vesting dates or conditions are included in this offer letter. 298 The letters have not been sent. 299 The issue of the Second Directors' Options would create the possibility of those options being exercised, thereby diluting CDO's interest in Laava. Thus, there is a potential prejudice to CDO. Whether that potential prejudice could be considered an unfair prejudice for the purposes of s 232(e) of the Corporations Act arises for consideration in a context which includes: the proposed capital raising; the negotiations with Intertek; the contributions made to Laava by Mr Michel, Mr Surtees, Mr Ger and Mr Fitzpatrick; the requests being made by Mr Ger for a greater interest in Laava; and the terms of the offers. 300 The McDonald Interests submitted that the 27 August 2021 board paper prepared by Mr Michel was central and "speaks for itself" and in particular the references to "a significant issue of options skewed heavily towards key employees to achieve ahead of the transaction", Mr McDonald as "one founder who was paid and never invested in the business" and to the absence of "capital to buy-out passive shareholders". The McDonald Interests also submitted that Mr Michel was proposing that Laava issue options so as to increase the equity holdings of Mr Michel, Mr Surtees, Mr Ger and Mr Fitzpatrick and thereby deliberately dilute CDO's equity "ahead of a value-accretive transaction or (possibly) transactions". 301 As previously discussed, a decision to issue options, in what amount(s) and at what strike price(s) is ultimately a question of commercial judgment and the Court should only second-guess the exercise of such judgment when the decision made is one that is so unfair that reasonable directors would not have thought the decision fair. 302 Mr Michel's evidence is that at the time of voting for the 22 October 2021 resolution he considered that the proposed allocation of options was appropriate and in the best interests of Laava because: (1) it was critical for Laava to retain and incentivise key staff, and he considered that the allocation and number of options for each team member appropriately served that purpose; (2) it was important to present a company to investors that was aligned to market expectations, where the persons whom investors are backing to lead the Company are sufficiently incentivised with equity and are satisfied with their equity position so that their performance and retention is maximised; (3) it was important to reward "those who had been in the company for a long time and who had made substantial sacrifices over the past years with only a minute equity stake"; and (4) as the economy started to pick up following what appeared to have been the worst of the COVID-19 pandemic, it was important to lock in key team members for the next three to four years. 303 Mr Michel's calculation of the number of options to be issued to each person was explained by him as follows: (a) taking into account the Series A raising and conversion of convertible notes (but excluding the new options under consideration), Gavin's 3,000 shares and 9,000 options would amount to only approximately 3.4% of the Company's fully diluted capital, whereas the Company's founders, Wilemich, MCA and CDO, would collectively hold 30.5%, a significantly higher amount; (b) Gavin's equity on that basis did not reflect that Gavin had worked full time since 2018 and had led the Company as Joint CEO for almost 2 years, and was in many respects seen by the team and the Board as a founder. For me, this not only or even predominantly a question of rewarding Gavin for previous efforts (although that was a factor), but rather a means by which to "lock him in" for at least the next 3-4 years or until an exit event; (c) Gavin had requested a post raising equity of 20-25% of total options issued as set out in his Slack message to me dated 24 August 2021; (d) I prepared in Microsoft Excel a table of team members who would be issued options, and populated the table with different option scenarios taking into account their contribution to the Company and their seniority, as well as the overall impact on the Company's fully diluted capitalisation table, and their relative proportions of the option pool having regard to those factors; (e) after experimenting with various scenarios in the spreadsheet, I discussed the proposed structure with Tony, Rob and Gavin on a number of occasions in late August and September 2021. Following these discussions, I circulated a version of the table via email on 2 September 2021. … and it also appeared in my paper prepared for the 24 September 2021 board meeting referred to above. Ultimately the board agreed that those proportions were appropriate and approved them; (f) in respect of the options to be issued to me, I did not seek a parity of options with Gavin, but was prepared to accept 65% of Gavin's allocation, notwithstanding that we both held the role of Joint CEO, having regard to both my then current amount of equity, and my own assessment of Gavin's value to