The plaintiff essentially is a company controlled by Mr Bob Bosnjak. The first defendant, to which I will refer as "Holdings" or "the Company" is the holding company of a series of companies who collectively will be referred to as "Westbus". The principal business of Westbus is to operate buses and coaches. The map in evidence shows that Westbus has almost exclusive rights to operate buses in the area which can be described approximately as bordered by the Nepean River in the West, North Richmond in the North, Parramatta in the East and South Liverpool in the South.

The plaintiff basically seeks relief against oppression by the majority interests in Holdings. In these reasons, for brevity, I will use the term "oppression" as connoting the full phrase "conduct which is oppressive or unfairly prejudicial or discriminatory against a member or members or contrary to the interests of the members as a whole", the phrase that is actually employed in s 260(1)(a) of the Corporations Law.

It is convenient to deal with the matters requiring decision under the following heads.

3. Was there oppression in all or any of the following:-

Up until relatively recently, the shares in Holdings were held as to two-sevenths by the plaintiff, two-sevenths by the fourth defendant Feyama Pty Ltd, two-sevenths by the fifth defendant, Fexule Pty Ltd and one-seventh by Bosnjak Group Pty Ltd (Group). Recently the Feyama and Fexule shares were transferred to the sixth defendant National Bus Company Pty Limited (NBC). NBC plays a considerable role in these proceedings as will appear below.

Although it is necessary to look at the control of Fexuto in fuller detail later in these reasons, essentially it is a company controlled by Mr Bob Bosnjak. Feyama is a company controlled by Mr Jim Bosnjak. Fexule is a company controlled by Mrs Carol Bosnjak.

In order to understand the dramatis personae and the general background to this case, it is necessary to set out briefly the Bosnjak family history. That history is a good illustration of how a family can come from overseas without assets and with sheer hard work and determination develop the largest private bus and coach operation in Australia.

Mr Simun Bosnjak was born on 27 September, 1904. He came to Australia in 1938. After a while, Simun Bosnjak purchased a farm at Bonnyrigg. In November, 1947, the rest of the family was able to migrate to Australia and join Simun. At that stage the rest of the family consisted of Mrs Anda Bosnjak who had been born on 3 November, 1913 and had married Simun in Croatia, John Bosnjak who had been born on 22 April, 1935 and Bob Bosnjak who was born on 2 June, 1938.

After the family settled in Bonnyrigg, Slavko James Joseph Bosnjak, known as Jim, was born on 31 October, 1948.

In due course, Bob married Dragica and they have one child, Sandra. John married Carol. They have a child, Debbie who is employed by the family business. John died suddenly on 26 July, 1979 and Carol succeeded to his property. Jim married Gloria and they have four children Simon, James, Marie and Julie.

Simun Bosnjak died shortly after John on 27 October, 1979. Anda Bosnjak died on 31 October, 1992.

After her husband's death, Anda lived with Jim and Gloria and their family.

Simun Bosnjak left his estate to Anda. I will deal with the issues that arise under Anda's will in section 3(c) of these reasons. It is sufficient for present purposes to note that under the will as admitted to probate, the residue of her estate which included the control of one-seventh of the shares in Holdings passed to her grandsons, the two sons of Jim, Simon and James.

In October, 1995, Simon and James commenced proceedings to compel the transfer of Anda's interest in Holdings to them. Bob countered by bringing proceedings to revoke the probate on the ground that the will was the result of some undue influence. Those proceedings are still pending.

The history shows that the Bosnjak family's first foray into the bus industry was when Simun Bosnjak purchased the run from Edensor Park to Canley Vale from Cecil C Prowse for $30,000 in 1955. This acquisition included five buses and the Edensor Park Bus Depot which was on a three-quarter acre block of land on which a fibro house had been built. In 1966 Simun and Anda Bosnjak purchased two and one quarter acres directly opposite the Edensor Park Depot and constructed a home on that block, now known as 1 Bosnjak Avenue, Edensor Park into which they moved in 1967.

The Company purchased the Parramatta Bus Company in 1963 for $170,000 which included 28 buses and real property at 552-560 Church Street, North Parramatta which then was used as a bus depot.

Some insight into the then situation of what was to become Westbus can be gleaned from the report in Bosnjak's Bus Service Pty Ltd v Commissioner For Motor Transport (1970) 92 WN (NSW) 1003. This case deals with the conflict between the original Bosnjak service then numbered as Route 45 with a route operated by Calabro Bros, Route 40 from the Mulgoa Road to Cabramatta Station.

On 1 May, 1974, the family purchased the business run by W J Bale & Sons Pty Ltd at Penrith for about $465,000. The purchase included 28 buses and a depot on one acre in Mulgoa Road, Penrith.

In 1976, the Company acquired Fairlane Bus Service Pty Ltd of Fairfield for $375,000. This included 14 buses, but no land.

In 1976, the Company purchased 7.5 acres of vacant land at Northmead. This became the Northmead depot. The Company's Parramatta depot was transferred to Northmead and the Parramatta land redeveloped but retained by the Company. The head office was also moved to Northmead.

In 1981, the Company purchased some bus runs between Parramatta and Smithfield from Western Roads Bus Service Pty Ltd for $275,000.

In 1983, Bowman's Bus Service Pty Ltd was acquired for $2,500,000. The purchase included 29 buses and the St Marys Depot. The Bowman company's name was changed to Westbus Pty Ltd and thereafter this was the company that owned the bus runs and the buses.

In 1988, Windsor-Richmond Bus Service was purchased for $3,000,000 approximately. The purchase included 44 buses and the Windsor depot on 5 acres of land in Thornley Street, Bligh Park.

In January, 1989, Toongabbie Bus Service was purchased. Bob Bosnjak was against this acquisition because he said the Company's debt was too high. The purchase was to be funded out of selling buses and leasing them back from the bank. Nonetheless, the purchase proceeded on the votes of Bob and Carol Bosnjak. The cost was $3,300,000 and the purchase included 33 buses and the Seven Hills Depot. Bob Bosnjak accepted the majority's decision on the acquisition, but he never actually acquiesced in it.

In May, 1989, the owners of Calabro Bros Bus Service indicated that their company was for sale. Jim Bosnjak wished to acquire the company. Anda Bosnjak expressed the view that this company should be acquired as it had been a thorn in the flesh of the Bosnjaks for years. Bob Bosnjak opposed the acquisition. He did this for three stated reasons, first he considered that a continuing history of family disputes meant that rather than acquiring assets, there should be a split of assets between family members, secondly, he considered that the Company's debt was already too high, and thirdly, he considered that the purchase price of $7,000,000 was excessive.

The purchase of Calabro Bros is said by the defendants to have been authorised at a board meeting held on 29 May, 1989 at which only Anda and Bob Bosnjak were present. Jim Bosnjak was not present. He was actually in hospital, but had purported to appoint Anda as his proxy. This, of course, he had no power to do. The minutes tendered by the defendants state that a decision was made to proceed with the purchase and then Bob left the meeting. Bob denies that there ever was such a meeting. I deal with this "meeting" when I review the evidence in section 2 of these reasons. As I there indicate, there must be extreme doubt as to whether there ever was such a meeting.

However, for historical purposes, this matters little because further meetings were held at which Jim and Carol were present and Bob absent, when the deal with Calabro Bros was confirmed. Bob never changed his mind about the purchase. However, the effect of the purchase was that the Company obtained 45 buses and the Bonnyrigg Depot. The Bonnyrigg Depot was close to the Edensor Park Depot and, in due course, the route buses formerly garaged at Edensor Park were moved to Bonnyrigg.

In 1992, Holdings purchased ten acres of land at Wetherill Park with the intention of replacing the Bonnyrigg Depot in due course.

In late 1992, Holdings purchased land at Arncliffe for a depot and offices. This depot services the Coach Division of the Company, being conveniently located near Sydney Airport.

In 1994, Holdings purchased certain bus runs from Richmond Bus Service for $400,000. No buses or land were included in this purchase.

In addition to the matters I have listed, at some stage, the Company commenced operating tourist coaches in London. Recently, it has established new services from the Hills District to Sydney and Milsons Point along the M2 Motorway.

Thus from one bus run in 1955, the Company by 1994 had become the largest private bus company in Australia with about 400 buses and coaches operating from six depots.

John and Bob Bosnjak worked in the bus business from 1955. Bob worked on cleaning the buses, doing some mechanical work and acting as conductor until he reached 21 and could obtain a driver's licence for buses. Bob worked long hours for little financial reward.

Holdings was incorporated on 19 October, 1960. Up until 19 September, 1986, it was named "Bosnjak Bus Services Pty Limited". It currently has 11 subsidiary companies. These do not include Group.

The business of Westbus should be more closely defined. The business is principally the operation of route buses that link major suburban centre, buses that feed railway stations, buses to take children to school, buses and coaches to take schoolchildren on excursions, railway replacement services, tourist coach services and the holding of property including bus depots. For a while the business included the building of bus bodies using a company, Smithfield Bus and Coach Works Pty Ltd, but this business was sold in 1982.

There is little evidence as to what percentage of the business falls under which head. However, Mr Mostyn the Chief Executive Officer of the Company gave evidence that the school business was about 40% of the total business. There was also some suggestion that the services that operated out of Penrith accounted for about two-sevenths of Holdings' business.

Exhibit PX777 was a series of examples of contracts pursuant to which the Company operates its bus services. These contracts are headed "New South Wales Department of Transport. Commercial Service Contract No...".

A typical example is contract R027 which is an agreement made between the Director General of the New South Wales Department of Transport and Westbus Pty Ltd made 6 September, 1996. It recites the statutory duty of the Director General under the Transport Administration Act, 1988 to ensure the provision of safe, efficient, adequate and economic passenger services and that Westbus has agreed to provide such services. The contract then specifies that for five years, Westbus has the exclusive right to operate regular passenger services and school services in the area specified in the attached map with certain exceptions. The contract is assignable, but only with the consent of the Director General which consent is not to be unreasonably withheld. There is a right of renewal provided that the service has been satisfactory.

The schedules to the contract set out the fares to be charged, the frequency of service required, the designated routes (in this case Parramatta to Toongabbie, Blacktown to Seven Hills and Seven Hills to Kellyville routes, 700, 702, 705, 708, 709, 710, 713, 714, 715, 717 and 718) plus school services.

Returning to the history of Westbus, Holdings seemed to work well up until 1988. Between 1979 when Simun died and 1988, the management and direction was provided by Bob and Jim Bosnjak. Bob always considered himself to be a "hands on manager" and was proud of it.

Whilst Simun or Anda Bosnjak were alive, there was a family dinner at the parents' home each Sunday. These dinners included discussion as to how the business was going. The dinners became less cohesive after the first appointment of Carol Bosnjak to the board.

The problems appear to commence on 12 September, 1988. On that date, Carol was appointed a director. Bob says that that proposal was not previously discussed with him. He had two principal objections. First, that Carol was not a real member of the family as she was not a Bosnjak by blood. Secondly, the move was seen as the beginning of the process of sidelining Bob from management. Up until then, Bob reckoned that all decisions were made by Jim and himself and things prospered. However, with Carol joining Jim, Bob was in a minority and Jim's will always prevailed. Bob's evidence traces through how this state of affairs continued or was exacerbated through to the present day.

The proceedings were commenced by summons filed on 28 August, 1997. Pleadings were ordered and various editions of a statement of claim were filed. The latest is the second further amended statement of claim. I will simply refer to this latest edition as the statement of claim.

The plaintiff, Fexuto primarily seeks a declaration that the affairs of Holdings are being conducted in a manner which is oppressive and unfairly prejudicial to its interests and to those of the members of Holdings as a whole, contrary to section 260 of the Corporations Law.

The statement of claim also seeks various subsidiary orders, the most significant of which (using the paragraph numbers employed in paragraph 122 of the statement of claim) are:-

(xvi) An order that Fexuto purchase the shares formerly held by Feyama and Fexule; and

(xviii) An order that the assets and liabilities of Holdings and its subsidiaries be split up and returned to the shareholders in a manner considered to be just and equitable to the Court.

I should note that there is also a claim in paragraph 121 of the statement of claim that because Holdings is controlled by Jim and Carol, Fexuto may also mount a claim for misfeasance to claim compensation for and on behalf of Holdings. This matter did not figure prominently at the trial, being subsumed in the claim under s 260(2)(g) of the Corporations Law.

In their defence, the defendants deny oppression and say that any predicament in which the plaintiff finds itself is a result of Bob Bosnjak's conduct. However, they say that should oppression be found, the appropriate order is that they purchase Bob Bosnjak's shares at the appropriate price.

Up until the first day of the trial, the Company, the first defendant, appeared by Mr R R Stitt, QC and Mr A P Coleman of counsel instructed by Messrs Freehill Hollingdale & Page. The first defendant was a vigorous litigant during the interlocutory stages of this case. On the first day, Mr Stitt, QC announced that the first defendant would only take a watching role in the proceedings.

The other defendants appeared by Mr Rayment, QC, Mr Pembroke, SC and Mr Stevenson instructed by Messrs Hunt & Hunt. These defendants (to whom I will refer simply as "the defendants") vigorously opposed the plaintiff's application.

Mr Ellicott, QC, who appeared with Mr Drummond and Mr M Jones, for the plaintiff, opened the case by saying that there were a large number of incidents which, when added together, made a case of oppression. I will list the main incidents below. When going through this list, Mr Ellicott, QC, stressed that Holdings is essentially a family company and a quasi-partnership. He then made it clear that his client regarded some of the incidents in themselves as being obvious instances of Jim and Carol and their associated entities being in breach of the fiduciary principles set out in Regal (Hastings) Ltd v Gulliver [1942] UKHL 1; [1942] 1 All ER 378; [1967] 2 AC 134n and Phipps v Boardman [1966] UKHL 2; [1967] 2 AC 46.

As often occurs in this type of litigation, the 17 headings of oppression mentioned in the statement of claim received greater or less attention during the trial. In the plaintiff's closing address, nine categories of oppression were dealt with and I will deal with these nine matters in due course. However, it will then be necessary to consider the total picture in the light of the applicable principles to determine whether there has been oppression. I will do this in section 4.

This was principally a documentary case, so that impressions of the witnesses may not ultimately be vital. The basic facts and indeed most of the facts, were deposed to by witnesses of both sides, though from different perspectives. There is thus not much need to determine who is truthful and who is not. As in all cases, this problem did occur to some minor extent. Thus it is useful to review the witnesses who gave evidence.

The first witness for the plaintiff was Mr Bob Bosnjak.

Bob Bosnjak swore four large affidavits which were read in chief. He was cross-examined by Mr Rayment, QC for three days. Bob Bosnjak was painted by his opponents as a man who tended to lose his temper. However, he kept his temper superbly under cross-examination. Despite this, a good deal of the cross-examination was very effective. Mr Rayment, QC showed quite convincingly that a lot of what Bob Bosnjak was saying was contrary to contemporaneous documents.

I formed the general opinion that Bob Bosnjak deeply and conscientiously believes that he is being oppressed. He is the older surviving son of the founder of the company. He considers that up to 1988 the company worked well. He considers that this was primarily as a result of his skills and that his younger brother, Jim, was more of a show pony who spent many hours in industry committees, but little time in the Company's business. He acknowledges that his mother was a director and that she was a strong force, but says that she never functioned as a director. However, he considers that as a woman and not only a woman but one who could not speak English, she had no significant part to play in the Westbus business.

Bob Bosnjak was very emotionally affected by the appointment of Carol Bosnjak as a director in 1988. That emotional torment has to a great extent led to Bob Bosnjak being obsessed and seeing a conspiracy in almost everything that was done in the Company. He resented the fact that his input was not invited when proposals were being made to the board. That resentment led to Bob Bosnjak opposing virtually every proposal that was put to the board. It also led to Bob Bosnjak saying over and over again in evidence that he was being publicly degraded and humiliated by managers who were sympathetic to Jim and Carol, particularly the present Chief Executive Officer, John Mostyn.

The obsession led to Bob Bosnjak seeing a conspiracy in even the most trivial matters such as the fact that Debbie Bosnjak had a key to the stationery cupboard, but he did not. The obsession has led Bob Bosnjak to reconstruct events in a particular light. That light has often given a false impression as to what really occurred. I did not regard Bob Bosnjak as a completely reliable witness.

The next witness called was the well known accountant Mr John William O'Brien. His credit was not in issue. However, his main evidence was to comment from a financial point of view on some of the actions of the Company and the effect of certain proposals.

The next witness called was Dr Safraz who was the general practitioner who attended Anda Bosnjak and also attends Bob Bosnjak. He was called to show that Anda Bosnjak did not speak English and was unlikely to move about much. The doctor's evidence was credible, but he really was not in a position to speak categorically on the relevant matters.

Mr Gotze followed. He was called to show that there would be no real difficulty in dismembering the Bosnjak empire, if the Court so ordered. However, I found his evidence of little value. Mr Gotze was mainly concerned with the bus industry in Victoria. He was not able to give much cogent evidence as to the type of services operated by the Company. He did not know of any private bus company that had been dismembered, but did identify government services that had been privatized in Melbourne, Adelaide and Perth.

Mr Hancock, Bob Bosnjak's accountant was the next witness. He was called to give evidence as to the use by Jim Bosnjak of Company funds. His evidence was disappointing as he had not done the relevant work himself and was unfamiliar with the work that had been put into the report he had signed by his six employees. I found his evidence of little value.

Mr Watts was the next witness. He had been an executive of Volvo Bus who had become the manager of the Coach Division of the Company. He gave evidence of an incident in June, 1993 when he received two conflicting sets of instructions from Jim and Bob Bosnjak as to whether the Edensor Park Depot should be closed and the coaches kept at that site be transferred to the Arncliffe Depot which was the headquarters of the Coach Division. He gave some evidence as to the different management styles of the two brothers. It is clear that Mr Watts was favourably disposed to Bob Bosnjak.

Jim Bosnjak was the first witness for the defendants. He was cross-examined for three and a half days by Mr Ellicott, QC. He obviously had been advised that he should keep calm under cross- examination (because he actually said so in the witness box) and he almost always remained calm. He said in re-examination that he had thought he had had a hectic time during cross-examination. He came across as a careful man with an outgoing personality.

However, cross-examination did bring out the fact that some of Jim Bosnjak's recollections were faulty as being inconsistent with contemporaneous documents. Some matters of which he disclaimed knowledge did in fact come to his notice at the time though he could well have forgotten. An illustration is the matter of the 60% quorum needed to transact business at general meetings. Further, he sometimes considered that he had followed advice of his accountant or solicitor when he had either completely misunderstood it or gone against it. An illustration was where he issued the notice convening the Extraordinary General Meeting for July 1993 "By Order of the Board" when he was advised that Feyama Pty Ltd would need to requisition the meeting.

Jim Bosnjak was cross-examined at considerable length on volume 13 of the plaintiff's bundle which contained many notes of Price Waterhouse & Co (his accountants) including letters from Mr Jim Marsden (Jim Bosnjak's then solicitor) to Ms Margaret Gibson of Price Waterhouse. It is quite obvious that both Margaret Gibson and Jim Marsden were acutely aware of the necessity for a 60% quorum and the other problems involved in holding the July, 1993 Extraordinary General Meeting. Jim Bosnjak was at pains to point out that none of these documents bore his name or signature. Neither Margaret Gibson nor Jim Marsden were called. It is very difficult to accept that none of these matters which were causing Jim Bosnjak's advisers so much concern were not transmitted to him, especially as the relevant meeting was held at Price Waterhouse's premises.

Again, some part of the material presented by Jim Bosnjak was a little unrealistic. One of the reasons for opposing Bob's "split of assets scheme" was because the Company would be injured through not being able to buy Busway's Blacktown routes (the only enclave in the whole West Liverpool-Parramatta-Richmond-Penrith area not controlled by Westbus) when the elderly Mr Rowe who is said to own it dies. The evidence tends to support Bob Bosnjak's opinion that this is fantasy as Busways controls other bus services as well as those in Blacktown. The other reason given, namely the government's proposal to have a super bus lane from Liverpool to Parramatta via Fairfield Hospital which could not be taken advantage of unless Westbus had more or less a monopoly is also, to my mind, specious.

