Legitimate expectation .
409 Counsel for Fexuto made the general submission that Young J should have found legitimate expectation. Counsel for the respondents said Young J was right in deciding it had not been established.
410 Particular submissions supporting Fexuto's general submission were made in written and oral submission and included the following. After referring to the three questions that Young J had formulated, namely, had the legitimate expectation that Mr Bob Bosnjak would share in day to day management arisen; if it had, did it still exist; and if it still existed, had it been frustrated, it was submitted that he was in error in answering the first two questions no. Further, in regard to the second question, it was submitted that his apparent assimilation of the present case to Re Blue Arrow28 was unjustified, because of the marked factual difference between the cases. The arguments for the respondents supported the trial judge's conclusions, examined the evidence supporting them at length and additionally referred to the facts that Article 101 of Holdings' Articles provided for the appointment of a managing director and that there were no pre-emptive rights in the Articles.
411 My approach to the "legitimate expectation" question is based on the same complex of facts dealt with by Young J when he dealt with the question. Many of the facts are not in dispute. On disputed facts Young J made some explicit findings. I will use these unless I indicate otherwise. He also made some more general observations in his assessment of witnesses. In instances where it seems likely that other factual findings were influenced by those assessments I will use those findings on the same basis.
412 Young J also commented on the non calling of witnesses, on both sides, who he would have expected to be called. I do not think he made any findings of fact based on this comment. It is a matter on which I take a somewhat different view, and although I also do not base any specific inference on it, I think I should mention it.
413 Young J tended, I think, to treat the contending parties as equally subject to his comment. However in my view the comment applies with more weight to witnesses who were not called from the defendants' side. Young J named four witnesses he thought would be in the defendants' camp. One was Mr Graham who had intimate knowledge of company matters from 1980 onwards and was closely associated with the NBC matter. Another was Mr Jim Marsden, whose evidence could have thrown more light on the making of Mrs Anda Bosnjak's 1992 will, and also on Mr Jim Bosnjak's knowledge of problems concerning the passing of motions at general meetings. Another was Margaret Gibson of Price Waterhouse who was one of Mr Jim Bosnjak's advisers concerning the last mentioned problems. These were all witnesses on important issues in the case. The fourth was Mrs Gloria Bosnjak, Mr Jim Bosnjak's wife. I would not attach any particular tactical significance to her not being called.
414 The two witnesses mentioned by the judge who he thought might have been called on the plaintiffs' side were Mr Bob Bosnjak's wife and his daughter, Sandra. As with the non-calling of Gloria Bosnjak in the defendants' case, I would not attach particular significance to the non-calling of these two family members.
415 Before stating my own conclusions I again mention the fact that in the interval between Young J's decision in this case and the hearing of the appeal, further consideration had been given by Lord Hoffmann to his use in earlier company law oppression cases of the term "legitimate expectation". In Re a company; O'Neill v Phillips,29 Lord Hoffmann referred to the fact that in earlier cases he had used the term
" as a label for the 'correlative right' to which a relationship between company members may give rise in a case when, on equitable principles, it would be regarded as unfair for a majority to exercise a power conferred upon them by the articles to the prejudice of another member. " 30
416 He mentioned that in Re Saul D. Harrison & Sons plc31 he had used as an example what he called "the standard case" in which shareholders had entered into association upon the understanding that each of them who had ventured capital would also participate in the management of the company and that in such cases it would usually be considered unjust, inequitable or unfair for a majority to use their voting power to exclude a member from participation in the management without being given the opportunity to remove the invested capital upon reasonable terms. Lord Hoffmann had said that the aggrieved member could be said to have had a "legitimate expectation" of either participating in the management or withdrawing from the company.