the Company. I raised this during discussions with Tony, Gavin and Rob Fitzpatrick and they agreed; (g) in respect of the options to be issued to Tony, I considered that an allocation of 25% of the options to be issued to Gavin was an appropriate reflection of Tony's relative contribution in terms of time, effort and value brought to the Company (which included, for example the introduction of lntertek, which I deal with below in this affidavit). I raised this during discussions with Tony, Gavin and Rob Fitzpatrick and they agreed; (evidentiary cross-references omitted) 304 In cross-examination, Mr Michel gave the following evidence: Mr Condon: All right. And can I suggest to you, the reasons you wanted so many options exercised, or to be issued, in September 2021 - or a reason - was that it would dilute Mr McDonald's interest in the company?--- Mr Michel: The reason we needed to issue what is considered a - you've said it yourself, and the notes talk about a significant amount of option was - and the fact that the options to date had been issued in part to Mr Buckley and others, and were not sufficient to give investors what they were seeking, which is to see that the team that they were backing were heavily incentivised to make it happen, whether - there's plenty of terminology being bandied about, which I won't bring up in the court, but they want to see skin in the game, and same as the answer I gave you in relation to the shareholders agreement, there's a few things that investors needed ticked. Mr Shein, David Shein, probably one of Australia's most highly-regarded investor at OIF, and a very seasoned investor as well as entrepreneur, for example, said, "I'm not investing in this until you guys have got a -" you know, the people pulling the levers are the ones incentivised. Mr Condon: And - - -?--- Mr Michel: I was therefore not contemplating this with a purpose of diluted Mr - CTO, Mr McDonald, no. Mr Condon: Did it ever cross your mind? Are you saying it was no part of your thinking, in September 2021, that a purpose of his proposed transaction was to deal with the problem of Mr McDonald's shareholding?--- Mr Michel: No. An outcome of it would be that he would be diluted, and I did have concerns about also investors like Mr Longstaff ..... who had backed us previously in ordinary shares. They didn't have convertible notes, and they had ordinary shares, and they too would be diluted. Mr Condon: And part of the reason you wanted to dilute Mr McDonald's interest was because you wanted to accommodate Mr Ger's concern to increase his equity in the company, correct? Mr Condon: I'm sorry, forgive. Okay. Part of the - I'm sorry, that was - I apologise, Mr Rayment. Mr Michel: Part of the reason you wanted this to occur was to accommodate Mr Ger's concern, to ensure that the equity in the company - his equity in the company was increased?---Absolutely, and that of the team. Part of the reason for doing this was to make sure that the team felt heavily incentivised and locked in. Mr Condon: No, but you were pushing this through because you knew of the possibility of a sale to Intertek of the company, correct? Mr Michel: Pushing what through, Mr Condon? Mr Condon: The issue of the options? Mr Michel: You asked me before. It was in - the issue of the options was motivated to keep the team engaged. And I was responding to Mr Fitzpatrick there that the board has full control on this right now. It's not enshrined in the ESOP, which is what he had pointed out. Mr Condon: See, what I'm suggesting is at the time, in September 2021, you perceived of the possibility that the company would be bought by Intertek for a very significant amount of money, correct? Mr Michel: It was a possibility, probably, yes, a far - - - Mr Condon: And you wished to exercise - well, have these options issued for a number of reasons, one of them was to take advantage of the proposed purchase by Intertek, correct? Mr Michel: No, Mr Condon. The purchase of Intertek was definitely hanging in the - in the air, as you would say. But as a director, we're trying to raise capital. In fact, as you know, it's 17 million. We weren't telling Mr Fitzpatrick or Mr Dwyer that the company was to be raising capital at … million, because it had such a - you know, a high level of uncertainty and probability attached to it, but I needed to continue to operate on the basis that we were going. As a going concern, we needed to raise capital to lock in the team and to continue to ensure that these people stayed on in the company for a long period of time, because they were all, in my eyes, core, except perhaps for Erin, even though I - she would be very offended to hear that. She is very core, but she didn't need any more options because she wasn't - - - Mr Condon: And in October 2021 you were contemplating issuing over 100,000 options; is that right? Mr Michel: Correct, yes. Mr Condon: And I want to suggest to you that a reason for doing that was to delight - to dilute CDOs interest in the company? Mr Michel: A consequence