Carol Bosnjak was the next witness. She was sworn in and affirmed the truth of her affidavits. I then adjourned for what I thought would be a few minutes so that she could swear her amended defence before cross-examination proceeded. However, she then became ill and never returned to the witness box.

At that stage of the trial, I had already read Carol Bosnjak's affidavits. There were competing applications as to what I should do with those affidavits. After considering those submissions, I decided to admit part of the affidavits into evidence and noted that I would discount the weight of those parts because the witness was not available for cross-examination.

Mr Ellicott, QC made submissions that Carol Bosnjak's absence from the witness box was a very significant matter. I would agree that it was significant, though would not go as far as "very significant." It was obvious from what I was told that Carol had become unfit to continue in the box as a result of psychological problems. The cause of those problems was just a matter of speculation.

John Mostyn was the next of the defendants' witnesses to be cross-examined. He appeared nervous when taking the oath and was over cautious in considering whether he would make any admissions as invited by Mr Ellicott, QC.

However, as the careful, well prepared and skilful cross-examination proceeded, the reasons for the nervousness became apparent.

He had problems in verifying everything that appeared on his Curriculum Vitae. His only academic qualification seems to be from a private institution offering a course in what it called "motivational science" in a place called Croton-on-Hudson somewhere in New York State. There was debate in addresses as to whether this was an institution of repute. In the end, Mr Ellicott, QC ended this debate by saying that if it was reputable, Mr Mostyn must have been a poor scholar.

Mr Mostyn claimed that he had some experience in the transport industry. However, this was limited to managing heavy earth moving equipment and trucks as an employee of Theiss Bros Ltd and he had no experience with passenger transport.

Mr Mostyn came across very poorly. He was supposed to be a person who had skills in dealing with the situation where a company was not performing as a result of a dissident director not being able to change with the times. He demonstrated no such skills.

Bob Bosnjak and Mostyn clashed at their very first meeting. I will set out the details in section 3(b) of these reasons. Whilst that clash may not have been Mostyn's fault in any way, the clash so wounded him that thereafter he was incapable of holding the scales between the various directors. This was the purpose of his appointment according to the evidence of both Jim Bosnjak and Mostyn.

Although Mostyn denied it, he was quite obviously Jim Bosnjak's right hand man by May, 1995 at the latest. He never ever agreed with any proposal Bob Bosnjak put up. He only disagreed with Jim or Carol Bosnjak on two occasions that were the subject of evidence, though there might have been some others. He was appointed Jim Bosnjak's alternate director in May, 1995.

Mostyn actually said in evidence that Bob Bosnjak's suggestions were so irrational that he could not accept them. As Mr Ellicott, QC put to Mr Mostyn this answer in itself shows his incapacity to do the task he was appointed to do.

Mr Mostyn was followed by Robert Ash, the financial controller of the Company. He gave his evidence in a calm fashion, and was not obviously partial to any party.

Mr Stanko, the Director of Bus Services of the Victorian Department of Infrastructure gave some evidence as to how the tender process for the former MET buses was carried out. (MET bus was the trading name of the Victorian Government bus and tram services probably deriving from when these vehicles were operated by the Melbourne & Metropolitan Tramways Board). There was no challenge to his credit. His evidence was to the effect that the Victorian Government was disappointed in the response to its presentation. Only three companies put in expressions of interest. These were NBC, a New Zealand Company and a unit of the Public Transport Commission itself.

Mr Peter Oliver was the next witness. Both sides recognized Mr Oliver as an excellent manager in the industry. His credit was not in issue. He gave his evidence clearly with reasoned propositions.

He was followed by Mr Cammareri who is the purchasing and technical officer for Westbus. He had mostly been stationed at Edensor Park. On one occasion he had an argument with Bob Bosnjak who sacked him, but, two days later, Jim reinstated him. His evidence is only relevant as to the use of the Edensor Park Depot and whether Westbus staff did work for NBC. He gave his evidence calmly and his credibility was not affected in cross-examination.

Mr Cook was the next witness. He is the driver trainer and service manager of Westbus. His credibility was unaffected in cross-examination. His evidence mainly went to the use of Edensor Park and was not vital.

Mr Debono, the general manager was next. Again he gave his evidence quietly and competently and was not fazed by cross-examination. There are, however, some odd things about his evidence relating to his appointment as general manager which I have noted in section 3(b)(iii). However, Mr Debono's credibility plays no part in this decision.

The final witness on the merits was Debbie Bosnjak. She gave brief evidence. She appeared to be very naïve, but she was not in the box long enough for me to make any complete assessment. Again, her credibility is not in issue.

Two other witnesses who gave evidence for the defendants by affidavit were not cross-examined. These were Messrs Boffa and Wright. The former is the financial controller of NBC, the latter NBC's fleet and purchasing manager. Each gave evidence that there was little working together of NBC and Westbus. Neither gave vital evidence.

It is also necessary to note the witnesses who were not called. Roger Graham who was closely associated with Westbus, and who was also intimately involved in the Victorian Government's privatization plan was not called. It is a fair comment that Mr Graham may well have been able to contribute to the knowledge about the successful tender by the National Bus Company and that he is in Jim Bosnjak's camp.

Other witnesses who might have been called by the defendants, but were not were Gloria Bosnjak, Jim Marsden, a solicitor, and Margaret Gibson of Price Waterhouse. Witnesses that might have been called by the plaintiff were his wife, Dragica and his daughter, Sandra. I will draw the usual inferences from their failure to give evidence.

Despite the fact that there were over thirty lever arch files full of documents in evidence, there were what I considered to be severe gaps. I was given precious little information as to the details of Holding's business. I was told that there might be interest by some overseas company wanting to bid for the Company and the word "Stagecoach" was mentioned, but there were no details given. There were no details of how the bus industry may have developed from the time when there were conductors on semi-rural routes filling out way-bills as their bus passed each section marker to how, at the present day, one person operators of a large fleet of buses pay in their daily takings to the Company's computer.

One of the problems for Bob Bosnjak is the lack of corroboration of his evidence as to the attitude of Jim and Carol. Of course, corroboration is not necessary as a matter of law. However, when there are as here two diametrically opposed accounts of attitudes and facts, corroboration is important. Although some matters are to be considered by the impact felt by Bob Bosnjak and, to that extent, his subjective perceptions are relevant, other matters have to be judged by objective facts.

Bob Bosnjak says that he was constantly humiliated by the conduct of Jim and Carol Bosnjak and the conduct of Mostyn and others acting under their direction. There was no other witness who corroborated this, though many heard Bob Bosnjak's complaints to this effect.

On the other hand, Jim Bosnjak with complete sincerity volunteered perhaps the most surprising statement in the trial. I quote from T 441 " The shareholders, I have to say, have never been taken into consideration in any move that Westbus has made in the last 20 years." There was an attempt in re-examination to say that this was referring to holding shareholders' meetings. I gleaned the general flavour in the evidence that the company really was worked for some years after Simun's death as a two man company. However, before her death Anda intervened from time to time as later did Carol.

Two lever arch files of so called board minutes were tendered by the defendants. It would seem that no actual minute book was kept as required by the Corporations Law: the "minutes" appear to have been kept in a folder. Bob Bosnjak made it clear that he doubted the veracity of at least some of these minutes. Bob Bosnjak endeavoured to have his daughter present to record true minutes. This was thwarted. Bob then took a tape recorder into the meetings. There were objections to this, but, he was permitted to record what he himself said at meetings.

It is fairly clear to me that the "minutes" of the alleged meeting of 29 May, 1989 which are recorded as "outlined by Mrs Anda Bosnjak" attempt to record something that did not actually occur. Although Anda Bosnjak's command of English was greater than Bob would give her credit for, it was not sufficient to be involved in a meeting to the extent disclosed by these "minutes". This fact, and the attempt to give Anda Bosnjak a proxy to vote for Jim Bosnjak at this meeting because Jim took the opportunity to give a proxy when his mother visited him in hospital, do not enhance the credit of Jim Bosnjak. However, in general, although the minutes were not actually adopted at a meeting at which Bob Bosnjak was present, I consider that I should accept them as fair evidence of what took place at the relevant meeting.

I should make one final comment about the evidence. The defendants and the Company spent tens of thousands of dollars in getting legal and accounting advice from leading firms of solicitors and accountants. Some of the advice given was misunderstood, probably because those who were given the advice only heard the part they wanted to hear. However, it is a matter of concern that some of the advice was quite inadequate. On one occasion solicitors gave advice in a letter that junior counsel could give for a couple of hundred dollars. The solicitors charged over $20,000 including time taken "for legal research". Despite this research time, the solicitors missed the vital article respecting the quorum as did the high powered accountants.

The problems between the main people in this case start with the appointment of Carol Bosnjak as a director on 12 September, 1988. Bob Bosnjak was extremely upset by this appointment. He made his attitude abundantly clear. As a result members of the clan who had previously been quite friendly ceased to speak to each other. Solicitors' letters passed from one to the other. On 1 June, 1989, at the strong suggestion of Anda Bosnjak, Carol Bosnjak tendered her resignation from the board in tears.

Bob said that he opposed Carol's appointment as a director because her appointment destroyed the concept of a family business as Carol was not a Bosnjak by blood. I did not accept this.

I formed the impression that one of the reasons Carol was not accepted as a director in 1988 was because she was a woman. This impression was gained from T93 ("I do not go around talking to women about this and that"), T68 where he said that at the weekend family meetings business was mainly discussed with his father as ("my mother got tied up in the kitchen with my wife and my sister-in-law") and T128 ("I do not know what these women do all day") despite Bob Bosnjak's denial at the latter page.

Again, whilst Bob Bosnjak acknowledges that Carol has a one-third interest, I agree with the submission of the defendants' counsel that this really means that she has a one third share in the profits and not that she has any right to govern.

Indeed in his affidavit, PA03 paragraph 52, Bob Bosnjak lists as his first reason for opposing Carol's appointment to the board was that his father had made it clear that the Company was a family company "which should therefore be managed by family members, namely, his sons".

However, Bob's main reason for opposition was that the balance of power changed. Up until 1988, Bob Bosnjak was chairman who tended to get his own way. Even up to 1993, when Terry Watts was manager, Bob Bosnjak's will tended to prevail, often to the protests of Jim. However, little by little, Jim and Carol changed the balance to the opposite position.

It is not uncommon in cases where there is a family who have moved from overseas to Australia that the eldest male occupies a very significant position. Bob Bosnjak became the older surviving male in 1979. He would and did expect that due respect be paid to him and his wishes. This does not always happen in modern day Australia. However, when it does not, the person concerned suffers considerable emotional torment. Although counsel for Bob Bosnjak said in their written submissions in reply that this categorization of Bob Bosnjak was unrealistic, my view was that it had a good deal to do with what has occurred in the instant case.

Bob Bosnjak's reaction to Carol's appointment was strange and strong. He had a solicitor write to his mother in English demanding that she sign the acknowledgment at the foot of the letter threatening that if she did not, the family would not be able to be brought together again. Again, I cannot see any purpose in this move unless it is the senior male asserting his will.

The episode surrounding this letter does not bring any credit to Bob Bosnjak. Indeed, the whole of this incident shows behaviour by him that one would not have expected in the senior member of the family. None of this material goes to any oppression extant at the time of filing the summons. It is, however, vital background material.

3. (b) Legitimate Expectations of Management Rights

The House of Lords held in Ebrahimi v Westbourne Galleries Ltd [1973] AC 360, that it is just and equitable to wind up a company which is a quasi partnership if it is in deadlock. The plaintiff says that this principle also applies, mutatis mutandis to cases of oppression. Of course, there is no actual deadlock in the instant case, though the situation is closely analogous.

The concept of a legitimate expectation originated in administrative law. Its first use in a company oppression case appears to be by Hoffmann, J as his Lordship then was in Re a Company [1986] BCLC 376, 379, where, in an application to strike out a statement of claim alleging oppression a plaintiff had been dismissed as managing director. His Lordship set out the principle in greater detail in Re Posgate & Denby (Agencies) Ltd [1987] BCLC 8, 14, when he said,

"...the concept of unfair prejudice...enables the court to take into account not only the rights of members under the company's constitution, but also their legitimate expectations arising from the agreements or understandings of the members inter se. There is an analogy in Lord Wilberforce's analysis of the concept of what is `just and equitable' in Ebrahimi v Westbourne Galleries Ltd.... The common case of such expectations being superimposed on a member's rights under the articles is the corporate quasi-partnership, in which members frequently have expectations of participating in the management and profits of the company, which arise from the understandings on which the company was formed and which it may be unfair for the other members to ignore....

"Although the answer to this question must in each case depend on the particular facts, it is well to recall that in Ebrahimi v Westbourne Galleries Ltd, Lord Wilberforce said that in most cases the basis of association would be `adequately and exhaustively' laid down in the articles. The `superimposition of equitable considerations' requires, he said, something more. This was said in the context of the `just and equitable' ground for winding up, but in my judgment it is equally necessary for a shareholder who claims that it is `unfair' within the meaning of s 459 for the board to exercise powers conferred by the articles to demonstrate some special circumstances which create a legitimate expectation that the board would not do so. Section 459 enables the court to give full effect to the terms and understandings on which the members of the company became associated but not to rewrite them."

Section 459 of the English Companies Act, 1985 is similar to s 260 of the Corporations Law.

It is to be noted that Hoffmann, J in Re Posgate & Denby (Agencies) Ltd does not deal with the case where the company was originally incorporated under a certain regime but problems have arisen as a result of events that occurred years afterwards. However this sort of situation did occur in various reported cases. Re a Company [1986] BCLC 376 is one example, a more illustrative one is Quinlan v Essex Hinge Co Ltd [1996] 2 BCLC 417. In that case, the company was incorporated in 1936. The plaintiff was employed by the company in 1961. In 1965, he was allotted shares in the company for which he paid and was given a managerial role. He was dismissed in 1992 and brought proceeding under the English equivalent of s 260 on the basis that he had a legitimate expectation when he purchased his shares that he would continue to have a managerial role. Hamilton, AJ found at 426 that the plaintiff had established a legitimate expectation and ordered the majority purchase the plaintiff's shares without any discount for the fact that they were a minority interest.

An illustration of a case where a claim of legitimate expectation failed is Re Leeds United Holdings plc [1996] 2 BCLC 545. In that case there were three persons holding shares in a company which gave them management rights. By a two to one majority, these persons as the board agreed to recommend a takeover of the company. Even if there had been a legitimate expectation about management, there was no legitimate expectation that the majority would not sell their shares, and, even if there were, such expectation did not relate in any way to the conduct of the company's affairs (pp 559-560).

The English Court of Appeal considered the doctrine with approval in Re a Company [1997] 2 BCLC 739.

The court thus looks at the constitution of the company to see if it founds a legitimate expectation such as relied on by the plaintiff. However, even if there is nothing in that constitution, the court will, in appropriate cases, look to the understandings of the parties when they entered into the corporate quasi-partnership.

The court looks at the question by considering the impact on the oppressed, not on the intention of the alleged oppressor. Oppression is to be considered "in terms of the impact on the oppressed, not in terms of the intention of the oppressor, except to the extent that the word itself has some moral or emotional content": Re M Dalley & Co Pty Ltd [1968] HCA 82; (1968) 1 ACLR 489, 492; Re Quest Exploration Pty Ltd (1992) 6 ASCR 659, 669.

Three provisos should be spelt out loudly and clearly. The first is that the mere fact that the company is a quasi partnership is insufficient to raise a legitimate expectation that each partner will be able to take part in management. The second is that mere failure to agree between the majority and the minority is not usually of itself sufficient to demonstrate oppression (see Re Five Minute Car Wash Service Ltd [1966] 1 WLR 745, 751; Re Quest Exploration Pty Ltd supra at p 668). The third is that the legitimate expectation does not last forever. It will be lost, if it is no longer practicable for the right to the expectation to continue.

Authorities outside England do not refer to the expression "legitimate expectation" as such, but the cases apply the same type of consideration. A good example is Re Norvabron Pty Ltd (No 2) (1986) 11 ACLR 279, 292. In Thomas v HW Thomas Ltd [1984] 1 NZLR 686, 695, which was approved by the High Court in Wayde v New South Wales Rugby League Ltd [1985] HCA 68; (1985) 180 CLR 459, the principle was accepted, but was not extended to the case where the minority's complaint was not exclusion from management, but rather the majority conducting the company so as not to obtain proper commercial returns from its assets.

It should also be noted that the doctrine of legitimate expectation may apply in reverse. Thus, in a family company, the history of how things were done including an historic policy of not borrowing may excuse what might otherwise appear to be oppression; see eg Re DG Brims and Sons Pty Ltd [1995] QSC 53; (1995) 16 ACSR 559.

Thus, it is necessary to see (i) whether the legitimate expectation that Bob Bosnjak would have a share in day to day management arose; (ii) if it did, whether it still exists; and (iii) if it still exists, whether it has been frustrated. I will deal with these three issues in turn.

(i) Was there a legitimate expectation formed by Bob Bosnjak?

As the cases make clear, the constitution of the Company as registered, and particularly its Articles of Association, are the most significant factor in determining whether there was a legitimate expectation.

Holdings was incorporated under the name "Bosnjak's Bus Service Pty Limited" on 19 October, 1960. It changed to its present name on 16 September, 1986.

There are currently 2,323,939 shares in Holdings, of which the plaintiff owns 663,983, representing 2/7th of the total issued shares. Fexuto itself was incorporated in 1976 as part of the restructure of the family concerns organized by Simun Bosnjak. Before then, at least from June, 1975, there were seven issued shares held as to one share each by Simun, Anda, John, Carol, Bob, Dragica and Jim Bosnjak. Up until December, 1975, Simun and Anda were the only directors. On 31 December, John, Bob and Jim Bosnjak were appointed as additional directors.

It would seem to me that as far as Bob Bosnjak is concerned, if some legitimate expectation was formed, it must have been formed on and after 31 December, 1975.

The Articles of Holdings were composed when Simun and Anda Bosnjak were alive and the former was very much in charge of the Company. Pursuant to article 11(b), Simun Bosnjak was issued with the "Governor's Share" which entitled him to exercise virtually complete control of Holdings. Article 12 made Simun Bosnjak the Governing Director during his lifetime. Simun and Anda were the first directors (art 86).

Thus, from 1975 until Simun's death in 1979, there was no legitimate expectation of Bob Bosnjak to be intimately involved in management. At the most, there would have been a weak expectation that John, Bob and Jim would run the company after Simun's death. I have called this a weak expectation because the Articles provided for Simun to appoint a governing director after his death. In fact he did not do so, but no-one was to know this until after Simun's death.

After Simun's death in 1979 and until Anda's death in 1992, there were (apart from a time in 1988-9 when Carol was a director) three directors, namely Anda, Bob and Jim.

There was a dispute between the parties as to how far Anda participated in the decision making processes in the company. Bob Bosnjak says that Anda was virtually unable to speak English and had limited mobility. He says that in this period, he and Jim Bosnjak made the decisions jointly or not at all.

Carol Bosnjak swore that she did not speak Croatian, which was Anda's first language, though she could understand some basic Croatian words. However, she says that she was able to converse with her mother- in-law, the latter using broken English. I have already referred to Dr Sarfraz' evidence which, although not of that much weight, tended to support Carol Bosnjak's evidence.

Jim Bosnjak said that during this period, corporate life was tolerable because Anda would join in the decision making process and so avoid deadlock. I think this is more likely to be the case than the scenario painted by Bob Bosnjak. The preponderance of the evidence is that Anda Bosnjak spoke English to a greater degree than Bob Bosnjak would concede. Furthermore the undisputed evidence is that Anda Bosnjak did involve herself in key decisions such as the acquisition of Calabro Bros Bus Service.

Anda Bosnjak lived in the same house as Jim and Gloria Bosnjak and their family. She tended to favour Jim Bosnjak. I consider that it is more likely than not that she did participate in business decisions to the extent outlined by Jim Bosnjak.

Thus during this period, I consider that there was a mechanism for breaking the deadlock and the position was not as Bob Bosnjak suggested that decisions were either made by Bob and Jim together or not at all.