417 He now said that it was probably a mistake to use the term when in this area of the law the idea had already been sufficiently defined in other terms. He went on that when in Saul D Harrison he had said that legitimate expectation was correlative to the equitable restraint
" I meant that it could exist only when equitable principles of the kind I have been describing would make it unfair for a party to exercise rights under the articles. It is a consequence, not a cause of the equitable restraint. A concept of a legitimate expectation should not be allowed to lead a life of its own, capable of giving rise to equitable restraints in circumstances in which the traditional equitable principles have no application. " 32
418 In his reasons for judgment, Young J had noted that although, following Lord Hoffmann's lead in earlier cases, the concept of "legitimate expectation" had been accepted in England in the area of company law presently in question, it had not been adopted in other jurisdictions, although the kind of consideration given by the courts elsewhere to the situations dealt with in England under the term was very much to the same effect. Thus, although, following Lord Hoffmann's comment in O'Neill v Phillips, use of the term may drop off in England, the application of the equitable principles which resulted in its adoption will continue. Lord Hoffmann discussed those equitable principles in an earlier section of O'Neill v Phillips under the heading "Unfairly prejudicial" in terms which, from the Australian point of view, are in my opinion substantially consistent with the way those words in s 260 of the Corporations Law have come to be understood and applied in Australia. His statement of the position provides a very useful background against which to approach the present case.
419 Lord Hoffmann first pointed out that in company law persons become associated for an economic purpose on terms "contained in the articles of association and sometimes in collateral agreements between the shareholders" so that the affairs of the company will be conducted according to rules agreed by the shareholders.33 Secondly, however, he said,
" company law has developed seamlessly from the law of partnership, which was treated by equity, like the Roman societas, as a contract of good faith. One of the traditional roles of equity, as a separate jurisdiction, was to restrain the exercise of strict legal rights in certain relationships in which it considered that this would be contrary to good faith. These principles have, with appropriate modification, been carried over into company law. "34
420 He then briefly discussed three cases which have become well known in this area of the law, Ebrahimi, then Blisset v Daniel35 which was used as an example by Lord Wilberforce in Ebrahimi, and Re Wondoflex Textiles Pty Ltd36 (a decision of Smith J). He then continued:
" I cite these references to 'the literal construction of the articles' contrasted with good faith and 'the plain meaning of the deed' and 'what the parties can fairly have had in contemplation' to show that there is more than one theoretical basis upon which a decision like Blisset v Daniel can be explained. Nineteenth century English law, with its division between law and equity, traditionally took the view that while literal meanings might prevail in a court of law, equity could give effect to what it considered to have been the true intentions of the parties by preventing or restraining the exercise of legal rights. So Smith J speaks of the exercise of the power being valid 'in law' but its exercise not being just and equitable because contrary to the contemplation of the parties. This way of looking at the matter is a product of English legal history which has survived the amalgamation of the courts of law and equity. But another approach, in a different legal culture, might be simply to take a less literal view of 'legal' construction and interpret the articles themselves in accordance with what Page Wood V.-C. called 'the plain general meaning of the deed'. Or one might, as in Continental systems, achieve the same result by introducing a general requirement of good faith into contractual performance. These are all different ways of doing the same thing. I do not suggest there is any advantage in abandoning the traditional English theory, even though it is derived from arrangements for the administration of justice which were abandoned over a century ago. On the contrary, a new and unfamiliar approach could only cause uncertainty. So I agree with Jonathan Parker J when he said in In re Astec (B.S.R.) Plc [1998] 2 BCLC 556, 588:
'in order to give rise to an equitable constraint based on "legitimate expectation" what is required is personal relationship or personal dealings of some kind between the party seeking to restrain such exercise, such as will affect the conscience of the former.'
This is putting the matter in very traditional language, reflecting in the word 'conscience' the ecclesiastical origins of the long-departed Court of Chancery. As I have said, I have no difficulty with this formulation. But I think that one useful cross-check in a case like this is to ask whether the exercise of the power in question would be contrary to what the parties, by words or conduct, have actually agreed. Would it conflict with the promises which they appear to have exchanged? In Blisset v Daniel the limits were found in the 'general meaning' of the partnership articles themselves. In a quasi-partnership company, they will usually be found in the understandings between the members at the time they entered into association. But there may be later promises, by words or conduct, which it would be unfair to allow a member to ignore. Nor is it necessary that such promises should be independently enforceable as a matter of contract. A promise may be binding as a matter of justice and equity although for one reason or another (for example, because in favour of a third party) it would not be enforceable in law.