of doing that, not a reason, Mr Condon. Mr Condon: Yes. And was one of the reasons you were contemplating the conversion of loan into equity the dilution of Mr McDonald's interest in the company? Mr Michel: No, not at all. 305 Mr Surtees's evidence is that he voted in favour of the resolutions for the issue of the options because he believed that the resolution was in the best interests of Laava, as it would help to secure the long-term commitment from key managers and team members. Mr Surtees considered that each of the parties to whom the options were to be issued was important to the future of the Company, and the number of options proposed to be issued to each person were appropriate incentives and reflected the value of their ongoing contribution to the business. Mr Surtees understood that he would receive 20 per cent, and Mr Michel would receive 60 or 65 per cent of the number of options issued to Mr Ger. He also understood that this would cause CDO's shareholding to be diluted but this was not the purpose of the issue of the options. 306 Taking all of the above into account it is clear from both the contemporaneous correspondence and the evidence of Mr Michel and Mr Surtees that the decision to issue the options was a commercial decision made to provide incentives to those working in Laava and to demonstrate to investors that those working for Laava had appropriate incentives. I do not accept that the decision was made so as to dilute CDO's shareholding, albeit that would be a potential consequence if the options were to be exercised. 307 To the extent (which is not clear) that the McDonald Interests rely upon the July 2017 agreement concerning a 12 per cent limit on the number of ESOP options, as noted above, the effect of the ESOP Rules is to provide the directors of Laava with a broad discretion as to the number of options. Whilst I recognise that the proposed issue is for a large number of such options, this does not change my view that this is a commercial decision of the kind with which the Court should not interfere. 308 I am not satisfied that it is a decision which is so unfair that reasonable directors would not have considered it fair.

Further Attempted Loan Conversion 309 On 27 January 2021, Mr Michel and Mr Surtees, as directors of Laava, resolved to call upon themselves and Mr Ger to provide loans to assist Laava "to meet the terms of the grant agreement with Accelerating Commercialisation". The resolution was: The Board has resolved to call upon Patrick, Tony and Gavin to provide a loan to assist the company meet the terms of the grant agreement with Accelerating Commercialisation. The company has approved the terms of this loan (on the same commercial terms as received from Paddington Capital for R&D Loans) which is as follows; • $93,333 each, • 12% interest for a 6 month loan term, repayable on 1st July, • a fixed and floating list call charge as security over the assets of the business in total, • loans can be converted to equity on the basis of a pre-money valuation of $5 million if not repaid, • timing - funds made each by COB 1st February from Patrick and Tony. Gavin has a timing issue but will provide his funds as soon as possible. 310 During February 2021, Laava entered into loan agreements with Wilemich and MCA, the terms of which included that: (1) each of Wilemich and MCA would lend $93,333 to Laava; (2) Laava would agree to pay interest at the rate of 12 per cent per annum and a default interest rate of 15 per cent per annum on those loans; and (3) if an Event of Default occurred, then Wilemich and MCA were able to require Laava to repay the loan and interest immediately or to cause the loans to be converted into equity at a pre-money valuation of $5 million if not paid. 311 Each of Wilemich and MCA advanced $93,333 to Laava pursuant to the loan agreements. 312 On 29 August 2021, Wilemich and MCA each wrote to Laava agreeing to waive any pre-existing events of default and extending the maturity date of the loan to: "earlier of 31/12/2021, or the sale of the company (or asset equivalent), or the closing of a capital raising currently contemplated by Laava ID Pty Ltd". 313 On 26 October 2021, Mr Michel and Mr Surtees met as the board of Laava and passed a resolution to give effect to the Series A capital raising. As part of that resolution, they resolved to issue Series A Preference Shares to each of Wilemich, MCA and Lufrapa in the following amounts: (a) 5,381 Series A Preference Shares to Wilemich, in conversion of a debt of $228,333 owed by Laava, comprising the $93,333 loan and a $135,000 wage loan from Mr Michel for the period 1 January to 30 September 2021; (b) 2,836 Series A Preference Shares to MCA in conversion of a debt of $120,333 owed by Laava comprising the $93,333 loan and a $27,000 wage loan from Mr Surtees for the period 1 January to 30 September 2021; and (c) 8,248 Series A Preference Shares to Lufrapa in conversion of $350,000 of the $450,000 debt owed by Laava to Lufrapa. 314 The issue of these shares has not yet occurred. 