However, even if the fact were, as Bob Bosnjak says, that Anda took little part in the management, under the constitution of the Company she had that right and that would tell against Bob forming a legitimate expectation that he was to have a continuing role in management.

After, Simun's death Article 62 which provides for a quorum at general meetings, became of particular significance. The article said that the quorum was two. However, for all business other than "nominating a Chairman declaring a dividend recommended by the Directors re-electing retiring Auditors and Directors and voting their remuneration on a scale not exceeding that for the then preceding year" members had to be present in person who held at least 60% of the issued shares entitled to vote. At all material times, Jim and Carol controlled only 4/7ths (57.1428%) of the voting shares.

It is true that between 1989 and mid-1993, Bob and Jim in fact had day to day management and control of Holdings. However, as I have said previously, that fact alone is insufficient from which to construct a legitimate expectation of continuing involvement in management.

Thus I fail to see how, in the instant case, despite the Company having the appearance of a corporate quasi partnership, there was any legitimate expectation as relied on by Bob Bosnjak.

In Tay Bok Choon v Tahansan Sdn Bhd [1987] 1 WLR 413, 417-8, Lord Templeman giving the decision of the Privy Council said, "Although no specific undertakings may have been given an obligation is to be implied or inferred from the conduct of the parties to allow the petitioner to participate in management and to be a director unless by withdrawal of his support or for some other good reason a change in management and control became necessary." (The underlining is mine).

These thoughts were taken up by Robert Walker, J in R & H Electric Ltd v Haden Bill Electrical Ltd [1995] 2 BCLC 280, 295:-

"Lord Templeman qualified the expectation of the petitioner in that case by limiting it to the period until `for some other reason a change in management and control became necessary'; and that qualification is no doubt appropriate in any similar case, including the present case. The personal troubles between Mr Pitt and Mr Watkins...made it inevitable that there should be a change in management and control, and Mr Watkins' alliance with the Hoggs...made it inevitable that Mr Pitt should be the one to go."

This passage may well be the clue to the resolution of the current dispute as the bulk of the evidence concerned Bob Bosnjak's view that he was isolated and removed from any effective voice in management where he had a legitimate expectation to be involved despite his clashes with others. However, it is expedient to examine other ways in which legitimate expectation may cease.

Another cause of ending a legitimate expectation to be involved in management is where the company becomes so changed in structure or size that the legitimate expectations of others brought about by changing the constitution of the company would be thwarted if the petitioner's expectation was to continue. An illustration is provided by Re Blue Arrow plc [1987] BCLC 585. In that case, the company had been founded by the petitioner and the Articles preserved the office of President to be held by her. The company had some times afterwards been floated and ceased to be a quasi partnership. One reason for the petitioner failing in her oppression suit over her being displaced as President was that the change of Articles and the float, meant that her expectations of earlier years could no longer be regarded as compatible with the expectations of the recent investors.

There is no doubt, whichever version of the facts I accept that relations between Bob and Jim became strained to the degree that they could not work together.

It is really unnecessary to go further than to refer to Mr Ellicott, QC's submission that his client's case was that Bob should be the purchaser as Jim and Carol were no longer worthy to use the name Bosnjak. Such a feeling in itself shows the impossibility of working together.

Indeed the statement of claim itself shows the same. Paragraph 48 of the statement of claim and the principal particulars thereto are as follows:-

48. Since 19 July 1993 Jim Bosnjak and Carol Bosnjak have jointly controlled the management and affairs of Holdings and the Bosnjak Group and its business activities to the exclusion of Bob Bosnjak.

(a) Jim Bosnjak and Carol Bosnjak jointly represent a two thirds voting majority at all meetings of directors of Holdings held since 19 July 1993;

(b) Jim Bosnjak and Carol Bosnjak have since 19 July 1993 voted as

one at all meeting of directors of Holdings, to the exclusion of the

views of Bob Bosnjak, in relation to all significant items of business

(e) Mostyn, in exercising the delegated authority referred to in paragraph 38(a) above, and all other senior management of Holdings take instructions and directions directly from Jim Bosnjak and Carol Bosnjak and John Mostyn pursuant to the said delegated

(f) Most, if not all, issues affecting the day to day management of Holdings have been and are conducted by Jim Bosnjak, Carol Bosnjak, John Mostyn, Robert Ash and senior management of Holdings without reference to and to the exclusion of Bob Bosnjak.

The same sort of allegations are also clearly made in earlier parts of the statement of claim, viz:

34. Prior to 19 July 1993 the day to day management and affairs of Holdings had been conducted jointly by Bob Bosnjak and Jim Bosnjak as full time executive directors of Holdings.

35. As a direct consequence of the success of the NBC Tender referred

to in the paragraphs below, Jim Bosnjak and Carol Bosnjak were

unable to devote all of their time to the management and affairs of

Holdings, they being required to devote significant time to the business, management and affairs of National Bus Company.

36. By reason of the absence of Jim Bosnjak and Carol Bosnjak in Melbourne attending to the affairs of National Bus Company, the

day to day management of the business and affairs of Holdings

37. On 13 January 1995 Jim Bosnjak and Carol Bosnjak caused the appointment of John Mostyn ("Mostyn") as Chief Executive Officer of Holdings and thereby the Bosnjak Group, which appointment was opposed by Bob Bosnjak.

These allegations of fact are not all established by the evidence. However, the fact that they are made in itself shows that the point has been reached where the brothers cannot work together and any legitimate expectation has ceased.

Finally, there is paragraph 100(e) of Bob Bosnjak's affidavit PA03 in which he swears that a principal reason for his non-involvement with the Melbourne tender was the level of disputation that had occurred up to 1993 and continued to increase.

I will review the principal facts disclosed by the evidence more fully in section 3(b)(iii), but it is sufficient here to note a few major matters.

Although it is a gross oversimplification, Bob Bosnjak sees himself as a conservative cost conscious hands on director. Jim Bosnjak sees himself as a man with a wider vision, more prepared to take risks and to rely on administrative staff. Bob Bosnjak likes to stay within Westbus and organize: Jim Bosnjak considers it to be important to be involved in wider groups and has become Chairman of the Bus Proprietors Association. Bob rails at Jim for this which he sees as a "show pony" activity contributing nothing to Westbus. This philosophical difference or difference in management style is deep rooted and naturally leads to clashes.

During the period between Anda's death on 31 October, 1992 and July, 1993, when Jim and Bob were the only directors, it seems clear that the de facto position was that either there was agreement between the two or the status quo remained. This was quite acceptable to Bob as he usually preferred the status quo. Bob indeed thought of these as the golden days in which he sat in his large office at Northmead, was seen as the "boss" by the staff and could effectively veto any initiative by Jim either by disagreeing or simply by not participating in a meeting.

On the other hand Jim was frustrated by this scenario. He just could not succeed in any initiative unless he could talk Bob into agreeing with it. He did this on a quite a few occasions, but his frustration is evident.

During this period, the Nepean Nipper operation commenced in Penrith. This was a strategy where ordinary size buses were replaced by 16 mini buses signwritten as "Nepean Nipper" whereby smaller buses could provide a more frequent service on more routes. The Nepean Nipper service was launched in February, 1993 with great publicity. Both Bob and Jim Bosnjak were present at the launch. Bob points to this innovation as an example of the two brothers working together and Bob being involved in innovation. Jim says that somebody ordered 16 mini buses and a use had to be found for them. Although I favour Bob's version, I do not think that one example of co-operation, even though a significant example, proves any real point.

After the July, 1993 meeting, the position changed. Carol was an additional director. On one occasion she voted with Bob Bosnjak on a motion he proposed to close the Edensor Park depot. She did this even though Jim Bosnjak strongly opposed the closure because he (at least now says that he) did not want the company to lose existing use rights. However, on every other occasion, including every occasion when Jim proposed a motion at a directors' meeting, Carol voted with Jim. Jim says that Carol has a mind of her own and was not his puppet. Bob says he knew from the beginning that Carol would just go along with everything Jim wanted to do.

In addition to the frustration felt by any perpetual dissenter at board meetings, Bob felt the impact of the appointment of executives who were predominantly loyal to the majority of the board. This meant that instead of being seen as "the boss", he considered that he was being bossed about by underlings.

It is clear that, in particular, there were clashes between Bob Bosnjak and John Mostyn. I will deal with these in detail in the next subsection. Whichever version of the facts one takes, or whoever was at fault, Bob Bosnjak was not able to work as part of a management team with Jim Bosnjak or with Carol Bosnjak. Or, to put it the other way round, Jim Bosnjak was not able to work in a management team with Bob. On the authorities to which I have already referred, that meant that any legitimate expectation to be involved in management by Bob Bosnjak ceased.

There is also another reason why any legitimate expectation may have ceased before these proceedings were commenced.

It was held in a recent administrative law case, R v Secretary of State for the Home Department; Ex Parte Hargreaves [1996] EWCA Civ 1006; [1997] 1 WLR 906; [1997] 1 All ER 398, a legitimate expectation is not set in stone, but must be subject at least to ordinary changes of policy and circumstances that will occur in time. The same holds true in company law. A person's legitimate expectation cannot ordinarily be a barrier to the company altering its constitution by the ordinary means.

As has been seen, Holdings started from very humble beginnings to become the largest private bus company in Australia. It is very hard to conceive how a management style which was suitable for a small bus service out of a few suburban railway stations was necessarily suitable for a large concern.

Indeed, it is a generally accepted sociological fact that when an organization exceeds about 150 people, it is no longer practicable to operate it on a personal relationship basis and that some hierarchical structure becomes necessary. It is clear that, at some stage of its growth, the business moved through that barrier.

In my view, the mere expansion of the Company indicates that it was no longer possible for the 1989 status quo to continue so far as management was concerned.

(iii) If the legitimate expectation exists, has it been frustrated?

In view of my answers to the previous two sub-questions, this is of no moment so far as oppression based on legitimate expectation is concerned. However, the material discussed below is very significant when analysing the total effect of the conduct of the majority.

I should commence discussion with a typical extract from Bob Bosnjak (T182):-

"...as I have said before, Mostyn was put there by Jim Bosnjak to be a hitman for Jim Bosnjak. I get a letter, as a director, a responsible director, with 42 years of work in the Westbus and Bosnjak Holdings organisation, there are one or two letters coming to my house on a fax - if they are not on a fax they are underneath my door in the office - humiliating me in every form that he could from the beginning, when he started, right up to today - not only myself, my family, my daughter - humiliating me. Of course I feel oppression, and I continue to feel oppression when we have got a person like that who just writes a letter to one director, it doesn't matter what I say, humiliating me, the family and me, taking everything away, my rights and everything else. Humiliating."

This passage shows the gravamen of the complaint and indeed the difference between the two opposing cases.

Board meetings were not pleasant affairs. I have already mentioned the unreliability of the minutes in at least some respects and that Bob Bosnjak in due course tape recorded what he himself said at board meetings. One of Bob Bosnjak's tapes is in evidence. The tone of Bob Bosnjak's voice and the content of his speech on that tape was almost enough in itself to demonstrate to my satisfaction that it is not possible for there to be management or direction by both Bob and Jim Bosnjak.

In his affidavit Bob Bosnjak sets out the events which led up to Mr Mostyn's appointment. He says that the proposal was first raised at the board meeting of 26 October, 1993 when Jim Bosnjak said that he considered that Holdings should advertise for a general manager. Bob opposed this suggestion on the basis that it was unnecessary and complained that any management problem flowed from the time that Jim and Carol were spending in Melbourne in connection with the affairs of NBC. Bob Bosnjak reiterated this at the directors' meeting of 10 January, 1994. Jim and Carol denied the truth of this allegation.

There were further meetings at which the appointment of a general manager was discussed during 1994. Unfortunately, Bob Bosnjak became upset that the detailed proposals were being worked on by Mr Debono without his input. Bob Bosnjak walked out of a directors' meeting on 29 November, 1994 after saying, "This is not the way to operate. I am not being given any opportunity to provide any input to these proposals. This is just blackmail and dictatorship by you, Jim, as Carol will just follow you automatically. I object to all of these proposals because they are determined behind my back."

According to Mostyn's affidavit, he first met Jim Bosnjak on 22 November, 1994 being introduced by Ian Burns of the personnel consultants, Morgan & Banks.

Mr Mostyn says that he was initially appointed by the board to carry out a review of the Company's operations in late November, 1994.

Mr Mostyn says that he knocked on Bob Bosnjak's office door on 1 December, 1994. He says that he was invited to enter and offered to shake hands which gesture was refused. He says that Bob Bosnjak leapt out of his chair and said, "I don't know you, you f........ mongrel. Who are you? I don't recognise you. I don't want you. Get out or I'll call the police and have you removed. This is my company and I'll see you never get paid. Get out. Get out." He says that Bob continued to yell in this vein and then pointed at Jim Bosnjak and said, "And take no notice of that show pony fella. I run this place."

Bob Bosnjak was cross-examined on this evidence at T159 and following. He denied that this "conversation" took place. He agreed that he had referred to Jim Bosnjak as a "show pony", but never in front of the staff.

On 13 December, 1994, Mr Mostyn says that he went into Bob Bosnjak's office and they had a quiet conversation. During this conversation, Bob Bosnjak told Mostyn that he considered that Jim and Carol had influenced his mother to betray Bob in her will. Bob ended the conversation by saying, "I'm not going to help you. I did not want you here. I don't trust you." In conversations over the next month, Bob Bosnjak continued to say that he had been betrayed by his mother and his brother Jim who had recruited Carol to help them. He further said that he would oppose Mostyn because he was in the majority's pockets.

On 13 January, 1995, Bob Bosnjak endeavoured to postpone the decision until an audit had been completed. This was unsuccessful and Mr Mostyn was appointed by the board that day on an interim basis, Bob Bosnjak voting against the appointment.

Mr Mostyn was appointed Chief Executive Officer to commence on 16 January, 1995. He attended a board meeting on that day. Mostyn says that at that meeting Bob Bosnjak continually interrupted by saying, "You have got yourself a hit man. Don't think I will let go of day to day management. This is my company. I spent 40 years building it and I will run it as I like. You can sit here all day, two to one, two to one, and I will take no notice."

On the same day, Bob Bosnjak said to Mr Mostyn privately, "I do not agree with your appointment. I run this place and will continue to run it. I want to know on a daily basis what you are doing. You must clear with me any directions to managers or any changes. I want a written detailed report of your daily activities every week. I don't want you to use the office at Edensor Park. You must stay here." ("Here" meant Northmead). Needless to say, Mostyn did not comply.

In May, 1995, Mr Mostyn's appointment was made permanent.

I am fairly sure that the first of these clashes cannot be said to be the fault of Mostyn. Indeed it can be said that the problems have come about because both Bob Bosnjak and John Mostyn are people of domineering personalities. However, fault does not really matter. The question I am presently considering is whether management involving Bob Bosnjak has become unviable regardless of fault.

It is common ground that there were constant clashes between Bob Bosnjak and John Mostyn thereafter. On one occasion Bob Bosnjak said to Mostyn, "Get out of my sight, you mongrel." The most significant clash occurred when each gave contrary directions to a receptionist, Mrs Agnes Grima. Mrs Grima obeyed Bob Bosnjak and was dismissed. She unsuccessfully appealed to the NSW Industrial Relations Commission in which case both Bob Bosnjak and John Mostyn gave evidence.

The high point of this antipathy is the Grima incident and the notice on the notice board on 19 May 1995 under which Mostyn instructed staff to refuse directors access to records without Mostyn's approval (defts' volume 3 page 216).

There is material to show that Jim Bosnjak and Mostyn would on at least some occasions get together to bait Bob Bosnjak. There is also material to show Mostyn's mind may have been poisoned by Bob Bosnjak's attitude. However, these are just gratuitous pieces of nastiness and do not affect the result of the case.

The clashes between Bob Bosnjak and John Mostyn were, on my assessment of the evidence, more the product of the attitude of Bob Bosnjak to the diminution of his influence in Westbus rather than to any active planning by Jim or Carol Bosnjak to belittle or humiliate him.

On the other hand, there is little doubt that Mostyn became close to Jim Bosnjak. It is also noteworthy that the same day as the notorious memorandum was placed on the notice board, John Mostyn was appointed by Jim Bosnjak as the latter's alternate director on the board.

Again, the evidence shows that within three weeks of his appointment, Mostyn was seeking legal advice as to how to get rid of directors. Jim Bosnjak says that that was done without his authority and he told Mostyn so. However, from then on, Mostyn and Bob Bosnjak could not work together. Knowing that, Jim Bosnjak continued to back Mostyn against his brother.

The point must also be made that although Jim Bosnjak's primary case was that he, like Bob, had abdicated direct management in favour of Mostyn and other managers, in fact Jim's management was continuing, Mostyn taking notice of his wishes as he represented the majority on the board.

However, the point should also be made that Westbus did seem to be trading normally. Apart from running day to day services, adjusting timetables, answering customer inquiries, managing staff etc, the company was pursuing new initiatives such as the Nepean Nipper project and the M2 Express Services. This tends to show that, whatever internal problems there were, the Company was able to function at least adequately.

The evidence further showed that Mostyn would confer with Jim and Carol Bosnjak before board meetings. Mostyn would tell them what his recommendations were and was able to obtain their reactions.

This is a practice which often causes great emotional hurt to the director who is excluded from advance discussions of matters which are likely to come up at board meetings. It is clear that Bob Bosnjak did suffer great emotional stress here. Whether that suffering was at least partly self induced by his display of aggression is neither here nor there. Most cases of this practice stop at emotional hurt. However, as I said in John J Starr (Real Estate) Pty Ltd v Robert R Andrew (A'asia) Pty Ltd (1991) 6 ACSR 63, 71-2, members have the right to have decisions made at board meetings after the members have listened to a full discussion of the pros and cons and persistent caucusing or predetermination of issues may infringe that right and be oppressive.

However, in the instant case, Mostyn says that this predigestion of issues did not in any way shorten the time taken at meetings to discuss issues. I accept this evidence. I do not consider that there was the pre-determination of issues that were to arise at board meetings as has been the position in some other cases. However, there was some predigestion. Furthermore it must have been known to the majority, as Bob loudly and often complained that vital decisions had already been made "behind my back", that this was objectionable to him.

It seems to me that the whole of the evidence shows that after about May, 1995, Mostyn, at the behest of Jim Bosnjak and aided by the assent of Carol Bosnjak, acted with ill will towards Bob Bosnjak and deliberately made sure that he had minimal power with respect to the day to day management of Westbus.

It is also clear that Mostyn so behaved for at least two reasons. First, he considered that the majority of the board was virtually the board. Secondly, Bob Bosnjak's treatment of him had so soured his mind that he would almost automatically reject any proposal that Bob Bosnjak might put up as irrational and unworthy of consideration.

Bob Bosnjak sought to give the impression that the only way to run a company of this type was hands on management by the directors. He criticized Jim Bosnjak for being involved in the Bus Proprietors Association and other committees which took him away from the job. He obviously did not consider that Carol had sufficient experience in the day to day running of the Company to be able to make a contribution. He criticized the appointment of Mostyn who had no experience in the industry and to a lesser extent people like Ash and Debono. This criticism was over and above the attack that the appointment of these middle managers was because Jim Bosnjak's interests in the National Bus Company was removing any time he had to devote to the affairs of Holdings.

I should first say that I do not accept that Mr Mostyn was appointed because it was necessary for Jim and Carol Bosnjak to spend time that they would otherwise have devoted to Westbus on their NBC investment. The evidence does not bear this out. Indeed, I accept Mr Oliver's evidence that 99% of the decisions in NBC are made by him and that Jim and Carol are only minimally involved in spending time on that company's affairs.

It may well have been that the primary purpose of the appointment was to ensure the dominance of the majority. The story that Mostyn was to be appointed because of his skills in mediation with a dissident director just does not hold water, especially when, before the interim appointment on 16 January and before his final appointment in May, 1995, Mostyn had shown himself incapable of speaking rationally to Bob Bosnjak.

In any event, it would seem that Mr Mostyn is about to sever his connection with Westbus, so that, if this were the only problem, it would not be necessary to give any specific relief.