I do not suggest that exercising rights in breach of some promise or undertaking is the only form of conduct which will be regarded as unfair for the purposes of section 459. For example, there may be some event which puts an end to the basis upon which the parties entered into association with each other, making it unfair that one shareholder should insist upon the continuance of the association. The analogy of contractual frustration suggests itself. The unfairness may arise not from what the parties have positively agreed but from a majority using its legal powers to maintain the association in circumstances to which the minority can reasonably say it did not agree: non haec in foedera veni. It is well recognised that in such a case there would be power to wind up the company on the just and equitable ground (see Virdi v Abbey Leisure Ltd [1990] BCLC 342) and it seems to me that, in the absence of a winding up, it could equally be said to come within section 459. " (at 1100-1102)
421 Although by the time the present appeal came to be argued, Lord Hoffmann's doubt about the wisdom of using the term "legitimate expectation" in the area of the law now in question was well-known to the parties, (a number of their submissions referred to aspects of O'Neill v Phillips), they continued to use the term in both written and oral submissions. It is a convenient shorthand term, so long as Lord Hoffmann's caveat about its proper significance is kept in mind, namely that it is a consequence not a cause of equitable restraint upon legal rights. It seems to me to be a useful label for describing the result of the way in which equitable considerations operate. It is difficult to find a short counterpart for it. I will therefore use it, as counsel did, in the sense defined by Lord Hoffmann.
422 One of the notable features in the long passage I have set out from Lord Hoffmann's opinion in O'Neill v Phillips is his adoption of what Jonathan Parker J said in In re Astec. That adoption and what he himself said in his following paragraph make it clear that the equitable considerations which give rise to a "legitimate expectation" themselves grow out of the relationships and dealings between the parties and the whole of their conduct in regard to one another. This seems to me to support a wider approach to the question whether equitable considerations have given rise to a "legitimate expectation" in a particular case than is recognised by the six propositions which Young J drew from the authorities.
423 I set out those six propositions in par 324. Subject to what I have just said I agree generally with the first five of these propositions, although I think more is to be drawn from the cases than they contain. I have reservations about the sixth. In my view, in some circumstances if it is no longer practicable for the expectation to continue, that may cause it to be lost; but it would all depend on the particular circumstances of the case, and there will be cases where even if it is no longer practicable for the expectation of continuation in management to continue that will not bring the considerations leading to that legitimate expectation to an end. For example, the party enjoying the legitimate expectation will certainly in some such circumstances be entitled to be bought out.
424 Fexuto's legitimate expectation claim was pleaded in par 28C of the final version of the statement of claim as being "a legitimate expectation that its nominee on the Board of Directors, Bob Bosnjak, would be in a position at all material times to effectively participate in the management of Holdings".
425 This was the legitimate expectation for which Fexuto argued at the trial, and also on the appeal. In rejecting the contention at the trial, Young J divided the time from the start of the business in 1955 up to the commencement of the proceedings in 1997 into different periods. Mainly because of the legal controls that were available to the parents, and in particular to Mr S. Bosnjak, both until 1975 and until the death of Mr S. Bosnjak in 1979, Young J thought that no legitimate expectation of the type contended for by Mr Bob Bosnjak had arisen before 1975 or before 1979.
426 I have a different impression of the position from 1955 to 1979. That is that the business was from the beginning a family business, in which the father and the three sons were, as their ages permitted, the active principals. The family worked as a unit and, no doubt, the views of the father were generally adopted. However, specific evidence about what happened before 1975, and indeed 1979, about decision-making and allocation of duties was rather sparse at the hearing and is not enough to justify turning my impression into firm findings.