315 Mr Michel's evidence is that he voted in favour of those transactions because in the context of the Series A capital raising he considered that it was important and appropriate to convert these outstanding and immediately payable debts to equity to remove them as short term liabilities on Laava's balance sheet, which would otherwise have been a significant disincentive to investors. Mr Michel also gave evidence that the removal of short term liabilities such as director loans had been specifically requested by Mr John Fitzpatrick as a significant investor in the Series A capital raising. 316 Mr Surtees' evidence is that the conversion of the loans was important because not having those loans on Laava's balance sheet, in the context of Laava seeking to raise capital, would be attractive to investors. 317 The McDonald Interests do not challenge the proposed conversion of the Lufrapa loan. Nor have they taken issue with the fact that part of the consideration for the proposed conversions of the debts owed by Laava to Wilemich and MCA is the wage loans for 2021. Instead, the focus of the challenge by the McDonald Interests to these proposed conversions is upon the component of the consideration relating to the $93,333 loans made by Wilemich and MCA in February 2021. 318 In this regard, the McDonald Interests submitted that the Court should reject the evidence of Mr Michel and Mr Surtees as to why the conversions are proposed and should find that the loans were entered into in February 2021 for the purpose of facilitating the further issue of equity to Wilemich and MCA (and Lufrapa), and (implicitly) that the conversion of the loans was the fulfilment of that purpose, and that such purpose was improper, rendering the issue of the shares conduct satisfying s 232(e) of the Corporations Act and a fraud on the power to issue shares. The McDonald Interests submitted: Given that (1) $5 million was a substantial discount to contemporaneous valuations which the company and external investors had placed on the company; (2) the February 2020 loans between the company and MCA/Wilemich were not otherwise commercially negotiated - they were entered into after finance was extended; (3) while these loans notionally replaced pre-existing loan agreements from May 2020, they were not on the same terms as those agreements in that the pre-existing agreements did not involve any debt to equity swap; (4) the company did not seek to raise finance from any third parties to meet its short term cash flow needs, in circumstances where it had been able to raise finance from third parties previously; (5) the loan agreements involving the debt to equity mechanism were made at a time at which Mr Michel was "confident" that the company would succeed in its Series A fundraising and Mr Surtees was "confident" the company would repay the loans; (6) the loan agreements were made at a time, or shortly after, Mr Michel's exploration of a means to "rebalance" Laava's cap table to increase the equity held by (among others) Mr Surtees and Mr Michel, and decrease CDO's equity, the Court would conclude that the purpose of the debt to equity mechanism included in the loans was to ensure that Mr Surtees and Mr Michel could acquire (through their companies) more shares in Laava, at the expense of CDO's shareholding, and at an undervalue. That is, the loans were the "investment in cash" by Mr Michel and Mr Surtees referred to in Mr Michel's email of 17 December 2020 to Mr Aaron. To the extent that Mr Surtees and Mr Michel denied this proposition, which was in substance put to them … the Court would reject that denial as inconsistent with the objective probabilities assessed in light of the documentary material and surrounding circumstances. Moreover, and independently, the Court would find that the price at which Wilemich and MCA's loan converted to equity was a significant undervalue, and in that way, the transaction was not commercially justifiable. (evidentiary cross-references omitted) 319 The McDonald Interests' submission again invites the Court to review the commercial wisdom of the decisions made in entering into the loan agreements and later resolving to convert those loans to equity. As noted previously, the Court should be reluctant to do so. It cannot be said that the loans or their conversion lacked any commercial basis, or that they were so unfair that reasonable directors would not have considered them fair, particularly in circumstances where Laava received the benefit of the $186,666 lent to it and the conversion occurred as part of a capital raising in respect of which the directors of Laava (being Mr Michel and Mr Surtees and no CDO representative in circumstances where CDO chose not to have a director) considered it to be desirable not to have substantial debt on Laava's balance sheet. For the same reasons, I am not satisfied that the purpose of the proposed loan conversions is an improper purpose, much less an improper purpose but for which the loan conversions would not occur.