The clashes did not only occur between Bob Bosnjak and Jim and Carol Bosnjak and between Bob Bosnjak and Mostyn. Bob Bosnjak also complained about his perception that other key managers, particularly Robert Ash, the Financial Controller, and Charlie Debono, the General Manager, were part of a bloc firmly against him.

Mr Rayment, QC put that many of the clashes were over the most trivial of matters and that, despite them, the management were generally able to carry on the business to the benefit of Westbus. He also says that it could almost be said that it was Mostyn's duty to clash with Bob Bosnjak if Westbus was to carry on its business. Both these submissions are true sub modo. However, there is a question of degree. Some of Bob Bosnjak's complaints were matters of real substance. Further, a CEO who is put in position with one aim to smooth differences between the directors has to be far more circumspect than was Mr Mostyn.

As to Robert Ash, paragraph 44 of the statement of claim pleads that, "By reason of the appointment of Ash as Financial Controller of Holdings, the appointment of Carol Bosnjak as a director of Holdings on 19 July 1993 and the appointment of Mostyn as referred to in paragraph 37 above, all of the day to day management and control of the business of Holdings has been conducted by a combination of Jim Bosnjak, Carol Bosnjak, Mostyn and Ash to the exclusion of Bob Bosnjak".

There does not appear to be any particular criticism of the appointment of Mr Ash, indeed, at the beginning, he was favourable or neutral towards Bob Bosnjak.

The principal complaint here is really just an extension of the problems perceived by Bob Bosnjak in connection with Mr Mostyn. When Robert Ash did what Mostyn instructed him to do, which he always did, the ineluctable result was that Bob Bosnjak's influence on management was reduced. The matter really just shows that management which involves Bob Bosnjak is unworkable.

However, Bob Bosnjak also complains that Robert Ash was very partial in his administration towards Jim. Bob criticizes the way in which Ash dealt with expenses of Jim Bosnjak for NBC as expenses of Westbus. Mr Ash is further criticized for the amount of time Bob Bosnjak reckons he spent on the Transcard project and on NBC's affairs. There is no doubt that Mr Ash did what Jim Bosnjak asked him to do and that factor must be considered along with other matters in the final analysis of the facts constituting oppression in section 5(b).

The basic objections of Bob Bosnjak to Charlie Debono were (1) that he was a person that had risen from a menial job who had no academic qualifications or management skills; and (2) that the best person for the job, Terry Watts was by-passed for insufficient reason. Bob Bosnjak also complains at the manner in which Mr Debono was appointed.

The matter started with the suggestion by Bob Bosnjak on 31 August, 1993, that Terry Watts be appointed as General Manager. Jim Bosnjak objected to this and indicated that he did not consider that he could work with Mr Watts. The flavour is that Mr Watts tended to side with Bob Bosnjak.

The matter of appointment of a general manager was before the board for over a year before the appointment was made.

On 27 September, 1994, Mr Debono tendered his resignation on the basis that he did not have sufficient authority to do the job he had been given namely that of planning manager. Jim Bosnjak then negotiated and informed Mr Debono that if he withdrew his resignation, he would be given proper authority and the title "General Manager." Mr Debono withdrew his resignation on 30 November, 1994.

There is something strange about the appointment. The board met on 29 November, yet Jim Bosnjak told Mr Debono by memorandum dated 28 November.

Bob Bosnjak came to hear that Mr Debono was calling himself General Manager and asked Mr Debono how this came to be. Mr Debono replied by a memorandum of 23 January, 1995. Oddly this memorandum did not include the memorandum of 28 November signed by Jim Bosnjak, but an unsigned memo. Bob was put out by the process. However, it was regularized by the majority in due course.

Whilst I can understand Bob Bosnjak's endeavours to have Mr Watts appointed, I cannot see that the decision of the majority to appoint Mr Debono was in any way oppressive. He may not have the academic skills that some employers might have required, but this is not a decisive matter. Again, I cannot see how one can validly criticize the majority for appointing Mr Debono to a new title when that saved the company from losing an employee who had tendered his resignation and who the majority considered should be retained.

Before closing this section, I should note that there is a paucity of material as to what Bob Bosnjak actually did do in latter years in the Company. We know that he had an office and he sought to be involved, and that he attended lunches in the Parramatta area, but just what else he did do is quite unclear.

However, the answer to this sub-question is clearly, "Yes" on the evidence I have already recited.

Anda's last will, dated 29 April, 1992 was admitted to probate on 17 December, 1993, the grant being to the executors named therein, Bob and Jim. The will left a legacy to each of her four granddaughters and the residue which included control of one-seventh of the shares in Holdings, to her grandsons, who, of course are the two sons of Jim, namely, Simon and James.

The circumstances of the making of the will were later investigated more fully and Bob commenced proceedings in the Probate Division of this Court to revoke the probate and set up an earlier will under which Anda's property including her interest in the company would pass to Bob and Jim in equal shares. These proceedings have not yet been heard.

Bob Bosnjak says that the 1992 will was brought about by pressure from Jim to ensure his control of the Company. He says that this conclusion is reinforced by the fact that the share in Holdings was omitted from the inventory filed for probate purposes even though surrounding circumstances show that the existence of the share must have been at the forefront of the mind of Jim and his advisers at the time. The fact that Bob also signed the application for probate documents and might have noticed the omission was not given any prominence in the evidence.

I do not consider that I should go into matters which will be dealt with in greater detail in the probate proceedings. The main reason for taking this attitude is that I cannot see how any skulduggery, if indeed there be any, could be conduct in the affairs of Holdings.

The final paragraph of the plaintiff's written submissions say that the circumstances of the probate are relevant to the general case of oppression not only because they are further evidence of the animosity between the two sides, but also because they evidence the length to which Jim Bosnjak would go to ensure that Bob Bosnjak did not control Holdings. This submission is valid. I will take it into consideration when dealing with oppression as a whole. It does not make me revise anything I said in section 3(b).

This is another of the key issues in the case and needs to be considered in great detail. It is raised both as an incident of oppression and also as a misfeasance in that it is claimed that Jim and Carol Bosnjak took personal advantage of a corporate opportunity.

Paragraphs 49, 50 and 51 of the statement of claim are as follows:-

49. National Bus Company was incorporated on 7 May 1993. The issued and paid up capital of National Bus Company is, and has been at all material times, 2 ordinary shares of $1.00 each. The Directors of National Bus Company are and have at all material times been Jim Bosnjak and Carol Bosnjak. Each of Jim Bosnjak and Carol Bosnjak hold, and have at all material times held, since incorporation, one share in the issued capital of National Bus Company.

50. On or about 6 March 1993 the Department of Transport of the

Victorian Government called for expressions of interest for the

provision of public passenger bus services currently operated by the

Public Transport Corporation of Victoria ("the Victorian Bus

51. The Victorian Bus Contract represented a significant business

The statement of claim then sets out detailed allegations as to how the resources of Holdings were used to support the tender documents to obtain the Melbourne bus services. The NBC tender was successful and on 26 September, 1993 NBC contracted with the Victorian Government to acquire the substantial part of the Public Transport Corporation's Melbourne bus services.

Not only does the statement of claim suggest that the acquisition of the Melbourne services occurred via misappropriation of corporate opportunities, but also that Jim and Carol Bosnjak have since used Holdings staff and resources for the benefit of NBC. It further alleges that NBC is actually competing with Holdings.

Paragraphs 49 and 50 of the statement of claim are basically admitted: paragraph 51 is denied.

The undisputed facts are that the Victorian Public Transport Corporation wished to privatize all its bus services. As things turned out, this was done in two tranches. NBC was successful in acquiring the whole of the first tranche being the services in the Ringwood, Templestowe and Clifton Hill areas of Melbourne. (See Press Release 23 August, 1993 PX165).

The evidence shows that the possibility of Westbus or NBC being able to tender for the Melbourne bus services was drawn to their attention by Roger Graham. Roger Graham was a previous general manager of Holdings and since his resignation had carried on business as a consultant in the transport industry. He appears to be a specialist in timetabling. As I have already said, he was not called to give evidence. Roger Graham was retained by the Victorian Government to assist it in the privatization of its bus services. It would seem that it was part of Roger Graham's brief that he should make it known to reputable bus people who were possible tenderers that it might be worthwhile them expressing interest.

The evidence shows that Roger Graham caused the Victorian Government to fax notices drawing attention to the invitation to supply expressions of interest to a significant number of established bus companies including Deane, Busways, Forest Coachlines, Calabro Bros (who after they had sold their Liverpool runs to Westbus took over other companies on the Gold Coast and in the Hawkesbury Valley) and overseas operators who already had operating companies in the southern hemisphere, Stagecoach of Scotland and Wellington New Zealand and Mr Harry Blundred's Transit Holdings of England and Queensland.

The fax to Westbus was sent to Jim Bosnjak at Edensor Park rather than to the head office.

Roger Graham advised Jim Bosnjak that there would be a briefing session in Melbourne about the privatization on 16 March, 1993. Jim Bosnjak says that he spoke to Bob Bosnjak and told him that he, Jim, thought that the company should have a look at the Victorian situation. Jim says that Bob Bosnjak's response was, "No way. I'm not interested in anything you want to do." Bob denies that this was said.

Jim Bosnjak went to Melbourne on 16 March, 1993, attended the briefing and collected handouts including timetables and maps. Jim says, but Bob denies, that Jim called on Bob and told him that he had collected papers from Melbourne, but was told in coarse language to leave.

Robert Ash says that, at the request of Jim, he spoke to Bob Bosnjak in mid to late March, 1993. This must have been after 16 March and after Jim's conversation.

Mr Ash says that he told Bob that Jim had asked him to talk to Bob about the Melbourne privatization. Bob's reply was that he was not interested in talking about that because, "We have too many problems in the family as it is and I don't want to add to them." When Mr Ash said, "It's only an expression of interest and it's worth putting in" Bob replied, "I'm not interested." Bob Bosnjak denies that he ever spoke to Robert Ash about the Victorian contract.

Jim Bosnjak says that he spoke to Carol about the matter and she expressed keen interest. He then prepared an Expression of Interest document with the assistance of his wife, Gloria, and Robert Ash.

The Expression of Interest document was lodged in the name of Bosnjak Holdings Pty Ltd on 13 April, 1993. The document was prepared by Robert Ash. The document was enclosed with a covering letter on the letterhead of Holdings. However, the usual Northmead address had been whited out and Jim's address at Edensor Park (at which he also had an office) was substituted. Jim says that this address was substituted because Bob had the habit of opening mail and retaining documents which he did not want Jim to see. Bob says that this was done to hide the activities about the Melbourne tender from him.

The final paragraph of the covering letter read as follows:-

"For the purpose of this expression of interest details have been provided in respect of the Bosnjak Holdings Pty Ltd group. At the tender stage we will determine the precise entity that would undertake the services. Such entity may be a related company in the group or a joint venture with another major transport service provider outside of Victoria."

Jim Bosnjak said in evidence that this last paragraph was included so that the options would be left open. If Bob wished to join in, then a Westbus company could put in the tender. However, it may be that it would be expedient to join with another local or overseas bus company. Bob says that this was merely the first stage of a process to deprive Holdings of a legitimate business opportunity and for Jim and Carol to seize it for themselves. I accept Jim Bosnjak's evidence on this point.

On 20 April, 1993, Jim Bosnjak received a letter from the Victorian Government that Bosnjak Holdings Pty Ltd was invited to lodge a tender.

On 24 April, 1993, Jim Bosnjak travelled to Melbourne and spent three days researching the operations of the then MET buses.

Jim Bosnjak says that, shortly afterwards, he spoke to Bob and told him, "Bosnjak Holdings has been given an opportunity to lodge a tender for Melbourne." He says that Bob replied, "I don't give a stuff....I'm not interested in going into business with you - I've told you before, if you want to do it, do it yourself." Bob Bosnjak again denied this conversation.

National Bus Company was incorporated on 7 May, 1993. The shareholders have at all material times been Jim and Carol Bosnjak.

Jim Bosnjak then worked on the tender document with Robert Ash. He says that he hoped that it would be lodged in the name of Holdings because Bob would change his mind. Robert Ash says he worked hard for two to three weeks on the tender.

Debbie Bosnjak was informed of the matter in early May, 1993. At Jim Bosnjak's request and after instruction as to how to conduct surveys from Charlie Debono, she proceeded to Melbourne with a friend, Esther Savvas, and a Westbus employee, Scott McDonald to undertake passenger loading surveys. These people carried out these surveys and also took some photographs of buses.

The tender document was substantially completed on 26 May. It is in evidence as document 15 in plaintiff's volume 6. The tender is a professionally produced document, well reasoned and obviously has taken a considerable amount of time and skill to compose. The tender document was in the name of NBC. However, it noted that the shareholders of NBC were the proprietors of the majority interest in Holdings and relied on some information of Holdings.

Jim Bosnjak says that, after talking the matter over with Carol, he again approached Bob Bosnjak. He says that he went into Bob Bosnjak's office and said, "Tenders are closing for Victoria soon. We've got most of the papers ready to go. Have you given it any more thought?" Bob Bosnjak said, "I told you before I'm not going into this with you or anybody else. If you want to go for it, you go for it - I don't want anything to do with you. Get out of here and don't come back." Again Bob Bosnjak denied that that conversation took place.

On 28 May, Debbie Bosnjak bound the final tender document, took it to Melbourne and lodged it with the appropriate authority.

Bob says that the only conversations he ever had with Jim Bosnjak in relation to the tender for the Melbourne contract are those referred to in paragraphs 26, 27 and 30 of affidavit PA01.

These paragraphs set out three conversations. The first conversation, which Bob places in June, 1993, is to the effect that Jim Bosnjak told Bob that expressions of interest were being called for some MET bus routes in Melbourne and that Jim suggested that they should go to Melbourne and have a look at it. Bob says he replied, "We have got enough problems up here, never mind about going to Melbourne."

The second is that, shortly after the first conversation, Jim and Bob Bosnjak were dining with Roger Graham at David's Restaurant at Parramatta. When Roger Graham mentioned the Melbourne matter, Jim said he thought that he would like to look at it and Bob said that there were enough problems without going to Melbourne.

The third conversation was on 31 August, 1993, after Bob found out from an associate that Jim had won the Melbourne tender.

I have already set out when dealing with Mr Stanko's evidence how there were three tenderers.

On 23 August, 1993, the relevant Victorian minister issued a press release noting the successful tender for the areas I have mentioned above and that both Jim and Carol Bosnjak were associated with the successful tenderer.

It would seem on all accounts that entry into the purchase of the majority of the Victorian Government's bus services involved considerable risk. Indeed, in the events which happened, NBC acquired the majority of these routes, two bus depots and 265 buses. At this stage, Westbus itself only held six depots and 350 buses. Moreover the operator would be working in an environment that could be quite different to that appertaining in western Sydney. Moreover, the Company owed its bankers about twenty million dollars. However, the purchase was not described on either side as speculative

The financial projections produced showed that there would be losses for perhaps three years. This has happened. However, it would now seem that NBC has or will soon become quite profitable.

The majority say that Bob Bosnjak was opposed to acquiring the Melbourne services because of the risk involved. He only changed his mind in January, 1997 and, now as there are profits flowing, he wants "a slice of the action".

The National Bus Company matter raises a number of issues, one of which is the alleged taking by Jim and Carol Bosnjak of a corporate opportunity. As I have set out earlier, the defence of Jim and Carol is to deny that they took advantage of a corporate opportunity, but that if they did, Holdings effectively renounced any business opportunity it might otherwise have available to it and further that the Company approved and consented to what they did (para 65). They further say (para 66) that Bob Bosnjak acquiesced in or waived any objection to such involvement.

Mr Ellicott, QC says that the tender document is littered with Westbus information, has all the hallmarks of being prepared by Westbus staff and is obviously a tender made on the back of Westbus' reputation.

The defendants contested the issue of fact as to whether the senior staff of Westbus were ulitized to do work for NBC. I have no doubt that this did occur. Indeed, the evidence adduced by the defendants itself gave some illustrations of this especially at the time the tender was submitted.

The evidence shows that Robert Ash was involved in NBC. He regularly sent NBC invoices for time spent and out of pocket expenses which it paid. Mr Ash says that this was for work on his own time. On the balance of probabilities, I should accept that this is so.

It is also clear that the Melbourne bid involved the skills of Jim Bosnjak as an experienced bus service operator. He gave evidence that on looking at some of the MET routes, he could see that improvements could be made at little cost such as shifting bus stops to places where pensioners did not have to cross a six lane highway and making a slight diversion to serve a university. However, such expertise, although doubtless gained from Westbus, was Jim Bosnjak's personal expertise and his use of it was not a use of Westbus property.

Bob Bosnjak raised an allied issue as to the use of Westbus employees in taking messages etc on behalf of NBC. In particular, a lot was made of a letter sent by Southern Bandag seeking a tyre contract with NBC which was addressed to Mr Cammereri, the Supply Manager of Westbus, by name. I consider it is more likely than not that Mr Cammereri's explanation is true. That is Southern Bandag found out from reception who was Westbus' purchasing officer and sent the letter to him by name. In my view any use by NBC of Westbus' employees only occurred to a minimal extent and only at Edensor Park and is not a significant factor in this case.

It is fairly clear on the documents that this was a business opportunity available to the Company. The Victorian Government seemed to be particularly keen to ensure that it only invited tenders from established bus operators. As I have noted, established bus companies both in Australia and overseas were notified of the invitation to submit an expression of interest. At the time, it was not known whether any of them would do so. In fact, the only three Expressions of Interest and Tenders were submitted by NBC, a group from within the MET and a relatively unknown New Zealand company. Thus, as things worked out, it was quite unnecessary for NBC to rely on the Westbus name as its tender was the only substantial one submitted. However, I repeat, this was only known after the event and, at the time, it was obviously thought necessary to involve the Westbus reputation and know-how.

I should now deal with another aspect of the formation and operation of the National Bus Company.

On at least two occasions since its formation, both Westbus and NBC looked like being competitors for acquisition of the same business. Both initially considered operating the new Sydney Trams and both initially considered making a show of interest in part of the privatization of the Adelaide buses. Indeed, on the latter occasion, both considered retaining Roger Graham as a consultant to assist in the plan of acquisition. In each case both bodies decided not to proceed. However, this circumstance illustrates that there is a real possibility of competition between the two. It further illustrates the need for full disclosure so that all stakeholders are aware of possible problems of conflict.

There is no doubt in my mind that there was use of a corporate opportunity by NBC at the behest of Jim and Carol, who were fiduciary agents of Holdings, being two of its directors; see Phipps v Boardman [1966] UKHL 2; [1967] 2 AC 46, 88.

However, it should be noted that the actual effect of the use of the Westbus name was offset, at least to some extent, by two factors. First, Bob Bosnjak clearly informed the Victorian Premier and other persons that Westbus itself had no interest in NBC. Secondly, of the persons who did tender, NBC was the only one (outside the Victorian PTC itself) which showed that its directors had a real feel for the bus industry.

Awkward issues of fact arise as to whether Bob Bosnjak was informed of the proposed involvement of Jim and Carol and NBC in the Melbourne tender and whether Bob clearly indicated that he wanted nothing to do with it and consented to Jim and Carol taking up the opportunity themselves.

The evidence given on this issue by Jim Bosnjak and by Robert Ash is completely consistent with the general attitude Bob Bosnjak displayed not only in the witness box, but also in his dealings with various witnesses in this case. However, it is most surprising when Jim Bosnjak was being advised by high powered and high priced solicitors and accountants that there is not one piece of paper which could corroborate Jim Bosnjak's version. When one marries this with the fact that often Jim Bosnjak jumped to the conclusion that it was a waste of time conferring with Bob because he would say "no" to any proposition in any event the doubt about their version increases.

As to the matter as to why Jim Bosnjak used the Edensor Park address for mail that might come to him for the Melbourne bid, there are two competing theories. Mr Ellicott, QC says that it is clear that this was done to prevent Bob Bosnjak having notice of what he calls the deceit and fraud that was happening with the Melbourne matter. In response to Jim Bosnjak's answer that Roger Graham must have put that address on the Melbourne documentation, Mr Ellicott, QC merely says that it really was unthinkable that with all his contact with Westbus, Roger Graham did not know the address of the Company's registered office. Roger Graham was not called.