427 Even on the sparse evidence however, it is clear that all three sons contributed to the fullest extent of which they were capable in running the business and that each by 1975 would have been justified in regarding himself as an integral part of the ownership of the business, subject to the regulation and wishes of the father. But, as I have said, the evidence does not permit any firm finding on this period, beyond noticing the important fact that the business was a completely family business.
428 From 1975 the picture becomes clearer. One factor in this is the re-arrangement of family affairs carried out under the oversight of Mr S. Bosnjak in 1975-77, which set in place a framework for what was to happen from then on. What happened from 1979 onwards must be considered in the light of that framework.
429 The overall plan of the 1975-77 re-arrangement is relatively plain. The plan was based on the expectation that, probably, Mr S. Bosnjak would die before his wife and that they would both die before any of their sons. The plan was to re-arrange the family affairs so that when the eldest member, Mr S. Bosnjak, died, arrangements would be in place for the continuation of the family bus business under the direction of Messrs John, Bob and Jim Bosnjak. Their families would each have the beneficial ownership of two-sevenths of the shareholdings in the company. The presence of Group as one of the two trustees of the shares in the business owned by each family trust meant that there would have to be co-operation between the directors of Group. The same would apply, more simply, to the other seventh of the shareholding directly owned by Group as trustee for Trust No 4. For practical purposes they appear to have treated control as ownership by the particular family group (stirps). I mentioned earlier that it would appear that the wills of both Mr S. Bosnjak and Mrs A. Bosnjak, were part of the overall scheme; that their terms were known to the family at the time of their making; and that their effect was that after both parents were dead their property would pass equally to each of their then surviving sons. While Mr S. Bosnjak lived he could keep control of the business, by means of his wide rights as Governing Director, so long as he wished. This arrangement envisaged a continuing closely knit family, property and business relationship. The directorship of Group would give the family, through the sons, a direct supervising power over each of the four trusts. The transfer of Mrs Anda Bosnjak's shares in Bus Services to Group as Trustee of Trust No 4 left her without any equitable interest in the business. Her only legal interests were her directorship of Bus Services, and after her husband's death, her ownership of one share in Group. It must have been intended that the sons would see she still benefited from the business, perhaps by consultancy fees or other employment, or by loans. In her position as the mother, her wishes would be likely to lead to agreement on major matters, but she would have no part in the day to day management of the business. Upon Mr Simun Bosnjak's death, if he died first, the family of each son would own two sevenths and prospectively one third of the family business and between them the sons would have the management and direction of the business.
430 In view of the history of the family business until that time, there was no reason, upon the death of the father, why the management of the business should not be continued by the three brothers in the way outlined above, the two elder, for some time at least, with their greater experience and longer time in the business, being likely to have the major role in running it. The youngest brother, Mr Jim Bosnjak, was twenty-eight at the time of this family re-arrangement and would be likely to play a larger part in the management of the business as time passed. In time, each of the three would be likely to have an equal voice. What was envisaged was very much a family partnership, but for convenience and for fiscal reasons flowing from the way business is done in these times, regulated by the forms of company and trust law.
431 Although there does not seem to have been much evidence before Young J about the character and activities of Mr S. Bosnjak, or anything specific about his position in the family (it is possible that in the tundra of the appeal papers there is some evidence about this that I have missed) one glimpse of him appears in Mrs Carol Bosnjak's affidavit. Since this does not appear to have been objected to or contradicted it seems safe to use it. She describes the way in which family members were paid during Mr S. Bosnjak's lifetime. She said:
" Prior to Simun's death we were all paid wages but those wages were given to Simun who then gave each family a living allowance and paid out bills, I believe from the company. "
432 I mention this because it resembles evidence that was common ground at the hearing, concerning Mr Bob Bosnjak's somewhat similar attention to cash, his daily collecting of the takings from each of the depots, which he did for many years, until prevented by his poor health in 1991. He was not only collecting the money. Until 1994, whenever at the office, he was the one who opened all mail. He was keeping a close eye on the everyday detail, big and small, of the family business. These are examples of the "hands on management" which Young J noted as being the way Mr Bob Bosnjak thought the company should be run. They also indicate his status in the company.