H. UNCONSCIONABLE CONDUCT CASE 320 The McDonald Interests pleaded, in a "rolled-up" manner, that the conduct which was oppressive was also unconscionable for the purposes of s 12CB of the ASIC Act. This case was not developed and it was not suggested that any different result would follow if CDO's case were considered through the prism of unconscionable conduct rather than oppressive conduct. To the limited extent that the McDonald Interests' closing submissions mentioned unconscionable conduct, that occurred together with reference to oppressive conduct in connection with share and options issues. No separate case was developed with respect to unconscionable conduct against Mr McDonald and in any event such a case would have failed for the reasons given above when considering the oppression case.

I. DIRECTORS' DUTIES CASE 321 The McDonald Interests also pleaded that by engaging in the conduct which was alleged to be oppressive, Mr Michel and Mr Surtees contravened the duties owed by them to Laava under ss 180 to 183 of the Corporations Act. However, no leave was sought to bring such an action on behalf of Laava against Mr Michel and Mr Surtees. The alleged breaches of these duties as a cause of action (brought by or on behalf of Laava against Mr Michel and Mr Surtees) separate from the oppression claim (brought by CDO against the Majority Interests) was not developed by the McDonald Interests. Conduct which may have been relevant to a claim for breach of the statutory duties and which is also relevant to the oppression claim has been taken into account as part of the latter claim.

J. BREACH OF CONTRACT CASE 322 The McDonald Interests pleaded that the failure to notify them of the impugned transactions constituted a breach of cl 5.1 of the Shareholders' Deed. For the reasons previously discussed, there was no contractual obligation upon the Majority Interests to notify the McDonald Interests of the impugned transactions. In any event, there is no evidence that the failure to notify them of the impugned transactions caused them loss. In particular, it is not suggested that if notice had been given and the procedure in cl 5.1 had been engaged, then CDO would have subscribed for further shares and thus that CDO was deprived of the opportunity to subscribe for further shares. 323 The McDonald Interests also relied upon the implied term described at [213] above. For the reasons discussed at [214] to [217] above, no such term is to be implied.

K. RELIEF 324 For the reasons set out above, I have concluded that the affairs of Laava were conducted in a manner that was unfairly prejudicial to or discriminatory against CDO with respect to the issue of: (1) 3,524 shares to Wilemich and 3,527 shares to MCA in June 2020 (as part of the Second Share Issue); and (2) 2,500 shares to Wilemich and 500 shares to MCA in July 2021 (Third Share Issue), (together, the contravening share issues), but not otherwise. Thus, the Court's discretion in s 233 of the Corporations Act is enlivened. 325 I turn now to consider the appropriate remedy. Section 233 of the Corporations Act provides: 233 Orders the Court can make (1) The Court can make any order under this section that it considers appropriate in relation to the company, including an order: (a) that the company be wound up; (b) that the company's existing constitution be modified or repealed; (c) regulating the conduct of the company's affairs in the future; (d) for the purchase of any shares by any member or person to whom a share in the company has been transmitted by will or by operation of law; (e) for the purchase of shares with an appropriate reduction of the company's share capital; (f) for the company to institute, prosecute, defend or discontinue specified proceedings; (g) authorising a member, or a person to whom a share in the company has been transmitted by will or by operation of law, to institute, prosecute, defend or discontinue specified proceedings in the name and on behalf of the company; (h) appointing a receiver or a receiver and manager of any or all of the company's property; (i) restraining a person from engaging in specified conduct or from doing a specified act; (j) requiring a person to do a specified act. Order that the company be wound up (2) If an order that a company be wound up is made under this section, the provisions of this Act relating to the winding up of companies apply: (a) as if the order were made under section 461; and (b) with such changes as are necessary. Order altering constitution (3) If an order made under this section repeals or modifies a company's constitution, or requires the company to adopt a constitution, the company does not have the power under section 136 to change or repeal the constitution if that change or repeal would be inconsistent with the provisions of the order, unless: (a) the order states that the company does have the power to make such a change or repeal; or (b) the company first obtains the leave of the Court. 