The prime answer given was that Bob Bosnjak opened all the mail at the Head Office and would deliberately hold back some letters. I am quite sure he did so from time to time. I also consider that this was probably the prime reason why the Edensor Park address was used for the Melbourne bid.

However, there was something furtive about this matter. It is part of the apparent stealth with which the tender was submitted. I formed the view that there was concern that Bob might find out more than Jim was willing to tell Bob. However, this was because Jim did not want Bob to sabotage the bid rather than to deprive Bob or Westbus of the opportunity of being involved in it.

On balance, I accept the evidence that Jim and Bob Bosnjak did have the conversations to which Jim swears. I believe that this is consistent with the whole of the evidence in the proceedings. I have far less confidence about the evidence that the Westbus name was used because Bob might change his mind as he allegedly did on previous occasions. I consider that Mr Ellicott, QC's submission that Bob never changed his mind over the Calabro Bros purchase is valid. It is also hard to imagine why Jim would want Bob involved in Victoria in view of the poor relations between them.

Mr Ellicott, QC further submits that, in one sense, it does not matter if I accept that Bob Bosnjak did say to Jim what Jim has deposed, that would still not amount to consent. Principally this is for the reason that there had never been sufficient information given to Bob for him to give fully informed consent.

Most of the reported cases on appropriation of corporate opportunities concentrate on whether the profit maker was a fiduciary. However, there is no doubt that a company can abandon a corporate opportunity and consent to directors taking it up for their own benefit. Ideally this should be done by resolution of the company in general meeting after full disclosure is made. However, such a resolution is not always necessary. Indeed it must also be remembered that ratification of prejudicial conduct, even by a resolution of a general meeting, may in itself constitute oppression: Hannes v MJH Pty Ltd (1992) 7 ACSR 8, 11.

Gower's Principles of Modern Company Law (Sweet & Maxwell, London, 1997) 6th Ed at p 615 truly says, "...directors ... must not, without the informed consent of the company, use for their own profit the company's assets, opportunities or information." Indeed these were the words used by Lord Upjohn in Phipps v Boardman [1966] UKHL 2; [1967] 2 AC 46, 109 when he said that, "Nothing short of fully informed consent" could excuse an appropriation by a fiduciary for profit of a corporate opportunity.

The word "consent" can have different connotations in different areas of the law. When it is employed in connection with absolving a director from a breach of fiduciary duty in taking advantage of a corporate opportunity what has to be established is made clear by the authorities to which I will now refer.

In the well known case of Furs Ltd v Tomkies [1936] HCA 3; (1936) 54 CLR 583, Tomkies was the managing director of the plaintiff company. Tomkies negotiated the sale of a division of the plaintiff's business with the full approval of the board. The purchaser wished to obtain Tomkies' services. In the course of the negotiations, Tomkies mentioned this to the chairman, who discussed the matter informally with other directors and then told Tomkies to make the best arrangement for himself that he could with the purchaser. The sale proceeded. Tomkies in fact obtained for himself a contract of service with the purchaser under which he was to disclose to the purchaser formulae in his possession. He did not disclose that fact to the plaintiff.

The High Court held that Tomkies owed a fiduciary duty to do the best deal for the plaintiff and he had created a conflict by doing the side deal for himself. He was thus accountable to the plaintiff for profit.

At p 599, Rich, Dixon and Evatt, JJ said that no doubt the co-directors' advising Tomkies "to look after himself exposed him to the temptation of preferring his own advantage to the interests of the company. But the board could not relieve him of his equitable obligations which arose out of this conflict of duty and of private interest. His one recourse... was complete disclosure to and confirmation by the shareholders."

The cases in this area of the law may sometimes appear to give a harsh result to a more or less innocent director. However, as a matter of policy, equity bares its teeth to ensure that fiduciary agents lead a pure corporate life.

In Queensland Mines Ltd v Hudson (1978) 3 ACLR 176, 181, the Privy Council considered a case where a director had taken over a project for his own profit. The project was one which was worked up for the company to exploit and so was a corporate opportunity. However the Privy Council held that, in the circumstances of the case before it, the plaintiff's board had reached a firm decision to renounce all interest in the relevant project and assented to Mr Hudson taking over the venture for his own account. There was no explicit resolution of the board to this effect. However the board knew that Mr Hudson was interested in the project personally and it resolved that the company should not pursue the matter further itself.

In the Regal (Hastings) case in the Court of Appeal (unreported but quoted in Peso Silver Mines Ltd (NPL) v Cropper (1966) 58 DLR (2d) 1, 8-9) Lord Greene, MR said that, "Where a Board of Directors considers an investment which is offered to their Company and bona fide comes to the conclusion that it is not an investment which their Company ought to make, any Director, after that Resolution is come to and bona fide come to, who chooses to put up the money for that investment himself" is not open to attack by the company. The Supreme Court of Canada adopted this in the Peso Silver Mines case, noting that Lord Russell in Regal (Hastings) merely said that this statement was not relevant to the decision in that case, not that it was wrong.

In Canadian Aero Service Ltd v O'Malley (1973) 40 DLR (3d) 371, the Canadian Supreme Court reconsidered this type of problem. At p 382, Laskin, J noted that the only escape for fiduciaries was to show that the company had approved of the transaction by the fiduciary, the approval being "properly manifested upon full disclosure of the facts".

It is not enough that the company appeared unable to take up the opportunity: Furs Ltd v Tomkies; Regal (Hastings) at p 139; GE Smith Ltd v Smith [1952] NZLR 470. Nor is there consent where the only other director is the wrongdoer's wife who normally leaves everything to her husband and where the wife has no information from which she could make any assessment of the situation: Maxmor Engineering Pty Ltd v Walsh (1980) 5 ACLR 358, 363.

There is considerable support for the view that, where the breach of fiduciary duty affects the value of the shares, the directors cannot waive a breach, but this can only be done by the shareholders in general meeting after full disclosure: Furs Ltd v Tomkies, Equiticorp Industries Group Ltd v The Crown [1996] 3 NZLR 586, 613.

RP Austin in his essay, "Fiduciary Accountability for Business Opportunities" in Finn, Equity and Commercial Relationships (LBC, Sydney, 1987) 141 at p 183 says that the authorities in this area are in "an appalling muddle". He notes that there is some authority for the view that there cannot be consent given to a breach of fiduciary duty. However, looking at the mainstream cases, he says, with some justification, that there are two categories which overlap and tend to be confused.

My assessment is that this is correct as a matter of theory. The first category is where the company's constitution leaves it to the directors to take up or leave a business opportunity. In such a case, the bona fide resolution of the directors after full information should be sufficient. The second category is where the decision impacts on the value of the shareholders' investment. In such a case, the shareholders are vitally concerned, and only they may give relief in a general meeting after full disclosure.

I will adopt this categorization. However, a very real problem is into what category one places a case which has some flavour of each category? The answer must be, "in the tighter category". This is so because equity takes a very hard line against breach of fiduciary duty and makes even a comparatively innocent fiduciary account. In practical terms, this approach will mean that whilst in a large corporation a decision to abandon a small project may fall into the first category, in a closely held smaller company, the decision will almost certainly fall into the second category.

In the instant case, there has been no consent by the general meeting. It may be that it would be very difficult to obtain that consent as Jim and Carol Bosnjak could only muster 57% of the votes and 60% was the vote required to pass any resolution to allow them to take the corporate opportunity. However, even though it could well be said by the person in the street that it is unduly harsh for Jim and Carol to be denied the opportunity which Bob did not want to take up, the law is the law, and equity has taken a hard stand on this issue. In any event, as Mr Ellicott, QC has reminded me more than once, apart from Bob Bosnjak, there is also the interest of the beneficiaries under Anda's estate to be considered.

Even if the directors' consent was enough, there are difficulties in finding that a fully informed consent was given. Even accepting that Bob would not listen to Jim Bosnjak or Mr Ash, there were ways of ensuring that Bob was given more information about the project. There was nothing to stop a fully detailed letter being sent through the mail or for one of the solicitors or accountants retained by Jim and Carol to have provided a fully detailed letter to Bob which could have been delivered by certified mail. The onus is on the majority to show consent. I do not consider that they have done so.

I should mention that a different approach to this problem has been taken in some cases. In Re RA Noble & Sons (Clothing) Ltd [1983] BCLC 273, Nourse, J had to consider a case where there were two corporators, Bailey an investor and Noble who managed the business. Bailey complained that he was not informed of vital decisions made by Noble. The arrangement made by the corporators showed that Bailey had consented to Noble being in virtually sole control so that the s 260 petition should be dismissed. The company was, however, wound up under the just and equitable ground.

Mr Rayment, QC argued that the real principle was the principle of waiver or dispensation used in insurance law. He said that the cases show that if an insurer indicates that it does not want to be told anything further about a claim, the insured is dispensed from any further duty to provide information; see eg Craine v Colonial Mutual Fire Insurance Co Ltd [1920] HCA 64; (1920) 28 CLR 305. Mr Rayment, QC submitted that this principle had a wider application than merely insurance law and cited ICT Pty Ltd v Sea Containers Ltd (1995) 39 NSWLR 640, 666-7.

I do not accept this submission. The principles to be applied in this area of the law have been clearly laid down and analogies from other areas are not of assistance.

Accordingly, I find that Bob Bosnjak's case on this issue, succeeds. However, it is now necessary to consider whether this matter goes to the issue of oppression or merely to the derivative action

Normally this sort of conduct leaves the directors open to an action by the company, but not an individual member. Moreover, the corporators, in general meeting, may, because of their own commercial reasons, tolerate the situation or demand an accounting.

The point was considered by Von Doussa, J and later by the Full Federal Court in Coombs v Dynasty Pty Ltd [1994] FCA 1193; (1994) 14 ACSR 60 and, on appeal, Dynasty Pty Ltd v Coombs [1995] FCA 1447; (1995) 59 FCR 122. The Court had no real difficulty in holding that, in a proper case, abstraction of a corporate opportunity might amount to oppression.

In Diligenti v RWMD Operations Kelowna Ltd (1976) 1 BCLR 36, Fulton, J in the British Columbia Supreme Court decided that such conduct might be classed as "unfairly prejudicial". The Corporations Law, like the Canadian Act, refers to conduct that is oppressive or unfairly prejudicial. The Canadian case thus appears to be a sound authority in Australia. (See also Diligenti (No 2) (1978) 4 BCLC 134 where the appropriate orders are considered).

In my view, conduct which abstracts a corporate opportunity such as occurred in this case, is oppressive to the "members as a whole." The oppression could still be in existence even after a general meeting purported to condone it, as the majority's conduct at the meeting might add to the oppression rather than justify it.

Accordingly, I consider that I should take this factor into account when considering whether the total conduct of the majority was oppressive.

However, it should be noted that the appropriate form of relief if there is appropriation of a corporate opportunity is to have the majority recompense the company for the real loss. There is usually no call for a buy out order. This is because what the court is really doing is short circuiting the procedure of ordering the company to commence proceedings against the majority to refund their profits.

Thus, I must consider what would be the order for recompense that would be made in an action by the company against the majority. Mr Ellicott, QC says that the proper order is one which will see the property gained by fiduciary by the equitable fraud held on trust for the Company.

Mr Rayment, QC says that the appropriate order is for the majority to account for their profits. He says that this flows from the more recent decisions such as Warman International Ltd v Dwyer [1995] HCA 18; (1995) 182 CLR 544, 560-1. He submits that courts now take the view that where a business is acquired by the fiduciary, it is preferable merely to order an account of profits for a period.

I will deal with this matter in section 6(b) of these reasons.

It is also necessary to consider when Bob Bosnjak had sufficient knowledge as to the position in Melbourne to be able to commence proceedings.

The NBC saga commenced in March-May, 1993. On his own evidence, Bob Bosnjak knew that Jim Bosnjak had won the Melbourne tender not later than 31 August, 1993. However, there is dispute as to how much more Bob Bosnjak knew at that stage.

Bob Bosnjak prepared a questionnaire which is PX168-171. He handed a copy to Jim Bosnjak, to Carol Bosnjak and to Robert Ash in that order. The questionnaire asked whether any financial documents of Westbus were produced in connection with the tender for Melbourne or to suppliers of the Melbourne operation. Jim and Carol Bosnjak declined to sign the document: Robert Ash answered "No" to question 3 and gave a brief answer to question 4.

Mr Rayment, QC at T209 and thereabouts closely questioned Bob Bosnjak about why he distributed that questionnaire on 31 August, 1993 to Carol Bosnjak and Robert Ash, if the only information he possessed at that time was that Jim Bosnjak had won the tender. Bob Bosnjak's evidence under cross-examination was unconvincing. It is clear from the press release of the Victorian Minister of Transport which Bob had, if not before 31 August, then shortly thereafter, that Carol Bosnjak was one of the persons involved in NBC. To my mind Bob Bosnjak knew far more about the involvement of Westbus in the NBC expression of interest and tender by January, 1994, than he would have me believe.

The answer of Robert Ash to the questionnaire may have deflected Bob slightly. I do not consider it stopped him from continuing to amass material about the Melbourne deal. That it had become a strong point of conflict was clear from what happened on 10 January, 1994.

The matter of Jim and Carol Bosnjak's involvement in the Melbourne operations was clearly raised at the board meeting of Holdings on 10 January, 1994. The minutes, which are in both parties tender documents, record that Bob Bosnjak said he wanted to know how much time Jim and Carol planned to spend in Melbourne and that their wages should be adjusted to reflect that time. Bob Bosnjak said that he had discussed the matter with Robert Ash. The following paragraph then occurs:-

"Bob Bosnjak said that Jim Bosnjak and Carol Bosnjak were acting as if he had no ownership in the company. Jim Bosnjak stated that it was in fact Bob Bosnjak who was acting as if he was in fact the only owner. In relation to Melbourne Jim Bosnjak said that it was in fact Carol's and his business and nothing to do with Bob Bosnjak. Jim Bosnjak further stated that if it started to affect the performance of Westbus then they could sit down and thrash it out. Jim Bosnjak added that it was Westbus that needed attention at this time."

Bob Bosnjak's affidavit (PA03) paragraph 105 and PX172 show that he certainly knew no later than 2 August 1995 that Holding's financial accounts had been utilized to facilitate the Expression of Interest documents.

Although laches, as such, was never pleaded, delay in commencing proceedings is clearly relevant to any relief to be given. The potential unfairness of the plaintiff standing by until NBC was profitable and then suing was stressed by the defendants at the trial.

Plaintiff's counsel say that it would be unfair, in view of the attempts by Jim and Carol Bosnjak to withhold information as to their true deep involvement in NBC to "penalize" the plaintiff for delay. They say that it was really only when the discovery process was complete in the present litigation that the full facts were revealed.

It may well be the case that the "full facts' were only available at that stage, but litigants do not ordinarily wait for full facts before they commence litigation. There were sufficient facts available to Bob Bosnjak by 10 January, 1994 for him to assess whether he would challenge Jim and Carol Bosnjak over NBC or not.

The control of NBC, the use of Westbus information in the expression of interest and tender processes and the employment of Jim and Carol Bosnjak in the Melbourne operations make up Bob Bosnjak's principal complaints. Most of the other allegations are, as I have already said, either of a minor nature or not established.

I consider that by 10 January, 1994, Bob Bosnjak was in a position to know sufficient of any breach of fiduciary duty, to enable him to decide whether or not to commence proceedings.

I have already considered some aspects of this relatively minor complaint.

The basic complaint here is that when the Company moved its ordinary bus operations from the former Edensor Park Depot to Bonnyrigg, the former depot was kept and employees deployed there not for the benefit of Holdings, but for the benefit of NBC.

There have been a series of arguments over Edensor Park. This was the first depot which the Company owned. When Calabro Bros Bus Service was acquired in June, 1989, the former Calabro Bros depot at Bonnyrigg was acquired and the bulk of the Bus Division activities were moved to Bonnyrigg.

When the Coach Division was headquartered at Arncliffe, there was a move by Bob Bosnjak and Terry Watts to move all the coaches to Arncliffe. This was in September, 1993. On the basis of Terry Watts' report, Carol voted with Bob to move the coaches. Jim was displeased. He says this was for two reasons. First, the school work in the Liverpool area was affected detrimentally and secondly, though this does not appear to be stated as a reason until July, 1994, that existing use rights might be lost.

Two purchasing officers, Messrs Cammareri and Cook were stationed at the Edensor Park Depot. These gentlemen did not play any part in the operations of the buses. Bob Bosnjak says that Jim and Carol Bosnjak caused those gentlemen to be located at Edensor Park so that they would be close to where Jim Bosnjak lived and work on behalf of NBC in addition to the work they did in Westbus.

The matter came to a head when on 29 November, 1993, Bob Bosnjak dismissed Mr Cammareri. Bob put to Mr Cammareri that he was getting paid by Westbus, but was working for NBC. Mr Cammareri denied this, and was fired. The board reinstated him on 30 November, 1993.

At the board meeting on 10 January, 1994, Bob Bosnjak moved that Mr Cammareri's appointment be terminated. The motion was discussed and the various directors gave their reasons for their respective attitudes. The motion was put and lost with Jim and Carol voting against it.

Again, I cannot see that there is corroboration of Bob's views that these gentlemen were spending significant time on NBC affairs. The decision of the board meeting of 10 January, does not appear to me to a matter of oppression.

The material shows that in 1991, a proposal surfaced that Holdings might become involved in a joint venture under which a stored value card would be promoted which could be used on Westbus buses and could also be used to make purchases from fast food outlets and the like. This card was to be known as Transcard. Paragraph 80D of the statement of claim says that this was a significant business opportunity for Holdings. Paragraph 80B says that confidential information of Holdings was used in the preparatory work for the establishment of Transcard. Paragraph 80K says that Jim Bosnjak became a director of the Transcard company on 11 August, 1993. Westbus entered into a service agreement with the Transcard company which was for the benefit of that company. Paragraph 86 complains that Jim Bosnjak never made any disclosure of this interest.

Transcard was proposed by the Cabcharge company as a business venture between itself and Westbus. However, outside Jim Bosnjak, relatively little information about it flowed through to the Westbus directors.

There is little doubt that Jim Bosnjak became a director of Transcard. Furthermore, Jim Bosnjak's share in Transcard was held by a solicitor as his nominee. Further, it is quite clear that Jim Bosnjak never made any disclosure even to the board until 20 May, 1997 (see Interrogatory 71). Indeed the publicity issued by Transcard for its launch on 1 September, 1993 did not disclose any association with Westbus. Nor did the material for the national launch of Transcard in March, 1995.

The Transcard scheme had some obvious advantages for Westbus. If passengers could be convinced that they should purchase a smartcard from some outlet and insert the card in a machine in the bus which would electronically deduct the fare, considerable administrative costs in fare collection would be saved. About a 70% use rate was required before those savings would be sufficient to warrant the scheme proceeding, but it was thought that this was achievable. Trials, however, disclosed that the ordinary commuter in the western and south western suburbs could see no advantage in prepaying fares, and the only success was with the premium express service to the City along the M2.

It is quite significant that although a considerable amount of work was to be done by Westbus in and about the Transcard scheme from Debbie Bosnjak selling Transcards on St Marys railway station to renewing the ticketing machines on the buses, there was no formal resolution authorizing the expenditure at board level. Indeed the evidence shows that not even John Mostyn was aware of the details of the Transcard project or who was behind it even in January, 1995.

I was not impressed by some of the reasons given for the lack of a board resolution. It may be that the ticket machines in the buses had to be renewed in any event, but this does not necessarily mean that they had to be replaced by machines which could read and deduct money from a smart card. The evidence gives me a firm impression that the Transcard affair was being carried on by Jim Bosnjak under a cloak of secrecy.

Transcard appeared at first to be quite a profitable scheme from which large profits might be derived. In the end, the Transcard scheme came to nothing and Cabcharge bought Jim Bosnjak's interest in the scheme for $902,868, being the amount he owed to Cabcharge for his share of the development costs.

Mr Ellicott, QC says that Transcard cannot merely be put to one side because it was not successful. He puts that it was expected to be successful and that Jim Bosnjak's efforts to conceal what was happening was a significant illustration of oppression. He further submits that I should not accept Jim Bosnjak when he says now that Westbus would get the benefit of the Cabcharge project. He puts, and I generally accept, that if this were so, why would Jim Bosnjak go to such pains to conceal his involvement?