433 In 1979 the expected course of affairs was disturbed by the death of Mr John Bosnjak at the age of forty-four. Following the death of Mr S. Bosnjak three months later, the management of the family business now fell to Mr Bob Bosnjak, aged forty-one, who had been working in it continually since 1955 and Mr Jim Bosnjak, aged thirty-one, whose working time in it had been at least ten years shorter, and whose full time working in the business had, on any view, been somewhat shorter again.
434 Despite the conflicts in the evidence, the overall position seems clear, that from 1979 to 1988 the business grew and was conducted under the direction and management of Mr Bob Bosnjak and Mr Jim Bosnjak. This was the continuing day to day position. Mrs Anda Bosnjak only very occasionally took part, but then her wishes would, in a family manner, be likely to lead to a consensus that what she thought should be done, would be done. In company law language the two brothers were for all practical purposes joint managing directors. In partnership law language they were for all practical purposes partners who had to make joint decisions about partnership business.
435 This quasi-partnership position continued until September 1988, when what turned out to be only a brief interruption occurred. Any major decisions in the business were made by agreement between the brothers. Mr Bob Bosnjak's views usually prevailed in matters when one of the brothers was reluctant to go ahead with a proposal. This mainly happened when Mr Bob Bosnjak did not agree to a proposal of Mr Jim Bosnjak. In the submissions made on behalf of Mr Jim Bosnjak, this was referred to as a veto power. So it was, but it was equally a power which Mr Jim Bosnjak could use. It is an inbuilt ingredient of decision by consensus. If Mr Bob Bosnjak usually prevailed, it was because of the relation in which the two men stood as a result of their age, experience and characters.
436 The position as it was until at least 1988 was described by Mr Jim Bosnjak, in cross-examination, (when he was contrasting it to the position later):
" We used to walk into one another's office and talk. ... we spent years together sitting down and walking into one another's offices and trying to come to resolution as to whether we should proceed or not proceed. At this period though there was no formal directors' meeting in writing. The only way to function was for him to walk into my office or for me to walk into his office and discuss these sorts of things. "
437 One element in what happened from 1988 onwards must have been Mr Jim Bosnjak's increasing prestige in the bus industry outside the family business, growing experience and growing wish to turn the family business into what he regarded as a more professional operation.
438 As against this Mr Bob Bosnjak took the view that he should be regarded as the head of the family, at least for business purposes and that the business should continue as a family business. This attitude was clearly shown in conversations he had with Mr Jim Bosnjak of which both gave versions in their affidavit evidence. Mr Jim Bosnjak gave his account in his affidavit of 3 June 1998, Mr Bob Bosnjak in his affidavit of 9 June 1998. Mr Bob Bosnjak denied his brother's version, but went on as follows:
" ... in or about May 1988 ... I said words to the following effect:
'As our father was chairman and managing director and John would have been had he survived, I think I should be chairman and managing director and you a director.'
Jim said:
'I'll have a think about that and get back to you.'
(ii) Shortly thereafter, when we met at the offices of Holdings at Parramatta, Jim Bosnjak said to me words to the following effect:
'I've had a think about what you said and there's no way I want you to be chairman and managing director because that will give you too much control.'
I said:
'I am the eldest one in the family and I've worked the hardest and I deserve it.
JB: 'Well, I don't agree.' "
439 It is interesting that in Mr Jim Bosnjak's version of these conversations, he reported Mr Bob Bosnjak as saying that if he were managing director, he would not use his casting vote.