326 The breadth of the Court's discretion is apparent from the chapeau of s 232(1) - the Court can make any order that it considers appropriate in relation to Laava. In Campbell: (1) French CJ stated at 334 [72]: ... It is neither necessary nor desirable to explore, in the light of the rather diverse approaches taken below, the propounded limitations on the circumstances in which the remedies for oppression or unfairly prejudicial conduct of a company's affairs can be granted. Their language and history indicate that ss 232 and 233 are to be read broadly. The imposition of judge-made limitations on their scope is to be approached with caution. … (2) Gummow, Hayne, Heydon and Kiefel JJ stated at 359 [174]: If one or more of the grounds identified in s 232 of the Corporations Act is established, the Court is empowered by s 233(1) to "make any order under this section that it considers appropriate in relation to the company". Ten species of order are identified - ranging from an order for winding-up to an order restraining a person from engaging in specified conduct or from doing a specified act, or requiring a person to do a specified act….". 327 Whilst the range of relief that may be granted is broad, in the exercise of the discretion it is appropriate to seek to identify a remedy which meets the needs of the particular case in view of the nature of the unfair conduct that has been established, by removing the effect of the that conduct and framing orders which are the least intrusive and enable the company to continue if possible. In Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [1998] NSWSC 413; (1998) 28 ACSR 688 Young J (as his Honour then was) stated at 742: Although there is no reported authority on the matter, my view is that the section should be applied by first considering whether orders can be made for regulating the company's affairs in the future so that there is no further oppression or unfair conduct, if that cannot be done, to see if there should be a buy-out by one faction of another: Re Enterprise Gold Mines NL (1991) 3 ACSR 531 at 539. The remedy chosen should be the least intrusive: Martin v Australian Squash Club Pty Ltd (1996) 14 ACLC 452 at 475. Only as a last resort is the court to make a winding up order of an otherwise solvent company under the section. The flavour of the section also is that the court is only to give the remedy which removes the oppression. Note the remedy in fact given in Re H R Harmer Ltd [1959] 1 WLR 62 at 68. Thus it is not enough merely to find oppression and then proceed to find some remedy that might bring peace to the company generally. The court should only grant the remedy that removes the oppression found. 328 In Tomanovic v Argyle HQ Pty Ltd; Tomanovic v Global Mortgage Equity Corporation Pty Ltd; Sayer v Tomanovic [2010] NSWSC 152 Austin J explained at [44]: Although a compulsory buy-out is often ordered, the granting of such relief is properly subject to the broader principle that the Court will seek to craft orders which are the least intrusive to the management of the affairs of the company, consistent with the termination of the oppression: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1998) 28 ACSR 688, at 742 per Young J; [1998] NSWSC 413; John J Starr (Real Estate) Pty Ltd v Robert R Andrew (A'asia) Pty Ltd (1991) 6 ACSR 63. Consequently, a compulsory buy-out should not be ordered, if less drastic remedies are consistent with the termination of oppression. … 329 Subject to the consideration of further submissions, it appears that there may be remedies short of a buy-out order available which will end the oppression. One such remedy would be setting aside the contravening share issues and allotments, with (or without) the reinstatement of the wage loans in respect of which those shares were issued and allotted. An alternative remedy would be an order that the wage loan owed by Laava to Mr McDonald be converted into shares in Laava at a particular price. Any change to Laava's share structure should be the subject of an order for the rectification of its share register. 330 Whilst the parties made submissions as to the appropriate form of relief, those submissions were addressed at a global level and were not directed at the particular outcome that has now been reached namely, that the contravening share issues, but not the other pleaded conduct, satisfy s 232 of the Corporations Act. In this context, it is appropriate to allow the parties an opportunity to confer as to the form of relief and if agreement is not reached, then to make short further submissions addressing that issue. I certify that the preceding three hundred and thirty (330) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Goodman.

SCHEDULE OF PARTIES NSD 1153 of 2021 Defendants Fourth Defendant: MORTGAGE COMPANY OF AUSTRALIA PTY LIMITED AS TRUSTEE FOR THE SURTEES FAMILY TRUST ACN 062 471 096 Fifth Defendant: LAAVA ID PTY LTD ACN 617 775 578 Sixth Defendant: GAVIN GER Seventh Defendant: WYARGINE GROUP PTY LTD ACN 124 126 987 Eighth Defendant: LUFRAPA PTY LTD AS TRUSTEE FOR THE LUCETTE MICHAEL FAMILY TRUST ACN 161 701 195 Ninth Defendant: ROBERT FITZPATRICK