Mr Ellicott, QC submits, and I agree, that the Transcard matter is a significant illustration of oppression. However, it is the type of oppression that calls for money to be paid back into the Company rather than a compulsory purchase of shares.

Mr Ellicott, QC further submits that Jim Bosnjak should account to Westbus both to recompense for its expenditure on the project and also for the release of the $902,868 debt which he submits should be treated as profit. Mr Rayment, QC says that there was no profit.

It is not obvious from the material presently before the court whether there was a profit, but it is clear that the Westbus group did expend considerable sums on the project which were spent without proper authority and which, in my view could not be justified by some expectation of benefit to Westbus. Of course, the vice here is the conflict of interest and duty of a fiduciary. In such a case, it usually matters not that the fiduciary has made no profit so long as the principal has suffered loss, or that the principal has suffered no loss as a result of the fiduciary making a profit, see Mason and Carter, Restitution Law in Australia (Butterworths, Sydney, 1995) para [1712]; Jackman, The Varieties of Restitution (Federation Press, Sydney, 1998) page 123; see also Humphris v Jenshol (1997) 25 ACSR 212.

I will deal further with this matter in section 6(b). It is sufficient for the present merely to say that there will be need for an accounting before the Master or a referee.

Mr Ellicott, QC submits that the evidence clearly shoes that since 1995, although revenue has increased, operating costs have also considerably increased so that profits have fallen dramatically. He says that the evidence shows that operating costs increased by $6,000,000 over this period.

Mr Ellicott, QC says that there are some obvious reasons for this. First, he says, there was a failure to provide a business plan which is clearly a necessity in a business of this nature. He then says that there was overuse of expensive consultants.

There is some real substance in what Mr Ellicott, QC is putting here and there is evidence to back up what he is putting. However, in matters of management, the court usually takes the view that unless it can be seen that the majority have taken a line that involves self interest or a decision that no reasonable board could have taken, it does not interfere. Even though the plaintiff may feel that his or her shares are falling in value because of the business practices being adopted, ordinarily, the management strategy adopted by the majority will prevail.

A major part of the complaint is the use of the Parramatta property. It will be remembered that when the head office and depot were moved from Parramatta to Northmead, the Parramatta property was redeveloped. This property is now producing steady rental income. The majority intend to sell at least some of this property to reduce debt. Bob Bosnjak objects to this on the basis that the Company holds a lot of non-income producing property which should be realized before this Parramatta property. He says the majority wrongly elected to dispose of good income producing assets and retain non-income producing assets because it was in their interests rather that the interests of Holdings to do so.

Paragraph 113 of the statement of claim states that in late October, 1997, the Company's then bankers, Commonwealth Bank of Australia made it clear that it required a substantial reduction in the Company's exposure to the bank.

Bob complains that the board on a circular resolution signed by Jim and Carol resolved that the Arncliffe Depot and property in Church Street, Parramatta be sold. Bob complained that these are income producing properties. He also says that the Company had at least four non-income producing properties and the loss making English coach operations which could be sold first if anything had to be sold.

One of the properties referred to by Bob Bosnjak was the Wetherill Park site which was purchased for the purpose of using as a bus depot in lieu of one or more of the existing sites.

I cannot see sufficient evidence which would let me hold that this matter is other than one where different minds may make different choices.

The next complaint relates to the decision to move the head office from Northmead to Parramatta.

Paragraphs 88 and 89 of the statement of claim are as follows:-

88. At a meeting of directors of Holdings held on 10 April 1995

it was resolved that the head office of Holdings and the

Bosnjak Group be moved from premises owned by Holdings

being the Northmead premises to commercial premises

located at Level 12, McNamara Building, 100 George Street,

Parramatta and for Holdings to pay a commercial rental for

such premises, Bob Bosnjak voting against such resolution.

Parramatta ... was unnecessary and involved Holdings in

Bob Bosnjak says that at the board meeting of 6 February, 1995 Jim Bosnjak asked John Mostyn about estimates for office renovations. A figure was given. Jim Bosnjak when he heard the sum involved suggested that a separate location for head office should be considered. Bob Bosnjak opposed both the renovations and the retainer of consultants to advise on alternatives.

On 10 April, 1995 the board next considered the matter. Mr Mostyn recommended that the Company rent Level 12 of the McNamara Building at Parramatta as its head office. Bob Bosnjak opposed this recommendation. Debbie Bosnjak who was present as Carol's alternate said that the current premises were cramped and suffered from the smell of sewerage. There was further discussion at the board meeting on 18 April, 1995 at which it was resolved to proceed with the lease.

Mostyn worked on a Network Design Report which was produced in February, 1997. The report estimated a cost of $308,500 to renovate Northmead. Defendants' counsels' written submission put, "There is no evidence that this report was not made available to Bob Bosnjak."

I agree with plaintiff's counsels' submissions in reply that the complete lack of reference to this report anywhere in the minutes of any board meeting and its absence from Mr Mostyn's "detailed report" make it more likely than not that it was never shown to Bob Bosnjak and that this again is a case of important matters which were withheld.

It does not seem to me that, apart from the reinforcement given to Bob Bosnjak's overall case by the lack of disclosure of the Network Design Report, this matter has anything more to it than a disagreement between members of the board which was resolved by majority decision. There does not appear to be any hidden motive or malice. The decision was one which reasonable directors could have made. This is not to my mind a significant matter.

Finally, there is connected to this section an allegation made in paragraphs 77 and 77A of the statement of claim as follows:-

77. During the course of 1991 and 1992 Jim Bosnjak, without

the knowledge or approval of Holdings or any of its

77A. Further, during the period 1991 to 1997 Jim Bosnjak,

without the knowledge or approval of Holdings or any of its

subsidiaries, reduced the financial resources of Holdings for

This episode took on a completely different significance when viewed through the eyes of Bob Bosnjak rather than those of Jim Bosnjak. Bob considered that Jim had just used the Company's funds for his own purposes. Jim, on the other hand considered that at Bob's suggestion the Company had paid Bob, Jim and Carol various amounts of back pay. Jim had left his money in the Company and was now drawing on it to fund the building of his house.

3. (h) Asset Split and Access to Books and Records

Although the plaintiff's submission put these two matters in the one section, they are really separate.

As to the asset split, from time to time over the last seven years or so, Bob has indicated that the way to end the arguments within the family is to split the assets of Holdings between himself and the rest of the family.

Jim Bosnjak said in evidence that the split that he was considering was one under which he would run the buses and coaches and his brother would operate the depots. This is clearly not now acceptable to Bob who said that his continuing desire was to operate buses and coaches.

Bob indicated that he now would like a share of NBC. Jim's evidence was to the effect that he did not see why Bob should take a share of NBC now that it had become profitable without having borne any of the risks in setting it up. Indeed, Bob Bosnjak had made the deliberate decision not to bear those risks.

Bob Bosnjak mentioned on many occasions in the minutes and in evidence that he desired a split of the assets. Defendants' counsels' submissions give 18 references. Despite the many occasions when the matter was raised between December, 1988 and the commencement of these proceedings, it is difficult to find any finite proposals as to how the split might take place.

Part of the reason for this may be that Bob was not being provided with sufficient information to enable him to put forward a definite proposal. I do not believe that this is the case. The asset split idea did not receive any sympathetic reception and seems just to have been an idea which was continually floated.

There is what Bob Bosnjak calls his 21 point plan which he put forward to the board meeting. This is set out verbatim in paragraph 106 of the statement of claim. The plan was put to the board on 25 November, 1996 (Defts' Vol 1A p 488). Mr Mostyn said that there was no attempt to cost any of the 21 points and nothing to assist the board in assessing the proposals. The context shows that all this was said whilst Mr Mostyn was fuming about some slight by Bob Bosnjak that occurred shortly before at the Commonwealth Bank. The plan does not really deal with a split of the assets, but rather suggested how savings could be made by addressing management issues and the sale of what Bob Bosnjak considered surplus non-income producing assets.

There was also some evidence that Bob from time to time proposed a split into third shares of the totality of Westbus and NBC so that Bob would take one-third, one-third would pass to Carol and one-third to Jim. This, of course, cuts out any interest that Jim's children take under Anda's will as presently admitted to probate.

However, near the end of the evidence, Mr Ellicott, QC said that Bob Bosnjak would like to take the routes based on Windsor and Penrith with whatever adjustment was necessary to deal with the difference between the value of those runs and the value of his shares in Holdings.

I cannot see how any reaction or non-reaction to Bob's nebulous proposals could constitute oppression. Whether the court will now impose such a split is a matter I will consider in section 6.

I will now turn to the matter of non-access to records.

The complaint made in paragraph 79 of the statement of claim is that after Mostyn's appointment on 13 January, 1995, Bob Bosnjak has been prevented from exercising proper and lawful access to the records of Holdings and the Bosnjak group.

Bob Bosnjak says that the matter first was raised at the board meeting of 7 May, 1995 when he said that as there would not be any independent audit as he requested, he wanted his accountant, Mr Hancock to be given access to the Company's books and records. He says that both Jim and Carol Bosnjak voted against that proposal.

A board meeting was held on 11 May, 1995 when this matter again surfaced. According to the minutes, there were present Bob, Jim and Debbie Bosnjak (Debbie being alternate for Carol), and Jim and Debbie voted against the proposal. The matter came up again at the board meeting of 18 May, 1995 with a similar result.

On 18 May, 1995, the plaintiff and Bob Bosnjak then commenced proceedings in the Federal Court of Australia to obtain access to the records. On 17 August, 1995, the Federal Court noted an agreement that certain records would be made available to Mr Hancock.

Whilst the Federal Court proceedings were pending, requests for documents by Bob Bosnjak to the board were met with the simple answer that the matter was sub judice.

On 30 September, 1996, by consent, Lindgren, J made orders dismissing the proceedings with costs after further undertakings had been given.

Bob Bosnjak continued to complain about non-access to documents even after the Federal Court proceedings had terminated.

Bob Bosnjak says that the position taken with reference to his request to see records must be compared with the ease with which Jim Bosnjak was able to obtain any information he needed when he wanted it.

Jim Bosnjak and John Mostyn say that Bob's demands were just too great and that they could not afford to take the time away from production to satisfy his insatiable demands for information.

I believe that the history of the litigation on this aspect of the case shows that Jim and Mostyn should have provided Bob with more information than they in fact did.

Bob says that the reason information was not provided was to mask the activities of Jim about matters such as NBC and Transcard. I do not find this established, but, even if it were established, the relief to be given in relation to the NBC and Transcard matters would subsume any relief that might be given under this head.

3. (i) Proposed Amalgamation of National Bus Co with Westbus

Paragraph 108A of the statement of claim is as follows:-

108A. In late 1996/early to mid 1997 National Bus Company

was in financial difficulties and required a substantial

The statement of claim then gives particulars and alleges in paragraphs 108B -108F that to surmount those difficulties Jim and Carol Bosnjak orchestrated the making of a proposal to amalgamate NBC and Holdings. It is claimed that the proposal was put together using the staff and expertise of Holdings. It is then said that Jim and Carol Bosnjak or their associated entities accepted the proposal and transferred their shares in Holdings to NBC.

Paragraph 112 of the statement of claim then claims that the plaintiff has suffered oppression in that Fexuto will henceforth be a minority shareholder in NBC.

It is important to note that there were two schemes for amalgamation (a) one propounded in July, 1997; and (b) a scheme propounded in November, 1997.

It is clear that in late 1996 and through to mid-1997, NBC was suffering severe liquidity problems. Both schemes appear to have their genesis because of this fact.

Bob says that these proposals are significant as further examples of how Westbus is being used by Jim and Carol Bosnjak to suit their own convenience. He says that both of the schemes for proposed amalgamation were grossly unfair, prejudicial and discriminatory to him and the other minority shareholders. He further says that they were clearly aimed, at least in part, in further reducing the authority and involvement of Bob Bosnjak in Holdings. The proposed involvement of outside directors would be a dramatic change to the way Holdings had been run.

The July scheme commenced in May, 1997 with Jim Bosnjak entering into discussions with a merchant bank with a view to a float. The basic idea was that there would be a merger of NBC and Westbus and for the amalgamated enterprise to be floated so that the public would have 40% and the Bosnjak family 60%.

On 13 May, 1997, Jim Bosnjak arranged with Price Waterhouse to produce an approximate value of Westbus from information supplied by Robert Ash. Mr Ellicott, QC says that this is a graphic illustration of Jim Bosnjak using Westbus for his own ends and Robert Ash's ready compliance with Jim Bosnjak's requests (as opposed to Ash's refusal of or reluctance to comply with Bob Bosnjak's requests for information).

There were then many hours of discussion between NBC's then solicitors, Gilbert & Tobin and its accountants Price Waterhouse. Some of these documents put forward different possibilities each of which involved sidelining Bob Bosnjak. Plaintiff's bundle, Volume 12 Tab 37, set out three scenarios each of which left a "Bob free" structure or comprehensively excluded Bob Bosnjak from the float structure.

In the witness box, Jim Bosnjak said that he had been advised by the proposed underwriters that the float could not get off the ground unless there were no dissident directors. It was thus necessary temporarily to remove Bob Bosnjak from the board, but it was not to be a permanent situation.

Gilbert & Tobin very carefully prepared a letter to Bob Bosnjak which was despatched on 10 July, 1997. A copy is to be found in Volume 2 of the exhibits to Bob Bosnjak's affidavits pp 841-846. The proposal was put in guarded language that the enterprises would merge, 40% would be sold to the public, Bob was not to be on the board, at least for the present and further non-family directors were to be appointed. Alternatively, Jim and Carol indicated that they were prepared to buy Bob's share in Holdings at valuation. Bob was given to 18 July, 1997 to indicate his acceptance or otherwise.

Bob Bosnjak rejected the offer and commenced these present proceedings on 28 August, 1997.

The November scheme, which, it should be noted was presented after these proceedings were commenced, was a refinement of the earlier scheme. It was presented to Bob Bosnjak for his consideration on 24 November, 1997 and he was given three days to make his decision.

On 27 November, 1997 the amalgamation proposal was considered by the board. The minutes record that Bob Bosnjak protested that he had only been in possession of the relevant papers for three days whilst the other two board members had had them for much longer. He asked for a seven to fourteen day adjournment, but his request lapsed for want of a seconder.

Peter Oliver then made a presentation to the board. Mr Oliver said that the presentation was based on a report which had taken himself and Robert Ash four weeks to prepare. At the conclusion of the presentation, Jim is recorded as saying it was "brilliant". John Mostyn said it was "imaginative and well balanced."

The board then voted on the proposal, and, not surprisingly adopted it by a two to one majority. There were then ten subsidiary motions including the authorisation of the lease of the head office to NBC and the sale to it of all the fittings and fixtures in head office, the appointment of Peter Oliver as CEO of Holdings and provision for informing the staff of the changes. On the same day the transfers of shares from Jim and Carol's trustee companies to NBC of the majority's shares in Holdings were approved.

On 16 December, 1997, by consent, Cohen, J restrained any implementation of the November amalgamation proposal until further order.

The evidence of the discussions between Jim Bosnjak, Price Waterhouse and Gilbert & Tobin clearly discloses that the real aim of the merger was to benefit NBC and/or to rid Westbus of Bob Bosnjak.

However, Mr Oliver's evidence, which I accept, is that there were very real benefits to Westbus from such amalgamation as well. Mr Oliver considered that the probable scenario would be that after the initial float, Bob Bosnjak should be on the board to provide expertise on particular aspects of the joint operation. He did not actually say what this covered.

Even taking this into account, it is difficult to come to any other conclusion than that the principal aim of the proposed amalgamation was to exclude Bob Bosnjak's influence even further.

When challenged as to how the majority and the senior executives came to be considering an amalgamation at all, reference was made to the board resolution of 22 November, 1995. Essentially this provided that John Mostyn should explore all avenues of funding and capital injection and report back to the board with his findings. There was neither express nor implied mention of any amalgamation.

Mr Ellicott, QC says that it is extraordinary that both John Mostyn and Robert Ash when asked to justify their involvement in the amalgamation proposals would independently rely on such an out-dated resolution. Thus they must have put their heads together before giving evidence. I think that this is correct. I also consider that it is right to say that the defendants' reliance on such a wide resolution of 18 months previous which made no reference to the amalgamation shows that, at least at the trial, they realised that there was no justification for them being involved in the amalgamation on behalf of Westbus.

Bob further says that the only fair way of judging amalgamation proposals is by a board on which those with a conflict of interest do not participate. He says, and I would agree, that it is certainly improper to approve such a proposal by a board consisting of a majority who have a conflict of interest a fortiori where the minority has been given limited time to consider the matter.

However, the interim injunction put an end to any potential oppression by the amalgamation proposal. Any effect on Bob's legitimate expectations is irrelevant for the reasons set out at the start of this section. Although what has happened is a relevant set of facts to take into account when looking at oppression in all the circumstances, it cannot affect the ultimate result of the litigation. The interim injunction might, however, be made permanent if there is no buy-out.

Counsel for the defendants put that any act done by the majority with respect to the amalgamation of NBC and Westbus was not an act in the affairs of the Company. I reject this submission as not being in accordance with the evidence. Although the proposals emanated from NBC, they were considered at board level by Holdings and part of what is alleged as oppression is what occurred at the board meetings. In any event, the concept of "the affairs of the company" is now so broad that even without involvement of the board, the case probably comes within the concept.

I should note that, for a number of reasons, the principal one being the negotiations with the Victorian Government which produced more favourable contracts, NBC is now profitable. Because of this, Bob does not now seem to object to a merger, provided that he has a one-third interest in the whole conglomerate.

3. (j) The role of Holdings in these Proceedings

Paragraph 116F of the statement of claim pleads that Jim and Carol Bosnjak organised affairs at Holdings to use the powers and funds of Holdings for an improper purpose. The particulars included that Holdings instructed its solicitors vigorously to defend these proceedings with a view to opposing all the orders for relief sought by the plaintiff.

Mr Ellicott, QC pointed to the board minutes of 5 September, 1997 shortly after these proceedings were instituted. At that meeting, Jim, Bob and Carol Bosnjak were present and Robert Ash was in attendance. The minutes record that Jim Bosnjak was chairman and that, "The chairman said that having received advice we reject the allegations contained in the summons taken out by Fexuto Pty Ltd as false, reckless and defamatory and we will vigorously defend the action". The board then left it to Mr Mostyn to conduct the defence.

As I have noted, there were separate solicitors retained by the Company and the defendants.

A full defence was prepared by the solicitors for the Company. Solicitors and counsel were paid thousands of dollars by the Company for preparing for the hearing and filing evidence and pleadings.

The cases show that, in general, the majority should not permit the company to expend shareholders' funds in opposing suits brought by the minority under s 260 of the Corporations Law.

In Re DG Brims and Sons Pty Ltd [1995] QSC 53; (1995) 16 ACSR 559, Byrne, J in the Supreme Court of Queensland said at pp 591-2, "Many thousands of dollars of company funds have been spent on lawyers, accountants and valuers in defending these proceedings on behalf of the majority shareholders. This is unfair and infringes the basal principle that "the powers, and the funds, of a company may only be used for the purposes of the company.... Expenditure to protect its discrete interests or for other proper purposes of the company may be made from company resources. The essential dispute here, however, is between the shareholders; and company funds should not have been used to defend the majority shareholders."

This passage is supported by other authorities; see eg Re M Dalley & Co Pty Ltd [1968] HCA 82; (1968) 1 ACLR 489, 492; Re Kenyon Swansea Ltd [1987] BCLC 514, 521; Re a Company; Ex parte Johnson [1992] BCLC 701 and Coombs v Dynasty Pty Ltd [1994] FCA 1193; (1994) 14 ACSR 60, 94. It is sometimes difficult to determine just what is the dividing line between expenditure on legal costs to protect the company's real interests and those to support the majority and, for this reason, courts will not make a determination in advance; see Re a Company [1994] 2 BCLC 146.