440 The evidence all seems to me to show that although Mr Bob Bosnjak wished to be recognised as the head of the family, with the accompanying dignity of the title of managing director, he recognised at all times that the management had to be by consensus. The evidence also shows that Mr Jim Bosnjak had a good deal of respect for his older brother, but that as he became successful in his own right outside the business he became increasingly determined to see that his own ideas about the way in which the company's business should develop and be managed were given greater weight.
441 Mrs Anda Bosnjak occasionally took part in a major decision, but not often. As a widow, she continued to live in the house at 1 Edensor Avenue, with Mr Jim Bosnjak, his wife and their four children, (that is, four of her grandchildren). Mr Jim Bosnjak said she discussed the business daily with him when he went home, but I do not infer from this that she played an active part in management. Rather his evidence on this point indicates that on going home from work each day he would tell his mother anything of interest that had happened during the day. I do not mean to understate the position of the mother in the family. The respect in which she was held is shown by two events in particular, in 1989, which I will come to later, but although she was a considerable force in the family, that does not detract from the fact that from 1979 onwards her two remaining sons were doing all the management work and making virtually all the management decisions in the business.
442 Until 1988, Mr John Bosnjak's widow worked in the business but did not seek to take her husband's former place in a directorial/managerial role.
443 The conduct of all concerned parties from 1975 to 1988 in my opinion showed a set of mutually accepted understandings giving rise to a situation quite like what Lord Hoffmann in O'Neill v Phillips described as the "standard case" which would mean, putting it in terms of the present case, that it would be arguable that it would properly be considered unjust, inequitable or unfair for a majority in Holdings to use their voting power to exclude either Mr Bob Bosnjak or Mr Jim Bosnjak from participation in the management without giving him the opportunity to remove his capital upon reasonable terms. This last aspect of his legitimate expectation was not however something for which Mr Bob Bosnjak contended. His contention was confined to what he had stated in par 28C of the final version of his statement of claim. Nevertheless I think had he contended for such a version of his legitimate expectation, it would have had a serious claim to be recognised. I will explain why I say this.
444 The only difference of any materiality between the main features of the "standard case" where the right, in appropriate circumstances, to be bought out is recognised, and the present case, is that the present case has the further element of the long family presence in the business, so that family relationships both in the business and the family were woven into the relationships that exist between unrelated persons joining together in a continuing business. This extra factor in my opinion increases the weight of the equitable considerations created during the course of the relationship.
445 This additional element is connected with three other considerations that seem to me to be important in the case. The first is that on any view of the facts Mr Bob Bosnjak had played a major part in the building of the business. In lay language he had a very real stake in it. This had been so all his working life. This contributes to my view that he had a significant case for saying that his "legitimate expectation", if he was to be excluded from management, was either that he should be bought out at a fair price or that there should be a division of assets.
446 The second consideration is related to the first. It is the family nature of the business. In my view it is both expectable and reasonable for the main family members working in a family owned business to develop a proprietorial attitude to the business, that is, to regard themselves as the owners or the business and to expect that if the family goes out of the business, the assets of the business will be divided in fair shares between the members of the family who had taken part in the business. This approach may of course vary according to the particular circumstances of the case, but it seems to me to have represented the attitudes of the relevant family members in the circumstances of the present case.
447 The second consideration is reflected in the third, which is that two of the principal parties concerned, Mr Bob Bosnjak and Mr Jim Bosnjak, both thought that a division of assets was an appropriate solution to the disagreements that had arisen in the family. Mr Bob Bosnjak first thought this should be done during the period following the appointment of Mrs Carol Bosnjak as a director in 1988. Mr Jim Bosnjak proposed an asset split in 1991. In 1993 he proposed that legal advice be sought concerning a split or a restructuring. From then on there was continuing discussion about a split. The brothers could never agree about who should take which assets.
448 These additional considerations lead me to think that Mr Bob Bosnjak could well have argued that the legitimate expectation was somewhat wider in the present case than in the "standard" case described by Lord Hoffmann which lacks the first two considerations of the three I have just mentioned, namely an expectation of continuing in direct management, or, being bought out at a fair price or taking a fair share of the assets of the business.
449 Having raised this question about the precise extent of Fexuto's legitimate expectation, I need to consider whether I can pursue it at this stage of my reasoning. This involves looking at the way the matter was dealt with at trial and in the appeal.
450 First, as already mentioned, the legitimate expectation alleged by Fexuto in its statement of claim was that its nominee on the Board of Directors, Mr Bob Bosnjak, would be in a position at all material times to effectively participate in the management of Holdings.
451 The oral submissions to Young J, following the conclusion of the evidence, were not recorded. Extensive written submissions were later filed. In Fexuto's written submissions, under the heading "Legitimate expectation of Management", the history of the growth of the business was set out, including the materials and evidence upon which the assertion of the legitimate expectation was based, and materials supporting the submission, focused on the appointment of Mrs Carol Bosnjak as a director in July 1993 and the consequential change from consensus management to management by board majority, supporting a submission that Mr Jim Bosnjak and Mrs Carol Bosnjak were wrongfully disregarding and overriding the legitimate expectation of Mr Bob Bosnjak/Fexuto to consensus style and direct management.
452 The submissions for the defendants on the other hand (a) first conceded that the Bosnjak Group of Companies had been run as a family partnership, particularly during the 1950s, 1960s and 1970s but (b) then contended that as the business grew that form of management became unworkable and inefficient, (c) said that Mr Bob Bosnjak unreasonably resisted a change to an obviously required board of directors style of management, (d) asserted Mr Bob Bosnjak had insisted upon retaining what the submissions called a veto power and (e) said that the whole history of the business showed that Mr Bob Bosnjak had no legitimate expectation of the so-called consensual method continuing for an indefinite period. The greater part of the remainder of the submission then details what it characterises as Mr Bob Bosnjak's unreasonable opposition to various management decisions proposed by Mr Jim Bosnjak and carried through by majority following the appointment of Mrs Carol Bosnjak as director in 1993, with particular emphasis on Mr Bob Bosnjak's opposition to the appointment of Mr J. Mostyn as CEO and the attitude he displayed towards Mr J. Mostyn after his appointment as CEO in 1995.
453 The main argument about legitimate expectation at the trial thus seems to me to have been whether if the legitimate expectation contended for had existed, had it come to an end? The parties do not appear to have made any direct submissions on the question what consequences followed if Mr Bob Bosnjak succeeded in showing his contended for legitimate expectation had existed, but the defendants showed that it had come to an end.
454 Young J did not need to consider this question because of his primary finding, the reasons for which I have earlier abstracted, that he did not accept Mr Bob Bosnjak's contentions about the coming into existence of the legitimate expectation. Although he did go on to consider whether if the legitimate expectation had existed, circumstances had brought it to an end (which he found), because of his primary finding he needed to go no further and examine the consequences of the legitimate expectation having come to an end.
455 In the appellant's written submissions in the appeal the same legitimate expectation was contended for as at the trial. The submissions were principally aimed at showing that the trial judge's answers to the three questions he had posed under this head were in error. The respondents' written submission answers those of the appellant. Again, no narrower form of legitimate expectation was contended for, nor was there any direct exploration of the question of the consequences of there having been a legitimate expectation such as the appellant had contended for, but that it had come to an end.
456 During oral argument, counsel for the appellant was asked about what Lord Hoffmann had said in O'Neill v Phillips about "the standard case" in which shareholders have contributed capital on the understanding that they will participate in management giving rise to a legitimate expectation of participating in management together with the opportunity to remove their capital upon reasonable terms if excluded from management.37 Counsel replied,
" He is obviously not trying to deal with all cases there. There are other statements which suggest that a fair way of dealing with the matter is for the minority to be bought out at a fair price. In this case, my client does not want to be bought out. It doesn't mean, however that there isn't some other answer which he is entitled to have considered. ... There is no doubt on the authorities that the court can, in special cases, order that the majority transfer their shares to the minority. "