Some of the English cases make the point that the expenditure by the company in this way is not something about which a plaintiff can complain as the only proper complainant is the company. However, for the same reasons as I mentioned in relation to the National Bus Company, under the Australian law, the court is not so inhibited.

I indicated during the trial that I would take notice of what happened before me during the case management phase of this case. Both sides acquiesced in this approach.

During the time set aside for written submissions, Mr Jones, solicitor for the Company made submissions as to the involvement of the Company in the proceedings. Essentially, he submits that the Company was required to take vigorous interlocutory steps to ensure that the Company knew what was the case it had to meet. He submits that, even now, the statement of claim contains embarrassing allegations such as the matter of Anda Bosnjak's estate. Furthermore, the interrogatories served on the Company were voluminous and oppressive and indeed it was successful in bringing about the situation where the Company did not have to answer many interrogatories thus saving great cost in manpower. Then, Mr Jones says, when it became apparent that the factual allegations against the Company were not to be seriously pursued, the Company withdrew from active participation in the proceedings.

The plaintiff says that the Company's involvement was much more than protecting its own interests. Mr Ellicott, QC points to the fact that the Company in its sworn defence denied that the majority had made use of the Company's property or confidential information, denied that Jim Bosnjak had failed to disclose his personal involvement in the Transcard matter and denied that the majority directors had failed to act honestly and in good faith. Mr Ellicott, QC says that none of the issues raised by these denials assisted the Company and notably were in the exact same terms as the denials of the active defendants.

Mr Ellicott, QC cross-examined Mostyn on the Company's sworn defence to paragraph 58 of the statement of claim. This defence, which was sworn by Mostyn was not completely accurate. Mr Mostyn said that this was because he had inadequate information from Mr Ash and others. He also blamed his solicitors for not fully explaining the defence. Mr Ellicott, QC suggests that these matters give flavour to the allegation that the Company was using every tactic available to defend the case: I agree.

There is no doubt that the Company itself was a strong participant in these proceedings up to the first day of the trial. There was certainly vigorous opposition led by Mr Stitt, QC on behalf of the Company at the directions hearings. Indeed, as Mr Jones himself points out, this was in accordance with Mr Mostyn's instructions that the matter be vigorously fought, those instructions flowing from the resolution of the board to which I have already referred.

In my view, the extent of the defence by the Company went beyond merely protecting its discrete interests. Doubtless some part, perhaps even up to two-thirds of the Company's legal costs may well have been properly incurred. However, the balance of probabilities is that at least one-third of these costs were incurred to support the majority. This was authorised by the majority who did not just instruct Mr Mostyn to look after the Company's discrete interests, but to defend vigorously. This Mr Stitt, QC and Freehill, Hollingdale & Page, both renowned for their vigour, duly did up to the first day of hearing. This went beyond what was a proper course for the board to take and is oppressive. The remedy again, however, is merely that the majority compensate the Company for the unauthorized expenditure: Martin v Australian Squash Club Pty Ltd (1996) 14 ACLC 452, 477.

The amount of the unauthorized expenditure can be assessed by the Master or by a referee. However, Mr Coleman for the Company has asked to be heard on the question of the Company's costs. My initial reaction is to make no order as to those costs and let the matter be dealt with by the Board in the first instance, and ultimately by the Master or a referee. However, Mr Coleman may persuade me otherwise.

Closely allied to the submission that Bob Bosnjak was denied his legitimate expectation in management are the allegations that the appointment of Carol Bosnjak to the Board was motivated by Jim Bosnjak's strategy to control the Company. The evidence shows that Carol was appointed to the Board on two occasions. The first was in 1988. I have dealt with these in sections 2 and 3(a).

The subsequent appointment of Carol Bosnjak to the Board was purportedly made on 19 July, 1993.

The background to this appointment is that on 15 June, 1993, Jim prepared an agenda for a proposed board meeting to be held on 16 June, 1993 at 10am. Jim says that Bob made it quite clear to him that Bob would not attend any such meeting. Bob denies this. Jim then sought to hold a directors' meeting on 24 June, but Bob did not attend. Jim says that he was advised that as there could not be a directors' meeting, it was necessary to hold a members' meeting to appoint a further director. Jim says that he was concerned that there was a deadlock on the board so that no decisions could be made.

On 25 June, 1993, a Notice of Extraordinary General Meeting for 19 July, 1993 was issued by Jim which he signed under the words "By order of the Board". There was no board authority to convene that meeting and there was no other authority which was vested in Jim to convene the meeting (vide Art 58). The notice said that the special business of the meeting was to consider the appointment of additional directors.

On 7 July, Bob Bosnjak's then solicitors wrote to Jim's solicitors that, on medical advice, Bob Bosnjak needed to proceed overseas and requesting that the meeting be postponed until his return. There was an exchange of faxes. Bob Bosnjak went overseas on 17 July. The meeting was held on 19 July with Jim and Carol each representing their respective companies. The meeting resolved that Carol be appointed an additional director.

Of course, as there were only shareholders representing 57% of the shares present at the meeting, it was incompetent to transact the business of appointing additional directors. In addition, there was almost certainly no valid notice convening the meeting.

Thus, as a matter of law, the appointment of Carol as a director was irregular to say the least. However, Bob Bosnjak in due course recognized Carol as a director. He says that the problem was that she joined Jim in turning the administration of the company in such a way as he was effectively excluded from participating in management decisions.

The appointment was invalid or irregular. It may be that it would have been validated under s 1322 of the Corporations Law, but that never arose.

I would accept that the reason for the appointment of Carol was not any conspiracy against Bob Bosnjak, but an attempt to break the deadlock which was being caused by Bob Bosnjak not attending directors' meetings.

The statement of claim contains a series of miscellaneous matters which are said, with the other matters to which I have referred, to constitute oppression. These include defamation proceedings which Mr Mostyn has been maintaining against Bob Bosnjak at the expense of Holdings, alleged misuse of the Company's funds in this litigation and general continued denigration of Bob Bosnjak.

Bob Bosnjak says that at the board meeting of 20 May, 1997, Mostyn said that Bob Bosnjak has been making abusive and defamatory comments about him, he had had enough and was going to sue. He further said that as he was suing as Chief Executive Officer his costs would be paid by the Company. The minutes of 20 May, 1997 record such a statement as part of Mostyn's report. There is no note in the minutes as to the board's reaction to that report.

The Supreme Court statement of claim in the defamation proceedings is in evidence. The basic allegations are that Bob Bosnjak said of Mostyn, (a) he was a liar; (b) he was so incompetent as a director that he had been removed from every board on which he had sat; (c) he was disloyal to his employer; and (d) he received secret commissions. Bob Bosnjak basically relied on qualified privilege and raised in mitigation Mostyn's bad reputation. Bob Bosnjak also cross-claimed in defamation. The proceedings have not yet been heard. Because of this, I cannot assess the significance of this incident.

I should note that if the Company did expend money in financing Mostyn's claim, unless Mostyn was bound to hand over to the Company any fruits of the action, the costs would be an unauthorized expenditure of the Company funds.

There is also a complaint that Sandra Bosnjak was victimized**.** Paragraph 100 of the statement of claim is as follows:-

Mostyn, in his capacity as the Chief Executive officer of Holdings,

at the instigation and direction of Jim Bosnjak and Carol Bosnjak,

has engaged in a course of conduct in an attempt to establish the

grounds to justify the employment of Sandra Bosnjak being

terminated as an employee of the Bosnjak Group and thereby

The particulars to the statement of claim show that the principal complaint is that Mr Mostyn keeps a file on Sandra Bosnjak, but does not keep similar files on other comparable employees.

There is insufficient evidence to make out this allegation.

In re-examination, Mr Rayment, QC on two occasions asked a witness what he understood by a question asked in cross-examination. I disallowed these questions on the basis that a witness could explain an answer which might give the tribunal the wrong impression, but could not say what he understood the question to mean. I ruled that the witness needed to say at the time if he or she did not understand the question. However, on each occasion I had the answer recorded in case the Court of Appeal should take a contrary view. However, when the answers came, they had no effect on the result of the case.

There were about 35 lever arch files full of papers plus other assorted documents placed in evidence. The case was what is often called "a documents case". Counsel on both sides had obviously spent considerable time mastering those documents and that hard work paid off in cross-examination where, quite often, a witness corrected testimony when shown a contemporaneous document. Theoretically, every word of every document which was in evidence was in for all purposes. However, I stated that I intended only to refer to those documents which had been considered during the oral evidence or in addresses unless I drew the attention of counsel to a provision in some document I myself had found during my research. Counsel said that they had no comment to make about that statement. I proceeded on that basis. I could see no other way in which a trial of this nature could be satisfactorily concluded.

Because of the great amount of material, it has been necessary to be selective and only make findings of fact where those findings are necessary for the final decision. Should either party wish me to make findings of fact because they consider that such is necessary for the purpose of an appeal I will do so, within reason, within 28 days, provided that the formal order is not taken out.

Three weeks were set aside for the hearing of the case. These were fully taken up. Indeed counsel limited their addresses to four hours each with supplementation in writing. Both took advantage and produced bulky written submissions.

At the pre-trial hearings I indicated that I expected all evidence including valuation evidence would be put before the Court. The defendants did so. The plaintiff eventually put before the court some material. Needless to say, the ideas of the "experts" as to the valuation of the Company's shares varied widely.

During the third week of the hearing my mind was coming to the view that the most serious matters of oppression that were likely to be established were those requiring an account of profits rather than a buy-out. Accordingly, in order to save time and expense, I backtracked and did not read the valuation evidence at the oral hearing. I think in the events that have happened, it is probably irrelevant. I thought, however, I should record this statement as it may be relevant as to costs.

Some core issues of procedure should be dealt with here. These are:

(ii) the role of s 260(2)(g) of the Corporations Law;

(iii) the rule in Foss v Harbottle [1843] EngR 478; (1843) 2 Hare 461; 67 ER 189; and

(i) As to the role of Fexuto, Mr Rayment, QC submitted that it would be wrong to equate the plaintiff, Fexuto and Bob Bosnjak. He pointed out that the evidence showed that Fexuto was the trustee of a discretionary trust in which Bob Bosnjak had a potential interest in income, but whose ultimate beneficiary was Sandra Bosnjak.

This submission goes both ways. No informal consent by Bob to activities of Jim and Carol which were otherwise wrongful could possibly bind Sandra. On the other hand, merely because Bob was humiliated as a working director, does not affect the value of Fexuto's shares.

I consider that I should recognize the commercial reality of the situation here. Although in Simun Bosnjak's restructuring of 1975, shares were to be held by trustee companies, the parties at all relevant times regarded and were entitled to regard the senior Bosnjak member of the trustee company as being substantially the persona of the company.

I thus do no consider that this submission bears on the result of the case.

(ii) In my view s 260(2)(g) may be used to short circuit the requirement that the company must be the plaintiff in proceedings against those who have committed misfeasances against it and that if the company does not proceed, a shareholder may mount an action only in certain circumstances.

Section 260(2)(g) came into companies law when the Corporations Law came into operation. There was no corresponding provision in earlier Companies Acts. However, even before its enactment, Rowland, J in Re Overton Holdings Ltd [1985] WAR 224, found that s 260 is often an alternative to the former derivative action. The same approach was taken in New Zealand in Thomas v HW Thomas Ltd [1984] 1 NZLR 686.

The matter of whether an order should be made that the company commence an action against wrongdoers was considered in Parker v National Roads and Motorists' Association (1989) 1 ACSR 227 (Hodgson, J) and (1993) 11 ACSR 370 (CA), though the only relevant order made was that the board of the public company concerned consider whether it should bring an action. These proceedings were before

There does not appear to be any reported case where an order has been made under s 260(2)(g) that the company commence an action against the wrongdoer and, needless to say, no case where the court has short circuited that action by awarding relief in the original proceedings.

Plaintiff''s counsel in their written submissions in reply reminded me that the relief referred to in s 260 of the Corporations Law is couched in the broadest terms and empowers the court to make "such order or orders as it thinks fit." The whole thrust of the recent amendments to

s 260 has been to ensure that the Court is invested with plenary power to deal with all types of variegated oppression with whatever weapon seems just and equitable.

I agree with this broad approach, which I consider fulfils the intent of the legislature. After considering the submissions of both sets of counsel and after reading the discussion in Boros, Minority Shareholders' Remedies (Clarendon Press, Oxford, 1995) pp 158 & seq, I hold that, in an appropriate case, such a short circuiting order can be made.

Thus there is no barrier to the court short circuiting procedure by making a direct order for sale or the like which takes into account such a profit made by the majority, if it considers it just to do so.

(iii) The law is that the company is the only proper plaintiff in a case where a wrong is done to the company: Foss v Harbottle (supra). There are five exceptions to this rule. The fourth of these is where the wrongdoers are in control of the company. Ordinarily, this exception cannot be invoked unless there has been an attempt to have the company hold a meeting to authorize proceedings against the wrongdoer. It is doubtful whether this applies here. The fifth exception is when justice so requires.

I held this to be a valid exception in Mesenberg v Cord Industrial Recruiters Pty Ltd (1996) 39 NSWLR 128. Mr Rayment, QC formally submitted that that decision was wrong. I note that that decision has been followed in Victoria (Rural Corp Consulting Pty Ltd v Pynery Pty Ltd (1996) 134 FLR 188) though not followed by a single judge of the Federal Court in some statutory proceedings (Airpeak Pty Ltd v Jetstream Aircraft Ltd (1997) 73 FCR 161). I still consider the decision was correct and will follow it until convinced otherwise or a higher court tells me otherwise.

Mr Rayment, QC also submitted that to take the proposed course under s 260(2)(g) was to abandon the principle laid down in Foss v Harbottle. He submits that recent cases, including the decision of the Full Federal Court in Christianos v Aloridge Pty Ltd (1995) 59 FCR 273, show that that principle is still a vibrant part of the current law. See also Eros Cinema Pty Ltd v Nassar (1996) 133 FLR 34 (Simos, J). Although Foss v Harbottle is one of the "sacred" rules of company law, the reasons for its existence must be considered. I briefly dealt with these in Carnie v Esanda Finance Corporation Ltd (1996) 38 NSWLR 465, 470. Furthermore, the rule, being a rule of the court's creation can be dispensed with where the circumstances show that it is just to do so: Mesenberg v Cord Industrial Recruiters Pty Ltd (1996) 39 NSWLR 128. In this background, I can see no problem with ascribing to the legislature a commercially realistic, non-technical rule that, in the proper case, there can be a short circuiting of procedures by use of s 260(2)(g) either by authorizing the oppressed to bring an action in the name of the company or for a buy out of shares on the basis that the accounting that would come about as a result of that action were done here and now.

If it were necessary to do so, I would permit the plaintiff to bring a derivative action under that fifth exception.

(iv) Mr Rayment, QC says that there was laches in not commencing these proceedings until well after the National Bus Company had been established. Mr Ellicott, QC objects that laches was not pleaded and that, if it had been pleaded, other evidence might well have been called. However, this submission is not really a defence of laches in the full sense brought to kill the whole action. Indeed, it is extremely doubtful whether laches is a defence to a statutory action. However, I agree that delay and laches is relevant to the type of remedy that might be granted.

Although, there may well be cases where each single allegation in itself could not be regarded as oppressive, I must assess the totality of the allegations to see if there is oppression. The authorities show that this type of case has to be judged on all the circumstances; see eg Re Horwood & Co Ltd [1921] NSWStRp 74; (1921) 21 SR (NSW) 750, affirmed by the High Court as Menard v Horwood & Co Ltd [1922] HCA 39; (1922) 31 CLR 20. Although that was a "just and equitable" winding up case, the principle is the same under

s 260 as appears from Re Ashby Bergh & Company Ltd (1988) 4 NZCLC 96-194 at p 64,141 and Martin v Australian Squash Club Pty Ltd (1996) 14 ACLC 452, 474.

It is important when assessing corporate activities to see if there has been oppression that judges do not remain in their ivory tower. The business world is replete with individuals who quite legitimately are seeking the best for themselves. For mutual enrichment, they may enter into contractual regimes or corporate structures. They may also take on fiduciary obligations. However, subject to these obligations, they can act as they like in their own interests.

One particular matter that judges take into consideration in this type of case is that the minority will often bait the majority to act in an apparently oppressive manner. This is done so that the minority can free their capital from a venture in which it is otherwise locked away. When this occurs, and there is a reaction from the majority, the court both notes what happened and the reason for it happening.

Having considered the particular allegations, I must now look at the overall picture. I will do this by first considering principles of law not mentioned under the individual sections and then looking at the facts as a whole.

Section 260 of the Corporations Law permits a member of a company who believes that the affairs of the company are being conducted in a manner that is oppressive or unfairly prejudicial to, or unfairly discriminatory against a member, to apply to the court for relief. The court may give relief if the court is of the opinion that the affairs of the company are being so conducted. The relief that may be given includes making orders for purchase of shares of any member by any other member. Winding up is only to be ordered under the section as a last resort.

As I noted earlier, the additional words "conduct...unfairly prejudicial" expand the scope of the section from that of its English forbear.

There is a considerable amount of authority on the construction of the section. The leading cases are Wayde v New South Wales Rugby League Ltd [1985] HCA 68; (1985) 180 CLR 459 and Morgan v 45 Flers Avenue Pty Ltd (1987) 11 NSWLR 573. However, these cases are not really germane to the present problems. I am flattered that words of mine in the last mentioned case at page 704 have been adopted by subsequent cases as explicitly summarizing the applicable test, viz, "whether (there is) conduct which is so unfair that reasonable directors who consider the matter would not have thought the decision fair."

I said further at the same page that "the court looks at sub-s 2(a) 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."

The authorities also are to the effect that courts should not take any narrow approach to cases under s 260. The clearest statement of this is by the Full Federal Court Edwards v Idaville Pty Ltd (1996) 22 ACSR 1, 3. A court must consider that the legislature has bit by bit greatly enlarged the scope of the section since it first appeared in the companies legislation and apply the section broadly, though, because of the serious consequences of its application, it is not to be lightly applied: Thomas v HW Thomas Ltd [1984] 1 NZLR 686.

I note that Murray, J took a different approach in Re Spargos Mining NL (1990) 3 WAR 166. However, with respect, this decision is now out of the mainstream of authority.

No order can be made at all unless the court comes to the opinion set out above. The fact situations in this class of case are infinitely various. However, I spent a fair amount of time reviewing the cases in John J Starr (Real Estate) Pty Ltd v Robert R Andrew (A'asia) Pty Ltd (1991) 6 ACSR 63, 65-7.

In summary, I there said that it was legitimate for the majority to use its numbers to achieve its wishes by voting at meetings. However, once the court could see that there was caucusing before meetings, or that the meetings were becoming just a formality or that the majority were so conducting themselves so as to be overbearing, there may well be oppression; see Re Jermyn Street Turkish Baths Ltd [1971] 1 WLR 1042, 1060; Re Tivoli Freeholds Ltd [1972] VicRp 51; [1972] VR 445, 453.

Because it is easily overlooked, it is necessary to repeat that a plaintiff must actually prove oppression before obtaining relief. Oppression is not normally established merely by showing that the majority are in control of the company, that the applicant is consistently outvoted nor because the majority have made some decisions which were questionable from a business point of view or have later turned out to be disastrous.

I will mention, but not quote heavily from, various authorities which make this point. In New South Wales Rugby League Ltd v Wayde (1985) 1 NSWLR 86, 102, the Court of Appeal emphasized that relief under s 260 was exceptional and that care must be taken to ensure that the traditional roles of directors and shareholders to manage and control their own companies was not invaded without due cause.

In Re Posgate & Denby (Agencies) Ltd [1987] BCLC 8, 14, Hoffmann, J said that prima facie one looks at the Articles to see the parties' rights and duties and that ordinarily what is sanctioned therein is not unfair. He points out that, "all decisions concerning the business of the company involve the risk that other decisions may turn out to have been better."

In Re M Dalley & Co Pty Ltd [1968] HCA 82; (1968) 1 ACLR 489, 492, Lush, J pointed out that the mere disadvantages of being in a minority, no matter how "galling and even financially damaging these may be...do not in themselves constitution oppression...."

In Re Horwood & Co Ltd [1921] NSWStRp 74; (1921) 21 SR (NSW) 750, the mere fact that the governing director was overbearing and constantly offensive to staff was not in itself sufficient in a petition to wind up on the just and equitable ground.

On the other hand, "Simply because the shareholders or directors whose conduct is complained of, are exercising their powers lawfully in strict legal terms, will not avail them if the result of their exercise of such powers can be said to lead to unjust detriment to those who complain." Re Ashby, Bergh & Company Ltd supra at p 64,141.

Mr Ellicott, QC submitted that it did not matter that Bob Bosnjak may not have been blameless in his conduct. With respect, this submission has aspects of truth and aspects of falsity. It is true in the sense that "contributory negligence" and "provocation" are not actual defences to this type of proceeding. It is false in the sense that if the majority's conduct is the natural result of the conduct of the minority, the conduct will be assessed in that background and may have lesser significance than it otherwise might have.

Traditionally, lack of "clean hands" by the minority in a petition for winding up on the just and equitable ground would defeat the petition; see eg the Westbourne Galleries case at p 387. However, in s 260 cases, there has been a softening of the court's attitude and there is now no overriding requirement of clean hands; see Re London School of Electronics Ltd [1986] Ch 211. Boros op cit discusses this point at

Even if oppression is found, the courts have to bear in mind the principle of proportionality. Just because some oppression is found does not justify the court in ordering the remedy which it considers may best provide for peace in the future. The remedy must relate to eliminating the oppression found. I will amplify these matter in section 6.

The facts in this case were voluminous. I have found that there was oppression in relation to the National Bus Company, Transcard and payment of the Company's costs of these proceedings to assist the majority position. However, for the reasons I have set out in the preceding sections the facts that relate to Bob Bosnjak's legitimate expectation of being involved in management can be set to one side because there was no such legitimate expectation at the time these proceedings were commenced.

However, those facts may, when married with the other facts amount to an all over view that the conduct of the majority has been burdensome, harsh and wrongful. As I have said, in making that assessment, one looks at the impact of the conduct on Bob rather than the intention of the majority.

I have noted in various parts of these reasons, particularly in section 3(b) that various complaints that Bob made, were, at least in part, justified. The senior staff, particularly Messrs Mostyn and Ash did act partially in Jim Bosnjak's interest and tended to by-pass Bob.

There is no doubt in my mind that the attempts to create a "Bob free environment" by the majority did affect Bob's rights as a member of the Company even putting aside any legitimate expectations of management. Bob's general attitude may have been seen by the majority as meaning that they could not work together. However, contributory negligence is no defence to oppression. The majority must respect the rights of the minority no matter how difficult or trying they might consider that to be.

Looking at the conduct of the majority as a whole, I must ask myself whether there has been conduct of the affairs of Holdings and Westbus which is unfair to Bob judged from the point of view of the reasonable observer.

In my view the conduct does step over the mark. Bob Bosnjak, despite his personality was entitled to be consulted much more than he was. Despite his propensity for abusing people who approached him, there was no reason why at least key proposals could not have been submitted to him in writing. His views as to the change from management by the directors to management by executives and to the use of consultants were entitled to be given greater heed than they were.

However, for reasons which follow, I consider that the appropriate remedy for the oppression is, if Bob Bosnjak so wishes, his shares be purchased by the majority after there has been an actual or notional accounting for monies which should be returned to Holdings

Section 260 sub-sections (2)(c)-(k) set out a smorgasbord of remedies which the court may award in appropriate cases. 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, 539. The remedy chosen should be the least intrusive: Martin v Australian Squash Club Pty Ltd (1996) 14 ACLC 452, 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, 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.

Although, as Mr Rayment, QC has reminded me from time to time, Bob Bosnjak has shifted in his choice of remedies, his present position is that he does not want to sell his shares, but wants to continue to be a bus operator. Bob Bosnjak is willing to buy out the majority shareholders or to have the assets of the company split between the shareholders. I have already mentioned under section 3(h) the possible splits.

Mr Ellicott, QC puts that the most appropriate order would be that the assets of the company be split up and allocated to Bob, Jim, Carol and the Anda Trust.

The court's direct power to make such an order is questionable. However, there is clear jurisdiction to make orders regulating the affairs of the Company: s 260(2)(c). That power may be used effectively to provide a split of assets.

Bob Bosnjak also made an open offer to acquire the Jim and Carol Bosnjak (or NBC) shares in Holdings for $25,000,000. Bob said that this was the valuation of those shares which was submitted to his solicitors by the opposing solicitors.

There was evidence that Jim and Carol Bosnjak had offered $20,000,000 for Bob Bosnjak's shares in Holdings. Bob refused this offer.

Bob Bosnjak has advocated a three way split of assets. This is unacceptable to Jim and Carol Bosnjak because it fails to recognize (a) the interest of the estate of Anda Bosnjak; and (b) compensation for the financial risks they took in setting up NBC. I agree with the position taken by the defendants.

There are various ways in which the assets might be split. One is that Jim Bosnjak have the bus operations and Bob Bosnjak the asset management. This is not acceptable to Bob Bosnjak who wishes to keep his involvement with the bus operations. Another, acceptable to Bob Bosnjak, but not acceptable to Jim Bosnjak is, as I have said, for Bob to take the buses centred on Penrith and Windsor.

During the case I indicated a third possible split. Essentially this involved an impartial chairman being appointed a director of Holdings having a casting vote only. Bob Bosnjak would then form a company, called, for the purposes of discussion, BBB. The board would, with respect to each of the bus and coach contracts of the Company and each depot determine a performance standard for each contract or of each depot. The board would then call from NBC and BBB tenders for the franchised operation by BBB or NBC of each of the routes, contracts and depots on the basis of compliance with the performance standards and shall fix a date for tenders to be lodged. The board might decide to offer routes, contracts or depots in packages. Provided there are no complications with creditors, or the parties require cash for legal fees or to complete their tenders or to establish franchised services, there can be a reduction of capital by the sale of assets which neither party wishes to utilize. Full details are set out in MI772 which has been left with the papers.

I gave a copy of MI772 to counsel during the second week of hearing. My experience of this type of case is that sometimes such a scheme suggested by the judge can form the basis of agreement, but that, if there are heartfelt reservations even by one of the active parties to the litigation about such a proposal, the judge should not pursue it. In the present case, Bob Bosnjak would be prepared to consider such a scheme such as set out in the schedule which Mr Ellicott, QC says is basically a scheme for sub-contracting. Mr Rayment, QC does not consider that this is the way forward. I accordingly do no more than merely record what occurred.

Another way of preserving the Company would be to put in an independent board or organize an amalgamation on terms acceptable to both parties. The key to both exercises is an independent board. Bob Bosnjak considers that such a board would mean one controlled by persons who had no conflicts of interest. Ideally, in his eyes, this would be himself plus some outsiders. This proposition only has to be stated for it to be clear that it offers no real solution to the present problems.

If no restructuring proposal can be implemented, the court must consider a buy-out. The key question often is who should buy out whom? The early cases made the assumption that the appropriate order was that the majority buy out the minority at a fair value. Indeed, there is authority for the proposition that it may well be an abuse of process to continue with oppression proceedings after a fair offer to purchase the plaintiff's shares has been made: Re a Company [1987] BCLC 562, 563 and see also Re a Company [1983] 2 All ER 854 and Re a Company [1996] 2 BCLC 192. I noted this point in the John J Starr case at p 66 stating that "If a fair offer is made by the defendants to purchase the plaintiff's shares, prima facie no order for winding up ought to be made." There is abundant authority for that proposition: I can see no reason why that proposition does not also apply where winding up is not the primary order sought.

The ordinary order is that the majority buy out the minority: Wilton-Davies v Kirk [1998] 1 BCLC 274, 277. There have been orders made that the majority sell their shares to the minority, but this has been considered to be exceptional; see eg Re a Company; Ex Parte Shooter [1990] BCLC 384; Re Brenfield Squash Racquets Club Ltd [1996] 2 BCLC 184, 190.

Ordinarily, the court will not order an oppressed plaintiff to sell his shares against his will. It may, as occurred in the Australian Squash Club case allow the plaintiff to elect to continue to live under the defendants' regime or sell his shares to the majority at valuation.

In the present case, Mr Ellicott, QC's principal reason for asking that the majority sell their interests to Bob Bosnjak is that the majority's conduct show that they are no longer worthy to trade under the name of "Bosnjak". Even if this were true, it would not, of itself, justify such an order.

The principal oppression found is by Jim (and sometimes Carol is involved too) taking advantage of a corporate opportunity. To a degree, I dealt with the consequences of this type of oppression in section 3(d). The relief to be granted is to make the majority account to the Company. If there is to be a buy-out, then the price of the shares is adjusted accordingly. This may be done by valuing the minority's shares on the basis that the misconduct did not occur; see Re Golden Bread Pty Ltd [1977] Qd R 44, 50 and 55; Re Dalkeith Investments Pty Ltd (1984) 9 ACLR 247, 255. Another method of attacking the problem is to first perform the accounting exercise of writing back what should not have been abstracted from the company and then valuing the shares. As appears from Re London School of Electronics Ltd [1986] Ch 211, 225, this may involve both parties accounting for unfair gains.

All in all, it seems to me that the established oppression would be better met by ordering an accounting and by continuing the existing interim injunction permanently or at least until an amalgamation proposal is presented in proper form before an appropriately constituted board.

I now must deal with Mr Ellicott, QC's submissions that, with respect to NBC and Transcard, the appropriate order is that the defendants hold their shares in NBC and Jim Bosnjak holds his "profit" from Transcard on trust for Holdings. As I have previously said, Mr Rayment, QC contends that the appropriate remedy is an account of profits. He says that all that the majority should be ordered to do if this type of oppression is found is to pay over their salary minus just allowances.

I have already mentioned Mr Rayment, QC's reliance on Warman International Ltd v Dwyer supra. In that case at pp 561-2, five justices of the High Court said,

"In the case of a business it may well be inappropriate and inequitable to compel the errant fiduciary to account for the whole of the profit of his conduct of the business or his exploitation of the principal's goodwill over an indefinite period of time. In such a case, it may be appropriate to allow the fiduciary a proportion of the profits, depending on the particular circumstances. That may well be the case when it appears that a significant proportion of an increase of profits has been generated by the skill, efforts, property and resources of the fiduciary, the capital he has introduced and the risks he has taken, so long as they are not risks to which the principal's property has been exposed. Then it may be said that the relevant proportion of the increased profits is not the product of the plaintiff's property but the product of the fiduciary's skill, efforts, property and resources. That is not to say that the liability of a fiduciary to account should be governed by the doctrine of unjust enrichment, though that doctrine may well have a useful part to play; it is simply to say that the stringent rule requiring a fiduciary to account for profits can be carried to extremes and that in cases outside the realm of specific assets, the liability of the fiduciary should not be transformed into a vehicle for the unjust enrichment of the plaintiff.

It is for the defendant to establish that it is inequitable to order an account of the entire profits. If the defendant does not establish that that would be so, then the defendant must bear the consequences of mingling the profits attributable to the defendant's breach of fiduciary duty and the profits attributable to those earned by the defendant's efforts and investment..."

The decision of the High Court in Warman is, of course, binding on me. It is also in accordance with long standing authority such as Clegg v Edmondson [1857] EngR 375; (1857) 8 De G M & G 787, 814; [1857] EngR 375; 44 ER 593, 604 and In re Jarvis [1958] 1 WLR 815, 821.

There are, of course, cases where the business being carried on by the errant fiduciary is in every real sense of the term part of the trust property. Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488 was such a case. However, normally, where the fiduciary has established a business with the aid of confidential information or with some other springboard provided by the property of the principal, it is more appropriate to order an injunction if the application is made timeously or an account of profits; see eg Seager v Copydex Ltd [1967] 1 WLR 923 and United States Surgical Corporation v Hospital Products International Pty Ltd [1983] 2 NSWLR 157, 230-1.

Despite Mr Ellicott, QC's submissions to the contrary, I believe that an account of profits is the proper course to follow in the instant case to remedy this oppression.

Mr Rayment, QC spent some time approaching the problem according to relatively new theories of the law of restitution. He cited the theories of Professor Birks in Introduction to the Law of Restitution (Clarendon Press, Oxford, 1985) esp pp 132 et seq and the essay by Professor Youdan in Equity, Fiduciaries and Trusts (Carswell, Toronto, 1989). However, as I have reached the result for which Mr Rayment, QC contends by a more direct route, it is unnecessary to do more than note this submission.

Where a fiduciary breaches a duty not to profit at the expense of his or her principal, without dishonesty, it is customary for the court in an action brought by the company or in a derivative action to allow the directors a proper fee for the risks they have taken in bringing about a profitable property which must now pass to the company; see Quinlan v Essex Hinge Co Ltd [1996] 2 BCLC 417.

Mr Rayment, QC says that there was no dishonesty in this case, but, even if there was, the same principle applies nowadays after Warman's case, at least where the company has received incontrovertible benefit by the acts of a fiduciary.

I consider that this last submission is too wide. The allowance of a just amount to an errant fiduciary is discretionary. Mason and Carter, op cit at para [1735] say that the allowance is "invariably withheld against the dishonest fiduciary". With respect, that is too general a statement. The court must examine all the circumstances of the case and see what is fair and equitable. If there has been a degree of dishonesty by the fiduciary, but the fiduciary's efforts have been the prime source of the profit, it is open to the court to make an allowance.

In the instant case, there was what would be considered to be dishonesty in this branch of the law by Jim Bosnjak's conduct with respect to Transcard. The situation with NBC is harder to assess. After due consideration of all the matters I have recounted above, I consider that Jim Bosnjak (and, a fortiori, Carol Bosnjak) genuinely believed that Bob Bosnjak was not interested in the Melbourne buses and that they had done all that was necessary to do their duty to him. They were in error in assuming that there was consent to their obtaining advantages, but they did not act dishonestly.

Even if there was dishonesty in the case of the NBC, I would consider that this was a case where, notwithstanding that dishonesty, a sizable allowance would need to be made to the erring fiduciaries for their efforts.

The facts of the NBC matter seem to me to get extremely close to the highest case exemplified by the High Court in Warman's case. No Westbus money went into NBC, Jim and Carol Bosnjak financed the acquisition from their own resources, they bore all the financial risks, NBC was for a while, unprofitable, but became profitable by a renegotiation with the Victorian Government independent of Westbus and day to day managerial success was achieved not through Westbus, but primarily through the skill of Mr Oliver.

Mr Ellicott, QC says that it is not correct to say that NBC prospered because of the efforts of Jim and Carol Bosnjak. He puts that its success was achieved by a non-fiduciary, Peter Oliver. However, what Mr Oliver did, he did as the CEO of a company controlled by Jim and Carol Bosnjak and in respect of which they bore the financial risk.

In my view, the defendants have established that the proper remedy is an account of profits, and not a constructive trust.

I now have to consider the fact that Bob Bosnjak waited quite a time before commencing these proceedings. He waited until after NBC started to become profitable and then asked for a one third share, even though he had the opportunity to object sooner. The High Court said in the Warman case at page 559,

"The conduct of the plaintiff may be such as to make it inequitable to order an account. Thus a plaintiff may not stand by and permit the defendant to make profits and then claim entitlement to those profit."

I have set out the facts as to Bob Bosnjak's knowledge of the NBC operations in section 3(d) of these reasons. I there found as a fact that Bob Bosnjak had adequate knowledge to commence proceedings by 10 January, 1994.

Although Bob Bosnjak mounted Federal Court proceedings in 1995 to force disclosure of more documents and kept up his suggestion for an asset split, he only became interested in becoming involved in NBC in January, 1997. The present proceedings were not commenced until late August, 1997.

I realize that, apart from Bob Bosnjak, the one-seventh interest of Anda Bosnjak's estate is also affected. However, that estate is not a claimant, and I do not consider I need examine when its controllers had sufficient knowledge of the matter.

In my view, the only account that Bob Bosnjak should have is an enquiry as to what, if anything, is the amount which Jim and Carol Bosnjak should refund to Westbus because they utilized the time and information of Westbus in connection with the acquiring of the NBC franchise for the Melbourne bus operations up to 10 January, 1994.

Although I have referred to the "majority" as the oppressors, it is necessary to distinguish between Jim and Carol.

Carol had no involvement with Transcard at all. She was a member of the board at the time, but Jim Bosnjak's involvement in Transcard was not revealed to the board and there is no evidence to make her accountable in connection with this matter.

However, with the other categories of oppression found, even though Jim was the principal actor, Carol was either a participant or stood back with knowledge and there is no reason why she should not be in the same plight as Jim.

The defendants submitted that I should give the opportunity to Holdings' shareholders to ratify any breach of fiduciary duty committed by Jim and Carol Bosnjak. I agree with the view put by the plaintiff''s counsel in their written submissions in reply that this would be a waste of time. For one thing, it may well be that no 60% quorum would be achieved. Secondly, the entrenched positions of all relevant parties has been made clear except the position of Anda Bosnjak's estate, which, because of the proceedings in the Probate Division cannot immediately be ascertained.

Mr Ellicott, QC submits that ratification by the shareholders means by all the shareholders and as the plaintiff will not join in the ratification, it is a waste of time holding a meeting. He puts that such submission is supported by Kinsela v Russell Kinsela Pty Ltd (1986) 4 NSWLR 722, 729. It is true that LW Street, CJ did say words to that effect, but his reference immediately afterwards to Bamford v Bamford [1970] Ch 212 and Winthrop Investments Ltd v Winns Ltd [1975] 2 NSWLR 666, 681 in the former of which that proposition was rejected and in the latter the proposition was assumed to be wrong, make me doubt whether one should take the passage from Street, CJ as literally correct. It seems to me, that though there are still some strong arguments either way (see eg the decision of the Full Bench of the South Australian Supreme Court in Residues Treatment & Trading Co Ltd v Southern Resources Ltd (No 4) (1988) 14 ACLR 569), the prevailing view is still that the fiduciary duties are owed to the company as a whole and not to each and every one of the members. Thus, if there can be ratification of a breach of fiduciary duty, that can occur by the resolution of the appropriate majority in general meeting after full disclosure and the resolution need not be unanimous.

It follows from what I have said that there must be an accounting to the Company: (a) by Jim and Carol Bosnjak for any advantage at the expense of the Company or at the cost of or the detriment to Holdings with respect to NBC up to 10 January, 1994; (b) by Jim on the same basis, though without limitation as to time, in connection with Transcard; and (c) there must be a recovery of costs paid to the Company's legal advisers for taking part in this litigation to shore up the majority position.

Some thought will need to be given as to the most efficient way to do this. It is obviously inappropriate at this stage to go too deeply into the accounting process. If what I have said in these reasons is insufficient guidance, a referee can apply for further guidance, and, if a Master is to deal with the next part of the case, he or she can decide the relevant point or refer it to me.

After that accounting is actually or notionally performed, Bob Bosnjak would be entitled to an order that the majority purchase his shares at a price to be fixed by the court. At present he does not want this order to be made. If he continues in that attitude, I will not make any further order. I cannot see how the oppressors can obtain that order because it is convenient for them to obtain it. To allow this would be to allow oppressors to benefit from their own wrong; see the discussion in the Australian Squash Club case supra.

I would imagine that there will be some very interesting submissions made about costs. I have already mentioned the application by the Company for costs. My present feeling, which is by no means intended to be even a preliminary adjudication on the issue is that the reasonable costs of each party should come out of the assets of Holdings on analogy with a suit to wind up a partnership, but that each party should bear his her or its own costs over and above this including the not inconsiderable costs of multiple photocopying of documents.

Doubtless some time will be needed to digest these reasons. I will thus stand the matter over for mention on Thursday 8 October, 1998 at 9:30am on the basis that counsel may, by arrangement with my Associate at least a week beforehand, vary that date. When I say, "for mention", I really just want to know what the parties intend about arguments as to costs and forms of orders and otherwise so that an appropriate time can be allocated for those matters to be properly argued.

To avoid any doubt, I will expressly continue the interim injunction granted by Cohen, J until further order. Unless, there is some relevant collateral matter raised, my present thought is that that order should be made permanent though it should lapse if there is a proper proposal for amalgamation on due notice presented for consideration.